Embargoed: Not for publication, or broadcast, before 07.00hrs 14 November 2002

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

Dairy Crest, the UK’s leading chilled dairy foods company with market leading brands Clover, Cathedral City, Frijj and Petits Filous, today announces its unaudited results for the six months ended 30 September 2002. Highlights include:

Financial  Adjusted profit before tax down 6.5% to £31.6 million (2001: £33.8 million)  Adjusted earnings per share down 8.3% to 18.9 pence (2001: 20.6 pence)  Interim dividend up 6.3% to 5.1 pence (2001: 4.8 pence)

Operational  Synergies from Unigate acquisition being delivered in full and on time  Double-digit volume growth by Dairy Crest’s market leading brands  Sale of Westway site for £18 million completed on 3 October 2002  Acquisition of St Ivel Spreads business completed on 1 November 2002

Drummond Hall, Chief Executive, Dairy Crest Group plc, said:

“ Our strategy to drive profitable growth and shareholder value through our added value and branded business remains the Group’s major focus. We believe that our strong portfolio of brands, together with our position as the UK’s leading chilled dairy foods company, provides us with sustainable competitive advantage. The acquisition of the St. Ivel Spreads business represents an important step in further increasing the proportion of the Group’s profits from added value activities.

“Trading conditions in the commodity areas of the business remain challenging and pressures in our liquid products business are likely to continue. Overall, we expect profits for the second half of the year to show good progress over the same period last year, even before taking into account the benefits from the St. Ivel Spreads acquisition.”

For further information, please contact:

Dairy Crest Group plc 01372 472200

On Thursday 14th November: Drummond Hall, Chief Executive 020 7638 9571 Ian Laurie, Finance Director 020 7638 9571

Sinead Noble, Corporate Communications Manager 020 7638 9571

Citigate Dewe Rogerson 020 7638 9571 Charles Vivian/Sarah Peters/Caroline Costello Operating and financial review

This is my first interim statement as Chief Executive following my appointment at Dairy Crest’s Annual General Meeting on 18 July 2002.

We indicated in our recent trading update, as well as our preliminary statement in June, that the full year’s results would have a greater than normal second half weighting, due to short term pressures on the commodity cheese business and the increasing benefits from the Unigate acquisition. Adjusted Group profit before tax is £31.6 million compared to £33.8 million last year and, while adjusted Group operating profit for the business, excluding commodity cheese, has continued to grow, operating profit for the total business is 5.7% down on the same period last year, when the Group performed particularly strongly.

As the UK’s leading chilled dairy foods company, our main strategic focus remains our branded and added value business and our programme of brand development continues to deliver strong results. All of Dairy Crest’s market leading brands - Clover, Cathedral City and Frijj - grew market share and achieved double-digit volume growth for the six months to 30 September 2002.

In line with this strategy of building brands, we acquired the St Ivel Spreads business, which includes the Utterly Butterly and St Ivel Gold brands, from the Uniq Group for a consideration of £86.5 million on 1 November 2002. This acquisition provides Dairy Crest with an attractive position within the spreads and butter market and is expected to provide returns in excess of Dairy Crest’s cost of capital in its first full year. We believe it will further underpin Dairy Crest’s ability to continue to deliver attractive growth in shareholder value.

We also continue to invest in industry leading facilities to create competitive advantage. The restructuring and capital investment programme following the acquisition of Unigate’s dairy and cheese business in July 2000 is on track. The final major step, the closure of the Kidlington dairy, was recently completed at the end of October 2002. The planned annual synergy benefits of £25 million are being delivered in full and on time. I am also pleased to report that we are making good progress with the £49 million investment in our Davidstow creamery, Cornwall, which will support the on- going strong growth of the Cathedral City and Davidstow brands.

Recognising that the UK dairy farming industry is currently facing great difficulties, we have worked closely with major retailers to achieve price increases across a range of products, particularly fresh milk and cheese, which we are passing back to milk producers.

