Preliminary Results

21 May 2015

Dairy Crest Group plc ("Dairy Crest")

Final results for year ended 31 March 2015

1 From continuing operations

2 Profit on operations before exceptional items and amortisation of acquired intangibles

3 Before exceptional items, amortisation of acquired intangibles and pension interest

Highlights

· Total Product group profits of retained Cheese and Spreads businesses up 19% year on year

· Sale of Dairies operations approved by shareholders; regulatory approval in progress

· Cathedral City brand continues to grow strongly - now Britain's 16th largest grocery brand, accounting for over 50% of total branded retail cheddar sales

· On track to start production of demineralised whey powder and galacto-oligosacharide this year for growing global markets

· Strong Corporate Responsibility commitment maintained - top ranked UK business by BITC for second consecutive year

· Proposed final dividend payment of 15.7p taking full year to 21.7p, up 2%

Commenting on the results, Mark Allen, Chief Executive, Dairy Crest Group plc said:

"This has been another year of significant progress for Dairy Crest. We have grown combined Cheese and Spreads sales despite the deflationary market environment. We have also delivered an encouraging improvement in the combined margin of these businesses. Cathedral City has again outperformed and accounts for over 50% of retail sales of branded cheddar. Our focus on product development has underpinned these results and our investment in a new innovation centre will support this. We have again met our target to deliver annual cost savings of over £20 million. These include consolidating our butter and spreads production onto one site.

We have agreed to sell our Dairies operations. The conditional sale is a positive development for Dairy Crest and the wider UK dairy sector. Shareholders have approved the sale and the process to obtain regulatory approval is on track. Completion of the sale will result in Dairy Crest operating from five well-invested manufacturing sites. It will be a much simpler, more focused, predominantly branded business. It will also have exposure to the growing infant formula category and emerging markets.

Looking ahead, Dairy Crest is well positioned for sustainable, profitable growth. Over the coming year as a whole we expect results to benefit from the continued growth of Cathedral City, ongoing cost savings and the completion of our project at Davidstow where we will add value to our whey stream by producing ingredients for infant formula. This growth will be second half weighted.

We expect that our net debt, which at the year end remains within our target range, will fall once we have completed our major investment projects. The receipt of the proceeds from the sale of our Dairies operations will accelerate this reduction."

For further information:

A video interview with Mark Allen and Tom Atherton 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 10:30 (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 www.dairycrest.co.uk/investors later today.

Chief Executive's review

Summary

This has been another year of significant progress for Dairy Crest. We have grown combined Cheese and Spreads sales despite the deflationary market environment. We have also delivered an encouraging improvement in the combined margin of these businesses. Cathedral City has again outperformed and accounts for over 50% of retail sales of branded cheddar. Our focus on product development has underpinned these results and our investment in a new innovation centre will support this. We have again met our target to deliver annual cost savings of over £20 million. These include consolidating our butter and spreads production onto one site.

We have agreed to sell our Dairies operations. The conditional sale is a positive development for Dairy Crest and the wider UK dairy sector. Shareholders have approved the sale and the process to obtain regulatory approval is on track. Completion of the sale will result in Dairy Crest operating from five well-invested manufacturing sites. It will be a much simpler, more focused, predominantly branded business. It will also have exposure to the growing infant formula category and emerging markets.

Market background

This year has been a difficult one for the major food retailers, our principal customers. They have faced falling sales due to food price deflation and greater competition.

It has also been a very difficult year for dairy farmers. Global dairy commodity prices have fallen steeply since the first quarter and ended the year close to half the peak they reached as recently as the autumn of 2013. The collapse in these markets and high milk production around the world and in the UK have led to a significant reduction in the price UK farmers have received for their milk. Our purchase prices for milk fell by around 25% across the year, reversing the increases we have paid in recent years.

The long-awaited abolition of European milk production quotas took effect from 1 April 2015. This has been widely expected to lead to an increase in milk production across Europe, although not in the UK where production has been unconstrained by quotas. It is too early to say how the reduction in global dairy commodity prices and the removal of quotas will affect milk production and imports of dairy products, particularly cheddar cheese, into the UK, although cheddar imports into the UK decreased 9% in the year ended 31 December 2014 (Source: DairyCo). While we monitor this situation closely we anticipate that our market leading Cathedral City branded cheddar will not be affected significantly by these changes and will continue to perform strongly.

