Supplementary memorandum from First Milk (DFoB 38a)

1. Since submitting our first Memorandum, we have announced the sale of 4,170,171 shares in Robert Wiseman Dairies plc at £4.50 a share[1].

2. We were unable to make any reference to this matter as any hint at the possibility of a disposal of shares in a quoted company constitutes market abuse, prohibited under the Financial Services & Markets Act 2000.

3. The shares were acquired for £2.50 and sold for £4.50. In our accounts, the shares were valued at cost of acquisition on the balance sheet, and the value at year end shown in a foot note - see Note 14.[2] At point 7 of our first memorandum - lessons to be learned - we emphasised 'the importance of consistent, conservative and rigorous application of accounting standards'. Our treating cost of acquisition of these shares as the appropriate basis for the balance sheet is an example of this.

4. At point 3, we referred to Mr Geoffrey Cox QC MP's criticism of our 2008/09 results at Q 101[3]. As we explained, our Board decided to shelter our members from the worst of the market downturn in late 2008 and therefore we used some of our reserves to support members. This led to the P&L showing a deficit of £7million. We referred to our press release of 23.9.09[4]. We now invite the Committee to note that we have crystallised a profit in excess of £8million on the sale of shares. We hope that this will remove any remaining doubts that the Committee may have had about our prudent and conservative approach to managing our finances; and also that we were showing a proper care to our members in deciding to maintain the milk price to ease their difficulties.

First Milk

November 2009

[1] Here - or click on News on our website, www.firstmilk.co.uk

[2] Here - or click on Our Business on Home Page of the website and then Annual Reports

[3] Q101 Mr Cox: Forgive me. I hear what you say about that, but we have had one of the main five go out of business and go bust; we hear that First Milk is making a loss of, what was it, seven-odd million; we hear stories of problem in others. I do not buy this story that somehow co-operatives are all fine and dandy...

[4] Here - First Milk uses reserves to shelter members from Market Downturn under News on the website.