Kerry Co-operative Creameries Limited (the “Society Board”) is very pleased to announce that an agreement (the “Resolution Agreement”) has been entered into between it, Kerry Group PLC, Kerry Creameries Limited and Kerry Dairy Holdings (Ireland) Limited (“Dairy Ireland”) in relation to the resolution of the disputes and related claims in relation to the milk prices paid under the current Milk Supply Contract between Kerry Creameries Limited and its Milk Suppliers for the years 2015 to 2020 (the “LMP Dispute”).

The Resolution Agreement is entered into in the context of the agreement which has been reached and announced on 12 November 2024, whereby the Society will acquire a 70% majority interest in Dairy Ireland with a mechanism to increase to 100% over time (the “Dairy Ireland Acquisition”). Under the Resolution Agreement, the parties have agreed to establish a monetary fund of €50,000,000 within Kerry Creameries Limited which be allocated as outlined below amongst the relevant Milk Suppliers and will be activated on completion of the Dairy Ireland Acquisition (the “Fund”).

In this context Kerry Creameries Limited has consulted with the Society in relation to the milk pricing for the years 2015 to 2020 pursuant to Clause 5.1 of the Milk Supply Contract. Kerry Creameries Limited has proposed to the Society, conditional on completion of the Dairy Ireland Acquisition, to pay to relevant Milk Suppliers an additional 5.4 cent per litre (CPL) (VAT inclusive) at Kerry’s average solids in respect of all milk supplied pursuant to the terms of the Milk Supply Contract for the years 2015 to 2020 other than for (i) milk supplied under fixed price contracts and (ii) Guaranteed Volume excess on an individual supplier basis, (such volumes referred to as “Guaranteed Volumes”). This additional balancing payment involves the aggregated CPL amount being allocated against the Guaranteed Volumes supplied under the terms of the Milk Supply Contract in the years 2015 to 2020 pro-rata to the Leading Milk Price (LMP) differential claimed in each of these years.

The balancing payment will be made on the basis that it (together with payments made by Kerry Creameries Limited for milk supplied during these years and the goodwill payment made to Milk Suppliers in January 2020) is intended to discharge Kerry Creameries Limited’s and Kerry Group plc’s commitment under the Milk Supply Contract to pay the Leading Milk Price on a Like-For-Like basis.

Following the consultation process, the Society, having considered this proposal is, on a without prejudice basis conditional on completion of the Dairy Ireland Acquisition, recommending it to the relevant Milk Suppliers as the Leading Milk Price on Like-For- Like basis for each of the relevant years for the purposes of Clause 5.1 of the Milk Supply Contract.

It is important to emphasise that the Resolution Agreement (to include the proposal, its recommendation and the establishment of the Fund) is conditional on completion of the Dairy Ireland Acquisition, expected to occur before 31 January 2025, and is made on a without prejudice basis to the existing claims and arbitrations in relation to the LMP Dispute pending completion. Once the Fund is activated on completion of the Dairy Ireland Acquisition, Kerry Group PLC will no longer have any involvement in, or exposure to, issues relating to the Milk Supply Contract which remains in place until 2026.

We believe this represents a fair and reasonable outcome to address the concerns of our Milk Suppliers, to finally draw a line under this long-standing issue and to enable us to focus on the future.

Upon completion of the Dairy Ireland Acquisition (subject to all conditions being satisfied, including the vote of Society members at the SGM to be held on 16 December 2024), further communications will be sent to you by both the Society and Kerry Creameries Limited in relation to the calculation of the payment proposed to be made to you and the process for claiming your balancing payment to finally bring the LMP Dispute to a long awaited conclusion for all parties.