Financial Highlights Highlights of the Group s 2011 financial statements as at 31 March 2011 are as follows:

Particulars Market Capitalisation Enterprise Value PE Ratio Revenue

2011 479m 3.5%) 790m 5.1%) 8.3 1.6bn

2010 (-

Comments

(9.2 This reflects reduced confidence in the Group s future earnings prospects. Marginal fall (1-1.5%) since 2008, reflecting the nature of a competitive, mature market and represents a key commercial risk going forward. Due to cost reduction program.

Operating Profit Operating Margin Asset Turnover Return on Capital Employed Earnings per Share Gearing Ratio

100m 6% 1.94 ( 12%

97m

1.81 10% Primarily due to reclassifying of 65m of long -term debt to short-term (due to maturity) which has led to growth of asset turnover and increase in profit margin . [INSERT COMMENT ON CHANGE FROM 2010] Significant improvement from former five-year trend of over 100%. This reduces risk to the Group in difficult financial times and a reduced requirement for borrowing in a stable market with little opportunities for significant growth.

0.43 (+6%) 85%

) 0.41

1. PROFITABILITY AND ASSET MANAGEMENT ANALYSIS 2011 2010 Comments Sales 1,605m (- 1,630 This has declined largely due to disposal of 50% of the Revenue 1.5%) m) shares of a subsidiary (Wexford Creamery Limited). Total revenue has fallen but volatility is anticipated to be low in this mature market for branded consumable products. Cost of 1,132m 1,152 Reductions are caused largely due to disposal of shares in Sales m subsidiary. Distribution, administrative and remuneration costs have all fallen ( -10m, -2m and -22m, respectively before exceptional items). The cost reduction program has mitigated the full imp act of increasing input prices for milk, vegetable oil, fuel and packaging. Although this trend is likely to continue into 2012, the Group expects to set-off cost initiatives of 2.5%. Operating 100m 6.2% 97m Operating profit has risen due to decreased operating Profit costs, although margin remains stable. 5.9% & Profit Margin Net Profit 58m 53m A marginal increase has resulted from operating profit increases as well as reduction of finance costs and tax expense. Net Profit 3.6% 3.2%) Improvement suggests stability of return. Ratio Non820m These have remained stable but improvement is Current [ ? ] anticipated due to ongoing efficiency projects in the Assets & Spreads and Dairies segments. Fixed Asset Turnover Current (+53m; Increases reflect growth in inventories and the impact of Assets +17%) inflation on costs of raw materials and consumables. Increases in trade receivables largely arise from price growth and foreign currency activity (Euro and USD). This reflects increase in maturing cheese stock and the impact of cost inflation on raw materials and consumables. The increase can lead to The major increase in trade receivables is in US Dollars. This could be attributed to improvements to core supplier contracts introduced by DairyCrest in July 2010. Whilst the improvements will help Dairycrest manage its assets better, it needs to be careful of not gaining reputation of slow payer, resulting in higher prices. It may discourage
Comment [JS1]: I think we should comment on why this is or what it means.

Inventory Turnover Period Receivable Collection Period Payable Payment Period

53 days

49 days 27 days 31 days

29 days

44 days

future farmers leading to negative impact on the business

Amit to do the below figures

Cash Operating Cycle

38 days

44 days

The reduction is positive outcome although partly due to increased payable payment period rather than improving collections. This could be attributable to the strategy to focus on efficiency in a challenging market environment. Ongoing projects and investment program to increase UK spread and dairy segments efficiency will help further in coming years.

Net Asset 1.94 (2010: Turnover 1.81[1.84?])

Total Asset 1.36 Turnover

1.42

Improvements may be anticipated in future as a result of efficiency projects and the Group s investment programme.

Business Segment Analysis

Cheese Segment

Revenue for the segment fell due to sale of shares in a subsidiary. Increased profit margin (13%) and profit/assets ratio (14%) due to price increases. The Group has a 9% UK market share of this segment and going forward this position will be supported by its strong brands. However, opportunities for growth of market share and increasing cheese stocks remain negative factors. Contributes a half of the Group s profit and has maintained a profit margin of 19% but due to low turnover, return on assets is only 11%. Falling consumption and stable market share presents obstacles for revenue growth. Planned consolidation of the Kirkby production site may mitigate increasing marketing expenditure. Assets have increased by 7% as a result of capital expenditures but profit has decreased due to difficult trading conditions and return on assets has fallen from to 7% (2010: 10%).

Spreads Segment

Dairies Segment

2. FINANCIAL STRUCTURE, RISK AND LIQUIDITY ANALYSIS Despite high level of borrowings, liquidity remains stable. The challenge is for the Group to fund investment programs without substantially increasing debt. Ratio Net Debt 2011 312m 8%) Equity 85% (2010 Comments This is continuing to decrease for a fourth consecutive year. 115% The ratio is not alarming but high and falling. A ratio over 1 may indicate a risk of inability to discharge long term borrowings. The decrease arises from increase in shareholder funds, reflecting reduced business risk.

Debt to Ratio

Total Debt Shareholder Funds Ratio

on 1.02

1.32

Short-Term Debt Current Ratio 1.02 1.26

While short-term debt appears to have increased significantly, this is due to a facility maturing in

Quick Ratio

0.56

0.63

November 2011. Notionally, this reduced Current and Quick Ratios. The availability of the July 2013 facility means liquidity is not at risk. Loan covenants specify a maximum Net Debt to EBITDA ratio of 3.5 times and minimum interest cover ratio of 3.0 times. All these covenants remain a reserve to decrease operatining profit by 30 -40m, which the Group can meet at least in the short term.

Loan Covenants

Retirement Benefit Obligations

779m

822m

Net Pension 45m Liability

103m

The net pension deficit of 60.1m has had a significant impact on non -current liabilities and certain ratios . This fell significantly due to actuarial gains and good plan assets management.