Dairy Crest Group plc Annual Report 2005
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Dairy Crest Group plc
Annual Report 2005
Dairy Crest Group plc
Claygate House
Littleworth Road
Esher
Surrey KT10 9PN
Company No: 3162897
Visit our website at www.dairycrest.co.uk
4561_DC_cover AW_4_Lores  13/6/05  9:17 AM  Page 4 Dairy Crest is the UK’s leading chilled dairy foods
company. The Group’s strategy continues to be to focus
on the development of profitable branded and added
value dairy products and to invest in low cost operations
to maintain competitive advantage. Our aim is to deliver
excellent value to all our stakeholders.
leading 
brands
Number one in the dairy 
spreads sector 
Number one in the mature
cheddar sector 
Number one in the 
children’s chilled yogurts 
and desserts  sector
Number one in the fresh
flavoured milk drinks sector Contents
2 Highlights of the year
3 Chairman’s statement
4 Chief Executive’s review
6 Operational review
6 Spreads
8 Cheese
11 Fresh dairy products
12 Liquid products
14 Household
14 Ingredients
15 Milk purchasing
16 A responsible company
18 Financial review
21 Directors and Advisers
22 Corporate governance 
26 Report of the Board on directors’ remuneration
33 Directors’ report
34 Statement of directors’ responsibilities
35 Consolidated profit and loss account and 
Statement of Group total recognised gains and losses
36 Balance sheets
37 Consolidated cash flow statement
38 Accounting policies
40 Notes to the financial statements
55 Independent auditors’ report
56 Group financial history
57 Shareholders’ information
58 Notice of Ninth Annual General Meeting
4561_DC_pp ifc-7  1/6/05  5:06 PM  Page ifc1 4561_DC_pp ifc-7  13/6/05  9:56 AM  Page 1 2 Dairy Crest Annual Report 2005
of    
year and recent
developments
• Turnover (including share of joint ventures) down 1% to £1,349 million  (2004 – £1,362 million)
• Profit before tax up 46% to £66.7 million (2004 – £45.6 million)
• Adjusted profit before tax (before exceptional items and goodwill amortisation) down 1% to £84.2 million (2004 – £85.1 million)
• Earnings per share up 36% to 38.2 pence (2004 – 28.1 pence)
• Adjusted earnings per share (before exceptional items and goodwill amortisation) down 1% to 49.3 pence (2004 – 50.0 pence)
• Year-end net debt £228 million (2004 – £280 million)
• Strong cash generation resulting in £52 million reduction in year-end net debt
• Total dividend for the year up 7% to 20.2 pence (2004 – 18.9 pence)
• Encouraging progress from brand portfolio with particularly strong performance from Cathedral City
• Acquired 100% ownership of Country Life brand with new marketing campaign planned
• Own label cheese contract gains with ASDA and Morrisons
• Own label fresh milk supply gains with Morrisons and Sainsbury’s following loss of other retail business
• Strategic acquisitions of Midlands Co-op Dairies and Starcross Foods to strengthen Dairies business
• Launch of ‘St Ivel advance’ – an innovative branded fresh milk enriched with Omega-3 
35.4
45.2
46.4
50.0
49.3
14.1
15.2
16.4
18.9
20.2
1,307.1 785.5 521.6
1,366.7 841.6 525.1
1,326.1 814.8 511.3
1,361.8 880.3 481.5
1,348.8 887.3 461.5
73.8 40.8 33.0
93.0 63.0 30.0
97.5 62.4 35.1
104.8 72.2 32.6
100.6 72.0 28.6
Turnover (£m)
(including share of 
joint ventures)
01 02 03 04 05
Operating profit (£m)
(excluding operating 
exceptional items and 
goodwill amortisation)
01 02 03 04 05
Adjusted earnings 
per share (pence)
(excluding exceptional 
items and goodwill 
amortisation)
01 02 03 04 05
Dividend per share 
(pence)
01 02 03 04 05
Food Services
Consumer Foods
4561_DC_pp ifc-7  1/6/05  5:48 PM  Page 2 Dairy Crest Annual Report 2005 3
Dairy Crest has delivered a solid
performance in the year ended March
2005 despite the competitive retail
environment with reported adjusted profit
before taxation of £84.2 million on
turnover of £1.35 billion and adjusted
earnings per share of 49.3 pence. 
The Group’s strategy continues to be
to focus on the development of profitable
branded and added value dairy products
and to invest in low cost operations to
maintain competitive advantage. Our
Foods business has made good
progress benefiting from an encouraging
performance across our portfolio of
brands. The year has seen
unprecedented changes to the supply 
of fresh milk to the major UK food
retailers resulting in a significant impact
on the future profitability of our Dairies
business. We have taken actions to
strengthen the strategic position of our
Dairies business which leave us well
placed to improve its future performance
albeit from a lower base.
The UK dairy industry must continue
to take account of the potential impact of
the Common Agricultural Policy (CAP)
reforms that are currently being
implemented. We are active through
Dairy UK and other industry bodies in
promoting the long-term future of the UK
dairy industry. We have also
strengthened our working relationship
with Dairy Crest Direct, our direct milk
supply association, which supplies over
two thirds of our milk volumes, as we
believe that this is beneficial both to the
Group and our milk producers in
planning for the future. 
The Board is recommending an
increase in the final dividend of 7% to
14.3 pence per share. This together with
the interim dividend of 5.9 pence makes
a total dividend for the year of 
20.2 pence per share, an increase of
7%. The Board remains committed to a
progressive dividend policy. 
Board changes
As already announced, Paul Lewis will
retire as a non-executive director at the
Annual General Meeting in July after
almost 9 years service, having previously
served for 3 years as a non-executive
director of Dairy Crest Limited. I should
like to thank Paul for his valuable counsel
during his years on the Board,
particularly since the Group’s flotation in
1996. I am pleased to welcome David
Richardson, previously Finance Director
of Whitbread PLC, who joined the Dairy
Crest Board as a non-executive director
in December 2004. I am sure that the
Board will benefit from his extensive
experience in finance and in consumer
facing industries. 
Simon Oliver, Chairman
24 May 2005
Chairman’s statement
Simon Oliver
Chairman
“Dairy Crest has delivered a solid
performance in the year ended
March 2005 despite the competitive
retail environment”
4561_DC_pp ifc-7_lores  13/6/05  10:18 AM  Page 3 4 Dairy Crest Annual Report 2005
Overview
Dairy Crest has traded well in the year
and continues to be strongly cash
generative. We have increased
investment in our branded and added
value businesses, which have again
made encouraging progress. It has been
a particularly challenging year in fresh
milk with unprecedented changes in
supply arrangements by major food
retailers. Whilst these changes will
adversely impact the Group in 2005/06
we have taken actions to strengthen the
Dairies business for the future. 
Financial results
Group turnover (including our share of
joint ventures’ turnover) was £1.35 billion
(2004 – £1.36 billion). Group operating
profit, before operating exceptional items
and goodwill amortisation, decreased to
£100.6 million (2004 – £104.8 million)
after absorbing increased pension costs
of approximately £4.3 million. Adjusted
profit before tax was down slightly at
£84.2 million (2004 – £85.1 million). After
taking account of £13.1 million of goodwill
amortisation and £4.4 million (2004 –
£27.3 million) of net exceptional charges,
profit before tax was up 46% at £66.7
million (2004 – £45.6 million). Adjusted
earnings per share decreased to 49.3
pence per share (2004 – 50.0 pence).
Group net debt as at 31 March 
2005 was £52.2 million lower at 
£227.5 million (2004 – £279.7 million)
reflecting the Group’s strong operational
cash generation.
Investing in brand development
We continue to focus on innovation with
a number of new product development
initiatives being launched. The key area
of recent activity has been our entry into
the growing market for ‘functional’
products within the dairy category. We
have just launched ‘St. Ivel advance’, a
branded fresh milk enriched with
Omega-3. A number of studies have
shown that Omega-3 may have learning
and concentration benefits for some
children as well as being good for the
heart. This functional product gives us a
position in the growing branded fresh
milk market and is expected to appeal,
in particular, to parents with young
children. Elsewhere we have continued
to extend the range of Cathedral City
with new formats focused on
convenience such as Cathedral City
Grated. We have also extended our
‘Health’ offering in spreads with the
launch of Gold Lowest, the lowest fat
branded spread in the UK market.
Yoplait Dairy Crest has also launched  a
yogurt under the Petits Filous brand
aimed at extending the brand’s usage by
older children. 
The Group puts strong emphasis on
a continuous programme of cost
reduction which not only ensures that we
remain competitive in the market place,
but also supports increasing levels of
marketing spend. Over the last three
years this marketing investment has
strengthened the position of our key
brands. Increasingly, marketing spend
Chief Executive’s review
Drummond Hall
Chief Executive
“We have increased investment 
in our branded and added value
businesses, which have again 
made encouraging progress”
4561_DC_pp ifc-7_lores  13/6/05  10:26 AM  Page 4 Dairy Crest Annual Report 2005 5
“Our results have been achieved
through the skills and efforts 
of all our people, in whom we 
will continue to invest”
has moved from promotional activity to
media investment with our brands
Clover, Utterly Butterly, St Ivel Gold and
Cathedral City as well as the Yoplait
brands all being advertised on television
during the year. Cathedral City, our
market leading branded cheddar, has
had a particularly strong year with value
growth well over 20%. The brand is now
worth approximately £90 million at retail
value. The acquisition of 100%
ownership of the Country Life brand
during the year represents a significant
opportunity for us to accelerate the
development of this brand, particularly in
the fast growing spreadable butter
category. We will be supporting Country
Life with a significant television
advertising campaign in late summer. 
Retail milk strategic developments
In a challenging market we have taken
action to strengthen the Dairies
business. In May 2005 we announced
the acquisitions of both Midlands Co-op
Dairies and Starcross Foods Limited.
Midlands Co-op Dairies is the largest
regional dairy operator in the UK. It
processes approximately 200 million
litres of milk per annum at its dairy in
Birmingham and distributes milk, via 16
distribution centres to a range of retail,
wholesale and doorstep customers
across the Midlands. Starcross is a
modern dairy in Foston, Derbyshire,
opened in May 2002 with current
capacity to process up to 100 million
litres of milk per annum. Starcross will
significantly extend our existing
geographical footprint across England
and Wales to cover most of the major
northern conurbations. These two
acquisitions will strengthen our
competitive position, improve the
profitability of the Dairies business and
better align our operations to our major
customers’ requirements.
The last 12 months have seen an
unprecedented period of change in fresh
milk supply arrangements by major food
retailers. By October 2005 Dairy Crest will
be supplying approximately 50% of fresh
milk volumes to both Sainsbury’s and
Morrisons. In addition, we have retained
our sole supply positions with Waitrose
and Marks & Spencer. However, as
previously announced, we have lost our
fresh milk supply positions to both Tesco
and ASDA. Overall, taking into account
these changes and the volume gained
through the Midlands Co-op Dairies
acquisition, we expect to increase fresh
milk volumes in our Dairies business.
New organisational structure
A new organisational structure was put
in place from 1 November 2004. The
previous five business units were
consolidated into two operating
divisions: Foods, comprising spreads
and cheese, headed by Peter Thornton,
who also retains responsibility for Yoplait
Dairy Crest, and Dairies, comprising
liquid products, household and
ingredients and headed by Mark Allen.
The restructuring streamlined the roles
and responsibilities of the senior
management team, reduced duplication
between the business units and our
overhead costs. This cost saving has
helped to offset the higher energy and
packaging costs that have been
experienced across the industry. 
People
Our people have responded particularly
well to the challenges of the last 12
months. Our results have been achieved
through the skills and efforts of all our
people, in whom we continue to invest.
During the year we have significantly
increased our investment in sales and
marketing training in particular. We
continue to make progress in improving
our communication and engagement
with our workforce. 
Outlook
We have continued to invest in the 
long-term development of our brands
and we have made sound strategic
moves to strengthen our Dairies
business for the future. Trading at the
start of the new financial year is in line
with our expectations.
Drummond Hall, Chief Executive
24 May 2005
4561_DC_pp ifc-7  31/5/05  7:32 AM  Page 5 6 Dairy Crest Annual Report 2005
A strong branded position in the
UK spreads and butter market
Market share by volume
Dairy Crest 24%
     Unilever 34%
Arla 17%
Own label
       19%
Other 6%
Source: AC Nielsen 52 w/e 16 April 2005
Market share of taste sector
by volume
Dairy Crest 34%
Unilever 10%
Arla 29%
Own label
         20%
Other 7%
Market share of health sector
by volume
Dairy Crest 11%
Unilever 68%
Own label
       15%
Other 6%
Spreads 
The spreads business, the Group’s
biggest profit centre, has continued to
make good progress with increased
profitability during the year. The butter
and spreads market grew by 3% in value
to approximately £845 million but
declined by 1% in volume. The growth in
value reflects the impact of price
increases achieved across the market
last summer and the general trend
towards higher value products such as
spreadable butter. As expected volumes
were impacted by the retailer moves
towards ‘Every Day Low Pricing’ which
has reduced the opportunity for
promotional activity. 
Against this market background, our
spreads business has made progress
due to a successful portfolio approach
towards managing the brands and the
increased marketing expenditure
primarily directed at additional
investment in media. Our market-leading
dairy spreads brands Clover and Utterly
Butterly were supported by television
advertising campaigns. Whilst the dairy
spreads category showed slight decline
in both volume and value both Clover
and Utterly Butterly delivered sales value
growth of 2% and 1% respectively
despite a small decline in volumes. 
In September 2004 we acquired
100% ownership of the Country Life
brand through the acquisition of the 44%
minority interests in the English Butter
Marketing Company for a consideration
of £4.6 million. Country Life packet
butter and spreadable have performed
strongly achieving sales value growth of
26% and 27% respectively. Whilst
Country Life has a strong and growing
market share in packet butter, it is
relatively small in spreadable. This is a
real opportunity for growth with the
spreadable butter segment up by 10% in
value in the year. We will be supporting
the Country Life brand this summer with
a major new marketing campaign.
Our health spread St. Ivel Gold has
continued to make progress following its
relaunch in the autumn of 2003 and we
are seeing continued good underlying
‘off promotion’ growth. In January we
launched Gold Lowest, the lowest fat
branded spread on the market and so
far performance has been encouraging.
Operational review This operational review reflects the reporting divisions of Consumer Foods and Food Services
in line with the segmental reporting analysis of these results
Consumer Foods The Consumer Foods division comprises the spreads, cheese and liquid
products businesses, including our share of the Yoplait Dairy Crest joint venture. Turnover
increased to £887.3 million (2004 – £880.3 million). Operating profit, before operating
exceptional items and goodwill amortisation, was flat at £72.0 million (2004 - £72.2 million)
with operating margin down from 8.2% to 8.1% reflecting the competitive environment and
cost inflation in retail milk.
4561_DC_pp ifc-7_lores  13/6/05  10:30 AM  Page 6 mum
knows best
As mums know, unlike any other dairy spread, Clover is traditionally
churned using fresh buttermilk, which is why the families who buy Clover
tell us that it’s the best tasting dairy spread on the fridge shelves. Clover is
the UK’s favourite dairy spread and enjoyed in over 5 million homes
throughout the country.
4561_DC_pp ifc-7  13/6/05  9:39 AM  Page 7 8 Dairy Crest Annual Report 2005
Comparison of sectors 
of cheddar market by value (£m)
04 05 04 05 04 05 04 05
180 181
104 100
347
375
129 132
+0.6%
-3.8%
+8.1%
+2.3%
Source: TNS Superpanel 52 w/e 24 April 2005
Mild Medium Mature Extra  
mature
Analysis of cheddar 
market by volume
Mild 27%
    Medium 
11%
Mature 37%
Extra
mature   
13%   
Other 12%
Anchor 5%
Pilgrims 
Choice 14%
Other 34%
  
Share of the UK branded 
cheddar market by volume
      Seriously 
Strong 15%
  Davidstow 
7%
Cathedral 
       City 25%
Operational review – Consumer foods
Cheese
The UK cheese market grew by 1% in
volume and 4% in value during the year
and is now worth over £1.8 billion. The
mature and extra mature cheddar
segment was the strongest performing of
the market, growing by 5% in both
volume and value. Having risen in the
second half of 2003/04 market prices
remained stable throughout the year
reflecting the lower levels of industry
cheese stocks. Up to the end of March
2005, on a seasonally adjusted basis,
we saw 29 successive months of decline
in industry stocks. Dairy Crest
significantly reduced its own cheese
stocks during the year by approximately
11% or £18 million.
Cathedral City had another year of
strong growth, with both volume and
value up by over 20%, reinforcing its
position as the UK’s leading branded
cheddar. The brand is now worth
approximately £90 million at retail prices.
We have again increased the level of
marketing and promotional support
behind the brand with new television
advertising. In addition we have
extended the range with the launches of
Cathedral City in grated form, a second
version of Dip & Go! and a new ‘Lunch
Pack’ format.
The Davidstow sub-brand also
performed well with sales value growth
of 8%. The new creamery at Davidstow
was successfully commissioned last
summer. The cheddar now being
manufactured at Davidstow has met all
of our high quality and taste criteria. The
investment has increased capacity from
33,000 tonnes to 55,000 tonnes per
annum and this will support future
growth of Cathedral City.
The retailer own brand cheese
market remained extremely competitive.
However, we were pleased to win a
major agreement to supply ASDA with all
of its own label cheddar and other British
cheeses. These arrangements
commence in June 2005 and cover an
annual volume of around 30,000 tonnes
which will be made for ASDA at our
creamery in Aspatria. The new
arrangements will underpin the long-term
future of this creamery and of our
supplying dairy farmers in Cumbria.
We were also pleased recently to win
a significant new agreement to supply
the majority of own label cheddar to
Morrisons which will increase our
annualised volume by approximately
8,000 tonnes. This volume will be
supplied principally from the
Haverfordwest creamery.
As a result of these business wins we
will increase our cheese stocks.
We are continuing to discuss cost
related cheese price increases with our
customers. However we remain cautious
over market prices in the medium-term
in the context of the continued reduction
in intervention prices under the European
Union CAP reform.
4561_DC_pp 8-13  13/6/05  9:57 AM  Page 8 Not only dad but the whole family enjoy
Cathedral City's mature yet mellow taste.
As well as being the perfect everyday cheese
it is ideal for special occasions with family
and friends. Everyone loves the special taste
of Cathedral City – a family favourite.
dad’s favourite
4561_DC_pp 8-13  13/6/05  9:43 AM  Page 9 10 Dairy Crest Annual Report 2005
Operational review – Consumer foods
goodness for 
the growing 
generation
4561_DC_pp 8-13  13/6/05  9:45 AM  Page 10 Dairy Crest Annual Report 2005 11
Fresh dairy products
The chilled yogurts and desserts market
has again been a strong area of growth
in the dairy sector with volumes up by
8% and value up by over 10%. The
market is now worth nearly £1.7 billion
per annum.
Our Yoplait Dairy Crest joint venture
has continued to make good progress.
The Yoplait Dairy Crest brands are now
worth approximately £170 million at retail
value and have delivered double-digit
sales growth. All the key brands have
performed well with Petits Filous up 14%,
Frubes up 11%, Wildlife up 21%, YOP 
up 35% and Weight Watchers up 14%
by value during the year. Yoplait Dairy
Crest has continued to grow market
share in a very competitive market.
Yoplait Dairy Crest has recently
extended its market leading Petits Filous
brand with a smooth fruity yogurt. This is
aimed at widening the brand’s usage
amongst older children thereby reinforcing
Yoplait’s number one position in the
important children’s sector. The launch is
being supported by a new television
campaign during May and June 2005.
During the year the performance of
the brands continued to be somewhat
offset by the difficulties in retailer own
brand yogurts and desserts where
markets remained challenging.
Consequently, Yoplait Dairy Crest
decided to focus its future development
on branded products and, as previously
announced, both the Enfield and Yeovil
sites are expected to close by the end 
of June 2005. These actions will 
improve Yoplait Dairy Crest’s profitability
in 2005/06.
Share of children’s chilled yogurts 
and desserts market by volume
Yoplait Dairy 
 Crest 44%
  
Uniq 3%
Nestle 30%
Muller 11%
Other 12%
Share of chilled yogurts and 
desserts market by volume
Yoplait Dairy Crest 9%
ROB 27%
Nestle 
9%
Muller 31%
Other 24%
Source: Information Resources 52 w/e 16 April 2005
Petits Filous means little rascals in French and, for generations,
French mothers have been feeding their rascals with tiny pots
of Petits Filous. The little pots are just the right size for small
hands and the delicious, creamy taste makes them perfect for
the whole family, as mums and grandmas know.
4561_DC_pp 8-13_Lores  13/6/05  10:33 AM  Page 11 12 Dairy Crest Annual Report 2005
Operational review – Consumer foods
Liquid products
The retail milk market continued to grow
during the year with volumes up by
almost 2%. The retail milk market is now
worth over £2 billion per annum. Whilst
our overall fresh milk volumes to major
retailers were up 5% year on year,
profitability in our liquid products business
was impacted by the competitive retail
environment and higher fuel and plastics
costs, particularly in the second half.
During the financial year major food
retailers reviewed their milk supply
arrangements. We were pleased to
increase our share of Sainsbury’s volume
to approximately 50% and to maintain our
sole supply positions with Waitrose and
Marks & Spencer. We will increase our
share of Morrisons fresh milk supply from
approximately 30% to approximately 50%
from October 2005. However we lost our
supply positions with both ASDA and
Tesco with effect from November 2004
and April 2005 respectively.
