annual 2020 report

www.norco.com.au
 CORPORATE
DIRECTORY
In this special year in which we collectively celebrate Norco’s 125th
anniversary, we would like to share with you some congratulatory
messages the Co-operative has received throughout this report.

REGISTERED OFFICE
Norco Co-operative Limited

125
ARBN 009 717 417 / ABN 17 009 717 417
‘Windmill Grove’, 107 Wilson Street
South Lismore NSW 2480
Telephone: 02 6627 8000 Facsimile: 02 6627 8099
Web Site: www.norco.com.au

Congratulations
AUDITORS
Ernst & Young Chartered Accountants
Level 51, 111 Eagle Street BRISBANE QLD 4000

FINANCIERS/BANKERS
Rabobank Australia
Level 14, Waterfront Place, 1 Eagle Street
BRISBANE QLD 4000
St George Bank
Level 12, Waterfront Place, 1 Eagle Street
BRISBANE QLD 4000

SOLICITORS
Thomson Geer Lawyers BRISBANE QLD 4000
Addisons Lawyers SYDNEY NSW 2000
S+P Walters Solicitors LISMORE NSW 2480
Piper Alderman Lawyers SYDNEY NSW 2000

YEARS thank you

Thank you to our Co-operative Members,
Employees, Norco Milk Distributors
and Customers who feature in this
Annual Report photography.
Your time and participation
is greatly appreciated.
 PRIME MINISTER

MESSAGE FROM THE PRIME MINISTER

125TH ANNIVERSARY OF NORCO CO-OPERATIVE

Congratulations to Norco for a tremendous 125 years of history. The Norco story is about
giving back – to your members and employees, to the community, and to Australia. Your
success is part of our story, and we’re grateful for what you do.

The dairy farmers of northern New South Wales and south-eastern Queensland have worked
their herds for generations. You produce a core staple, as well as some of life’s simple
pleasures.

The wonderful quality of your milk, cream, cheese and ice cream is part of our Australian fare.

In the face of the challenges of 2020, Norco has been true to the resilient spirit of its community.
By committing to business as usual, you’ve provided jobs and income to Australians at a time
when they need them most. I know you’ll keep delivering on that promise, as you have
throughout your long history.

When you reassure your members and your customers that the work continues – on the land,
in the dairies and in the shops – you give us all confidence in the road ahead. Your example is
why we can lift our heads as Australians and know that the future is bright.

Good on you, Norco, and thanks very much.

Happy 125th Anniversary!

The Hon Scott Morrison MP

Prime Minister of Australia

August 2020

1
 CONTENTS
3 Corporate Profile 6 Facts At A Glance 8 Chairman’s Report
12 Chief Executive Officer’s Report 19 Directors’ Report
27 Auditor’s Independence Declaration 30 Corporate Governance Statement
37 Financial Statements 59 Independent Auditor’s Report
64 Corporate And Branch Directories

NORCO’S PURPOSE
Norco’s purpose is to build wealth, security and sustainability for our
shareholders, business partners and employees. We achieve this by:
- maintaining a diverse and strong range of businesses;
- being a competitive regional purchaser and supplier of milk; and
- creating integrated solutions for our partners.

NORCO’S VALUES
Norco applies a common set of values to everything it does.
These values include:
RESPECT
- We respect our shareholders, employees, business partners and
customers - We respect a diversity of views and opinions - We
encourage and support people to grow as individuals and contributors
to our organisation - We respect our heritage and legacy - We respect
our natural environment.
RESPONSIBLE
- We are responsible for preserving the co-operative principles - We are
responsible for our actions and our performance - We are responsible
for providing a safe work environment.
EFFICIENT
- We seek to add value in everything we do.
INNOVATION
- We seek to consistently improve through innovation.
COMMUNITY
- We seek active involvement in our communities.

2
CORPORATE PROFILE
This time last year we reported that we were hoping for a more settled outlook for our dairy farming community
and for the Co-operative. Well, 2019/20 has not quite followed the script as all Australians would know.
Our Members / Milk Suppliers continued to be severely affected by the ongoing drought conditions during the
first half of the financial year, and some continue to battle the effects of the drought even now. These conditions
then fuelled a devastating bush fire season which created some very anxious and worrying times for everyone in
the path of these fierce fires. In many areas, particularly coastal regions, the drought was broken and fire danger
extinguished in early 2020 with significant rain events which resulted in some minor to moderate flooding in the
Norco supply area.
Australians were then further tested by mid to late March 2020 with the very real threat of the global pandemic
COVID-19 which has profoundly changed the way we now live and carry on business activities.
How has Norco responded to these challenges?
Norco continued to drive milk pricing for our Members / Milk Suppliers in the 2019/20 financial year with the
average base milk price paid being 70.63 cents per litre, an increase of more than 10 cents per litre over the
2018/19 financial year. This significant increase was in recognition of the continuing difficult climatic conditions
and high dairy input costs for fodder and grain.
The onset of the bush fires thankfully did not impact too many Norco farms directly but there were consequences
for our farmers and our processing facilities. Widespread road closures meant that there were significant
challenges in transporting milk from farm to factory and in many cases it was impossible to move the milk.
Norco ensured that all our dairy farmers were paid at full rates for all milk produced, even if the milk was not able
to be transported off farm.
The widespread threat posed by the bush fires ensured that the Leadership Team, led by Chief Executive Officer,
Michael Hampson was prepared and could enact business continuity plans and contingencies in the event of
disruption to business, whether that was at a Foods’ factory, Norco Stockfeed Mill or a Norco Rural Store. This
close and detailed look at the business, including reviewing supply chain interdependencies from the farm to
consumers stood the business in good stead for when COVID-19 took hold and further disrupted business (not
that we necessarily envisaged a pandemic being the next issue to face the business at that time). However, the
business resilience work that was undertaken that allowed the Co-operative to adapt quickly to the changing
environment in both the Foods’ and Rural sectors, as witnessed by the initial panicked spending and changed
consumer trends, allowed Norco to not only survive the challenge of COVID-19 but to take opportunities to
service our markets and customers in new and innovative ways that created some significant wins for the Co-
operative. This, together with a strong desire to continue to drive business performance by ensuring internal
projects that create operating efficiencies and reduce costs were realised, has resulted in strong business
performance for the 2019/20 financial year.
We have pleasure in presenting to you the reports and financial statements for the Co-operative for the 2019/20
financial year, a year that has tested us all but has also provided us with the opportunity to improve our resilience
and point of difference as a Co-operative.

3
 Acknowledging Greg McNamara
After serving 24 years as a Director, Greg McNamara has recently announced his resignation from the Board of
Directors effective 1 October 2020. Greg was elected to the Board of Directors on 4 October 1996 as a Supplier
Director from the Central Region.
Greg was then elected Chairman of the Co-operative on 15 November 1999 and served an initial term in that
position until 27 August 2002. After a series of special general meetings in February 2003 that resulted in major
changes to the makeup of the Board, Greg was again elected Chairman on 12 February 2003, a position he has
held continuously until 30 July this year.
During his time as Chairman, Greg has presided over 18 annual general meetings, three special general meetings
and many, many Board meetings. These are impressive numbers but they only tell a very small part of Greg’s
story as a Member, Milk Supplier, Director and Chairman of what is now Australia’s most significant dairy co-
operative and one of the largest co-operatives in Australia.
It is not possible to even start to succinctly articulate Greg’s achievements as a Director and Chairman over these
24 years of total dedication to the Co-operative. What should be noted is that Greg’s passion and commitment
to Norco and the northern dairy industry is second to none. He has worked tirelessly over these years to ensure
that dairy farmers in northern New South Wales and south-east Queensland have a home for their milk and that
their processor has a significant point of difference. It is not an exaggeration to state that without the vision Greg
always had for Norco and the personal sacrifices he made, Norco may not have survived the period leading up,
and subsequent to deregulation of the dairy industry.
Greg’s family has played a pivotal role in him being able to devote much of his time to Norco. Their support,
particularly from partner Sue and son Todd, has enabled Greg to spend significant amounts of time and energy
in the Norco business knowing the family dairy farm was in good hands.
Greg’s legacy as a Director and Chairman of Norco is that the Co-operative is in a much better position today
than it was when he first came onto the Board in 1996. He has acted with the greatest care and diligence in
undertaking his role as a custodian of the Co-operative’s substantial assets to ensure that Norco has a long and
successful future.
There is not much more that can be said to Greg other than a collective and heartfelt “THANK YOU” from all
members, milk suppliers, staff, business partners, customers and consumers.

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from all members, milk suppliers, staff,
business partners, customers and
consumers.

5
 FACTS AT
A GLANCE
$
683m
2019/20 TOTAL REVENUE
2018/19 - $603m 2017/18 - $552m

$
5.4m
TOTAL NET PROFIT
$
4.4m
TOTAL NET PROFIT
(before Significant Items) (after Significant Items)

2018/19 - $1.2m 2017/18 - $1.9m 2018/19 - $0.0m 2017/18 - $0.7m

860
STAFF EMPLOYED
1,056
AVERAGE MILK
as at 30 June 2020
PRODUCTION PER
Norco Foods 613 MEMBER FARM
Norco Rural 181 000’s Litres
Norco Agribusiness 42
Corporate 24 2018/19 - 1,003 2017/18 - 1,104

includes permanent, part-time

and casual staff

203 214
TOTAL MEMBERS’
MEMBER FARMS MILK INTAKE
Millions Litres

2018/19 - 194 2017/18 - 201 2018/19 - 195 2017/18 - 220

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total member returns
TOTAL MEMBER SUPPLY
total ave
financial ave base step ave total dividend suppliers’ member
year milk price ups milk pay patronage returns

2019/20 70.63 - 70.63 0.21* 0.76 71.60

2018/19 60.14 - 60.14 0.19 0.76 61.09
2017/18 57.07 - 57.07 0.27 0.64 57.98
2016/17 57.29 0.13 57.42 0.25 0.51 58.18
2015/16 57.30 - 57.30 0.24 0.52 58.06

NORTHERN REGION
CONTRACT PRICE
total ave
financial ave base step ave total dividend suppliers’ member
year milk price ups milk pay patronage returns

2019/20 70.98 - 70.98 0.25* 0.82 72.05

2018/19 60.30 - 60.30 0.20 0.75 61.25
2017/18 57.29 - 57.29 0.28 0.64 58.21
2016/17 57.40 0.13 57.53 0.26 0.51 58.30
2015/16 57.28 - 57.28 0.24 0.55 58.07

SOUTHERN REGION
CONTRACT PRICE
total ave
financial ave base step ave total dividend suppliers’ member
year milk price ups milk pay patronage returns

2019/20 69.24 - 69.24 0.08* 0.55 69.87

2018/19 58.74 - 58.74 0.13 0.89 59.76
2017/18 55.29 - 55.29 0.16 0.60 56.05
2016/17 56.34 0.13 56.47 0.17 0.47 57.11
2015/16 57.52 - 57.52 0.16 0.35 58.03

*Dividend proposed for consideration at 2020 Annual General Meeting

7
 CHAIRMAN’S
REPORT
I report on behalf of the Board of Directors and as the recently
elected Chairman of the Co-operative. After taking a leave of
absence from the Board for health reasons, Greg McNamara
recently announced that he was standing down as Chairman and
would be retiring from the Board of Directors before ultimately
deciding to resign from the Board, effective 1 October 2020.
Having served on the Board with Greg for the last eight years, I
would like to acknowledge Greg’s dedication and commitment
to Norco during his time on the Board and we extend our best
wishes to Greg for the future. In conjunction with my election
as Chairman, Heath Hoffman has subsequently been elected to
fill the role of Deputy Chairman and I congratulate Heath on his
appointment.
As reported last year, Michael Hampson was recruited into the
Co-operative on 4 March 2019 as Chief Operating Officer. After
a period of settling in and getting to know the business, Michael
quickly demonstrated to the Board that he had the necessary
skills, knowledge and acumen to lead the business and was
elevated to the position of Chief Executive Officer on 3 October
2019. Prior to Michael’s appointment as Chief Executive Officer,
Greg McNamara had been performing the role on an interim
basis.
The year in review has been dominated by natural disasters
including severe drought, bush fires that shocked the nation
and even the threat of floods in part of our supply area.
However, we have also been witness to the onset of the
COVID-19 pandemic that continues to have far-reaching social
and economic effects on all Australians and the markets in
which Norco operates. We at Norco are therefore very fortunate
that as an essential food manufacturer, rural reseller and stock
feed manufacturer, the Co-operative has not only been able to
sustain our Members’ / Milk Suppliers’ returns and our business
operations, but we have in fact improved our Members’ returns
and the performance of the business. In these uncertain and
challenging times, being a 100% Australian farmer owned dairy
co-operative is a proposition that certainly resonates with our
customers and consumers alike and we appreciate the growing
support our brand continues to have in the market place we
service as it continues to outperform competitors’ brands.

8
9
 Business overview 2019/20
It is very pleasing to report to you that the Co-operative has
achieved a 13.2 percent increase in total revenue to reach
$683 million with a net profit (before significant items) of $5.4
million which compares very favourably with the equivalent
2018/19 result of a net profit (before significant items) of $1.2
million. This result was achieved after increasing the base farm
gate milk price paid to our Members / Milk Suppliers during the
financial year by $17.1 million in an effort to address the severe
increases in production costs experienced on farm. During the
year the Co-operative’s debt position continued to improve
with a reduction of $8 million resulting in a comfortable level
of headroom over banking covenants.
The financial performance for the 2019/20 year has been very
pleasing given the challenging environment experienced as
a consequence of continued drought and now COVID-19.
A major contributor to the improvement in the financial
results has been the continued support from our customers
for the Norco brand. In the aftermath of the devastating
fires experienced in early 2020, we saw an example of the
importance of the strong relationship Norco has with our
customers and the importance of the Norco brand when the
Coles Chief Executive Officer, Steven Cain, whilst visiting the
Mid North Coast to survey the impact of the fires, extended an
invitation to meet with Michael Hampson and myself at one
of the Coles stores. The visit provided a unique opportunity for
us to walk around the supermarket with the Coles executive
discussing the dairy cabinet, consumer support of the 100%
Australian farmer owned Norco brand and opportunities
to expand the ranging of Norco products within the Coles’
network. The store visit was followed by a visit to one of our
Member’s farms, which further reinforced the values of the
Co-operative and the unique offering of the Norco brand.
During the year, the brand has continued to gain the support
of the major retailers with improved ranging in Coles,
Woolworths and Aldi, in addition to a large number of new
independent retailers and route trade customers responding
to the growing consumer support for the 100% Australian
farmer owned proposition.
The Norco Rural / Agri business has continued its strong
performance again in 2019/20 through further sales growth in
the rural stores network and record volumes achieved in the
feed mills and grain trade divisions.
10
A significant contributor to the improved financial result has
been the continued focus on the delivery of the strategic
plan set by the Board. Actions from the strategic plan such as
achieving operational efficiencies through the implementation
of the continuous improvement program, growing the
geographical reach and profile of the brand, moving milk into
high returning categories, creating value in everything we do,
improving safety and implementing positive change across
the business, have all played a part in achieving the improved
result.
A Year of Change
During the course of the year, the Board of Directors and
the Senior Executive Team have remained focussed on
progressing the strategic plan and implementing change
within the business.
Change has become a new and consistent theme within the
business and we have seen change occur in many forms
under the leadership of Michael Hampson, including the
recruitment of a number of new senior members of staff with
new skill sets who have been welcomed into the business
and the implementation of several new initiatives and ways of
thinking about how we do things and how we create value in
everything we do such as the activity projects in Foods.
A major catalyst for change has been how we cope with the
changing working environment and a significantly changing
market place as a result of the COVID-19 pandemic. As the
pandemic unfolded, the development and implementation
of a comprehensive crisis management plan became the
major focus of the Board, the Senior Executive Team and the
Leadership Team. Specialist consultants from Ernest & Young
were engaged to assist with the development of the crisis
management strategy, which centred on identifying areas of
risk and mitigation strategies to ensure the impacts on the
business operations were kept to a minimum whilst always
ensuring the safety of our employees was maintained as a
priority.
One of the major mitigation measures employed to ensure
that the continuity of business was maintained during the
pandemic has been that large numbers of our staff were
required to work remotely from their homes by connecting
electronically to Norco’s IT system. Social distancing and
hygiene requirements have meant change had to occur
at all sites with new work practices being developed
and implemented. The way in which the Board and the
management team communicate also required a major
change. As the pandemic unfolded, the Board moved from
holding monthly face-to-face meetings to meeting bi-weekly
electronically with more regular meetings with the senior
executive occurring on a weekly basis.
Safety continues to be of paramount importance to both the
Board and the management team, the COVID-19 pandemic
has required a heightened level of awareness and a renewed
focus on safety within the business.
Members
Norco’s Members / Milk Suppliers continued to endure some
of the harshest weather conditions on record, in particular
during the first half of 2019/20. This was on top of the ever
increasing costs of doing business on farm and the highly
inflated grain and fodder prices which we hope will ease
somewhat with the new season crop to be harvested in the
near future. Unfortunately the northern dairy industry has lost
many good dairy farmers as a result of the prolonged period
of drought including some who supplied the Co-operative.
On behalf of the Board, I wish to thank all our Members / Milk
Suppliers, both current and now retired for their extraordinary
efforts in supplying milk under such difficult conditions.
Norco’s milk pricing in the 2019/20 financial year did however
allow Norco to attract and recruit many new Member farms
in South East Queensland and Northern New South Wales
which have helped to replace the volume lost from farm
retirements and to ensure that Norco is able to continue to
service our increasing customer base with fresh milk. Sales of
Norco branded milk continues to grow significantly as does
the reach of our brand and we have welcomed 32 new farms
to the Co-operative. From an RD&E perspective we are excited
that Tocal Agricultural College transferred their milk supply to
Norco during the year and this now means the Norco milk
supply area is bookended by two very prestigious institutions
supplying milk to the Co-operative, being the University of
QLD Gatton Campus and Tocal Agricultural College. We look
forward to continuing to strengthen our partnerships with
these two institutions for the benefit of our Members / Milk
Suppliers and the broader industry.
The Co-operative has continued to receive outstanding
support from Members with 100 percent of Member farms
signing the new code compliant Milk Supply Agreements as
a result of the introduction of the Dairy Industry Mandatory
Code with the majority of Members electing to enter into a
new contract term or increase the length of their previous
contract.
Director elections
Directors Elke Watson (Northern Region) and Greg Billing
(Southern Region) completed their respective three year
terms as supplier Directors in 2019. Member nominations
were received for both regions and a ballot was conducted
resulting in Matthew Trace (Northern Region) and Heath Cook
(Southern Region) being elected to the Board. I would like
to take this opportunity to thank both Elke and Greg for the
contribution they made during their time as Directors.
On behalf of the Board of Directors, I would like to thank
everyone associated with the Co-operative for your collective
strength, resilience and support in what has been an
extraordinary year for many reasons as outlined in my report.
Our Members / Milk Suppliers, senior executives, management
and staff, business partners, customers and consumers have
all played very important roles in ensuring that Norco has not
only continued to grow but additionally, a very strong platform
has been established during the year for the future ahead. I
personally would like to thank the Board and Management
Team for their contributions and support throughout the year
and I look forward to the 2020/21 year with enthusiasm as
Chairman of “Our Norco”.
MICHAEL JEFFERY
Chairman
Board of Directors
11
 CHIEF EXECUTIVE
OFFICER’S
REPORT
I feel quite privileged to present my first report to Members as
Chief Executive Officer of Norco Co-operative Limited, in our
125th year. Norco has a long history that we should remain
proud of, supporting farmers across a significant geographical
footprint and holding an important role in the industry as
Australia’s largest dairy farmer owned co-operative.
The events that occurred in the 2019/20 financial year provided
us all with many challenges. Together, we successfully fought off
the crippling drought and the widespread fires in many of our
dairy farming regions. We then welcomed the rains that had been
scarce from our country for so long, only to see these rains turn
into floods. As we pulled through the floods, COVID-19 came
very quickly into our lives. Our country’s leaders put in place
measures to control the spread of the virus in our communities,
however our markets then became disrupted.
2019/20 has been a year like no other. However, there have
been some quite significant wins that our Co-operative has
delivered, which attests to the activity management program
that was put in place across the business in May 2019. Through
the help and support of our customers and consumers, made
possible through the relationships held and the messaging of
our brand, we were able to increase the base farm gate milk
price we paid to our Members during the financial year by $17.1
million. In addition to this, we have increased the operating
profit before significant items from $1.2 million to $5.4 million,
an increase of $4.2 million.
In this challenging year, our change process and realignment
under a focused activity management program, has seen
the Norco management team increase the value created for
Members by $21.3 million, a record year on year increase in
Member value.
Operating Result
For the 2019/20 financial year, we have recorded an operating
profit before significant items of $5.4 million, being an increase
of $4.2 million over last year. What is pleasing to see in this
result, is that each of the business units of Norco improved
their financial performance over the last financial year, with

