Barossa Co-op 2016 Annual Report by Algo Más

The Co-op 2016 Annual Report Growing for the Future

Contents About the Co-op �� 5 About Us �� 5

Strategic Review �� 15

Mission, Vision, Values �� 5

Our Future �� 17

7 Co-operative Principles �� 7

Growing For Our Future �� 17

Membership Overview �� 8

The Redevelopment �� 17

Year in Review

�� 10

Community �� 18

Highlights �� 10

Sponsorship and Donations �� 18

Our People �� 22

Financials �� 35

Our Policies ��22

Discussion and Analysis of the Financial Statements �� 35

About Our People ��22 Recognising Our Team ��22

Statement of Financial Position �� 37

Governance �� 27

Statement of Changes in Equity ��38

Notice of AGM �� 27

Statement of Cash Flows �� 39

Regulatory Information �� 27

Notes to the Financial Statements ��40

Co-op Ambassador Program  ��20

Chairman’s Report �� 12 CEO Report �� 13

Statement of Comprehensive Income �� 36

Directors’ Report ��28

Co-op Care ��20 Co-op Wellbeing ��20

Board of Directors �� 32

Co-op Circle ��20

Directors’ Declaration �� 41 Independent Audit Report �� 42

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CO-OP FAMILY the Heart of the Community the Heart of the Community

PEOPLE

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outstanding & sustainable region as an our STORES COMMUNITY STORES COMMUNITY provider of a competitive shopping choice our

& exceptional member services The Co-op will be WHY WE GET OUT OF BED

www.barossa.coop

WHY WE GET OUT OF BED

recognised by its members and the broader The Co-op willregion be as an outstanding & sustainable provider of a competitive shopping choice

& exceptional member services recognised by its members and the broader

region as an outstanding & sustainable 4 provider of a competitive shopping choice www.barossa.coop

About the Co-op

Mission

About Us The Community Co-operative Store Nuriootpa Pty. Ltd., known as ‘The Co-op’, is one of Australia’s leading retail co-operatives. Formed in 1944, The Co-op is the largest and longest standing consumer co-operative in Australia. It has over 18,000 members who currently own the Barossa-based Co-op Shopping Centre of 24 tenancies, as well as operating 10 businesses within the Centre (including a Foodland, Mitre10 and Betta Electrical). This allows The Co-op to directly employ over 300 staff. Membership is open to any individual through the minimum purchase of a single share for $2 dollars. The Co-op distributes approximately $700,000 dollars to its members annually through interest on share capital, interest on accumulated rebates and rebates on qualifying

Mission, Vision, Values purchases. In 2015, members also shared in savings worth over one million dollars through The Co-op’s instant rebate saving scheme. In addition, it also provided over $90,000 annually in sponsorship to local sporting clubs, schools, community organisations and events.

Values based leadership is at the heart of our decision-making. Vision: To be The Heart of the Barossa Mission: The Co-op will be recognised by its members and the broader region as an outstanding and sustainable provider of competitive shopping choice and exceptional member services.

The Co-op is also a community asset and fulfills a social function, providing an informal meeting place for people in the Barossa. Moreover, it gives additional value to its members, suppliers and the local community, which is often not reported in financial statements. The Co-op is not only a successful business, supplying products and services to its members and community, but also creates financial, human, social and relationship capital for its members, suppliers and the business.

Values: Community Minded, Always Friendly, Unsurpassed Service, Innovative and Forward Looking, Commercially Sustainable, Integrity. 5 Strategic Platforms: Our Members, Our Customers, Our Stores, Our People, Our Community

The Co-op will be recognised by its members and the broader region as an outstanding and sustainable provider of competitive shopping choice and exceptional member services.

About theâ&#x20AC;¯Co-op

Voluntary and Open Membership

Democratic Member Control

7 Co-operative Principles Co-operatives around the world generally operate according to the same core principles and values, adopted by the International Co-operative Alliance in 1995. Co-operatives trace the roots of these principles to the first modern co-operative founded in Rochdale, England in 1844. 1. Voluntary and Open Membership Co-operatives are voluntary organizations, open to all people able to use its services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination. 2. Democratic Member Control Co-operatives are democratic organisations controlled by their members—those who buy the goods or use the services of the co-operative—who actively participate in setting policies and making decisions.

3. Members’ Economic Participation

the development of their co-operative. Members also inform the general public about the nature and benefits of co-operatives.

Members contribute equally to, and democratically control, the capital of the co-operative. This benefits members in proportion to the business they conduct with the co-operative rather than on the capital invested.

6. Co-operation Among Co-operatives Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.

4. Autonomy and Independence Co-operatives are autonomous, self-help organizations controlled by their members. If the co-op enters into agreements with other organizations or raises capital from external sources, it is done so based on terms that ensure democratic control by the members and maintains the co-operative’s autonomy.

7. Concern for Community While focusing on member needs, co-operatives work for the sustainable development of communities through policies and programs accepted by the members.