We recently announced the
acquisitions of both Starcross Foods
Limited for £16.9 million and Midlands
Co-op Dairies for £20 million. Starcross is
an advanced modern facility, capable of
processing up to 100 million litres of milk
per annum. This will significantly extend
our geographical footprint across England
and Wales to cover most of the major
northern conurbations. Midlands Co-op
Dairies processes approximately 200
million litres of milk per annum and
distributes fresh milk to a range of retail,
wholesale and doorstep customers
across the Midlands region. This business
will be consolidated into Dairy Crest’s
existing dairy operations and it is
anticipated that the Midlands Co-op
Birmingham dairy will be closed in due
course. Milk processing will be transferred
to Dairy Crest’s existing dairies including
the Starcross site. The acquisitions of
thirst
Midlands Co-op Dairies and Starcross
Foods and the recent business wins are
expected to have a broadly neutral effect
on earnings in the financial year 2005/06
and benefit group profitability by
approximately £4 million per annum
thereafter. These acquisitions better align
our business to customers’ requirements
and have strengthened Dairy Crest’s
competitive position.
The business achieved price increases
on fresh milk sales in March and April
2005. A significant element of this price
increase was used to increase the price
we pay to our milk suppliers, whose costs
have increased during the year. On
average, taking into account customer
specific milk pools, Dairy Crest had
increased its prices for its liquid milk by
0.75 pence per litre by April 2005.
We continue to work towards adding
value to fresh milk in a number of ways.
The organic milk business made good
progress, benefiting from a strong market
and the continued improvement in
managing the demand and supply
balance. Retailer own label organic milk
sales value grew by 38% and the 
Rachel’s organic milk brand (under licence
from Horizon Organic Dairies) sales value
grew by 22%.
Frijj, our flavoured fresh milk drink, has
maintained its position as the leading
brand in the flavoured fresh milk sector
with sales up 1% by value. We have
improved our added value mix of potted
cream business even though overall
volumes are slightly down. Our potted
cream business will benefit in the current
financial year from the completion of the
investment in a new speciality cream
facility at our Chard site. In May 2005 
we launched ‘St. Ivel advance’, a new
branded fresh milk enriched with
Omega-3.
4561_DC_pp 8-13  13/6/05  9:58 AM  Page 12 Dairy Crest Annual Report 2005 13
For whatever they want to be, St. Ivel advance is fresh milk enriched with
Omega-3 to feed their bodies and minds. Studies have shown that Omega-3
may enhance learning and concentration in some people.
for 
knowledge
4561_DC_pp 8-13  13/6/05  9:59 AM  Page 13 14 Dairy Crest Annual Report 2005
The Food Services division comprises Dairy Crest’s household and ingredients operations.
Turnover decreased by 4% to £461.5 million (2004 - £481.5 million), reflecting the
downsizing of our commodity ingredients business in 2003/04. Operating profit, before
operating exceptional items and goodwill amortisation, decreased by 12% to £28.6 million
(2004 - £32.6 million), reflecting the ongoing decline in our household business, partially
offset by a good performance from our ingredients operations. The Food Services margin
decreased from 6.8% to 6.2%.
Operational review
100 depots
100 depots
2,200 milk rounds
1,000,000 households
Dairy Crest milkmen now deliver
freshly picked and packed
organic fruit and vegetables to
our customers’ doors.
Household
The household business has performed
well with an overall increase in volumes
following business gains with
wholesalers and smaller retailers. As a
result, together with a doorstep price
increase of one penny per pint from
October 2004, overall turnover for the
household business was slightly up. Our
increased canvassing activity and ‘first
class service’ initiatives have helped
reduce the underlying annual decline rate
in doorstep, which is now at around 8%.   
An area of focus during the year has
been on non-milk products such as
juice, organic fruit and vegetables. Non-
milk product sales on the doorstep grew
by over 8% year on year despite the
underlying decline in doorstep
customers. We again had a successful
Christmas which is a key trading period
for non-milk products.
We have continued the successful
programme of infill acquisitions. We
expect that doorstep operations will
benefit from the acquisition of Midlands
Co-op Dairies which has a sizeable
doorstep business with 16 distribution
depots across the Midlands region. 
This will provide an extended network
increasing the opportunity for future 
infill acquisitions.
Ingredients
Ingredients markets have remained
relatively strong for most of the year
leading to a good performance. The
impact of the initial implementation of CAP
reform was delayed until the last quarter of
the year. We expect CAP reform to have
greater influence in 2005/06 through
reduced commodity prices. A further
reduction in intervention prices of 7% on
butter and 5% on skimmed milk powder
will take place in July 2005.
4561_DC_pp 14-15_lores  13/6/05  10:06 AM  Page 14 Dairy Crest Annual Report 2005 15
Milk purchasing Dairy Crest is one of the UK’s largest
purchasers of milk, buying approximately 2.2 billion litres
of milk each year. A consistent source of high quality,
farm assured British milk is critical to our business
success and Dairy Crest recognises the vital role that
dairy farmers play in the milk supply chain.
Main photograph: David and Jane Homer of
Chisbury Lane Farm near Marlborough, with
Direct Supply Manager, Chris Mayo.
Top centre: Sue Webb, Dairy Crest Direct
Forum Chairman, at Upper Ley Farm,
Westbury-on-Severn in Gloucestershire.
Bottom right: Heather Jenkins and Natalie
Mitchell from Waitrose with John
Pennington at Treore Farm, Cornwall.
We buy milk from 1,400 British dairy
farmers who supply us directly, as well as
from First Milk, one of UK’s leading milk
co-operatives. We would like farmers to
feel proud that the milk they supply to us
is used to make our brands and products
and our aim is to be the industry’s milk
purchaser of choice.
The dairy industry continues to face a
number of challenges, including reform of
the Common Agricultural Policy which
began in July 2004. We believe that
working in partnership with our farmers
will help to deliver a sustainable, 
long-term future for the industry, built on
driving efficiencies through the supply
chain and growing the proportion of
added value dairy products in the UK.
We have established added value,
segregated milk pools in recent years
which are a good example of what can
be achieved when farmers and
processors work together towards
common goals.
Good relationships with our farmers
are important if we are to achieve these
objectives. A dedicated team of Direct
Supply Managers, supported by a farmer
helpdesk, works closely with farmers on
an individual basis, assisting with
operational and milk quality issues and
ensuring that the requirements of the
industry farm assurance scheme are met.
May 2004 saw the launch of Dairy
Crest Direct (DCD), the farmer
organisation representing the great
majority of our direct suppliers, which we
have encouraged and supported. DCD
has a voice at all levels within the
company and has already made
significant progress in achieving its
objective to represent and inform direct
suppliers, as well as strengthening
relationships with both the company and
our customers. We will continue to work
with DCD and our other milk suppliers to
make sure that the needs of both farmers
and Dairy Crest are reflected in our
decisions.
We also believe that Dairy Crest has a
role to perform in improving trust within
the dairy industry and we are committed
to regular, transparent communication
with farmers, customers, industry bodies
and government. We also play an active
part in Dairy UK, the body which brings
together all elements of the dairy industry
for the first time.
4561_DC_pp 14-15_lores  13/6/05  10:06 AM  Page 15 16 Dairy Crest Annual Report 2005
Dairy Crest’s Chief Executive has overall
responsibility for performance for
Corporate Social Responsibility (CSR),
which is monitored by regular reporting
to the Board. The Company has
established a CSR steering group which
brings together senior managers with
specific CSR responsibilities to review
our activities and assess the needs of
our stakeholders. 
In the last financial year we joined
Business in the Community (BITC).
Membership of BITC is proving
enormously valuable and has provided us
with a robust CSR framework, which we
are using as a benchmark for evaluating
Dairy Crest’s current activities. This is an
ongoing exercise but this year for the first
time we are using BITC’s framework to
report on our policy and practice.
Environment
We recognise that food production
potentially has numerous impacts on the
environment and attach great
importance to protecting the
environments local to our sites. For the
first time since 1998, we have been
prosecuted for a breach of environmental
legislation, after an incident which
occurred at Davidstow in February 2004,
during the construction of our new
creamery. Steps have been taken 
to prevent a repeat of this relatively 
minor incident.
All our manufacturing sites continue
to maintain accreditation to ISO 14001
and our national distribution centre at
Nuneaton has achieved this standard 
in the last year. Our sites are
independently audited by Lloyds Register
Quality Assurance.
Our sites set targets annually to
improve environmental performance and
this year we have reduced effluent
discharged, per litre of milk processed,
by 13%. All milk processing sites are set
to be issued with Integrated Pollution
Prevention and Control (IPPC) permits in
the coming year.
Marketplace
Food and its relationship with health is
an issue which increasingly concerns
consumers and we are committed to
producing food and drink to the highest
standards of safety, quality and hygiene
in line with our Good Manufacturing
Practice. Each manufacturing site is
audited annually by a third party against
the British Retail Consortium Technical
Standard. This year all sites have once
again achieved accreditation at the
higher level.
We have a short supply chain,
enabling close relationships with the
1,400 British dairy farmers who supply
us directly, as well as supplying dairy co-
operatives. The Dairy Crest Assurance
Scheme ensures the delivery of top
quality milk, produced to high standards
of food safety, animal welfare and
protection of the environment. Dairy
Crest provides a subsidised support
package, through the independent White
Gold Service, to enable direct supplying
farmers to maintain Farm Assurance
standards with the minimum of
disruption and cost.
At Dairy Crest we recognise the
important relationship between a
balanced diet, lifestyle and health. We
fully support the Department of Health’s
Food & Health Action Plan goals of
reducing salt, fat and added sugar in
products where appropriate, without
compromising on food safety, nutrition,
quality or taste. We are also committed
to providing full nutritional information on
all of our product labels, which will
include fat, sugar and salt per portion as
a percentage of the recommended daily
allowance (RDA), where space allows.
We have updated our ethical trading
policy in the last year to maintain good
working practices in social and ethical
matters, meeting the requirements of the
UK Ethical Trading Initiative. All of our
manufacturing sites have been audited
successfully by Bureau Veritas. We have
also recently published policies relating
to food and health, food safety, farmers,
customers and our suppliers.
Workplace
The success of our business is
underpinned by the 7,000 people who
work for Dairy Crest and our joint
A responsible company Dairy Crest recognises that our actions and decisions have an
impact on the staff we employ, the local communities where we operate, our suppliers, our
customers and the environment. We take our responsibilities to our stakeholders seriously.
4561_DC_pp 16-17  13/6/05  10:36 AM  Page 16 Dairy Crest Annual Report 2005 17
venture, Yoplait Dairy Crest, across 23
manufacturing and administration sites
and 100 household depots. We focus on
creating an environment where our
people are safe, valued and motivated to
improve performance continuously.
Health and safety remains a key focus
for the Company. Our accident incidence
rate continues the trend of recent years,
falling by 12% since last year, and is 18%
below the dairy industry average. We
have achieved this result through rigorous
training and working with third parties
such as the Health and Safety Executive.
We continue to augment the Group’s
health and safety audit programme with a
programme of external accreditation by
the British Safety Council. This year all of
our sites have achieved 4* or 5*, the
highest ratings.
In the last year the Company has
continued to place particular importance
on improving employee relations 
through a constructive partnership with
our staff and their representatives.
Training programmes are focussed on
developing our people to ensure they
have the knowledge and skills for now
and the future.
Our commitment to our people also
includes seeking Investors in People
accreditation for all our manufacturing
sites and household depots, the majority
of which have achieved this standard.
Photographs from left to right: 
Davidstow and KISSAG teamed up for a
second year to help reduce the financial
strain for five talented young Cornish
sportspeople and their families.
Dairy Crest delivers over a million cartons 
of fresh milk to schools each week.
Our Esher head office sponsors a local
school walking bus initiative.
Dairy Crest milkmen in Honiton have formed
a crime-fighting partnership with East 
Devon police.
In the last two years our staff have raised an
impressive £465,000 through a variety of
fundraising activities for Leukaemia
Research.
Community
The majority of our sites are in rural
settings or small towns, where Dairy
Crest is often one of the largest local
employers. We recognise that the
Company has a valuable role to play in
the life of the local community. We intend
to work with the BITC on a regional level
during the next year to support the
relationships already in place and to
encourage new relationships within the
wider community. 
Several of our sites are involved with
schools in their local areas, giving talks on
food and dairy technology, science and
manufacturing. We also take in students
as part of their work experience and give
donations in kind to local causes.
Our household business plays an
important role at the heart of the local
community. We deliver over 350 million
bottles of milk from 100 depots in
southern England and Wales to one
million customers every year, as well as a
range of other products including staples
such as bread, eggs, fruit and
vegetables and juices.
Our thanks go to our sites and
depots which have supported Dairy
Crest’s corporate charity, Leukaemia
Research, and raised a total of £465,000
in the last two years through a variety of
fundraising activities. We will continue to
support the UK’s leading blood cancer
charity for a third year.
For more information and our position on
a range of CSR issues, please visit our
website at www.dairycrest.co.uk.
4561_DC_pp 16-17  13/6/05  10:39 AM  Page 17 18 Dairy Crest Annual Report 2005
Financial review
Turnover
Group turnover, including our share of
joint ventures’ turnover, reduced by 1%
to £1,349 million principally reflecting the
full year impact of the closure of our
ingredients facility at Chard in July 2003.
Operating profit
In this review, except where otherwise
referred to, operating profit is stated
before exceptional items and goodwill
amortisation. Operating profit reduced by
4% to £100.6 million after absorbing an
increase in pension costs of £4.3 million.
After operating exceptional items and
goodwill amortisation, operating profit
increased by 20% to £82.1 million. 
Consumer Foods operating profit,
including our share of joint ventures’
profit, was flat at £72.0 million reflecting
a good performance by spreads and
Yoplait Dairy Crest offset by margin
pressure in liquid products. Consumer
Foods margin decreased by 0.1% to
8.1%. Food Services operating profit
decreased by 12% to £28.6 million
reflecting the on-going decline in the
household business partially offset by a
strong performance from the ingredients
operation. The Food Services margin
decreased by 0.6% to 6.2%.
Exceptional items and goodwill
amortisation
Operating exceptional costs of £5.4
million have been charged against
operating profit, of which £4.3 million
represents our share of Yoplait Dairy
Crest’s closure costs of its factories at
Enfield and Yeovil. In addition, operating
exceptional costs of £1.1 million have
been incurred in the commissioning of
our Davidstow creamery which is now
completed.
Goodwill amortisation amounts to
£13.1 million (2004 – £12.2 million) of
which £7.1 million relates to the acquisition
of the St Ivel Spreads business. 
We have also recognised
non-operating exceptional profits of
£1.0 million representing profits on
disposal of closed dairy sites and receipt
of contingent consideration relating to
the sale of the juice business.
Interest
The Group’s interest charge has
decreased by 17% to £16.4 million. 
This decrease reflects the impact of
lower debt levels and the benefit from
reduced margins and fees following the
refinancing of our facilities in June 2004.
The interest charge includes £0.1 million
(2004 – £0.4 million) in respect of our
share of Yoplait Dairy Crest’s interest
charge and is stated after capitalising
interest of £0.1 million (2004 –
£2.4 million) on our capital investment
at Davidstow. Interest cover calculated
before operating exceptional items and
goodwill amortisation was 6.1 times
(2004 – 5.3 times).
Taxation
The Group’s effective tax rate on profits
excluding exceptional items and goodwill
amortisation was 27.1% (2004 – 27.0%).
This reflects a benefit of 0.8% (2004 –
2.9%) from adjustments to tax liabilities
in respect of prior years. The tax credit
on the operating exceptional items of
£5.4 million was £1.6 million, a rate
of 29.6% and the tax charge on the
non-operating exceptional items of
£1.0 million was £0.3 million. Overall,
excluding goodwill amortisation, the
Group’s effective tax rate was 26.9%
(2004 – 22.0%).
Earnings per share
The Group’s adjusted earnings per share
reduced by 1% to 49.3 pence per share.
Basic earnings per share, which includes
the impact of exceptional items and
goodwill amortisation, increased by
36% to 38.2 pence per share.
The weighted average number of
shares increased by approximately 
0.8 million to 123.4 million, following the
exercise of sharesave and long-term
incentive share plan options.
Dividends
The proposed final dividend of
14.3 pence per share, together with the
interim dividend of 5.9 pence per share,
gives a total dividend of 20.2 pence per
share for the full year. This represents an
increase of 7% on the dividend declared
for 2003/04. The final dividend will be 
Alastair Murray
Finance Director
0197_DC_AR_2005_p18_21  2/6/05  2:10 pm  Page 18 Dairy Crest Annual Report 2005 19
paid on 9 August 2005 to shareholders
on the register on 8 July 2005.
Dividend cover, calculated as profit
for the year after minority interests,
excluding exceptional items and goodwill
amortisation, divided by dividends payable,
was 2.4 times (2004 – 2.6 times).
Pensions 
During the year, the actuary completed
the triennial valuation of the Dairy Crest
Group Pension Fund as at 31 March
2004. This indicated that there was a
surplus of £30 million of the funds’
assets over the value of the members
accrued benefits. This compared with
a deficit under Financial Reporting
Standard No. 17 on Retirement Benefits
(FRS 17) of £95.2 million at this date. The
difference between the two assessments
arises because the actuarial basis under
Statement of Standard Accounting
Practice No. 24 – Accounting for
Pension Costs (SSAP 24) uses the
weighted average return on investments
to discount the liabilities whereas FRS 17
uses the AA Corporate Bond yield. At
31 March 2004, the respective discount
rates were 7.2% and 5.6% for SSAP 24
and FRS 17. The Group increased its
contributions from 4% to 7.9% of
pensionable salaries with effect from
April 2004 and it has increased its
contributions by a further 3.5% to
11.4% from April 2005.
We continue to apply the transitional
arrangements of FRS 17 and will move
directly to the International Accounting
Standard (IAS) equivalent for the financial
year ending 31 March 2006.
The actuary has estimated that on an
FRS 17 basis the gross deficit in the fund
at 31 March 2005 was £104.4 million
compared with a deficit of £95.2 million
at 31 March 2004. The movement largely
reflects a gain of £20.4 million as a result
of the actual return on investments being
above the expected return offset by an
increase in the present value of liabilities
of £20.3 million, principally due to an
increase in the market expectation of
future inflation of 0.1% per annum and
a reduction of 0.1% in the yield on AA
corporate bonds and a difference of
£8 million between the FRS 17 current 
service cost and employers’ pension
contributions paid into the fund. At
31 March 2005 the fund was invested
in equities (76%) and Index Linked
Gilts (24%).
Cash flow
The cash inflow from operating activities
was £143.0 million (2004 – £136.6 million).
This included a working capital inflow
of £20.6 million (2004 – £10.2 million).
Stocks decreased by £16.8 million
principally reflecting reductions in
maturing cheese stocks.
Depreciation amounted to
£34.4 million (2004 – £36.0 million)
and goodwill amortisation amounted to
£13.1 million (2004 – £12.2 million).
Interest payments amounted to
£17.7 million including fees relating to
the refinancing of facilities in June 2004.
The Group currently borrows at a margin
of 47.5 – 75 basis points over the
relevant interbank rate.
Tax payments were £12.6 million
(2004 – £8.7 million) reflecting lower
exceptional costs and the continued
benefit of capital allowances on capital
expenditure on major projects.
Capital expenditure, net of grants of
£1.6 million, was £37.7 million with
significant amounts being invested at
Chard, Somerset on our new cream
facility and at Davidstow, Cornwall and
Hartington, Derbyshire. The Group’s
cash flow benefited by £8.2 million
resulting from the disposal of fixed
assets. In addition, the Group undertook
a sale and leaseback of £18.7 million of
processing equipment at Davidstow.
Net borrowings
Net debt decreased by £52.2 million to
£227.5 million at the end of the year
which reflects profits, improved working
capital and reduced capital expenditure.
At 31 March 2005, gearing was 83%
(2004 – 113%).
Shareholders’ funds
Shareholders’ funds at 31 March 2005
were £262.5 million including goodwill
of £97.3 million, £16.9 million of which
related to the Unigate dairy and cheese
acquisition and £53.8 million to the 
St Ivel Spreads acquisition. The Group’s
balance sheet is strong with stocks of
£172.7 million and tangible fixed assets
of £322.7 million.
Treasury policies
The Group operates a centralised
treasury function which controls cash
management and borrowings and the
Group’s financial risks. The main treasury
risks faced by the Group are liquidity,
interest rates and foreign currency. The
Group uses derivatives only to manage
its foreign currency and interest rate risks
arising from underlying business activities.
Transactions of a speculative nature are
prohibited. The Group’s treasury activities
are governed by policies approved and
monitored by the Board. These policies
are summarised below.
Liquidity risk
The Group’s objective is to ensure that
forecast net borrowings plus a reasonable
operating headroom are covered by
committed facilities which mature at least
12 months after the year end.
At 31 March 2005 the Group’s total
credit facilities amounted to £470 million.
The facility consists of a five year term
loan of £80 million repayable in four
semi-annual instalments from December
2008 to June 2010, a £270 million five
year multi-currency revolving credit
facility repayable at maturity in June
2010 and a five year term loan facility
of £120 million repayable in four semi-
annual instalments from March 2006
to September 2007. 
Short-term funding requirements are
met through uncommitted overdraft and
short-term facilities amounting to over
£20 million.
All borrowings are through banks
with strong long-term credit ratings.
Funds temporarily surplus to business
requirements are invested overnight
through deposit accounts with
commercial banks with a credit rating
of AA or better. The Group currently has
no requirement to place deposits for a
longer period, accordingly counterparty
risk is considered to be low.
0197_DC_AR_2005_p18_21  31/5/05  9:27 am  Page 19 Foreign currency risk
Translation exposures arise on the
earnings and net assets of our overseas
subsidiary, Wexford Creamery Limited.
Our policy is to hedge the net asset
exposure through borrowings in the
relevant foreign currency. At present, our
only translation exposure is in euros.
The majority of the Group’s
transactions are carried out in sterling
and so transaction exposures are limited.
The Group trades skimmed milk
products and bulk butter mainly to
customers in Europe and Central and
South America. The Group also exports
its own skimmed milk products, bulk
butter, Stilton and other branded
products. The Group’s policy requires
foreign currency sales and purchases to
be hedged by foreign exchange
contracts once the transaction is
committed so that the margin on the
transaction can be fixed. In addition a
substantial part of Yoplait Dairy Crest’s
purchases are denominated in euros.