12
13
 the combined Dairy business improving their contribution by
over 100 percent.
A special mention needs to be made to our team members
within our Agri business, whom delivered record volumes of
formulated feeds, hay and grain to a wide range of customers,
including many of our Members during the drought. The
team work that was displayed and the willingness to assist our
customers and the Norco business was excellent, all during an
incredibly stressful time for all participants in the supply chain.
Brand Performance
The Norco brand accounted for $154.7 million in milk sales
during the 2019/20 year, representing an overall growth rate
of 15.9 percent. This is a pleasing result, as it enabled Norco to
support Members through the drought and also provided an
excellent outlet for our Members’ milk.
Within the retail channel, the Norco brand enjoyed value
growth of 39.3 percent, the highest of all major brands, where
the total milk category only grew by 10.4 percent, due to
increased retail pricing. Our volume growth was 28.4 percent
within a total milk category that grew by only 1 percent -
Norco’s growth represented circa 75 percent of the national
growth in retail milk sales – an exceptional result considering
we are only ranged in NSW and QLD, and not all stores in
these states.
Consumers are buying into the Norco 100% Farmer Owned
proposition, and the results are showing us this. Our retail
partners are assisting with providing us further ranging
opportunities to enable us to reach a wider group of
consumers, and we look towards the future confident that our
unique selling point will hold us in good stead.
Sales Performance
2019/20 saw our total sales exceed $683 million, representing
growth of 13.3 percent, with all of our business segments
delivering growth on the prior year.
The stock feed and grain trading business, fuelled by
significant drought demand and increased commodity prices,
grew by $34.4 million or 32.9 percent over last year. This
increased level of sales is a credit to our teams in this area of
our business, as volume records were regularly set and then
broken as the growth tested the capacity of our plant, process
and, at times, our people.
14
Notwithstanding the market disruption that was caused by
the COVID-19 restrictions, our branded milk business grew by
$21.1 million, reflecting the additional volumes we have sold
to consumers that prefer purchasing a milk brand owned by
famers, and the additional value we were able to take from the
market as we increased prices to support Members through
the drought.
Norco, as recognised by other industry participants, took a
leading position with regard to the value of dairy products
in the market place, and the value of milk at the farm gate.
This has created value in the market that we have been able
to share with our Members via improved milk prices, and a
broader benefit to the industry as a whole.
Our ice cream business sales grew by $14.7 million, or 13.6
percent, as more customers gained an appreciation for the
higher end quality products in Norco’s portfolio of capabilities.
Our services are coming under significant demand in the ice
cream category, the model of combining quality products
with an organisation that is easy to deal with, resonates well
with our contract manufacturing customer base.
Milk Supply
Due to the harsh drought that we continued to experience
during the year, we acknowledge both the significant financial
and non-financial pressures that our Members endured to
supply us milk during the last year.
Norco collected 214.4 million litres of milk from our Members,
an increase of 19.9 million litres from the prior financial year. On
a like for like farms basis, our total supply for the year was down
1.1 percent, with the largest reductions from the South East
Queensland, Taree/Hunter and Kempsey collection regions.
Norco welcomed 32 new farms into the membership of
our Co-operative as we secured our milk supply for our
growing branded business. This recruitment ensured that
we maintained supply of high quality fresh milk to our broad
customer base across retail, route and industrial channels.
Across our milk pool, our average farm gate milk price increased
to 70.63 cents per litre in 2019/20, inclusive of retail levies. This
was an improvement of over 10 cents per litre over 2018/19,
which delivered critical cash flow to members to assist with
the ever increasing demands of fodder procurement during
the drought.
Debt Performance This would not have been possible without the dedication and
Over the course of the financial year, Norco’s net debt commitment of the management team and all 860 members
reduced by $8.0 million to $28.9 million, whilst still investing of the wider team at Norco. I would like to acknowledge their
$9.2 million in capital improvement projects for the year and significant contribution in making such an improvement to
increasing the milk price by $17.1 million. the financial outcomes and collaboration across the business,
they have done an exceptional job.
Norco is well in compliance with the covenants of our bankers,
Rabobank, and recently renewed our funding facilities, which Lastly, I would like to share my appreciation of the support
incorporated an increase in our facilities to provide us flexibility that the Board has provided me and I am looking forward
to make investments where we see strong value to be created to the year ahead under the leadership of the Chair, Michael
for the Co-operative and our Members. Jeffery. Being able to work with this Board that is very invested
in improving the business and outcomes for our Members is
Safety
motivating, and provides the management team with the
At Norco, we have an absolute commitment to improve the
necessary support to continue the growth and change in our
work health and safety outcomes of our people.
business.
Norco commenced the IPaM project at our Labrador
facility and the P2 program in NSW, which are both State
Government assisted behavioural based safety improvement
programs. These programs will assist Norco and our people
in the delivering of safe working practices, and importantly,
highlight and remove at risk behaviour that may occur within MICHAEL HAMPSON
the workplace.
Chief Executive Officer
These programs, whilst in their infancy, are being well supported
and resourced by the business, and well received by our team
members. Our safety journey is an important one, and that is
top of mind for all managers within the Leadership Team.
Norco has also invested heavily in Chain of Responsibility
leadership, creating a new department and engaging experts
to help us ensure we are operating our logistics operations
within a best practice framework for the safety of our people
and the wider community. We expect that these initiatives
will roll out within the next financial year, including the
implementation of new technologies to improve safety of the
transport fleet at Norco.
Acknowledgement
2019/20 has been a year of significant change. We have made
a number of structural realignments within the business to
improve the communication, collaboration and cohesion
within the business. These changes have shown to be quite
effective and have driven the significantly improved financial
performance of the Co-operative and the farm gate milk
payout to a new record level.

15
 It is an honour to congratulate Norco Co-operative Limited on its 125th
anniversary of continuous operations in Australia this year. This is a fantastic and rare achievement
for which everyone associated with Norco, past and present, should be proud. Norco is a recognised
Australian owned and run dairy business supporting Aussie farmers throughout northern New South
Wales and south-east Queensland. Its dairy exports overseas have grown from strength to strength.
As Minister for Trade, Tourism and Investment, I am proud to see Aussie businesses such as Norco
develop such strong trading relationships around the world, growing and promoting Australia’s
exports of premium agricultural goods and introducing consumers to new and different Australian
dairy products. Through connecting Aussie milk and ice-cream producers to global consumers,
Norco has demonstrated its enduring resilience despite the significant challenges posed by the
COVID-19 pandemic and tough ongoing seasonal conditions.

Contribution from Senator the Hon Simon Birmingham – Minister for Trade, Tourism and
Investment, and Deputy Leader of the Government in the Senate

I congratulate Norco on their proud 125 years as a prominent part of the

Australian Dairy industry.
Norco has strived to and become a major and respected player in the Australian dairy industry.
Despite the challenges 125 years bring through droughts, floods and fires, Norco has always remained
committed to its founding values - delivering for our local communities and farmers.

Contribution from the Hon Melinda Pavey MP – State Minister for Water, Property and Housing

privilege Well done to

It is a

Norco on meeting the significant milestone

to offer my heartfelt congratulations
of 125 years of continuous operations.
to Norco Co-operative for its growth
and great success over 125 years: to Norco is so vital to the Australian dairy
its farmer owners and shareholders industry, particularly across Northern New
and it’s loyal, hardworking staff across South Wales and South Eastern Queensland,
two states. and its brands have made an enormous
contribution to driving the strong reputation
As a regional co-operative it has
that the Australian dairy industry is world-
grown from a small local organization
renowned.
to one recognized across Australia.
As Australia’s largest remaining dairy co-
This has been achieved despite
operative, Norco has demonstrated the
major changes in the dairy industry,
power of what can be done when dairy
deregulation of the national market
farmers partner together to create a better
milk industry and a contracting dairy
future for their families.
farmer base across Australia.
Contribution from Dr David Nation –
May Norco continue to grow and
Managing Director of Dairy Australia
prosper for many years to come.

Contribution from Mr Alan Hoskins –

past Norco General Manager

16
 history, from its
It is often written that Norco’s

very humble beginnings in 1895, is

proud
the history of the North Coast region
of NSW. With the early settlers of this
Norco has a region coming together to form a
place in Northern NSW, as does the Co-operative which was to become a
Westpac Rescue Helicopter. significant influence in the Australian
Our first Northern service mission was dairy industry, and that also saw the
in December 1982 and in March 2020 introduction of new and improved
we marked 10,000 missions on the farming systems. This led to major
North Coast. increases in agricultural productivity in
Since 1985, Norco has been a part this region.
of each mission, with sponsorship I acknowledge all those who believed
support and other initiatives. in, and contributed to Norco and its
Norco’s support has been integral to very strong and proud history of 125
changing thousands of lives and I’d years in this region.
like to thank and congratulate Norco
on this milestone. Contribution from Mr John
Seccombe – Chairman of the
Contribution from Mr Richard Jones Northern Co-operative Meat
OAM – Chief Executive Officer – Company and Cooperatives Alliance
Westpac Rescue Helicopter

Norco Co-operative Limited celebrating 125 years

of continuous operations is a fantastic milestone. It is the best example of the important
role co-operatives play in supporting regional communities and their economies. This
was most evident during the recent difficult year with most people battling drought,
fires, floods and now a pandemic. Congratulations on a most wonderful effort!

Contribution from the Hon Mick Veitch MLC – Shadow Minister for Industry and
Trade, Shadow Minister for Rural Roads, Shadow Minister for Rural Affairs, and
Shadow Minister for Western NSW

Looking back over the 125 years of Norco’s History there were many successful and
disappointing times. I am reminded of this present year Norco has just gone through.
Now Australia’s largest and most successful dairy co-operative yet still battling with
drought, fires, floods and Coronavirus all in one year. Yet Norco has survived and

strength.
prospered thanks to its dedicated Suppliers and Staff.

They are, and always will be, Norco’s purpose and

Amazing! Congratulations Norco.

Contribution from Mr Warren Noble – past Norco Chairman and Director

17
18
DIRECTORS’ REPORT
The Directors present their report together with the financial reports for Norco Co-operative Limited (‘the Co-operative’) for the year
ended 30 June 2020 and the Auditors’ report.
The Board of Directors currently comprises six supplier Directors (non-executive) and there are currently no Independent Directors
elected to the Board.
As part of the standard agenda items for each Board meeting, time is always allocated to strategic discussions which allows the Directors
and Chief Executive Officer to look forward and discuss emerging opportunities and trends as well as future challenges. The Directors
have a shared desire to ensure Norco’s strategic business objectives are met while at all times, acting in the best interests of the Members
as a whole.
The Board and management continued to spend a significant amount of time in the last financial year formulating strategies to assist
Members who continued to deal with severe drought conditions on their farms, in particular during the first half of the 2019/20 financial
year. This strategic focus, in addition to management undertaking activities and initiatives to strengthen business performance led
to significantly higher milk prices being paid to Members in 2019/20 as detailed earlier in this Annual Report. The onset of COVID-19
during late March 2020 also ensured that the Board and management maintained a sharp focus on business performance and strategic
resilience business planning to guide the business through this unprecedented pandemic emergency.
During the year, the Chairman invited members of the management team to Board meetings to provide in depth information regarding
various aspects of the business in addition to usual monthly business updates. Marketing, brand plans and campaign updates were
presented by Mr B Menzies (General Manager Marketing and Brands) during the year for both the Norco Foods’ business unit and the
Rural / Agri business unit. Mr G Vaughan (Health and Safety Manager) provided information regarding Norco’s Work Health and Safety
(WHS) performance and Dr M Callow (Milk Supply Manager) provided updates regarding matters relevant to Norco’s milk suppliers.
The Directors also continue to be committed to their ongoing professional development and during the year have had the opportunity
to attend, and represent Norco, at a range of industry conferences as can be seen from their profiles. This has been somewhat disrupted
with the onset of COVID-19 from March 2020 onwards, however Directors have adapted well to the use of on-line conferencing facilities
as a means of participating in industry events.
The Co-operative maintains Australian Institute of Company Directors (AICD) membership for all Directors on an annual basis and is
supportive of Directors participating in AICD educational courses and attendance at functions as well as industry events. Directors are
constantly on a path of learning as the Co-operative has a diversified business model. Continually improving the knowledge and skills
base in the Boardroom assists to ensure that the Directors are able to govern the Co-operative in the most effective manner possible,
using all relevant information, tools and resources available to them to ensure they fully inform themselves of important and emerging
issues.
COVID-19 played a disruptive role in relation to Norco’s most recently elected Directors attending the AICD Company Directors’ Course
(residential). It is a requirement that Directors complete this course within the first year of their appointment as supplier Directors. Both
Mr HS Cook and Mr MT Trace were enrolled into the Company Directors’ Course in QLD from 17 to 24 August 2020 but only Mr Trace
was able to attend and complete the residential course as he is a QLD resident. Being a resident of NSW, Mr Cook was unable to attend
due to the NSW-QLD border closure, however he will attend a NSW-based course 12 to 16 October 2020.

19
 DIRECTORS
Michael C Jeffery – Chairman

All of the six non- Michael Jeffery has been a Director of Norco Co-operative Limited for eight years, having been
executive supplier first elected to the Board on 14 November 2012 and is from the Southern Region. Michael is
Directors listed below Chairman of the Board of Directors, having been elected to the role on 30 July 2020. Michael
are Active Members is a member of both the Member Services Committee and Human Resources Committee and
under the Rules of the was the Chairman of the Audit and Risk Management Committee during the year until being
Co-operative and have appointed Chairman of the Board.
a direct interest in their Michael is a member of the Australian Institute of Company Directors and the Governance
dairy farms that supply Institute of Australia. Michael has completed the AICD Finance for Directors course, the AICD
milk produce to the Company Directors Course and holds an Advanced Diploma in Agriculture.
Co-operative.
During the year, Michael attended the Dairy Research Foundation Symposium in Bega during
July 2019 with Heath Hoffman and in August 2019 Michael was a speaker and a member of the
processor panel at the NSW Dairy Industry Forum held at Parliament House Sydney. Michael
represented Norco at the China International Import Expo in Shanghai during November 2019
and in March 2020 joined an Ernst & Young webinar titled “Managing Working Capital in a
Crisis (COVID-19)”. Michael has represented Norco at numerous industry meetings relating
to the impacts of COVID-19 during the year and was appointed to the NSW Dairy Industry
Advisory Panel in January 2020.

