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Hybu Cig Cymru-Meat Promotion Wales

2007-08ANNUAL REPORT & ACCOUNTS

REFLECTING OUR INDUSTRY

HC 641-11 SE/2008/103

Volume IMeat and Livestock CommissionAnnual Report and Accounts 2008

Volume IIHybu Cig Cymru-Meat Promotion Wales Annual Report and Accounts 2007-08

Presented to the House of Commons pursuant to section 19 of the Agriculture Act 1967

Ordered by the House of Commons to be printed 16 July 2008

London: The Stationery Office £18.55 Not to be sold separately

Hybu Cig Cymru-Meat Promotion WalesAnnual Report & Accounts 2007-08

Published by TSO (The Stationery Office) and available from:

Onlinewww.tsoshop.co.uk

Mail, Telephone, Fax & E-mailTSO, PO Box 29, Norwich NR3 1GNTelephone orders/General enquires: 0870 600 5522 Fax orders: 0870 600 553 Order through the Parlimentary Hotline Lo-Call: 0845 7 023474E-mail: [email protected] Textphone: 0870 240 3701

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TSO@Blackwell and other Accreditated Agents

Hybu Cig Cymru-Meat Promotion Wales (HCC) is the strategicbody for the promotion and development of the Welsh red meatindustry and its mission is to develop profitable and sustainablemarkets for the benefit of all stakeholders in the supply chainin Wales.

HCC represents the interests of the industry supply chainthrough a programme of activities to add value, inform andraise awareness of our excellent quality products.

Hybu Cig Cymru-Meat Promotion WalesPO Box 176AberystwythCeredigionSY23 2YA

01970 62505001970 [email protected]

The company is limited by guarantee and does not have any sharecapital. Company Registration Number: 4635113

Hybu Cig Cymru-Meat Promotion Wales is part financed by the WelshAssembly Government.

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ANNUAL REPORT & ACCOUNTS 2007-08

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ANNUAL REPORT & ACCOUNTS 2007-08ANNUAL REPORT & ACCOUNTS 2007-08

Rees RobertsHCC Chairman

CHAIRMAN’S FOREWORD

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HCC has now been in existence for five years and to date2007-8 has been the most difficult of those years by far forproducers in Wales. Market uncertainties and a debilitatingsequence of damaging external influences that were beyondthe control of the industry in Wales enforced poorer returns forour quality products.

HCC’s direct role in representing the whole of the industry inWales from farmgate to consumer plate enabled a series ofswift, strategic responses to take effect and achieve themaximum impact possible in very difficult circumstances.

In 2007, the Welsh Assembly Government had announced theretention of HCC as a separate red meat authority in Wales.This followed a consultation in Wales of the recommendationsof the “Review of the Agricultural and Horticultural LevyBodies” undertaken by Rosemary Radcliffe on behalf of the UKand Devolved Administration Ministers.

In the past twelve months, HCC has worked with the WelshAssembly Government to deliver the findings of the report and,in April 2008, a new HCC Board took office that reflects thewidest possible representation of the industry.

I am sure that the strengthening made to the structure in thepast twelve months, on the solid foundations that have beenlaid in the previous four years, will empower HCC in the futureto take to a higher level its already strong record on delivery,innovation, application and inclusivity and in doing so achieveits main goal - to maximise returns for Welsh farmers in themarketplace.

On a personal note, in November 2007, I was delighted to beappointed Chairman of HCC for three years - a period that willgive me the chance to oversee the integration of the changesthat have been planned over the past eighteen months or soand one which I intend to see produce advancement andregeneration while ensuring stability and continuity.

ANNUAL REPORT & ACCOUNTS 2007-08 ANNUAL REPORT & ACCOUNTS 2007-08

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5AboveA selection ofpromotional materialproduced for theUnique/Unigrywcampaign.

HCC believes quality is the watchword for our red meat products and seeks todifferentiate both Welsh Lamb and Welsh Beef brands on their consistently highstandards of production and their Protected Geographical Indication (PGI) credentials-the highly-prized European Union designation for a special regional food of quality;

HCC’s delivery strategies remain at the heart of our marketing and promotional workin the retail markets at home and abroad as well as our work within the food servicesector;

It is essential, at a time when the red meat industry in Wales faces increasingcompetition from the global market, that HCC’s work to reinforce the central brandmessages enables sustained and widening awareness of both Welsh Lamb and WelshBeef within the target markets;

HCC has facilitated the pursuit of technical improvement and breeding excellenceacross the length and breadth of Wales by directing an influential and regionalprogramme of strategic industry development that has contributed to improvements inanimal health, the introduction of new technologies and a boosting of competitiveness;

HCC has worked with key partners to strengthen the red meat supply chain;

And HCC has continued to improve its communication of activities to stakeholders.

Five established strategic goals have underpinned HCC’s workon behalf of stakeholders in Wales and they are outlined here:

These strategic objectives are the foundations of the rollingprogramme of marketing, promotional and industrydevelopment work that is carried out by HCC to assist theindustry in Wales to become stronger and more competitive.

TM

The year began with the delivery of a promise from last year. I reported that HCC wanted to do more to encourage the use ofour quality local meat in hotels and restaurants and that wewere in the process of bringing together an all-Wales foodservice project that will encourage and help to build links withtourism businesses and food outlets across Wales.

In May 2007, HCC linked up with tourism organisations TheBritish Hospitality Association and The Wales Tourism Allianceto launch the Unique/Unigryw campaign, with the aim ofencouraging the promotion of quality, PGI Welsh Lamb andWelsh Beef products in hotels, restaurants, pubs, inns anddiners across Wales.

RightThe TV advertisingcampaign for WelshLamb

In response to low lamb prices in June, HCC’s Board ofDirectors took the decision to make use of financial reserves tofund extra marketing activity for Welsh Lamb, in a bid to resolvethe issues facing the sheep industry in Wales.

The reserves were used to fund a TV advertising campaign forWelsh Lamb in July, to keep the brand in the forefront ofconsumer’s minds and with the aim of maintaining profile rightthrough to September, when the planned TV and Printcampaign for Welsh Lamb was due to begin.


That was before a chain of events in the summer turned all ofthe industry’s plans and ambitions on their head.

On 05 August 2007, a restricted zone was put in place acrossWales as part of the GB-wide ban on livestock movement,following a confirmed case of Foot and Mouth Disease inSurrey. The ban applied to all susceptible animals, includingcattle, sheep, pigs and goats. No link to Wales from the infectedpremises was identified. Within days, the EuropeanCommission announced a GB-wide export ban on live animals,meat and meat products.

The ban had a severe economic impact on Wales; the nation’sred meat industry was losing £285,000 per day in revenuebecause of the export restrictions. Before movement washalted, HCC reported that exports of Welsh Lamb and WelshBeef to European markets had grown to £2million a week.

I had been in regular contact with Mike Petersen, Chair of Meat& Wool New Zealand, and welcomed the swift announcementthat their promotion activity in the UK would be suspended andon 23 August 2007 HCC welcomed the decision by the StandingCommittee on Food Chain and Animal Health (SCoFCaH) at theEuropean Commission to allow the resumption of exports fromWales and other parts of Great Britain back into Europe. Sixdays later, Minister for Rural Affairs, Elin Jones, announced there-commencement of livestock markets, animal gatheringsand shows in Wales.

Eventually, but not until November 2007, the European Unionallowed the export of meat from Wales to resume under normalconditions, paving the way for Welsh red meat exporters to fullyrebuild trading links with important markets such as France,Italy and the Benelux countries.

After the return of normal market conditions, HCC reported tothe Welsh Assembly Government's Finance Committee that theWelsh sheep industry had suffered more than £30m of lossessince early August as a result of the Foot and Mouth diseaseoutbreak.

