Foodstuffs (Auckland) Limited Annual Report 2009 … auckland 2009.pdfsupport rebate has been...

Annual Report

Foodstuffs (Auckland) Limited Annual Report 2009

Contents

02 Financial Highlights

06 Directors Report

12 National Progress Report

18 Retail Services Report

20 Executive Team

22 Directors

24 Financial Reports

32 Directory

Financial Highlights

2 / Foodstuffs (Auckland) Ltd Annual Report 2009

SalesGroup sales for the year were $3,292m, a reduction on the previous year.

2009 $3,292,636,000

2008 $3,418,372,000

2007 $3,239,008,000

2006 $3,057,744,000

2005 $2,891,434,000

2004 $2,732,851,000

Distribution to membersThe distribution to members of $102.1m is reduced by 4.5% on the previous year as a result of dividends reducing

after the sale of the joint ventures in the previous year. The distribution to members includes rebates, interest on

Rebate Investment Vouchers and a fully imputed dividend.

2009 $102,097,000

2008 $106,957,000

2007 $97,305,000

2006 $92,127,000

2005 $80,098,000

2004 $79,941,000

Foodstuffs (Auckland) Ltd Annual Report 2009 / 3



Directors Report


It gives your Directors great pleasure to present to you the 84th Annual Report of the company, covering the company’s operations and financial results for the year (52 weeks) ended 1 March 2009. The comparatives are for a 53 week year.

FINANCIAL PERFORMANCE

Group sales for the 52 week year were $3,292m, a

reduction on the previous year. Parent company

sales were $2,857m, an increase of $222m or 8.4%.

The bulk of the sales increase registered in the

parent company reflects sales increases from

existing supermarket business and store

refurbishments. The reduction in sales for the group

reflects the loss of a major tobacco distribution

agreement and the withdrawal from unprofitable

business in James Gilmour & Company Ltd.

The reduction in group profit from $150m to $97m is

principally the result of a $57 million profit on sale

of our interest in associate companies in the

previous year and the consequent reduction in

share of profits from associates. Operating

expenses were contained at previous years levels.

The group cash flow strengthened during the year

and the group is well positioned to fund future store

development and continue to provide financial

support to members.

Profit before distribution to members for the parent

company is $81m compared to $75m last year, an

increase of 8.6%. Profits have been maintained as

a proportion of sales and costs in the parent

company have increased primarily due to the

centralisation of group supply chain activities and

an increase in delivery costs through fuel and road

user charges increases.

DISTRIBUTION TO MEMBERS

As a matter of policy and in accordance with the

co-operative principle, all profits made in the parent

company from trading with members are paid out to

members.

The total distribution to members includes rebates

and a fully imputed dividend. Interest on Rebate

Investment Vouchers is separately disclosed in

Finance costs.

The distribution to members payable in June is as

follows:

2009 2008

($000) ($000)

Rebate from members trading 66,090 63,350

Gross dividend (including imputation credits) 22,089 30,597

Interest on Rebate

Investment Vouchers 13,918 13,010

102,097 106,957

The distribution to members of $102.1m including

interest is reduced by 4.5% on the previous year as

a result of dividends reducing after the sale of the

joint ventures in the previous year. Rebate from

member trading has increased by 4.3%. It once

again highlights the benefits of the co-operative

system in which profits earned are returned to

members in direct proportion to the business

transacted with the company. The greater the

support members give to the Company the greater

the benefit they receive.

The overall rebate on Private Label products

purchased through the company’s warehouses has

been retained at 7.5% and the rebate on meat

charged through the Company at 1%. This

represents a supplementary margin on Private

Label products in addition to the already very

favourable margin enjoyed at the time of sale. After

taking into consideration the future requirements for

funding of new stores, the rate of the overall


support rebate has been maintained at 1.75%

resulting in a total value of this rebate of $44.7m,

again payable by way of 5 year Rebate Investment

Vouchers. The Vouchers attract interest at an initial

rate of 8% pa, but with the interest rate subject to

annual review by the Board, depending upon the

level of interest rates in the economy. Remaining

supplier and other rebates are payable in cash. The

Directors have approved the payment in cash of a

fully imputed dividend of $14.8m (gross dividend

$22.1m). As the dividend is fully imputed the

dividend is in effect "tax paid". The dividend is

distributed on the same basis as the distribution of

rebates.

FINANCIAL POSITION

A history of steady earnings and cashflow growth,

together with a managed capital expenditure

program has placed the company in a strong and

conservative financial position.

Total assets have increased by $29m to $1,495m.

Inventory levels receivables have slightly increased

and related party receivables have decreased by

$10m. Property, Plant and Equipment increases,

primarily represent the acquisition and development

of retail and warehousing properties.

Financial ratios have been maintained well within

the requirements set down by the company’s

principal lenders.

