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Salvesen(Christn) (SVC)

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Tuesday 05 June, 2007


Final Results

                            Christian Salvesen PLC

                Preliminary results for the year ended 31 March 2007

Financial Highlights

Revenue up 10% to £899m (2006: £819m)

Underlying operating profit before exceptionals decreased to £18.1m (2006: £20.7m)

Underlying profit before tax and exceptionals down to £12.5m (2006: £15.4m)

Earnings per share of 17.90p (2006: 4.46p)

Strong free cash flow of £61m, reflecting the £46m from the property sale & leaseback

Significant reduction in net debt to £39m (2006: £94m)

Final dividend unchanged at 2.45p


Operational Highlights

-     Sales growth momentum continues

-     New business wins ahead of last year at £130m

-     Food and Consumer sector performed strongly

           - UK businesses had an excellent year

-     Transport sector had a difficult year

           - Review of UK Transport complete and turnaround actions underway

           - France continued strong revenue growth with new wins

-     Strengthened management team


Stewart Oades, Chief Executive, said:

"Whilst the continued improvement in growing the business through new wins and
increased retention rates is pleasing, there remains much to be done. The
markets we operate in are still highly competitive and the performance of UK
Transport is not acceptable. We have completed a thorough review of this
business unit and have put in place a plan to move this business back into
profit. Although this will take time, UK Transport is an essential part of our
strategy to create a pan-European shared-user business.

"In the current year we expect revenue growth to continue and anticipate some
benefit from the restructuring, although it will take longer before we see the
full impact."

For further information please contact:

Christian Salvesen PLC   5 June:     020 7353 4200
Thereafter:                          01604 662 600
Stewart Oades, Chief Executive
Julian Steadman, Group Finance Director

Tulchan Communications               020 7353 4200
Stephen Malthouse
David Allchurch

A briefing will be held for analysts at JP Morgan Cazenove, 20 Moorgate, London
EC2R 6DAM at 9.30am. An audio webcast of the presentation will be available on

Chairman's Statement

The growth strategy we outlined a year ago is working well. After several years
when our sales growth has been limited, it is encouraging to be firmly on the
front foot again. Overall, we increased revenue by 10% in the year but, as we
cautioned last year, the continuing competitive market conditions mean it is
taking longer than we had hoped to move operating profit in the same direction.
Pricing remains under pressure, and as we go forward we must increase our focus
on margin improvement.

After a challenging year, overall operating performance was slightly ahead of
recent expectations. Our Food and Consumer sector performed better than
anticipated: revenue was up 11% and a strong performance in the UK helped to
increase operating profit before exceptional items by 9%. However, the
Transport sector fared less well: revenue grew 8%, but disappointing
performances in the UK and to a lesser extent in Iberia, halved operating
profit before exceptional items. The French and Iberian Transport businesses
achieved good margins compared with their local competitors, but the UK is
still losing money. Turning this business around remains our top priority and
our plans to do so are well advanced.

Financial highlights

Revenue increased by 10% to £899m. Although underlying operating profit (i.e.
before exceptional items) reduced as margins tightened, net profit increased
strongly from £11.8m to £47.4m, reflecting the benefit of several exceptional
items, which produced a net gain of £35.5m after tax. Earnings per share
increased by 301% from 4.46p to 17.90p, again reflecting the exceptional items.

In our last annual report we said we were looking at ways to release capital
from the existing asset base to reduce gearing and support our plans for
renewed growth. In September 2006 we accomplished this through the sale and
leaseback of part of our UK property portfolio. The deal generated a net £46m
of cash from property with a book value of £19m. The impact on future earnings
is broadly neutral, and we still hold freehold property worth significantly
more than its net book value of £43m.
This has helped us to cut net debt by more than half over the year, from £94m
to £39m. At the year-end, gearing (excluding the pension deficit) was 29%,
compared with 83% a year earlier.


The board is recommending a final dividend of 2.45p a share, making an
unchanged total of 3.65p for the year. The dividend is covered 1.2 times by
underlying net earnings, compared with the previous year's 1.1 times. The final
dividend will be paid on 31 August 2007 to shareholders on the register at 3
August 2007.


We have agreed some important changes with the trustees of our UK pension
scheme. The most important of these involves the way annual increases in
pension payments are calculated. In line with widespread UK practice, increases
will in future reflect price inflation rather than wage inflation. Largely as a
result of this change, the pension fund deficit, on an IAS 19 basis, reduced by
£23.7m over the year without the need for additional cash contributions. The
changes will reduce the future cost of the scheme and resulted in an
exceptional gain of £14.7m in the year.

Operational highlights
Our sales growth has continued to build momentum. New contract wins during the
year were again ahead of the previous year - £130m compared with £120m. We
maintained our excellent record of retaining contracts as they came up for
renewal and our healthy pipeline suggests that we can continue growing the top
line, with the prospect of some of the larger-scale deals that we have been
targeting. We pride ourselves on the service and value that we deliver for our
customers and were particularly pleased to receive a General Motors Global
Supplier of the Year Award for the second consecutive year. Our Holistica joint
venture, which enables us to manage global supply chains, is now fully staffed;
it has built its own interesting pipeline of prospects to add to the first
management contract from Marks & Spencer.

We are now working to ensure that our growth is achieved profitably, to bring
the bottom line in step with our progress on sales. We must manage our margins
better, maximise returns on investment and improve under-performing activities.
We are addressing all these issues; and our most pressing priority is to tackle
the impact on our bottom line from the UK Transport business.
In addition to upgrading the central team, we have continued to restructure
individual businesses - primarily the UK and Iberian Transport businesses and
the continental Food and Consumer business. The exceptional costs that we have
incurred to deliver these changes will be recouped by significant savings in
the future.
In our Food and Consumer sector, the UK business had an excellent year.
Improved dedicated contracts and cold store utilisation helped it to raise
underlying operating profit by 21%. Our Support Services business continued to
grow and has been investing to support expansion plans for continental Europe.
Salvesen Foods returned to profit despite a difficult harvest in summer 2006.
On the continent, we had a more challenging year. The tough pricing environment
demands significant productivity improvement, and it is taking time and
investment to implement the necessary upgrades in transport and warehousing
systems. However, we are now seeing signs of improvement under new leadership.

In the Transport sector, our French business continued to grow its share of a
difficult market, and although margins are tight they compare well with local
competitors. The Iberian business is still growing and has also maintained
relatively strong margins; but operating profits were reduced by the cost of
our network investment programme and a continuing shortage of subcontractors
that has increased prices. The final phase of our Spanish fleet restructuring
programme was completed by the year-end.

A new managing director and new management team are working to restore the UK
Transport business. Progress during the year was slower than hoped, due in part
to a difficult start-up for our national tyre distribution partnership with
Goodyear Dunlop. The unplanned start-up costs were a significant factor in the
increased losses for the year. As part of the turnaround plan for our UK
network business, we are investing in new systems to achieve rapid improvement
in operational efficiency. For the longer term, we are investigating options
that will require more fundamental infrastructure changes.

Across the Group, the year's major contract wins show that we are succeeding in
expanding our relationships with existing customers, entering new sectors and
winning larger contracts involving added-value services.

For example, we have extended our relationship with Ford from the UK to Spain
and France. We have broadened our contracts with Rockware, Marks & Spencer,
Tesco, Carrefour and Le Duff.

We have moved into ambient food storage and distribution, while at Manchester
Airport we now provide security screening for all retailers: both activities
provide platforms for future growth. Our Iberian Transport business has won
several additional contracts in the textiles sector and the French business won
a large contract from air-conditioner manufacturer Daikin. We have won
e-commerce contracts with Superdrug, Urban Outfitters, Weightwatchers and

Added-value business included a new reverse logistics contract from Tesco, a
contract from the world's leading cash and carry group to consolidate and
distribute stock for its Makro stores in the UK.


In July 2006, Peter Cawdron and Dr Antonie Edelman retired from the board after
more than eight years of distinguished service as non-executive directors. I
would like to thank both of them for their contributions through a period of
considerable change.

These are challenging times for the business and our continuing restructuring
has made additional demands on people at all levels. Their response has been
tremendous and I am grateful to everyone for their contribution to our

Health and safety is the first item on the agenda at all board, Executive
Committee and business unit board meetings. I am therefore particularly pleased
that we have won a Gold Award from the Royal Society for the Prevention of
Accidents, and individual gold awards for four of our UK sites.

Sustainability and environment

It is also encouraging to see continuing improvement in our environmental
impact. Our emphasis on shared-user transport networks is an inherently
carbon-efficient approach to road transport, and we continue to apply
technology to increase our efficiency. We are also helping customers to improve
their waste management through our reverse logistics operations which support
reuse and recycling and have eliminated many millions of cardboard cartons from
the supply chain altogether.