Currency exposures on other
transactions, such as capital expenditure
denominated in a foreign currency, are
hedged following approval of the project
using forward foreign exchange contracts.
Interest rate risk
The Group’s policy is to reduce the
exposure of the business to changes in
interest rates. The Group borrows at
floating rates of interest and uses interest
rate swaps or forward rate agreements
to limit the exposure to movements in
sterling LIBOR, although interest rate
caps may also be used. The policy is to
fix or cap the interest cost on between 
one third and three quarters of floating
rate borrowings, although a higher
percentage may be fixed within a
12 month horizon. £170 million, 75% of
net debt, was fixed at 31 March 2005
for remaining terms of up to five years.
International Financial Reporting
Standards
International Financial Reporting
Standards (IFRS) have come into force
for listed companies in all member
countries of the European Union from
January 2005. Thus Dairy Crest will be
required to prepare its accounts in
accordance with IFRS for the year
ending 31 March 2006.
The Company has completed its
initial assessment of the adjustments
required to restate the accounts from
UK GAAP to IFRS for the year ended
31 March 2005. This assessment has
been based on all IFRS and interpretations
issued by the International Accounting
Standards Board (IASB) and its
committees. These are subject to ongoing
amendment by the IASB and industry
interpretation. They are unaudited and
are subject to possible change.
Dairy Crest estimates that under
IFRS, the Group’s net assets at
31 March 2005 will be reduced by
around £51 million. The largest
adjustment relates to the change in
accounting for pensions under IFRS
where the net deficit in the Dairy Crest
Group Pension Fund of £73.1 million
(after deferred taxation of £31.3 million)
is included as a liability in the balance
sheet. In addition the pension prepayment
of £3.7 million (net of deferred taxation) 
has to be reversed. Offsetting this the
accrual for the final dividend of £17.7
million is reversed and reflected as a
liability when declared in 2005/06 and
goodwill amortisation of £10.6 million
(after deferred taxation of £2.5 million) is
also reversed. It is also estimated that,
under IFRS, the profit before tax
excluding exceptional items and goodwill
amortisation for the year ended
31 March 2005, will reduce by around
£9 million. This principally relates to
increased charges for pensions of
around £7 million and for share based
payments of around £2 million. The
introduction of IFRS will have no impact
on the reported cash flows of the Group.
A detailed presentation on the impact of
restating the accounts from UK GAAP
to IFRS is available on the Dairy Crest
website www.dairycrest.co.uk
Going concern
The financial statements have been
prepared on a going concern basis as
the directors are satisfied that the Group
has adequate financial resources to
continue its operations for the foreseeable
future. In making this statement, the
directors have reviewed the Group’s
budget and available facilities and have
made such other enquiries as they
considered appropriate.
Alastair Murray, Finance Director
24 May 2005 
20 Dairy Crest Annual Report 2005
Financial review continued
0197_DC_AR_2005_p18_21  2/6/05  10:13 am  Page 20 Dairy Crest Annual Report 2005 21
Directors and Advisers
David Richardson * 
‡†
Non-Executive Director (53)
Peter Thornton
Executive Managing Director (39) 
Simon Oliver 
‡ 
Chairman (64) 
David Dugdale * 
‡ †
Non-Executive Director (63)
Drummond Hall
Chief Executive (55)
Mark Allen
Executive Managing Director (45) 
Gerry Grimstone * 
‡†
Non-Executive Director (55) 
Paul Lewis * 
‡ †
Non-Executive Director (68)
Howard Mann * 
‡†
Non-Executive Director (58) 
Alastair Murray
Finance Director (44) 
Auditors
Ernst & Young LLP
Solicitors
Clifford Chance LLP
Principal Bankers
HSBC Bank plc
The Royal Bank of Scotland plc
Rabobank International, London Branch 
Westdeutsche Landesbank Girozentrale,
London Branch
Corporate Brokers
Hoare Govett Ltd
Registered Office
Claygate House,
Littleworth Road,
Esher, Surrey KT10 9PN
Registered in England No. 3162897
* Audit Committee Members
‡ Nomination Committee Members
† Remuneration Committee Members
On 19 May 2005 the Board reviewed the membership of Board Committees and concluded that improved communication and coordination would be achieved if the non-executive
directors were members of all Board Committees. Accordingly from that date non-executive directors were appointed to Board committees of which they were not previously members.
The dates of appointment for Drummond Hall and Paul Lewis refer to the year when they were appointed to the Board of Dairy Crest Limited. They were appointed to Dairy Crest Group
plc on 4 July 1996.
Was appointed as a non-executive director
in December 1997 and became Chairman
in July 2000. He farms 670 acres of
cereals in Cornwall and has many years’
experience in the dairy industry, notably
as Chairman of Mendip Foods Limited
prior to its acquisition by Dairy Crest in
November 1995. He is Chairman of Private
Investor Capital Limited.
Was appointed in September 1991 and
became Chief Executive in July 2002.
He was Managing Director, Cider and Beer
Division, HP Bulmer Holdings plc and was
previously Marketing Director of Pepsi Cola
Northern Europe. He is also a non-executive
director of Mitchells & Butlers plc.
Was appointed in July 2002. He joined
Dairy Crest in August 1991 and is
responsible for the Group’s dairies
operating division.
Was appointed in January 2002. He is
Managing Partner of Crathorne Farms in
North Yorkshire, a mixed dairy/arable
operation of 2,000 acres. He is a council
member of the Royal Association of British
Dairy Farmers and holds a number of
offices, including Farmer Director and Vice
Chairman of United Oilseeds Marketing Ltd.
Was appointed in March 1999. He is
a non-executive director of Candover
Investments plc and The Standard Life
Assurance Company and is Chairman of
F&C Smaller Companies plc. He is also
a member of the Horserace Totalisator
Board and of the RAF Strike Command
Board. He previously held a number of
senior positions in investment banking
at Schroders and in the UK Civil Service.
Was appointed in May 2003. He was
President and Chief Executive of McCain
Foods Limited, Toronto, Canada from May
1995 to May 2004 and previously held a
number of senior positions with Rank
Hovis McDougall.
Was appointed in December 2004. He
retired as Finance Director of Whitbread
PLC in April 2005, having joined Whitbread
in January 1983 where his earlier roles
included that of Strategic Planning
Director. He is also a non-executive
director and Chairman of the Audit
Committee of Serco Group plc.
Was appointed in April 2003. He joined
Dairy Crest in March 1993 and is
responsible for the Group's foods
operating division. He was formerly with
UB (Ross Young's) Ltd.
Roger Newton
Company Secretary (56)
Joined in February 1992. He is a Solicitor
and Chartered Secretary and was
previously Secretary of Nabisco
Group Limited.
Was appointed in September 2003. He was
Finance Director of The Body Shop
International plc from January 1999 and
was previously Finance Director of Dalgety
Food Ingredients Limited.
Was appointed in August 1993. He was
Deputy Chairman and previously Group
Finance Director of Tate & Lyle plc. He is
also a non-executive director of Federal
Mogul Corporation in Southfield, Michigan,
USA. He will be retiring from the Board at
the conclusion of the AGM on 14 July 2005.
0197_DC_AR_2005_p18_21  2/6/05  10:27 am  Page 21 Corporate governance
The Board is committed to maintaining the highest standards of
corporate governance. This report sets out how the Company
complies with the principles contained in Section 1 of the
Combined Code on corporate governance published by the
Financial Reporting Council in July 2003 and now set out in the
Listing Rules of the Financial Services Authority. In early 2004 a
Corporate Governance Working Group was established,
comprising the Chairman, Chief Executive and the Company
Secretary and the Board has progressively adopted and
implemented the recommendations of this group. The Board
considers that, throughout the financial year under review,
the Company has complied with the provisions set out in
Section 1 of the Combined Code with two exceptions. Firstly the
non-executive directors did not meet during the year without the
Chairman present. However such a meeting was held on
19 May 2005 during the course of which the senior non-executive
director reported on the Chairman’s performance appraisal.
Such meetings will now be held annually. Secondly no meetings
were held between shareholders and the Chairman and the
senior independent non-executive director during the year.
The Board considers that arrangements are in place to ensure
a balanced understanding of the issues and concerns of major
shareholders. These arrangements include regular feedback
from the Chief Executive and the Finance Director on their
meetings with major shareholders, together with periodic reports
to the Board on the views of major shareholders from the
Company’s broker. 
We describe below the way in which the Company complies
with the detailed provisions of the Combined Code. 
The Board 
Currently the Board consists of the non-executive Chairman,
four executive directors and five non-executive directors.
The table opposite identifies the number of Board and
Committee meetings held during the past year and the
attendance of each director. 
The Board has responsibility for the overall management and
performance of the Group with the key objective of delivering
shareholder value. The Board reserves a formal schedule of
matters for its approval which includes strategy and
management, financial structure and capital, reporting and
controls, Board appointments and committees, executive
remuneration, dividend policy and corporate governance
compliance. The schedule of matters reserved for the Board,
the Board objectives, the terms of reference of the Board
Committees, a summary of the service contracts of the
executive directors and of the terms of appointment of the non-
executive directors together with the respective responsibilities
of the Chairman and Chief Executive are available on the
Company’s website, www.dairycrest.co.uk. The biographies
of the directors are set out on page 21.
Senior executives below Board level attend certain Board
meetings and make presentations to the Board on strategic,
financial, operational and compliance matters. Directors are
given Board papers in advance of each meeting. Where
directors have concerns about the running of the Company, 
or a proposed action that cannot be resolved, their concerns
are recorded in the Board minutes.
Below the Board level there are limits of authority allowing the
executive committee (comprising the four executive directors)
and senior management to make financial commitments. In
addition there are clear policies and procedures over the key
risk areas where management has been given delegated
responsibility, including financial reporting, treasury, purchasing,
milk procurement, food safety and environmental matters.
All directors have access to advice from the Company Secretary
or independent professional advice at the expense of the
Company. During the year training sessions, led by Clifford
Chance and by a consultant from the Institute of Directors, were
provided on directors’ legal responsibilities and on Board
effectiveness to ensure that directors are regularly updated
and refresh their knowledge and awareness of corporate
responsibilities. The Company maintains appropriate insurance
cover for the directors and officers. The Company’s insurance
cover also includes insurance of employers’ liability and public
and product liability risks.
The Board has three Board Committees and details of directors’
attendance at Board and Board Committee meetings are set
out below:
Board Audit Remuneration Nomination
Committee Committee Committee
No. of meetings in year 9 3 2 1
Mr S M D Oliver 9 – 2 1
Mr J W D Hall 9 – – –
Mr M Allen 9 – – –
Mr D J Dugdale 9 3 – 1
Mr G E Grimstone 9 3 2 –
Mr H Mann 8 – 2 –
Mr A S N Murray 9 – – –
Mr P S Lewis 8 3 2 1
Mr D H Richardson 2 – – –
Mr P Thornton 9 – – –
All directors have attended all meetings of the Board and of
Committees of the Board of which they were members at the
relevant time unless prevented from doing so by prior
commitments. All directors attended the annual general meeting
in July 2004. 
The Audit Committee: Until 17 March 2005 the Committee
comprised three non-executive directors, Mr D J Dugdale,
Mr G E Grimstone and Mr P S Lewis (Chairman). Mr D H
Richardson joined the Committee on 17 March 2005 and
Mr H Mann on 19 May 2005. The Chairman, the Chief
Executive, the Finance Director, the head of internal audit, senior
finance management and representatives of the external
auditors are in attendance at meetings of the Committee. The
Committee holds private meetings without management present
with both the external and internal auditors.
22 Dairy Crest Annual Report 2005
0197_DC_AR_2005_p22_39  2/6/05  10:18 am  Page 22 The Committee is responsible for exercising the full powers and
authority of the Board in reviewing a wide range of accounting
and financial reporting matters. Since the last Annual Report the
Committee has met to consider amongst other matters:
• The Company’s interim and annual financial statements and
formal announcements on financial performance before
submission to the Board for approval; 
• The Group’s risk register and the adequacy of the Group’s
accounting systems and internal controls; 
• Review of the Group internal audit process and the 2005/06
internal audit plan;
• The provision of audit and non-audit services provided by
the external auditors, their audit fees for 2004/05 and a
report from the external auditors confirming their
independence and objectivity; 
• An evaluation of the effectiveness of the external auditors; 
• Recommendation of re-appointment of the external auditors;
• Developments in accounting standards in particular the
Group’s preparation for the adoption of International
Financial Reporting Standards; 
• The adoption of the Group’s whistle blowing procedures and
application of these procedures; and 
• The Group’s compliance with the Combined Code. 
Where the external auditors have provided non-audit services
the Finance Director has obtained prior authorisation from the
chairman of the Committee to instruct Ernst & Young to carry
out this work.
The Committee members bring considerable financial and
accounting experience to the achievement of the Committee’s
objectives. Collectively members have significant past business
experience in industry and finance. Mr D H Richardson, who
was Finance Director of Whitbread PLC until April 2005, will
assume the Chairmanship of the Committee following the
retirement of Mr P S Lewis in July 2005.
The Nomination Committee: During the year the Committee
comprised two non-executive directors Mr D J Dugdale
(Chairman) and Mr P S Lewis and the non-executive Chairman.
Other directors and advisors attend meetings by invitation only.
Mr G E Grimstone, Mr H Mann and Mr D H Richardson joined
the Committee on 19 May 2005. The Committee is responsible
for succession planning at Board level, overseeing the selection
of directors and making recommendations to the Board on
subsequent appointments. The appointment of Mr D H
Richardson was initiated by the non-executive Chairman and
the Chief Executive who briefed executive search consultants to
locate a non-executive director with a strong financial
background. The Company interviewed a number of candidates
identified by the consultants and from other sources. The
Committee met in December 2004 to receive a report on the
progress of the recruitment exercise and subsequently
recommended the appointment of Mr D H Richardson.
The Committee also discussed Board succession arrangements
in December 2004 and has subsequently recommended to
the Board that Mr G E Grimstone should be proposed for 
re-election at the Annual General Meeting (‘AGM’). 
Mr G E Grimstone has completed two terms of three years but
his business background and his governance knowledge gained
from other board appointments are considered to be of
considerable on-going benefit to the Company. The Committee
approves any non-executive directorships taken by executive
directors. The Board believes that directors can gain valuable
experience and knowledge from becoming a non-executive
director of another listed company that will ultimately benefit
the Company. MrJWD Hall, the Group’s Chief Executive, was
appointed as a non-executive director of Mitchells & Butlers plc
in July 2004. His fees for this position have been passed to
the Company. No other executive director holds a non-
executive directorship.
The Remuneration Committee: The membership of the
Committee during the year is set out on page 26. The
Committee is responsible for determining, within remuneration
principles agreed with the Board, the salaries, bonuses and
pension rights of the executive directors. Remuneration is
designed to be set at a level appropriate to the Company’s
circumstances having regard to market information provided by
external consultants. The Board itself determines the
remuneration of non-executive directors also having regard to
market information provided by external consultants.
An explanation of how the Company has applied the principles
of the Combined Code with respect to remuneration is outlined
in the Report of the Board on directors’ remuneration on
pages 26 to 32.
Chairman and Chief Executive
There is a clear division of responsibilities between the Chairman,
Mr S M D Oliver, and the Chief Executive, Mr J W D Hall. The
respective responsibilities of the Chairman and Chief Executive
have been agreed by the Board and, as previously advised, are
available on the Company’s website.
Board balance and independence
The Board considers all of the non-executive directors including
the Chairman to be independent under the guidelines set out in
the Combined Code. The non-executive directors and the
Chairman are free from any material business relationship with
the Company and have not held executive positions within the
Group. None of the non-executive directors nor the Chairman
have served as a director of the Company for more than nine
years. Mr P S Lewis joined the Board in 1996, having previously
served for three years as a director of Dairy Crest Limited, and
is therefore in his ninth year of service with the Company.
Mr P S Lewis will retire by rotation at the AGM and is not
seeking re-election. Currently there are five non-executive
directors and the non-executive Chairman, out of a total
Board of ten. The directors are of the opinion that an
appropriate balance between executive and independent 
Dairy Crest Annual Report 2005 23
0197_DC_AR_2005_p22_39  31/5/05  9:33 am  Page 23 non-executive directors exists. Mr P S Lewis will be succeeded
by Mr G E Grimstone as the senior non-executive director. Any
shareholder who has a concern about the affairs of the
Company should contact, in the first instance, the Chairman,
the Chief Executive or the senior non-executive director.
Performance evaluation
The Board conducts an annual evaluation of individual directors,
its own performance and that of its Committees. The evaluation
process is designed to improve the effectiveness of the Board.
Individual director performance is reviewed as follows:
• The Chairman is appraised by the senior non-executive
director with input from other directors. The procedures for
determining the Chairman’s remuneration are outlined in the
Report of the Board on directors’ remuneration on page 27.
• The Chief Executive appraises the performance of the other
executive directors and monitors and reviews the
remuneration structure for senior managers.
• The performance of the Chief Executive and of directors,
in relation to their Board responsibilities, is appraised by
the Chairman. 
Appraisals were performed for all the directors during the year
for their performance in 2004/05 and the Chairman reported to
the Board on the outcome of the appraisals in relation to the
Board’s overall effectiveness at its meeting on 19 May 2005.
Following receipt of this report, the Board has assessed its
overall performance and that of its Committees and has
determined training requirements for the current year.
Re-election
The Company’s articles require that one third of Board members
retire by rotation at each AGM. In addition, directors appointed
to the Board after the previous AGM have to seek election at
the next AGM. At the AGM to be held on 14 July 2005 Mr G E
Grimstone, Mr J W D Hall and Mr P S Lewis will retire by
rotation. The Nomination Committee has recommended that
Mr G E Grimstone is proposed for re-election as a non-
executive director. The Board supports this recommendation
and is satisfied that Mr G E Grimstone’s performance continues
to be effective and that he demonstrates appropriate
commitment to the role, including time for Board and
Committee meetings and any other duties. 
The Board also supports the proposed re-election to the Board
of Mr J W D Hall, the Company’s Chief Executive. As previously
stated, Mr P S Lewis is not seeking re-election.
Mr D H Richardson joined the Board on 9 December 2004 and,
having been appointed during the year, will retire at the AGM
and offers himself for election. 
Accountability and audit
The directors confirm that they are satisfied that the Group has
adequate resources to continue in operational existence for the
foreseeable future. It is therefore appropriate to continue to
adopt the going concern basis in preparing the accounts. 
The Board is responsible for maintaining a sound system of
internal control to safeguard the shareholders’ investment and
the Company’s assets. As required by the Combined Code, the
Board has established an ongoing process, in accordance with
the guidance of the Turnbull committee on internal control, to
identify, evaluate and manage significant risks faced by the
Group. This process, which includes the consideration of a
schedule identifying and evaluating the Group’s significant risks
and related financial, operational and compliance controls has
been in place for the year under review and up to the date of
approval of the Annual Report. The Board has reviewed the
effectiveness of the Group’s system of internal control (including
that of its joint venture Yoplait Dairy Crest Limited) which is
designed to manage rather than eliminate risk of failure to
achieve the Group’s strategic objectives and to provide
reasonable, but not absolute, assurance against material
misstatement or loss.
The main elements of the process applied in reviewing the
effectiveness of the systems of internal control include:
• Board – the Board exercises its responsibilities through
organisational structure with clearly defined levels of
responsibility and rules relating to delegated authorities. The
Board meets regularly throughout the year and receives oral
and written presentations to maintain control over strategic,
financial, operational and compliance matters. The executive
committee is responsible for embedding risk management
and controls in the Group. The executive director of each
division, in conjunction with senior management, operates
and maintains controls appropriate to its own activities and
conforms to Group policies and procedures. 
• Financial reporting – there is an annual budget presented
and approved by the Board which includes consideration
of the major business risks, an assessment of the likelihood
of crystalisation and actions in place to mitigate these risks.
Each business is required to report monthly to the Board
on financial performance. The monthly financial information
includes trading results, balance sheet and cash flow
information by business unit with comparison against prior
year and budget. Each business periodically reassesses its
forecast for the financial year. Annually a strategic plan is
also presented to the Board, which reviews financial
projections for the following three years and includes
consideration of current and likely future strategic,
operational and market environment matters. 
24 Dairy Crest Annual Report 2005
Corporate governance continued
0197_DC_AR_2005_p22_39  2/6/05  10:28 am  Page 24 • Business unit reviews – on a quarterly basis, each business
unit is required to complete a self-assessment controls
questionnaire that requires the approval of business unit
management. In addition, the Audit Committee and the
executive committee receive copies of all Group internal
audit reports which detail audit issues noted and corrective
action plans. They also receive reports from the external
auditors on the conclusions of their interim review and
final audit.
Relationships with shareholders
The Company places considerable importance on its
communication and relationship with its institutional and private
shareholders. The Chief Executive and the Finance Director hold
meetings with key institutional shareholders to discuss strategy,
financial performance and investment activities immediately after
the full year and interim results announcement. Slide
presentations made to institutional shareholders are also
available on the Company’s website. Feedback from meetings
with shareholders was provided to the Board to ensure that the
non-executive directors have a balanced understanding of the
issues and concerns of major shareholders. In addition the
Board received periodic reports from the Company’s broker
on investor relations and the views of shareholders.
The principal method of communication with private
shareholders is through the Annual and Interim reports, the
AGM and through the Company’s website. A business review is
presented by the Chairman at the AGM to facilitate shareholder
understanding of the Group’s activities. All executive directors,
the Chairman and the chairmen of Board Committees attend
the AGM and are available to answer shareholders’ questions.
The Notice of the AGM is posted to shareholders with the
annual accounts at least 20 working days before the date of the
AGM. Resolutions are proposed for each substantial separate
issue and details of the proxy votes for each resolution passed
are announced after the result of each show of hands is known
and are then posted on the Company’s website following the
conclusion of the meeting.
