For the period ended 27 December 2014
The Directors submit their report together with the audited financial statements for the period ended 27 December 2014.
The Directors are responsible for preparing the Directors’ Report and the financial statements in accordance with Irish law and regulations.
Irish law requires the directors to prepare financial statements for each financial period giving a true and fair view of the state of the Society’s affairs at the end of the financial period and of its profit or loss for the financial period. Under that law the Directors have elected to prepare the financial statements in accordance with Generally Accepted Accounting Practice in Ireland (accounting standards issued by the Financial Reporting Council and promulgated by the Institute of Chartered Accountants in Ireland and Irish law).
In preparing these financial statements, the Directors are required to:
The Directors are responsible for keeping proper books of account that disclose with reasonable accuracy at any time the financial position of the Society and enable them to ensure that the financial statements have been properly prepared in accordance with the requirements of the Industrial and Provident Societies Act, 1893 to 1978. They are also responsible for safeguarding the assets of the Society and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Society’s website. Legislation in Ireland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The Directors, through the use of appropriate procedures and systems and the employment of competent persons, have ensured that measures are in place to secure compliance with the Group’s obligation to keep proper books of account. The books of the Company are kept at the registered office of the Parent Society.
The Directors, after making enquiries, have a reasonable expectation that the Group has adequate resources to continue operating for the foreseeable future. For this reason, the going concern basis continues to be adopted in preparing the financial statements.
The Group is engaged in the purchase, marketing, and sale of consumer dairy products and dairy food ingredients worldwide through its subsidiaries and extensive network of agents and distributors. Consumer dairy products are marketed primarily under the Kerrygold, Pilgrims Choice, Kerrygold Dubliner, MU and Beo brands and the Consumer Foods division’s activities are supported by cheese packing facilities in the UK and butter packing facilities in Germany. The Dairy Trading & Ingredients division sells and trades products across the globe and its facilities include powder blending and packing in the UK and ingredient cheese processing in Spain, the UK and US.
The Group owns a speciality food distribution network in the US offering refrigerated, frozen and dry food distribution to both local and national food retailers. The network consists of four operating divisions each with their own marketing, sales, warehousing and distribution facilities.
The Group reported a Turnover of over €2.34 billion in 2014, up 10% year-on-year and a very strong Operating Surplus of €30.3 million, up 17% on prior year. The strong operating performance enabled a €12 million bonus to be declared to members, included in this was a cash bonus of €7.5 million, up 15% on the previous year. These strong results built on the excellent performance in 2013.
The Group closed the year with a very strong Balance Sheet, with net assets of €436 million. As part of the drive to increase capacity in advance of the removal of quotas, major capital expenditure and working capital investments were made across our key markets. As a result of this the Group ended the year with net debt of €99.3 million but the significant investments made leave the Group well placed for the post-quota environment.
Access to capital allowing the flexibility and strength to invest in the future of the business is essential to its strategy for growth. In March of 2014, IDB secured a new five year syndicated bank facility of €420 million, replacing its existing three year €350 million syndicated bank facility. These new syndicated five year facilities comprise a financing agreement with facilities available of €165 million and a RID facility with committed facilities of €200 million, stepping up to €255 million over the period of the facility. These new increased facilities were significantly over-subscribed and provide IDB and the Irish dairy industry with significant funds to meet domestic expansion and international growth requirements.
The Group’s Consumer Foods division reported a solid result for 2014, with all markets contributing well despite the ongoing challenges faced by customers. Continued investments in brand growth and NPD have strengthened the position and offering of Kerrygold and our other brands such as Pilgrims Choice and Kerrygold Dubliner. 2014 was a year which saw some large-scale NPD projects reach fruition and be successfully launched in international markets.
The Dairy Trading & Ingredients division reported a solid trading performance for 2014, with strong growth in volume, Turnover and Operating Surplus. The Republic of Ireland and US Food Ingredients businesses continued to perform strongly. The UK market had a challenging year; however DTI UK returned a solid performance. The year’s highlights included the opening of a new state-of-the-art facility at the Hilbert site, Wisconsin, the acquisition of a Spanish cheese business and FoodTec in the UK.