Against this market background we continue to position ourselves to deliver sustainable and profitable growth.

Transformational sale of Dairies operations

In November 2014 we agreed to sell the assets of our Dairies operations to Müller UK & Ireland Group ("Müller") for a cash consideration of £80 million. The conditional sale of our Dairies operations will result in Dairy Crest becoming a stronger, predominantly branded business that can grow profitably and generate cash.

In December 2014 Dairy Crest's shareholders overwhelmingly approved the proposed sale, which remains conditional on the approval of the competition authorities. This process is on track. The European Commission referred it back to the UK for review by the Competition and Markets Authority ("CMA") which is currently expected to make a phase one decision in June 2015. Although this deadline may change and the review could move to a second phase we remain confident that a sale will ultimately be approved and proceed.

The conditional sale of our Dairies operations and their subsequent combination with Müller's dairies business will help create a more sustainable UK dairy sector by delivering economies of scale and cost efficiencies that will underpin investment and help the UK to compete more successfully in global markets. It is encouraging that we have received support for the sale from the independent organisation that represents our farmers, Dairy Crest Direct, and the wider farming community.

A successful outcome will benefit farmers, consumers, customers, employees and Dairy Crest's shareholders.

Cathedral City outperforms

In total, sales of our four key brands, Cathedral City, Clover, Country Life and FRijj were unchanged over the year. As the table below shows, both Cathedral City and FRijj performed strongly. However Clover and Country Life sales both fell in a butter and spreads market that continues to decline. Despite this we saw a welcome increase in margins in our Spreads and butters business.

* Dairy Crest value sales 12 months to 31 March 2015 v 12 months to 31 March 2014

** IRI data 52 weeks to 28 March 2015

Cathedral City again outperformed the market and grew sales by 5%. Its annual growth over the last five years has averaged over 7%. Cathedral City is now Britain's 16th largest grocery brand (Source: The Grocer 21 March 2015) up from 18th last year. Cathedral City now accounts for over 50% of total branded retail cheddar sales. Sales of competing cheddar brands have continued to decline. Taken together retail sales of the next three largest cheddar brands were down over 20% in the year and were just half those of Cathedral City.

The UK butter and spreads market remains difficult. Total market sales fell by 4%. Consumption is falling as consumers continue to turn away from making sandwiches in the home. Butter, where market sales are unchanged compared to last year, continues to gain share from spreads where sales are down 8%. Against this background Clover and Country Life butter, our two key brands in this market, have delivered a satisfactory performance. Clover performed in line with the spreads market as a whole and was awarded Which magazine's 'Best Buy' in the spreads category (Source: Which February 2015). Country Life Spreadable, which now accounts for nearly 60% of total Country Life butter and spreads sales outperformed the butter market and grew sales by 2%. We expect to use some of the savings we will achieve from the consolidation of our spreads and packet butter production to increase marketing expenditure in this high-margin category.

FRijj performed well. In a ready to drink flavoured milk market that is still growing, but at a much slower pace than last year, FRijj sales grew by 7%. Some of this growth came from sales to the food service and convenience sectors and is therefore not reflected in the IRI market data which just covers major multiples. The FRijj brand is included in the conditional sale of our Dairies operations to Müller.

We have also seen strong growth from Frylight one calorie cooking spray, which we purchased in 2011. This brand has responded well to the increased investment in marketing that we have made consistently since then and has the potential to grow further. In future we expect to report it as one of our key brands alongside Cathedral City, Clover and Country Life butter and spreads.

Dairy is one of the UK's largest food retail categories and during the year Dairy Crest carried out a comprehensive category strategy project. 'Dairy for Life' is a framework to make people look differently at the dairy category. It forms the foundation for future innovation, marketing and category merchandising for our key brands. We will work with our major customers to implement the Dairy for Life findings and drive growth across the dairy category. Some ideas generated by Dairy for Life, such as cross-sector promotions and additional store positionings, have already been implemented.

