At First Milk's Special General Meeting (15 December), members overwhelmingly approved the major governance proposals put forward by the Board.
Chief executive Mike Gallacher commented:
"The new governance structure is a critical enabler for the continuing transformation of First Milk. It delivers a more commercial, leaner and robust governance structure while sustaining the recent rapid pace of change across First Milk. Today's vote is clear evidence of the strong support for change amongst our members."
Chairman Nigel Evans added:
"This new governance structure gives members a stronger voice via the new Council and a more commercially focused Board. We will shortly be making an announcement about our new Chairman whose commercial skills and experience will complement those brought in via the appointment of Mike Gallacher as CEO, Brian Mackie as COO and Carl Ravenhall as non-executive director."
The structure of the new Board will consist of a non-executive Chairman and two other non-executive directors, two farmer directors, the Chief Executive and one other executive director. The structure of the new Council will consist of 7 elected members and an independent chairperson. The role of council will include holding the Board to account on behalf of the members, approving the annual budget, business plan and capital targets. Additionally the Council will appoint of the Chairman and Vice-Chairman of the Board.
To manage the transition, a new nominations committee has been formed, which will oversee the selection process of potential candidates and make recommendations to the transitional Board and Council.
Reshaped First Milk
Following the arrival of the new CEO, Mike Gallacher, at the end of March 2015, First Milk has made significant progress implementing a turnaround plan. This follows a number of years of poor business performance leading up to substantial losses in 2014/15.
To date, the business has announced the establishment of business units, significant restructuring, the appointment of a new experienced executive team and new commercially based pricing scheme.
Over the last 6 months the company has made a number of heavyweight appointments, including Kenny Bain (group operations director, ex Unilever, ABF, Mars), Brian Mackie (chief operating officer, ex Starbev/Molson Coors Europe, Maxxium Worldwide, Cott Corporation) and most recently Carl Ravenhall (non-executive director, ex MD Müller, Milk Link, Adams Foods).
The actions taken to reduce costs, improve quality, and drive operational performance fed through into operating profits of £1.1m for the six months to 30 September 2015, an improvement of £8.7m on the prior year. Debt has also continued to reduce, and at the end of September 2015 was £46.1m, compared to £60.7m as at March 2015.
Following the completion of a full strategy review over the summer, the company announced the sale of its Glenfield Dairy business based in Fife, Scotland to Graham's the Family Dairy in November.
The approval by members of Governance changes yesterday (15 December) will lead to a smaller, more commercial Board and the establishment of a new Council. This will be followed by the appointment of a new commercially experienced chair following the conclusion of a search conducted by headhunters Odgers Berndtson.
Timeframes for Governance changes
The timing of the transitional arrangements is as follows: