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Financial Results – Year Ending 31 May 2002

Friday 19 July, 2002

Financial Results – Year Ending 31 May 2002

Fonterra Co-operative Group has today announced its financial results for the year ended 31 May 2002.

Formed in October 2001, this is Fonterra’s first year-end result.

The Chief Financial Officer, Graham Stuart, said that, while the company was paying its shareholder suppliers a record $5.9 billion, 13.4% higher than last years record paid by the legacy companies, the decline in international prices of dairy commodities and the appreciating dollar will negatively impact on Fonterra’s payout for the new season. 2002 season milk volumes were up 5.9% on the 2001 season.

Total revenues of $13.9 billion were derived; from sales of commodities and ingredients by NZMP of $7.8 billion, sales from the consumer goods subsidiary NEW ZEALAND MILK of $5.6 billion and revenues from the businesses that comprise Fonterra Enterprises of $0.5 billion.

In what has probably been the most volatile year in the industry’s recent history Fonterra believe a payout of $5.33 represents a very credible result.

The payout to shareholder suppliers of $5.9 billion resulted in a deficit recorded for the year of $50 million (4.5 cents per kilogram of milksolids). This was brought about primarily by the impact of sharply falling commodity prices on inventory valuations and a surge in milk production in the last month of the season. The adverse impact of the decline in commodity prices on the value of closing stocks was $366 million.

The company’s balance sheet reflects the significant changes arising as a result of the use of the purchase method for accounting for the merger.

Shareholders equity at $4.485 billion reflects adjustments of purchase accounting of the valuations of brands, and other intangible assets, fixed assets and investments, of $1,513 million.

This is offset by a $257 million adverse movement in reserves recorded from restating the $NZ value of off shore assets reflecting the New Zealand dollar exchange rate.

Included in these revaluations are write downs in investments of $41 million. $28 million of this resulted from the liquidation and write down of investments in companies that formed part of the Food Solutions Group of companies.

Fonterra’s Annual Results Presentation is available on under Shareholder Information.

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