Sale of vegetable processing business & interim management statement

Christian Salvesen today announces that it has signed a definitive agreement for the sale of its frozen vegetable business, Christian Salvesen Foods (“the business”), comprising stock, plant, machinery, people and contracts to Pinguin Foods UK Limited, a subsidiary of Pinguin NV (“Pinguin”) for estimated total cash consideration payable at completion of GBP 17.2m. The consideration is subject to adjustment for the actual amount of stock at the date of closing. In addition, Christian Salvesen will continue to provide storage and distribution services to the business on normal commercial terms for a minimum term of sixteen months. The transaction is expected to close in mid-September following employee consultation.

The business consists of vegetable processing, packing and storage activities at three sites in Lincolnshire, located in Bourne, North Thoresby and Easton. In the year ended 31st March 2007 the business reported revenues of GBP 44.6m and operating profit of £0.7m; operating profit included exceptional net income of GBP 0.4m and an allocation of £0.8m of Group overheads. The gross assets of the business were GBP 29.5m at 31st March 2007.

The impact of the transaction on earnings is expected to be broadly neutral. The proceeds will be used for general working capital purposes.

As part of the transaction structure, Christian Salvesen will retain responsibility for the debtors and creditors at the date of closing. The land and buildings at the three sites will be retained by Christian Salvesen, with rent-free leases granted for 6 years to Pinguin. In addition, Pinguin has been granted an option to buy a 999 year lease of the Bourne site for GBP 4m within two years.

The Christian Salvesen sites at Grimsby, Hull and Lowestoft, which provide contract processing and storage services and are reported as part of the UK Logistics business, are not included in this transaction and will remain with Christian Salvesen.

Christian Salvesen is also releasing its first Interim Management Statement.

Overall, for the financial year to date, the Group’s continuing business has traded broadly in-line with our expectations, which are weighted to the second half of the year.

As widely reported, the wet weather in the UK has severely affected crops that are harvested during the summer. As part of our continuing UK Logistics business we process and store frozen vegetables for customers at sites in Grimsby, Hull and Lowestoft. During July, this part of the business felt the first impact of lower volumes and this will impact the first half financial performance for UK Logistics. Looking forward, storage volumes of these products are also likely to be lower than expected during the remainder of the financial year.

The UK Transport recovery plan is under way although, as expected, we do not expect to see significant financial benefit until the second half.