• Consolidated income statement
• Consolidated statement of comprehensive income
• Consolidated and Parent Company balance sheets
• Consolidated statement of changes in equity
• Parent Company statement of changes in equity
• Consolidated and Parent Company statement of cash flows
• Accounting policies
• Notes to the financial statements
• Independent auditors’ report
• Group financial history
• Shareholders’ information

Notes to the financial statements

1 Segmental analysis

IFRS 8 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. Previously, segments were determined and presented in accordance with IAS 14, ‘Segment Reporting’.

The CODM uses trading profit, as reviewed at monthly business review meetings, as the key measure of the segments’ results as it reflects the segments’ underlying trading performance for the period under evaluation. Trading profit is a consistent measure within the Group and the reporting of this measure at the monthly business review meetings, which are organised according to the product types, has been used to identify and determine the Group’s operating segments. Trading profit is defined as profit on operations before exceptional items and amortisation of acquired intangible assets, but includes the Group share of post-tax profit of joint ventures.

Following the adoption of IFRS 8, the Group has revised its operating and reporting segments. The Group’s operating segments are ‘Cheese’, ‘UK Spreads’, ‘St Hubert’, ‘Liquid Products’, ‘Household’, ‘Share of Joint Ventures’ and ‘Other’. Certain of these operating segments have been aggregated and the Group reports on five continuing segments within the business: ‘Cheese’, ‘Spreads’, ‘Dairies’, ‘Share of Joint Ventures’ and ‘Other’.

The ‘Cheese’ segment has not been aggregated with any other segment. This business manufactures predominantly branded cheese in the UK and Ireland and sells mainly to retail customers.

The ‘UK Spreads’ and ‘St Hubert’ segments have been aggregated into one reportable segment being ‘Spreads’. Both of these segments operate within the European Union and manufacture branded dairy spreads, using similar production methods. Products are sold to similar end consumers in similar economic environments. Distribution methods are similar and in both businesses customers are major retailers.

The ‘Liquid Products’ and ‘Household’ segments have been aggregated into one reportable segment being ‘Dairies’. The ‘Liquid Products’ and ‘Household’ businesses both operate in the UK and predominantly sell fresh milk to a similar class of customer. The milk processing sites, included in the ‘Liquid Products’ segment, pack milk for both businesses.

‘Share of Joint Ventures’ forms a separate segment whose results are reviewed on a post-tax basis consistent with IFRS. The results of this segment are now insignificant following the group’s disposal of its 49% share of Yoplait Dairy Crest Limited in March 2009. Further description is provided in Notes 14 and 15.

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

Comparative information has been restated to reflect these new reportable segments.

Previously the Group reported two segments under IAS 14. These comprised ‘Foods’ and ‘Dairies’. The ‘Dairies’ segment was equivalent to the ‘Dairies’ segment under IFRS 8. The ‘Foods’ segment incorporated ‘Cheese’, ‘Spreads’ and ‘Joint Ventures’ as reported under IFRS 8 and for revenue also incorporated ‘Other’ revenue from third party distribution.

The segment results for the year to 31 March 2010 and for the year ended 31 March 2009 and the reconciliation of segment measures to the respective statutory items included in the financial statement are as follows:

Interest revenue and expense are not included in the measure of segment profit reviewed by the CODM. Group treasury is centrally managed and external interest income and expense is all incurred in the UK and is not allocated to segments. Where interest is reviewed by the CODM it is done so on a net basis. Further analysis of the interest expense for the Group is provided in Note 5.

Tax costs are not included in the measure of segment profit reviewed by the CODM. Group tax is centrally managed and the group effective tax rate, not individual segment tax rates, is reported.

Segment assets comprise property, plant and equipment, goodwill, intangible assets, inventories, receivables, assets in disposal group held for sale and investment on joint ventures and exclude cash and cash equivalents, derivative financial assets and deferred tax assets as these items are managed on a Group basis. Other segment assets comprise certain property, plant and equipment that is not reported in the segments. Total segment liabilities have not been presented as this measure is not regularly reviewed by or provided to the CODM.

Inter-segment revenue comprises the sale of finished Cheese and Spreads products into the Dairies segment on a cost plus basis and is included in the segment result. Other inter-segment transactions principally comprise sales of cream from the Dairies segment to the Spreads segment for the manufacture of butters. Cream sold into Spreads is priced by reference to external commodity markets and is adjusted regularly so as to reflect the costs that the Spreads segment would incur if it were a stand alone entity. Revenue from inter-segment cream sales is not reported as revenue to the CODM but as a reduction to the Dairies segment’s input costs.

Segment depreciation and amortisation excludes amortisation of acquired intangible assets of £9.2 million (2009: £9.6 million) as these costs are not charged in the segment result.

Segment additions to non-current assets comprise additions to goodwill, intangible assets and property, plant and equipment through capital expenditure and acquisition of businesses.

Geographical information

* Comprises property, plant and equipment, goodwill, intangible assets and investment in joint ventures.

No individual customer contributes more than 10% of Group revenue (2009: nil). The business segmentation above is based upon similar product groupings, namely cheese, spreads and liquid products and therefore any analysis of Group revenue by products and services is consistent with the revenue analysis presented above with the exception of non-milk product sales in the Dairies segment (through the Household division), which amounted to £37.1 million (2009: £42.0 million).