Jefferson Smurfit Group plc Full Year Statement for Year Ended December 31, 1999.

Business Editors

DUBLIN, Ireland--(BUSINESS WIRE)--Feb. 29, 2000

Jefferson Smurfit Group plc (Dublin: SMFT.I; London: SMFT. L and NYSE: JS), the geographically balanced paper-based packaging group, today announced full year results for the year ended December 31, 1999.

NOTE:  E = EURO

Sales:

         Third party sales          E3,689m     up 1% (1998: E3,667m)

Pre-tax profits:

         Before exceptional items     E167m  down 20% (1998: E209m)
         After exceptional items      E263m    up 21% (1998: E217m)

Earnings per share:

         Before exceptional items      7.7c  down 40% (1998: 12.9c)
         After exceptional items      11.2c  down 29% (1998: 15.7c)

Dividend:

         Final dividend(a)            3.96c     up 5% (1998: 3.77c)(b)

(a)  Payable on July 3, 2000 to shareholders on the record on June 2,
     2000
(b)  Paid as first interim for 1999

JEFFERSON SMURFIT GROUP plc (the "GROUP" or "JSG")

Period in Review

Pre-tax profits of E263 million and EPS of 11.2 cent reflect a year of two contrasting halves. These figures show strong, sequential improvement and represent a significant increase relative to the first half of 1999.

1999 was a year when, both the Group and our US associate, Smurfit Stone Container Corporation ("SSCC") began to deliver upon each of their strategic commitments. We made promises and we kept our promises. We are now in the midst of, what we believe to be, a longer, stronger upcycle. The catalyst for the industry's recovery has been the various strategic initiatives which are the subject of this statement.

Promises Made, Promises Kept

We will now review some of those initiatives as they relate to current business conditions. The SSCC deal itself was based upon a simple theory. Action has more potential for value creation than inaction. The concept was simple as good concepts always are. Achieve scale economies and eliminate inefficient capacity, which in turn, allowed JSG and the industry to benefit. Beyond theory and compelling strategic logic, however, this transaction is a case study in concept, strategy and execution. A superior entity has emerged with improving financial performance at all points in the paper cycle. SSCC has now achieved four consecutive quarters of earnings improvement and is expected to be solidly in the black for 2000. The commitment was to eliminate inefficient capacity, to dispose of non-core assets and to achieve synergies. SSCC has delivered, and will continue to deliver, on each of its promises.

Where does this transaction leave the current configuration of the Group? We have, from a product market standpoint, increased our scale and exposure in the US. We have also significantly increased our balance sheet exposure to the US dollar. The majority of the Group's assets are now dollar denominated. This, in fact, understates the true dollar exposure as our European kraftliner facilities are essentially dollar driven or denominated; in effect, direct beneficiaries of a strong dollar. Their relative competitive position has, since 1995, improved by 30%; 25% of which is attributable to the strength of the dollar. With the continuing strength of the dollar, US tonnage is quite simply uncompetitive in the European market place. US producers have seen a gradual erosion of their 'low cost producer' status and have tempered their capacity expansion plans accordingly. This, we believe, will serve as a catalyst for further retirement of inefficient capacity. The Group is thus a net beneficiary of a strong dollar both financially and, more significantly, in terms of our relative competitive position; naturally hedged to a rise in the value of the US dollar.

Strategic Vision

Scale and grade specialization are the shape of things to come. The winners in this industry will be structurally different in terms of scale and business focus. No management team has, we believe, the capacity or the ability to focus on more than a few grades. Scale, market power and liquidity will be necessary attributes of the true global players. Tomorrow's players will command a 20 million ton system with a 20 % market share; businesses of sufficient scale as to be a valid component of major equity market indices. For JSG, scale, of itself, is not the overriding strategic imperative; the intention is to continue to build the world's pre-eminent paper-based packaging producer. In an era where equity markets seem unwilling to pay for slow growth, we will, once again, embark upon an aggressive growth strategy while at all times managing the associated risk. The message is clear and compelling. To achieve our objective, there will be further deals but they will be effected in a manner which preserves the integrity of the Group's balance sheet.