While market conditions are unlikely to get any easier, our healthy pipeline
makes us confident of continuing revenue growth, albeit at a slower pace than
the past 12 months. Margin improvement is now the order of the day. We expect
to see some benefit from the restructuring, but we will remain cautious about
the overall margin until we have turned the corner with our Transport
businesses, especially in the UK.

David Fish

Operating review

Strategy - rejuvenating the business

Although market conditions remain highly competitive, the broad trends in the
marketplace play to our strengths. Road transport in Europe is a growth
business. As manufacturing migrates to the lower-wage economies on Europe's
fringes, supply chains are lengthening and the number of road miles being
driven is increasing.

Our strength in shared-user operations meets the growing commercial demand for
lower costs and the environmental imperative to improve vehicle utilisation.
Our strength in IT gives customers the visibility they require, so that they
can track and locate their goods at all times. We are marketing these strengths
with increasing success. And we are now focusing our marketing effort more
sharply on strong growth sectors with good margins where we can apply these
strengths to particular advantage, for example in non-food retail.

Our overall aim is to create a pan-European logistics services provider based
on a Transport business with strong shared-user transport networks in each
country. These will be seamlessly linked through class-leading technology to
create international capability including global freight forwarding and supply
chain management. Alongside the Transport business - and supported by its
resources and know-how - will be a Logistics business providing innovative
solutions and reverse logistics including dedicated warehousing with ancillary
dedicated vehicle fleets. Together, these complementary business streams will
enable us to squeeze more from our assets and create more value for customers
and shareholders alike.

The details of this strategy and the way we intend to deliver it are set out in
a series of pages running throughout this report.

Achieving our goals will require some investment - in locating where our
customers want us to be, in upgrading existing depots to meet the needs of new
types of customer, and in achieving the productivity required to achieve
acceptable margins. Our strategy is to be asset-light wherever we can. We will
be careful investors, minimising our spending on assets and focusing on
partnerships to maximise margins and returns.

We continue to keep a close eye on Salvesen Foods and are strengthening our
temperature-controlled businesses to ensure they are fit for purpose. We also
need to modernise our Transport operations in the UK and will continue to
support the planned growth in our Iberian and French networks. Our credibility
with both shareholders and international customers depends on having a
portfolio in which every local business is a strong and capable player, and we
have reinvigorated our management teams across the business to be properly

Operational review

Our performance in the year made it clear that we still have some way to go. We
again delivered mixed results in which strong performances by some businesses -
such as our Food and Consumer businesses in the UK and Iberia - were offset by
weakness elsewhere. However, we feel all of our businesses are positioned to
move forward.

Food and Consumer sector

This sector includes our UK and Mainland European business units, now
incorporating our Support Services operations, and our Salvesen Foods frozen
vegetable business. Overall revenue rose 11% to £457.0m as the UK business
maintained its strong growth. For our total domestic business, operating profit
before exceptional items was up by 27% - but a relatively disappointing
performance on the continent, as we re-establish this business, held back the
overall improvement to £14.4m, an increase of 9.1%.

UK Food and Consumer                                
Year to 31 March                2007    2006  Change
Revenue                      £253.6m £217.6m     17%
Operating profit              £35.7m  £10.8m +£24.9m
Underlying operating profit#  £10.4m   £8.6m  +£1.8m
Operating margin#               4.1%    4.0%   +0.1%
Year end capital employed     £34.6m  £53.0m -£18.4m
Return on capital employed#    30.1%   16.2%  +13.9%

#before exceptional items


The UK business grew strongly in a good year for both dedicated logistics and
the shared-user temperature controlled network: revenue grew 17% and operating
profit before exceptional items was up 21%. Intense competition among retailers
is increasing customer interest in the cost advantages of shared-user
operations. As the leading shared-user provider we are ideally placed to
benefit from this and the growth of retailers' e-commerce activities. Although
the frozen logistics market remained difficult, with excess storage capacity,
and prices still depressed, this business unit made further good progress.

New business wins increased markedly, but were partially offset by some limited
contract losses. The pipeline grew strongly over the year, and includes a
number of large-scale prospects.

Existing customers rewarded our service and innovation with further business,
and both Marks & Spencer and Rockware awarded us additional operating centres.

We are successfully extending into new markets: for Manchester Airport Group we
now security screen and distribute all products for airport-based retail
outlets, and in e-commerce we have won new business from Superdrug,
Weightwatchers, Urban Outfitters and Mackays. Our Holistica joint venture made
a prestigious start with the Marks & Spencer import management contract. And we
have started to sell our UK shared-user transport capability into the retail
sector with new contracts from Zara and Makro - for whom we are handling all UK

The temperature controlled business operated close to capacity in the first
half. Poor harvests reduced capacity utilisation in the third quarter, but
business was recovering well in the final quarter and we have continued to gain
market share. Productivity continues to improve and we have, in the main, been
able to pass energy cost increases on to customers. Service levels remain high,
supporting good customer retention.

Our Support Services operation continues to perform strongly, offering reverse
logistics solutions for the retail and industrial markets. It specialises in
optimising reverse supply chains, and managing loose equipment, return products
and packaging waste. Its core competences include applying its engineering
systems and process skills to support customers' sustainable development

Revenue was boosted by new business wins and the continuing rollout of major
contracts with Asda and Tesco.

Our network continues to grow, and we opened two new service centres - one in
Corby for Tesco flower buckets and mushroom trays with annual throughput
capacity of 30m trays, and an environmentally-friendly facility for Asda in
Falkirk. Other major wins during the year included a new loose equipment
contract from Argos and a waste management contract for B&Q, which includes
recycling returned electrical goods, other products and packaging.

We continue to refine our industry-leading COMET and BACTRAC IT systems, and
are seeking partners to help us exploit opportunities arising from the new
Waste Electrical and Electronic Equipment (WEEE) legislation.

The year ahead looks promising. The pipeline remains strong but we are still
experiencing cost pressure in all sectors. We will continue to build on our
strong relationships with major customers and expect to make further headway
with our strategy of targeting the non-food retail, e-commerce, ambient storage
/distribution and aviation sectors. In the frozen food sector we expect to
continue to recover cost increases and expect to find further scope for
improving profits as we continue to enhance productivity.

Salvesen Foods                                           
Year to 31 March                      2007    2006 Change
Revenue                             £44.6m  £39.1m    14%
Operating profit/(loss)              £0.7m (£0.2m) +£0.9m
Underlying operating profit/(loss)#  £0.3m (£0.2m) +£0.5m
Operating margin#                     0.7%  (0.5%)  +1.2%
Year end capital employed           £24.0m  £20.0m +£4.0m
Return on capital employed#           1.3%  (1.0%)  +2.3%

#before exceptional items


Our frozen vegetable business increased its revenue by 14% and returned to
profit despite low yields caused by the very wet spring of 2006. We achieved
price increases across our customer base, although rising raw material and
utility costs will remain a challenge in the current year.

We had an excellent year for new business, boosted by new product development
and international sourcing. We won new contracts from Sainsbury's, Iceland and
Brakes Foodservices, and the new business pipeline is very strong. This year we
plan to continue developing new vegetable and non-vegetable products,
increasing our international sourcing, developing new sources of organic
produce and increasing our sales to the new customers won in 2006.

Mainland Europe                                    
Year to 31 March                2007    2006 Change
Revenue                      £158.8m £154.2m     3%
Operating profit               £2.4m   £4.8m -£2.4m
Underlying operating profit#   £3.7m   £4.8m -£1.1m
Operating margin#               2.3%    3.1%  -0.8%
Year end capital employed     £28.5m  £29.1m -£0.6m
Return on capital employed#    13.0%   16.5%  -3.5%

#before exceptional items


After modestly improving operating profit in the previous year, our continental
European operations performed less well. Despite continued growth in Iberia,
overall revenue grew modestly and, with performance weakening in Benelux and
France, operating profit before exceptional items fell by over 20%.

We have restructured our management team to target a customer-focused growth
agenda and fix our problem operations. They have started well.

In Benelux, good growth in the retail sector and encouraging new business wins
were offset by the loss of our major contract with Laurus at the end of the
year, after it decided to divest a large number of its shops in the
Netherlands. Revenue was flat and operating profit was further impacted by
productivity problems, although most of these were resolved under a new
management team and performance improved in the last quarter. Loss-making
logistics contracts are being addressed and new customer agreements have
improved under-performing transport contracts. Major contracts with Carrefour,
Delhaize and Spar were renewed in Belgium. We see significant market
opportunities in the coming year, particularly once our SHARP transport
management system is fully operational at the end of the first half. Key
customers are showing interest in buying additional services and extending our
geographic coverage.

In France, growth in both the frozen and chilled food sectors was weak,
although the catering sector maintained reasonable growth. Against this
background we achieved modest revenue growth. We renewed important contracts
with Aldi, Lidl and Masterfoods - and strengthened our relationship with two
major restaurant chains. Productivity should improve this year with new
management teams at Duppigheim and Langon and new voice picking technology in
several warehouses. In reverse logistics, we developed a new packaging solution
for Carrefour's non-food business.

