Annual Report 2009 - Dairygold

The Natural Source of Quality
Dairygold Co-operative Society Limited
Annual Report and Accounts 2009
Dairygold Co-operative Society Limited
Annual Report and Accounts

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
Contents
CHAIRMAN’S STATEMENT 5
CHIEF EXECUTIVE’S REVIEW 9
FINANCIAL OVERVIEW 15
DIRECTORS, COMMITTEES AND OTHER INFORMATION 19
STATEMENT OF BOARD RESPONSIBILITIES 24
INDEPENDENT AUDITOR’S REPORT 25
Consolidated Profit and LOss Account 26
Consolidated Balance sheet 27
Consolidated Cash Flow STATEMENT 28
Consolidated STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 29
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS’ FUNDS 29
STATEMENT OF ACCOUNTING POLICIES 30
NOTES TO FINANCIAL STATEMENTS 32
FIVE YEAR HISTORICAL INFORMATION 50
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Dairygold Co-Operative Society Limited Annual Report and Accounts 2009

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
Chairman’s
Statement
In economic terms, 2009 was certainly one of the most challenging
years in living memory and as a sector, agriculture was badly hit.
In economic terms, 2009 was certainly
one of the most challenging years
in living memory and as a sector,
agriculture was badly hit. The farming
community was already reeling from
the near collapse in world prices which
had occurred during the previous
twelve months and then had to contend
with further price falls, resulting from
weakening demand.
A third consecutive poor summer and a
late harvest exacerbated an already very
difficult situation and placed all farmers
and rural communities under severe
pressure.
The Society has emerged from 2009 in
a stronger position having managed to
improve its overall profitability during
the year whilst still lifting the milk price
in September at the earliest sign of a
possible recovery in market returns.
It is our role to supply farm inputs at
least possible cost, to process our
Members’ milk efficiently and to offer the
highest price possible consistent with
achieving a commensurate return in the
dairy marketplace.
Dr. Anthony Crudden -
in Dairygold's Innovation Centre
“The Society
has emerged
from 2009
in a stronger
position”
For the dairy industry, with the milk
price at a 25 year low and limited EU
supports, 2009 was certainly among
the worst years on record. No industry
could experience such precipitous price
falls and not experience a crisis but the
problems besetting the dairy sector
were compounded as the crisis in Irish
and international banking restricted
credit availability and credit insurance.
Uncertainty is the only constant we can
look forward to in the near term.
I am pleased to state that your Society
responded to these challenges and
despite the extraordinarily difficult
environment it delivered on its financial
targets. It brought to fruition important
capital projects and successfully
concluded the acquisition of the
Solailoire cheese business in France and
the acquisition from Reox Holdings plc of
seven 4HOME Stores, now rebranded as
Co-Op Superstores.
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Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
Milk Price
Dairygold is fortunate to be among the
most efficient dairy processors in the
country, nevertheless no one can defend
the milk price levels which farmers were
forced to accept during 2009. The fact
remains that no other industry sector
or group of people has been asked to
accept prices or rates of pay less than
they received three decades ago. It is
no consolation whatsoever to any dairy
farmer to know that the events which
have conspired to create this situation
are completely beyond either their
control, or that of their processors.
I am pleased to say that we are seeing
the first sign of an upturn in world
markets, but a note of caution should
be sounded here. These are just early
signs and while encouraging, are by no
means an indication that the market is
going to quickly return to acceptable and
sustainable price levels for producers.
Despite this continuing uncertainty, we
still took the lead in the Irish dairy sector
and have increased the milk price by 4.7
cent per litre between September 2009
and February 2010.
This was in line with our duty and
responsibility as a Co-Operative Society
to deliver the best prices possible to our
Member suppliers.
It has to be acknowledged that this is
of little comfort when it is seen in the
context of the price reductions which
preceded it. On the other hand it is at
least a move in the right direction and
a move which shows Dairygold’s desire
to return the maximum to our farmers
within the constraints of market returns,
financial investments and financial
commitments.
2009 saw the successful introduction of
the new A+B-c milk payment system.
This has helped shift the financial
reward in favour of the milk suppliers
who supply high milk solids. Under this
system, suppliers are paid on the basis
of the kgs of protein (A) and butterfat
(B) produced, less a volume adjustment
(c). This gives a greater reward to those
suppliers with high milk solids as it costs
less to transport and process than milk
with lower milk solids equivalent.
If we are to sustain the upward trend in
milk price and take full advantage of any
upturn in markets we must continue our
drive for greater levels of efficiency.
There is little point in adding value to
milk if that value is eaten up by inefficient
processing. Our goal is to continue to
pay a leading milk price and to remain
competitive through our own efficiency
and maximising market opportunities.
Looking at Dairygold’s core milk
business we have to recognise that
our future does not solely lie in being a
commodities business at the whim of
global market forces beyond our control.
The future will see increased production
of milk in Ireland and in our competitor
countries and therefore one where the
focus must be squarely on value added.
Our strategy is to optimise commercial
returns through maximising our product
mix, developing the most efficient
routes to market and investing in tightly
focused research and development, with
Dairygold Food Ingredients as a centre of
dairy processing excellence.
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Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
The Industry on a
National Scale
The industry debate currently taking place
on the rationalisation of the Irish dairy
processing and commercial sectors remains
an issue for all involved. Dairygold has long
been at the forefront of rationalisation efforts
and indeed was founded out of the merger
of two of Munster’s leading dairy Co-Ops.
This is a never-ending journey and we are
constantly striving for greater efficiencies
and economies of scale.
In this context Dairygold is always open and
willing to explore all relevant and appropriate
options for operational and commercial
improvements and we are currently active
participants in the ICOS ‘Milk Ireland’
discussions. Dairygold has also established
an in-house team to analyse how we might
best progress the ongoing development of
the business to the benefit of Members.
We will not enter into any co-operation or
further co-processing arrangements unless
we are fully convinced that they will deliver
value to Dairygold suppliers in terms of
a higher milk price. Our guiding principle
when seeking efficiency improvements and
cost reductions has always been to pass the
benefit on to our Members and suppliers and
this will remain the case.
Milk Testing
An ICOS initiative to establish a
centralised milk testing laboratory had
the potential to deliver benefits to dairy
farmers throughout Ireland. It was
planned that this facility would provide
testing services for eight Co-Ops with
more than 7,000 milk suppliers.
Dairygold supported the proposal
which unfortunately failed to attract
the industry consensus required
to proceed. While it is unfortunate
that this industry initiative was not
achieved, you can be assured that
Dairygold’s own milk testing facility
continues to operate to the highest
standards.
In addition, the Dairygold milk
testing laboratory is undergoing
an independent accreditation
process which your Board believes
is a necessary enhancement going
forward. It will also be expanded
to cater for extra milk testing and
various disease testing. The inclusion
of disease testing is seen as key to
assisting farmers in their individual
herd health programmes.
Grain
Grain growers had one of the most
challenging years in living memory.
Difficult weather conditions saw yield
significantly down in Ireland and a
collapse in grain prices worldwide.
These and other factors combined
to decimate the profitability of the
enterprise at farm level. Dairygold
offered growers the opportunity to
supply the grain for drying and storage
whilst retaining ownership until sold at
a later date in the expectation of higher
market returns prevailing. Present
indicators are for a challenging year
for growers in 2010 based on trends in
the futures market.
Board and
Management
I would like to note a change to your
Board of Directors. Mr. Terence
O’Donnell retired at the end of the year
by rotational retirement. I would like
to thank Terence for his contribution
and commitment to the Society and
the Board during his tenure and for his
assistance to me over the years.
I would like to formally welcome Mr. Tom
Feeney to the Board and I look forward to
Tom’s contribution and working with him.
I wish to thank the management and staff of
the Society for their work and commitment
over the last year and to place on record
my gratitude for their help and support,
in particular during the periods of change
in the CEO position. I wish to express the
gratitude of the entire Board to Interim
Chief Executive Mr. Michael Harte who took
the reins for six months and guided the
business safely through a difficult period.
On that note I formally congratulate Mr.
Jim Woulfe on his appointment as Chief
Executive of the Society and acknowledge
his commitment and achievements since
taking up office. I wish him all the very best
for the future as he continues in his task
of leading Dairygold through the current
challenging environment.
Conclusion
My Board colleagues and I fully understand
and appreciate the difficult situation
prevailing at farm level resulting from low
produce prices. We have worked through
what has been a most difficult year for all
concerned. We are presently seeing an
improvement in dairy market returns and
are cautiously optimistic for the future.
Whilst many businesses have been
impacted by the recent economic turmoil,
our business is still fundamentally sound
with a strong and united management team
in place.
The Board and management recognise
the future milk processing challenges
and is focused on delivering a sustainable
business performance that will allow
the business develop and grow in order
to return to our producers a strong and
competitive milk and grain price.
I wish to acknowledge and thank you for
your continued support of our Society.
Your custom and business are greatly
appreciated and are vital for the continued
success of the organisation.
Vincent Buckley
Chairman
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Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
Svitlana Binns, Dairygold Food Ingredient’s Marketing Manager
in the Food Tasting Kitchen in Dairygold’s Innovation Centre
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Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
Chief Executive’s
Review
The market environment for Dairygold and its various operations
remained extremely challenging throughout 2009.
“all divisions
of the business
made a positive
contribution to
the bottom line”
The slump in returns from world dairy
markets combined with the ongoing
turmoil in financial markets created
what has probably been the most difficult
operating climate in our history.
Despite these difficulties, Dairygold
delivered retained profit for the 2009
financial year of €8.1 million on a
turnover of €555 million. I’m pleased
to be in a position to report that all
divisions of the business made a positive
contribution towards the bottom line.
The 2009 profit was delivered against
a backdrop of borrowings increasing
by €9.7 million on 2008 to €77.9
million. This increase in borrowings
was necessary to fund the increase in
farmer debtors, capital investment in the
business and the acquisition of seven
4HOME stores and a small industrial
cheese business in France.
Dairygold has significant borrowings and
requires a defined level of profitability
to secure the support of our bankers
for the ongoing financing of the
business. The current phase of our Dairy
capital investment programme is now
largely complete and our borrowing
requirements should be reduced over the
coming years from the performance of
our existing activities.
As a Co-Op we were disappointed with
the returns available for our Members’
milk. While cognisant of the low returns
from international markets and our
requirement to fulfil our financial
obligations, Dairygold nonetheless lifted
the milk price paid to Members at the
first available opportunity.
True to our Co-Operative ethos, Dairygold
raised its milk price in response to early
signs of some recovery in world prices
which began to emerge in the latter part
of the year.
On the efficiency side, payroll savings
of some €3 million were achieved over
the course of the year through the
implementation of a number of initiatives
including, among others, a pay freeze
