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S&P recommends Fonterra fair value range

Standard & Poor's Corporate Value Consulting (S&P Cvc) Group Releases Guidance For The Fair Value Share Price And Commodity Milk Price For The 2003/04 Season

S&P CVC has recommended to the Board of Directors of Fonterra a fair value range for a co-operative share for the 2003/04 season of NZ$ 4.05 to NZ$ 4.71. Fonterra's Board will set the actual share price on the basis of this recommendation and other factors it considers relevant. S&P CVC has also advised the Board of Directors of Fonterra that the commodity milk price determination under Section 4.0 of Fonterra's constitution is best expressed as NZ$ 3.00 per kilogram of milk solids for the 2003/04 season.

Factors which influence the annual derivation of the fair value range for a co-operative share and the commodity milk price include, but are not limited to, trends in global base commodity prices, product mix and forecast volumes, foreign exchange rates (primarily USD/NZD), global capital costs and trends in fixed and variable manufacturing costs. In addition to the foregoing, Fonterra's constitution provides specific guidance regarding factors to be considered in the derivation of the fair value range for a co-operative share and the commodity milk price.

The advice provided by S&P CVC in its report dated May 15, 2003 is based upon consideration of a variety of factors, including the results of certain operational improvements undertaken by Fonterra since the merger.




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