Annual Report & Accounts 2013-14 - utdni.co.uk Farm Business...Annual Report & Accounts 2013-14 14...

Annual Report & Accounts 2013-14

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Business Review

Innovation was a key factor in Dale Farm’s

successful growth in 2013/14 and is central to the Group’s strategy of adding sustainable value to our members’ milk.

Product development activity increased over the year and was reflected in the launch of a record 63 new consumer products with 130 different product variants, and 9 product rejuvenations in 11 individual product variants. Sales of new products less than 3 years old exceeded £60 million during the year and accounted for over 35% of consumer products turnover.

Health remains a key NPD driver, with the targeted development of lower sugar and fat formulations that still deliver on taste and quality.

New product offerings included reduced fat spreads, Zero % fat yogurt ranges and the addition of new varieties to the Zero % Fat Greek style range of yogurts.

Prior to Christmas Dale Farm launched its new Fresh Custard product, offering a convenient ready to eat custard to accompany hot puddings or be eaten on its own: such was the exceptional quality of this product that national listings were achieved with major retailers.


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There was significant process and product development at Kendal, where the plant’s cottage cheese capability was upgraded and an own label range of 16 product variants, covering natural and fruited versions, was developed and launched for a major multiple retailer.

In ingredients development work led to the introduction of new enriched powder products formulated to meet the requirements of specific customers generating new business in key export markets. Development work was also undertaken in cheese and whey processing, specifically on optimising maturation to enhance flavour and texture and reducing downgrade.

All Group milk processing sites retained their ‘Grade A’ BRC classification following audits at the recently introduced Version 6 standard. Various customer audits were also carried out and it is pleasing to report that all such audit results were positive, resulting in site approvals. The level of consumer complaints per million units of output, finished the year at a record low level for the Group and below the company’s best in class target performance level.

In both Group central laboratories service levels continue to improve and external quality assessments have resulted in positive comments

on the laboratory processes and administration. Activity in the laboratories has increased reflecting growth in output and the additional testing necessary to meet the requirements of new retail and ingredient customers.

Business Review continued

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Cheese & Whey ProductsThe latest stage in the implementation of the development strategy for the Group’s cheese business was completed in December 2013 with the official opening of the new whey protein nano filtration plant and the expanded cheese facilities at Dunmanbridge. The investment in new facilities over the last four years has doubled cheese production capacity to 50,000 tonnes per annum and enabled all of the resulting whey to be processed into Whey Protein Concentrate (WPC) 35, 50 or 80.

The cheese and whey products business delivered an excellent performance with increases of 40% in total cheese and whey output and 50% in sales of consumer cheese products. Dale Farm’s reputation as a quality cheese supplier was further reinforced by a series of prestigious awards at recognised international cheese shows in 2013, including Nantwich and the Great Taste Awards. These brought the total number of awards received by

Dale Farm in recent years for its cheese products to 100 and helped underpin growth in the company’s sales of own label cheese to major national and international retailers.

To support the increase in sales of consumer cheddar products, the Ash Manor Cheese business based in Wrexham, North Wales was acquired in January 2014 providing an established cheese grating, slicing and packing business to compliment Dale Farm’s existing capability and customer base. An additional retail portion packing line was also installed at Dunmanbridge.

Sales of cheese products in Dromona, Rowan Glen, Loseley and Dale Farm Lakeland brands continued to enjoy double digit growth and together with rapidly growing sales in retailer own brands helped deliver further growth in market share with Dale Farm now an established major player in the UK and Irish cheese markets.


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Liquid Milk and CreamDale Farm maintained its position as market leader in the fresh milk and cream categories in Northern Ireland. Boosted by further growth in the multiple and foodservice sectors, the fresh liquid milk business again saw volume growth ahead of the market. Cream sales also continued to grow, benefitting from strong multi-purchase activity across the multiple channel and improved distribution throughout our foodservice customer base.