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Following the damage caused by Foot and Mouth, confirmationwas then received of cases of Bluetongue in England. Anextension of the Bluetongue Restricted Zone was established inSouth East Wales when the disease was found on a farm nearPoole in Dorset in mid-February, the first time any part ofWales was within 150km of a confirmed case of Bluetonguedisease.

Lamb prices were a cause for concern throughout the summer.In July 2007, HCC’s latest lamb costs of production researchand current farm gate prices showed that farmers were falling71p per kilogram short of reaching profitability. The positiondeterioriated throughout the summer, exacerbated by the FMDrestrictions, until prices hit rock bottom in November.

HCC welcomed the European Union’s announcement of apartial ban on Brazilian beef imports in late December, eventhough the industry felt the decision was long overdue. TheStanding Committee on the Food Chain and Animal Healthruled that only beef from a list of Brazilian farms deemed tomeet EU standards would be allowed to export meat to Europefrom 31 January 2008.

HCC had been calling on the EU to make a decision onBrazilian imports for some time, and I had previously written toCommissioner Markos Kyprianou urging him to consider a banon all beef imports from Brazil.

HCC announced in February 2008 that it would take directresponsibility for the marketing, promotion and development ofthe Welsh pig sector from 01 April 2008 in order to ensure asustainable future for the sector. Previously HCC had anagreement with the British Pig Executive (BPEX) to undertakeactivities on behalf of Welsh pig levy payers, using the levy thatit collected at point of slaughter in Wales.

I would like to mention briefly the very positive contributionmade to our industry by the Farming Connect Sheep and BeefDevelopment Programme, funded by the Welsh AssemblyGovernment and administered by HCC. Farming Connect hasbeen the main vehicle for effectively promoting businessdevelopment and awareness; environmental safeguarding andimproved market focus and awareness.

It has been an invaluable resource and if, as an industry, we areable to meet our competition targets- that is, the application ofthe latest genetic and technological information with our traditional husbandry techniques, our marketing and brandingwork and equitable farmgate prices – the fact that we will havean industry here in Wales that will be sustainable for years tocome will be due in no small part to the work carried out underthe Farming Connect banner to date.

Finally, I would like to extend my thanks to Hybu Cig Cymru’sBoard members and staff for their valuable contributions to theorganisation over the past twelve months.

Sincere thanks also to our partner organisations - the Farmer’sUnion of Wales, the former Meat and Livestock Commission,National Farmer’s Union Cymru, Welsh Assembly Government,Welsh Lamb and Beef Producers, The Welsh LivestockAuctioneers Association and The Guild of Welsh Lamb and BeefSuppliers.

As the Board has now changed in shape and in content, theprevious incumbents can be rightly proud of the gains that havebeen recorded in the five years that HCC has been in existenceand that they have been in office.

In this time HCC has risen from a fledgling organisation thatwas feeling its way to a representative stakeholder authoritythat has an international reputation and impact.

Rees RobertsHCC Chairman


DELIVERY IN DIFFICULT CIRCUMSTANCES:MEETING STAKEHOLDER NEEDS AND COPINGWITH MARKET PRESSURES

Gwyn HowellsHCC Chief Executive

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This year, 2007-8 was a year of three parts for our industry; thenew season began with tempered optimism and a satisfactorydegree of success in terms of achieving Hybu Cig Cymru-MeatPromotion Wales’ (HCC) strategic goals and delivering theindustry's aspirations.

Then all efforts were derailed by the outbreaks of Foot andMouth in England, which resulted in very damaging restrictionson exports that depressed lamb prices in Wales.

However, the year ended with a determined revival followingthe lifting of restrictions and a concerted marketing push byHCC, both at home and abroad, which helped put Welsh redmeat on the road to recovery and back where it belonged- asthe first choice of many consumers across Europe.

On 07 November 2007, Minister for Rural Affairs Elin Jonesannounced the appointment of Mr. Rees Roberts as Chair ofHCC. Mr Roberts, a sheep and beef farmer from Llanrhaeadr-ym-Mochnant, Powys, is a well known and respected figure inagricultural circles.

I am grateful to Mr. Roberts and the Board of Directors for theirhelp and advice and once again I give my warm thanks to HCC’sstaff for their support, dedication and hard work. Unperturbedby the frustrations caused by the extraordinary circumstances,their determined efforts kept on course the industry’s longterm strategy by delivering the maximum programme ofactivities possible and often in the most difficult circumstances.

A selection of the work they have performed on your behalf inthe past twelve months appear on the pages that follow thisintroduction.

I would also like to thank others who have helped Hybu CigCymru-Meat Promotion Wales to sustain its growth in the pasttwelve months – the Welsh Assembly Government and otherfunding and project partners – that have enabled HCC’sall-Wales support schemes to produce considerable grassrootsbenefits for our supply chain stakeholders.


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ACTIVITIES AND ACHIEVEMENTS IN 2007-8 A promotional roadshow at supermarkets all over Wales in

June 2007 showcased the versatility of Welsh Lamb and itsnutritional benefits. The travelling kitchen, funded by HCC, inpartnership with the Welsh Assembly Government, a westWales abattoir and a leading UK retailer, set up camp in the carparks of leading outlets in eight different locations thatincluded Swansea, Bridgend, Cardiff, Newport, Cwmbran,Wrexham and Rhyl.

(1) Promotion Of Welsh Lamb And Welsh Beef And RedMeat Products In Wales, the UK and Europe

Hybu Cig Cymru-Meat Promotion Wales took the first steps inthe quest to open up a new market for Welsh Lamb in the FarEast by participating in the renowned HOFEX AsianInternational Exhibition of Food and Drink, held in Hong Kongin May 2007.

In October 2007, Welsh red meat exporters took centre stage atAnuga, an internationally renowned food fair in Germany thatattracts 160,000 visitors from around 156 countries and isrenowned as one of the most important trade fairs in the worldof food and beverages.

Maintaining export contacts and forging new customers for PGIWelsh Lamb and Welsh Beef was the main aim of HCC, who setup the umbrella stand at the event. Positive signals werereceived from the southern European light lamb markets inSpain, Portugal, Greece and Italy.

A dynamic, dual-industry, local food campaign driven by HCCwith partners from the tourism industry was described as a“win-win promotion for Wales” by HCC at its Wales-wide launchin May 2007 as both the red meat supply chain and tourismbusinesses would benefit from the joint initiative.

HCC linked up with tourism organisations The BritishHospitality Association and The Wales Tourism Alliance tolaunch the Unique/Unigryw campaign, with the aim ofencouraging the promotion of quality, PGI Welsh Lamb andWelsh Beef in hotels, restaurants, pubs, inns and diners acrossWales.

AboveInternational Exhibition

RightPromotional roadshowdemonstrating theversatility of WelshLamb

RightWales CaptainRyan Jones at theRoyal Welsh Show


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eating forenergy

R E D M E A T – a n a t u r a l p a r t o f a b a l a n c e d d i e t

Welsh Lamb & Beefare excellent sources of iron, which helps keep blood

healthy, boosts vitality and reduces fatigue.

Add them to your diet and put a spring in your step.

www.MeatPromotionWales.co.uk

fi nd the right balance


Welsh Lamb & Beefare valuable sources of protein, zinc and iron, all of

which play a vital role in any balanced diet.

Whoever thought healthy eating could be this tasty?



put a spring in your step

Welsh Lamb & Beefare good sources of zinc, which helps boost

fertility, growth, the immune system and

generally keeps you ticking over nicely.


lose the fatgain the taste


On average, 100g of lean uncooked

Welsh Beefcontains only 5% fat. So by adding it to a balanced diet,

it can help you stay nice and lean too.


