Directors' Report - Barossa Co-op

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MBA, Dip CM, MAICD, ACIS, AGIA. Chairman ... The Co-op taking on bank funding with CBA and reviewing the accounting trea
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 Barossa Co-op (‘the Company’) 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 Barossa Co-op during or since the end of the financial year: Phillip Schmaal MBA, Dip CM, MAICD, ACIS, AGIA Chairman Director since April 2011 John Curnow MAICD Deputy Chairman Director since April 2013 Guy Ewing DPharm, MAICD Director Director since June 2010 Katherine Newland MAICD Director Director since April 2011 - Resigned 31 October 2016 Rebecca Tolhurst LLB (Hons), BComm, MAICD Director Director since March 2012 Stephen O’Loughlin BCom (VPM), AAPI CPP, MAICD Director Director since August 2013

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John Auld RDWM, MAICD Director Director since February 2014 Kevin Renshaw CPA, BBus Director Appointed November 2016 Principal activities The principal activity of the Group is to provide outstanding and sustainable shopping choice and retail services to our Members and the Barossa community. There have been no significant changes in the nature of these activities during the year. 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 reduction in operating costs to combat the disruption of the construction work. 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. 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. Likely developments 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: External bank funding with CBA including covenant requirements. Management have 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.

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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:

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

Stephen O’Loughlin

11

10

0

0

1

1

0

0

Kevin Renshaw Where: y

column A: is the number of meetings the Director was entitled to attend

y

column B: is the number of meetings the Director attended

Unissued shares under option No options over issued shares or interests in Barossa 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 Company issued ordinary shares to directors and other key management personnel. Refer to note 18 to the financial statements. Environmental legislation Barossa 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, Barossa 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 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.

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Grant Thornton House Level 3 170 Frome Street Adelaide, SA 5000 Correspondence to: GPO Box 1270 Adelaide SA 5001 T 61 8 8372 6666 F 61 8 8372 6677 E [email protected] W www.grantthornton.com.au

AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF THE COMMUNITY CO-OPERATIVE STORE (NURIOOTPA) LTD In accordance with the requirements of section 307C of the Co-operatives National Law (South Australia) Act 2013, as lead auditor for the audit of The Community Co-operative Store (Nuriootpa) Ltd for the year ended 31 January 2017, I declare that, to the best of my knowledge and belief, there have been: a

no contraventions of the auditor independence requirements of the Co-operatives National Law (South Australia) Act 2013 in relation to the audit; and

b

no contraventions of any applicable code of professional conduct in relation to the audit.

GRANT THORNTON AUDIT PTY LTD Chartered Accountants

Justin Humphrey Partner - Audit & Assurance Adelaide, 24 May 2017

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation. Page 5

THE COMMUNITY CO-OPERATIVE STORE (NURIOOTPA) LIMITED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 JANUARY 2017 Note Revenue

14

Changes in inventories Costs of goods sold Employee benefits expense Depreciation and amortisation expense Other expenses Loss on disposed / demolished property, plant and equipment Finance costs

15(a) 15(a)

Profit from ordinary activities before appropriations to members Rebates to members Interest on share capital Profit from ordinary activities before income tax expense Income tax expense

2017 $ 67,445,818

(594,153) (185) (49,250,953) (50,054,333) (10,312,738) (11,009,226) (868,022) (906,078) (4,513,302) (4,899,951) (141,668) (109,502) (139,366) 1,655,480

1,498,519

(367,101) (150,898)

(392,304) (161,684)

1,137,481 16(a)

2016 $ 68,507,658

944,531

(300,848)

(295,430)

836,633

649,101

Other comprehensive income:

-

-

Other comprehensive income for the year, net of tax

-

-

836,633

649,101

Profit for the year

Total comprehensive income for the year

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THE COMMUNITY CO-OPERATIVE STORE (NURIOOTPA) LIMITED STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 31 JANUARY 2017 Note ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables Current tax receivables Inventories

