Barossa Co-op Annual Report 16/17

2016/17

Annual Report

Growing for the Future

Contents About The Co-op

4

Co-op Advantage

11

A Snapshot

5

Sponsorship and Donations

12

Mission, Vision, Values

6

Chairman’s Report

15

Vision

6

Strategic Review

17

Values

6

5 Strategic Platforms

6

CEO’s Report

18

Mission

6

The Community Co-operative Store

Principal Activities

A Strong History of Co-operation

8

Highlights

8

A Brief History

9

Our Community

10

Co-op Volunteering

10

Co-op Sponsorship

10

Co-op Social Capital

10

2

17

18

Ever Changing and Dynamic Retail Market

18

Proudly Local Helping Locals

19

Business Performance

19

Our Future

Building for the Next Generation Fast Facts about our ongoing redevelopments

2016/17 Annual Report

22

22 23

Our People

24

Employment 24 Redevelopment 24 Workplace Gender Equality

24

Achievements 25 Social Club

25

Our Key Personnel

26

7 Co-operative Principles

28

Governance 29 Notice of AGM

29

Regulatory Information

29

Directors’ Report

Board of Directors

Financials 37 Discussion and Analysis of the Financial Statements

37

Statement of Profit or Loss and other Comprehensive Income

38

Statement of Financial Position

39

Statement of Changes in Equity

40

Statement of Cash Flows

41

Notes to the Financial Statements

42

Directors’ Declaration

42

Independent Auditor’s Report

43

30

Director Details

30

Auditor’s Independence Declaration

33

3

34

Growing for the Future

About The Co-op The Community Co-operative Store Nuriootpa 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, as well as operating 8 businesses within the Centre (including a Foodland, Mitre10 and Betta Home Living). This allows The Co-op to directly employ over 300 people.

Membership is open to any individual through the minimum purchase of a single share for $2 dollars. The Co-op distributes approximately $600,000 dollars to its members annually through interest on share capital, interest on accumulated rebates and rebates on qualifying purchases. In 2016, members also shared in savings worth over one million dollars through The Co-op’s instant rebate saving scheme at the cash registers. In addition, it also provides over $109,000 annually in sponsorship to local sporting clubs, schools, community organisations and events.

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The Co-op is also a community asset and fulfils 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 employees.

2016/17 Annual Report

A Snapshot

5

Growing for the Future

Mission, Vision, Values Values based leadership is at the heart of our decision-making.

Mission

Vision

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.

To be the Heart of the Barossa

Values

5 Strategic Platforms

» Community Minded

» Our Members

» Always Friendly

» Our Customers

» Unsurpassed Service

» Our Stores

» Innovative and Forward Looking

» Our People

» Commercially Sustainable

» Our Community

» Integrity

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2016/17 Annual Report

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forward looking

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www.barossa.coop www.barossa.coop 7

Growing for the Future

The Community Co-operative Store Highlights

1944 Co-operative commenced operation in Sheard’s Store, Nuriootpa. Purchased Hastings General Store (another Nuriootpa retailer).

1949 ‘Christmas in the Park’ event commenced.

1992 Closed Newlands, Mitre 10, Victor Harbor.

1993 Acquired previous Shoe Store at 13 Murray Street, Nuriootpa (Demolished for car park September 2003).

Major re-adjustment and modernisation of Rules.

2016–2017 The Co‑op Redevelopment Project commences.

1952 Opened Self Service Store (Current Police Station site).

1988 Opened Newlands/ Mitre 10 Store at Victor Harbor, December.

1990 Expand Furniture Store Building.

1994 Purchased Mitre 10 site, specialty shops and shopping centre site, Gawler Street, Nuriootpa.

Upgraded computer and register system.

2016 Foodland goes online with Co-op Fresh.

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1962 Opened Foodland.

1998 Barossa Regional Shopping Centre (Foodland Barossa Fresh) opens November. Purchased former Hatch property, 9 Murray Street, Nuriootpa.

2009–2010 Barossa Mall Stage II occupied.

2016/17 Annual Report

2008 Mitre 10 Trade Centre opened on former Juncken property.

A Brief History

In the mid 1930’s Nuriootpa was in the wake of strong community awareness with the building of the Centennial Park, Community Hotel and the Community Centre embracing the Kindergarten Child Care Centre and Swimming Pool.

It was in this environment in April 1944 that men of vision such as Arthur Reusch, Dr F W Hoopmann, Harry Craker and others rallied enough citizen support to form a consumer Co‑operative. The business of Mr H L Sheard was purchased for £4,120 and commenced operation on the 16th October 1944 as The Community Co-operative Store (Nuriootpa) Limited. The first Annual General Meeting was held in December 1944, with a Membership of 570.

Current Membership stands in excess of 18,000 Members.

1965 Northern aspect of Department Store building modernised and expanded to house the Hardware division.

1981 Foodland supermarket expanded.

1987 Department/Foodland store expansion opened in March. Furniture Store opened in March.

1986 Barcode scanning introduced in Foodland.

1999 Department Store refurbished.

Betta Electrical Store opened March.

2000 Former Dallwitz property at 1 Gawler Street acquired.

1983 Purchased Tom’s Supermarket, 11 Murray Street, Nuriootpa.

1984 Computerised – introduced plastic Membership Cards. Major rules update to accommodate Special Rebate Deposits (or delayed payment rebate).