Heath B J Hoffman – Deputy Heath S Cook - Director

Chairman
Heath Hoffman has been a Director
of Norco Co-operative Limited for six
years, having been first elected to the
Board on 12 November 2014 and is a
supplier Director from the Northern
Region. Heath was recently elected
as Deputy Chairman of the Board of
Directors and he is the Chairperson
of the Audit and Risk Management
Committee.
Heath is a member of the Australian
Institute of Company Directors.
During the year, Heath attended
the Dairy Research Foundation
Symposium in July 2019 with Michael
Jeffery. He also attended the Australian
Dairy Conference in Melbourne with
Heath Cook and Matthew Trace in
February 2020.
Heath Cook was elected to the Board
of Directors on 27 November 2019 and
is a supplier Director from the Southern
Region. Heath is a member of both the
Audit and Risk Management Committee
and the Human Resources Committee.
Heath is an affiliate member of the
Australian Institute of Company Directors.
Since joining the Board, Heath has
undertaken induction activities and site
visits and has also attended the Australian
Dairy Conference in Melbourne with Heath
Hoffman and Matthew Trace in February
2020. As reported earlier Heath was
enrolled into the AICD Company Directors’
Course (residential) in QLD from 17 to 24
August 2020 but due to Heath being a
resident of NSW, he was unable to attend
due to the NSW-QLD border closure,
however he will attend a NSW-based
course 12 to 16 October 2020.

20
Gregory J McNamara – Director
Greg McNamara has been a Director of
Norco Co-operative Limited for 24 years
and is from the Central Region.
Greg is a member of the Australian
Institute of Company Directors.
During the year Greg attended the
Australian Dairy Products Federation
dinner and discussion regarding the
Australian Dairy Plan. Later in July 2019
Greg attended the Australian Dairy
Plan National Workshop. Greg was a
presenter at the DIAA Conference in
Brisbane and was a speaker as part
of the dairy panel at the ICA Pacific
Research Conference at the University
of Newcastle in December 2019.
Greg stood down from the role of
Chairman of the Board on 30 July 2020
and has now resigned from the Board of
Directors effective 1 October 2020.
Leigh Shearman - Director
Leigh Shearman has been a Director of
Norco Co-operative Limited for eight
years having been first elected to the
Board on 14 November 2012 and is from
the Central Region. Leigh is Chairperson
of both the Member Services Committee
and the Human Resources Committee.
Leigh is a member of the Australian
Institute of Company Directors.
Leigh has continued with her speaking
roles during the year, attending and
speaking to groups such as Probus
in the local heartland areas of Norco.
The people in these groups are great
supporters of the Norco brand and Leigh
enjoys sharing Norco’s story with an
enthusiastic and appreciative audience.
Matthew T Trace – Director
Matthew Trace was elected to the Board
of Directors on 27 November 2019 and
is a supplier Director from the Northern
Region. Matthew is a member of the
Audit and Risk Management Committee.
Matthew is a member of the Australian
Institute of Company Directors.
Since joining the Board, Matthew has
undertaken induction activities and site
visits and has also attended the Australian
Dairy Conference in Melbourne with
Heath Hoffman and Heath Cook in
February 2020. As reported earlier
Matthew recently attended the AICD
Company Directors’ Course (residential)
in QLD from 17 to 24 August 2020.
21
 External consultants and professional advice
The Board continues to engage the professional services of
a number of external consultants and advisors that specialise
in the areas of governance, operational performance, legal,
human resources and corporate management. During the
year consultants have attended Board meetings as invitees to
provide additional skill sets to Board discussions and specific
advice when required.
DIRECTOR ELECTIONS – 2019/20
In accordance with the annual rotation of Directors, the
Directors due to retire at the 2019 Annual General Meeting
were Mrs E Watson (Northern Region) and Mr GJ Billing
(Southern Region). Mrs E Watson, being eligible, offered herself
for re-election however Mr GJ Billing did not seek re-election.
Member nominations were also received from Mr MT Trace
(Northern Region) and from Mr HS Cook and Mrs SE McGinn
OAM (Southern Region) and accordingly a postal ballot was
held for both the Northern and Southern Regions resulting in
Mr MT Trace (Northern Region) and Mr HS Cook (Southern
Region) being elected for three year terms effective from the
2019 Annual General Meeting on 27 November 2019.
The positions of Chairman and Deputy Chairman are voted
on annually by the Directors following the Annual General
Meeting.
Directors’ Meetings
As a result of COVID-19 and the need to adhere to social
distancing practices in the workplace, from late-March 2020
the Directors commenced holding meetings using on-line
conferencing facilities (rather than face to face) which has
proven very successful. A programme of more frequent on-
line meetings were scheduled in the April to June 2020 period
to not only conduct the Board’s usual business but for the
Board to receive regular updates on the changing business
environment brought about by COVID-19 and the resilience
planning activities to manage the business through this
unprecedented period. Similar to the Board meetings being
held on-line from late-March 2020, meetings of the Audit and
Risk Management Committee were also held this way during
the same time frame.
During the course of the 2019/20 financial year there were
also 14 Directors’ meetings held by teleconference (primarily
in the period of the financial year prior to on-line conferencing
facilities being used). Teleconferences are organised to discuss
and resolve specific issues that cannot be held over until the
next scheduled monthly meeting and generally the duration
of such teleconferences is one hour or less.
CORPORATE INFORMATION
Corporate structure
Norco Co-operative Limited is a co-operative limited by
shares which is incorporated and domiciled in Australia.

The number of Board meetings (and meetings of the Audit Nature of operations and principal activities
and Risk Management Committee) and number of meetings The principal activities of the Co-operative during the
attended by each of the Directors of the Co-operative during financial year were the processing, manufacture and sale of
the financial year are: dairy products, the manufacture and sale of stockfeeds and
Audit and Risk rural retailing.
Management
Employees
Directors’ Committee
Meetings Meetings The Co-operative employed 563 full-time, 55 part-time
A B A B permanent and 242 casual employees at 30 June 2020
MC Jeffery 18 18 12 12 (2019 541 full-time, 62 part-time permanent and 231 casual
HBJ Hoffman 18 18 12 11 employees).
HS Cook 14 14 - - Results of operations
GJ McNamara 18 17 - - The net amount of the total comprehensive income for the
L Shearman 18 18 - - financial year of the Co-operative after providing for income
MT Trace 14 14 8 8 tax was $4.8 million (2019: $41,000).
GJ Billing 4 4 - - Derivatives and other financial instruments
E Watson 4 4 4 4 The Co-operative’s activities expose it to changes in interest
A R
 eflects the number of meetings held during the time the rates, foreign exchange rates and commodity prices. It is
Director held office during the year also exposed to credit, liquidity and cash flow risks from its
B Number of meetings attended

22
operations. During the year, the Board has maintained policies
and procedures in each of these areas to manage these
exposures. Management reports to the Board on a monthly
basis on the monitoring of and compliance with the policies
in place.
Dividends
Dividends paid during the 2019/20 financial year totalled
$445,000 (being a dividend rate of 4.0% [four percent] on
issued capital), declared and approved by Members at the 2019
Annual General Meeting, which was held on 27 November
2019.
Operations review
The Directors’ have reviewed the Co-operative’s operations
during the financial year and the results of those operations,
which are discussed in the Chairman’s Report for the financial
year ended 30 June 2020 (see page 8).
Events subsequent to balance date
During the interval between the end of the financial year
and the date of this report, there has not arisen any item,
transaction or event of a material and unusual nature which, in
the opinion of the Directors, is likely to significantly affect the
operations of the Co-operative, the results of those operations
or the state of affairs of the Co-operative in subsequent
financial years.
Future developments
In the opinion of the Directors, disclosure of information
regarding the likely developments in the operations of Norco
in future financial years and the expected results of those
operations is likely to result in unreasonable prejudice to the
Co-operative. Accordingly, this information has not been
disclosed in this report.
Indemnification and insurance of Directors and Officers
The Co-operative has entered into agreements to indemnify
all Directors named at the beginning of this report, former
Directors and current and former Officers of the Co-operative
against all liabilities to persons (other than to the Co-operative
or to a related body corporate) which arise out of the
performance of their normal duties as a Director or Officer,
unless the liability relates to conduct involving a lack of good
faith.
The Co-operative has agreed to indemnify the Directors and
Officers against all costs and expenses incurred in defending
an action that falls within the scope of the indemnity and
any resulting payments. The relevant insurances cover legal
liabilities and associated costs arising from the performance
of their duties as Directors and Officers and compensation for
loss or injury sustained in the course of such duties.
Indemnification of Auditors
To the extent permitted by law, the Co-operative has agreed
to indemnify its Auditors, Ernst & Young Australia, as part of
the terms of its audit engagement agreement against claims
by third parties arising from the audit (for an unspecified
amount). No payment has been made to indemnify Ernst &
Young during or since the financial year.
Options over unissued shares
Options over unissued shares have not been granted to any
person or Director since the end of the previous financial year
to date of this report.
Directors’ benefits
Since the end of the previous financial year, except as declared
below, no Director of the Co-operative has received or become
entitled to receive any benefit (other than a benefit included
in the aggregate amount of emoluments received or due and
receivable by Directors shown in the financial statements or
the fixed salary of a full time employee of the Co-operative
or of a related corporation) by reason of a contract made by
the Co-operative or a related corporation with the Director
or with a firm of which the Director is a member, or with a
company in which the Director has a substantial financial
interest, except for that benefit which may be deemed to
accrue to those Directors in their capacity as dairy farmers in
the supply of milk to the Co-operative in the ordinary course
of business.
Directors’ declarations of interest
On 30 January 2020 Mr MC Jeffery advised that he has been
appointed as a panel member on the NSW Dairy Industry
Advisory Panel. On 15 July 2020 Mr Jeffery advised that as
a panel member of the NSW Dairy Industry Advisory Panel,
he had an involvement in high level preliminary discussions
regarding the H4 RD&E Dairy Project proposal. This is a
collaborative co-investment project to de-risk the NSW dairy
industry for sustainable future growth and which Norco has
provided indicative funding support towards. Mr Jeffery has
declared his interest in accordance with Section 208 of the
Co-operatives National Law (NSW) and, in addition, excluded
himself from any discussions or decisions relating to this
entity and project.
On 27 November 2019 Mr HS Cook advised that he is a member
of the NSW Farmers’ Association Dairy Committee and is the
Regional Chairperson of Subtropical Dairy Programme Ltd.
23
24
Congratulations Norco!

Farmers, staff, management, directors – and our communities – can reflect on an outstanding
record over 125 years. For Norco, change has meant opportunities, not problems. Barriers
have been demolished – fresh milk into China has shifted from pipedream to reality. As a
strong regional 100% Aussie company, Norco is backing its heartland and delivering what its
consumers want – which points to great times ahead.

While Norco’s celebrations may have been curtailed a little due to necessary restrictions,
the Australian Government will continue to back communities and industries during this
pandemic as we all look to a strong future for regional Australia.

Contribution from the Hon Michael McCormack MP – Deputy Prime Minister, Minister for
Infrastructure, Transport and Regional Development and Leader of the National Party

Iconically Aussie, Norco has shown

that resilience runs deep in the veins of our farmers. Through world wars, depression,
drought and disasters, generations of families have come to trust Norco’s famously healthy
dairy produce. The Australian Government congratulates the Co-op’s significant 125-year
contribution to its communities and our worldwide clean green food reputation. Agriculture
will be at the heart of our COVID-19 recovery and innovative farmer-owned success stories
like Norco will play a critical role.

Contribution from the Hon David Littleproud MP – Minister for Agriculture, Drought and
Emergency Management and Deputy Leader of the National Party

Thank you and congratulations Norco on 125 years of

continuous service to our community. This is a remarkable milestone, unmatched

by few in any industry.

Your 125th year has been extraordinary. Our farmers have been on the frontline
through drought, fires, flooding and a pandemic. You have continued to serve
our community and keep milk products on our shelves – we thank you for
your unwavering dedication.

Thank you to all our farmers and processors, and to

everyone who buys Norco products, for supporting
our local farmer owned co-operative. Norco – an icon.

Contribution from the Hon Kevin Hogan MP – Assistant Minister

to the Deputy Prime Minister, Federal Member for Page

25
 Mr Cook has declared his interest in accordance with Section Rounding off of amounts
208 of the Co-operatives National Law (NSW) and, in addition, The amounts in this report and the accompanying financial
excluded himself from any discussions or decisions relating statements have been rounded to the nearest one thousand
to these entities. dollars in accordance with the Co-operatives National Law
On 26 September 2019 Mr GJ McNamara advised that he has (NSW).
been selected as a team member of the Australian Dairy Plan Auditor’s independence declaration to the directors
Joint Transition Team (JTT). Mr McNamara has declared his
The Directors received a declaration of independence from
interests in accordance with Section 208 of the Co-operatives
the Co-operative’s auditor, Ernst & Young. A copy of that
National Law (NSW) and, in addition, excludes himself from
declaration is included after this Directors’ Report.
any discussions or decisions relating to this entity.
Appreciation
On 30 July 2020 as Chairperson of Dairy Industry Group
The efforts and contribution of our management and staff
(DIG), Ms L Shearman advised that DIG has an interest in the
during the year were greatly appreciated by Directors.
H4 RD&E Dairy Project (mentioned above), with DIG providing
an in-kind contribution to the project. Ms Shearman has Signed in accordance with a resolution of the Directors.
declared her interest in accordance with Section 208 of the
Co-operatives National Law (NSW) and, in addition, excluded
herself from any discussions or decisions relating to this entity
and project.

On 27 November 2019 Mr MT Trace advised that he is the

Vice President of the Queensland Dairyfarmers’ Organisation
(QDO) and a Director of Subtropical Dairy Programme Ltd. Mr
Trace has declared his interest in accordance with Section MC Jeffery
208 of the Co-operatives National Law (NSW) and, in addition, Chairman
excluded himself from any discussions or decisions relating
to these entities.
Lismore, 30 September 2020
On 30 August 2019 Mrs E Watson advised that she has been
appointed to the Board Selection Committee of Subtropical
Dairy Programme Ltd. Mrs Watson has declared her interest
in accordance with Section 208 of the Co-operatives
National Law (NSW) and, in addition, excluded herself from
any discussions or decisions relating to this entity up to 27
November 2019 when she ceased being a Director of the
Co-operative.

26
 Ernst & Young Tel: +61 7 3011 3333
111 Eagle Street Fax: +61 7 3011 3100
Brisbane QLD 4000 Australia ey.com/au
GPO Box 7878 Brisbane QLD 4001

Auditor’s Independence Declaration to the Directors of Norco

Co-operative Limited

As lead auditor for the audit of the financial report of Norco Co-Operative Limited for the financial year
ended 30 June 2020, I declare to the best of my knowledge and belief, there have been:

a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in

relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Norco Co-Operative Limited and the entities it controlled during the
financial year.

Ernst & Young

Brad Tozer
Partner
30 September 2020

A member firm of Ernst & Young Global Limited

Liability limited by a scheme approved under Professional Standards Legislation

27
28
‘‘
Over many decades,
Norco Co-operative Limited has contributed greatly to
Australia’s dairy industry and regional economies. I would
like to congratulate Norco Co-operative Limited and all its
members for reaching 125 years of business.

There is at least one litre of milk in every Australian

household at any given time and 195 million litres of milk
will come from Norco every year.

After a summer of devastating bushfires, made worse by

prolonged drought and now the COVID-19 pandemic, I
would like to recognise the resilience that dairy farmers
have shown during this time and thank the community for
its continued support to help strengthen the dairy industry.

125 years of continual production and Australian ownership

is an incredible achievement and a great opportunity
to reflect on the great contribution Norco Co-operative
Limited has made to regional Australia and households
right across the country.

Again, congratulations on this fantastic milestone!

Contribution from the Hon John Barilaro MP – Deputy

Premier, Minister for Regional New South Wales,
‘‘
Minister for Industry and Trade