The group have committed long term bank credit

facilities of $500m and debt levels fluctuate

significantly throughout the month, increasing at

calendar month end when suppliers are paid and

reducing steadily in the following weeks. This year

our balance date was after creditors had been paid

and has resulted in an increase in borrowings.

FINANCE TO MEMBERS

The company continues to play an important

funding role for members by assisting with finance

by way of direct advance or finance guarantee to

help members in the setting up of new businesses,

funding of changes of ownership and the financing

of major upgradings and/or extensions to existing

businesses.

As at balance date, loans to members stood at

$143m and bank overdraft and term loan

guarantees by the company on behalf of members

amounted to $104m. This gave a total financing

commitment at balance date in respect of members

of $247m compared to $233m at the end of the

previous financial year.

RETAIL AND COMPANY ACTIVITIES

The company continues to commit considerable

resources to the development of modern store

formats, new store construction and modernisation

of exisiting stores. We opened new New World

stores in Waiuku and Southmall which have traded

very strongly. Major extensions and upgrades were

completed for Glen Innes PAK'nSAVE and Royal

Oak PAK'nSAVE. We commenced construction of

New Lynn New World, Morrinsville New World and

most importantly achieved resource consents for

PAK'nSAVE Wairau Road to open post balance date.

Turnover growth in both New World and PAK'nSAVE

groups exceeded 9% reflecting the strength of

positioning in the market place.

During the year we developed and started to

implement a long term strategic solution for

Gilmours that will ensure that the business to

business segment will grow and prosper into the

future. This is a major undertaking involving major


business process and systems changes along with

people and change management to integrate with

the parent company.

EVENTS SUBSEQUENT TO BALANCE DATE

The Directors are not aware of any matter or

circumstance since the end of the financial year, not

otherwise dealt with in this report or the group

financial statements that has significantly or may

significantly affect the operation of Foodstuffs

(Auckland) Limited, the results of those operations

or the state of affairs of the company or group.

AUDITORS

PricewaterhouseCoopers have conveyed their

willingness to continue in office.

SHAREHOLDER REPORTS

The Annual Report is a summary of the operational

and financial activities for the financial year. It is

designed to be informative and easy to read. The

full financial statements are available for

shareholders on the company’s web site.

SUMMARY AND APPRECIATION

Despite the current economic environment the

group has had another successful trading year

which has seen strong sales growth in the parent

company due to strong retail performance,

improved profitability and an increased rebate to

members. We believe we are well placed to face

any challenges.

The grocery industry is highly competitive requiring

highly motivated and skilled personnel. The

commitment of our executive and staff has been

outstanding throughout the year. Additionally, the

company is well served by the members who are

involved with committees and of course our fellow

Directors in achieving the company’s purpose and

direction. The Directors extend their appreciation to

the executive and staff for the first class job done

during the year under review and to those members

who have been active on committees.

We also express our thanks to our fellow directors,

for the time they have spent on company affairs and

for the contribution they make to the company’s

progress. The excellent co-operation and common

sense of purpose which exists between the

directors, management, executive, staff, committee

representatives and members, continues to be a

major strength underpinning the group’s success.

After 25 years Trevor Jones retired from the Board

in December. Trevor served in many capactities

during his time with the Board, including both as

Deputy Chairman and as a Director of Foodstuffs

New Zealand. Trevor’s wise counsel will be greatly

missed by the Board.

On behalf of the Board

G R Miller A J Carter

CHAIRMAN OF MANAgINg DIRECTORS DIRECTOR




National Progress Report


National Progress Report

The year ended February 2009 saw the national Foodstuffs organisation achieve similar sales to the previous year with the combined wholesale turnover for the three Foodstuffs companies at $7.6 billion.

Distribution to members in respect of the year’s

trading, including all rebates and dividends, increased

from $316 million last year to $337 million this year,

an increase of 6.6%.

The retail operations of the Foodstuffs’ companies

are structured to cover the major segments of the

market. These include full service supermarkets,

retail food warehouses, conventional main order

grocery stores in smaller communities and

convenience stores. During the year under review,

two new New World supermarkets were opened in

the Foodstuffs Auckland region replacing existing

New World stores at Waiuku and at Southmall

in Manurewa. Foodstuffs Wellington opened

a new New World at Greenmeadows in Napier

and Foodstuffs South Island opened a new Four

Square store at Twizel.

Foodstuffs South Island also opened two new

Henrys Beer Wine & Spirits outlets at Shirley and

Ferrymead in Christchurch.

Further to the new store openings, major

extensions and renovations to existing stores were

completed at Royal Oak PAK’nSAVE and Glen Innes

PAK’nSAVE in Auckland. Additionally Victoria Park

New World underwent a significant renovation. In

the Foodstuffs Wellington area, major renovations

were completed during the year at Hastings

New World and at Merrilands New World in New

Plymouth. Foodstuffs South Island completed major

extensions at Gardens New World in Dunedin and at

Lumsden Four Square and Tokomairiro Four Square

in South Otago. Foodstuffs South Island have also

continued the implementation of Self Checkout

units and now have over 133 units in 28 stores.