Finally, on 3 October 2002 we announced the sale of the Westway site, London, to CGNU Life Assurance Limited and Commercial Union Life Assurance Company Limited, with the approved developer being Helical Bar Plc. The consideration of £18 million was received on 17 October 2002. Further consideration, which may be substantial, will be received in due course on receipt of satisfactory planning permission. The book value of the site was £13.3 million and the profit will be recognised in the second half as a non-operating exceptional credit.

Financial review

The Group achieved half year turnover of £638 million compared with £692 million last year. This fall was mainly due to the reduction in realisations for commodity products, the continued decline in the doorstep business and our strategic withdrawal from less profitable retail milk business in the first half of last year.

1 Operating and financial review continued

Adjusted operating profit (before operating exceptional items and goodwill amortisation) was £41.0 million compared with £43.5 million previously. Exceptional costs of £23.8 million have been charged against operating profit of which £12.6 million represents non-cash write downs to stocks and fixed assets. These costs mainly relate to the closure of the Kidlington dairy and the complex commissioning of the Severnside “super dairy”. Exceptional costs relating to the acquisition of Unigate’s dairy and cheese business will come to an end by the close of the year.

The interest charge has reduced to £9.4 million from £9.7 million last year. This reflects the benefit of lower interest rates partly offset by increased borrowings. Currently, the Group has fixed the interest rates on £250 million of its borrowings at 5.3% (excluding margin) to reduce interest rate exposure and, latterly, to also take advantage of current lower interest rates. This compares with £197 million at 5.9% at 31 March 2002.

Excluding operating exceptional items and goodwill amortisation, the Group’s adjusted profit before tax was £31.6 million compared to £33.8 million last year. The tax charge of £1.9 million includes a tax credit of £6.8 million on the operating exceptional items and it represents an effective tax rate of 27.5% on adjusted profit before taxation. Basic earnings per share, calculated after charging operating exceptional items and goodwill amortisation, were 3.8 pence compared to 8.0 pence last year. Adjusted earnings per share were 18.9 pence compared to 20.6 pence last year.

The directors have declared an interim dividend of 5.1 pence per share, which represents an increase of 6.3% over the dividend of 4.8 pence per share last year. The dividend will be paid on 30 January 2003 to shareholders on the register at 22 November 2002.

Group net debt amounted to £331.5 million at September 2002, reflecting a net cash outflow of £46.6 million. Capital expenditure amounted to £36.0 million and included £22.6 million on the investments at the Severnside “super dairy” and the Davidstow creamery. There was a net working capital outflow of £36.1 million reflecting the normal seasonal trends, amplified by particularly high milk flows into cheese stocks. We expect a significant working capital inflow in the second half of this financial year.

Business operations

Dairy Crest’s strategic focus is on driving the growth of the Group’s brands and added value products and we continue to make good progress. Dairy Crest’s market leading brands - Clover, Cathedral City and Frijj - have all continued to outperform their market sectors, achieving volume growth in excess of 10% in the six months to 30 September 2002, compared to the same period in the last year.

Consumer Foods achieved an operating profit of £23.0 million on turnover of £378 million producing an operating margin of 6.1%. This compared with last year when it earned £29.0 million on turnover of £423 million giving an operating margin of 6.9%. This decline was anticipated and mainly resulted from margin pressure in commodity cheese.

Our spreads business has again performed strongly. Clover continues to grow, with sales volumes increasing by 13% over the first half of last year, compared with the spreads and butter market at 5%. In addition, both Country Life butter and Country Life Spreadable have also shown significant volume growth. The launch of Argento in June 2002 gave Dairy Crest a presence in the growing olive oil based spreads sector. The brand is currently being supported by launch advertising and its initial performance is encouraging.

2 Operating and financial review continued

With the acquisition of the St Ivel Spreads business, Dairy Crest has gained leading brands Utterly Butterly, St Ivel Gold and Vitalite, as well as the UK licence for the Carapelli brand, together with a well invested manufacturing facility in Liverpool. As a result, Dairy Crest is now the market leader, by volume, in the growing taste sector of the spreads and butter market, as well as the number two player in the health sector.

Dairy Crest is the UK’s leading manufacturer of branded and added value cheddar and the underlying performance of the cheese business reflects the continued benefits of sustained marketing and capital investment. Cathedral City has had another satisfying six months, with sales volumes ahead by 12% over the same period last year, compared to the mature cheddar market which was broadly unchanged.

However, as noted previously, the cheese business has been affected by the short term margin pressure in commodity cheddar where realisations reduced to a 10 year low. In addition, industry cheese stocks have remained at unsustainably high levels as a result of higher than forecast UK milk supply, particularly in the three month period between April and June. This resulted in commodity cheese prices remaining at low levels for longer than anticipated. The reduction in raw milk input pricing from April 2002 is restoring margins to more normal levels. In addition, milk supply is now starting to fall which will reduce cheese stocks over the coming months.

The performance of the Yoplait brands was flat in the first six months, reflecting industrial action at Yoplait’s plants in France. Nevertheless, the Petits Filous brand grew by 14% and, with full supply now restored, the Yoplait brands are showing good growth. However, market conditions in the retailer brand yogurt sector continue to be demanding. In response to this pressure, Yoplait Dairy Crest has restructured its cost base and completed the closure of its Basildon plant with production transferred to other group facilities.

Following the completion of the 50% purchase of the Yoplait business by Paribas Affaires Industrielles, the Yoplait Dairy Crest joint venture agreement will be extended until at least 2012, reinforcing the success of the venture.

Trading conditions in the retail liquid milk market were challenging. Dairy Crest’s £54 million programme to create two “super dairies” at Chadwell Heath, London, and Severnside, Gloucestershire, will give the Group significant competitive advantage. As a result, Dairy Crest is well-placed to compete effectively and to capitalise on any further industry consolidation. Chadwell Heath, which is capable of processing 400 million litres per annum, was completed last year. Following the closure of the Kidlington dairy in October 2002, the Severnside “super dairy” is now operational and is capable of processing 500 million litres per annum.

Our organic fresh milk business has been impacted by pressures in the retailer own brand sector, which we are addressing by increasing sales of the Rachel’s brand (under licence from Horizon Organic Dairy) and bringing supply into balance with anticipated demand over the next 12 months. In addition, the profitability of our juice business has been affected by an increase in raw material prices, which we are recovering progressively in a competitive market place. Frijj continues to benefit from our marketing focus and had yet another good half year, with sales volumes increasing by 16%. Overall, profits in our liquid products business for the first half were slightly below last year.

Food Services achieved an operating profit of £18.0 million on turnover of £260 million giving an operating margin of 6.9%. This compares with last year’s operating profit of £14.5 million on turnover of £269 million at a margin of 5.4%.

3 Operating and financial review continued

Although doorstep volumes have continued to decline at an annual rate of just over 12%, the household business has performed well and has made a strong contribution to the Group’s profit and cash flows. We have now successfully completed the integration of the Unigate doorstep business. This, together with the acquisition of small infill dairy businesses, has enabled the business to mitigate the impact of this market decline. The business continues to be managed to reduce cost to counteract the effect of falling volumes.

The performance of our ingredients business was in line with last year, despite commodity prices for skim milk powder being at their lowest level for over 10 years. Our objective continues to be to manage this business efficiently while continuing to look for ways to reduce the scale of our commodity exposure.

Board changes

The appointment of Mark Allen as Executive Managing Director, with continued responsibility for the Cheese Business, and my appointment as Chief Executive were announced at the Company’s Annual General Meeting on 18 July 2002.

Outlook

Our strategy to drive profitable growth and shareholder value through our added value and branded business remains the Group’s major focus. We believe that our strong portfolio of brands, together with our position as the UK’s leading chilled dairy foods company, provides us with sustainable competitive advantage. The acquisition of the St Ivel Spreads business represents an important step in further increasing the proportion of the Group’s profits from added value activities.