5. Education, Training and Information

Members’ Economic Participation

Autonomy and Independence

Education, Training and Information

Co-operation Among Co-operatives

Co-operatives provide education and training for members, elected representatives, managers and employees so they can contribute effectively to

Concern for Community 7

About the Co-op Membership Overview Membership with The Co-op has continued to grow during the past year and there are now over 18,000 members of The Co-op. Here are a few great reasons to be part of The Co-op, and there are plenty more »» Instant in-store rewards exclusive to members »» Access to member’s prices and promotions

»» Yearly rebate from shopping at The Co-op »» Own a share of local community stores »» Have a genuine say in how The Co-op is run »» Support for local schools, clubs and charities »» Access to The Co-op’s member services »» At call Funds interest rate is 1% above the Reserve Bank’s cash rate

Member's Share capital interest rate

»» Share capital interest rate is 2% above the Reserve Bank’s cash rate

is 2% above the Reserve Bank’s cash rate

Membership has continued to grow during the past year $392,304 $ 275,541 Rebates on Purchases

Interest on Funds

for Year ending January 31, 2016

invested in your Co-operative

1,103,863 Member Instant rebates given during the year

Year in Review

18k+ members and growing

HIGHLIGHTS 150 +

Number of suburbs delivered to via our new online supermarket

1,400,000 visitors to The Co -op

100 + store promotions 10

125k

Given back directly to community clubs, organisations and schools

15 New in-store brands added

Record Christmas sales

First Apple stockist in the Barossa

1.1 mil

â&#x20AC;˘ New digital strategy â&#x20AC;˘ New social media channels

in instant rebates

â&#x20AC;˘ Email communication program launched 11

Chairman’s Report Our Co-op is experiencing some very exciting times. I feel privileged to be chairing the board through such a period of evolution and growth, and am delighted to present to you The Co-op’s Annual Report for the year ended January 2016.

PHILLIP SCHMAAL Chairman of the Board

complexity involve many chess pieces and aligning all of those pieces can at times be challenging. Our Management Team and the various consultants, architects and designers have come together as a functional team to ensure the project continues on track.

The past twelve months have seen a re-emergence of interest in the co-operative movement. Senators Barnaby Joyce, Nick Xenophon and Sean Edwards, as well as Jay Weatherill, our State Premier, along with the Treasurer and other Ministers of State Parliament have all visited your Co-op over the past year and without exception, all have been singularly impressed by The Co-op’s business model and the broad range of services on offer to our members within the regional Barossan community. Co-operatives have a strong history of, and continue to be, a major contributor to regional sustainability across Australia through economic and social development.

At an operational level, our sales and operating profit have increased over the previous year, in what continues to be a very competitive and tight retail environment. Nevertheless, it is an environment in which we remain confident of The Co-op’s ability to grow and deliver new services and increased returns to the membership. At an operational level, our sales and operating PROFIT have increased over the previous year. Over time your Co-op has evolved into a large and complex organisation and operates in a challenging and ever changing economic environment. The complexities of today’s corporate world necessitate we recruit and retain a Board of Directors who have the relevant skills, experience and judgement to lead an

The Board and Management are continuing to move forward with delivery of The Co-op’s strategic plan. The redevelopment of the new Foodland supermarket and the new Mitre 10 Hardware complex have commenced. Developments of this size and

organisation of this magnitude through new and uncharted waters. We continue to be one of the largest employers in the region and certainly the largest employer of youth within the region. Our staff are the main interface between the organisation and you – our members and our customers. They provide the friendly smiles and service that creates your shopping experience. Whilst a major focus for the next twelve months will be the construction of the new shopping centre and Mitre 10 Hardware store across the road, the board is keen to ensure these activities do not detract from the ongoing friendly, supportive and competitive services our staff offer to you our members. On behalf of the Board, I wish to thank our Management Team and all of our Staff for a fantastic effort throughout the year. All staff can be very proud of what they have achieved – individually and collectively. I also wish to personally thank all the Directors for their contributions and the wealth of experience and knowledge they bring to the Board.

CEO Report Overview

more local small business. The Foodland supermarket alone supports dozens of local businesses by helping them get ‘retail ready’ and preparing them for bigger and broader markets outside of the Barossa.

Your local co-operative is Australia’s leading retail co-operative. The primary role for The Co-op is to assist the local regional community to thrive and prosper. By having a retail offer that is good enough to encourage members to shop locally, any surpluses generated through trading are returned back into the community through either:

Outlook The Co-op continues to take a positive view of the region and its long term future. Our region is underpinned by; »» a solid and strong wine and food industry,

»» Investments back into even better and improved retail offers

GRAEME A. LONGMUIR Chief Executive Officer

»» world class infrastructure in schools and healthcare and

»» Investments back into the community through 100’s of local sponsorships and donations

»» a passionate, engaged community.

»» Direct returns to the members through an annual rebate and instant store level rebates based on each members shopping loyalty.

The Co-op has continued to take a leadership role in the community by continually running day to day events and activity that generate exceptional deals and value for our members. The Co-op is also driving long term investment into the Barossa for the benefit of future generations to be enjoyed.