In Iberia the chilled market continued to expand at around 8%, but margins in
general were under pressure. Our market-leading joint venture with Danone
increased revenue in line with the market and increased operating profit.
Significant new business wins included contracts from Carrefour to manage a
multi-temperature regional distribution centre in Seville and provide
additional transport services in the Madrid area. We are also successfully
penetrating the fruit and vegetable market to enhance asset utilisation and
create profitable synergies. This year we aim to consolidate our position as
one of the top two players in the Iberian market.

Transport sector

This sector comprises business units in the UK, Iberia and France. Overall
revenue grew by 8% to £442.0m, led by a strong performance in France. But as
margins weakened in all units and UK losses mounted sharply, operating profit
before exceptional items more than halved from £7.5m to £3.7m.

Across the sector, recent price increases have positioned the business for a
stronger performance this year. Addressing the UK business remains our biggest
single priority.

Year to 31 March                2007    2006 Change
Revenue                      £166.6m £155.6m     7%
Operating profit/(loss)        £4.5m (£1.7m) +£6.2m
Underlying operating profit# (£4.6m) (£1.7m) -£2.9m
Operating margin#             (2.8%)  (1.1%)  -1.7%
Year end capital employed     £30.0m  £38.4m -£8.4m
Return on capital employed#  (15.3%)  (4.4%) -10.9%

#before exceptional items


Our UK Transport business faced significant competition from pallet networks
and ongoing price pressure from our industrial customer base. Performance was
very disappointing and we are taking decisive action to address the situation.
A new management team has been installed and we are pursuing improvements
across our existing operations.

We remain focused on developing a lower operating cost structure and will work
with external partners to take advantage of any opportunities for efficiencies,
together with a modernisation of our working practices and facilities. A strong
UK transport business is essential to our clear commitment to a pan-European
shared-user transport strategy.

Revenues increased due to the launch of the national tyre distribution
contracts for Goodyear Dunlop and Continental Tyre Group and some success with
rate reviews. However, the unplanned start-up costs contributed significantly
to the overall increase in losses. It was a frustrating start for what has
proved to be a very exciting new development. The efficiency and cost benefits
of sharing a single logistics platform dedicated to their sector are so
compelling that rivals Goodyear Dunlop and Continental are happy for us to
manage their logistics on a confidential basis for the benefit of both.

Our ability to deliver dedicated service standards from shared-user operations
has also impressed cash and carry operator Makro. We expect this to be the
first of many new contracts of this nature as we migrate from an industrial to
a consumer network and reinvest in new facilities appropriate for this

Other new business wins included contracts from Agfa, Marigold, Remploy and
Baumatic. We also grew our business with existing customers such as Daikin,
where we now provide specialist service deliveries to their support engineers,
and Caravel. On an annualised basis, business wins were well ahead of contract
losses, but compared with a very good performance in the previous year wins
were down and losses increased. The new business pipeline also weakened over
the year.

We are continuing the work on productivity and overhead efficiency. We will
also maintain our focus on new sectors including the building, packaging,
healthcare, high tech and non-food retail sectors that will, over time, provide
a more balanced portfolio.

Year to 31 March                2007    2006 Change
Revenue                      £129.7m £121.8m     6%
Operating profit               £0.9m   £3.5m -£2.6m
Underlying operating profit#   £1.9m   £3.5m -£1.6m
Operating margin#               1.5%    2.9%  -1.4%
Year end capital employed*    £11.4m  £12.8m -£1.4m
Return on capital employed*#   16.7%   27.3% -10.6%

#before exceptional items

*excluding goodwill


We have achieved market leadership positions in almost all our key business
areas, and built a strong reputation that is attracting high quality people and
customers. Major new business wins during the year included Total lubricants,
Ford after-sales and significant expansion in the textile sector; and there
were no major contract losses. While full load volumes stayed flat, our
shared-user network maintained its rapid growth, with overall volumes up 33%
and the night delivery network growing even faster. Logistics volumes grew 8%.

Given this good progress, the near halving of operating profit before
exceptional items was disappointing. Our rapid volume growth has required
substantial infrastructure investment as we grow the network and upgrade
facilities and, during the year, we opened new facilities in Madrid, Valencia,
Porto, Alicante and Irun. Further facilities are planned for Madrid, Girona,
Tarragona, Seville and Santiago. We also faced continuing cost increases due to
a shortage of subcontractors; these proved difficult to pass on during much of
the year, but as transport supply and demand has become more balanced we have
seen improving prices in recent months.

Despite continuing investment this year we are optimistic that margins and
profits will improve as we curb operating costs and maintain strong volume
growth in the shared-user network and warehousing.


Year to 31 March               2007    2006 Change
Revenue                     £145.7m £131.0m    11%
Operating profit              £6.4m   £5.7m +£0.7m
Operating margin               4.4%    4.4%      -
Year end capital employed*    £8.9m  £15.6m -£6.7m
Return on capital employed*   71.9%   36.5% +35.4%

*excluding goodwill


Darfeuille remains one of the most successful transport companies in the French
market. We aim to maintain our strong market position through continuing
investment in our network infrastructure and further productivity gains to
offer customers high quality at a competitive price.

We maintained strong growth across a broad range of sectors. New business wins
included Ford and Visteon auto parts, Del Monte canned goods, PVG Zibro air
conditioning and heating, Poujoulat chimney products, Yves Saint Laurent
packaging, Florendi garden products, Allibert toilets, Schneider electrical
parts and MDP paint. There were no significant contract losses.

The reported profit growth reflects a £1.2m refund of VAT on road tolls from
prior years, with underlying growth constrained by the need for substantial
investment in facilities to handle the continuing increase in volumes. During
the year we relocated the Bourges and Aulnay (Paris North) depots to larger
cross-dock facilities, and Nancy followed in early 2007. The relocation of the
Bordeaux depot and the Roye depot extension are nearing completion. IT
enhancements were also completed at several warehouses, and we acquired over
100 new vehicles.

Over the next two years we expect to extend our services into the adjacent
markets of Belgium and Italy, and to establish even stronger links into the UK
and Spain.

Prices were under pressure during the past year, but we have already agreed
increases for this year. We are also now focusing on improving margins and have
already seen signs that this strategy will improve the overall financial
performance this year.


One of the factors that consistently differentiate Christian Salvesen is the
quality of our service. We recognise that we are essentially a service
business, and that we depend on high quality people, communications and
relationships to deliver a competitive service.

We have set ourselves demanding strategic goals, and one reason we can do this
with confidence is the calibre of people we have been attracting into the
management of the business. In the past year we have made a succession of
appointments that indicate the way we see the future and will guide the
successful implementation of our strategy.

During the year we made a number of important senior appointments for both
business unit and central roles. In addition to new managing directors for our
UK Transport and continental Food and Consumer businesses, we also recruited a
Corporate Development Director, Chief Information Officer and Head of Talent.

Leadership and communication are the keys to providing good service. Our One
Team project is focused on rejuvenating the leadership capabilities of the
entire line management team, from supervisors through to site managers.
Launched in 2004, it aims to improve productivity and customer service levels
by engaging all our employees.

We want to be recognised as an employer of choice with a strong service and
quality culture, achieving high levels of productivity through fair treatment
of all colleagues. It will be particularly important to be able to communicate
and share this culture where we are extending our reach through partnerships
and strategic alliances, and addressing any under-performing operations.

We are making progress towards this goal. Colleague briefings have been
reintroduced, we use Listening Groups to promote dialogue, and we are
displaying KPI performance on standard format boards to increase the focus on
productivity. To identify areas of concern at company and local level we are
using employee surveys, followed-up with an improvement action plan at each

We are proud to have been listed as one of Britain's Top Employers 2007 by the
Corporate Research Foundation. In its analysis, Christian Salvesen appears as a
solid all-round performer across a wide range of scoring categories. For
further information, see the website.

Health and safety

We are strongly committed to being a safe and responsible business. Concern for
the wellbeing of our staff is a key element in our drive to be the employer of
choice in our sector - particularly for HGV drivers, who remain in short
supply. To reflect the importance we attach to health and safety, we have made
it the first item on the agenda at all board, Executive Committee and business
unit board meetings.

For the first time we have entered the annual award scheme run in the UK by the
Royal Society for the Prevention of Accidents (RoSPA). I am delighted to report
that we won one of its prestigious Gold Health and Safety Awards. In addition,
four sites were also chosen for individual gold awards: the Bracknell
temperature controlled depot, the British Airways World Cargo Centre at
Heathrow, and our Support Services sites at Skelmersdale (Asda) and Middleton

Environmental impact

We take our environmental responsibilities very seriously. As a road transport
business we meet a manifest social need but recognise a corresponding social
responsibility to moderate the associated environmental impacts. We also
believe it makes commercial sense to do so: our customers increasingly wish to
minimise their own environmental impacts and attach value to our conscientious
and innovative approach. Our aim is to achieve a balance that benefits both the
environment and our shareholders.

