THIS ANNOUNCEMENT, INCLUDING THE APPENDIX AND THE INFORMATION CONTAINED HEREIN, IS RESTRICTED AND NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, NEW ZEALAND, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. PLEASE SEE THE IMPORTANT NOTICES AT THE END OF THIS ANNOUNCEMENT.

This announcement contains inside information as defined in EU Regulation No. 596/2014 and is in accordance with the Company’s obligations under Article 17 of that Regulation.

Dairy Crest Group plc ("Dairy Crest" or the "Company") today announces its intention to conduct a non pre-emptive cash placing (the "Placing") to institutional investors of up to 14,107,224 new ordinary shares of 25 pence per share in the capital of the Company (the "Placing Shares"), representing approximately 9.98 per cent. of the Company's current issued share capital, at a price of 495 pence per Placing Share (the "Placing Price").

In order to effect the Placing, the Company intends to utilise the authorities granted to it at its Annual General Meeting held on 18 July 2017 which enable it to issue up to 10% of its issued share capital on a non pre-emptive basis in connection with financing a transaction which the Board of the Company determines to be an acquisition or other specified capital investment of a kind contemplated by the 2015 Statement of Principles on Disapplying Pre-Emption Rights published by the Pre-Emption Group.

The Placing will be conducted through an accelerated bookbuild process which will be launched immediately following this announcement, in accordance with the terms and conditions set out in the Appendix to this announcement. Peel Hunt LLP (“Peel Hunt”) and Shore Capital Stockbrokers Limited (“Shore Capital”) are acting as joint bookrunners in connection with the Placing (the "Joint Bookrunners").

In addition, Dairy Crest is today announcing its preliminary results for the full year to 31 March 2018 (please see separate announcement).

Background to the Placing and use of proceeds

• • As set out in its preliminary results today, Dairy Crest delivered a 10% increase in revenue in the year to 31 March 2018 and Cathedral City continues to deliver strong growth ahead of its market. Cathedral City is the UK’s number 1 cheese brand, with a 20% share of the UK cheddar market1, and Dairy Crest sees a number of attractive opportunities for further growth for this industry leading brand:
• The UK cheese market is growing at around 2% per year
• 65% of the market remains private label
• There are growth opportunities in snacking and convenience ranges
• There is demand for high-quality, mature cheddar in Europe, the US, China and the Far East
• As a result of growing demand for cheese, the Company expects cheese production capacity constraints within its existing facility at Davidstow in Cornwall in the coming years. As such, the Company is seeking to expand its cheese production capacity from 54,000 tonnes per annum today to up to 77,000 tonnes. The Company’s whey production will also grow proportionally. The overall cost of this expansion is expected to be £85 million and will be implemented through a phased expansion programme over the next four to five years. By obtaining the proceeds at the outset, the Company has flexibility to adjust the pace of, and consequently expenditure required to effect, the expansion in line with purchasing requirements for new equipment as well as demand growth.
• As well as funding increased cheese production capacity, the Placing proceeds will also be used by Dairy Crest to become self-sufficient in the supply of water and improve its energy resilience at its Davidstow creamery, thereby reducing the site’s environmental impact. In addition, Dairy Crest will invest in packaging, both in terms of increasing available capacity but also delivering enhanced packaging solutions to meet changing consumer demands.
• Key stages of the investment include:
• Phase 1: Process changes to optimise existing capacity;
• Phase 2: Increase pasteurisation capacity; install two new vats;
• Phase 3: Replace five vats and install one more; improvements to cheese packing;
• Phase 4: Replace remaining vats; and
• Phase 5: Upgrade cheddar-making machine; add new block formers.
• The Placing proceeds will be used to part fund this investment.
• As a result of the Placing, the Company’s pro forma net debt / EBITDA ratio will reduce from 2.9x at 31 March 2018 to 2.1x and the Company expects c.6% earnings dilution in the short term. The Company’s dividend policy will remain unchanged.

Shareholder consultation

Ahead of the proposed Placing, Dairy Crest consulted with a number of its shareholders regarding the rationale for the proposed Placing. The Board believes that the proposed Placing will promote the success of the Company.