29
 CORPORATE GOVERNANCE
STATEMENT
This statement outlines the main corporate governance
practices that were in place throughout the 2019/20 financial
year, unless otherwise stated. These practices are dealt with
under the headings: Board of Directors and its Committees;
Internal Control Framework; Ethical Standards; Business Risks
and Emergency Planning; and The Role of Members.
Board of Directors and its Committees
The Board of Directors is responsible for the overall corporate
governance of the Co-operative and aims to align and
maximise effort and decision-making across the business to
ensure that strategic objectives are achieved and that decisions
are made within the risk appetite set by the Board. The key
functions of the Board include establishing and overseeing
the desired organisational culture and values for Norco, testing
and approving strategy, setting policy, monitoring financial
performance (including approving the annual budget) and also
monitoring non-financial performance. In addition to setting
risk appetite, the Board also monitors risk and compliance
in a business environment of increasing legislative and
regulatory requirements. The selection and appointment of
the Chief Executive Officer is also a key function of the Board,
as is the ongoing monitoring of the Chief Executive Officer’s
performance and also ensuring there is adequate succession
planning in place. The Board of Directors is also responsible for
reporting to members and being accountable to, and focussed
on the needs of members.
The Board has established committees to assist in the
performance of its functions. The standing committees are
the Audit and Risk Management Committee, Member Services
Committee and the Human Resources Committee. The Board
may form or convene other ad hoc committees for specific
purposes.
To better understand the operations of the Co-operative’s
businesses the Board receives regular management reports,
presentations and briefing papers on key aspects and makes
site visits to the Co-operative’s operations.
Composition of the Board
Under the Rules of the Co-operative the Board of Directors
is comprised of a minimum of six non-executive (supplier)
Directors who represent the members from the Northern,
Central and Southern regions. Each region is represented
30
by two supplier Directors, with Directors serving a three year
term. At each Annual General Meeting two Directors retire in
accordance with the Rules of the Co-operative. The Rules also
allow for two Independent Directors to be elected to the Board
however both Independent Director positions remain vacant.
An active member of the Co-operative may seek election
as a supplier Director in accordance with the Rules and, if
elected, serve a term of three years after which time they retire.
Independent Directors, when nominated and elected, are
elected for a term of three years after which time they retire.
The Directors regularly consider whether or not the skills and
characteristics which might be contributed by Independent
Directors should be added to the Board to maximise its
effectiveness. Independent Directors are to be nominated by
the Board and elected by members.
While there are presently no Independent Directors appointed,
the Board continues to engage the professional services of a
number of external consultants and advisors that specialise
in the areas of governance, operational performance, legal,
human resources and corporate management. During the
year consultants have attended Board meetings as invitees to
provide additional skill sets to Board discussions and specific
advice when required.
Regarding potential conflicts of interest, it is the practice of
the Norco Board to open every meeting by giving Directors
the opportunity to declare any actual, potential or perceived
conflicts. If a conflict of interest should arise, the Director
concerned takes no part in discussions at the Board meeting
on the issue, nor exercises any influence over other Board
members.
The total remuneration package for Directors is voted on at
each Annual General Meeting. The amount paid may vary
between Directors depending on their level of responsibilities.
Remuneration of Directors is set out in the notes to the financial
statements.
Board Corporate Governance Policy and Emerging Corporate
Governance Issues
The purpose of the Corporate Governance Policy Statement is
to provide guidance to Directors and management on how the
Co-operative is to be governed in practice. The document was
developed having regard to the Co-operatives National Law
(NSW) and Norco’s Rules. All current Directors have signed Deed
Polls and Statutory Declarations to ensure their commitment to
the Corporate Governance Policy Statement and the duties and
responsibilities specifically addressed in the Deed Polls.
A review of the Corporate Governance Policy Statement is
undertaken annually by the Directors to ensure that issues of
governance are dealt with in accordance with the policy. At the
same time, the policy is reviewed to ensure it is still relevant
and up to date.
All current Directors except for Mr HS Cook have attended
and completed the comprehensive residential AICD Company
Directors’ Course. Mr Cook was registered to attend a Company
Directors’ Course during August 2020 at a QLD venue but
due to the NSW / QLD border closure as a result of COVID-19
restrictions, he was not able to attend that event, however he
will attend a NSW-based course 12 to 16 October 2020.
Co-operatives National Law in NSW
The Co-operative continues to operate under the Co-operatives
National Law (CNL) which was introduced on 3 March 2014.
Board Committees
The Directors seek to achieve best practice in corporate
governance and accountability through the following standing
Board Committees which assist the Board in the execution of
its responsibilities. These committees are subject to Charters
which have been approved by the Board and which define their
respective objectives, powers, roles and responsibilities.
Audit and Risk Management Committee
The objective of the Audit and Risk Management Committee
is to assist the Board of Directors in fulfilling its statutory and
fiduciary responsibilities relating to accounting and reporting
practices of the Co-operative and subsidiaries. The Committee
advises on the establishment and maintenance of an overall
framework of internal control and appropriate ethical
standards for the management of the Co-operative. The
Committee gives the Board additional assurance regarding the
quality and reliability of financial information prepared for use
by the Board in determining policies for inclusion in financial
statements. The Audit and Risk Management Committee
also embraces, as part of its Charter, the Co-operative’s Risk
Management Program.
The Audit and Risk Management Committee ensures:
• compliance with statutory responsibilities relating to financial
disclosure;
• focus on significant changes in accounting policies, standards
and practices or other reporting requirements likely to affect
developments in financial reporting;
• regular reviews of operations and policies are conducted;
•
review of the audit and annual financial statements and
interim financial information and the adequacy of existing
external audit arrangements with particular emphasis on the
scope and quality of the audit; and
• risk management reporting systems are in place to effectively
identify and manage strategic, operational and financial
risks. To give further effect to identifying and quantifying
risks faced by the Co-operative, a risk register has been
developed which is managed under the scope of the Audit
and Risk Management Committee. The risk register details the
probability and impact of various business risks and creates a
risk score together with a mitigation plan.
The Audit and Risk Management Committee reviews the
performance of the external auditors on an annual basis and
meets them during the year as follows:
• to review the results and findings of the audit, the adequacy
of financial and operating controls, and to monitor the
implementation of any recommendations made; and
• to review the draft financial statements and the audit report
and to make the necessary recommendation to the Board for
the approval of the financial statements.
The Audit and Risk Management Committee also reviews
the Co-operative’s Executive Authority Limits on at least an
annual basis to ensure that the delegated levels of authority are
appropriate for key employee positions.
The Committee is comprised of three Directors and meets at
least six times per year. The Chairperson of the Co-operative
shall not be a member of the Committee.
Member Services Committee
The objective of the Member Services Committee is to make
properly considered recommendations to the Board of
Directors in relation to the adoption of policies pertaining to
non-milk supply, member issues.
31
 In giving effect to this objective, the Committee will make
recommendations to the Board of Directors in relation to
policies regarding:
• developing and encouraging the sustainability of the Norco
farm base through initiatives such as improving farming
techniques, study tours and improving business skills;
• assisting with the ongoing wellbeing of the Norco farm base
by helping members with succession planning, mental health
issues and social networking / support;
•
providing and disseminating information from external
sources relating to issues such as the education and training
of potential Directors, government assistance and climate
variability; and
•
providing support to the Norco farm base through the
management of issues such as exceptional circumstances,
disaster recovery planning and other critical farm issues (such
as tick infestations).
The Committee is comprised of up to three Directors and
meets at least every quarter.
Human Resources Committee
The objective of the Human Resources Committee is to
make properly considered recommendations to the Board of
Directors in relation to the adoption of policies pertaining to
Human Resources within Norco.
In giving effect to this objective, the Committee will make
recommendations to the Board of Directors in relation to
policies regarding:
• Developing and monitoring succession plans within Norco;
• Remuneration, salary and staff entitlements;
• The effective use of Human Resources throughout Norco;
• Performance management culture;
• Efficiency and value of Human Resources;
• Training and development;
• Continuous improvement;
• Work Health and Safety (WHS); and
• The review and updating of the Committee’s Charter from
time to time.
The Committee is comprised of up to three Directors and
meets at least every quarter.
32
INTERNAL CONTROL FRAMEWORK
The Board acknowledges that it is responsible for the overall
internal control framework, but recognises that no cost-
effective internal control system will preclude all errors and
irregularities. To assist in discharging this responsibility, the
Board has instigated an internal control framework which can
be categorised under the following headings:
• Corporate Strategy – there are clearly defined short, medium
and long term strategic objectives set and reviewed by
the Board of Directors on at least an annual basis and an
operational strategic plan developed by management to
meet these objectives. Strategic issues are considered at each
meeting of the Board of Directors.
•
Financial reporting - there is a comprehensive budgeting
system with an annual budget approved by the Board. Monthly
actual results are reported against budget and revised rolling
year end forecasts are prepared monthly.
• Quality and integrity of personnel - the Co-operative’s policies
are detailed in a policy and procedures manual. New policies
and procedures are developed, or amendments made to
existing policies and procedures, as the need arises.
• Investment appraisal - the Co-operative has clearly defined
guidelines for capital expenditure. These include annual
budgets, detailed appraisal and review procedures and due
diligence requirements where businesses are being acquired
and divested.
•
Executive authority limits – the Co-operative has clearly
defined financial authority limits for management positions
in relation to capital expenditure, foreign exchange, forward
purchase agreements, forward grain sale agreements and
general expenses.
Quality Accreditation and Auditing
The Norco Foods division strives to ensure that its products are
of the highest standard. The Lismore Ice Cream Business Unit
is licensed by the NSW Food Authority and has certification
against SQF Code Edition 8 Level 3: Comprehensive Food Safety
and Quality Management System, Coles Food Manufacturing
Supplier Requirements V2 March 2017 (CFMSR), Woolworths
Quality Assurance Standard, ALDI Quality Assurance, U.S. Food
and Drug Administration registered and has an Approved
Arrangement with the Department of Agriculture for export.
The Labrador milk factory is licensed by SafeFood QLD and has
certification against SQF Code Edition 8 Level 3: Comprehensive
Food Safety and Quality Management System, Coles Food
Manufacturing Supplier Requirements V2 March 2017 (CFMSR),
ALDI Quality Assurance and has an Approved Arrangement
with the Department of Agriculture for export. The Raleigh milk
factory is licensed with the NSW Food Authority and certified
for SQF Code Edition 8 Level 3: Comprehensive Food Safety
and Quality Management System, ALDI Quality Assurance,
Walmart Supply Chain Security, ACO accreditation and has an
Approved Arrangement with the Department of Agriculture for
export. Raleigh is also Kosher certified for the production of all
A2 products.
In the Norco Agribusiness unit both the Norco Stockfeeds
manufacturing mills at Lismore New South Wales and
Windera Queensland have FeedSafe accreditation under
the Stockfeed Manufacturers’ Association of Australia and
HACCP accreditation. Norco is a member of the Stockfeed
Manufacturers’ Association of Australia.
Norco maintains accreditation against AS4801:2001 - business and monitors this information closely. The Board
Occupational Health and Safety Management Systems.
Norco Rural Stores are audited internally in line with AS4801 as
well as requirements under the following Australian Standards:
• AS 3833:2007 – The storage and handling of mixed classes of
dangerous goods, in packages and IBC’s.
• AS 4775:2007 – Emergency eyewash and shower equipment.
• AS 4084:2012 – Steel Storage Racking.
To maintain currency of knowledge and skills, Rural employees
undergo various ongoing safety related training in the following
areas:
• Norco Agvet Awareness course developed in line with the
above mentioned standards as well as following nationally
accredited units of competency relating to:
o AHCCHM101A – Follow basic chemical safety rules.
o AHCCHM304A – Transport, handle and store chemicals.
• Heavy and light vehicle load restraint.
• Online safety courses in areas such as:
o Manual handling.
o Forklift safety.
o Fire safety training.
o Chain of Responsibility.
o Safety data sheets.
In response to the COVID-19 restrictions, the WHS Team is
developing a distance learning mode of delivery for the Norco
Agvet Awareness course. The WHS Team is also implementing
a new safety database system which meets the requirements
for AS4801 and ISO45001 with a goal to transition to the
international standard for Occupational Health and Safety
Management Systems.
Safety
Norco is committed to the safety and wellbeing of staff across
its entire operations. Norco strives to comply with the provisions
of a safe working environment and continues to make safety
an integral part of our organisation, which is essential if we are
to continue building a successful business into the future. On
a monthly basis, the Board of Directors receives management
reports detailing the safety performance and trends for the
also receives a copy of all minutes of the various site WHS
committee meetings that are held. In addition, a detailed
WHS report is provided to the Human Resources Committee
when the Committee meets. As noted above Norco maintains
accreditation against AS4801:2001 Occupational Health and
Safety Management Systems. This accreditation is current to 15
February 2022.
Environment
Norco aims to ensure that the highest standard of environmental
care is achieved. The Co-operative recognises that it has a
responsibility to ensure that its operations are sensitive to
the environment and comply with the letter and spirit of all
applicable environmental legislation. Norco is also a party to
the Australian Packaging Covenant and has a ‘Buy Recycled’
procurement practice as part of our obligations under the
Covenant.
ETHICAL STANDARDS
All Directors, managers and employees are expected to act
with the utmost integrity and objectivity, striving at all times
to enhance the reputation and performance of Norco. Every
33
34
My Great Grandfather attended the very first meeting which was held at Clunes
which led to the eventual establishment of NORCO as we know it today. I was an

milestones during my time:

employee for 29 years from 1967 until 1996.

I list just a few of the major

o The Labor Government (Minister Don Day) changing quota milk allocations to a
fairer system so it enabled farmers in non-metropolitan areas to have a better share
which improved their four weekly pay cheque massively. A number of Directors
of the Co-operative were heavily involved in this process which went against their
political persuasion.

o The Amalgamation with Casino Dairy and Central Dairy (Raleigh/Dorrigo). Many
others followed all strengthening Norco for all farmers involved.

o The purchase of the PDS Rural Store businesses which when added to the existing
Norco Rural Stores allowed some rationalisation and allowed Norco into new
territory particularly the Tablelands. This has been further expanded. The promotion
by using farmers such as Denzil Thomas, Hugh and Warren Gallagher and the
Shearman Family has been the best I have seen. Many other farming families have
been included.

o Diversification of the Norco distribution business which enabled distribution of

many products not made by the Co-operative. This part of the business, built up by
the employees, became valuable when the Co-operative needed financial support.

o The market milk joint venture with QUF/Gold Coast Milk which I understand
Norco owns outright today due to pre-emptive rights agreements and some
courageous decision making by those at the time.

There have been many honest hardworking farmers and employees over
125 years. I remember so many during my time. I found that when
the Board and Senior Management were stable the Co-operative
performed to its best.

There will always be challenges but to operate for 125 years

is a truly remarkable achievement. Congratulations
NORCO.

Contribution from Mr Graeme Hancock past

Norco Commercial Manager/Secretary

35
 employee has a nominated manager or supervisor to whom
they may refer any issue arising from their employment and
there is a suite of Human Resource policies and procedures
that assist in ensuring employees’ conduct is of the highest
standard possible. In addition, the Corporate Governance Policy
Document serves to provide guidance to Directors on how the
Co-operative should be governed from a practical perspective.
The Norco Foods division also has an Ethical Sourcing Policy
which sets out the standards that the business expects all
suppliers to comply with when producing and supplying
products and/or services for Norco Foods, no matter where
they operate in the world.
BUSINESS RISKS AND EMERGENCY PLANNING
Management has identified, and continues to identify, business
risks and potential emergencies with the aim of minimising any
consequential adverse effects on the Co-operative.
Business risks arise from such matters as:
• action by competitors and industry rationalisation;
• government policy changes;
• physical loss of assets through fire or another natural disaster
and the resultant business interruption that may occur;
• the impact of exchange rate movements on the price of raw
materials and on sales
• variations in interest rates;
• difficulties in sourcing raw materials; and
• the purchase, development and use of information systems,
and other emergencies that may occur.
THE ROLE OF MEMBERS
The Board of Directors aims to ensure that the members are
informed of all major developments affecting the Co operative’s
state of affairs. Information is communicated to members as
follows:
• The Annual Report is distributed to all members. The Annual
Report includes relevant information about the operations of
the Co-operative for the financial year just ended, changes
in the state of affairs of the Co-operative and details of future
developments, in addition to the other disclosures required by
the Co operatives Legislation;
• Meetings are held at least twice yearly with supplier members
at various locations to personally inform them about the affairs
of the Co-operative. The impact of COVID-19 has meant a
change in format of these meetings to on-line meetings and
this has been embraced well by supplier members;
• In addition to the meetings with supplier members, a more
informal communication network called ‘NorcoNet’ is active
in some localities within the Norco supply area. The purpose
of ‘NorcoNet’ is to bring small groups of members together on
a regular basis to form a local network to discuss general dairy
industry issues and issues that relate to the Co-operative;
• The preparation and distribution of a monthly Norco Bulletin
and ad hoc newsletters;
•Some proposed major changes in the Co-operative which
relate to the core businesses, Rules and compulsory schemes
are required by the Co operatives National Law (NSW) to be
submitted to a vote of members; and
•
Communication is a two-way process, and the Board
encourages individual members or groups of members
to apply to attend Board Committee and / or meetings by
appointment.
The Board encourages full participation of members at the
Annual General Meeting to ensure a high level of accountability
and identification with the Co-operative’s strategies and goals.
Due to the geographical spread of members, the holding of the
Annual General Meeting is rotated between the three member
regions. Important issues are presented to the members as
single resolutions for their consideration.
The members are responsible for the election of Directors.

36
STATEMENT OF PROFIT OR LOSS
& OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2020
2020 2019
Before Before
Significant Significant Significant Significant
Items Items (1) Total Items Items (1) Total
Notes $000 $000 $000 $000 $000 $000

Revenue from contracts with

customers 4 683,426 - 683,426 602,961 - 602,961

Other income 5.1 543 - 543 249 - 249

Finance income 474 - 474 512 - 512

Milk payments to suppliers 5.3 (155,310) - (155,310) (125,840) - (125,840)

Cost of sales (376,901) - (376,901) (338,317) - (338,317)
Employee expenses 5.4 (72,659) - (72,659) (68,828) - (68,828)
Depreciation expense 5.5 (10,199) - (10,199) (6,177) - (6,177)
Borrowing costs/finance costs 5.2 (2,675) - (2,675) (2,369) - (2,369)
Occupancy expenses (3,759) - (3,759) (6,191) - (6,191)
Administration and other costs (57,482) (305) (57,787) (54,907) - (54,907)
(Loss)/gain on disposal of
non-current assets (104) - (104) 140 - 140
Restructure costs - (192) (192) - (597) (597)
Profit/(loss) before tax from
ordinary activities before
income tax expense and
member distributions 5,354 (497) 4,857 1,233 (597) 636

Member distributions 7 - (445) (445) - (626) (626)

Profit/(loss) before income tax 5,354 (942) 4,412 1,233 (1,223) 10

Income tax expense 6 - - - - - -

Net profit/(loss) attributable
to members 5,354 (942) 4,412 1,233 (1,223) 10

Other comprehensive income

Other comprehensive income
to be reclassified to profit or loss
in subsequent periods:
Net gain on cash flow hedges - 423 423 - 31 31
Other comprehensive income
for the year, net of tax - 423 423 - 31 31
Total comprehensive
income/(loss) for the year,
net of tax 5,354 (519) 4,835 1,233 (1,192) 41

(1) Significant items are presented separately due to their nature and size.

The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.

37
 STATEMENT OF FINANCIAL POSITION As at 30 June 2020
2020 2019
Assets Notes $000 $000
Current assets
Cash and cash equivalents 20.1 4,686 5,332
Trade and other receivables 8 61,000 61,932
Inventories 9 39,339 41,632
Other assets 1,991 1,279
Total current assets 107,016 110,175
Non-current assets
Investments 10 3 3
Property, plant and equipment 11 66,879 64,166
Right-of-use assets 12 19,628 -
Intangible assets and goodwill 13 37,038 37,038
Total non-current assets 123,548 101,207
Total assets 230,564 211,382

Liabilities
Current liabilities
Trade and other payables 14 85,460 82,307
Interest-bearing loans and borrowings 15 5,471 1,818
Derivative financial instruments 16 - 423
Employee benefit liabilities 17 9,886 9,669
Total current liabilities 100,817 94,217

Non-current liabilities
Trade and other payables 14 397 397
Interest-bearing loans and borrowings 15 47,966 40,428
Employee benefit liabilities 17 1,554 1,138
Total non-current liabilities 49,917 41,963
Total liabilities 150,734 136,180
Net assets attributable to members 79,830 75,202

Members’ interest 18.1 10,087 10,294

Net assets 69,743 64,908

Equity
Retained earnings 30,656 26,244
Reserves 19 39,087 38,664
Total equity 69,743 64,908

The above statement of financial position should be read in conjunction with the accompanying notes.

STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2020
Cash flow Asset
Retained hedge revaluation
earnings reserve reserve Total equity
$000 $000 $000 $000
At 1 July 2019 26,244 (423) 39,087 64,908

Profit for the year 4,412 - - 4,412

Other comprehensive income - 423 - 423
Total comprehensive income for the year 4,412 423 - 4,835

At 30 June 2020 30,656 - 39,087 69,743

At 1 July 2018 27,289 (454) 39,087 65,922

Effect of adoption of new accounting standards (1,055) - - (1,055)
At 1 July 2018 (restated) 26,234 (454) 39,087 64,867

Profit for the year 10 - - 10

Other comprehensive income - 31 - 31
Total comprehensive income for the year 10 31 - 41

At 30 June 2019 26,244 (423) 39,087 64,908

The above statement of changes in equity should be read in conjunction with the accompanying notes.

38
STATEMENT OF CASH FLOWS
For the year ended 30 June 2020

2020 2019
Notes $000 $000
Operating activities
Receipts from customers 684,756 596,662
Payments to suppliers and employees (509,169) (463,359)
Interest received 474 512
Interest paid 5.2 (2,675) (2,369)
Milk supplier payments (152,372) (128,561)
Net cash flows from operating activities 20.2 21,014 2,885

Investing activities
Proceeds from sale of property, plant and equipment 116 273
Purchase of property, plant and equipment 11 (9,186) (7,573)
Net cash flows used in investing activities (9,070) (7,300)

Financing activities
Suppliers’ share contribution 18 (207) 101
Distributions paid to members 7 (445) (626)
Payment of finance lease liabilities 20.2 - (305)
Payment of principal portion of lease liabilities 20.2 (3,537) -
(Repayments of)/proceeds from borrowings 20.2 (8,401) 5,959
Net cash flows (used in)/from financing activities (12,590) 5,129

Net (decrease)/increase in cash and cash equivalents (646) 714

Cash and cash equivalents at 1 July 5,332 4,618
Cash and cash equivalents at 30 June 20.1 4,686 5,332

The above statement of cash flows should be read in conjunction with the accompanying notes.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2020

1. Corporate information
The financial statements of Norco Co-operative Limited and its controlled entities (the “Co-operative”) for the year ended 30 June
2020 were authorised for issue in accordance with a resolution of the directors on 30 September 2020.
Norco Co-operative Limited is a for-profit Co-operative under the Co-operatives National Law (NSW), incorporated and domiciled
in Lismore, Australia. The Co-operative operates out of its registered place of business at “Windmill Grove” 107 Wilson Street, South
Lismore, New South Wales. The principal operations of the Co-operative are the processing, manufacture and sale of dairy products,
the manufacture of stockfeed and rural retailing.
2. Summary of significant accounting policies
2.1 Basis of preparation
The general purpose financial report has been prepared on the basis of historical cost (except for certain land and building assets
where in 2004 fair value was deemed to be cost and derivative financial instruments which are at fair value) and in accordance with
the requirements of the Corporations Act 2001. Cost is based on the fair values of the consideration given in exchange for assets.
In the application of Australian equivalents to International Financial Reporting Standards (‘IFRS’) management is required to make
judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to
be reasonable under the circumstance, the results of which form the basis of making the judgements. Actual results may differ from
these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if
the revision affects both current and future periods.
Judgements made by management in the application of IFRS that have significant effects on the financial statements and estimates
with a significant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to the financial
statements and Note 3. Accounting policies are selected and applied in a manner which ensures that the resulting financial information
satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events
is reported.
The accounting policies set out below have been applied in preparing the financial statements for the year ended 30 June 2020 and
the comparative information presented in these financial statements for the year ended 30 June 2019. Where necessary, comparatives
have been reclassified to conform to current year classification.

39
 The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($’000) unless
otherwise stated under the option available to the Co-operative under ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191. The Co-operative is an entity to which the instrument applies.
Statement of compliance
The financial report complies with Australian Accounting Standards, which include International Financial Reporting Standards (IFRS)
as issued by the International Accounting Standards Board.

2.2 Changes in accounting policies, disclosures, standards and interpretations

New and amended standards and interpretations
The Co-operative applied AASB 16 Leases for the first time. The nature and effect of the changes as a result of adoption of this new
accounting standard is described below.
Several other amendments and interpretations apply for the first time in 2020, but do not have a material impact on the financial
statements of the Co-operative.
AASB 16 Leases
AASB 16 supersedes AASB 117 Leases and it replaces AASB 117 Leases, AASB Interpretation 4 Determining whether an Arrangement
contains a Lease, AASB Interpretation 115 Operating Leases-Incentives and AASB Interpretation 127 Evaluating the Substance of
Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentation
and disclosure of leases and requires lessees to recognise most leases on the statement of financial position.
Lessor accounting under AASB 16 is substantially unchanged from AASB 117. Lessors will continue to classify leases as either operating
or finance leases using similar principles as in AASB 117. Therefore, AASB 16 does not have an impact for leases where the Co-
operative is the lessor.
The Co-operative adopted AASB 16 using the modified retrospective method of adoption, with the date of initial application of 1
July 2019. Under this method, the standard is applied retrospectively with the cumulative effect on initially applying the standard
recognised at the date of initial application. The Co-operative elected to use the transition practical expedient to not reassess whether
a contract is, or contains, a lease at 1 July 2019. Instead, the Co-operative applied the standard only to contracts that were previously
identified as leases applying AASB 117 and AASB Interpretation 4 Determining whether an Arrangement contains a Lease at the date
of initial application.
The Co-operative has lease contracts for various items of vehicles and properties. Before the adoption of AASB 16, the Co-operative
classified each of its leases (as lessee) at the inception date as either a finance lease or an operating lease.
Upon adoption of AASB 16, the Co-operative applied a single recognition and measurement approach for all leases except for short-
term leases and leases of low-value assets. The standard provides specific transition requirements and practical expedients, which
have been applied by the Co-operative.
Leases previously accounted for as finance leases
The Co-operative did not change the initial carrying amounts of recognised assets and liabilities at the date of initial application
for leases previously classified as finance leases (i.e., the right-of-use assets and lease liabilities equal the lease assets and liabilities
recognised under AASB 117). The requirements of AASB 16 were applied to these leases from 1 July 2019.
Leases previously accounted for as operating leases
The Co-operative also applied the available practical expedients wherein it:
• Used a single discount rate to a portfolio of leases with reasonably similar characteristics
• Relied on its assessment of whether leases are onerous immediately before the date of initial application
• Applied the short-term leases exemptions to leases with lease term that ends within 12 months of the date of initial application
• Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application
• Used hindsight in determining the lease term where the contract contained options to extend or terminate the lease
Based on the above, as at 1 July 2019:
• Right-of-use assets of $18,346,000 were recognised and presented separately in the statement of financial position. This includes the
lease assets recognised previously under finance leases of $895,000 that were reclassified from property, plant and equipment.
• Lease liabilities of $18,005,000 (included in Interest bearing loans and borrowings) were recognised in addition to liabilities previously
recognised as finance lease liabilities of $341,000.
The lease liabilities as at 1 July 2019 can be reconciled to the operating lease commitments as at 30 June 2019, as follows:

$000
Operating lease commitments as at 30 June 201914,563

Weighted average incremental borrowing rate as at 1 July 2019 3%

Discounted operating lease commitments as at 1 July 2019 13,429

Less:
Commitments relating to short-term leases (545)
Commitments relating to leases of low-value assets (63)
Add:
Commitments relating to leases previously classified as finance leases 341
Lease payments relating to renewal periods not included in operating lease commitments as at 30 June 2019 5,184
Lease liabilities as at 1 July 2019 18,346

Accounting Standards and Interpretations issued but not yet effective

The following Australian Accounting Standards and Interpretations have recently been issued or amended but are not yet effective
and have not been adopted by the Co-operative for the annual reporting period ended 30 June 2020:

40
• AASB 2019-1 Amendments to Australian Accounting Standards - References to the Conceptual Framework
• AASB 2018-6 Amendments to Australian Accounting Standards - Definition of a Business
• AASB 2019-3 Amendments to Australian Accounting Standards - Interest Rate Benchmark Reform
• AASB 2018-7 Amendments to Australian Accounting Standards - Definition of Material
•A
 ASB 2019-7 Amendments to Australian Accounting Standards - Disclosure of GFS Measures of Key Fiscal Aggregates and GAAP/
GFS Reconciliations
• AASB 2019-5 Amendments to Amendments to Australian Accounting Standards - Disclosure of the Effect of New IFRS Standards
Not Yet Issued in Australia
• AASB 1059 Service Concession Arrangements: Grantors
• AASB 2019-2 Amendments to Australian Accounting Standards - Implementation of AASB 1059
• AASB 2020-4 Amendments to Australian Accounting Standards - Covid-19-Related Rent Concessions
• AASB 17 Insurance Contracts
• AASB 1060 General Purpose Financial Statements - Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities
•A
 ASB 2020-2 Amendments to Australian Accounting Standards - Removal of Special Purpose Financial Statements for Certain
For-Profit Private Sector Entities
• AASB 2020-1 Amendments to Australian Accounting Standards - Classification of Liabilities as Current or Non-current
• AASB 2020-3 Amendments to Australian Accounting Standards - Annual Improvements 2018-2020 and Other Amendments
• AASB 2014-10 Amendments to Australian Accounting Standards - Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture
• Amendments to IFRS 17 Insurance Contracts
• Amendments to IFRS 4 Insurance Contracts, Extension of the Temporary Exemption from Applying IFRS 9
The Co-operative anticipates that the adoption of these standards in the period of initial application have no material impact on the
financial statements.
2.3 Significant accounting policies
a) Basis of consolidation
The financial statements comprise the financial statements of the Co-operative and its subsidiaries as at 30 June 2020. Control is
achieved when the Co-operative is exposed, or has rights, to variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the investee. Specifically, the Co-operative controls an investee if, and only if, the
Co-operative has:
• Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);
• Exposure, or rights, to variable returns from its involvement with the investee; and
• The ability to use its power over the investee to affect its returns.
Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Co-
operative has less than a majority of the voting or similar rights of an investee, the Co-operative considers all relevant facts and
circumstances in assessing whether it has power over an investee, including:
• The contractual arrangement with the other vote holders of the investee;
• Rights arising from other contractual arrangements; and
• The Co-operative’s voting rights and potential voting rights.
The Co-operative re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control. Consolidation of a subsidiary begins when the Co-operative obtains control over the
subsidiary and ceases when the Co-operative loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary
acquired or disposed of during the year are included in the statement of profit or loss and other comprehensive income from the date
the Co-operative gains control until the date the Co-operative ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the
Co-operative and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When
necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Co-
operative’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Co-operative are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Co-
operative loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and
other components of equity, while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at
fair value.
b) Current versus non-current classification
The Co-operative presents assets and liabilities in the statement of financial position based on current/non-current classification. An
asset is current when it is:
• Expected to be realised or intended to be sold or consumed in the normal operating cycle;
• Held primarily for the purpose of trading;
• Expected to be realised within twelve months after the reporting period; or
• Cash or a cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the
reporting period.
All other assets are classified as non-current.
A liability is current when it is:
• Expected to be settled in the normal operating cycle;
• Held primarily for the purpose of trading;

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 • Due to be settled within twelve months after the reporting period; or
• There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Co-operative classifies all other liabilities as non-current.
c) Revenue from contracts with customers
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an
amount that reflects the consideration to which the Co-operative expects to be entitled in exchange for those goods or services. The
Co-operative has generally concluded that it is the principal in its revenue arrangements and that it typically controls the goods or
services before revenue transferring them to the customer.
Variable consideration
If the consideration in a contract includes a variable amount, the Co-operative estimates the amount of consideration to which it
will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception
and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not
occur when the associated uncertainty with the variable consideration is subsequently resolved. Some contracts for the sale of dairy
products provide customers with discounts. The discounts give rise to variable consideration.
Sale of goods
Revenue from contracts with customers is recognised when the performance obligation has been satisfied. The performance obligation
is satisfied at the point of delivery to the customer when the risks and rewards of the item is transferred. For the Foods division, the
performance obligation is satisfied when goods are transferred to the central distribution centre. For Rural, the performance obligation
is at the point of sale.
d) Finance income
Interest income is recorded using the effective interest rate (EIR). The EIR is the rate that exactly discounts the estimated future cash
receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the
financial asset. Interest income is included in other income in the statement of profit or loss and other comprehensive income.
e) Government grants
Grants received for the construction of non-current assets are deferred and recorded as revenue over the life of the funded asset.
f) Dividends
Dividend income is recognised when control of a right to receive consideration for the investment in assets is attained, usually
evidenced by approval of the dividend at a meeting of shareholders.
g) Borrowing costs
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. All loans and
borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.
h) Leases
The Co-operative assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to
control the use of an identified asset for a period of time in exchange for consideration.
Co-operative as a lessee
The Co-operative applies a single recognition and measurement approach for all leases, except for short-term leases and leases of
low-value assets. The Co-operative recognises lease liabilities to make lease payments and right-of-use assets representing the right
to use the underlying assets.
(i) Right-of-use assets
The Co-operative recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any
remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs
incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are
depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:
• Property 5 to 10 years
• Motor vehicles 3 to 5 years
If ownership of the leased asset transfers to the Co-operative at the end of the lease term or the cost reflects the exercise of a purchase
option, depreciation is calculated using the estimated useful life of the asset.
The right-of-use assets are also subject to impairment. Refer to the accounting policies in Note 2.3(r) Impairment of non-financial
assets.
(ii) Lease liabilities
At the commencement date of the lease, the Co-operative recognises lease liabilities measured at the present value of lease payments
to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease
incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the
Co-operative and payments of penalties for terminating the lease, if the lease term reflects the Co-operative exercising the option to
terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to
produce inventories) in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Co-operative uses its incremental borrowing rate at the lease commencement
date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount
of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to
future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment
of an option to purchase the underlying asset.
The Co-operative’s lease liabilities are included in interest-bearing loans and borrowings.
(iii) Short-term leases and leases of low-value assets
The Co-operative applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e.,

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those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also
applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease
payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term if there is no
reasonable certainty that the Co-operative will obtain ownership by the end of the lease term.
i) Cash and cash equivalents
Cash and short-term deposits in the statement of financial position comprise cash at bank and on hand and short-term deposits with
an original maturity of three months or less. For the purposes of the statement of cash flows, cash and cash equivalents consist of
cash and cash equivalents as defined above, net of outstanding bank overdrafts.
j) Trade and other receivables
A receivable represents the Co-operative’s right to an amount of consideration that is unconditional (i.e., only the passage of time
is required before payment of the consideration is due). They are generally due for settlement within 30-90 days and therefore are
all classified as current. Trade receivables are recognised initially at the amount of consideration that is unconditional unless they
contain significant financing components when they are recognised at fair value. The Co-operative holds the trade receivables with
the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective
interest rate (EIR) method.
For trade receivables, the Co-operative applies a simplified approach in calculating ECLs. Therefore, the Co-operative does not track
changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Co-operative has
established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the
debtors and the economic environment.
k) Inventories
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and condition are accounted for, as follows:
• Raw materials: purchase cost on a first in, first out basis.
• Finished goods and work in progress: cost of direct materials and labour and a proportion of manufacturing overheads based on
normal operating capacity but excluding borrowing costs.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the
estimated costs necessary to make the sale.
Maintenance spares are recognised as inventories and expensed when utilised.
l) Foreign currencies
Transactions in foreign currencies are initially recorded by the Co-operative’s entities at their respective functional currency spot rates
at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at
the reporting date.
Differences arising on settlement or translation of monetary items are recognised in profit or loss with the exception of monetary
items that are designated as part of the hedge of the Co-operative’s net investment in a foreign operation. These are recognised in OCI
until the net investment is disposed of, at which time, the cumulative amount is reclassified to profit or loss. Tax charges and credits
attributable to exchange differences on those monetary items are also recognised in OCI.
In determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the
derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is
the date on which the Co-operative initially recognises the non-monetary asset or non-monetary liability arising from the advance
consideration. If there are multiple payments or receipts in advance, the Co-operative determines the transaction date for each
payment or receipt of advance consideration.
m) Taxes
Current income tax
Current income tax assets and liabilities for the current year are measured at the amount expected to be recovered from or paid to
the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted,
at the reporting date in the countries where the Co-operative operates and generates taxable income.
Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except:
• When the GST incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the GST is
recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable.
• When receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing
and financing activities, which is recoverable from, or payable to, the taxation authority is classified as part of operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
n) Investments
Investments in subsidiaries held by the Co-operative are accounted for at cost in the statement of financial position of the Parent
entity less any impairment charges.
The Co-operative has designated to account for its investments in unlisted entities at fair value through profit and loss. Financial
assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value
recognised in the statement of profit or loss and other comprehensive income.
o) Property, plant and equipment
Items of property, plant and equipment including buildings and leasehold property, but excluding freehold land, are measured at
cost less accumulated depreciation and less any impairment losses recognised. Freehold land is held at cost and is not depreciated.