2 3 17 4

2017 $

2016 $

1,040,035 728,255 117,038 5,980,128

1,519,452 1,034,211 50,488 6,574,281

7,865,456

9,178,432

70,271 53,834,450 475,155

12,330 60,581 38,505,683 415,065

TOTAL NON-CURRENT ASSETS

54,379,876

38,993,659

TOTAL ASSETS

62,245,332

48,172,091

5,467,478 4,547,006 1,286,666

4,072,938 4,145,148 1,267,577

11,301,150

9,485,663

45,711 11,314,394 4,218,176

134,157 94,668 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 10,804,681 20,424,879

4,021,933 11,837,224 18,555,703

Total equity attributable to equity holders of the Co-operative

35,365,901

34,414,860

TOTAL EQUITY

35,365,901

34,414,860

TOTAL CURRENT ASSETS NON-CURRENT ASSETS Trade and other receivables Financial assets Property, plant and equipment Deferred tax assets

5 6 17

LIABILITIES CURRENT LIABILITIES Trade and other payables Borrowings Employee benefits

7 8 9

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

9 8 17

EQUITY Issued capital Reserves Retained earnings

10

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THE COMMUNITY CO-OPERATIVE STORE (NURIOOTPA) LIMITED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 JANUARY 2017

Balance at 31 January 2015

Asset Ordinary Realisation Shares Reserve $ $ 3,998,708 10,804,681

Capital Profits Reserve $ 1,032,543

Retained Earnings $ 17,906,602

Total $ 33,742,534

Profit attributable to members of the parent entity

-

-

-

649,101

649,101

Total other comprehensive income for the year

-

-

-

-

-

Transactions with owners in their capacity as owners Shares issued during the year

291,723

-

-

-

291,723

Shares bought back during the year

(268,498)

-

-

-

(268,498)

23,225

-

-

649,101

672,326

Balance at 31 January 2016

4,021,933

10,804,681

1,032,543

18,555,703

34,414,860

Balance at 31 January 2016

Asset Ordinary Realisation Shares Reserve $ $ 4,021,933 10,804,681

Capital Profits Reserve $ 1,032,543

Retained Earnings $ 18,555,703

Total $ 34,414,860

Sub-total

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

-

Transactions with owners in their capacity as owners Shares issued during the year

435,378

-

-

-

435,378

Shares bought back during the year

(320,970)

-

-

-

(320,970)

Sub-total

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 2017

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THE COMMUNITY CO-OPERATIVE STORE (NURIOOTPA) LIMITED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 JANUARY 2017 Note

2017 $

2016 $

67,747,958 (62,770,529) (109,502) 16,250 (465,280) (252,055)

68,304,116 (66,171,518) (392,304) 19,518 (320,879) (393,791)

4,166,842

1,045,142

CASH FLOWS FROM INVESTING ACTIVITIES Payments for property, plant and equipment Borrowing costs capitalised to property, plant and equipment Proceeds from sale of property, plant and equipment Payments for investments

(16,041,691) (296,766) 18,615 (9,690)

(1,469,354) (6,588)

Net cash used by investing activities

(16,329,532)

(1,475,942)

CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from issue and redemption of shares Repayment of borrowings Proceeds from borrowings

114,408 (88,853) 11,657,718

23,225 (167,585) -

Net cash used by financing activities

11,683,273

(144,360)

CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Borrowing costs Interest received Appropriations to members Income tax paid Net cash provided by operating activities

21

Net increase (decrease) in cash and cash equivalents held Cash and cash equivalents at beginning of year Cash and cash equivalents at end of financial year 2

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(479,417) 1,519,452

(575,160) 2,094,612

1,040,035

1,519,452

THE COMMUNITY CO-OPERATIVE STORE (NURIOOTPA) LIMITED STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 31 JANUARY 2017 The financial report includes the consolidated financial statements and notes of The Community Co-Operative Store (Nuriootpa) Ltd and controlled entities (the Co-operative). The Community Co-Operative Store (Nuriootpa) Ltd is a for profit co-operative. NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a)

Basis of preparation The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Co-operatives National Law (South Australia) Act 2013 The financial statement covers The Community Co-operative Store (Nuriootpa) Ltd as an individual entity and The Community Co-operative Store (Nuriootpa) Ltd and controlled entities as the consolidated group. The Community Co-operative Store (Nuriootpa) Ltd is a co-operative, incorporated under the Co-operatives National Law (South Australia) Act 2013 and domiciled in Australia. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless otherwise stated. The financial statements have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.

