F o S od u st mmAuffs R S y Rout epoh Isl Rtand Li mit e d A n n u al R e p o rt 2 0 1 1 Contents Directors and Executive Team ..................................................................... 2 About Us ...................................................................................................... 4 Annual General Meeting .............................................................................. 5 Chairman’s Review ...................................................................................... 6 Retail Review ................................................................................................ 14 Food for Thought ......................................................................................... 18 Foodstuffs (South Island) Community Trust ................................................ 19 National Progress Report ............................................................................ 20 Executive Team ............................................................................................ 24 Auditors’ Report ........................................................................................... 26 Foodstuffs South Island Limited Group Financial Statements ................................................................................... 27 The Network ................................................................................................. 32 011 2 rt o p Re al u n n A d e mit Li d n a sl n I ut o S s uff st d o o F 1 ie Robin BrownNew World RangioraChairman Kevin RyanNew World AlexandraDeputy Chairman Russell McKenzNew World St Martins Stephen BoockPAK’nSAVE Northlands s, nt e e c m Servi cure bers’ & Pro m s e n M o Steve Andersonhief Executive Officer Alan Malcolmsoneneral Manager Retail Operations Kim DeGarnhameneral Manager Administration & ompany Secretary John Mullinseneral Manager Wholesale Operati C G GC G 2 2011 line up d l a n John NilesFour Square Owaka Roy BridgmanNew World Rolleston Chris McDoPAK’nSAVE Dunedin Marcel GrayPAK’nSAVE Wainoni 011 nt 2 Phil WrightGeneral Manager Information Technology Malcolm WrattGeneral Manager Finance Roger DavidsonGeneral Manager Property & Retail Developme Philip LemonGeneral Manager Trents Wholesale Limited Annual Report uffs Soutn Island Limited st d o o F 3 About Us Foodstuffs South Island Limited is Currently, Foodstuffs South Island or members who trade independently a South Island, 100% New Zealand Limited has a membership of 686 of these groups in the convenience owned co-operative, formed in banner group, independent grocer or grocery or foodservice industries. 1988 from the merger of two long- foodservice members. Over recent years, the foodservice established grocery co-operatives These members recognise that industry and the number of Foodstuffs (Christchurch) Limited and shareholding in the co-operative customers/members involved in that Foodstuffs (Otago/Southland) Limited. confers on its members the right to industry have grown dramatically. Foodstuffs South Island Limited, whose enjoy the benefits of the co-operative These people trade with our wholly- membership consists of independent and the shares are not held as a form owned subsidiary, Trents Wholesale grocers who own and operate their of investment in equity shares. As Limited. This subsidiary was own businesses and work together such, our members are caretakers of specifically created to service this for their mutual benefit and the benefit the co-operative and its assets. They sector of the South Island economy of the co-operative, trades only in the have a responsibility to hand them and now has a strong South Island- South Island of New Zealand. on to enable future generations of wide customer base. Trents trade via It has two sister co-operatives, grocers to trade. seven Cash’nCarry sites throughout Foodstuffs (Auckland) Limited and the South Island or through one of The co-operative is principally funded Foodstuffs (Wellington) Co-operative our Trents distribution partners. using Retained Patronage Shares Society Limited, which trade in the (previously five-year Redeemable Many of our grocery members lease northern and southern sectors, Preference Shares). These shares are their supermarket or shop premises respectively, of the North Island of issued to our members in direct ratio from the Company which, in turn, New Zealand. to their last year’s trading with the co- is the registered proprietor or holds The three co-operatives are operative and paid for by deferring the head lease of the property independent of each other and the physical payout of the year-end concerned. have their own boards and rebate of profits until each tranche of The Company offers a substantial executive structures. shares is redeemed. degree of assistance to its members The three co-operatives jointly own Our membership generally falls in as well as its core activity as a Foodstuffs (New Zealand) Limited, two categories; independent grocers wholesale merchant. These ancillary a small non-trading entity, which trading as members of one of our activities include the marketing of represents the three co-operatives’ banner groups: their business and products, industry- interests on issues of national or related training and education, PAK’nSAVE food warehouses grocery specific importance. They food safety programmes, business have also jointly entered into a New World supermarkets services, merchant guarantee funding purchasing group with an Australian arrangements with major banks, and, Four Square supermarkets grocery wholesaler to achieve at-call deposit facilities for trading On the Spot convenience stores economies of scale for the purchase members, former members and of housebranded product. Henry’s Beer, Wine and Spirits related parties. 