AboveSeries of Posterspromoting the benefitsof red meat

RightWelsh Lambpromotional kit

In response to low lamb prices, HCC’s Board of Directors inJune 2007 announced that they would make use of financialreserves to fund extra marketing activity for Welsh Lamb. Thereserves were used to fund a TV advertising campaign forWelsh Lamb in July to keep the brand in front of UK consumersthrough to September, when HCC’s planned TV marketingcampaign would commence.

HCC produced four vibrant and colourful posters focussing onthe low-fat and high-iron and zinc benefits of red meat forcirculation to health professionals all over Wales.

HCC welcomed a host of international visitors to the RoyalWelsh Agricultural Show in July 2007. Groups, from Belgium,Denmark, France, Germany, Italy, Kosovo, Netherlands,Romania, Russia and USA attended to find out more about PGIWelsh Lamb and Welsh Beef, visiting processing plants andfarms in the surrounding area during their stay.

Tens of thousands of day visitors enjoyed stepping out at theRoyal Welsh Agricultural Show and many called in to HCC’sstand to see the cooking demonstrations, sample the foodprepared or pick up some technical industry advice- and theywere able to also pick up a promotional pedometer.

Wales Captain and British Lion Back Row Ryan Jones packeddown at HCC’s stand on the Wednesday of the Show to getacross the benefits of healthy eating to scores of juniorshowgoers. Osprey Ryan signed autographs and took part ininteractive computer games and cooking demonstrations andalso gave tips on food preparation, nutrition and the balancedplate to young fans that joined in with the wide range offun-filled activities during HCC’s Children’s Day at the Show.

Hollywood star, Matthew Rhys voiced a new Welsh Lamb TVadvert, shot in the Brecon Beacons in English and Welsh andpart of a marketing campaign to promote the unique qualitiesof Welsh Lamb. Entitled “Wet Your Appetite”, the 30-secondlong advert, created by HCC, brought together alternate imagesof a Welsh Lamb joint being prepared in a farmhouse set in arain-soaked Welsh landscape. It depicted the freshness andnaturalness of Welsh Lamb and carried the slogan “WelshLamb – from Wales, naturally”, stressing the link betweenquality Welsh Lamb and the surroundings in which it is reared.

HCC announced in September 2007, following a successfulmeeting with leading UK multiple retailers and the WelshAssembly Government, that it was to implement a majormarketing campaign to boost demand for Welsh Lamb in thedomestic market and assist the Welsh red meat sector in thewake of the recent Foot and Mouth Disease outbreak inEngland, which had led to restrictions on all exports. The meeting, called by First Minister for Wales Rhodri Morganand Minister for Rural Affairs Elin Jones, explored ways on howthe Welsh Assembly Government and HCC could workcollaboratively with the supermarket chains.

HCC developed a fully integrated, individually tailoredpromotional programme, with the aim of boosting demand forWelsh Lamb all over the country. It had been estimated that, asa result of the export ban on all red meat products from the UK,an additional 1.1 million Welsh lambs would be on the marketin the last months of the year.

Butchers across Wales were urged to support Welsh farmersas part of a nationwide marketing campaign by HCC. A specialWelsh Lamb promotional kit was created exclusively forbutchers, which included a new recipe leaflet containing tenmouth-watering ways to cook and serve Welsh Lamb.


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The advert remained a key factor in HCC’s later autumnmarketing and was aired on ITV1 Wales, ITV1 Meridian, ITV1Central, Channel 4, GMTV, S4C and UKTV Food. It was shown incinemas nationwide in November- the first time HCC had usedthe big screen to promote Welsh Lamb.

The 50-second cinema advert appeared in a total of 1091cinemas between 16 –29 November 2007 as part of an UK-wideadvertising campaign to promote the unique qualities of WelshLamb. Research in the key target area of Meridian TV, whichcovers south east England, showed that during the campaign,Welsh Lamb achieved significantly higher recognition comparedto the same period the previous year.

When asked if Welsh Lamb was a brand they could trust, 70 percent of those questioned agreed with the statement, comparedto just 59 per cent the previous year, and 59 per cent agreedthat the Welsh Lamb TV advert made them more likely to buyWelsh Lamb, compared to 40 per cent in 2006.

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In December 2007, retailers were issued with a specialChristmas recipe leaflet, posters, stickers and otherpromotional point of sale material created by HCC. Recipesfeatured included Welsh Rib Eye Steak with Clementine andBlack Pepper Butter, Welsh Sirloin of Beef with Horseradishand Rosé Wine Glaze, Festive Welsh Lamb Curry and WelshLamb Racks stuffed with lamb, leek, cranberry and pistachiostuffing.

Welsh Lamb and Welsh Beef kicked off its 2008 exportcampaign at a top Italian culinary congress. HCC highlightedthe qualities of PGI Welsh Lamb and Welsh Beef at theprestigious Identità Golose trade show in Milan, from 27-30January 2008. HCC then attended the Gulf Food Fair in Dubai,from 24-27 February 2008, to re-engage trade in the regionfollowing the closure of exports as a result of the Foot andMouth disease outbreak in the UK last year.

HCC’s stand at Gulfood was used as a platform for buyers andsellers to conduct direct business face to face, encouragingspeculation that fresh Welsh Lamb could soon be back on theshelves of top supermarkets and exclusive restaurants in theUnited Arab Emirates.

Minister for Rural Affairs Elin Jones AM visited the show,leading discussions between HCC and the UAE Governmentministers about the possibility of an early resumption to thetrade in Welsh Lamb.

At a function in Paris to celebrate St David’s Day 2008 andpromote Welsh Lamb and Welsh Beef, HCC announced itwould screen its well-received Welsh Lamb television advert inParis in French for the new season because successive salescampaigns had encouraged more Parisians to buy qualityWelsh Lamb.

LeftHCC’s advertisingcampaign

RightChristmaspoint-of-sale recipes


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HCC Chairman Rees Roberts addressed exporters, importers,specialised wholesalers and retailers at the highly-rated LeDôme du Marais restaurant in Paris where Welsh Lambfeatures as a signature dish. He said quality, PGI Welsh Lamband Welsh Beef was back in business in 2008 and that theWelsh Assembly Government and HCC were supporting aseries of worldwide events to showcase the best of Welshproduce.

In March 2008, HCC announced a strong year-on-yearperformance with both lamb and beef brands enjoyingsignificant sales and volume rises during January and February2008.

Expenditure on lamb frying and grill steaks and stewing lambwas nearly twenty per cent up on figures produced for the earlymonths of 2007 and beef steak and mince sales around ten percent up in that period, according to data supplied byindependent research specialists TNS.

(2) Building Strongly Differentiated Products

HCC’s marketing efforts seek to maximise returns for Wales’producers by clearly differentiating our red meat products fromthose of our competitors.

At the centre of these efforts is the prestigious ProtectedGeographical Indication (PGI) status of both the Welsh Lamband Welsh Beef brands. PGI status remains a strong element ofall of HCC’s domestic and export marketing activity.

The European Commission awarded PGI status to Welsh Lamband Welsh Beef in recognition of its quality and special regionalidentity. Meat bearing the branding Welsh Lamb and WelshBeef is born and reared in Wales, fully traceable, andslaughtered in an HCC approved abattoir. An independentinspectorate, appointed by HCC, provides authenticity ofassurance and protection of the integrity of Welsh Lamb andWelsh Beef’s PGI status. PGI adds value to high-qualityproducts from particular geographical areas and plays aleading part in enhancing sales opportunities in the UK and inEurope.

The awards for Innovation and Excellence in Meat Products, runby HCC, produced more than 600 entries in the north and southheats in the spring of 2007 with 363 of them receiving GoldAwards. The grand final was held at the Royal Welsh Show inJuly.

Independent butchers from across Wales again took up thechallenge in 2008. The number of entries continues to increasewith another record set this year.