New markets and extensions to existing markets

from the three companies provided an additional

gross retail floor area of over 16,500m2 during

the year.

On the wholesale side of the business, Foodstuffs

(Auckland) continued the restructure of the

Gilmours operations, with the Gilmours North

Shore branch transferred as a pilot project to an

owner/operator model incorporating both a

Cash n’ Carry operation and a service operation

providing service business to foodservice

customers. In light of the success of the pilot

project, the decision was taken shortly after year

end to transfer the other Gilmours branches into

private ownership.

At year end, the first stage of a very major

extension to Foodstuffs Auckland’s chilled and

frozen Distribution Centre at Nesdale Road in Wiri

was nearing completion.

As reported last year the Foodstuffs Fresh

Auckland operation moved into the new purpose

built 10,000m2 temperature controlled facility at

Pavilion Drive near the Auckland airport at

Mangere. Initially, Foodstuffs Fresh serviced only

the Auckland stores and stores north of Auckland

but during the year commenced distribution of fruit

and produce to Foodstuffs Auckland’s southern stores.

During the year, Foodstuffs Wellington commenced

construction of a 38,000 sq. m Distribution Centre

on a 10 hectare greenfields site in Palmerston

North. The new DC will include a semi-automated

“goods to man” picking solution for the majority of

repack/split case picking. On completion of this

project the Silverstream DC will be closed and all

dry grocery distribution for Foodstuffs Wellington

and Toops will be picked from the new DC.

Foodstuffs South island centralised all General


Merchandise stock holdings at their Hornby

Distribution Centre in August 2008 which resulted

in improved service levels and overall inventory

reduction. Voice picking was introduced to the

Dunedin DC in August 2008, being the last of the

South Island DC’s to convert to this type of

operation which has seen not only a reduction in

equipment repair rates but more importantly, a

reduction in both the rate and severity of accidents

in the DCs.

For the national organisation one of the significant

achievements of the year was the acquisition of

Liquorland by the three Foodstuffs companies.

This provides Foodstuffs nationally with a strong

retail liquor brand and the opportunity to

participate as a substantial player in the retail

liquor market.

Foodstuffs New Zealand continued its role as a

federation body of the Foodstuffs companies.

Foodstuffs New Zealand represents the Foodstuffs

companies effectively on industry organisations

such as the Grocery Industry Council, GS1 New

Zealand Ltd (the bar-coding association), many

industry training organisations, and several other

industry bodies including the Packaging Council of

NZ and Nargon. It continues to play a very

important role in expanding the organisation’s

profile and in representing Foodstuffs interest in

areas of concern to the wider community. During

the year Foodstuffs New Zealand made many

submissions to Parliament on legislation affecting

our industry and continued to provide a national

profile for the organisation within the political field.

The Company also coordinates national activities

of the Foodstuffs companies, where this is

appropriate. It is involved with administrative and

secretarial activities for the wider group, including

the production of calendars, organisation of

national meetings and conferences, and collation

of national sales reports.

One of Foodstuffs (NZ) Ltd key functions is to

co-ordinate the development of national policy and

several new national policies were adopted during

the year.

In June 2008 Foodstuffs adopted a Healthy Eating

Policy which sets out the organisation’s objectives

in supporting the Government’s Healthy Eating

Healthy Action Strategy to address the rise in

obesity and related disease. The aim of the policy

is to encourage customers to eat, in moderation, a

variety of nutritious foods that will enhance health.

The focus is to ensure customers have the

opportunity to learn about healthy eating, have

access to foods that are nutritious and are

affordable, and have sufficient product information

to make well informed food purchase decisions.

Recognising our responsibilities as a major alcohol

retailer, our wholehearted support for the

responsible consumption of alcohol in our

communities, and public concern about the social

impact of alcohol, Foodstuffs has adopted a new

Alcohol Policy. In line with this new policy

Foodstuffs will not be selling alcohol products

below cost apart from the clearance of small

quantities of obsolete or short dated stock that

would otherwise be unsaleable. This change has

taken into account the views of a range of

stakeholders including the Liquor Licensing

Authority which believes that loss leading is

contrary to the spirit of the Sale of Liquor Act.

Foodstuffs have also announced a policy to

introduce unit pricing. Unit pricing is to be

introduced for all New World and PAK'nSAVE

stores by June 2010. The roll out of unit pricing will

enable customers to more easily compare the


price of goods on a unit basis e.g. per 100 grams,

and to also compare the relative pricing of different

pack sizes.

Under the NZ Packaging Accord, the Foodstuffs

companies have for several years participated in a

successful campaign to reduce plastic bag use. In

furtherance of this objective the three companies

announced shortly after year end that they would

be introducing a charge on plastic checkout bags

with the proceeds of this charge to be made

available to fund environmental initiatives.

