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Chief Executive Officer
Honorary Secretary K«gati» uo»»»» ui UDL, DHltlo[1»J
In November 2004 the Board appointed Ursula Lidbetter as Chief Executive Officer and following the half
year end Jane Powell was appointed as Group Secretary replacing Keith Darwin who held the honoraryposition of Secretary during the half year.
FOR THE SIX MONTHS ENDED 5th March 2005
TurnoverThe Society recorded an uplift in Gross turnover for the group of 1.0% to f117,650,000 for the 26 weekperiod. Pharmacy and Food business moved forward strongly and production increased significantly in
the Bakery and Dairy. Home and Travel showed a small reverse following strong increases last year.Turnover and volume decreased in petrol filling stations, in part due to the closure of the unit inBracebridge Heath. Motor turnover also fell due to the closure of the Rover dealerships at Bostonand Sleaford.
F ina nciaIGroup trading surplus after depreciation but before interest, exceptional income, dividend, memberbenefits and tax was E6,646,000 a decrease of f9,000 or 0.1%.Trading surplus was depressed by costs ofclosure of the Sleaford and Boston Rover dealerships
Lincolnshire Co-operative Ltd
GENERALHALF- YEARLY MEETING
The Lawn, Union Road, Lincoln
I)'ednesday 25th May 2005 at 7.00pm
1.To co!1f!!"1 'll-; iv!u! ' d.-" o; Me'!!hers 6~i" oudl Gel'e: 3;'IVIES e;lrio,
2.To receive the Directors' Half-Yearly Report.
3.To declare the results of Elections for six Members to the Board.
After the members meeting there will be a presentation bythe University of Lincoln
~ ~ ~ ~ \
MEMBERS MUST PRODUCE THEIR
SHARE BOOK OR
DiVIDEND CARD TO GAIN ENTRY TO
THE MEETING
PLEASE NOTE: To USE DIVIDEND CARD ToGAIN ENTRY, THE MINIMUM BALANCE OF f. 1
MUST BE IN THE MEMBERS' SHARE ACCOUNTBY SATURDAY 14th MAY 2005.
Free transport to the meeting will beavailable from:
Lindsey Centre, GainsboroughMarket Place, HorncastleVictoria Street, NewarkLincoln Road, Sleaford
Winsover Centre, Spa lding
Tickets can be booked by calling(01522) 544632
Questions must be submitted in accordance with Special Rute Vll(d) and General Rule T3.
SPECIAL RULE Vll (d): Members wishing to ask a question at any Members' Meeting of the Society must submit the
question in writing to the Secretary at least 48 hours before the relevant meeting.
GEh)ERAL RULE 73 —COMPLAINTS BY MEMBERS: A Member who has any complaint to make as to the quality, quantity. or
price of any goods or services supplied by the Society, or the conduct of any officer or employee of the Society, shall send
the particulars of such complaint to the board who shall inquire into and decide upon them, subject to an appeal from any
such decision to an ordinary meeting of members; but no such complaint shall be brought before any such meeting
except an appeal.
Developments~A new food store and Post Office was opened in
Misterton in November replacing a smaller storein which the Society had traded for 100 years..The Society re-developed property in
Nunsthorpe, Grimsby to incorporate a new foodstore and Post Office. M:
At the Carlton Centre, Lincoln a food store incor-
porating a Post Office and a new Travelcare outletwere opened as part of the Society's major retail
park development.
.A ceremony held at Convamore Road in
Grimsby signalled the start of a developmentwhich wiil feature a new Food Store and PostOffice along with several retail units andaffordable housing..The purchase of a Pharmacy at Swineshead,near Boston has increased the number ofPharmacies operated by the Society to 30.
Property developments in the last 6 months haveincluded the purchase of the Grand Hotel in
Lincoln, a Shopping Parade in Scartho Grimsby,
property on Beevor Street Lincoln and in Saxilby.
