Dairygold Co-Operative Society Limited

Annual report and accounts 2013

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Contents 3 7

Chairman’s Statement

23

Consolidated Balance Sheet

Chief Executive’s Review

24

Consolidated Cash Flow Statement

12 15

Financial Overview

25

Directors, Committees and Other Information

Consolidated Statement of Total Recognised Gains and Losses

25

20 21

Statement of Board Responsibilities

Reconciliation of Movement in Shareholders’ Funds

26

Statement of Accounting Policies

22

Consolidated Profit and Loss Account

29 48

Notes to Financial Statements

Independent Auditor’s Report

Five Year Historical Information

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Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

‘‘ Dairygold Co-Operative Society remains firmly on course with its plans for sustainable profitable expansion‘‘

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Chairman’s Statement 2013 was both a busy and successful year for Dairygold Co-Operative Society and its farming Members on a number of fronts.

In the early months of 2013 the Society continued its post quota preparation with one-to-one meetings with Milk Suppliers. These were very well attended and confirmed a milk growth rate of 55% to 60% by 2020, over the 2011 base year. At the Special General Meeting (SGM) in Mallow in April, the Society’s Members overwhelmingly endorsed the Society’s Post Quota Plan giving the Society a clear mandate to proceed. The fodder crisis in the early part of the year was a significant challenge for Members, and the Society took the lead role in responding to it. The weather significantly improved from June onwards resulting in Members producing a record volume of milk and delivering an excellent grain tonnage. Buoyant dairy market returns resulted in the payment of a high milk price during 2013 and provided much needed cash flow to cover the high costs incurred in a difficult first half of the year. In November, the High Court action brought by the Society’s former CEO against Dairygold Co-Operative Society Limited was satisfactorily concluded. In recognition of the very successful year the Society paid year end bonuses to suppliers and customers of €7.5 million. The bonuses comprised a 0.5 cent per litre on all contracted 2013 milk supply, a €7 per tonne rebate on all compound feed purchased during 2013 and a €5 per tonne rebate on all fertiliser purchased during 2013.

Milk Supply Agreements and Post Quota Planning A key focus for the Society during 2013 was the continued planning for post quota expansion. The ending of the quota regime in 2015 offers Irish dairy farmers the first opportunity in thirty years to increase milk production without external restrictions. In January, the Society launched a three month programme of one-to-one meetings with Milk Suppliers who were encouraged to participate fully in the consultation process, to use the meetings to evaluate their post quota plans and to understand the Milk Supply Agreement (“MSA”) fully in light of their own particular farming circumstances. Almost all Milk Suppliers participated in the one-to-one consultations and over 97% of all Milk Suppliers have signed up to an MSA with the Society. Members’ commitment to milk forecasting, as part of the MSA, will ensure the right capacity is in place to process post quota milk in a highly efficient manner. The fundamental elements of the plan are well advanced including milk forecasting, enhancing the cheese, ingredients and IMF centric product portfolio, developing routes to market and investing in processing capability. The plan also ensures the appropriate funding is available to fund the development and to allow the Society to maintain effective control over milk price.

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Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Special General Meeting At the SGM, in Mallow on 11 April 2013, the Society’s Members voted by an over 4:1 majority to endorse its Post Quota Plan. The Society’s Plan, combined with its financial strength, is designed to maintain a leading milk price, reflecting maximum reward for milk quality and milk solids, produced in a sustainable way. The Society’s pioneering Post Quota Plan broke new ground, in addressing issues that the whole industry is now facing, as all seek to find new ways of managing operations and the supplier/processor relationship without the certainty of milk quotas. I am confident that the plan which is both robust and flexible, will meet the challenges which will undoubtedly exist in future years, whilst also ensuring that the Society and its Members will be able to take advantage of the opportunities that the post quota era will offer.

Sustainable Dairy Assurance Scheme The Society will only be able to avail of the opportunities expansion can bring if we produce quality milk in a sustainable manner. To support this, the Society is an active participant in Bord Bia’s national Sustainable Dairy Assurance Scheme which is now being rolled out nationwide. The Scheme is a hugely positive development for the Irish dairy industry and will offer significant benefits to the Society and its Members. To demonstrate this, the Board has approved a 0.1 cent per litre bonus for all Dairygold Suppliers who sign up as participants in 2014 and successfully complete the related audit. It will be especially important in the context of meeting customers’ expectations and securing new customers and markets for the Society’s expanded dairy output post 2015. Almost all of the international food companies who are the major buyers of dairy produce have set out long term targets to enhance the sustainability of their supply chains. It will mean that the Society will have accreditation from an independent international body that demonstrates the quality and sustainability of its dairy produce right back to the farm where the milk is produced. This will complement the factory accreditations such as ISO and BRC, and CLAS accreditation for the laboratories, that the Society has already achieved.

At the announcement of Dairygold’s €33 million investment in Castlefarm were (l ro r) Bertie O’Leary, Dairygold Chairman, Jim Woulfe, Dairygold Chief Executive, Richard Bruton TD, Minister for Jobs, Enterprise and Innovation, Sean Sherlock TD, Minister of State for Research and Innovation and Michael Cantwell, Head of Food at Enterprise Ireland.

Supplier Information The Society continues to support its Suppliers through the provision of advisory and other services. The latest of these supports is the Society’s new smartphone App which is available to all of the Society’s Milk Suppliers. The pioneering ‘MyMilk App’ allows the Society’s Milk Suppliers, on a timely basis, to view their milk supply volumes, composition and quality results and their Balanced Scorecard points. It also provides a secure link to their monthly milk statement and other important time sensitive information to help them effectively monitor performance.

Awards Congratulations to Milk Suppliers, Richard and Nora Fitzgerald from Mitchelstown who won the 2013 Dairygold Milk Quality Awards. The judges described Richard and Nora’s achievement as an excellent example of what good management and high standards of production can deliver. Dairygold Milk Suppliers, Richard and Nora Fitzgerald of Gortnahoun, Mitchelstown who were declared the overall winner of the 2013 Dairygold Milk Quality Awards are pictured on their farm with Dairygold Milk Advisor Frank O’Flynn.

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Dairygold Chief Executive, Jim Woulfe and Chairman, Bertie O’Leary pictured at the Port of Cork where the Society imported and distributed hay to relieve the Fodder Crisis.

Lorries coming from Rosslare Port, distributing fodder to Dairygold’s catchment area.

Dairygold Teagasc Joint Programme

Rules Review

Dairygold and Teagasc have initiated a new joint programme, which will proactively and effectively engage with all of the Society’s Milk Suppliers to help them deliver sustainable on-farm profitability aligned to market requirements. I would encourage all Milk Suppliers to participate in this programme.

The Board, the Rules Committee and the General Committee, reviewed the rules of the Society primarily in relation to categorisation of Members who trade with the Society through companies and partnerships, permitted consecutive service period and eligibility for service on the Representative Structure and related procedural issues.

Fodder Crisis The unique benefits of the Co-Operative model and ethos were clearly highlighted in late spring when fodder supplies ran short in the absence of grass growth due to the prolonged and exceptionally cold winter. The Society quickly rose to the challenge that the fodder crisis presented to its Members and led the initiative to import fodder, from the UK, Netherlands and France, which was provided to Members at cost. In excess of 700 loads, carrying over 10,000 tonnes of fodder, were shipped and distributed throughout the Society’s catchment area helping to bring much needed fodder relief to farmers in difficultly. Arranging the sourcing, transport and distribution of this quantity of fodder in such a short time period was a logistical challenge, but well executed. In addition to this, the Society also offered interest free credit on ruminant compound feed for March and April to all customers.

Open Days 2013 also saw the opening of a new chapter in the Society’s Member communications activity. At the SGM, the Board and management gave a commitment to Members to make arrangements for them to see at firsthand how the Society invests in the business.

I believe that the motions to be put before the SGM, proposing the rule changes relating to the above are equitable and necessary to ensure the ongoing development and good governance of the Society.

Board and Management I would like to thank all my fellow Board colleagues for their significant contribution, support and commitment over what has been a very busy year for the Society. I also thank the Members of the General and Regional Committees for their input and contribution to the progress we have made over the last year. I thank outgoing Board Member Liam Foley for his valued contribution to the Board over the last three years while I welcome John O’Sullivan to the Board and I look forward to his positive contribution during his tenure. I would also like to express the Board’s appreciation to Chief Executive, Jim Woulfe, for his leadership and commitment and also to his management team and all employees for their work and dedication during 2013. Finally, I thank all Members and customers whose continued loyalty is the foundation of the Society’s ongoing success.

Conclusion

As a result, the Society organised six separate Dairygold Open Days which attracted over 1,000 Members to guided tours of the Clonmel Road and Castlefarm facilities. This was a significant undertaking on the part of all involved and very positive feedback was received from Members.

As a business, Dairygold Co-Operative Society remains firmly on course with its plans for sustainable profitable expansion and I would like to thank you all for your efforts in making this possible. This is an exciting time for the Society and I ask for your continued support and commitment to ensure that we continue to deliver our goals in the years ahead.

Those who attended the Open Days had an opportunity to see the €33 million redevelopment programme underway at Castlefarm which is now being commissioned in time for peak production in 2014. This represents the successful completion of the first phase of the Society’s post quota processing expansion plan.

Bertie O’Leary Chairman

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Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

‘‘ 2013 milk supply was 4% ahead of 2012 and the Society received its highest ever annual volume from it Members‘‘

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Chief Executive’s Review 2013 was an excellent year for Dairygold. The year saw a record milk price paid to Members and record operating profit, continuing the strong performance of recent years.

Turnover rose to €847 million in 2013, from €731 million in the previous year, with a substantial rise in operating profit to €27.9 million from €20.9 million in 2012. The operating profit represents a 33% increase on the previous financial year. This was achieved after paying a leading milk price and €7.5 million in year end bonuses to both Members and other customers. 2013 saw the Society record its highest ever annual milk volume of 959 million litres from its Suppliers. The Society’s strong financial performance was delivered by optimising its product and customer mix and by the processing and operating efficiencies achieved following the investment in capital expenditure and continuous improvement over the last number of years. In addition, the unprecedented strong returns from international dairy markets helped the Society achieve its strong financial performance and deliver a leading milk price to Members. The 2013 financial results build on the five year trend which has seen our operating profit on core activities grow from €11.8 million in 2009 to €27.3 million in 2013. In addition, from 2008, the Society has invested approximately €140 million in the business, while reducing its net debt over this period.

€30.0

Dairygold’s 2013 Product Portfolio (milk utilisation)

Whey 71%

Casein/ Butter 33%

Cheese 38%

Whole Milk Powder 12%

€27.3

€25.0

€22.6 €18.9

€20.0

5% of the milk processed above is through collaborative arrangements

€20.6

€11.8

The projected growth is based on detailed surveys of our Members’ future milk growth intentions which indicate a desire to increase milk volume output by approximately 55% to 60% by 2020.

2009

Dairygold has led the way in terms of developing a strategy which is based, not just on anticipated global demand for output, but on the capability and the appetite of its Members to expand.

€10.0 €5.0 €0.0

The vision sees Dairygold building its business on a core cheese and IMF ingredients product portfolio, growing incrementally through an appropriately financed modular investment plan which will support both volume and margin growth.

IMF Skim/Butter 17%

Operating Profit 1m

€15.0

The Society can look forward to continued growth in turnover and profit together with a leading milk price reflecting maximum reward for milk solids produced by Dairygold’s farmers in a sustainable and quality assured manner.

2010

2011

2012

2013

Post Quota Strategy 2013 represented a key milestone for Dairygold’s Post Quota Strategy. At the SGM in April, the Strategy was endorsed by the Members who voted overwhelmingly in favour of the Society’s Post Quota Plan with its central objectives to maximise Members’ returns, minimise risk and ensure sustainable business growth. The conclusive endorsement gave the Society the backing to move forward and continue to build on the achievements of recent years.