Innovation remains key to the success of our brands. During the year we have launched several brand extensions including Cathedral City Spreadable, Clover Lighter than Light, and reduced sugar FRijj. Since the year end we have started to produce and sell Clover cooking oil which combines Frylight spray technology and the strength of the Clover brand.

In the year ended 31 March 2015 around 7% of our combined Cheese and whey and Spreads and butter revenue came from products introduced in the last 3 years. This compares to our ongoing ambitious target of 10% and last year's performance of 4% across the business as a whole and 7% for our branded business.

To further increase our focus on innovation we have entered into a new partnership with Harper Adams University. Our innovation team has moved to Harper Adams and we are building a £4 million innovation centre on the university campus. We expect this to be fully operational by the end of 2015. The partnership will give us access to food and farming research that will help us continue to develop new products and ways of working.

Building from strength

We have continued to make good progress with projects that enhance the future prospects of our Cheese and Spreads operations, including consolidating butter and spreads production onto one site and investing in demineralised whey and galacto-oligosaccharide ("GOS"), a lactose based prebiotic.

We are nearing completion of the project to make demineralised whey powder and GOS at our Davidstow creamery in Cornwall. These products will give us access to new sales channels in growing global markets. Both products are used in the manufacture of infant formula for which there is growing demand across the world. We expect commercial manufacture of both products to start later this year. During the year we entered into a strategic partnership with Fonterra, the world's leading dairy exporter. Fonterra will market and sell our products on our behalf and is also providing valuable technical and engineering support.

Cost cutting

We have again achieved our target of making cost savings in excess of £20 million in the year.

The consolidation of our spreads and packet butter manufacturing into one site at Kirkby, Merseyside and the closure of Crudgington will give us a lower fixed cost base that will benefit future years.

We continue to work with non-milk suppliers to drive efficiencies and lower our purchase costs. During the year we have increased our use of lighter weight polybottles; reduced packaging costs and made our distribution network more efficient.

Cost reduction is essential in our residential milk delivery business, where sales fell by 11% compared to the year ended 31 March 2014. We have continued with our programme of depot closures. In addition we announced that we would further rationalise our Dairies operations and consult with employees regarding the closure of our glass bottling dairy in Hanworth, West London and our specialist cream potting facility in Chard, Somerset. We anticipate that Chard will close later in 2015 and Hanworth in 2016.

Completion of the sale of our Dairies operations will significantly reduce the complexity of the business and will allow us to streamline our future overhead structure and systems.

Increased dividend recommended

The Board is recommending a final dividend of 15.7 pence per share, making a full year dividend of 21.7 pence per share, up 2% from last year. This dividend is covered 1.8 times by adjusted basic earnings per share, compared to 1.9 times last year. Looking ahead, we propose to maintain our progressive dividend policy with a target cover range of 1.5 to 2.5 times.

Future prospects

Completion of the sale of our Dairies operations will result in Dairy Crest operating from five well-invested manufacturing sites and be a much simpler, more focused, predominantly branded business. It will also have exposure to the growing infant formula category and emerging markets.

Looking ahead, Dairy Crest is well positioned for sustainable, profitable growth. Over the coming year as a whole we expect results to benefit from the continued growth of Cathedral City, ongoing cost savings and the completion of our project at Davidstow where we will add value to our whey stream by producing ingredients for infant formula. This growth will be second half weighted.

We expect that our net debt, which at the year end remains within our target range, will fall once we have completed our major investment projects. The receipt of the proceeds from the sale of our Dairies operations will accelerate this reduction.

Mark Allen

Chief Executive

20 May 2015

Financial review

Overview

Dairy Crest has continued to make progress in difficult trading conditions and 2014/15 saw an important step in delivering against our long-term strategy.

In November 2014 we announced that we had agreed to sell our Dairies operations to Müller UK & Ireland Group ("Müller"). The sale has been approved by shareholders but remains subject to the approval of the CMA. Completion of this sale will deliver a step-change in delivering our strategy of creating a value-added, streamlined business with reduced exposure to commoditised markets and the ability to deliver future growth both organically and through acquisitions.