Development of the Carlton Centre in Lincoln hasprogressed well, with tenants now open forbusiness in the neighbourhood shops which
serve the new houses to the rear of the site,together with the Glebe and St.Giles areas.
IN ghl*
gjjj~iiaiii~3.
-F Following the half year end the Societyconcluded the transfer of the Boultham Park
Dairy to Dairy Farmers of Britain, a farmers co-operative. All Dairy staff have transferred with
the business and we wish them well. TheSociety's food stores will continue to be supplied
from Boultham Park.
The Society had 146,384 members at the half year end, having recruited 5,020 new members in the last sixmonths.
In November a final dividend of E1,054,000 was paid to members.
Our nine Members Groups have been active helping to distribute donations to local good causes. In
addition, our stores collected f20,000 from customers for the Asian Tsunami Disaster Appeal. This wasmatched with an additional f20,000 by the Society. In addition, staff donated E1,182 from their wagesand E20,000 was sent to the national co-operative appeal for rebuilding work.
Our Healthy Habits programme in primary schools, which we run with Football in the Community, teacheschildren about healthy eating, keeping fit and other health issues.
Club 12-16 has been relaunched as Activate and, together with Kool Kidz, runs activities for young people.
The Group employed 2,802 staff as at 5th March 2005. The Society continues to invest in training and staff
development. At the Annual Staff Awards evening in October 2004 199qualifications were celebrated.
The following long-serving staff have retired during the last six months and we extend to them our bestwishes for a long and happy retirement.
Mr. P.ThomasMrs. C.PeateMrs. S.Harley
Mrs. P. Kirk
Mr. D.GarnerMrs. V. Sta neerMrs. C.Hindle
Gainsborough GrocerySaxilby GroceryWelton GroceryMarket Rasen Grocery
Food Dist. Centre, Lincoln
City Square Grocery
City Square Grocery
39 years30 years26 years21 years20 years16 years15 years
Mr. C.Pitts Food 24 yearsMr. T.Brumpton Photography 40 yearsMr. R.West Bouttham Park Dairy 38 years
It is with regret that we report the deaths of the following pensioners:
Peter HemsteadHerbert BoothEdward Martin
Eric BinnsAnnie Hardy
Betty WatsonMarion Lusher
Gainsborough Carpet Dept.Gainsborough Dairy
Sleaford Dairy
Bakery, Lincoln
Handybank
Queensway Grocery
Queensway Grocery
aged 73aged 95aged 75aged 90aged 94aged 80aged 70
AcknoM/IBdgm&nt5The Directors acknowledge that the Society's progress is dependant upon its members, staff and managers.
Thanks are extended to all those whose support contributes to the continued success of Lincolnshire
Co-operative.
For and on behalf of the Board of Directors
Terry Wilmer, President
Ursula Lidbetter, Chief Executive Officer
Jane Powell, Group Secretary
l/
5~ I
the widest possible range ofservices for our members
quality, valueand ethical principles
0 '
for the future by generating profits todevelop our services, pay dividends to membersand support our local communities
customers tobecome members and to be involved inrunning their Society
to help achieve
the skills our staff need,
officials
directors' reportboard of directors
financial report
social and co-operative performance
food and filffng stations
pharmacy
travelcare
funerals
post offices
home
dairy
motor
2
3-283
4-56-78-91011
12-1314151617
Sraiemenr oi reepuinieieiiee i i
internal auditors' statement
eud iors report
f nanc:el statements
28
directors+ Juke Romney
Allen Horne MCIPD+ ~ Alan Middleton JP
~ Eileen Bangay BA+*~ Stuart Parker BSc (Eng)
Sue Neal+ ~ Margaret Tranter
Paul AstonRon Foster
PresidentVice PresidentChair of Remuneration and Audit Committees
Audrt CommitteeRemuneration Committee
+ Board nominated trustee of Pension Scheme
chief executive officer+ Ursula Lidbetter BSc Hons, FCIS
group secretaryJane Powell LLB Hone, MBA
senior management teamDavid Darnley Dip. FD. MBIE, MBIFDAlastair Farquhar BSc, MR Pharm S
+ Stephen Galjaard BA Hons, ACAMatthew Jones BSc Hone, MRICSHeather Lee BA Hons, MCIPD, MBAJim Thomson BA HonsAndrew TurnerTracy WilliamsRay Yeardley
Funeral Services ControllerSuperintendent PharmacistChief Financial OfficerEstates and Property ControllerHead of People and PerformanceFood ControllerInformation Systems ControllerSpecialist Retail ControllerOperations Manager
AuditorsKPMG LLPSt Jame's Square, Manchester M2 6DS
BankersCo-operative Bank pic16 Saltergate, Lincoln LN2 1DG
SolicitorsAndrew & CoSt Swrthin's Square, Lincoln LN2 1HB
Registered DfgceStanley Bett House, 15/23 Tentercroft Street,Lincoln LN5 TDB
Registered Number141R
board of directorsThe Directors are pleased to present tomembers their report for the year to 3rdSeptember 2005.