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Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

The Society’s Milk Supply Agreement (“MSA”), with forecasting at its core, is a key element of the Post Quota Strategy to ensure returns are maximised and risk is minimised. A key focus of the Plan in 2013 and 2014 is the continued development of the enhanced routes to market, including building strategic customer relationships, both independently and in conjunction with the Irish Dairy Board, for the additional dairy products that the incremental milk volumes will produce. Our objective, at all times, is to maximise the commercial equation, in a sustainable way. A key enabler to increasing our routes to market is the national Sustainable Dairy Assurance Scheme, which will assure customers of the advantages of our product offering as they seek independent verification that we offer high quality, sustainably produced dairy products.

Dairy Markets Global milk supplies in 2013 did not grow in line with forecast, primarily due to adverse weather events in many of the major dairy production and exporting regions. The knock on consequence saw sharp price increases, which coincided with our milk production season. This is further proof that dairy market returns are cyclical in nature and will continue to experience price volatility which farmers and processors need to be aware of. Dairygold Market Returns/Milk Price Tracker 2008 to 2013 40

Dairygold Quoted Milk Price incl VAT @ 3.3% Protein and 3.6% Butterfat

38

38.1

36 34

33.6

33.4

CPL

32 7 Year Average Price 31.5 CPL

30 28 26 24 22 20

21.8 2008

2009

2010

Year

2011

2012

Food Ingredients Ireland The Irish Dairy Business had a very successful year and was a key contributor to the Society’s overall improved financial performance. On this basis, the Society declared a year end milk bonus of 0.5 cent per litre on all contracted 2013 milk supply. Milk supply was 4% ahead of 2012 and the Society received its highest ever annual volume of 959 million litres from its Members. While good weather from mid-year onwards was a contributing factor, the growth pattern also offers a good indication of our Milk Suppliers’ desire for expansion. January 2013 saw work begin on the €33 million investment to develop and expand our Castlefarm facilities. New milk intake bays and a new pasteurisation and separation plant have been completed and internal work is nearing completion on the new evaporator, dryer and an automated centralised bag off. The support we received from Enterprise Ireland for this development has enabled us to improve the energy efficiency and environmental performance of the site. The second phase involving the development of our existing site in Mallow is underway. This will see the development of new state-of-the-art milk drying facilities capable of producing the full range of milk powders, up to and including, infant milk formula. The Mallow development continues the Society’s modular approach which aligns expansion with forecasted milk volume growth and separates the proposed investment into a number of stages. The initial installation of a 7½ tonne per hour dryer and associated infrastructure in 2015 will be fully operational in 2016.

30.9

29.4

Notwithstanding this, the long-term outlook for dairy products globally is positive, driven by population growth, higher incomes and increased urbanisation, combined with changes in eating habits. The developing regions of the world are in milk deficit. For example, China is only 80% self-sufficient in milk and its whole milk powder imports increased from 50,000 tonnes to over 600,000 tonnes in the five years from 2008 to 2013. The Society is targeting emerging markets, such as Asia, Middle East and Africa, for its additional product, post quota.

2013

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

During the spring, with limited grass growth, Dairygold’s mill in Lombardstown produced a record weekly average of 8,800 tonnes in the March/April period. In addition, fertiliser sales were also significantly up. Those early months were a very expensive period for milk and beef production. In recognition of this, the Board declared a feed rebate to its Members of €7 per tonne on all compound feed purchased in 2013 plus a fertiliser rebate of €5 per tonne on all fertiliser purchased in 2013.

Agri Retail

Sarah Moore, Raheen Co-Op Superstore.

Member milk forecasting will continue to determine the timing and extent of the investment required in the business. Milk Suppliers’ volume forecasting will ensure the Society operates at optimum efficiency from a processing capacity and marketing perspective.

Food Ingredients Overseas Our overseas dairy businesses performed well and in line with expectations, despite being challenged by higher raw material costs as a result of increased dairy commodity prices. The main challenge for the businesses was to recover these higher raw material costs from the competitive food manufacturing and food service sectors in the main markets of the United Kingdom and Mainland Europe. The UK business, based in Crewe and Leeds performed well, despite the increased raw material price challenges and difficult market environment. The business continues to be a leading supplier of a range of formatted and soft cheeses to the UK’s ready meals and food manufacturing sectors. In a competitive business environment, innovation is critical and the UK business continues to develop technical solutions in order to provide its customers with value offerings. The French business, following its restructuring in late 2012, delivered an improved performance in 2013. The business, which now focuses on cheese powders, is projected to continue to grow and contribute to the overall financial performance of the Society. Dairygold Germany provides a key sales distribution network for the Society’s Irish dairy ingredients sales to Central and Eastern Europe. In addition, its cheese sales to the industrial, food service and retail sectors continue to grow and deliver in line with expectations. Dairygold‘s sales office in Spain continues to develop market opportunities in Southern Europe, the Middle East and North Africa for the Society’s Irish dairy ingredients.

Agri Operations 2013 was a very successful year for Agri Operations. Difficult farming conditions created unprecedented demand for feed, with ruminant feed sales, which reached record levels, up significantly on 2012.

Dairygold’s Agri Retail Business performed well in 2013, with turnover ahead of expectations. Despite continued weak consumer confidence in the general economy, higher demand for agri inputs from our traditional Co-Operative customer base resulted in a positive year for the business. We are currently investing in the development of a new e-commerce sales and distribution channel for Agri Retail which will provide our customer base with an alternative way to do business with the Society. The business still has challenges and with the advancement of IT technology and distribution systems, it is imperative that we examine and evaluate alternative options that fulfil our customer needs.

Subsidiaries, Joint Ventures and Associates Munster Cattle Breeding Group Limited had another successful year, despite the weather related challenges in the early part of 2013. The key highlight for the year was the opening of the new Bull Stud facility at its headquarters in Ballyvorisheen, Mallow, which is being operated by the National Cattle Breeding Centre.

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Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

This is a positive development for the animal breeding industry and particularly important from a biosecurity and animal welfare perspective. In 2013, Dairygold and Glanbia acquired the IAWS shareholding in the Malting Company of Ireland Limited. This resulted in the Malting Company of Ireland Limited becoming a 50:50 joint venture owned by Dairygold and Glanbia. This protects Dairygold’s grain suppliers’ interests in an added value route to market for premium Irish barley.

Reox In November 2013, the Board of Dairygold and the independent Directors of Reox Holdings plc (“Reox”) reached an agreement which sees Dairygold acquiring Reox’s property assets in a “Debt for Asset” transaction which was completed on 31 March 2014. The Reox property assets, having a net book value of €24 million as at 30 June 2013, were acquired in return for the release of the €16 million loan note and certain legacy property related liabilities owed by Reox to Dairygold, plus a cash payment of €0.5 million from Dairygold to Reox. This transaction is in the best interests of Dairygold as it further strengthens the Dairygold organisation, finally removing the financial exposure to Reox and allowing it to focus on dairy and agri business growth and Post Quota Strategy.

Continuous Improvement and People Development Our post quota expansion plans are critically dependent on our ability to maintain the competitive position which our current cost structure has given us. Competitiveness will be the key to Dairygold’s success in achieving profitable growth and our focus in that regard is unwavering. In relation to this, our Continuous Improvement Programme (Advance 2020) is a priority in giving our organisation the competitive edge it needs, to take full advantage of the opportunities that the post quota era offers. In 2013, sixteen Dairygold managers completed an intensive one year diploma programme in High Performance Leadership, delivered by the Irish Management Institute in conjunction with University College Cork. These graduates are the first group of Dairygold employees to have completed this one year programme tailored for business development and growth. A further sixteen managers are participating in this year’s programme. The business recognises that people development is a key requirement to deliver on the future strategy of the Society and these programmes are one of many key initiatives, which will help in delivering this.

Member Relations 2013 was a year of intensive interaction between the Society and its Members, which commenced with the one-to-one discussions with Milk Suppliers on their future milk supply intentions, which provided both parties the opportunity to discuss the post quota era. This was followed by the SGM, where more than 2,000 Members attended and engaged in debate on the expansion strategy. In the days following the SGM, the Society became acutely aware of the fodder crisis which was looming and led the initiative on importing fodder to meet our Members’ needs at a time of great challenge on farms. We committed to establishing ever closer links with our Members and a series of open days in September were arranged for Members to visit the new and expanding dairy facilities in Mitchelstown. This widespread engagement is an essential aspect of the core ethos of the Society with Members, Suppliers and management engaged with each other on an ongoing basis.

A Word of Thanks 2013 represented a year of intensive work for all involved in the Dairygold business. The progress we have made across strategic, operational and financial fronts was achieved through the committed effort of a lot of people. On a personal level, I wish to thank the Membership of the Regional and General Committees, the Chairman and the Board for their support during the year. I want to thank Government Agencies including Enterprise Ireland and the Department of Agriculture, Food and the Marine and our Banking Syndicate, whose support is vital for our business growth plan. Finally, I wish to thank our customers, suppliers and shareholders for their contribution to our 2013 success. I also wish to express special thanks to my management colleagues and all employees, for their full commitment to the Society in 2013.

Summary In summary, the Dairygold business is in good shape and primed for growth ready to meet our Member Suppliers’ expectations. A thought out strategy combined with our strong financial position will enable us to deliver on our goal, which is to maximise our Member Suppliers’ income from farming, by maximising the value we add to current and future milk and grain supply and by minimising the cost of farm inputs, while growing the Net Asset Value of the Society.

Jim Woulfe Chief Executive

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Dairy Expansion Phase 1 - Castlefarm Development 2013/2014

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Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Financial Overview 2013 has been a very successful year for Dairygold Co-Operative Society Limited, continuing the financial and operational progress made over the last number of years. The Society generated a record Operating Profit of €27.3 million (after paying a leading milk price and declaring year-end bonuses of €7.5 million) from its core activities in 2013.

2013 Key Financials

Dairygold generated an Operating Profit for the year from its core dairy and agri business activities of €27.3 million after declaring year-end bonuses of €7.5 million.



Dairygold’s net asset value increased by €22.6 million to €273.8 million.



Dairygold invested a total of €32.1 million of cash in capital expenditure in 2013.



The Society’s bank debt position increased by €4.1 million, to €60.9 million, at the end of 2013, with Member funding contributing €5.2 million.



Dairygold secured its investment in Reox Holdings plc, through the completion of a “Debt for Asset” transaction on 31 March 2014.

Profit and Loss Account The overall Operating Profit of €27.9 million (2012: €20.9 million) increased by €7.0 million, including the share trading performance of €0.6 million (2012: €0.3 million). The increase in the Operating Profit on core activities of €6.7 million was principally due to continued: – product and customer mix optimisation. – processing and operating efficiencies following the investment in capital and continuous improvement over the last number of years. Turnover in 2013 increased by €116.2 million compared with 2012, from €731.2 million to €847.4 million. The increase was driven across the Society, with: – Dairygold Food Ingredients’ sales volumes increasing together with the benefit of a significant increase in dairy market returns; – Dairygold Agri Business achieving increased revenue, primarily through higher ruminant feed and fertiliser volumes and retail store sales.

The share of joint ventures’ and associates’ performance was an operating loss of €64,000 in 2013 (2012: loss of €12,000). In order to reflect the increase in the share price of One51 plc, a reversal of the 2012 financial asset impairment of €1.8 million occurred. Net interest payable was €2.0 million (2012: €2.2 million). Bank interest payable of €4.5 million (2012: €4.7 million) was partially offset by a finance credit of €2.5 million (2012: €2.5 million). The taxation charge for the year of €2.1 million (2012: €2.5 million) relates primarily to corporation tax on profits, partially offset by a deferred tax credit. Profit after taxation for the financial year was €25.6 million (2012: €14.4 million) and the retained profit was €24.0 million (2012: €12.6 million) after paying share interest of €1.2 million (2012: €1.2 million) to Members. The increase in retained profit primarily reflects the higher operating profit and the reversal of the financial asset impairment.

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Balance Sheet In 2013, the net asset value of the Society’s Consolidated Balance Sheet increased by €22.6 million to €273.8 million. The increase primarily reflected the retained profit for the year of €24.0 million, an increase in minority interest of €0.4 million and net shares issued of €0.3 million. These were partially offset by the negative impact of currency movements on net investments of €1.3 million, a decrease in the pension asset accounted for through reserves of €0.8 million and decreases in the share of joint ventures’ and associates’ reserve movements of €0.1 million. Fixed assets of €239.5 million comprising tangible assets, intangible assets and financial assets, increased by €18.9 million, from €220.6 million primarily as a result of: – capital expenditure investment of €40.4 million; – an increase in the value of quoted investments of €2.0 million; – an increase in the share of joint ventures’ and associates’ net assets of €0.2 million.

