Irish Food Board annual report and financial statements 2001 Contents To the Minister for Agriculture, Food and Chairman’s Statement 3 Ráiteas an Chathaoirligh 5 Chief Executive’s Review 9 Rural Development In accordance with Section 22 of An Bord Bia Act 1994, the Board is pleased to submit to the Minister its Annual Report and Accounts for the 12-month period ended 31 December 2001. Corporate Statement 20 Prompt Payment of Accounts 21 Don Aire Talmhaíochta, Bia agus Forbatha Tuaithe Board Membership 22 Der réir Alt 22 den Acht um an mBord Bia 1994, tá áthas ar an Organisation Structure 26 2001 a chur faoi bhráid an Aire. The Organisation 27 Philib Ó Loinsigh Report of the Comptroller and Philip Lynch Michael Duffy Chairman Chief Executive mBord a Thuarascáil Bhliantúil don bhliain dar críoch 31 Nollaig Micheál Ó Dufaigh An Cathaoirleach An Príomhfheidmeannach Auditor General 28 Statement of Accounting Policies 29 Income & Expenditure Account 31 Balance Sheet 32 Cash Flow Statement 33 Notes forming part of the Financial Statements Irish Food Board 34 Exports 2001 Irish Food & Drink Exports (€m) Animal Foods 2% Fish 4% Dairy Products 26% Edible Horticulture & Cereals 3% Beverages 13% Prepared Foods 26% Poultry 2% Lamb 4% Pigmeat 5% Beef 14% Live Cattle 1% 117 120 288 288 1,759 1,722 163 180 871 880 1,639 1,710 146 140 184 260 279 330 1,492 902 203 58 Exports By Sector (value in €m) 2000 2001(e) Animal Foods 117 120 2% Fish 288 288 4% 1,759 1,722 26% Edible Horticulture & Cereals 163 180 3% Beverages 871 880 13% 1,639 1,710 26% Poultry 146 140 2% Lamb 184 260 4% Pigmeat 279 330 5% 1,492 902 14% 203 58 1% 7,141 6,590 100 Dairy Products1 Prepared Foods Beef 1 Live Cattle Total value of Irish food and drink exports 1 Including refunds % of 2001 Exports Chairman’s Statement Philip Lynch Chairman The year 2001 will be remembered for the major outbreak of Foot and Mouth Disease (FMD) in Britain. In addition, the emergence of BSE on the continent had a significant adverse impact on the levels of beef exports from Ireland. Whilst dairy showed a small reduction due to difficult international conditions, increases in exports were evident in prepared foods, lamb, pigmeat and beverages. Total exports were €6.6 billion for the year. The tremendous response by the Irish public to the FMD controls was a critical factor in the successful management of the campaign. This support highlighted the importance of the agri-food sector to the performance of the Irish economy, not surprising when we consider the regional dispersion of the industry, its output of over €14 billion and direct and indirect employment in excess of 178,000. The Irish food and drink industry operates at an international level and in a most competitive, complex and fast moving marketplace. Bord Bia’s mission is to deliver effective and innovative market development, promotion and information services to assist companies win new business. Supply chain management is evolving as retailers look to remove cost from the system. Developments in this area often pose fundamental challenges to suppliers. Competition from non-food items for limited shelf space and the move up the value chain for retailers’ own brand offer puts further pressure on companies to develop unique selling propositions. Companies can expect this competitive environment to continue. It is essential that our market development services are practical, relevant and continue to assist companies manage their key relationships in this context. One of Bord Bia’s most important services is to provide industry with information and intelligence on the marketplace, with particular emphasis on emerging consumer trends and needs. Today the consumer is ever changing. We have smaller households, dual family incomes and a growing ‘grey’ market. Consumers are more informed and more demanding. They want safe and healthy food that meets their special, individual needs and value for money. Food and drink are increasingly driving lifestyles rather than reacting to them. There is a merging of eating out and eating at home. All of these factors impact on how new products are developed and how our retail and foodservice partners communicate with the consumer. Bord Bia’s goal is to provide information and knowledge which assists companies identify new opportunities and to find gaps in the marketplace that can be filled profitably by Irish suppliers. With recovery in markets, the food and drink industry will return to overall growth in 2002. Critical to continued success will be the maintenance of competitiveness in a cost conscious environment. Servicing the needs of our global customer base in retail, foodservice and manufacturing, in an innovative, market led manner will be vital if Irish companies are to build on existing relationships and grow their business. I am confident that Bord Bia has the strategy, the services and the people to play a key role in assisting companies achieve their growth objectives. Above all the Board, Management and Staff are committed to actively living and realising our vision - to champion the success of Irish food and drink. Appreciation Bord Bia relies on the co-operation and assistance of many key people and organisations to achieve its strategic objectives and to deliver value to its stakeholders and clients. We are grateful for the proactive support of Mr Joe Walsh, TD, Minister for Agriculture, Food and Rural Development and his Department. The Minister and his Department faced challenges in 2001 that made unprecedented demands on them and I wish to record Annual Report & Financial Statements 2001 3 Chairman’s Statement here our congratulations and gratitude for the leadership and judgement that they brought to bear in a time of severe national crisis. In addition to Minister Walsh, Minister of State Noel Davern, Minister of State Eamon Ó Cuív and Secretary General John Malone and their officials continued their commitment to, and support for, Bord Bia’s programmes and assisted us in the implementation of these in a most active way, including participating at events abroad (on top of otherwise very demanding schedules). Operating effective programmes requires working closely with other organisations, both public and private and with industry representative organisations. We value greatly the support and inputs they so willingly make available to us and which contribute so much to our activities. I also want to thank our Ambassadors and Irish embassies in overseas markets who are always there to support and add value to our activities. In the highly competitive, challenging and changing environment that lies ahead of us there is no doubt but that the bedrock of the organisation’s success will be the excellence and commitment of our staff. They have shown they are committed to change and that their reputation for excellence and service is well deserved. The Chief Executive, Michael Duffy, has been at the forefront of these developments and his leadership and teambuilding have been critical to Bord Bia’s success. On behalf of the Board and on my own behalf, I thank him, the Management and Staff of Bord Bia for their contributions to date and for their continuing commitment to achieving our objectives. 4 Annual Report & Financial Statements 2001 It is the role of the Board to take ultimate responsibility for the governance of the organisation. We have an excellent Board, ably assisted by the Subsidiary Boards and I am pleased once again to acknowledge their generous dedication and commitment, which I value greatly and without which we could not take on challenging workloads and continue to achieve significant success. Finally, I wish to say I am honoured that the Minister has re-appointed me for another term, a task I am pleased to undertake knowing I have the support of a highly dedicated Board and Management team. Philip Lynch Chairman Ráiteas an Chathaoirligh Beidh cuimhne ar 2001 mar an bhliain ar bhris ráig mhór den ghalar Crúb agus Béil amach sa Bhreatain. Chomh maith leis sin bhí tionchar suntasach agus diúltach ag teacht chun cinn BSE ar an mór-roinn ar leibhéil onnmhairithe mairteola as Éirinn. Cé go raibh laghdú beag i ndéiríocht de bharr coinníollacha idirnáisiúnta, ba léir go raibh meadú ar onnmhairiú bia ullmhaithe, uaineoil, muiceoil agus deochanna. Ba é luach na n-onnmhairí iomlána don bhliain ná €6.6 billiún. Bhí freagairt mhuintir na hÉireann ar rialaithe FMD mar fhachtóir criticiúil i mbainistíocht rathúil an fheachtais. Thug an tacaíocht seo chun solais chomh tábhachtach is atá an earnáil bhia-talmhaíochta d’fheidhmíocht gheilleagar na hÉireann agus ní nach ionadh nuair a smaoinimíd ar scaipeadh réigiúnach an tionscail, ar an aschur de bhreis is €14 billiún agus an fhostaíocht dhíreach agus indíreach de bhreis is 178,000. Oibríonn an tionscal bia agus dí ag leibhéal idirnáisiúnta agus i margaí atá fíorchasta, fíorthapa, agus fíor-íomaíoch. Is é misean Bhord Bia ná forbairt margaí nuálach agus éifeachtach, seirbhísí eolais agus chur chun cinn a sheachadadh chun cuidiú le cuideachtaí gnó nua a bhaint amach. Tá bainistíocht an tslabhra soláthair ag éabhlú de réir mar a fhéachann miondíoltóirí le deireadh a chur le costas a bhaineann leis an gcóras. Go minic cothaíonn forbairtí sa réimse sin dúshláin do sholáthróirí. Cuireann iomaíocht don spás teoranta ar sheilfeanna ó earraí nach earraí bia iad agus an ghluaiseacht suas ar an slabhra luacha do bhranda na miondíoltóirí féin tuilleadh brú ar chuideachtaí a gcuid tograí díolta ar leithligh féin a fhorbairt. Féadfaidh cuideachtaí a bheith ag súil go leanfaidh an timpeallacht iomaíoch sin. Tá sé ríthábhachtach go mbeidh ár gcuid seirbhísí forbartha margaí praiticiúil, cuí agus sa chomhthéacs sin go leanfaidh siad ag cuidiú le cuideachtaí bainistiú a dhéanamh ar a bpríomhchaidrimh. Ceann de na seirbhísí is tábhachtaí atá ag Bord Bia ná eolas agus faisnéis ar an margadh