The surpluses that the members generate stay in the community. Your co-operative generates significant financial and social returns to the Barossan community. One dollar spent in any of The Co-op businesses, generates $1.70 return for the community enabling the employment of more local people and support for

Currently The Co-op is operating in a low growth and highly competitive market place with low inflation rates placing a cap on price rises. The cost of doing business

across the board continues to rise at a higher rate than prices, and in particular, local rates and taxes. The competitive environment is changing at a rapid rate with several new entrants entering into the market and there are more coming. Online retailing continues to build acceptance by consumers and challenges traditional bricks and mortar businesses. Additionally the job growth rate in the region is also being limited by an overall slow level of economic activity across the whole state. The primary role for The Co-op is to assist the local regional community to thrive and prosper. Your Co-op is taking proactive steps to stay ahead of this change and is investing in the long term sustainability of the co-operative. The investments today into the new shopping centre will ensure the next generation will benefit and prosper. The investment into Co-op Fresh Online has proven very successful with revenues exceeding $2.0m and extending the reach of your Co-op outside of the immediate region.

CEO Report Business Performance Revenue continued to grow at a modest rate of 1.38% increasing to $68.507m across The Co-op. The ongoing competitive nature of retail continues to put pressure on the margins across all stores. Excellent buying programs and the additional volume has enabled The Co-op to maintain gross margins at a similar level to last year, a positive outcome in this environment.

Trading Results The trading result of the group before providing for Income Tax and Appropriations to members amounted to $1.499m (previous year $1.792m). Net Profit after Appropriations (Interest on Share Capital and Rebates on Qualifying Purchases) and Provisions for income tax was $650k (previous year $861k). The Co-op continues to reinvest back into the business to ensure the very best shopping experience is achieved and the ongoing costs to date for the redevelopment have been absorbed into this years results.

Reserves

The Co-op also continues to reinvest back into the community with over $125k given back in the form of sponsorships and donations to a large variety of groupsâ&#x20AC;Żthroughout the region. Instant member rebates for the year, available at the time of purchases, totalled $1.103m Compared to the previous year of $1.238m.

The strength of the balance sheet has enabled The Co-op to perform strongly and to invest into the future. The Reserves remained constant at $11.837m and Retained Earnings increased from $17.907m to $18.555m.

Interest on Share Capital The Co-op have continued with the previous practise of calculating interest on share capital at a floating rate set at 2.0% above the Reserve Bank official rate and when varied, the rate paid on Share Capital is updated within three working days. The rate on share capital as at the end of the reporting period (31 January 2016) was 4.0%. At this rate The Co-op is an option worth considering for longer term investments (with the appropriate financialâ&#x20AC;Żadvice).

Expenses Overall employee benefits increased 2.5% reflecting the change in operating hours, a focus on weekend trading and the annual award increases. Overall operating expenses were controlled in line with plan. Depreciation and amortisation charges totalled $906k. The ongoing drive for efficiencies across the business during the year will bear fruit in the new stores, opening throughout 2017.

Share Capital and Shareholder Funds Share Capital increased to $4.021m from $3.998m reflecting a net increase of $23k.

Distribution to Shareholders

Cash Flow and Externalâ&#x20AC;ŻBorrowings

as at 31 Jan

2016

2015

Interest on Share Capital

4.0%

$161,684

$177,342

Interest on Accumulated Rebate and Interest

3.0%

$113,857

$129,689

1.0%/0.5%

$392,304

$387,521

$667,845

$694,552

Rebate on Qualifying Purchases

Cash on hand at the end of the reporting period was $1.519m after investing in the preliminary planning for the redevelopment. There was no external debt at the end of the reporting period.

Strategic Review We have expanded on previous years strategic objectives to develop outcomes that drive decision making.

Principal Activities The principal activity of the Group is to provide outstanding and sustainable shopping choice and retail services to our Members and the Barossa community.

Strategic Platforms

Outcomes

Our Customers

1. We give unsurpassed customer service, delivered with unique, country-style friendliness and warmth.

2. We all strive to make The Co-op well known and a key part of our community.

3. We make shopping easier and through technology we give our customers even better service.

4. We give our customers good, ongoing value for money.

Our Members

5. We get more people involved as members and actively promote the benefits of membership.

6. Create even more exciting services, offers and benefits for our members.

7. We’ll ensure members get more out of their membership.

8. Our members are to share our pride and our sense of community as part of The Co-op.

9. Team up with local business groups and the local community for the sustainable development of the Barossa.

10. We do our bit by always supporting a healthy and vibrant community.

11. We all show leadership skills within The Co-op, within the community and within the wide co-operative community.

12. Our environmental plans will benefit both The Co-op and the community.

13. We will continue to work towards our masterplan for The Co-op.

14. We will keep our main source of revenue safe.

15. We are creating the best mix of stores and services to make sure The Co-op thrives into the future.

16. We work together to make the most out of assets.

17. Our people show pride in the ‘Heart of the Co-op’ and bring our Co-op values to life.

18. We’ll look out for each other and you’ll be safe and respected in The Co-op.

19. We encourage you to do and be your best.

20. We’ll make a pathway for your career in The Co-op – onwards and upwards.

Our Community

Our Stores

Our People

helping our community prosper

Our Future Growing For Our Future The Co-op Board, the leadership team and the staff are all focussed on ensuring The Co-op is well positioned for the next generation of Barossan’s to benefit from. The Co-op has 70 years of history in investing in the future and in building a sustainable business that is the envy of regional communities around the country. Without the foresight of our founding fathers and of subsequent groups of members and employees, The Co-op would not be in such a strong position to invest even further for the next generation. Our purpose is to not only provide the best shopping experience possible but to also enable the community as a whole to prosper. By investing in people, technology and infrastructure we will be able to be in a leading position, able to weather the fluctuations of the ever changing world around us, to build a strong and enduring future that we can all be proud of.