These increases were partially offset by: – depreciation and amortisation charges of €19.5 million, – impairment of tangible assets and disposals of €0.2 million, – a transfer in the loan note of €3.0 million to current assets, – a net reduction in loan stock of €0.7 million, and – the impact of negative currency movements of €0.3 million. Net current assets less creditors falling due after more than one year of €39.5 million (2012: €39.9 million) were down €0.4 million, primarily as a result of: – an increase in stocks of €20.9 million to €109.5 million, – an increase in debtors of €19.8 million to €120.4 million, – an increase in creditors (excluding bank debt) of €37.1 million to €129.5 million, and – an increase in bank debt of €4.1 million to €60.9 million. The net pension asset increased by €1.8 million driven by an improvement in the asset returns, reductions in the assumptions surrounding inflation, payroll and pension payment increases, partially offset by a reduction in the discount rate of 0.2%. The capital grants’ liability of €8.3 million decreased by €1.4 million as a result of the amortisation credit for the year. The deferred tax liability of €0.1 million decreased by €1.0 million from 2012. The share capital increased by €0.3 million to €93.4 million, reflecting shares issued of €1.8 million less shares redeemed of €1.5 million.

The revenue reserves increased by €21.8 million to €169.7 million, resulting from the retained profit for the year of €24.0 million, partially offset by the negative impact of currency movements on net investments of €1.3 million, the actuarial loss on the pension asset of €0.8 million and a reduction in the share of associates’ reserves of €0.1 million.

Cash Flow The net cash outflow of €3.1 million during 2013 and a negative non cash movement of €1.0 million are the drivers of the increase in bank debt of €4.1 million to €60.9 million at 31 December 2013. The net cash outflow of €3.1 million results from: the investment in the business of €32.1 million primarily relating to investment in capital expenditure. increased working capital requirements of €12.1 million, resulting primarily from increased debtors balances and stock reflecting the increased dairy market prices, partially offset by an increase in creditors. payments of €10.0 million to cover net finance costs, taxation, pension contributions, share redemption and share interest. EBITDA of €46.0 million, which was generated from the business (incorporating a profit of €0.6 million from share trading). Member funding receipts in relation to revolving fund and loan notes of €5.2 million, inclusive of interest.

Pension An actuarial valuation of the pension scheme was undertaken in 2013. This confirmed that the pension scheme met the Minimum Funding Standard as at the valuation date, 01 January 2013. However, given the current challenges around financial markets and pension schemes in general, the Society will keep the scheme under review on an on-going basis. The net pension asset, based on the FRS 17 valuation as at 31 December 2013, was €3.2 million, compared to an asset of €1.4 million in 2012. The increase was driven predominantly by an improvement in the asset returns, reductions in the assumptions surrounding inflation, payroll and pension payment increases, partially offset by a reduction in the discount rate of 0.2%.

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Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Dairygold Headquarters, Clonmel Road, Mitchelstown, Co. Cork

Based on FRS 17 the pension scheme continues to have sufficient assets to meet future liabilities and continues to be adequately funded.

Financial Assets The Society’s investment portfolio, managed in conjunction with a third party investment manager, had a market value of €34.7 million including ARYZTA AG at €23.5 million (€56.38 per share), FBD at €0.9 million (€17.39 per share) and One51 plc at €2.5 million (€0.65 per share) as at 31 December 2013. The investment portfolio was carried on the Society’s Balance Sheet at cost, less any impairment provision, at €8.9 million (2012: €7.0 million) as at 31 December 2013.

Member Funding In addition to the €1.8 million shares issued, in 2013, through the minimum shareholding mechanism, the Society received €1.6 million of loan notes and €3.6 million in revolving fund contributions, both inclusive of interest. This member funding compliments the Society’s bank funding in delivering the Society’s business growth and development strategy.

Post Balance Sheet Events On 31 March 2014, the Society completed a “Debt for Asset” transaction with Reox Holdings plc. Dairygold acquired the Reox property assets with a net book value of €24 million in return for releasing both a €16 million loan note and the indemnity associated with certain legacy property related liabilities, plus a cash payment of €0.5 million from Dairygold to Reox. This transaction eliminates the Society’s financial exposure to Reox, as the Society has received assets in exchange for an unsecured loan note, thereby strengthening the Society’s Balance Sheet.

Conclusion and Outlook The Society has delivered a very positive financial performance in 2013, with all businesses contributing to this improved performance. The Society is in a strong financial position as it prepares to take advantage of the opportunities that the post quota era will provide and to grow and develop the business in a sustainable manner.

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Directors, Committees and other information

The Dairygold Board of Directors and Officers Back row, l to r: John O’Sullivan, Thomas Feeney, John Malone, Richard Hinchion, Patrick O’Keeffe, John F. O’Gorman and Donal Buckley. Front row, l to r: Edmund C. Lynch, Dan Flinter, Jim Woulfe (Chief Executive), Bertie O’Leary (Chairman), James Lynch (Vice Chairman), Eamonn Looney (Secretary) and John McKeogh.

Board of Directors Bertie O’Leary (Chairman) James Lynch (Vice Chairman) Donal Buckley Thomas Feeney Dan Flinter Richard Hinchion Edmund C. Lynch John Malone John McKeogh John F. O’Gorman Patrick O’Keeffe John O’Sullivan

15

16

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Senior Management Team

Jim Woulfe

Michael Harte

Tim Healy

Chief Executive

Chief Financial Officer

Head of Dairygold Food Ingredients, Ireland

Chris Edge

Sean O’Sullivan

John O’Carroll

Head of Dairygold Food Ingredients, UK and Europe

General Manager Agri Operations

General Manager Agri Retail

Eamonn Looney

Adrian Beatty

Secretary

Head of Human Resources

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Other information Chief Executive

Secretary

Auditor

Jim Woulfe

Eamonn Looney

Deloitte & Touche, No. 6 Lapp’s Quay, Cork.

Registered Office

Principal Bankers

Clonmel Road, Mitchelstown, Co. Cork.

Allied Irish Banks plc Bank of Ireland HSBC Bank plc Rabobank Ireland plc Ulster Bank Ireland Limited

Board Committees The Board has established a committee structure to assist it in the discharge of its responsibilities in compliance with the highest standards of corporate governance. The committees and their membership are detailed below. All committees of the Board have written terms of reference dealing with their role and authority delegated by the Board. The Secretary of the Society acts as secretary to each of these committees.

Audit Committee

›

monitoring the integrity of the financial statements of the Society and reviewing significant financial reporting judgements contained in them;

›

reviewing the annual financial statements before submission to the Board;

›

monitoring and reviewing the operation and effectiveness of the internal audit function;

›

considering and making recommendations to the Board in relation to the appointment, reappointment and removal of the external auditors and terms of engagement of the external auditors;

›

approving the remuneration of the external auditors for statutory audit work and ensuring that the level of fees is appropriate to enable an adequate audit to be conducted. Reviewing the extent of any non-audit services and related fees;

Arthur Cox McCann Fitzgerald

›

assessing annually the independence and objectivity of the external auditors and the effectiveness of the audit process, taking into consideration relevant professional and regulatory requirements and the relationship with the auditors as a whole, including the provision of any non audit services;

›

reporting to the Board on the operation of the Society’s system of internal control and risk management, making any recommendations to the Board thereon;

›

reviewing the arrangements by which employees of the Society may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters and ensuring that these arrangements allow proportionate and independent investigation of such matters and appropriate follow up action;

›

reviewing its own effectiveness as a committee and making any necessary recommendations for change to the Board.

The Audit Committee comprises Messrs Dan Flinter (Chairman), Edmund Lynch, John McKeogh and Patrick O’Keeffe. The Chief Executive, Chief Financial Officer, Head of Internal Audit, other Directors, Senior Management and representatives of the external auditors may be invited to attend all or part of any meeting. The role and responsibilities of the Audit Committee are set out in its written terms of reference and include:

Solicitors

The key activities undertaken by the Committee during 2013 under its Charter were as follows:

Financial Reporting The Audit Committee reviewed the statutory accounts of the Society and following the appropriate engagement with the external auditors, recommended their adoption by the Board. Risk Management and Control The Audit Committee continued to review the risk registers for the Society on a rolling basis during 2013. It considered the reports of the internal audit department which formed part of the annual work plan of that function and which had been approved by the Audit Committee. The focus of the work of the internal audit department was reviewed by reference to best practice externally.

17

18

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

External Audit The Audit Committee reviewed the report of external audit on the processes they have in place to ensure their independence and objectivity. The remuneration of external audit was approved by the Audit Committee. The Audit Committee reviewed the external audit plan and subsequent findings from the annual audit. The Audit Committee reviewed external audit’s management letter and management’s response.

General Committee

A policy is in place governing the use of external audit for non-audit services. The policy of the Society is that the services of the external auditor may be used for non-audit services provided that those services are not in conflict with auditor independence and where there are sound commercial reasons to so use them.

Remuneration Committee The Remuneration Committee comprises Messrs John Malone (Chairman), James Lynch, John F. O’Gorman and Bertie O’Leary. The role and responsibilities of the Remuneration Committee are set out in its written terms of reference. The principal responsibilities of the committee are to: ›

›

›

determine the policy for the remuneration of the Chief Executive, Secretary and Direct Reports to the Chief Executive as well as the Society’s policy on remuneration and or expenses payable to members of the Board, members of the Regional Committees, General Committee and members of any sub committee established from time to time; review and sanction new or amended salaries, incentive bonus, retirement benefit and or other benefits for Senior Executives of the Society whose remuneration is to be determined by the committee; agree the policy and or procedures for authorisation of claims for expenses of Senior Executives, the Board, and members of the Regional Committees, General Committee and any other sub committee established from time to time.

MALLOW

TIPPERARY

Mr. Donal Buckley

Mr. Ciaran McGrath

Mr. Vincent Buckley

Mr. Eamonn Morrissey

Mr. Michael Duane

Mr. John F. O’Gorman

Mr. John Fitzgerald

Mr. Michael Tobin

Mr. John Hedigan

Mr. Michael Tuohy

Mr. John Kenny Mr. Finian Magner Mr. Timothy McSweeney Mr. Michael O’Hanlon

Mr. Liam Lane

Mr. Andrew O’Keeffe

Mr. Patrick D. Lehane

Ms. Elizabeth Sheehan

Mr. Edmund C. Lynch

Mr. Donal Shinnick

Mr. Patrick Millerick

Mr. Peter Twomey

Mr. Sean O’Brien Mr. Barry O’Connor

MITCHELSTOWN

The Rules Committee comprises Messrs Bertie O’Leary (Chairman), James Lynch, John F. O’Gorman and Patrick O’Keeffe. The principal responsibilities of the committee are to: ›

›

›

18

review the rules of the Society on a periodic basis to ensure they are consistent in their application and aligned to the Society’s strategic objectives. advise and make recommendations in conjunction with the General Committee, as necessary, to the Board of the Society with regard to any alterations or amendments required to the rules. make recommendations on policy matters, to the Board of the Society, in relation to the implementation of the rules.