a sholáthar do thionscal le béim ar leith ar threochtaí agus riachtanais nua an tomhaltóra. Bíonn an tomhaltóir ag síor athrú sa lá atá inniu ann. Tá líonta tí níos lú, tá dhá ioncam ag teaghlaigh agus tá margadh daoine scothaosta ag méadú againn. Tá níos mó eolais ag tomhaltóirí agus éilíonn siad níos mó. Tá bia sláintiúil agus sábháilte uathu, tá bia uathu a fhreastalaíonn ar a riachtanais speisialta féin agus tá siad ag iarraidh luach a gcuid airgid. Tá bia agus deoch ag stiúradh ár mbealaí maireachtála seachas a bheith ag freagairt dóibh. Tá cumasc anois ann idir a bheith ag ithe sa bhaile agus ag ithe amuigh. Bíonn tionchar ag na fachtóirí sin ar fad ar conas a fhorbraítear táirgí nua agus conas mar a dhéanann compháirtithe miondíola agus seirbhíse bia cumarsáid leis an tomhaltóir. Is é sprioc Bhord Bia ná eolas agus faisnéis a sholáthar a chuidíonn le cuideachtaí deiseanna nua a aithint agus bearnaí a fháil sa mhargadh ionas gur féidir le soláthróirí Éireannacha iad a líonadh go brabúsach. Le feabhas ar na margaí, beidh an tionscal bia agus dí ar ais chuig fás ar an iomlán i 2002. Ríthábhachtach do rathúlacht leanúnach tá cothabháil an iomaíochais i dtimpeallacht atá coinsiasach faoi chostas. Beidh seirbhísiú ar riachtanais ár mbonn custaiméirí domhanda i miondíol, seirbhís bia agus déantúsaíocht ar bhealach nuálach, margadh-threoraithe ríthábhachtach má tá cuideachtaí Éireannacha chun cur le caidrimh atá acu cheana agus cur lena ngnó. Táim muiníneach go bhfuil straitéis, na seirbhísí agus na daoine ag Bord Bia chun ról tábhachtach a imirt chun cuidiú le cuideachtaí a gcuspóirí fáis a bhaint amach. Thar ní ar bith eile tá an Bord, an Bhainistíocht agus an Fhoireann tiomanta dár bhfís ceannródaíocht a dhéanamh le go n-éireoidh le bia agus deoch na hÉireann. Annual Report & Financial Statements 2001 5 Ráiteas an Chathaoirligh Buíochas Tá Bord Bia ag brath ar chomhoibriú agus ar chúnamh go leor daoine agus eagraíochtaí chun a chuspóirí straitéiseacha a bhaint amach agus chun luach a thabhairt dá pháiritithe leasmhara agus a chliaint. Táimid buíoch as tacaíocht fhorghníomhach an Uasal Joe Walsh, TD, an tAire Talmhaíochta, Bia agus Forbartha Tuaithe agus a Roinne. Tháinig dúshláin chun cinn i 2001 don Aire agus dá Roinn a chuir éilimh gan choinne orthu agus ba mhaith liom comhghairdeas a dhéanamh leo agus buíochas a ghlacadh leo as a gceannaireacht agus a mbreithiúnas le linn ama a raibh géarchéim náisiúnta ann. Chomh maith leis sin lean an tAire Walsh, an tAire Stáit, Noel Davern, an tAire Stáit Éamonn Ó Cuív agus an Rúnaí Ginearálta John Malone agus a n-oifigigh dá dtiomantas agus dá dtacaíocht do chláir Bhord Bia agus chuidigh siad linn iad a fheidhmiú ar an mbealach is gníomhaí lena n-áirítear a bheith rannpháirteach in imeachtaí thar lear (chomh maith lena sceidil chrúógacha féin). Chun cláir éifeachtacha a oibriú ní mór obair go dlúth le heagraíochtaí príobháideacha agus poiblí eile agus le heagraíochtaí atá ionadaíoch ar an tionscal. Is mór againn an tacaíocht agus an t-ionchur a chuireann siad ar fáil dúinn agus a chuireann chomh mór lenár ngníomhaíochtaí. Ba mhaith liom buíochas a ghlacadh freisin lenár n-Ambasadóirí agus ár n-Ambasáidí Éireannacha i margaí thar lear a bhíonn ar fáil i gcónaí chun tacaíocht a thabhairt dár ngníomhaíochtaí agus chun cur leo. 6 Annual Report & Financial Statements 2001 I dtimpeallacht atá fíor- iomaíoch, dúshlánach agus athraitheach níl aon amhras ach gurb é bunchloch rathúlachta na heagraíochta ná tiomantas agus sármhaitheas na foirne. Léirigh siad go bhfuil siad tiomanta d’athrú agus go bhfuil a gcáil mar fhoireann thiomanta agus shármhaith tuillte acu. Bhí an Príomhfheidhmeannach, Michael Duffy i dtús cadhnaíochta ar na forbairtí sin agus tá a cheannaireacht agus a chumas chun foirne a chothú criticiúil do rathúlacht Bhord Bia. Thar ceann an Bhoird agus uaim féin ba mhaith liom buíochas a ghlacadh leisean, leis an mBainistíocht agus le Foireann Bhord Bia as a n-obair go dtí seo agus as a dtiomantas leanúnach dár gcuspóirí a bhaint amach. Is é ról an Bhoird freagracht a ghlacadh as rialú na heagraíochta. Tá Bord den scoth againn a fhaigheann cúnamh cumasach ó na Boird Chúnta agus tá áthas orm arís aitheantas a thabhairt dá ndílseacht agus a dtiomantas. Is mór agamsa iad agus ní bheimis ábalta tabhairt faoi na hualaí oibre dúshlánacha dá n-uireasa. Ar deireadh ba mhian liom a rá gur mór an onóir dom go bhfuilim athcheaptha ag an Aire do théarma eile, tasc a bhfuilim thar a bheith sásta tabhairt faoi agus fios agam go bhfuil tacaíocht agam ó Bhord agus ó fhoireann bainistíochta sárthiomanta. Philib Ó Loinsigh An Cathaoirleach Chief Executive’s Review Michael Duffy Chief Executive Irish food and drink exports reached €6.6 billion in 2001, a reduction of 7.7 per cent on 2000, in what was a very challenging environment for the industry. The continued impact of the BSE crisis in Europe, followed by the emergence of Foot and Mouth Disease (FMD) in the UK and subsequently the single case of FMD in the Republic of Ireland, proved a direct and serious challenge to our meat industry and to the agrifood sector in general. In response to this challenging environment, Bord Bia moved quickly to intensify activity across its market development, promotion and information services through effectively organising and managing a range of tailored and highly focused initiatives on behalf of the food and drink sector. Examples of these initiatives included: Brand Programme Bord Bia established the Brand Programme in 2001, the objective being to sustain and nurture new Irish food and drink brands. The Programme provides a networking opportunity and knowledge-sharing platform for member food and drink companies through a Brand Forum. The uniqueness of the forum is its exclusive dedication to the discussion of food and drink brand issues. Forty companies have since joined the group. The Brand Programme also initiated the development of practical guides to food and drink brands. Additionally research was commissioned in Britain and Ireland as to how Irish origin can be used as a supporting statement to various brand positioning options. Féile Bia European Meat Forum An overall decline of eight per cent on beef consumption on the continent due to BSE concerns, combined with a loss of access to key International Markets for EU beef, adversely affected beef exports. A European Meat Forum, to stimulate key European customers to increase purchases of Irish beef, was attended by over 360 delegates, along with 160 European buyers and 18 trade journalists from over 10 countries. The majority of our key retailers and foodservice operators from our core target markets were represented at the level of purchasing director or buyer. In addition, all the main importers/wholesalers handling Irish beef were present. An independent evaluation carried out after the event, revealed that 73% of buyers expected to increase their levels of purchasing of Irish beef by an average of 29%. Féile Bia is a joint collaboration between Bord Bia, the Restaurants Association of Ireland, the Irish Hotels Federation and with the support of the farming community. It evolved into a year-round promotion in 2001 with 330 hotels and restaurants signing up to the Féile Bia charter. The aim of Féile Bia is to promote the use of quality food in the foodservice sector in Ireland. Deli Futures Deli Futures, a trade development service for small food and drink firms in Ireland, was successfully launched and included countrywide retail account briefings with the main retail trade accounts. This proved effective in assisting over 85 small food and drink firms to gain access to the required information to develop their business with accounts which make up to 60 per cent combined purchasing power in grocery food in Ireland. Annual Report & Financial Statements 2001 9 Chief Executive’s Review French Lamb Promotion The “L’Agneau de la St Jean” promotion campaign for Irish lamb in France was extended to 850 outlets of the Carrefour and Intermarche retail chains, as well as a number of independent retailing outlets. The campaign was timed to take place during the summer period, when Irish lamb quality is at its best, and volume availability is also at its highest. Foodservice Programme New market guides were produced for both the Irish and French Foodservice sectors. These provide practical direction for food companies, documenting the structure and developments in each market over the past four years and outlining food buying and menu planning policies. The considerable uptake of both initiatives reflected the growing interest of Irish companies in the foodservice sector. Quality Assurance In 2001, Bord Bia’s Quality Assurance activities encompassed a wider range of food products. Arrangements were put in place to develop Quality Assurance programmes for both the poultry and lamb sectors. Specialist Technical Advisory Committees (TACs) were established for both sectors and during the year considerable progress was made in drafting the required technical standards. Separately, the Egg Quality Assurance Scheme, which had been successfully launched two years earlier, was completely revised in line with the requirements of the International benchmark standard EN45011. The revised standard was issued to the egg sector and made operational at year-end and has also been submitted to the National Accreditation Board (NAB) for accreditation purposes. Good corporate governance requires that Quality Assurance Schemes operate to the highest standards of International best practice, accordingly it is Board policy to seek to have all its Quality Assurance programmes adapted to conform to the EN45011 product standard. Work is currently in process to have the beef scheme accredited to this standard in 2002. Ireland The Food Island Ireland The Food Island was launched as an umbrella brand for Irish food