(3) Improving The Quality and Cost-Effectiveness ofPrimary Production And (4) Strengthening The Red MeatSupply Chain

The value of the Farming Connect Sheep and Beef Development Programme was evident at a MonmouthshireOpen Day where advisers confirmed farmer Graham Probert ofGreat Bottom Farm, Penrhos near Raglan, had managed tosave a total of £2,350 a year by reducing the calving period ofhis herd of suckler cows.

Improving the performance of the herd of 56 cows was a keyobjective and calculations showed that changes on the farmover the last few years had improved the performance of theherd by nearly £50 per cow.

BelowGraham Probert ofGreat Bottom Farm,Penrhos

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RightRob & Teresa Wilsonwith daughters Emily,Sophie & Chrissy

A trial of a Video Image Analysis (VIA) system of sheep carcasesconcluded the VIA was as accurate and more consistent thanexpert classifiers at predicting carcase conformation- howeverit was less accurate and less consistent at predicting fatness.The study also confirmed that VIA offers sheep abattoirs ameans of predicting both meat yield and primal weights. Thestudy was funded by HCC and other industry bodies.

Another HCC-funded project at IGER, Aberystwyth, came upwith simple but effective findings- that if farmers wrappedsileage bales with six instead of the more commonly used fourlayers of film, oxygen seepage is reduced, the bales seal muchbetter and produce better quality silage.

Another trial, at a north Wales demonstration farm, found thatincreased performance could be achieved by feeding cattle withprotein supplements. The three-month trial was held over thewinter months at Camaes farm, Llangernyw near Abergele.

In July and August 2007 respectively, Nant yr Efail farm, hometo Richard, Helen and Gethin Owen, at Betws-yn-Rhos, nearAbergele and Bwlchyddwyallt, farmed by Rob and TeresaWilson, at Merthyr Cynog, Brecon, became the latest additionsto HCC’s Farming Connect portfolio of ten demonstration farmsacross Wales. The HCC pan-Wales network of demonstrationfarms operates in Trawsfynydd, Llandysul, Newport (Pembs),Cowbridge, Abergele, Llangollen, Welshpool and Raglan.

The Ectoparasite Survey, funded by the Welsh AssemblyGovernment through Farming Connect, concluded that externalparasites were now less of a problem than in previous studieswith sheep scab, blowfly strike, ticks and lice occurring on 11.6 per cent, 57.6 per cent, 11.1 per cent and 15per cent ofsheep farms, respectively. Sheep scab costs the Welsh industryaround £2.3 million per year, while blowfly strike costs £0.8 million in terms of reduction in performance, preventionand cost of treatment.

The innovative use of DNA technology in sheep breeding andthe financial benefits of performance recording werehighlighted at a well-attended open afternoon, held at Richardand Penny Chantler’s Hill farm at Llanigon, Hay-on-Wye, inAugust.

More than 700 farmers have signed up to date to HCC’s WelshBeef Quality Improvement Project scheme and qualify forfunding of up to £2,500 towards buying a top performing bull fortheir herd. The Welsh Assembly Government-funded project,which is administered by HCC, offers farmers the chance toapply for 40 per cent of funding – up to £2,500 – on purchasinga top performing bull.

The bull must be in the top ten per cent of its breed, in 400 DayGrowth or Muscle Depth and top ninety per cent for CalvingEase. The scheme is available to viable mainstream sucklerbeef and dairy farmers in Wales and both pedigree and / orcommercial beef breeding businesses may apply for support.

More than 300 bulls are expected to have been purchased bythe conclusion of the Scheme, making a valuable contributionto the improvement of the genetic quality of the Welsh herd.

Dafydd Rhodri Davies from Pontargamddwr, Tregaron; BedwyrJones from Gwastadanas, Nant Gwynant and Roger Jamesfrom Pistyllgwyn, Llanyre became the winners in August of theFarming Connect annual scholarship, which is organised byHCC.

All three will visit New Zealand on their own personal factfinding missions and on their return they will use theirexperiences to develop and better their farming practices.

BelowDafydd Rhodri Daviesfrom Pontargamddwr,Tregaron - one of thethree winners of theHCC - Farming Connectannual scholarship

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A leading scientist told an HCC backed event that it waspractical to feed animals less yet achieve the same growth rate.It had been achieved in the beef industry and could equallyapply to sheep production, Robert Herd, principal researchscientist at the University of New England in Australia, told theSheepbreeders Roundtable at an event sponsored by HCC andother industry bodies.

Over 200 entries were received from visitors to the Royal WelshWinter Fair in December 2007 for the beef carcase assessmentcompetition at HCC’s stand. The competition helps to promotethe series of selection for slaughter training courses that HCCrun throughout the year, for both lamb and beef. The coursesare designed to help farmers to achieve accurate selection forslaughter, and maximise returns on their animals.

To enrol on a lamb or beef classification course please contactHybu Cig Cymru on 01970 625050.

A growing number of Welsh farmers are reaping the benefits ofadvice from top industry specialists under the Welsh AssemblyGovernment's Farming Connect Beef and Sheep DevelopmentProgramme, which is co-ordinated by Hybu Cig Cymru-MeatPromotion Wales (HCC).

More than sixty farmers gathered at a December 2007 open dayorganised by HCC at Dinas Island Farm, Dinas, Newport,Pembrokeshire, which concentrated on maximising growthrates to ensure that lambs are finished and off the farm asearly as possible.

In December 2007, HCC and Farming Connect launched a pilotstudy in mid Wales aimed at improving active flock and herdhealth planning. The study was to take place in the Machynlletharea through a series of farmer meetings, vet workshops andsome online health modules.

Welsh Mountain sheep breeders were set to eradicate footrot,estimated to cost the Welsh sheep industry around £7millionper year, from their flocks after embarking in December on anew project that allowed for selection of resistant rams.Theproject, which has been granted a SPARK award by GenesisFaraday and funded by additional money from HCC, would takeon board an innovative genetic test for footrot resistancedeveloped by a New Zealand University.

Reducing reliance on purchased feeds to cut costs and improveanimal growth rates was the central discussion point at ademonstration farm open day in Ceredigion in December atJohn and Audrey Davies’s, Blaenglowon Fawr farm, Talgarreg,Llandysul.

The benefits of using high genetic merit performance recordedrams to increase the growth rates and increase muscle depthof lambs and maintain an adequate finish, was the theme of theFarming Connect Sheep and Beef Development Centredemonstration farm open day at Gelli Goll Farm nearCowbridge.

An open evening to discuss controlling feed costs and exploringthe potential to grow homegrown cereals took place at Nant yrEfail, Betws yn Rhos, Abergele in January; the option ofconverting to organic farming was explored during an open dayorganised by HCC and hosted by the Probert family on theirGreat Bottom Farm, Penrhos, Raglan, farm in January andimproving performance of the suckler herd while dealing withthe issues of bTB status was discussed at an open day atPanteg Farm, Llanddewi Velfrey, Narberth, Pembrokeshire inJanuary.

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TopCelebrating the officiallaunch of the muttonseason

AboveElin Jones AM, Ministerfor Rural Affairsunveiling the NationalBeef Day

RightHCC ConsumerExecutive Elwen Robertsconducting cookingworkshops

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(5) Communicating Activities and Issues

HCC Chairman Rees Roberts called for equity in the supplychain and a fairer return for farmers at HCC’s fourth annualAutumn conference at Brecon in November 2007.

The conference’s keynote speaker was Elin Jones AM, Ministerfor Rural Affairs. HCC will run a fifth Autumn conference forstakeholders during November 2008.

Leading Welsh politicians celebrated the official launch of themutton season in Wales in September 2007 at aHCC-supported event at the National Assembly for Wales.

The event, organised by the Farmers Union of Wales, showcased Welsh mutton and was arranged in order to raisethe profile of this increasingly popular meat amongst Welshpoliticians and the press. HCC had been supporting the MuttonRenaissance Club and its various campaigns since its inceptionin 2004, when it was launched by the Mutton Renaissancepatron, His Royal Highness The Prince of Wales.