Directors’ indemnities
An amendment to the Companies Act 1985 (the ‘Act’) came
into force on 6 April 2005 under which companies may
indemnify their directors and officers against liabilities (including
against legal costs) to a greater extent than was previously
possible. This amendment has been introduced by the
Government following its consultation process in respect of
director and auditor liability. The amendment addresses
concerns raised in that process that exposure to liabilities
arising from legal action brought against directors by third
parties and the cost of lengthy court proceedings were 
affecting the recruitment and behaviour of directors. The Board
wishes to continue to attract good quality directors and
therefore believes it is in the interests of the Company to take
advantage of this amendment. Accordingly resolution 10 at the
AGM proposes the adoption of a new article 147 of the
Company’s articles of association to give the directors and the
officers the benefit of the new indemnity provisions to the extent
permitted by the Act.
Dairy Crest Annual Report 2005 25
0197_DC_AR_2005_p22_39  2/6/05  10:28 am  Page 25 • Long-Term Incentive Share Plan 
A Long-Term Incentive Share Plan (‘LTISP’) was introduced 
on 28 June 1996 which is designed to encourage continuing
improvement in the Group’s performance over the longer term.
An LTISP award is payable in shares, rather than cash, to
emphasise the alignment of interest between the participants
and the Company’s shareholders. The LTISP has a three year
performance cycle and pre-determined performance conditions
which must be met before awards under the LTISP can be
exercised. Awards under the LTISP are granted annually.
For awards from 2002 onwards, 50% of the total award is
measured on the growth in the Company’s adjusted earnings,
excluding goodwill amortisation and exceptional items, per
share compared with the increase in the retail prices index (RPI)
over the three year performance period and 50% is measured
on total shareholder return (TSR) performance.
The TSR of Dairy Crest Group plc is measured against that of
14 comparator companies in the foods sector, the FTSE 250
Index (excluding investment companies) and the FTSE Food
Producers and Processors Index.
The targets will be as follows:
LTISP Award TSR Element EPS Element
Proportion Proportion
of total Growth in of total
LTISP excess of LTISP
award RPI over 3 award
Performance Achieved vesting years vesting
Upper quartile 50% 24% 50%
Median 20% 9% 20%
Between median and 
upper quartile Pro rata Pro rata Pro rata
between between between
20% and 50% 9% and 24% 20% and 50%
The value of shares awarded under the LTISP in any financial
year is subject to limits determined by the Remuneration
Committee from time to time. The current annual limit for awards
is 100% of base salary and the maximum awards during the
year were in line with this limit.
The current list of comparators is: 
Arla Foods Premier Foods
Associated British Foods Richmond Foods
Cadbury Schweppes Robert Wiseman Dairies
Devro Tate & Lyle
Glanbia Unilever
Greencore Uniq
Kerry FTSE 250 Index (excluding investment companies)
Northern Foods FTSE Food Producers & Processors Index
The constituents of the comparator group remained the same
for the years ended 31 March 2004 and 2005 except that in
July 2003 the FTSE Food Producers and Processors Index
replaced HP Bulmer and in February 2005 Premier Foods
replaced Big Food Group both following the delisting of these
companies. From 1 April 2005 Richmond Foods replaced Geest
in view of the expected delisting of that company. 
Report of the Board on directors’ remuneration
26 Dairy Crest Annual Report 2004
The Board has appointed a Remuneration Committee of 
non-executive directors of the Company. During the year the
Committee consisted of Mr G E Grimstone (Chairman),
Mr H Mann, Mr P S Lewis and Mr S M D Oliver. Mr S M D Oliver
ceased to be a member of the Committee on 19 May 2005 but
will be invited to attend future meetings. Mr D J Dugdale and
Mr D H Richardson were appointed to the Committee on
19 May 2005. Members of the Remuneration Committee have
no potential conflicts of interest arising from cross-directorships
and they are not involved in the day-to-day running of the
Company. The Remuneration Committee determines, within
remuneration principles agreed with the Board, the total
remuneration package of each executive director. It has
appointed Monks Partnership to provide advice on levels of
remuneration and Aon Consulting on pensions issues. Monks
Partnership is part of PwC who have also provided advice on
valuations of share based payments under International
Financial Reporting Standards and to the Yoplait Dairy Crest
joint venture. With the exception of this advice neither Monks
Partnership nor PwC provide any other consulting services.
The Chief Executive attends all meetings and provides advice
on matters other than those concerning himself.
Total remuneration
The total remuneration package, which is reviewed annually, 
is structured to attract, retain and motivate executive directors.
The total remuneration of executive directors consists of base
salary, bonus, pension benefits, selected benefits in kind and
share incentive and option arrangements. The Board intends to
introduce a guideline to encourage executive directors to build
up a personal shareholding in the Company’s shares.
• Base salary
Salary levels for executive directors are reviewed annually based
on an independent assessment of market practice. They are set
to reflect the pay levels of executives with similar responsibilities
in companies of comparable size and complexity.
• Bonus
As stated in last year’s report the maximum annual bonus
opportunity for all executive directors has been increased to
100% of annual salary from 2005/06. In 2004/05 the maximum
bonus opportunity was capped at 80% of annual salary.
Payment of the bonus is subject to the achievement of
demanding short-term financial targets agreed by the
Remuneration Committee. To ensure that an appropriate
balance is maintained between long-term and short-term
reward, from 2005/06 any bonus earned over 50% of annual
salary will be paid in the Company’s shares and deferred for a
three year period.
0197_DC_AR_2005_p22_39  31/5/05  9:39 am  Page 26 • Executive Share Option Scheme
The Dairy Crest Executive Share Option Scheme (‘ESOS’) was
established on 30 July 1996. Part A is approved by the Inland
Revenue and Part B is an unapproved scheme. Options are
granted to participants at prices determined by the
Remuneration Committee which may not be less than the
market price of the shares as derived from the London Stock
Exchange Daily Official List at the time of grant.
Up until 21 July 2002 the options could not be exercised unless
the Company’s adjusted earnings per share had increased over
a three year period by RPI plus 6%.
After that date the EPS performance condition was made more
demanding and ESOS options granted after 21 July 2002 will
now only vest:
(a) if after three years EPS growth exceeds RPI growth by 9%,
(b) if condition (a) is not achieved, if after four years EPS growth
exceeds RPI growth by 12%,
(c) if condition (b) is not achieved, if after five years EPS growth
exceeds RPI growth by 15%.
Directors of the Company who are granted awards under the
LTISP are not granted additional share options under the ESOS
except in the case of promotion. Currently Mr P Thornton is the
only participant in ESOS subject to the original performance
criteria and Mr J W D Hall is the only participant in ESOS
subject to the new performance criteria. The LTISP and ESOS
were both established at flotation in July 1996 and permit
awards to be made thereunder for periods of 10 years from
their establishment. The Remuneration Committee will be
undertaking a review of market practise with regard to executive
share schemes with a view to recommending appropriate
replacements for the current arrangements in 2006.
• Sharesave Scheme 
The Dairy Crest Sharesave Scheme was first established on 
30 July 1996 and there have been five grant phases since that
date. It is open to all eligible employees and full time directors.
Employees enter into an approved savings contract over a three
or five year term to make monthly contributions up to an overall
maximum of £250 per month. At the end of the term employees
have the right to buy ordinary shares in the Company at a price
fixed at the time of the option grant. The price at which the
options may be offered may not be less than 80% of the market
price at the time of option grant.
• Pension benefits
All executive directors are members of the Dairy Crest Group
Pension Fund which provides for a pension based upon an
executive’s final basic salary. No bonuses are pensionable.
Benefits are restricted by the Inland Revenue earnings cap and
the following supplementary arrangements are in effect. 
Mr J W D Hall is party to a funded unapproved retirement benefit
scheme (‘FURB’). Under this defined contribution scheme an
amount of 42.7% of his salary is contributed by the Group to his
FURB. He is responsible for paying income tax and national
insurance contributions on the amounts paid to the FURB. 
Mr M Allen, Mr A S N Murray and Mr P Thornton receive a salary
supplement of 20% of base salary above the earnings cap which
is included in basic salary in the emoluments table on page 28. 
Changes in pension legislation will come into force on
6 April 2006. The Company and the trustee of the Dairy Crest
Group Pension Fund have agreed to retain a notional earnings
cap from this date. This will prevent the up-rating in accrued
and future benefits of executive directors who are subject to
the earnings cap. However it is intended to allow pension fund
members, including the executive directors, the flexibility
afforded under the new tax regime applicable from April 2006
and to amend the Fund rules to remove previous restrictions
from superseded tax regimes.
• Beneﬁts in kind 
These include the taxable value of company car benefits, life
assurance cover, company contributions to medical insurance
plans and relocation costs and allowances.
• Service contracts 
In accordance with best practice as set out in the Combined
Code, all executive directors have a notice period not exceeding
one year. All such directors’ service contracts provide explicitly
for termination payments in the event of termination by the
Company other than on grounds of incapacity or in
circumstances justifying summary termination. Payments on
termination are calculated, depending on the age of the director,
at 70–90% of the value of annual salary, benefits, pension and
bonus for the notice period. A summary of the service contracts
of the executive directors is available on the Company’s
website.
Details of the directors offering themselves for election and 
re-election at the forthcoming AGM are set out in the Directors’
report on page 33.
Remuneration of the Chairman and 
non-executive directors
The remuneration of the Chairman is determined by the Board
following a recommendation by the Chief Executive and the
chairman of the Remuneration Committee in consultation with
Monks Partnership. Other non-executive directors receive a
basic fee of £30,000 for their services plus a sum of between
£2,500 and £5,000 for the chairmanship of a Board Committee.
Their remuneration is determined by the Board, also in
consultation with Monks Partnership. The total fees for non-
executive directors remain within the limit set in the articles of
association. There are no pre-determined special provisions for
non-executive directors with regard to compensation in the
event of loss of office.
Dairy Crest Annual Report 2004 27
0197_DC_AR_2005_p22_39  2/6/05  10:28 am  Page 27 Report of the Board on directors’ remuneration continued
28 Dairy Crest Annual Report 2005
Directors’ remuneration for the year ended 31 March
Emoluments Pension payments
Basic (excluding pension to defined contribution
salary/fees Benefits Bonus contributions) scheme
555555555551 555 555 555 555555111 555555111
2005 2005 2005 2005 2004 2005 2004
£000 £000 £000 £000 £000 £000 £000
555555555551 555 555 555 555 555 555 555
Non-executive Chairman
S M D Oliver 115 – – 115 115 – –
555555555551 555 555 555 555 555 555 555
Executive directors
M Allen 270 22 89 381 313 – –
J W D Hall 420 20 83 523 548 178 170
I C Laurie (resigned 17 July 2003) –––– 867 – 46
A S N Murray 283 16 50 349 208 – –
P Thornton 263 14 73 350 350 – –
555555555551 555 555 555 555 555 555 555
1,236 72 295 1,603 2,286 178 216
555555555551 555 555 555 555 555 555 555
Non-executive directors
D J Dugdale 33–– 33 30 – –
G E Grimstone 35–– 35 33 – –
T H Jones (retired 29 May 2003) –––– 5 – –
P S Lewis 35–– 35 33 – –
H Mann 30–– 30 24 – –
D H Richardson
(appointed 9 December 2004) 9–– 9 – – –
555555555551 555 555 555 555 555 555 555
142 – – 142 125 – –
555555555551 555 555 555 555 555 555 555
1,493 72 295 1,860 2,526 178 216
555555555551 555 555 555 555 555 555 555
Basic salary, benefits and bonus are defined on pages 26 to 27.
Mr J W D Hall was appointed as a non-executive director of Mitchells & Butlers plc in July 2004. His fees of £28,000 in relation to
these services have been paid to the Company.
As noted in last year’s report Mr I C Laurie left the Group on 10 August 2003. Mr I C Laurie’s emoluments included a compensation
payment of £740,077, including a FURB payment of £174,181, which was paid to Mr I C Laurie in accordance with the provisions
of his service contract.
The information on pages 28 to 32 is subject to audit, except the details on service contracts on page 29, details of directors’
shareholdings on page 30 and the graph on total shareholder return on page 31.
0197_DC_AR_2005_p22_39  31/5/05  9:39 am  Page 28 Service contracts
The service contracts and letters of appointment include the following terms:
Executive directors Date of contract Notice period (months)
M Allen 18 July 2002 12
J W D Hall 18 July 2002 12
A S N Murray 20 June 2003 12
P Thornton 1 April 2003 12
Non-executive directors Letters of appointment Current duration
S M D Oliver 15 March 2001 July 2007
D J Dugdale 17 January 2002 July 2007
G E Grimstone 3 February 1999 July 2005
P S Lewis 4 July 1996 July 2005
H Mann 15 April 2003 July 2006
D H Richardson 9 December 2004 July 2008
None of the non-executive directors have service contracts. Letters of appointment provide for an initial period of three years
and can be extended, by mutual agreement, for subsequent periods of three years. A summary of the terms of appointment
of non-executive directors is available on the Company’s website. In the case of Mr P S Lewis his appointment term has been
extended on an annual basis. Assuming that Mr G E Grimstone is re-elected at the AGM his appointment term will be extended
to July 2008.
Directors’ pension entitlements
The pension entitlements of the directors from the Dairy Crest Group Pension Fund, a defined benefits scheme, which have been
excluded from the table on page 28, were as follows:
Accumulated Accumulated Increase in Transfer value
total accrued total accrued accrued of increase
Length of pension at pension at pension during in accrued
service 31 March 2005 31 March 2004 the year pension
Age Years £000 £000 £000 £000
555555551111 5555 5555 5555 5555 5555 5555
M Allen 45 13.6 34 29 3 20
J W D Hall 55 13.5 46 41 3 36
A S N Murray 44 1.5 5 2 3 18
P Thornton 39 12.1 27 23 3 14
The increase in accrued pension during the year excludes the effect of inflation of 3.1% and is after deducting the director’s contributions.
The transfer value of each director’s accrued benefits at the end of the financial year is set out below. The transfer values shown in
the table have been calculated in accordance with actuarial guidance note GN11. Transfer values are determined based on financial
conditions at the date of calculation including stock market values and bond yields. 
Directors’ Movement less
As at As at contributions directors’
31 March 2005 31 March 2004 in the year contributions
£000 £000 £000 £000
000000000 5555 5555 5555 5555
M Allen 265 217 9 39
J W D Hall 610 507 9 94
A S N Murray 43 15 9 19
P Thornton 164 130 9 25
Dairy Crest Annual Report 2005 29
0197_DC_AR_2005_p22_39  2/6/05  10:28 am  Page 29 Report of the Board on directors’ remuneration continued
30 Dairy Crest Annual Report 2005
Directors’ shareholdings
The interests of the directors at the end of the year in the ordinary share capital of the Company were as follows:
As at As at
31 March 2005 31 March 2004
Beneﬁcial Beneﬁcial
555555555555555555551 5555555 5555 5555
M Allen* 52,587 30,064
J W D Hall* 136,664 100,296
H Mann 20,000 –
A S N Murray* 3,000 3,000
P Thornton* 26,167 2,300
D J Dugdale 10,999 10,999
G E Grimstone 10,000 10,000
P S Lewis 5,000 5,000
S M D Oliver 40,000 30,000
D H Richardson
†
5,000 –
* These directors are potential beneficiaries of the ESOP and QUEST. In addition to the shares noted above under beneficial interests they are also deemed to have a
beneficial interest in all the shares held by the ESOP and QUEST (see Note 21 on page 48).
†
At date of appointment.
No director holds a non-beneficial interest in the Company’s share capital. There have been no changes in directors’ shareholdings
between 31 March 2005 and 24 May 2005. The above interests exclude any rights to acquire shares under the LTISP arrangements
which are set out below.
Long-term incentive share plan awards
LTISP performance conditions are set out on page 26. The performance periods commence on 1 April in each year and conclude
on 31 March three years later. Potential awards held by executive directors under LTISP at the beginning and end of the year, details
of actual awards, awards lapsed during the year and their value are as follows:
Market
price at
Year of Balance Balance original
award 1/4/04 Awarded Lapsed 31/3/05 award
555555555515555111 555 555 555 555 555 555
M Allen 2002 47,604 2,917 (50,521) – 415.0p
2003 49,393 3,027 – 52,420 431.5p
2004 – 61,412 – 61,412 398.0p
555 555 555 555 555
96,997 67,356 (50,521) 113,832
J W D Hall 2002 92,635 5,675 (98,310) – 415.0p
2003 96,433 5,909 – 102,342 431.5p
2004 – 107,471 – 107,471 398.0p
555 555 555 555 555
189,068 119,055 (98,310) 209,813
A S N Murray 2003 56,704 3,474 – 60,178 438.5p
2004 – 65,251 – 65,251 398.0p
555 555 555 555 555
56,704 68,725 – 125,429
P Thornton 2002 17,060 1,045 (18,105) – 415.0p
2003 49,393 3,027 – 52,420 431.5p
2004 – 61,412 – 61,412 398.0p
555 555 555 555 555
66,453 65,484 (18,105) 113,832
Notes to the LTISP table:
Additional shares awarded on LTISP 2002 and LTISP 2003 represent reinvestment of dividends.
The performance conditions attaching to LTISP 2002 set out on page 26 have not been satisfied and therefore these awards have lapsed on 31 March 2005.
LTISP 2003 and LTISP 2004 vest on 1 April 2006 and 1 April 2007 respectively subject to the performance conditions being fully satisfied.
0197_DC_AR_2005_p22_39  2/6/05  10:28 am  Page 30 Long-term incentive share plan awards continued
Performance graph
Schedule 7A of the Companies Act 1985 requires companies to provide by graph an analysis of their performance over time.
The graph below sets out for the five years ended 31 March 2005 the total shareholder return of Dairy Crest Group plc and
the performance of the Food Producers and Processors sector of the FTSE and of the FTSE 250 Index (excluding investment
companies) of which the Company is a constituent member.
50
100
150
200
250
300
350
400
450
March 05 March 04 March 03 March 02 March 01 March 00
Dairy Crest Group plc
FTSE Food Producers and Processors
FTSE 250 (excluding investment companies)
Dairy Crest – Relative Total Shareholder Return over five years
Dairy Crest Annual Report 2005 31
0197_DC_AR_2005_p22_39  2/6/05  12:46 pm  Page 31 Report of the Board on directors’ remuneration continued
32 Dairy Crest Annual Report 2005
Directors’ share options (ESOS and Sharesave)
At 31 March 2005 the directors held the following share options under the ESOS and Sharesave scheme. ESOS option performance
conditions are set out on page 27. 
As at Granted Exercised As at Exercise Date when
1 April during during 31 March price options Expiry
2004 the year the year 2005 (pence) exercisable date
555555555515 555 555 555 555 555 555 555
M Allen 2,305 1,063 (3,368) – 282 01.03.05 31.08.05
J W D Hall 86,746* – – 86,746* 415 22.07.05 21.07.12
2,305 1,063 (3,368) – 282 01.03.05 31.08.05
A S N Murray 136 815 – 951 368 01.03.07 31.08.07
P Thornton 2,074 957 (3,031) – 282 01.03.05 31.08.05
14 82 – 96 368 01.03.07 31.08.07
13,177* – – 13,177* 341 14.07.01 13.07.08
*ESOS options
The mid-market price of the above shares as at the close of business on 31 March 2005 was 463.0 pence per share. During the
year between 1 April 2004 and 31 March 2005 the mid-market closing price ranged from 316.0 pence per share to 463.0 pence
per share. 
On 1 March 2005 Mr M Allen, Mr J W D Hall and Mr P Thornton exercised Sharesave options at a market price of 425 pence
resulting in unrealised gains of £4,816, £4,816 and £4,334 respectively. There were no options exercised in the prior year.
Gerry Grimstone, Chairman of Remuneration Committee
24 May 2005 
0197_DC_AR_2005_p22_39  2/6/05  10:29 am  Page 32 Directors’ report
The directors of Dairy Crest Group plc present their ninth annual
report and the audited financial statements for the year ended
31 March 2005. 
Principal activity
The principal activity of the Group is the manufacture and
trading of milk and dairy products.
Review of operations
The Group’s operations and future developments are dealt with
in the Chief Executive’s review, Operational review and Financial
review on pages 4 to 20.
Results and dividends
The consolidated profit and loss account is on page 35. The
profit for the year, after taxation, amounted to £47.7 million
(2004 – £35.2 million). The directors recommend a final dividend
of 14.3 pence per share which, together with the interim
dividend of 5.9 pence per share paid on 31 January 2005,
makes a total dividend for the year of 20.2 pence per share.
If approved, the dividend will be paid on 9 August 2005 to
shareholders on the register on 8 July 2005.
Fixed assets
Following the introduction of FRS 15 – Tangible Fixed Assets,
the Company followed the transitional provisions to retain the
existing book value of land and buildings. The directors have
obtained an informal valuation of the Group’s land and buildings
and believe that the current market value in existing use of these
properties slightly exceeds their book value.
Directors
A list of the directors at the end of the year together with a brief
biography is set out on page 21.
In accordance with the Company’s articles of association Mr G
E Grimstone and Mr J W D Hall retire by rotation and being
eligible seek re-election at this year’s Annual General Meeting.
Mr P S Lewis also retires by rotation but will not seek re-
election.
Mr D H Richardson was appointed as a non-executive director
on 9 December 2004. As he was appointed during the year he
will retire at this year’s Annual General Meeting in accordance
with the articles of association and will seek election.
Details of the directors’ remuneration, service contracts (letters
of appointment in the case of the non-executive directors),
interests in shares, share options and long-term incentive share
plan awards are given in the Report of the Board on directors’
remuneration on pages 26 to 32.
Share capital
The authorised and issued share capital of the Company,
together with details of the shares issued during the year, are
shown in note 20 on page 48. On 23 May 2005, Aviva plc had
a material interest of 5.44% in the Company. No other person
has notified an interest in the ordinary shares of the Company
required to be disclosed to the Company in accordance with
Sections 198 to 202 of the Companies Act 1985.
Employee involvement
The importance of good communication is recognised by the
Company. There are also well-established consultation and
negotiating arrangements with recognised trade unions.
Employment of disabled persons
The Company considers applicants for posts compatible
with their disability. Staff who become disabled are retained
wherever practicable.