We review our environmental performance continuously, seek out best practices
and technologies, and share them with our customers.

Our principal environmental impact is our carbon footprint. The trend to longer
supply chains and increased road miles imposes constant upward pressure on
carbon emissions. By improving our carbon efficiency we help to offset this
trend and reduce both our own and our customers' carbon footprints.

The most inefficient vehicle of all is an empty one: we are helping to reduce
empty running through the development of vehicle optimisation software.
Shared-user operations are inherently carbon-efficient as they increase vehicle
utilisation. We have long been leading proponents of shared-user operations,
which account for a significant proportion of our business. We further increase
our efficiency by applying technology - from better route planning software to
more economical vehicles and engines. We can also eliminate road miles through
better trailer design - as we did last year with the double-deck temperature
controlled trailers we designed for Marks & Spencer. Over the longer term, we
believe our strategy of creating new distribution centres at ports and airports
will also help to reduce empty vehicle miles.

All our new vehicles meet the Euro 4 standard, and in selecting our preferred
vehicle suppliers we take account of their manufacturing processes. We have
developed fuel management and consumption monitoring which focuses on both
vehicle and driver and are moving to automatic transmissions to gain better
economy. As a result, we are making measurable progress on fuel efficiency.

We are also conducting extensive trials on alternative fuels such as bio
diesel, compressed natural gas and liquefied natural gas. These include a joint
project with the Royal Mail in which we are sharing bio fuel trial data.

Reducing our carbon footprint is a journey and education will play an important
part in improving our performance. We have retained external advisers to
improve our knowledge and give us leading academic advice on environmental best
practice in our fleet and sites. By developing sector leading technical
competencies we can, in turn, advise our customers on best practice. For
example, we have teamed up with a specialist software consultancy to provide
customers with systems for measuring their carbon footprints.

Our reverse logistics business makes a major contribution to customers' own
environmental and waste reduction programmes by providing reusable transit
packaging and associated reverse logistics services. In its 10-year life it has
enabled customers to recover and recycle over 2.5m tonnes of cardboard and
plastic packaging. And its reusable trays have eliminated over 2bn cardboard
cartons from the supply chain altogether.

We now publish separate reports on both our health and safety performance and
environmental impacts. The reports for last year will be published on our
website at shortly.

Financial review


Group revenue increased by 10% to £899.0m (2006: £819.3m), with minimal impact
from changes in the euro exchange rate.

Food and Consumer revenue increased by 11%; Transport revenue increased by 8%.

Operating profit

Underlying operating profit (before exceptional items) decreased by £2.6m to £
18.1m and resulted in a reduction in an overall operating margin from 2.5% to
2.0%. The impact of the euro exchange rate had minimal effect on operating

Food and Consumer underlying operating profit increased by £1.2m to £14.4m,
primarily due to improved performance in our UK businesses offset by weaker
performance in continental Europe.

Transport underlying operating profit decreased by £3.8m to £3.7m, due to
weaker performance in the UK and Iberian businesses outweighing the improvement
in France.

Exceptional items

Exceptional items had a positive impact on pre-tax profits of £31.6m compared
to £0.2m in the prior year. In addition a £2.0m provision has been established
for potential liabilities relating to a business sold in an earlier year, which
reduces the positive impact to £29.6m.

The current year included a gain of £26.0m from the sale and leaseback of some
UK properties and a gain of £14.7m from changes in the UK pension plan offset
by £6.3m of charges for the continuing restructuring programme and £2.8m
related to lease costs for two underutilised UK properties. The restructuring
charges are expected to deliver annualised savings of approximately £2m in the

The prior-year costs related to the gain on disposal of a UK property and
restructuring charges.

Interest costs

The net interest charge increased by £0.3m to £5.6m (2006: £5.3m), with higher
interest rates outweighing the benefit of lower average debt levels during the
second half of the year. The interest charge is covered 3.2 times by operating
profit before exceptional items (2006: 3.9 times).

Profit before tax

Profit before tax and exceptional items ("underlying profit before tax")
decreased by £2.9m to £12.5m. After taking account of the exceptional items,
reported profit before tax on continuing operations increased by £29.4m to £


For the year, there is an overall tax credit of £5.3m (2006: £3.8m charge). The
exceptional profit on the sale of UK property did not give rise to a tax charge
due to the availability of prior-year capital losses, and the retention of
future capital allowances resulted in a net credit. The exceptional gain for
past service cost in the UK pension scheme was a non-taxable item. The
effective tax rate on underlying profits of 5% (2006: 29%) reflects the impact
of favourable settlements with various tax authorities relating to earlier
years. We expect the effective tax rate for future years to reflect the mix of
UK and overseas earnings and to increase over time.

Earnings per share

Basic earnings per share increased by 301% from 4.46p to 17.90p based on 264.8m
shares (2006: 264.7m shares). Earnings per share, before exceptional items
("underlying earnings per share") increased by 8% from 4.16p to 4.49p.


The board has recommended a final dividend of 2.45p per share. This brings the
total for the year to 3.65p per share, unchanged from the previous year. The
dividend is covered 4.9 times by net earnings (2006: 1.2 times) and 1.2 times
by earnings before exceptional items ("underlying earnings") (2006: 1.1 times).

Cash flow

Free cash flow, defined as net cash generated from operating activities plus
cash generated from investing activities, was £50.2m higher than the previous
year at £61.2m (2006: £11.0m), and is boosted by the £52.2m from asset sales
(2006: £7.1m). Cash spent on capital expenditure of £16.1m was £2.3m lower than
the previous year (2006: £18.4m). The majority of the capital was for
replacement of existing assets with a small amount supporting new contracts.
There were no significant individual projects.

Cash outflow from working capital was £3.5m (2006: £4.5m). The year-end working
capital position of £5.6m is quite small and, for most of the year, is
considerably higher than at the year-end. The £3.5m increase reflects the
growth in revenue.

The cash cost of dividends paid during the year was unchanged at £9.6m.

Return on capital employed

Return on capital employed is calculated by dividing underlying operating
profit by the average net assets during the year. Net assets exclude net debt,
goodwill, pension deficit and tax provisions. The return for the year was 11.9%
(2006: 11.8%). Average net assets during the year were £152.2m (2006: £176.0m).

Balance sheet

Group net assets increased by £46.3m, with the major changes being a £29.5m
decrease in tangible fixed assets, a £54.9m decrease in net debt and £25.4m
decrease in net pension liabilities. We still hold freehold property worth
significantly more than its net book value of £43.0m.


The Group's main defined benefit scheme in the UK is closed to new employees.
During the year, the trustees agreed to reductions in the benefits provided by
the scheme and the company agreed to maintain its cash contributions. The total
charge against operating profit, before exceptional items, for the UK defined
benefit scheme reduced by £1.1m to £5.5m (2006: £6.6m), primarily due to a
lower net interest cost. In addition, earnings for the year were improved by a
£14.7m exceptional gain related to the benefit cost from past service as a
result of the changes made to the scheme.

The year-end deficit decreased by £23.7m to £49.2m (2006: £72.9m) on a pre-tax
basis, with the major reductions coming from the £14.7m exceptional gain
related to past service and £13.3m from the actuarial assumptions related to
future liabilities. Offsetting these was a £6.5m increase due to actual
investment returns in the year being less than the assumed returns. During the
year, the trustees maintained an asset allocation with around 80% invested in

A discount rate of 5.4% has been used to compute the net present value of
liabilities (2006: 5.05%). The scheme actuary has calculated that a discount
rate of 6.2% would eliminate the £49.2m pre-tax deficit.

At the year-end, there was a deferred tax asset of £14.8m (2006: £13.1m)
related to the deficit. After including this, the after-tax deficit decreased
by £25.4m to £34.4m (2006: £59.8m).

During the year, the Group contributed £7.7m in cash, equivalent to 18% of
pensionable payroll.

Funding and capital structure

At the year-end, net debt was £39.4m (2006: £94.3m) and represented gearing of
39% (2006: 175%). Excluding the pension deficit and the related deferred tax
asset, year-end gearing stood at 29% (2006: 83%). Net debt included £70.5m of
euro-denominated debt (2006: £116.7m), with the change in the year-end exchange
rates reducing net debt by £3.3m.

Treasury policies

The financial risks arising from changes in currency and interest rates are
managed centrally by the Group treasury department with policies that are
approved and monitored by the board.

Foreign currency risk

The Group is exposed to fluctuations in the value of the euro. Overseas trading
results have been translated using a euro exchange rate of 1.48 (2006: 1.46).
The Group's policy is to hedge euro-denominated profits.