Terry Wilmer retired from the Board in Mayafter 24 years as a Director. The Directorswish to record their appreciation for hisconsiderable contribution to the developmentand governance of the Somety. Marcus Steadstood down dunng the year and Ron Fosterwas elected in May.
Your Board continues to place greatImportance on sound corporate governanceFollowing the approval by Co-operativeCongress in May 2005 of a new CorporateGovernance Code, members approved a rulechange in October 2005 which will enable theSociety to remain at the forefront of bestpractice. The new rules will allow for Directorsto be appointed to fill any skills gape identifiedon the Board and it is intended to work withinterested members to provide acomprehensive programme for thoseinterested in standing for election as aDirector.
In November 2004 the Board appointedUrsula Lidbetter as the Society's ChiefExecutive Officer, following her career with theSociety spanning 20 years. Jane Powell wasrecruited in April 2005 as Group Secretary.Jane is a lawyer and previously worked for thePlymouth & South West Co-operative SocietyThe Directors look forward to the progress ofthe Society under its new team.
financial report
Group turnover decreased this year by 5.3%to 2225,082,000, reflecting the disposal of theDairy division and the closure of WrightsMotor Group during the year. Group net salesfor continuing operations have increased by1.5%, aided by above inflation increases in
Food and Pharmacy. Reductions in PetrolFilling Stations, Home and Post Offices haveimpacted on this growth but overall theDirectors consider the level of turnoverachieved in the continuing operations to besatisfactory.
Group trading surplus moved forward againthis year to 213,241,000, up 8.9% on theprevious year. Losses in the Dairy andWrights Motor Group totalling 22,474,000have impacted on this result, howeverimprovements in the continuing operationshave resulted in an increase in the grouptrading surplus overall. The Board is satisfiedwith this level of surplus given the difficultiesin the Dairy and Motor divisions.
turnover OOOO237,670
223,662 MPi 225,0622 I 9,702
trading surplus j 000
12, 157I 3,210
ill 51ll"
Et 8 million of capital was invested in thebusiness in the year. Cash and finanmal
investments stood at 223.7 milhon at the endof the financial year and net interest receivedincreased by 2313,000. The Revenue Reservehas increased by 233.2 million to over 2319million with the Revaluation Reserve moving
forward by 212.7 milhon to 263.8 milhon giving
a total addition for the year of 225.8 milhon.
The Society's total reserves now stand at2183.5 million.
