Interim Results

1
Interim Results For Period Ended 1 October 2005
2
Contents

• Key Points
• Operating Review
• Financial Results
• Office of Fair Trading
• Summary and Outlook

3
Key Points

• Increased Sainsbury/Tesco business integrated
• Volumes up 13.2 to 687 million litres
• Turnover up 14.7 to 281.3 million
• Operating profit down 17.6 to 12.5 million
• Underlying pre tax profit down 18.9 to 12.1
  million
• Underlying earnings per share up 16.5 to 11.35 p
• Dividend up 9.1 to 2.40 pence per share

4
Operating Review
5
Sales

• Volumes up 13.2 to 687 million litres
• New Tesco stores commenced in April
• New Sainsbury stores commenced in January
• Own label deliveries to Morrisons ceased October
• Lower volumes in second half
• Stability in supermarket contracts short term

6
Sales (continued)

• Additional pot cream business with Tesco
• Small volume gain from Longslow closure in
  Manchester
• Scottish Milk acquisition not pursued
• Bulk cream prices declining
• Steady progress with sales of the One
• Successful launch of Pure product for Tesco

7
Tesco Pure Sales
Represents sales of Pure since launch, with first
weeks sales indexed to 100
8
Existing Dairies

• All dairies at record levels in six months
• Over 450 million litres processed in England
• With Morrisons loss employee numbers reduced by
  83, of which 33 were made redundant, at a cost of
  0.2 million
• Plastic costs increased 30 in the last month
• As a result costs could increase by 2.2 million
  this year
• Energy costs increased circa 50 for next year
• Increases costs by over 1.0 million per annum

9
Volumes Processed
- Represents volumes processed in first half
annualised - Represents impact of ceasing
Morrison deliveries
10
New Dairy

• Heads of Terms agreed re land for new dairy
• Construction to commence in Spring of New Year
• Total cost of 30 million
• Initial capacity of 200 million litres per annum
  with capability of 300 million litres per annum

11
Distribution

• Working Time Directive now fully implemented
• Diesel costs at a record high
• With Morrisons loss employee numbers reduced by
  49, none of which were made redundant
• Northampton depot to be operational this month

12
Facilities
New Depot
New Dual Production/Distribution Site
13
Milk Procurement

• Increased raw milk prices by 1 p per litre in
  early 2005
• Subsequently reduced by 0.6 p per litre during
  the period
• Pay significant premium over major competitors
• Unlikely that we can maintain premium

14
Milk Prices - Per Litre
- Relates to standard litre prices produced by
Milk Development Council and Milkprices.com
15
Financial Results
16
Financial Reporting

• International Financial Reporting Standards
  (IFRS) effective this year
• Restated 2005 comparatives for 2006 results
• Impact of adopting IFRS on profit before tax,
  excluding goodwill, estimated to be a 0.5
  million decrease in the current year (0.2
  million in previous year)

17
Underlying Profit and Loss
Reported results adjusted to eliminate impact
of non-recurring tax credit in 2004/2005
18
Operating Costs
19
Balance Sheet
20
Capital Expenditure
21
Cash Flow Review
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Office of Fair Trading

• Appeal concluded September 2005 re Chapter II
• OFT not required to reopen case
• Issue of costs award to be finalised
• Chapter I Inquiry re Scottish processors reopened
  in August 2003 remains unresolved
• Providing information re a Chapter I Inquiry into
  past Retail Price Initiatives

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Summary and Outlook

• Record volume and turnover
• Stability in supermarket contracts short term
• Margins affected by contract changes and cost
  increases
• Look to recover margins in second half
• Keeping raw milk prices under review
• Northampton depot to be operational on schedule
• Final stages of acquiring land for new dairy
• Business in good shape and remain confident for
  long term

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Interim Results For Period Ended 1 October 2005