across the Society, a 40% cut in variable
pay and a base salary reduction for
senior management, strict control of
overtime, a reduction in temporary and
contract work and some 35 redundancies.
Further operational efficiencies were
achieved including a re-alignment of work
practices.
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Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
Management
I was appointed Chief Executive in July
2009 and I feel privileged to have been
selected by the Board to take on this
role of responsibility within the Society,
only the third to do so since Dairygold’s
establishment through merger in 1990.
I would like to thank the Board for its
ongoing encouragement and support
during my tenure to-date as Chief
Executive.
I accepted the position knowing full well
the challenges that lay ahead. Dairygold’s
success is largely reliant on international
market factors outside of our control. I
am confident that the new management
team with its skillset and the organisation
structure put in place will help ensure
that the hard work required to succeed is
delivered.
The new structure will see each person
take full responsibility for their functional
areas across our entire business both in
Ireland and overseas where applicable. The
changes are also designed to facilitate clear
lines of responsibility and accountability
while creating a single point of ownership
and focus on growing the business.
ERP
In 2009 the Society successfully
implemented an integrated business
information system, covering all Financial,
Sales, Procurement, Inventory, Payroll,
Point of Sale, Milk Management and
Share Management activities for its Irish
operations. The new business information
system provides management with
enhanced capability to optimise the
performance of the business.
Dairy Markets
For all dairy processing businesses
the continuing slump in returns from
international dairy markets presents
the most severe of challenges. The well
documented fall in international demand
for dairy produce resulted in milk price
returns being forced down to 25 year
lows for most of 2009.
The supply side is now slowly correcting
itself with production easing back in
most geographies. The EU will be under
quota by as much as 5% in this current
quota year to March 2010. The global
demand for dairy produce remains weak,
as buyers are slow to commit to longer
term contracts or to invest in stocks.
Underpinning all expectations for a
sustained recovery in dairy prices
is the expectation of some form of
economic recovery globally. Consumer
confidence will not return without it.
Despite all of these factors, Dairygold
remains cautiously optimistic about an
improvement in market returns in 2010.
As a Co-Op, milk price is at the core of
our commitment to Members and we will
continue to strive to pay the best milk
price possible within prevailing market
conditions.
Dairygold Food
Ingredients
Dairygold’s strategy in milk utilisation is
to follow the European model by directing
more milk away from butterfat and
towards cheese and added value dairy
ingredients, both products which are
on the growth curve globally. Our dairy
processing business, Dairygold Food
Ingredients, is now firmly focussed on
providing cheese and dairy ingredient
solutions to the international food
processing, baby food and ready meals
sectors.
Over the past number of years we
have invested in modernising plant
and operations to target these product
areas and provide greater flexibility in
manufacturing customised products to
deliver on individual customer needs.
These investments have put Dairygold in
a very strong position to compete for an
increased share of these markets.
In our ingredients business the
Castlefarm, Mitchelstown site has
one of the largest demineralised whey
manufacturing plants in Europe and is the
foundation for Dairygold’s focus on the
premium Baby Food market. The delivery
of this strategy was made possible by
significant investment in the Castlefarm
facility.
Our ingredients business has a particular
focus on the infant milk formula sector
and Dairygold has developed strong
commercial relationships with a number
of key players. The business is developing
a foothold in the Asian market where
there is significant growth potential. In
China alone some 18 million babies are
born each year - more than the total born
each year in Europe and the Americas
combined.
In our cheese business the Clonmel
Road, Mitchelstown site has one of the
most efficient cheddar cheese plants in
Britain and Ireland whilst our Mogeely
site remains a dedicated producer of
speciality cheeses for export, including
the leading brands Jarlsberg and Regato.
Meanwhile our Mallow site continues to
provide the additional capacity needed to
manage peak milk intake and ingredient
processing during the summer season.
In the UK, our Dairygold Food Ingredients
businesses, based in Leeds and in
Crewe, are both profitable and growing
businesses. They have established
Dairygold as a leading supplier of a
range of formatted cheeses and soft
cheeses to the UK’s Ready Meals and
Food Manufacturing sectors. Following an
investment programme at both facilities
during 2009, the manufacturing capability
now exists to meet significant increases
in demand from their industrial customer
base over the coming years.
In September, Dairygold acquired
the French based cheese ingredients
supplier, Solailoire. The company, based
near Nantes, offers customised cheese
solutions to industrial customers in
the ready meals and snack sectors.
The acquisition provides Dairygold
with access to the French and broader
European markets while the technology
allows us to extend our overall value
added product offering.
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Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
Ms Andrea Coleman - in Dairygold’s
Centralised Product Testing Laboratory
The acquisition, coupled with our existing
commercial operations based in Germany
and Spain will help Dairygold in realising
its ambition of replicating and extending
our successful UK cheese solutions
business in the wider European market.
Dairygold Food Ingredients in the UK,
Dairygold Germany and now Solailoire in
France are examples of modest but very
successful businesses that are utilising
Dairygold’s expertise in cheese to find
higher value sales avenues. They are
helping to strengthen and consolidate our
relationship with all the leading operators
in the Ready Meals and broader Food
Manufacturing sectors. These businesses
are also benefiting from the support and
skillset offered by Dairygold’s Innovation
Centre in Mitchelstown, in terms of
Product and Process Re-engineering,
Research and Development and New
Product Development.
2009 represented the first full year of
operation for our new Innovation Centre
in Mitchelstown. The Centre is focussing
on the development of new solutions for
our Food Ingredients business and its
industrial customers. The Centre is also
active in industry collaboration, working
with Enterprise Ireland’s Food Health
Ireland initiative, involving four dairy
processors, Teagasc, and a number of
universities.
Overall, the level of efficiency of our
dairy processing division combined
with our clear strategy to drive higher
value sales has enabled Dairygold
Food Ingredients to maintain its
performance in what has been one of
the worst years for the dairy industry.
We recognise that there is scope at
industry level for further improvement
in the Irish dairy processing and
marketing sectors. Your Board and
management team is conscious
of this challenge and any proposal
that can deliver improved returns to
our Members will be given serious
evaluation and consideration.
Dairygold Agri Operations
The operating environment for Dairygold
Agri remained challenging during the year.
2009 marked the third consecutive year of
extremely unfavourable weather conditions
for farmers and the Society worked hard to
lessen the impact of this on Members in a
number of ways.
During the year Dairygold Agri made a
particular effort to offset the volatility in
international fertiliser prices through its
management of purchasing and stocking
arrangements. This deliberate strategy
combined with price reductions in the latter
part of the year enabled us to close the year
in a very competitive position.
In June, Dairygold took account of the
very unfavourable weather conditions and
gave our customers a rebate on dairy feed
purchases to the value of €400,000 in order
to support their milk production operations
at this critical time of the year for dairy
farming.
The tough conditions for dairy farming
created feeding challenges at farm level.
Recognising this issue, Dairygold Agri
expanded its feed range to offer greater
flexibility and choice. The feed range
available over the year covered the full
spectrum of product specification and
price. This allowed our customers the
flexibility to make the feed investment
decisions that best suited their individual
farming operations knowing that there was
no compromise on product quality.
On a like-for-like basis Dairygold’s
feed prices remained very competitive
throughout the year, maintaining good
throughputs in the feed mills.
Dairygold Agri exists to service our
farming Members’ needs. To fulfil this
objective the management team is
focussed on constantly driving out cost
and consolidating the business in a highly
competitive and shrinking market. The
strategy also seeks to maintain a modest
operating profit that will allow the operation
to remain an asset to our farmer Members
into the future. With that in mind we
would encourage all Members to support
the business. In doing so, you will help
us achieve our aim to continue to grow
your Society’s position as the leading Agri
supplier in Munster.
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Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
Agri Retail -
Co-Op Superstores
As with our entire Agri business, the
Co-Op Superstores business provides an
important service to our Members. The
business priorities remain customers’
needs and improving operational efficiency
while retaining a modest profit to support
the ongoing development of the business.
The highlight of 2009 was the acquisition
of seven profitable and strategically
located 4HOME Superstores. These seven
stores traditionally have had a strong
affinity with our Dairygold customer base.
The acquisition will strengthen the Co-
Op Superstores brand, provide valuable
economies of scale and will be central to
any future rationalised structure.
The acquisition will help strengthen
the geographic structure with a strong
spine of stores now operating across
our catchment area which will allow us
to develop an optimal structure for the
future.
Munster AI
2009 was a defining year in cattle
breeding in that genomic selection of
bulls was finally adopted. This is an
important progression for the Dairy
industry as it faces into the post
quota era. Irish dairy farmers need
their animals to be the most efficient
converters of grass into milk solids.
The EBI evaluation process readily
identifies the best bulls and breeding
strategy to enable that to happen.
In that context Munster AI, in which
the Society has a 66% shareholding,
offers a very important service and
will play a central role in the Society’s
future milk production strategy.
Reox Holdings plc
Dairygold has a substantial
investment in Reox, so naturally
we are deeply interested in how
that business is performing. After
a particularly difficult year in 2009,
Reox is focussed on protecting
shareholders’ investment in the
current difficult economic climate.
Responsibility for the operation of
the business lies with the Board and
management of Reox Holdings plc.
Conclusion
As we close out on the 2009 financial year I want
to offer particular thanks to the Chairman and
Board members, management team and staff,
all of whom have given me great encouragement
and support for which I am grateful. Your Board
and management team are presiding over a
strong business which is meeting all of its
financial commitments. We are well positioned in
the market with a hard working and committed
team and good facilities to take advantage of the
opportunities that will most assuredly come
our way.
Looking forward, one of our key aims is to prepare
for the new quota-less world in which we will find
ourselves in the not too distant future. We would
encourage all milk suppliers and customers to
become Members of the Society so that we can
use our combined strength to prepare for the
future together.
Dairygold will continue to focus on high value
added market segments where the quality of our
raw materials and our innovation expertise can
give us real advantage.
Our business is fundamentally sound and stable
and stability is a good place to be at this time. We
await the inevitable recovery and are well placed to
survive the worst ravages of the current recession.
Jim Woulfe
Chief Executive
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Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
Operational Footprint-Dairy Business
Infant Nutrition and
Functional Powders
Mitchelstown
(Castlefarm)
Cheddar Cheese
Mitchelstown
(Clonmel Road)
Soft
Cheeses
Leeds
Ireland
Cheese
Formatting
Crewe
Dairy Powders
Mallow
United Kingdom
Germany
Speciality
Cheeses
Mogeely
DFI (Germany)
Mainz
France
DFI (France)
Nantes
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Dairygold Co-Operative Society Limited Annual Report and Accounts 2009