Heading Towards The Finish Line The Co-op family is extremely diverse and is represented by all ages, all backgrounds and every section of the community. Regardless of whether you are a 3rd or 4th generation Barossan or you have just joined the community, The Co-op is your co-operative. You own a piece of every store and every dollar you spend stays here in the Barossa for future generations to benefit from.

Construction began in May 2016, with the first stages opening in December 2016. The development is part of our commitment to re-invest in the Barossa community and support this region’s growth. In fact, it means employment for over 350 people during construction and an additional 100 jobs ongoing. For shoppers, there will be a much greater range and choice of retail shopping options plus the added benefit of more space for the community to share and enjoy.

The Redevelopment A new Shopping Centre for the Barossa. The Co-op is planning to construct an exciting new supermarket as the first stage in a major shopping centre redevelopment in Nuriootpa. The supermarket will include an expanded ‘market-style’ food hub, and an open space village square with many new places to meet and relax. There will also be the first all-weather car parking space for over 110 cars in the Barossa.

Stage 1 Business Case

Stage 2

Concept Design and Project Brief

Stage 3

DA Documentation

Stage 4

Development Consent

Stage 5

Tender and Award

Stage 6

Delivery and Handover

Community Sponsorship and Donations

Sporting Club Sponsorship

The Co-op sponsors a number of community organisations, sporting clubs, schools and kindergartens as well as community events each year. Last year we donated over $90,000 in gift cards and money to these organisations.

Angaston Bowls Club

Nuriootpa Bowling Club

Angaston Cricket Club

Nuriootpa Cricket Club

Angaston Football Club

Nuriootpa Football Club

Angaston Netball Club

Nuriootpa Netball Club

Angaston Panthers Basketball Club

Tanunda Football Club

Why do we sponsor these organisations? Simply put, we believe in making our community a great place to live. Also, by giving back to these organisations, we believe this money will be recycled throughout the community, helping it, and the people in it, grow, develop and prosper.

Barossa Tigers Junior Basketball Club

Tanunda Hockey Club

Barossa Valley Golf Club

Tanunda Netball Club

Barossa Valley Hockey Association

Truro and District Raceway

Freeling Junior Football Club

Vine Vale Tennis Club

Greenock Cricket Club

Total for all Sporting Clubs 2015â&#x20AC;&#x201C;2016

$24,400

Kapunda Bowling Club Kapunda Cricket Club

Donations

Kapunda Football Club

Donations (misc.)

$37,839

Kapunda Netball Club

Total Donations 2015â&#x20AC;&#x201C;2016

$37,839

Kegel Club Tanunda

Schools and Community Organisations

Barossa Band Festival

NFA

Sporting Clubs

$62,239

Barossa Bush Gardens

Nuriootpa Primary School – Breakfast Club

Donations (misc.)

$37,839

Barossa Domestic Violence Action Group

Nuriootpa RSL Club

Schools and Community Organisations

$46,940

Barossa Drive Reviver

Tanunda Town Band

CEO Adhoc Donations

Barossa Food Inc

Marananga Brass Band

Total Donations

Barossa Men's Shed

Mount Pleasant Men's Shed

Barossa Pathways to Employment Expo

Nuriootpa High School Food Therapy Group

Barossa Valley Lions Club

Nuriootpa High School Performing Arts

Barossa Vintage Festival Young Ambassadors

Nuriootpa RSL Club

BLNF Youth Programs

Nuriootpa Scout Group

Carerslink Coffee Club

Nuriootpa Uniting Church

Faith Lutheran College – human powered vehicles

South Australian Endurance Riders Association

Foundation Barossa

Southern Barossa Community Childcare

Freeling Christmas Street Party

St Paul’s Lutheran Church

Good Shepherd Lutheran School P & F

Tanunda Lutheran School

Greenock Village Community Association

The Barossa German Language Association

Hand in hand Family Centre (LCC)

Transition Initiative Gawler

Indigenous Marathon Project

Total for Schools and Community Organisations 2015–2016

Kapunda Kindergarten

2015–2016

$8,500 $117,679

117,679 $46,940

Lone Pine Tanunda Ag Bureau of SA

Total Donations 19

Community Co-op Ambassador Program  A new initiative is the 2016 Co-op Ambassador program. As part of The Co-op’s Sponsorship Program, all sponsored organisation have access to a member of the Co-op Senior Leadership team as a contact person throughout the year. This Ambassador will foster a relationship with the organisation and be able to assist them with any questions they may have about The Co-op, their sponsorship, or how they can help them beyond their initial sponsorship request. It is hoped that in 2017, this program will be expanded to include more Co-op employees as Co-op Ambassadors.