Brand support was provided through sponsorship of Ulster Rugby and the Dale Farm Athletes Academy. Following the Dairy Council decision to withdraw from sponsorship of Northern Ireland’s leading international youth football tournament, Dale Farm agreed to step in as the lead sponsor of the 2014 Dale Farm Milk Cup, helping to maintain the competition’s long association with the local dairy industry and providing a national and international platform for promoting the brand and its products.

In the Republic of Ireland the National Dairy Council continued its campaign to exclude products from Northern Ireland by promoting the exclusive sales of products which are farmed and processed in the RoI. As a direct result of this activity one major supermarket contract was lost, impacting liquid milk sales into this market. However, improved distribution and the addition of new customers in the convenience channel ensured continued growth of cream sales in the Republic of Ireland with performance ahead of the market.

MILKCUPdalefarmmilkcup.com

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The performance of the liquid milk business also benefitted from the upgraded facilities at Pennybridge, which is now one of the most modern and efficient liquid milk dairies in the British Isles with a new high speed liquid milk filling line, fed directly from the on-site milk bottle blowing plant, and automated loading into supermarket trolleys. Continued growth in the Group’s retail sales resulted in increased throughput at the new Central Distribution Centre at Pennybridge, with reduced picking and storage costs and excellent Customer Service levels.

Butter and SpreadsThe Dale Farm butter and spreads business delivered a strong performance in 2013/14, with increased throughput and good consumer products sales growth, particularly in the UK market. Growth in the level of milk being processed across Dale Farm generated additional cream contributing to an increase of over 40% in amount of butter churned in the year.

Butter sales were boosted by an excellent performance in the foodservice sector, particularly on portion packs, and a further good performance from the award winning Loseley Summer Meadow butter.

Spreads sales also performed extremely well, boosted by double digit growth from the Dromona brand in Northern Ireland, building on the market share gain achieved in the previous year. Rowan Glen spreads also continued to perform well, benefiting from new listings and improved distribution, particularly in the convenience channel. The addition of an own label contract with a leading national retailer also ensured continued spreads sales growth.


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Yogurt, Cottage Cheese and DessertsInnovation in the cultured products sector helped deliver continued sales and profit growth, despite an extremely challenging and competitive marketplace.

New product launches in the 0% Fat and Greek style yogurt ranges, coupled with the introduction of distinctive new packaging on the low fat range, helped ensure brand appeal in these growing subsectors of the yogurt market. Yogurt sales were boosted by continued double digit growth from the Rowan Glen brand, which was supported by additional listings in the convenience and discount channels, and resulted in market share growth which further cemented the brand’s position within the top Scottish grocery brands. Dale Farm Spelga remains the largest regional yogurt brand in the UK and sales in Republic of Ireland continue to grow, boosted by new listings across the multiple channel, reinforcing Dale Farm Spelga’s position as an all Ireland brand.

Desserts sales were boosted by a strong performance from Dale Farm branded product. Increased listings and distribution growth in trifles and cheesecakes across a wide customer base in the UK and Ireland ensured a sales performance well ahead of the market, and a new range of Rowan Glen desserts was successfully launched in early 2014. Continued focus on growth areas of the desserts market resulted in the successful launch of Dale Farm Fresh Custard. This product secured local and national listings with major retailers, which assisted in category growth.

A major investment in cottage cheese, including increased capacity and product capability at the Kendal plant, helped secure an own label supply contract with a prominent national retailer, substantially increasing output and requiring additional milk from our GB farmers members to meet demand.

Ice Cream Dale Farm’s Ice Cream business delivered year on year sales growth of 30%, boosted by good weather in early summer and the acquisition in April 2013 of the Mullin’s Ice Cream business based in Kilrea. Like for like growth was 10% year on year, with our market share increasing in both Northern Ireland and the Republic of Ireland.

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The launch of 4 new Dale Farm Ice Cream products in 2013/14 further strengthened the product portfolio with 3 of these new lines being manufactured at the Mullin’s site in Kilrea. The new Honeycomb Cup performed particularly well and has grown our overall share in this category.