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 Plant and equipment is depreciated on a straight-line basis over the estimated useful life of the assets, units of output, life of project
or other appropriate basis.
Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is shorter, using the straight-
line method.
The following estimated useful lives are used in the calculation of depreciation:
-
Buildings 2 - 5%
- Plant and vehicles 8 - 33%
- Leasehold plant and equipment 10 - 20%
The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end.
Impairment
The carrying values of items of property, plant and equipment are reviewed for impairment at each reporting date, with recoverable
amounts being estimated when events or changes in circumstances indicate that the carrying value may be impaired.
The recoverable amount of property, plant and equipment is the higher of fair value less costs to sell and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating
unit (CGU) to which the asset belongs, unless the asset’s value in use can be estimated to be close to its fair value.
An impairment exists when the carrying value of an asset or CGU exceeds its estimated recoverable amount. The asset or cash-
generating unit is then written down to its recoverable amount.
Derecognition and disposal
An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected
from its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the
carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.
p) Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a
business combination are their fair value as at the date of acquisition. Following initial recognition, intangible assets are carried
at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding
capitalised development costs, are not capitalised and the related expenditure is reflected in the statement of profit or loss and
other comprehensive income in the year in which the expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an
indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset
with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected
pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period
or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets
with finite lives is recognised in the statement of profit or loss and other comprehensive income as the expense category that is
consistent with the function of the intangible assets.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the
cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues
to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds
and the carrying amount of the asset and are recognised in the statement of profit or loss and other comprehensive income when
the asset is derecognised.
q) Goodwill
Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination
over the Co-operative’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.
Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying
value may be impaired.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each
of the Co-operative’s CGUs, or groups of CGUs, that are expected to benefit from the synergies of the combination, irrespective of
whether other assets or liabilities of the Co-operative are assigned to those units or groups of units. Each unit or group of units to
which the goodwill is so allocated:
• Represents the lowest level within the Co-operative at which the goodwill is monitored for internal management purposes; and
• Is not larger than a segment based on the Co-operative’s primary reporting format determined as if applying AASB 8 Operating
Segments.
Impairment is determined by assessing the recoverable amount of the CGU (group of CGUs), to which the goodwill relates. When
the recoverable amount of the CGU (group of CGUs) is less than the carrying amount, an impairment loss is recognised. When
goodwill forms part of a CGU (group of CGUs) and an operation within that unit is disposed of, the goodwill associated with the
operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the
operation. Goodwill disposed of in this manner is measured based on the relative values of the operation disposed of and the
portion of the CGU retained. Impairment losses recognised for goodwill are not subsequently reversed.
r) Impairment of non-financial assets
The Co-operative assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset is required, the Co-operative estimates the asset’s recoverable amount. An
asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal and its value in use. Recoverable
amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those

44
from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less
costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate
valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded
companies or other available fair value indicators.
An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment
losses may no longer exist or may have decreased. If such an indication exists, the recoverable amount is estimated. A previously
recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable
amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its
recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss
unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal
the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a
systematic basis over its remaining useful life.
s) Trade and other payables
Trade and other payables are carried at amortised cost and due to their short-term nature they are not discounted. They represent
liabilities for goods and services provided to the Co-operative prior to the end of the financial year that are unpaid and arise when
the Co-operative becomes obliged to make future payments in respect of the purchase of these goods and services.
t) Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction
costs.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective
interest method.
Gains or losses are recognised in profit or loss when the liabilities are derecognised.
u) Employee benefit liabilities
Provisions are recognised when the Co-operative has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate
can be made of the amount of the obligation. When the Co-operative expects some or all of a provision to be reimbursed, for
example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement
is virtually certain. The expense relating to any provision is presented in the statement of profit or loss and other comprehensive
income net of any reimbursement.
Wages, salaries and sick leave
Liabilities for wages and salaries, including non-monetary benefits and accumulating sick leave which are expected to be settled
within 12 months of the reporting date are recognised in respect of employees’ services up to the reporting date. They are
measured at the amounts expected to be paid when the liabilities are settled. Expenses for non-accumulating sick leave are
recognised when the leave is taken and are measured at the rates paid or payable.
Long service leave and annual leave
The Co-operative does not expect its long service leave or annual leave benefits to be settled wholly within 12 months of each
reporting date. The Co-operative recognises a liability for long service leave and annual leave measured as the present value of
expected future payments to be made in respect of services provided by employees up to the reporting date using the projected
unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and
periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate
bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.
v) Members’ interest
In periods before 1 July 2004, members units in the Co-operative were recorded in equity as contributed equity. On 1 July 2004,
the Co-operative re-classified these instruments to non-current interest-bearing liabilities in accordance with generally accepted
International Accounting Practice. Any distributions paid on these instruments are treated as a borrowing cost.
This position which was clarified by UIG 2 Members’ Shares in Co-operative Entities and Similar Instruments, which the Co-
operative adopted effective 1 July 2004.
w) Norco capital units
Norco Capital Units are carried at the principal amount. Interest is accrued at the entitlement rate and is included in “Note 15
Interest-bearing loans and borrowings”.
x) Derivative financial instruments and hedge accounting
Initial recognition and subsequent measurement
The Co-operative uses interest rate swaps (derivative financial instruments) to hedge its interest rate risks. Such derivative financial
instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently
remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when
the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the effective
portion of cash flow hedges, which is recognised in Other Comprehensive Income (OCl) and later reclassified to profit or loss when
the hedge item affects profit or loss.
For the purpose of hedge accounting, hedges are classified as:
• Cash flow hedges: when hedging the exposure to variability in cash flows that is either attributable to a particular risk associated
with a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm
commitment.
At the inception of a hedge relationship, the Co-operative formally designates and documents the hedge relationship to which it
wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation
includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the

45
 entity will assess the effectiveness of changes in the hedging instrument’s fair value in offsetting the exposure to changes in the
hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving
offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been
highly effective throughout the financial reporting periods for which they were designated.
Hedges that meet all the qualifying criteria for hedge accounting are accounted for, as described below:
Cash flow hedges
The effective portion of the gain or loss on the hedging instrument is recognised in OCI in the cash flow hedge reserve, while any
Ineffective portion is recognised immediately in the statement of profit or loss as other operating expense.
The Co-operative uses interest rate swaps to hedge the exposure to cash flow movements in loan movements. The Co-operative
has entered into interest rate swaps which are economic hedges, which are fair valued by comparing the contracted rate to the
future market rates for contracts with the same length of maturity. During 30 June 2020, there were no swaps that have been
designated as effective interest rate swaps (2019: $0.4 million).
If the forecast transaction or firm commitment is no longer expected to occur, the cumulative gain or loss previously recognised
in equity is transferred to the income statement. If the hedging instrument expires or is sold, terminated or exercised without
replacement or rollover, or if its designation as a hedge is revoked, any cumulative gain or loss previously recognised in other
comprehensive income remains in other comprehensive income until the forecast transaction or firm commitment affects profit
or loss.
y) Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the
asset or transfer the liability takes place either:
• In the principal market for the asset or liability, or
• In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Co-operative.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset
or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits
by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest
and best use.
The Co-operative uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to
measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair
value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
• Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
• Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or
indirectly observable
• Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For the purpose of fair value disclosures, the Co-operative has determined classes of assets and liabilities on the basis of the nature,
characteristics and risks of the asset or liability and the level of the fair value hierarchy, as explained above.

3. Significant accounting judgements, estimates and assumptions

Significant judgements
The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the
reported amounts in the financial statements. Management continually evaluates its judgments and estimates in relation to assets,
liabilities, contingent liabilities, revenue and expenses. Management bases its judgments and estimates on historical experience
and on other various factors it believes to be reasonable under the circumstances, the result of which form the basis of the carrying
values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under
different assumptions and conditions.
Management has identified the following critical accounting policies for which significant judgments, estimates and assumptions
are made. Actual results may differ from these estimates under different assumptions and conditions and may materially affect
financial results or the financial position reported in future periods.
Further details of the nature of these assumptions and conditions may be found in the relevant notes to the financial statements.
Impairment of non-financial assets other than goodwill
The Co-operative assesses impairment of all assets at each reporting date by evaluating conditions specific to the Co-operative
and to the particular asset that may lead to impairment. These include product and manufacturing performance, technology,
economic and political environments and future product expectations. If an impairment trigger exists the recoverable amount of
the asset is determined.
Provision for expected credit losses of trade receivables and contract assets
The Co-operative uses a provision matrix to calculate ECLs for trade receivables and contract assets. The provision rates are based
on days past due for groupings of various customer segments that have similar loss patterns (i.e., customer type and rating and
age profile of debt).
The provision matrix is initially based on the Co-operative’s historical observed default rates. The Co-operative will calibrate
the matrix to adjust the historical credit loss experience with forward-looking information. For instance, if forecast economic
conditions (i.e., gross domestic product) are expected to deteriorate over the next year which can lead to an increased number
of defaults in the manufacturing sector, the historical default rates are adjusted. At every reporting date, the historical observed
default rates are updated and changes in the forward-looking estimates are analysed.
The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant
estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Co-operative’s

46
historical credit loss experience and forecast of economic conditions may also not be representative of customer’s actual default
in the future. The information about the ECLs on the Co-operative’s trade receivables is disclosed in Note 8.
Provision for inventory obsolescence
The Co-operative periodically reviews the inventory ledger to identify inventory items that may be held in excess of their net
realisable value. For such items that are identified, a provision for inventory obsolescence amount is raised which represents the
amount for which the Co-operative may not recover through use of sale of the goods. Obsolete stock is written off when identified.
Leases - Estimating the incremental borrowing rate
The Co-operative cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate
(IBR) to measure lease liabilities. The IBR is the rate of interest that the Co-operative would have to pay to borrow over a similar
term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar
economic environment. The IBR therefore reflects what the Co-operative ‘would have to pay’, which requires estimation when
no observable rates are available (such as for subsidiaries that do not enter into financing transactions) or when they need to be
adjusted to reflect the terms and conditions of the lease (for example, when leases are not in the subsidiary’s functional currency).
The Co-operative estimates the IBR using observable inputs (such as market interest rates) when available and is required to make
certain entity-specific estimates (such as the subsidiary’s stand-alone credit rating).
Determining the lease term of contracts with renewal and termination options – Co-operative as lessee
The Co-operative determines the lease term as the non-cancellable term of the lease, together with any periods covered by an
option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if
it is reasonably certain not to be exercised.
The Co-operative has several lease contracts that include extension and termination options. The Co-operative applies judgement
in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it
considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the
commencement date, the Co-operative reassesses the lease term if there is a significant event or change in circumstances that
is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate (e.g., construction of
significant leasehold improvements or significant customisation to the leased asset).
The Co-operative included the renewal period as part of the lease term for leases of property, motor vehicles and other equipment
with shorter non-cancellable periods (i.e., 3 to 10 years). The renewal periods for leases of property with longer non-cancellable
periods (i.e., > 10 years) are not included as part of the lease term as these are not reasonably certain to be exercised. In addition,
the renewal options for leases of motor vehicles are not included as part of the lease term because the Co-operative typically
leases motor vehicles for not more than five years and, hence, is not exercising any renewal options. Furthermore, the periods
covered by termination options are included as part of the lease term only when they are reasonably certain not to be exercised.
Refer to Note 12 for information on potential future rental payments relating to periods following the exercise date of extension
and termination options that are not included in the lease term.

4. Revenue from contracts with customers

Disaggregated revenue information
Set out below is the disaggregation of the Co-operative’s revenue from contracts
with customers: 2020 2019
$000 $000
Type of goods or service
Sale of goods - Foods 375,818 337,652
Sale of goods - Rural 280,951 244,996
Sale of goods - Milk supply 26,657 20,313
Total revenue from contracts with customers 683,426 602,961

Geographical markets
Australia 678,926 598,663
Other 4,500 4,298
Total revenue from contracts with customers 683,426 602,961

Timing of revenue recognition

Goods transferred at a point in time 683,426 602,961
Total revenue from contracts with customers 683,426 602,961

5. Other income and expenses

5.1 Other income 2020 2019
$000 $000
Rental income 131 152
Sundry income 412 97
543 249

5.2 Borrowing costs/finance costs 2020 2019

$000 $000
Interest on lease liabilities 566 21
Borrowing costs 2,109 2,348
2,675 2,369

47
 5.3 Milk payments to suppliers 2020 2019
$000 $000
Milk payments to Norco member suppliers 151,450 117,010
Milk payments to external suppliers 3,860 8,830
155,310 125,840

5.4 Employee expenses 2020 2019

$000 $000
Salaries and wages (including contractors) 62,633 59,495
Workers compensation 2,534 2,144
Superannuation costs 4,709 4,557
Payroll tax 2,783 2,632
72,659 68,828

5.5 Depreciation expense 2020 2019

$000 $000
Plant and equipment 5,846 5,673
Buildings 511 504
Right-of-use assets 3,842 -
10,199 6,177
5.6 Administration and other costs
Administration and other costs include the following: 2020 2019
$000 $000
Inventory obsolescence 53 63
Expected credit losses (Note 8) 145 417

6. Income tax expense

The major components of income tax expense for the years ended 30 June 2020 and 2019 are: 2020 2019
$000 $000
Current income tax:
Current income tax charge - -
Adjustments for current tax of prior periods - -

Deferred tax:
Relating to origination and reversal of temporary differences - -
Income tax expense reported in the statement of profit or loss and other
comprehensive income - -
A reconciliation between tax expense and the product of accounting profit before income
tax multiplied by Co-operative applicable income tax rate is as follows:
2020 2019
$000 $000
Accounting profit before income tax 4,412 10
At Australia’s statutory income tax rate of 30% (2019: 30%) 1,323 3
Non-deductible amounts 316 1,056
Movement in temporary differences 181 (936)
Other movements in tax (380) -
Tax loss movement (1,440) (123)
- -
Tax losses
At 30 June 2020, the Co-operative had an estimated gross $0.9m in carry forward losses (actual 2019: $5.7m). These tax losses
have not been brought to account in the statement of financial position. There are no available franking credits.
Temporary Differences – Net
The Co-operative has a surplus of deductible temporary differences. In effect the deferred tax liabilities are recorded, however
are 100% offset by deferred tax assets so a net $Nil position is seen in the balance sheet. At 30 June 2020 and 2019 a surplus
of temporary difference assets was present as disclosed below.
2020 2019
Unrecognised deferred tax assets and liabilities $000 $000
Provision for expected credit losses 778 763
Provision for employee benefits 3,432 3,242
Trademark (819) (819)
Provision for obsolescence 506 477
Property, plant and equipment (2,344) (2,199)
Right-of-use asset (5,888) -
Lease liability 5,980 -
1,645 1,464
48
7. Member distributions 2020 2019
$000 $000
Expensed in the year 445 626

8. Trade and other receivables 2020 2019

$000 $000
Trade receivables 62,832 63,354
Allowance for expected credit losses (2,593) (2,542)
60,239 60,812
Other receivables 761 1,120
61,000 61,932
Set out below is the movement in the allowance for expected credit losses of trade receivables and contract assets:
2020 2019
$000 $000
As at 1 July 2,542 923
Adjustment on adoption of AASB 9 - 1,055
Charge for the year (Note 5.6) 145 417
Other (94) 147
As at 30 June 2,593 2,542
Trade receivables are generally on 30-90 day terms. An allowance for expected credit losses is made where there is objective
evidence that a trade receivable is impaired. The carrying value of trade and other receivables approximates fair value.
At 30 June, the ageing analysis of trade receivables is as follows:

< 30 30-60 61-90

Total days days days 91+ days
$000 $000 $000 $000 $000
2020 62,832 42,607 12,648 4,934 2,643
2019 63,354 41,447 14,330 4,571 3,006
Receivables past due have been considered for impairment and are partially included in the $2.6m expected credit loss
provision based on management’s expectation of cash to be collected.

9. Inventories 2020 2019

$000 $000
Raw materials 11,447 11,929
Finished goods and work in progress 29,580 31,294
Provision to net realisable value (1,688) (1,591)
Total inventories at the lower of cost and net realisable value 39,339 41,632
An allowance for inventory obsolescence is made where there is objective evidence that inventories are carried in excess of
their net realisable value.

10. Investments 2020 2019

$000 $000
Shares
Unlisted corporations 3 3

11. Property, plant and equipment 2020 2019

$000 $000
Land and buildings
At cost 29,022 28,943
Accumulated depreciation (7,258) (6,747)
Net carrying amount 21,764 22,196

Plant, equipment and vehicles

At cost 97,102 98,030
Accumulated depreciation (58,429) (60,898)
Net carrying amount 38,673 37,132

Capital expenditure work in progress

At cost 6,442 4,838
Net carrying amount 6,442 4,838

Total property, plant and equipment

At cost 132,566 131,811
Accumulated depreciation (65,687) (67,645)
Net carrying amount 66,879 64,166

49
 Reconciliation of carrying amounts at the beginning and the end of the year 2020 2019
$000 $000
Land and buildings
At 1 July 22,196 22,397
Transfers from work in progress 79 303
Depreciation expense (511) (504)
At 30 June 21,764 22,196

Plant, equipment and vehicles

At 1 July 37,132 37,060
Disposals (116) (118)
Transfers from work in progress 7,503 5,863
Depreciation expense (5,846) (5,673)
At 30 June 38,673 37,132

Capital expenditure work in progress

At 1 July 4,838 3,431
Additions 9,186 7,573
Transfers to property, plant and equipment (7,582) (6,166)
At 30 June 6,442 4,838

Total property, plant and equipment

At 1 July 64,166 62,888
Additions 9,186 7,573
Disposals (116) (118)
Depreciation expense (6,357) (6,177)
At 30 June 66,879 64,166

There were no impairment losses recognised in the 2020 or 2019 financial years.
The Co-operative’s property, plant and equipment is subject to a first charge as security over its interest-bearing liabilities. See
Note 15(c) for further information.
The Co-operative adopted AASB 16 Leases for the year ended 30 June 2020, under which all operating and finance lease
commitments are now included a right-of use assets and lease liabilities (see Notes 2.3 (h), 12 and 15).