Charitable and political donations
Charitable donations amounted to £0.1 million (2004 –
£0.1 million) in the year. Small contributions, mainly of product,
were also made to local charities. No donations were made to
any political party.
Supplier payment policy
Payment dates are established according to the agreed date of
delivery of goods or provision of services and the receipt of a
correct invoice. The Group agrees the length of payment terms
with each of its suppliers as part of the overall purchasing
agreement. It is the Group’s policy to abide by these agreed
terms of payment. The number of days’ purchases in the Group’s
creditors at 31 March 2005 was 24 days (2004 – 24 days).
Auditors
Ernst & Young LLP have expressed their willingness to continue
as auditors of the Company. A resolution to reappoint Ernst &
Young LLP as the Company’s auditors will be put to the
forthcoming Annual General Meeting.
Annual General Meeting
The Annual General Meeting will be held at the Chartered
Accountants’ Hall, Moorgate Place, London EC2P 2BJ on
Thursday 14 July 2005 at 11.00 am. Details of the resolutions
to be proposed, including items of special business, are given
in the Notice of Annual General Meeting and Explanatory Notes
which appear on pages 58 to 60.
The directors believe that the resolutions are in the best
interests of the Company and its shareholders as a whole
and unanimously recommend that shareholders should vote
in favour of all resolutions.
By order of the Board
Roger Newton, Secretary 
24 May 2005
Dairy Crest Annual Report 2005 33
0197_DC_AR_2005_p22_39  2/6/05  10:29 am  Page 33 34 Dairy Crest Annual Report 2005
Statement of directors’ responsibilities
for the financial statements
The directors are required by the Companies Act 1985 to
prepare financial statements for each financial year which give
a true and fair view of the state of affairs of the Company and
of the Group as at the end of the financial year and of the profit
or loss of the Group for the financial year.
The directors consider that, in preparing the financial statements
on pages 35 to 54, the Company has used the going concern
concept and appropriate accounting policies, consistently
applied and supported by reasonable and prudent judgements
and estimates, and that all accounting standards which they
consider to be applicable have been followed.
The directors have responsibility for ensuring that the Group
keeps accounting records which disclose with reasonable
accuracy the financial position of the Group and which enable
them to ensure that the financial statements comply with the
Companies Act 1985.
The directors have general responsibility for taking such steps 
as are reasonably open to them to safeguard the assets of the
Group and to prevent and detect fraud and other irregularities.
In adopting a going concern basis in the financial statements
the directors, after making enquiries, have a reasonable
expectation that the Company and the Group have adequate
resources to continue in operational existence for the
foreseeable future.
0197_DC_AR_2005_p22_39  31/5/05  9:45 am  Page 34 Consolidated profit and loss account
Year ended 31 March 2005
Year ended 31 March 2005 Year ended
31 March 2004
Note £m £m £m £m
555555555555555555 5555 5555 5555 5555
Before Exceptional Total Total
exceptional items items and 
and goodwill goodwill 
amortisation amortisation 
555555555555555555 5555 5555 5555 5555
Turnover
Group and share of joint ventures 2 1,348.8 – 1,348.8 1,361.8 
Less:
Share of joint ventures 2 (88.2) – (88.2) (90.6)
555555555555555555 5555 5555 5555 5555
Group turnover 1,2 1,260.6 – 1,260.6 1,271.2 
Operating costs before exceptional items and 
goodwill amortisation 3 (1,167.5) – (1,167.5) (1,172.0)
Operating exceptional items 3,5 – (1.1) (1.1) (20.8)
Goodwill amortisation 3 – (13.1) (13.1) (12.2)
555555555555555555 5555 5555 5555 5555
Operating costs 3 (1,167.5) (14.2) (1,181.7) (1,205.0)
555555555555555555 5555 5555 5555 5555
Group operating profit 93.1 (14.2) 78.9 66.2 
Share of profits of joint ventures 2,5 7.5 (4.3) 3.2 2.2 
555555555555555555 5555 5555 5555 5555
Total operating profit
Group and share of joint ventures 2,4 100.6 (18.5) 82.1 68.4
555555555555555555 5555 5555 5555 5555
Profits/(loss) on disposal of business and properties 5 – 1.0 1.0 (3.1) 
Net interest payable 
– Group 6 (16.3) – (16.3) (19.3)
– Share of joint ventures (0.1) – (0.1) (0.4)
555555555555555555 5555 5555 5555 5555
Profit on ordinary activities before taxation 84.2 (17.5) 66.7 45.6 
Tax on profit on ordinary activities 7 (22.8) 3.8 (19.0) (10.4)
555555555555555555 5555 5555 5555 5555
Profit for the year before minority interests 61.4 (13.7) 47.7 35.2 
Equity minority interests (0.5) – (0.5) (0.8)
555555555555555555 5555 5555 5555 5555
Profit for the year after minority interests 60.9 (13.7) 47.2 34.4 
Dividends 8 (24.9) – (24.9) (23.4)
555555555555555555 5555 5555 5555 5555
Transfer to reserves 21 36.0 (13.7) 22.3 11.0 
555555555555555555 5555 5555 5555 5555
Basic earnings per share (p) 9 38.2 28.1 
Adjusted earnings per share (p) 9 49.3 50.0 
Diluted earnings per share (p) 9 37.8 27.5
The profit and loss account relates to continuing operations. 
Statement of Group total recognised gains and losses
Year ended Year ended
31 March 2005 31 March 2004
£m £m
5555555555555555555555555155 5555 5555
Profit for the year after minority interests 47.2 34.4 
Translation differences on foreign currency investments 0.1 0.2 
5555555555555555555555555155 5555 5555
Total recognised gains for the year 47.3 34.6 
5555555555555555555555555155 5555 5555
Net assets at 31 March 2004 were originally £237.7 million before deducting a prior year adjustment of £0.9 million for the change
in accounting policy for owned shares as set out in Note 1 of the Accounting policies.
Dairy Crest Annual Report 2005 35
0197_DC_AR_2005_p22_39  31/5/05  9:46 am  Page 35 Balance sheets
as at 31 March 2005
36 Dairy Crest Annual Report 2005
Group Company
000000000 55555555111 55555555111
2005 2004 2005 2004
Restated* Restated*
Note £m £m £m £m
555555555555555555 5555 5555 5555 5555
Fixed assets
Intangible assets 11 97.3 99.8 – –
Tangible assets 12 322.7 321.2 – –
Investments 13 – – 96.5 346.5
Investments in joint ventures 14
Share of gross assets 22.6 21.4 – –
Share of gross liabilities (16.2) (17.3) – –
555555555555555555 5555 5555 5555 5555
6.4 4.1 – – 
555555555555555555 5555 5555 5555 5555
426.4 425.1 96.5 346.5 
555555555555555555 5555 5555 5555 5555
Current assets
Stocks 15 172.7 188.5 – – 
Debtors 16 129.3 130.6 56.7 10.5
Cash at bank and in hand 27.2 16.6 0.3 0.1 
555555555555555555 5555 5555 5555 5555
329.2 335.7 57.0 10.6 
555555555555555555 5555 5555 5555 5555
Creditors: amounts falling due within one year
Borrowings 17 (0.3) (3.5) – – 
Other creditors 17 (182.8) (175.2) (21.8) (257.3)
555555555555555555 5555 5555 5555 5555
(183.1) (178.7) (21.8) (257.3)
555555555555555555 5555 5555 5555 5555
Net current assets/(liabilities) 146.1 157.0 35.2 (246.7)
555555555555555555 5555 5555 5555 5555
Total assets less current liabilities 572.5 582.1 131.7 99.8 
Creditors: amounts falling due after more than one year
Borrowings 18 (254.4) (292.8) – – 
Other creditors 18 (10.7) (10.3) – – 
Provisions for liabilities and charges 19 (34.7) (32.4) – – 
555555555555555555 5555 5555 5555 5555
Net assets 272.7 246.6 131.7 99.8 
555555555555555555 5555 5555 5555 5555
Capital and reserves
Called up equity share capital 20 31.2 31.0 31.2 31.0 
Equity reserves
Share premium account 21 28.2 24.8 28.2 24.8 
Merger reserve 21 55.9 55.9 – – 
Owned shares 21 (1.6) (3.8) (1.6) (3.8)
Profit and loss account 21 148.8 128.9 73.9 47.8 
555555555555555555 5555 5555 5555 5555
Equity shareholders’ funds 22 262.5 236.8 131.7 99.8 
555555555555555555 5555 5555 5555 5555
Equity minority interests 10.2 9.8 – – 
555555555555555555 5555 5555 5555 5555
272.7 246.6 131.7 99.8 
555555555555555555 5555 5555 5555 5555
*Restated for the change in accounting policy for owned shares as set out in Note 1 of the Accounting policies.
Simon Oliver, Chairman
Drummond Hall, Chief Executive
The financial statements were approved by the directors on 24 May 2005.
0197_DC_AR_2005_p22_39  2/6/05  10:30 am  Page 36 Consolidated cash flow statement
Year ended 31 March 2005
Year ended Year ended
31 March 2005 31 March 2004
Note £m £m
5555555555555555555555555551 5555 5555
Net cash inflow from operating activities 23(a) 143.0 136.6 
5555555555555555555555555551 5555 5555
Dividends from joint ventures – 0.6
5555555555555555555555555551 5555 5555
Returns on investments and servicing of finance
Interest paid (17.7) (20.6)
5555555555555555555555555551 5555 5555
Net cash outflow from returns on
investments and servicing of finance (17.7) (20.6)
5555555555555555555555555551 5555 5555
Taxation paid (12.6) (8.7)
5555555555555555555555555551 5555 5555
Capital expenditure
Payments to acquire fixed assets (net of grants) (37.7) (41.7)
Proceeds from disposals of fixed assets 23(c) 8.2 12.0 
5555555555555555555555555551 5555 5555
Net cash outflow for capital expenditure (29.5) (29.7)
5555555555555555555555555551 5555 5555
Acquisitions and disposals
Purchase of businesses 24 (9.9) (3.7)
Receipt from sale of business 23(c) 0.2 10.3
5555555555555555555555555551 5555 5555
Net cash (outflow)/inflow from acquisitions and disposals (9.7) 6.6
5555555555555555555555555551 5555 5555
Equity dividends paid (23.9) (20.5)
5555555555555555555555555551 5555 5555
Net cash inflow before financing 49.6 64.3
5555555555555555555555555551 5555 5555
Financing
Decrease in long-term borrowings (57.2) (37.0) 
Decrease in short-term borrowings (3.5) (18.6) 
Decrease in loan notes – (1.4)
Proceeds from exercise of options by employees 3.6 0.2
Proceeds from sale and leaseback 18.7 –
Finance lease repayments (0.6) (0.7)
5555555555555555555555555551 5555 5555
Net cash outflow from financing (39.0) (57.5) 
5555555555555555555555555551 5555 5555
Increase in cash in the year 10.6 6.8
5555555555555555555555555551 5555 5555
Reconciliation of net cash flow to movement in net debt
Net debt at beginning of the year (279.7) (345.2)
Increase in cash in the year 10.6 6.8
Decrease in short-term borrowings 3.5 18.6
Decrease in long-term borrowings 57.2 37.0
Decrease in loan notes – 1.4
Proceeds from sale and leaseback (18.7) –
Cash outflow from decrease in lease financing 0.6 0.7 
Exchange differences on long-term borrowings (1.0) 1.0 
5555555555555555555555555551 5555 5555
Net debt at end of the year 23(b) (227.5) (279.7)
5555555555555555555555555551 5555 5555
Dairy Crest Annual Report 2005 37
0197_DC_AR_2005_p22_39  31/5/05  9:48 am  Page 37 Accounting policies
38 Dairy Crest Annual Report 2005
1 Basis of preparation
The financial statements have been prepared under the
historical cost convention and in accordance with applicable
accounting standards. The Group has adopted Urgent Issues
Task Force Abstract 38 – Accounting for ESOP trusts which
required the net book value of shares held by the Dairy Crest
Employees’ Share Ownership Plan (‘ESOP’) Trust to be
deducted from Shareholders’ Funds instead of being shown as
Fixed Assets-Investments. The comparative balance sheet and
reserves at 31 March 2004 have been restated to reflect
this adjustment. There is no impact on results for the current
or prior year.
2 Consolidation
The Group financial statements consolidate the accounts of
Dairy Crest Group plc and its subsidiary undertakings drawn
up to 31 March each year and include the appropriate share
of the results and net assets of its joint ventures. Subsidiary
undertakings and joint ventures acquired during the year are
consolidated from the date of acquisition.
On consolidation, assets and liabilities of foreign subsidiaries
are translated into sterling at year end exchange rates. The
results of foreign subsidiaries are translated into sterling at
average rates of exchange for the year. Exchange differences
arising from the retranslation of the net investment in foreign
subsidiaries at year end exchange rates, less exchange
differences on borrowings which finance or provide a hedge
against those undertakings, are taken to reserves and are
reported in the statement of total recognised gains and losses.
3 Goodwill
Goodwill arising on acquisitions since 1 April 1998, comprising
the difference between the cost of shares or businesses
acquired and the fair value of the identifiable net assets at the
date of acquisition, is capitalised as an intangible fixed asset
and amortised through the profit and loss account over the
estimated useful life of the asset, not exceeding 20 years. 
Goodwill arising on acquisitions since 1 April 2002 will normally
be amortised over 10 years. 
Goodwill arising on acquisitions before 1 April 1998 has been
charged against the merger reserve and has not been reinstated
following the implementation of FRS 10. Goodwill is reviewed for
impairment at the end of the first full year following acquisition
and in other periods if events or changes in circumstances
indicate that the carrying value may not be recoverable.
If a subsidiary or business is disposed of, any goodwill arising
on acquisition that was written off directly to reserves or that
has not been amortised through the profit and loss account
is taken into account in determining the profit or loss on sale.
4 Turnover
Turnover represents the amount invoiced, net of VAT, for goods
and services supplied to customers.
5 Tangible fixed assets
Tangible fixed assets are stated at cost less accumulated
depreciation. The carrying values of tangible fixed assets are
reviewed for impairment whenever events or circumstances
indicate that the carrying value may not be recoverable. Interest
is capitalised on major capital projects during the period of
construction based on the Group’s average cost of borrowings.
6 Depreciation
Depreciation is calculated to write off the cost of tangible fixed
assets, excluding freehold land, over their estimated useful lives
in equal annual instalments over the following periods:
Freehold buildings – 25 years
Leasehold land and buildings – 25 years or, if shorter, the
period of the lease
Plant and equipment – 4 to 20 years
Vehicles – 4 to 10 years
7 Government and other grants
Regional development and other grants received for the
purchase of fixed assets are included in creditors and
subsequently released to profit over the useful life of the
asset by equal instalments.
8 Leased assets
Assets acquired under finance leases are included in the
balance sheet at cost less depreciation. The net present value
of future lease rentals is included as a liability on the balance
sheet. The interest element of lease rentals is charged to the
profit and loss account in the year.
Rentals payable under operating leases are charged to the profit
and loss account on the straight line basis.
9 Investments
Joint ventures are those in which the Group holds a long-term
interest and shares control under a contractual arrangement.
Joint ventures are accounted for using the gross equity method.
The Group’s share of joint ventures’ profits is included in the
consolidated profit and loss account and its share of their
attributable net assets is included in the Group balance sheet.
10 Stocks
Stocks are stated at the lower of cost (including attributable
production overheads) and net realisable value. Consumable
stores are valued at cost, net of provisions where appropriate.
0197_DC_AR_2005_p22_39  2/6/05  10:30 am  Page 38 11 Deferred taxation
Deferred taxation is recognised using the incremental liability
approach in respect of all timing differences that have originated
but have not been reversed by the balance sheet date.
Deferred tax assets are recognised to the extent to which
they are recoverable.
12 Pensions
The Group continues to use SSAP 24 ‘Accounting for
Pension Costs’ to account for pension costs and provides
the required disclosures under the transitional rules of FRS 17
‘Retirement Benefits’.
Pension costs are recognised on a systematic basis in order
to spread the costs of providing retirement benefits evenly over
the service lives of the employees concerned. Any excess or
deficiency of the actuarial value of assets over the actuarial
value of liabilities is allocated over the average remaining service
lives of current employees on an even percentage of payroll.
13 Research and development
Expenditure on research and development is written off
as incurred.
14 Foreign currencies
Forward foreign exchange contracts are accounted for as
hedges when they relate to a foreign currency asset or liability
that is probable and which involves the same currency as the
hedged item. Assets and liabilities denominated in foreign
currencies are translated into sterling at the rates of exchange
prevailing at the balance sheet date, or the forward rate where
hedged. Exchange rate differences are charged to the profit
and loss account.
15 Derivative instruments
The Group uses forward foreign currency contracts to reduce
exposure to changes in foreign exchange rates. The Group also
uses interest rate swaps to reduce interest rate exposures. The
Group considers that its derivative instruments qualify for hedge
accounting when certain criteria are met as set out below:
Forward foreign currency contracts
The criteria for forward foreign currency contracts are that the
instrument must be related to a foreign currency asset or liability
that is probable and whose characteristics have been identified,
it must involve the same currency as the hedged item and it
must reduce the risk of foreign currency exchange movements
on the Group’s operations.
The rates under such contracts are used to record the
hedged item. As a result, gains and losses are offset against
the foreign exchange gains and losses on the related financial
assets and liabilities, or where the instrument is used to hedge
a committed or probable future transaction, are deferred until
the transaction occurs.
Interest rate swaps
The Group’s criteria for interest rate swaps are that the
instrument must be related to an asset or a liability and it
must change the character of the interest rate by converting
a variable rate to a fixed rate or vice versa.
Interest differentials are recognised by accruing the net interest
payable. Interest rate swaps are not revalued to fair value or
shown in the Group’s balance sheet at the year end.
Dairy Crest Annual Report 2005 39
0197_DC_AR_2005_p22_39  31/5/05  9:49 am  Page 39 Notes to the financial statements
40 Dairy Crest Annual Report 2005
1 Turnover
Turnover originates principally in the United Kingdom. Analysis of turnover by destination which all relates to continuing operations:
Year ended Year ended
31 March 2005 31 March 2004
£m £m
5555555555555555555555555155 5555 5555
United Kingdom 1,176.0 1,184.2
Other EU countries 26.5 24.7
Rest of the world 58.1 62.3
5555555555555555555555555155 5555 5555
Group 1,260.6 1,271.2 
5555555555555555555555555155 5555 5555
2 Segmental information
Analysis of turnover, operating profit and net operating assets of continuing operations by business segment:
Year ended Year ended
31 March 2005 31 March 2004
£m £m
5555555555555555555555555155 5555 5555
Turnover
Consumer Foods 887.3 880.3
Food Services 461.5 481.5
5555555555555555555555555155 5555 5555
Group and share of joint ventures 1,348.8 1,361.8
Less: Share of joint ventures – Consumer Foods (88.2) (90.6)
5555555555555555555555555155 5555 5555
Group turnover 1,260.6 1,271.2
5555555555555555555555555155 5555 5555
Year ended 31 March 2005 Year ended 31 March 2004
£m £m £m £m £m £m
555555551111 55155555555555 55155555555555
Before operating Operating Total Before operating Operating Total
exceptional exceptional exceptional exceptional
items and items and items and items and
goodwill goodwill goodwill goodwill
amortisation amortisation amortisation amortisation
555555551111 5555 5555 5555 5555 5555 5555
Operating profit
Consumer Foods – Group 64.5 (12.4) 52.1 66.6 (15.0) 51.6
– Share of joint ventures 7.5 (4.3) 3.2 5.6 (3.4) 2.2
Food Services 28.6 (1.8) 26.8 32.6 (18.0) 14.6 
555555551111 5555 5555 5555 5555 5555 5555
Group and share of joint ventures 100.6 (18.5) 82.1 104.8 (36.4) 68.4 
555555551111 5555 5555 5555 5555 5555 5555
At At
31 March 2005 31 March 2004
£m £m
5555555555555555555555555551 5555 5555
Net operating assets
Consumer Foods 498.3 526.6
Food Services 70.6 61.8
5555555555555555555555555551 5555 5555
Group and share of joint ventures 568.9 588.4 
5555555555555555555555555551 5555 5555
Net operating assets comprise net assets excluding cash, borrowings, tax and dividend creditors.
3 Operating costs Year ended 31 March 2005 Year ended 31 March 2004 
£m £m £m £m £m £m £m £m 
0005001111555115551155511 555111555115551155511
Before operating Operating Goodwill Total Before operating Operating Goodwill Total
exceptional exceptional amortisation exceptional exceptional amortisation
items and items items and items
goodwill goodwill 
amortisation amortisation 
5555555 001 551111 551111 551111 555111 551111 551111 551111
Cost of sales 926.9 1.1 – 928.0 940.0 19.9 – 959.9 
Distribution costs 190.8 – – 190.8 185.0 – – 185.0 
Administrative expenses 49.8 – 13.1 62.9 47.0 0.9 12.2 60.1
5555555 001 551111 551111 551111 555111 551111 551111 551111
1,167.5 1.1 13.1 1,181.7 1,172.0 20.8 12.2 1,205.0 
5555555 001 551111 551111 551111 555111 551111 551111 551111
0197_DC_AR_2005_p40_54  31/5/05  9:58 am  Page 40 4 Operating profit Year ended Year ended
31 March 2005 31 March 2004
£m £m
5555555555555555555555555155 5555 5555
Operating profit is stated after charging/(crediting):
Depreciation – owned assets 33.2 35.5 
– assets held under finance leases 1.2 0.5 
Amortisation of goodwill 13.1 12.2 
Release of grants (0.8) (0.9)
Operating lease rentals – vehicles and plant & equipment 13.7 14.0
– land and buildings 3.2 3.1
Research and development expenditure 2.1 1.8 
Net profit on rationalisation of household business (3.1) (3.0) 
Auditors’ remuneration – audit fees 0.3 0.3 
– non-audit fees 0.2 0.2 
5555555555555555555555555155 5555 5555
The Group continues to rationalise the household operations following the ongoing decline in doorstep volumes. This rationalisation
includes the closure of certain depots, acquisition of small infill dairy businesses and rationalisation of the ongoing household
operations. These rationalisation activities represent a fundamental part of the ongoing ordinary activities of the household
operations. Fees payable to Ernst & Young LLP for non-audit services mainly related to tax advice and project management
assistance on the Davidstow project and amount to £0.2 million (2004 – £0.2 million).