The joint venture agreement with BP allowing

selected supermarket sites to sell fuel, continues

as a very successful retail offering to customers

and a significant strategy within the overall

supermarket operation. Further new Fuel sites

were constructed during the year. In Auckland as

well as the major instore renovations at Glenn

Innes PAK’nSAVE a new PAK’nSAVE Fuel site was

also completed. Foodstuffs Wellington opened two

new Fuel sites at Levin New World and at Hastings

New World. Twenty-five PAK'nSAVE Fuel sites and

eight New World Fuel sites are now operating

nationally. Technology continues to improve and

further new fuel sites are planned to open during

the coming year.

The fuel discount scheme jointly operated by BP

and Foodstuffs which provides Foodstuffs retail

customers with vouchers based on their grocery

purchases to gain discounts on fuel purchases

from BP service stations continues to be a

successful promotion in protecting Foodstuffs’

market share.

The national company, Foodstuffs Own Brands

Ltd, continues to deal with suppliers of private

label product on a national basis. This venture

together with the national trans-Tasman joint

venture, Metfoods Pty Ltd, has again been of

benefit and continues to generate good savings for

the Foodstuffs companies. FOBL also financially

supports The Food for Thought Trust which runs a

nutrition education programme in schools with

support from individual stores. Since launching in

August 2007 the programme has been used in 97

schools and 414 classrooms with a reach to more

than 10,000 students.

As Chairman of Directors I would like to express

my appreciation to my fellow directors and to the

executives and staff of the respective Foodstuffs’

companies for the commitment and enthusiasm

they show in ensuring the ongoing progress,

development and success of the Foodstuffs

organisation. I would also like to thank all the retail

members of the Foodstuffs group nationally for the

support that they have shown both to their own

Foodstuffs’ companies and to the national

organisation. The Foodstuffs companies continue

to face challenges at both wholesale and retail

level, more so in the light of the current economic

climate but with the strong base which has been

developed over many years Foodstuffs appears to

be well equipped to meet these challenges. The

close cooperation which exists between the three

Foodstuffs companies is a major strength of our

organisation and we are confident that the

organisation will continue to make real progress in

the coming year.

Glenn Miller

CHAIRMAN OF DIRECTORS

Foodstuffs (NZ) Limited




Retail Services Report


Foodstuffs Auckland has outperformed both its

Foodstuffs sister companies and also competitor

Progressive Enterprises Limited. These strong retail

sales are based on more and more customers

turning to both PAK’nSAVE and New World who

they can depend on in these uncertain times. In the

case of PAK’nSAVE, customers are choosing to

purchase a greater number of value pack options

while our New World customers are typically

coming in the store more frequently to take

advantage of the great range and focus on fresh

foods and all round service.

Foodstuffs Auckland has worked very successfully

with its sister companies to run national

promotional campaigns for New World and

PAK’nSAVE. New World continued to sponsor elite

netball in New Zealand including the sponsorship of

the New Zealand Silver Ferns. This was an

incredibly successful national sponsorship which is

now filtering down to a local level. Most of our New

World operators have a strong relationship with

their local netball club and are providing great

support at the grass roots level.

The PAK’nSAVE stickman campaign has been

incredibly successful achieving one of the highest

recognition rates of any brand advertising on

television. The stickman concept enables us to get

across the simple message of lowest prices in a

humorous way.

Progressive’s focus on Homebrand and fuel

discount offers, combined with their new store and

refurbishment programme have not made any

impact on the growth of Foodstuffs Auckland’s

retail sales. Looking at retail sales growth over the

last 18 months, Foodstuffs Auckland’s growth has

accelerated against Progressive’s and we are now

growing more than 2 times the rate that they are.

It is our belief that as long as we offer the customer

what they require and we do it offering the best

value available in the market we will continue to be

successful. This coming fiscal year we will be

focussing on reducing the cost of doing business.

We will be looking at improving the efficiency of

what we do both at the support centre and at stores

to enable us to provide the best offer in the market

to our customers on a sustainable basis.

There are a number of customer focussed

innovations that we have launched over the last 12

months. Late last year we successfully introduced

New World and PAK’nSAVE gift cards which have

been very well received by our customers. We also

launched a new Christmas Club in both banners

which offers great value to our customers in a user

friendly format. On the fresh foods front we are

starting to reap the benefits of our investment in a

fresh foods distribution centre (DC). The investment

in the DC is just part of our strategy which includes

getting closer to our growers so we can, at the best

possible price, bring the freshest produce to our

customers. Our customers saw the results of this

through last summer with an excellent selection of

summer fruit available at great prices in our stores.

We have been very busy on the Property front both

in terms of new stores with the opening of a

replacement New World in Southmall and Waiuku.