..I'V"' f 000 1st 545
I57,712
I 39.655
I I 5, 159
soctal anoco-operativeperformance
Last year we began reporting on ourpedormance as a socialiy responsibleco-operahve in addit on to ourhnancial results IVe are measunngourselves against I 0 indicators ofsociai co-operative and environmentsperformance
fyembe eco"omic n. olLement2 fv'emoe democratic cart c pat on: Pan c pat on of emoloyees a d
r emoers i- ra ri. , o a"d educarion— Staff; u-. acd aosen:ee rar s
Staff croiile —gender nd e:n: S siomer sacsfac: onC -s,oe SI on —etr, ical issu s .croc rema ' a-d rvestme-'clecis 0 .sI".e ' ent - ccmmu ity andco-opera'. .e.n. lia. . s
= ¹Ica.oo- o ":de em. ss o-a = C fro —.ooeraton
'0 oropcnioc of nest ecyc edre sed
lVe have made progres- n measi r IgIhe maiority of the ndica ors and e'eare some ol our f ndings
Member Economic InvolvementMemoer econom c involvementnd cates hots well we are .r eetir- ' ou"me. Cers neecs -d I "e he v. e a, Lioness u I'e. I'LI
' - „' ns cer'orri o i' custo' ' IScsr I' . 'nc'eas ng IO repani!nat fc I-e Ie'enc no Septa me" . OQS nea, I2-Soc.et. Sales recoroeo o- c
against u" iast ea h ..oercenlaoe i strares ou i o "commun "; c 'tu e and o,.r - c..es= i
'rec u'. n- ne. members and sa sfv - .
go i.s
Member Democratic participation, ne Scc ety c demcc' hcco-tro ed O. : mnmoera
therefore important to us to measurethe number of members who areactively involved in the decisionmaking process. In the election formembers of the board of directorsheld this year 874 members voted.This was down on last year's record.This figure equates to 1 in 169members compared to 1 in 119members last year. The reduction is
possibly because this year's vote wasfor a non-contested election.
Staff injury and absentee ratesStaff inlury and absentee ratesprovide the Society with an indicationof how well we control the risks to thehealth, safety and well-being of ouremployees. Staff are encouraged toreport all accidents, no matter howminor, and these are recorded toensure that safety standards aremaintained and continuouslyimproved.
This year 375 accidents werereported. 1 employee per 53 full timeemployees had a reportable accident(as against 1 per 52 last year) and 1
employee in 5 experienced anaccident of some description(compared to 1 employee in 7 last
year) . The average number of dayslost per employee in the year throughsickness and absenteeism was 3.7
days. The comparative figure was 2.4days. Although the level of sicknessand absenteeism has increased it isstill well below the national average of7.2 days per employee. (National
average data taken from Bl /AXA
absence and labour turnover survey
2005)
Customer satisfactionCustomer satisfaction is very important
to us as we strive to offer the bestpossible service. One way of checkingthis is by customer survey. During theyear we mailed out 60,000questionnaires asking our members arange of questions to gauge theiropinions based on their experience ofshopping in our food stores. 7996 ofthose who responded said that theirlevel of expectation was either mst orexceeded by the level of service theyreceived.
The EnvironmentCarbon dioxide (CO) emissions areproduced as a direct result of burning
fossil fuels. For the year endingSeptember 2005 the Society produced11,955 tonnes of CO' from on siteoperations. This represents an increaseof 2.796 in total produced. We arealways looking into ways to reduce ourimpact on the environment and wehave introduced a number of initiatives
in recent store refurbishmentsincluding more energy effiment kghting
and water saving toilets.
Proportion of Waste recycled/reusedWe actively encourage the recycling ofwaste. Cardboard and plastic wasteare collected from our retail outlets,compacted centrally and then sent forrecycling. This year we have recycledlust under 800 tonnes of cardboardand 65 tonnes of plastic. We alsorecycle redundant computers andother IT equipment through aregistered charity.
foocl andfilling stationsWe have an active store dimprovement programmeoutlets.
evelopment andfor our 68 food
~ ~ ~
Sales in the Food Division movedforward strongly in the year, despitedifficult market conditions andincreased competition. Ourcommunity stores are now thebackbone of the division and aim toprovide a wide range of qualityproducts at fair prices in convenientlocations.