The Mullin’s Ice Cream business has been a successful addition to the Ice Cream business with Dale Farm’s strong distribution channels enabling a 25% increase in Mullins sales mainly in the 900ml retail ice cream range and scoop products into the convenience sector.

Ingredients Sales of dairy ingredients increased by 83% to a record £99.9 million in 2013/14, with strong growth in speciality powders, WPC and cheese & butter sales. Bulk liquid sales of cream and skimmed milk products also experienced strong year on year growth.

Ingredients returns were strong across the year, with a tight supply situation, largely the result of adverse weather, in the first half of 2013 and strong demand, particularly from China and Russia, helping to boost Dale Farm sales. However as the


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year progressed improved milk prices and better weather conditions encouraged a recovery in global milk production and the year ended with markets weakening and signs of renewed price volatility.

Dale Farm continues to develop its international customer base in ingredients helped by very successful trade shows in Anuga and Dubai which attracted substantial interest from customers from North Africa, the Middle East and Asia. Dale Farm’s sales of commodity products fell by 9.5% to £24 million as the company continued to switch its focus to selling customised ingredients products direct to end users as opposed to trading standard commodities.

PowderThe milk powder business based at Dunmanbridge performed well in 2013/14 on the back of improved powder returns and additional throughput across the year. Recent capability investments enabled the business to focus on selling value added bespoke enriched milk powders to end users.

The substantial increase in cheese output, together with the commissioning of the new whey plant,

supported a significant growth in sales of WPC35 powder, especially to China. The new whey ultra filtration plant has the capability to produce whey protein concentrate with a range of protein levels and during the year the first WPC80 product was successfully produced which has been well received by potential customers.

Milk Sales & LogisticsThere was a slow start to milk production in 2013/14 as unseasonably poor weather impacted grass growth and milk yields across the British Isles in April and early May. After the late spring weather conditions improved and production recovered strongly, with record annual milk supplies in Northern Ireland of 2.05 billion litres, almost 4% ahead of the previous year.

United’s milk supplies were largely processed by Dale Farm who, with increased milk processing capacity, purchased and processed a record volume of milk taking in excess of 75% of the total supply. Therefore, to a much greater extent than previously was the case, the milk price paid to United members was largely driven by Dale Farm’s processing activities. With United’s milk auction

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ending in January 2013, milk sold to external buyers was sold via direct negotiations with individual buyers and reflected the strong global market for dairy products during 2013/14.

The butterfat base used to calculate quality bonuses for milk purchases and sales was reduced from 4.00% to 3.85% from 1 April 2013. This had the effect of increasing the milk prices paid to members by 0.33 pence per litre. Taking account of this change, the average price paid to all Northern Ireland members, including quality related adjustments, began the year at a record level for the month of April of 30.70ppl. It continued to rise month-on-month, peaking in November 2013 at an average price paid of 34.52ppl. The price remained strong and relatively flat for the remainder of the year, easing to an average of 33.67ppl in March 2014.

For the 2013/14 year as a whole the average price paid to Northern Ireland members increased by 7.2 pence to 32.9 pence per litre, an all-time record for the Society.

The focus on reducing milk collection costs continued with a further improvement in the proportion of alternate day collection helping to offset cost increases especially for fuel. With the support of United members, many of whom have installed increased capacity milk tanks, the proportion of milk collected on alternate days during the peak production month of May 2013 exceeded 90% for the first time.

Table: United Monthly Average Price Paid (pence per litre)

Producer ServicesUnited’s Producer Services team, which supports dairy farmers in the production of quality milk, had a very busy year in 2013/14. Field staff assisted members in improving their milk quality, preparing for Red Tractor farm audits and dealing with a wide range of other queries. It is encouraging that through the combined efforts of members and field staff the overall quality of milk saw further improvement, especially in hygiene, with Bactocount improvements over the previous year.