12 Leases
Co-operative as a lessee
The Co-operative has lease contracts for various items of property and motor vehicles used in its operations. All the leases
generally have lease terms between 3 and 10 years. The Co-operative’s obligations under its leases are secured by the lessor’s
title to the leased assets. Generally, the Co-operative is restricted from assigning and subleasing the leased assets and some
contracts require the Co-operative to maintain certain financial ratios. There are several lease contracts that include extension
and termination options and variable lease payments, which are further discussed below.
The Co-operative also has certain leases of machinery with lease terms of 12 months or less and leases of office equipment with
low value. The Co-operative applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases.
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period:

Property Motor vehicles Total

$000 $000 $000
As at 1 July 2019 (on adoption of AASB 16) 15,234 3,112 18,346
Additions 2,603 2,521 5,124
Depreciation expense (2,343) (1,499) (3,842)
As at 30 June 2020 15,494 4,134 19,628
Set out below are the carrying amounts of lease liabilities (included under interest-bearing loans and borrowings)
and the movements during the period: 2020
$000

As at 1 July 2019 (on adoption of AASB 16) 18,346

Additions 5,124
Accretion of interest 566
Payments (4,103)
At 30 June 2020 19,933

Current 3,887
Non-current 16,046

The following are the amounts recognised in profit or loss: 2020

$000
Depreciation expense of right-of-use assets 3,842
Interest expense on lease liabilities 566
Expense relating to short-term leases (included in occupancy expenses) 2,176
Expense relating to leases of low-value assets (included in occupancy expenses) 1,584
Total amount recognised in profit or loss 8,168

50
The Co-operative had total cash outflows for leases of $7,863,000 in 2020. The Co-operative also had non-cash additions to
right-of-use assets and lease liabilities of $5,124,000 in 2020.
Set out below are the undiscounted potential future rental payments relating to periods following the exercise date of extension
and termination options that are not included in the lease term:
Total
2020 $000
Extensions options expected not to be exercised 12,173
Termination options expected to be exercised -
12,173

13. Intangible assets and goodwill

2020 2019
$000 $000
Acquired goodwill 34,309 34,309
Trademark 2,729 2,729
Net carrying amount 37,038 37,038

(a) Impairment test of acquired goodwill

Goodwill acquired through business combinations has been allocated at an entity level to the relevant cash generating units
(CGUs). The CGUs for the Co-operative are Norco Foods, Norco Rural Retail and Norco Agribusiness. The goodwill acquired and
trademark are allocated to the Norco Foods CGU.
The discount rate applied to cash flow projections is 12% pre-tax (2019: 12%).
Key assumptions used in the value in use calculation are:
• Revenue: based on projected growth predictions;
• Cost of sales: based on revenue growth; and
• Other costs: based on rural store growth and expected wage increases.
No reasonably possible change in the key assumptions noted would result in an impairment.

14. Trade and other payables 2020 2019

$000 $000
Current
Trade payables 67,940 66,871
Accruals 17,520 15,436
85,460 82,307

Non-current
Other payables 397 397

Trade payables are generally on 30 day terms. The fair value of trade and other payables approximates their carrying value.

15. Interest-bearing loans and borrowing 2020 2019

$000 $000
Current
Lease liability (Note 12) 3,887 233
Norco Capital Units 84 85
Term loans - secured 1,500 1,500
5,471 1,818
Non-current
Lease liability (Note 12) 16,046 108
Term loans - secured 31,920 40,320
47,966 40,428

The Co-operative finance facility with Rabobank was amended during the year, the Borrowing Base Facility is scheduled to
expire on 30 September 2021 and the Term Loan Facility is scheduled to expire on 30 September 2023. Bank Guarantees and
Credit Card Facilities remain in place with St George Bank.
Refer to Note 15(d) for financing facilities available to the Co-operative.
(a) Fair values
The carrying amount of the Co-operative’s current and non-current borrowings approximates their fair value. The fair values
have been calculated by discounting the expected future cash flows at prevailing market interest rates.
(b) Interest rate, foreign exchange and liquidity risk
Details regarding interest rate, foreign exchange and liquidity risk is disclosed in Note 30.
(c) Assets pledged as security
The carrying amounts of assets pledged as security for current and non-current interest-bearing liabilities are:
2020 2019
$000 $000
Property asset charges 66,879 64,166
Trademark 2,729 2,729
Total assets pledged as security 69,608 66,895
There are no specific terms and conditions related to the above pledges.

51
 (d) Financing facilities
The following financing facilities are available for the Co-operative at 30 June: 2020 2019
$000 $000
Term loan facilities
Used facilities 33,420 41,820
Unused facilities 35,580 21,305
69,000 63,125
Bank guarantees and finance leases
Used facilities 1,298 1,353
Unused facilities 402 347
1,700 1,700
Business credit card facility
Used facilities 19 34
Unused facilities 135 106
154 140
Total finance facilities
Used facilities 34,737 43,207
Unused facilities 36,117 21,758
70,854 64,965

16. Derivative financial instruments 2020 2019

$000 $000
Financial liabilities at fair value through OCI

Current
Interest rate swap contracts - cash flow hedges - 423

The Co-operative has entered into cash flow interest rate swaps, which are measured at fair value by comparing the contract
rate to the future market rates for contracts with the same maturity terms. During 2019, an amount of $0.4m of swaps have
been designated as effective interest rate swaps and therefore satisfy the accounting standard requirements for hedge
accounting. The timing of the interest rate payments for the swaps are in line with the interest rate payments of the bank
facility. As at 30 June 2020, the Co-Operative had no interest rate swaps.
The Co-operative has applied fair value factors in accordance with AASB 13. The inputs used in the valuation method are
classified as Level 2 (2019: Level 2).

16.1 Hedging activities and derivatives

Cash flow hedges
The Co-operative does not hold interest rate swaps as at 30 June 2020.
Change in fair value used for
As at 30 June 2019 Notional Carrying Line item in the statement of measuring ineffectiveness for
amount amount financial position the period
$000 $000 $000

Interest rate swaps 25,188 423 Derivative financial instruments -

The impact of hedged items on the statement of financial position is, as follows:
30 June 2020 30 June 2019
Change in fair
value used Change in fair value
for measuring Cash flow hedge used for measuring Cash flow hedge
ineffectiveness reserve ineffectiveness reserve
$000 $000 $000 $000

Interest rate swaps - - - (423)

The effect of the cash flow hedge in the statement of profit or loss and other comprehensive income is, as follows:
Amount
Total hedging Ineffectiveness reclassified from
gain/(loss) recognised in OCI to profit or
Year ended 30 June 2020 recognised in OCI profit or loss loss
$000 $000 $000
Interest rate swaps 423 - -

Year ended 30 June 2019

Interest rate swaps 31 - -

2020 2019
17. Employee benefit liabilities $000 $000
Current
Employee entitlements 9,886 9,669
Non-current
Employee entitlements 1,554 1,138

52
18. Members’ interest
18.1 Movements in shares on issue $000
Opening balance - 10,193,000 fully paid shares 10,193
Repurchases of cancelled shares (353)
Subscriptions 454
At 30 June 2019 - 10,294,000 fully paid shares 10,294

Opening balance - 10,294,000 fully paid shares 10,294

Repurchases of cancelled shares (945)
Subscriptions 738
At 30 June 2020 - 10,087,000 fully paid shares 10,087

18.2 Terms and conditions of contributed equity

Contributed equity has rights in accordance with the Co-operatives National Law (NSW).

19. Reserves
Asset revaluation reserve
Effective 1 July 2004, the Co-operative changed the valuation basis applied to non-current land and buildings. Under historical
AGAAP, the Co-operative carried land and buildings at fair value. From 1 July 2004, the Co-operative deemed the fair value
to be cost. The asset revaluation reserve represents the historical accumulation of revaluation adjustments. The reserve will
no longer be available to offset decrements in the value of land and buildings and will be transferred to retained earnings on
impairment and/or disposal of land and buildings.
Cash flow hedge reserve
This reserve records the portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined to be an
effective hedge.

20. Cash and cash equivalents

20.1 Reconciliation of cash
For the purpose of the statement of cash flows, cash and cash equivalents compose of the following at 30 June:

2020 2019
$000 $000
Cash at bank and on hand 4,686 5,332

20.2 Cash flow reconciliation 2020 2019

$000 $000
Reconciliation of net profit before tax to net cash flows:
Profit before tax 4,412 10
Adjustments for:
Depreciation of property, plant and equipment 6,357 6,177
Depreciation of right-of-use assets 3,842 -
Member distribution expense 445 626
Expected credit losses 145 417
Inventory obsolescence 53 63
Net loss/(gain) on disposal of property, plant and equipment 104 (140)
Changes in assets and liabilities:
Decrease/(increase) in trade and other receivables 787 (6,548)
Decrease/(increase) in inventories 2,240 (2,841)
(Increase)/decrease in other assets (712) 404
Increase in trade and other payables 2,708 4,468
Increase in employee benefit liabilities 633 249
Net cash flows from operating activities 21,014 2,885

Changes in liabilities from financing activities

Cash inflows/ Adoption of

2019 (outflows) AASB 16 New leases 2020
$000 $000 $000 $000 $000

Liabilities with cash flows from

financing activities
Interest bearing loans and borrowings
(excluding lease liabilities) 41,905 (8,401) - - 33,504
Suppliers’ share contribution 10,294 (207) - - 10,087
Distribution paid to members - (445) - - (445)
Lease liabilities 341 (3,537) 18,005 5,124 19,933
52,540 (12,590) 18,005 5,124 63,079

53
 Cash
inflows/
2018 (outflows) 2019
$000 $000 $000
Liabilities with cash flows from financing activities
Interest bearing loans and borrowings (excluding lease liabilities) 35,946 5,959 41,905
Suppliers’ share contribution 10,193 101 10,294
Distribution paid to members - (626) (626)
Lease liabilities 646 (305) 341
46,785 5,129 51,914

21 Controlled entities
% equity interest Investment $000
Name Principal activities 2020 2019 2020 2019
Logan Valley Dairies Pty Ltd Dormant 100% 100% 165 165
Norco Wholesalers Pty Ltd* Wholesaler 100% 100% - -
Fieldco Pty Ltd* Dormant 100% 100% - -
Norcofields Pty Ltd* Dormant 100% 100% - -
Beaudesert Milk Pty Ltd* Dormant 100% 100% - -
Norco Milk Pty Ltd** Dormant 100% 100% - -
Gold Coast Milk Pty Ltd Property Holder 100% 100% 15,783 15,783
ACN 146 859 074 Pty Ltd* Dormant 100% 100% - -
15,948 15,948
* Investment <$101
** 100 shares at $1 each

22. Commitments
Capitalised finance lease commitments for plant and vehicles:
2019
$000
Within one year 233
After one year but not more than five years 108
Total minimum lease payments 341
341
Non-cancellable operating lease commitments for equipment, land and buildings:
2019
$000
Within one year 2,591
After one year but not more than five years 6,787
More than five years 2,351
11,729
Cancellable operating lease commitments for vehicles and plant:
2019
$000
Within one year 1,350
After one year but not more than five years 1,484
2,834

The Co-operative adopted AASB 16 Leases for the year ended 30 June 2020, under which operating and finance lease
commitments are now included as lease liabilities (see Notes 2.3 (h), 12 and 15).

23. Contingent liabilities

Legal Actions
The directors are not aware of any material legal actions being brought against the Co-operative, its controlled entities or any
joint venture to which the Co-operative holds an interest which has not been provided for.
Bank Guarantees
Contingent liabilities exist in respect of bank guarantees given to various parties that amount to $1,298,000 (2019: $1,353,000)
and are not included as creditors.

24. Financial guarantee contracts

A letter of financial support is provided by Norco Co-operative Limited to Norco Wholesalers Pty Limited.
The Co-operative has no other outstanding financial guarantee contracts at 30 June 2020 (2019: $Nil).

25. Capital management

The Co-operative manages its capital structure through regular reviews of its exposure to debt and members as shareholders.
The Co-operative has no set levels for equity and debt. The management of the Co-operative views members shares as equity.
Members’ interests are managed in line with the requirements of the Co-operatives National Law (NSW). The Co-operative has
complied with all requirements of the Co-operatives National Law (NSW) during the year.

54
26. Directors and executive disclosures

26.1 Directors
(i) The directors of Norco Co-operative Limited during the financial year were:
Michael Jeffery (Non-Executive)
Heath Hoffman (Non-Executive)
Greg McNamara (Non-Executive)
Leigh Shearman (Non-Executive)
Greg Billing (Non-Executive) (a)
Elke Watson (Non-Executive) (b)
Heath Cook (Non-Executive) (c)
Matthew Trace (Non-Executive) (d)
(a) Retired as Non-Executive Director effective 27 November 2019
(b) Ceased as Non-Executive Director effective 27 November 2019
(c) Elected Non-Executive Director effective 27 November 2019
(d) Elected Non-Executive Director effective 27 November 2019

26.2 Key management personnel

(i) The executives of Norco Co-operative Limited during the financial year were:
Michael Hampson (Chief Executive Officer) (a)
Sean Southwood (Chief Financial Officer) (b)
Andrew Burns (EGM Foods) (c)
Damon Bailey (EGM Rural/Agribusiness)
Brett Arthur (GM Commercial Foods) (d)
(a) Appointed Chief Executive Officer effective 3 October 2019, formerly Chief Operating Officer
(b) Appointed Chief Financial Officer 13 November 2019, formerly Financial Controller
(c) Resigned as EGM Norco Foods effective 28 February 2020.
(d) Appointed GM Commercial Foods effective 28 February 2020

26.3 Compensation of key management personnel and Directors

2020 2019
$ $
Short term - wages and salaries 1,712,406 1,601,434
Termination benefits 121,130 173,364
Superannuation 140,334 158,934
Non-cash 16,931 16,932
Total compensation 1,990,801 1,950,664

The above amounts only relate to the cash and other benefits paid to Directors and key management personnel for the period
of their employment with the Co-operative or for the period they held a position as a Director or key management person.

26.4 Transactions with and balances with key management personnel

Purchases
Purchases of milk from key management personnel and related entities are on the same commercial terms and conditions
as enjoyed by other non key management personnel members.
Sales
Purchases of milk from key management personnel and related entities are on the same commercial terms and conditions
as enjoyed by other non key management personnel members.

26.5 Share transactions

2020 2019
Aggregate number of shares held by Co-operative Directors and their related
entities at 30 June 500,847 677,022
Aggregate number of shares acquired by Co-operative Directors and their related
entities during the year 29,825 27,574

27. Superannuation commitments

All employees participate in an employer sponsored defined contribution/accumulation style superannuation plan. Contributions
by the Co-operative of 9.5% (2019: 9.5%) of employees’ wages and salaries are legally enforceable except employees of the Ice
Cream division who are paid 11% (2019: 11%) superannuation commitments in line with their Enterprise Bargaining Agreement.

28. Auditor’s remuneration

The auditor of Norco Co-operative Limited is Ernst & Young (Australia). 2020 2019
$ $
Amounts received or due and receivable by Ernst & Young (Australia) for:
An audit or review of the financial report 164,000 144,000
Other services
Financial statements compilation 11,500 11,000
175,500 155,000
In the year ended 30 June 2020 an additional initial fee of $17,500 was paid to Ernst & Young
associated with additional audit requirements associated with the first-time adoption and audit of AASB 16 Leases.

55
 29. Information relating to the Norco Co-operative Limited (the Parent) 2020 2019
$000 $000
Information relating to Norco Co-operative Limited:
Current assets 107,016 110,180
Total assets 214,782 195,605
Total liabilities (149,745) (135,191)
Net assets attributable to members 65,037 60,414

Members’ interest 13,312 13,519

Net assets 51,725 46,895

Asset revaluation reserve 31,215 31,215

Cash flow hedge reserve - (423)
Retained earnings 20,510 16,103
Total equity 51,725 46,895

Profit of the Parent entity 4,413 9

Total comprehensive income of the Parent for the year 4,836 40

Details of any guarantees entered into by the Parent entity in relation to the debts of its subsidiaries
The Parent’s share of the jointly controlled entities financial guarantees is included in disclosures in Note 24.
Details of any contingent liabilities of the Parent entity
The Parent’s share of the jointly controlled entities contingent liabilities is included in disclosures in Note 23.
Details of any contractual commitments by the Parent entity for the acquisition of property, plant or equipment
The Parent’s share of the jointly controlled entities commitments is included in disclosures in Note 22.

30. Financial risk management objectives and policies

The Co-operative’s principal financial liabilities, other than derivatives, comprise of loans and borrowings, trade and other
payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Co-operative’s
operations and to provide guarantees to support its operations. The Co-operative’s principal financial assets include trade and
other receivables and cash and short-term deposits that derive directly from its operations.
The Co-operative is exposed to market risk, credit risk and liquidity risk. The Co-operative’s senior management oversees the
management of these risks. The Co-operative’s senior management is supported by the Audit and Risk Management Committee
that advises on financial risks and the appropriate financial risk governance framework for the Co-operative. The Audit and Risk
Management Committee provides assurance to the Co-operative’s Board of Directors that the Co-operative’s financial risk-taking
activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in
accordance with the Co-operative’s policies and risk objectives. All derivative activities for risk management purposes are carried
out by specialist teams that have the appropriate skills, experience and supervision. It is the Co-operative’s policy that no trading
in derivatives for speculative purposes shall be undertaken. The board of directors reviews and agrees policies for managing each
of these risks which are summarised below.