Trading conditions in the commodity areas of the business remain challenging and pressures in our liquid products business are likely to continue. Overall, we expect profits for the second half of the year to show good progress over the same period last year, even before taking into account the benefits from the St Ivel Spreads acquisition.

J. W. D. Hall, Chief Executive 13 November 2002

4 Consolidated profit and loss account (unaudited)

Half year ended 30 September Year ended 31 March 2002 2002 2001 £m Note £m £m Turnover 841.6 Consumer Foods 378.1 422.5 525.1 Food Services 259.6 269.1 1,366.7 Group and share of joint ventures 637.7 691.6 (80.4) Less share of joint ventures (38.8) (42.3) 1,286.3 598.9 649.3 Operating profit 59.0 Consumer Foods - Group 21.1 27.4 4.0 - share of joint ventures 1.9 1.6 63.0 23.0 29.0 30.0 Food Services 18.0 14.5 93.0 41.0 43.5 (2.3) Goodwill amortisation (1.2) (1.1) Operating exceptional items (35.8) Consumer Foods – Group (21.2) (18.5) (2.6) Share of joint ventures (1.0) - (38.4) (22.2) (18.5) (5.8) Food Services (1.6) (2.7) (44.2) Total operating exceptional items 2 (23.8) (21.2) 46.5 Total operating profit 16.0 21.2 1.7 Share of joint venture’s profit on disposal of property - 1.7

Net interest payable (18.7) Group 3 (9.2) (9.4) (0.6) Share of joint ventures (0.2) (0.3) (19.3) (9.4) (9.7) 28.9 Profit on ordinary activities before taxation 6.6 13.2 (7.3) Taxation on ordinary activities 4 (1.9) (3.6) 21.6 Profit for the period before minority interests 4.7 9.6 (0.3) Equity minority interests (0.1) (0.2) 21.3 Profit for the period after minority interests 4.6 9.4 (18.2) Dividends 5 (6.2) (5.7) 3.1 Transfer (from)/to reserves (1.6) 3.7 18.0 Basic earnings per share (p) 6 3.8 8.0

45.2 Adjusted earnings per share (p) 6 18.9 20.6

17.3 Diluted earnings per share (p) 6 3.7 7.8

The consolidated statement of total recognised gains and losses is shown in Note 10

5 Consolidated balance sheet (unaudited)

30 September 31 March 2002 2002 2001

£m Note £m £m Fixed assets 39.3 Intangible assets 40.4 37.9 323.7 Tangible assets 328.4 319.2 9.1 Investments 9.6 12.7 372.1 378.4 369.8 Current assets 224.5 Stocks 234.7 232.3 143.1 Debtors 147.3 150.4 2.6 Cash at bank and in hand 5.6 21.2 370.2 387.6 403.9 Creditors: amounts falling due within one year (7.0) Borrowings (29.1) (5.6) (208.8) Other creditors (183.5) (218.2) (215.8) (212.6) (223.8) 154.4 Net current assets 175.0 180.1 526.5 Total assets less current liabilities 553.4 549.9 Creditors: amounts falling due after more than one year (280.5) Borrowings (308.0) (311.7) (4.5) Other creditors (4.4) (4.9) (26.2) Provisions for liabilities and charges (26.1) (25.3) 215.3 Net assets 214.9 208.0

Capital and reserves 30.9 Called up equity share capital 7 31.0 30.3 175.8 Equity reserves 7 175.2 175.0 206.7 Shareholders’ funds 9 206.2 205.3 8.6 Equity minority interests 8.7 2.7 215.3 214.9 208.0 The interim financial statements were approved by the directors on 13 November 2002.

Segmental net operating assets comprise: Continuing operations 440.3 Consumer Foods 483.0 437.8 111.7 Food Services 109.1 111.5 552.0 592.1 549.3 Net operating assets comprise net assets excluding cash, borrowings, tax and dividend creditors.