Red Tractor accreditation is an essential element of Dale Farm’s drive to develop its growing product sales into consumer markets, locally and in Great Britain. From 1 July 2013 the Dale Farm Red Tractor bonus of 0.4ppl was paid on all milk supplied from accredited farms in Northern Ireland regardless of where the milk was processed. This change led


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to a strong interest in the Red Tractor scheme, with many more members reaping the benefits of accreditation. The Dale Farm Red Tractor milk pool is now the largest milk pool in Northern Ireland.

United Tankcare sales of new and ex-farm tanks reflected the improving economic conditions on dairy farms during 2013/14; and legislation banning the use of R22 gas for servicing refrigeration equipment from 1 January 2015 prompted strong sales of new condensing units. Heat recovery units also witnessed a surge in demand as producers increasingly realise the potential energy savings from their use.

Membership of Dairy Herd Management continued to expand and herd health testing is becoming an increasingly popular aspect of this service. Driven by a renewed focus on the economic and welfare benefits of improved animal health, whole herd testing for Johne’s disease has continued to increase in popularity. Demand for better recording of information, particularly with regard to fertility, has continued to encourage more producers to access and input data to the online ‘Your Herd’ programme. The Mobile Herd App which enables

herd data and events to be to be recorded via a smart phone also gained in popularity. Heatime continued to gain traction with Dairy Herd Management installing a range of systems during the last year. A unique Heatime Rumination system, which provides real time information on cow health and welfare was launched, with the first units installed on farms.

United FeedsUnited Feeds delivered another strong trading performance with record sales volumes resulting from increased feed demand and further growth in market share. Feed demand remained high throughout the year, driven initially by a difficult spring which delayed grass growth and stretched forage resources on all farms. Demand was also supported by favourable milk prices throughout the year and a gradual reduction in feed costs as raw material prices weakened.

The company continues to focus on improving efficiency at farm level through innovative feeds and effective management programmes. Improvements in productivity were also implemented within the company’s mills in Belfast


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and Dungannon in order to meet the increased demand and reduce overhead costs. In particular the mixers at both plants were upgraded to improve mixing efficiency and reduce batch mixing time.

ITThe Group continued an extensive range of IT projects designed to deliver improved business performance. There was further growth in the use of Electronic Data Interchange (EDI) for processing customer orders and invoices. Fully integrated Warehouse Management Systems are now operational at the Group’s distribution centres and a project is underway to introduce the system for managing stock in the cheese and powder businesses.

Mullins Ice Cream and Ash Manor have been integrated into the Group central Enterprise Resource Planning system and a major project to upgrade the ERP system is underway and on schedule for completion in 2014. The programme to virtualize the server infrastructure in the Group is nearly complete, resulting in improvements in processing and reductions in costs.


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People The dedication and commitment of Group employees continues to provide the organisation with a key competitive advantage and contributed to the improved financial and operational performance in the past year.

Due to the increased activity within Dale Farm and the acquisition of Ash Manor, total numbers employed across the Group, inclusive of temporary and agency workers, increased from 936.5 in March 2013 to 1043.5 in March 2014.

As part of its overall talent management process and succession planning strategy, the Group has embarked on an enhanced graduate development programme, employing nine new high potential graduates during 2013/14. Web based interview software, which allows applicants to complete an initial interview at a time and place that suits them, was used for the first time as part of this process and will be more widely used in future recruitment exercises.

There was a significant increase in business improvement activity as Business Improvement and Lean Manufacturing techniques were rolled out to new employees and our newly acquired sites. Business improvement projects again delivered significant savings and efficiency improvements across the Group.

The on-going investment in staff training was supplemented by a number of technical training programmes designed to deliver greater employee capability and workforce flexibility in key manufacturing and technical functions. During the year the Group also designed and implemented an online version of its employee attitude survey. Following a successful trial the Group will now utilise this web based system for future surveys.