HCC unveiled the second National Beef Day celebration on 04 October 2007 and revealed that more schools in Wales thanever before were sourcing Welsh red meat. The ‘Buy Local’policy of Welsh authorities had clearly changed dramatically injust a few years.

A snapshot survey of the buying policy of Welsh authoritiesshowed further gains have been made in the past twelvemonths. From key urban authorities, such as Cardiff, whereWelsh Beef featured on the capital city’s school menus for thefirst time, to rural councils, such as Powys, where Welsh Beefwas specified when supply contracts were renewed last yearand now all minced, diced and roasting beef supplied in thecounty is Welsh.

National Beef Day is a Wales-wide day that is co-ordinated byHCC. It was fully backed by Welsh Assembly GovernmentMinister for Rural Affairs Elin Jones, farming unions,processors and suppliers in Wales. Local authorities acrossWales staged a blanket of events as part of this year’s all-Waleslocal sourcing promotion, after the previous year’s inauguralevent was hailed as a resounding success by schools, parents,farmers and politicians alike.

HCC backed Welsh Food Fortnight (22 September-06 October2007) which was created to connect young people with the foodthat they eat, raise their awareness of produce available withinWales and the impact of food on their health. Among otherevents Consumer Executive visited Ysgol Glan Clwyd, Llanelwyto conduct cooking workshops with the pupils and highlight thehealth benefits of Welsh Lamb and Welsh Beef as part of abalanced diet.

Adapting to changes in subsidy and global competition hadcreated substantial challenges to Welsh farmers over the lastfew years, Rees Roberts, Chairman of HCC told the WelshAffairs Select Committee on Tuesday 4 December 2007. HCCgave evidence to outline to MPs how adapting to CAP reform,together with growing global competition has meant that eventhe most efficient Welsh livestock producers have had to facenew production and marketing challenges.

HCC said that most livestock farmers have limited directcontact with the end consumer and are under-equipped topromote their products directly, or to develop new marketopportunities. Global competition from lower cost producers,who are often unhindered by the level of regulation and the highlabour, environmental and animal welfare standards that existin this country, was also increasing.

The sector was heavily reliant on multiple retailers to sell theirproduct to the consumer – around 75 per cent of retail beefsales and 65 per cent of retail lamb sales were now through themultiple retailers.

The Committee is made up of MPs from all parties in Wales,and was hearing from HCC as part of its inquiry into the effectsof globalisation on food production and supply in Wales.

PERFORMANCE AGAINST TARGETSSET FOR THE YEAR 2007/08

26 27


Four school children from Denbighshire were the stars of thefirst ever bilingual cookbook created exclusively for children byHCC and released in March 2008. Elin Roberts, Elis Ifans andGwenno Roberts from Ysgol Betws Gwerfyl Goch, Corwen andHuw Roberts, from Ysgol Brynhyfryd, Rhuthun are featured inthe colourful “Cool2Cook” cook book helping children tobecome aware of the importance of the food choices they makeand become involved in preparing food.

Recipes include Welsh Beef Bolognaise in Cheesy Jackets; Pitstop Sausages; Welsh Lamb Crumble; Oriental Welsh Beef &Noodles and even a Fruit Berry Smoothie.

HCC supported and participated in the Nursing in Practiceconference in Cardiff in June 2007, launching a set of vibrant,colourful posters that focus on the low-fat and high-iron andzinc benefits of red meat. They have been circulated to healthprofessionals all over Wales.

Throughout the year, HCC organised educational roadshows,visiting schools and colleges across Wales to promote cookingand nutrition and pass on guidance about how to buy andprepare food. More than 3,000 pupils were involved over thetwelve month period.

Gwyn HowellsHCC Chief Executive

Strategies

1 UK market: Consumer advertising/trade campaigns/business to business campaigns

2 Export: develop trade/consumer programmes for PGI Welsh lamb

1 UK market: Consumer advertising/trade campaigns/business to business campaigns

2 Export: develop trade/consumer programmes for PGI Welsh beef

1 Develop research and development programme

2 Set up technology transfer mechanism to discuss new developments

3 Develop a programme of genetic and health improvement for sheep and beef sectors

4 Develop a framework to collect information for farm to farm comparison

5 Guardian of PGI for Welsh lamb and beef

1 Introduce training schemes for farmers to understand requirements of processors

2 Facilitate projects to increase efficiency within supply chain

1 Interpret Government policy initiatives in areas such as public sector food provision, health promotion and food labelling etc and advise industry sectorson most appropriate response

1 Coverage in all relevant print and media

2 Publications and resource materials

3 Industry issues affecting supply and demand

Targets

Maintain % of consumer awareness fromHCC commissioned U&A study above 60%

Increase trade/consumer awareness andenhance market share/value by 5%

Maintain % of consumer awareness fromHCC commissioned U&A study above 60%

Increase trade/consumer awareness andenhance market share/value by 5%

Undertake 10 projects over next five years

2,500 farmers advised in the year

200 farms involved in improvementschemes

Reports by end of July (lamb) andSeptember (beef)

Maintain audit exercise

300 farmers per annum

Communicate with all abattoirs in Wales;communicate with stakeholders in supplychain

Regular reports as initiatives arise

Achieve over 270 press articles in the year

Provide industry with monthly bulletindealing with the prevailing marketconditions

All issues dealt with appropriately andreport as necessary to HCC Board

Performance

Achieved. Awareness at 65%

Not achieved. Exports during year stoppeddue to FMD outbreak in England

Achieved. Awareness at 65%

Not achieved. Exports during year stoppeddue to FMD outbreak in England

Achieved. Further 7 commenced this year,26 undertaken to date

Achieved. 4,200 farmers advised

Achieved. 230 farms involved

Achieved. Reports issued at appropriatetimes

Achieved. All 25 abattoirs operating havebeen visited

Achieved. Over 500 farmers have attendedtraining courses

Achieved. Communication made on aregular basis

Achieved. Articles in Gwlad and monthlybulletin issued

Achieved. Over 350 articles in year

Achieved

Achieved. Reports made to board

Effective promotion of Welsh lamb products in order to maintain value and volume in target markets and sub-sectors

Effective promotion of Welsh beef products in order to maintain value and volume in target markets and sub-sectors

Improve the quality and cost effectiveness of Welsh red meat products

Strengthen the red meat supply chain

Effective promotion of Welsh beef products in order to maintain value and volume in target markets and sub-sectors

Effective communication of HCC activities and industry issues

2928


FINANCIAL SUMMARY

INCOME

Cattle Levy 7.05%

Sheep Levy 36.64%

WAG Core Grant10.79%

WAG Project Funding19.38%

Other Project Funding15.19%

Other Income10.51%

Pig Levy 0.44%

EXPENDITURE

Marketing &Promotion

54.32%

Industry Development30.94%

Communications6.82%

Finance & Administration7.92%

LEVY INCOME (£000)

HCC’s principle source of income is derived from the MLC levy collected from animalsslaughtered in Wales.

As the levy is collected under statute, HCC are required to prepare the financial statementsin accordance with the Government Financial Reporting Manual. These financial statementsare reviewed by the National Audit Office in discussion with HCC’s independent auditors.

FINANCIAL SUMMARY

Other income represents HCC’s share, based upon its share of GB levy, of MLC accumulatedlevy reserves on its wind up.

At the year end the accumulated surplus was £1,599k. The Board has reviewed the reserveand consider it prudent to maintain this surplus in order to cover any unexpected crises andfluctuations in the number of animals slaughtered. The reserve will ensure that the companyis able to continue to operate without receiving any income, whilst still undertaking asignificant amount of its activities.

