1. Slide 1 © The Delos Partnership 2005 Tesco Supply & Procurement Thinking like Tesco…

2. Slide 2 © The Delos Partnership 2005 Key People – Tesco Ireland Gordon Fryett – CEO Sandra Turner – Commercial Director Paul Slevin – Head of Commercial Karl Pratt & Liam Forsyth – Senior Buying Managers Chris Burns – Buying Manager Tony Keohane – Property & Supply Chain Director

3. Slide 3 © The Delos Partnership 2005 Assumed Supply Priorities – Europe Communicate the Tesco Vision & Strategies to the suppliers Assess the risk & supply potential from the local suppliers Benchmark local suppliers versus Tesco Strategic and UK Best in Class Put the best deals in place with local suppliers to underpin corporate supply and procurement goals Implement Supply Synergies & e Processes

4. Slide 4 © The Delos Partnership 2005 Tesco 2006 Likely Challenges & Goals –Reduced Reduced Consumer Spending –Cost Up (Energy, Logistics, Petrol) –Aggressive Competitors - Price Cutting –Higher Supplier Discounts –Integrated Supply Processes

5. Slide 5 © The Delos Partnership 2005 Likely Tesco 2006 Approach Assumed Procurement Budget Focus Purchasing Price Reduction Cost Reduction (Overheads, Projects, Processes) Cash Flow Generation Capital Expenditure How to deliver a £300m Improvement Stretch Goal… Tough Supplier Negotiations Verify / Reduce contract volumes Improved Quality / Less Refunds Reduced Tesco Inventory Less Suppliers Refuse all price increases Special Deals/Rebates

6. Slide 6 © The Delos Partnership 2005 Likely Tesco 2006 Approach Why bigger Supply Discounts are justified? –Tesco is the No 1 – More Differential is needed –Bigger Rebates Year on Year are the retail norm –We are growing and rebates help you grow with us

7. Slide 7 © The Delos Partnership 2005 How Tesco Europe might evaluate Dairygold #1 - Risk and Supply Value Potential

8. Slide 8 © The Delos Partnership 2005 Dairygold Risk Assessment Scenario 1.Product A 2.Product B 3.Service C 4.Service D 5.Supplier E Risk Map Key Severity Major Medium Low Minimal Medium Priority High Priority Low Priority Medium Priority MinimalLowMediumMajor

9. Slide 9 © The Delos Partnership 2005 Dairygold is Tactical / Leverage The level of trust between Tesco and the Dairygold is low. Information sharing by both parties is limited. Tesco dictates pricing. There is no Strategic Partnering Programme and joint projects. Relationships are restricted and there is little Dairygold Supplier senior management engagement.

10. Slide 10 © The Delos Partnership 2005 Dairygold is Strategic/Critical The products / services that Dairygold supplies are Strategic Critical Dairygold openly demonstrates an international commitment to Tesco and proactively keeps us on the competitive edge. Strategies have been jointly shared & developed. Contact at all levels is excellent. Quality, HSE and Regulatory compliance are outstanding and have anticipated future needs. Detailed programmes are in place to manage risk, quality, cost and the supply chain. Processes have been fully optimised to ensure maximum product and service velocity and accuracy at the optimum cost.

11. Slide 11 © The Delos Partnership 2005 Workshop Why would Tesco Europe/Ireland position Dairy Crest as a Strategic Supplier?

12. Slide 12 © The Delos Partnership 2005 Supplier Ranking & Performance There are five levels of Supplier Performance is assessed against ten elements The level or ranking is based on the net total value delivered by the supplier Suppliers might be eliminated at any level BRONZE BRONZE(New) SILVER SILVER(Development) SILVER GILT SILVER GILT(Approved) GOLD(Preferred) PLATINUM PLATINUM(Strategic) SUPPLIER ELIMINATION

13. Slide 13 © The Delos Partnership 2005 Dairygold Performance Measures Performance MeasurementDairygold Assessment 1. Dairy Risk Management Risk Management Tool in place? 2. Dairygold RFTQ100%OTIF Is RFTQ in ppm & Quality Report in place? 3. Dairygold Net Price/Cost Competitiveness Are cost competitiveness & savings in place? 4. Dairygold Lead Time (Calendar days) Are lead times in place? 5. Dairygold Supply Chain Management Is VMI/ Sales Forecast in place? 6. Dairygold Supplier Schedule Achievement Is Schedule Achievement monitored? 7. Dairygold On Time New Products Are new products / innovation value recorded?. 8. Dairygold Strategic Alignment Is their evidence of Strategic Alignment? 9. Dairygold Education & Training Has Dairygold education been provided? 10. Dairygold Self Monitoring / Reporting Is Dairygold measuring / reporting performance?

14. Slide 14 © The Delos Partnership 2005 Dairygold Assessment Findings

15. Slide 15 © The Delos Partnership 2005 How we have prepared for Dairygold Planned the Tesco Purchasing Budget Looked at the Dairygold Spend History Assessed Dairygold past performance Met Dairygold competition to > leverage Researched the market Evaluated Supply / Demand Looked at Dairygold Financials

16. Slide 16 © The Delos Partnership 2005 How we will run the Negotiations

17. Slide 17 © The Delos Partnership 2005 What we will concede Very little

18. Slide 18 © The Delos Partnership 2005 What we will not concede

19. Slide 19 © The Delos Partnership 2005 When we leave the 10Nov05 Meeting Dairygold