Risk exposures and responses

Interest rate risk
The Co-operative’s exposure to interest rate risks relates primarily to the Co-operative’s long-term debt and associated
obligations. The level of debt is disclosed in Note 15.
At balance date, the Co-operative had the following mix of financial assets and liabilities
exposed to Australian variable interest rate risk: 2020 2019
$000 $000
Financial assets and liabilities
Cash and cash equivalents 4,686 5,332
Derivative financial instruments - (423)
Net exposure 4,686 4,909

Interest rate swap contracts during 2019 outlined in Note 16, with a fair value of $0.4m loss are exposed to fair value movements
if interest rates change. The Co-operative’s policy is to manage its finance costs using variable rate debt with an appropriate
level of instruments to fix interest exposure. The Co-operative constantly analyses its interest rate exposure. To manage this mix
in a cost-efficient manner, the Co-operative has entered into interest rate swaps, in which they agree to exchange, at specified
intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional
principal amount. Consideration is given to potential renewals of existing positions, alternative financing and the mix of fixed
and variable interest rates.
The following sensitivity analysis is based on the interest rate risk exposures in existence at the reporting date:
Judgements of reasonably possible movements: Post tax profit Equity
Higher/(Lower) Higher/(Lower)
2020 2019 2020 2019
$’000 $’000 $’000 $’000
+1.0% (100 basis points) - (53) - -
-1.0% (100 basis points) - 53 - -

The movements in post-tax profit are due to the movement in fair value of cash, based on movements in interest rates only.

56
Significant assumptions used in the interest rate sensitivity analysis include:
• A price sensitivity of derivatives based on a reasonably possible movement of interest rates at balance dates by applying
the change as a parallel shift in the forward curve.
• The net exposure at balance date is representative of what the Co-operative was and is expecting to be exposed to in the
next twelve months from balance date.
Foreign currency risk
The Co-operative has no material exposure to foreign currency therefore this is not an applicable risk.
Commodity price risk
The Co-operative’s exposure to commodity price risk is present through the grain purchasing requirements for the Agribusiness
business. It is the Co-operatives policy to secure grain quantities and prices through forward grain contracts. As these contracts
are regular advance purchase contracts for process inputs, derivative accounting is not applied and contract fair value
movements are not recorded.
Credit risk
Credit risk arises from the financial assets of the Co-operative, which comprise cash and cash equivalents and trade and other
receivables. The Co-operative’s exposure to credit risk arises from potential default of the counter party, with a maximum
exposure equal to the carrying amount of these instruments. Exposure at balance date is addressed in each applicable note.
The Co-operative does not hold any credit derivatives to offset its credit exposure.
The Co-operative trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the
Co-operative’s policy to securitise its trade and other receivables.
It is the Co-operative’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures
including an assessment of their independent credit rating, financial position, past experience and industry reputation. Risk limits
are set for each individual customer in accordance with parameters set by the board. These risk limits are regularly monitored.
In addition, receivable balances are monitored on an ongoing basis with the result that the Co-operative’s exposure to bad
debts is not significant.
There are no significant concentrations of credit risk within the consolidated entity.
Liquidity risk
The Co-operative’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank
overdrafts, bank loans, finance leases and committed available credit lines.
The table below reflects contractual finance principal repayments and interest resulting from recognised financial liabilities as
of 30 June 2020. Cash flows for financial liabilities without fixed amount or timing are based on the conditions existing at 30
June 2020.
The remaining contractual maturities of the consolidated entity’s and parent entity’s financial liabilities are presented with an
analysis of the financial assets.
2020 2019
$000 $000
0-1 year 90,847 84,040
1-5 years 49,352 40,825
140,199 124,865
Maturity analysis of financial assets and liability based on management’s expectation.
The risk implied from the values shown in the table below reflects a balanced view of cash inflows and outflows. Leasing
obligations, trade payables and other financial liabilities mainly originate from the financing of assets used in our ongoing
operations such as property, plant, equipment and investments in working capital e.g. inventories and trade receivables. These
assets are considered in the consolidated entity’s overall liquidity risk.
<12 months 1 to 5 years Over 5 years Total
Year ended 30 June 2020 $000 $000 $000 $000
Cash and cash equivalents 4,686 - - 4,686
Trade and other receivables 61,000 - - 61,000
Interest-bearing loans and borrowings (1,500) (31,920) - (33,420)
Lease liabilities (3,887) (16,046) - (19,933)
Trade and other payables (85,460) (397) - (85,857)
Net maturity (25,161) (48,363) - (73,524)

<12 months 1 to 5 years Over 5 years Total

Year ended 30 June 2019 $000 $000 $000 $000
Cash and cash equivalents 5,332 - - 5,332
Trade and other receivables 61,932 - - 61,932
Interest-bearing loans and borrowings (1,500) (40,320) - (41,820)
Lease liabilities (233) (108) - (341)
Trade and other payables (82,307) (397) - (82,704)
Net maturity (16,776) (40,825) - (57,601)

Fair value
The methods for estimating fair value are outlined in the relevant notes to the financial statements.

31. Events after the reporting period

There have been no significant events occurred after the reporting period which may affect either the Co-operative’s operations
or results of those operations or the Co-operative’s state of affairs.

57
 DIRECTORS’ DECLARATION
30 June 2020

In accordance with a resolution of the directors of Norco Co-operative Limited, I state that:
In the opinion of the directors:
(a) t he financial statements and notes of the Co-operative are in accordance with the Corporations
Act 2001 and Co-operatives National Law (NSW), including:
(i) giving a true and fair view of the Co-operative’s financial position as at 30 June 2020 and of
its performance for the year ended on that date; and
(ii) complying with Accounting Standards, as required by the Co-operatives National Law (NSW);
and
(b) t here are reasonable grounds to believe that the Co-operative will be able to pay its debts as
and when they become due and payable.

On behalf of the Board

M.C. Jeffery
Chairman
Lismore
30 September 2020

58
 Ernst & Young Tel: +61 7 3011 3333
111 Eagle Street Fax: +61 7 3011 3100
Brisbane QLD 4000 Australia ey.com/au
GPO Box 7878 Brisbane QLD 4001

Independent Auditor’s Report to the Members of Norco Co-operative

Limited
Report on the Audit of the Financial Report

Opinion

We have audited the financial report of Norco Co-operative Limited (“the Co-operative”), which
comprises the statement of financial position as at 30 June 2020, the statement of profit or loss and
other comprehensive income, the statement of changes in equity and the statement of cash flows for
the year then ended, notes comprising a summary of significant accounting policies and other
explanatory information and the Directors’ Declaration.

In our opinion:

the accompanying financial report of Norco Co-operative Limited is in accordance with the
Corporations Act 2001 and Co-operatives National Law (NSW), including:

(i) giving a true and fair view of the Co-operative’s financial position as at 30 June 2020 and of
its financial performance for the year ended on that date; and

(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Co-operative in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.

A member firm of Ernst & Young Global Limited

Liability limited by a scheme approved under Professional Standards Legislation

59

We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial statements. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
1. Recoverable value of intangible assets and goodwill
Why significant
The annual non-current asset impairment assessment
was a key audit matter due to the value of these
assets relative to total assets and the degree of
estimation and assumptions required to be made by
the Co-operative, specifically concerning future
discounted cash flows.
Note 13 of the financial report discloses the individual
intangible assets and goodwill and the key
assumptions used in the Co-operative’s cash flow
model to test these assets for impairment.
2. Interest bearing loans and borrowings
Why significant
The Co-operative’s interest-bearing loans and
borrowings was a key audit matter due to their value
and the importance of the loan facility in funding the
Co-operative’s operations. In addition, the facility is
subject to the Co-operative complying with financial
covenants.
The Co-operative assessed it is in compliance with the
applicable financial covenants as at 30 June 2020 and
expects to continue to be compliant for the remaining
period of the facility.
Note 15 of the financial report discloses the details of
the interest bearing loans and borrowings.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
60
Independent Auditor’s Report
Norco Co-Operative Limited
Page 2
How our audit addressed the key audit matter
Our audit procedures included the following:
• Assessed whether the impairment testing
methodology used by the Co-operative complied with
the requirements of Australian Accounting
Standards.
• Tested the mathematical accuracy of the cash flow
forecasts and impairment model.
• Assessed the key assumptions within the cash flow
model including growth rates and discount rate.
• Considered the accuracy of historical cash flow
forecasts in order to evaluate the Co-operative’s
forecasting capability.
• We applied our knowledge of the business and
corroborated our work with external information
where possible.
• Assessed the impairment related disclosures
included in Note 13 of the financial report.
How our audit addressed the key audit matter
Our audit procedures included the following:
• Confirmed the loans and borrowings outstanding
with the each of the Co-operative’s financiers at 30
June 2020.
• Examined the Co-operative’s calculations to support
their testing of compliance with applicable financial
covenants.
• Assessed the adequacy of the disclosures relating to
funding and covenants included the financial report.
 Independent Auditor’s Report
Norco Co-Operative Limited
Page 3

3. Milk payments to suppliers

Why significant How our audit addressed the key audit matter

The Co-operative’s milk payments to suppliers was a
key audit matter due to the significance the milk
supply process to members and on the operations of
the business.
Payments are made to milk suppliers based upon the
quantity and quality of milk supplied. The price paid
is based on rates approved by the Co-operative’s
Board.
Our audit procedures included the following:
• Selected a sample of payments made to milk suppliers
during the year and determined whether the payment
was based upon Board approved rates.
• Tested, on a sample basis, the effectiveness of
selected controls over the Co-operative’s monthly milk
supply reconciliation process where volumes of milk
paid for were reconciled to the volumes of milk
supplied and other quality measures such as fat and
protein percentages were addressed.
• Tested, on a sample basis customer receipts to invoice
and bank statement.

Information Other than the Financial Report and Auditor’s Report

The Directors of the Co-operative are responsible for the other information. The other information
comprises the information in the Co-operative’s Annual Report for the year ended 30 June 2020 but
does not include the financial report and the auditor’s report thereon.

Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If,
based upon the work we have performed, we conclude that there is a material misstatement of this
other information; we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the Financial Report

The Directors of the Co-operative are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards, the Corporations Act 2001
and Co-operatives National Law (NSW) and for such internal control as the Directors determine is
necessary to enable the preparation of the financial report that gives a true and fair view and is free
from material misstatement, whether due to fraud or error.

In preparing the financial report, the Directors are responsible for assessing the Co-operative’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either intend to liquidate the Co-operative
or cease operations, or have no realistic alternative but to do so.

A member firm of Ernst & Young Global Limited

Liability limited by a scheme approved under Professional Standards Legislation

61
 Independent Auditor’s Report
Norco Co-Operative Limited
Page 4

Auditor’s Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.

As part of an audit in accordance with Australian Auditing Standards, we exercise professional

judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s or the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Company’s or Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw attention
in our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Company or
the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in
a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.

A member firm of Ernst & Young Global Limited

Liability limited by a scheme approved under Professional Standards Legislation

62
 Independent Auditor’s Report
Norco Co-Operative Limited
Page 5

We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.

From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.

Ernst & Young

Bradley Tozer
Partner
30 September 2020

A member firm of Ernst & Young Global Limited

Liability limited by a scheme approved under Professional Standards Legislation

63
 HEAD OFFICES
NORCO CORPORATE
‘Windmill Grove’, 107 Wilson Street SOUTH LISMORE NSW 2480 (PO Box 486 LISMORE NSW 2480)
Phone: 02 6627 8000 Fax: 02 6627 8099
NORCO RURAL
‘Windmill Grove’, 107 Wilson Street SOUTH LISMORE NSW 2480 (PO Box 3107 LISMORE DC NSW 2480)
Phone: 02 6627 8000 Fax: 02 6627 8099
NORCO AGRIBUSINESS
Windmill Grove’, 107 Wilson Street SOUTH LISMORE NSW 2480 (PO Box 3107 LISMORE DC NSW 2480)
Phone: 02 6627 8000 Fax: 02 6627 8099
MILK SUPPLY
Windmill Grove’, 107 Wilson Street SOUTH LISMORE NSW 2480 (PO Box 486, LISMORE NSW 2480)
Phone: 02 6627 8029 Fax: 02 6627 8095

NORCO FOODS
NORCO MILK – LABRADOR
Cnr Pine Ridge Road & Gold Coast Highway LABRADOR QLD 4215 (PO Box 530, SOUTHPORT QLD 4215)
Phone: 07 5511 7200 Fax: 07 5511 7298
NORCO MILK – RALEIGH
North Street RALEIGH NSW 2454 Phone: 02 5641 6100 Fax: 02 5641 6198
ICE CREAM BUSINESS UNIT
Union Street SOUTH LISMORE NSW 2480 (PO Box 486, LISMORE NSW 2480)
Phone: 02 6627 8000 Fax: 02 6627 8102

NORCO AGRIBUSINESS – NORCO STOCKFEEDS AND NORCO GRAIN

NORCO STOCKFEEDS
Krauss Avenue SOUTH LISMORE NSW 2480 Phone: 02 66278299 Fax: 02 6627 8298
NORCO STOCKFEEDS
2814 Murgon – Gayndah Road WINDERA QLD 4605 Phone: 07 4168 6300 Fax: 07 4168 6399
NORCO GRAIN – TOOWOOMBA
22 Carrel Drive HARRISTOWN QLD 4350 Phone: 07 4637 3313 Fax: 07 4637 3399

NORCO RURAL BRANCHES

ALSTONVILLE 17 Kays Lane Russelton Estate ALSTONVILLE NSW 2477 Phone: 02 6625 8400 Fax: 02 6625 8499
ARMIDALE 252 Mann Street ARMIDALE NSW 2350 Phone: 02 6775 4300 Fax: 02 6775 4399
BEAUDESERT 9A Thiedke Road BEAUDESERT QLD 4285 Phone: 07 5542 4500 Fax: 07 5542 4599
BELLINGEN 1076 Waterfall Way BELLINGEN NSW 2454 Phone: 02 6692 3800 Fax: 02 6692 3899
BOWRAVILLE 51 Carbin Street BOWRAVILLE NSW 2449 Phone: 02 6564 5400 Fax: 02 6564 5499
BRANCH DIRECTORY

BUNDABERG 96 Mount Perry Road BUNDABERG QLD 4670 Phone: 07 4326 3500 Fax: 07 4326 3599
CASINO 136 Dyraaba Street CASINO NSW 2470 Phone: 02 6661 2100 Fax: 02 6661 2199
COFFS HARBOUR 25 Wingara Drive COFFS HARBOUR NSW 2450 Phone: 02 6691 2800 Fax: 02 6691 2899
DUNGOG Stroud Road DUNGOG NSW 2420 Phone: 02 4999 2600 Fax: 02 4999 2699
GAYNDAH 59 Dalgangal Road GAYNDAH QLD 4625 Phone: 07 4140 8542 Fax: 07 4140 8572
GLEN INNES 165 Lang Street GLEN INNES NSW 2370 Phone: 02 6739 7400 Fax: 02 6739 7499
GLOUCESTER Cnr Church & Phillip Streets GLOUCESTER NSW 2422 Phone: 02 6558 9600 Fax: 02 6558 9666
GRAFTON 19 Queen Street GRAFTON NSW 2460 Phone: 02 6641 3400 Fax: 02 6641 3499
GYMPIE 11 Station Road GYMPIE QLD 4570 Phone: 07 5481 4600 Fax: 07 5481 4699
HEATHERBRAE 9 Hank Street HEATHERBRAE NSW 2324 Phone: 02 4988 5300 Fax: 02 4988 5399
KEMPSEY 3 Kemp Street WEST KEMPSEY NSW 2440 Phone: 02 6563 3700 Fax: 02 6563 3799
KINGAROY 97 River Road KINGAROY QLD 4610 Phone: 07 4336 2400 Fax: 07 4336 2409
KYOGLE Willis Street KYOGLE NSW 2474 Phone: 02 6632 5900 Fax: 02 6632 5999
LISMORE 105 Wilson Street SOUTH LISMORE NSW 2480 Phone: 02 6627 8266 Fax: 02 6627 8094
MACKSVILLE Tilly Willy Street MACKSVILLE NSW 2447 Phone: 02 6598 8700 Fax: 02 6598 8799
MURGON 21 Lamb Street MURGON QLD 4605 Phone: 07 4168 3060 Fax: 07 4168 2996
MURWILLUMBAH 17 Buchanan Street MURWILLUMBAH NSW 2484 Phone: 02 6671 3600 Fax: 02 6671 3699
STUARTS POINT 906 Stuarts Point Road STUARTS POINT NSW 2441 Phone: 02 6569 0955 Fax: 02 6569 0983
TAREE 3 Grey Gum Road TAREE NSW 2430 Phone: 02 5594 2500 Fax: 02 5594 2599
TENTERFIELD 445 Rouse Street TENTERFIELD NSW 2372 Phone: 02 6736 7300 Fax: 02 6736 7399
TOOWOOMBA 22 Carrel Drive TOOWOOMBA QLD 4350 Phone: 07 4637 3300 Fax: 07 4637 3399
WAUCHOPE 4/6 Wallace Street WAUCHOPE NSW 2446 Phone: 02 5514 0334
WOOLGOOLGA 16 Featherstone Drive WOOLGOOLGA NSW 2456 Phone: 02 6690 4800 Fax: 02 6690 4899
64
 CORPORATE
DIRECTORY
In this special year in which we collectively celebrate Norco’s 125th
anniversary, we would like to share with you some congratulatory
messages the Co-operative has received throughout this report.

REGISTERED OFFICE
Norco Co-operative Limited

125
ARBN 009 717 417 / ABN 17 009 717 417
‘Windmill Grove’, 107 Wilson Street
South Lismore NSW 2480
Telephone: 02 6627 8000 Facsimile: 02 6627 8099
Web Site: www.norco.com.au

Congratulations
AUDITORS
Ernst & Young Chartered Accountants
Level 51, 111 Eagle Street BRISBANE QLD 4000

FINANCIERS/BANKERS
Rabobank Australia
Level 14, Waterfront Place, 1 Eagle Street
BRISBANE QLD 4000
St George Bank
Level 12, Waterfront Place, 1 Eagle Street
BRISBANE QLD 4000

SOLICITORS
Thomson Geer Lawyers BRISBANE QLD 4000
Addisons Lawyers SYDNEY NSW 2000
S+P Walters Solicitors LISMORE NSW 2480
Piper Alderman Lawyers SYDNEY NSW 2000

YEARS thank you

Thank you to our Co-operative Members,
Employees, Norco Milk Distributors
and Customers who feature in this
Annual Report photography.
Your time and participation
is greatly appreciated.
 annual 2020 report

www.norco.com.au