Overseas balance sheets and foreign currency debt have been translated using a
year-end euro exchange rate of 1.47 (2006: 1.43) with the impact of the change
in exchange rates being charged directly to reserves. The Group's policy is to
use euro-denominated debt as a natural hedge against the translation of
euro-denominated assets. At the year-end the value of unhedged net assets was
covered by forward exchange contracts.

Liquidity and interest rates

The Group has a syndicated banking facility totalling £130m, which expires in
September 2008. The interest payable on this facility is at floating rates. The
board believes that this facility is adequate to finance the working capital
demands of the Group.

Accounting standards and policies

During the year a number of new Standards and Interpretations were adopted by
the Group. The adoption of IFRIC 4 'Determining whether an arrangement contains
a lease' has led to a reclassification of certain plant and equipment into
finance lease receivables. Revenue and cost of sales are also affected
marginally following the adoption of the interpretation although earnings and
net assets were unaffected. Prior year comparatives have been restated

Consolidated income statement
Forthe year ended 31 March 2007

                                                                2007       2006
                                                       Notes      £m (restated)
Continuing operations                                                          
Revenue                                                  2     899.0      819.3
Cost of sales                                                 (838.1)    (754.6)
Gross profit                                                    60.9       64.7
Other operating income                                          42.4        2.4
Administrative expenses                                        (53.6)     (46.2)
Operating profit                                                49.7       20.9
Interest receivable                                      4       3.7        1.6
Interest payable and similar charges                     4      (9.3)      (6.9)
Profit before income tax                                        44.1       15.6
Analysed as:                                                                   
Underlying profit before exceptional items                      12.5       15.4
Exceptional operating income                             3      40.7        2.2
Exceptional administrative expenses                      3      (9.1)      (2.0)
Profit before income tax                                        44.1       15.6
Income tax                                               5       5.3       (3.8)
Profit for the year from continuing operations                  49.4       11.8
Discontinued operations                                  3      (2.0)         -
Profit for the year                                             47.4       11.8
All profits are attributable to equity shareholders of the company.            

Dividends paid in the year at 3.65p per share (2006:     6       9.6        9.6
3.65p per share)                                                               
Earnings per share                                       7     pence      pence
From continuing operations                                                     
 - basic                                                       18.66       4.46
 - diluted                                                     18.36       4.43
From continuing and discontinued operations                                    
- basic                                                        17.90       4.46
- diluted                                                      17.62       4.43
Earnings per share before exceptional items is disclosed in note 7              

Statement of recognised income and expense
Forthe year ended 31 March 2007

                                                          Group  Group Company Company
                                                           2007   2006    2007    2006
                                                    Notes    £m     £m      £m      £m
Exchange translation effect on foreign currency net                                   
investments                                               (0.4)    0.1       -       -
Taxation on foreign currency exchange differences         (0.2)    0.1       -       -
Actuarial gain/(loss) recognised in the pension                                       
scheme                                               12     6.8 (10.7)       -       -
Deferred tax relating to pension liability                  1.7      -       -        
Net income/(expense) recognised directly in equity          7.9 (10.5)       -       -

Profit for the year                                        47.4   11.8     7.0     4.1
Total recognised income and expense for the year           55.3    1.3     7.0     4.1

There were no changes recognised directly in associates' equity in 2007 or 2006.

Balance sheets
As at 31 March 2007

                                                    Group      Group Company  Company
                                                     2007       2006    2007     2006
                                           Notes           (restated)              
                                                       £m         £m      £m       £m
Non-current assets                                                                     
Goodwill                                             66.8       68.7       -        -      
Other intangible assets                               8.2        8.2     0.1        -      
Property, plant and equipment                       110.2      139.7     0.1      0.2    
Investment in subsidiaries                              -          -   151.4    150.4  
Investment in associates                              0.7        0.7       -        -      
Deferred tax assets                                  15.6       13.9       -        -      
Trade and other receivables                           3.2        3.2   318.9    292.3  
Finance lease receivables                            13.1       13.0       -        -       
                                                     217.8     247.4   470.5    442.9  
Current assets                                                                         
Inventories                                           20.7      16.9       -        -      
Trade and other receivables                          164.0     149.0     4.4      5.8    
Current tax receivables                                1.2       2.7       -      3.0    
Cash and cash equivalents                            139.0      56.1    18.9      4.1    
Finance lease receivables                              2.5       2.2       -        -      
                                                     327.4     226.9     23.3    12.9   
Current liabilities                                                                    
Trade and other payables                            (179.5)   (161.9)    (6.7)   (5.9)  
Current tax liabilities                               (2.8)     (2.3)    (1.8)      -      
Financial liabilities - short-term borrowings        (79.8)     (9.4)   (75.8)   (0.2)  
Short-term provisions                                (18.6)    (14.4)    (8.9)   (7.5)  
                                                    (280.7)   (188.0)   (93.2)  (13.6) 
Short-term provision in respect of disposal in 3      (2.0)        -     (2.0)      -      
prior year                                                                             
                                                    (282.7)   (188.0)   (95.2)  (13.6) 
Net current assets / (liabilities)                    44.7      38.9    (71.9)   (0.7)  
Total assets less current liabilities                262.5     286.3    398.6   442.2  

Non-current liabilities                                                                
Long-term payables                                    (2.8)     (1.1)  (123.2) (125.2)
Financial liabilities - long-term borrowings         (98.6)   (141.0)   (91.4) (131.5)
Retirement benefit obligations                 12    (49.2)    (72.9)       -       -      
Deferred tax liabilities                              (7.7)    (14.7)       -       -      
Long-term provisions                                  (4.0)     (2.7)       -    (0.1)  
                                                    (162.3)   (232.4)  (214.6) (256.8)

Net assets                                           100.2      53.9    184.0   185.4  
Called up share capital                        8      74.6      74.6     74.6    74.6   
Share premium account                          8      43.8      43.8     43.8    43.8   
Capital redemption reserve                     8       3.8       3.8      3.8     3.8    
Retained earnings and translation reserve      8     (22.0)    (68.3)    61.8    63.2   
Total shareholders' equity                           100.2      53.9    184.0   185.4  

Approved by the board of directors on 5 June 2007 and signed on its behalf by:


Stewart Oades
Julian Steadman

Consolidated cash flow statement
For the year ended 31 March 2007

                                                       Group      Group Company Company
                                                        2007       2006    2007    2006
                                                          £m         £m      £m      £m
Net cash from operating activities                                                     
Operating profit                                        49.7       20.9    (0.2)   (0.6)
Adjustments for:                                                                       
Exceptional operating costs                              9.1        2.0     0.8     0.4
Exceptional profit on disposal of non-current assets   (26.0)      (2.2)      -       -
Exceptional past service pension credit                (14.7)         -       -       -
Profit on disposal of non-current assets                (0.2)      (1.4)      -       -
Depreciation and amortisation of non-current assets     21.7       23.3     0.1       -
Employee share based payment schemes charge              0.6        0.5     0.2       -
                                                        40.2       43.1     0.9    (0.2)
Movements in working capital and provisions             (3.5)      (4.5)  (26.8)   (1.3)
Difference between pension charge and cash              (2.2)      (0.3)      -       -
Cash outflow from exceptional items excluding                                          
proceeds on disposal of non-current assets              (4.4)      (3.1)   (0.5)   (0.4)
Net cash generated from / (used in) operations          30.1       35.2   (26.4)   (1.9)
Interest paid                                           (7.9)      (7.0)   (7.5)   (5.6)
Interest received                                        2.7        1.6    19.4    13.0
Income tax repaid/(paid)                                 0.2       (7.5)    2.3    (3.7)
Net cash generated from / (used in) operating           25.1       22.3   (12.2)    1.8
Cash flows from investing activities                                                   
Purchase of property, plant and equipment              (16.1)     (18.4)   (0.1)      -
Proceeds from sale of property, plant and equipment*    52.2        7.1       -       -
Overdraft acquired with subsidiary undertakings            -       (0.1)      -       -
Dividends received from subsidiary undertakings            -          -     1.2       -
Net cash generated from / (used in) investing           36.1      (11.4)    1.1       -
Cash flows from financing activities                                                   
Proceeds from new borrowings                             0.1      137.2       -   137.2
Repayments of borrowings                               (37.0)    (137.9)  (39.9) (139.6)
Capital element of finance lease rentals                (2.2)      (1.8)      -       -
Dividends paid                                          (9.6)      (9.6)   (9.6)   (9.6)
Net cash used in financing activities                  (48.7)     (12.1)  (49.5)  (12.0)
Increase/(decrease) in net cash and cash                12.5       (1.2)  (60.6)  (10.2)
Net cash and cash equivalents at 1 April                50.8       51.5     3.1    13.3
Exchange gains on cash and cash equivalents             (0.7)       0.5       -       -
Net cash and cash equivalents at end of year            62.6       50.8   (57.5)    3.1
* Including £49.5 (2006: nil) proceeds on exceptional disposal of non-current assets

The preliminary announcement for the year ended 31 March 2007 has been prepared
in accordance with International Financial Reporting Standards (IFRS) and IFRIC
interpretations as adopted by the European Union as at 31 March 2007.

