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DAIRY CREST GROUP PLC

PRELIMINARY RESULTS For the year ended 31 March 2008

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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

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Financial Review

Alastair Murray

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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

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Income Statement

* Before exceptional items and amortisation of acquired intangibles

£’m Year

March 08

Year

March 07

Change

Profit on operations* 104.5 80.0 + 31%

Finance costs (26.2) (19.2)

Other finance income: pensions 10.1 9.5

Share of JV net profit* 7.7 7.1

Adjusted profit before tax* 96.1 77.4 + 24%

Exceptional items (21.1) (10.1)

Amortisation of acquired intangibles (9.0) (2.7)

Profit before tax 66.0 64.6 + 2%

Taxation (12.5) (11.3)

Discontinued operations 1.2 (4.1)

Group profit after tax 54.7 49.2 + 11%

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Segmental Analysis

£’m YearMarch 08

YearMarch 07

Change%

Revenue

Foods excl JV 499.6 381.3 +31%

Share of JV 66.9 68.5 -2%

Foods 566.5 449.8 +26%

Dairies 1,070.1 928.0 +15%

Total 1,636.6 1,377.8 +19%

Profit on operations *

Foods excl JV 72.9 52.9 +38%

Share of JV (post tax) 7.7 7.1 +8%

Foods 80.6 60.0 +34%

Dairies 31.6 27.1 +17%

Total 112.2 87.1 +29%

* Before exceptional items and amortisation of acquired intangibles

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Operating Margin*

% Year March 08

Year March 07

Foods excl JV 14.6% 13.9%

Foods incl JV (post tax) 14.2% 13.3%

Dairies 3.0% 2.9%

Group 6.9% 6.3%

* Before exceptional items and amortisation of acquired intangibles

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Exceptional Items

£’m Year March 08

  Cash Non Cash

Total

Express Dairies integration (8.6) - (8.6)

Totnes Closure (3.1) (1.7) (4.8)

OFT costs (incl. fees) (0.4) (9.6) (10.0)

Onerous contract (1.5) (2.9) (4.4)

(13.6) (14.2) (27.8)

Westway property profit 6.7 - 6.7

(6.9) (14.2) (21.1)

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Balance Sheet

£’m YearMarch 08

YearMarch 07

Net operating assets 960.1 879.2

Tax (97.6) (85.1)

862.5 794.1

Net debt (474.8) (451.0)

Net assets employed 387.7 343.1

Gearing 122% 131%

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Operating Cash Flow

£’m YearMarch 08

YearMarch 07

Adjusted profit on operations* 104.5 80.0

Depreciation and amortisation** 39.2 40.2

Exceptional items (excl Westway) (13.6) (3.1)

Pensions (11.5) (15.2)

Other*** (2.8) (4.9)

Working capital (7.4) (2.8)

Operating cash flow 108.4 94.2

* Before exceptional items and amortisation of acquired intangibles** Net of grant amortisation*** Operating property profits, share based payments charges and impairment of JV

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Cash Flow£’m Year

March 08Year

March 07

Operating cash flow 108.4 94.2

Capital expenditure (net of grants) (34.0) (36.3)

Interest, tax and dividends (60.4) (49.1)

Dividends received from joint venture 7.3 8.9

Acquisitions of businesses (7.8) (293.3)

Disposal of business and assets 16.2 68.0

Foreign exchange movement (46.2) (2.7)

Equity placing and other (7.3) 39.5

Movement in net debt (23.8) (170.8)

Net debt at 31 March 2007 (451.0)

Net debt at 31 March 2008 (474.8)

FX adjusted net debt (428.6)

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Financing

£m Facility Net Debt Fixed Floating2004 RCF/Term Loan (to June 2009) 275 118 118

2006 RCF (to November 2011) 100* 107* 59 48

Loan notes (to 2013/16) 143 143 143

Loan notes (to 2014/17) 130* 130* 130

Finance Leases (2014 to 2015) 16 16 16

Cash (39) (39)

Total 664 475 348 127

% Fixed / Floating 73% 27%

• Two key financial covenants on bank debt and loan notes- borrowings: Net debt to EBITDA < 3.5x- cover: EBITDA to Net Interest > 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.

