Half Year Ended 30 September 2009

6 November 2014

Dairy Crest Group plc (“Dairy Crest”) Interim Results Announcement

Half year ended 30 September

Financial Highlights: 2014 2013 Change Revenue 1 : £682.1m £672.2m +1% Adjusted profit before tax 1, 2 : £21.3m £21.9m -3% Profit before tax 1 : £0.9m £19.7m -95% Adjusted basic earnings per share1, 2 : 13.0p 13.1p -1% Basic earnings per share 1 : 0.5p 13.1p -96% Half year net debt: £209.6m £192.3m +9% Interim dividend: 6.0p 5.9p +2%

1 From continuing operations 2 Before exceptional items, amortisation of acquired intangibles and pension interest

First half profitability maintained despite challenging trading environment - All four key brands grow retail market share - Annual cost reductions on target to deliver £20 million - Strong contributions from Spreads and Cheese and lower interest charges offset Dairies losses - Whey investment on track to boost profits in 2015/16 - Interim dividend up 2%

Disposal of Dairies operations also announced - Cash consideration of £80 million on completion - Conditional on the approval of shareholders, relevant competition authorities and employee consultation Mark Allen, Chief Executive, said:

“Dairy Crest has delivered adjusted first half profits broadly in line with last year and we have continued to grow our key brands and reduce our cost base. In an environment which remains particularly difficult to predict our immediate focus is on delivering the second half.

“The investments we are making to add value to whey are on track to grow future profits. In addition the proposed disposal of our Dairies operations, which we are also announcing today, is another positive development for Dairy Crest and the wider UK dairy industry.”

For further information:

Dairy Crest Group plc Arthur Reeves 01372 472236

Brunswick Tim Danaher / Max McGahan 020 7404 5959

A video interview with Mark Allen will be available from 07:00 (UK time) from the investor section of the Group’s website investor.dairycrest.co.uk. There will be an analyst and investor meeting at 8.30 (UK time) today at The Lincoln Centre, 18 Lincoln’s Inn Fields, London, WC2A 3ED. An audiocast of the presentation will be available from the investor section of the Group’s website investor.dairycrest.co.uk later today. Operating review

In line with our well-established strategy, Dairy Crest continues to focus on growing added value sales and reducing our cost base.

Key brand sales up

In aggregate, sales of our four key brands (Cathedral City, Country Life, Clover and FRijj) were up 2% compared to the first half of 2013/14.

Brand Market Dairy Crest Retail market statistics** Brand growth Market growth sales growth* Cathedral City Cheese +2% +3% - Country Life Butter +4% +6% +3% Clover Spreads -12% -4% -8% FRijj Ready to drink +27% +12% +6% flavoured milk Total +2% +3%

* Dairy Crest value sales 6 months to 30 September 2014 v 6 months to 30 September 2013 ** IRI data 26 weeks to 11 October 2014

We use IRI data to monitor the performance of our brands in retail markets and monitor their share of these markets. Differences between our sales and IRI data can be explained by sales we make to non-retail markets that are not reflected in IRI data and changes in the relationship of our selling prices to retail prices. There are also timing differences because the IRI data is for 26 weeks to 11 October 2014 rather than to the end of our accounting period.

IRI data for the 26 weeks ended 11 October 2014 show that our four key brands grew their retail sales by 3% compared to the same period last year. They further indicate that all four brands grew their market shares. This is a strong performance in an environment where consumer expenditure on food is falling and reflects ongoing support for these brands in the form of advertising and innovation.

Investing in innovation Looking to the future, we have recently confirmed that we will be investing £4 million to build a dedicated Food Innovation Centre on the Harper Adams University campus. Planning permission has been granted and building will start imminently. The partnership between Dairy Crest and Harper Adams provides us with a link into leading research within the agriculture and food sectors and demonstrates Dairy Crest’s continuing support for British agriculture.

Annual cost reductions on target to deliver £20 million

Cost reduction remains an important part of our strategy and we are on track to meet our annual £20 million target. We have also previously proposals to close two dairies, at Hanworth in West London and Chard in Somerset and the savings arising from these will contribute towards our annual £20 million target in future years.

Another strong performance from Cheese, with Cathedral City again outperforming

Sales of Cathedral City, the UK’s leading cheese brand, grew by 2% compared to the six months ended 30 September 2013. However Cheese product group profits fell slightly as a result of the higher cheese costs arising from last year’s high milk purchase prices and lower whey realisations.

Cathedral City strongly outperformed the market, both private label and competitor brands, and increased its overall market leadership. Behind this is a continuous programme of innovation. New products introduced in recent years include Chedds, Selections and Spreadable Cathedral City, all of which have contributed to Cathedral City’s overall outperformance. In the first half we have launched easy open packaging and this will be followed in the second half by a new range of Cathedral City flavoured cheeses comprising caramelised onion, sweet chilli and smoked varieties. We will also introduce different cheese types into our Selections packs.

Increased profits from Butters and Spreads Butters and Spreads product group profits increased in the six months ended 30 September 2014 compared to the same period last year when profits were adversely impacted by high cream input costs. This year input costs have fallen and margins have improved.

IRI data indicates that both of our key brands in this product group, Country Life (butter) and Clover (spread) have increased their respective market share. Their performance reflects consumers’ increasing preference for butter. Country Life sales grew by 4% in the period compared to the first half of 2013/14 on the back of strong Spreadable sales. Clover sales fell by 12% in the same period.