2002 Para House and land at 3 Murray Street acquired.

2003 Mitre 10 Solutions building refurbished.

60 YEARS

2007 Kalleske property acquired at 5 Second Street.

2006 Sold land at corner of Railway Terrace and Barossa Valley Way. Juncken properties acquired (Gawler, Second, Third Street).

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Growing for the Future

2004 60th Anniversary.

Purchase of land at corner of Railway Terrace and Barossa Valley Way.

Our Community The community within which we live and work is also the community of our members, staff and many of our suppliers. One of the unique aspects of being part of a co-operative is the ability to give back to your community.

Co-op Social Capital

Co-op Volunteering

This year we have held many initiatives to contribute to and support our community.

It’s well researched that the largest benefit and impact that a co-operative can have with its members and community is by providing social capital benefits. In 2016 we contributed to the social capital of the Barossa in many ways including through our Biggest Morning Tea events, Co-op CASH for Schools, Co-op CASH for Sporting Clubs and a new initiative Co-op CASH for Community Groups.

Our team contributes individually to our community by being part of and volunteering their time to many organisations including sporting clubs, community groups and the local CFS brigades.

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Co-op Sponsorship Our annual sponsorship program outlines some of the financial ways we contribute to the many groups around us and the success of this program, combined with our Co-op AMBASSADOR program, continues to grow.

2016/17 Annual Report

Co-op Advantage The Co-op Advantage is a new way of sharing in the benefit of Co-op membership. The member rebate on purchases made during the previous year is now available in a new convenient rewards voucher, to spend at The Co-op when you earn over $10. Advantage dollars can be redeemed at any Co-op store.

Membership with The Co‑op has continued to grow during the past year and there is 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

»» Access to The Co-op’s member services

»» A share in The Co-op surplus

»» At call Funds interest rate is 1% above the Reserve Bank’s cash rate

»» Own a share of local community stores »» Have a genuine say in how The Co-op is run

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

»» Support for local schools, clubs and charities

$1,103,863

$367,101

Rebates on purchases for year ending January 31 2017.

$252,544

Interest on share capital and accumulated rebates.

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Growing for the Future

Member instant rebates given during the year.

Sponsorship and Donations 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 $109,000 in gift cards and money to these organisations.

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.

Sporting Groups

Sporting Groups

Angaston Cricket Club

Northern Zone Pony Club SA

Angaston Football Club

Nuriootpa Bowling Club

Angaston Panthers Basketball Club

Nuriootpa Cricket Club

Barossa District Netball Club Inc

Nuriootpa Football Club

Barossa Tigers Junior Basketball Club

Nuriootpa Hockey Club

Barossa United Junior Soccer Club

Nuriootpa Netball Club

Barossa Valley Amateur Basketball Association

Nuriootpa Tennis Club

Barossa Valley Golf Club

Tanunda Cricket Club

Barossa Valley Hockey Association

Tanunda Football Club

Eudunda Robertstown Netball Club

Tanunda Netball Club

Greenock Cricket Club

Tanunda Tennis Club

Kapunda Football Club

Truro Cricket Club

Kapunda Netball Club

Vine Vale Tennis Club

Kegel Club Tanunda

Total for all Sporting Groups

Lyndoch Tennis Club

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2016/17 Annual Report

$25,250

Total Donations

$109,857

Schools and Community Organisations

Schools and Community Organisations

150 Year Eden Valley Celebration Committee

Nuriootpa Futures Association – History Group

Angaston Kindergarten

Nuriootpa Community Children's Centre

Barossa and District Pipe Band

Nuriootpa High School – Sports

Barossa Band Festival

Nuriootpa Primary School – Breakfast Club

Barossa Bush Gardens

Nuriootpa Primary School – Learning Assistance

Barossa Food Inc

Nuriootpa Primary School – Parent Support

Barossa Enterprises Inc

Nuriootpa RSL Club

Barossa Men's Shed

Rotary Club of Barossa Valley

Barossa Tourism – Vintage Parade 2017

SA Country Carers

Barossa Valley Girl Guides

Soroptimists International Barossa Valley

Barossa Youth Advisory Committee (YAC)

Spectrum SA – Disability Link Services

Carerslink Coffee Club

St John's 'Road Runner' Pedal Prix Team

Faith Lutheran College – Human Powered Vehicles

Tanunda Town Band

Foundation Barossa

Vine Patch Quilters Association

Friends of the Barossa Library Inc

Total for all Schools and Associations

$55,957

Good Shepherd Lutheran School P & F Greenock Primary School Kapunda Kindergarten

Total Donations

Kapunda Men’s Shed

Total for all Schools and Community Organisations

Lone Pine Tanunda Ag Bureau of SA Luhrs Cottage Preservation Society Mt Pleasant Men’s Shed Nuriootpa Futures Association

$55,957

Total for all Sporting Groups

$25,250

Total for Gift Card Donations

$28,650

GRAND TOTAL

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Growing for the Future

$109,857

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2016/17 Annual Report

Chairman’s Report Phillip Schmaal

Chairman of the Board

On behalf of the Board I am delighted to present to you The Co-op’s Annual Report for the year ended January 2017. Preceded by many years of strategic and well considered planning, this year saw the initial construction commence for the various new developments which will provide foundations for your Co-op’s future growth and prosperity.