Added to that we have had a very strong

refurbishment programme with the completion of

the redevelopment of PAK’nSAVE Royal Oak and

Glen Innes which are showing significant increases

in turnover as a result. We also completed the

refurbishment of Victoria Park and PAK’nSAVE

Manukau which have brought both stores up to an

excellent standard.

We are working very hard to make the next fiscal

year as successful as this one. In these current

uncertain economic times we are fortunate to have

three very good offerings, be it PAK’nSAVE with

lowest prices, New World offering great value, wide

range of product and best service or our Four

Squares who offer true convenience. We are

looking forward to the roll out of our owner

operated Gilmours stores in the months ahead

which again we believe will be well suited to the

current environment and beyond to give those

especially in the food service industry who are not

having an easy time of it the best possible chance

of success in their business.

The retail team very much looks forward to the

challenge of the year ahead and delivering to our

customer’s expectations.

The 2009 fiscal year has been characterised by strong retail sales across all Foodstuffs banners.


Angela Bull

gENERAL MANAgER, PROPERTY DEVELOPMENT

Murray Tonkin

gENERAL MANAgER, COMMERCIAL OPERATIONS

Gijs Faber

gENERAL MANAgER, SUPPLY CHAIN

Tony Carter

MANAgINg DIRECTOR AND CHIEF EXECUTIVE OFFICER

Murray Jordan

gENERAL MANAgER, RETAIL OPERATIONS

Executive Team


Executives

Mark Dunlop

gENERAL MANAgER, TRAININg & DEVELOPMENT

Kevin Ferguson

COMPANY SECRETARY

Rob Chemaly

gENERAL MANAgER, STRATEgY & NEW VENTURES

Malcolm Paul

gENERAL MANAgER, INFORMATION MANAgEMENT SOLUTIONS


Grant Prince

DIRECTOR

Grant was first appointed as a director in March 2006. Grant has been a member of Foodstuffs since March 1996 when he became a New World operator at City Centre New World in Papatoetoe. Grant moved to Remuera New World in November 1998 prior to moving to his present business, Pukekohe PAKnSAVE, in September 2000.

7. Rob Redwood

DIRECTOR

Rob became a director in 2004. He commenced with Foodstuffs as a Scholarship Award Winner in 1987 at Cut Price Store, Taumarunui which he later converted to a Four Square Discount operation. Rob owned Hillcrest New World in Hamilton prior to moving in 1995 to his present business, Eastridge New World in Auckland’s eastern suburbs.

John Smith

DIRECTOR

John was elected to the Foodstuffs Board in July 2006. John has owned and operated a New World supermarket at Warkworth since 1990 having previously been at Dinsdale New World in Hamilton and also having been involved in the Warkworth Four Square store which was a family business.

Russ Wilkinson

DEPUTY CHAIRMAN

Russ Wilkinson has been a director since 2000 and a Foodstuffs member since 1983 although also having had a much longer retail association with Foodstuffs through family foodmarket and supermarket businesses. Russ also was a Foodstuffs Scholarship Award winner and is presently the owner/operator of Kerikeri New World.

Glenn Miller

CHAIRMAN

Glenn was appointed Chairman of Directors in 2005, having been a director since 1999. A member since 1978 in a New World supermarket, Glenn’s association with Foodstuffs commenced well before that in the family Four Square business. Glenn purchased his PAKnSAVE market at Mill Street in Hamilton in September 1992.

Garry Christini

DIRECTOR

Garry was appointed to the Foodstuffs Board in January 2009. Garry is an owner/ operator in partnership at Orewa New World having been a member of Foodstuffs since March 1994.

Directors


Directors Glenn Cotterill

DIRECTOR

Glenn became a director in 1997. He joined the company in February 1992 with the purchase of Te Puke New World. In October 1994 he moved to Whakatane PAKnSAVE and in February 2002 purchased Tauranga PAKnSAVE, his present business.

Vern Heydon

DIRECTOR

Vern Heydon has been a director of the company since 1987. Vern joined the company as a Scholarship Award winner, purchasing Murupara Four Square in 1973. In 1982 Vern moved to Matamata New World before purchasing his present business, Manukau PAKnSAVE in 1993.

Brian Frecker

DIRECTOR

Brian has been a director of the company since 1983. He joined the company as a Four Square member in 1970 and also owned and operated two Cut Price Stores and two New World supermarkets before moving to his present business, Glen Innes PAKnSAVE in February 1992.

Tony Carter

MANAgINg DIRECTOR

Tony was appointed Managing Director and Chief Executive Officer of Foodstuffs (Auckland) Ltd in 2001. Prior to joining Foodstuffs Auckland, Tony was Chief Executive Officer of Foodstuffs (South Island) Ltd.

RETIRED

Trevor Jones

Trevor retired from the Board in January 2009 after 25 years as a director.


