Boots Group PLC Trading and corporate development update 7 th April 2005

Sir Nigel Rudd Chairman

Richard Baker Chief Executive

Headlines BTC and Group performance for 04/05 expected to be in line with revised market forecasts Lower consumer spending and infrastructure costs expected to lead to lower BTC operating profits in 05/06 Proposed sale of Boots Healthcare International Continued return of cash to shareholders

04/05 Trading update BTC –Operating profit expected to be in line with March update at £470m –Weak sales in Q4 –Gross margin % -80bp for the year BHI –Operating profit slightly ahead of expectations at £85m Group –PBT in line with revised market expectations at £475m Q4Full Year Sales - Total+1.1%+3.8% Sales - LFL-0.9%+2.3% Underlying LFL+0.7% Note: All trading results estimated at time of going to press

Boots The Chemists Tougher retail environment underlines need to change Improved competitive position in increasingly competitive market Good progress on renewing operational infrastructure Moving from unsustainable model to modern, competitive and efficient model

Planning assumptions for 2005/06 Sales growth expected to remain subdued –LFL growth 0 – 2% –New space contribution 2% Stable gross margin expected –Continued investment in price –Cost of Goods improvement Costs expected to be up 6% due to new space and infrastructure renewal

BTC cost growth £m YoY cost increase04/0505/06Total Inflation Volume GiS/Productivity(90)(70)(160) (30)(10)(40) Pension15 30 Existing stores/trading IT Infrastructure/tills New space

Intention to sell BHI BHI concluding successful 4 year growth strategy Strong organic growth prospects but significant investment required Focus Group resources on making BTC modern, competitive and efficient Completion within 05/06 financial year Intention to return significant proportion of proceeds to shareholders

Boots Healthcare International 2004/05 sales £520m, +5.7% on a comparable basis 2004/05 operating profit £85m Operating in 130 countries with 2,900 staff 5 manufacturing plants Nottingham (3), Germany and Thailand Note: All trading results estimated at time of going to press Nurofen £150m Strepsils £90m Clearasil £90m Dermo- Cosmetics £50m Other £140m

Proposed sale and leaseback 300 secondary properties identified Expect proceeds in excess of £250m Plan completion over the summer Broadly EPS neutral Proceeds used to pay down short term borrowings

Capital structure and shareholder returns Clear ongoing commitment to return surplus cash –£1.7bn returned to shareholders over the last three years –Significant proportion of BHI proceeds to be returned to shareholders –2 nd £350m tranche of share buyback to be completed over two to three years – matched to BTC performance Dividend key element of delivering shareholder returns Maintain strong investment grade debt rating

Summary BTC and Group performance for 04/05 expected to be in line with revised market forecasts Lower consumer spending and infrastructure costs expected to lead to lower BTC operating profits in 05/06 Proposed sale of Boots Healthcare International Continued return of cash to shareholders

Boots Group PLC Trading and corporate development update