Co-op Care

Co-op Circle

Our Co-op CARE program is designed to support our people to support our community. This takes various forms over the year from individual contributions to group contributions from our team. Many of our team are part of local community organisations; volunteering and being part of boards and committees, getting involved in our community. This year we took part in the Hutt Street Centre’s Walk a Mile in my boots event in the Barossa reminding all of us of the plight of people facing homelessness.

Co-op CIRCLE is an initiative whereby our 300 plus team members have access to our CEO and Senior Leadership Team on a monthly basis, providing opportunity for updates and communication on all that is happening around The Co-op. This initiative has been and will be particularly important as we embark on our redevelopment work.

Co-op Wellbeing Our Co-op Wellbeing program continued to thrive this year whilst taking a new direction. After providing the 10 week fitness challenge last year, based on feedback from our team we have built our skills in Yoga undertaking a program with a local Yoga instructor, providing benefits not only to our team but further supporting local small business. This year the Barossa Marathon will see a Co-op Wellbeing team too! Walk a Mile

We want to make our community a great place toâ&#x20AC;Żlive.

Our People Our Policies We are proud to provide flexible working arrangements to our team members. As a business that operates over 7 days a week we are able to offer work that fits our employeeâ&#x20AC;&#x2122;s lifestyles, ensuring that they have a life outside of work, living in our community. We also have many employees who work across our businesses, providing greater variety for our team and better service for our members.

ABOUT OUR PEOPLE In 2015 we recognised 42 employees who reached a milestone of service including two team members with 25 years of service and one with 30 years of service in 2015!

Recognising Our Team Each year we recognise our long serving employees; those who have contributed to the success of our Co-op.

percent

Female team members

1919 yrs. Our teamâ&#x20AC;&#x2122;s combined years of service with The Co-op

percent

Male team members

520,355

Total hours of work to keep your Co-op going in 2015/16 (from 1/2/15 to 31/1/16)

YOUTH Employer 35% of our workforce is under 25 years old

10M

Total payroll per year

Our People

Graeme A. Longmuir

Jerie Schmidt

Amber Rushton

Shane Wild

Paul Amos

Robert Zander

Kenneth Hodges

Terri Hollenberg

Chief Executive Office and Company Secretary

People Relations Manager

Chief Financial Officer

Marketing Manager

Information Services Manager

Co-op Fresh Foodland Storeâ&#x20AC;ŻManager

Facilities Manager

Mitre 10 Store Manager

Richard Inwood

Kathryn Kahl

Wayne Hampel

Jane Ziegeler

Betta Home Living Storeâ&#x20AC;ŻManager

Barossa Home Living and Toyworld Marketing and Merchandise Manager

Paul Schupelius

Rod & Spur and Orchard Lane Store Manager

SportsPower and Barossa Surfâ&#x20AC;ŻStore Manager

Barossa Home Living and Toyworld Operations Manager

We have many Team Members who work across our businesses, providing greater variety for our team and better service for our members.

every dollar spent stays in the Barossa

Governance Notice of AGM Wednesday 22 June, 2016 Notice is hereby given that the Annual General Meeting of the Shareholders of The Community Co-operative Store (Nuriootpa) Limited will be held at The Co-op Shopping Centre, Nuriootpa, on Wednesday 22 June, 2016 at 7:30pm. Business 1. To confirm the minutes of the Annual General Meeting held 24 June, 2015. 2. To receive and adopt the Board of Directors Declaration, Statement of Comprehensive Income and Statement of Financial Position for The Community Co-operative Store (Nuriootpa) Limited Group for the 12 months ending January 2016. 3. To approve the rate of interest on Share Capital effective from 1 July 2016, as recommended by the Board of Directors.

4. To elect three Directors of the Co-operative. In accordance with the Rules, three Directors retire, Katherine Newland, John Auld and Stephen O’Loughlin by rotation. All have offered themselves and are eligible for re-election.

By order of the Board of Directors G Longmuir, Company Secretary Nuriootpa SA 5355 1 June, 2016 The Co-operative rules allow voting in person only, voting by proxy is not permitted.

No other Nominations have been received.

Regulatory Information

Retiring Directors Available for Re-election

The Community Co-operative Store (Nuriootpa) Limited

Katherine Newland – Company Director 13 Katoomba Road Beaumont SA 5066

Registered under the Co-operatives Act 1997 ABN 80 147 431 373

John Auld – Company Director 10 Dean Street Angaston SA 5353

Registered Office 3 Murray Street, Nuriootpa South Australia

Stephen O’Loughlin 12 Gooden Drive Nuriootpa SA 5355

Website www.barossa.coop Telephone (08) 8568 6000 Facsimile (08) 8568 6010

5. To fix the remuneration of the Board of Directors.

Subsidiary Company Heritage Stores Pty. Ltd ACN 008 017 105 ABN 98 008 017 105

6. To transact any other business of which due notice is given.

Bankers Bank of South Australia Auditor Paul V. Jorgensen Partner of Kennedy & Co Chartered Accountants Insurance Broker Vinechange Pty Ltd

Directors’ Report 31 January 2016 Your directors present their report on the Co-operative and its controlled entities for the financial year ended 31 January 2016.

