Annual Report 2009 - Dairygold

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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
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Annual Report 2009 - Dairygold

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