Dairy Business Plan 2012 Final

DAI RY MANAGEMENT BOARD
BUSINESS PLAN
2012 /13

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GUERNSEY DAIRY 2012/13 BUSINESS PLAN

COMMENT FROM GUERNSEY DAIRY MANAGEMENT BOARD CHAIRMAN
I am pleased to be able to report another satisfactory performance with the business
delivering a net surplus of 480,000 in 2011 (405,000 in 2010) alongside a 5%
(310,000) increase in turnover.

The 16% increase (190,000) in the value of 2011 Dairy product sales (on top of the
13% increase in 2010) was largely due to the realignment of Guernsey Dairy butter
prices with the prevailing and significantly higher price for butter on the European
market. Currently, Guernsey Dairy butter prices are being maintained at 2011 levels,
but to remain competitive and protect the sales volume price reductions may be
necessary in 2012/ 13.

The Dairy engaged the services of Foodlink CI Ltd. to assist with the promotion of milk-
product sales during 2011, an approach that did help improve sales and
communications with retail outlets. However it became evident during the year that
further substantive advances in sales would be difficult to achieve at the present time
within the existing supply chain model. Consequently, it was mutually agreed that the
contract with Foodlink-CI Ltd. be suspended pending the final outcome of States
reviews of the industry and its regulation.
Working losses in production were reduced by a further 2% during 2011 (2010 6 %).
However, due to the continuing rise in unit cost, energy expenditure increased by 21%
in addition to the 13% rise in 2010. Further substantial increases in energy costs are
already being experienced in 2012.

As in 2009 and 2010, supplies of raw farm milk were maintained at sustainable levels
throughout the 2011 winter period and at no time was there a threat of the need to
import from other jurisdictions. Regular meetings between representatives of the
Guernsey Farmers Association and the Guernsey Dairy over the last few years has
delivered a better understanding of the partnership approach required to obtain
constancy of supply, best quality and value for the local consumer. Revised and
flattened annual quota profiles, which aim to encourage a steady and reliable
supply of raw milk year-round, were implemented on 1 J anuary 2012. Also, revised
rules of supply delivering improvements in the quality of raw milk supplied to the
Dairy were introduced on 1 April 2012. Planned incremental quality improvements to
the supply of raw milk from farms will lead to better quality products and potentially
longer shelf-life.

Against an encouraging background of progress and growing confidence in the
Guernsey dairy industry, at its meeting in November 2011 the States of Deliberation
decided to note the recommendations of the Independent Dairy Industry Review
Panel which made proposals for the future direction of the Industry. The States
instructed the Commerce and Employment Department to undertake a further
review, reporting back to the States of Deliberation no later than the end of 2013.

That the Dairy was able to produce a financial surplus in 2011 is testament to General
Manager, Andrew Tabels determination that, come what may, the Guernsey Dairy is
open for business 365 days of the year. This he achieves with a can do attitude, an
optimistic outlook, the support of an extremely loyal team and by leading from the
front. What more could I ask?

May I take this opportunity to thank Deputies Robert Sillars (resigned Dec 2011),
Martyn Storey and Al Brouard (appointed Dec 2011) for their wisdom, advice and
support during the last States term, and welcome Deputies Mike Hadley and David
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de Lisle newly elected to the Dairy Management Board. Also, my grateful thanks to
Non-States members, Simon Keys and Steve Hogg, for their invaluable contributions,
constantly challenging accepted practice and encouraging the commercial
evolution of the business.

Alan Child
Chairman

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THE DAIRY MANAGEMENT BOARD MEMBERS

Chairman - Alan Child

Commerce & Employment - Deputy Mike Hadley

Commerce & Employment - Deputy David de Lisle

Non-States Member - Simon Keys

Non-States Member - Steve Hogg

Ex officio - Andrew Tabel (Dairy General Manager)

Ex officio - Richard Nash (Director of Client Services)

Note:

The Boards Financial Management Service is provided by Martyn Smith
(Director of Finance and Resources for the Commerce and Employment
Department)

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Contents

1. Introduction

1.1. Statement of Purpose
1.2. Overview
1.3. Operational Context
1.4. Principle Activities
1.5. Business Strategy

2. Stakeholder Relationship Plan

2.1. Guernsey Farmers Association (GFA)
2.2. Guernsey Milk Retailers Association (GMRA)
2.3. Dairy Trade Counter Customers
2.4. Retail trade and commercial Customers

3. Raw Milk Supply Plan

3.1. Volume
3.2. Quality

4. Products and Quality Plan

4.1. Milk
4.2. Cream
4.3. Butter
4.4. Ice Cream
4.5. Cheese
4.6. Quality Management Systems Review

5. Sales and Marketing Plan

5.1. Local Market Sales
5.2. Export Sales
5.3. Product Pricing

6. Business and Operations Plan

6.1. Business Outcomes
6.2. Operational Review
6.3. Management and Administration Structure Review
6.4. Business Continuity and Security Review

7. Capital Investment Plan

8. Appendices
8.1. Dairy Trading Account 2011 and Probable Outturn 2012
8.2. Dairy Sales Projections 2012
8.3. Capital Investment Programme 2012-2016
8.4. Dairy Organisational Chart (May 2012)
8.5. Dairy Business Plan 2012/13 Summary of Activities

9. Figures
9.1. Raw milk supply graph (2006 2012)
9.2. Export (retail) butter sales
9.3. % split of the retail price of milk
9.4. Product contribution to annual sales
9.5. Percentage split in milk sales by product type
9.6. Percentage split in milk sales by milk type
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1. INTRODUCTION

1.1. Statement of Purpose

To provide a modern processing unit for the local dairy industry, that
supplies a range of high quality dairy products for local and export
markets.

To satisfy the local demand for processed fresh Guernsey milk at an
acceptable price to the consumer

To operate commercially within the context of government
intervention designed to maintain Guernseys traditional countryside.

1.2. Overview

Guernsey Dairy performs a vital milk processing and marketing role, operating at
the interface between the raw milk producers (Guernseys dairy farmers) and the
people of Guernsey, as customers. The Milk and Milk Products (Guernsey) Law 1955
(as amended) instituted what is effectively a States monopoly over the supply of
liquid milk on the Island. The prevention of imports in this way has acted as a key
factor in protecting the Islands dairy farming industry and preserving the unique
nature of the Guernsey countryside.

1.3. Operational Context

Guernsey Dairy aims to manufacture, market, and sell commercially viable, high
quality and high value dairy produce, operating an effective and efficient raw milk
processing facility to UK national standards of hygiene and safety.

Whilst the Dairys terms of reference include operating as commercially as
possible and challenging accepted practice, the following restraints to operational
efficiency currently apply:

Island milk production is controlled (and effectively capped at 8.1
million litres per year) through the Dairy Supply Contract and quota
system.

All raw milk produced (to agreed quality standards) must be
purchased from the suppliers regardless of the Dairys need.

Raw milk is purchased, and processed milk is sold at prices set by
others.

Until 2015, area monopoly licences apply to the distribution of all
processed milk and doorstep deliveries of dairy products.

The remuneration and conditions of service directives for all public
sector employees apply to Dairy staff. The Dairy Management Board
has no control over the pay or employment conditions of its own
workforce.

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1.4. Principle Activities

The principal activities of the Guernsey Dairy are:

Collecting raw milk from farms.

Processing raw milk to produce milk, cream, butter, cheese, and ice
cream for retail and catering sale.

Operating agreed systems to pay farmers for milk collected.

Supplying milk and other dairy products to customers.

Ensuring that all milk collection and production activities are carried
out in accordance with best practice and UK accepted food hygiene
and safety standards.

Ensuring that developments in the UK food and drink industry are
closely monitored and beneficial methods appropriate to the
Guernsey Dairy are adopted.

1.5. Business Strategy

The Dairy aims to provide a modern processing unit for the local dairy
industry, that supplies a range of high quality dairy products for local
and export markets.

The Dairy seeks to satisfy the local demand for processed fresh
Guernsey milk and to operate in a commercial manner within the
context of government intervention designed to maintain Guernseys
traditional countryside.

The Dairy will focus on sales and their enhancement.

The Dairys product range will be kept under review (including the
market testing of new products) and the fully absorbed manufacturing
costs of each product will be accurately determined.

At all times, the Dairy will be operated to ensure a hygienic and safe
working environment is maintained. This will be pursued with
investment in staff, in training, equipment, and facilities.

The Dairy will continue to work with a specialist dairy industry Quality
Assurance consultancy, to ensure that the Dairy achieves quality
standards in line with the UK industry and that efficiencies are
maximised, shelf life is increased, and products are produced to the
highest quality standards.

Investment in facilities and equipment will continue, self financed from
any operating surpluses generated using a save to spend policy. A
comprehensive Investment Plan has been developed, and continues
to be implemented.

The Dairy is committed to maintaining good communications with all of
its stakeholders. This will include a twice-yearly In-Council meeting
and regular operational dialogue.
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The Dairy will work closely with milk distributors to investigate sales
incentives for retail products, promotions, and marketing. Sales
performance will be monitored and the Dairy will optimise its strategy
for sales in the light of these investigations.

The Dairy is keen to work with local dairy farmers prepared to produce
raw milk over and above their quota allowance. This could result in the
Dairy being able to supply all of the Islands liquid milk requirements
and in turn alleviate the need for raw or processed milk imports and
the associated threat to the Islands dairy industry this may carry.

A steady improvement in raw milk intake quality will be pursued in
collaboration with Island dairy farmers to ensure quality, improved
product shelf life, reduction of operational losses, and an adequate
year round intake to satisfy demand is maintained.

Export sales of butter remain important to the Dairy and its financial
performance and will continue to be supported by ensuring a regular
supply of product is maintained. The Dairy will also act to ensure that
the local retail butter market is similarly maintained.

Significant operational improvements have been made through
revised working practices leading to the reduction of milk losses in the
business. The Dairy will continue to look for operational cost savings
and will consider amongst other things reducing the length of the
effective working week taking into consideration the result of a full
product review.

A review of the management and administration structure of the Dairy
will be conducted to determine the most efficient staffing model
required to sustain the Dairys needs.

The Dairy will review its operation annually and this will form the basis of
its business plan (which will be made public in its entirety) and of its
submission to the Milk Price Review Panel. The latter will propose price
changes to provide an Annual Business Outcome showing a surplus for
re-investment in the region of 5% of turnover.

The Dairy will seek to play its part and have a strong role in ensuring
that Island consumers are aware of the benefits that accrue from
making the choice to continue to buy local dairy products over
imported alternatives.

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2. STAKEHOLDER RELATIONSHIP PLAN

2.1. Guernsey Farmers Association (GFA)

Key to the future success of the Guernsey Dairy Industry is the relationship
between the GFA as a representative body, of the Island dairy farmers, and the
Guernsey Dairy. Meetings are now held on a regular basis with the aim of involving
GFA members in a partnership approach to the development of the local dairy
industry.
2.1.1. Activity
Regular meetings continue to be held between Dairy management and GFA
representatives to work together to: -

improve the quantity and quality of the raw milk produced from the
Guernsey breed of cattle

obtain a good match between the Dairys requirement for raw milk
(demand curve) and the supply pattern throughout the year, and

explore ways of improving the efficiency of the industry and the operation
of the Dairy, to the benefit of all stakeholders and customers.

(Notes of the meetings are circulated to participants and to members of the Dairy
Management Board for information)
When
Monthly
Who
Chairman, General Manager and Quality Assurance Manager

2.2. Guernsey Milk Retailers Association (GMRA)

Until 2015 licensed milk distributors are guaranteed a territory based monopoly
over the distribution of all Guernsey Dairy retail packaged milk and for the doorstep
sales of Guernsey Dairy retail products. It is therefore important for the Dairy to work
with the GMRA to maximise these sales.