5 Exceptional items Year ended Year ended
31 March 2005 31 March 2004
£m £m
5555555555555555555555555155 5555 5555
Operating exceptional items
Fixed asset write-downs (net of grant release) (0.2) 16.2
Redundancy costs – 1.6
Consumable and engineering stock write-offs – 0.7
Other rationalisation costs 1.3 2.3 
5555555555555555555555555155 5555 5555
1.1 20.8
Share of joint venture’s write-down of fixed assets and consumables 1.2 3.4 
Share of joint venture’s net loss on closure of site and related rationalisation costs 3.1 – 
5555555555555555555555555155 5555 5555
5.4 24.2 
5555555555555555555555555155 5555 5555
Non-operating exceptional items
Profit on disposal of properties (0.4) (0.1)
(Profit)/loss on disposal of juice business (0.3) 3.2
Share of joint venture’s profit on disposal of property (0.3) –
5555555555555555555555555155 5555 5555
(1.0) 3.1 
5555555555555555555555555155 5555 5555
Operating exceptional items
Operating exceptional items in 2005 principally relate to the final commissioning of the creamery at Davidstow. Yoplait Dairy Crest
has announced the closure of its Enfield and Yeovil factories. Dairy Crest’s share of Yoplait Dairy Crest’s estimated closure costs
amounts to £4.3 million, representing redundancy costs of £2.2 million, write-downs in fixed assets and consumables of £1.2 million
and other rationalisation costs of £0.9 million.
During 2004 the investment and commissioning of the creamery at Davidstow resulted in exceptional costs of £3.6 million. These
costs principally related to fixed asset write-downs of £2.3 million, stock write-offs of £0.3 million and duplicate operating costs of
£1.0 million resulting from the operation of two facilities during the commissioning period.
In July 2003 Dairy Crest closed its butter and powder manufacturing facility at Chard which resulted in closure costs of £16.7 million.
These exceptional costs relate to fixed asset write-downs of £13.9 million, engineering stock write-offs of £0.4 million and
redundancy and other costs of £2.4 million.
The remaining balance in 2004 of £0.5 million relates to the integration of St Ivel Spreads.
Non-operating exceptional items
Profit on disposal of properties includes profits of £0.6 million on the disposal of the closed dairy sites net of the write-down of other
closed sites to their recoverable value. The share of joint venture’s profit on disposal of property relates to additional proceeds
received on a previously disposed site.
Dairy Crest Annual Report 2005 41
0197_DC_AR_2005_p40_54  31/5/05  9:58 am  Page 41 Notes to the financial statements continued
42 Dairy Crest Annual Report 2005
6 Net interest payable (Group) Year ended Year ended
31 March 2005 31 March 2004
£m £m
5555555555555555555555555155 5555 5555
Bank loans and overdrafts 16.3 19.3
5555555555555555555555555155 5555 5555
Interest payable on bank loans and overdrafts is stated after capitalising £0.1 million (2004 – £2.4 million) of interest on expenditure
on capital projects at the Group’s average cost of borrowing of 5.5%.
7 Taxation Year ended Year ended
31 March 2005 31 March 2004
£m £m
5555555555555555555555555155 5555 5555
The taxation charge comprises:
Corporation tax at 30% (2004 – 30%) 18.1 12.1
Adjustments in respect of prior years 
Current tax (0.7) (2.5)
Transfer to deferred tax (1.8) –
Share of joint ventures 1.1 0.7 
5555555555555555555555555155 5555 5555
16.7 10.3 
Deferred tax
Origination and reversal of timing differences 0.5 0.1
Transfer from current tax 1.8 –
5555555555555555555555555155 5555 5555
19.0 10.4 
5555555555555555555555555155 5555 5555
The taxation credit in respect of operating exceptional items is £1.6 million (2004 – £8.6 million). The tax credit in respect of
goodwill amortisation is £2.5 million (2004 – £2.3 million). The tax charge in respect of non-operating exceptional items is
£0.3 million (2004 – credit £1.7 million).
The differences are explained below:
Year ended Year ended
31 March 2005 31 March 2004
£m £m
5555555555555555555555555155 5555 5555
Profit on ordinary activities before tax 66.7 45.6 
Profit on ordinary activities multiplied by standard rate of 
corporation tax in the UK of 30% (2004 – 30%) 20.0 13.7
Effects of:
Adjustments to tax in respect of prior years
Current tax (0.7) (2.5)
Transfer to deferred tax (1.8) –
Adjustments in respect of joint ventures 0.1 0.1
Profits offset by available tax relief (2.7) (3.7)
Expenses not deductible for tax purposes 2.3 2.8 
Deferred tax timing differences (0.5) (0.1) 
5555555555555555555555555155 5555 5555
16.7 10.3 
5555555555555555555555555155 5555 5555
Factors that may affect the future tax charge 
Based on current capital investment plans, the Group expects that future years’ capital allowances will exceed depreciation.
8 Dividends Year ended Year ended
31 March 2005 31 March 2004
£m £m
5555555555555555555555555155 5555 5555
Interim dividend paid of 5.9p (2004 – 5.5p) per share 7.2 6.9 
Proposed final dividend of 14.3p (2004 – 13.4p) per share 17.7 16.5 
5555555555555555555555555155 5555 5555
24.9 23.4 
5555555555555555555555555155 5555 5555
The proposed final dividend will be paid on 9 August 2005 to shareholders on the register on 8 July 2005.
0197_DC_AR_2005_p40_54  31/5/05  9:58 am  Page 42 9 Earnings per share
Earnings per share for the year ended 31 March 2005 have been calculated on the basis of the profit for the year of  £47.2 million
(2004 – £34.4 million) and the weighted average number of shares in issue, totalling 123,424,537 (2004 – 122,624,171). 
The shares held by the Dairy Crest Employees’ Share Ownership Plan Trust (‘ESOP’) and the Dairy Crest Qualifying Employee Share
Ownership Trust (‘QUEST’) are excluded from the weighted average number of shares in issue used in the calculation of earnings
per share in accordance with FRS 14.
To show earnings per share on a consistent basis, which in the directors’ opinion reflects the underlying performance of the
business more appropriately, adjusted earnings per share have been calculated as follows:
Year ended Year ended
31 March 2005 31 March 2004
£m £m
5555555555555555555555555155 5555 5555
Profit for the year 47.2 34.4
Goodwill amortisation (net of taxation) 10.6 9.9 
Operating exceptional items (net of taxation) 3.8 15.6
(Profit)/loss on disposal of business and properties (net of taxation) (0.7) 1.4
5555555555555555555555555155 5555 5555
Adjusted earnings 60.9 61.3 
5555555555555555555555555155 5555 5555
Adjusted earnings per share 49.3p 50.0p 
5555555555555555555555555155 5555 5555
Diluted earnings per share have been calculated on the basis of earnings for the year of £47.2 million (2004 – £34.4 million) and the
weighted average number of shares of 124,760,248 (2004 – 124,935,444) representing the weighted average number of shares
totalling 123,424,537 (2004 – 122,624,171) and the dilutive effect of options amounting to 1,335,711 shares (2004 – 2,311,273).
10 Remuneration of directors and employees Year ended Year ended
31 March 2005 31 March 2004
£000 £000
5555555555555555555555555155 5555 5555
Directors
Salaries and benefits 1,308 1,224
Bonus 295 305
Fees to non-executive directors 257 240
5555555555555555555555555155 5555 5555
Emoluments 1,860 1,769 
5555555555555555555555555155 5555 5555
Compensation for loss of office/retirement – 757
5555555555555555555555555155 5555 5555
Payments to defined contribution pension scheme 178 216
5555555555555555555555555155 5555 5555
Gain on exercise of Sharesave options 14 –
5555555555555555555555555155 5555 5555
Highest paid director
Salary and benefits 440 422
Bonus 83 126
5555555555555555555555555155 5555 5555
Emoluments 523 548
5555555555555555555555555155 5555 5555
Payments to defined contribution pension scheme 178 170
5555555555555555555555555155 5555 5555
Defined benefit accrued pension 46 41 
5555555555555555555555555155 5555 5555
Gain on exercise of Sharesave options 5 – 
5555555555555555555555555155 5555 5555
The performance conditions attaching to long-term incentive scheme awards which commenced during 2002 have not been 
satisfied. As a result these awards lapsed on 31 March 2005. Further information relating to directors’ remuneration for the year 
ended 31 March 2005 is provided in the Report of the Board on directors’ remuneration on pages 26 to 32.
Year ended Year ended
31 March 2005 31 March 2004
number number
5555555555555555555555555155 5555 5555
Employees
Average number of employees:
Production 2,514 2,599
Sales, distribution and administration 4,296 4,446
5555555555555555555555555155 5555 5555
Total employees 6,810 7,045 
5555555555555555555555555155 5555 5555
Dairy Crest Annual Report 2005 43
0197_DC_AR_2005_p40_54  31/5/05  9:59 am  Page 43 Notes to the financial statements continued
44 Dairy Crest Annual Report 2005
10 Remuneration of directors and employees continued Year ended Year ended
31 March 2005 31 March 2004
£m £m
5555555555555555555555555155 5555 5555
Remuneration of employees, including directors:
Wages and salaries 168.4 168.6 
Social security costs 14.8 14.3
Other pension costs 7.5 3.2 
5555555555555555555555555155 5555 5555
190.7 186.1 
5555555555555555555555555155 5555 5555
Remuneration excludes redundancy costs included in Note 5 – Exceptional items.
11 Intangible assets
Goodwill
Group £m
55555555555555555555555551551115555 5555
Cost
At 1 April 2004 123.7
Additions 10.6 
55555555555555555555555551551115555 5555
At 31 March 2005 134.3 
55555555555555555555555551551115555 5555
Amortisation
At 1 April 2004 23.9
Amortisation charge 13.1
55555555555555555555555551551115555 5555
At 31 March 2005 37.0
55555555555555555555555551551115555 5555
Net book value at 31 March 2005 97.3
55555555555555555555555551551115555 5555
Net book value at 1 April 2004 99.8 
55555555555555555555555551551115555 5555
Goodwill is being amortised over its estimated economic life as set out on page 38.
12 Tangible assets Vehicles and
Land and plant & Assets in course
buildings equipment of construction Total
Group £m £m £m £m
555555555555555555 5555 5555 5555 5555
Cost
At 1 April 2004 172.2 317.1 58.8 548.1
Acquisitions – – 0.1 0.1
Additions 11.1 11.0 17.6 39.7
Interest capitalised (Note 6) – – 0.1 0.1
Disposals (17.3) (79.4) – (96.7)
Transfers and reclassifications 12.4 45.0 (57.4) –
Exchange – 0.4 – 0.4
555555555555555555 5555 5555 5555 5555
At 31 March 2005 178.4 294.1 19.2 491.7 
555555555555555555 5555 5555 5555 5555
Depreciation
At 1 April 2004 57.8 169.1 – 226.9
Charge 5.7 28.7 – 34.4
Impairment – (0.2) – (0.2)
Disposals (14.2) (78.2) – (92.4)
Exchange – 0.3 – 0.3
555555555555555555 5555 5555 5555 5555
At 31 March 2005 49.3 119.7 – 169.0
555555555555555555 5555 5555 5555 5555
Net book value at 31 March 2005 129.1 174.4 19.2 322.7 
555555555555555555 5555 5555 5555 5555
Net book value at 1 April 2004 114.4 148.0 58.8 321.2 
555555555555555555 5555 5555 5555 5555
The aggregate amount of interest capitalised in the cost of tangible fixed assets is £7.2 million (2004 – £7.1 million).
0197_DC_AR_2005_p40_54  31/5/05  9:59 am  Page 44 12 Tangible assets continued 2005 2004
£m £m
5555555555555555555555555155 5555 5555
Net book value of land and buildings comprises:
Freehold 119.0 104.4
Leasehold – over 50 years 7.9 7.7
– under 50 years 2.2 2.3
5555555555555555555555555155 5555 5555
129.1 114.4 
5555555555555555555555555155 5555 5555
Capitalised leases included in plant and equipment comprise:
Cost 51.4 35.1
Depreciation (30.3) (34.6)
5555555555555555555555555155 5555 5555
Net book value 21.1 0.5 
5555555555555555555555555155 5555 5555
13 Investments Shares held
by ESOP
Group £m
55555555555555555555551115551555555 5555
Cost
At 1 April 2004 – as reported 3.8
Restatement of shares held by ESOP (Note 21) (3.8)
55555555555555555555551115551555555 5555
At 1 April 2004 – as restated –
55555555555555555555551115551555555 5555
At 31 March 2005 –
55555555555555555555551115551555555 5555
Shares in Loans to
Shares held subsidiary subsidiary
by ESOP undertakings undertakings Total
Company £m £m £m £m
000000000 00 5555 5555 5555
Cost
At 1 April 2004 – as reported 3.8 96.5 250.0 350.3
Restatement of shares held by ESOP (Note 21) (3.8) – – (3.8)
555555555555555555 5555 5555 5555 5555
At 1 April 2004 – as restated – 96.5 250.0 346.5
Disposals – – (250.0) (250.0)
555555555555555555 5555 5555 5555 5555
At 31 March 2005 – 96.5 – 96.5
555555555555555555 5555 5555 5555 5555
On 14 March 2005, by mutual agreement between Dairy Crest Group plc and Dairy Crest Limited, the Discounted Convertible Loan
Stock 2030 issued by Dairy Crest Limited to Dairy Crest Group plc was redeemed at its full market value of £293 million plus
accrued interest. The gain on redemption of £43 million has been recognised in the profit and loss account of Dairy Crest Group plc. 
Dairy Crest Annual Report 2005 45
0197_DC_AR_2005_p40_54  31/5/05  9:59 am  Page 45 Notes to the financial statements continued
46 Dairy Crest Annual Report 2005
13 Investments continued
At 31 March 2005 the principal subsidiary undertakings and joint ventures were:
Percentage of
ordinary share
Business capital held
555555555555511 5555555555555555511111 5551111
Subsidiary undertakings:
Dairy Crest Limited Manufacture of dairy products 100%
Millway Dairy Crest Limited* Manufacture of Stilton and other speciality cheeses 100%
English Butter Marketing Company Limited* Promotion of the ‘Country Life’ brand 100%
Philpot Dairy Products Limited* Trading in dairy products 100%
Wexford Creamery Limited Manufacture of dairy products 80%
Haverfordwest Cheese Limited* Manufacture of dairy products 80%
Joint venture:
Yoplait Dairy Crest Limited* Manufacture, marketing and distribution of fresh dairy products 49%
The principal place of operation and country of incorporation of all subsidiary undertakings and joint ventures is 
England and Wales except for Wexford Creamery Limited which is in Ireland.
*Investments are held by Dairy Crest Limited.
14 Investments in joint ventures Group
£m
550000000000000051111 5555
At 1 April 2004 4.1 
Share of retained profits 2.3
550000000000000051111 5555
At 31 March 2005 6.4 
550000000000000051111 5555
Group
5500000000005100 55555111555
2005 2004
Analysis of underlying assets: £m £m
5555555555555555555555555155 5555 5555
Share of fixed assets 5.7 5.4
Share of current assets 16.9 16.0
5555555555555555555555555155 5555 5555
Share of gross assets 22.6 21.4
Share of liabilities due within one year (16.2) (17.3)
5555555555555555555555555155 5555 5555
Share of net assets 6.4 4.1
5555555555555555555555555155 5555 5555
15 Stocks Group
5500510000000000 55555111555
2005 2004
£m £m
5500510000000000 00 00
Raw materials and consumable stores 20.5 18.2
Finished goods 152.2 170.3
5500510000000000 00 00
172.7 188.5
5500510000000000 00 00
16 Debtors Group Company
5500000000 1110000 55555111555
2005 2004 2005 2004
£m £m £m £m
555555555555555555 5555 5555 5555 5555
Trade debtors 106.3 106.8 – –
Amounts owed by subsidiary undertaking – – 56.7 10.5
Amounts owed by joint ventures 1.7 2.4 – –
Other debtors 12.2 14.3 – –
Prepayments and accrued income 9.1 7.1 – –
555555555555555555 5555 5555 5555 5555
129.3 130.6 56.7 10.5
555555555555555555 5555 5555 5555 5555
0197_DC_AR_2005_p40_54  31/5/05  10:02 am  Page 46 17 Creditors: amounts falling due within one year Group Company
555555555555555555 555500111 555500111
2005 2004 2005 2004
Restated
£m £m £m £m
555555555555555555 5555 5555 5555 5555
Borrowings
Bank overdrafts – 3.5 – – 
Obligations under finance leases 0.3 – – – 
555555555555555555 5555 5555 5555 5555
0.3 3.5 – – 
555555555555555555 5555 5555 5555 5555
Other creditors
Trade creditors 79.8 82.0 – –
Dividends payable 17.7 16.5 17.7 16.5
Amounts payable to subsidiary undertaking – – – 236.9
Corporation tax 16.3 13.2 4.1 3.9
Other taxation and social security 5.1 4.9 – –
Grants 0.9 0.5 – –
Other creditors 15.1 17.3 – –
Accruals 47.9 40.8 – –
555555555555555555 5555 5555 5555 5555
182.8 175.2 21.8 257.3
555555555555555555 5555 5555 5555 5555
18 Creditors: amounts falling due after more than one year Group
5555555555555555555555555155 55555555111
2005 2004
£m £m
5555555555555555555555555155 5555 5555
Borrowings
Bank loans 236.6 292.8
Obligations under finance leases – between one and two years 0.7 – 
– between two and five years 5.3 –
– over five years 11.8 –
5555555555555555555555555155 5555 5555
254.4 292.8 
5555555555555555555555555155 5555 5555
Other creditors
Grants 10.7 10.3 
5555555555555555555555555155 5555 5555
19 Provisions for liabilities and charges Deferred
taxation
£m
50000001100111001110011100111 00
Group
At 1 April 2004 32.4
Transfer from current tax 1.8
Profit and loss account credit 0.5
50000001100111001110011100111 00
At 31 March 2005 34.7
50000001100111001110011100111 00
2005 2004
£m £m
5555555555555555555555555155 5555 5555
Group
The deferred tax liability comprises:
Capital allowances 36.5 33.3
Other timing differences (1.8) (0.9) 
5555555555555555555555555155 5555 5555
34.7 32.4
5555555555555555555555555155 5555 5555
No deferred tax has been provided on capital gains due to the availability of capital losses.
Dairy Crest Annual Report 2005 47
0197_DC_AR_2005_p40_54  31/5/05  10:03 am  Page 47 Notes to the financial statements continued
48 Dairy Crest Annual Report 2005
20 Share capital
The Company has an authorised share capital of 240,000,000 ordinary shares of 25 pence each (2004 – 240,000,000), of which
124,982,062 are issued and fully paid (2004 – 124,131,673).  During the year ended 31 March 2005 850,389 shares were issued
to the QUEST at a premium of £3.4 million for an aggregate consideration of £3.6 million.
Employee share schemes:
Options granted under the Dairy Crest Executive Share Option Scheme (‘ESOS’) to subscribe for the Company’s shares can be
exercised up to 2012.
Options granted under the Dairy Crest Sharesave Scheme options can be granted to eligible employees at a discount of up to 20%
of the market value of the shares at the date of grant.
The Dairy Crest Long Term Incentive Share Plan (‘LTISP’) is a long-term incentive scheme. Awards are made to directors and senior
managers consisting of the right to acquire shares for a nominal price subject to the achievement of financial targets based on total
shareholder return over a three year period versus comparator companies and growth in earnings per share.  
The shares held by the ESOP are available to satisfy awards under LTISP and ESOS and the shares held by the QUEST were
available to satisfy awards under the Sharesave Scheme. In aggregate, the Company has granted options on ESOS and Sharesave
over the unissued share capital at prices between 189.0 pence and 415.0 pence exercisable at varying dates up to 23 July 2012
and grants under LTISP exercisable at dates up to 6 July 2014 as follows:
Sharesave
LTISP ESOS Scheme
Number Number Number
00000000000111 5555 5555 5555
Options outstanding at beginning of the year 2,066,309 130,882 2,889,560
Options granted during the year 871,338 – –
Options exercised during the year (725,331) – (1,262,890) 
Options lapsed during the year (818,726) – (315,750) 
00000000000111 5555 5555 5555
Options outstanding at end of the year 1,393,590 130,882 1,310,920
00000000000111 5555 5555 5555
21 Equity reserves Share Merger Owned Profit and loss
premium reserve shares account
£m £m £m £m
000000000 00 00 00 00
Group
At 1 April 2004 – as reported 24.8 55.9 – 126.0
Restatement of shares held by ESOP – – (3.8) 2.9 
000000000 00 5555 5555 5555
At 1 April 2004 – as restated 24.8 55.9 (3.8) 128.9
Issue of shares to QUEST 3.4 – – (3.6)
QUEST options exercised – – – 3.5
Retained profit for the year – – – 22.3
ESOP options exercised – – 2.2 (2.4)
Exchange differences – – – 0.1 
000000000 00 5555 5555 5555
At 31 March 2005 28.2 55.9 (1.6) 148.8 
000000000 00 5555 5555 5555
The cumulative amount of goodwill charged against the merger reserve is £86.8 million (2004 – £86.8 million).
The comparatives at 31 March 2004 have been restated to comply with UITF 38, resulting in an increase in profit and loss account
reserve of £2.9 million and an overall reduction in equity shareholders’ funds of £0.9 million, at this date.
