• Unique new business created
  through Booker merger
• Cost savings and synergies
  of at least £50 million expected next year
• Iceland like for like
  food sales up 6%
• Group profit before taxation
  up 10% to £32.1 million
• Diluted earnings per
  share up 12% to 10.73 pence
• Interim dividend up 10%
  to 2.2 pence per share
• Roll-out of new Iceland.co.uk
  fascia and ‘Extra’ range under way
• Extending range of organic
  food at everyday supermarket prices
• Trialling sales of Iceland
  and Woodward products through Booker
• Experimenting with extended
  range home shopping offer

‘Despite poor summer weather
and a highly competitive market, Iceland’s like for like food sales in the nine
weeks to 2nd September have grown by 4.5 per cent, while Booker’s like for like
sales excluding tobacco are up 2.0 per cent. We are vigorously pursuing every
opportunity to drive down costs, and to maximise the selling opportunities created
by the merger of these two highly complementary businesses.’

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ENQUIRIES:

Iceland Group
Malcolm Walker C.B.E., Chairman 020 7796 4133 on 5 Sept / 01244 830100
Stuart Rose, Chief Executive 020 7796 4133 on 5 Sept / 020 7411 5585
Andrew Pritchard, Group Finance Director 020 7796 4133 on 5 Sept / 01244 830100
Charles Wilson, Managing Director – Booker 020 7796 4133 on 5 Sept / 01933 371000
Russell Ford, Managing Director – Iceland 020 7796 4133 on 5 Sept / 01244 830100

Hudson Sandler
Keith Hann / Michael Sandler 020 7796 4133

CHAIRMAN’S AND CHIEF EXECUTIVE’S STATEMENT

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The core Iceland business
maintained a robust performance in the first six months of 2000, with like for
like food sales up 6 per cent and Group pre-tax profit up 10 per cent. We continued
to differentiate Iceland from its competitors through an emphasis on Food You
Can Trust, announcing in June that we would convert our complete frozen vegetable
range to organic at everyday supermarket prices in October this year. The merger
with Booker has created a unique new business serving retail and trade customers
through both traditional and new economy formats. Our integration teams are
up and running, and our experience to date underpins our confidence in the delivery
of our forecast cost savings, and in our ability to seize the expected opportunities
to drive top-line growth.

Results

Like for like food sales
growth of six per cent was sustained throughout the first half, and total sales
rose by eight per cent to £997.9 million. Operating profit grew by 10
per cent to £39.5 million, with a slight increase in our operating margin.
Pre-tax profit grew by 10 per cent to £32.1 million, and diluted earnings
per share rose by 12 per cent to 10.73 pence.

Finances

The Booker acquisition was
completed on 23rd June and therefore made no material contribution to our trading
results in the first half. The Group balance sheet at 1st July does reflect
its consolidation, with net assets of £576.0 million, borrowings of £477.8
million and goodwill of £427.5 million. Gearing is 83 per cent and pro
forma interest cover is 3.4 times, which we regard as comfortable in the light
of the enlarged Group’s strong cash generation.

Dividend

The Board has declared an
interim dividend of 2.2 pence per share (1999: 2.0 pence), an increase of 10
per cent. This will be payable on 13 November 2000 to all shareholders on the
register at the close of business on 15 September 2000. As a result of the change
in the enlarged Group’s year end from December to March, we will announce our
recommended final dividend in June 2001, and will adjust this payment to reflect
its coverage of a nine month period. We remain committed to our policy of raising
dividends broadly in line with the growth of earnings per share over the medium
term.

Iceland.co.uk

The core Iceland retail
business has continued to make good progress. Following the successful trials
of our Extra convenience store format, we have decided to include elements of
its extended range in all refurbished stores. We plan 85 such refurbishments
this year, around half of which will carry the complete Extra range including
fresh fruit and vegetables, health and beauty products, and extended chilled,
grocery and non-food ranges. The product offer in the other refitted stores
will be tailored to reflect our analysis of sales potential, based on their
location, customer mix and local competitive profile. All refurbished stores
will carry the new Iceland.co.uk fascia, which is being rolled out progressively
across the chain. It will be carried by 250 stores by end of 2000, and by the
entire chain by June 2001. Our vehicle fleet will all carry the new livery by
October 2000.

After its very successful
trial in Birmingham, the Bhs Food Store concept was extended to a further 11
locations during the first half, covering a broad mix of towns and store types.
Some of these additional units are trading well, while the performance of others
is slightly below our expectations. We are awaiting clarification of Bhs’s own
strategy under its new owners and managers before considering further development
of the concept.

We are committed to making
high quality, wholesome and natural food available to all, at affordable prices.
In June we converted our entire standard ice cream tub range to organic, and
in October we will also complete the conversion of our Iceland brand frozen
vegetable range. Our move to make organic food available at ordinary supermarket
prices has been very well received by consumers, and we will progressively convert
further major ranges in the future.

Booker Cash & Carry

The Booker cash and carry
business has achieved further planned efficiency improvements in both its branches
and the supply chain. The roll-out of new designs for the ‘Happy Shopper’ own
label range is proceeding to plan, and the ‘Premier’ convenience store fascia
has been extended to 550 UK locations. Catering turnover has benefited from
a range of initiatives to extend the product range, guarantee availability on
key lines and hold prices throughout the summer season as an aid to menu planning.
Booker sold its 50 per cent interest in Booker Tate on 11 August 2000, completing
the programme of non-core business disposals that began in 1998.

Woodward Foodservice

Woodward has continued to
perform well, growing in line with our plans. It recently won a major contract
to supply Punch Taverns nationwide, and is well on course to meet our target
of becoming a £100 million turnover business by 2001. The merger with
Booker creates new opportunities, giving access to Booker’s 300,000-strong catering
customer base.