Dairy senior management will continue to meet GMRA representatives regularly
to discuss operational matters associated with supply and distribution issues.

2.2.1. Activity

Regular meetings will continue be held between Dairy management and GMRA
representatives to explore ways of working together to:-

maximise the sales of milk and dairy products in Guernsey

explore ways of improving the service to local customers and

discuss operational issues associated with demand, supply and delivery.

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(Notes of the meetings will be circulated to participants and to members of the
Dairy Management Board for information)
When
Monthly
Who
Chairman, General Manager, Quality Assurance Manager, and Production
Manager

2.3. Trade Counter Customers

There are currently 17 active customers who hold a Trade Account with the
Guernsey Dairy. Collectively their turnover in 2011 was circ. 235k which represents
approximately 3.5 % of the Dairys annual turnover.

Trade account customers currently have access to the following milk products
produced by the Guernsey Dairy subject to availability:

Catering butter (salted and unsalted) currently unavailable

Catering cream (whipping and double)

The full range of ice-cream (catering and retail)

There are also (subject to conditions) bulk discounts for catering cream and butter
that are available to all Dairy customers. The thresholds are currently:

Catering salted butter minimum order of 500 kgs

Catering unsalted butter minimum order quantity of 250 kgs

Catering cream minimum order quantity of 100 litres per week (across the
entire range)
2.3.1. Activity
The trade counter scheme will be kept under review with the aim of maximising
Guernsey Dairys local market share of dairy product sales.

The particular focus in 2012/13 will be

product availability

ordering schedules and units of sale/bulk discount thresholds

increasing the awareness and use of locally produced dairy products
When
Continuous
Who
General Manager

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2.4. Retail Trade and Commercial Customers

The Dairys products are distributed to Island consumers via a system based
around the requirements of twenty-six individual businesses that form the GMRA.
Feedback from customers within the multiple retail outlet sector of the market has
long been that they would be better able to support and stock local Guernsey Dairy
products if they could speak directly to the Dairy; in particular to discuss matters such
as promotional activity and POS advertising.

In 2010/11 a Sales and Marketing Adviser was retained on a part-time temporary
contract to develop links and build sales through improved communication and
promotion across all Guernsey Dairy products. Substantial progress was achieved
during 2010/11, but it was recognised that substantive further advances in sales would
be difficult to achieve within the existing supply chain model. With the Boards
reluctance to pursue changes to the supply chain model in advance of a decision
expected from the States of Deliberation on the Industry review the contract was
mutually suspended and is unlikely to be re-instated before further consideration of
the issues by the States in 2013. Meanwhile sales and marketing activity is limited to
what is achievable within the resources available in house combined with those of
the GMRA.
2.4.1. Activity
To ensure that wherever possible the placement of Guernsey Dairy products on
shop shelves is in a prominent position.
When
Throughout 2012/13
Who
General Manager and GMRA Representatives
2.4.2. Activity
To engage in the process of in-store sampling to help raise the profile of the
Guernsey Dairy, increase sales and brand loyalty
When
Throughout 2012/13
Who
2.4.3. Activity
To engage in the process of in-store promotional activity to help raise the profile
of the Guernsey Dairy, increase sales and brand loyalty
When
Throughout 2012/13
Who

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3. RAW MILK SUPPLY PLAN

3.1. Volume

As in 2011, a key issue for the Dairy (See Fig 1 Raw Milk intake 2006-2012), is the
seasonal variation of raw milk supply throughout the year. Whilst this is to a degree
unavoidable, of particular concern have been the periods of low production in the
winter. The Dairy Farm quota arrangements have not given sufficient incentive to
date to avoid the need to import raw milk to make up for seasonal under production
in some years. The Dairy has discussed this at length with the GFA and is pleased to
note that production held up in the winter of 2010/ 2011, and again in 2011/ 2012.
Similar changes to those made during the previous year were re-introduced with the
suspension of B price, i.e. by raising the B price to the A price level for raw milk
produced during the period J anuary to March 2012. The Dairy will review the matter
and may well re-instate this arrangement for further trialing in the winter 2012/2013.
The Dairy will continue to work with the Commerce and Employment Department
(C&E) on the details of the milk quota system by offering incentives for winter milk
production to ensure continuity of supply is maintained.

C&E through consultation with the GFA, have introduced a modified quota line that
applies to all farms which aims to match farm output requirements to the even year
round pattern of the consumption of liquid milk.
3.1.1. Activity
Review the experience of a raised B price with the GFA in stimulating winter
milk production. Consultation on any further changes will take place with the Industry.
When
Ongoing throughout 2012/13
Who
Chairman, General Manager
3.1.2. Activity

Review the outcomes of the introduced changes to the monthly milk quota profile
(in conjunction with C&E) with the aim of more closely aligning raw milk production to
demand, reducing seasonal variations in raw milk supply, and minimising the risk of
under supply in the winter months. Consultation on any further changes will take
place with the Industry.
When
Who

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3.2. Milk Quality

The quality of the raw milk produced on the island remains high but ongoing
improvement will be required in order to reach the levels afforded to some processors
of premium branded fresh milk in the UK. Increase in raw milk quality will not only
provide opportunities for extending the shelf life on milk and cream, but will also
enable the review of operational efficiencies.

Following an extended period of consultation between the Guernsey Dairy and
the GFA, a revised Rules of Supply initiative was introduced in April 12. This will
continue to be discussed as part of the Dairy/GFA Operational meetings and
reviewed more formally on an annual basis with a view of improving raw milk quality
received by the Dairy.

Bacterial quality and antibiotic contamination of raw milk are issues that affect
the Dairy, potentially raising costs, jeopardising product shelf life, and threatening
continuity of local supply.

However, the volumes of milk lost due to contamination by antibiotics, and/or
extraneous water entrainment are relatively low. Losses over the last 6 years being:-

Year Litres
2007 9,920
2008 14,792
2009 13,488
2010 4,878
2011 8,933
2012 9,901 (to 15 J une 2012)

When contamination is identified in the Dairys milk tanker during pre-acceptance
tests the volume lost is greater, as it is not only the offending farms milk that is
contaminated, but also milk from the other farms making up that collection round.
3.2.1. Activity
An annual review of the Rules of Supply to be undertaken with any changes
being part of a thorough consultation process with the GFA and an agreed
implementation plan.
When
Who
Chairman, General Manager, Quality Assurance Manager (with independent
consultancy advice from Food Industry Consultancy Services (FICS)), GFA
Representatives.

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4. PRODUCTS & QUALITY PLAN
4.1. Milk
Liquid milk sales continue to account for 80.05 % of annual sales turnover by value
(Fig. 4) and the total volume of liquid milk sold has remained reasonably static over
the last 10 years. In line with the long-term trend, skimmed milk sales continue to
increase although there has been a general overall reduction in half-litre milk sales as
the consumer recognises the difference in price when buying a half-litre carton of
milk as opposed to a litre. Note: The price of half litres reflects the higher operational
costs of producing, packing, and handling half-litre cartons.

The percentage stakeholder split in the retail price of milk (currently 105 ppl) is
shown in Fig. 3. Sales of milk per product type is shown in Fig. 5. and by milk type in Fig.
6.
4.1.1. Activity
Milk sales in 2012 are expected to reflect those of recent years with a continuing
trend towards lower fat products and a general steady decline in liquid milk sales
amounting to approximately 50,000 litres (0.85%) over the past 5 years. The Dairy will
monitor the commercial expediency of continuing to manufacture a half-litre full-
cream product and alternative approaches to production processing to reduce its
costs, whilst maintaining acceptable use-by dates.
When

Who
General Manager, Quality Assurance Manager, Production Manager
4.1.2. Activity
Obtain revenue from the sale of advertising space on milk cartons.
When

Who
4.1.3. Activity
investigate the feasibility of cross-advertising with other island businesses for
mutual benefit and to boost revenue from this income stream.
When

Who


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4.1.4. Activity

As part of a brand preference campaign, create, develop, and use a story
board on milk cartons based around the five key areas associated with the Islands
dairy industry to fill any gaps in advertising runs.

Environment
Breed
Dairy
Producer
Health benefits

When


Who

Chairman, General Manager, PR Advisor

4.2. Cream

Year on year, catering cream sales decreased in volume by 6.4% (5,072 litres) with
retail cream sales showing an increase of 3.61 % (1,443 litres). Overall, cream sales
decreased by 3.04 % (3,630 litres) across this sector of the business.
4.2.1. Activity
The Dairy will continue to work with the GMRA and trade counter customers to
increase the awareness and benefits of supporting locally produced cream products
in order to gain an increased share of local market sales.
When
Ongoing throughout the year
Who
Chairman, General Manager, and GMRA Representatives.
4.2.2. Activity
Targeted promotional activities to be supported using the assistance of the GMRA
in conjunction with major retail outlets on the island.
When
Who

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4.2.3. Activity
Work to continue with the catering section of the CoFE on the training of young
chefs in the use of Guernsey cream rather than cream substitutes.
When
Who

4.3. Butter
J uly 2011 saw the European and UK butter commodity price reach
unprecedented levels of 3,800 per tonne. The Guernsey Dairy adjusted its gate
prices across all existing product lines in August 2011 to reflect the shift in the market
price, which also had the impact of reducing the demand as the Retail Sale Price
was realigned with competing products. This ensured that retail product availability
locally was restored following several weeks of interrupted supply despite the
withdrawal of the catering product line in November 2010 to allow the business to
concentrate on the more financially rewarding retail sector.
UK butter exports (marketed and sold in Guernsey Dairy branded retail wrap)
showed an increase of 11.25 % (6,745 Kgs - Fig. 2). This remains a lucrative and
valuable export market for the business, which raises the profile of the Guernsey Dairy
(and the Island) as a producer of premium quality, high value, niche market dairy
produce. The Dairy will again support and build on its relationship with this sector of
the market throughout 2012/13.
Overall, reflective of the withdrawal of the catering product line, total butter
sales were down 4.18 % (9,341 Kgs) v 2010, but income was up.
4.3.1. Activity
The Dairy will offer and run targeted price promotions as necessary to increase
sales working with its distribution network and commercial customers both locally and
in the export sector of the market.

Guernsey Dairy will continue to work with UK export customers to ensure
continuation of existing supply contracts.
When
Who
General Manager
4.3.2. Activity
Continue to work with DEFRA to establish some form of accreditation relating to
the initial Protected Designation of Origin application for Guernsey Dairy butter or
possibly a Protected Geographical Indication.
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When
December 2012

Who
General Manager, Quality Assurance Manager, and States of Guernsey
Agriculture Advisor
4.3.3. Activity
Ensure the correct positioning of Guernsey Dairy butter (local and export) by
evaluating each sector of the market to enable the business to benefit from the high
value premium branding associated with its products.
When
Continuing throughout 2012/13
Who
General Manager

4.4. Ice-cream

Guernsey Dairy ice-cream is available via the GMRA and the Trade Counter and
thus available to any customer of the Guernsey Dairy with the appropriate form of
refrigerated storage/transport.

Ice-cream sales by volume show an increase of 2.64 % (4,239 litres) in 2011
compared to 2010 despite some changes to the product listing being made i.e. some
flavours withdrawn and gate prices increased across all remaining product lines. This
helped to re-establish the margins (against the FAMCs) and align the prices against
competing products. 2011 also saw the introduction of new 2-litre packaging and
labelling which better reflected the quality of the contents for products aimed at the
retail sector of the market. Consequently, 2-litre retail ice-cream sales saw an uplift of
4.81 % (1,612 litres) in 2011 against those of 2010.