Building for the Future vs. Disruption Today

» Demonstrates your Co-op’s contribution to the growth and sustainability of the Barossa’s regional economy

With a construction project of this scale, comes both excitement as well as a certain level of disruption. The Board has put practices in place to mitigate risks associated with a large scale construction as and where appropriate.

Networking and Compliance I have enjoyed representing The Co-op at The Business Council of Co-operatives and Mutuals where in partnership with the Australian Institute of Company Directors we are developing a set of Corporate Governance Principles aligned to Co-operatives and Mutuals which both reflect the governance standards of ASX listed companies and embody the seven fundamental and underlying principles of Co-operatives.

Disruption Today » Disruption is short term » It ensures we maintain a strong focus on the delivery of our core business operations in a very competitive and tight retail environment » The redevelopment project has consumed a great deal of time for both the Board and Management alike

I note with interest that Government is paying more attention to the positive role Co-operatives have and can play, particularly in rural and regional communities.

Building for the Future » Construction of the tangible and intangible paves the way for business and employment opportunities for generations » Provides overall long-term benefit for our membership

The Board has commenced a review of The Co-op’s Constitution to ensure it is relevant to today’s business environment and will report back to members in due course.

» Ensures profits remain and are reinvested in the local community

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Growing for the Future

As profits remain within the local community ... your Co-op contributes to the on-going growth and sustainability of the regional economy...

The Directors and the Board

Staff

The complexities of today’s corporate world necessitate we recruit and retain a Board of Directors who have relevant skills, experience and judgement to lead an organisation of this magnitude through new and uncharted waters. During the year Ms Kath Newland retired from the Board after over five years of dedicated and loyal service. Mr Kevin Renshaw was appointed to the Board. Kevin brings strong business and commercial experience as a former Chair of the Lenswood Co-operative and current Chair of the CCW Co-operative in the Riverland. I would like to especially thank Kath for her contributions and also welcome Kevin to the Board.

Our CEO and Management Team, Staff, and the various consultants, architects and designers have come together as a very functional team ensuring the redevelopment project remains on track, while day to day retail services continue to be delivered with the friendly smile to which we have all become accustomed. Our staff are the interface between the organisation and you – our members and our customers. On behalf of the Board, I wish to thank our Management Team and all Staff for a fantastic effort throughout the year. All staff can be very proud of what they have achieved – individually and collectively.

Sometimes the Board is placed in situations where we have to be very transparent and careful. Board Member and tenant of The Co-op Mr Guy Ewing, owner of the Terry White Chemmart, abstained from attending Board meetings whilst there were any lease negotiations regarding his tenancy and any discussions regarding the tenancy are handled through professional and experienced leasing consultants.

2017/18 will continue to see a strong focus on completing the remaining stages of our major redevelopment project. After allowing for rain delay days due to a particularly wet and rainy 2016, stages completed to date have been delivered within timeframes and budget estimates. I would like to thank you, our Members for your on-going support, patience, and very positive feedback about where your Co-op is heading for the future.

I wish to thank all the Directors for their contributions, wealth of experience and knowledge that they bring to the Board.

The demands are high and it is pleasing to see local people with the relevant skills and expertise willing to take on these challenges.

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2016/17 Annual Report

Strategic Review Principal Activities

We have reviewed and updated previous years’ strategic objectives and outcomes that drive decision making.

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

Strategic Platforms Our Customers We give unsurpassed customer service, delivered with unique, authentic friendliness and warmth.

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

We work to bring more retail stores and additional membership services to our region.

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

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

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

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

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

Our Community We do our bit by always We team up with local business groups and the supporting a healthy and local community for the vibrant community. sustainable development of the Barossa.

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

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

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

We will keep our main source of revenue safe.

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

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

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

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

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We encourage you to do We’ll make a pathway for and be your best. your career in The Co-op – onwards and upwards.

Growing for the Future

CEO’s Report Graeme Longmuir Chief Executive Officer

A Strong History of Co‑operation

There are many things that impact our retail sector and keep our lives interesting:

The Barossa is arguably Australia’s most liveable country area and your membership of The Co-op makes an important contribution to the overall success of our region. The Co‑op, as a cornerstone of your community, has evolved continually over 70 years to meet the needs of a growing Barossa. The new plans that are underway build on past successes and contribute to an even more sustainable future for the next generation of Co‑op members.

Our region’s excellent facilities, strong community spirit, progressive businesses and beautiful landscapes, evoke the enormous sense of pride our members have for the Barossa. It is quite unique. The Barossa is strong because of our community and our heritage and we are forging a positive future of more growth, jobs and increased prosperity.

»» Ongoing low economic growth in SA »» Highly competitive retail market »» Low inflation »» Rising costs of doing business »» Less wholesale suppliers »» International business establishing locally »» More retailers in general »» Growing concern over energy security »» High cost impost of the current SA energy strategy Opportunities »» The cost of construction is the lowest in years »» External funding costs remain at historical lows »» Strong, clear business plan for The Co-op’s future

Ever Changing and Dynamic Retail Market Operating across such a variety of retail businesses, The Co-op must remain extremely flexible and adaptable to the continually changing market to ensure each of our businesses remain on track.

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Challenges

»» Confidence in the Barossa to continue growing faster than other regional areas

2016/17 Annual Report

The Co-op, as a cornerstone of your community has evolved continually over 70 years to meet the needs of a growing Barossa.