277 3111,505 1,550

14 231,796 1,884

CattleSheepPig

General Promotional2007-08

289 3251,427 1,470

11 171,727 1,812


320 3581,588 1,681

10 161,918 2,055


286 3211,472 1,469

8 131,766 1,803


293 3281,370 1,410

8 121,671 1,750


2007-08 2006-07 2005-06 2004-05 2003-04Income £000 £000 £000 £000 £000Levy 3,680 3,539 3,973 3,569 3,421Grants 3,782 2,403 1,462 1,658 1,451Services 46 45 23 36 11Interest 87 65 42 42 25Other Income 743 - - - -

8,338 6,052 5,500 5,305 4,908

2007-08 2006-07 2005-06 2004-05 2003-04Expenditure £000 £000 £000 £000 £000Marketing & Promotion 4,111 3,015 2,738 2.273 1,933Industry Development 2,342 1,945 1,379 1,321 1,167Communications 516 440 602 532 487Finance & Administration 599 628 716 533 483

7,568 6,028 5,435 4,659 4,070

DIRECTORS’ REPORT (continued)Year Ended 31 March 2008

4 MembersOn 4 April 2007, the Welsh Assembly Government became the sole member of the company.

5. Share CapitalThe company is limited by guarantee and does not have any share capital. The liability of the member is limited to £100.

6. AuditorsFollowing the change in ownership of the company, work is underway to make the company subjectto audit by the Auditor General for Wales by means of an under s144 of the Government of Wales Act 1998.

7. Statement on Internal ControlScope of responsibility The Chief Executive has responsibility for maintaining a sound system of internal control that supports HCC’s policies, aims and objectives and safeguards the public funds and organisational assets. HCC is funded by grant income, invoiced sales and levy. For the year under review, the levy was collected under statute by the Meat and Livestock Commission and under a delegation agreement the Meat and Livestock Commission delegated their statutory functions in relation to Wales to HCC. With effect from 1 April 2008, the levy raising powers has been granted to the Welsh Levy Board. Under a delegation agreement, the Welsh Levy Board has delegated their statutory functions to HCC.

The purpose of the system of internal controlThe system of internal control is designed to manage risk to a reasonable level, rather than eliminate all risk of failure to achieve policies, aims and objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness.The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement of HCC’s policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically.The system of internal control has been in place for the year ended 31 March 2008 and up to the date of approval of the annual report and accounts and accords with Treasury guidance.

Capacity to handle riskLeadership is given to the risk management process through the Board of Directors and audit committee. HCC’s executive management are the company’s risk management team and are responsible for disseminating good practice throughout the organisation. Training is given to the executive team to enable them to fulfil this role.The company continues to make advances in its risk management framework and this will be continually reviewed.

The Risk FrameworkThe company’s risk management policy is a key element within its internal control and corporate governance framework. It covers HCC’s approach to risk management, roles and responsibilities, risk management process and its review.HCC’s risk appetite is determined upon the assessed impact the risk has on the goals, objectives and financial resources of the company.The following items are key elements in the system of internal control.

Risk RegisterA risk register is in existence, identifying risks and ranking them for risk and effect. The register is examined regularly by the executive team and reviewed by the audit committee.

Business Continuity PlanA draft plan has been prepared to consider ways and means for HCC to continue to operate its coreactivities should a disaster occur. This will be finalised in the forthcoming year.

DIRECTORS’ REPORTYear Ended 31 March 2008

The directors present herewith their annual report, together with the audited financial statements of thecompany, for the year ended 31 March 2008.

1. ResultsThe surplus for the year was £770,280.

2. Principal ActivityThe company's principal activity during the year was that of the development and promotion of Welsh red meat. A full review of the year is provided in the Chairman’s Foreword and Delivery in Difficult Circumstances.

3. Directors and their InterestsThe directors of the company throughout the period were as follows:

Other Directorships/InterestsE Bailey (resigned 31 March 2008) Director of Dyffryn Seaside Estates

Limited and NFU MutualJ H Brereton Partner in Jones Peckover, Brereton

Dalby and Oswestry Cattle AuctionsJ E Collins (appointed 1 April 2008) Director of Abertawe Bro Morgannwg

University NHS Trust and SwanseaBuilding Society

H Evans (appointed 1 April 2008)R W Evans (appointed 1 April 2008)A F Gardner (appointed 1 April 2008)W J Goldsworthy (resigned 31 March 2008) Chair of Welsh Assembly Government

Agri-Food Partnership, WEFO Rural Thematic Group and Bridgend College

Prof W Haresign (appointed 1 April 2008)A S Horine (resigned 31 March 2008)W P Hughes (resigned 1 April 2007)W Jenkins (appointed 1 April 2008)Dr N Lampkin (appointed 1 April 2008)G Probert (appointed 1 April 2008)J R Roberts (Chairman) Commissioner of Meat and Livestock

Commission (until 31 March 2008) K J Roberts (resigned 31 March 2008) Director of Meat and Livestock Commercial

Services Ltd, Assured British Meat and Assured Food Standard; Interim Chief Executive officer of Agriculture and Horticulture Development Board (under secondment from MLC)

W G RobertsE W Williams (appointed 1 April 2008)J Yeomans (appointed 1 April 2008)D K Thomas (resigned 31 March 2008) Director of Welsh Farm Suppliers Limited,

Border Distribution Limited, Border Distribution (2000) Limited, Livestock Marketing Ltd, Welsh Lamb & Beef Producers Ltd and Quality Welsh Food Certification Ltd. Member of governing board of IGER

AlternatesR M Howells (for D K Thomas) (resigned 31 March 2008)A M Owen (for W G Roberts) (resigned 31 May 2007)J M Thomas (for E Bailey) (resigned 31 March 2008)

All directors appointed on 1 April 2008 were appointed by the Minister for Rural Affairs under Nolan principles, for a period of three years. Messrs Brereton and WG Roberts already served as directors but were appointed under the above principles.

ANNUAL REPORT & ACCOUNTS 2007-08Hybu Cig Cymru-Meat Promotion Wales Company Limited By Guarantee

30 31


9. Remuneration Report

Remuneration CommitteeThe Remuneration Committee of the Board of Directors recommends the remuneration of the chairman, directors and chief executive. The composition of the committee during the year to 31 March 2008 was as follows:-

K RobertsJ R RobertsW J Goldsworthy

Statement Of Remuneration PolicyAll directors of the company are non-executive and, in view of the company being limited by guarantee, have no share interest in the company.

The Chairman was appointed by the Minister for Rural Affairs from 1 November 2007 for a three year period. His remuneration is set at £24,000pa for the duration of his term of office. The remuneration of the non-executive directors was set at £4,000pa.

Directors EmolumentsEmoluments of the directors who served throughout the year to 31 March 2008 are as follow:

£J R Roberts 26,833E Bailey 4,000J H Brereton (2) 2,000W J Goldsworthy 4,000A Horine 4,000W P Hughes 500K Roberts 0W G Roberts 4,000D K Thomas (1) 4,000

Alternate directors are not entitled to receive any fees.

None of the directors received any benefits in kind or were eligible for membership of the company pension scheme. Expenses, being mileage incurred on company business, were re-imbursed at Inland Revenue approved rates.(1) fees due in relation to Mr Thomas’ services were paid to Welsh Lamb and Beef Producers

Limited, a company of which he is a director.(2) fees due in relation to Mr Brereton’s services were paid to Jones Peckover, a business of which

he is a partner.

Attendance RecordsThe Board met 8 times during the period April 2007 to March 2008. The number of Board meetings attended by the directors are as follows:

E Bailey 7J H Brereton 6W J Goldsworthy 5A Horine 7W P Hughes 1J R Roberts 8K Roberts 4W G Roberts 8D K Thomas 7


Business PlanThe company presents an annual business plan and budgets to its board. The plan for 2008/9 was approved at the March Board meeting.

Financial ReportingFinancial reports are presented to the Board.