Despite a delay in obtaining the re-branded packaging from our Supplier (which
resulted in a J une launch) 100 ml ice-cream sales in 2011 exceeded those from the
previous year, up 56.92 %. The Dairy forged close links with Muse Ltd. who operated a
Guernsey Dairy/Muse branded mobile ice-cream vending tricycle at key locations
around St. Peter Port, has no doubt contributed to these successes.

2011 sales of the catering ice-cream range remain on a par with those in 2010 (-
0.3 % or 196 litres).

Total ice-cream sales reflect an increase of 2.64 % (4,239 litres).

Sales and marketing activity will continue throughout the year to include:-

Streamline/improve ordering arrangements for shops
Impulse purchase fridges in selected outlets
Point of sale displays
Proactive contacts with local wholesalers
In-store sampling
Review of packaging and pack sizes (catering and retail)
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Continue to develop relationships with third party ice-cream re-sellers
4.4.1. Activity

Continue to work with prospective partners to raise the profile of Guernsey Dairy
ice-cream at key sites across the island.
When
Who
General Manager
4.4.2. Activity

Investigate and evaluate the catering and retail sectors for Guernsey Dairy ice-
cream with a view to repositioning the gate (and consequently the Retail Sale Price)
against competitors products, the pack sizes and range of flavours subject to Dairy
Management Board approval.
When
December 2012
Who
General Manager
4.4.3. Activity

Investigate the feasibility of introducing a one-litre luxury ice-cream range either
in conjunction with, or as an alternative to, the current two-litre retail range.
When
December 2012
Who
General Manager, Quality Assurance Manager

4.5. Cheese

Frie dOr, the first soft cheese to be developed by the Guernsey Dairy, was
launched in 2008 in partnership with Meadow Court Farm who assisted with the initial
marketing and promotion. Smoked cheese was also re-introduced after an absence
of 3 years (in both retail and catering packs). There has been a continuation of small
batches of specialist flavoured cheeses targeted for release at specific times of the
year i.e. Christmas, and seasonal Farmers markets, but these account for a marginal
percentage of total sales.

With working losses still being managed effectively (2011 saw a reduction of 8.56
% or 30,187 litres compared to the previous year) and with strong raw milk production
from the islands dairy farmers, excess milk, i.e. that which is above and beyond what
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is required for liquid milk sales, continues to be readily available particularly during
the Spring flush. Overall, cheese production in 2011 saw a reduction of 21.2 %
(11,369 Kgs) from the unprecedented high experienced in 2010. Cheese
production in 2012 has already surpassed that of 2011 and reflects that of 2010.

Competition in this sector of the market remains intense, with major brand leaders
engaging in ongoing promotional activity throughout the year. The Guernsey Dairy
countered this by running several blanket promotions of their own across both
product ranges i.e. catering and retail. Despite this, 15,170 Kgs of cheese was
exported to the UK due to it nearing its maximum maturation point, and the inherent
risk of spoiling. This was the legacy of the Dairy having to accept over 8.24 million
litres of raw milk in 2010 (the highest volume recorded since the introduction of Milk
Quotas in 2000) and consequently having to absorb the surplus milk by turning it into
cheese.

In addition, 2011 saw the Dairy sell 18,792 Kgs (an increase of 37.07 % on 2010) of
cheese to the Food Service industry where it is used for grating. This gave the Dairy a
slightly better return on its initial investment compared to exporting it onto the bulk
export market. The continuation of this activity highlights the risks shouldered by the
Dairy and the continuing need for a level supply pattern of liquid milk.

Retail cheese sales saw a slight decline of 0.77 % (116 Kgs) in overall sales with
local catering block bucking the trend by comparison by showing an increase of
24.94 % (844.37 Kgs).

Total cheese sales (by volume) show an increase in sales of 57.77 % (19,898 Kgs)
although 26.96 % (15,170 Kgs) of this was consigned to the bulk export market, which
due to the high price the Dairy pays for its raw milk doesnt offer a positive return on
the initial investment.
4.5.1. Activity

The Guernsey Dairy will continue to work with the GMRA, trade counter
customers, and retail outlets to market Guernsey Dairy cheeses. Specifically, the
Dairy will endeavour to:-

Improve point of sale and general awareness
Improve the presence of Guernsey Dairy cheeses on deli-counters
Develop and promote, at a modest level, the Dairys range of flavoured
speciality cheeses
Undertake in-store sampling
Support the sampling and use of Guernsey Dairy cheeses at high profile local
events

The Guernsey Dairy will also promote Guernsey Dairy cheeses by attending
events such as Taste Guernsey and cheese and wine tasting events organised by
local wine merchants.
When
Who
General Manager, Production Manager, Cheese production team

P a g e | 20

4.5.2. Activity
Investigate the feasibility of introducing an artisan cheese e.g. waxed coated, to
compliment the Dairys existing product range
When
December 2012
Who
General Manager, Production Manager, Cheese production team
4.5.3. Activity
Conduct a feasibility study of the cost/benefit in continuing the production of Frie
dOr cheese and the price-point it retails for in the local market place taking into
consideration the Fully Absorbed Manufacturing Costs (FAMC).
When
December 2012
Who
General Manager, Production Manager
4.5.4. Activity
Review the packaging and gas mixtures used on the retail range of Dairy
cheeses in order to increase their visibility against the competition.
When
December 2012
Who
General Manager, Chief Engineer, Production Manager, Quality Assurance
Manager

4.6. Quality Management Systems Review

The Guernsey Dairy was audited by Environmental Health Department in April
2011 and retained the appropriate EU food manufacturing standard accreditation.
The date of the 2012 audit is yet to be confirmed.

Waitrose, prior to setting up its retail operation in Guernsey, audited the business
as a supplier of milk and milk-products which was successfully completed. Third
party accreditation (endorsed by Waitrose and used by many of their existing
suppliers) in the form of Small And Local Supplier Accreditation (SALSA) was obtained
in October 2011. This ensures the Dairys Quality Management System is fit for
purpose and further enhances our long-standing relationship with a key customer
account, both on and off the Island.

The Guernsey Dairy underwent a formal pre-audit visit from the Food Safety
Consortium who are subcontracted by Marks and Spencer to manage their Food
Safety Plan.

P a g e | 21

The annual audit by the Soil Association to enable the Guernsey Dairy to be
licensed to process and pack Organic milk is scheduled to take place on 23 J une
2012.
4.6.1. Activity
Guernsey Dairys food industry advisor, FICS, will continue to train the Guernsey
Dairy Hazard Analysis Critical Control Point (HACCP) team to Level 1, & 3 (HACCP for
manufacturing).
When
Level 1 training to be completed by August 2012.
Level 3 training for the Quality Assurance Manager to be completed by May 2012
HACCP Team Members to complete training to Level 3 by December 2012

Who

Quality Assurance Manager (with consultancy advice from FICS)
4.6.2. Activity
Guernsey Dairy will continue to work with FICS to ensure that the Dairy achieves
quality standards in line with the UK industry and that efficiencies are maximised, shelf
life results are monitored, and products are of the highest quality within the
manufacturing and production processes.
When
Annual trends will be monitored and reviewed quarterly
Who
4.6.3. Activity
Review the current Laboratory microbiological testing procedures and establish
whether they still fulfil the needs of the business or whether alternative and more
responsive testing methods are available.
When
This is the subject of continuous review and auditing principles ongoing
throughout 2012/13
Who
4.6.4. Activity
Maintain the Dairys compliance to the SALSA and Soil Association standards
When
This is the subject of continuous review and auditing principles ongoing
throughout 2012/13
Who

P a g e | 22

5. SALES & MARKETING PLAN

5.1. Local Market Sales

The sale of Guernsey Dairy products into the local retail market produces the
highest net worth of sales in the business. Marketing will therefore concentrate on
gaining a higher percentage of the available local dairy market.
5.1.1. Activity
Establish what percentage of the market share the Guernsey Dairy has in each
sector of the market.
When
Who
General Manager, (with input from the GMRA and local Retail Outlets)
5.1.2. Activity
Create a catering sales brochure aimed at raising the Dairys brand
profile/preference by informing local Chefs of the full range of Guernsey Dairy milk
and milk-products available from their local Dairy
When
June 2012
Who
Chairman, General Manager, GMRA Representatives
5.1.3. Activity
Develop a similar concept to the catering brochure specifically aimed at
Doorstep customers, or those who currently dont get their milk delivered.
When
July 2012
Who
Chairman, General Manager, GMRA Representatives

5.2. Export Sales
The Dairys main export over recent years has been the sale of retail butter to a
major retail multiple based in the UK (Fig. 2). This continues to be an ideal market for
the Guernsey Dairy as the supply and demand relationship is harmonised.

Cheese also has potential for exports but the market is extremely competitive for
an undifferentiated product. Guernsey Cheddar is a traditional, farmhouse type of
P a g e | 23

cheddar cheese along with the manufacturing process and maturation/storage
techniques, whilst fit for purpose, it is considered not to be of artisan style. Finding a
high value niche market along with a satisfactory, cost-effective route to market is
essential, but continues to remain elusive despite recognition in the form of a Gold
medal for the Dairys oak-smoked cheddar at the 2011 Nantwich International
Cheese Show.
5.2.1. Activity
Marketing opportunities for one-off export sales of excess butter - stocks will be
actively monitored and supply/demand profiles taken into consideration ensuring
that the business achieves the best possible return on its investment.
When
Ongoing
Who
General Manager
5.2.2. Activity
Opportunities for export markets for cheese will continue to be investigated.
When
Ongoing
Who
General Manager

5.3. Product Pricing
The FAMC project is complete, but will be continuously monitored and updated
throughout the course of the year.
5.3.1. Activity
The FAMC of Guernsey Dairy products will be regularly monitored and price
changes to products will be implemented taking into account variations in FLHP,
packaging/labour costs and prices of competitive products in the same sector of the
market.
When
Ongoing
Who
Chairman, General Manager and Chief Engineer
5.3.2. Activity
The Guernsey Dairy will undertake periodic benchmarking reviews on
competitors products.
When
Throughout 2012/13
Who
General Manager
P a g e | 24

6. BUSINESS AND OPERATIONS PLAN

6.1. Business Outcomes

The trading accounts for the year ended 31 December 2011 together with the
2012 Probable Outturn are attached as Appendix 1. See also Appendix 2 for sales
projections
6.1.1. Activity
The Dairy will make a submission to the Milk Price Review Panel (MPRP), which
aims to provide an Annual Business outcome showing an operating surplus in the
region of 5% of turnover.
When
July 2012
Who
Chairman, DMB Members, General Manager, Financial Service Provider (C&E)
6.1.2. Activity
As part of the MPRP submission, the Dairy will request that it is given the financial
resources to enable it to adopt the most efficient financial model of funding
infrastructure investment from savings, in a similar manner permitted by other States
Trading Boards i.e. save to spend.
When
June 2012
Who
Chairman, DMB Members, General Manager, Financial Service Provider (C&E)

6.2. Operational Review

Significant operational improvements were made during 2010/11 through revised
working practices leading to the reduction of milk losses across the business. Although
work will continue to reduce losses even further, it is likely that any additional savings
in this area will be small compared with those already achieved. Additional
operational savings may be attainable through reviewing production schedules, the
range of products manufactured, and significant capital investment in automated
systems.