We are completing the consolidation of butter and spreads production onto our site at Kirkby in the second half and this will reduce our manufacturing costs in future years.

Dairies records a first-half loss in volatile environment

Despite the strong growth of our flavoured milk brand, FRijj, increased property sales and cost reductions, lower commodity realisations and a significant divergence between cream revenues and farmgate milk prices have resulted in losses in our Dairies operations in the six months ended 30 September 2014.

The lower commodity realisations have now led to difficult milk price cuts for British dairy farmers. Although dairy markets remain volatile and unpredictable we expect a stronger second half.

In the first half of 2013/14 we scaled back FRijj promotions while we increased our production capacity and capability. These improvements are now complete. FRijj had a strong first half and sales grew by 27% compared to the first half of last year. Cost savings included the benefit from lighter plastic bottles and reduced distribution costs.

Whey Our demineralised whey and galacto-oligosaccharide projects, which will enable us to manufacture products for the growing, global infant formula market for the first time, are on track to contribute to profits in the year ending 31 March 2016. We currently process our whey into whey powder and, although whey powder realisations have fallen in the first half, the premium that we expect to receive for our new products over the price of whey powder and the resultant paybacks on these projects remain broadly unchanged.

In total we expect to invest £65 million in these projects. £8 million was spent last year and a further £16 million in the first half of this year. The balance will be spent mainly in the second half of the year.

We announced in July that we had chosen to partner with Fonterra to maximise returns from our investment in these projects and we are pleased with the way our relationship with Fonterra is developing.

Financial review

Group revenue of £682.1 million represents a 1% increase from last year. Higher cheese and milk sales have been offset by lower spreads sales.

Total product group profit from continuing operations fell 8% to £25.0 million (2013: £27.3 million). Improved Spreads product group profits and broadly maintained Cheese product group profits were outweighed by a deterioration in Dairies profitability despite an increase in property profits, arising from an ongoing programme of sales of delivery depots that we no longer require, to £7.5 million in the six months ended 30 September 2014 (2013: £2.5 million).

Product group analysis consistent with prior periods can be found in note 4 to the interim financial statements.

Finance costs of £3.7 million are lower than last year and reflect lower interest charges since the repayment and maturity of loan notes in April 2013 and some capitalised interest on major capital projects at Davidstow and Kirkby. Group adjusted profit before tax (before exceptional items, amortisation of acquired intangibles and pension interest) was £21.3 million, down 3% versus £21.9 million in 2013.

Exceptional costs of £19.3 million were incurred during the six months ended 30 September 2014, including £9.3 million associated with the closure of Hanworth and Chard dairies announced in September 2014, £8.8 million in relation to the consolidation of spreads and butter manufacturing onto one site, and £1.1 million associated with the significant investment on whey projects at Davidstow.

The total cash cost of exceptional items in the first half was £7.1 million including £0.6 million associated with the closure of Hanworth dairy, £4.9 million in relation to the consolidation of spreads and butter manufacturing, and £1.0 million associated with the Davidstow whey projects.

Further exceptional charges of approximately £6 million are expected in the second half associated with the consolidation of spreads and butter manufacturing, the Davidstow whey projects and the future closure of Hanworth and Chard.

The pension interest charge of £0.9 million was £0.7 million higher than last year.

The pre-exceptional tax expense of £3.3 million represents an effective tax rate of 16.3% based on expectations for the full year. This effective tax rate benefits from property profits which do not attract tax due to rollover relief and significant brought forward capital losses. The equivalent full year effective tax rate for 2013/14 was 14.6%.

Basic earnings per share on continuing operations are 0.5 pence, down from 13.1 pence in 2013. Adjusted basic earnings per share of 13.0 pence represents a 1% decrease in the half, consistent with the decrease in adjusted profit before tax and the slightly lower normalised effective tax rate.

The directors have declared an increased interim dividend of 6.0 pence per share, (2013: 5.9 pence per share). We remain committed to a progressive dividend policy with a target cover range of between 1.5 and 2.5 times. Group net debt amounted to £209.6 million at 30 September 2014, an increase of £67.4 million since 31 March 2014. This reflects capital expenditure of £33.3 million (2013: £29.8 million) and the normal working capital increase in the first half of the year.

As usual we expect year end net debt to be lower than at 30 September, although it will be higher than at 31 March 2014, reflecting the significant investment we are making on the whey projects at Davidstow.

Looking further forward we continue to expect net debt reductions in future years as a result of lower capital expenditure and reduced stock holdings as milk prices fall.

The defined benefit pension scheme deficit reported under IAS 19 increased in the first half to £68.7 million (31 March 2014: £57.7 million), as corporate bond yields (being the benchmark used to discount scheme liabilities) fell to 3.8% at 30 September 2014 from 4.3% at 31 March 2014.

The principal risks and uncertainties affecting the Group are set out below the statement of directors’ responsibilities and further details are disclosed on pages 14 and 15 of the 2014 Annual Report and Accounts. Related party transactions are given in note 12 to the interim financial statements.

Summary and outlook

Dairy Crest has delivered adjusted first half profits broadly in line with last year and we have continued to grow our key brands and reduce our cost base. In an environment which remains particularly difficult to predict our immediate focus is on delivering the second half.

Mark Allen Chief Executive 6 November 2014