Prior period comparative figures have been restated to reflect a re-analysis of
£0.4m between administrative expenses and cost of sales in order to give a more
meaningful and consistent comparison. The adoption of IFRIC 4 'Determining
whether an arrangement contains a lease' has also led to the reclassification
of certain property, plant and equipment into finance lease receivables. Prior
year comparatives have been changed accordingly with a reduction in revenue and
depreciation within cost of sales of £1.4m, property, plant and equipment
reduced by £3.3m, intangibles by £0.1m, and finance lease receivables within
non-current assets increased by £0.8m and within non-current assets by £2.6m
respectively. Cash flows have been reclassified between working capital,
depreciation and purchase of property, plant and equipment. There is no profit
impact or net asset impact.

The information set out in this preliminary statement does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act
1985.  Statutory accounts for the year ended 31 March 2006 have been filed with
the Registrar of Companies.  The auditors' report on those accounts was
unqualified and did not contain any statement under section 237 of the
Companies Act 1985.  The information presented in the preliminary announcement
for the year ended 31 March 2007 is extracted from, and is consistent with,
that in the Group's audited financial statement for the year ended 31 March
2007, and those financial statements will be delivered to the Registrar of
Companies following the company's Annual General Meeting.

1 Exchange rates

The exchange rates used for the translation of euro into sterling were:

                                                              euro    euro
                                                              2007    2006
Average rate - income statement                               1.48    1.46
Year-end rate - balance sheets                                1.47    1.43

2 Segmental analysis

The Group's primary reporting format is business segments and its secondary is
geographical segments. The operating businesses are organised and managed
separately according to the markets they serve.

                                     Revenue                     Segment result
                            Inter-  Sales to       profit                      
                           segment  external       before Exceptional Operating
                     Gross   sales customers exceptionals       items    profit
Year ended 31 March  sales      £m        £m           £m          £m        £m
2007                    £m                                                     
Food and Consumer                                                              
UK                   256.7   (3.1)     253.6         10.4        25.3      35.7
Salvesen Foods        44.6       -      44.6          0.3         0.4       0.7
Mainland Europe      158.8       -     158.8          3.7       (1.3)       2.4
Total Food and       460.1   (3.1)     457.0         14.4        24.4      38.8
UK                   168.1   (1.5)     166.6        (4.6)         9.1       4.5
Iberia               130.6   (0.9)     129.7          1.9       (1.0)       0.9
France               146.3   (0.6)     145.7          6.4           -       6.4

Total Transport      445.0   (3.0)     442.0          3.7         8.1      11.8
Total segment        905.1   (6.1)     899.0         18.1        32.5      50.6
Exceptional items -                                     -       (0.9)     (0.9)
Operating profit                                     18.1        31.6      49.7
Finance costs - net                                 (5.6)           -     (5.6)
Profit before tax                                    12.5        31.6      44.1
Tax                                                 (0.6)         5.9       5.3
Profit for the year                                  11.9        37.5      49.4
from continuing                                                                
Loss from                                               -       (2.0)     (2.0)
Profit for the year                                  11.9        35.5      47.4

2 Segmental analysis continued

                                            Revenue                     Segment result
                                           Sales to    Operating                      
                                  Inter-   external       profit                      
                           Gross segment  customers       before Exceptional Operating
                           sales   sales (restated) exceptionals       items    profit
Year ended 31 March   (restated)      £m         £m           £m          £m        £m
2006                          £m                                                      
Food and Consumer                                                                     
UK                         220.1   (2.5)      217.6          8.6         2.2      10.8
Salvesen Foods              39.1       -       39.1        (0.2)           -     (0.2)
Mainland Europe            154.2       -      154.2          4.8           -       4.8
Total Food and             413.4   (2.5)      410.9         13.2         2.2      15.4
UK                         155.6       -      155.6        (1.7)           -     (1.7)
Iberia                     122.1   (0.3)      121.8          3.5           -       3.5
France                     131.1   (0.1)      131.0          5.7           -       5.7
Total Transport            408.8   (0.4)      408.4          7.5           -       7.5
Total segment              822.2   (2.9)      819.3         20.7         2.2      22.9
Exceptional items -                                            -       (2.0)     (2.0)
Operating profit                                            20.7         0.2      20.9
Finance costs - net                                        (5.3)           -     (5.3)
Profit before tax                                           15.4         0.2      15.6
Tax                                                        (4.4)         0.6     (3.8)
Profit for the year                                         11.0         0.8      11.8

Revenue excludes sales of £33.5m (2006: £66.5m) where the Group is obliged
under certain logistics contracts to purchase goods on customers' behalf and
sell them on at cost.

Inter-segment sales are priced at cost.

                                                2007                                2006
                 Assets Goodwill Liabilities     Net Assets Goodwill Liabilities     Net
Balance sheet                                 assets                              assets
                     £m       £m          £m      £m     £m       £m          £m        
Food and Consumer                                                                                
UK                 74.5        -      (39.9)    34.6   81.7        -      (28.7)    53.0
Salvesen Foods     29.5        -       (5.5)    24.0   24.7        -       (4.7)    20.0
Mainland Europe    65.7        -      (37.2)    28.5   65.9        -      (36.8)    29.1
Total Food and    169.7        -      (82.6)    87.1  172.3        -      (70.2)   102.1
UK                 54.6        -      (24.6)    30.0   57.2        -      (18.8)    38.4
Iberia             43.6     47.4      (32.2)    58.8   42.6     48.8      (29.8)    61.6
France             41.3     19.4      (32.4)    28.3   48.5     19.9      (32.9)    35.5
Total Transport   139.5     66.8      (89.2)   117.1  148.3     68.7      (81.5)   135.5
Total segment     309.2     66.8     (171.8)   204.2  320.6     68.7     (151.7)   237.6

Central            13.4        -      (33.1)  (19.7)   12.3        -      (28.4)  (16.1)
Discontinued          -        -       (2.0)   (2.0)      -        -           -       -

Cash and cash     139.0        -           -   139.0   56.1        -           -    56.1

Tax and deferred   16.8        -      (10.5)     6.3   16.6        -      (17.0)   (0.4)
tax balances                                                                            

Retirement            -        -      (49.2)  (49.2)      -        -      (72.9)  (72.9)

Financial             -        -     (178.4) (178.4)      -        -     (150.4) (150.4)
Total             478.4     66.8     (445.0)   100.2  405.6     68.7     (420.4)    53.9

2 Segmental analysis continued

                                    2007          2006            2007            2006
                                 Capital       Capital   Depreciation/   Depreciation/
                             expenditure   Expenditure    amortisation    Amortisation
                                            (restated)                      (restated)
                                      £m            £m              £m              £m
Food and Consumer                                                                     
UK                                   3.9           3.4             4.2             4.6
Salvesen Foods                       0.9           0.6             1.2             1.3
Mainland Europe                      2.4           3.5             5.0             5.2
Total Food and Consumer              7.2           7.5            10.4            11.1
UK                                   3.0           3.1             5.1             5.5
Iberia                               2.0           3.7             2.0             2.2
France                               1.4           1.7             1.7             1.8
Total Transport                      6.4           8.5             8.8             9.5
Total segment                       13.6          16.0            19.2            20.6
Central                              1.7           2.4             2.5             2.7
Total                               15.3          18.4            21.7            23.3

Geographical analysis
The sales analysis in the table below is based on the location of the
geographical market which is not materially different from the geographical

                                          Revenue  Segment assets   Capital expenditure
                                  2007       2006    2007    2006  2007            2006
                                       (restated)                            (restated)
                                    £m         £m      £m      £m    £m              £m
UK                               464.5      412.2   172.0   175.9   9.6             9.3
France                           194.0      177.9    84.2    91.9   2.4             3.5
Benelux                           69.2       69.0    34.4    33.3   1.2             1.6
Iberia                           171.3      160.2    98.8   100.5   2.1             4.0
Total segment                    899.0      819.3   389.4   401.6  15.3            18.4
Unallocated assets                                                                     
- Cash and cash equivalents                         139.0    56.1                      
- Tax and deferred tax balances                      16.8    16.6                      
                                                    545.2   474.3                      

Analysis of revenue by category

                                                                    2007           2006
                                                                      £m             £m
Sales of goods                                                      43.9           36.7
Revenue from services                                              855.1          782.6
                                                                   899.0          819.3