Industry Environment

Within the containerboard sector, it can be argued that business risk has been permanently reduced as a consequence of substantial, structural changes. The immediate risk of uneconomic production decisions has also been mitigated by the industry wide withdrawal of 2.5 million tons or approximately 6% of North America's capacity base. Our fundamental disposition is to build value and not merely to rationalize. However, without the actions that SSCC and some other producers have taken, we would not be in the midst of, what should be, a longer, stronger upcycle with rational decision making being applied to the deployment of existing equipment or the addition of new capacity. The status quo was not an option; quantum and not incremental change was needed. Long-term thinking and short-term action was necessary to address a marketplace which had become endemically oversupplied. The result, US capacity is more balanced today than at anytime in the last 40 years. Global capacity growth for containerboard is now projected at less than 1 % per annum. Greenfield capacity expansion is increasingly regarded as a 20th century strategy. Whatever new capacity is introduced (and there will be a need for new capacity), it will likely come from a base which has now eliminated inefficient production.

This is an industry which is more sensitive to changes in supply than it is to changes in demand. The supply side has been addressed. Demand has never been a problem. In a global context, consumption of containerboard is projected to grow from 87 million tons in 1998 to 125 million tons by 2010. Shortening the time horizon, demand for containerboard is likely to reach 110 million tons by 2005 which, in effect, leaves a requirement of 20 million tons new capacity. Some of this can be dealt with through incremental expansion of existing facilities but it could mean that the industry will need new capacity by the end of 2000. These numbers, which are largely based upon historic consumption patterns may, in any event, prove conservative. Certainly the US box shipment statistics for December 1998 and 1999, support our view that future growth rates could exceed historic rates driven by developments such as e-commerce. Almost everything sold on the internet is shipped in a corrugated container, which is, in our view, the most reliable, hygienic and user friendly transport medium that exists.

The advent of, what is termed, the `mega store' will, we believe, also impact future consumption rates favorably. Mega stores are effectively selling space with packaging as point of sale advertising. There is a consequent emphasis on high-graphics appeal, functionality and multi pack potential. For the Group, again, this implies growth in the area of enhanced graphics but also implies increased consumption of micro fluting and lighter weight grades of containerboard - products that are lighter and cheaper but provide equal rigidity and strength. Clearly, no demand side problem. The industry will need new capacity. New capacity, of itself, is not the problem. Bringing hundreds of thousands of tons of new product into an adequately supplied marketplace, is, however, a problem. Put simply, new capacity should be introduced incrementally based on demand for the product today not tomorrow.

Outlook

We have painted a pretty optimistic yet, we believe, credible picture of the industry's current fundamentals. What is the single biggest threat to the longer, stronger upcycle thesis? Any excessive new capacity announcements will affect the upcycle long before the project reaches ground-breaking. We would, again, stress the term excessive, as we have stated, new capacity will be needed to adequately service the customer base. The probability of capacity announcements increases as product prices approach re-investment levels. There is, however, a new game in town and the producers who get greedy will see their stock decline disproportionately. Their problem will provide others (including ourselves) with the opportunity to buy their assets cheaply when they fail. As was achieved through the SSCC transaction, one approach to any subsequent downturn is to, achieve scale economies, rationalize inefficient production, realize synergies and repeat. In a related context, there is also an unprecedented degree of investor activism. They are advocating and doing their best to ensure that discipline sustains in the good times and the bad.

By way of conclusion, let us deal with some of the commitments that the Group has made. First, we committed to unlock hidden value from the disposal of non-core assets. Quietly but effectively, we have divested ourselves of E450 million non-core assets over the last eighteen months. We promised to deliver E125 million in cost take-out (ending in 1999). We achieved that and the next cost take out program will be more aggressive. The recently announced product-based structure and the co-ordination of our European businesses with SSCC's European businesses will facilitate these initiatives. Finally, we committed to exercise restraint in our capital programs. We have done so in 1999 and, for 2000, capital expenditure will be limited to a maximum of 70% of depreciation. We advocated and have begun to develop more constructive relationships with our customers. We are now working on pricing strategies that reward the shareholder yet respect the customer. The central element behind each of these initiatives is a continuous and unrelenting focus on cash flow generation; the resource through which we will pursue our objectives. A promise we have made and one we intend to keep.

