2019 Chairman’s Report to Members

On behalf of the board I am honoured to report to you on the Society’s financial and operational performance in 2019. In summary it represents a very successful year’s trading for the Society.

28 May 2020

Creamery volume increased by 6.95 million litres (3.5%) on 2018; mill output reached almost 80,000 tonnes, its highest level excluding 2018 (which saw record levels due to poor weather conditions in the Spring and drought conditions in the Summer); sales in the branches network also exceeded prior years apart from 2018 with growth sustained in the non-agri sector. The Pharmacy division saw continued growth with sales up almost 5%. Together, the divisions yielded an increase in operating profit of €0.141 million on 2018.

The Consolidated Income Statement reports investment income of €3.63 million compared with a negative €4.81 million in 2018. This includes €2.45 million derived from a revaluation of our German property resulting from a significant improvement in the rented space and tenant lease terms, with the balance received from rental, investment and other income. In 2018 there was an unrealised loss as a result of the market value movement between 31 December 2017 and 31 December 2018 of €6.37 million in respect of Aryzta, IPL and Mainstream combined – reporting on the difference in market value from one financial year to the next rather than on the profit or loss that may have been realised on the sale of these being required under Financial Reporting Standard 102 (FRS102). In 2019 there was a comparable unrealised profit of €0.159 million. The performances of both Drinlis and Shinagh Estates have again contributed positively to profit for the financial year.

Carbery reported a strong performance for 2019 with gross profit increasing by 2.7% on 2018. This can be attributed to continued positive results from its Dairy, Nutrition and Taste businesses. Poorer returns, however, in butter and cheese markets resulted in reduced milk pricing over the course of 2019. Carbery was able to cushion the effect of this in utilising €2.78 million from the stability fund in supporting milk price during 2019.

During the year the €78 million cheese diversification project began in earnest with significant construction work being completed. Achieving such complex fabrication whilst successfully operating the plant during peak production has to be noted and commended. The investment will broaden the range of manufactured products and will open up more diverse markets. This has to be welcomed as the uncertainty with the Brexit phenomenon continues to cause concern.

Milk supply increased by 3.5% to just under 205 million litres for the year. Favourable weather for grass growth during the key milk production months and a solid milk price were the main contributory factors to this increase.

The quality standards required for value added products on the world dairy market are ever-increasing. To help meet these targets the Society increased testing for TBC to every collection during the year. Thermoduric testing was also initiated in an effort to reduce these environmental bacteria which can survive pasteurisation and downgrade some products. Suppliers were also encouraged to use chlorine free detergents to reduce the levels of thrichloromethane (TCM) in the final product.

The Society was well represented at local and national milk quality awards during the year. William and Dan Joe O’Donovan, Minanes, Drinagh were the Drinagh winners of the Carbery Milk Quality awards. John and Rita Young, Curraghlickey, Drinagh were the winners of the Carbery Sustainability award. Brendan and Pauline O’Driscoll, Shreelane, Leap won the Development award at the NDC and Kerrygold Quality Milk awards.

Both the trading and pharmacy divisions delivered strong performances during 2019 with a continuous emphasis on customer service and improved efficiency.

The Society’s provender mill continues to operate to a very high standard in throughput and quality terms. Following an intense Tesco audit it was awarded a green BRAG score which is the top score available for such an operation. To further streamline the operation and improve efficiency a new four tonne mixer was installed in the period. This represents the final phase of the current modernisation plan. Completion was achieved within the scheduled time frame. Our customers’ co-operation during the installation is greatly appreciated. To reward our customers’ loyalty the board has again approved generous feed bonuses for purchases during the year.

Since early March of 2020 our lives have been utterly changed by the pandemic known as Covid-19. As Chairman I would like to take this opportunity to thank all staff, customers and shareholders who helped the Society to adapt appropriately so that we can continue to serve the community. The health of our staff and other stakeholders in this crisis is paramount and I urge everybody to abide by the HSE guidelines in operation at any one time.

I wish to thank all those who contributed to another successful year. To the management and staff for their hard work and dedication. To the loyal customers, milk suppliers and shareholders throughout the area for their continued custom and support. To the board members for their advice and dedication to the Society during the year. A special word of thanks from the board to Mr. Ian Kingston, whose board term ends shortly, for his contribution. We welcome his replacement Mr. John Hurley and look forward to working with him.

While 2019 was a successful year, the early months of 2020 have quickly taught us that the future is always uncertain. However, Drinagh Co-op is a deep rooted community business with significant resources and is well placed to continue to serve our customers, milk suppliers and shareholders alike.

TJ Sullivan

TJ Sullivan

Drinagh Annual Report 2019
Drinagh Annual Report 2018
Drinagh Annual Report 2017
Drinagh Annual Report 2016
Drinagh Annual Report 2015
Drinagh Annual Report 2014
Drinagh Annual Report 2013
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