3 Exceptional operating income and cost

                                                                             2007   2006
                                                                               £m     £m
Continuing operations                                                                   
Profit on sale of non-current assets                                         26.0    2.2
Past service pension credit (note 8)                                         14.7      -
                                                                             40.7    2.2
Restructuring and site closure costs                                         (9.1)  (2.0)
                                                                             31.6    0.2
Discontinued operations                                                                
Additional provision in respect of business sold in an earlier year          (2.0)     -
                                                                             29.6    0.2
Attributable tax                                                              5.9    0.6
                                                                             35.5    0.8

Restructuring costs in the year include £2.8m (2006: nil) in respect of onerous
lease costs

4 Interest receivable, interest payable and similar charges

                                                                         2007     2006
                                                                           £m       £m
Interest expense:                                                                     
Bank loans and overdrafts                                               (7.9)    (5.7)
Interest payable on finance leases                                      (0.7)    (0.7)
Amortisation of issue costs of bank loan                                (0.7)    (0.5)
Interest payable and similar charges                                    (9.3)    (6.9)
Interest receivable                                                      3.7      1.6
Net interest payable                                                    (5.6)    (5.3)

5 Income tax

                                                                          2007     2006
                                                                            £m       £m
Analysis of tax (credit) / charge in the year                                          
Current tax                                                                            
UK corporation tax                                                       (2.3)      0.5
Overseas tax                                                              4.0       2.4
                                                                          1.7       2.9
Deferred tax                                                                           
UK                                                                       (6.8)     (0.9)
Overseas                                                                 (0.2)      1.8
                                                                         (7.0)      0.9
Tax (credit) / charge                                                    (5.3)      3.8

Analysed as:                                                                           
Tax on profit                                                             2.7       3.8
Tax credit on exceptional administrative expenses                        (2.8)     (0.6)
Tax credit on exceptional profit on sale of non-current assets           (3.1)        -
Prior year tax adjustments                                               (2.1)      0.6
Taxation                                                                 (5.3)      3.8

Tax on items charged / (credited) to equity                                            
                                                                             2007  2006
                                                                               £m    £m
Current tax charge / (credit) on exchange movements offset in reserves        0.2  (0.1)
Deferred tax on pension deficit                                              (1.7)    -
Net tax credited to equity                                                   (1.5) (0.1)

The tax for the year is lower than the standard rate of corporation tax in the
UK (30%). The differences are explained below:

                                                                             2007  2006
                                                                               £m    £m
Profit before income tax on continuing operations                            44.1  15.6
Multiplied by standard rate of corporation tax in the UK of 30% (2006:30%)   13.2   4.7
Effects of:                                                                            
Adjustments to tax in respect of prior period                                (2.1)  0.6
Adjustment in respect of overseas tax rates                                   0.4   0.1
UK capital gains covered by relief / non taxable pension past service       (15.3) (1.0)
Other timing/disallowable items                                              (1.5) (0.6)
Actual tax on profit                                                         (5.3)  3.8

6 Dividends on ordinary shares

                                                                              2007 2006
                                                                                £m   £m
Prior year final paid  2.45p per share (2005: 2.45p)                           6.4  6.4
Current year interim paid 1.20p per share (2006: 1.20p)                        3.2  3.2
Total                  3.65p per share (2006: 3.65p)                           9.6  9.6
                                 (note 8)                                                        

The directors are proposing a final dividend in respect of the financial year
ended 31 March 2007 of 2.45p per share which will absorb £6.4m of shareholders'
funds.  If approved, the final dividend will be paid on 31 August 2007 to
shareholders who are on the register of members on 3 August 2007.

7 Earnings per share

Basic earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the year, excluding those held in the employee share trust,
which are treated as cancelled.

The directors consider that the basic earnings per share from continuing
operations before exceptional items provides a more meaningful measure of
underlying performance.

For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all dilutive potential ordinary
shares. The Group has four classes of dilutive potential ordinary shares: those
share options granted to employees where the exercise price is less than the
average market price of the company's ordinary shares during the year and the
contingently issuable shares under the Group's executive share option schemes,
Long Term Incentive Plan and Deferred Share Bonus Plan.

                                       2007  2006
                                      pence pence
Continuing operations                            
Basic                                 18.66  4.46
Basic - before exceptional items       4.49  4.16
Diluted                               18.36  4.43

Discontinued operations                          
Basic                                (0.75)     -
Diluted                              (0.75)     -


                                            2007  2006
                                           pence pence
Continuing and discontinued operations                
Basic                                      17.90  4.46
Diluted                                    17.62  4.46


                                                                           2007    2006
                                                                           '000    '000
Average number of shares                                                               
Weighted average ordinary shares in issue during the year               265,292 265,264
Shares owned by the Christian Salvesen Employee Share Trust                (525)   (538)
Weighted average ordinary shares used in basic earnings per share       264,767 264,726
Dilutive potential ordinary shares                                        4,266   1,912
Diluted weighted average number of shares in year                       269,033 266,638

8 Consolidated statement of changes in equity

                                          Share    Capital                             
                             Share      premium redemption Translation  Retained  Total
                           capital      account    reserve     reserve  earnings equity
Group                           £m           £m         £m          £m        £m     £m
Balance at 1 April 2005       74.6         43.8        3.8         0.7    (61.2)   61.7
Currency translation             -            -          -         0.2         -    0.2
adjustments net of                                                                     
Pension deficit movement         -            -          -           -    (10.7) (10.7)
net of taxation                                                                        
Profit for the year              -            -          -           -      11.8   11.8
Total recognised income          -            -          -         0.2       1.1    1.3
for the year                                                                           
Cost of share based              -            -          -           -       0.5    0.5
Dividend (note 6)                -            -          -           -     (9.6)  (9.6)
Balance at 31 March 2006      74.6         43.8        3.8         0.9    (69.2)   53.9
Balance at 1 April 2006       74.6         43.8        3.8         0.9    (69.2)   53.9
Currency translation             -            -          -       (0.6)         -  (0.6)
adjustments net of                                                                     
Pension deficit movement         -            -          -           -       8.5    8.5
net of taxation                                                                        
Profit for the year              -            -          -           -      47.4   47.4
Total recognised income          -            -          -       (0.6)      55.9   55.3
for the year                                                                           
Cost of share based              -            -          -           -       0.6    0.6
Dividend (note 6)                -            -          -           -     (9.6)  (9.6)
Balance at 31 March 2007      74.6         43.8        3.8         0.3    (22.3)  100.2

8 Consolidated statement of changes in equity continued

                                     Share premium       Capital                       
                             Share         account    redemption     Retained     Total
                           capital              £m       reserve     earnings    equity
Company                         £m                            £m           £m        £m
Balance at 1 April 2005       74.6            43.8           3.8         68.7     190.9
Profit for the year              -               -             -          4.1       4.1
Total recognised income          -               -             -          4.1       4.1
for the year                                                                           
Dividend (note 6)                -               -             -        (9.6)     (9.6)
Balance at 31 March 2006      74.6            43.8           3.8         63.2     185.4
Balance at 1 April 2006       74.6            43.8           3.8         63.2     185.4
Profit for the year              -               -             -          7.0       7.0
Total recognised income          -               -             -          7.0       7.0
for the year                                                                           
Cost of share based              -               -             -          1.2       1.2
Dividend (note 6)                -               -             -        (9.6)     (9.6)
Balance at 31 March 2007      74.6            43.8           3.8         61.8     184.0

Translation reserve
Translation reserve is the cumulative exchange adjustment on restating overseas
net assets net of exchange gains/losses on hedging net overseas assets.

9 Analysis of Group net debt

                                              At                             At
                                        31 March    Cash   Exchange    31 March
                                            2006    flow adjustment        2007
                                              £m      £m                     £m
Cash at bank and in hand                    41.8    70.9      (0.7)       112.0
Overdrafts                                 (5.3)  (71.1)          -      (76.4)
                                            36.5   (0.2)      (0.7)        35.6
Liquid resources                                                               
Short-term deposits                         14.3    12.7          -        27.0
Total net cash and cash equivalents         50.8    12.5      (0.7)        62.6
Debt due within one year                   (2.0)     0.9          -       (1.1)
Finance leases due within one year         (2.1)   (0.2)          -       (2.3)
Debt due after one year                  (131.5)    36.1        4.0      (91.4)
Finance leases due after more than         (9.5)     2.3          -       (7.2)
one year                                                                       
                                         (145.1)    39.1        4.0     (102.0)
Total net debt                            (94.3)    51.6        3.3      (39.4)

10 Analysis of balance sheet net debt position
                                                    in year
                                2007    2006             £m
                                  £m      £m               
Cash and cash equivalents      139.0    56.1           82.9
Overdrafts                    (76.4)   (5.3)         (71.1)
Net cash and cash equivalents   62.6    50.8           11.8
Short-term loans               (1.1)   (2.0)            0.9
Long-term loans               (91.4) (131.5)           40.1
Finance leases                 (9.5)  (11.6)            2.1
                              (39.4)  (94.3)           54.9