Proudly Local Helping Locals

Business Performance

All of the operating surpluses from The Co‑op are reinvested back where you live.

The ongoing competitive nature of retail continues to put pressure on the margins across all stores. Excellent buying programs and relationships with suppliers has enabled The Co-op to maintain gross margins at a similar level to last year – a positive outcome in this environment. A year of careful expense control has also contributed to a reduction in operating costs to combat the disruption of the construction project.

In line with the membership consultation process, The Co-op has moved over $3 million of retail sales closer to the main street and once the redevelopment is complete, the Barossa will become a major retail destination with significant flow on benefits to other proactive businesses. Additionally, your Foodland supermarket is supporting dozens of local businesses by helping them get ‘Retail Ready’ and preparing them for bigger and broader markets.

The more retail shopping you do in your local community, the stronger all the retailers and small businesses will become.

By being positive and supportive of your home town, the Barossa and The Co-op you will continue to see: »» More local youth employed and given their first start »» More training and development for local people

Trading Results The trading result of the group before providing for Income Tax and Appropriations to members amounted to $1.655m (previous year $1.498m).

Net Profit after Appropriations (Interest on Share Capital and Rebates on Qualifying Purchases) and Provisions for income tax was $836k (previous year $650k).

The Co-op continues to reinvest back into the community with over $109k given back in the form of sponsorships and donations to a large variety of groups throughout the region.

»» More support to the broader Barossa retail businesses »» More sponsorships of and donations to community groups across the whole Barossa

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Growing for the Future

CEO’s Report continued Expenses

Interest on Share Capital

Overall employee benefits decreased by 6.75% due in part to existing staff members’ time allocated to the redevelopment project and as such expenses capitalised during the year. Overall operating expenses were controlled in line with the budget and reflective of sales. Depreciation and amortisation charges totalled $868k.

The Co-op has 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 2017) was 3.5%. At this rate The Co-op is an option worth considering for longer term investments (with the appropriate financial advice).

Cash Flows and External Borrowings Cash on hand at the end of the reporting period was $1.04m after commencement of the redevelopment project and considerable investment from cash reserves for preliminary works completed.

Share Capital and Shareholder Funds Share Capital increased to $4.13m from $4.02m reflecting a net increase of $114k.

CBA have partnered with The Co-op in the funding of the redevelopment project and the external debt at the end of the reporting period was $11.31m and work in progress for the redevelopment $17.71m.

Distribution to Shareholders

Reserves The strength of the balance sheet has enabled The Co-op to perform strongly and to invest into the future. Retained Earnings increased from $18.55m to $20.42m.

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As at 31 Jan

2017

2016

Interest on Share Capital

3.50%

$150,898

$161,684

Interest on Accumulated Rebate and Interest

2.50%

$101,646

$113,857

1.0%/0.5%

$367,101

$392,304

$619,645

$667,845

Rebate on Qualifying Purchases

2016/17 Annual Report

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

Our Businesses

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Growing for the Future

Our Future

Building for the Next Generation The Co-op takes a strong leadership role by investing into the future of the Barossa. This is not a short term position. The Co-op proudly has confidence in the local wine and food industries, in our farmers and all the associated allied businesses.

It’s vitally important to have the retail infrastructure in place to support the broader Barossa growth plans.

Stronger businesses means more local jobs.

After many years of extensive community consultation and detailed planning the redevelopment project is well underway and taking shape. In the face of above average rainfall all the key milestones of the project to date have still been met.

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2016/17 Annual Report

Proudly designed by Barossans, for all Barossans, there is something for every member of the family.

Fast Facts about our ongoing redevelopments Mitre 10 – the decision to rebuild the store has already proven positive »» Delivered on time and on budget »» Achieving the members’ consultation feedback shopping list »» Best standards, huge range and exceptional customer service = best Mitre 10 in Australia »» Regional hub for the construction and home improvement sector

SportsPower Superstore

Foodland

»» Big new super-store »» Growing faster than ever, catering to members’ demand »» Pride in being the preferred outlet for local sporting groups »» Focus on helping our community to be healthy and happy through stocking new ranges and big brands perfectly suited for a sporty Barossan lifestyle Barossa Home Living »» What’s old is new again »» Newly configured Womenswear, Menswear and Homewares »» Delivering on members’ consultation for a more relaxed department store style shop

»» Will be Barossa’s finest and proudly benchmarked against the world’s best supermarkets »» Over 25,000 products »» More customer service than any nearby store »» To be completed in the latter half of 2017 New tenants such as Aldi, Cheap as Chips and Barossa Fine Foods will offer our members more choice, competition and value than members have ever had locally – another way we have listened to our members. With the three major anchor tenants now in place before the project is complete, confidence is high that the remaining spaces will fill quickly.

»» Proudly designed by Barossans, for all Barossans, there is something for every member of the family

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Growing for the Future

Our People 25

500+

our 20 longest serving employees have over 500 years of combined service.

The Co-op leads gender equality indicators with higher female participation levels at management level than similar size retailers across Australia.

65% of new employees in 2016/17 were under 25 years of age.

More female key management personnel

More female executives/managers

More female senior managers

NOW

NOW

NOW

up from 0 two years ago

up from 28% two years ago

up from 44% two years ago

40%

43%

50%

Employment

Redevelopment

The Co-op continues to be a major employer in the Barossa with around 300 team members employed throughout the year. In 2016 the focus on youth employment was renewed with over 30 new team members recruited to the Supermarket under the age of 21. The support of our members and the local community enables us to continue to support youth employment and provide many of Barossa’s young people with their first job, helping them to gain skills and experience for their future, all without them (and their parents!) needing to travel outside the region.