Advisers

Greenhill and Rabobank have acted as joint financial advisers to the Company.

Details of the Placing

The Placing is subject to the terms and conditions set out in the Appendix (which forms part of this announcement, such announcement and the Appendix together being the "Announcement").

The Joint Bookrunners will today commence an accelerated bookbuild process in respect of the Placing (the "Bookbuild").

The book will open with immediate effect following this Announcement.

The timing of the closing of the book, the number of Placing Shares to be issued and allocations are at the discretion of the Joint Bookrunners following consultation with Dairy Crest.

Final details of the Placing and the number of Placing Shares will be announced as soon as practicable after the close of the Bookbuild.

The Joint Bookrunners have entered into an agreement with the Company (the "Placing Agreement") under which, subject to certain conditions, they each agree to use their reasonable endeavours to procure subscribers for the Placing Shares. The Placing is not underwritten.

The Placing Shares, when issued, will be fully paid and will rank pari passu in all respects with the existing ordinary shares of the Company, including the right to receive all dividends and other distributions declared, made or paid after the date of issue, including the Company’s final dividend for the year ended 31 March 2018 of 16.3 pence per share.

If all the Placing Shares are placed, it would represent an increase of approximately 9.98 per cent. of the current issued ordinary share capital of the Company. The issue of the Placing Shares will be made on a non pre-emptive basis pursuant to the authorities granted at the Company's Annual General Meeting held on 18 July 2017.

Applications will be made for the Placing Shares to be admitted to the premium listing segment of the Official List of the Financial Conduct Authority (the "FCA") and to be admitted to trading on the main market for listed securities of London Stock Exchange plc (the "London Stock Exchange") (together, "Admission").

Settlement of the Placing Shares and Admission are expected to occur at 8.00 a.m. on 30 May 2018.

The Placing is conditional, among other things, upon Admission becoming effective and the Placing Agreement not being terminated in accordance with its terms.

The Appendix sets out further information relating to the Bookbuild and the terms and conditions applicable to the Placing.

This Announcement should be read in its entirety. In particular, you should read and understand the information provided in the "Important Notices" section of this Announcement below.

By choosing to participate in the Placing and by making an oral and legally binding offer to acquire Placing Shares, investors will be deemed to have read and understood this Announcement in its entirely and to be making such offer on the terms and subject to the conditions in it, and to be providing the representations, warranties and acknowledgements contained in the Appendix.

This Announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014 (“MAR”). The person responsible for arranging release of this Announcement on behalf of Dairy Crest is Tom Atherton.

ENQUIRIES

For further information on the Announcement, please contact:

Dairy Crest:
Tom Atherton
01372 472 264

Kate Goode
01372 472 236

Peel Hunt (Joint Bookrunner and Broker):

Dan Webster

George Sellar

Nicole McDougall
020 7418 8900
Shore Capital (Joint Bookrunner and Broker):

Dru Danford

Mark Percy

Toby Gibbs
020 7408 4090

Brunswick:
Tim Danaher
Alison Kay
020 7404 5959

IMPORTANT NOTICES

The information contained within this Announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (Regulation 596/2014). Upon the publication of this Announcement via a Regulatory Information Service this inside information is now considered to be in the public domain.

This Announcement has been issued by and is the sole responsibility of the Company.