Overall, the financial performance of the Group during the year has been satisfactory. The performance of the operations we expect to retain, namely Cheese and whey and Spreads and butter ("the Retained business") has been strong with revenue and product group profits up 0.5% and 19.3% respectively and a fully costed margin of 15%. However, profits in our Dairies operations have reduced markedly in the year reflecting strong competition in liquid milk markets and sharp falls in commodity realisations.

We have continued to invest in the businesses we are retaining. Our investment at our spreads site at Kirkby enabled us to close Crudgington during the year and the new demineralised whey and galacto-oligosaccharide facilities at Davidstow, which are nearing completion, will increase future whey returns. Having completed these investments, the businesses to be retained will run out of five well-invested, efficient processing sites.

Sale of Dairies operations

The sale of our Dairies operations to Müller remains on track and, subject to clearance by the CMA, is expected to complete during the year ending 31 March 2016.

The sale includes the FRijj brand and bulk butter manufacture and the Dairies supporting overhead structure to Müller for £80 million, payable in cash, on completion. This includes the factories at Foston, Chadwell Heath and Severnside. It also includes the Hanworth glass bottling site, where Dairy Crest has consulted with employees on the site's future, and the depot distribution network.

Dairy Crest will retain full ownership of the closed dairies at Totnes and Fenstanton, its Chard site and a number of previously closed depots and will sell these in the future.

Under the terms of the sale agreement the two companies will also enter into a supply agreement whereby Müller will sell bulk butter to Dairy Crest for five years. In addition Dairy Crest will provide certain transitional IT services to Müller.

Dairy Crest will continue to be responsible for the defined benefit pension obligations in relation to the closed Dairy Crest Group Pension Fund.

Any consideration payable by Müller is subject to upward or downward adjustments for variances from agreed levels of working capital, capital expenditure and the profitability of Dairy Crest's Dairies operations and will also be adjusted to reflect profits made on the sale of properties included in the transaction that are sold by Dairy Crest before completion.

Müller has the ability not to complete their purchase of our Dairies operations should there be a material deterioration of more than £20 million in the agreed level of profitability of Dairy Crest's Dairies operations before completion. At this time we do not anticipate that there will be such a material deterioration in the profitability of our Dairies operations before completion. Müller may also not complete if any of our four dairies are inoperable when completion is due.

The sale constitutes a Class 1 transaction for Dairy Crest pursuant to the Listing Rules. Shareholder approval was received on 23 December 2014. 

Following shareholder approval for the sale, we are separating our Dairies operations, including the relevant IT systems, from the rest of the business. This creation of a stand-alone Dairies operation is necessary for completion of the sale but also ensures that supporting overhead costs are fully transferred along with the underlying business. Furthermore, it results in both the retained business and the Dairies business staying focussed on delivering their plans until such time that the sale completes.

Because the sale remains conditional upon approval from the CMA it was not, at 31 March 2015, considered to have met the "highly probable" criteria required under IFRS 5 in order for the Dairies business to be classified as held for sale. This judgement will be kept under review as the CMA continues its review of the transaction.

Product group revenue

We continue to provide product group analysis consistent with prior years to assist the users of the Financial Statements although the Group operated as one segment throughout 2014/15.

Revenues from our Retained business increased marginally which represents a good performance in categories experiencing price deflation. In particular, Cathedral City has had another strong year with revenue up by 5%. Conversely, our Dairies operations have seen some volume declines along with significant price deflation and overall revenue has reduced by 6.7% in the year to £881.6 million.

Overall Group product group profit (before interest, acquired intangible amortisation and exceptional items) fell by 8.6% to £68.7 million. However, product group profit of the businesses we are retaining grew by 19.3% to £66.9 million.

Cheese and whey profits reduced somewhat after a very strong year ended 31 March 2014 as the cost of sales reflected milk cost increases in that year and whey realisations softened in the second half of the year ended 31 March 2015. Lower milk input costs during the year ended 31 March 2015 have resulted in the cost of cheese in stock falling. However, due to the maturity profile of cheese, this will not be fully reflected in reduced cost of goods sold until the second half of the year ending 31 March 2016.

Spreads and butter profits were higher following a difficult 2013/14 principally as a result of significantly lower cream input costs.