and drink. In the competitive environment in which Irish companies operate, there is a need for the assertive promotion of Ireland’s capability as a quality food producer with efficient modern and technically advanced companies producing quality products. The new Ireland The Food Island design builds on the traditional image of Ireland but in its execution it delivers on the more commercial values and capability of the Irish food and drink industry. The goal is to position Ireland as a place where excellent food is produced with uniquely Irish values. Irish Beef Identity Use of the “Irish Beef” mark on packed fresh retail product was extended in 2001, and by year-end, was being used in the top seven multiple retail groups in Britain. Sales of Irish beef to the British retail 10 Annual Report & Financial Statements 2001 sector also grew rapidly in the year, to account for 35% of Irish exports at year-end. With an overall increase of 65% in exports of Irish beef to Britain last year, Irish beef has consolidated its position as the main import supplier. Traceability To inform the public of the traceability of beef and the new EU beef labelling scheme, an EU funded information leaflet was produced by Bord Bia and distributed to all households in the Republic (over one and a quarter million). In addition, over quarter of a million leaflets entitled The Facts & Irish Beef were distributed to Irish consumers through multiple retailers and butchers. Trade Marketing A new trade advertising campaign, was piloted at the Food Ingredients trade exhibition in London using people who work in the industry to deliver key capability messages. The sponsorship of the exclusive Ireland The Food Island Irish Champion Stakes exploited the ability of the new Food Island brand to both promote awareness of Ireland as a food producer and to act as a platform for a premium hospitality event for Irish companies and their customers. Information Services We extended our information resources with the recruitment of business analysts and further investment in our IT services to enhance and quicken the flow of data between markets and client companies. In 2001, some original consumer research in the Irish market, PERIscope – (Purchasing and Eating in the Republic of Ireland) was completed and will be written up as a series of reports in 2002. An IT strategy following on from our strategic review was progressed by a Requirements & Design project that set out the broad requirements of new systems for Bord Bia. This was followed by a EU tender for products and services to implement the strategy and a contract with the selected vendor is proceeding to implementation. It is planned to have a Web portal for clients by the final quarter of 2002. Such a portal will provide an additional access method to services allowing clients serve themselves at a time of their choosing. Exhibitions and Demonstrations The trade fair programme had 21 events scheduled for 2001. Three of these were cancelled due to FMD; IFEX, The Royal Highland Show and The Ploughing Championships. In spite of the cancellations, over 60 client companies participated on the Bord Bia Ireland stands over the year with customers routinely reporting a high rate of satisfaction with the turn-key service Bord Bia’s exhibitions department provides. On the Irish market over one hundred food demonstrations were held around the country. Annual Report & Financial Statements 2001 11 Marketing Finance Programme North-South Programmes The Marketing Improvement Programme (MIAP) provides assistance to firms involved with designated agricultural products, e.g. chilled dairy products, bioyoghurts, garlic butter spreads, farmhouse cheeses, honey, calcified seaweeds, food ingredients, prepared meals, jams & preserves, charcuterie and edible horticulture. Cross-border trade in food and drink now stands at over €760m and represents 30% of North-South trade. Food and drink continues to be one of the most important indigenous industries north and south of the border through its sourcing of raw materials and the provision of direct, and indirect employment. Bord Bia and the Industrial Development Board (IDB), Northern Ireland have come together for a joint export marketing programme. The programme centres on market development activities including; joint participation at key trade fairs, market investigations and sharing market intelligence. While the initial programme concentrated on the US market, which included a joint Ireland stand at the US Fancy Food Fair, the programme has now been extended to include the UK and Ireland market. The Marketing Participation Programme (MPP) offers aid to companies manufacturing and marketing other food and drink products such as drinks and confectionery. Consumer Foods Development The expansion of the Consumer Foods, Beverages and Ingredients Division of Bord Bia has enhanced our capability to deliver timely, specific services to client companies. The division’s additional resources have been dedicated to working with companies in the important UK market and to the development of opportunities in Continental Europe. The division is involved with a wide range of companies and sectors. This years expansion and re-organisation resulted in a significant increase in client contact and the launch of a number of new initiatives. Highlights included the Brand Programme, the Spirit of Ireland promotion in the USA, the creation of a Chocolate Association and a newly formatted Consumer Foods and Ingredients Industry day. 12 Annual Report & Financial Statements 2001 Beef Irish export beef production was marginally ahead of 2000 levels. Nevertheless, Irish beef exports, at €900 million in 2001, represented a decline of almost 40 per cent on 2000 levels. This was due to a fall in the volume of exports of 34 per cent (to 340,000 tonnes) primarily following the closure of a number of key international markets for EU beef exports, while prime cattle prices were seven per cent lower. A decline of 13 per cent in heifer supplies was more than offset by a rise of eight per cent in male cattle disposals due to lower live exports to International markets and a move towards younger finishing of cattle by producers. An estimated 28 per cent of Irish production was removed through the various market support schemes introduced by the EU following the BSE crisis on the Continent towards the end of 2000. Chief Executive’s Review A 65 per cent increase in sales to the UK to 210,000 tonnes resulted in overall Irish beef exports to the EU increasing by 10 per cent on 2000 levels. However, reduced beef consumption on the Continent, 13% below pre-BSE crisis levels, resulted in a decline of over 40 per cent in Irish exports there. Within this, Irish exports to Holland held up well, with sales to the retail sector increasing by close to 10 per cent on 2000 levels with the top four retailers in Holland all now stocking Irish beef. However, lower sales of bonein beef resulted in overall exports to Holland falling by over 10 per cent to 25,000 tonnes. Reduced import requirements in key markets such as France, Italy and Scandinavia led to a difficult market environment for Irish beef. In International Markets, Bord Bia undertook a number of activities in support of the Department of Agriculture, Food and Rural Development's efforts to reopen the Egyptian market. These activities included participation in Cairo Agro Food, liaisons for key officials and trade in the Irish embassy, and a Quality Assurance Seminar. The Egyptian market was reopened in November to Irish beef. Bord Bia continued to support the operation of the Russian Veterinary Service in Ireland on behalf of the beef and pork sectors contributing to the increase in Irish beef exports to Russia to 47,000 tonnes (cwe). This included hosting the first visit of the newly appointed Russian Chief Veterinary Officer (CVO) to Ireland. Beef exports to International Markets were affected by the decision of most key markets to suspend purchases of EU beef towards the end of 2000. Most of these markets have been slow to reverse this decision although both Russia and more recently Egypt have re-opened for Irish beef. Overall for the year export volumes amounted to 55,000 tonnes, compared to 255,000 tonnes in 2000. Bord Bia’s activities in the UK during 2001 focused on increasing sales of Irish beef at retail level and by the end of the year the top seven retail multiples were stocking identified Irish beef. In Continental Europe, the focus of activities was firstly to reassure and secondly to inform customers of the quality and traceability of Irish beef. This involved ongoing contact with key customers as well as liasing with the Irish trade to minimise the impact of BSE on exports. As consumer confidence began to recover, Bord Bia worked with the Irish trade and customers to develop strategies and initiatives where appropriate, to re-establish sales of Irish beef. Besides organisation of the European Meat Forum, this involved retail promotions in Britain, Holland, Italy and Belgium. Annual Report & Financial Statements 2001 13 Exports to Continental EU markets increased by an estimated 40 per cent during 2001 to reach 45,000 tonnes. This increase was mainly due to the lack of UK product on the Continent, which led to increased opportunities for Irish pigmeat. Germany remains the main market at 20,000 tonnes followed by France and Italy. Live Cattle Exports of live cattle were valued at €58 million, a decline of 71 per cent on year earlier levels. Export volumes to key markets such as the Continent and the Lebanon fell by 87 and 81 per cent respectively as the combined impact of BSE and FMD affected demand levels. However, live exports to Northern Ireland increased by over 85 per cent to 50,000 head due to the continuing strength of sterling and the increased demand for beef in Britain. Overall live exports amounted to 100,000 head compared to 400,000 head in 2000. Bord Bia’s programmes, in support of the livestock trade during 2001, focused mainly on keeping Irish exporters informed on the developments taking place in terms of demand for live cattle and competitor activity in our key markets. Bord Bia also assisted Irish exporters to make contact with potential customers in the marketplace. Pork and Bacon Irish pigmeat exports increased in value to €330 million in 2001, up 18 per cent on 2000 levels - helped by both an increase in volume of four per cent and a rise of 14 per cent in prices. The UK remains the main export market for Irish pigmeat accounting for over 50 per cent of the total at 65,000 tonnes. Export volumes were affected by the lower import requirement in the UK for much of 2001 due to the FMD restrictions placed on UK pigmeat exports. 