Mr. Timothy O’Leary Mr. John O’Sullivan

Mr. Patrick Clancy Mr. John W. Coughlan Mr. Robert Drake

LIMERICK

Mr. Thomas Feeney

Mr. Maurice Curtin

Mr. John A. Fox

Mr. William Hickey

Mr. Michael Gowen

Mr. Daniel Hogan

Mr. Philip Leahy

Mr. John Hough

Mr. Martin O’Doherty

Mr. Roger Keogh

Mr. Patrick O’Keeffe

Mr. James Lynch

Ms. Mary Twomey-Casey

Mr. John McKeogh Mr. Gerard O’Dwyer

MID-CORK Mr. Patrick Ahern Mr. John Bernard Mr. Donal Creedon Mr. Jerome Desmond

Rules Committee

CORK/EAST CORK

Mr. Brendan Hinchion Mr. Richard Hinchion Mr. Donal F. Hurley Mr. John Joe Kelleher Mr. Sean MacSweeney Mr. Don McSweeney Mr. Michael Murphy Mr. Gerard O’Connell Mr. Daniel P. O’Donovan Mr. Bertie O’Leary Mr. Cornelius O’Riordan

Mr. David Woulfe

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Regional Committees AGHABULLOGUE/ RYLANE Mr. Patrick Ahern Mr. Edward Twomey AHADILLANE Mr. Donal Barrett Mr. Patrick Sexton ALLENSBRIDGE Mr. Cornelius Murphy ANGLESBORO Mr. William Bourke ANNACOTTY/ BIRDHILL/KILLALOE Mr. Michael Caplis Mr. John McKeogh Mr. Laurence McNamara ARAGLEN Mr. Thomas Feeney Mr. Patrick O’Donoghue ARDAGH/OLDMILL Mr. Denis Hayes Mr. John Hough Mr. David Woulfe ARDFINNAN Mr. Shane Mason BALLINAMONA Vacancy BALLINDANGAN Mr. Martin O’Doherty Mr. Patrick O’Keeffe BALLINGEARY Mr. Sean O’Sullivan BALLINHASSIG Mr. James Crowley Mr. Michael Murphy BALLYCLOUGH Mr. Donal Buckley Mr. Martin O’Brien Mr. Andrew O’Keeffe BALLYHOOLY Mr. Philip Leahy Mr. Jeremiah Lenihan

BAWNMORE Mr. Cornelius O’Riordan BENGOUR Mr. Patrick O’Driscoll BERRINGS/DRIPSEY Mr. Denis B. O’Mahony Mr. John Walsh BLACK ABBEY/ KILDIMO Mr. Patrick O’Brien Mr. Seamus O’Riordan Mr. Michael Reidy BOHERLAHAN Mr. Joseph Tobin Mr. Michael Tuohy BUNRATTY Mr. James Lynch Mr. Kevin McInerney BUTTEVANT/ TEMPLEMARY Mr. Denis O’Connell Mr. Donal Shinnick Mr. Ian Wharton CAHIR Mr. Thomas Marnane Mr. Michael Tobin CAPPAMORE Mr. Sean Meehan CARRIGALINE Mr. John Bernard Mr. Patrick Foott Mr. Jeremiah McCarthy Mr. Gerard O’Connell CARRIGNAVAR Vacancy CASTLETOWNROCHE/ KILLAVULLEN Mr. Henry Fitzgerald Mr. Finian Magner Vacancy CAUM/MACROOM Mr. Michael Murphy

BALLYLOOBY Mr. Stephen Keating Mr. Eamonn Morrissey

CHURCHTOWN / LISCARROLL Mr. John Hedigan Mr. Michael Mangan

BALLYMAKEERA Mr. Daniel Hallissey Mr. Bertie O’Leary

CLOGHEEN Mr. John Flynn Mr. John F. O’Gorman

BALLYPOREEN Mr. Patrick M. Clancy Mr. Michael Sweeney

CLONDROHID Mr. Finbarr O’Connell Mr. Stephen Roche

BALLYRICHARD/ COBH Mr. Anthony Barry Mr. Andrew Bird Mr. Patrick O’Donovan Ms. Martina O’Neill Mr. Thomas Russell Vacancy

CLOVERFIELD/ CORELISH Mr. Sean O’Brien COACHFORD/ KILCOLMAN Mr. Denis Finnegan Vacancy

C.M.P. Mr. Timothy Cashman Mr. Patrick D. Lehane Mr. James Murphy Mr. Donal O’Brien Mr. Timothy O’Leary Mr. John O’Sullivan Mr. Flor Riordan CORROGHURM/ MITCHELSTOWN Mr. Patrick Condon Mr. Martin Fox Mr. David Kent Jnr Mr. Eamonn O’Brien Mr. Don Whelan

KILBEHENNY Mr. William O’Doherty Mr. Martin Russell

NEWMARKET-ONFERGUS Mr. Kieran Woods

KILCORNEY Mr. John Browne Mr. Tim Leader

OOLA Mr. Gerard O’Dwyer

KILDORRERY Mr. Robert Drake Mr. John Walsh KILLOWEN/ MOSSGROVE Mr. John Canty Mr. Don McSweeney

OUTRATH Mr. Matthew McEniry Mr. Ciaran McGrath Mr. Martin Moloney Mr. John O’Donnell Mr. Thomas Prendergast Mr. Thomas Ryan

COURTBRACK Mr. Vincent Buckley Mr. Timothy McSweeney

KILLUMNEY Mr. Jerome Desmond Mr. Thomas M. Griffin

PARK Mr. Kevin Galvin Mr. Matthew Hurley Mr. Barry O’Connor Mr. Michael J. Riordan

DARRAGH Mr. James Condon Mr. Thomas Hyland

KILNAMARTYRA Mr. Brendan Hinchion Vacancy

RATHDUFF Mr. John Aherne Mr. Teddy Buckley

DONERAILE Mr. Michael Duane Mrs. Elizabeth Sheehan

KILROSS Mr. Daniel Hogan Mr. John O’Neill

RUSHEEN Mr. Sean Corkery

DONOUGHMORE Mr. Liam Foley Mr. Fintan McSweeney

KILWORTH Mr. John Clancy Mr. Michael Gowen

DROMBANNA Mr. William Hickey Mr. John O’Brien Mr. William Walsh

KNOCKADEA Mr. John W. Coughlan Mr. John A. Fox

DROMTARIFFE Mr. Peter Duggan Mr. Eamonn Tarrant GALBALLY Mr. Timothy Blackburn Mr. Michael Donovan

KNOCKLONG/ GORMANSTOWN Mr. Geoffrey Walsh LISSARDA Mr. Richard Hinchion Mr. Sean MacSweeney

GARRYSPILLANE Mr. Morgan Murphy Mr. John P. Tobin

LOMBARDSTOWN Mr. Frank O’Connor Mr. Michael O’Hanlon Mr. Peter Twomey

GLANWORTH Mr. Denis Joyce Ms. Mary Twomey-Casey

MALLOW Mr. Coleman Cronin Mr. John Kenny

GLOSHA/ REARCROSS Mr. Roger Keogh Mr. Eamonn O’Toole

MILLSTREET/ BALLYDALY Mr. Diarmuid Corkery Vacancy

GRANAGH/MILTOWN Mr. Vincent Griffin Mr. Gerard Kennedy

MOGEELY Mr. John Dunne Mr. Liam Lane Mr. Edmund C. Lynch Mr. Patrick Millerick Mr. Denis O’Brien Mr. Sean O’Brien Mr. Maurice Smiddy

HOLLYFORD Mr. Martin O’Connell HOSPITAL/KILTEELY/ SARSFIELD Mr. Patrick Hanley Mr. Liam O’Carroll INCHIGEELA/ TEERGAY Mr. Donal Creedon

MOURNEABBEY Mr. Derry Cronin Mr. John Fitzgerald MUSKERRY Mr. Daniel P. O’Donovan

SHINAUGH Vacancy SHOUNLARAGH/ TOGHER Mr. Donal F. Hurley TEMPLEMARTIN Mr. Michael P. Murphy TERELTON/TOAMES Mr. John Joe Kelleher Mr. Liam O’Riordan TOURNAFULLA/ MEENAHELA Mr. Denis Aherne Mr. Maurice Curtin Mr. Donal Fitzgerald

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20

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Statement of Board Responsibilities The Industrial and Provident Societies Acts, 1893 to 1978 require the Board to provide for the preparation of financial statements, in accordance with accounting standards generally accepted in Ireland, for each financial year which gives a true and fair view of the state of affairs of the Society and of the result of the Society for that period. In preparing those financial statements, the Board shall cause: ›

suitable accounting policies to be selected and applied consistently;

›

reasonable and prudent judgements and estimates to be made;

›

the financial statements to be prepared on a going concern basis.

In accordance with Rule 63 of the Society’s rules, the Board shall cause proper books of account and records to be kept as are necessary to give a true and fair view of the Society’s business and affairs. The Board is also responsible for safeguarding the assets of the Society and shall cause reasonable steps to be taken to provide adequate protection in this regard.

On behalf of the Board:

Bertie O’Leary James Lynch Chairman Vice Chairman 31 March 2014

31 March 2014

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Independent Auditor’s Report to the Members of Dairygold Co-Operative Society Limited We have audited the financial statements of Dairygold Co-Operative Society Limited for the year ended 31 December 2013 which comprise the Consolidated Profit and Loss Account, the Consolidated Balance Sheet, the Consolidated Cash Flow Statement and Consolidated Statement of Total Recognised Gains and Losses and the related notes 1 to 36. The financial reporting framework that has been applied in their preparation is Irish law and accounting standards issued by the Financial Reporting Council and promulgated by the Institute of Chartered Accountants in Ireland (Generally Accepted Accounting Practice in Ireland). This report is made solely to the Society’s Members, as a body, in accordance with Section 13 of the Industrial and Provident Societies Act, 1893. Our audit work has been undertaken so that we might state to the society’s members those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the society and the society’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective Responsibilities of Directors and Auditors As explained more fully in the Statement of Board Responsibilities, the Board are responsible for the preparation of the financial statements giving a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with Irish law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group and the parent company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements In our opinion the financial statements ›

give a true and fair view of the state of the affairs of the Group as at 31 December 2013 and of the profit of the Group for the year then ended; and

›

have been prepared in accordance with Generally Accepted Accounting Practice in Ireland.

As required by section 13(2) of the Industrial and Provident Societies Acts, 1893 we examined the balance sheets showing the receipts and expenditure, funds and effects of the society, and verified the same with the books, deeds, documents, accounts and vouchers relating thereto, and found them to be correct, duly vouched, and in accordance with law.

Chartered Accountants and Statutory Audit Firm Cork 31 March 2014

21

22

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Consolidated profit and loss account for the year ended 31 December 2013 2013 Notes E’000

TURNOVER 1

2012 E’000

847,407 731,233

OPERATING PROFIT before amortisation

2

29,301 22,235

Goodwill and other intangible asset amortisation

9

(1,359) (1,381)

OPERATING PROFIT 27,942 20,854 Share of losses of joint ventures

(118) -

Share of gains/(losses) of associates

54 (12)

Financial asset impairment credit/(charge)

3

1,841 (1,841)

Interest payable and similar charges

4

(4,461) (4,657)

Interest receivable and similar income

4

2,509 2,506

PROFIT on ordinary activities before taxation 27,767 16,850 Taxation charge on profit on ordinary activities

6

(2,145) (2,494)

PROFIT after taxation 25,622 14,356 Minority interest

22

(424) (602)

PROFIT for the financial year 25,198 13,754 Share interest RETAINED PROFIT for the year

The above results are derived from continuing operations.