Overall margins in the retained businesses increased from 13% in 2013/14 to 15% in 2014/15. These margins are stated after allocating all costs including central administrative overheads of the Group.

Dairies profits fell despite lower milk input costs, reflecting the competitive marketplace and significantly lower dairy commodity realisations. Within this, profits from the sale of closed depots were marginally lower at £17.6 million (2014: £18.2 million). The Dairies business stabilised somewhat in the second half of the year and losses (before property profits) reduced from £11.9 million in the first half to £3.9 million in the second half. However, the dairy sector remains challenging and contract renewals and continued weak commodity returns will continue to put pressure on our Dairies operations in 2015. Although we retained our contract to supply Morrisons for a further three years following a competitive tender the volumes we expect Morrisons to purchase have reduced by around one third from March 2015.

Exceptional items

Pre-tax exceptional charges in the year totalled £36.3 million (2014: £10.4 million). Cash exceptional operating costs reduced to £19.8 million (2014: £20.8 million).

Exceptional charges of £16.7 million were associated with the final consolidation of Spreads and butter production at Kirkby along with the installation of a bulk butter churn at Severnside and creation of a new innovation centre at Harper Adams University. The Crudgington site was closed in December 2014 and any further exceptional costs associated with the completion of the Innovation Centre will be more than offset by future exceptional profit from the sale of the Crudgington production site.

Exceptional costs of £3.4 million relate to the investment in demineralised whey and galacto-oligosaccharide. These relate predominantly to incremental site costs incurred as a result of the significant works being undertaken, for example additional site shut downs. These projects remain on track for completion later in 2015.

In September 2014 we announced the future closures of our glass bottling site at Hanworth and our specialist cream potting facility at Chard. £11.8 million of exceptional charges have been made in respect of these closures of which £9.2 million are non-cash asset write downs and accelerated depreciation.

Further exceptional costs of £4.3 million have been charged in respect of the proposed sale of our Dairies operations. These include costs associated with the transaction, predominantly professional fees as well as costs relating to the separation of the Dairies business into a standalone entity.

Finance costs

Finance costs of £8.1 million reduced by £2 million in the year reflecting some capitalised interest on the major projects at Kirkby and Davidstow as well as the repayment of £27 million of loan notes in April 2014 that were at effective fixed rates of 4.97%. Interest cover excluding pension interest, calculated on total product group profit increased to 8.5 times (2014: 7.6 times).

Other finance expenses, which are derived by applying the discount rate to pension scheme assets and liabilities at the start of each financial year, increased to £1.8 million (2014: £0.3 million). These amounts are dependent upon the pension scheme position at 31 March each year and are volatile, being subject to market fluctuations. We therefore exclude this item from headline adjusted profit before tax.

Adjusted profit before tax (before exceptional items and amortisation of acquired intangibles) decreased by 7% to £60.6 million. This is Managements' key Group profit measure. Reported profit before tax of £22.1 million represents a £32.1 million decrease from 2014 predominantly due to the higher level of exceptional items incurred in 2015.

Taxation

The Group's effective tax rate on continuing operations fell slightly to 14.0% (2014: 14.6%). The effective tax rate continues to be below the headline rate of UK corporation tax due to property profits on which tax charges are offset by brought forward capital losses or rollover relief.

Group profit for the year

The reported Group profit for the year was £22.1 million (2014: £54.2 million).

Earnings per share

The Group's adjusted basic earnings per share from continuing operations fell by 6.9% to 38.0 pence (2014: 40.8 pence). Basic earnings per share from continuing operations, which includes the impact of exceptional items, pension interest expense and the amortisation of acquired intangibles, amounted to 15.0 pence (2014: 35.8 pence).

Dividends

We remain committed to a progressive dividend policy and have continued to deliver against that policy by increasing our proposed dividend. The proposed final dividend of 15.7 pence per share represents an increase of 0.3 pence per share - a 1.9% increase. Together with the interim dividend of 6.0 pence per share (2014: 5.9 pence per share) the total proposed dividend is 21.7 pence per share (2014: 21.3 pence per share). The final dividend will be paid on 6 August 2015 to shareholders on the register on 3 July 2015.

Dividend cover of 1.8 times is within the target range of 1.5 to 2.5 times (2014: 1.9 times).