Financial Reports



group Group Parent Parent

2009 2008 2009 2008 $000 $000 $000 $000

Revenue 3,292,636 3,418,372 2,857,408 2,635,628

Cost of sales (3,052,366) (3,182,797) (2,720,153) (2,508,703)

Gross profit 240,270 235,575 137,255 126,925

Other Income 32,929 85,268 23,304 22,286

Operating expenses (157,538) (159,669) (91,035) (84,825)

Finance income 14,925 15,110 24,901 22,592

Finance costs (35,284) (37,594) (12,944) (11,955)

Net finance (costs)/income (20,359) (22,484) 11,957 10,637

Share of profit from Associates 2,455 12,148 – –

Profit before distribution to members 97,757 150,838 81,481 75,023

Distribution to members (86,590) (81,850) (86,590) (81,850)

Profit/(loss) before income tax 11,167 68,988 (5,109) (6,827)

Income tax expense (7,957) (1,129) (4,704) (4,145)

Profit/(loss) for the period attributable to members 3,210 67,859 (9,813) (10,972)

FOODSTUFFS (AUCKLAND) LIMITED

Income Statements for the period ended 1 March 2009


group Group Parent Parent 2009 2008 2009 2008 $000 $000 $000 $000

ASSETSNon-current assetsProperty, plant and equipment 945,302 890,191 98,513 101,835 Intangible assets 26,970 18,094 11,304 4,541 Investments in subsidiaries – – 10,304 10,304 Investments in associates 15,297 10,690 10,190 8,390

Derivative financial instruments 586 – 586 –Other financial assets 34,498 61,273 – –Deferred tax asset – – 5,438 4,862

Total non-current assets 1,022,653 980,248 136,335 129,932

Current assetsCash and cash equivalents 765 6,391 – 4,509Trade and other receivables 209,811 205,402 157,982 154,261 Inventories 106,210 103,652 81,410 65,335 Related party receivables 155,789 165,077 156,914 182,866 Income taxation receivable 207 5,780 – –

Total current assets 472,782 486,302 396,306 406,971

Total assets 1,495,435 1,466,550 532,641 536,903

EQUITYCapital and reserves attributable to equity holders

Share capital 1,039 1,039 1,039 1,039

Other financial asset revaluation reserve (17,389) 9,386 – –Hedging reserve (3,679) – (3,679) –Retained earnings 634,878 631,668 120,167 129,980

Total equity 614,849 642,093 117,527 131,019

LIABILITIESNon-current liabilitiesRebate investment vouchers 190,675 171,716 44,778 41,983 Borrowings 366,700 343,500 – –Deferred tax liability 17,436 16,034 – – Other liabilities 305 472 200 312

Total non-current liabilities 575,116 531,722 44,978 42,295

Current liabilitiesBank overdraft – 8 2,227 –

Rebate investment vouchers 33,477 33,397 – –Trade and other payables 246,350 237,106 209,854 185,125 Cash distribution to members 12,595 13,750 12,595 13,750 Income taxation payable – 725 610 1,818 Derivative financial instruments 5,255 219 5,255 219 Related party payables 7,793 7,530 139,595 162,677

Total current liabilities 305,470 292,735 370,136 363,589

Total liabilities 880,586 824,457 415,114 405,884

Total equity and liabilities 1,495,435 1,466,550 532,641 536,903

Director19 May 2009

Director


Balance Sheets as at 1 March 2009


Issued Other share financial asset Hedging Retained Total capital revaluation reserve reserve earnings Equity $000 $000 $000 $000 $000

group

At 25 February 2007 1,039 21,400 – 563,809 586,248

Increase/(decrease) in fair value of other financial assets – (12,014) – – (12,014)

Profit/(loss) for the year – – – 67,859 67,859

At 2 March 2008 1,039 9,386 – 631,668 642,093

Increase/(decrease) in fair value of other financial assets – (26,775) – – (26,775)

Increase/(decrease) in fair value of hedging net of tax – – (3,679) – (3,679)

Profit/(loss) for the year – – – 3,210 3,210

At 1 March 2009 1,039 (17,389) (3,679) 634,878 614,849

Parent

At 25 February 2007 1,039 – – 140,952 141,991

Profit/(loss) for the year – – – (10,972) (10,972)

At 2 March 2008 1,039 – – 129,980 131,019

Increase/(decrease) in fair value of hedging net of tax – – (3,679) – (3,679)

Profit/(loss) for the year – – – (9,813) (9,813)

At 1 March 2009 1,039 – (3,679) 120,167 117,527


Statements of Changes in Equity for the period ended 1 March 2009



Cash flows from operating activities

Cash receipts from customers 3,318,551 3,437,625 2,876,880 2,640,698

Cash paid to suppliers and employees (3,176,811) (3,389,261) (2,822,668) (2,658,682)

Cash generated from operations 141,740 48,364 54,212 (17,984)

Interest received 14,925 15,110 24,901 22,592

Interest paid (21,366) (24,584) (12,944) (11,955)