14 Annual Report & Financial Statements 2001 The main focus of Bord Bia activities, in the UK, was on building relationships at trade level to increase awareness of the availability of Quality Assurance Scheme pigmeat from Ireland. This was achieved through meetings with individual buyers and also through trade advertising. On the domestic market, Bord Bia continued to promote quality assured pigmeat through TV, radio and print media. Point of sale material was developed in conjunction with these campaigns to inform consumers of the versatility and quality of Irish pigmeat. In Continental EU, in line with the significant rapid expansion in business, Bord Bia’s activity focus was to further develop relationships with existing and new customers. Irish exports to International markets were affected by the decision of a number of key markets such as Japan and the United States to ban EU pigmeat following the outbreak of FMD in a number of EU countries. While the Russian market re-opened in June and the US market towards the end of the year overall export volumes to International markets fell by an estimated 50 per cent during 2001. In International markets, Bord Bia organised a seminar in Tokyo on the Irish Pork industry as part of a programme, in conjunction with the Department of Agriculture, to reopen the market for Irish pork following the outbreak of FMD in Ireland. A visit by a Japanese inspector was agreed for early 2002 creating the prospect of the market reopening in Spring 2002. Chief Executive’s Review Lamb Prepared Consumer Foods The value of Irish sheepmeat exports increased by over 41 per cent in 2001 to an estimated €260 million, due to a corresponding rise in producer prices arising from the suspension of UK sheepmeat exports due to FMD. The volume of sheepmeat exported was marginally ahead of 2000 levels at 50,000 tonnes. The dynamic prepared foods sector continued its upward exporting trend showing an increase of 4.3 per cent in 2001. It now accounts for 26 per cent of total food and drink exports. The prepared food sector is characterised by a variety of companies at different stages of development in the marketplace from entry to maturity. In 2001, Bord Bia has worked in partnership with a range of client companies to facilitate sales growth through the provision of information, business development and promotion services. France remains the principal destination for Irish sheepmeat exports, accounting for over 80 per cent of the total at 41,000 tonnes. Exports to the UK and Germany were lower during 2001 due to the prices prevailing on the French market, while exports to Mediterranean markets were lower due to limited demand in Spain although exports to Portugal performed strongly. In France, Bord Bia’s activities included the continued development of Irish lamb identification in retail outlets under the “L’Agneau de la St. Jean” label, with a number of key retailers involved in the campaign. Other activities involved ongoing trade liaison and marketing activities with key customers. On the domestic market, Bord Bia directed lamb promotions at younger consumers with the focus of our campaigns being to highlight the flexibility and ease of use of lamb. Irish companies continue to trade successfully in the competitive British market and continue to build their reputation for supplying high quality consumer foods under both private and branded labels. Overseas the newly developed Gap-Analysis service assisted 17 companies strategically position themselves with retailers and develop competitive in-store propositions during 2001. The Gap-Analysis service begins by comprehensively studying the market place, segmenting it and identifying relevant “gaps” in a retailers offering. Irish suppliers can then present themselves and their products as solutions to a retailer rather than a “me too” proposition. Poultry Irish poultry meat exports in 2001 were valued at €140 million, which represents a decline of just over four per cent on 2000 levels. The main contributing factor to the decline was a fall off in sales of frozen poultry meat to the Continent and to a lesser extent lower exports of chilled product. However, a strong increase was recorded in the value of prepared poultry products during 2001. Annual Report & Financial Statements 2001 15 FMD, the prices achieved for Irish products were variable. Product output also varied considerably compared to 2000 with an increase in the production of cheese at 23 per cent, due to the strong prices during the first nine months of the year and the general increase in demand in the UK and European markets. The development of retail and foodservice business into Continental European markets remains an important medium term strategic objective for the prepared consumer foods sector. Retail projects were carried out successfully in France and in Holland. A buyer supplier event in Holland led to listings for four of the nine companies participating. To underscore the demand for information on the growing foodservice sector, forty companies participated on the first foodservice study visit to France which included meetings with potential trading partners. Irish chocolate manufacturers came together in a new association aimed at facilitating the Irish Chocolate Industry to work together in areas of common interest. In addition Irish prepared food companies participated at a number of sector and channel specific trade shows including Private Label Manufacturers Association (PLMA), In-Flight Catering Association (IFCA) and the Sweet and Confectionery Trade Exhibition (ISM). Dairy and Food Ingredients In circumstances of fluctuating prices, the FMD crisis, a general weakening of international demand for dairy products and world economic downturn, Irish dairy exports were valued at €1.72bn, a 2.1per cent decrease over the year 2000. With milk production 2.3 per cent higher compared to 2000, and having suffered little overall effect due to 16 Annual Report & Financial Statements 2001 Casein production increased by 4.3 per cent with an overall weakening of demand in the EU and US, compounded by US certification difficulties during the FMD crisis. The increase in both cheese and casein production resulted in reduced production of milk powders and butter. Skimmed Milk Powder (SMP) suffered from a combination of FMD related milk supply concerns, including cross border restrictions of raw milk, a weakening of the US dollar and a reduction in export refunds, all of which contributed to a decrease in output of 14.8 per cent. Butter also saw periods of fluctuating prices, with an estimated decrease in production for 2001 of around 6.6 per cent, while Whole Milk Powder (WMP) experienced only a marginal decrease. The production and sales activity of the various dairy product sectors will continue to be affected by the world economic situation, intervention support, stock levels and world market prices are expected to remain weak at least for the early part of 2002. The dairy industry was very active in their participation on a variety of Bord Bia initiatives throughout 2001. The largest co-ordinated Irish dairy participation ever was present at Anuga in Cologne. Dairy companies also participated at a sector specific level looking at opportunities in general foodservice or more specifically inflight catering. Six leading ingredient companies participated on Bord Bia’s co-ordinated Ireland stand at FIE (Food Ingredients Europe) in London in November. Irish participation was supported by the newly launched trade marketing campaign and a buyer reception, which was attended by 90 guests. Chief Executive’s Review Beverages Irish beverage products continued to show growth in 2001 in export markets especially in the whiskey, cream liqueur and soft drinks sectors, despite adverse affects in the last quarter on duty free sales post September 11. In terms of value, the sector reported an increase of +1% over 2000, with exports amounting to €880 million. The cream liqueur sector demonstrated growth in excess of 15 per cent. This important sector is expected to grow further in the medium term on foot of expansion plans from key industry players. Irish whiskey exports also continued their upward growth trend with a sales increase of over 12 per cent. In terms of white spirits, vodka remains the world’s most popular spirit and Irish vodka is now increasing its awareness and distribution in key markets with innovative products and packaging concepts. organised to highlight Ireland as a source of quality drinks products and identify opportunities for Irish companies to develop new business. A new joint marketing initiative was launched in 2001 targeting increased sales to Florida. Five Irish drinks companies joined together under the Spirit of Ireland banner to increase sales and awareness through a series of retail promotions and participation at local trade shows. Point of sale material and a merchandise unit was developed for use during this promotion. Speciality Food and Small Business Bord