Finance Review

The Group reported a profit of E167 million before exceptional items and tax against E209 million in 1998. These results reflect substantial recovery on the first half results and are an encouraging base for the current year. Exceptional items amounted to over E96 million in 1999. These relate to the gains on disposals by both JSG and SSCC, but were partially offset by restructuring and other costs. Including exceptional items, the Group reported pre-tax profits of E263 million.

The Group's associates generated profits before exceptional items of E35 million against E46 million in 1998. Again, these results reflect a strong recovery in the second half, particularly in the case of SSCC, where the loss sustained in the first half was more than offset by a strong performance in the second half.

Exceptional Items

In 1999, we reported a number of exceptional items in respect of both our subsidiaries and associates. Disposal gains were partially offset by restructuring costs and provisions for impairment of fixed assets. Reflecting our continued commitment to focus on the core business, we disposed of a number of businesses including Smurfit Finance and our 50% interest in Smurfit Paribas Bank generating a pre-tax profit of E35 million. We have continued to focus on restructuring our operations to enhance future profitability. Accordingly, we have recorded costs of E23 million representing provisions for impairment of fixed assets and a charge of E43 million for reorganization and restructuring costs.

In the first full year since its formation, SSCC disposed of approximately US$1.5 billion of assets, the proceeds of which were used to pay down debt. It disposed of timberlands, newsprint operations and their stake in Abitibi Consolidated. These disposals generated a net gain of approximately E450 million for SSCC, of which our share was E148 million. These gains were partially offset by E20 million in respect of our share of SSCC's restructuring charges.

Earnings per Share and Dividends

Earnings per ordinary share declined to 11.2 cent per share from 15.7 cent. EPS before exceptional items decreased from 12.9 cent in 1998 to 7.7 cent in 1999. The decrease reflects the reduced level of overall profitability in 1999, the impact of higher tax charges and an increase in minority interests.

In early 1999, Dividend Withholding Tax ("DWT") was introduced in Ireland. DWT applies to all dividends paid by an Irish company on or after April 6, 1999. Although certain classes of shareholder qualify for exemption, the former system of tax credits was generally more favorable from the perspective of our shareholders. Accordingly, the dividend payment was brought forward to March 31, 1999 in order to pass on to shareholders the benefit of the full tax credit available before they were phased out in April.

Reflecting a commitment to increase shareholder value, the Group continues to pursue a prudent policy of sustainable dividend growth. Accordingly, the Board has declared a final dividend of 3.96 cent for 1999, which will be paid on July 3, 2000, to shareholders on the record on June 2, 2000. The proposed final dividend reflects a 5% increase on the comparable dividend paid in March 1999. Together with the second interim dividend paid in November 1999, this gives a normalized dividend for 1999 of 6.31 cent, representing a 3.8% increase on the comparable figure for 1998.

     Cash Flow

Summary cash flows for 1999 and 1998 are set out in the following
table:

Summary Cash Flows                                  1999        1998
                                               E Million     E Million

Profit before taxation - subsidiaries only           100         272
Exceptional items                                     32        (109)
Depreciation and amortization                        210         199
Working capital change                               (57)        (18)
Capital expenditure                                 (171)       (219)
Sales of fixed assets                                 43          33
Tax paid                                             (73)        (34)
Associates and finance company dividends              15          17
Other                                                  5         (13)
                                           --------------------------
Free cash flow                                       104         128

Investments                                          (23)       (706)
Sale of businesses and investments                    84         358
Share issues                                           1           1
Dividends                                            (82)        (70)
                                           --------------------------
Net cash inflow / (outflow)                           84        (289)

Debt acquired                                        (51)        (56)
Currency translation adjustments                    (143)         19
                                           --------------------------
Increase in net borrowing                           (110)       (326)
                                           --------------------------

Free cash flow (cent per share)                      9.6        11.8
                                           ==========================

Profit before taxation from subsidiaries decreased from E272 million in 1998 to E100 million in 1999, reflecting a decline in net exceptional items and a more difficult trading environment. Excluding exceptional items, the decrease is more modest, from E163 million in 1998 to E132 million in 1999 reflecting the recovery in the second half of the year.

