Dairy Crest Sells Stake in Yoplait JV

The sale of Dairy Crest's 49% stake in YDC to the Yoplait group, which completed yesterday, will result in an exceptional profit on disposal for Dairy Crest of £50 million. No tax is expected to be payable on the disposal.

27/03/09 Dairy Crest Group plc announces sale of its stake in Yoplait Dairy Crest and pre-close trading update for the full year. Dairy Crest has sold its 49% stake in Yoplait Dairy Crest Limited (YDC) for £63.5m. - This is consistent with its strategy to focus on and invest in core brands owned outright. - Cash proceeds will be used to repay debt, substantially increasing available headroom under banking covenants. Trading performance for year ending 31 March 2009 remains in line with expectations. - Clover, Country Life and Cathedral City all show strong volume growth

Sale of Stake in Yoplait Dairy Crest (YDC)

YDC was established in 1991 when Dairy Crest formed a joint venture with Yoplait S.A.S., the owner of the international Yoplait brand, and acts as the distributor in England, Scotland and Wales for fresh dairy products supplied by Yoplait S.A.S. from its factories in France.

The sale of Dairy Crest's 49% stake in YDC to the Yoplait group, which completed yesterday, will result in an exceptional profit on disposal for Dairy Crest of £50 million. No tax is expected to be payable on the disposal. At 31 March 2008 Dairy Crest's share of the net assets of YDC was £2.7 million, Dairy Crest's share of the gross assets of YDC was £19.2 million and Dairy Crest's share of YDC's profit after tax for the year ended 31 March 2008 was £7.4 million. A similar performance is forecast for the year ending 31 March 2009, but, going forward, YDC's performance would have been negatively impacted by the £/€ exchange rate as well as a challenging market environment.

The joint venture agreement with the Yoplait group contained provisions for termination in February 2012. Dairy Crest's decision to sell its stake in YDC before that date is consistent with the Group's strategy to focus on and invest in core brands that it owns outright. The cash proceeds will reduce Group debt and increase headroom against banking covenants.

Under the terms of the sale agreement, Dairy Crest will continue physically to distribute Yoplait products in Great Britain until March 2010. These products include Petits Filous, Frubes, Yop and Wildlife yoghurts. In addition, Dairy Crest will take on the Yoplait group's share of YDC's defined benefit pension scheme liability, estimated at £1.5 million.