• Independent auditor’s report
• 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
• 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.

The CODM uses product group profit, as reviewed at monthly business review meetings, as the key measure of the Group’s results as it reflects the Group’s underlying trading performance for the period under evaluation. 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 associate.

In April 2013, the Group reorganised from a divisional structure to a functional structure to become ‘One Dairy Crest’. Prior to the reorganisation, the business was structured into divisions according to product types and this was used to identify and determine the Group’s operating segments as ‘Cheese’, ‘Spreads’, ‘MH Foods’, ‘Dairies’, ‘Share of Associate’ and ‘Other’. Certain of these operating segments were aggregated and the Group reported on five continuing segments within the business: ‘Cheese’, ‘Spreads’, ‘Dairies’, ‘Share of Associate’ and ‘Other’.

Following the reorganisation, the CODM’s primary focus for review and resource allocation is the Group as a whole and no longer any component part of the business. All revenue streams for the business are managed centrally by functional teams (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.Having considered these factors, management has judged that following the implementation of the new structure, the Group comprises one operating segment under IFRS 8. As such, disclosure required under IFRS 8 for the financial statements is 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 historic 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.

Associate 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 the product groups such that their result reflects the total cost base of the Group. ‘Other’ operating profit therefore is nil.

The results under the historic segmentation basis for the year ended 31 March 2014 and for the year ended 31 March 2013 and the reconciliation of product group measures to the respective line items included in the financial information are as follows:

* Before exceptional items, amortisation of acquired intangibles and pension interest.

The prior year comparatives have been restated to reflect the amendment to IAS 19R: Employee Benefits (see Accounting policies and Note 20).

Interest income and expense are not included in the measure of product group profit. Group treasury has always been centrally managed and external interest income and expense are not allocated to product groups.

Further analysis of the Group interest expense is provided in Note 5.

Tax costs are not included in the measure of product group profit.

Product group assets comprise property, plant and equipment, goodwill, intangible assets, inventories, receivables, assets in disposal group held for sale and investments in associates using the equity method and deferred consideration but exclude cash and cash equivalents, derivative financial assets and deferred tax assets. Other product group assets comprise certain property, plant and equipment that is not reported in the principal groups.

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

Product group depreciation and amortisation excludes amortisation of acquired intangible assets of £0.4 million (2013: £0.4 million) as these costs are not charged in the product group result.

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

* Comprises property, plant and equipment, goodwill, intangible assets, investments and investment in associate.

The Group has two customers which individually represent more than 10% of revenue from continuing operations in the year ended 31 March 2014 (2013: two) with each customer accounting for £152.1 million and £174.8 million (2013: £151.8 million and £175.3 million) of revenue from continuing operations being 10.9% and 12.6% (2013: 11.0% and 12.7%).

The product group analysis provided above is based upon groupings of similar products, namely Cheese, Spreads and Dairies, and therefore the analysis of Group revenue by product and services is consistent with the revenue analysis presented above with the exception of non-milk product sales in the Dairies product group, which amounted to £66.3 million (2013: £81.3 million).