Non Financial ReportingHCC has developed a monitoring and evaluation system which monitors outcomes and outputs against targets set at the business planning stage. Regular reviews are undertaken by each department and the executive team to ensure that outcomes are being achieved, resources are applied in appropriate areas and that HCC are delivering value for money for its levy payers.

Review of effectivenessHCC has conducted its own review of the effectiveness of the system of internal control. The review took account of the external auditors’ comments, following a system review, and was overseen by the audit committee. The implications of the result of the review of the effectiveness of the system of internal control have been advised to the Board of Directors. The company’s systems are under constant review.

The Board of DirectorsThe Board of Directors has a number of key roles in the management of risk, including setting the tone and influencing the culture of risk management within HCC and determining the level of risk that is acceptable in specific areas of activity. It does this by its policy and overall approach.

HCC’s Audit CommitteeThe remit of the Audit Committee is defined to include considering the planned activity and results of both internal and external audit.

In reviewing the effectiveness of HCC’s system of internal control the Audit Committee has undertaken the following key activities:

● Internal ControlGained an understanding of whether internal control recommendations made by external auditors have been implemented by management.

● Financial ReportingGained an understanding of the current areas of greatest financial risk and how management is managing them effectively.

● Annual Financial StatementsReviewed the annual financial statements and determined whether they are complete and consistent with the information known to committee members; assessed whether the financial statements reflect appropriate accounting principles. Met with management and the external auditors to review the financial statements and the results of the audit.

● Internal AuditCertain reviews were undertaken internally by the company. These were reviewed by the audit committee.

● External AuditReviewed the external auditors’ proposed audit scope and approach and ensured no unjustified restrictions or limitations had been placed on the scope.

8. Payment Policy

The company’s policy is to make payment to suppliers not more than 30 days after receipt of the invoice, unless alternative payment terms have been agreed with suppliers. The ratio, expressed in days, between the amount invoiced to the company by its suppliers during the year and the amount owed to itstrade creditors at the end of the year was 20 days.


3332

We have audited the financial statements, whichcomprise the Income and Expenditure account,Balance Sheet, Cash Flow statement and relatednotes (1 to 16), which have been prepared underthe historical cost convention and the accountingpolicies set out in note 1.

This report is made solely to the company’smember in accordance with Section 235 of theCompanies Act 1985. Our audit work has beenundertaken so that we might state to thecompany’s member those matters we arerequired to state to him in the auditor’s reportand for no other purpose. To the fullest extentpermitted by law, we do not accept or assumeresponsibility to anyone other than the companyand the company’s member, for our audit work,for this report, or for the opinions we haveformed.

Respective Responsibilities of Directors andAuditors

The directors’ responsibilities for preparing theAnnual Report and the financial statements inaccordance with applicable law and UnitedKingdom Accounting Standards (United KingdomGenerally Accepted Accounting Practice) are setout in the Statement of Directors’ Responsibilities.

Our responsibility is to audit the financialstatements in accordance with relevant legal andregulatory requirements and InternationalStandards on Auditing (UK and Ireland).

We report to you our opinion as to whether thefinancial statements give a true and fair view andare properly prepared in accordance with theCompanies Act 1985. We also report to you if, inour opinion, the Directors’ Report is notconsistent with the financial statements. Inaddition we report to you, if, in our opinion, thecompany has not kept proper accounting records,if we have not received all the information andexplanations we require for our audit, or ifinformation specified by law regarding directors’remuneration and transactions is not disclosed.

We read other information contained in theAnnual Report and consider whether it isconsistent with the audited financial statements.This other information comprises only theChairman’s Statement, Delivery in DifficultCircumstances: Meeting Stakeholders Needs andCoping with Market Pressures, PerformanceAgainst Targets and Financial Review. Weconsider the implications for our report if webecome aware of any apparent misstatement ormaterial inconsistencies with

the financial statements. Our responsibilities donot extend to any other information.

Basis of Audit Opinion

We conducted our audit in accordance withInternational Standards on auditing (UK andIreland) issued by the Auditing Practices Board.An audit includes examination, on a test basis, ofevidence relevant to the amounts and disclosuresin the financial statements. It also includes anassessment of the significant estimates andjudgements made by the directors in thepreparation of the financial statements, and ofwhether the accounting policies are appropriateto the company’s circumstances, consistentlyapplied and adequately disclosed.

We planned and performed our audit so as toobtain all the information and explanations whichwe considered necessary in order to provide uswith sufficient evidence to give reasonableassurance that the financial statements are freefrom material misstatement, whether caused byfraud or other irregularity or error, and that in allmaterial respects, the expenditure and incomehave been applied to the purposes intended byparliament and the financial transactionsconform to the authorities which govern them. Informing our opinion we also evaluated the overalladequacy of the presentation of information in thefinancial statements.

OpinionIn our opinion:

● the financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of the company’s affairs as at 31 March 2008 and of the surplus of the company for the year then ended and have been properly preparedin accordance with the Companies Act 1985.

● the information given in the Director’s Report isconsistent with the financial statements.

● in all material respects the expenditure and income have been applied to the purposes intended by parliament and the financial transactions conform to the authorities which govern them.

Baker Tilly UK Audit LLPRegistered AuditorChartered AccountantsElgar House, Holmer Road, Hereford HR4 9SF


3534

INDEPENDENT AUDITORS’ REPORT to the members of Hybu Cig Cymru-Meat Promotion Wales


10. Statement Of Directors’ Responsibilities

Company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the company and of the surplus or deficit of the company for that period. In preparing those financial statements, the directors are required to:

● Select suitable accounting policies and then apply them consistently;

● Make judgements and estimates that are reasonable and prudent;

● Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguardingthe assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors who were in office on the date of approval of these financial statements have confirmed, as far as they are aware, that there is no relevant audit information of which the auditors are unaware. Each of the directors have confirmed that they have taken all steps that they ought to have taken as directors to make themselves aware of any relevant audit information and to establish that it has been communicated to the auditor.

By Order of the Board.

T G HowellsSecretary

Company Registration Number: 4635113 Registered Office: 21a North Parade, Aberystwyth SY23 2JL

INCOME AND EXPENDITURE ACCOUNTYear Ended 31 March 2008

The surplus for 2008 and 2007 arises from continuing operations. There are no recognised gains and lossesin 2008 or 2007 other than the surplus for the year.


3736

Notes 2008 2007 £ £

Income 2 8,250,540 5,987,206

ExpenditureMarketing and promotion 4,110,987 3,015,463Industry Development 2,341,427 1,945,051Communications 516,070 440,131Finance and administration 599,027 627,515

7,567,511 6,028,160

Operating Surplus/(Deficit) 3 683,029 (40,954)

Interest receivable 87,251 64,662

Excess of Income Over Expenditureon Ordinary Activities Before Taxation 770,280 23,708

Taxation 6 16,169 12,285

Surplus for the year 11 754,111 11,423

2008 2007Notes £ £ £ £

Fixed Assets Tangible assets 7 27,423 31,270

Current AssetsDebtors 8 1,873,963 818,038Cash at bank and in hand 1,572,692 2,033,476

3,446,655 2,851,514

Creditors - amounts fallingdue within one year 9 1,177,016 1,339,833

Net Current Assets 2,269,639 1,511,681

2,297,062 1,542,951

Represented by:Reserves 11 2,297,062 1,542,951

BALANCE SHEET31 March 2008

The financial statements, which comprise the Income and Expenditure account, Balance Sheet, CashFlow statement and related notes (1 to 16), were approved and authorised for issue by the Board ofDirectors on 6 June 2008 and signed on its behalf by:

J R Roberts

The financial statements were authorised for issue on 16 July 2008 by the Chief Executive.