On behalf of the Board:

Bertie O’Leary James Lynch Chairman Vice Chairman 31 March 2014



31 March 2014

7

(1,163) (1,179)

20

24,035 12,575

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

23

Consolidated balance sheet as at 31 December 2013

2013 2012

Notes

E’000

E’000

FIXED ASSETS Tangible assets

8

194,215 172,199

Intangible assets

9

10,499 12,076

Financial assets

10

34,770 36,347

239,484 220,622 CURRENT ASSETS Stocks

11

109,515 88,570

Debtors

12

120,386 100,633

Bank and cash

1,466 8,973

231,367 198,176 CREDITORS falling due within one year

13

(125,058) (108,440)

NET CURRENT ASSETS 106,309 89,736 TOTAL ASSETS LESS CURRENT LIABILITIES

345,793 310,358 14

(66,794) (49,784)

Capital grants

16

(8,257) (9,618)

Deferred taxation

17

(128) (1,117)

CREDITORS falling due after more than one year PROVISION FOR LIABILITIES AND CHARGES

270,614 249,839 PENSION ASSET

18

NET ASSETS

3,230 1,427 273,844

251,266

CAPITAL AND RESERVES Share capital

19

93,430 93,079

Capital reserves

20

1,007 1,007

Revaluation reserve

20

6,946 6,946

Bonus reserve

20

138 138

Profit and loss account

20

169,733 147,930

SHAREHOLDERS’ FUNDS Minority interest 22

271,254 2,590

249,100 2,166

CAPITAL EMPLOYED

273,844

251,266

On behalf of the Board:

Bertie O’Leary James Lynch Chairman Vice Chairman 31 March 2014



31 March 2014

24

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Consolidated cash flow statement for the year ended 31 December 2013 2013 Notes E’000

2012 E’000

Net cash inflow from operating activities

24

33,188 32,715

Returns on investments and servicing of finance

25

(4,342) (4,747) (4,684) (244)

Taxation paid 26

(31,516) (15,756)

Equity share interest paid

(1,126) (1,154)

Management of liquid resources

4,621 (295)

Capital expenditure and financial investment

27

738 (853)

Financing 28

(3,121) 9,666

(Decrease)/increase in cash in the year

Reconciliation of net cash flow to movement in net debt for the year ended 31 December 2013 2013

2012

E’000 E’000

(Decrease)/increase in cash in the year

(3,121) 9,666

Non cash movements

(961) 744

(4,082) 10,410

Movement in net debt Net debt at 1 January

(56,832) (67,242)

Net debt at 31 December

(60,914) (56,832)

Analysis of net debt At Non

1 January. 2013

Cash

cash

flow movement

E’000 E’000

E’000

At

31 December 2013 E’000

Cash and bank balances

8,973

(6,546)

(961)

1,466

Invoice discounting and overdrafts

(17,586)

16,210

-

(1,376)

Finance leases

(225)

-

-

(225)

(8,838) 9,664 (961) (135) Debt due after one year

(47,000)

(13,000)

-

(60,000)

Finance leases

(994)

215

-

(779)



(47,994) (12,785)

- (60,779)

(56,832) (3,121) (961) (60,914)

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

25

Consolidated statement of total recognised gains and losses for the year ended 31 December 2013



2013

2012



E’000

E’000

Profit for the financial year 25,198 13,754 Share of joint ventures’ reserves movements

(57) -

Share of associates’ reserves movements

(49) (75)

Currency translation difference on net investment

(1,297) 1,142

Difference between actual and expected return on pension scheme assets

(2,575) 17,581 (629) 4,471

Experience (losses)/gains arising on pension scheme liabilities Effects of changes in assumptions underlying the present value of pension scheme liabilities

2,632 (28,536) (257) 417

Deferred tax associated with movement on pension scheme Total recognised gains relating to the year

22,966

8,754

Reconciliation of movement in shareholders’ funds for the year ended 31 December 2013

2013 2012

Notes

E’000

E’000

Total recognised gains relating to the year

22,966 8,754

Share interest

7

(1,163) (1,179)

Issue of ordinary shares including conversions

19

1,817 34

Shares redeemed

19

(1,466) (1,245)

Net change in shareholders’ funds

22,154 6,364

Opening shareholders’ funds

249,100 242,736

Closing shareholders’ funds

271,254

249,100

26

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Statement of Accounting Policies The significant accounting policies adopted by the Society are: Basis of Preparation: The financial statements have been prepared in accordance with accounting standards issued by the Financial Reporting Council and the Irish Industrial and Provident Societies Acts, 1893 to 1978.

Accounting Convention: The financial statements, which are denominated in euros, are prepared under the historical cost convention as modified by the revaluation of certain fixed assets.

Basis of Consolidation: The consolidated financial statements incorporate: a) the accounts of Dairygold Co-Operative Society Limited (“the Society”) and its subsidiaries for the year ended 31 December 2013. b) the Society’s share of the results and post acquisition reserves of joint ventures and associates as reported in the latest audited financial statements. This is to 30 June 2013 for Reox Holdings plc and 31 December 2012 for the other joint ventures and associates. c) any material adjustments for joint ventures and associates (arising between the date of their latest financial statements as above and the year end of the Society) and consequently Reox Holdings plc, Co-Operative Animal Health Limited and Malting Company of Ireland Limited results are incorporated to 31 December 2013. d) any material differences between the Society’s accounting policies and that of its joint ventures and associates where required. The results of subsidiaries, joint ventures and associates acquired or disposed of are included in or excluded from the financial statements from the effective date of acquisition or disposal. The interests of minority shareholders in subsidiary companies reflect the minority’s proportion of the net assets of the relevant subsidiaries. The results of overseas subsidiary companies are translated into euros at the average rate for the year.

The assets and liabilities of overseas subsidiary companies have been consolidated at the rate of exchange ruling on the balance sheet date. Exchange differences arising on the retranslation of the opening balance sheets of overseas subsidiary companies together with differences in exchange rates on the translation of the profit and loss account are included in reserves.

Turnover: Turnover represents the invoiced value of goods and services to third parties, including EU export refunds and excluding value added tax. Turnover is recognised when the Society receives the right to consideration as ownership and risk passes to third parties. Rebates are recognised by the Society on a receipts basis.

Share Trading: Accounting for Transactions Investment transactions are accounted for on the trade date. All investments are stated at cost and are not subsequently revalued. Realised gains and losses on investment disposals are calculated using the first in first out method based on the difference between the original cost and the disposal amount. A provision is made for impairment in value, particularly in the case where impairment is permanent, as evidenced by losses crystallised post year end. This is reassessed on a yearly basis, based on current market prices and valued at the lower of cost and market value.

Investment Income and Expenses Dividends are recognised as income on the dates that securities are first quoted “ex-dividend” to the extent information thereon is reasonably available to the Society. Interest income is recognised by the Society on an accruals basis. Income from quoted companies is stated net of withholding tax.

Tangible Fixed Assets and Depreciation: Tangible fixed assets are stated at cost or valuation less accumulated depreciation. Depreciation is calculated to write off the cost or valuation of tangible fixed assets other than freehold land over their estimated useful lives by equal annual instalments at the following annual rates:

Buildings:

2.0% - 10.0%

Plant and machinery: 7.5% - 33.3% Motor vehicles:

12.5% - 25.0%

Tangible fixed assets in the course of construction are carried at cost less any recognised impairment loss. Depreciation of these assets commences when they are commissioned and ready for their intended use. The carrying value of tangible assets is reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable. Impairment is assessed by comparing the carrying value of an asset with its recoverable amount (being the higher of net realisable value and value in use). Net realisable value is defined as the amount at which an asset could be disposed of net of any direct selling costs. Value in use is defined as the present value of the future cash flows obtainable through continued use of an asset including those to be realised on its eventual disposal.

Leased Assets: Assets held under leasing arrangements that transfer substantially all the risks and rewards of ownership are capitalised. The capital element of the related rental obligations is included in creditors. The interest element of the rental obligations is charged to the profit and loss account so as to produce a constant periodic rate of charge. Rentals in respect of all other leases are charged to the profit and loss account as incurred.

Goodwill: Goodwill arising on acquisitions representing the excess of the total cost of the Society’s investment over the fair value of the separable net assets acquired is amortised over its expected useful economic life of a maximum of twenty years, on a straight line basis. The carrying value of goodwill is reviewed annually and provision is made for any impairment. Impairment losses are recognised in the profit and loss account.

Intangible Assets: Purchased intangible assets are included at cost and amortised over a maximum of ten years, depending on their estimated useful economic life, in equal annual instalments. A provision is made for any impairment in value.

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Statement of Accounting Policies (continued) Financial Fixed Assets:

Taxation:

Provisions:

Associated and Joint Venture undertakings Associated undertakings are those undertakings in which the Society has a significant interest in the equity capital and over which it is able to exercise significant influence. Joint Venture undertakings are those undertakings in which the Society has a joint interest in the equity capital and over which it jointly exercises control. The Society’s interests are stated at cost, plus its share of post acquisition reserves, less provision for permanent diminution in value.

Corporation tax is calculated on the result for the year after taking account of capital allowances and any relevant reliefs.

Provisions are charged against the profits of the Society where there may exist a liability arising from present obligations. Provisions are reviewed at each balance sheet date and adjusted to reflect current best estimate. Where material, some provisions are discounted.

Joint ventures and associates are accounted for using the gross equity method and equity method respectively. The group’s share of the profits less losses of joint ventures and associates are included in the consolidated profit and loss account. The group’s interests in their net assets or liabilities are included as fixed asset investments in the consolidated balance sheet at an amount representing the group’s share of the fair values of the net assets at acquisition plus the group’s share of post acquisition retained profits or losses. Goodwill arising on acquisition of joint ventures and associates is dealt with as stated above.

Other investments Trade investments are those undertakings in which the Society does not exercise a significant or participating interest. The Society’s interest in these undertakings is stated at cost, less provision for permanent diminution in value.

Stocks: Stocks are valued at the lower of cost and net realisable value. Cost in the case of raw materials, goods for resale and expense stocks comprise the purchase price including transport and other directly attributable costs. Cost in the case of work-in-progress and finished goods comprises direct material and labour costs and an appropriate proportion of manufacturing overhead based on normal production levels. Net realisable value represents the estimated sales price less costs to completion and all appropriate holding, selling and distribution expenses.

Deferred Taxation: Deferred taxation is provided in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or right to pay less or to receive more tax, with the following exceptions: i) vision is not made for tax on gains arising from the revaluation of fixed assets unless there is a binding agreement for the disposal of assets.

Research and Development: Expenditure on research and development is written off to the profit and loss account in the year in which it is incurred.

Foreign Currencies: Foreign currency transactions entered in to by entities during the year have been translated at the rates ruling at the time of these transactions.

ii) deferred tax assets are recognised only to the extent that the Board of Directors consider that it is more likely than not that there will be suitable future taxable profits from which the underlying timing differences can be deducted.

Monetary assets and liabilities arising in foreign currencies have been retranslated at rates ruling at the balance sheet date. Exchange differences have been included in the profit and loss account for the year.

Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which the timing differences reverse based on existing tax rates and law.

Revolving Fund: The revolving fund is a compulsory mechanism by which milk suppliers contribute to the funding of the Society with monies contributed repaid in full, together with accumulated interest when the period expires. Contributions will be made over seven years from 2013 to 2019, with a maximum of sixty monthly deductions over the seven year period. The first 75,000 litres of milk supplied by each member in any year will be exempt from the deduction. No contribution will be made when the Dairygold quoted milk price is below 27 cent per litre including VAT. When the milk price is 27 cent per litre or above a 0.5 cent per litre deduction will be made. Contributions will be repaid in the eighth year after receipt i.e. contributions made during 2013 will be repaid with interest in 2020 and so on. The interest rate applying to contributions is 3 month EURIBOR (Euro Interbank Offered Rate) plus 2.5%. Interest is accrued on a yearly basis.

Capital Grants: Grants receivable in respect of tangible fixed assets are included in the financial statements when the amounts have been ascertained and are released to the profit and loss account in equal annual instalments over the expected useful lives of the relevant assets.

Revenue Grants: Revenue based grants are accounted for in the year in which the related expenditure is incurred and are dealt with directly through the profit and loss account.

Debtors: Known bad debts are written off and specific provision is made for any amount the collection of which is considered doubtful. A further general provision is also maintained.

Member Funding:

27

28

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Loan Notes Members are offered the opportunity to invest on a voluntary basis in a loan note. The scheme commenced in 2013 and will run for three years. Members who subscribe to the loan note will be repaid their investment in full plus accumulated interest on the fifth anniversary of their investment. A total of €15 million will be offered and the offer will close once the voluntary €15 million target has been subscribed to. The interest rate applying to the loan note is 3 month EURIBOR plus 4%. Interest is accrued on a yearly basis.

The full service cost of the pension provision is charged to operating profit. The net impact of the unwinding of the discount rate on scheme liabilities and the expected return of the scheme assets is charged and credited to finance costs.

Minimum Shareholding Each milk supplier is required to achieve and maintain a shareholding in the Society equivalent to 4.0 cent per litre of milk supplied. Where a milk supplier’s shareholding is less than 4.0 cent per litre at the end of any year, a contribution of 0.5 cent per litre will be deducted from his or her monthly milk payment in the following year until the supplier achieves the required threshold of 4.0 cent per litre of milk supplied. This commenced in 2013. Deductions are converted in to shares in the Society.