Dairygold Co-Operative Society Limited 2009 Annual Operations Report and and Financial Accounts Review 2009
Financial Overview
In 2009 Dairygold Co-Operative Society Limited generated an operating profit of €13.5
million of which €11.8m was generated from its core activities, with all the individual
businesses contributing to the performance.
2009 Key Financials
In 2009:
» Dairygold generated an
operating profit for the year
of €13.5 million - a profit of
€11.8 million on dairy (both
Ireland and overseas) and
agri-trading activities, with
a profit of €1.7 million from
share trading.
» Dairygold’s Shareholders’
Funds increased by €14.8
million from its 2008 position
of €205.3 million to €220.1
million.
» Dairygold’s Net debt position
increased from €68.2 million
to €77.9 million, an increase
of €9.7 million compared to its
2008 position.
» Dairygold invested a total of
€21.6 million of its cash in
capital expenditure (net of
grants) across the business
and in acquisitions, to meet
the future challenges of the
business.
Profit and Loss Account
» The turnover generated in 2009
decreased by €132.9 million versus
2008 from €688.1 million to €555.2
million. The decrease occurred
across the main business activities,
as dairy commodity product prices
fell significantly year on year as did
feed and fertiliser prices.
» The operating profit of €13.5 million
achieved in 2009 was an increase of
€11.2 million on 2008, an increase of
€12.3 million on core activities and
a reduction of €1.1 million on share
trading.
The increase in operating profit
from core activities was principally
attributable to the:
» performance of the individual
businesses which benefited
from the restructuring and
investment programmes over
recent years;
» achievement of significant
payroll reductions and lower
energy costs;
» re-alignment in the year of
milk and grain prices with
market returns, whereas in
2008 the Society supported
Members by paying milk
and grain prices in excess of
market returns.
» The share of associates’
performance before related
taxation was a loss of €1.0 million
in 2009 compared to a loss of
€1.9 million in 2008. The loss of
€1.0 million is driven primarily
by Dairygold’s share of the
performance of Reox Holdings plc.
» Net interest payable was €1.0
million. Net bank interest payable
of €4.3 million was offset by
RIBB interest of €2.5 million and
a finance credit of €0.8 million
relating to investment returns from
the pension schemes.
» The taxation charge for the year
of €0.9 million relates primarily
to share trading and overseas
subsidiaries.
» The profit for the financial year
was €9.3 million and the retained
profit was €8.1 million after paying
share interest of €1.2 million to
Members.
Balance Sheet
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Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
The Balance Sheet of the Society
strengthened in 2009 with shareholders
funds increasing by €14.8 million to
€220.1 million. The increase was driven
primarily by a retained profit for the
year of €8.1 million, an increase in the
pension asset of €7.4 million, the positive
impact of currency movements on net
investment of €2.6 million, a reduction in
share of associates reserve movements
of €2.1 million and shares redeemed of
€1.3 million.
» Fixed assets of €209.0 million
comprising tangible assets,
intangible assets and financial
assets, increased by €1.6 million,
from €207.4 million as a result of:
» investments of €19.3 million in
capital expenditure, acquisitions
and shares and the impact of
positive currency movements
of €1.2 million, which was
offset by:
» depreciation and amortisation
charges of €16.0 million and
a reduction in the share of
associates net assets of
€2.9 million.
» Net current assets less creditors
falling due after more than one year,
of €8.3 million were up €4.8 million
on 2008, explained by:
» a €12.3 million reduction
in stocks to €73.1 million,
reflecting lower prices and a
reduction in stock volumes.
» an increase in debtors of €2.6
million to €99.0 million.
» a reduction in total creditors
of €24.3 million, incorporating
a reduction in capital accruals
and trade creditors.
» an increase in net debt of €9.7
million, required to meet the
financing needs of the business.
» The net pension asset increased
by €7.4 million, resulting primarily
from gains of €5.3 million arising
from the withdrawal of Reox
Holdings plc as a participating
employer from the pension schemes
and an increase in the value of the
scheme’s assets over liabilities of
€2.2 million.
» The capital grants’ liability of €6.3
million was in line with 2008, as
the grants received during the
year of €0.8 million equalled the
amortisation credit for the year. The
deferred tax liability decreased by
€1.3 million reflecting the deferred
tax assets acquired during the year
as part of the acquisition activity.
» The share capital decreased by €0.4
million to €98.6 million reflecting
the shares redeemed and cancelled
of €1.4m offset by shares issued of
€1.0m.
» The revenue reserves increased
by €16.3 million to €113.4 million,
resulting primarily from the
increase in the net pension asset of
€7.4 million, the positive currency
movements of €2.6 million, a
reduction in share of associates’
reserves of €2.1 million and the
retained profit for the year of €8.1
million.
Scientist Haiyan Yu - working in
Dairygold’s Innovation Centre
16

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
Cash Flow
The cash out-flow of €7.5 million, the debt
acquired from acquisitions of €4.7 million
and the positive non cash movement of
€2.5 million are the key drivers of the
increase in net debt of €9.7 million to
€77.9 million.
The cash out-flow of €7.5 million results
from an EBITDA (Earnings Before Interest
Taxation Depreciation and Amortisation),
of €29.6 million, which was generated
from the business, adjusted for the actual
pension cost and was offset by:
» the investment in the business of
€23.6 million incorporating capital
expenditure, acquisitions, purchases
of investments, and restructuring
costs.
» increased working capital
requirements of €8.5 million.
» paying €5.1 million to cover net
finance costs, taxation and share
interest.
The increase in the net debt to €77.9
million was a consequence of the
continued investment in the business,
increased working capital requirements
incorporating the acquisitions and
increased dairy and agri debtors.
Pension Assets
In 2009, the Society and Reox Holdings
plc reached agreement in relation to the
future management and control of the
common pension schemes. It was agreed
that Reox Holdings plc would voluntarily
exit as a participating employer in the
pension schemes. As a result the Society
has assumed full responsibility for such
pension schemes.
On the basis of the Society taking on
the Reox Holdings plc share of funds, it
realised a gain of €5.3 million, based on
the FRS17 valuation at 31 December 2009.
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 €16.4 million (€25.70 per share) and
One51 plc. at €10.7 million (€2.80 per
share), which was carried on the Society
Balance Sheet at cost, of €9.6 million as at
31 December 2009.
During 2009, Dairygold Finance realised
€0.5 million from sales from its original
investment base and given the negligible
book value of these original shares, the
Society realised a profit equivalent to
the sales proceeds of these shares. In
addition, the Society traded €17.4 million
of shares during the period on which it
realised a profit of €1.2m, giving a total
operating profit on Share Trading of €1.7
million.
Reox Holdings plc
Dairygold has a 26.1% shareholding in
Reox Holdings plc, however a market
value is not available, due to the lack of
current market trading activity.
Dairygold’s 2009 balance sheet reflects
the following:
» its shareholding of €7.3 million,
based on its share of the net assets of
the company,
» the Redeemable Interest Bearing
Bond (“RIBB”) of €33.0 million, and
» €12.1m of other assets primarily
relating to the disposal of
Breeo Foods Limited, Property
Commitments and RIBB Interest
prepaid (payable in March 2010).
The Society decided, on reviewing its
overall investment in Reox Holdings plc,
to provide for some of this investment.
€6 million has been provided for due
to uncertainty about the timing of the
recoverability of these assets, reducing
the value of its investment by c. €3.5
million.
Conclusion
In summary, for 2009, the Society
in a very challenging environment,
which resulted in reduced returns
to Members and a higher debt
position, delivered a strong financial
performance.
In 2010, the Society will be focussed
on reducing the debt level, while
maximising returns to Members.
This will require an improved financial
performance in line with our 2010
targets.
17

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
Dairygold management team (l to r)
Tim Healy, Dairy Operations Director, Chris Edge, Dairy Commercial Director,
Sean O’Sullivan, General Manager Agri Operations, Eamonn Looney, Company Secretary,
Michael Harte, Chief Financial Officer, John O’Carroll, General Manager Agri Retail,
Declan Carville, Head of Human Resources, Jim Woulfe, Chief Executive.
18