At 31 March 2005 the Dairy Crest Employees’ Share Ownership Plan Trust (‘ESOP’) held 535,791 shares (2004 – 1,261,122 shares)
in the Company at a cost of £1.6 million (2004 – £3.8 million). The ESOP was established in August 1996 to purchase shares in the
Company in order to hedge certain future obligations of the Group including shares awarded under the LTISP and the ESOS. During
the year the Trustee of the ESOP issued 725,331 shares following exercises of LTISP options. The market value of the shares held by
the ESOP which are listed on the London Stock Exchange was £2.5 million at 31 March 2005 (2004 – £5.0 million).
Shares issued to the QUEST, which have not been issued to parties outside the Group, have been deducted from the profit and loss
account. Exercises of these shares are credited to the profit and loss account. The fair value of the options issued under the Dairy Crest
Sharesave Scheme in March 2002 was £2.0 million and the fair value of the options issued under LTISP in July 2002 was £0.6 million.
0197_DC_AR_2005_p40_54  31/5/05  10:03 am  Page 48 21 Equity reserves continued
At 31 March 2005 the QUEST held no shares (2004 – 412,501 shares). All shares, including 850,389 shares subscribed for during 
the year, were transferred to employees and ex-employees exercising options under the Dairy Crest Sharesave Scheme. The QUEST
was terminated in April 2005 and all future obligations to issue shares under the Dairy Crest Sharesave Scheme will be satisfied by 
the issue of new shares by Dairy Crest Group plc.
Share Owned Profit and loss
premium shares account
£m £m £m
00000000000111 00 5555 5555
Company
At 1 April 2004 – as reported 24.8 – 47.8
Restatement of shares held by ESOP – (3.8) –
00000000000111 00 5555 5555
At 1 April 2004 – as restated 24.8 (3.8) 47.8
ESOP options exercised – 2.2 –
Issue of shares to the QUEST 3.4 – (3.6)
QUEST options exercised – – 3.5
Profit for the year after dividends – – 26.2
00000000000111 00 00 00
At 31 March 2005 28.2 (1.6) 73.9 
00000000000111 00 5555 5555
As permitted by section 230 of the Companies Act 1985, no separate profit and loss account is presented for the Company. The
profit for the year dealt with in the accounts of the Company is £51.1 million (2004 – £23.0 million). No dividends were received from
subsidiary undertakings during the year (2004 – £15.0 million).
22 Reconciliation of movements in Group shareholders’ funds Year ended Year ended
31 March 2005 31 March 2004
£m £m
000000000000051 5555 5555
Profit for the year 47.2 34.4 
Dividends (24.9) (23.4)
000000000000051 5555 5555
Retained profit for the year 22.3 11.0
Issue of shares to the QUEST 3.6 0.6
ESOP options exercised (0.2) –
Shares issued to the QUEST (3.6) (0.5) 
QUEST options exercised 3.5 0.2
Exchange differences 0.1 0.2 
000000000000051 5555 5555
Movement in the year 25.7 11.5
At beginning of the year – as restated 236.8 225.3
000000000000051 5555 5555
At end of the year 262.5 236.8
000000000000051 5555 5555
23 Cash flow statement Year ended Year ended
31 March 2005 31 March 2004
£m £m
000000000000051 5555 5555
(a) Reconciliation of operating profit to net cash inflow from operating activities
Operating profit for Group and share of joint ventures 82.1 68.4
Non-cash items:
Pensions 0.1 (1.0)
Operating exceptional items (0.2) 16.9
Depreciation 34.4 36.0
Goodwill amortisation 13.1 12.2
Release of grants (0.8) (0.9)
Share of profits of joint ventures (3.2) (2.2)
Net profit on rationalisation of household business (3.1) (3.0)
Decrease in stocks 16.8 16.7
Decrease in debtors 3.7 9.2
Increase/(decrease) in creditors 0.1 (15.7)
000000000000051 5555 5555
Net cash inflow from operating activities 143.0 136.6 
000000000000051 5555 5555
Cash flows on operating exceptional items amounted to £1.3 million (2004 – £3.9 million – principally closure of Chard) and relate to
the commissioning of the creamery at Davidstow.
Dairy Crest Annual Report 2005 49
0197_DC_AR_2005_p40_54  2/6/05  10:31 am  Page 49 Notes to the financial statements continued
50 Dairy Crest Annual Report 2005
23 Cash flow statement continued At Exchange At
1 April 2004 Cash flow movement 31 March 2005
£m £m £m £m
555555555555555555 5555 5555 5555 5555
(b) Analysis of net debt
Cash at bank and in hand 16.6 10.6 – 27.2
Short-term bank borrowings (3.5) 3.5 – –
Long-term bank borrowings (292.8) 57.2 (1.0) (236.6)
Finance leases – (18.1) – (18.1)
555555555555555555 5555 5555 5555 5555
Total (279.7) 53.2 (1.0) (227.5)
555555555555555555 5555 5555 5555 5555
(c) Disposals
Proceeds from the disposal of fixed assets during the year ended 31 March 2005 includes consideration received from the disposal
of closed dairy sites, £2.1 million (2004 – £5.3 million) and from the disposal of household depots of £6.1 million (2004 – £5.9 million).
Receipt from sale of business represents additional consideration of £0.2 million (2004 – £10.3 million) relating to disposal of the
chilled juice business based at Kidlington.
24 Purchase of businesses
During the year ended 31 March 2005 the Group acquired the goodwill of a number of bottled milk buyers for a cash consideration
of £6.3 million (2004 – £3.7 million). The fair value of the net assets acquired was £0.3 million, including cash of £0.1 million resulting
in goodwill on acquisition of £6.0 million.
During the year ended 31 March 2005 the Group also acquired the remaining 44% interest in English Butter Marketing Company
Limited for £4.6 million, including deferred consideration of £1.0 million. The fair value of net assets acquired was nil resulting in
goodwill on acquisition of £4.6 million.
25 Contingent liabilities
Trading guarantees
The Group has provided guarantees and counter-indemnities which totalled £17.9 million at 31 March 2005 (2004 – £27.8 million).
This includes a guarantee for the liabilities amounting to £10.9 million (2004 – £15.7 million) (as defined in Section 5(c)(iii) of the
Companies (Amendment) Act 1986, Republic of Ireland) of Wexford Creamery Limited and subsidiaries, which are Irish registered
companies, for the financial year ended 31 March 2005. As a result Wexford Creamery Limited and subsidiaries are exempt from filing
statutory accounts with the Registrar of Companies in Ireland, under the provisions of Section 17 of the Irish Companies (Amendment)
Act 1986. 
The Company has provided guarantees to its bankers amounting to £236.6 million at 31 March 2005 (2004 – £297.2 million including
£4.4 million to the bankers of one of its joint ventures).
26 Capital commitments Group
000000000000051 0000111
2005 2004
£m £m
5555555555555555555555555155 5555 5555
The following future capital expenditure had been contracted at 31 March 7.6 6.8
5555555555555555555555555155 5555 5555
0197_DC_AR_2005_p40_54  31/5/05  10:03 am  Page 50 27 Operating lease rentals Vehicles and Vehicles and
Land and plant & Land and plant &
buildings equipment buildings equipment
555555555555555555 5555 5555 5555 5555
2005 2005 2004 2004
£m £m £m £m
555555555555555555 5555 5555 5555 5555
Rentals payable by the Group during the following year 
relate to commitments expiring:
Within one year 0.3 4.6 – 5.3
Between one and five years 0.5 9.3 0.6 8.6
After five years 2.2 1.1 2.8 0.7 
555555555555555555 5555 5555 5555 5555
3.0 15.0 3.4 14.6 
555555555555555555 5555 5555 5555 5555
28 Pensions
At 31 March 2005 permanent staff of Dairy Crest Group plc and its subsidiary undertakings were eligible for membership of the
Dairy Crest Group Pension Fund (‘the Dairy Crest Fund’).
The Dairy Crest Fund, which is of the defined benefits type, is funded by contributions from employees and the Group. The Group
has continued to account for pensions in accordance with SSAP 24.
An actuarial assessment of the Dairy Crest Fund was carried out as at 31 March 2004 by the Fund’s actuary using the projected unit
method. The principal actuarial assumptions adopted for the assessment were that, over the long term, the annual rate of return on
the investments of 7.2% would be 2.6% higher than the increase in pensionable pay and 4.3% higher than the annual increase in
present and future pensions in payment.
At the date of the assessment, the market value of the Dairy Crest Fund assets amounted to £451.9 million. The actuarial value of
the assets was sufficient to cover 107% of the value of the members’ accrued benefits representing an actuarial surplus of £30.0
million. The surplus is amortised over the service lives of Fund members (on average 11.2 years) as an even percentage of payroll
resulting in a credit to the profit and loss account of £2.7 million. The next actuarial valuation will be carried out as at 31 March 2007.
The pension debtor at 31 March 2005 was £5.2 million (2004 – £5.3 million).
The Group has charged £0.2 million (2004 – £0.2 million) in respect of unfunded pensions for a director whose benefits are
restricted by Inland Revenue limits. Group contributions paid to the Dairy Crest Fund amounted to £7.0 million (2004 – £4.7 million).
FRS 17 was issued in November 2000. However, it is not mandatory until the financial year ending 31 March 2006. The Company
is required to adopt International Accounting Standards (‘IAS’) for the year ending 31 March 2006 and plans to move directly to the
equivalent standard under IAS. Under FRS 17 certain disclosures are required as to the potential impact on the balance sheet, profit
and loss account and the statement of total recognised gains and losses as if this standard was adopted.
The calculation used for FRS 17 disclosures has been based on the most recent actuarial valuation at 31 March 2004 and updated
by Aon Consulting to take account of the requirements of FRS 17 in order to assess the liabilities of the scheme at 31 March 2004
and 31 March 2005. This update does not represent a formal valuation. Scheme assets are stated at their market values at the
respective balance sheet dates.
The following assumptions are used for FRS 17 purposes: Group Group
0000000000000111111 0000111
2005 2005 2004 2004
Annual rates Value Annual rates Value
%£m %£m
555555555555555555 5555 5555 5555 5555
Rate of increase in salaries 4.5 – 4.4 – 
Rate of increase in pensions in payment and deferred pensions
(and price inflation) 3.0 – 2.9 – 
Discount rate 5.5 – 5.6 – 
Equities 8.0 375.8 7.8 338.4
Bonds and other investments 4.7 119.0 4.7 113.4 
555555555555555555 5555 5555
494.8 451.8
555555555555555555 5555 5555
Dairy Crest Annual Report 2005 51
0197_DC_AR_2005_p40_54  31/5/05  10:03 am  Page 51 Notes to the financial statements continued
52 Dairy Crest Annual Report 2005
28 Pensions continued
For FRS 17 purposes the net pension liability as at 31 March 2005 was £73.1 million. This is derived as follows:
Group Group
2005 2004
£m £m
5555555555555555555555555155 5555 5555
Total market value of assets 494.8 451.8 
Present value of scheme liabilities (599.2) (547.0)
5555555555555555555555555155 5555 5555
Deficit in the scheme (104.4) (95.2)
Related deferred tax asset 31.3 28.6
5555555555555555555555555155 5555 5555
Net pension liability (73.1) (66.6) 
5555555555555555555555555155 5555 5555
An analysis of the defined benefit cost under FRS 17 assumptions for the year ended 31 March 2005 is as follows:
Group Group
2005 2004
£m £m
5555555555555555555555555155 5555 5555
Current service cost (15.4) (14.8)
Past cost – (0.2)
5555555555555555555555555155 5555 5555
Total operating charge (15.4) (15.0)
5555555555555555555555555155 5555 5555
Expected return on pension scheme assets 31.4 25.1
Interest on pension scheme liabilities (30.6) (27.4)
5555555555555555555555555155 5555 5555
Total other finance income/(cost) 0.8 (2.3)
5555555555555555555555555155 5555 5555
Actual return less expected return on pension scheme assets 20.4 63.7
Experience (losses)/gains arising on scheme liabilities (1.7) 1.2
Loss arising from changes in assumptions underlying the present value of scheme liabilities (20.3) (22.4)
5555555555555555555555555155 5555 5555
Actuarial (loss)/gain recognised in the statement of total recognised gains and losses (1.6) 42.5
5555555555555555555555555155 5555 5555
The total actuarial loss recognised in the statement of total recognised gains and losses in 2003 was £177.0 million (36% of scheme
liabilities). This comprises actual return less expected return on pension scheme assets (£142.6 million, 38% of scheme assets),
experience losses arising on scheme liabilities (£0.1 million) and losses arising from changes in assumptions underlying the present
value of scheme liabilities (£34.3 million).
Analysis of movements in deficit during the year:
Group Group
2005 2004
£m £m
5555555555555555555555555155 5555 5555
At 1 April 2004 (95.2) (125.1)
Total operating charge (15.4) (15.0)
Total other finance income/(cost) 0.8 (2.3)
Actuarial (loss)/gain (1.6) 42.5
Contributions 7.0 4.7
5555555555555555555555555155 5555 5555
At 31 March 2005 (104.4) (95.2)
5555555555555555555555555155 5555 5555
History of experience gains and losses:
Group Group
2005 2004
5555555555555555555555555155 5555 5555
Difference between actual return and expected return on pension scheme assets:
– amount (£m) 20.4 63.7
– % of scheme assets 4% 14%
5555555555555555555555555155 5555 5555
Experience (losses)/gains arising on scheme liabilities:
– amount (£m) (1.7) 1.2
– % of the present value of scheme liabilities – –
5555555555555555555555555155 5555 5555
Total actuarial (loss)/gain recognised in the statement of total recognised gains and losses
– amount (£m) (1.6) 42.5
– % of the present value of scheme liabilities – 8%
5555555555555555555555555155 5555 5555
0197_DC_AR_2005_p40_54  2/6/05  10:31 am  Page 52 28 Pensions continued
Reconciliation of net assets and reserves under FRS 17:
Group Group
Restated
2005 2004
£m £m
5555555555555555555555555155 5555 5555
Net assets
Net assets less minority interests 262.5 236.8 
FRS 17 net pension liability (73.1) (66.6)
Less SSAP 24 pension asset net of deferred tax in accounts (3.7) (3.7)
5555555555555555555555555155 5555 5555
Net assets including FRS 17 net pension liability 185.7 166.5
5555555555555555555555555155 5555 5555
Reserves
Profit and loss reserve 148.8 128.9
FRS 17 net pension liability (73.1) (66.6)
Less SSAP 24 pension asset net of deferred tax in accounts (3.7) (3.7)
5555555555555555555555555155 5555 5555
Profit and loss reserve including FRS 17 net pension liability 72.0 58.6
5555555555555555555555555155 5555 5555
29 Financial instruments
An explanation of the Group’s objectives and policies relating to financial instruments is set out in the Financial review on pages 19 to 20.
Financial instruments other than derivatives comprise cash, overdrafts and bank loans. Short–term debtors and creditors are excluded. 
The Group finances its operations through issued share capital, retained profit and bank loans. At 31 March 2005 the Group has available
facilities of £470 million, £350 million of which expires by June 2010 and £120 million which is fully utilised and expires by September 2007.
All bank loans and overdrafts are unsecured.
Interest rate risk profile of financial assets and liabilities
Financial assets
The Group has no financial assets, other than short-term debtors and cash at bank and in hand. Cash at bank and in hand is
predominantly denominated in sterling and earns interest at floating rates based on LIBOR.
Financial liabilities
After taking into account the interest rate contracts entered into by the Group, the interest rate profile of the Group’s financial liabilities was:
Floating rate Fixed rate
financial liabilities financial liabilities Total
£m £m £m
5555555555555555555555111 11115155 5555 5555
Currency
Sterling 66.7 170.0 236.7 
Euro 18.0 – 18.0 
5555555555555555555555111 11115155 5555 5555
At 31 March 2005 84.7 170.0 254.7 
5555555555555555555555111 11115155 5555 5555
Currency
Sterling 25.0 245.0 270.0
Euro 26.3 – 26.3
5555555555555555555555111 11115155 5555 5555
At 31 March 2004 51.3 245.0 296.3 
5555555555555555555555111 11115155 5555 5555
The Group’s floating rate liabilities are at rates which fluctuate, mainly dependent upon LIBOR. All the Group’s other creditors falling
due within one year are excluded from the above table as they are short-term items. For fixed rate financial liabilities the average
interest rates, including margin, and the average period for which the rates are fixed were:
2005 2004
000000000 0000111 0000111
Weighted Weighted average Weighted Weighted average
average period for which average period for which
interest rate the rate is fixed interest rate the rate is fixed
000000000 00 5110111 00 00
Currency
Sterling 5.63% 14 months 5.90% 20 months 
000000000 00 5110111 00 00
Dairy Crest Annual Report 2005 53
0197_DC_AR_2005_p40_54  31/5/05  10:04 am  Page 53 Notes to the financial statements continued
54 Dairy Crest Annual Report 2005
29 Financial instruments continued
Currency exposures
As at 31 March 2004 and 31 March 2005, after taking into account the effects of forward foreign exchange contracts, the Group
had no material currency exposures.
Maturity of financial liabilities
The maturity profile of the Group’s financial liabilities was:
2005 2004
£m £m
5555555555555555555555555155 5555 5555
In one year or less, or on demand 0.3 3.5
In more than one year but not more than two years 20.0 192.8 
In more than two years but not more than five years 222.6 100.0
In over five years 11.8 –
5555555555555555555555555155 5555 5555
254.7 296.3 
5555555555555555555555555155 5555 5555
Borrowing facilities
Committed undrawn borrowing facilities available at 31 March 2005 amounted to £233.0 million (2004 – £162.2 million). £20.0 million
(2004 – £60.0 million) of the undrawn facility expires within one year, £40.0 million (2004 – £102.2 million) of the facility expires in one
to two years and £173.0 million (2004 – £nil million) expires in over two years.
Fair values of financial assets and liabilities
The book values and fair values of the Group’s financial assets and liabilities at 31 March were:
2005 2004
555555555555555555 51115555555 55551115555
Book value Fair value Book value Fair value
£m £m £m £m
555555555555555555 5555 5555 5555 5555
Primary financial instruments held or issued to finance 
the Group’s operations:
Short-term borrowings 0.3 0.3 3.5 3.5
Long-term borrowings 254.4 254.4 292.8 292.8
Cash (27.2) (27.2) (16.6) (16.6)
Derivative financial instruments:
Interest rate swaps – (0.2) – 0.2
Forward foreign currency contracts – 0.1 – 1.4
555555555555555555 5555 5555 5555 5555
227.5 227.4 279.7 281.3
555555555555555555 5555 5555 5555 5555
The fair values of the interest rate swaps and foreign currency contracts have been determined by reference to prices available from
the markets in which the instruments are traded.
As indicated in the table above there were no material differences between the book values and the fair values of the Group’s
financial assets and liabilities at 31 March 2004 or 31 March 2005. There were no material unrecognised or deferred gains or losses
on forward exchange contracts or interest rate swaps at 31 March 2004 or 31 March 2005.
The Group is exposed to loss in the event of non-performance by the counterparties of the above forward exchange contracts
and interest rate swaps but non-performance is not expected to occur because all counterparties have a long-term AA credit rating
or better.
30 Related party transactions
Yoplait Dairy Crest Limited, a joint venture of Dairy Crest Group plc, incurred fees of £10.6 million (2004 – £10.5 million) from the
Group for sales and distribution activities carried out on its behalf. Details of amounts owed by joint ventures are shown in Note 16.
Sales of milk by the Group to Yoplait Dairy Crest Limited amounted to £4.9 million (2004 – £7.6 million). Ashton Associates a
partnership between Mr and Mrs S M D Oliver received £22,000 (2004 – £22,000) for administration and secretarial services
covering the operations of the Chairman’s office.
31 Post balance sheet events
On 5 May 2005 the Group acquired 100% of the ordinary share capital of Starcross Foods Limited, a dairy in Foston, Derbyshire for
£7.8 million, plus debt on acquisition of £9.1 million.
On 14 May 2005 the Group acquired the dairy business and assets of the Midlands Co-operative Society for a cash consideration
of £20 million subject to working capital adjustments.
0197_DC_AR_2005_p40_54  2/6/05  10:31 am  Page 54 Independent auditors’ report to the members of Dairy Crest Group plc
We have audited the Group’s financial statements for the year
ended 31 March 2005 which comprise the Consolidated profit
and loss account, Statement of Group total recognised gains
and losses, Balance sheets, Consolidated cash flow statement,
Accounting policies and the related notes 1 to 31. These
financial statements have been prepared on the basis of the
accounting policies set out therein. We have also audited the
information in the Report of the Board on directors’
remuneration that is described as having been audited.
This report is made solely to the Company’s members, as a
body, in accordance with Section 235 of the Companies Act
1985. Our audit work has been undertaken so that we might
state to the Company’s members those matters we are required
to state to them in an auditors’ report and for no other purpose.
To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and
the Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
The directors are responsible for preparing the Annual Report,
Report of the Board on directors’ remuneration and the financial
statements in accordance with applicable United Kingdom law
and accounting standards as set out in the Statement of
directors’ responsibilities in relation to the financial statements.
Our responsibility is to audit the financial statements and the
part of the Report of the Board on directors’ remuneration to
be audited in accordance with relevant legal and regulatory
requirements, United Kingdom Auditing Standards and the
Listing Rules of the Financial Services Authority.
We report to you our opinion as to whether the financial
statements give a true and fair view and whether the financial
statements and the part of the Report of the Board on directors’
remuneration to be audited have been properly prepared in
accordance with the Companies Act 1985. We also report to
you if, in our opinion, the Directors’ report is not consistent with
the financial statements, if the Company has not kept proper
accounting records, if we have not received all the information
and explanations we require for our audit, or if information
specified by law or the Listing Rules regarding directors’
remuneration and transactions with the Group is not disclosed.
We review whether the Corporate governance statement reflects
the Company’s compliance with the nine provisions of the 2003
FRC Code specified for our review by the Listing Rules of the
Financial Services Authority, and we report if it does not.
We are not required to consider whether the Board’s statements
on internal control cover all risks and controls, or form an
opinion on the effectiveness of the Group’s corporate
governance procedures or its risk and control procedures. 