MEMBERS OF THE PUBLIC ARE NOT ENTITLED TO PARTICIPATE IN THE PLACING. ALL OFFERS OF PLACING SHARES WILL BE MADE PURSUANT TO AN EXEMPTION UNDER DIRECTIVE 2003/71/EC (AND AMENDMENTS THERETO), AND INCLUDING ANY RELEVANT IMPLEMENTING MEASURE, IN THE RELEVANT MEMBER STATE OF THE EUROPEAN ECONOMIC AREA ("EEA")) (THE "PROSPECTUS DIRECTIVE"), FROM THE REQUIREMENT TO PRODUCE A PROSPECTUS FOR OFFERS OF THE PLACING SHARES. THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT IN THIS ANNOUNCEMENT ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT PERSONS WHO ARE: (A) PERSONS IN AN EEA MEMBER STATE WHICH HAS IMPLEMENTED THE PROSPECTUS DIRECTIVE (A "RELEVANT MEMBER STATE"), UNDER THE FOLLOWING EXEMPTIONS UNDER THE PROSPECTUS DIRECTIVE, IF AND TO THE EXTENT THEY HAVE BEEN IMPLEMENTED IN THAT RELEVANT MEMBER STATE: (I) TO ANY LEGAL ENTITY WHICH IS A "QUALIFIED INVESTOR" AS DEFINED IN THE PROSPECTUS DIRECTIVE; (II) TO FEWER THAN 150 NATURAL OR LEGAL PERSONS (OTHER THAN QUALIFIED INVESTORS AS DEFINED IN THE PROSPECTUS DIRECTIVE), AS PERMITTED UNDER THE PROSPECTUS DIRECTIVE; OR (III) IN ANY OTHER CIRCUMSTANCES WHICH DO NOT REQUIRE THE PUBLICATION BY THE COMPANY OF A PROSPECTUS PURSUANT TO ARTICLE 3 OF THE PROSPECTUS DIRECTIVE, PROVIDED THAT NO SUCH OFFER TO THE PUBLIC SHALL RESULT IN A REQUIREMENT FOR THE PUBLICATION BY THE COMPANY OR EITHER OF THE JOINT BOOKRUNNERS OF A PROSPECTUS PURSUANT TO ARTICLE 3 OF THE PROSPECTUS DIRECTIVE; (B) (I) INVESTMENT PROFESSIONALS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, (THE "ORDER"); OR (II) HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS AND OTHER PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) OF THE ORDER; AND (C) ANY PERSON TO WHOM IT MAY OTHERWISE LAWFULLY BE MADE (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS").

THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. PERSONS DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. THIS ANNOUNCEMENT DOES NOT ITSELF CONSTITUTE AN OFFER FOR THE SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISORS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF A PURCHASE OF PLACING SHARES.

THE DISTRIBUTION OF THIS ANNOUNCEMENT AND THE OFFERING, PLACING AND/OR ISSUE OF THE PLACING SHARES IN CERTAIN JURISDICTIONS MAY BE RESTRICTED BY LAW. NO ACTION HAS BEEN TAKEN BY THE COMPANY, THE JOINT BOOKRUNNERS OR ANY OF THEIR RESPECTIVE AFFILIATES THAT WOULD PERMIT AN OFFER OF THE PLACING SHARES OR POSSESSION OR DISTRIBUTION OF THIS ANNOUNCEMENT OR ANY OTHER OFFERING OR PUBLICITY MATERIAL RELATING TO SUCH PLACING SHARES IN ANY JURISDICTION WHERE ACTION FOR THAT PURPOSE IS REQUIRED. PERSONS INTO WHOSE POSSESSION THIS ANNOUNCEMENT COMES ARE REQUIRED BY THE COMPANY AND THE JOINT BOOKRUNNERS TO INFORM THEMSELVES ABOUT AND TO OBSERVE ANY SUCH RESTRICTIONS.

THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR ISSUE OR THE SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE FOR OR OTHERWISE ACQUIRE SECURITIES IN ANY JURISDICTION IN WHICH ANY SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF THE SECURITIES LAWS OF SUCH JURISDICTIONS.

This Announcement and the information contained herein is not for release, publication or distribution, directly or indirectly, in whole or in part, in or into or from the United States, Canada, Australia, Japan, New Zealand, the Republic of South Africa or any other jurisdiction where to do so might constitute a violation of the relevant laws or regulations of such jurisdiction.

This Announcement does not constitute or form part of any offer to sell, or any solicitation of an offer to buy, securities in the United States. Securities may not be offered or sold in the United States absent: (i) registration under the Securities Act of 1933 (the “Securities Act”); or (ii) an available exemption from registration under the Securities Act.

The Placing Shares have not been and will not be registered under the Securities Act or under the securities laws of any state or other jurisdiction of the United States and may not be offered, sold, resold or delivered, directly or indirectly, in or into the United States absent registration except pursuant to an exemption from or in a transaction not subject to the registration requirements of the Securities Act.