(b)

Comparative figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. When the Co-operative applies an accounting policy retrospectively, makes a retrospective restatement or reclassifies items in its financial statements, a statement of financial position as at the beginning of the earliest comparative period will be presented.

(c)

Principles of consolidation The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by The Community Co-Operative Store (Nuriootpa) at the end of the reporting period. A controlled entity is any entity over which The Community Co-Operative Store (Nuriootpa) has the power to govern the financial and operating policies so as to obtain benefits from its activities. Control will generally exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are also considered. In preparing the consolidated financial statements, all inter-group balances and transactions between entities in the Co-operative have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those adopted by the parent entity. Subsidiaries Subsidiaries are all entities (including structured entities) over which the parent has control. Control is established when the parent is exposed to, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the relevant activities of the entity.

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THE COMMUNITY CO-OPERATIVE STORE (NURIOOTPA) LIMITED STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 31 JANUARY 2017 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT) (d)

Inventories Inventories are measured at the lower of cost and net realisable value. Overheads are applied on the basis of normal operating capacity. Costs are assigned on the basis of weighted average costs, except for the Foodland division which is based on last cost. Costs of purchased inventory are determined after deducting relevant rebates and discounts.

(e)

Property, plant and equipment Each class of property, plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses. Property Freehold land and buildings are shown at their fair value (being the amount for which an asset could be exchanged between knowledgeable willing parties in an arm's length transaction), based on periodic, but at least triennial, valuations by external independent valuers, less subsequent depreciation for buildings. An independent valuation was carried out in December 2011 by Craig Barlow a certified practising valuer of Knight Frank. Revaluation of land and buildings has been deferred until the completion of the redevelopment project. It is expected that construction will be completed before the end of next year. Increases in the carrying amount arising on revaluation of land and buildings are credited to a revaluation reserve (net of tax) in equity. Decreases that offset previous increases of the of the same asset are charged against this reserve directly in equity; all other decreases are charged to the statement of profit and loss or other comprehensive income. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Plant and equipment Plant and equipment are measured on the cost basis less depreciation and impairment losses. Cost includes expenditure that is directly attributable to installing assets ready for use. Depreciation The depreciable amount of all fixed assets including buildings and capitalised leased assets, but excluding freehold land, is depreciated over the asset's useful life to the Co-operative commencing from the time the asset is held ready for use. Land is not depreciated. The depreciation rates used for each class of depreciable assets are: Class of Fixed Asset Buildings Plant and Equipment Motor Vehicles

Depreciation Rate 2.5% - 4% 5% - 50% 18.75%

The assets' residual values, depreciation methods and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

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THE COMMUNITY CO-OPERATIVE STORE (NURIOOTPA) LIMITED STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 31 JANUARY 2017 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT) (e)

Property, plant and equipment (Cont) Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of profit and loss. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.

(f)

Financial instruments Initial recognition and measurement Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions of the instrument. For financial assets, this is the equivalent to the date that the Co-operative commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted). Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below. Classification and subsequent measurement Financial instruments are subsequently measured at either fair value, amortised cost using the effective interest rate method, or cost. Fair value represents the amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing parties in arm's length transaction. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted. Amortised cost is calculated as: (a)

the amount at which the financial asset or financial liability is measured at initial recognition;

(b)

less principal payments;

(c)

plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognised and the maturity amount calculated using the effective interest method; and

(d)

less any reduction for impairment.