Our team continues to remain informed regularly about our redevelopment works with our monthly forum, Co-op CIRCLE enabling our team to hear updates directly from our CEO and Senior Leadership Team. This is also a great forum for our team to ask questions and present new ideas and will continue to be an important communication mechanism through our next transition stage to the new shopping centre.

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Workplace Gender Equality The Co-op 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 www.barossa.coop

2016/17 Annual Report

Length of service of workforce 52% 37% 11% Less than 5 years

5 to less than 15 years

Over 180 people work in our Foodland Supermarket.

Plus 15 years

Reliability built on loyalty More female non‑managerial full time employees than similar retailers across Australia.

We are 50% vs. 36% for the comparison group.

More female non‑managerial permanent employees than similar retailers across Australia.

We are 68% permanent vs. 46% for the comparison group.

Achievements Our team of Co-op people have an amazing involvement with our members and the community around us. In 2016 we celebrated with our team their engagements, weddings and new children whilst congratulating them on their success in local and state sporting teams and within our business. We also continue to celebrate significant milestones in service with The Co-op with nearly half of our team serving our Co-op for more than five years each. Our 20 longest serving employees now have over 500 years of combined service between them!

Our culture of give and take has been long standing as we continue to work flexibly with our people, offering employment that can work around our people’s lives; one of the 25

Gender pay gap still has some work to do but our gap is less than a quarter of the comparison retail group and has been cut by over half in the last two years.

advantages of a 7 day a week business. Our team has gone above and beyond the call in 2016/17 in many ways as we build our future, not the least of which was relocating our Mitre 10, SportsPower and Barossa Home Living stores to their new premises.

Social Club The Co-op has a thriving staff Social Club that offers yet another way to build our community within The Co-op, within our employee’s families and also by contributing to the Barossa community. Our Social Club has held movie nights in Gawler, a tour to the Monarto Zoo, BBQ’s, Christmas events and more.

Growing for the Future

Our Key Personnel

Graeme Longmuir

Jerie Schmidt

Shane Wild Facilities Manager

Chief Executive Officer

Chief Financial Officer and Company Secretary

Paul Amos

Robert Zander

Kenneth Hodges

People Relations Manager

Information Services Manager

Co-op Fresh Foodland Store Manager

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2016/17 Annual Report

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

Craig Dodman

Richard Inwood

Mitre 10 Store Manager

Betta Home Living Store Manager

Paul Schupelius

Kathryn Kahl

SportsPower, Barossa Surf and Toyworld Store Manager

Barossa Home Living, womenswear, menswear and homeware Store Manager

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Growing for the Future

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 Everyone is welcome Co-operatives are voluntary organisations, 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 We all get to have a say 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 The more you put in, the more you get back 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.

organisations 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.

5 Engaged, proud and involved Co-operatives provide education and training for members, elected representatives, managers and employees so they can contribute effectively to the development of their co-operative. Members also inform the general public about the nature and benefits of co-operatives.

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

7 Concern and care for our community

4 Locally owned and for local people Co-operatives are autonomous, self-help organisations controlled by their members. If The Co-op enters into agreements with other 28

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

2016/17 Annual Report

Governance Notice of AGM

5. To fix the remuneration of the Board of Directors

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 28 June, 2017 at 7.30pm.

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

Business

The Co-operative rules allow voting in person only, voting by proxy is not permitted.

Wednesday 28 June, 2017

By order of the Board of Directors J Schmidt, Company Secretary Nuriootpa SA 5355, 1 June 2017

1. To confirm the minutes of the Annual General Meeting held 22 June, 2016 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 2017 3. To approve the rate of interest on Share Capital effective from 1 July 2017, as recommended by the Board of Directors 4. To elect three Directors of the Co-operative. In accordance with the Rules, three Directors retire, Kevin Renshaw, Rebecca Tolhurst and Phillip Schmaal by rotation. All have offered themselves and are eligible for re-election.

No other nominations have been received Retiring Directors available for re-election: Kevin Renshaw – Director 12 Hurst Court, Tanunda SA 5352 Phillip Schmaal – Director 2 Reusch Drive, Nuriootpa SA 5355 Rebecca Tolhurst – Director 14 Waechters Road, Penrice SA 5353 29

Regulatory Information The Community Co-operative Store (Nuriootpa) Limited Registered under the Co-operatives National Law (South Australia) Act 2013.

ABN 80 147 431 373 Registered Office 3 Murray Street, Nuriootpa SA 5355 W www.barossa.coop T (08) 8568 6000 F (08) 8568 6010 Subsidiary Company Heritage Stores Pty. Ltd ACN 008 017 105 ABN 98 008 017 105 Bankers Bank of South Australia and Commonwealth Bank of Australia Auditor Justin Humphrey, Partner of Grant Thornton Insurance Broker Vinechange Pty Ltd

Growing for the Future

Directors’ Report The Directors of The Community Co-operative Store (Nuriootpa) Ltd (‘The Co‑op’) present their report together with the financial statements of the Consolidated Entity, being The Co-op and its controlled entities (‘the Group’) for the year ended 31 January 2017 and the Independent Audit Report thereon.