It is pleasing to report that labour stability and attendance rates showed further year on year improvements and continue to remain ahead of industry benchmarks.



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Health & Safety Maintaining a safe and healthy working environment for all employees continues to be a key priority for the Group and managers and employees are supported and encouraged to ensure a safe working environment.

Activity levels within the Group continue to increase by a combination of new business acquisitions and increased production on existing facilities. Against this background, it is pleasing to report that in 2013/14 the Group recorded its lowest annual number of accidents and days lost due to accidents and that the Group performance compares favourably with industry benchmarks.

Environment Achieving best practice standards of environmental performance and energy consumption are key competitive issues for the Group. The following activities and achievements were completed in the past year.

Energy Consumption: The Group maintained its focus on reducing energy consumption and, following substantial reductions in the previous two years, use per tonne of production volume across the Dale Farm and United Feeds’

manufacturing facilities fell by a further 2% in 2013/14.

Environmental Infrastructure Improvements: The expansion and upgrading of the cheese and whey processing plant, including new cheese cooling facilities, made an important contribution to reduced energy, water and chemical consumption. Across the Group total water use per tonne of production has decreased by 12%. Cleaning chemical use has also decreased and there was a major reduction in the volume of material disposed by landfill.

The new membrane bioreactor effluent treatment plant at Dunmanbridge was fully commissioned in mid 2013 and has operated effectively, producing an extremely high quality effluent discharge. A new decanting centrifuge was commissioned to treat the resulting effluent sludge, converting it into a cake suitable for anaerobic digestion and reducing significantly the off-site transport requirements.

Packaging improvements: The Group continues to implement business improvement programmes designed to reduce the amount of primary and secondary packaging required for its products,


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while maintaining or improving packaging performance. An example is the new award winning Infini 2 litre bottle which contains recycled plastic and up to 20% less plastic than a standard bottle. This bottle is increasingly being used for Dale Farm’s liquid milk business, leading the local industry in this field.

Environmental Accreditation: During the year all of Dale Farm’s NI manufacturing sites successfully retained the industry leading ISO 14001 environmental accreditation standard and met their targets for the first year of the climate change agreement. The latest phase on the EU Emissions Trading Scheme came into effect on 1 January 2013 and Dunmanbridge, the only Group site impacted, successfully complied with the scheme requirements.

Dale Farm was successful in achieving Quintile 1 in the 2013 Arena Network Environmental Benchmarking survey of Northern Ireland’s leading public and private sector organisations

Corporate Social Responsibility The Group continues to partner a number of organisations in line with our commitment to operate in a sustainable manner, with the local community at the centre of our efforts.

As a Corporate Patron of the Prince’s Trust, Dale Farm has supported a number of CV skills

workshops and mock interview days. The company also supports the Trust’s ‘Get into Food Processing’ Programme, which provides unemployed young people with the skills and experience necessary to secure employment within the food industry.

Fostering closer links with local universities, the Group has provided a further series of challenging work placements for under graduate students across a range of functions including new product development, marketing and IT. In association with local schools the Group facilitates a range of work experience opportunities for GCSE and A-level pupils, and proactively supports the Tasty Careers campaign run by the Food and Drink Sector Skills Council, providing young people with an insight into the rewarding career opportunities available throughout the food sector.

As part of Dale Farm’s efforts to promote ethical working, the company continues to comply with the internationally recognised Sedex Ethnical Trading standard. This standard is recognised by major multiple customers and illustrates the Group’s commitment to operating each of its businesses in an ethical manner.

Group employees continue to play an active role in their local communities and participated in a number of charitable fund raising events throughout the year.



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Board of Directors

1. John Dunlop, Chairman, is a dairy farmer from Portadown, Co Armagh. He was elected as a Director of United Dairy Farmers in 1998, as Vice-Chairman in 2009, and as Chairman of the Society in 2010. John is also a Director of Dale Farm Limited and United Feeds Limited, and is a member of the Farmer Forum of Dairy UK. He is a past County Chairman of the Ulster Farmers’ Union for Co Armagh and was previously a director of Craigavon and Armagh Rural Development.