11 Group summary cash flow

                                                                2007       2006
                                                                  £m         £m
Operating profit                                                49.7       20.9
Depreciation and amortisation of non-current assets             21.7       23.3
Exceptional operating costs                                      9.1        2.0
Exceptional profit on disposal of non-current assets          (26.0)      (2.2)
Exceptional past service pension credit                       (14.7)          -
Earnings before interest, tax, depreciation, amortisation and   39.8       44.0
exceptional items (EBITDA)                                                     
Employee share based payment schemes charge                      0.6        0.5
Profit on disposal of non-current assets                       (0.2)      (1.4)
                                                                40.2       43.1
Changes in working capital                                                     
- (Increase)/decrease in inventories                           (3.9)        0.7
- Increase in receivables                                     (21.9)      (8.9)
- Increase in payables and provisions                           22.3        3.7
Increase in working capital                                    (3.5)      (4.5)
Difference between pension charge and cash contributions       (2.2)      (0.3)
Interest & tax paid/received                                   (5.0)     (12.9)
Exceptional costs                                              (4.4)      (3.1)
Fixed asset receipts                                            52.2        7.1
Capital expenditure                                           (16.1)     (18.4)
Free cash flow                                                  61.2       11.0
Acquisitions and disposals                                         -      (0.1)
Dividends paid                                                 (9.6)      (9.6)
Net cash flow                                                   51.6        1.3

12 Pension commitments

The Group operates a number of pension schemes involving defined benefit and
defined contribution schemes. The total pension cost was £12.8m (2006: £12.2m)
before taking account of the £14.7m exceptional past service credit in respect
of the UK defined benefit scheme. Of this £5.5m (2006: £6.6m) relates to the UK
defined benefit scheme. The assets of the schemes are held in separate trustee
administered funds. The UK defined benefit scheme was restructured during the
year with a cap put in place over future salary increases. This led to a one
off past service credit of £14.7m being credited to the income statement.

In the UK, the main scheme is of the defined benefit type and pension costs are
assessed with the advice of qualified actuaries, using the projected unit

An actuarial gain of £6.8m (2006: loss £10.7m) has been credited in the
consolidated statement of changes in equity.  This principally arises due to an
increase in the discount rate used for the measurement of scheme liabilities.

The amounts recognised in the income statement in the year are as follows:

                                                               2007   2006
                                                                 £m     £m
Current service cost                                            6.5    6.3
Past service credit                                          (14.7)      -
Interest cost                                                  15.0   13.6
Expected return on plan assets                               (16.0) (13.3)
Defined benefit pension (credit) / cost                       (9.2)    6.6
Defined contribution pension cost                               7.3    5.6
Total pension (credit) / cost included within employee costs  (1.9)   12.2

Of the total charge £10.8m (2006: £10.6m) and £2.0m (2006: £1.6m) were included
in cost of sales and administrative expenses respectively.  The £14.7m
exceptional past service credit is included in other operating income.

12 Pension commitments continued

The amounts recognised in the balance sheet, along with the expected rate of
return on scheme assets, are as follows:

                                        2007    2007  2006    2006 2005    2005
                                        % pa      £m  % pa      £m % pa      £m
Equities                                8.0%   191.7  7.7%   180.5 8.0%   143.0
Corporate bonds                         5.1%    22.9 4.75%    22.1 5.3%    18.6
Government bonds                        4.5%    23.2  4.1%    22.1 4.4%    18.8
Other                                   4.7%     1.2  3.7%     2.0 3.7%     1.7
Total fair value of plan assets         7.4%   239.0  7.1%   226.7 7.3%   182.1
Present value of funded obligations          (288.2)       (299.6)      (244.6)
Net retirement benefit obligations -          (49.2)        (72.9)       (62.5)
before tax                                                                     

The parent company holds no retirement benefit obligations directly.

The expected rate of return is based on market expectations at the beginning of
the period for returns over the life of the benefit obligation. The overall
expected rate of return is the weighted average of the expected return on each
asset category.

The major categories of plan assets as a percentage of total plan assets are as

                  2007  2006  2005
Equities         80.2% 79.7% 78.5%
Corporate bonds   9.6%  9.8% 10.2%
Government bonds  9.7%  9.8% 10.3%
Other             0.5%  0.7%  1.0%

The last full actuarial valuation for the main defined benefit scheme, the UK
scheme, on which the IAS 19 figures have been based was at 31 December 2004 and
has been updated to 31 March 2007 by an independent qualified actuary. The
principal assumptions used for IAS 19 were:

                                                                 2007  2006  2005
Rate of increase in salaries                                    2.95%  3.6%  3.6%
Rate of increase in pensions              - RPI up to 5%        2.95%  2.6%  2.6%
                                          - RPI up to 2.5%      2.25%  2.5%  2.5%
Discount rate                                                    5.4% 5.05% 5.55%
Inflation assumption                                            2.95%  2.6%  2.6%

The average life expectancy (in years) used to determine benefit obligations

                                               2007        2006    
                                            Male Female Male Female
Members aged 65 (current life expectancy)     18     21   18     21
Members aged 45 (life expectancy at age 65)   20     23   20     23

Analysis of the movement in the balance sheet deficit

                                        2007   2006
                                          £m     £m
At 1 April                            (72.9) (62.5)
Credit / (charge) to income statement    9.2  (6.6)
Actuarial gain / (loss)                  6.8 (10.7)
Contributions paid                       7.7    6.9
At 31 March                           (49.2) (72.9)

Cumulative actuarial gains and losses recognised in equity since 1 April 2004

                                                     2007   2006
                                                       £m     £m
At 1 April                                          (9.5)    1.2
Net actuarial gains/(losses) recognised in the year   6.8 (10.7)
At 31 March                                         (2.7)  (9.5)

12 Pension commitments continued

Analysis of the movement in the fair value of scheme assets

                                2007  2006
                                  £m    £m
At 1 April                     226.7 182.1
Expected return on plan assets  16.0  13.3
Benefits paid                  (8.4) (7.2)
Member contributions             3.5   2.6
Employer contributions           7.7   6.9
Actuarial (loss) / gain        (6.5)  29.0
At 31 March                    239.0 226.7

The actual return on assets in the year was £9.5m (2006: £42.3m).

Analysis of the movement in the present value of obligations

                           2007    2006
                             £m      £m
At 1 April              (299.6) (244.6)
Current service cost      (6.5)   (6.3)
Past service credit        14.7       -
Interest cost            (15.0)  (13.6)
Benefits paid               8.4     7.2
Member contributions      (3.5)   (2.6)
Actuarial gain / (loss)    13.3  (39.7)
At 31 March             (288.2) (299.6)

Amounts recognised in the statement of recognised income and expense

                                                                    2007   2006
                                                                      £m     £m
Difference between actual and expected return on pension scheme    (6.5)   29.0
Experience gains and losses arising on scheme liabilities            1.5  (2.3)
Impact of changes in assumptions on scheme liabilities              11.8 (37.4)
Actuarial gain/(loss)                                                6.8 (10.7)

The estimated employer defined benefit contributions for the year ended 31
March 2008 are £7.2m.

                                                 2007    2006    2005    2004    2003
                                                   £m      £m      £m      £m      £m
Fair value of scheme assets                     239.0   226.7   182.1   163.7   129.5
Present value of defined benefit obligations  (288.2) (299.6) (244.6) (226.6) (215.9)
Deficit in the scheme                          (49.2)  (72.9)  (62.5)  (62.9)  (86.4)
Experience adjustments on scheme assets                                              
Amount (£m)                                     (6.5)    29.0     5.3    20.7  (49.7)
Percentage of scheme assets                    (2.7%)   12.8%    2.9%   12.7% (38.4%)
Experience adjustments on scheme liabilities                                         
Amount (£m)                                       1.5   (2.3)   (1.1)   (1.3)     3.1
Percentage of scheme liabilities                 0.5%  (0.8%)  (0.4%)  (0.6%)    1.5%
Impact of changes in assumptions of scheme                                           
Amount (£m)                                      11.8  (37.4)   (3.0)    26.2  (74.2)
Percentage of scheme liabilities                 4.1% (12.5%)  (1.2%)   11.6% (34.4%)

13 Contingent asset

As a result of the sale and leaseback of certain UK properties in the year, the
Group may be entitled to receive a further £1.0m of proceeds in the new
financial year.  The receipt of this sum is by no means certain and hence no
asset has been reorganised in respect of this amount.

Other notes

i The annual report will be posted to shareholders on 12 June 2007 and will be
available on request from The Secretary, Christian Salvesen PLC, 500 Pavilion
Drive, Northampton, NN4 7YJ.  The Annual General Meeting will be held in
Edinburgh on 12 July 2007.

ii This preliminary announcement was approved by the board of directors on 5
June 2007.

a d v e r t i s e m e n t