Bia increased its services for small food and drink businesses throughout 2001, aiming to facilitate companies gain ground. The focus for small business was primarily with the Irish and English markets but also with some activity in Continental Europe and the USA. Spirit based ready to drink products continue to drive growth in world markets with new ranges of innovative flavours and concepts backed by international brands. Additional launches in this area are likely to keep the sector vibrant and increase consumer interest. During 2001, Bord Bia organised programmes for the sector including participation at key international trade fairs in the UK, France, and the USA including Vinexpo, Bordeaux; Wine & Spirit Wholesalers of America (WSWA); London International Wine & Spirits Show. Market study visits and business development programmes in the USA and Italy were Annual Report & Financial Statements 2001 17 Chief Executive’s Review Deli Futures, a trade development service for small food and drink firms in Ireland, was successfully launched and included countrywide retail account briefings with the main retail trade accounts. This proved effective in assisting over 85 small food and drink firms to gain access to the required information to develop their business with accounts which make up to 60% combined purchasing power in grocery food in Ireland. seminar and new speciality food product seminars. These took place in conjunction with the Fancy Food Show. A business and marketing tour of the top delis and food halls of New York were also included. The HIP (Highly Individual Products) Food Store built for Deli Futures allowed over 40 buying representatives to browse and taste new products from 85 speciality food firms. The HIP Food Store was opened to the public at the e-Ireland exhibition at the RDS. Edible Horticulture Bord Bia completed the first international consumer research study into the market for speciality food in Ireland, Britain, Continental Europe and the USA. Bord Bia also organised a market study visit to the USA including attendance at the e-food strategy 18 Annual Report & Financial Statements 2001 Bord Bia invested in alternative routes to market for small business and carried out a feasibility study into the direct sales of speciality food to consumers via the internet. Exports of edible horticulture and cereal products reported growth of 10.4% in 2001. Fresh mushrooms are still the most important and dominant product in this market sector and Irish mushroom companies continued to play a major role in supplying fresh mushrooms to the UK retail market and account for approximately 50 per cent of retail sales. It was a year of intense price pressure in the UK retail market for fresh mushrooms and this is set to continue into 2002. The Irish mushroom industry is well placed to compete and increase its market share in the UK going forward through gaining new market share and increasing share from existing customers. The continued growth in the convenience food and ready meals sector is an opportunity for producers to supply this ever-growing sector of the UK food industry. This is the fastest growing sector for washed, sliced and diced mushrooms. Companies with the necessary technology and structures are well placed to target this growing sector of the market. Organisational Change and Development The process of organisational change, mapped out as part of Bord Bia’s strategic vision, continued in 2001. Significant developments took place in relation to Staff recruitment, Information Technology, People Performance Management (PPM) and Business Performance Management (BPM). Above all, we have continued to develop a working environment, which will support personal development and a team approach to the achievement of organisational goals and strategies. Our focus is to create an environment that people want to be part of and which supports our vision of championing the success of this important indigenous industry. By year-end the structures and processes for operation of Business Performance Management (BPM) and an enhanced People Performance Management (PPM) system linked to Business Performance Indicators and Values were in place and ready for full implementation in 2002. This has been a highly participative and inclusive process in which everybody in the organisation has taken part and to which everybody has been able to contribute. The procurement and planning processes in relation to the proposed Enterprise Portal were dealt with by year-end and the completion and rollout of this project will be a major organisation “deliverable” for 2002. It will be a comprehensive information system that will support Bord Bia’s activities and the information requirements of the industry. It will, in effect, be the “information gateway” between Bord Bia and its clients. Our focus is the marketplace, where we must constantly strive to be fully informed about, and relevant to, current and emerging needs of customers and consumers, and where we must endeavour to be “ahead of the game”. Our marketplace network is a key resource. During 2001 the personnel resources in our overseas offices were strengthened and augmented as part of overall organisational development and realignment. In addition, a USA office was opened in Chicago in order to support the substantial and increasing value of Irish exports to this market. Increased resources were also allocated to Asian market development reflecting the growth potential of these markets. Last year saw a major development in relation to the execution of our Trade Fairs Programme. Following research and consultation with client companies a new design and construction approach was adopted in order to create the most effective platform for promoting the Ireland The Food Island brand in the marketplace. Underpinning and enabling these activities has been the recruitment of the additional personnel approved by the Department for Agriculture, Food and Rural Development (DAFRD). This recruitment provides the essential additional resourcing for Bord Bia to achieve its objectives and to deliver maximum client and stakeholder value. It is also part of the process of refining Bord Bia’s activities to ensure the organisation continues to develop to meet the evolving needs of a dynamic Irish food and drinks industry while also delivering value for money. Our objective is to have an environment where personal and organisational development go hand in hand and where innovation, excellence and value for money are our hallmarks. Michael Duffy Chief Executive Annual Report & Financial Statements 2001 19 Corporate Statement Statement of Board Responsibilities Section 21 of An Bord Bia Act 1994 requires the Board to "keep in such form and in respect of such accounting periods as may be approved by the Minister, with the consent of the Minister for Finance, all proper and usual accounts of monies received or expended by it, including an Income and Expenditure Account, a Cash Flow Statement and a Balance Sheet, and, in particular, shall keep in such form as aforesaid all such special accounts as the Minister may, or at the request of the Minister for Finance shall, from time to time direct and the Board shall ensure that separate accounts shall be kept and presented to the Board by any Subsidiary Board that may be established by the Board under this Act and these accounts shall be incorporated in the general statement of account of the Board." The books of account are held at the Board’s headquarters at Clanwilliam Court, Lower Mount Street, Dublin 2. In preparing these financial statements the Board is required to: 1. Select suitable accounting policies and then apply them consistently 2. Make judgements and estimates that are reasonable and prudent 3. Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Board will continue in operation 4. State whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements. The Board has overall responsibility for the organisation’s system of internal controls and has delegated responsibility for implementation of this to Executive Management. This system can provide only reasonable and not absolute assurance against material error. It includes financial controls, which enable the Board to meet its responsibilities for the integrity and accuracy of the organisation’s accounting records, and which disclose, with reasonable accuracy at any time, the financial position of Bord Bia. In addition, the Board’s system of internal controls is designed to provide reasonable assurance that transactions are executed in accordance with Board policy and management authorisation and within statutory parameters and guidelines. The Board is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud or other irregularities. The effectiveness of the system of internal financial control is kept under continuous review. There is an Audit Committee of the Board to which the internal auditor and the external auditor have full and unrestricted access. Corporate Governance The Board is committed to maintaining the highest standards of corporate governance and best practice. It has adopted the Code of Practice for the Governance of State Bodies (2001). The Secretary is responsible to the Board for ensuring that procedures are implemented and that relevant legislation, regulations and guidelines are complied with. Ethics in Public Office Acts The provisions of the Ethics in Public Office Act 1995 are being implemented in Bord Bia. In addition, the requirements of the Standards in Public Office Act 2001, effective from December 2001, have been noted and the provisions of this Act in relation to Bord Bia are being implemented. 