The Guernsey Dairy is mindful of the outcome from the Policy Councils
Independent Review of the Islands dairy industry and the direction given to the
Commerce and Employment Dept. by the States of Deliberation (November 2011). It
is anticipated that the latest review will commence mid-2012 with a deadline of
appearing before the States in December 2013. No major initiatives will be launched
by the Guernsey Dairy until the reviews findings are known, and have been formally
considered.
P a g e | 25

6.2.1. Activity
Draft and supply information for the review of the Islands dairy industry
When
Continuous throughout 2012/13 as part of the consultation process
Who
6.2.2. Activity
Review current ordering schedules and units of sale for all milk and milk-products
When
Who
Chairman, General Manager, Production Manager, Quality Assurance Manager
6.2.3. Activity
Review the existing layout of the Dairys production and storage capacity to
ensure that the facility is fit for purpose.
When
December 2012
Who
General Manager, Chief Engineer, Quality Assurance Manager, Production Manager

6.3. Management and Administration Structure Review

The human resources needed to provide an efficient commercial operation,
including succession planning for key roles, will be determined largely by the
implementation of SAP and the effectiveness of the Shared Transaction Service
Centre which forms part of a wider Policy Council strategic initiative to reduce costs
across the whole of the SofG. It remains to be seen how involved the Guernsey Dairy
(as a Trading Board generating and supporting its own business activities) will
become and to what extent some commercial freedom and autonomy will be
offered.

A review of the Dairys organisational structure (management, staff, and
administration personnel) will be considered to enable the business to provide the
most efficient staffing model required to sustain the Dairys needs. In the interim, Dairy
staffing will be maintained at a level commensurate with providing a safe, rewarding,
and hygienic working environment based on existing constraints.

P a g e | 26

6.3.1. Activity
Review the organisational structure of the business taking into consideration the
above comments and the outcome of the introduction of the Systems Application
and Products (SAP) based States accounting system as part of the wider Shared
Transaction Service Centre (STSC).
When
Following the implementation of SAP, the considered views of C&Es review of the
dairy industry, and the conclusion of product and operational reviews.
Who
Chairman, General Manager, and Staff representatives

The current establishment of the Guernsey Dairy is shown in Appendix 4.

6.4. Business Continuity & Security Review

Three threats to business continuity exist which are difficult to plan for, namely -
the importation of processed milk into the Island uncontrolled by the Dairy, the
inability of the local dairy farming community to supply sufficient raw milk over a
sustained period of time, and the inability of the Guernsey Dairy to function because
of some unforeseen catastrophic incident.
6.4.1. Activity
The Dairy will identify and monitor the known and most likely of risks and threats to
business continuity and endeavour to plan accordingly.
When
Who
Chairman, General Manager, Chief Engineer, Quality Assurance Manager (with
consultancy support from FICS), Production Manager, Health Safety and Risk
Management Group (HSRMG).
6.4.2. Activity
Review the Dairys ITRisk Strategy and establish a Service Level Agreement with
Central ITU in order to provide the required ITsupport that will equal or exceed the
Dairys requirements.
When
Who
General Manager, Chief Engineer, Representatives from C&E and Central ITU.
6.4.3. Activity
Investigate the cost/benefit of undertaking a sustained brand preference/brand
loyalty initiative subject to DMB approval.
P a g e | 27

When
September 2012
Who
Chairman, General Manager, PR Advisor

P a g e | 28

7. CAPITAL INVESTMENT PLAN

7.1. Capital Investment

A shortage of funding generated from a negative operating surplus and
uncertainties over future finances resulted in a lack of investment in facilities and
equipment between 2002 and 2008. Having thoroughly reviewed the needs of the
business a comprehensive Capital Investment Plan (attached as Appendix 8.3) has
been developed. Improved financial performance has greatly assisted the Dairy in
establishing a capital investment fund limited to its trading activities and consistent
with the States save to spend policy.

Two significant items of dairy equipment were ordered in 2010 with the milk
packaging machine (361,500) arriving in the island in early December, although this
wasnt commissioned and fully operational until 2011. The replacement butter packer
(199,950) arrived on site in September but was found to have sustained extensive
damage in transit and was subsequently returned to the Supplier. This delayed the
installation/commissioning by several months and production on the replacement
equipment didnt commence until May 2011. The impact of this meant that 2011 saw
the total capital expenditure of 866,918 against a previous years total of 131,247.

Several smaller projects were also completed in 2011 along with routine remedial
repairs/maintenance work being carried out to the fabric of the building and existing
systems. Work included a significant upgrade to the Dairys SCADA system (103,069),
the replacement of the ice-bank pumps/pipe-work (32,260), new storage racking in
the cheese maturation store (24,975), and the rewiring of one of the Dairys main
control panels (17,111).

During the course of 2012, several capital projects are planned with the
replacement/repair of several key areas around the facility as the deterioration of
systems and services installed during the 1989/1990 refurbishment show signs of
degenerative wear and tear. The effects of a major failure could have a direct
impact on the Dairys ability to process liquid milk, leading at best to an interruption to
the supply chain, and at worst, the threat of milk imports.

Other CAPEX items such as the Laboratory refurbishment and upgrades to the
Dairys SCADA system - which will afford the business enhanced control over milk
processing and CIP systems (by the addition of automation/integration and a
reduction in manual processes) will ensure that the business moves forward,
engages in industry standard practices, and that the facility remains fit for purpose.

A projected CAPEX figure of 783,150 has been put in place for 2012 with a further
752,000 scheduled for 2013.
7.1.1. Activity
The rolling Capital Investment Plan will be implemented as indicated over the
coming years and will be determined by a system of prioritisation whilst taking into
consideration available funding on a save to spend policy.
When
Continuous throughout 2012/13 (Appendix 3)
Who
Chairman, DMB, General Manager, Chief Engineer
P a g e | 29

8. APPENDICES

8.1 Dairy Trading Account 2011 & Probable Outturn 2012
8.2 Dairy Sales Projections
8.3 Capital Investment Programme 2012 2016
8.4 Dairy Organisational Chart (May 2012)
8.5 Dairy Business Plan 2012 Summary of Activities

9. Figs

9.1 Raw milk supply graph (2006 2012)
9.2 Export (retail) butter sales
9.3 % split of the retail price of milk
9.4 Product contribution (as a percentage) to annual sales
9.5 Percentage split in milk sales by product type
9.6 Percentage milk sales by milk type

P a g e | 30

Appendix 8.1 - Dairy Trading Account 2011 and Probable Outturn 2012
Dairy Revenue account for the year ended 31 December 2011

2011

2010

Sales
Liquid milk 5,308,348 5,177,090
Dairy products 1,352,128 1,164,800
Sundry income
27,208 36,375

Total sales 6,687,684 6,378,265

Cost of sales
Opening product stock 273,061 258,978
Opening packaging stock 168,734 441,795 145,338 404,316

Production wages 766,298 747,770
Milk 3,136,597 3,065,740
Milk working losses 129,717 136,889
Dairy product ingredients 42,391 36,060
Packaging materials 494,361 523,504
Carriage inwards 14,291 15,121
Offshore processing and freight 46,941 34,015
Sundries 0 4,630,596 111 4,559,210

Closing product stock (251,122) (273,061)
Closing packaging stock (155,932) (407,054) (168,734) (441,795)

Total cost of sales 4,665,337 4,521,731

Gross surplus 2,022,347 1,856,534

Administration expenses (1,566,930) (1,455,830)

Operating surplus for the year 455,417 400,704

Interest receivable 8,924 3,992
Gain on sale of fixed assets 17,756 60

Retained surplus for the year 482,097

404,756

All material activities derive from continuing operations.

There are no recognised gains or losses or other movements in reserves for the
current or preceding financial years, other than as stated in the revenue account.

P a g e | 31

Balance sheet at 31 December 2011

2011 2010

Tangible fixed assets 2,221,787 1,538,804

Current assets
Stocks 472,314 506,854
Debtors and prepayments 1,040,033 1,274,271
Balances held with the States Treasury 839,799 332,935
Cash at bank and in hand 131,800 618,107

2,483,946 2,732,167

Creditors: amounts falling due within
one year

(418,710)

(466,045)

Net current assets 2,065,236 2,266,122

Total net assets 4,287,023 3,804,926

Reserves 4,287,023 3,804,926

P a g e | 32

Cash flow statement for the year ended 31 December 2011

2011 2010

Net cash inflow from operating
activities

855,901

188,710

Returns on investments and
servicing of finance

Interest received

8,924

3,992

Capital expenditure

Payments to acquire tangible
fixed assets

(846,918)

(131,247)

Receipts from sales of tangible
fixed assets

2,651

60

Net cash outflow from capital
expenditure

(844,267)

(131,187)

Management of liquid resources

(Increase) /decrease in assets
held with States Treasury

(506,864)

200,550

(Decrease) / increase in cash

( 486,306)

262,065

P a g e | 33

Capital expenditure 2010/2011
Capital expenditure 2011 2010
Plant & Machinery

Fan Convector Heaters for Heated Carton Store
Hot Water Calorifier
PS70 Filling Manifold
Refrigeration Equipment Unit for Cold Store 5
Refrigeration Equipment for Cheese Maturation Room
Milk Collection Systems
Milk Tanker Data Capture System
C.I.P. Up Grade to Cream Tank Controls
C.I.P. Pipe-Work
Semi Automatic Churn Washer
Ice Bank System Pipe-Work & Pumps
Scalox/Prime Delivery Pipe-Work
Scada Upgrade of Milk & Cream Pasteuriser
Shokoku S-PS60 Milk Packaging Machine
Brine Injector Pump
Rotary End Ford Butter Packaging Machine
LMS Cooled Brie Incubator
Two Ice Cream Scooping Freezers
MCC2 Electrical Control Panels
Cheese Maturation Store Racking

-
-
-
-
-
-
-
-
2,836
24,500
32,260
6,628
103,069
361,500
2,510
199,950
3,381
4,340
17,111
24,975

2,769
1,920
842
6,925
6,925
4,742
22,489
14,635
-
-
-
-
-
-
-
-
-
-
-
-

Site & Roads

Repairs to Tarmac

780

-
Buildings

Laboratory Storeroom Refurbishment
Aluminium Doors
Guttering & Fascias
Tanker Office Refurbishment
Loading Bay Refurbishment
Resurface Floor in Cold Store 5

-
-
-
-
-
-

1,584
2,022
22,923
2,694
6,212
6,170
Motor Vehicles

Forklift Truck
Isuzu Rodeo Denver 4x4 Pickup Truck
Diesel Tank for Road Vehicles
Tanker Chassis
Road Tanker, Tank & Pump Cabinet
Road Tanker Pump

-
-
2,811
36,914
29,383
4,677

45
17,264
-
-
-
-
Other Office Equipment (F&F)

HP Compaq 8000 Elite PC +Work Station
Upgrade to SCADA System Software
Electronic Safe
HP Laser J et P4014DN Printer
Storage & Segregation Racking
HP USDT Computer, VDU & Cabling
Oak Desk, Pedestal & Chair
Shockproof Laptop

-
-
523
1,212
4,780
1,625
339
814

1,616
9,470
-
-
-
-
-
-

Total Capital expenditure 866,918 131,247
P a g e | 34

Dairy probable outturn
For the year ended 31 December 2012

2012

Sales
Liquid milk 5,456,100
Dairy products 1,299,000
Sundry income 20,000

Total sales 6,775,100

Cost of sales
Production wages 775,000
Milk 3,384,800
Milk working losses 137,300
Dairy product ingredients 36,500
Packaging materials 483,000
Freight 4,000

Total cost of sales 4,880,600

Gross surplus 1,894,500

Expenses
Advertising & promotion 62,000
Cleaning materials 63,000
Depreciation 215,000
Fuel, light, power, water, rates 366,000
General administration costs 21,500
Laboratory expenses 81,000
Motor vehicle expenses 20,500
Other expenses including carriage 69,500
Professional fees 71,500
Repairs, maintenance, insurance 123,500
Salaries and wages 567,000