We have an active store developmentand improvement programme for our68 food outlets. Refurbishments werecompleted at our stores in Chapel StLeonards, Spilsby, Kirton in Lindsey,Market Rasen, Sutton on Trent,Waddington, Westcliffe Estate inScunthorpe, The Willows in Grimsbyand North Hykeham. We haveopened four new food stores in theyear, each incorporating a communityPost Office. A new store was created
on the precinct at Willoughby RoadScunthorpe. In Misterton we replacedour small unit which has traded on thesite for 100 years with a much biggeroutlet. The former store is beingconverted for community uses. Wealso opened a new store inNunsthorpe Grimsby, as part of ourcommunity strategy to bring backservices to estates where famlitieshave become run down over theyears. Our property development atCarlton Centre in the north of Lincolngave us the opportunity to open asmall convenience store to serve thenorthern end of the city.
We have also been redeveloping ourstore at Crowland and building a newoutlet in Convamore Road Grirnsbywhich opened following the year end.
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In April we sold our dairy operationsto a dairy farmers' co-operatwe, DairyFarmers of Bntain. This was as aresult of a strategic review of thewabiiity and prospects for the dairyfol owing the Go-ooerat ve Group'ssaic cf their dairy ous;ness theprev, ous year. which affected ourabiliny to participate in nationalcontrac'. s
We were pieased to pass on our dairyto a fellovr co-ooerative business run
b. 'arme - The ie nas secured, cbs lo us stafr ann has a ioaeo the
productive famlity in Lincoln tocontinue in operation under its newownership. The dairy still supphes all
our food stores and dehvers doorstepmilk around the countv
The sale of '.he dairy marks the end o'
a verv s ccessfui association of thesociety wth 'he dairy inuust y and tire
Drectors souls ' e to '. hank a tn
empo, ees wno have corilr bu ed:otnis business over tne years and wisli
everv success 'o those:: o na:e. ansfen d '. D iv Farn =rs o B ita-
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We completed a further phase of theCarlton Centre development in thenorth of Lincoin this year and havesecured some good tenants. including
Coop. ands bakers and local servicebusinesses Our own food store. PostOffice and travel agency also occupyunits The sale of a site to the rear ofthe Carlton Centre to Redraw Homesby our Joint t/enture companyGreetwell Developments orovided aone off boost this year.
We are refurbishing the doctorssurgery at Newland Health CentreLinco n, which will be completed in thenew year Further development isunderway at Hykeham Green Centre in
North Hykeham to provide localfadkt es in add tion to the food store.pharmacy doctors surgery. vetennary
surgery and small shops and servicesalreadv at the Centre
We completed the redevelopment ofthe Willoughby Road Shopping Paradem Scunthorpe dunng the year This
was a partnership protect with North
Lmcolnshire Counml prowding a muchneeded upkft to!he commercial vital'. :;of the parade whicn serves theRiddings Estate We undertookenvironmental improvements andrefurbished the flats and shopsmaking up the parade.
Plans for the redevelopment of theLincoln city centre markets. SincilStreet and bus station areas areprogressing and it is hoped that adevelopment partner will be appointedearly in 2006
As part of the development plan theGrand Hotel was purchased, tofacilitate a redesign of the transportnetwork and a new transportinterchange for bus and trainpassengers. The small number ofmarket traders occupying stalls on theCornhill Pavement and Sincil Streetcorner are to be relocated to newstallage on Sincil Street, which will
include lockable storage to minimiseloading and unloading. This will
create more interest on Sincil Streetand support our traders in the indoormarket.
We agreed disposals of someproperties during the year, includingSecor House in Lincoln and our formerWrights showrooms in Spalding andNewark.
The Society's property holdingsprovide an income stream whichunderpins the economic performanceof the business, gives a return on thecapital not immediately required fortrading operations and offersopportunities for future developmentof services. There is also the potentialfor capital growth which strengthensthe Society for the longer term. In lastyear's accounts, properties held in oursubsidiary Lincoln Corn Exchange andMarkets (1991)Ltd were valued as at31st December 2003. This year werevalued all properties held by theSociety and its subsidiaries as at 3rdSeptember 2005. A strong moveforward in valuations has increasedthe revaluation reserve by 212.7million.