2. William Hanna, Vice Chairman, is a dairy farmer from Rathfriland, Co Down. He was elected as a Director of United Dairy Farmers in 2003 and is also a member of the Northern Ireland Board of Dairy UK and a former Chairman of the Dairy Council for Northern Ireland. William is a member of the Board of Trustees of Agrisearch and a past County Chairman of the Ulster Farmers’ Union for Co Down.

3. Fred Allen is a dairy farmer from Randalstown, Co Antrim. He was elected as a Director of United Dairy Farmers in 2009.

4. Robert Bryson is a dairy farmer from Banbridge, Co Down. He was elected as a Director of United Dairy Farmers in 2013.

5. Robert Fyffe is a dairy farmer from Omagh, Co Tyrone. He was elected as a Director of United Dairy Farmers in 2006 and was formerly a member of the Northern Ireland Local Board of the NFU Mutual Insurance Society.

6. Harry Johnston is a dairy farmer from Ahoghill, Co Antrim. He was elected as a Director of United Dairy Farmers in 2011 and is also a Director of the Dairy Council for Northern Ireland and Glenfarm Holdings Limited. He is a past County Chairman of the Ulster Farmers’ Union for Co Antrim.

7. Bertie Kelso is a dairy farmer from Dungannon, Co Tyrone. He was elected as a Director of United Dairy Farmers in 1996, is also a Director of the Dairy Council for Northern Ireland, and a past Chairman of the Ulster Farmers’ Union for Co Tyrone.

8. James Murphy is a dairy farmer from Tempo, Co Fermanagh. He was elected as a Director of United Dairy Farmers in 2010 and is currently the County Chairman of the Ulster Farmers’ Union for Co Fermanagh.

9. David Rea is a dairy farmer from Crossgar, Co Down. He was elected as a Director of United Dairy Farmers in 2008.

10. David Rowe is a dairy farmer from Armoy, Co Antrim. He was elected as a Director of United Dairy Farmers in 2014.

11. Eric Bell OBE is an appointed independent Director of United Dairy Farmers and a Director of Dale Farm Limited, having joined both Boards in 2009. Eric is a former Senior Partner in Grant Thornton (Chartered Accountants) and is Chairman of Samuel Lamont Holdings Group Limited. He is also a non-executive Director of a number of other Northern Ireland companies, and a former Chairman of the Institute of Directors in Northern Ireland.

12. Helen Kirkpatrick is an appointed independent Director of United Dairy Farmers and a Director of Dale Farm Limited. A Fellow of the Institute of Chartered Accountants in Ireland and a member of the Chartered Institute of Marketing, Helen joined both Boards in 2014. She is a non-executive director of Kingspan Group plc and UTV Media plc and works in the Corporate Finance Division of Invest Northern Ireland. Helen was formerly a board member of the International Fund for Ireland, a director of the Enterprise Equity Venture Capital Group and a non-executive director of a number of other Northern Ireland companies and charities.

The Board of Directors of United Dairy Farmers consists of 12 non-executive Directors. The Board of Directors of Dale Farm Limited consists of 4 non-executive Directors, all of whom are also Directors of United Dairy Farmers. The current Group Directors are:

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ChairmanJohn Dunlop

Vice-ChairmanWilliam Hanna

DirectorsFred Allen Eric Bell OBERobert Bryson Robert FyffeHarold JohnstonBertie KelsoHelen Kirkpatrick (appointed 1 April 2014)

Ian McMorris MBE (retired 31 March 2014)

Billy Morton (retired 31 March 2014)

James Murphy David ReaDavid Rowe (appointed 1 April 2014)

Chief ExecutiveDavid Dobbin CBE

Financial DirectorDanny McAleese

SecretaryEuel Agnew

AuditorsErnst & Young LLPBedford House16 Bedford StreetBelfast BT2 7DT

BankersUlster Bank11-16 Donegall Square EastBelfast BT1 5UB

Danske Bank Donegall Square WestBelfastBT1 6JS

Company StatusUnited Dairy Farmers Limited is a members’ voluntary co-operative registered under the Industrial and Provident Societies Acts (Northern Ireland) 1969 and 1976.