The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in profit or loss. The Co-operative does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of accounting standards specifically applicable to financial instruments. (i)

Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments. Available-for-sale financial assets are included in non-current assets, except for those which are expected to be realised within 12 months after the end of the reporting period. Page 12

THE COMMUNITY CO-OPERATIVE STORE (NURIOOTPA) LIMITED STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 31 JANUARY 2017 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT) (f)

Financial instruments (Cont) (ii)

Financial liabilities Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost. Fees payable on the establishment of loan facilities are recognised as transaction costs of the loan. Borrowings are classified as current liabilities unless the Co-operative has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Fair value Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm's length transactions, reference to similar instruments and option pricing models.

Impairment Objective evidence that a financial asset is impaired includes default by a debtor, evidence that the debtor is likely to enter bankruptcy or adverse economic conditions. At the end of each reporting period, the Co-operative assess whether there is objective evidence that a financial asset has been impaired through the occurrence of a loss event. In the case of available-for-sale financial instruments, a significant or prolonged decline in the value of the instrument is considered to indicate that an impairment has arisen. Where a subsequent event causes the amount of the impairment loss to decrease (e.g. payment received), the reduction in the allowance account (provision for impairment of receivables) is taken through profit and loss. However, any reversal in the value of an impaired available for sale asset is taken through other comprehensive income rather than profit and loss. Impairment losses are recognised through an allowance for loans and receivables in the statement of comprehensive income. Derecognition Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer as any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer or non-cash assets or liabilities assumed, is recognised in profit or loss. When available-for-sale investments are sold, the accumulated fair value adjustments recognised in other comprehensive income are reclassified to profit or loss.

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THE COMMUNITY CO-OPERATIVE STORE (NURIOOTPA) LIMITED STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 31 JANUARY 2017 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT) (g)

Impairment of non-financial assets At the end of each reporting period, the Co-operative assesses whether there is any indication that an asset may be impaired. The assessment will include considering external sources of information and internal sources of information and dividends received from subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profits. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use to the asset's carrying value. Value in use is calculated by discounting the estimated future cash flow of the asset or cash generating unit (CGU) at a pre-tax discount rate reflecting the specific risks in the asset / CGU. Any excess of the asset's carrying value over its recoverable amount is expensed to the statement of comprehensive income. Where it is not possible to estimate the recoverable amount of an individual asset, the Co-operative estimates the recoverable amount of the cash-generating unit to which the asset belongs. Impairment losses recognised in respect of CGU's are allocated first to reduce the carrying amount of goodwill to nil and then to the other assets in the unit in proportion to their carrying amount. Impairment losses are recognised as an expense immediately, unless the relevant asset is property, plant and equipment held at fair value (other than investment property carried at a revalued amount) in which case the impairment loss is treated as a revaluation decrease as described in the accounting policy for property, plant and equipment.

(h)

Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less which are convertible to a known amount of cash and subject to an insignificant risk of change in value, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the statement of financial position.

(i)

Employee benefits Provision is made for the Co-operative's liability for employee benefits arising from services rendered by employees to the end of the reporting period. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the liability, consideration is given to employee wage increases and the probability that the employee may satisfy vesting requirements. Those cash flows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cash flows.

(j)

Trade and other payables Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services received by the Co-operative during the reporting period which remain unpaid. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability.

(k)

Income tax The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income).

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THE COMMUNITY CO-OPERATIVE STORE (NURIOOTPA) LIMITED STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 31 JANUARY 2017 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT) (k)

Income tax (Cont) Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at the end of the reporting period. Current tax liabilities (assets) are therefore measured at the amounts to be paid to (recovered from) the relevant taxation authority. Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses. Current and deferred income tax expense (income) is charged or credited outside profit or loss when the tax relates to items that are recognised outside profit or loss. Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at the end of the reporting year. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future. Current assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.

(l)

Leases Lease payments for operating leases, where substantially all of the risks and benefits remain with the lessor, are charged as expenses on a straight-line basis over the life of the lease term. Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term.