1. Accounting Policies

The principal accounting policies of the companyare as follows:

a) Basis of AccountingThe financial statements have been prepared under the historical cost convention and in accordance with the Government Financial Reporting Manual 2007-08.

b) IncomeThe income of the company for the year represents levy income, grants and invoiced sales, exclusive of value added tax.

Income is recognised as follows:

Levy and services – invoices raised in respect of the period;

Grants - grants of a revenue nature are credited to the Income and Expenditure account in the year in which they accrue and matched with the appropriate expenditure. Repayments of grant are only made where, as informed by the grant provider, the terms of the grant have not been met.

c) Tangible Fixed AssetsTangible fixed assets are stated at cost less accumulated depreciation. Depreciation is provided to write off the cost of tangible fixed assets over their expected useful lives at the following annual rates:

Office equipment 25%-33%

2. Income

d) PensionsThe company makes contributions to individual pension plans for some of its employees. Contributions payable for the year are charged to the income and expenditure account.

The company makes contributions for other employees to a defined benefit pension scheme. The regular pension cost is charged to income and expenditure account and is based on the expected pension costs over the service lives of the employees.

e) TaxationTaxation is provided on interest receivable in the period. No tax liability is provided for on the company’s operating surplus as this is notconsidered to be a taxable trading activity.

f) Leases and Hire PurchaseCosts under operating leases are charged to income and expenditure account as arises.

g) Foreign CurrencyNormal trading activities denominated in foreign currencies are recorded in sterling at the exchange rates as of the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rate prevailing at the year end.

CASH FLOW STATEMENTYear Ended 31 March 2008

3938


2008 2007 £ £

Net cash from Operating activities (527,834) 220,338

Interest received 87,251 64,662Purchase of plant & equipment (5,330) (4,999)Taxes paid (14,871) (8,378)

(Decrease)/Increase in cash (460,784) 271,623

Reconciliation of operating surplus to cash flow from operating activitiesOperating (deficit)/surplus 683,029 (40,954)Depreciation 9,177 10,329Decrease/(increase) in debtors (1,055,925) 477,059(Decrease)/increase in creditors (164,115) (226,096)

(527,834) 220,338

Reconciliation of net cash flow to movement in net funds

1 April 2007 Cash Flow 31 March 2008£ £ £

Cash in hand and at bank 2,033,476 (460,784) 1,572,692

2008 2007£ £

Levy 3,679,563 3,538,492Grants received: WAG - core 900,000 950,000

- project 1,615,523 926,364EAGGF 1,266,670 526,808

Services 46,136 45,542MLC levy reserves payment 742,648 -

8,250,540 5,987,206

NOTES AND ACCOUNTING POLICIESYear Ended 31 March 2008

Following the review of the UK Agriculture and Horticulture levy boards, the Meat and LivestockCommission was wound up at 31 March 2008. HCC received a percentage of accumulated levyreserves based upon its share of GB levy. All income is generated in the United Kingdom and relates tocontinuing operations.

NOTES AND ACCOUNTING POLICIES (continued)Year Ended 31 March 2008

6. TaxationTaxation is provided on interest receivable in the period.

7. Fixed Assets - TangibleTangible fixed assets comprised:


3. Excess of Income Over Expenditure on Ordinary Activities Before TaxationThe result is stated after charging the following:

Staff costs, postage and stationery are assigned to the department to which they relate.

4. Staff CostsStaff costs comprised:

5. Directors’ EmolumentsDirectors' emoluments were as follows:


40 41

2008 2007£ £

Wages and salaries 652,303 546,677Social security costs 60,682 57,282Other pension costs 34,579 21,760

747,564 625,719

The average number of persons employed, on UK employment contracts, during the year was:

2008 2007Development, promotion and administration:Core 15 14Project 6 6

21 20

Office Equipment£

Cost1 April 2007 65,434Additions 5,330

At 31 March 2008 70,764

Depreciation1 April 2007 34,164Charge for the year 9,177

At 31 March 2008 43,341

Net Book ValueAt 31 March 2008 27,423

At 31 March 2007 31,270

2008 2007£ £

Fees 49,333 42,375Expenses 9,357 4,145

58,690 46,520

2008 2007£ £

Auditors – audit 14,350 14,375Auditors – non audit fees 2,650 4,100Staff costs (note 4) 747,564 625,719Directors fees (note 5) 58,690 46,520Operating lease rentals – equipment 59,650 63,276

– property 24,500 24,000Exceptional item:Bad debts re levy due - 88,833

2008 2007£ £

Taxation charge for the period 16,169 12,285

Reconciliation of tax charge:Interest received 87,251 64,662

Corporation tax at 20%/19% 16,169 12,285Marginal rate relief - -

16,169 12,285


11. Reserves

Both reserves represent realised surpluses of the company.

The transfer to the building reserve represents a reserve designated by the Board for the developmentof an office building. This reprsents non levy income comprising interest received on investments, andan element of MLC reserves payment earmarked for building development.

12. Financial CommitmentsOperating LeasesAt the year end the company was committed to making the following annual payments in respect ofoperating leases:

13. Capital CommitmentsAt the 31 March the Board had approved, but not contracted for, the purchase of an office buildingcosting £882,000 (2007: nil).

14. Contingent LiabilitiesThere were no contingent liabilities at 31 March 2008 (2007: £96,000. This did not crystalise).


8. DebtorsDebtors comprised:

All amounts included above are receivable within one year of the balance sheet date.

9. CreditorsCreditors comprised:

10. Share CapitalThe company is limited by guarantee and does not have any share capital. The liability of the member is limited to £100.


2008 2007Operating leases which expire: £ £

Within one year - property 26,000 -- other 3,076 10,578

Between one and two yearsWithin two to five years - property - 24,000

- other 42,871 41,816

71,947 76,394

BuildingIncome & Development

Expenditure Reserve Total£ £ £

At 1 April 2007 968,971 573,980 1,542,951Surplus for the year 754,111 - 754,111Transfer between reserves (124,129) 124,129 -

At 31 March 2008 1,598,953 698,109 2,297,062

Amounts falling due within one year2008 2007

£ £Corporation tax 9,761 8,463Other taxation and social security 62,835 21,302Other Creditors 660,618 847,190Accruals and deferred income 443,802 462,878

1,177,016 1,339,833

2008 2007£ £

Other debtors 247,553 152,746Outstanding levy income 782,808 578,591VAT - 4,984Prepayments and accrued income 843,602 81,717

1,873,963 818,038

42 43


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15. Related Party Transactions

Throughout the year to 31 March 2008, the Welsh Assembly Government were the sole member of thecompany and appointed a representative to the board.

The company receives funding from the Welsh Assembly Government, which amounted to £2,515,523 (2007: £1,876,364). This included £1,081,821 in relation to the Foot and Mouth Disease recovery campaignfollowing the outbreak in the summer.

No transactions were undertaken with directors.

16. Pension Scheme

The company made contributions to individual personal pension plans for some of its employees.Contributions are charged to the profit and loss account as incurred and amounted to £17,782 (2007: £13,807). Contributions amounting to £1,618 (2007: £1,029) were outstanding at the year-end.

The company also made contributions to a defined benefit pension scheme which is operated by the Meatand Livestock Commission. The employees of Hybu Cig Cymru who are members form only part of thescheme. The contributions paid in the year amounted to £16,797 (2007:£7,953) and there were outstandingcontributions at the year end of £1,408 (2007:£678). This cost is based on the actuarial valuation made as at31 March 2006.

Information regarding the split of the scheme’s assets between the Meat and Livestock Commission andHybu Cig Cymru is not available. The market value of the entire pension scheme assets at 31 March 2008was £212.7m (2007: £211.3m) and this was sufficient to cover 130.4% (2007:113.2%) of the value of thebenefits that had accrued to members, after allowing for earnings increases.

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REFLECTING OUR INDUSTRY Documents/GEN-LD7174 - Hybu Cig Cymru … · standards of production and...

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