Defined Contribution: Retirement benefits to employees are funded by contributions from the company and employees. Payments are made to pension trusts which are financially separate from the Society.

Pensions: Defined Benefit: Under Financial Reporting Standard 17 Retirement Benefits, pension scheme assets are measured using fair values. Pension scheme liabilities are measured using a projected unit method and discounted at the current rate of return on a high quality corporate bond of equivalent term to the liability, which is estimated by reference to appropriate yield curves. The pension scheme surplus (to the extent that it is recoverable) or deficit is recognised in full, net of deferred tax and presented on the face of the balance sheet. The movement in the scheme surplus/deficit is split between operating and financing items in the profit and loss account and the statement of total recognised gains and losses.

Any difference between the expected return on assets and that actually achieved is charged through the statement of total recognised gains and losses. Similarly, any differences that arise from experience or assumption changes are charged through the statement of total recognised gains and losses.

Where the Society is a participating employer in a multi-employer defined benefit pension scheme and its share of the underlying assets and liabilities cannot be identified on a consistent and reasonable basis, the scheme is accounted for as a defined contribution scheme.

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Notes to financial statements 1 Turnover 2013

2012

E’000

E’000

Turnover: group and share of joint ventures’

866,316 731,233

Less: Share of joint ventures’ turnover

(18,909) -

Group turnover 847,407 731,233 Geographical analysis by destination: 2013

2012

E’000

E’000

Ireland 378,370 322,805 United Kingdom

152,106 133,801

Rest of Europe

195,864 162,827

Rest of World

121,067 111,800

847,407 731,233 Principal activities by class of business: Food Ingredients 593,153 500,803 Agri Business 250,012 225,932 Dairygold Finance 4,242 4,498 847,407

731,233

Segmental information, by market, has not been given because, in the opinion of the Board of Directors, to do so would be prejudicial to the interests of the Society.

2 Operating profit 2013

2012

E’000

E’000

Turnover - Note 1 847,407 731,233 Less: Raw materials and consumables

661,813 575,430

Payroll costs - Note 5

55,965 52,492

Operating costs

63,682 65,330

Depreciation - Note 8

18,091 17,211

Grant amortisation - Note 16

(1,361) (1,067)

Change in stock of finished goods and goods for resale

19,916 (398)

Operating profit before amortisation

29,301 22,235

29

30

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Notes to financial statements 3 Financial asset impairment credit/(charge)



2013

2012



E’000

E’000

Financial asset impairment credit/(charge)

1,841 (1,841)

The financial asset impairment reversal for 2013 reflects the Society’s interest in its long term shareholding in One51 plc.

4 Net interest (payable)/receivable and similar (charges)/income



2013

2012



2013

2012



E’000

E’000

Interest payable and similar charges Bank interest payable and similar charges Share of joint ventures’ net interest payable

(4,399) (4,657) (62) (4,461) (4,657)

Interest receivable and similar income Bank interest receivable

57 48

Net interest receivable and similar income relating to pensions

2,452 2,458



2,509 2,506



(1,952) (2,151)

5 Payroll costs The weekly average number of employees:

2013

2012

Number

Number

Dairygold Food Ingredients

586 566

Dairygold Agri Business

531 533



1,117 1,099

Payroll costs comprise:

E’000

E’000

Wages and salaries

48,025 45,199

Social welfare costs

5,044 4,896

Pension costs

2,896 2,397



55,965 52,492

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Notes to financial statements 6 Taxation charge on profit on ordinary activities

2013 E’000



2012 E’000

Corporation tax Irish tax Foreign tax

(2,713) (1,815) (489) (224) (3,202) (2,039)

Prior year provision movement Irish tax

6 (44)

Foreign tax

- (29)



6 (73)

Tax charge Share of associates’ tax Share of joint ventures’ tax Total corporation tax Deferred tax credit/(charge) - Note 17 Total tax

(3,196) (2,112) 83 (44) (21) (3,134) (2,156) 989 (338) (2,145) (2,494)

The tax assessed for the year is different from the standard rates of corporation tax, as follows:

Profit before tax

27,767

Corporation tax at standard rate

(3,471) (2,106)

16,850

Effects of: Expenses allowable for tax purposes

618 353

Research and development tax credits

100

101

Excess depreciation over capital allowances

(424) (253)

Higher tax rates (non-trading income)

(101) (49)

Non taxable income Losses brought forward Current year losses Higher tax rates (overseas)

25

26

360

469

-

(536)

(309) (44) (3,202) (2,039)

7 Share interest

2013

2012



E’000

E’000

Share interest paid @ 1.25% (2012: 1.25%) Ordinary share capital

(1,163) (1,179)



(1,163) (1,179)

The Board has recommended that share interest of 1.25% be paid on the share capital in issue at 31 December 2013. This will amount to €1,168,000 and is subject to approval at the Annual General Meeting.

31

32

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Notes to financial statements 8 Tangible assets

Land &

Plant &

Motor

Construction



buildings

machinery

vehicles

In Progress

Total



E’000

E’000

E’000

E’000

E’000

4,553

7,271 286,770

COST OR VALUATION At 1 January 2013 Cost Valuation Additions

88,409

186,537

35,749 124,158

55,872 242,409

4,020

-

3,253

Impairment

-

Disposals

-

7,271 378,391

664 32,475 40,412

(159) (1,229)

- 91,621

4,553

- (131)

- (159) - (1,360)

Transferred from CIP

50

7,221

-

(7,271)

-

Translation adjustments

(85)

(203)

(1)

-

(289)

At 31 December 2013 Cost

92,394

Valuation

35,749



128,143

195,420 55,872

5,085 32,475 325,374 -

- 91,621

251,292

5,085 32,475 416,995

34,378

168,867

2,947

Charged during year

3,328

14,387

Relating to disposals

-

(1,202)

(24)

(146)

37,682

181,906

DEPRECIATION At 1 January 2013

Translation adjustments At 31 December 2013

-

206,192

376

-

18,091

(130)

-

(1,332)

(1)

-

(171)

3,192

-

222,780

NET BOOK VALUE At 31 December 2013

90,461

69,386

1,893 32,475 194,215

At 31 December 2012

89,780

73,542

1,606

7,271

172,199

A professional valuation of substantially all the Society’s land, buildings and plant and machinery was undertaken by Lisney during 1996. The basis of valuation was depreciated replacement cost or, where appropriate, open market value. The valuation was incorporated into the financial statements and the surplus arising taken to the revaluation reserve. The valuers also estimated the remaining useful lives of the assets. The Society has not adopted a policy of annual revaluations as permitted by Financial Reporting Standard 15. The Board of Directors has taken the view that a reasonable valuation of the cost of tangible fixed assets under a historical cost basis would be €285 million.

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

33

Notes to financial statements 9 Intangible assets

2013 2012

GOODWILL

E’000

E’000

COST At 1 January Translation adjustments At 31 December

22,016 21,553 (426) 463 21,590

22,016

AMORTISATION At 1 January Charged during year Translation adjustments At 31 December

10,522 9,054 1,242 1,265 (208) 203 11,556

10,522

NET BOOK VALUE At 31 December

10,034

11,494

844

844



OTHER INTANGIBLE ASSETS COST At 1 January and 31 December AMORTISATION At 1 January

262 146

Charged during year

117 116

At 31 December

379

262

NET BOOK VALUE At 31 December NET BOOK VALUE TOTAL

465

582

10,499

12,076

The carrying value of goodwill relates to a number of UK and Irish businesses acquired in previous years. The other intangible assets relate to customer lists acquired. All intangible assets are amortised over a maximum of 20 years. In 2012, the Society reviewed the amortisation rates of its intangible assets and decided to increase the amortisation rate to 10 years, to reflect estimated useful life, in relation to the customer lists acquired.

34

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Notes to financial statements 10 Financial assets

2013 2012

E’000

E’000

JOINT VENTURES Share of net assets - 1 January Tranferred from Associates Share of net results Share of associates reserve movements

6,189 (201) (57) -

Share of net assets - 31 December Loans to joint ventures - Note 30

5,931 435 -

Balance

6,366 -

ASSOCIATES Share of net assets - 1 January Net assets other than goodwill Transferred to joint ventures Share of net results Share of associates reserve movements

7,984 8,115 (6,189) 137 (56) (49) (75)

Share of net assets - 31 December Loans to associates - Note 30 Loan notes - Note 30

1,883 7,984 - 85 10,000 13,000

Balance

11,883 21,069

UNQUOTED Shares at cost - 1 January and 31 December

444 444

QUOTED Shares at cost - 1 January Additions Disposals Impairment credit/(charge)

6,972 8,391 3,008 4,478 (2,874) (4,056) 1,841 (1,841)

Shares at cost - 31 December

8,947 6,972

LOAN STOCK At - 1 January Additions Redemptions

7,862 8,901 877 569 (1,609) (1,608)

7,862 At - 31 December 7,130 TOTAL

34,770 36,347

a)

The joint ventures and associates are included in the financial statements at the cost of the investment plus the Society’s share of post acquisition reserves.

b)

In the opinion of the Board of Directors, the value of the unquoted investments is not less than that shown above.

c)

The market value of the quoted investments excluding Reox Holdings plc at 31 December 2013 was €34,696,000 (2012: €24,661,000).

d)

The loan stock refers to unconverted loan stock received from the Irish Dairy Board based on the Society’s trading activity with it.

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

35

Notes to financial statements 10 Financial assets (continued) Details of principal subsidiaries, joint ventures and associates are included in Note 35 to these financial statements. In 2011, Reox Holdings plc issued subordinated unsecured loan notes of €19 million to the Society. These loan notes were repayable over six years (commencing in 2012) in annual instalments of €3 million each year for five years and €4 million to be repaid in December 2017. Interest does not accrue on these loan notes, unless the repayments are not received by the Society on the due dates. See note 34 (Post Balance Sheet Events) regarding the redemption of these loan notes as part of a “Debt for Asset” transaction. The following additional disclosures are required by Financial Reporting Standard 9, Associates and Joint Ventures, as the Co-Operative’s share of the results of its associate entities and joint ventures exceed certain thresholds specified in the standard. Disclosure in aggregate of the Co-Operative’s share of results of all associates and joint ventures:

2013 2012

E’000

E’000

Turnover

21,869 26,100

Fixed assets

12,621

Current assets

10,172 11,232

Liabilities due within one year

(9,563) (9,762)

Liabilities due after one year

(3,585)

11,420

(4,019)

The results detailed below for Reox Holdings plc are disclosed separately based on criterion specified in Financial Reporting Standard 9, Associates and Joint Ventures, as follows: Name:

Reox Holdings plc

2013

E’000

The Co-Operative’s share of: Turnover 308 Loss before exceptional items Exceptional items Loss before taxation

(115) (115)

Taxation

83

Loss after taxation

(32)

Fixed assets

6,338

Current assets

1,808

Liabilities due within one year

(3,914)

Liabilities due after one year

(2,612)

The results detailed below for joint ventures, in aggregate, are disclosed separately based on criterion specified in Financial Reporting Standard 9, Associates and Joint Ventures, as follows:

2013

E’000

Joint ventures analysed as follows: Fixed assets Current assets

6,080 8,066

Share of gross assets

14,146

Liabilities due within one year

(5,459)

Liabilities due after more than one year

(963)

Share of gross liabilities

(6,422)

Share of net assets

7,724

36

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Notes to financial statements 11 Stocks

2013

2012



E’000

E’000

Raw materials

15,156 15,353

Finished goods

74,581 53,635

Goods for resale

14,525 15,555

Expense stocks

5,253 4,027



109,515

88,570

There is no material difference between the above amounts and the replacement cost of stocks.