Registered OfficeDale Farm House15 Dargan RoadBelfast BT3 9LS

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Board of Directors


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The Board is committed to adopting best practice in Corporate Governance as deemed practical and appropriate for a member owned cooperative.

The Board

The Board meet monthly (except for July) with a formal schedule of matters specifically reserved for its decision. Additional meetings are held as required. The Board reviews trading performance, ensures adequate funding, sets and monitors strategy, examines major acquisition opportunities and formulates policy on key issues. To enable the Board to discharge its duties all members receive appropriate and timely briefing papers. The Group has appropriate insurance cover in place for Board Members.

The Board comprises 12 non-executive Directors, 8 of whom are appointed by the farmer members through Area elections; 2 are elected by the members’ Area Councils acting collectively; and 2 Directors are appointed by the elected Directors. The term of office of elected Directors is 4 years while appointed Directors are appointed for not more than 3 years and can only serve a maximum of two terms.

The attendance of Directors at the eleven routine Board meetings in 2013/14 was as follows:

John Dunlop 10 William Hanna 11 Fred Allen 11 Bertie Kelso 11 Eric Bell 10 Ian McMorris 11 Robert Bryson 11 Billy Morton 11 Robert Fyffe 10 James Murphy 11 Harold Johnston 11 David Rea 11

The Chairman and Vice Chairman are both elected annually by the Board. The remuneration of the directors of the society is determined each year by the members at the annual general meeting. All farmer directors are also suppliers of milk to United Dairy Farmers, but they and the appointed directors are regarded as independent. Induction training is provided for newly elected/appointed Directors and further training is provided as required.

The Board Committees Comprise: Audit

Eric Bell (Chairman) James Murphy (appointed 4 June 2013) Ian McMorris (retired 31 March 2014) Billy Morton (retired 31 March 2014) Helen Kirkpatrick (appointed 1 April 2014) David Rea (appointed 12 May 2014)

Nominations

John Dunlop (Chairman) William Hanna David Dobbin

The Audit Committee

The Audit Committee meets at least twice a year and has specific terms of reference which include responsibility for reviewing the Annual Accounts prior to submission to the Board, monitoring the internal control systems and liaison with both external and internal auditors. The Committee satisfies itself on the independence of the auditors and monitors the level of non-audit fees. The internal auditors review key risk areas and relevant controls across the Group and report their findings to the Audit Committee, together with any recommendations for improvement.

The Nominations Committee

The Nominations Committee makes recommendations to the Board on the appointment of “non elected” directors to the Boards of the Group subsidiary and associate companies, as well as senior executive appointments.

The Management Team

The Group Chief Executive and management team, who are responsible for operating decisions and the effective functioning of the main activities in the Group, report to the Board.

Dialogue with Shareholders

Communication with members is given the highest priority by the Board and the Annual Report gives a comprehensive review of the financial and operating performance of the Group for the year. The Board uses the AGM to have an open dialogue with members and the Group has 4 Area Councils elected by the membership, which meet about 4 times a year with the elected Directors for their Area to discuss the affairs of the Society. In addition “Open” Area Council meetings were held in 2013/14, to which all members in the relevant Area were invited, and the Board continued its programme of “Open Days” for members at Dale Farm plants. The Society also keeps in touch with members through the issue of the monthly magazine “United News” and via the Group Web site www.utdni.co.uk.

Any member wishing to contact the Company can do so at the registered office of the Company.

Corporate Governance

UNITED DAIRY FARMERSTelephone: 028 9037 2237Email: [email protected]

www.utdni.co.uk

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