We read other information contained in the Annual Report and
consider whether it is consistent with the audited financial
statements. This other information comprises the Directors’
report, unaudited part of the Report of the Board on directors’
remuneration, Chairman’s statement, Chief Executive’s review,
Operational review, Financial review, Corporate governance
statement and Statement of the directors’ responsibilities. We
consider the implications for our report if we become aware of
any apparent misstatements or material inconsistencies with the
financial statements. Our responsibilities do not extend to any
other information.
Basis of audit opinion 
We conducted our audit in accordance with United Kingdom
Auditing Standards issued by the Auditing Practices Board. An
audit includes examination, on a test basis, of evidence relevant
to the amounts and disclosures in the financial statements and
the part of the Report of the Board on directors’ remuneration
to be audited. It also includes an assessment of the significant
estimates and judgements made by the directors in the
preparation of the financial statements, and of whether the
accounting policies are appropriate to the Group’s
circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the
information and explanations which we considered necessary in
order to provide us with sufficient evidence to give reasonable
assurance that the financial statements and the part of the
Report of the Board on directors’ remuneration to be audited
are free from material misstatement, whether caused by fraud
or other irregularity or error. In forming our opinion we also
evaluated the overall adequacy of the presentation of
information in the financial statements and the part of the
Report of the Board on directors’ remuneration to be audited.
Opinion
In our opinion:
• the financial statements give a true and fair view of the state
of affairs of the Company and of the Group as at 31 March
2005 and of the profit of the Group for the year then ended; and
• the financial statements and the part of the Report of the
Board on directors’ remuneration to be audited have been
properly prepared in accordance with the Companies Act 1985.
Ernst & Young LLP
Registered Auditor
London
24 May 2005
Dairy Crest Annual Report 2005 55
0197_DC_AR_2005_p55-60  31/5/05  10:06 am  Page 55 Group financial history
2001 2002 2003 2004 2005
Profit and loss account summary £m £m £m £m £m
555555555551155 5555 5555 5555 5555 5555
Turnover by segment:
Consumer Foods 785 841 815 880 887
Food Services 522 525 511 482 462
555555555551155 5555 5555 5555 5555 5555
Group including share of joint ventures 1,307 1,366 1,326 1,362 1,349
Share of joint ventures’ turnover (79) (80) (80) (91) (88)
555555555551155 5555 5555 5555 5555 5555
Group 1,228 1,286 1,246 1,271 1,261
555555555551155 5555 5555 5555 5555 5555
Operating profit by segment:
Consumer Foods 41 63 63 72 72
Food Services 33 30 35 33 29
Acquisition reorganisation costs (20) (42) (31) – –
Other operating exceptional items (2) (3) (1) (24) (6)
Amortisation of goodwill (1) (2) (7) (12) (13)
555555555551155 5555 5555 5555 5555 5555
Total operating profit 51 46 59 69 82
Non-operating exceptional items – 2 10 (3) 1
Interest (17) (19) (21) (20) (16)
555555555551155 5555 5555 5555 5555 5555
Profit before tax 34 29 48 46 67
555555555551155 5555 5555 5555 5555 5555
Balance sheet summary
Operating assets:
Consumer Foods 376 440 549 526 498
Food Services 120 112 90 62 71
555555555551155 5555 5555 5555 5555 5555
Total operating assets 496 552 639 588 569
Tax and dividend creditors (48) (52) (59) (61) (68)
Net borrowings (246) (285) (345) (280) (228)
555555555551155 5555 5555 5555 5555 5555
Net assets 202 215 235 247 273
Minority interests (2) (9) (9) (10) (10)
555555555551155 5555 5555 5555 5555 5555
Shareholders’ funds 200 206 226 237 263
Cash flow summary
Generated from operating activities 107 48 105 137 143
Dividends from joint ventures 1 1 1 1 –
Fixed asset investment (net of grants) (29) (60) (62) (42) (38)
555555555551155 5555 5555 5555 5555 5555
79 (11) 44 96 105
Interest paid (16) (19) (22) (21) (18)
Taxation paid (11) (5) (4) (9) (13)
Dividends paid (15) (17) (19) (21) (24)
Purchase of businesses (236) (3) (94) (4) (10)
Other items (principally asset disposals) 1 16 35 24 12
555555555551155 5555 5555 5555 5555 5555
Net cash inflow/(outflow) (198) (39) (60) 65 52
555555555551155 5555 5555 5555 5555 5555
Basic earnings per share (p) 20.2 18.0 30.2 28.1 38.2
Adjusted earnings per share (p) 35.4 45.2 46.4 50.0 49.3
555555555551155 5555 5555 5555 5555 5555
56 Dairy Crest Annual Report 2005
0197_DC_AR_2005_p55-60  2/6/05  10:32 am  Page 56 Shareholders’ information
Company registrar and shareholder enquiries
Administrative enquiries concerning your shareholdings in the Company, such as the loss of share certificates, change of address,
dividend payment arrangements, amalgamation of accounts or requests for the report and accounts or interim reports should be
directed to the Company’s registrar, Lloyds TSB Registrars, The Causeway, Worthing, West Sussex BN99 6DA.
Lloyds TSB Registrars also provide online facilities for shareholders to check their holdings and update their details. Registering is
easy and there is no fee involved, simply access www.shareview.co.uk
Payment of dividends
Shareholders may arrange to have their dividends paid directly into a bank or building society account using the Bankers Automated
Clearing System (BACS). Bank Mandate forms are available from Lloyds TSB Registrars whose details appear above. 
Low cost share dealing service
If you do not have share dealing arrangements in place the Company has a low cost share dealing service arranged by Hoare
Govett Limited. Shareholders wishing to use the service should contact Hoare Govett at 250 Bishopsgate, London EC2M 4AA. 
Gifting shares to charity
Shareholders who have a small holding of shares on the register whereby their value makes them uneconomic to sell, may donate
these shares to charity under the Sharegift Scheme – administered by the Orr Mackintosh Foundation – a registered charity.
Information can be found at www.sharegift.org
Telephone: 020 7678 8300. 
Analysis of ordinary shareholders at 23 May 2005 Holders
Number % Shares %
555555555555555555 5555 5555 5555 5555
Category
Individuals and other holders 21,448 88.66 35,781,475 28.60
Insurance companies, pension funds, banks, 
nominees and limited companies 2,743 11.34 89,323,631 71.40
5555 5555 5555 5555
24,191 100.00 125,105,106 100.00
5555 5555 5555 5555
Size of holdings
Up to 5,000 shares 22,297 92.17 29,926,895 23.92
5,001 – 20,000 shares 1,608 6.65 12,013,509 9.60
20,001 – 100,000 shares 165 0.68 7,061,881 5.65
Over 100,000 shares 121 0.50 76,102,821 60.83
5555 5555 5555 5555
24,191 100.00 125,105,106 100.00
5555 5555 5555 5555
General information
General information about the Company can be found on our corporate website, www.dairycrest.co.uk
Investors who have questions relating to the Group’s business activities should contact: 
Investor Relations, Dairy Crest Group plc, Claygate House, Littleworth Road, Esher, Surrey KT10 9PN. 
Telephone: 01372 472200.
Financial calendar
Dividends 
Ex-dividend Wednesday 6 July 2005
Record date Friday 8 July 2005
Payment date Tuesday 9 August 2005
Group results (anticipated)
Half Year (Interims) November 2005
Preliminary Announcement of 2005/06 results May 2006
2005/06 Report and Accounts circulation June 2006
Dairy Crest Annual Report 2005 57
0197_DC_AR_2005_p55-60  2/6/05  10:32 am  Page 57 Notice of Ninth Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the Ninth Annual General
Meeting of the Company will be held at the Chartered
Accountants’ Hall, Moorgate Place, London EC2P 2BJ on
Thursday 14 July 2005 at 11.00am for the following purposes:
Ordinary business
1. To receive and adopt the Company’s annual accounts for the
year ended 31 March 2005, together with the directors’ report
and auditors’ report on those accounts.
2. To approve the Report of the Board on directors’
remuneration for the year ended 31 March 2005.
3. To declare a final dividend for the year ended 31 March 2005
of 14.3 pence per share.
4. To re-elect Mr G E Grimstone as a director of the Company.
5. To re-elect Mr J W D Hall as a director of the Company.
6. To elect Mr D H Richardson as a director of the Company.
7. To re-appoint Ernst & Young LLP as auditors, to hold office
from the conclusion of this meeting until the conclusion of the next
general meeting at which accounts are laid before the members,
and to authorise the directors to determine their remuneration.
Special business
To consider and, if thought fit, pass the following resolutions
which will be proposed in the case of resolution 8, as an
ordinary resolution and, in the case of resolutions 9, 10 and 11,
as special resolutions:
Ordinary resolution
8. That the authority conferred on the directors by article 4(B)
of the Company’s articles of association to exercise all powers
of the Company to allot relevant securities within the meaning of
section 80 of the Companies Act 1985 (the ‘Act’) be renewed for
the period from the date of the passing of this resolution until the
conclusion of the next Annual General Meeting of the Company
and for that period the ‘section 80 amount’ is £10,415,000.
Special resolutions
9. That, pursuant to article 41 of the Company’s articles of
association, the Company be generally and unconditionally
authorised, in accordance with Section 166 of the Act to make
market purchases (within the meaning of Section 163(3) of the
Act) of ordinary shares of 25 pence each in the capital of the
Company (‘ordinary shares’) provided that:
• the maximum number of ordinary shares hereby authorised
to be acquired is 12,498,606;
• the minimum price which may be paid for any such ordinary
share is 25 pence (exclusive of expenses and appropriate taxes);
• the maximum price (exclusive of expenses and appropriate
taxes) which may be paid for any such ordinary share shall be
not more than 5% above the average of the middle market
values for an ordinary share as taken from the London Stock
Exchange Daily Official List for the five business days
immediately preceding the date of purchase; and
• the authority hereby conferred shall expire at the conclusion
of the next Annual General Meeting of the Company (except in
relation to a purchase of ordinary shares the contract for which
was concluded before such time and which will or may be
executed wholly or partly after such time).
10. That the Company’s articles of association be amended by
the deletion of article 147 and the insertion of a new article 147
so as to be in the form produced to the meeting and initialled by
the Chairman for the purposes of identification.
11. That the power conferred on the directors by article 4(C) of
the Company’s articles of association to allot equity securities
(within the meaning of section 94(2) of the Act) for cash be
renewed for the period from the date of the passing of this
resolution until the conclusion of the next Annual General
Meeting of the Company and for that period the ‘section 89
amount’ is £1,562,275.
By order of the Board
Roger Newton, Secretary
6 June 2005
Registered Office: 
Claygate House, Littleworth Road, Esher, Surrey KT10 9PN
58 Dairy Crest Annual Report 2005
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to what
action you should take, you are recommended to seek your own personal financial advice immediately from your
stockbroker, bank manager, solicitor, accountant or other independent financial adviser duly authorised under the
Financial Services and Markets Act 2000.
If you have already sold or otherwise transferred all of your Dairy Crest shares, please send this document as soon as
possible to the purchaser or transferee, or to the stockbroker, bank or agent through whom the sale or transfer was
effected for delivery to the purchaser or transferee.
0197_DC_AR_2005_p55-60  2/6/05  9:54 am  Page 58 Dairy Crest Annual Report 2005 59
Notes
1. A member entitled to attend and vote at the meeting is also entitled
to appoint one or more proxies to attend and, on a poll, vote instead of
him/her. A proxy need not be a member of the Company.
2. You may use the form of proxy enclosed with this Notice to appoint a
proxy to attend the meeting on your behalf. To be effective, the form of
proxy and any authority under which it is executed (or a certified copy of
such authority) must reach the offices of the Company’s registrar, Lloyds
TSB Registrars, The Causeway, Worthing, West Sussex BN99 6LA not
less than 48 hours before the time for holding the meeting. Completion
and return of the form of proxy will not preclude shareholders from
attending and voting in person at the meeting.
CREST members who wish to appoint a proxy or proxies through the
CREST electronic proxy appointment service may do so for the meeting
and any adjournment(s) thereof by using the procedures described in the
CREST Manual. CREST personal members or other CREST sponsored
members, and those CREST members who have appointed a voting
service provider(s), should refer to their CREST sponsor or voting service
provider(s), who will be able to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST
service to be valid, the appropriate CREST message (a ‘CREST Proxy
Instruction’) must be properly authenticated in accordance with
CRESTCo’s specifications and must contain the information required for
such instructions, as described in the CREST Manual. The message,
regardless of whether it constitutes the appointment of a proxy or to an
amendment to the instruction given to a previously appointed proxy
must, in order to be valid, be transmitted so as to be received by the
issuer’s agent (Lloyds TSB Registrars – ID 7RA01) by the time stated
above for the receipt of forms of proxy. For this purpose, the time of
receipt will be taken to be the time (as determined by the timestamp
applied to the message by the CREST Applications Host) from which
the issuer’s agent is able to retrieve the message by enquiry to CREST
in the manner prescribed by CREST. After this time any change of
instructions to proxies appointed through CREST should be
communicated to the appointee through other means.
CREST members and, where applicable, their CREST sponsors or
voting service providers should note that CRESTCo does not make
available special procedures in CREST for any particular messages.
Normal system timings and limitations will therefore apply in relation to
the input of CREST Proxy Instructions. It is the responsibility of the
CREST member concerned to take (or, if the CREST member is a
CREST personal member or sponsored member or has appointed a
voting service provider(s), to procure that his CREST sponsor or voting
service provider(s) take(s)) such action as shall be necessary to ensure
that a message is transmitted by means of the CREST system by any
particular time. In this connection, CREST members and, where
applicable, their CREST sponsors or voting service providers are
referred, in particular, to those sections of the CREST Manual
concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the
circumstances set out in Regulation 35(5)(a) of the Uncertified Securities
Regulations 2001.
3. In accordance with Regulation 41 of the Uncertificated Securities
Regulations 2001, the Company specifies that only those shareholders
appearing in the register of members as at 6.00pm on Tuesday 12 July
2005 (‘the specified time’) shall be entitled to attend and vote at the
meeting in respect of the number of shares registered in their name at
that time. Changes to the register of members after the specified time
shall be disregarded in determining the rights of any person to attend
or vote at the meeting.
4. Individuals will be entitled to attend and vote at the meeting only if their
own name appears on the share register or, where the shares are held in
a different trading or registration name, on production of written evidence
of their authority to act as that shareholder’s representative. A partnership
the name of which is entered in the register of members may, by any two
persons purporting to be partners in the partnership, authorise a person
to act as its representative at the meeting. A company or other institution
may by prior written authorisation confirm the appointment of a corporate
representative to attend the meeting on its behalf. Such a representative
shall be entitled to exercise the same rights as an individual member in
respect of the shares to which the authorisation relates. Any company or
partnership appointing a representative to attend the meeting is
requested to notify the Company’s registrar of such appointment in
writing not less than 48 hours before the time for holding the meeting. 
5. Only individual shareholders whose names appear on the register,
their proxies or representatives duly authorised in the above manner will
be permitted to attend and vote at the meeting.
6. The register of the interests of the directors’ and their families in the
ordinary shares of the Company and copies of the directors’ service
contracts and letters of appointment are available for inspection by the
members at the registered office on any business day during normal
business hours until the date of the AGM and will also be available for
inspection at the AGM for at least 15 minutes before it commences.
Resolution 1
The directors of the Company have a duty to present to shareholders in
general meeting the annual accounts, together with the directors’ report
and the report of the auditors. The auditors’ report can be found on
page 55.
Resolution 2
As required by the Act, the Board has presented its Report of the Board
on directors’ remuneration to shareholders in the Annual Report, which
may be found on pages 26 to 32. This report gives details of the
directors’ remuneration for the year ended 31 March 2005 and sets out
the Company’s overall policy on directors’ remuneration.
As also required by the Directors’ Remuneration Report Regulations 2002,
the Company’s auditors, Ernst & Young LLP , have audited the relevant
parts of the Report of the Board on directors remuneration and their report
may be found on page 55.
The Board considers that appropriate executive remuneration plays
a vital part in helping to achieve the Company’s overall objectives.
In compliance with the Act, shareholders are invited to approve the
Report of the Board on directors’ remuneration.
Resolution 3
The directors recommend that a final dividend of 14.3 pence per share
be paid on 9 August 2005 to shareholders on the register on 8 July
2005. Payment of the final dividend will bring the total dividend for the
year ended 31 March 2005 to 20.2 pence per share.
Resolutions 4 and 5
The articles of association specify that up to one third of the directors
(other than the director covered by Resolution 6) must retire by rotation at
the Annual General Meeting. This year Mr G E Grimstone, Mr J W D Hall
and Mr P S Lewis retire by rotation. Mr G E Grimstone and Mr J W D Hall
are eligible for and seek re-election. Details of their biographies can be
found on page 21. Mr P S Lewis is not seeking re-election and will retire
from the Board at the conclusion of the Annual General Meeting. 
Explanatory notes
0197_DC_AR_2005_p55-60  2/6/05  4:44 pm  Page 59 Explanatory notes continued
60 Dairy Crest Annual Report 2005
Resolution 6
The articles of association also require that any director appointed by the
Board since the last Annual General Meeting must offer himself for election.
Mr D H Richardson has been appointed by the Board during the year and
being eligible offers himself for election by the shareholders. Details of his
biography can be found on page 21.
Resolution 7
This is a standard resolution proposing the reappointment of Ernst &
Young LLP as the Company’s auditors.
Resolution 8
At the Annual General Meeting held on 15 July 2004, shareholders
passed a resolution giving the directors authority, in accordance with
article 4(B) of the Company’s articles of association, to allot relevant
securities, within the meaning of Section 80 of the Act, in the amount of
£10,344,000. The Company proposes to renew this authority and the
section 80 amount referred to in Resolution 8 allows the directors to
allot relevant securities up to a nominal value of £10,415,000,
representing approximately 33% of the issued ordinary shares of the
Company as at 24 May 2005. The directors have no present intention of
exercising this authority other than to satisfy the exercise of options.
Resolution 9
The authority for the Company to make market purchases of its issued
share capital, granted last year, will expire at the close of the Annual
General Meeting. This resolution seeks renewal of that authority, again
limited to a maximum number of shares which amounts to approximately
10% of the Company’s current issued share capital. The authority has
not been used to date and would only be exercised if the directors
believed that a repurchase of shares would result in an increase in
earnings per share and would be in the best interests of shareholders as
a whole. Any shares repurchased under this authority may be held by the
Company as treasury shares.
Resolution 10
Article 147 of the articles of association currently allows the Company
to indemnify the directors and the company secretary against liability
incurred in defending civil or criminal proceedings in which judgement is
given in their favour or they are acquitted, and against the costs of
successfully applying for relief under the Act. Section 19 of the
Companies (Audit, Investigations and Community Enterprise) Act 2004
(the ‘2004 Act’) amended the Act as of 6 April 2005 to permit
companies to indemnify officers (other than auditors) in respect of
liabilities (including legal costs) incurred by them in proceedings brought
against them by third parties.
This form of indemnity was previously prohibited under section 310 of
the Act. Amongst other things, the indemnity cannot cover: liability
incurred by a director to the Company or any associated company; fines
imposed in criminal proceedings and penalties imposed by regulatory
authorities; costs incurred in criminal proceedings where the director is
convicted; costs incurred in defending civil proceedings brought by the
Company or an associated company where judgement is given against
the director; or costs incurred in proceedings for relief where the court
refuses to grant relief. 
Companies are also permitted under the 2004 Act to provide their
directors with funds to cover the costs incurred by them in defending
legal proceedings brought against them. Previously, companies had only
been able to fund their directors’ defence costs once final judgment in
their favour had been reached. Directors are increasingly being added
as defendants in legal actions against companies, and litigation is often
very lengthy and expensive; the risk of directors being placed under
significant personal financial strain is increasing. The Board therefore 
believes that the provision of appropriate indemnities and the funding
of directors’ defence costs as they are incurred, as permitted by the
new legislation, is both reasonable protection for the directors and an
important means of ensuring that the Company continues to attract
and retain the highest calibre of directors.
The Board therefore proposes that the articles of association be
amended by adopting a new article 147 in place of the existing article
147. The new article 147 reflects the new provisions permitted under
the 2004 Act and deletes provisions reflecting the old statutory
provisions which are no longer relevant.
To ensure that the Board is able to exercise the discretionary power
to fund defence costs, the new article 147 provides that each of the
directors may vote and be counted in the quorum at any meeting
considering a proposal which falls within the provisions of the new
article 147(D), unless the director concerned is to receive a privilege
or benefit not generally available to, or awarded to, any other director.
(Individual directors of the Company would still be liable to repay their
defence costs, to the extent funded by the Company, if their defence
is unsuccessful.) The Company’s auditors are excluded from the
indemnity provisions of new article 147. 
Further information about this resolution is provided under ‘Directors’
indemnities’ on page 25.
Resolution 11
At the Annual General Meeting held on 15 July 2004 shareholders
passed a resolution giving the directors authority to disapply the
pre-emption requirements for allotments of equity securities for cash up
to £1,551,645. The Company proposes to renew this authority up to a
nominal value limit of £1,562,275 (being approximately 5% of the issued
share capital of the Company as at 24 May 2005). The authority has not
been used so far and the Board has no present intention of allotting any
shares in these restricted circumstances.
The directors believe that the resolutions are in the best
interests of the Company and its shareholders as a whole and
unanimously recommend that shareholders should vote in favour
of all resolutions.
0197_DC_AR_2005_p55-60  2/6/05  4:44 pm  Page 60 Designed by Tor Pettersen & Partners 020 7432 6100
Printed in England by St Ives Westerham Press
0197_DC_ibc  2/6/05  9:46 am  Page 1 Dairy Crest Group plc Annual Report 2005
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Dairy Crest Group plc
Annual Report 2005
Dairy Crest Group plc
Claygate House
Littleworth Road
Esher
Surrey KT10 9PN
Company No: 3162897
Visit our website at www.dairycrest.co.uk
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