12 Debtors falling due within one year

2013 2012

E’000

Trade debtors

E’000

105,414 85,915

Prepayments and accrued income

5,505 10,015

Amounts due from related parties - Note 30

6,440 3,123

Corporation tax VAT

87 2,940 1,580 120,386

100,633

13 Creditors falling due within one year

2013 2012

E’000

Bank loans, invoice discounting and overdrafts Obligations under finance leases

E’000

1,376 17,586 225 225

Trade creditors

33,716 18,742

Provisions, accruals and deferred income

86,008 67,702

Amounts due to related parties - Note 30

1,073 491

Corporation tax

- 1,401

PAYE and PRSI

1,996 1,757

Loan stock - Note 23

664 536 125,058

108,440

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

37

Notes to financial statements 14 Creditors falling due after more than one year

2013 2012

E’000

Bank loans falling due between two and five years Obligations under finance leases - Note 15 Other loans Advances received for members’ loan notes

E’000

60,000 47,000 779 994 - 340 25 315

Loan notes (including interest accrued)

1,544 -

Revolving Fund (including interest accrued)

3,586 -

Convertible stock - Note 21 Loan stock - Note 23

226 228 634 907 66,794



49,784



15 Obligations under finance leases

2013 2012

E’000

Falling due within one year Falling due after more than one year

E’000

225 225 779 994 1,004 1,219

16 Capital grants

2013 2012

E’000

At 1 January Receivable during year

E’000

9,618 4,652 - 6,033

Credited to profit and loss account

(1,361) (1,067)

At 31 December

8,257 9,618

17 Deferred taxation

2013 2012

E’000

At 1 January

E’000

1,117 779

(Credited)/charged to profit and loss account

(989) 338

At 31 December

128 1,117

The deferred tax arose due to timing differences, relating to the manner in which items are treated in the profit and loss account from an accounting perspective as opposed to from a taxation perspective, in addition to the existence of losses forward. The Society had unrecognised deferred tax assets of €1,341,193 (2012: €1,546,842) at the end of the year. This asset has not been recognised due to uncertainty surrounding the timing of future profits. Deferred tax in relation to the pension schemes is dealt with under the pension’s note 18 in accordance with the provisions of Financial Reporting Standard 17, Retirement Benefits.

38

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Notes to financial statements 18 Pension asset

Dairygold Pension Schemes



The Society operates and contributes to a number of externally funded defined benefit and defined contribution pension schemes in Ireland.



Dairygold Co-Operative Society Limited Pension Plan 2010



This is a defined benefit pension plan which was established as a result of the merger of four defined benefit pension plans sponsored by the Society. The accounting calculations reported herein relate to this plan and are based on accounting policies, actuarial methods and assumptions which are consistent with the requirements of FRS 17 and were selected by the Society having taken advice from Mercer who are the company’s professional pension service providers.



The cash contributions payable to the plan are determined from a full actuarial valuation undertaken by the Scheme Actuary at intervals not exceeding three years. The last such valuation of the plan was undertaken as at 1 January 2013 in accordance with generally accepted actuarial principles and assumptions. The principal assumptions used in the valuation of accrued liabilities were that investment return would exceed future general salary inflation by 3.25% per annum and pension increases by 0.75% per annum in respect of existing pensioners and 1.5% per annum in respect of future pensioners. At the effective date of that valuation, the value of the assets was €232 million which was sufficient to cover approximately 98% of the benefits that had accrued to members, after allowing for future expected increases in pensionable remuneration. The valuation report is not available for public inspection. The main financial assumptions employed in the accounting valuation as at 31 December 2013 are:

2013

2012

2011

% % %

Inflation rate increase

1.80 2.00 2.00

General payroll rate increase

2.30 2.50 3.00

Pension payment increase

1.60 1.80 2.00

Discount rate

3.90 4.10 5.10

The expected long-term rates of return for: Equities

7.00 8.00 8.00

Bonds

3.10 2.70 4.40

Property

6.50 7.00 7.00

Cash

0.30

0.75 1.40



Expected return on assets: In developing the expected long-term rate of return on asset assumptions, consideration was given to the prevailing yield on low risk investments (government bonds), the historical level of risk premium associated with the other classes in which the portfolio is invested (equities) and the expectations for future returns of each asset class. The expected return for each asset class was then weighted based on the actual asset allocation to develop the expected long term rate of return on asset assumptions for the portfolio.



Discount rate assumption: In setting the discount rate, as with all other assumptions, the Society obtained independent actuarial advice from Mercer. The discount rate is set by reference to the yield on high (AA rated) quality bonds denominated in euro with duration equivalent to the duration of the liabilities.





Mercer has advised that the discount rate selected of 3.9% (2012: 4.1%) reflects the market yield on high quality corporate bonds at 31 December 2013. They have confirmed that they are satisfied that the approach taken is in accordance with the requirements of FRS 17.



Pension levy: The Irish Finance (No. 2) Act 2011 introduced a stamp duty levy of 0.6% on the market value of assets under management in Irish pension funds, for the years 2011 to 2014 (inclusive). The levy is based on scheme assets as at 30 June in each year, or as at the end of the preceding scheme financial year. A further levy of 0.15% was introduced in the 2014 Finance Act for 2014 and 2015, bringing the total levy due in 2014 to 0.75%.



Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Notes to financial statements

18 Pension asset (continued)

During 2012, the Society informed the Trustees of the plan that the cost of the pension levy would have to be borne by the members of the plan, primarily in the form of adjustments to their benefits. Therefore the Society has, in its consolidated profit and loss account for 2013, recognised the cost of the levy in the form of an addition of €1.4 million to its service cost but this was counterbalanced by a negative past service cost of €1.4 million to reflect the benefit adjustments that will be made to fund the levy.



Mortality assumptions: Membership of the Society’s pension plan is too small to allow a statistical analysis of mortality experience suitable for facilitating a scheme specific projection of future experience. In the circumstances standard mortality tables have been employed. These tables include allowance for future improvements in mortality rates.





Following the completion by the Scheme Actuary of the full valuation mentioned above, there is now one standard consolidated mortality table applied to all members of the merged plan whereas in the past plan specific assumptions had been applied to the members of the four original plans. The assumption adopted in the accounting calculations is consistent with that which the Scheme Actuary adopted in the full funding valuation and also with statistics published by the Society of Actuaries in Ireland. They incorporate an allowance for expected future mortality improvements in line with Central Statistics Office projections. These assumptions would be regarded by Mercer to be a “best estimate” and they are in line with those adopted by most Irish plcs.



The assumed life expectations on retirement at age 65 are noted below.



Weighted average life expectancy:



As at 31 December 2013

Members age 65 (current life expectancy)

22.6 23.9 22.4 24.9

Members age 45 (current life expectancy)

25.0 26.0 23.8 25.9

The sensitivities regarding the principal assumptions used to measure the scheme liabilities are set out below:

Assumption

Discount rate Rate of inflation Rate of salary growth Rate of mortality



As at 31 December 2012

Male Female Male Female

Change in assumption

Increase by 0.25% Increase by 0.50% Increase by 0.50% Increase by 1 year

% Impact on scheme liabilities

Decrease by 4.6% Increase by 6.5% Increase by 2.0% Increase by 2.3%

Plan assets The weighted average asset allocation at the year end was as follows: 2013 2012 % %

Equities 43.4% 47.6% Bonds 51.7% 47.7% Properties 4.5% 4.3% Cash 0.4% 0.4% 100% 100%

39

40

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Notes to financial statements 18 Pension asset (continued) The overall surplus in the scheme at 31 December is:

2013 2012 2011

E’000

E’000

E’000

Fair value of assets: Equities 102,464 110,287 98,207 Bonds Property

122,003

110,408 97,794

10,636

9,939 9,903

871

1,057 413



235,974

231,691 206,317

Present value of scheme liabilities

(232,283) (230,060) (201,350)

Cash

Surplus in scheme Related deferred tax

3,691

1,631 4,967

(461)

(204) (621)

Closing pension asset 3,230 1,427 4,346 The amounts included within operating profit for the year under FRS 17 are as follows:

2013 2012

E’000

E’000

Current service cost

3,784

3,375

Past service credit

(1,402) (1,700)

Total charged within operating profit

2,382

1,675

The amounts included within finance charges for the year under FRS 17 are as follows:

2013

2012

E’000

E’000

Expected return on the pension scheme assets

11,881 12,701

Interest on past service scheme liabilities

(9,429) (10,243)

Net finance credit within interest receivable and similar income

2,452 2,458

The analysis of amounts recognised in the statement of total recognised gains and losses are as follows:

Actual return less expected return on the pension scheme assets Experience (losses)/gains arising on the scheme liabilities Changes in assumptions underlying the present value of the scheme liabilities Actuarial loss recognised in the statement of total recognised gains and losses

2013

2012

E’000

E’000

(2,575) 17,581 (629) 4,471 2,632 (28,536) (572)

(6,484)

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

41

Notes to financial statements 18 Pension asset (continued) Movement in pension scheme assets:

2013

2012

E’000

E’000

231,691 206,317

Value at 1 January Expected return on assets

11,881 12,701

Actual return less expected return on pension scheme assets

(2,575) 17,581

Employer contributions

2,562 2,365

Plan participants’ contributions

1,345 1,338

Benefit payments and expenses

(8,930) (8,611) 235,974 231,691

Value at 31 December Movement in pension scheme liabilities:

(230,060) (201,350)

Value at 1 January Current service cost

(3,784) (3,375)

Past service credit

1,402 1,700

Interest cost

(9,429) (10,243)

Gains/(losses) on liabilities

2,003 (24,065)

Plan participants’ contributions

(1,345) (1,338)

Benefit payments and expenses

8,930 8,611 (232,283) (230,060)

Value at 31 December

The history of experience gains and losses has been:

2013



E’000

Difference between the expected and actual return on scheme assets Percentage of scheme assets Experience gains and losses arising on the scheme liabilities Percentage of past service scheme liabilities Amount that has been recognised in statement of total recognised gains and losses Percentage of past service scheme liabilities

(2,575)

2012 2011 2010 2009 E’000

E’000

17,581 (20,853)

E’000

E’000

(88) 9,974

(1.09%)

7.59% (10.11%) (0.04%) 4.80%

(629)

4,471 1,424 (3,036) 2,624

(0.27%)

1.94% 0.71% (1.50%) 1.38%

(572) (0.25%)

(6,484) (18,603) 4,496

2,537

(2.82%) (9.24%) 2.28% 1.33%



Irish Co-Operative Societies Pension Scheme



The Society also participates in an industry wide Irish Co-Operative Societies Pension Scheme. This is a multi-employer defined benefit scheme. However, as the underlying assets and liabilities attributable to individual employers cannot be identified on a consistent and reasonable basis, the Society is accounting for the pension scheme as if it were a defined contribution scheme in accordance with FRS 17. The charge in the profit and loss account in respect of this plan was €204,000 (2012: €204,000).



The most recent actuarial valuation of the scheme was carried out as at 1 July 2011. At this date the actuarial value of the assets of the scheme was insufficient to cover 100% of the benefits that had accrued to members. The funding level was 79% at 1 July 2011. The valuation also confirmed that the scheme did not satisfy the statutory minimum funding standard at that date. The actuarial report for this scheme is available for inspection by members of the scheme but not for public inspection.

42

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Notes to financial statements 18 Pension asset (continued)

Pension Cost



The total pension cost charged to the operating profit was €2,896,000 (2012: €2,397,000). Valuations have been performed in accordance with the requirements of Financial Reporting Standard 17, Retirement Benefits, as at 31 December 2013. Scheme liabilities have been calculated using a consistent projected unit valuation method and compared to the scheme’s assets at the valuation date.

19 Share capital

Issued ordinary shares of E1 each



2013

2012



E’000

E’000

At 1 January Shares issued Conversion of convertible stock - Note 21

93,079 94,290 1,817 33 - 1

Shares redeemed

(1,466) (1,245)

At 31 December

93,430

93,079

In 2010, the Society introduced a revised share redemption process, whereby the value of shares redeemed up to €5,000 or 30% of such value, if greater, is paid in cash in that year. The balance is transferred to a loan stock account, which is being paid in equal instalments over the following four years.

2013 2012

E’000

Cash paid Arising as loan stock - Note 23 Shares redeemed

E’000

(1,077) (884) (389) (361) (1,466)

(1,245)

From 2012 onwards, the Society has accelerated the payment of the value of shares redeemed, whereby the value of shares redeemed up to €5,000 or 40% of such value, if greater, is paid in cash in that year. The balance is transferred to a loan stock account, which is being paid in equal instalments over the following three years. In common with other Societies incorporated under the Industrial and Provident Societies Acts, 1893 to 1978, the Society does not have an authorised share capital. The rules make provision for the issue of shares at the discretion of the Board and for the issue of convertible stock and loan capital. Any issues have taken place at par.