Pensions

The latest full actuarial valuation of the closed defined benefit pension scheme was performed at 31 March 2013 and resulted in an actuarial deficit of £105 million taking into account the one-off contribution of £40 million we made to the scheme in April 2013.

During the year ended 31 March 2015 the Group paid £13 million cash contributions into the scheme in line with the new schedule of contributions agreed with the Trustee in March 2014. This level of contributions will continue for the year ending 31 March 2016 before increasing to £16 million for the year ending 31 March 2017.

During the year the focus of the Trustee and the Group has been to reduce the scheme's exposure to equities in line with the derisking flight path agreed as part of the 2013 actuarial review. The proportion of assets (excluding insurance) held in higher risk/ higher return type assets has reduced from 75% at March 2014 to 61% at March 2015.

The reported deficit under IAS 19 at 31 March 2015 was £41.4 million a decrease of £16.3 million from March 2014. Asset returns have been strong during the year and have offset a further reduction in the discount rate used to measure liabilities. We continue to stick to a derisking programme that targets a self-sufficient scheme by 2019 requiring returns at that point of only 0.5% above gilt yields.

Cash flow

Our ambition is for the business to generate strong free cash flows in future years and we are making good progress towards this target. Pension contributions have reduced from levels seen in previous years and lower milk input costs have reduced the value of cheese stocks. Capital expenditure, which has been high for several years and peaked this year, will fall significantly following the completion of the demineralised whey and galacto-oligosaccharide projects in Davidstow in the first half of 2015/16. Furthermore, the sale of our Dairies operations will reduce exceptional restructuring costs in future years and result in one-off sales proceeds.

In the year ended 31 March 2015 cash generated by operations was £35.3 million (2014: £13.8 million outflow). This includes a working capital increase of £12.8 million albeit there has been a working capital reduction of £27.8 million in the second half of the year. Working capital changes reflect lower cost cheese stocks offset by the timing of customer receipts and supplier payments at the end of the year. Cheese stock valuations should continue to decrease in the year ending 31 March 2016 as higher cost cheese is sold and replaced in stock with that made at reduced milk input costs. Cash generated by operations also reflects reduced payments to the pension scheme as described above and exceptional cash costs of £19.8 million (2014: £20.8 million).

Cash interest payments amounted to £10.5 million (2014: £14.0 million). There were no net tax payments or receipts (2014: net receipt of £2.1 million).

Capital expenditure of £80.1 million (2014: £58.8 million) reflects the investments at Kirkby, Harper Adams and in particular at Davidstow, which together totalled £53.3 million as well as ongoing expenditure elsewhere in the business. In total capital expenditure was somewhat higher than we anticipated as we took the opportunity to accelerate investment in some other site infrastructure at Davidstow to avoid disruption in the future. We expect capital expenditure to fall below levels of depreciation once our investment in Davidstow is complete in summer 2015.

Proceeds from property disposals remain strong. In the year ended 31 March 2015 these totalled £21.1 million (2014: £25.1 million).

Net debt

Net debt includes the fixed Sterling equivalent of foreign currency loan notes subject to swaps and excludes unamortised facility fees.

Net debt increased from £142.2 million at 31 March 2014 to £198.7 million at 31 March 2015, somewhat higher than was anticipated due to the working capital movements and higher capital expenditure referred to above. However the ratio of net debt to EBITDA at 31 March 2015 remained within our target range of 1.0 to 2.0 times. Looking ahead, we expect net debt to fall by at least £20 million in the year ending 31 March 2016 mainly as a result of reduced capital expenditure.

At 31 March 2015, gearing (being the ratio of net debt to shareholders' funds) was 69% (2014: 49%).

Borrowing facilities

Treasury Policies

The Group operates a centralised treasury function, which controls cash management and borrowings and the Group's financial risks. The main treasury risks faced by the Group are liquidity, interest rates and foreign currency. The Group only uses derivatives to manage its foreign currency and interest rate risks arising from underlying business and financing activities. Transactions of a speculative nature are prohibited. The Group's treasury activities are governed by policies approved and monitored by the Board.