Directors, Committees
and Other Information
19

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
Board of Directors and Officers
Seated left to right
John McKeogh
Patrick Healy
Bertie O’Leary (Vice Chairman)
Vincent Buckley (Chairman)
Jim Woulfe (Chief Executive)
Flor Riordan
Adrian Burke
Standing left to right
Thomas Feeney
Donal Buckley
John Malone
Eamonn Looney (Secretary)
John Hally
James Lynch
Patrick O’Keeffe
Chief Executive
Jim Woulfe
Secretary
Eamonn Looney
Registered Office
Clonmel Road, Mitchelstown,
Co. Cork.
Principal Bankers
Allied Irish Banks plc
Bank of Ireland
Ulster Bank
Auditors
Deloitte & Touche
No. 6 Lapps Quay, Cork.
20

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
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
The Audit Committee comprises Messrs
Adrian Burke (Chairman), John Hally,
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:
» 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, whether fees for
audit or non-audit services, and
ensuring that the level of fees is
appropriate to enable an adequate
audit to be conducted;
» 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 nonaudit
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.
21

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
Remuneration Committee
General Committee 2010
The Remuneration Committee comprises
Messrs John Malone (Chairman), Vincent
Buckley, Bertie O’Leary and Flor Riordan.
The role and responsibilities of the
Remuneration Committee are set out in its
written terms of reference. The principal
responsibilities of the Committee are:
Region 1
MALLOW - 13
Mr. Donal Buckley
Mr. Vincent Buckley
Mr. Ivor Dulohery
Region 3
MID-CORK - 14
Mr. Patrick Ahern
Mr. John Bernard
Mr. Donal Creedon
Region 6
CORK/EAST CORK - 8
Mr. Liam Lane
Mr. Edmond C. Lynch
Mr. Patrick Millerick
» 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
salary, 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.
Mr. Patrick Fleming
Mr. Liam Foley
Mr. John Hedigan
Mr. Tim Leader
Mr. Timothy McSweeney
Mr. Damian Murphy
Mr. Noel O’Keeffe
Mr. Thomas O’Regan
Mr. Donal Shinnick
Mr. Peter Twomey
Region 2
MITCHELSTOWN - 10
Mr. Patrick Clancy
Mr. Thomas G. Coffey
Mr. John W. Coughlan
Mr. Robert Drake
Mr. Thomas Feeney
Mr. Michael Gowen
Mr. Jerome Desmond
Mr. Patrick Healy
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. Bertie O’Leary
Mr. Cornelius O’Riordan
Region 4
TIPPERARY - 5
Mr. Philip Coman
Mr. John Hally
Mr. Ciaran McGrath
Mr. Michael Tobin
Mr. William Walsh
Mr. Sean O’Brien
Mr. Barry O’Connor
Mr. Timothy O’Leary
Mr. John O’Sullivan
Mr. Flor Riordan
Region 7
LIMERICK - 10
Mr. Timothy Blackburn
Mr. William Hickey
Mr. Daniel Hogan
Mr. John Hough
Mr. James Lynch
Mr. John McKeogh
Mr. Patrick Ryan
Mr. Martin Stapleton
Mr. Tony Tuohy
Mr. David Woulfe
Mr. Thomas Hyland
Mr. Philip Leahy
Mr. Patrick O’Keeffe
Ms. Mary Twomey-Casey
Solailoire Facility,
Nantes, France
22

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
Regional Committees
AGHABULLOGUE/
RYLANE
P. Ahern
M. Twomey
AHADILLANE
P. Fleming
J. Holmes
ALLENSBRIDGE
C. Murphy
D. Murphy
ANGLESBORO
M. Lenihan
M. Martin
ANNACOTTY/
BIRDHILL/
KILLALOE
M. Caplis
J. McKeogh
L. McNamara
ARAGLEN
T. Feeney
P. O’Donoghue
ARDAGH/OLDMILL
D. Hayes
J. Hough
D. Woulfe
ARDFINNAN
W. Walsh
BALLINAMONA
T. O’Regan
BALLINDANGAN
M. O’Doherty
P. O’Keeffe
BALLINGEARY
S. O’Sullivan
BALLINHASSIG
T. Allen
J. Crowley
BALLYCLOUGH
D. Buckley
I. Dulohery
A. O’Keeffe
BALLYHOOLY
P. Leahy
J. Lenihan
BALLYLOOBY
L. Fitzgerald
E. Morrissey
BALLYMAKEERA
D. Hallissey
B. O’Leary
BALLYPOREEN
P. Clancy
M. Sweeney
BALLYRICHARD/
COBH
A. Barry
A. Bird
J. Cashman
P. O’Donovan
M. O’Neill
T. Russell
BAWNMORE
C. O’Riordan
BENGOUR
P. O’Driscoll
BERRINGS/DRIPSEY
E. Casey
P. Healy
BLACK ABBEY/
KILDIMO
R. Foley
S. O’Riordan
M. Reidy
BOHERLAHAN
P. Coman
M. Tuohy
BUNRATTY
J. Lynch
K. McInerney
BUTTEVANT/
TEMPLEMARY
D. O’Connell
N. O’Keeffe
D. Shinnick
CAHIR
T. Marnane
M. Tobin
CAPPAMORE
S. Meehan
M. O’Donoghue
CARRIGALINE
J. Bernard
D. Lynch
J. McCarthy
G. O’Connell
CARRIGNAVAR
Vacancy
CASTLETOWNROCHE/
KILLAVULLEN
H. Fitzgerald
B. Lenihan
F. Magner
CAUM/MACROOM
M. Murphy
CHURCHTOWN
J. Hedigan
CLOGHEEN
J. Flynn
J. F. O’Gorman
CLONDROHID
P. Kelleher
S. Roche
CLOVERFIELD/
CORELISH
S. O’Brien
T. Tuohy
COACHFORD/
KILCOLMAN
D. Finnegan
J. Kelleher
C.M.P.
T. Cashman
P. Lehane
J. Murphy
D. O’Brien
T. O’Leary
J. O’Sullivan
F. Riordan
CORROGHURM/
MITCHELSTOWN
M. Fox
D. Kent Jnr
E. O’Brien
E. Quinlan
Vacancy
COURTBRACK
V. Buckley
T. McSweeney
DARRAGH
T.G. Coffey
T. Hyland
DONERAILE
M. Duane
E. Sheehan
DONOUGHMORE
L. Foley
F. McSweeney
DROMBANNA
W. Hickey
J. O’Brien
W. Walsh
DROMTARIFFE
J. Lenihan
J. F. Tarrant
GALBALLY
T. Blackburn
M. Donovan
GARRYSPILLANE
M. Murphy
J. P. Tobin
GLANWORTH
D. Joyce
M. Twomey-Casey
GLOSHA/
REARCROSS
R. Keogh
E. O’Toole
GRANAGH/MILTOWN
G. Kennedy
Vacancy
HOLLYFORD
M. O’Connell
HOSPITAL/KILTEELY/
SARSFIELD
J. Burke
P. Hanley
M. Hayes
INCHIGEELA/
TEERGAY
D. Creedon
M. McSweeney
KILBEHENNY
W. O’Doherty
M. Russell
KILCORNEY
J. Browne
T. Leader
KILDORRERY
R. Drake
T. O’Donnell
KILLOWEN/
MOSSGROVE
J. Canty
D. McSweeney
KILLUMNEY
J. Desmond
T. Griffin
KILNAMARTYRA
P. Cronin
B. Hinchion
KILROSS
D. Hogan
J. O’Neill
KILWORTH
J. Clancy
M. Gowen
KNOCKADEA
J.W. Coughlan
J. Fox
KNOCKLONG/
GORMANSTOWN
G. Walsh
LISCARROLL
T. Brosnan
W.J. Egan
LISSARDA
R. Hinchion
S. MacSweeney
LOMBARDSTOWN
F. O’Connor
M. O’Hanlon
P. Twomey
MALLOW
C. Cronin
J. Kenny
MILLSTREET/
BALLYDALY
C. Buckley
D. Corkery
MOGEELY
A. DeCogan
J. Dunne
L. Lane
E.C. Lynch
P. Millerick
D. O’Brien
S. O’Brien
MOURNEABBEY
D. Cronin
J.C. Fitzgerald
MUSKERRY
D. O’Donovan
NEWMARKET-ON-
FERGUS
K. Woods
OOLA
P. Ryan
M. Stapleton
OUTRATH
J. Hally
C. McGrath
M. Moloney
J. O’Donnell
T. Prendergast
T. Ryan
PARK
A. Flavin
K. Galvin
B. O’Connor
M. Riordan
RATHDUFF
J. Aherne
T. Buckley
RUSHEEN
G. Buckley
SHINAUGH
Vacancy
SHOUNLARAGH/
TOGHER
D. F. Hurley
TEMPLEMARTIN
M. P. Murphy
TERELTON/TOAMES
J. J. Kelleher
L. O’Riordan
TOURNAFULLA/
MEENAHELA
D. Aherne
M. Curtin
D. Fitzgerald
23

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
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 the 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:
Vincent Buckley, Chairman
Bertie O’Leary, Vice Chairman
16 March 2010 16 March 2010
24