Director Details The following persons were Directors of The Co-op during or since the end of the financial year: Phillip Schmaal MBA, Dip CM, MAICD, ACIS, AGIA Chairman Director since April 2011

Kevin Renshaw CPA, BBus Director Appointed November 2016 Katherine Newland Director Director between April 2011 – resigned 31 October 2016 Principal activities

John Curnow Deputy Chairman Director since April 2013

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

Guy Ewing DPharm, MAICD Director Director since June 2010

There have been no significant changes in the nature of these activities during the year.

Rebecca Tolhurst LLB (Hons), BComm, GAICD Director Director since March 2012

Review of operations and financial results Commencement of the redevelopment during the year and an extraordinary year of weather impacted the business performances.

Together with the ongoing competitive nature of retail continues to put pressure on the margins across all stores. Excellent buying programs and relationships with suppliers has enabled The Co-op to maintain gross margins at a similar level to last year – a positive outcome in this environment. A year of careful expense control has also contributed to a

Stephen O’Loughlin BCom (VPM), AAPI, CPP, MAICD Director Director since August 2013 John Auld RDWM Director Director since February 2014 30

2016/17 Annual Report

reduction in operating costs to combat the disruption of the construction work.

Directors’ meetings The number of meetings of Directors (including meetings of Committees of Directors) held during the year and the number of meetings attended by each Director is as follows:

Significant changes in the state of affairs The commencement of the strategic redevelopment in 2016/17 was a significant change in the state of affairs for The Co‑op taking on bank funding with CBA and reviewing the accounting treatment of assets held now and in the future.

Board Meetings

Audit and Risk Committee

Board Member

A

B

A

B

Phillip Schmaal

11

10

9

9

John Curnow

11

9

9

7

John Auld

11

10

9

9

Katherine Newland

10

9

5

4

Rebecca Tolhurst

11

11

4

4

Guy Ewing

11

11

0

0

Likely developments

Stephen O’Loughlin

11

10

0

0

The material business risks faced by the Group that are likely to have an effect on the financial prospects of the Group, and how the Group manages these risks include:

Kevin Renshaw

1

1

0

0

Events arising since the end of the reporting period 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 the future financial years.

External bank funding with CBA including covenant requirements. Management has implemented a robust forecasting system to ensure that business performance and cash flows are projected well in advance and immediate action can be triggered if required.

A risk assessment with mitigations has been developed for worst case scenarios to protect The Co-op and members.

31

»» Column A is the number of meetings the Director was entitled to attend »» Column B is the number of meetings the Director attended

Growing for the Future

Directors’ Report continued

Unissued shares under option No options over issued shares or interests in The Co-op were granted during or since the end of the financial year and there were no options outstanding at the end of the financial year.

Shares issued during the year During the financial year, The Co-op issued ordinary shares to Directors and other key management personnel. Refer to note 18 to the financial statements.

Environmental legislation The Co-op operations are not subject to any particular or significant environmental regulation under a law of the Commonwealth or of a State or Territory in Australia.

Indemnities given to, and insurance premiums paid for, auditors and officers Insurance of officers During the year, The Co-op paid a premium to insure officers of the Group. The officers of the Group covered by the insurance policy also includes all Directors.

The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against

32

the officers in their capacity as officers of the Group, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else to cause detriment to the Group.

Details of the amount of the premium paid in respect of insurance policies are not disclosed as such disclosure is prohibited under the terms of the contract.

The Group has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify any current or former officer of the Group against a liability incurred as such by an officer.

Indemnity of auditors The Group has agreed to indemnify its auditors, Grant Thornton, to the extent permitted by law, against any claim by a third party arising from the Group’s breach of its agreement. The indemnity requires the Group to meet the full amount of any such liabilities including a reasonable amount of legal costs.

2016/17 Annual Report

Proceedings on behalf of The Co-op No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of The Co-op, or to intervene in any proceedings to which The Co-op is a party, for the purpose of taking responsibility on behalf of The Co-op for all or part of those proceedings.

The envy of regional communities around the country.

Auditor’s Independence Declaration A copy of the Auditor’s Independence Declaration as required under s.307C of the Corporations Act 2001 is included and forms part of this Director’s Report.

Signed in accordance with a resolution of the Directors

Director Schmaal, Phillip M

Director Curnow, John L

24 May 2017

33

Growing for the Future

Board of Directors

Phillip Schmaal

John Curnow

Qualifications MBA, Dip CM, MAICD, ACIS, AGIA

Qualifications

Board Member since April 2011 Number of shares – 143

Board Member since April 2013 Number of shares – 1284

Attendance Directors’ Meetings – 10 of 11 Audit Committee Meetings – 9 of 9

Attendance Directors’ Meetings – 9 of 11 Audit Committee Meetings – 7 of 9

Stephen O’Loughlin

John Auld

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

Qualifications RDWM

Board Member since August 2013 Number of shares – 149

Board Member since February 2014 Number of shares – 219

Attendance Directors’ Meetings – 10 of 11 Audit Committee Meetings – N/A

Attendance Directors’ Meetings – 10 of 11 Audit Committee Meetings – 9 of 9

Chairman

Deputy Chairman

Director

Director

34

2016/17 Annual Report

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.