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Lincoln Co-operative Ladies' c oo-
Co-operative World Programme
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This vear -"345.000 was a'ieca'teEi 'o ccmfTFL:;; y
gQQLi caases.
Our mission is to build for the future bygenerating profits to develop ourservices, pay dividend to members andsupport our local communities. This
year 2345,000 was allocated tocommunity good causes.
Our local area member groups made 758donations totalling over 060,000 tocharities and good causes through theCommunity Dividend scheme.
The Health Care Fund gave 640,000 in
cash and equipment to doctors'=- rge. es scnoo- an comm ntv rcr 53nea:n i
' a' ves In add tion:ne HealtiirHaoil orocramms nas cont nuec and-as gone 'rom strenc' io strencth0 r c:ne:ea we nave sited 65schon s nci c i c 3 soec a' schon's and
, omen: rr o.er —' 000 cupi's I- Ap" i
:-e orocramms ".a our cartners Football- t"o Comm. n', was successiu rscs . . - 'u-o nc ro- the F oioaii
=oundat "- oi r'80 000 over 3 sears
This will enable us to deliver theprogramme into more schools and alsodevelop an additional day based around"Unhealthy Habits".
The Education Fund has continued tosupport schools who bid for spemalistschool status. In particular, we havegone into partnership with BranstonCommunity College to develop co-operative curnculum materials andapproaches that introduce young peopleto the values of co-operative, mutual
and social enterprise
in adcition io ' e ' ncs g 'en tocomm n ty good cau es ws h:esuoporiec a rang"= oi lc al oroan sstionsthroucn soonsors- o nc ud ng Lin o 'ca:neural Flower Festive Ine casse, ire
Band the Ace dent a o Em= gens,Fh ng Sc ad:he C ii of Li coin 'OK
Run L "coin C t, Footoa, l C uo L nco'. , Ladies FC anc me IVI c L cs yourn
Focib I League
ne Sor. ery ain s o suooo . . Od ne pcave'00 o:t e co operat .e and so i
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ma aoe:a cont Out one:0 teeL ccolns re cd;:;-, cc-00 ra: .
de. eoome. r .ge -. :—.t .-. nigr;tne Soc ea and a ra- ge o-' a"-Sig ' 'ica ' evenrs d.. . 0i c ude tne recco- t 0 =' '. e, ane coa 0 r, -s s., cr as greene. n
"am B 0 coa-d:n 0- -= ana"-"=
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oped t"z t ca- ens .e:-e t. eatsLinco nsn re emam o.-. sen'. eo a'. a
reg. sra .= Ii a 0 0" 0 0 "tiaco"t'.,i.tec to i: tier' 'eg .o ans of ncoi sni e
0" g tnev .. ~ . . -' '. ' ll' ei -3"ooo ti e Soc = 0 n. rc. se sectr,-" cds .=. suoo' 0 '; a
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r.c n-c n=- .=' e'a area'tcomroooe at . . de. e semen "Li c- is- =
ano nas prod ceo ':- '"- gous "ess P a fo' . e re. rs' GB a"d an 0"O.a . =:,". u, e -:erea = 'iarc- =""-"=.