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
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 2009, which comprise
the Consolidated Profit and Loss
Account, the Consolidated Balance
Sheet, the Consolidated Cash Flow
Statement, the Consolidated Statement
of Total Recognised Gains and Losses,
the Reconciliation of Movement in
Shareholders’ Funds, the Statement
of Accounting Policies and the related
notes on pages 32 to 49 inclusive. These
financial statements have been prepared
under the accounting policies set out in
the Statement of Accounting Policies.
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
The Directors are responsible for
preparing the Annual Report, including
as set out in the Statement of Board
Members’ Responsibilities, the
preparation of the financial statements
in accordance with applicable law
and accounting standards issued by
the Accounting Standards Board and
published by the Institute of Chartered
Accountants in Ireland (Generally
Accepted Accounting Practice in
Ireland). The Directors are also
responsible for the safeguarding of the
assets of the Society.
Our responsibility, as independent
auditor, is to audit the financial
statements in accordance with relevant
legal and regulatory requirements and
International Standards on Auditing (UK
and Ireland).
We report to you our opinion as to
whether the financial statements give
a true and fair view, in accordance
with Generally Accepted Accounting
Practice in Ireland. We are also required
to examine the balance sheet showing
the receipts and expenditure, funds
and effects of the Society and verify the
same with the books, deeds, documents,
accounts and vouchers relating thereto
and to either sign the same as found
by us to be correct, duly vouched and
in accordance with law, or specifically
report to the Society in what respects we
find them incorrect, unvouched, or not in
accordance with law.
We read the other information contained
in the Annual Report and consider the
implications for our report if we become
aware of any apparent misstatement
or material inconsistencies with the
financial statements.
The other information comprises only the
Chairman’s Statement, Chief Executive’s
Review and Financial Review. Our
responsibilities do not extend to other
information.
Basis of audit opinion
We conducted our audit in accordance
with the International Standards on
Auditing (UK and Ireland) issued by
the Auditing Practices Board. An audit
includes examination, on a test basis,
of evidence relevant to the amounts and
disclosures in the financial statements.
It also includes an assessment of the
significant estimates and judgements
made by the Directors in the preparation
of the financial statements and of
whether the accounting policies are
appropriate to the Society’s and the
Group circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit
so as to obtain all the information and
explanations which we considered
necessary in order to provide us with
sufficient evidence to give reasonable
assurance that the financial statements
are free from material misstatement,
whether caused by fraud or other
irregularity or error. In forming our
opinion we also evaluated the overall
adequacy of the presentation of
information in the financial statements.
Opinion
In our opinion the financial statements
give a true and fair view of the state of
affairs of the Society as at 31 December
2009 and of the profit of the Society for
the year then ended.
The Society’s balance sheet is in
agreement with the books of account
which, in our opinion, have been
properly kept.
As required by section 13(2) of the
Industrial and Provident Societies Acts
1893 having examined the balance
sheet 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, we sign the
same as found by us to be correct, duly
vouched, and in accordance with law.
Chartered Accountants
and Registered Auditors
No. 6 Lapp’s Quay, Cork.
16 March 2010
25

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
Consolidated profit and loss account
for the year ended 31 December 2009
2009 2008
Notes E’000 E’000
TURNOVER 1 555,175 688,127
OPERATING PROFIT
before goodwill amortisation and exceptional items 2 14,520 3,199
Goodwill amortisation 10 (1,061) (932)
OPERATING PROFIT 13,459 2,267
Share of losses of associates (1,044) (1,857)
Fundamental reorganisation and restructuring costs 3 (1,019) -
Profit arising from disposal of fixed assets 4 - 58
Interest payable and similar charges 5 (4,369) (4,185)
Interest receivable and similar income 5 3,419 5,027
PROFIT on ordinary activities before taxation 10,446 1,310
Taxation charge on profit on ordinary activities 7 (875) (1,998)
PROFIT/(LOSS) after taxation 9,571 (688)
Minority interest 22 (258) (149)
PROFIT/(LOSS) for the financial year 9,313 (837)
Share interest 8 (1,238) (2,370)
Retained Profit/(Loss) for the year 20 8,075 (3,207)
The above results are derived from continuing operations.
On behalf of the Board:
Vincent Buckley, Chairman
Bertie O’Leary, Vice Chairman
16 March 2010 16 March 2010
26

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
Consolidated balance sheet
as at 31 December 2009
2009 2008
Notes E’000 E’000
FIXED ASSETS
Tangible assets 9 127,948 122,875
Intangible assets 10 14,668 14,844
Financial assets 11 66,423 69,711
209,039 207,430
CURRENT ASSETS
Stocks 12 73,086 85,419
Debtors 13 98,963 96,415
Bank and cash 9,533 8,090
181,582 189,924
CREDITORS falling due within one year 14 (105,129) (114,919)
NET CURRENT ASSETS 76,453 75,005
TOTAL ASSETS LESS CURRENT LIABILITIES 285,492 282,435
Less:
CREDITORS falling due after more than one year 15 (68,116) (71,423)
PROVISION FOR LIABILITIES AND CHARGES
Capital grants 16 (6,311) (6,301)
Deferred taxation 17 (441) (1,754)
210,624 202,957
PENSION ASSET 18 10,100 2,671
NET ASSETS 220,724 205,628
CAPITAL AND RESERVES
Share capital 19 98,617 98,997
Capital reserves 20 1,007 1,007
Revaluation reserve 20 6,946 6,946
Bonus reserve 20 138 1,177
Profit and loss account 20 113,382 97,125
SHAREHOLDERS’ FUNDS 220,090 205,252
Minority interest 22 634 376
CAPITAL EMPLOYED 220,724 205,628
On behalf of the Board:
Vincent Buckley, Chairman
Bertie O’Leary, Vice Chairman
16 March 2010 16 March 2010
27

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
Consolidated cash flow statement
for the year ended 31 December 2009
2009 2008
Notes E’000 E’000
Net cash inflow from operating activities 24 19,176 7,641
Returns on investments and servicing of finance 25 (1,869) (1,464)
Taxation paid (619) (3,535)
Capital expenditure and financial investment 26 (18,942) (24,797)
Acquisitions and disposals 27 (2,643) -
Equity share interest paid (1,296) (2,351)
Financing 28 (1,338) (205)
Decrease in cash in the year (7,531) (24,711)
Reconciliation of net cash flow to movement in net debt
for the year ended 31 December 2009
2009 2008
E’000 E’000
Decrease in cash in the year (7,531) (24,711)
Loans / leases acquired (4,653) -
Non cash movements 2,502 (5,150)
Movement in net debt (9,682) (29,861)
Net debt at 1 January (68,204) (38,343)
Net debt at 31 December (77,886) (68,204)
Analysis of net debt
At Non At
1 January Cash Acquisition cash 31 December
2009 flow movement movement 2009
E’000 E’000 E’000 E’000 E’000
Cash and bank balances 8,090 68 - 1,375 9,533
Overdrafts (794) 794 - - -
Finance leases - 609 (834) - (225)
7,296 1,471 (834) 1,375 9,308
Debt due within one year (5,000) (15,000) - - (20,000)
Debt due after one year (70,500) 6,502 (2,125) 623 (65,500)
Finance leases - (504) (1,694) 504 (1,694)
(75,500) (9,002) (3,819) 1,127 (87,194)
(68,204) (7,531) (4,653) 2,502 (77,886)
28

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
Consolidated statement of total recognised gains and losses
for the year ended 31 December 2009
2009 2008
E’000 E’000
Profit/(Loss) for the financial year 9,313 (837)
Share of associates’ reserves movements (2,068) (4,838)
Currency translation difference on net investment 2,572 (10,051)
Difference between actual and expected return on pension schemes’ assets 9,974 (36,630)
Experience gains/(losses) arising on pension schemes’ liabilities 2,624 (1,584)
Effects of changes in assumptions underlying the present value of pension schemes’ liabilities (10,061) 10,630
Gain arising on exit of a participating employer from pension scheme 6,090 -
Deferred tax associated with gain arising on exit of a participating employer from pension scheme (761) -
Deferred tax associated with movement on pension schemes (300) 3,368
Total recognised gains/(losses) relating to the year 17,383 (39,942)
Reconciliation of movement in shareholders’ funds
for the year ended 31 December 2009
2009 2008
Notes E’000 E’000
Total recognised gains/(losses) relating to the year 17,383 (39,942)
Share interest 8 (1,238) (2,370)
Issue of ordinary shares including conversions 19 4 59
Dividends associated with cancelled shares 31 31
Shares redeemed 19 (1,342) (1,167)
Net change in shareholders’ funds 14,838 (43,389)
Opening shareholders’ funds 205,252 248,641
Closing shareholders’ funds 220,090 205,252
29

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
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 generally
accepted accounting standards in Ireland
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 to 31 December 2009,
b) the Society’s share of the results
and post acquisition reserves of
associates as reported in the latest
audited financial statements. This is
to 30 June 2009 for Reox Holdings plc
and 31 October 2009 for The Malting
Company of Ireland. Other associates
results are included to 31 December
2008.
c) any material adjustments for
associates arising between the date
of their latest financial statements as
above and the year end of the Society
and consequently Reox Holdings
plc results are incorporated to 31
December 2009.
The results of subsidiaries 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. Surpluses or deficits arising
on the translation of overseas subsidiary
companies’ net assets 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
passes to third parties.
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.
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 gross
of withholding tax, which is disclosed
separately in the profit and loss account.
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
20.0% - 25.0%
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 twenty years, on
a straight line basis. The carrying value
of goodwill is reviewed annually and
provision is made for any impairment.
Intangible Assets:
Purchased intangible assets are included
at cost and amortised in equal annual
instalments over a period of twenty
years which is their estimated useful
economic life. A provision is made for
any impairment in value.
30

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
Statement of Accounting Policies (continued)
Financial Fixed Assets:
Associated undertakings
Associated undertakings are those
undertakings in which the Society has a
significant participating interest in the
equity capital and over which it is able
to exercise significant influence. The
Society’s interest is stated at cost plus its
share of post acquisition reserves.
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 diminuition 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 overheads
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.
Taxation:
Corporation tax is calculated on the
result for the year after taking account
of capital allowances and manufacturing
relief.
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) provision 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.
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.
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.
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.
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 by Irish
entities during the year have been
translated into Euro at the rates ruling at
the time of the transactions.
Monetary assets and liabilities of Irish
entities arising in foreign currencies
have been retranslated into Euro at rates
ruling at the balance sheet date.
Exchange differences have been included
in the profit and loss account for the year.
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.
Each 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.
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.
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.
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.
31