4 Annual General Meeting The 23rd Annual General Meeting of Shareholders of Foodstuffs South Island Limited will be held on Thursday, 21 July 2011 at the registered office of the Company, 167 Main North Road, Christchurch at 5.00pm. ordinary Business 1. To receive, consider and adopt the Directors’ Report, Group Income Statements, Statements of Comprehensive Income, Statements of Changes in Shareholders’ Equity, Balance Sheets and Audit Report for the year ended 28 February 2011. 2. To receive the results of the postal ballot conducted to elect two directors. 3. To fix the remuneration of directors for the ensuing year. 4. To authorise the Board of Directors to appoint an Auditor and fix the remuneration of the Auditors for the year to 28 February 2012. A tender for Auditor is being undertaken for the 2012 year. 5. To transact any other business whether by ordinary or special resolution that may be properly transacted at the Annual General Meeting. ‘A’ and ‘D’ Shareholders have the right and are entitled to attend and vote at the meeting. These members may appoint a proxy to attend and vote on their behalf. A form of proxy may be obtained from the Secretary. The completed proxy form must be deposited at the registered office of the Company not later than 48 hours before the time of the meeting. A proxy holder need not necessarily be an ‘A’ or ‘D’ Shareholder of the Company. Dated this 14th day of June 2011. By order of the board K N DeGarnham Company Secretary 011 2 rt o p Re al u n n A d e mit Li d n a sl n I ut o S s uff st d o o F 5 Chairman’s Review On behalf of the Board of Directors improve the customers’ overall of Foodstuffs South Island Ltd, I shopping experience, present to you the 23rd Annual Report • dealing with changes in tax detailing our activities, highlights, depreciation rules and the challenges and financial results consequences thereof, achieved for the year ended 28 • realising the benefits of the February 2011. past investments in information technology and investing in further During the reported period the after- retail technology initiatives, effects of the recession were taking its • refurbishment and expansions of toll on all businesses and uncertainty several retail properties, continued to plague the New Zealand • investment in the development of economy. The lacklustre economic logistics infrastructure, and growth during the latter half of the • streamlining SAP procurement year was further compounded by the efficiencies. Canterbury earthquakes, rise in fuel prices and increase in GST which The Board would like to congratulate placed an added burden on the the Crisis Management Team (CMT) already fragile New Zealand economy. and Foodstuffs South Island staff Businesses had to re-evaluate their for the professional manner in which situation to incorporate the effects of they conducted themselves after the the disaster. The cost of the two major September 2010 and February 2011 earthquakes will ensure that earthquakes. The Team’s methodical financial restraint remains the norm and solid approach was vital for the as New Zealand slowly recovers from Co-operative in order to navigate the the recession. Company through these turbulent times. In addition, the Board also recognises The hospitality and food service the trying times our Christchurch industry was particularly hard hit by Members went through after each the recession which was even further earthquake and can only applaud our exacerbated by the Christchurch Members in getting their stores fully earthquakes forcing numerous functional in such a short period. businesses to close. Coming out of the recession and the aftermath of the The impact of the earthquakes on earthquakes, the Co-operative strived Foodstuffs South Island was largely to place itself in the best possible mitigated due to a comprehensive position to capitalise on future insurance programme. This meant that opportunities available. Consequently, despite the damage the Co-operative in the year under review members and its Members suffered during the of the Co-operative devoted their September and February earthquakes energies, amongst other things, to; there was no significant financial impact, as insurance fully covered all • ensuring the fundamental business costs incurred. model and company strategy are still sound, The Co-operative has once again • further investigation to improve the delivered a strong financial result visibility on margin management, for the 2010/11 financial year. n • managing the earthquake insurance Revenues increased despite w o n process and ensuing costs, the disruption caused Br m a • training within banner groups to by the Christchurch bin hair Ro C 6 8