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organisationand people
The Somety's conl nued success relieson the motivation and performance oftne people we employ so their training
and development remain key pnonties567 recognised qualifications havebeen achieved and the number ofempioyees undertaking courses in theyear .vas 15lg Th s year moreemphasis has been olaced on higherlevel qualifications the new NationalCff Licence certificate specialist andcraft kilis courses
Customer S once a:vards went to thestaff of Churcn ll Dnve food store andMarket Rasen Post Offic
We carry ou', a range of n k
assessments to ens re our emoioyeesand c.istomers have a safeenuronment These assessments
,"uoe Hea rh and Safety Food
Hygiene, equal public access to goodsand services pregnant workers healthand safety, asbestos reporting. dnverassessment and manual handling
The Somety aims to offer acomprehensive package Of benefits tostaff. includ ng a share of the Society sprofits As a result of our successfulyear the amount distributed to staffhas increased to D 000.000 Staff areencouraged to support tne Society byshopping with us and the amountgiven in staff discounts this year was6367.900
We said goodbye this year to our dairyand Wnghts Motor Group staff and wethank them for their contnbution to theSociety over the years and wish themweil for the future
Acknowledgement
Internal Control
The Board has overall responsibility for theSociety's systems of internal control and formonitonng their effectiveness The system ofinternal controls is designed to manage ratherthan ekminate the nsk of failure to achieve theSociety's business oblectives. Internal
controls can provide only reasonableassurance against material mis-statement orloss.
The Turnbull Committee published guidancein 1999 on Directors' responsibilities forinternal control, which was incorporated into aCorporate Governance Code of Best Practiceproduced by Co-operatives"'.Co-operatives"' carries out a review ofSocieties penodically to monitor theircompliance with the code. The Sooetyachieved a score of 91% in 2004 (98% at theprevious review in October 2003) and isworking towards fuller compliance over time.
In 2003, Co-operatives"" recognised thatfurther work in this area was required and in
May 2005 published a revised CorporateGovernance Code of Best Practice. TheSociety is not required to comply with thiscode for the year to 3rd September 2005.
The Board wishes to ensure the Society is ascompliant with the new code as possible andwork is already underway in this area. A reportwill be included in the annual report andfinancial statements for the next financial year,setting out any relevant comphance issues.
The Audit Committee of the Board comprisesfour independent Directors and is chaired byone of its number who is not currently
President of the Sooety. The committee is
scheduled to meet at least three times peryear.
Its Terms of Reference have been agreed bythe Board and include:
Consideration of the appointmentof the external auditor and thescope of the audit,Review of the financial statementsand auditors' management letter,Review of the internal auditprogramme and all Internal Audit
reports andReview of the Society's statementon risk management and internalcontrol systems
The Chair of the Audit Committee reports theoutcome of all Audit Committee meetings tothe Board and the Board recewes the minutesof all Audit Committee meetings.
Executive Remuneration is determinedannually by the Board on the recommendationof the Remuneration Committee, whichcompnses the 5 longest serving non-employeeDirectors. The Remuneration Committeetakes external advice to ensure that executiveremuneration is appropriate to the scale andscope of the business. The current advisor isthe Co-operative Employers Association.
Internal audit services continue to beoutsourced. An annual report of the activitiesof the Internal Audit Service has beenproduced for the year 2004/05. The InternalAuditor's Overall Assurance Statement isincluded on page 28. A three yearprogramme for the audit of all key systemsand controls has been agreed with the Board.Any weaknesses identified are highlighted tomanagement and to the Audit Committeewhich monitors all Internal Audit Reports andensures that appropriate actions are taken.
26
Internal control framework
The Society has adopted an internal controlframework which the Directors considerappropnate to its size and diversity:
Risk ManagementThe Board and executive management havethe pnmary responsibility for identifying thekey business risks facing the Society and forthe development of appropriate policies tomanage these nsks. Each trading division
has a responsibility for identifying the keyrisks faong their business. The SeniorManagement Team and Internal Audit functioncontribute to the identification of corporaterisks.
Key risks are monitored throughout the yearand a complete review is undertaken annually
by the Senior Management Team andconsidered by the Audit Committee. Thisenables the targeting of resources on areas ofhighest risk, when analysed by likelihood andimpact.
The work of the business continuity groupcontinues. Recently a greater emphasis hasbeen placed on this area of the Society's
business.
The Executive considers any significantvariances from the budget on a regular basisand remedial action is taken whereappropriate. Following the end of every sixmonth period the Board examines thefinancal results for that period in detail at aSpecial Board Meeting.
