2003 press releases

Resignation of Group Chief Executive

Northern Foods (“Northern”) announces that Jo Stewart has today resigned from the position of Group Chief Executive and will be leaving the company. The process of appointing a successor will begin immediately. Group Chairman Peter Blackburn has assumed the role of Executive Chairman pending the appointment of a new Chief Executive.

Tony Hobson, Deputy Chairman and senior independent non-executive Director, said: “The board is very pleased that Peter has agreed to take on interim executive responsibility for the company. His considerable experience in the food industry, most recently as Chairman and Chief Executive of Nestlé UK, will provide Northern with the expertise and clear direction it needs at this time.”

Peter Blackburn added: “I would like to thank Jo for the very real contribution he has made during his 15 years with the company. Northern has an excellent product portfolio, strong customer relationships, well invested facilities and a solid financial base. It is a business which is capable of delivering consistent growth in earnings and shareholder value. However the board believes that the company is not operating to its full potential, and we are seeking a significant improvement in performance. It will be the task of the whole management team to achieve this improvement. I look forward to working with them closely as interim Executive Chairman before handing over to a new Chief Executive.”

Trading update

As anticipated in the Chairman’s AGM statement on 17 July, the underlying trend in Group sales in the second quarter to date has been weaker than in the first 13 weeks of the year, though headline sales have improved due to the acquisition of Solway Foods.

Grocery profits in the first half are expected to be ahead of the comparable period last year, despite the anticipated impact of weak biscuit trading. However, performance in Convenience Foods has reflected very challenging trading conditions, including business transfers to competitors, the negative effects of the extremely hot summer and margin pressures caused by raw material cost inflation. As a result, Group pre-tax profit for the first half, before goodwill amortisation and exceptional items, is expected to be significantly lower than in the comparable period last year.

Although further raw material cost inflation is expected, with new initiatives now under way the board anticipates that trends in the key trading period of the second half will be more positive. Pre-tax profit for this period, before goodwill amortisation and exceptional items, is expected to be around the level achieved in the second half last year.

Northern Foods expects to announce its first half results on 11 November 2003.

Appendix

Key sales data

	13 weeks to 28.6.03	8 weeks to 23.8.03
Total sales	+5.8%	+9.6%
Underlying retail sales	+5.5%	+3.0%
Sales to five largest customers	+7.0%	+10.0%
Underlying sales to five ;argest customers	+6.0%	+3.0%

 The Group’s five largest customers are Marks & Spencer, Tesco, Sainsbury’s, Asda and Safeway.

Share buyback programme

Northern Foods’ continuing share buyback programme, which is enhancing earnings per share, has resulted in 5.9 million shares being bought for cancellation in the current year to date at a cost of £9.4 million. This, when combined with last year’s purchase of 36.4 million shares for £55.5 million, will increase interest costs in the first half by some £1.1 million.