1. General Information Directors The names of the directors in office at any time during, or since the end of, the year are: Schmaal, Phillip M Chairman Curnow, John Deputy Chairman Ewing, Guy H Director Newland, Katherine A Director Tolhurst, Rebecca Director O’Loughlin, Stephen J Director

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.

We will do this by

Principal Activities

»» Providing training to all of our staff

»» Providing customer service of the highest standards »» Establishing operational benchmarks

The principal activity of the Group is to provide outstanding and sustainable shopping choice and retail services to our Members and the Barossa community.

»» Developing our marketing strategy »» Refreshing our brand »» Actively promote the benefits of Membership

Short Term Objectives

»» Work with local government to provide options for sustainable development

»» To be a retailer of choice »» Provide value for money »» Provide exceptional customer service »» To be an employer of choice Longer Term Objectives »» To provide Members with a growing range of services and financial benefits »» To be a generous and trusted leader in our region and in the wider Co-operative Community »» To optimise our physical assets to provide a sustainable future

Auld, John D Director

2. Business Review Operating Results The consolidated profit of the Group after providing for income tax and eliminating minority equity interests amounted to $650,191 (2015: $861,882).

Results of Operations/Appropriations to Members Economic Entity 2016

2015

68,507,658

67,573,132

1,499,609

1,792,772

- Interest on Share Capital

(161,684)

(178,474)

- Rebate on Qualifying Purchases

(392,304)

(387,521)

945,621

1,226,776

(295,430)

(364,894)

650,191

861,882

Net Sales Turnover (excluding GST)

Net Profit from Ordinary Activities

Capital Invested

$3,998,708

$291,723

Capital Withdrawn or Notice of Withdrawal given

The economic entity’s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a State or Territory.

No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in future financial years.

Likely Developments The economic entity expects that there will be a minor financial impact to the present status and level of operations as a result of the redevelopment activities.

Share Capital Movements Balance Capital 1/02/2015

Significant Changes in State of Affairs

After Balance Day Events

Appropriations to Members

Income Tax

Environmental Issues

No significant changes in the Group’s state of affairs occurred during the financial year.

Operating Surplus for Year Before Appropriations

3. Other Items

Balance 31/01/2016 $4,021,933

$268,498

Dividends Paid or Recommended No dividends were paid or declared since the start of the financial year. No recommendation for payment of dividends has been made.

Workplace Gender Equality Agency The Co-operative complies with the requirements of the Workplace Gender Equality Act 2012, and has lodged its annual compliance report with the Workplace Gender Equality Agency. The report may be accessed at barossa.coop or www.wgea.gov.au

Directors’ Report Options No options over issued shares or interests in the Co-operative or a controlled entity were granted during or since the end of the financial year and there were no options outstanding at the end of the financial year.

Directors’ Benefits No Director since the end of the previous financial year has received or become entitled to receive a benefit by reason of a contract made by the Co-operative or a related corporation with the member or with a firm of which he/she is a member, or with a company in which he/she has a substantial financial interest other than as shown in the group accounts or received as a fixed salary of a full-time employee.

Indemnification of Officer or Auditor

The Co-operative was not a party to any such proceedings during the year.

No indemnities have been given or insurance premiums paid, during or since the end of the financial year, for any person who is or has been an officer or auditor of the economic entity with the exception of the following:

Signed in accordance with a resolution of the Board of Directors:

»» During the financial year, the Co-operative paid a premium of $13,794 in respect of contracts insuring all the Directors and Officers of the Co-operative under a management insurance policy.

Schmaal, Phillip M

Director .......................................................

Director ....................................................... Curnow, John L

Proceedings on Behalf of the Economic Entity

Dated 25 May 2016

No person has applied for leave of Court to bring proceedings on behalf of the Co-operative or intervene in any proceedings to which the Co-operative is a party for the purpose of taking responsibility on behalf of the Co-operative for all or any part of those proceedings.

the envy of regional communities around the country

Board of Directors

Phillip M Schmaal

John L Curnow

Guy H Ewing

Katherine A Newland

Qualifications MBA, Dip CM, MAICD, ACIS, AGIA

Qualifications MAICD

Qualifications DPharm, MAICD

Qualifications MAICD

Experience Board Member since April 2011

Experience Board Member since April 2013

Experience Board Member since June 2010

Experience Board Member since April 2011

Number of Shares 143

Number of Shares 1212

Number of Shares 156

Number of Shares 179

Directors’ Meetings Attended 11 out of 11

Directors’ Meetings Attended 9 out of 11

Directors’ Meetings Attended 10 out of 11

Audit Committee Meetings Attended 11 out of 11

Audit Committee Meetings Attended 9 out of 11

Audit Committee Meetings Attended N/A

Audit Committee Meetings Attended 11 out of 11

Chairman

Deputy Chairman

Director

Rebecca Tolhurst

Stephen O’Loughlin

John Auld

Qualifications LLB (Honsl.), B Comm. MAICD

Qualifications B Com (VPM). AAPI, CPP, MAICD

Qualifications RDWM, MAICD

Experience Board Member since March 2012

Experience Board Member since August 2013

Experience Board Member since February 2014

Number of Shares 60

Number of Shares 149

Number of Shares 219

Directors’ Meetings Attended 11 out of 11

Directors’ Meetings Attended 10 out of 11

Audit Committee Meetings Attended N/A

Audit Committee Meetings Attended 10 out of 11

Director

The Co-op will be recognised by its members and the broader region as an outstanding and sustainable provider of competitive shopping choice and exceptional member services.