20 Annual Report & Financial Statements 2001 Corporate Statement Equality Bord Bia is committed to ensuring equality of opportunity and its personnel and staff development programmes are geared towards this objective. Bord Bia is also committed to the implementation of Government policy in relation to the employment of disabled people in the public sector. There is a policy on sexual harassment in operation to support and protect the dignity of each person. Safety, Health and Welfare at Work Bord Bia is committed to implementing the provisions of the Safety, Health and Welfare at Work Act 1989, including the preparation and operation of a Safety Statement embracing all matters affecting safety, health and welfare of staff and visitors to Bord Bia’s premises. Implementation of State Policy on Extending Bilingualism in the Public Sector Bord Bia is committed to making every effort possible to implement the Guidelines for Action Programmes in the State Sector in relation to the use of Irish. Philip Lynch Chairman Michael Duffy Chief Executive Prompt Payment of Accounts Bord Bia is included as a listed purchaser of goods in the schedule to the Prompt Payment of Accounts Act, 1997. Since 2 January 1998 the Act has come into operation and Bord Bia has complied with the provisions of the Act. In accordance with the Act and the guidelines issued by the Department of Enterprise, Trade and Employment, the following information is provided. Procedures established to ensure compliance with the Act Bord Bia has procedures in place to ensure that all invoices received are paid within the time limits specified on the invoices or the statutory time limit if no period is specified. While the procedures are designed to ensure compliance with the Act, they can only provide reasonable and not absolute assurance against material non-compliance with the Act. These procedures operated in the financial period under review and in the case of late payments, the relevant suppliers were notified and interest was paid to them. In accordance with the Prompt Payment of Accounts Act, 1997, the following information is provided for the financial year ended 31 December 2001. a) payment practices Bord Bia makes payments to suppliers in accordance with the terms stated on the invoices or terms specified in individual contracts if appropriate. The standard terms are 45 days. b) late payments in excess of €317 (IR£250) The number of invoices in excess of €317 (IR£250) which were paid late was 54 and the average period of delay was 8 days. c) overall percentage of late payments of total payments and total interest paid The overall percentage of late payments of total payments was 1.0%. The total amount of interest paid with respect to late payments was €274 (IR£216). Philip Lynch Chairman Joseph O’Sullivan Board Member Annual Report & Financial Statements 2001 21 Board Membership As at 31 December, 2001 Chairman Chief Executive Secretary Mr Philip Lynch Chief Executive, IAWS Group Mr Michael Duffy Mr Seamus Kenny Members Mr Dan Browne Managing Director, Dawn Meats, Grannagh, Waterford Dr Noel Cawley Managing Director, The Irish Dairy Board Mr Michael Dowling Company Director, Visiting Professor, UCC and Head of Agri Strategy, AIB Mr Tom Parlon Ex President, Irish Farmers’ Association (IFA) Ms Mary White Joint Managing Director, Lir Chocolates Ltd. Ms Sara White Deputy Secretary General, Department of the Marine & Natural Resources Changes during 2001 Mr John Duggan Director, Glanbia Mr Michael Kilcoyne Chairman, Consumers’ Association of Ireland Mr Denis Lucey Chief Executive, Dairygold Co-Operative Society Ltd. Ms Margo Monaghan Principal Officer, Department of Enterprise, Trade & Employment Ms Maura Nolan Head of Food Division, Department of Agriculture, Food and Rural Development Mr William O’Kane Managing Director, O’Kane Poultry Ltd. Mr Pat O’Rourke President, Irish Creamery Milk Suppliers’ Association (ICMSA) Mr Joseph O’Sullivan Chief Executive, Drinagh Co-Operative Society Ltd. 22 Annual Report & Financial Statements 2001 Term Expired 15 November, 2001 Mr Philip Lynch (re-appointed 16 November) Meat & Livestock Subsidiary Board As at 31 December, 2001 Chairman Changes during 2001: Mr Denis Lucey Chief Executive, Dairygold Co-Operative Society Ltd. Term Expired 4 June, 2001 Mr Paul Clarke (re-appointed 13 August) Members Mr Michael Behan Managing Director, Fair Oak Foods & Chairman IMA Dr Pat Mulvehill (re-appointed 30 July) Mr Tom McAndrew Managing Director, Eurowest Foods Mr Sean Buckley President, Associated Craft Butchers of Ireland Resigned 16 June, 2001 Mr Paul Clarke National Executive of the Livestock Trade Mr Liam McGreal Director, Dunnes Stores Mr Frank Corcoran Chairman, National Sheep Committee, IFA Appointed 30 July, 2001 Mr Michael Behan Mr Derek Deane Chairman, National Livestock Committee, IFA Mr Alan Graham IFA Poultry Committee Mr John Madden Chief Executive, Glanbia Meats Mr Tom McParland Resigned 13 September, 2001 Mr Eddie Keane IFA Term Expired 24 October, 2001 Dr Pat Mulvehill Director General, Irish Poultry Processors’ Association Ms Brid O’Connor (re-appointed 11 November) Appointed 23 November, 2001 Mr Tom McParland Managing Director, Kildare Chilling Ltd. Mr Alan Graham Mr Jimmy O’Brien Chairman, National Pigs & Pigmeat Committee, IFA Ms Brid O’Connor Assistant Director, Office of the Director of Consumer Affairs Mr Nicholas Ryan National Council, Irish Creamery Milk Suppliers’ Association (ICMSA) Annual Report & Financial Statements 2001 23 Consumer Foods Subsidiary Board As at 31 December, 2001 Chairman Changes during 2001: Mr Michael Dowling Company Director, Visiting Professor, UCC and Head of Agri Strategy, AIB Resigned 27 February, 2001 Ms Celine Murrin Consumers’ Association of Ireland Members Ms Darina Allen Ballymaloe Cookery School Mr Pat Doyle Managing Director, Rye Valley Foods Ltd. Ms Dorothy Gallagher Vice-Chairman, Consumers’ Association of Ireland Term Expired 10 March, 2001 Mr Brendan Smyth Glanbia Appointed 17 May, 2001 Ms Dorothy Gallagher Mr Tom Harrington Mr Pat Given Ex-UDV Operations Ireland Ms Eilis Gough Managing Director, Mileeven Fine Foods Term Expired 14 July, 2001 Ms Darina Allen (re-appointed 30 July) Mr Pat Given (re-appointed 30 July) Mr Tom Harrington Arabawn Co-Op., Nenagh Mr Con Lucey Marketing Director, Cheese & Spreads, Golden Vale plc. Mr Larry Murrin Managing Director, Dawn Farm Foods Ms Maura O’Donovan Poultry Instructress Mr Joe O’Flynn Marketing Development Director, Irish Dairy Board Ms Gina Quin Chief Executive, Dublin Chamber of Commerce Mr Paddy Walsh Director, Walsh Family Foods 24 Annual Report & Financial Statements 2001 Ms Maura O’Donovan (re-appointed 30 July) Quality Assurance Subsidiary Board As at 31 December, 2001 Chairman Changes during 2001: Mr John Duggan Director, Glanbia Appointed 29 January, 2001 Mr John Duggan (Chairman) Members Professor Joe Buckley Lecturer in Food Science and Technology, UCC Mr Kevin Cassidy Department of Agriculture, Food and Rural Development Dr Jim O’Grady Mr Pat O’Rourke Appointed 17 May, 2001 Mr Brendan Smyth Mr John Cunningham General Manager, Dairygold Meats Mr Derek Deane Chairman, National Livestock Committee, IFA Mr Dermott Jewell Chief Executive, Consumers’ Association of Ireland Mr Paul Nolan General Manager, Dawn Meats, Grannagh, Waterford Ms Brid O’Connor Assistant Director, Office of the Director of Consumer Affairs Dr Jim O’Grady Consultant Mr Pat O’Rourke President, ICMSA Mr Eamon Quinn Marketing Director, Superquinn Mr Brendan Smyth Glanbia Dr Patrick Wall Chief Executive, Food Safety Authority of Ireland Annual Report & Financial Statements 2001 25 Organisation Structure as at 30 June, 2002 Russia A.Barinova Director International Markets O.Brooks North America J.O’Donnell Asia Manager Meat F.Murray G.Brickley Middle East & Africa Manager Quality O.Brooks J.Keane Director Operations A.Cotter European/Home Markets Madrid Office C.Ruiz Manager Information Services Chief Executive Michael Duffy J.Smith Dusseldorf Office L.O’Riordan Manager Marketing Finance J.Bracken Manager Promotions & Exhibitions L.Williams Director Client Services London Office M.Murphy Milan Office P.McSweeney Small Business M.Kennedy M.Kennedy Paris Office J.O’Toole Secretary/Director CEEC Markets S.Kenny M.Kennedy Home Market G.O’Sullivan Financial Controller G.Bailey Director Consumer Foods & Marketing Manager Consumer Foods Ingredients J.McGrath T.McCarthy Manager International Media M.Bracken 26 Annual Report & Financial Statements 2001 The Organisation Board Quality Assurance Board Meat & Livestock Board Consumer Foods Board Board Committees Client Services Marketing & Communications Chief Executive Administration Operations The organisation structure of Bord Bia is comprised of the Board, three Subsidiary Boards, the Chief Executive and the Executive, which provide the range of operational and corporate services required to implement Board policy and programmes. The Board is comprised of a Chairman and 14 ordinary members appointed by the Minister for Agriculture, Food and Rural Development. There are three Subsidiary Boards (Meat & Livestock, Consumer Foods and Quality Assurance) comprised of a Chairman and 12 ordinary members, who are appointed by the Board with the consent of the Minister. The Chairman of each Subsidiary Board is a member of the Board. The following Board Committees are in place: Audit Committee, Evaluation Committee, Remuneration and Pensions Committee and Strategy Committee. The Executive is comprised of staff based in the Board’s head office and overseas. Annual Report & Financial Statements 2001 27 Report of the Comptroller and Auditor General I have audited the financial statements on pages 29 to 40 under Section 21 of An Bord Bia Act, 1994. Respective Responsibilities of the Board and the Comptroller and Auditor General The accounting responsibilities of the Board are set out in the Board’s Corporate Statement on pages 20 to 21. It is my responsibility, based on my audit, to form an independent opinion on the financial statements presented to me by the Board and to report on them. Basis of Audit Opinion In the exercise of my function as Comptroller and Auditor General, I conducted my audit of the financial statements in accordance with auditing standards issued by the Auditing Practices Board and by reference to the special considerations which attach to State bodies in relation to their management and operation. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made in preparation of the financial statements, and of whether the accounting policies are appropriate to the Board’s circumstances, consistently applied and adequately disclosed. I planned and performed my audit so as to obtain all the information and explanations that I considered necessary to provide me with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement whether caused by fraud or other irregularity or error. In forming my opinion I also evaluated the overall adequacy of the presentation of information in the financial statements. Opinion In my opinion, proper books of account have been kept by the Board and the financial statements, which are in agreement with them, give a true and fair view of the state of affairs of An Bord Bia – The Irish Food Board at 31 December 2001 and of its income and expenditure and cash flow for the year then ended. John Purcell Comptroller and Auditor General 28 August 2002 28 Annual Report & Financial Statements 2001 Statement of Accounting Policies (a) Basis of accounting: These financial statements are prepared under the accruals method of accounting, except as indicated below, and in accordance with generally accepted accounting principles under the historical cost convention. Financial Reporting Standards recommended by the accountancy bodies are adopted as they become operative. The unit of currency is the Euro. Comparative figures for 2001 and 2000 are displayed in Irish Pounds. (b) Keeping of accounts: Subsidiary Boards: Under the terms of the An Bord Bia Act, 1994, the Board is assisted by three Subsidiary Boards in respect of Meat and Livestock, Consumer Foods and Ingredients, and Quality Assurance. All income and expenditure relating to these Subsidiary Boards is reflected in these financial statements. Subsidiary Company: The Board operates a wholly-owned subsidiary company which does not trade. Due to the nature of the company, it is not considered appropriate to prepare consolidated financial statements. (c) Income: Income shown in the financial statements under Oireachtas Grant-in-Aid represents the actual receipts from this source in the period. Income from EU Structural Funds and the EU Quality Beef Promotion Fund is released to revenue in line with related expenditure and any unexpended balance is included in Creditors. Income from the Statutory Levy is accounted for on a cash receivable basis. (d) Fixed Assets and Depreciation: Fixed assets are stated at cost less accumulated depreciation. Depreciation is calculated to write off the original cost less the estimated residual value of tangible assets on a straight line basis at the following annual rates: Leasehold improvements Furniture and fittings Office equipment Computer equipment Motor vehicles 10% 12.5% 20% 331/3% 20% (e) Marketing Finance: Expenditure was incurred on the Targeted Marketing Consultancy (TMC) Programme in previous years. Under the terms of the programme, a proportion of the expenditure is recoverable over a 24 to 60 month period by way of a royalty based on sales achieved by this expenditure. Income arising under the TMC Programme from amounts reimbursed is accounted for on the basis of cash receipts. (f) Superannuation: Superannuation costs are funded over the employee’s period of service by way of contributions to a fund managed by trustees. The Board’s annual contributions are based on actuarial advice and are charged to the income and expenditure account in the period to which they relate. Annual Report & Financial Statements 2001 29 Statement of Accounting Policies (g) Leasing: The rentals under operating leases are dealt with in the financial statements as they fall due. Tangible assets acquired under finance leases are capitalised and depreciated as set out in note (d) above. (h) Tangible assets: Tangible assets are financed out of revenue. Provision is made in the income and expenditure account for a transfer to the capital account of amounts allocated for such capital purposes less credits to revenue over the life of the related assets. (i) Stocks: Stocks of stationery are stated at cost. (j) Provision for bad and doubtful debts: Known bad debts are written off and specific provision is made for any amounts the collection of which is considered doubtful. (k) Foreign currencies: Foreign currency balances are translated at the rates ruling at the balance sheet date. (l) Taxation: Provision has been made in respect of all VAT liabilities and the PRSI contributions of Irish employees attached to overseas offices. 30 Annual Report & Financial Statements 2001 Income and Expenditure Account year ended 31 December 2001 2001 2000 2001 2000 Notes €’000 €’000 IR£’000 IR£’000 1a 17,013 12,858 13,399 10,126 41 551 32 434 Income Oireachtas Grant-in-Aid EU Quality Beef Promotion Fund EU Structural Funds 1,228 967 Statutory Levy 1b 5,777 5,936 4,550 4,675 Project and Other Income 1c 2,546 2,429 2,005 1,913 25,377 23,002 19,986 18,115 22 113 17 89 25,399 23,115 20,003 18,204 Transfer from Capital Account 2 Total Income Expenditure Marketing and Promotional Expenditure 3 15,584 15,001 12,273 11,814 Marketing Finance 4 1,116 514 879 405 Operating Expenditure 5 9,004 7,226 7,091 5,691 25,704 22,741 20,243 17,910 Total Expenditure (Deficit)/Surplus for Year Balance at 1 January Balance at 31 December (305) 374 (240) 294 398 24 313 19 93 398 73 313 The Board has no gains or losses in the financial year or the preceding financial year other than those dealt with in the Income and Expenditure Account. The results for the year relate to continuing operations. The Statement of Accounting Policies and Notes 1 to 16 form part of these financial statements. Philip Lynch Chairman Michael Duffy Chief Executive Annual Report & Financial Statements 2001 31 Balance Sheet as at 31 December 2001 2001 2000 2001 2000 Notes €’000 €’000 IR£’000 IR£’000 Tangible Assets 6 920 942 725 742 Financial Assets 7 8 8 6 6 928 950 731 748 4 6 4 5 2,039 2,182 1,606 1,718 111 505 87 398 2,154 2,693 1,697 2,121 2,069 2,303 1,630 1,814 85 390 67 307 1,013 1,340 798 1,055 920 942 725 742 93 398 73 313 1,013 1,340 798 1,055 Fixed Assets Current Assets Stocks Debtors 8 Cash at bank and in hand Creditors (amounts falling due within one year) 9 Net Current Assets Total Assets less Current Liabilities Financed by Capital and reserves Capital account 2 Income and expenditure account The Statement of Accounting Policies and Notes 1 to 16 form part of these financial statements. Philip Lynch Chairman 32 Annual Report & Financial Statements 2001 Michael Duffy Chief Executive Cashflow Statement year ended 31 December 2001 2001 2000 2001 2000 €’000 €’000 IR£’000 IR£’000 Reconciliation of Deficit to Net Cash Outflow from Operating Activities: (Deficit)/Surplus for year (305) 374 (240) 294 Net interest receivable (95) (72) (75) (57) Depreciation 301 323 236 Capital account transfer (22) (113) (17) Loss on disposal of tangible fixed assets Decrease in debtors Decrease in stock Decrease in trade creditors (89) 5 5 5 4 143 162 112 128 2 1 1 1 (100) Increase in taxation and PRSI 254 80 (620) 6 (79) 63 (488) 5 (Decrease)/increase in accruals and deferred income (214) 531 (168) 418 Net cash (outflow)/inflow from operating activities (205) 597 (162) 470 (205) 597 (162) 470 CASHFLOW STATEMENT Net cash (outflow)/inflow from operating activities Returns on investment and servicing of finance: Bank interest received 95 72 75 57 (110) 669 (87) 527 Payments to acquire tangible assets (284) (215) (224) (169) (Decrease)/increase in cash (394) 454 (311) 358 (394) 454 (311) 358 Net funds at 1 January 505 51 398 40 Net funds at 31 December 111 505 87 398 Net current (outflow)/inflow of funds Capital expenditure: Reconciliation of net cash flow to movement in net funds: (Decrease)/increase in cash The Statement of Accounting Policies and Notes 1 to 16 form part of these financial statements. Philip Lynch Chairman Michael Duffy Chief Executive Annual Report & Financial Statements 2001 33 Notes Forming Part of the Financial Statements year ended 31 December 2001 1. Income (a) Included in Oireachtas Grant in Aid is €6,537,000 (IR£5,148,000) which has been made available to An Bord Bia under the Marketing Sub-Programme of the Productive Sector Operational Programme of the National Development Plan 2000-2006 (b) The An Bord Bia Act, 1994, provides for payment to the Board of a levy per head on slaughtered or exported livestock. Under section 37 of the Act, the rates were set at IR£1.50 per head for cattle, 20p per head for sheep and 20p per head for pigs. (c) Project and other income includes industry contributions to joint promotions, steak bar sales at trade fairs, and seminar and conference fees. Also included is income arising under the Targeted Marketing Consultancy (TMC) Programme. 