Depreciation was moderately higher than in 1998 at E210 million, however, we reduced capital expenditure by 22% on 1998 levels. Investments in 1999 were modest against 1998 levels, which included SSCC, Smurfit MBI and Nettingsdorfer. Disposals in 1999 of E84 million relate primarily to the proceeds from the sale of our finance companies.

Despite the difficult trading conditions in the first half of 1999, there was a net cash inflow for the year of E84 million. In terms of available cash flow (before dividends and investments), the Group achieved the target of E190 million set for the year.

The strength of the dollar and sterling in 1999 gave rise to currency adjustments which increased our net borrowing by E143 million. We also assumed E51 million in debt on the consolidation of Smurfit MBI.

Taxation

The taxation charge of E126 million represents an effective rate of 48%, up from 18% in 1998. Excluding exceptional items, the rate for 1999 was 41% compared to 30% in 1998. The variation in the tax rates reflects the different geographic spread of profits with their attendant different tax rates. In addition, minimum tax charges arise in certain countries irrespective of the profits generated, giving rise to very high effective tax rates when profits are reduced or when full tax relief is not available on losses sustained.

The overall effective rate of tax is further increased by the net charge relating to exceptional items. The exceptional items comprise net gains in SSCC (in respect which the Group reported its share of the relevant tax) as offset by net costs in the consolidated Group. While tax was provided in respect of the Group's disposal gains, limited tax relief was available on the offsetting asset impairment provisions and restructuring costs.

Treasury and Borrowing

At December 31, 1999, total debt amounted to E1,556 million and cash amounted to E457 million, giving net debt of E1,099 million. The net debt to equity ratio at December 31, 1999 was 49%. We maintain a combination of medium and long-term borrowing and committed facilities in order to ensure that we have sufficient financial resources to meet our funding requirements. Of our total debt at December 31, 1999, 72% was provided by institutional sources and 28% by banks. The average maturity profile of total debt at December 31, 1999 was 8 years.

Year 2000 and IT

We have not experienced any significant Y2K related problems to date. While we are aware that there is still the potential for problems to arise in the current year, we are confident that the extensive reviews and upgrades we carried out have addressed all potential problems. We still maintain contingency plans in the event of any unforeseen problems.

In 1999, we introduced SAP (an enterprise resource planning system) in the UK, Ireland, Holland and France The remaining countries across Smurfit Europe are scheduled to "go live" during the year 2000.

We are also focusing on our purchasing spend and purchasing practices in order to identify areas and methods of improvement. In late 1999, we launched a major purchasing initiative embracing Smurfit Europe, Smurfit Latin America, Nettingsdorfer, Munksjo and SSCC Europe.

Operations Review

1999 was a year of two contrasting halves. Product market conditions for the first half of the year were significantly weaker than the second half. The results for the second half reflect the sequential improvement over the first half, with profits before interest, exceptional items and tax up 53% half on half.

The US market is the world's largest market for the Group's core products: containerboard and corrugated containers. US demand for corrugated increased by 2% in 1999. There were two stages of price recovery in containerboard in the US in 1999, one in February and one in July. There were consequent recoveries in corrugated container prices, the latter being fully implemented by October, supported by reasonable demand but, more significantly, by better supply-side conditions; a result of the rationalization of inefficient, high cost capacity.