Members benefit

SPO NSOR SHIP

SHOPPING

Financials Discussion and Analysis of the Financial Statements FOR THE YEAR ENDED 31 JANUARY 2016 Information on the Community Co-operative Store (Nuriootpa) Limited and Controlled Entities Concise Financialâ&#x20AC;ŻReport The financial statements and disclosures in the concise financial report have been derived from the 2016 financial report of The Community Co-operative Store (Nuriootpa) Limited and Controlled Entities. A copy of the full report and auditors report can be accessed via the Co-operativeâ&#x20AC;&#x2122;s website www.barossa.coop or will be sent to any member, free of charge, upon request.

The discussion and analysis is provided to assist members in understanding the concise financial report. The discussion and analysis is based on The Community Co-operative Store (Nuriootpa) Limited and Controlled Entities financial statements and the information contained in the $672,326 concise financial report has been derived from the full 2016 financial report of The Community Co-operative Store (Nuriootpa) Limited and Controlled Entities. Further discussion is found in the body of the Annual Report.

Balance Sheet Net assets increased during the year by $672,326 to $34,416,860 representing an increase of 1.95%. This increase was mainly attributable to an increase in property, plant and equipment and a decrease in borrowings. Return on equity (after tax) was 1.91% compared to 2.61% in the previous year. Statement of Cash Flows Net cash provided by operating, investing and financing activities was ($575,160) in 2016 compared to $819,610 in the previous year. The major contributing factor was an increase to investment in the redevelopment project and payments to suppliers and employees for the year. In addition to this, there was an increase in capital expenditure.

Income Statement The consolidated profit of the Group after providing for income tax and eliminating minority equity interests amounted to $650,191 (2015:$861,882). Net sales revenue for the year is $68.5 million compared with $67.6 million for the previous year.

Financials Statement of Comprehensive Income FOR THE YEAR ENDED 31 JANUARY 2016 2016 Revenue Changes in inventories

2015

68,507,658

67,573,132

(185)

130,712

Cost of goods sold

(50,054,333)

(49,349,530)

Employee benefits expense

(11,009,226)

(10,734,340)

Depreciation and amortisation expense

(906,078)

(882,166)

(4,898,861)

(4,770,631)

Finance costs

(139,366)

(174,405)

Profit from ordinary activities before appropriations to members

1,499,609

1,792,772

Rebates to members

(392,304)

(387,521)

Interest on share capital

(161,684)

(178,475)

Other expenses

Profit from ordinary activities before income tax expense

945,621

1,226,776

(295,430)

(364,894)

650,191

861,882

Other comprehensive income

Other comprehensive income for the year, net of tax

650,191

861,882

Income tax expense Profit for the year Other comprehensive income

Total comprehensive income for the year

Financials Statement of Financial Position AS AT 31 JANUARY 2016

2016

2015

Cash and cash equivalents

1,519,452

2,094,612

Trade and other receivables

1,034,211

875,191

Inventories

6,574,281

6,574,096

TOTAL CURRENT ASSETS

9,127,944

9,543,899

CURRENT ASSETS

NON-CURRENT ASSETS Trade and other receivables

12,330

11,860

Financial assets

60,581

54,464

38,505,683

37,942,407

Property, plant and equipment Deferred tax assets

415,065

392,711

38,993,659

38,401,442

48,121,603

47,945,341

Trade and other payables

4,072,938

4,371,446

Borrowings

4,145,148

4,259,645

TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES

Current tax liabilities

(50,488)

109,496

Employee benefits

1,267,577

1,249,388

TOTAL CURRENT LIABILITIES

9,435,175

9,989,975

NON CURRENT LIABILITIES Borrowings Deferred tax liabilities Employee benefits TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS

94,668

167,585

4,042,743

3,958,771

134,157

86,476

4,271,568

4,212,832

13,706,743

14,202,807

34,414,860 33,742,534

EQUITY Issued capital

4,021,933

3,998,708

Reserves

11,837,224

Retained earnings

18,555,703

17,906,602

Total equity attributable to equity holders of the company

34,414,860

33,742,534

TOTAL EQUITY

34,414,860

33,742,534

Financials Statement of Changes in Equity FOR THE YEAR ENDED 31 JANUARY 2016 2015

Ordinary Shares $

Balance at 31 January 2014

4,078,588

Retained Earnings

Asset Realisation Reserve

17,044,720 10,804,681

Capital Profits Reserve

Total

1,032,543 32,960,532

Profit attributable to members of the parent entity

861,882

Total other comprehensive income for the year

178,814

(258,694)

(79,880) 861,882

782,002

10,804,681

1,032,543

33,742,534

Retained Earnings

Asset Realisation Reserve

Capital Profits Reserve

Total

Transactions with owners in their capacity as owners Shares issued during the year Shares bought back during the year Sub total Balance at 31 January 2015