2. Capital account 2001 €’000 Balance at 1 January 2001 €’000 IR£’000 942 Amount capitalised in respect of purchased tangible assets 284 IR£’000 742 224 Net amount realised on disposal of assets (5) (5) Amortisation in line with asset depreciation (301) (236) Net transfer to Income and Expenditure Account (22) (17) Balance at 31 December 2001 920 725 3. Marketing and Promotional Expenditure 2001 2000 2001 2000 €’000 €’000 IR£’000 IR£’000 Marketing Development Programmes 5,717 7,231 4,502 5,695 Trade Fairs and Exhibitions 3,275 2,984 2,579 2,350 Information Services 1,396 1,235 1,099 973 634 451 499 355 3,397 1,543 2,676 1,215 Quality Assurance Trade Services Strategic Marketing Programme 117 92 Marketing Services 390 349 307 275 Communications 298 427 235 336 Nutritional Advisory Services 477 664 376 523 15,584 15,001 12,273 11,814 34 Annual Report & Financial Statements 2001 Notes Forming Part of the Financial Statements year ended 31 December 2001 4. Marketing Finance 2001 2000 2001 2000 €’000 €’000 IR£’000 IR£’000 Marketing Improvement Assistance Programme 410 514 323 405 Market Participation Programme 706 - 556 - 1,116 514 879 405 283 190 223 150 Staff costs 4,723 3,888 3,720 3,062 Rent, rates and insurance 1,216 865 958 681 5. Operating expenditure Board and Sub-Board Members’ fees and expenses Telecommunications costs General business expenses Audit fee Depreciation (Note 6) Loss on disposal of tangible assets 199 207 156 163 2,265 1,737 1,784 1,368 12 11 9 9 300 323 236 254 6 5 5 4 9,004 7,226 7,091 5,691 Operating expenditure includes the full cost of staff and office expenses in head office departments and in the overseas offices. Staff costs comprise: Wages and salaries 3,921 3,214 3,088 2,531 Social insurance costs 256 209 201 165 Pension contributions 546 465 431 366 4,723 3,888 3,720 3,062 The total number of employees (including part-time) at 31 December 2001 was 75 (2000: 68). The cost of certain part-time employees is included in Marketing and Promotional Expenditure. Annual Report & Financial Statements 2001 35 Notes Forming Part of the Financial Statements year ended 31 December 2001 6. Tangible Fixed Assets Leasehold Furniture improvements and fittings Computer Office Motor equipment equipment vehicles Total €’000 €’000 €’000 €’000 €’000 €’000 800 615 161 741 81 2,398 39 30 90 78 47 284 212 (212) (1) (9) (12) (32) (31) (85) 838 636 451 575 97 2,597 366 415 37 590 48 1,456 84 57 84 57 19 301 228 (228) (8) (12) (31) (29) (80) Cost At 1 January 2001 Additions in year Transfers Disposals At 31 December 2001 - Depreciation At 1 January 2001 Charged in year Transfers Disposals - At 31 December 2001 450 464 337 388 38 1,677 Net book Amounts At 31 December 2001 388 172 114 187 59 920 At 31 December 2000 434 200 124 151 33 942 IR£’000 IR£’000 IR£’000 630 484 127 584 64 1,889 30 24 72 61 37 224 167 (167) IR£’000 IR£’000 IR£’000 Cost At 1 January 2001 Additions in year Transfers Disposals At 31 December 2001 - (1) (7) (10) (25) (24) (67) 659 501 356 453 77 2,046 288 327 29 465 38 1,147 65 45 66 45 15 236 180 (180) (6) (9) (24) (23) (62) Depreciation At 1 January 2001 Charged in year Transfers Disposals - At 31 December 2001 353 366 266 306 30 1,321 Net book Amounts At 31 December 2001 306 135 90 147 47 725 At 31 December 2000 342 157 98 119 26 742 36 Annual Report & Financial Statements 2001 Notes Forming Part of the Financial Statements year ended 31 December 2001 7. Financial Fixed Assets The Irish Food Board (An Bord Bia) France SARL is wholly-owned by An Bord Bia. The company does not trade. It rents property on behalf of Bord Bia and these costs are fully reflected in these financial statements. 8. Debtors 2001 2000 2001 2000 €’000 €’000 IR£’000 IR£’000 1,303 697 1,026 549 736 1,485 580 1,169 2,039 2,182 1,606 1,718 Trade creditors 556 656 438 517 Taxation and PRSI (Note 10) 189 109 149 86 1,324 1,538 1,043 1,211 2,069 2,303 1,630 1,814 139 80 110 63 50 29 39 23 189 109 149 86 Amounts falling due within one year: Debtors Prepayments and accrued income 9. Creditors (amounts falling due within one year) Accruals and deferred income 10. Taxation and PRSI Taxation and PRSI creditors comprise the following: Income Tax P.R.S.I. An Bord Bia is not liable to corporate taxes in Ireland or in the countries in which it operates because it is a non-commercial State-sponsored body. It is liable to employer taxes in Ireland and complies with related withholding, reporting and payment obligations. In some other countries in which it operates, an exemption from local taxation has been availed of under the governmental services article of the double taxation agreement. This position is currently under review by Bord Bia which is actively seeking clarification to determine whether overseas employment taxes arise in any of the jurisdictions where this exemption has been availed of. The review may result in a liability to taxes in some jurisdictions, but given that this decision rests with the various jurisdictions in question, there are uncertainties in relation to the amount and timing of any liabilities, if any. At the balance sheet date it was not possible to make a reliable estimate of these possible contingent liabilities and, consequently, no provision has been made in the financial statements for the year ended 31 December 2001. Annual Report & Financial Statements 2001 37 Notes Forming Part of the Financial Statements year ended 31 December 2001 11. Provisions for Liabilities and Charges At 1 January 2001 Provided/ (Released) At during 31 December year 2001 €’000 €’000 €’000 EU Quality Beef Promotion Fund 196 (196) - Value Added Tax 284 127 411 480 (69) 411 IR£’000 IR£’000 IR£’000 EU Quality Beef Promotion Fund 155 (155) - Value Added Tax 223 100 323 378 (55) 323 These provisions are included within Debtors and Creditors respectively. 12. Commitments (a) Capital Commitments An Bord Bia had no capital commitments at the year end. (b) Financial Incentives There were no commitments in respect of Marketing Finance Programmes at the year end. (c) Operating Leases Operating leases comprise leases on premises. Leasing commitments payable during the next twelve months amount to €825,461 (IR£650,103) made up as follows: €000’s IR£000’s Within one year 111 88 Within two to five years Within six to ten years 661 53 520 42 825 650 Payable on leases on which the commitment expires: 38 Annual Report & Financial Statements 2001 Notes Forming Part of the Financial Statements year ended 31 December 2001 13. Contingent liabilities (a) (b) Contingent liabilities exist in respect of amounts approved but unclaimed at the year end under the terms of the following Marketing Finance Programmes operated by An Bord Bia as follows: 2001 2000 2001 2000 €’000 €’000 IR£’000 IR£’000 Marketing Improvement Assistance Programme 211 - 166 - Market Participation Programme 275 - 217 - 486 - 383 - Litigation is in process against the Board arising from a dispute in which it is alleged that the former CBF infringed employment rights and in which the plaintiff is seeking €190,461 (IR£150,000). The Board are of the opinion that the claim can be successfully resisted. The information usually required by FRS12 is not disclosed on the grounds that it can be expected to prejudice seriously the outcome of the litigation. 14. Recoverable Incentives Under the terms of the Targeted Marketing Consultancy (TMC) Programme, a total of €2,911 (IR£2,293) was due to be recovered in 2002 and subsequent years from participating companies: 2001 2000 2001 2000 €’000 €’000 IR£’000 IR£’000 Estimated amount recoverable at start of year 3 132 2 104 Repayments during year - (129) - (102) Estimated amount recoverable at end of year 3 3 2 2 Recoverable incentives are accounted for on a cash receipts basis and accordingly are not included in debtors. Annual Report & Financial Statements 2001 39 Notes Forming Part of the Financial Statements year ended 31 December 2001 15. Superannuation The Board operates a defined benefits superannuation scheme for certain eligible employees, for which the approval of the Minister for Agriculture and Food and the Minister for Finance has been received. The contributions of employees and An Bord Bia are paid into a fund managed by the trustees and the total funding rate is in accordance with actuarial recommendations. A full actuarial valuation was carried out as at 1 January 2001 and updated by a qualified independent actuary to take account of the requirements of FRS 17 in order to assess the liabilities at the balance sheet date. Scheme assets are stated at their market value at the balance sheet date. The financial assumptions used to calculate the retirement liabilities under FRS 17 were as follows: At 31 December 2001 General salary increases 4.0% Promotional salary increases 0.5% Rate of increase of pensions in payment 4.0% Discount rate 6.0% Inflation assumption 2.5% The assets in the scheme and the expected rate of return were: Long-term rate of return expected at 31 Dec 01 Value at 31 Dec 2001 €’000 IR£’000 Equities 8.0% 6,062 4,774 Bonds 5.5% 1,677 1,321 Other 7.0% 860 677 Total market value of assets 8,599 6,772 Present value of scheme liabilities 8,883 6,996 (284) (224) Net deficit in pension scheme 16. Board Members - Disclosure of Transactions In the normal course of business the Board may approve grants and may also enter into other contractual arrangements with undertakings in which Bord Bia Board Members are employed or otherwise interested. The Board adopted procedures in accordance with the guidelines issued by the Department of Finance in relation to the disclosure of interests by Board Members and these procedures have been adhered to by the Board during the year. Grants totalling €64,122 (IR£50,500) were approved, and grants totalling €32,698 (IR£25,752) were paid during the year to companies with which Board Members are associated. The Members did not receive Board documentation on the proposed grant assistance nor did the Members participate in or attend any Board discussion relating to the matter. 40 Annual Report & Financial Statements 2001 Office Network Ireland Head Office Düsseldorf London Madrid Clanwilliam Court Lower Mount Street Dublin 2, Ireland Rolandstrasse 44 D40476 Düsseldorf Germany 2 Tavistock Place London WC1H 9RA United Kingdom Tel: +353 1 668 5155 Fax: +353 1 668 7521 Tel: +49 211 452 090 Fax: +49 211 453 353 Tel: +44 207 833 1251 Fax: +44 207 278 7193 Casa de Irlanda, Paseo de la Castellana. 46-planta 3 28046 Madrid, Spain Tel: +34 91 435 6572 Fax: +34 91 435 6211 Milan Moscow Paris Chicago Via S. 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