No public offering of the Placing Shares is being made in the United States.

No prospectus or other disclosure document for the purposes of Chapter 6D of the Corporations Act 2001 (Commonwealth of Australia) (“Corporations Act”) is being prepared in connection with the Bookbuild or Placing.

No offer under the Bookbuild or Placement is made to any person in Australia, or acting on behalf of someone in Australia, and this Announcement and other documentation may not be provided directly or indirectly to any person in Australia, unless the person is exempt from the disclosure requirements of Chapter 6D of the Corporations Act in accordance with section 708(8) or 708(11) of the Corporations Act, or otherwise a person to whom the securities may be offered without disclosure under Chapter 6D of the Corporations Act.

The securities the subject of the Bookbuild and Placing will not be able to be sold or offered for sale within Australia for 12 months after their issue except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act is not required or where the sale or offer is made pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act.

This Announcement does not constitute an offer to sell or issue or a solicitation of an offer to buy or subscribe for Placing Shares in any jurisdiction including, without limitation, the United States, Canada, Australia, Japan, New Zealand, the Republic of South Africa or any other jurisdiction in which such offer or solicitation is or may be unlawful (a “Prohibited Jurisdiction”).

This Announcement is not being distributed by, nor has it been approved for the purposes of section 21 of the Financial Services and Markets Act 2000 (as amended) ("FSMA") by, a person authorised under FSMA. This Announcement is being distributed and communicated to persons in the UK only in circumstances in which section 21(1) of FSMA does not apply.

Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this Announcement should seek appropriate advice before taking any action.

Neither the content of the Company’s website (or any other website) nor the content of any website accessible from hyperlinks on the Company’s website (or any other website) is incorporated into, or forms part of, this Announcement.

Peel Hunt, which is authorised and regulated in the United Kingdom by the FCA and is acting exclusively for the Company and no-one else in connection with the Placing and the matters referred to in this Announcement, will not regard any other person as its client in relation to the Placing and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing or any transaction or arrangement referred to in this Announcement.

Shore Capital, which is authorised and regulated in the United Kingdom by the FCA and is acting exclusively for the Company and no-one else in connection with the Placing and the matters referred to in this Announcement, will not regard any other person as its client in relation to the Placing and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing or any transaction or arrangement referred to in this Announcement.

Greenhill & Co. International LLP (“Greenhill”), which is authorised and regulated in the United Kingdom by the FCA and is acting exclusively for the Company and no-one else in connection with the Placing and the matters referred to in this Announcement, will not regard any other person as its client in relation to the Placing and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing or any transaction or arrangement referred to in this Announcement.

Coöperatieve Rabobank U.A. (“Rabobank”) is authorised by De Nederlandsche Bank and regulated by the Netherlands Authority for the Financial Markets, and in the United Kingdom, is authorised by the Prudential Regulation Authority (PRA) and subject to limited regulation by the FCA and PRA.
Apart from the responsibilities and liabilities, if any, which may be imposed on Peel Hunt, Shore Capital, Greenhill or Rabobank by the Financial Services and Markets Act 2000 (“FSMA”) or the regulatory regime established thereunder, neither Peel Hunt, Shore Capital, Greenhill nor Rabobank makes any representation or warranty, expressed or implied, as to the contents of this Announcement and neither accepts any liability whatsoever for this Announcement or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company or the Placing.

Peel Hunt, Shore Capital, Greenhill and Rabobank each accordingly disclaim all and any liability whether arising in tort, contract or otherwise (save as referred to above) in respect of this Announcement or any such statement.

No representation or warranty express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by the Joint Bookrunners or by any of their affiliates or agents as to or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

Certain statements in this Announcement are forward-looking statements which are based on the Company’s expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of such statements and, except as required by applicable law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. The information contained in this Announcement is subject to change without notice and neither the Company nor the Joint Bookrunners assume any responsibility or obligation to update publicly or review any of the forward-looking statements contained herein.

No statement in this Announcement is intended to be a profit forecast, and no statement in this Announcement should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.

1 Source: IRI Kantar 52 weeks ended 24 March 2018