Income tax paid 652 (10,411) 1,087 (4,250)

Net cash generated from/(used in) operating activities 135,951 28,479 67,256 (11,597)

Cash flows from investing activities

Purchase of property, plant and equipment (83,710) (78,001) (4,809) (3,880)

Proceeds from sale of property, plant and equipment 2,283 7,457 474 12,285

Purchase of intangible assets (10,877) (8,830) (6,778) (4,364)

Proceeds from sales of investments in other companies – 66,840 – –

Dividends received from related parties 440 31,534 108 –

Dividends received from other investments 2,165 5,686 3 279

Advances to members (96,132) (221,614) (95,868) (220,751)

Repayment of advances to members 110,972 156,219 110,972 156,219

Advances from group companies – – 14,803 164,629

Advances to Associates (7,847) – (7,847) –

Purchase of investments (560) (4,287) (100) (2,000)

Net cash generated from/(used in) investing activities (83,266) (44,996) 10,958 102,417

Cash flows from financing activities

Proceeds from borrowings 23,200 108,400 – –

Rebate investment vouchers paid (33,397) (32,460) – –

Interest on rebate investment vouchers paid (5,139) (4,925) – –

Dividends paid (20,500) (18,500) (20,500) (18,500)

Rebates paid (22,467) (27,911) (22,467) (27,911)

Transfers of rebate investment vouchers – – (41,983) (37,389)

Net cash generated from/(used in) financing activities (58,303) 24,604 (84,950) (83,800)

Net increase/(decrease) in cash and cash equivalents (5,618) 8,087 (6,736) 7,020

Cash and cash equivalents at beginning of period 6,383 (1,704) 4,509 (2,511)

Cash and cash equivalents at end of period 765 6,383 (2,227) 4,509


Cash Flow Statements for the period ended 1 March 2009


1. POLICIES

(a) Basis of Presentation

The summary financial statements are those of Foodstuffs (Auckland) Limited (the ‘Company’ or the ‘Parent Company’), its subsidiaries and associates (the ‘Group’ or ‘Foodstuffs’). Foodstuffs (Auckland) Limited has designated itself and the Group as profit oriented entities for the purposes of New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS). They have been prepared in accordance with Financial Reporting Standard No. 43 "Summary Financial Statements" and have been extracted from full financial statements that comply with NZ IFRS which also comply with International Financial Reporting Standards. The full financial statements, signed on 19 May 2009, have been audited by PricewaterhouseCoopers and given an unqualified opinion. For a complete understanding of the financial affairs of the group, the full financial statements are available for shareholders on the company's web page.


2. DISTRIBUTION TO MEMBERS

Cash rebates 21,312 21,367 21,312 21,367

Rebate investment vouchers 44,778 41,983 44,778 41,983

Dividends 20,500 18,500 20,500 18,500

Distributions to members before interest 86,590 81,850 86,590 81,850

Interest on rebate investment vouchers included in finance costs 13,918 13,010 – –

Total distributions to members 100,508 94,860 86,860 81,850

3. RELATED PARTY TRANSACTIONS

(a) Transactions with related parties

Foodstuffs (Auckland) Limited is a co-operative company and predominantly trades with members. All transactions are conducted on normal trading terms and conditions. Virtually all sales of the parent company are made to members. On a group level approximately $2,918,990,000 (2008: $2,626,592,000) of sales revenue represents sales to members.

(b) Outstanding balances at balance date with related parties

The Parent Company advances funds to subsidiaries, members and associate companies in the normal course of business at commercial lending rates. All loans are secured and repayable on demand. No related party debts have been written off. All of the interest received shown in the parent company’s Income Statement was from members or subsidiary companies.

group Group Parent Parent 2009 2008 2009 2008

$000 $000 $000 $000

Loans to members 143,361 160,215 143,361 158,465

Loans to Associates 9,847 2,000 9,847 2,000

Receivable from Subsidiaries – – – 16,080

Receivable from Other related companies 2,581 2,862 3,706 6,321

Related party receivables 155,789 165,077 156,914 182,866

Payable to Subsidiaries – – – 4,606

Payable to Other related companies 7,793 7,530 139,595 158,071

Related party payables 7,793 7,530 139,595 162,677


Notes to the Summary Financial Statements for the period ended 1 March 2009


3. RELATED PARTY TRANSACTIONS (continued)

(b) Outstanding balances at balance date with related parties (continued)

Loans to members are due within one year and the rate of interest is determined over the period at the floating rate existing at that time. The average floating rate at balance date was 5.8% (2008: 9.4%)

Directors of the Company are also store owners and as such receive loans under the same terms and conditions as other loans to members. At balance date these amounted to $22,086,000 (2008: $23,143,000) and are included in the loans to members balance above.

