Net profit up 21 percent

Sligro Food Group N.V. saw its profit after tax and amortisation of intangible fixed assets increase by 21.0% to € 44.8 million in 2003. All trading activities contributed to the profit improvement.
Total turnover increased by 4.4% to € 1,355.9 million. Organic turnover growth amounted to 1.7% in comparison with 4.4% in 2002. Organic turnover growth was reduced by 0.6% because of the decline in sales of Christmas hampers as a consequence of tax measures that have since been largely reversed.

The gross margin widened from 17.8% to 18.6% of turnover. This was the outcome of good margin management and the full consolidation of EM-TÉ Supermarkten and J. Smit Vishandel.

Total expenses increased from 12.8% of turnover to 13.1%, partly due to the aforementioned acquisitions. Total expenses for 2002 had included a provision of € 6.4 million. There were no non-recurring expenses in 2003.

As a result of these developments, operating profit was € 7.8 million higher at € 73.3 million. As a percentage of turnover, operating profit increased from 5.0% in 2002 to 5.4% in 2003, the highest level in our history.

Interest expense was reduced by a lower debt position and the inclusion of a non-recurring expense of € 2.2 million in this item in 2002.

Earnings per share calculated on the average number of shares in issue amounted to € 2.23 in comparison with € 1.92 in 2002, an improvement of 16.1%. The shares were split on 26 September 2003 in the ratio of two new shares to one old share.

A dividend is proposed for 2003 of € 0.90 per share, an increase of 20.0%. Shareholders may opt to take the dividend in cash or in shares at a ratio to be announced at a later date. The stock dividend will be worth about the same as the cash dividend.

Prospects
Market conditions for both our food retail and our food service activities are challenging. The price war in the supermarket channel is exerting pressure on both margins and volumes. The decline in volume in the food service market does not yet seem to have entirely bottomed out. Sligro Food Group again expects to outperform the market in this segment, as it has done in recent years. Consequently, we do not expect any organic growth in turnover as a whole in the first half of 2004.

The various improvement programmes we have launched are expected to keep the growth of costs under control. We expect to realise non-recurring income of several million euros on a property transaction in 2004. As a result of these developments, the net profit for 2004 is forecast to be approximately the same as that for 2003. The annual report will be published in printed form and electronically on www.sligrofoodgroup.com on 4 February 2004. The annual General Meeting will take place at 17 March 2004.

As is customary, at the end of the first quarter we shall make a more concrete announcement of our expectations for the first half of the year in a trading update that will be published on 15 April 2004.

Veghel, 22 January 2004

On behalf of the Executive Board,

A.J.L. Slippens
H.L. van Rozendaal
Tel: +31 413 34 35 00
www.sligrofoodgroup.com

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