Sales in Europe in the first half of 1999 were weak. Economic growth across the region was slow and pricesSales in Europe in the first half of 1999 were weak. Economic growth across the region was slow and prices fell in both containerboard and corrugated. In the second half, demand improved driven by stronger economic growth. Improving market conditions and rising waste paper prices supported two stages of kraftliner price recovery in May and September, recovery in recycled paper prices of E50 a ton in the second half and 6% to 7% in corrugated prices. The Group's European operations also experienced substantial volume growth in the second half, following volume declines in the first half.

Latin America reported mixed results with Mexico growing in terms of volume while Venezuela and Colombia continued in recession throughout the year. In the second half, Argentina began to recover from the combined effects of the 1998 Russian crisis and the 1999 Brazilian currency crisis, which had depressed prices significantly.

There was a continued emphasis in the year on cash generation and cost take out. At the time of announcement of our 1998 results, the Group set a target for 1999 of achieving E190 million in cash flow before acquisitions and dividends. We achieved this target. The sources of cash were operational cashflow, restricted capital expenditure and asset disposals. Capital expenditure was limited to 82% of depreciation. Capital approvals were even tighter, which will contain capital expenditure in 2000. We continued to divest of non-core assets with the disposal of our finance businesses.

In 1997, we also established a cost takeout target of E125 million for the three year period 1997 to 1999. This target has been achieved and new, more aggressive targets are being set. As part of our ongoing cost takeout program, we announced the reorganization of our European businesses into a product based structure rather than a country based structure. This new structure reflects the development of the EU and a single European currency. It will facilitate enhanced customer focus, improved selling efforts, greater cost competitiveness and growth. We also announced that we would co-ordinate our European operations with those of our US associate, SSCC. Under this structure, we will present a unified face to European customers and expand our services and market presence. We expect to benefit from synergies as we streamline administrative functions and leverage purchasing and logistical activities.

Europe

Net sales for the Group's European operations amounted to E2,672 million in 1999. This was a reduction of 7% from E2,884 million in 1998. Profit before interest, exceptional items and tax declined 22% to E183 million in 1999 against E234 million in 1998. The majority of the decline in profitability was attributable to two factors. The first was the European kraft market, for which pricing was weak in the first four months and the Group's largest mill - Facture - had a maintenance shutdown in March/April. The second was the disposal of Condat at the end of 1998.

Economic growth in Europe for 1999 was estimated at around 2%. First half growth of under 2% accelerated in the second half. By the fourth quarter of 1999, GDP growth was running at an annualized rate of approximately 3%. The first half of the year reflected economic uncertainty in Europe following the 1998 Russian crisis; the second half reflected stronger economic growth across Europe.

GDP growth in Ireland was estimated at 7.4% for 1999, reflecting growth in non-manufactured exports and the services sector. This was not reflected in packaging demand and the Irish corrugated market experienced both price and volume pressure throughout the year. Average prices in 1999, in common with most of the rest of Europe, were marginally higher than in 1998. A high level of throughput and new operations boosted sheet plant profitability in the year. Elsewhere in Ireland, the print and recycling operations performed well while the carton and publishing businesses saw continued downward pressure on profits.

In general terms, the results from the UK were similar to those of 1998, affected by the continuing strength of sterling and the difficult manufacturing environment in the UK. GDP growth in the UK was estimated at 1.8% in 1999 and reflected the stronger second half growth also experienced in the rest of Europe. Sales of corrugated similarly contrasted between the first and second halves. First half volumes declined 5%, second half volumes increased 8% over 1998, giving an overall annual increase of 1.3%. Prices were down 7% in the first half, but 3% up on 1998 in the second, with the annual average down 5%. While profitability in corrugated declined, it increased in containerboard, following price recovery in the second half and rising demand. Profits in sheet plants improved, as did those of the print and recycling operations.