Total expenses 1,660,500

Operating surplus for the year 234,000

Interest receivable 18,000

Retained surplus for the year 252,000

P a g e | 35

ProductLine 2011 2011 2012 2012
Actual UnitSales Literage/weight Projected Sales Literage/weight
Low Fat Litre Units 468,918 234,459 454,454 227,227 -3.08%
Low FatLitre Units 4,140,526 4,140,526 4,101,336 4,101,336 -0.95%
Low FatPergal Units 18,891 256,918 17,758 241,509 -6.00%
Full Cream Litre Units 134,254 67,127 127,213 63,607 -5.24%
Full Cream Litre Units 629,459 629,459 622,435 622,435 -1.12%
Organic Low Fat Litre Units 69,794 34,897 59,899 29,950 -14.18%
Full Cream Pergal Units 699 9,506 1,233 16,769 76.39%
Skimmed Litre Units 193,236 96,618 180,863 90,432 -6.40%
Skimmed Litre Units 1,070,245 1,070,245 1,115,251 1,115,251 4.21%
Projected 2012 Total Milk Sales(litres) Litres 6,539,755 6,508,514 -0.48%
Double Cream 142ml Units 65,927 9,362 66,345 9,421 0.63%
Double Cream 284ml Units 90,811 25,790 92,895 26,382 2.29%
Whipping Cream 142ml Units 16,506 2,344 16,519 2,346 0.08%
Extra Thick Cream 284ml Units 13,850 3,933 14,101 4,005 1.81%
Total Retail Cream Sales(litres) Litres 41,429 42,154 1.75%
Whipping Cream Pot Units 1,522 1,729 1,236 1,404 -18.79%
Whipping Cream Pot Units 3,025 6,873 2,625 5,964 -13.22%
Double Cream Pot Units 2,560 2,908 2,423 2,753 -5.35%
Double Cream Pot Units 3,553 8,072 3,628 8,243 2.11%
Bulk Discounted Double Cream Pot Units 1,612 1,831 1,420 1,613 -11.91%
Bulk Discounted Double Cream Pot Units 11,789 26,785 12,180 27,673 3.32%
Bulk Discounted Whipping Cream Pot Units 1,902 2,161 1,926 2,188 1.26%
Bulk Discounted Whipping Cream Pot Units 10,505 23,867 11,749 26,694 11.84%
Total Catering Cream Sales(litres) Litres 74,226 76,531 3.11%
Projected 2012 Total Cream Sales(catering +retail)
(lit )
Litres 115,655 118,685 2.62%
Butter Portions(x200) Units 4,483 6,276 3,949 5,529 -11.91%
Salted Butter (250g) Units 373,117 93,279 393,727 98,432 5.52%
Unsalted Butter (250g) Units 85,459 21,365 86,624 21,656 1.36%
Bulk Butter (10kg) Salted Units 178 1,780 215 2,150 20.79%
Bulk Butter (10kg) Unsalted Units 224 2,240 130 1,300 -41.96%
Catering Salted Butter 250g (<499kg) Units 0 0 0 0 0.00%
Catering Unsalted Butter 250g (<249 kg) Units 0 0 0 0 0.00%
Discounted Catering Salted Butter 250g (>500 kg) Units 2,800 700 0 0 -100.00%
Discounted Catering Unsalted Butter 250g (>250 kg) Units 4,480 1,120 0 0 -100.00%
Bulk Butter (25kg) Salted Units 832 20,800 434 10,850 -47.84%
Bulk Butter (25kg) Unsalted Units 1 25 0 0 -100.00%
ExportSales(20 x 250g cases) Units 13,343 66,715 12,256 61,280 -8.15%
Projected 2012 Total Butter Sales(kg's) KG's 214,300 201,196 -6.11%
Mild Cheddar Block (kg) Units 1,966 1,966 3,193 3,193 62.41%
Mild Cheddar Block (local grating) (kg) Units 18,792 18,792 26,824 26,824 42.75%
Mild Cheddar Block (export) (Kg) Units 11,507 11,507 0 0 -100.00%
Mature Cheddar Block (kg) Units 1,466 1,466 1,418 1,418 -3.25%
Mature Cheddar Block (export) (Kg) Units 2,886 2,886 0 0 -100.00%
Extra-mature Cheddar Block (kg) Units 798 798 397 397 -50.25%
Extra-mature Cheddar Block (export) (Kg) Units 777 777 0 0 -100.00%
Smoked Cheddar Block (kg) Units 1,107 1,107 1,248 1,248 12.73%
Frie d'Or 200g Units 1,532 306 1,638 328 6.92%
Mild Cheddar 240g Units 30,730 7,375 23,719 5,693 -22.81%
Mature Cheddar 240g Units 23,794 5,711 22,215 5,332 -6.64%
Smoked Cheddar 240g Units 2,172 521 2,197 527 1.15%
Extra Mature 240g Units 4,719 1,133 4,792 1,150 1.55%
Projected 2012 Total Cheese Sales(kg's) KG's 54,344 46,109 -15.15%
Fresh Cream 100 6,326 633 5,490 549 -13.22%
Strawberry and Cream 100 3,379 338 3,498 350 3.52%
Chocolate 100 2,750 275 2,958 296 7.56%
Honeycomb 100 3,568 357 4,490 449 25.84%
Total sales(units) Litres 16,023 1,602 16,436 1,644 2.58%
Vanilla 2 litre 6,228 12,456 6,743 13,486 8.27%
Strawberry 2 litre 1,685 3,370 1,541 3,082 -8.55%
Chocolate 2 litre 2,028 4,056 2,146 4,292 5.82%
Toffee 2 litre 1,431 2,862 1,231 2,462 -13.98%
Coconut 2 litre 1,217 2,434 1,042 2,084 -14.38%
Coffee 2 litre 1,158 2,316 1,166 2,332 0.69%
MintChoc Chip 2 litre 2,535 5,070 2,682 5,364 5.80%
Rum and Raisin 2 litre 1,292 2,584 1,159 2,318 -10.29%
Total sales(units) Litres 17,574 35,148 17,710 35,420 0.77%
Vanilla 4 litre 9,489 37,956 7,209 28,836 -24.03%
Strawberry 4 litre 2,781 11,124 2,193 8,772 -21.14%
Chocolate 4 litre 2,577 10,308 2,290 9,160 -11.14%
Total sales(units) Units 14,847 59,388 11,692 46,768 -21.25%
Luxury Vanilla 4.7 litre 126 592 130 611 3.17%
Strawberriesand Cream 4.7 litre 145 682 165 776 13.79%
Rich Chocolate Chunk 4.7 litre 126 592 128 602 1.59%
Honeycomb Crunch 4.7 litre 180 846 196 921 8.89%
Total sales(units) Units 577 2,712 619 2,909 7.28%
Herm Vanilla 10 litre 291 2,910 300 3,000 3.09%
Herm Vanilla 4.7 litre 210 987 326 1,532 55.24%
Total sales(units) Units 501 3,897 626 4,532 16.30%
Projected 2012 Total Ice-cream sales(litres) KG's 100,035 88,364 -11.67%
Guernsey Raw Intake Litres 8,105,940 8,159,000 0.65%
Working Losses Litres 322,541 299,481 -7.15%
Salesweeks1-52
Appendix 8.2 - Projected Sales 2012 (by volume)
Percentage
Difference

P a g e | 36

Priority
Status
Unique
Capex
Project
Code
Status Project / Asset description Category for budget Est. Cost
Month of
purchase
Useful
Life (yrs)
Residual
Value
Laboratory
equipment
Motor
vehicles
Office
equip.
Plant &
machinery
Site, roads
and
buildings
Complete Butter date coder Plant and machinery 2,500 J an 5 0 0 0 0 2500 0
Complete Spare inverter for Separator Plant and machinery 5,000 J an 3 0 0 0 0 5000 0
Complete Refurbishment of Eng. Workshop (Phase 1) Site, roads and buildings 12,000 April 10 0 0 0 0 0 12000
Complete Tanker Chassis (1) Motor vehicles 30,000 April 5 0 0 30000 0 0 0
Complete Tanker Chassis (2) Motor vehicles 30,000 April 5 0 0 30000 0 0 0
Complete Replacement of Condensor Unit (CS1) Plant and machinery 5,000 May 8 0 0 0 0 5000 0
Complete Check Office Refurbishment Site, roads and buildings 5,000 May 10 0 0 0 0 0 5000
Complete Improved racking and storage facilities (2) Site, roads and buildings 5,000 J une 10 0 0 0 0 0 5000
Complete Pasteuriser raw milk pump replacement Plant and machinery 4,000 J an 5 0 0 0 0 4000 0
Complete Delivery pumps CIP Plant and machinery 3,850 April 5 0 0 0 0 3850 0
Complete Inverters for delivery pumps Plant and machinery 800 August 5 0 0 0 0 800 0
Complete Milk Tanker Vessel (1) Motor vehicles 30,000 J uly 15 0 0 30000 0 0 0
Complete New PC (Chief Engineer) Office equipment 900 September 3 0 0 0 900 0 0
Complete Milk Tanker Vessel (2) Motor vehicles 30,000 November 15 0 0 30000 0 0 0
(1-10) Complete Butter Packer (40%deposit) Plant and machinery 78,800 September 10 0 0 0 0 78800 0
Complete Photocopier Office equipment 4,250 November 3 0 0 0 4250 0 0
Complete Replacement of condensor unit in CS2 Plant and machinery 17,500 October 5 0 0 0 0 17500 0
Complete Replacement of condensor unit in CS3 Plant and machinery 7,500 November 5 0 0 0 0 7500 0
Complete Replacement of condensor unit in CS4 Plant and machinery 10,000 November 5 0 0 0 0 10000 0
Complete Replacement Air Compressor Plant and machinery 14,000 November 5 0 0 0 0 14000 0
Complete Replacement Air Dryer (Compressor) Plant and machinery 2,500 November 5 0 0 0 0 2500 0
Complete New PC's * 2 (PS) Office equipment 1,200 December 3 0 0 0 1200 0 0
Complete New PC's * 2 (PM & Utility Desk) Office equipment 1,800 December 3 0 0 0 1800 0 0
Complete Replacement Forklift Truck Plant and machinery 16,500 December 5 0 0 0 0 16500 0
Complete Convert existing store into new Cold Store Site, roads and buildings 27,500 November 15 0 0 0 0 0 27500
Complete Milk Crates Plant and machinery 12,500 October 5 0 0 0 0 12500 0
Complete Replacement of the Dairy's file servers (1) Office equipment 5,000 November 5 0 0 0 5000 0 0
Complete Software for the servers Office equipment 2,000 December 3 0 0 0 2000 0 0
Complete Cream Ink J et Coder Plant and machinery 12,000 December 5 0 0 0 0 12000 0
Complete Printer for Check Office Office equipment 580 December 3 0 0 0 580 0 0
Complete Lab Chemical Storage Laboratory equipment 1,530 December 10 0 1530 0 0 0 0
CAPEX 379,210 0 1,530 120,000 15,730 192,450 49,500
Appendix 8.3 - Proposed Capex (30 May 2012)
Expenditure by Category 2009