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THE COMMUNITY CO-OPERATIVE STORE (NURIOOTPA) LIMITED STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 31 JANUARY 2017 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT) (m)

Revenue and other income The Co-operative recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Co-operative's activities. Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and volume rebates allowed. Sale of goods Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant risks and rewards of ownership of the goods and the cessation of all involvement in those goods. Interest revenue Interest revenue is recognised using the effective interest rate method, which for floating rate financial assets is the rate inherent in the instrument. Rental income Investment property revenue is recognised on a straight-line basis over a period of the lease term so as to reflect a constant periodic rate of return on the net investment. All revenue is stated net of the amount of goods and services tax (GST).

(n)

Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

(o)

Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of the acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

(p)

Critical accounting estimates and judgements The directors evaluate estimates and judgments incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Co-operative. Key estimates - impairment of plant and equipment The Co-operative assesses impairment at the end of each reporting period by evaluating conditions specific to the Co-operative that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions.

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THE COMMUNITY CO-OPERATIVE STORE (NURIOOTPA) LIMITED STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 31 JANUARY 2017 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT) (p)

Critical accounting estimates and judgements (Cont) Key judgments - provision for impairment of receivables The value of the provision for impairment of receivables is estimated by considering the ageing of receivables, communication with the debtors and prior history. Key estimates - fair value of land and buildings The Co-operative carries its land and buildings at fair value with changes in the fair value recognised in revaluation reserve. Independent valuations are obtained at least triennially and at the end of each reporting period, the directors update their assessment of the fair value of each property, taking into account the most recent valuations and movements in the market. Revaluation of land and buildings has been deferred until the completion of the redevelopment project. It is expected that construction will be completed before the end of next year.

(q)

New Accounting Standards and Interpretations The Co-operative has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The accounting standards that have not been early adopted for the year ended 31 January 2017, but will be applicable to the Co-operative in future reporting periods, are detailed below. Apart from these standards, other accounting standards that will be applicable in future periods have been reviewed, however they have been considered to be insignificant to the Co-operative. At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Co-operative. Management anticipates that all of the relevant pronouncements will be adopted in the Co-operative accounting policies for the first period beginning after the effective date of pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the Co-operative financial statements is provided below. Standard / Interpretation Effective Date AASB 9 Financial Instruments, AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010), AASB 2014-1 Amendments to Australian Accounting Standards (Part E- Financial Instruments), AASB 2014-7 01-Jan-18 Amendments to Australian Accounting Standards arising from AASB 9 (December 2014). AASB 15 'Revenue from Contracts with Customers' 01-Jan-18 AASB 16 'Leases' 01-Jan-19 AASB 2016-1 'Amendments to Australian Accounting Standards - Recognition of 01-Jan-17 Deferred Tax Assets for Unrealised Losses' AASB 2016-2 'Amendments to Australian Accounting Standards - Disclosure Initiative: 01-Jan-17 Amendments to AASB 107' We do not expect these accounting standards will have any material impact on our financial results upon adoption.

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THE COMMUNITY CO-OPERATIVE STORE (NURIOOTPA) LIMITED STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 31 JANUARY 2017 Note

2017 $

2016 $

NOTE 2: CASH AND CASH EQUIVALENTS Cash on hand Cash at bank

6,326 1,033,709

39,209 1,480,243

1,040,035

1,519,452

Cash and cash equivalents

1,040,035

1,519,452

Balance as per statement of cash flows

1,040,035

1,519,452

Reconciliation of cash Cash at the end of the financial year as shown in the statement of cash flows is reconciled to items in the statement of financial position as follows:

The effective interest rate on short-term bank deposits was 1.6% (2016: 1.3%). These deposits have an average maturity of one year.

NOTE 3: TRADE AND OTHER RECEIVABLES CURRENT Trade receivables Provision for impairment

435,045 (15,000)

409,528 (30,000)

420,045

379,528

Prepayments Other receivables

145,046 163,164

116,949 537,734

Total current trade and other receivables

728,255

1,034,211

(a) Collateral held as security The Co-operative does not hold any collateral over any receivables balances. (b) Past due but not impaired Past Due Gross and Amount Impaired $ $