GDP growth for France in 1999 was around 2.7% with an inflation rate under 1%. Demand for corrugated experienced a surge in the second half of the year, ending 3% up on 1998. This contrasted with a decline of 0.5% in the first half. Allied to demand strength, corrugated price recovery in the second half improved profitability year-on-year. Recycled containerboard demand increased 2% in 1999 with price recovery in the second half. High waste paper costs, however, meant that profits remained static. The maintenance shutdown at the Facture kraftliner mill and declining prices for the first four months impacted first half performance. Volumes in the second half were 30% up on 1998. For the full year, average prices were down 10% on 1998, and with the weaker first half, the Facture mill was substantially less profitable than 1998. Elsewhere in France, the sheet plants improved profitability while profits for the wood operations declined. Profitability of our French operations was also affected by the absence of profits of the Condat white paper mill sold at the end of 1998.

The Group's European sack operations showed a decline in profits on lower average prices with marginally higher volumes in 1999. The operations in Spain and Ireland were reasonably positive while profitability in France declined.

GDP growth in Italy was 1.3% for the year, with a relatively stronger second half to the year. Our operations, in turn, improved in the second half compared with the first with 5% growth over 1998 in volume and pricing. This compared to volumes down 1% and prices down 2% at the half year. The corrugated operations improved profitability over 1998. Sheet plant profits also improved while the Orsenigo folding carton plant's results were static on 1998.

GDP growth in Spain was approximately 3.5% in 1999, stemming from increases in disposable income and a strong export performance. The Spanish corrugated market, by contrast with much of the rest of Europe, increased 5% in each half of 1999, over 1998.

Average prices declined in the first half on 1998 levels but recovered in the second half. However, the result was a marginal decline in profitability on 1998. Recycled containerboard prices and volumes were both up on 1998, which offset the decline in profitability on the corrugated side. Prices for sack kraft paper declined 11% and although volumes were up by a similar percentage, profits declined moderately.

GDP growth in the Netherlands was approximately 3.5% in 1999, reflecting strong domestic demand. Volumes for corrugated products were flat for the year as a whole. With declining prices, profits were down on 1998. The pattern for the solid-board packaging operations was similar. Our graphic-board operations had an 8% increase in volume year-on-year, and a slight decline in prices. Overall, profits for the Netherlands disimproved marginally on 1998.

Economic growth in Germany was estimated at just under 1.5% in 1999 with the rate about double that in the fourth quarter. German corrugated volumes for the year as a whole declined 2%, but again this comprised a 7% decline in the first half and a 5% improvement in the second. Pricing was flat. Recycled containerboard volumes increased 4%, again on the back of a strong second half. Overall profits in Germany were down slightly on 1998.

1999 was the first full year for the Nettingsdorfer operations in Austria and Italy as subsidiaries of the Group. Volumes in the mill and corrugated operations increased on 1998 levels, however, the weak pricing environment for kraftliner in the early months of 1999, meant that profits declined on 1998 levels.

Latin America

Net sales for the Group's Latin American operations for the full year 1999 were E596 million, up 7% from E555 million in 1998. Profit before interest, exceptional items and tax was E64 million, representing an increase of 23% on the figure of E52 million for 1998.

Mexico ended 1999 with cumulative inflation of 12% and 3.7% GDP growth. Volumes increased in 1999: 5% in corrugated, 2% in containerboard and 6% in boxboard. Pricing trends were similar to those of the US, with recovery in 1999 bringing average prices to a higher level than in 1998. Mexico was, again, the best performer in the region reporting a 12% increase in profitability.

The Colombian economy underwent its worst recession since the 1930's, with a 5.7% drop in GDP. Nevertheless, there was evidence of a slow recovery during the fourth quarter. Volumes of containerboard, boxboard and sackpaper declined compared to 1998, while volumes of corrugated, sacks and printing/writing paper increased. Prices were generally lower than in 1998, by as much as 7% in corrugated, reflecting the difficult economic environment. As a consequence, operating profits declined significantly.

Venezuela was in recession through much of 1999 compounded by the consequences of the floods and mudslides of December 1999. GDP dropped 7.2% in the year. Our operations experienced declines in both volumes and prices for containerboard and corrugated. There was a reverse trend in boxboard, boosted by significant exports. Despite a poor economic environment, due to continued cost control in the operations, overall profitability was only slightly down on 1998.

