DAIRY CREST GROUP PLC

1
DAIRY CREST GROUP PLC PRELIMINARY RESULTS For
the year ended 31 March 2008
2
Key Highlights

• Strong financial results benefiting from good
  strategic progress
• Investment in brands driving strong revenue and
  profits growth in Foods division
• St Hubert continues to deliver on expectations in
  France
• most key brands have increased market share with
  strong growth
• new healthier variants making good progress
• Clover on track to recover strongly in 2008/09
• Improved performance by Dairies division
• manufacturing efficiencies being delivered
• integration of Express Dairies completed
• Significant price increases achieved across the
  Group to offset substantial raw milk and
  commodity cost inflation

3
Financial Review Alastair Murray

4
Financial Highlights

• Group Revenue up 20 to 1.57bn (2007 1.31bn)
• Adjusted profit before tax up 24 to 96.1m
  (2007 77.4m)
• Adjusted basic earnings per share up 17 to
  57.1p (2007 48.7p)
• Full year dividend up 6.6 to 24.4p (2007 22.9p)
• Net debt up 23.8m to 474.8m (2007 451.0m)
• IAS19 pension schemes surplus of 31.6m (2007
  deficit 0.4m)

before exceptional items and amortisation of
acquired intangibles
5
Income Statement
Before exceptional items and amortisation of
acquired intangibles
6
Segmental Analysis
Before exceptional items and amortisation of
acquired intangibles
7
Operating Margin
Before exceptional items and amortisation of
acquired intangibles
8
Exceptional Items
9
Balance Sheet
10
Operating Cash Flow
Before exceptional items and amortisation of
acquired intangibles Net of grant
amortisation Operating property profits,
share based payments charges and impairment of JV
11
Cash Flow
12
Financing

• Two key financial covenants on bank debt and loan
  notes
• borrowings Net debt to EBITDA lt 3.5x
• cover EBITDA to Net Interest gt 3.0x
• March 2008 Net Debt/EBITDA covenant ratio is less
  than 3.0x
• Net debt expected to remain broadly level at
  March 2009 due to one off factors
• increased capex
• final year of additional pension fund
  contributions
• OFT fine expected to be paid in 2008/09

Drawn down in Euros so translation impact at
year end.
13
Pensions Summary

• Full actuarial valuation as at 31 March 2007
  completed
• future funding plan agreed with the Trustee
• cash contributions in 2008/09 will amount to
  18.3 of pensionable salaries
• IAS19 net surplus at 31 March 2008 of 31.6m
• 32.0m improvement since March 2007
• based on more prudent life expectancy assumptions
• weaker asset returns offset by higher bond yields
  reducing PV of liabilities
• Additional cash contributions of 12.0m committed
  in 2008/09

14
Business Review Mark Allen
15
Dairy Crest Strategy

• Build market leading positions in branded and
  added value markets
• Invest in industry leading facilities to create
  competitive advantage
• Downsize commodity risk to improve quality of
  earnings
• Strategic acquisitions
• branded and added value markets
• opportunities for synergistic acquisitions in
  Dairies division
• Deliver excellent value to our shareholders and
  other stakeholders

16
Good Strategic Progress

• Focus on branded and added value markets has
  delivered exceptional performance by most key
  brands
• Continued investment in industry leading
  facilities
• closure of Totnes delivering manufacturing
  efficiencies
• commenced work on Nuneaton cheese packing plant
• new investment in regional distribution centres
  for Dairies
• Successful integration of St Hubert and Express
  Dairies
• Good progress on corporate responsibility
  initiatives

17
Strong Brand Performance
Source DC sales growth by value, AC Nielsen
or IRI or TNS 52 week MAT value growth to March
2008
18
French Italian Spreads

• Overall performance in line with our expectations
• total sales up 6
• market share of French spreads to 36
• Continued strong growth from Omega 3 up 17 by
  value and 14 by volume
• number one brand variant in French spreads
• Stabilised position of St Hubert 41 and Le
  Fleurier
• sales down 3 and 2 by value respectively
• increase in marketing and promotional activity
• Vallé performing well in Italy with sales up 12
  by value
• market share increased to 54

19
French Spreads Market Share

Source IRI (by value)
20
St Hubert Omega 3 No.1 Brand

20.5
15.0
13.7
12.2
11.6
7.7
6.1
Source IRI (by value)
21
UK Dairy Spreads

• Overall increase in market share in Dairy Spreads
• strengthened listings versus competition
• developing healthier variants to meet consumer
  lifestyles
• Strong growth from Utterly Butterly with sales up
  38 by volume and 29 by value with Omega 3
  launched in August 2007
• Clover sales down 22 by volume and 11 by value
• impacted by product recall in May 2007
• factory improvements implemented
• Clover on track to recover strongly in 2008/09
• strong promotional programme
• new TV advertising campaign
• Clover Lighter to be launched
• April 08 volumes back to April 07 levels (pre
  recall)

22
Leading Dairy Spreads
59.0m
58.5m
58.0m
m
43.0m
38.0m
30.6m
Source AC Nielsen, March 2008
23
Country Life

• Country Life Spreadable up 12 by volume and 25
  by value
• Lighter making good progress
• strong growth opportunity
• Country Life packet butter down 7 by volume but
  up 5 by value
• Uplift in marketing and promotional activity
  planned for 2008/09
• emphasis on British heritage
• brand stretch