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
Notes to financial statements
1 Turnover
Geographical Analysis by Destination:
2009 2008
E’000 E’000
Ireland 245,076 298,277
United Kingdom 131,167 148,814
Rest of Europe 103,082 135,389
Rest of World 75,850 105,647
555,175 688,127
Principal Activities by Class of Business:
Dairygold Food Ingredients 366,018 454,899
Agricultural and Retailing 170,714 204,245
Finance 18,443 28,983
555,175 688,127
The turnover for 2009 incorporates €5.9 million from a subsidiary, Solailoire SARL and the business of seven 4Home stores,
both acquired during the year.
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
2009 2008
E’000 E’000
Turnover - Note 1 555,175 688,127
Less:
Raw materials and consumables 447,037 571,238
Payroll costs - Note 6 45,493 47,832
Operating costs 45,071 47,308
Depreciation - Note 9 14,941 14,392
Grant amortisation - Note 16 (804) (943)
Change in stock of finished goods and goods for resale (11,083) 5,101
Operating profit before goodwill
amortisation and exceptional items 14,520 3,199
32

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
3 Fundamental reorganisation and restructuring costs
2009 2008
E’000 E’000
Cost of reorganisation and restructuring of on-going businesses (1,019) -
The costs in 2009 reflect the cost of reorganisation and restructuring programmes in the Society.
4 Profit arising from disposal of fixed assets
2009 2008
E’000 E’000
Profit on disposal of tangible fixed assets - 58
5 Interest payable and receivable
2009 2008
E’000 E’000
Interest payable and similar charges (4,369) (4,185)
Interest receivable and similar income
RIBB interest receivable - Note 11 2,475 2,443
Bank interest receivable 125 116
Interest receivable and similar income relating to pensions 819 2,468
3,419 5,027
Interest (Payable)/Receivable (950) 842
6 Payroll costs
The weekly average number of employees:
2009 2008
Number
Number
Dairygold Food Ingredients 516 537
Agricultural and Retailing 418 372
934 909
Payroll costs charged to profit and loss comprise: E’000 E’000
Wages and salaries 39,707 41,394
Social welfare costs 3,575 3,734
Pension costs 2,211 2,704
45,493 47,832
33

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
7 Taxation charge on profit on ordinary activities
2009 2008
E’000 E’000
Irish tax:
Irish corporation tax (see below) (845) (202)
Prior year over provision 158 25
Share of associates’ tax 184 147
(503) (30)
Foreign tax:
Foreign corporation tax (see below) (1,077) (1,037)
Prior year under provision (41) -
(1,118) (1,037)
Total corporation tax (1,621) (1,067)
Deferred taxation - Note 17 746 (931)
(875) (1,998)
The tax assessed for the year is different from the standard rate of corporation tax in Ireland (12.5%), as follows:
Profit on ordinary activities before taxation 10,446 1,310
Corporation tax at standard rate 1,306 164
Effects of:
Expenses not deductible/allowable for tax purposes 221 (4)
Manufacturing relief (92) (43)
Excess depreciation over capital allowances 313 665
Higher tax rates (non-trading income) 12 19
Non taxable income (39) -
Losses brought forward (377) (24)
Higher tax rates (overseas) 578 462
1,922 1,239
8 Share interest
2009 2008
E’000 E’000
Share interest paid @ 1.25% (2008 : 3.75%)
Ordinary share capital 1,238 2,370
1,238 2,370
The Board has recommended that share interest of 1.25% be paid in 2010 on the Share Capital and Permanent
Convertible Loan Capital in issue at 31 December 2009. This will amount to €1,236,000 and is subject to approval at
the Annual General Meeting.
34

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
9 Tangible assets
Land & Plant & Motor
buildings machinery vehicles Total
E’000 E’000 E’000 E’000
COST OR VALUATION
At 1 January
Cost 35,716 134,600 3,113 173,429
Valuation 35,749 55,872 - 91,621
71,465 190,472 3,113 265,050
Additions 612 12,929 182 13,723
Acquisitions 3,405 4,130 3 7,538
Translation adjustments 222 452 1 675
At 31 December
Cost 39,955 152,111 3,299 195,365
Valuation 35,749 55,872 - 91,621
75,704 207,983 3,299 286,986
DEPRECIATION
At 1 January 22,251 118,572 1,352 142,175
Relating to acquisitions 477 1,080 3 1,560
Charged during year 2,516 11,966 459 14,941
Translation adjustments 46 315 1 362
At 31 December 25,290 131,933 1,815 159,038
NET BOOK VALUE
At 31 December 2009 50,414 76,050 1,484 127,948
At 31 December 2008 49,214 71,900 1,761 122,875
HISTORICAL COST BASIS
At 31 December 2009
Cost 92,309 338,713 3,299 434,321
Aggregate depreciation (70,359) (275,272) (1,815) (347,446)
21,950 63,441 1,484 86,875
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 in existing use 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.
35

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
10 Intangible assets
2009 2008
GOODWILL E’000 E’000
COST
At 1 January 19,130 22,426
Additions - 1,862
Translation adjustment 1,252 (5,158)
At 31 December 20,382 19,130
AMORTISATION
At 1 January 5,112 5,452
Charged during year 1,018 914
Translation adjustments 367 (1,254)
At 31 December 6,497 5,112
NET BOOK VALUE
At 31 December 13,885 14,018
2009 2008
OTHER INTANGIBLE ASSETS E’000 E’000
COST
At 1 January 844 -
Additions - 844
At 31 December 844 844
AMORTISATION
At 1 January 18 -
Charged during year 43 18
At 31 December 61 18
NET BOOK VALUE
At 31 December 783 826
NET BOOK VALUE
TOTAL 14,668 14,844
During 2008 the group purchased intangible assets, including intellectual property and customer lists as part of the
acquisition of a number of businesses. The cost of the assets acquired in excess of the identifiable fair value of the
net assets has been included in goodwill for the year.
36

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
11 Financial assets
2009 2008
E’000 E’000
ASSOCIATES
Share of net assets - 1 January
Net assets other than goodwill 9,885 16,446
Goodwill 5,854 5,841
Share of results (net of taxation) (860) (1,710)
Share of associates reserve movements (2,068) (4,838)
Share of net assets - 31 December
Net assets other than goodwill 9,914 9,885
Goodwill 2,897 5,854
12,811 15,739
Loans to associates 85 85
Redeemable Interest Bearing Bond (RIBB) see below 33,000 33,000
At - 31 December 45,896 48,824
UNQUOTED
Shares at cost 139 139
QUOTED
Shares at cost - 1 January 9,115 6,856
Additions 21,318 28,798
Disposals (20,733) (22,635)
Impairment (81) (3,904)
Shares at cost - 31 December 9,619 9,115
LOAN STOCK
At - 1 January 11,633 11,482
Additions 705 1,638
Redemptions (1,569) (1,487)
At - 31 December 10,769 11,633
TOTAL 66,423 69,711
a) The associates are included in the accounts at the cost of the investment and the Society’s share of post
acquisition reserves.
b) The share of reserve movements of associates in 2009 includes an amount of €27,000 (2008: €40,000) relating to
changes in shareholding structures of associated groups.
c) In the opinion of the Board of Directors, the value of the unquoted investments is not less than that shown above.
d) The market value of the quoted investments excluding Reox Holdings plc at 31 December 2009 was €34,658,000
(2008: €41,978,000).
e) The loan stock refers to unconverted loan stock received from the Irish Dairy Board based on the Society’s trading
activity with it.
37

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
11 Financial assets - continued
Details of principal subsidiaries and associates are included in Note 35 to these financial statements.
The Redeemable Interest Bearing Bond (RIBB) was issued on 3 March 2006 by Reox Holdings plc to the Society.
The principal conditions attaching to the RIBB are:
» Interest for first four years will be at a rate of 7.5% per annum.
» Interest for remaining years will be 6% per annum.
» Redemption of the RIBB may commence on the day after the fifth anniversary of the date of issue at the discretion
of the holder.
» Redemption is permitted at a rate of €6,600,000 per annum.
The following additional disclosures are required by Financial Reporting Standard 9, Associates and Joint Ventures, as
the Co-Op’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-Op’s share of results of all associates and joint ventures:
2009 2008
E’000 E’000
Turnover 61,107 94,198
Fixed assets 36,042 54,111
Current assets 12,946 33,201
Liabilities due within one year (22,140) (40,249)
Liabilities due after one year (13,332) (30,122)
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
E’000
Co-Op’s share of:
Turnover 40,348
Loss before exceptional items (2,584)
Exceptional items 1,251
Loss before taxation (1,333)
Taxation 219
Loss after taxation (1,114)
Fixed assets 30,573
Current assets 3,886
Liabilities due within one year (14,746)
Liabilities due after one year (12,411)
38

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
12 Stocks
2009 2008
E’000 E’000
Raw materials 6,652 7,730
Finished goods 40,914 49,469
Goods for resale 22,127 24,655
Expense stocks 3,393 3,565
73,086 85,419
There is no material difference between the above amounts and the replacement cost of stocks.
13 Debtors falling due within one year
2009 2008
E’000 E’000
Trade debtors 82,201 81,440
Prepayments and accrued income 9,034 5,474
Amounts due from related parties - Note 30 6,164 7,004
V.A.T. 1,564 2,166
Corporation tax - 331
98,963 96,415
14 Creditors falling due within one year
2009 2008
E’000 E’000
Bank loans and overdrafts 20,000 5,794
Obligations under finance leases 225 -
Trade creditors 30,283 49,407
Accruals and deferred income 49,800 54,316
Amounts due to related parties - Note 30 2,122 3,651
Corporation tax 854 -
PAYE and PRSI 1,845 1,751
105,129 114,919
15 Creditors falling due after more than one year
2009 2008
E’000 E’000
Bank loans falling due between one and two years 65,500 5,000
Bank loans falling due between two and five years - 65,500
Obligations under finance leases 1,694 -
Other loans 680 680
Convertible stock - Note 21 242 243
68,116 71,423
39