Argentina also faced a recessionary year as the first half was impacted by the Brazilian currency crisis. GDP dropped by 3%. Against this backdrop, our corrugated shipments increased by over 70%, utilizing new equipment and expanding our market share. With prices under pressure the overall operating profitability for the country was similar to 1998, however, we have made progress in establishing ourselves as a significant player in the Argentinean corrugated market.

North America

Subsidiaries

The Group's subsidiaries in North America now comprise the Pomona newsprint mill and two recycling plants in California, a printing/voting systems division and 50% of Smurfit MBI, a Canadian corrugated company.

The newsprint mill suffered from depressed conditions in 1999, with product prices significantly down on 1998 levels. With increasing waste paper prices, the mill saw a substantial decline in profitability in 1999 on slightly higher tonnages than 1998. Improving waste prices, however, led to a turnaround in profitability at the two recycling plants.

The printing and voting division improved performance on 1998, despite 1999 being a non-election year. Significant rationalization was undertaken during 1999 in both the commercial printing and election businesses which underpinned this performance.

Smurfit MBI recorded an excellent performance in 1999. On a full year basis, volumes were up almost 9% on 1998, as share of production was increased. Average prices were also higher than in 1998 with overall profitability showing good progress.

SSCC

Our US associate, SSCC, reported 1999 pre-tax profits of US$339 million on sales of US$7.2 billion. In 1999 SSCC achieved four consecutive quarters of earnings improvement with the fourth quarter of 1999 the first profitable quarter since the formation of the company.

Containerboard production in 1999 was 6 million tons and corrugated shipments 74 billion square feet, substantially ahead of JSC's figures for 1998. Boxboard mill production was 581,000 tons and carton shipments were 550,000 tons, up 8.4% on 1998. The reclamation division benefited from a 27% increase in volumes over 1998 and higher prices. The bag and specialty packaging businesses were marginally less profitable than in 1998.

On February 24, 2000, SSCC announced the proposed acquisition of St. Laurent Paperboard Inc. ("SPI"), a Canadian containerboard company specializing in high-impact graphics packaging, principally mottled white-top linerboard. SPI complements SSCC's operations both geographically and product-wise. The Group's primary objective is, together with its associates, to confirm its position as the world's pre-eminent paper-based packaging producer and marketer. SSCC's acquisition of SPI is a further step towards that objective. On completion of this transaction the Group will retain its position as the single largest stockholder of the enlarged entity with a 29.5% holding and will continue to have the financial flexibility to participate in further growth opportunities.

Jefferson Smurfit Group ADRs, each equal to ten ordinary shares, trade on the New York Stock Exchange under the ticker symbol JS. Jefferson Smurfit Group ordinary shares trade in Dublin and London, and information can be accessed on Bloomberg under the symbols SMFT.ID and SMFT.LN respectively and on Reuters under SMFT.I and SMFT.L. Additional information is available on Jefferson Smurfit Group's home page: http://www.smurfit.ie.

Summary Group Profit and Loss Account
For the year ended December 31, 1999

                                             1999           1998
                                           Euro 000       Euro 000
                                           Unaudited       Audited

Turnover - continuing                      3,688,595     3,666,850
     Cost of sales                         2,728,050     2,645,977
     Impairment of fixed
      assets                                  23,235        67,754
Gross profit                                 937,310       953,119
Net operating expenses                       734,897       776,141
Reorganization and
     restructuring costs                      43,174        24,425

Operating profit --
     continuing                              159,239       152,553
Share of associates'
     operating profit                        222,285       134,599
Share of associates'
     exceptional items                       128,439      (101,004)
Group operating profit                       509,963       186,148

Profit on business
     disposals                                34,529       200,890

Group net interest                           (93,652)      (81,678)
Share of associates'
     net interest                           (187,528)      (88,209)
Total net interest                          (281,180)     (169,887)

Profit before taxation                       263,312       217,151
Taxation
     Group                                    59,538        65,011
     Share of associates                      65,981       (25,509)
                                             125,519        39,502