P a g e | 37
Priority
Status
Unique
Capex
Project
Code
Month of
purchase
Useful
Life (yrs)
Residual
Value
Laboratory
equipment
Motor
vehicles
Office
equip.
Plant &
machinery
Site, roads
and
buildings
Complete Ice-cream crates Plant and machinery 7,500 J an 5 0 0 0 0 7500 0
Complete Dairy Van (small) Motor vehicles 17,000 J an 5 0 0 17000 0 0 0
Complete Tanker Office refurbishment Site, roads and buildings 3,000 J an 10 0 0 0 0 0 3000
3 3-10 Complete Replacement of condensor unit in CS5 Site, roads and buildings 7,500 May 5 0 0 0 0 0 7500
4 5-10 Complete Replacement of condensor unit in cheese maturation room Site, roads and buildings 7,500 May 5 0 0 0 0 0 7500
2= 6-10 Complete Replacement Milk Packaging machine (50%) Plant and machinery 175,000 May 10 0 0 0 0 175000 0
Complete Replacement Admin block door & Tanker Office Site, roads and buildings 3,000 February 10 0 0 0 0 0 3000
7-10 Complete Heated Carton Store--Heating System Upgrade Plant and machinery 3,500 February 5 0 0 0 0 3500 0
1= 1-10 Complete Butter Packer (40%'intermediate payment') Plant and machinery 98,500 J une 10 0 0 0 0 98500 0
8 8-10 Complete Incoming Raw Milk Meter-Printer Plant and machinery 5,000 J une 5 0 0 0 0 5000 0
7 9-10 Complete Replace floor in CS5 (H & Sconcerns) Site, roads and buildings 8,000 May 20 0 0 0 0 0 8000
11-10 Complete Replacement Fascia and Guttering Site, roads and buildings 22,500 March 15 0 0 0 0 0 22500
5 12-10 Complete CIP System Delivery Flowmeter Plant and machinery 5,000 April 5 0 0 0 0 5000 0
13 13-10 Complete Repairs to Dairy yard (Loading Bay and drainage ref. RA) Site, roads and buildings 6,500 May 10 0 0 0 0 0 6500
14-10 Complete No.2 PS70 Filler Pneumatics Plant and machinery 4,000 April 5 0 0 0 0 4000 0
6= 19-10(A) Complete Improvements to existing CIP system (valve & pump replacement etc.) P1 SCADA. Plant and machinery 8,000 J uly 5 0 0 0 0 8000 0
17 17 Complete Dairy hot water calorifier Plant and machinery 2,000 August 5 0 0 0 0 2000 0
9 16-10 Complete Road Tankers Data-capture system Plant and machinery 20,000 J une 5 0 0 0 0 20000 0
2= 18-10 Complete Downline Handling (milk packaging)-Carton Conveyors (1) Plant and machinery 50,000 October 5 0 0 0 0 50000 0
6= 19-10(B) Complete Improvements to existing CIP system (valve & pump replacement etc.) P2. Plant and machinery 15,000 October 5 0 0 0 0 15000 0
2= 6-10 Complete Replacement Milk Packaging machine (50%) Plant and machinery 175,000 November 10 0 0 0 0 175000 0
18 22-10 Complete Replacement PC's (QAM & GM) Office equipment 1,500 November 3 0 0 0 1500 0 0
CAPEX 645,000 0 0 17,000 1,500 568,500 58,000

P a g e | 38

Priority
Status
Unique
Capex
Project
Code
Month of
purchase
Useful
Life (yrs)
Residual
Value
Laboratory
equipment
Motor
vehicles
Office
equip.
Plant &
machinery
Site, roads
and
buildings
1 1-11 Completed Replacement of Tanker 28 (Chassis) Motor vehicles 37,000 J uly 5 0 0 37000 0 0 0
2 2-11 Completed CIP Pipe-work replacement (Phase 1) Plant and machinery 3,500 February 15 0 0 0 0 3500 0
3= 3-11= Completed MCC2 Electrical Control Panel (Phase 1 - initial survey) Plant and machinery 6,500 J une 20 0 0 0 0 6500 0
21-10 Completed Repairs and upgrade to ice-bank system (Phase 1) Plant and machinery 15,200 August 5 0 0 0 0 15200 0
21-10 Completed Repairs and upgrade to ice-bank system (Phase 2) Plant and machinery 22,800 September 5 0 0 0 0 22800 0
29-11 Completed Replacement Churn Washer Plant and machinery 24,500 J uly 10 0 0 0 0 24500 0
6 6-11 Completed Seperator and Pasteuriser controls onto SCADA (Phase 1 - Review) Plant and machinery 1,000 J une 10 0 0 0 0 1000 0
6 6-11 Completed Seperator and Pasteuriser controls onto SCADA (Phase 2) Plant and machinery 34,000 October 10 0 0 0 0 34000 0
7 6-11 Completed Seperator and Pasteuriser controls onto SCADA (Phase 3) Plant and machinery 15,000 November 10 0 0 0 0 15000 0
8 6-11 Completed Seperator and Pasteuriser controls onto SCADA (Phase 4) Plant and machinery 53,000 December 10 0 0 0 0 53000 0
8 8-11 Completed Butter brine injection pump Plant and machinery 3,500 March 10 0 0 0 0 3500 0
1-10 Completed Butter Packer (10%'final payment') Plant and machinery 31,700 J une 10 0 0 0 0 31700 0
11 26-11 Completed Replacement Safe (Admin Office) Office equipment 550 April 5 0 0 0 550 0 0
29-11 Completed Replacement (road) Diesel tank Site, roads and buildings 2,900 August 10 0 0 0 0 0 2900
30-11 Completed Temperature controlled maturation storage unit for Frie d'Or Plant and machinery 3,600 September 5 0 0 0 0 3600 0
31-11 Completed 2 x branded scooping ice-cream freezers Plant and machinery 4,500 August 3 0 0 0 0 4500 0
12 12-11 Completed Exterior painting of structural steelwork (Fire Escape) Site, roads and buildings 10,000 September 5 0 0 0 0 0 10000
13 13-11 Cancelled Refurbishment of Eng. Workshop (phase 2) Site, roads and buildings 0 December 10 0 0 0 0 0 0
25-11 Completed Repairs to Dairy Yard Site, roads and buildings 1,000 J uly 10 0 0 0 0 0 1000
14 14-11 C/ F Exterior Dairy painting (general) Site, roads and buildings 0 September 5 0 0 0 0 0 0
15 15-11 Completed Replacement printers (Admin Office and Production Office) Office equipment 900 August 3 0 0 0 900 0 0
15 15-11 C/ F Repairs to FMT2 Plant and machinery 0 October 10 0 0 0 0 0 0
23= 23-11 Completed Cheese store racking (25%deposit with order) Site, roads and buildings 6,250 May 10 0 0 0 0 0 6250
32-11 Completed Misc. Storage and segregation racking Site, roads and buildings 5,000 September 15 0 0 0 0 0 5000
3= 3-11= Completed MCC2 Electrical Control Panel (Phase 2 electrical installation) Plant and machinery 18,000 October 20 0 0 0 0 18000 0
17 17-11 WIP Lab refurbishment Site, roads and buildings 0 September 10 0 0 0 0 0 0
18 18-11 Completed Replacement of Tanker 28 (incl. s/ s storage vessel) Motor vehicles 35,000 August 10 0 0 35000 0 0 0
23= 23-11 Completed Cheese store racking (75%on completion) Site, roads and buildings 18,750 August 10 0 0 0 0 0 18750
34-11 Completed Scalox/ prime delivery pipework Plant and machinery 5,000 November 10 0 0 0 0 5000 0
36-11 Completed Replacement tanker pump Plant and machinery 5,000 November 5 0 0 0 0 5000 0
20 35-11 Completed High Spec.' Laptop for SCADA control back up Office equipment 1,500 November 3 0 0 0 1500 0 0
20 32-11 Completed Boiler control - hot well level control Plant and machinery 1,500 December 10 0 0 0 0 1500 0
20 33-11 Completed Cabling, PC and office furnture for Dry Goods store Office equipment 2,500 October 5 0 0 0 2500 0 0
20 37-11 On hold MRP Software Office equipment 0 December 10 0 0 0 0 0 0
21 21-11 WIP Butter - cream metering pump Plant and machinery 5,000 October 5 0 0 0 0 5000 0
23 28-11 WIP Upgrade Dairy/ Site Security (Alarms etc.) Site, roads and buildings 25,000 November 10 0 0 0 0 0 25000
CAPEX 399,650 0 0 72,000 5,450 253,300 68,900
2011 Expenditure by Category

P a g e | 39
Priority
Status
Unique
Capex
Project
Code
Month of
purchase
Useful
Life (yrs)
Residual
Value
Laboratory
equipment
Motor
vehicles
Office
equip.
Plant &
machinery
Site, roads
and
buildings
4-11 Meter for Butter Cream to CT7 Plant and machinery 4,000 J anuary 5 0 0 0 0 4000 0
14-11 Exterior Dairy painting (general) Site, roads and buildings 10,000 5 0 0 0 0 0 10000
15-11 Repairs to FMT2 Plant and machinery 3,000 10 0 0 0 0 3000 0
17-11 WIP Lab refurbishment Site, roads and buildings 50,000 December 10 0 0 0 0 0 50000
37-11 On hold MRP Software (pending SAP review) Office equipment 0 December 10 0 0 0 0 0 0
21-11 Butter - cream metering pump Plant and machinery 5,000 October 5 0 0 0 0 5000 0
16-11 General Dairy tiling (ad-hoc repairs) Site, roads and buildings 30,000 10 0 0 0 0 0 30000
22-11 Reflooring CS1 and 2 Site, roads and buildings 35,000 10 0 0 0 0 0 35000
19-11 Replace CIP room floor Site, roads and buildings 50,000 September 10 0 0 0 0 0 50000
24-11 Butter cream tank (5,000 litre) Plant and machinery 18,800 December 5 0 0 0 0 18800 0
13-12 Completed J etstream 850 Foam Spray Unit Plant and machinery 1,000 J anuary 10 0 0 0 0 1000 0
14-12 Completed Fork mounted drum grab Plant and machinery 750 February 5 0 0 0 0 750 0
15-12 Completed Drum pallet loader Plant and machinery 850 February 5 0 0 0 0 850 0
16-12 WIP Lone Worker Alarm system for CS1 Site, roads and buildings 2,500 February 5 0 0 0 0 0 2500
4-12 Refurbishment of Eng. Workshop (Phase 3) Site, roads and buildings 12,000 April 10 0 0 0 0 0 12000
21-12 Completed Scope out future SCADA works and obtain quote/ specification Plant and machinery 2,500 April 5 0 0 0 0 2500 0
23-12 WIP Racking in 'Daily Use' store Site, roads and buildings 10,000 May 10 0 0 0 0 0 10000
20-12 SCADA linked to CS5, 6, 7, I/ C freezer (both) and blast freezer (thick cream) Plant and machinery 4,000 J uly 10 0 0 0 0 4000 0
24-12 WIP Replace Dairy signage in line with current legislation Site, roads and buildings 6,500 April 10 0 0 0 0 0 6500
1-12 On Order Electronic Pasteuriser controls on Organic Milk processing plant Plant and machinery 11,000 May 10 0 0 0 0 11000 0
17-12 On Order Automation of raw milk intake silo's Plant and machinery 25,000 May 10 0 0 0 0 25000 0
5-12 Preparation/ Paint cream platform steelwork Site, roads and buildings 25,000 September 5 0 0 0 0 0 25000
25-12 Admin Office redecoration Site, roads and buildings 6,500 October 5 0 0 0 0 0 6500
29-12 WIP Repair and paint exterior steelwork (Ice-bank support roof structure) Site, roads and buildings 18,000 J uly 10 0 0 0 0 0 18000
11-12 Cancelled Auger Drive on butter making equipment Plant and machinery 0 September 10 0 0 0 0 0 0
26-12 Refurbishment of butter-maker cannon Plant and machinery 95,000 September 10 0 0 0 0 95000 0
27-12 Cream Pasteuriser balance tank Plant and machinery 2,500 October 10 0 0 0 0 2500 0
22-12 Replace steam supply pipework to Garage block Site, roads and buildings 25,000 September 10 0 0 0 0 0 25000
10-12 Mix-proof valves and SCADA control software Plant and machinery 175,000 October 10 0 0 0 0 175000 0
8-12 Pasteuriser automation (linked to SCADA) Plant and machinery 100,000 November 10 0 0 0 0 100000 0
18-12 On Order Cream Pasteuriser: cream pump and drive system Plant and machinery 6,000 J une 5 0 0 0 0 6000 0
19-12 Insulate warm carton store/ new doors and heating system Site, roads and buildings 25,000 September 10 0 0 0 0 0 25000
30-12 On Order Upgrade flow transmitters on the Al-fast Plant and machinery 23,250 J uly 10 0 0 0 0 23250 0
0 0 0 0 0 0
CAPEX 783,150 0 0 0 0 477,650 305,500
2012
C
a
r
r
i
e
d