2016

3,998,708 17,906,602

Ordinary Shares $

Balance at 31 January 2015

3,998,708

17,906,602 10,804,681

1,032,543 33,742,534

Profit attributable to members of the parent entity

650,191

Total other comprehensive income for the year

(1,090)

291,723

(268,498)

23,225 649,101

672,326

10,804,681

1,032,543

34,414,860

Transactions with owners in their capacity as owners Shares issued during the year Shares bought back during the year Sub total Balance at 31 January 2016

4,021,933 18,555,703

Financials Statement of Cash Flows FOR THE YEAR ENDED 31 JANUARY 2016 2016

2015

CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers

68,304,116

67,853,666

(66,171,518)

(64,202,039)

Borrowing costs

(392,304)

(387,521)

Interest received

19,518

32,036

(301,050)

(352,879)

Payments to suppliers and employees

Appropriations to members Income tax paid

(393,791)

(432,027)

Net cash provided by operating activities

1,064,971

2,511,236

(1,469,354)

(943,663)

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment Redemption/(purchase) of investments Net cash used by investing activities

(6,588)

(1,475,942)

(943,663)

23,225

(79,880)

CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from issue of shares Increase in Accumulated Rebate and Interest

(19,829)

331,917

Repayment of borrowings

(167,585)

(1,000,000)

Net cash used by financing activities

(164,189)

(747,963)

Net increase (decrease) in cash and cash equivalents held

(575,160)

819,610

Cash and cash equivalents at beginning of year

2,094,612

1,275,002

Cash and cash equivalents at end of financial year

1,519,452

2,094,612

Financials Notes to the Financial Statements FOR THE YEAR ENDED 31 JANUARY 2016 1. Basis of Preparation The Concise financial report has been prepared in accordance with Accounting Standard AASB 1039: Concise Financial Reports and the Corporations Act 2001. The financial statements, specific disclosures and other information in the concise financial report is derived from and is consistent with the full financial report of The Community Co-operative Store (Nuriootpa) Limited. The concise financial report cannot be expected to provide as detailed an understanding of the financial performance, financial position and financing and investing activities of The Community Co-operative Store (Nuriootpa) Limited as the full financial report.

The financial report of The Community Co-operative Store (Nuriootpa) Limited complies with all Australian equivalents to International Financial Reporting Standards (AIFRS) in their entirety. The presentation currency used in this concise report is Australian dollars. 2. Events Subsequent to Balance Date No matters or circumstances have arisen since the end of the financial year, which significantly affected the operations of the Co-operative, the results of those operations or the state of affairs of the Co-operative in the subsequent financial year.

Financials Directorsâ&#x20AC;&#x2122; Declaration The directors of the company declare that: 1. The financial statements and notes, as set out on pages 28 to 40, are in accordance with the Corporations Act 2001 and: a. comply with Accounting Standards, which, as stated in accounting policy note 1 to the financial statements, constitutes explicit and unreserved compliance with International Financial Reporting Standards (IFRS);â&#x20AC;Żand b. give a true and fair view of the financial position as at 31 January 2016 and of the performance for the year ended on that date of the company and consolidated group.

Our purpose is to not only provide the best shopping experience possible but to also enable the community as whole to prosper.

This declaration is made in accordance with a resolution of the Board of Directors.

Director ....................................................... Schmaal, Phillip M

Director ....................................................... Curnow, John L Dated 25 May 2016

2. In the directorsâ&#x20AC;&#x2122; opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

Financials Independent Audit Report Report on the Financial Report The accompanying concise financial report of The Community Co-operative Store (Nuriootpa) Limited, which comprises the statement of financial position as at 31 January 2016, and the income statement, and statement of cash flows for the year ended that date and related notes, derived from the audited financial report of The Community Co-operative Store (Nuriootpa) Limited for the year ended 31 January 2016, as well as discussion and analysis. The concise financial report does not contain all the disclosures required by the Australian Accounting Standards. Directors’ Responsibility for the Financial Report The directors of the co-operative are responsible for the preparation and fair presentation of the financial report in

accordance with Australian Accounting Standards AASB 1039: Concise Financial Reports (including Australian Accounting Interpretations), statutory and other requirements. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the concise financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the concise financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Co-operative’s preparation and fair presentation of the concise financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also

Auditor’s Responsibility Our responsibility is to express an opinion on the concise financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit

includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the concise financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, provided to the directors of The Community Co-operative Store (Nuriootpa) Limited would be in the same terms if provided to the directors as at the date of this auditor’s report.

Financials Auditor’s Opinion

PKF Kennedy

In our opinion the financial report of The Community Co-operative Store (Nuriootpa) Limited is in accordance with the Corporations Act 2001, including:

.......................................................

(a) g iving a true and fair view of the Co-operative’s financial position as at 31 January 2016 and of its performance for the year ended on that date; and (b) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.

The Co-op is not only a successful business, but also creates financial, human and social and relationship capital for its members, suppliers and the business.

Paul Victor Jorgensen FCA Auditor, Chairman of Partners Adelaide, South Australia Date

May 2016