DPI, IDB’s US based speciality food distributor, continued to grow sales in 2014, by both winning new customer contracts and solid year-on-year growth. In 2014 Turnover was up 9.1% with DPI clearly maintaining its place as the third largest US distributor of speciality foods to the retail sector. The review of operations completed by management in 2013 delivered for the business in 2014 with increased profitability reported.
The Group’s Business Transformation Strategy is deeply embedded across the business and is successfully delivering real, measureable results.
Key operational highlights from 2014 were:
The Group has made significant investment across the business over the past few years as it prepares to take advantage of the opportunities the post quota environment will bring. The Group will continue to invest in its people, develop new products and build and enhance routes to market ensuring its role in driving the growth potential of the Irish dairy sector.
Innovation has played a critical role in the Group’s success over recent years. The NPD team has made great progress in developing innovative branded and ingredients products to meet consumer and customer needs across global markets. The Group will continue to invest its consumer and market insight capabilities to drive its growth plan.
It is the policy of the Group to ensure the safety, health and welfare of its staff, contractors and members of the public by ensuring that each Group site operates in full conformance with local legislative requirements and that appropriate policies and practices are in place to ensure safety in the workplace.
A list of the significant trading subsidiary companies is included in Note 34 to the financial statements.
The Directors and Secretary and their families had no interests in the shares of the Parent Society or any other Group company at any time during the period.
The Group did not make any political donations during the year (2013: nil).
The rules of the Society provide that the Auditor shall be appointed at the Annual General Meeting. The incumbent Auditor is eligible for reappointment.
There have been no significant events since the period end which require disclosure in the financial statements.
|Aaron Forde(i) (ii) (iii) (iv)||Chairman||Aurivo Co-operative Society Limited|
|Jim Russell(i) (ii) (iii) (iv)||Vice Chairman||Irish Co-operative Society Limited|
|Jim Bergin(iii) (iv)||Glanbia Ingredients Ireland Limited|
|John Comer(iv)||Appointed June 2014||Irish Creamery Milk Suppliers Association|
|Michael Hanley(i)||Co-opted July 2014||Lakeland Dairies Co-operative Limited|
|Martin Keane(i)||Appointed June 2014||Glanbia Co-operative Society Limited|
|Dan MacSweeney(ii) (iv)||Carbery Food Ingredients Limited|
|Ted O’Connor(iii)||Tipperary Co-operative Creamery Limited|
|Bertie O’Leary(ii)||Dairygold Co-operative Society Limited|
|Conor Ryan(ii)||Arrabawn Co-operative Society Limited|
|Donal Tobin(i) (iii)||Chairman of the Audit Sub-Committee /Appointed June 2014||Carbery Food Ingredients Limited|
|Sean O’Leary(i)||Appointed June 2014||Irish Farmers Association|
|Pat Sheahan(ii)||Appointed June 2014||Electoral Area|
|Jim Woulfe(iii) (iv)||Chairman of the Personnel and
|Dairygold Co-operative Society Limited|
|Jackie Cahill||Resigned June 2014||Irish Creamery Milk Suppliers Association|
|Vincent Gilhawley||Resigned June 2014||Town of Monaghan Co-operative Limited|
|Liam Herlihy||Resigned June 2014||Glanbia Co-operative Society Limited|
|Kevin Kiersey||Resigned June 2014||Irish Farmers Association|
|Sean McAuliffe||Resigned June 2014||Electoral Area C|
|John O’Brien||Resigned June 2014||Electoral Area B|
(i) Member of the Audit Sub-Committee
(ii) Member of the Rules Sub-Committee
(iii) Member of the Personnel and Remuneration Sub-Committee
(iv) Member of the Acquisitions and Investment Sub-Committee
|On behalf of the board of Directors|
|Aaron Forde||Donal Tobin|
|10 March 2015|