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
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
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
Foodstuffs (Auckland) Ltd Annual Report 2009 / 7
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
8 / Foodstuffs (Auckland) Ltd Annual Report 2009
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
Foodstuffs (Auckland) Ltd Annual Report 2009 / 9
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
Foodstuffs (Auckland) Ltd Annual Report 2009 / 13
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
14 / Foodstuffs (Auckland) Ltd Annual Report 2009
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
Foodstuffs (Auckland) Ltd Annual Report 2009 / 15
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.
Foodstuffs (Auckland) Ltd Annual Report 2009 / 19
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
20 / Foodstuffs (Auckland) Ltd Annual Report 2009
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
Foodstuffs (Auckland) Ltd Annual Report 2009 / 21
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
22 / Foodstuffs (Auckland) Ltd Annual Report 2009
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.
Foodstuffs (Auckland) Ltd Annual Report 2009 / 23
Foodstuffs (Auckland) Ltd Annual Report 2009 / 25
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
26 / Foodstuffs (Auckland) Ltd Annual Report 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
FOODSTUFFS (AUCKLAND) LIMITED
Balance Sheets as at 1 March 2009
Foodstuffs (Auckland) Ltd Annual Report 2009 / 27
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
FOODSTUFFS (AUCKLAND) LIMITED
Statements of Changes in Equity for the period ended 1 March 2009
28 / Foodstuffs (Auckland) Ltd Annual Report 2009
group Group Parent Parent 2009 2008 2009 2008 $000 $000 $000 $000
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
FOODSTUFFS (AUCKLAND) LIMITED
Cash Flow Statements for the period ended 1 March 2009
Foodstuffs (Auckland) Ltd Annual Report 2009 / 29
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.
group Group Parent Parent 2009 2008 2009 2008 $000 $000 $000 $000
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
FOODSTUFFS (AUCKLAND) LIMITED
Notes to the Summary Financial Statements for the period ended 1 March 2009
30 / Foodstuffs (Auckland) Ltd Annual Report 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.
FOODSTUFFS (AUCKLAND) LIMITED
Notes to the Summary Financial Statements CONTINUED for the period ended 1 March 2009
Foodstuffs (Auckland) Ltd Annual Report 2009 / 31
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
FOODSTUFFS (AUCKLAND) LIMITED
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
32 / Foodstuffs (Auckland) Ltd Annual Report 2009