F
o
r
w
a
r
d

F
r
o
m

P
r
e
v
i
o
u
s

Y
e
a
r
Expenditure by Category

P a g e | 40

Priority
Status
Unique
Capex
Project
Code
Month of
purchase
Useful
Life (yrs)
Residual
Value
Laboratory
equipment
Motor
vehicles
Office
equip.
Plant &
machinery
Site, roads
and
buildings
11-11 C/ F Resurface Dairy yard (phase 1) Site, roads and buildings 50,000 0 0 0 0 0 50000
3-12 C/ F Coldstore 1-4 lighting Site, roads and buildings 7,500 0 0 0 0 0 7500
6-12 C/ F Reflooring CS3 Site, roads and buildings 15,000 0 0 0 0 0 15000
2-12 C/ F Resurface Dairy yard (phase 2) Site, roads and buildings 50,000 0 0 0 0 0 50000
28-12 C/ F Butter cream tank loading cells Plant and machinery 3,000 0 0 0 0 3000 0
12-12 C/ F Main corridor retiling/ wall covering (1) Site, roads and buildings 35,000 0 0 0 0 0 35000
9-12 C/ F General Dairy tiling (milk packaging) Site, roads and buildings 50,000 0 0 0 0 0 50000
Installation of Class 2 Cabinet Laboratory equipment 5,000 J an 5 0 5000 0 0 0 0
7-12 C/ F Re-floor cheese maturation room Site, roads and buildings 20,000 J an 5 0 0 0 0 0 20000
Fit out 'Upper Store' re-lay floor and dry-line walls and ceiling Site, roads and buildings 45,000 J an 5 0 0 0 0 0 45000
Decorate and fit out Board/ meeting room Site, roads and buildings 10,000 10 0 0 0 0 0 10000
Ice-cream filler head 1 and 2 litre Plant and machinery 60,000 5 0 0 0 0 60000 0
Milk Packaging machines linked to CIP system Plant and machinery 30,000 February 5 0 0 0 0 30000 0
Replacement Milk Packaging machine 2 (50%) Plant and machinery 185,000 March 25 0 0 0 0 185000 0
Ice-cream data coding Plant and machinery 10,000 10 0 0 0 0 10000 0
Refurbishment of Eng. Workshop (Phase 4) Site, roads and buildings 12,000 April 10 0 0 0 0 0 12000
General Dairy tiling/ repair Site, roads and buildings 50,000 November 10 0 0 0 0 0 50000
Replacement Milk Packaging machine 2 (50%) Plant and machinery 185,000 October 25 0 0 0 0 185000 0
Downline Handling (milk packaging) - Carton Conveyor (2) Plant and machinery 50,000 October 10 0 0 0 0 50000 0
Reflooring CS4 Site, roads and buildings 15,000 October 10 0 0 0 0 0 15000
Re-roof Cheese Maturation and CS6 roof Site, roads and buildings 35,000 J uly 20 0 0 0 0 0 35000
SCADA - automation of silo routing valves and pipework changes Plant and machinery 60,000 10 0 0 0 0 60000 0
Butter-maker vacuum pump Plant and machinery 5,000 5 0 0 0 0 5000 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
CAPEX 752,000 0 5,000 0 0 588,000 394,500
2013 Expenditure by Category

P a g e | 41
Priority
Status
Unique
Capex
Project
Code
Month of
purchase
Useful
Life (yrs)
Residual
Value
Laboratory
equipment
Motor
vehicles
Office
equip.
Plant &
machinery
Site, roads
and
buildings
Organic Milk Processing Equipment Plant and machinery 35,000 J an 10 0 0 0 0 35000 0
Improvements to CIP system Plant and machinery 8,000 March 5 0 0 0 0 8000 0
MicroFoss machine Laboratory equipment 50,000 March 5 0 50000 0 0 0 0
Resurface Dairy yard (phase 3) Site, roads and buildings 50,000 J une 10 0 0 0 0 0 50000
General Dairy tiling (ex CICL room) Site, roads and buildings 35,000 November 10 0 0 0 0 0 35000
Milk Crates and pallets Plant and machinery 17,500 December 5 0 0 0 0 17500 0
General Dairy tiling (cheese room) Site, roads and buildings 50,000 December 10 0 0 0 0 0 50000
Relocate Server room Site, roads and buildings 17,500 10 0 0 0 0 0 17500
Catering cream data coding Plant and machinery 20,000 10 0 0 0 0 20000 0
General Dairy tiling (Milk Control & cream platform) Site, roads and buildings 50,000 10 0 0 0 0 0 50000
Dairy tiling (CIP room walls) Site, roads and buildings 50,000 10 0 0 0 0 0 50000
Main corridor retiling/ wall covering (2) Site, roads and buildings 35,000 10 0 0 0 0 0 35000
Refloor Corridor Site, roads and buildings 50,000 10 0 0 0 0 0 50000
SCADA - automation of cream routing vlaves and pipe-work Plant and machinery 195,000 10 0 0 0 0 195000 0
Cheese wrapping press Plant and machinery 25,000 5 0 0 0 0 25000 0
Replace main water supply pipework Site, roads and buildings 30,000 25 0 0 0 0 0 30000
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
CAPEX 718,000 0 50,000 0 0 300,500 367,500

P a g e | 42

Priority
Status
Unique
Capex
Project
Code
Month of
purchase
Useful
Life (yrs)
Residual
Value
Laboratory
equipment
Motor
vehicles
Office
equip.
Plant &
machinery
Site, roads
and
buildings
Replace steam boilers Plant and machinery 150,000 15 0 0 0 0 150000 0
Resurface Dairy yard (phase 4) and relay drainage channels Site, roads and buildings 50,000 20 0 0 0 0 0 50000
Relocate cream into ex-CICL room Site, roads and buildings 325,000 20 0 0 0 0 0 325000
Replace C.I.P system valve matrix Plant and machinery 95,000 10 0 0 0 0 95000 0
Peplace milk downline handling (carton coveyor) Plant and machinery 60,000 10 0 0 0 0 60000 0
Water supply pump (mains water) Plant and machinery 12,500 25 0 0 0 0 12500 0
Replace date coders - milk packaging Plant and machinery 25,000 10 0 0 0 0 25000 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
CAPEX 717,500 0 0 0 0 342,500 375,000

P a g e | 43
Priority
Status
Unique
Capex
Project
Code
Month of
purchase
Useful
Life (yrs)
Residual
Value
Laboratory
equipment
Motor
vehicles
Office
equip.
Plant &
machinery
Site, roads
and
buildings
Dairy tanker chassis (1) Motor vehicles 40,000 5 0 0 40000 0 0 0
Dairy tanker chassis (2) Motor vehicles 40,000 5 0 0 40000 0 0 0
C.I.P System (automate acid wash) Plant and machinery 50,000 10 0 0 0 0 50000 0
Milk Packaging (replace crate stacker) Plant and machinery 45,000 10 0 0 0 0 45000 0
Replace Nexon Forklift Motor vehicles 20,000 5 0 0 20000 0 0 0
Integrate Milk Packaging C.I.P onto SCADA Plant and machinery 18,000 10 0 0 0 0 18000 0
Replace cream-packer equipment Plant and machinery 125,000 10 0 0 0 0 125000 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
CAPEX 338,000 0 0 100,000 0 238,000 0

P a g e | 44

MartynSmith(Directorof
FinancesandResources)
DairyManagementBoard
AlanChild(Chairman)
Dep.DavidDeLilsle Dep.MikeHadley
SimonKeysandSteveHogg(nonPoliticalmembers)
RichardNashandAndrewTabel(exofficio)
GeneralManager:
AndrewTabel
AdminTeam:
WendyGuille(P/T)
WendyAnthony(P/T)
PeterCameron(P/T)
AntheaInder
ChiefEngineer:
IanFerbrache
EngineeringTeam:
AlanPike(P/T)
BrianRoberts
AdrianCraker
JohnBlackwell(P/TTemp)
ProductionManager:
DavidDomaille
Production
Supervisor:
PaulDomaille
ProductionTeam:
PaulGallienne DavidRich
GrahamHolberry RickyLawrence
ColinRabey PaulRenouf
BobBrown
KieranQueripel(Saturday'sonly)
GrenvilleDevonshire(Temp)BenParsons(Temp)
Production
Supervisor:
RobBougourd
ProductionTeam:
DarrenHooper PaulQueripel
KieranSkillet(Storeman) PeterAnderson
JohnMitchell SteveParsons
CraigLanyon PeterLeGoupillot
MichaelChick(Temp) TomInder
MarkBott
QualityAssuranceManager:
MelanieRoe
LaboratoryTeam:
MichelleRouillard
DianeBatiste
AnnaCleal
SharonClancy
FinanceOfficer(C&E)

Appendix 8.4 Guernsey Dairy
Organisational Chart (June 12)

P a g e | 45

Appendix 8.5 Dairy Business Plan 2012/13 Summary of Activities

[Number of planned activities in each area is shown in brackets]

Section 2 - Stakeholder Relationship Plan (6)

Section 3 - Raw Milk Supply Plan (3)

Section 4 Products & Quality Plan (21)

4.1 Milk (4)
4.2 Cream (3)
4.3 Butter (3)
4.4 Ice-cream (3)
4.5 Cheese (4)
4.6 Quality Management Systems Review (4)

Section 5 Sales & Marketing Plan (7)

5.1 Local Market Sales (3)
5.2 Export Market Sales (2)
5.3 Product Pricing (2)

Section 6 Business & Operations Plan (8)

6.1 Business Outcomes (2)
6.2 Operational Review (3)
6.3 Management & Administration Structure (1)
6.4 Business Continuity & Security Review (3)

Section 7 Capital Investment Plan (1)

P a g e | 46

Plan Plan Area Purpose/Outcome Activity When Who
2. Stakeholder
Relationship
Plan
2.1 (GFA) Improve the quantity and
quality of the raw milk
Regular meetings with GFA
Representatives and an annual review of
the Rules of Supply

Quarterly Chairman,
General Manager
& Quality
Assurance
Manager
Align raw milk supply with
demand throughout the
year
Representatives and input from C&E
Quarterly Chairman,
General
Manager, Quality
Assurance
Manager & C&E
Representatives
Improve the efficiency of
the industry
Representatives
Quarterly Chairman,
General Manager
& Quality
Assurance
Manager
2.2 (GMRA) Maximise sales of milk and
milk-products
Regular meetings with GMRA
Representatives

Monthly Chairman,
General
Manager, Quality
Assurance
Manager &
Production
Manager
Explore ways to improve
customer service/
Representatives

Monthly Chairman,
General
Manager, Quality

P a g e | 47
Assurance
Manager &
Production
Manager
Discuss operational
procedures
Representatives

Monthly Chairman,
General
Manager, Quality
Assurance
Manager &
Production
Manager
2.3 Trade
Counter
Review Trade Counter
activity with the aim of
maximising local market
sales of GD products
Continuous programme of meetings with
stakeholders
Throughout
2012/13
Chairman,
General Manager
Improve product availability
and advance ordering
schedules
Review product availability, ordering
schedules, and bulk discount thresholds
Throughout
2012/13
Chairman,
General
Manager, DMB
Increase the awareness and
use of GD products
Continuous programme of meetings with
stakeholders, attend trade shows and
catering/hospitality events
Throughout
2012/13
General Manager
2.4 Retail Trade
and
Commercial
Customers
Increase the profile of the
GD
Review and encourage Retail Outlets to
consider better placement of GD products
on their shelves
Throughout
2012/13
Chairman,
General
Manager, GMRA
Representatives
and Retail Outlets
customers
In-store sampling Encourage the GMRA and the Retail Chairman,
P a g e | 48