6 Consolidated cash flow statement (unaudited)

Year ended Half year ended 30 September 31 March 2002 2002 2001

£m Note £m £m 48.5 Net cash inflow from operating activities 8 11.2 0.5 1.1 Dividends from joint ventures 0.6 0.6

Returns on investments and servicing of finance (18.7) Net interest paid (10.0) (9.2) Net cash outflow from returns on investments and (18.7) servicing of finance (10.0) (9.2) (5.3) Taxation paid (1.4) (1.1)

Capital expenditure (60.2) Payments to acquire fixed assets (36.0) (33.1) - Grants received 0.4 - (2.7) Purchase of shares by Dairy Crest ESOP (3.0) (2.1) 2.0 Proceeds from disposal of shares 2.2 - 7.9 Proceeds from disposal of fixed assets 3.3 4.9 (53.0) Net cash outflow for capital expenditure (33.1) (30.3)

Acquisitions and disposals (3.2) Purchase of businesses (2.4) (0.4) 5.0 Receipt from sale of investment in subsidiary undertaking 0.9 - 1.8 Net cash (outflow)/inflow from acquisitions and disposals (1.5) (0.4) (17.0) Equity dividends paid (12.4) (11.2)

(42.6) Net cash outflow before financing (46.6) (51.1) Financing 2.7 Increase in short-term borrowings 22.1 1.0 33.8 Increase in long-term borrowings 27.0 64.9 (0.4) Decrease in loan notes (0.2) (0.3) 4.4 Issue of ordinary share capital 0.8 1.8 (0.2) Finance lease repayments (0.1) - 40.3 Net cash inflow from financing 49.6 67.4 (2.3) Increase/(decrease) in cash in the period 3.0 16.3

Reconciliation of net cash flow to movement in net debt (246.3) Net debt at beginning of the period (284.9) (246.3) (2.3) Increase/(decrease) in cash in the period 3.0 16.3 (2.7) Increase in short-term borrowings (22.1) (1.0) (33.8) Increase in long-term borrowings (27.0) (64.9) 0.4 Decrease in loan notes 0.2 0.3 - Exchange differences on long-term borrowings (0.3) (0.2) (0.4) Finance leases incepted (0.5) (0.3) 0.2 Cash outflow from decrease in lease financing 0.1 - (284.9) Net debt at end of the period (331.5) (296.1)

7 Notes to the interim financial statements (unaudited)

1 Basis of preparation The interim financial statements have been prepared under the historical cost convention in accordance with applicable accounting standards using accounting policies consistent with those set out in the 31 March 2002 Annual Report of Dairy Crest Group plc.

2 Operating exceptional items

Year ended Half year ended 30 September 31 March 2002 2002 2001 £m £m £m Continuing 14.6 Fixed asset write-downs 12.2 11.0 10.6 Business integration costs 7.1 2.6 14.6 Redundancy costs 3.1 7.6 1.8 Consumable and engineering stock write-offs 0.4 - 41.6 22.8 21.2 2.6 Share of net loss on closure of sites and rationalisation by joint venture 1.0 - 44.2 23.8 21.2

3 Net interest payable (Group) Net interest payable is stated after capitalising £0.7 million of interest on expenditure on capital projects (2001 - £0.4 million).

4 Taxation The tax charge for the half year ended 30 September 2002 has been calculated on the basis of the estimated effective tax rate on profit for the full year. The tax credit on the operating exceptional items for the half year ended 30 September 2002 was £6.8 million (2001 - £6.1 million). The tax charge on the Group’s share of joint venture’s profit on disposal of property for the half year ended 30 September 2001 was £0.2 million.

5 Dividends The interim dividend of 5.1p per share (2001 - 4.8p) will be payable on 30 January 2003 to shareholders on the register on 22 November 2002.

6 Earnings per share Earnings per share for the half year ended 30 September 2002 has been calculated on the basis of profit on ordinary activities after taxation and minority interests of £4.6 million (2001 - £9.4 million) and the weighted average number of shares in issue, totalling 120.583 million (2001 - 117.205 million).