24
Cheese

• Strong growth from Cathedral City with sales up
  23 by value and 16 by volume
• over 160m brand at retail sales price
• 36th in Nielsens Top 100 UK Grocery Brands
• Cathedral City Lighter performing well
• Davidstow growth sales up 8 by value and 13 by
  volume
• Stock profits in H2 resulting from price
  increases
• tighter industry stock levels
• whey market significantly down from 2007 peak
• Investment in Nuneaton cheese packing site on
  track to start commercial production early 2009

25
Cheese Stocks

• Industry cheddar stocks have tightened through
  2007/08
• March stock levels down 8 on prior year

K tonnes
British Cheese Board cheddar stocks 12 month
moving average
26
Yoplait Dairy Crest

• Overall Yoplait brand sales up 9 by volume and
  11 by value
• outperformed the market
• increased market share of childrens category to
  53
• Petits Filous and Frubes returned to strong
  growth
• Petits Filous up 25 by value and 32 by volume
• Frubes up 34 by value and 39 by volume
• increased promotional and marketing activity with
  emphasis on Vitamin D and Calcium
• Other brands performing well
• Yop up 20
• Weight Watchers up 2
• Wildlife down 7

27
Liquid Products

• Supermarket milk sales up 14 by value and 3 by
  volume
• retained as long-term key supplier to Morrisons
• recent launch of Sainsburys 1 fat milk
• Continued focus on operational cost base
• Totnes closed in September 2007
• 7m investment in regional distribution
• centres to lower distribution costs
• Strong second half performance by FRijj with
  sales
• up 11 by value and 1 by volume year on year
• Flavoured milk sales up 32 by value and potted
• cream sales up 20 by value

28
Ingredients

• Dairy ingredients prices fell significantly in H2
  following a very strong H1 market
• Investment in 50 interest in Fayrefield FoodTec
• cash consideration 2.1m
• develops and markets specialist added value food
  and dairy ingredients
• supplier to major food manufacturers throughout
  the UK
• strong emphasis on health
• opportunity to use intellectual property to
  develop Dairy Crests existing brand portfolio

29
Household

• Overall household milk volumes up 14 year on
  year
• benefit of full year inclusion of Express Dairies
  
• non-milk product sales up by 10
• Underlying doorstep net decline below 7
• Express Dairies integration completed
• Price increases achieved across middle ground and
  doorstep businesses without impacting volumes
• Acquired dairy distribution business of East of
  England Co-operative Society in February 2008 for
  4m
• 10 depots operating foodservice and doorstep
  rounds in East Anglia

30
milkmore

• Results continue to be encouraging with
  significant uplift in average spend per customer
• Trials extending beyond the South East
• Focus on improving customer acquisition rates
• Intention to roll out the ability to order and
  pay online to most doorstep customers

31
Milk Purchasing

• Unprecedented upward movement in milk prices in
  2007/08
• worldwide demand for dairy products increasing
• shortages in UK milk production

6.9p
6.6p
0.75p
0.5p

• Further Dairy Crest price increases in 2008/09
• 0.75ppl on Davidstow contracts from 1 May 2008
• 0.5ppl announced on liquids contracts from 1 June
  2008
• continue to be supportive of our farmers

Source Milkprices.com, cheese prices are based
on Davidstow contract
32
Commodity Costs

• Additional inflationary pressure from commodity
  costs
• Between 1 April 2007 and 1 April 2008 market
  prices rose significantly
• vegetable oil (rapeseed) up 95
• diesel up 65
• energy (gas year ahead) up 58
• resin (HDPE) up 18
• High oil price is continuing to put upward
  pressure on commodity costs since year end

33
Recovering Price Inflation

• Actively managing our margins
• price increases achieved in 2007/08 across the
  dairy category
• continue to be implemented to offset further
  price rises
• focus on cost reduction programmes

Source The Grocer/ESA, 26 April 2008
34
Corporate Responsibility

• Packaging
• We are collaborating with WRAP, supermarkets and
  other partners on projects to reduce packaging
  and improve recycling
• the Milk Roadmap launched May 2008
• target of at least 50 recycled in milk packaging
  by 2020
• launched worlds first plastic milk bottle using
  recycled material for Marks Spencer in March
  2007
• Waste
• all our manufacturing sites are targeting
  reductions in weight of waste materials sent to
  landfill
• household depots are committed to separate all
  cardboard and plastics by this summer
• Carbon emissions
• working with Carbon Trust to develop carbon
  reduction plan
• achieved 8 reduction in CO2 manufacturing
  emissions this year

35
Corporate Responsibility - Suppliers

• Environmental effects of dairy farming are
  becoming increasingly high profile
• Desire to reduce environmental footprint of milk
  production
• Working with Sainsburys to implement a scheme to
  firstly measure and then reduce environmental
  footprint
• Environmental Scorecard, Energy Use, Greenhouse
  Gas Emissions Modules

36
Summary and Outlook

• Good full year results
• Key brands are continuing to make good progress
• everyday market leading products
• further focus on development of healthier
  variants
• brand stretch to meet changing consumer
  lifestyles
• Clover on track to recover strongly in 2008/09
• Price increases implemented to offset rises in
  both milk and commodity costs
• Focus on further cost reduction programmes
• Trading at the start of the new financial year is
  in line with our expectations

37
DAIRY CREST GROUP PLC PRELIMINARY RESULTS For
the year ended 31 March 2008