Guy Ewing

Rebecca Tolhurst

Qualifications DPharm, MAICD

Qualifications LLB (Hons.), B Comm, GAICD

Board Member since June 2010 Number of shares – 2523

Board Member since March 2012 Number of shares – 60

Attendance Directors’ Meetings – 11 of 11 Audit Committee Meetings – N/A

Attendance Directors’ Meetings – 11 of 11 Audit Committee Meetings – 4 of 4

Kevin Renshaw

Katherine Newland

Qualifications CPA, BBus

Qualifications MAICD

Board Member since November 2016 Number of shares – 10

Board Member since April 2011 (resigned October 2016) Number of shares – 537

Attendance Directors’ Meetings – 1 of 1 (November) Audit Committee Meetings – N/A

Attendance Directors’ Meetings – 9 of 10 Audit Committee Meetings – 4 of 5

Director

Director

Director

Director

35

Growing for the Future

Benefiting you the Member

36

2016/17 Annual Report

Financials Discussion and Analysis of the Financial Statements

Income Statement The consolidated profit of The Co-op after providing for income tax and eliminating minority equity interests amounted to $836,633 (2016:$649,101). Net sales revenue for the year is $67.4 million compared with $68.5 million for the previous year.

For the year ended 31 January 2017 Information on The Community Co-operative Store (Nuriootpa) Limited and Controlled Entities Concise Financial Report.

Balance Sheet

The financial statements and disclosures in the concise financial report have been derived from the 2017 financial report of The Community Co-operative Store (Nuriootpa) Limited and Controlled Entities.

Net assets increased during the year by $951,041 to $35,365,901 representing an increase of 2.69%. This increase was mainly attributable to an increase in property, plant and equipment.

A copy of the full report and auditors report can be accessed via The Co-op’s website www.barossa.coop or will be sent to any member, free of charge, upon request.

Statement of Cash Flows

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 concise financial report has been derived from the full 2017 financial report of The Community Co-operative Store (Nuriootpa) Limited and controlled Entities.

Further discussion is found in the body of the Annual Report.

Net cash provided by operating, investing and financing activities was ($479,417) in 2017 compared to ($575,160) in the previous year.

The major contributing factor was an increase to investment in the redevelopment project.

We strive to provide the best shopping experience possible and enable the community as whole to prosper.

37

Growing for the Future

Financials continued Statement of Profit or Loss and other Comprehensive Income For the Year Ended 31 January 2017

2017

2016

$

$

67,445,818

68,507,658

(594,153)

(185)

Cost of goods sold

(49,250,953)

(50,054,333)

Employee benefits expense

(10,312,738)

(11,009,226)

(868,022)

(906,078)

(4,513,302)

(4,899,951)

Loss on disposed/demolished property, plant and equipment

(141,668)

-

Finance costs

(109,502)

(139,366)

1,655,480

1,498,519

Rebates to members

(367,101)

(392,304)

Interest on share capital

(150,898)

(161,684)

Profit from ordinary activities before income tax expense

1,137,481

944,531

Income tax expense

(300,848)

(295,430)

Profit for the year

836,633

649,101

Other comprehensive income

-

-

Other comprehensive income for the year, net of tax

-

-

836,633

649,101

Revenue Changes in inventories

Depreciation and amortisation expense Other expenses

Profit from ordinary activities before appropriations to members

Total comprehensive income for the year

38 

  2016/17 Annual Report

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

Statement of Financial Position As at 31 January 2017

2017

2016

$

$

1,040,035

1,519,452

Trade and other receivables

728,255

1,034,211

Current tax receivables

117,038

50,488

Inventories

5,980,128

6,574,281

Total Current Assets

7,865,456

9,178,432

-

12,330

70,271

60,581

53,834,450

38,505,683

475,155

415,065

Total Non-Current Assets

54,379,876

38,993,659

Total Assets

62,245,332

48,172,091

Trade and other payables

5,467,478

4,072,938

Borrowings

4,547,006

4,145,148

Employee benefits

1,286,666

1,267,577

Total Current Liabilities

11,301,150

9,485,663

45,711

134,157

11,314,394

94,668

4,218,176

4,042,743

Total Non-Current Liabilities

15,578,281

4,271,568

Total Liabilities

26,879,431

13,757,231

Net Assets

35,365,901

34,414,860

4,136,341

4,021,933

Assets Current Assets Cash and cash equivalents

Non-Current Assets Trade and other receivables Financial assets Property, plant and equipment Deferred tax assets

Liabilities Current Liabilities

Non Current Liabilities Employee benefits Borrowings Deferred tax liabilities

Equity Issued capital Reserves

10,804,681

11,837,224

Retained earnings

20,424,879

18,555,703

Total equity attributable to equity holders of the company

35,365,901

34,414,860

Total Equity

35,365,901

34,414,860

39

Growing for the Future

Financials continued Statement of Changes in Equity For the Year Ended 31 January 2017

Ordinary Shares

Asset Realisation Reserve

Capital Profits Reserve

Retained Earnings

Total

$

$

$

$

$

3,998,708

10,804,681

1,032,543

17,906,602

33,742,534

Profit attributable to members of the parent entity

-

-

-

649,101

649,101

Total other comprehensive income for the year

-

-

-

-

-

291,723

-

-

-

291,723

(268,498)

-

-

-

(268,498)