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

43

Notes to financial statements 20 Reserves

Capital

Revaluation

reserves

Bonus

reserve

Profit & Loss

reserve account



E’000

E’000

E’000

E’000

At 1 January 2013

1,007

6,946

138

147,930

Arising on currency translation

-

-

-

(1,297)

Actuarial loss recognised in the statement of total recognised gains and losses (net of deferred tax)

-

-

-

(829)

Share of joint ventures’ reserves movements

-

-

-

(57)

Share of associates’ reserves movements

-

-

-

(49)

Profit for year

-

-

-

24,035

At 31 December 2013

1,007

6,946

138

169,733

Society and subsidiaries

1,007

6,946

138

169,276

-

-

-

457

1,007

6,946

138

169,733

Joint ventures and associates At 31 December 2013

21 Convertible stock

2013 2012



E’000

At 1 January Conversion to share capital - Note 19

E’000

228 231 - (1)

Stock redeemed

(2) (2)

At 31 December

226 228

‘A’ convertible stock can be converted into ordinary shares based on conditions set out in the rules of the Society and subject to agreements at the time of the stock issue.

22 Minority interest

2013

2012



E’000

E’000

At 1 January Profit on ordinary activities after tax At 31 December

2,166 1,564 424 602 2,590

2,166

44

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Notes to financial statements 23 Loan stock

2013 2012



E’000

At 1 January

E’000

1,443 1,692

Arising on share redemption - Note 19

389 361

Loan Stock repayment

(534) (610)

At 31 December Falling due within one year Falling due after more than one year

1,298 1,443 664 536 634 907

24 Reconciliation of operating profit to net cash inflow from operating activities

2013

2012



E’000

E’000

Operating profit

27,942 20,854

Depreciation

18,091 17,211

Difference between current service pension cost and payments made

(180) (690)

Capital grants credit

(1,361) (1,067)

Goodwill and other intangible asset amortisation

1,359 1,381

Cash related to business terminations and restructuring

(602) (1,294)

Increase in stocks

(20,945) (3,274)

Increase in debtors

(16,666) (1,693)

Increase in creditors

25,550 1,287

Net cash inflow from operating activities

33,188 32,715

25 Returns on investments and servicing of finance

2013

2012



E’000

E’000

Interest received

57 48

Interest paid

(4,399) (4,795)



(4,342)

(4,747)

26 Capital expenditure and financial investment

2013

2012



E’000

E’000

Payments to acquire tangible fixed assets

(32,142)

(22,518)

Payments to acquire financial fixed assets

(3,885)

(5,047)

Receipts on disposal of fixed assets Receipts on disposals of financial fixed assets Capital grants

28

112

4,483

5,664

-

6,033

(31,516)

(15,756)

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Notes to financial statements 27 Management of liquid resources

2013

2012



E’000

E’000

Redemption of loan stock - Note 23

(534)

(610)

25

315

Loan notes

1,544

-

Revolving fund

3,586 -



4,621 (295)

Advances received for members’ loan notes

28 Financing

2013

2012



E’000

E’000

Issue of share capital

1,817 33

Redemption of shares

(1,077) (884)

Redemption of convertible stock

(2) (2) 738

(853)

29 Financial commitments Future investments and capital expenditure approved by the Board and not provided for in these financial statements amounted to €10,631,000 (2012: €7,620,000). At 31 December 2013, there were forward open foreign exchange contracts of approximately €2.5 million (2012: €3.1 million), on which there was an unrealised foreign exchange loss of €nil based on sales made in 2013 (2012: gain of €26,000 relating to 2012 sales) and a loss of €21,000 on 2014 related sales (2012: gain of €93,000 relating to 2013 sales).

30 Related party transactions The Group’s related parties, as defined by Financial Reporting Standard No. 8, Related Party Disclosures, the nature of the relationships and the extent of transactions with them are summarised below. The Group views key management personnel, directors and companies controlled by them, associate undertakings and non-wholly owned subsidiaries as related parties under the standard. The Society purchases goods and services from its joint ventures and associates and sells goods and services to its joint ventures and associates on standard commercial terms. The purchases from and sales to the joint ventures and associates during 2013 amounted to €10,223,000 (2012: €9,381,000) and €3,909,000 (2012: €5,043,000) respectively. The trading balances outstanding by and to the Society amounted to €661,000 (2012: €213,000) and €440,000 (2012: €123,000) respectively at the year end. The Society has provided a loan of €435,000 (2012: €85,000) to its joint venture, The Malting Company of Ireland. The Society purchases and sells goods and services from and to a non-wholly owned subsidiary, Munster Cattle Breeding Group Limited and its subsidiaries, on standard commercial terms. During 2013 the purchases from and sales to Munster Cattle Breeding Group Limited amounted to €7,000 (2012: €12,000) and €486,000 (2012: €475,000) respectively. The trading balance outstanding to the Society amounted to €41,000 (2012: €14,000) at the year end. On the establishment of this venture, the Society provided a loan of €1,320,000 to its non-wholly owned subsidiary, of which €660,000 was repaid in 2012, with the balance of €660,000 paid in 2013. In the ordinary course of business, some key management and directors, in their capacity as farmers and/or directors of trading companies are involved in trade with the Society on standard commercial terms. The aggregate level of purchases from and sales to these related parties during the year amounted to €1,852,000 (2012: €1,313,000) and €3,452,000 (2012: €3,470,000) respectively. The trading balances outstanding to the Society at the year end were €411,000 (2012: €278,000). No specific reserve has been required in 2013 (2012: nil) for bad or doubtful debts in respect of amounts owed by key management or directors and companies controlled by them.

45

46

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Notes to financial statements 30 Related party transactions (continued) Directors of the Society, in aggregate, contributed €108,000 (2012: nil) to loan notes and had deductions of €20,000 (2012: nil) made in respect of the revolving fund, both inclusive of accrued interest.



Reox Holdings plc During the year the Society and Reox Holdings plc (Reox) had a number of commercial arrangements. These are summarised below: i)

The Society has guaranteed lease obligations in respect of certain former subsidiaries of Reox. Reox has indemnified the Society for any costs that might arise in respect of those obligations.

ii) The Society supplies electricity to certain properties owned by Reox. All charges for supply of such electricity are based on arm’s length commercial terms. Reox owed the Society €16 million as at 31 December 2013 (2012: €16 million) in unsecured loan notes. The details of the terms and conditions and the repayment timeline of these loan notes are set out in Note 10. These loan notes were redeemed as part of a “Debt for Asset” transaction which was completed post year end on 31 March 2014 (See Note 34 – Post Balance Sheet Events).

31 Contingent liabilities Sales to the Irish Dairy Board are based on “on account” prices and are subject to adjustment when the prices are finally agreed. Provision is made as and when required for future deficits in the product categories. The Society has guaranteed the liabilities (as defined in Section 5 (c) (iii) of the Companies (Amendment) Act, 1986) for the financial year ended 31 December 2013 of its Irish subsidiaries and as a result they are exempted from filing their individual accounts under the provisions of Section 17 of the Companies (Amendment) Act, 1986. Grants of €13,645,000 (2012: €13,919,000) which have been received under agreements between the Society, its subsidiaries, Enterprise Ireland and the European Agricultural Guidance and Guarantee Fund may become repayable should certain circumstances set out in the agreements occur.

32 Securities and guarantees The Society has entered into bank guarantees on behalf of its subsidiaries. The amounts guaranteed at the balance sheet date were €61,376,000 (2012: €64,586,000) and they are secured by fixed and floating charges on the assets of the Society and its subsidiaries. The following liabilities disclosed under creditors falling due within one year are secured by the Society:

2013

2012



E’000

E’000

1,376

17,586

Invoice discounting

The invoice discounting facility of €60 million is secured on certain trade debtors. All debtor values are shown in the balance sheet at their gross value.

33 Restatement of comparatives Certain prior year figures included within the balance sheet account and related notes have been reclassified to ensure comparability with the current year presentation.

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Notes to financial statements 34 Post balance sheet events

Reox Holdings plc On 31 March 2014, the Society completed an “Debt for Asset” transaction with Reox Holdings plc. Dairygold acquired the Reox property assets with a net book value of €23.9 million in return for, releasing both a €16.0 million loan note and the indemnity associated with certain legacy property related liabilities, plus a cash payment of €0.5 million from Dairygold to Reox.

35 Principal operating subsidiaries, joint ventures and associates Subsidiaries Country of Incorporation

% Holding

Activity

Agricola Properties Limited

100.0%

Property

Ireland

Dairygold Agri Business Limited Ireland 100.0%

Procuring, distribution and retailing of agri and non agri supplies and farm inputs

Dairygold Deutschland Handlesgesellschaft mbH

Germany

100.0%

Sales & distribution

Dairygold Finance Limited

Ireland

100.0%

Finance company

Dairygold Food Ingredients Limited

Ireland

100.0%

Dairy ingredients

Dairygold Food Ingredients (U.K.) Limited

U.K.

100.0%

Dairy ingredients

Dairygold Food Ingredients (France) SAS

France

100.0%

Dairy ingredients

Munster Cattle Breeding Group Limited

Ireland

66.0%

AI and Farm services

Watfore Limited

Ireland

100.0%

Property

Joint Ventures Country of Incorporation

% Holding

Activity

Co-Operative Animal Health Limited

50.0%

Farm services

Ireland

The Malting Company of Ireland Limited Ireland 50.0% Malting Associates Country of Incorporation % Holding Activity National Cattle Breeding Centre Limited

Ireland

20.0%

AI services

Reox Holdings plc

Ireland

26.1%

Holding company

The Companies and Societies operate principally in the countries of incorporation. Only the principal operating subsidiaries are listed above. The names and addresses of the registered offices of all the subsidiaries and associates are available from the Secretary of Dairygold Co-Operative Society Limited.

36 Approval of financial statements The financial statements were approved by the Board of Directors on 31 March 2014.

47

48

Dairygold Co-Operative Society Limited Annual Report and Accounts 2013

Five year historical information Five year profit and loss account



2013

2012

2011



E’000

E’000

E’000

TURNOVER Core activities Share trading OPERATING PROFIT Share of joint ventures Share of associates

847,407

27,322 20,559 22,579 18,926 11,772 620 295 (415) 7,310 1,687 27,942 20,854 22,164 26,236 13,459 (118) - - - 54

(12) 999 (7,514) (1,044)

Exceptional items

1,841 (1,841)

(1,952) (2,151) (841)

PROFIT before taxation

27,767

Taxation

(2,145)

PROFIT after taxation

25,622

PROFIT for the financial year

E’000

731,233 757,833 693,559 555,175

Net interest payable

Minority interest

2010 2009 E’000

(424) 25,198

-

(18) (1,019) (419)

(950)

16,850 22,322 18,285 10,446 (2,494) (577) (1,177) (875) 14,356 21,745 17,108 9,571 (602) (578) (352) (258) 13,754 21,167 16,756 9,313

Share interest (1,163) (1,179) (1,205) (1,233) (1,238) RETAINED PROFIT

24,035

12,575 19,962 15,523 8,075

Five year balance sheet

2013

2012

2011



E’000

E’000

E’000

2010 2009 E’000

E’000

Net Assets Employed: Fixed assets

239,484 220,622 224,551 192,718 209,039

Stocks

109,515 88,570 85,296 86,853 73,086

Debtors

120,386 100,633 96,407 105,801 98,963

Creditors

(129,472) (92,419) (93,627) (92,808) (85,826)

Net Debt

(60,914) (56,832) (67,242) (62,332) (77,886)

Capital grants Deferred taxation liability Pension asset

(8,257) (9,618) (4,652) (5,492) (6,311) (128) (1,117) (779)

(364)

(441)

3,230 1,427 4,346 16,913 10,100 273,844 251,266 244,300 241,289 220,724

Financed by: Shareholders’ funds Minority interest CAPITAL EMPLOYED

271,254 249,100 242,736 240,303 220,090 2,590 2,166 1,564

986

634

273,844 251,266 244,300 241,289 220,724

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