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
16 Capital grants
2009 2008
E’000 E’000
At 1 January 6,301 1,265
Receivable during year 814 5,979
Credited to profit and loss account (804) (943)
At 31 December 6,311 6,301
17 Deferred taxation
2009 2008
E’000 E’000
At 1 January 1,754 823
Relating to an acquisition of a subsidiary and a business (567) -
(Credited)/Charged to profit and loss account (746) 931
At 31 December 441 1,754
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.
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.
18 Pensions
Dairygold Pension Schemes
The Society operates and contributes to a number of externally funded defined benefit and defined contribution pension
schemes in Ireland.
The valuation of the pension plan was performed in accordance with generally accepted actuarial principles and
procedures. The accounting calculations reported herein are based on the assumptions, methods and accounting policies
selected by Mercer, professional pension service providers, on behalf of the Society. The pension cost is assessed in
accordance with the advice of qualified actuaries using the projected unit method of funding.
The most recent full actuarial valuations in respect of the Irish Funds were carried out as at 1 January 2008. The principal
assumptions used in the actuarial valuations were that the difference between the investment return and general payroll
increases and future pension payments would be 2.5% greater. At the date of the latest actuarial valuations, the market
value of the assets was €242.6 million and the actuarial value of the assets was sufficient to cover in excess of 100% of
the benefits that had accrued to Members, after allowing for future expected increases in pensionable remuneration.
The actuaries’ reports are not available for public inspection but the results are advised to the Members of the various
Schemes.
To develop the expected long-term rate of return on asset assumptions, the Trustees considered the current level of
expected returns on risk free investment (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.
40

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
18 Pensions continued
The main financial assumptions are:
2009 2008 2007
% % %
Inflation rate increase 2.00 2.00 2.25
General payroll rate increase 3.50 3.50 3.75
Pension payment increase 2.00 2.00 2.25
Discount rate 5.25 5.75 5.50
The expected long-term rates of return for:
Equities 8.60 8.50 7.60
Bonds 3.80 3.70 4.20
Property 7.60 6.00 6.60
Mortality assumptions:
Membership of the Group’s pension plans 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. The assumed life expectations on
retirement at age 65 are:
As at December 2009 As at December 2008
Male Female Male Female
Members age 65 (current life expectancy) 21.3 24.6 21.3 24.6
Members age 45 (current life expectancy) 22.2 25.2 22.2 25.2
The sensitivities regarding the principal assumptions used to measure the scheme liabilities are set out below:
Change in
assumption
% Impact on
scheme liabilities
Discount rate Increase by 0.5% Decrease by 9%
Rate of inflation Increase by 0.5% Increase by 9%
Rate of salary growth Increase by 0.5% Increase by 2%
Rate of mortality Increase by 1 year Increase by 3%
Plan Assets
The weighted average asset allocation at the year end was as follows:
2009 2008
% %
Equities 58.3% 53.1%
Bonds 36.3% 39.5%
Property 5.4% 7.4%
100% 100%
41

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
18 Pensions continued
The overall surplus in the schemes at 31 December is:
2009 2008 2007
E’000 E’000 E’000
Fair value of assets:
Equities 121,303 59,365 74,845
Bonds 75,499 44,225 56,507
Property 11,137 8,266 12,060
207,939 111,856 143,412
Present value of schemes’ liabilities (190,672) (108,803) (113,426)
Effects of surplus cap (5,725) - -
Surplus in schemes 11,542 3,053 29,986
Related deferred tax (1,442) (382) (3,748)
Closing pension asset 10,100 2,671 26,238
The closing pension asset relates only to schemes operating in Ireland.
The amounts included within operating profit for the year under FRS 17 are as follows:
2009 2008
E’000 E’000
Current service cost 1,780 2,330
Total charged within operating profit 1,780 2,330
The amounts included within finance income for the year under FRS 17 are as follows:
2009 2008
E’000 E’000
Expected return on the pension schemes’ assets 7,087 8,744
Interest on the past service schemes’ liabilities (6,268) (6,276)
Net finance credit within finance costs 819 2,468
The analysis of amounts recognised in the statement of total recognised gains and losses:
2009 2008
E’000 E’000
Actual return less expected return on the pension schemes’ assets 9,974 (36,630)
Experience gains/(loss) arising on the schemes’ liabilities 2,624 (1,584)
Changes in assumptions underlying the present value of the schemes’ liabilities (10,061) 10,630
Actuarial gain/(loss) recognised in statement of total recognised gains and losses 2,537 (27,584)
42

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
18 Pensions continued
The movement in surplus during the year: 2009 2008
E’000 E’000
Surplus in schemes at beginning of year 3,053 29,986
Employer contributions paid 823 513
Current service costs (1,780) (2,330)
Other finance income 819 2,468
Actuarial gain/(loss) 2,537 (27,584)
Gain arising on exit of a participating employer from pension scheme 6,090 -
Surplus in schemes at end of year 11,542 3,053
The profit and loss balance is analysed below:
Profit and loss balance excluding pension reserve 103,282 94,454
Pension reserve 10,100 2,671
Profit and loss balance 113,382 97,125
The history of experience losses and gains has been:
2009 2008 2007 2006 2005
E’000 E’000 E’000 E’000 E’000
Difference between the expected and
actual return on schemes’ assets 9,974 (36,630) (3,600) 4,169 34,141
Percentage of schemes’ assets 4.8% (32.7%) (2.5%) 2.9% 14.3%
Experience gains and losses arising on
the schemes’ liabilities 2,624 (1,584) (1,882) (8,135) 4,700
Percentage of past service schemes’ liabilities 1.4% (1.5%) (1.7%) (7.0%) 2.1%
Amount that has been recognised in statement
of total recognised gains and losses 2,537 (27,584) 2,284 10,465 18,361
Percentage of past service schemes’ liabilities 1.3% (25.4%) 2.0% 9.1% 8.3%
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 €282,000 (2008: €295,000).
The most recent actuarial valuation of the scheme was carried out as at 1 July 2008 and updated to 1 February 2009.
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 69% at 1 February 2009. The actuarial report for this scheme is available
for inspection by Members of the scheme but not for public inspection.
Pension Cost
The total pension cost charged to the operating profit was €2,211,000 (2008: €2,704,000). Valuations have been
performed in accordance with the requirements of Financial Reporting Standard 17, Retirement Benefits, as at 31
December 2009. Scheme liabilities have been calculated using a consistent projected unit valuation method and
compared to the schemes’ assets at the valuation date.
43

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
19 Share capital - Issued ordinary shares of E1 each
2009 2008
E’000 E’000
At 1 January 98,997 63,209
Shares issued 4 59
Bonus issues from bonus reserve - Note 20 1,039 2,193
Conversion of convertible stock - Note 21 1 1
Shares redeemed (1,342) (1,167)
Bonus issue - 34,781
Shares cancelled (82) (79)
At 31 December 98,617 98,997
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.
A bonus issue of 11 new shares for every 20 shares held by Members as at 19th May 2008 in accordance with the
resolution passed by Members at the Annual General Meeting held on 20th May 2008, was incorporated in 2008.
20 Reserves
Capital Revaluation Bonus Profit & Loss
reserves reserve reserve account
E’000 E’000 E’000 E’000
At 1 January 1,007 6,946 1,177 97,125
Conversion to share capital - Note 19 - - (1,039) -
Arising on currency translation - - 2,572
Actuarial gain recognised in the statement
of total recognised gains and losses
(net of deferred tax) - - - 2,237
Gain arising on exit of a participating
employer from pension scheme
(net of deferred tax) - - 5,329
Share of associates’ reserves movements - - - (2,068)
Cancellation of shares and related dividends - - - 112
Profit for year - - - 8,075
At 31 December 1,007 6,946 138 113,382
Society and subsidiaries 1,007 6,946 138 108,209
Associates - - - 5,173
At 31 December 1,007 6,946 138 113,382
44

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
21 Convertible stock
2009 2008
E’000 E’000
At 1 January 243 247
Conversion to share capital - Note 19 (1) (1)
Stock redeemed - (3)
At 31 December 242 243
‘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
2009 2008
E’000 E’000
At 1 January 376 -
Arising during the year - 227
Profit on ordinary activities after taxation 258 149
At 31 December 634 376
23 Acquisition of a Subsidiary and Business
On 15 September 2009, Dairygold Food Ingredients (France) SAS acquired the entire share capital of Solailoire
SARL and on 21 October 2009 Dairygold Agri Business Limited acquired the business of seven 4HOME stores.
The book value of the assets acquired and consideration paid were as follows:
Book value Fair value Value
acquired adjustments acquired
E’000 E’000 E’000
Tangible fixed assets 5,913 562 6,475
Stocks 1,635 - 1,635
Debtors 275 - 275
Creditors (1,205) - (1,205)
Bank loans (2,719) - (2,719)
Finance leases (1,935) - (1,935)
Bank overdraft (177) - (177)
Pension 300 - 300
Deferred tax 567 - 567
Value acquired 2,654 562 3,216
Satisfied by:
Consideration paid 1,867
Consideration deferred 750
Acquisition costs 599
3,216
Cash impact of acquisition:
Consideration paid 1,867
Bank overdrafts acquired 177
Acquisition costs 599
2,643
45

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
24 Reconciliation of operating profit to net cash inflow from operating activities
2009 2008
E’000 E’000
Operating profit 13,459 2,267
Depreciation 14,941 14,392
Difference between current service pension cost and payments made 957 1,817
Capital grants credit (804) (943)
Goodwill and other intangible asset amortisation 1,061 932
Cash related to reorganisation and fundamental restructuring (1,992) (2,236)
Profit on disposal of fixed assets - (58)
Decrease in stocks 13,968 3,884
Increase in debtors (2,305) (5,731)
Decrease in creditors (20,109) (6,683)
Net cash inflow from operating activities 19,176 7,641
25 Returns on investments and servicing of finance
2009 2008
E’000 E’000
Interest received 2,600 2,590
Interest paid (4,469) (4,054)
(1,869) (1,464)
26 Capital expenditure and financial investment
2009 2008
E’000 E’00
Payments to acquire tangible fixed assets (20,115) (25,738)
Payments to acquire intangible fixed assets - (2,706)
Payments to acquire financial fixed assets (20,792) (30,436)
Receipts on disposals of tangible fixed assets - 78
Receipts on disposals of financial fixed assets 21,151 28,026
Capital grants 814 5,979
(18,942) (24,797)
27 Acquisitions and disposals
2009 2008
E’000 E’000
Payments to acquire a subsidary and a business - Note 23 (2,643) -
46

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
28 Financing
2009 2008
E’000 E’000
Issue of share capital 4 59
Loan received from shareholders - 906
Redemption of shares (1,342) (1,167)
Redemption of convertible stock - (3)
(1,338) (205)
29 Financial commitments
Future investments and capital expenditure approved by the Board and not provided for in these financial statements
amounted to €4,486,000 (2008 : €5,752,000).
The Society has operating lease commitments, as set out below:
2009 2008
E’000 E’000
Payable within 12 months 347 -
Payable within 1 - 2 years 497 -
Payable 3 - 5 years 1,746 -
Payable greater than 5 years 65 -
2,655 -
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 associates and sells goods and services to its associates on standard
commercial terms. The purchases from and sales to the associates during 2009 amounted to €6,932,000 (2008:
€8,540,000) and €6,767,000 (2008 : €14,299,000) respectively. The trading balances outstanding by and to the Society
amounted to €1,532,000 (2008 : €3,651,000) and €26,000 (2008 : €958,000) respectively at the year end.
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 2009 the purchases from and
sales to Munster Cattle Breeding Group Limited amounted to €73,000 (2008 : €78,000) and €393,000 (2008 : €691,000)
respectively. The trading balance outstanding to the Society amounted to €25,000 (2008 : €25,000) 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, which
was still in place at the year end.
In the ordinary course of business, some key management and directors, in their capacity as farmers and or directors
of other companies, trade with the Society on standard commercial terms. The aggregate level of purchases from and
sales to these individuals during the year amounted to €912,000 (2008 : €1,386,000) and €467,000 (2008 : €588,000)
respectively. The trading balances outstanding to the Society at the year end were €40,000 (2008 : €223,000). No reserve
has been required in 2009 (2008 : nil) for bad or doubtful debts in respect of amounts owed by key management or
directors and companies controlled by them.
47

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
30 Related party transactions continued
Reox Holdings plc
In 2006, Dairygold Co-Operative Society Limited (Dairygold) and Reox Holdings plc (Reox) entered into a number of arms
length commercial arrangements as part of the de-merger of Reox. All agreements are based on an open and transparent
basis and reflect the agreed actual cost of providing the services to both parties. These are summarised below:
i) Up to 26 January 2009, the former chief executive of Reox was also chief executive of Dairygold under the terms of
Agreement for Services between the two companies. The costs relating to these services were charged by Reox to
Dairygold.
ii)
Dairygold and its subsidiaries sold goods to Reox on a commercial arms length basis during 2009. The sale of goods
between the two groups has now discontinued following the sale of Breeo Foods Limited and the closure by Reox of its
4HOME business.
iii) There is a Redeemable Interest Bearing Bond in place between Dairygold and Reox and subsidiaries in the sum of €33
million. The interest rate attaching to this bond and the terms of repayment are outlined in Note 11 to these financial
statements.
iv)
IT systems support agreement. This agreement is for the support of certain software and certain shared servers and
network components. This agreement expired on 31 December 2009.
v) Licence Agreements. A number of the sites which are owned by Dairygold had a license agreement (999 year term) in
place and were used by Reox. This arrangement ceased following the sale of Breeo Foods Limited.
A number of the sites which are owned by Reox have a license agreement in place and will be used by Dairygold until
an acceptable replacement site is provided for use by Dairygold.
vi)
vii)
Lease Agreements. A number of sites which are owned by Reox are leased by Dairygold on a commercial arms length
basis.
Shared Services: Pursuant to shared services agreements, certain shared services, including effluent treatment,
energy, water and security, with respect to both the Dairy Spreads Site and the Process Cheese Factory, were provided
by Dairygold to Reox on arm’s length commercial terms, payment for such services to be made annually by Reox to
Dairygold on a cost-basis. This agreement ceased on 25 March 2009 following the sale of Breeo Foods Limited.
During the year an amount of €5 million was recorded in the financial statements, due from Reox to Dairygold, following
the disposal of Breeo Foods Limited. This remained outstanding at the year end. There is a further €7.1 million due from
Reox relating primarily to property commitments and RIBB Interest (payable in March 2010). In addition to these property
commitments, due to Dairygold from Reox, Dairygold has received an indemnity from Reox in relation to some obligations
and liabilities which may arise. Dairygold decided on reviewing its overall investment in Reox to provide for some of this
investment by €6 million which is due to uncertainty around the timing of the recoverability of these assets, thus reducing its
investment holding on the 2008 value by c. €3.5 million.
On 21 October 2009, Dairygold acquired the business of seven 4HOME stores from Reox for a consideration of €1,842,000.
During 2009 Reox voluntarily exited as a participating employer from the Dairygold pension schemes. As a result Dairygold
has assumed full responsibility for such pension schemes.
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 2009 of its Irish subsidiaries and as a result they are exempted from filing their individual
financial statements under the provisions of Section 17 of the Companies (Amendment) Act, 1986.
Grants of €8,338,000 (2008 : €7,616,000) 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.
48

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
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 €90,500,000 (2008 : €75,500,000) and they are secured by fixed and floating charges on the assets of the Society and its
subsidiaries.
33 Restatement of Comparatives
Certain prior year figures included within the financial statements and related notes have been reclassified to ensure
comparability with the current year presentation.
34 Post balance sheet events
No significant post balance sheet events have occurred that require reporting in the financial statements.
35 Principal operating subsidiaries and associates
Subsidiaries
Country of
Incorporation % Holding Activity
Agricola Properties Limited Ireland 100.0% Property Management
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 and distribution
Dairygold Farms Limited Ireland 100.0% Farming
Dairygold Finance Limited Ireland 100.0% Finance company
Dairygold Food Ingredients Limited Ireland 100.0% Dairy products
Dairygold Food Ingredients (U.K.) Limited U.K. 100.0% Dairy products
Dairygold Food Ingredients (France) SAS France 100.0% Holding Company
Dairygold Mills Limited Ireland 100.0% Milling
Dairygold Trading Limited Ireland 100.0% Agri retailing
Dan Dairies (U.K.) Limited U.K. 100.0% Dairy products
Solailoire SARL France 100.0% Dairy products
Munster Cattle Breeding Group Limited Ireland 66.0% AI and farm services
Associates
Country of
Incorporation % Holding Activity
Co-Operative Animal Health Limited * Ireland 50.0% Farm services
National Cattle Breeding Centre Limited Ireland 20.0% AI services
Reox Holdings plc Ireland 26.1% Holding company
The Malting Company of Ireland Limited Ireland 33.3% Malting
* This entity is treated as an associate due to the voting rights attached to the Society’s capital holdings therein.
The companies and societies operate principally from their countries of incorporation. Only the principal operating subsidiaries
are listed above. The names, addresses and 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 16 March 2010.
49

Dairygold Co-Operative Society Limited Annual Report and Accounts 2009
Five year historical information
Five year profit and loss account
2009 2008 2007 2006 2005
E’000 E’000 E’000 E’000 E’000
TURNOVER 555,175 688,127 625,100 543,037 866,482
Operating profit before goodwill amortisation
and exceptional items 14,520 3,199 22,653 1,169 19,597
Goodwill amortisation (1,061) (932) (1,192) (929) (811)
Share of associates (1,044) (1,857) (3,423) 11,279 3,485
Exceptional costs (1,019) - (4,485) (4,524) (15,153)
Profit arising from disposal of fixed assets - 58 85 424 -
Net interest (payable)/receivable (950) 842 2,334 1,435 (2,397)
PROFIT before taxation 10,446 1,310 15,972 8,854 4,721
Taxation (875) (1,998) (3,618) (3,200) 602
PROFIT/(LOSS) after taxation 9,571 (688) 12,354 5,654 5,323
Minority interest (258) (149) - - -
PROFIT/(LOSS) for the financial year 9,313 (837) 12,354 5,654 5,323
Share interest (1,238) (2,370) (2,294) (3,716) (2,173)
RETAINED PROFIT/(LOSS) 8,075 (3,207) 10,060 1,938 3,150
Five year balance sheet
2009 2008 2007 2006 2005
E’000 E’000 E’000 E’000 E’000
Net Assets Employed:
Fixed assets 209,039 207,430 209,450 194,456 250,485
Stock 73,086 85,419 89,303 72,655 115,751
Debtors 98,963 96,415 90,384 71,235 115,035
Current cash & bank balances (10,467) 2,296 (8,344) (4,975) (17,626)
Creditors (85,129) (109,125) (126,056) (82,459) (127,287)
Medium/long term creditors (68,116) (71,423) (30,246) (37,429) (105,699)
Capital grants (6,311) (6,301) (1,265) (1,475) (3,315)
Deferred taxation liability (441) (1,754) (823) (424) 2,000
Pension asset 10,100 2,671 26,238 23,063 14,253
Net Assets Employed 220,724 205,628 248,641 234,647 243,597
Financed by:
Shareholders funds 220,090 205,252 248,641 234,647 243,597
Minority interest 634 376 - - -
Capital employed 220,724 205,628 248,641 234,647 243,597
50

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