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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

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Business Review

Mark Allen

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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

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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

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Strong Brand Performance

Brand Market Market growth* Brand growth†

UK Cheese 7% 23%UK Dairy Spreads 3% 29%UK Dairy Spreads 3% 11%

UK Spreadable Butters 21% 25%

French non butter spreads 0% 17%

Chilled Yogurts and desserts 4% 25%

Chilled Yogurts and desserts 4% 34%

Flavoured Milk 7% 10%Source: †DC sales growth by value, * AC Nielsen or IRI or TNS 52 week MAT value growth to March 2008

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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%

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French Spreads Market Share

Source: IRI (by value)

31.0%

36.1%

51.0%

42.0%

12.8%

15.0%

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

55.0

St Hubert Unilever Lactalis

%

20

5.0

7.0

9.0

11.0

13.0

15.0

17.0

19.0

21.0

23.0

May

-05

Jul-0

5

Sep-0

5

Nov-0

5

Jan-

06

Mar

-06

May

-06

Jul-0

6

Sep-0

6

Nov-0

6

Jan-

07

Mar

-07

May

-07

Jul-0

7

Sep-0

7

Nov-0

7

Jan-

08

Mar

-08

SH Omega 3 Primevère Fruit d'Or FDO Pro Activ Planta Fin SH41 Le Fleurier

St Hubert Omega 3: No.1 Brand

Source: IRI (by value)

20.5%

15.0%

13.7%

12.2%

11.6%

7.7%

6.1%

%

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• 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)

UK Dairy Spreads

22

25

30

35

40

45

50

55

60

65

70

Oct-02

Mar-03

Aug-03Jan-04

Jun-04

Nov-04Apr-0

5

Sep-05Feb-06

Jul-06

Dec-06May-07

Oct-07

Mar-08

Clover (DC) ICBINB (Unilever) Utterly Butterly (DC)

Leading Dairy Spreads

£59.0m

£58.5m

£30.6m

£58.0m

£38.0m

£43.0m£m

Source: AC Nielsen, March 2008

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• 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

Country Life

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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 Nielsen’s 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

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85.0

90.0

95.0

100.0

105.0

110.0

115.0

Cheese Stocks

British Cheese Board cheddar stocks12 month moving average

K tonnes

• Industry cheddar stocks have tightened through 2007/08

- March stock levels down 8% on prior year

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• Overall Yoplait brand sales up 9% by volume and 11% by value

- outperformed the market

- increased market share of children’s 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%

Yoplait Dairy Crest

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Liquid Products

• Supermarket milk sales up 14% by value and 3% by volume - retained as long-term key supplier to Morrisons- recent launch of Sainsbury’s 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 salesup 11% by value and 1% by volume year on year

• Flavoured milk sales up 32% by value and pottedcream sales up 20% by value

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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 Crest’s existing brand portfolio

                                              

    

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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

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milk&more

• 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

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• 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

Milk Purchasing

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

Source: Milkprices.com, cheese prices are based on Davidstow contract

Dairy Crest

Contracts

Liquid

ppl*

Cheese

ppl*

April 2007 18.5p 18.7p

March 2008 25.4p 25.3p

May 2008 26.1p

June 2008 25.9p

+ 6.9p + 6.6p

+ 0.5p+ 0.75p

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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

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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

PRODUCT CATEGORY

% Price Increase

DAIRY +13.4%Frozen +10.4%

Bakery +10.0%

Liquor +9.8%

Meat, fish and poultry +4.9%

Soft drinks +4.5%

Average +4.4%Fruit and veg +3.8%

Deli products +2.7%

Dry grocery +2.3%

Biscuits, confectionery and snacks +1.0%

Household -2.3%

Health and Beauty -6.7%

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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 world’s 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

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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

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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

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DAIRY CREST GROUP PLC

PRELIMINARY RESULTS For the year ended 31 March 2008