Change to IT financing

Sainsbury(J) PLC
29 January 2004

29 January 2004


         Sainsbury's simplifies financing of IT contract with Accenture

J Sainsbury plc ('Sainsbury's') today announces a proposal to simplify the
financing structure of its extended outsourcing contract with Accenture.

In November 2000, Sainsbury's Supermarkets Ltd outsourced its IT re-development
and operations to Accenture for a period of seven years through an intermediary
company Swan Infrastructure plc ('Swan') (Note 1). Sainsbury's will complete its
business transformation programme by summer 2004, including the re-development
of its IT systems. In November 2003 Sainsbury's announced a three-year extension
to the contract with Accenture, negotiated at reduced costs.

Peter Davis, group chief executive of Sainsbury's said 'We are pleased with the
work that Accenture has completed on our behalf and we have extended our
relationship as our new IT infrastructure becomes fully operational.'

'We would now like to acquire Swan to create a direct commercial relationship
with Accenture, as we near completion of our business transformation programme
this summer.'

Sainsbury's is proposing to acquire Swan (Note 2) as follows:

•         £6m in cash for the acquisition of the share capital and the repayment
          of the subordinated debt of Swan Infrastructure Holdings Ltd,
•         £234m to discharge bank debt in Swan from Sainsbury's existing cash
          resources,
•         £313m by way of an exchange of bonds issued by a member of the Swan
          group, Store Finance plc, for similar term bonds to be issued by 
          Sainsbury's (the 'Exchange Offer').

The Exchange Offer is made upon the terms and is subject to the conditions set
out in the Exchange Offer Memorandum dated 29 January 2004 (Note 3).

The proposed transactions have been discussed with Moody's Investor Services and
Standard & Poor's. As a result Sainsbury's believes that the transactions would
have no impact on the company's existing credit ratings.

Under the proposed transactions, Sainsbury's would acquire IT assets to an
approximate value of £553m and depreciate them in accordance with Sainsbury's
accounting policies. The estimated impact of these transactions in the year 
2004/05 would be to increase Sainsbury's net debt by £553m, EBITDA by £155m,
depreciation by £100m and financing costs by £30m, resulting in a net reduction
in costs of £25m (Note 4).

Peter Davis said 'The net reduction in costs will provide Sainsbury's with
additional resources to develop our customer proposition, by investing in
quality and innovation and improving further our competitive offer, as we move
towards trading our business harder from summer 2004.'

Notes

1.        The Swan group is independent of Sainsbury's and comprises Swan
Infrastructure Holdings Ltd and its wholly owned subsidiaries Swan
Infrastructure plc and Store Finance plc.

2.      As at 31 December 2002 (the date of its last audited accounts), Swan
Infrastructure Holdings Ltd had net liabilities of £429m. Under Swan's
accounting policies, which expense all IT expenditure in the year in which it is
incurred, Swan Infrastructure Holdings Ltd made a loss on ordinary activities
before taxation of £213m for the year ended 31 December 2002.

3.      The Exchange Agent with respect to the Exchange Offer is The Bank of New
York. Copies of the Exchange Offer Memorandum may be obtained from The Bank of
New York, One Canada Square, London E1 5AL.

4.      The financial impact of these transactions arises because under the
current Swan IT contract, Sainsbury's charges a composite service fee to profit
which covers operational IT services, capital expenditure, debt servicing and
repayment.

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