Integration

We have established cross-business
teams tasked with maximising cost savings and synergies for the enlarged Group
in buying, the supply chain and e-commerce, and with developing sales of Iceland
and Woodward products through Booker and of the Booker range through Iceland.
All our work to date underpins our confidence in the delivery of cost savings
and trading synergies of not less than £20 million in the current trading
period to March 2001, and of at least £50 million in the year to March
2002.

E-commerce

Last year Iceland launched
the first Internet home shopping service to be truly available nationwide, and
the only service that is free of delivery and administration charges subject
to a minimum order value of £40. Further developments are planned under
our new home shopping director Jon Grey, who joined us in May. We have recently
begun an initial trial offering a significantly wider product range, picked
from a Booker depot. The Booker business-to-business internet portal is also
undergoing trials with small customer groups, and has received an encouraging
response. We are confident that there is significant potential to leverage our
already strong position in e-commerce, by combining Iceland’s brand and home
delivery expertise with Booker’s low cost space and supply chain.

Management

Following completion of
the merger on 23rd June, Malcolm Walker became Chairman and Stuart Rose Chief
Executive of the enlarged Group, with Charles Wilson as Managing Director of
Booker and Russell Ford as Managing Director of Iceland. Andrew Pritchard continues
as Group Finance Director. There are four non-executive directors: Tom Knowlton
and Iain Sharp from the former Iceland board, and David Price and Alan Smith
from Booker. The cultures of Iceland and Booker are proving genuinely complementary.
We are pleased to report that our executive teams at and below board level are
working well together, and are enthusiastically committed to maximising the
potential benefits of combining the two businesses.

We would also like to take
this opportunity to record our appreciation of the contributions of those directors
of Iceland and Booker who retired from the respective boards to facilitate the
merger.

Outlook

Despite poor summer weather
and a highly competitive market, Iceland’s like for like food sales in the nine
weeks to 2nd September have grown by 4.5 per cent, while Booker’s like for like
sales excluding tobacco are up 2.0 per cent. We are vigorously pursuing every
opportunity to drive down costs, and to maximise the selling opportunities created
by the merger of these two highly complementary businesses. The enlarged Iceland
Group has a distinctive position on the high street, a strong platform for growth
in catering and e-commerce, and great opportunities to realise economies of
scale in buying, logistics and administration. We view the future with confidence
and enthusiasm.

Malcolm C. Walker CBE, Chairman
Stuart Rose, Chief Executive

GROUP
PROFIT AND LOSS ACCOUNT FOR THE 26 WEEKS
ENDED 1 JULY 2000

* The earnings per ordinary share for the 52 weeks ended 1 January 2000 are stated
after exceptional items

There were no material gains or losses other than the profit for the current and
previous financial periods.

GROUP BALANCE SHEET AS AT 1 JULY 2000

Shareholders’
funds above include £nil (3 July 1999 – £10.2m, 1 January 2000 – £nil) relating
to non-equity shareholders.

GROUP CASH FLOW STATEMENT FOR THE 26 WEEKS ENDED 1 JULY 2000

NOTES TO THE ACCOUNTS

1. Basis of preparation of interim financial information

The interim financial information has been prepared on the basis of the accounting
policies set out in the Group’s statutory accounts for the year ended 1 January
2000. Expenses are accrued in accordance with the same principles used in the
preparation of the annual accounts.

2. Exceptional items

The exceptional costs relate to the reorganisation of the retail division’s distribution
network.

3. Interest payable

4.
Tax on profit on ordinary activities

Taxation
is provided at 32.0 per cent, being the anticipated rate of taxation for 2000
(26 weeks ended 3 July 1999 – 33.0 per cent, 52 weeks ended 1 January 2000 –
33.0 per cent).

5.
Dividends

6. Basic
and diluted earnings per ordinary share

Earnings
per ordinary share are based on profit for the financial period after exceptional
items, and after deducting other appropriations of £21.8m (26 weeks ended 3
July 1999 – £19.3m, 52 weeks ended 1 January 2000 – £38.5m), and the weighted
average number of ordinary shares in issue of 196.4m (26 weeks ended 3 July
1999 – 173.8m, 52 weeks ended 1 January 2000 – 184.7m), after excluding the
shares owned by the Iceland Group Employee Share Ownership Plan.

Diluted earnings
per ordinary share are based on profit on ordinary activities after exceptional
items and tax of £21.8m (26 weeks ended 3 July 1999 – £19.6m, 52 weeks ended
1 January 2000 – £38.8m), and the weighted average number of ordinary shares
in issue of 203.2m (26 weeks ended 3 July 1999 – 205.1m, 52 weeks ended 1 January
2000 – 204.8m) after adjusting for the effect of any dilutive potential ordinary
shares.

7. Reconciliation
of movement in shareholders’ funds

8.
Acquisition of Booker plc

On 25 May 2000 the boards of Iceland and Booker plc announced that they had
agreed the terms of the acquisition of Booker by Iceland. On 23 June the offer
became unconditional. The offer was made on the basis of 0.5292 Iceland shares
being issued for each Booker share held.

The interim financial statements include Booker plc. As the acquisition occurred
just before the half year end, the impact of Booker on the trading results of
the enlarged group is immaterial. On this basis, Booker’s results are not included
in the Group Profit and Loss Account.

The net assets of Booker at the date of acquisition are:

9.
Reconciliation of operating profit to operating cash flows

10.
Analysis of cash flows for headings netted in the cash flow statement

11.
Analysis of net debt

12. This interim financial information, which is unaudited, does not
constitute statutory accounts within the meaning of section 240 of the Companies
Act 1985. The accounts for the 52 weeks ended 1 January 2000 are an abridged
version of the Group’s full accounts which 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.

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