8 Notes to the interim financial statements continued (unaudited)

6 Earnings per share continued The shares held by the Dairy Crest ESOP and Dairy Crest QUEST amounting to 2.74 million and 0.89 million respectively (2001 - 2.31 million and 1.71 million) have been excluded from the weighted average number of shares in issue in accordance with FRS 14.

To show earnings per share before operating exceptional items and goodwill amortisation, adjusted earnings per share has been calculated as follows:

Year ended Half year ended 30 September 31 March 2002 2002 2001 £m £m £m

21.3 Profit for the period after minority interests 4.6 9.4 2.3 Goodwill amortisation 1.2 1.1 31.1 Operating exceptional items (net of taxation) 17.0 15.1 Share of joint venture’s profit on disposal of property (net of (1.2) taxation) - (1.5) 53.5 Adjusted earnings 22.8 24.1 45.2p Adjusted earnings per share 18.9p 20.6p

Diluted earnings per share has been calculated on the basis of earnings for the half year of £4.6 million (2001 - £9.4 million) and diluted number of shares of 123.709 million (2001 - 121.006 million).

7 Share capital and equity reserves

Share Share Merger Profit and capital premium reserve loss account £m £m £m £m

At 1 April 2002 30.9 23.3 55.9 96.6 Issue of shares 0.1 0.7 - - Retained loss for the period - - - (1.6) Exchange differences - - - 0.3 At 30 September 2002 31.0 24.0 55.9 95.3

9 Notes to the interim financial statements continued (unaudited)

8 Cash flow statement

Year ended Half year ended 30 September 31 March 2002 2002 2001 £m £m £m Reconciliation of operating profit to net cash inflow from operating activities 46.5 Operating profit for Group and share of joint ventures 16.0 21.2

Non-cash items 17.2 Operating exceptional items 13.7 11.0 2.3 Amortisation of goodwill 1.2 1.1 37.0 Depreciation 17.8 18.7 (1.0) Release of grants (0.5) (0.5) (1.4) Share of profit of joint ventures (0.9) (1.6) (52.1) Increase in working capital (36.1) (49.4)

48.5 Net cash inflow from operating activities 11.2 0.5

9 Reconciliation of movements in Group shareholders’ funds

£m Profit for the period after minority interests 4.6 Dividends (6.2) Transfer from reserves (1.6) Issue of shares 0.8 Exchange differences 0.3 Movement in the period (0.5) At 1 April 2002 206.7 At 30 September 2002 206.2

10 Consolidated statement of total recognised gains and losses

Year ended Half year ended 30 September 31 March 2002 2002 2001 £m £m £m 3.1 Transferred (from)/to reserves (1.6) 3.7 0.1 Currency translation differences on foreign currency investments 0.3 0.3 3.2 Total recognised (losses)/gains (1.3) 4.0

10 Notes to the interim financial statements continued (unaudited)

11 Subsequent events On 1 November 2002 the Group acquired the St Ivel Spreads business from the Uniq Group for cash consideration of £86.5 million.

On 3 October 2002 the Group sold the site at Westway, London for an initial consideration of £18 million, received on 17 October 2002, plus further consideration depending on final planning permission. The book value of the site at 30 September 2002 was £13.3 million.

12 Consolidated interim financial statements The consolidated interim financial statements do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The figures for the year ended 31 March 2002 have been extracted from the statutory accounts which have been delivered to the Registrar of Companies. The auditors have made a report under Section 235 of the Companies Act 1985 on the statutory accounts which was unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985.

11 Report of the auditors to Dairy Crest Group plc

Introduction We have been instructed by the company to review the financial information for the six months ended 30 September 2002 which comprises the consolidated profit and loss account, consolidated balance sheet, consolidated cash flow statement, consolidated statement of total recognised gains and losses and the related notes 1 to 12. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information.

Directors’ responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed.

Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information.

Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 September 2002.

Ernst & Young LLP 13 November 2002 London

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