Outlets to conduct a series of in-store
sampling sessions around key-dates
General
Manager, GMRA
Representatives
and Retail Outlets
customers
Price promotions Encourage the GMRA and the Retail
Outlets to conduct a series of in-store
promotions on key-products i.e. cheese,
butter & cream (as stocks allow)
Chairman,
General
Manager, GMRA
Representatives
and Retail Outlets
customers
3. Raw Milk
Supply Plan
3.1 Volume Reduce the need for the
importation of raw milk and
the threat of importation of
processed milk by others
(because the Dairy is short
of milk to maintain product
for liquid milk sales)

Review the effect the removal of the B
price had on milk production J an-March
2012

Throughout
2012/13

Chairman &
General
Manager, SoG
Agricultural
Advisor

Reduce the seasonal
variations of raw milk supply
to the Dairy to match the
islands demand for fresh
liquid milk
Review the effect of the changes made to
Farm quotas
Throughout
2012/13

Chairman &
General
Manager, SoG
Agricultural
Advisor
3.2 Raw Milk
Quality
Improve raw milk quality

Working with the GFA and C&E
Representatives to review and revise the
Rules of Supply
Continuous
throughout
2012/13
Chairman ,
General
Manager, QAM &
SoG Agricultural
Advisor
4. Products and
Quality Plan
4.1 Milk Production efficiency and
cost control
Review the continuation of the full-cream
litre and half-litre product lines by
Ongoing
throughout
General Manage,
Production

P a g e | 49
replacing the two with a litre version

2012/13 Manager, DMB
Obtain revenue from the
sale of advertising space on
the Milk cartons

Continue to work with local advertising
agencies and independently to attract
prospective clients
Ongoing
throughout
2012/13
Chairman,
General Manager
Investigate the feasibility of
cross-advertising on milk
cartons with other mediums
i.e. pro-rata, in the absence
of a fee-paying customer

Continue to liaise with local advertising
agencies, local charities and
independently to attract prospective
clients that would enhance our brand
profile
Ongoing
throughout
2012/13
Chairman,
General Manager
importance of supporting
Guernseys dairy industry by
establishing the Guernsey
Dairy brand as a high
quality, high value product

Create, develop & publish a story-board
feature on key areas within the local dairy
industry
Ongoing
throughout
2012/13
Chairman,
General
Manager, LR&D,
GFA
4.2 Cream Increase the awareness and
benefits of supporting
locally produced dairy
products

Marketing and promotional activities to be
carried out in conjunction with the GMRA
and Trade Counter customers.

Ongoing
throughout
2012/13

Chairman,
General
Manager, LR&D
Increase sales of GD cream Marketing and promotional activities to be
and Retail Outlets i.e. the running of
promotional activity and in-store sampling
sessions

Ongoing
throughout
2012/13

Chairman,
General
Manager, GMRA,
attributes of supporting the
Liaise with industry lecturers, chefs and
those affiliated to local schemes e.g. Taste
Ongoing
throughout
Chairman,
General
P a g e | 50

local dairy industry by using
GD products
of Guernsey.

2012/13

Manager, GMRA,
Trade Counter
customers, LR&D
4.3 Butter Increase sales of GD butter Marketing and promotional activities to be
and Retail Outlets i.e. the running of
promotional activity and in-store sampling
sessions

Ongoing
throughout
2012/13

Chairman,
General
Manager, GMRA,
PGI recognition for
Guernsey Butter

Submit an application to DEFRA for
Guernsey Dairy butter.

Ongoing
throughout
2012/13

QAM with
consultancy
advice from the
SoG Agricultural
Advisor
Review the effectiveness of
each market sector and its
positioning of GD butter
Ensure the correct positioning of GD butter
in order to maintain the best return on its
investment by supporting the high value
niche market branding associated with its
products
Ongoing
throughout
2012/13

Chairman,
General Manager
4.4 Ice-cream Increase sales and profile of
GD ice-cream
Work with prospective partners to increase
the availability of GD ice-cream at key
sites across the island
May. 12 Chairman,
General Manager
Production efficiency and
cost control
Review product range i.e. pack sizes and
flavours, and benchmark the RSP against
the competition
Dec. 12 Chairman,
General Manager
Product development Investigate the feasibility of introducing a
one-litre luxury ice-cream range
Dec. 12 General
Manager, QAM,
Production
Manager, DMB
4.5 Cheese Stimulate market awareness
and improved brand
Local marketing focus with GMRA and
trade counter customers (and promotion
Throughout
2012/13
General Manager

P a g e | 51
visibility on cheese

with wine merchants) for Guernsey Dairy
cheeses. Additional POS and advertorial
features to be considered

Artisan cheeses Evaluate the feasibility of making a more
artisan cheese product to compliment the
existing range
Dec. 12 General
Manager,
Production
Manager, QAM
Production efficiency and
cost control
Conduct a cost/ benefit study on the
current range of cheeses
Dec. 12 General
Manager,
Production
Manager, QAM
Brand visibility Review the packaging and gas mixtures
used on the retail product line to increase
its visibility and product association with
other GD products
Dec. 12 General
Manager,
Production
Manager, QAM
4.6 Quality
Management
Systems
Review
Training and awareness Conduct specific HACCP level -1 & 3
training (Manufacturing) for the Dairy
HACCP Team (staff development and
compliance with the QMS in place)
Dec. 12 QAM, Food
Consultancy
Services Ltd.
(FICS)
Product quality is
maintained/improved
GD to work closely with FICS to ensure that
its quality standards are in line with the UK
industry and that efficiencies are
maximised and shelf life/product quality is
closely monitored
Reviewed
quarterly
General
Manager, QAM,
Food
Consultancy
Services Ltd.
(FICS)
Testing protocols are in line
with industry practice
Review the current Laboratory
microbiological testing and audit
Continuous
throughout
QAM, Food
Consultancy
P a g e | 52

procedures and establish whether they
remain fit for purpose
2012/13 Services Ltd.
(FICS)
Maintain quality
accreditation
Maintain the Dairys compliance to the
SALSA scheme and Soil Association
organic status

5. Sales &
Marketing
Plan
5.1 Local
Market
Sales
Establish percentage
market share

Raise industry awareness of
GD catering products on
sale
Produce a catering brochure that details
all GD products available and their
respective pack sizes for use by the GD,
GMRA or Trade Account holders
May 12 General Manager
Raise awareness of GD retail
products available
Produce a brochure similar to that for
catering products but detailing GD retail
products the aim of this being to
distribute a leaflet to every household on
the island
J uly 12 General Manager
5.2 Export Sales Export of GD products Continue to support existing export
markets ensuring that the best return on
the Dairys investment is achieved, also
looking at opportunities that may exist for
one-off export sales of GD products
Ongoing
throughout
2012/13
General Manager
Explore opportunities for the
export of GD cheese
Continue to monitor the export market
price of cheese to afford the business a
better return on its investment
Ongoing
throughout
2012/13
General Manager
5.3 Product
Pricing

Continual review of the
Dairys product range
leading to a commercially
viable product and pricing
structure
Continual review and update of all
FAMCs for each product line and advising
the DMB of any recommendations.
Ongoing
throughout
2012/13
Non-States
Member, General
Manager, Chief
Engineer

P a g e | 53
Product placement The GD will undertake periodic
benchmarking exercises to ensure their
products remain competitive against
similar product lines in the same market
sector
Periodically
throughout
2012/13
General Manager
6. Business and
Operations
Plan
6.1 Business
Outcomes
Financial viability and
security
The Dairy will make a submission to the Milk
Price Review Panel aiming to provide an
Annual Business Outcome showing an
operating surplus in the region of 5% of
turnover

J une 12

Chairman, Non-
States Member,
General
Manager,
Financial Service
Provider

Operational business model As part of the MPRP process, the GD will
request that it is given the financial
resources to enable it to adopt the most
efficient model of funding future
investment from savings, in a similar
manner permitted by other SoG Trading
Boards
J une 12 Chairman, Non-
States Member,
General
Manager,
Financial Service
Provider

6.2
Operational
Review
Dairy Industry Review Draft and supply information for the Dairy
Industry Review
Throughout
2012/13
Chairman,
General Manager
Improved business efficacy
and reduced operational
costs
Review current ordering schedules and
units of sale for all milk and milk-products
Ongoing
throughout
2012/13
Chairman, DMB,
General
Manager,
Production
Manager, QAM
Improved production
efficacy and reduced
operational costs
Review existing layout of the Dairys
production and storage capacity to
ensure that the facility remains fit for
purpose
Dec. 12 General
Manager,
Production
P a g e | 54

Manager, QAM
6.3
Management
&
Administration
Structure
To maintain optimum
staffing levels
commensurate with the
Dairys trading activities
To maintain optimum staffing levels and
skills sets across the business unit in order to
fulfil its obligations as a Trading Board
under the remit of the C&E Dept. whilst
continuing to support some form of
centralisation being applied across the
SoG.
Chairman,
General
Manager,
Director of Client
Services
6.4 Business
Continuity and
Security
Review
Plan to deal with the most
important/damaging
threats to Dairy supply to
customers
The Dairy will continue to review its
continuity and resilience plan and
endeavour to cover the most likely of
events based on a balance of
probabilities
Throughout
2012/13
Chairman,
General
Manager, Chief
Engineer, Quality
Assurance
Manager (with
consultancy
support)
Robust and reliable IT
functions
The Dairy will review its IT Risk Strategy
with central ITU in order for a reliable and
robust service to be provided by the
centre that will service the Dairys needs
based on a formal SLA
Ongoing
throughout
2012/13
General
Manager,
Director of Client
Services IT support
(RFH)

Brand preference/brand
loyalty initiative.

Investigate the cost/ benefit of
undertaking a sustained brand
preference/brand loyalty initiative.

September 2012

Chairman,
General
Manager, PR
Advisor
7. Capital
Investment
Plan
7.1 CAPEX Continue to correct the lack
of investment since 2002
and ensure the Dairy is
properly equipped to
collect, process, test & pack
Implement agreed capital investment
plan (see Appendix 4) subject to funds
becoming available based on a save to
Continuous
throughout
2012/13 (see
Appendix 8.3 for
details)
Chairman,
General
Manager, Chief
Engineer, DMB

P a g e | 55
food in line with EHD
directives and applicable
legislation

spend philosophy
P a g e | 56

P a g e | 57
P a g e | 58

P a g e | 59
Milk,80.05%
Cream,3.87%
Butter,11.89%
Cheese,2.16%
Icecream,2.03%
Fig.9.4 Percentagecontributiontoannualsales(2011)
Milk
Cream
Butter
Cheese
Icecream

P a g e | 60

LowFatLitre
3.59%
LowFatLitre
63.31%
LowFatPergal
3.93%
FullCreamLitre
1.03%
FullCreamLitre
9.63%
OrganicLowFatLitre
0.53%
FullCreamPergal
0.15%
SkimmedLitre
1.48%
SkimmedLitre
16.37%
Fig.9.5 PercentageSplitinmilksalesbyproducttype(2011)

P a g e | 61
Lowfatsales(litres),70.83%
Skimmedsales(litres),
17.84%
Fullcreamsales(litres),
10.80%
Organicsales(litres),0.53%
Fig.9.6 Percentagemilksalesbymilktype(2011)
Lowfatsales(litres)
Skimmedsales(litres)
Fullcreamsales(litres)
Organicsales(litres)

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