(c) Rebate Investment Vouchers

Vouchers are payable to Members and mature five years after first being issued. An amount of $33,477,000 (2008:$33,397,000) is due for payment within twelve months subject to directors' approval. An initial interest rate of 8% per annum (2008:8%) is paid in cash or compounded. The rate of interest is subject to review periodically by the Board of Directors.

(d) guarantees

group and Parent 2009 2008 $000 $000

Guarantees for members’ bank overdrafts 104,672 73,060

The Group acts as guarantor for a number of members’ bank loans. The Group is obligated under the guarantee to make the loan payments in the event that members default on a loan arrangement. The Group generally hold first debenture security over the assets and prudently manages exposures. The directors have assessed that the carrying value of these is nil based on a review of the current financial situation of members.

(e) Investment in Subsidiaries

The Group's principal subsidiaries are:

Business Share of issued capital and voting rights activity 2009 2008

Equity Funding Limited Investment 100% 100%

Foodstuffs (Auckland) Nominees Limited Investment 100% 100%

Foodstuffs (Auckland) Systems & Technology Leasing Limited Leasing 100% 100%

Foodstuffs Finance (Auckland) Limited Funding 100% 100%

James Gilmour & Co Limited Wholesaling 100% 100%

Merchant Property Management Investment 100% 100%

Route & Retail Distribution Limited Transport 100% 100%

The National Trading Company of New Zealand Limited Retail property 100% 100%

Interests in subsidiaries Parent Parent 2009 2008 $000 $000

Shares at cost 10,304 10,304

(f) Investment in Associates

The Group’s principal associates are: Reporting Business Share of issued capital and voting rights date activity 2009 2008

The Bell Tea & Coffee Company Limited 31 March Grocery 33% 33%

Foodstuffs Fresh (Auckland) Limited 1 March Distribution 50% 50%

Foodstuffs Liquor New Zealand Limited 31 March Retail 33% 0%

Foodstuffs Own Brands Limited 1 March Procurement 33% 33%

Foodstuffs Retail Financial Services Limited 31 March Financial services 33% 33%

All associate companies are incorporated in New Zealand.


Notes to the Summary Financial Statements CONTINUED for the period ended 1 March 2009


3. RELATED PARTY TRANSACTIONS (continued)

(f) Investment in Associates (continued) group Group Parent Parent

2009 2008 2009 2008 $000 $000 $000 $000

Interests in Associates

Carrying value at beginning of period 10,690 34,852 8,390 5,690

Acquisition of additional shares in associates 560 3,505 100 2,000

Capitalisation of intercompany balance – 355 – –

Impairment in investment in associate – – – –

Reversal of impairment in investment in associate 1,700 700 1,700 700

Sale of associates – (9,336) – –

Increase in capital – – – –

Group's share of associates profit 2,455 12,148 – –

Dividends received or declared (108) (31,534) – –

Carrying value at end of period 15,297 10,690 10,190 8,390

Disposals

Total cash received – 66,840 – –

Net assets disposed of – (9,336) – –

Profit on disposal – 57,504 – –

Results of associate companies

Share of earnings before income tax 3,506 18,484

Income tax (1,051) (6,336)

Net earnings 2,455 12,148

The Group’s share of the results of its principal associates, all of which are unlisted, and its aggregated assets and liabilities are as follows:

Associates Assets Liabilities Revenues Profit

$000 $000 $000 $000

2009 36,006 20,709 119,839 2,455

2008 22,584 11,894 294,176 12,148


Notes to the Summary Financial Statements CONTINUED for the period ended 1 March 2009

Directory

Directors

G R Miller (Chairman)

R E Redwood (Deputy Chairman)

A J Carter (Managing Director)

G J Christini

G C Cotterill

B G Frecker

V N Heydon

G J Prince

J A Smith

C R Wilkinson

T M Jones (retired January 2009)

Senior Executives

A J Bull

R W Chemaly

M G Dunlop

G W Faber

M P Jordan

M J Paul

M W Tonkin

Company Secretary

K C Ferguson

New World Committee

S Purton (Chairman)

E Atherton

A Barkla

S Chimanlal

V Bhaga

D Trubshoe

J Witehira

B Good

J Smith (Directors Representative)

Four Square Advertising Committee

S Duffield (Chairman)

R Adams

M Crammond

S Singh

W Porter

P Pritchard

S Saunders

B Frecker (Directors Representative)

Training & Development Committee

M Dunlop

M Jordan

R Bryce

S Carter

B Carran

B Good

M Scott

J McGoldrick

R Redwood (Directors Representative)

Alternates: D Collins & L Gerlach

Bankers

ANZ National Bank Limited

Commonwealth Bank of Australia

Bank of New Zealand

Westpac Banking Corporation

Auditors

PricewaterhouseCoopers

Solicitors

DLA Phillips Fox

Chapman Tripp

Registered Office

60 Roma Road

Mount Roskill

Auckland

Directory


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