Profit after taxation                        137,793       177,649
Equity minority interests                     16,187         7,084
Profit for the financial year                121,606       170,565

Dividends (including Preference)             109,116        65,720

Retained profits                         Euro 12,490  Euro 104,845

Earnings per ordinary share --
  Basic                                        11.2c         15.7c
Earnings per ordinary share --
  before exceptional
  items -- Basic                                7.7c         12.9c
Earnings per ordinary
  share -- Diluted                             11.2c         15.7c
Earnings per ordinary
  share before exceptional
  items -- Diluted                              7.6c         12.9c

Jefferson Smurfit Group plc

Segment Analyses

Sales - third party

                     1999                     1998
                     E000          %          E000        %

Europe          2,672,095        72.4    2,884,461      78.7
United States
 and Canada       420,070        11.4      226,901       6.2
Latin America     596,430        16.2      555,488      15.1
------------------------------------------------------------
               E3,688,595       100.0   E3,666,850     100.0
------------------------------------------------------------

Associates
 third party
 sales         E7,217,036               E3,648,443

------------------------------------------------------------

Share of
 associates    E2,381,671               E1,592,705

------------------------------------------------------------


Profit before interest, exceptional items and taxation

                    1999                    1998
                    E000          %         E000         %

Europe            183,040        40.9      234,357      61.8
United States
 and Canada       200,608        44.8       92,665      24.4
Latin America      64,285        14.3       52,309      13.8
------------------------------------------------------------
Profit before
 interest,
 exceptional
 items and
 taxation         447,933       100.0      379,331     100.0
Group net                      ------                 ------
 interest         (93,652)                 (81,678)
Share of
 associates'
 net interest    (187,528)                 (88,209)
------------------------------------------------------------
Profit before
 exceptional
 items            166,753                  209,444

Exceptional
 items:
Profit on
 business
 disposals         34,529                  200,890
Impairment of
 fixed assets     (23,235)                 (67,754)
Reorganisation
 and
 restructuring
 costs            (43,174)                 (24,425)
Share of
 associates'
 exceptional
 items            128,439                 (101,004)
------------------------------------------------------------
Profit before
 taxation        E263,312                 E217,151
------------------------------------------------------------

Jefferson Smurfit Group plc

Summary Group Balance Sheet
as at December 31, 1999

                                        1999                1998
                                    Euro 000            Euro 000
                                   Unaudited             Audited

Assets Employed
Fixed Assets
Intangible assets                     96,447              11,853
Tangible assets                    2,085,678           2,004,026
Financial assets                   1,411,007           1,310,095
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                                   3,593,132           3,325,974
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Current Assets
Stocks                               350,486             334,581
Debtors                              989,397             741,495
Investments                              --              141,351
Cash at bank and in hand             457,408             887,892
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                                   1,797,291           2,105,319

Creditors (amounts falling
 due within one year)              1,491,248           1,198,859
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Net current assets                   306,043             906,460
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Total assets less current
 liabilities                  Euro 3,899,175      Euro 4,232,434
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Financed by
Creditors (amounts falling
 due after more than one year)     1,205,363           1,758,609
Government grants                     10,022              10,468
Provisions for liabilities
 and charges                         229,456             226,300
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                                   1,444,841           1,995,377
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Capital and Reserves
Called up share capital              332,257             351,415
Share premium                         99,217              98,595
Revaluation reserve                   10,579              10,579
Other reserves                       174,961               1,016
Profit and loss account            1,646,970           1,634,479
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Group shareholders' funds
 (equity interests)                2,263,984           2,096,084

Minority interests
 (equity interests)                  190,350             140,973
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                                   2,454,334           2,237,057
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                              Euro 3,899,175      Euro 4,232,434
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The above summarised consolidated balance sheet and the foregoing consolidated profit and loss account do not constitute full accounts and except where indicated are unaudited. Full accounts for the year ended December 31, 1998, which received an unqualified audit report, have been filed with the Irish Registrar of Companies and full accounts for the year ended December 31, 1999, will be filed in due course.