23,225

-

-

649,101

672,326

4,021,933

10,804,681

1,032,543

18,555,703

34,414,860

Ordinary Shares

Asset Realisation Reserve

Capital Profits Reserve

Retained Earnings

Total

$

$

$

$

$

4,021,933

10,804,681

1,032,543

18,555,703

34,414,860

Profit attributable to members of the parent entity

-

-

-

836,633

836,633

Total other comprehensive income for the year

-

-

-

-

-

Transfer to retained earnings

-

-

(1,032,543)

1,032,543

-

435,378

-

-

-

435,378

(320,970)

-

-

-

(320,970)

114,408

-

(1,032,543)

1,869,176

951,041

4,136,341

10,804,681

-

20,424,879

35,365,901

Balance at 31 January 2015

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

Balance at 31 January 2016

Transactions with owners in their capacity as owners Shares issued during the year Shares bought back during the year Sub total Balance at 31 Jan 2017

40 

  2016/17 Annual Report

Statement of Cash Flows

For the Year Ended 31 January 2017 2017

2016

$

$

67,747,958

68,304,116

(62,770,529)

(66,171,518)

Borrowing costs

(109,502)

(392,304)

Interest received

16,250

19,518

Appropriations to members

(465,280)

(320,879)

Income tax paid

(252,055)

(393,791)

Net cash provided by operating activities

4,166,842

1,045,142

(16,041,691)

(1,469,354)

(296,766)

-

Proceeds from sale of property, plant and equipment

18,615

-

Payments for investments

(9,690)

(6,588)

(16,329,532)

(1,475,942)

Net proceeds from issue and redemption of shares

114,408

23,225

Repayment of borrowings

(88,853)

(167,585)

Proceeds from borrowings

11,657,718

-

Net cash used by financing activities

11,683,273

(144,360)

(479,417)

(575,160)

Cash and cash equivalents at beginning of year

1,519,452

2,094,612

Cash and cash equivalents at end of financial year

1,040,035

1,519,452

Cash Flows from Operating Activities Receipts from customers Payments to suppliers and employees

Cash Flows from Investing Activities Payments for property, plant and equipment Borrowing costs capitalised to property, plant and equipment

Net cash used by investing activities Cash Flows from Financing Activities

Net increase (decrease) in cash and cash equivalents held

41

Growing for the Future

Financials continued Notes to the Financial Statements For the Year Ended 31 January 2017 Note 1: Basis of Preparation The financial report has been prepared in accordance with Accounting Standard AASB 1039: Concise Financial Reports, and the Co-operatives National Law (South Australia) Act 2013.

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.

Note 2: Events Subsequent to Balance Date No matter 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.

Directors’ Declaration 1 In the opinion of the Directors of The Community Co-operative Store (Nuriootpa) Ltd: a The consolidated financial statements and notes of The Community Co-operative Store (Nuriootpa) Ltd are in accordance with the Co-operatives National Law (South Australia) Act 2013, including: i Giving a true and fair view of its financial position as at 31 January 2017 and of its performance for the financial year ended on that date; and ii Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Co-operatives National Law (South Australia) Act 2013; and

b There are reasonable grounds to believe that The Community Co-operative Store (Nuriootpa) Ltd will be able to pay its debts as and when they become due and payable.

2 The consolidated financial statements comply with International Financial Reporting Standards.

Signed in accordance with a resolution of the Directors

Director Schmaal, Phillip M 24 May 2017

42

2016/17 Annual Report

Director Curnow, John L

Independent Auditor’s Report

Compilation report to the community Co-operative Store (Nuriootpa) LTD We have compiled the accompanying special purpose financial statements of The Community Cooperative Store (Nuriootpa) Ltd, which comprise the statement of financial position as at 31 January 2017, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, a summary of significant accounting policies and other explanatory notes. These have been prepared in accordance with the basis of accounting described in Note 1 to the financial statements. The specific purpose for which the special purpose financial statements have been prepared is set out in Note 1.

The Responsibility of the Directors The Directors of The Community Co-operative Store (Nuriootpa) Ltd are solely responsible for the information contained in the special purpose financial statements, the reliability, accuracy and completeness of the information and have determined that the basis of accounting used is appropriate to meet their needs and for the purpose that the financial statements were prepared.

Assurance Disclaimer Since a compilation engagement is not an assurance engagement, we are not required to verify the reliability, accuracy or completeness of the information provided to us by management to compile these financial statements. Accordingly, we do not express an audit opinion or a review conclusion8 on these financial statements.

The special purpose financial statements were compiled exclusively for the benefit of Directors, who are responsible for the reliability, accuracy and completeness of the information used to compile them.

Accordingly, these special purpose financial statements may not be suitable for other purposes. We do not accept responsibility for the contents of the special purpose financial statements.

GRANT THORNTON AUDIT PTY LTD Chartered Accountants

Our Responsibility On the basis of information provided by the Directors we have compiled the accompanying special purpose financial statements in accordance with the basis of accounting and APES 315 Compilation of Financial Information.

Justin Humphrey Partner – Audit and Assurance Adelaide, 24 May 2017

We have applied our expertise in accounting and financial reporting to compile these financial statements in accordance with the basis of accounting described in Note 1 to the financial statements. We have complied with the relevant ethical requirements of APES 110 Code of Ethics for Professional Accountants.

43

Growing for the Future

Growing for the Future 3 Murray Street, Nuriootpa SA 5355 p 08 8568 6000 f 08 8568 6010

e admin@barossa.coop www.barossa.coop 44

2016/17 Annual Report