Going concern

The financial statements have been prepared on a going concern basis as the Directors are satisfied that the Group has adequate financial resources to continue its operations for the foreseeable future. In making this statement, the Group's Directors have: reviewed the Group budget, strategic plans and available facilities; have made such other enquiries as they considered appropriate; and have taken into account 'Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009' published by the Financial Reporting Council in October 2009.

Tom Atherton

Finance Director

20 May 2015

Consolidated income statement

Year ended 31 March 2015

The prior year comparatives include discontinued operations that were a result of the disposal of the St Hubert business in August 2012 (see Note 17). The post-tax profit relating to discontinued activities is further analysed in Note 17.

* Adjusted earnings per share calculations are presented to give an indication of the underlying operational performance of the Group. The calculations exclude exceptional items, amortisation of acquired intangibles and pension interest in relation to the Group's defined benefit pension scheme, the latter being dependent upon market assumptions at 31 March each year.

Consolidated statement of comprehensive income

Year ended 31 March 2015

Consolidated balance sheet

At 31 March 2015

Consolidated statement of changes in equity

Year ended 31 March 2015

Consolidated statement of cash flows

Year ended 31 March 2015

Notes to the preliminary announcement

1 Basis of preparation

The consolidated financial statements have been prepared in accordance with the Disclosure and Transparency Rules of the UK Financial Services Authority, International Financial Reporting Standards ("IFRS") and International Financial reporting Interpretation Committee ("IFRIC") interpretations as endorsed by the European Union, and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 March 2014, as described in those financial statements.

The following accounting standards and interpretations became effective for the current reporting period:

IAS 16 - Improvement to IAS 16: Property, Plant and Equipment (effective 1 July 2014)

IAS 38 - Improvement to IAS 38: Intangible Assets (effective 1 July 2014)

IAS 24 - Improvement to IAS 24: Related Party Disclosure (effective 1 July 2014)

IFRS 13 - Improvement to IFRS 13: Fair Value Measurement (effective 1 July 2014)

IFRIC 21 - Levies (effective 13 June 2014)

The application of these standards has had no material impact on the net assets, results and disclosures of the Group in the year ended 31 March 2015.

The financial information set out in this document does not constitute the statutory accounts of the Group for the years ended 31 March 2015 or 31 March 2014 but is derived from the 2015 Group Annual Report and Financial Statements. The Group Annual Report and Financial Statements for 2015 will be delivered to the Registrar of Companies in due course. The auditors have reported on those accounts and have given an unqualified report, which does not contain a statement under Section 498 of the Companies Act 2006.

2 Segmental analysis

IFRS 8 'Operating Segments' requires operating segments to be determined based on the Group's internal reporting to the Chief Operating Decision Maker ("CODM"). The CODM has been determined to be the Company's Board members as they are primarily responsible for the allocation of resources to segments and the assessment of performance of the segments.

The CODM's primary focus for review and resource allocation is the Group as a whole. All revenue streams for the business are managed centrally by functional teams (e.g. Demand, Supply, Procurement and Finance) that have responsibility for the whole of the Group's product portfolio. Although some discrete financial information is available to provide insight to the management team of the key performance drivers, the product group profit is not part of the CODM's review. Management has judged that the Group comprises one operating segment under IFRS 8. As such, disclosures required under IFRS 8 for the financial statements are shown on the face of the Consolidated Income Statement and Consolidated Balance Sheet.

Voluntary disclosure

To assist the readers of the financial statements, management considers it appropriate to provide voluntary disclosure on a basis consistent with historical reporting of the product groups. In disclosing the product group profit for the year, certain assumptions have been made when allocating resources which are now centralised at a group level.

Share of associate's net profit forms a separate product group whose results are reviewed on a post-tax basis.

The Other product group comprises revenue earned from distributing product for third parties and certain central costs net of recharges to the other product groups. Generally, central costs less external 'other' revenue are recharged back into he product groups such that their result reflects the total cost base of the Group. 'Other' operating profit therefore is nil.

Notes to the preliminary announcement

2 Segmental analysis (continued)

The results under the historic segmentation basis for the year ended 31 March 2015 and for the year ended 31 March 2014 and the reconciliation of product group measures to the respective line items included in the financial information are as follows: