Annual Report 2009 - Dairygold

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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
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Annual Report 2009 - Dairygold

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