Procedure manuals cover the key controlsystems and all divisions are required tocomply with them. The intranet continues tobe used for dissemination and updating ofpolicy documents, instruction manuals, keyinformation and reporting forms.
Monitoring
The out-sourced provision of Internal Audit
services continues to be a success.Resources are concentrated in the areaswhere they are most required. The use of anexternal service provider for this role givesflexibility and an independent view. All
Internal Audit reports are considered by seniormanagement and then presented by theInternal Auditors to the Audit Committee. Thereports contain recommendations and actionplans agreed with management to improve
controls where weaknesses are found. Theseare followed up to ensure successfulimplementation.
Control environment
The Society has clearly defined reporting lines
and levels of delegated authority. Expenditureauthorisation levels are set for every area ofthe business. Larger capital pmlects andacquisitions require prior Board approval. TheGroup is centrally controlled.
There is a comprehensive system of financial
reports. A particular emphasis this year hasbeen an appropriate provision of regular and
timely management accounting information.
Budgets for all divisions are set six monthly
and reviewed by the Board.
Control activitiesThe Board considers information at everyBoard meeting on progress of the business in
relation to the budgets and the prior year.
During the year the Board undertook a review
of the system of internal controls and doesnot consider that any weaknesses have cometo light that have resulted in material losses or
contingences which require disclosure.
Supplier Payment Policy
It is Society policy to agree and clearlycommunicate the terms of payment as part ofthe commercial arrangement negotiated with
suppliers and then pay according to thoseterms based upon the timely receipt of anaccurate invoice. Trade creditor days for theyear ended 3rd September 2005 were 19days. This represents the ratio, expressed in
days, between the amounts invoiced to theSociety by its suppliers in the year and theamounts due at the end, to trade creditorswithin one year.
27
Industnal and Provident Society law requires
the Directors to prepare finanixal statementsfor each financial year which give a true andfair view of the state of affairs of the Group at
the end of the year and of the surplus or lossfor that period. In preparing those financial
statements, the Directors are required to:
s Select suitable accounting policies and
then apply them consistently,s Make judgements and estimates that are
reasonable and prudent,State whether applicable accounting
standards have been followed subject toany material departures disclosed and
explained in the financial statements.
The Board of the Society is responsible for
keeping proper books of account with respectto the Group's transactions and its assets and
liabilities as necessary to give a true and fair
view of the state of affairs of the Group. TheDirectors have general responsibility for taking
such steps as are reasonably open to them tosafeguard the assets of the Group and to
prevent and detect fraud and any otherirregularities.
Board Certification
The financial statements on pages 30 to 49are hereby signed on behalf of the Board ofDirectors pursuant to the Friendly andIndustrial and Provident Societies Act 1966.
Julia RomneyAllen HorneJane Powell
PresidentVice PresidentGroup Secretary
26th October 2005
Statement on Going Concern
After making all appropriate enquines, theDirectors have a reasonable expectation thatthe Group has adequate resources tocontinue in operational existence for theforeseeable future. For this reason, theycontinue to adopt the going concern basis in
preparing the Group's financial statements.
Internal Auditor's overall assurance statement
In our opinion, for the year 2004/06 the Lincolnshire Co-operative Ltd has an adequate, effective andreliable framework of internal control which provides reasonable assurances regarding the effectiveand efficient achievements of objectives.
Whilst some deficiencies in control have been identified by the internal audit service, we are satisfiedthat they are being resolved in an appropriate manner. This is based on our recommendationtracking procedures and follow up work which have confirmed that actions are being taken in
accordance with the agreed action plans as previously reported to the audit committee.
in the context of our three year strategic plan, we are able to confirm that the overall controlframework is reasonable, and due to the attention management have given to our previousrecommendations, generally improving.
Streets Internal Audit
28i
Vve have audited the Iinanciai statements onpages 30 to 49
This report is made solely to the Society'smembers, as a body, in accordance with
section 9 of the Friendly and Industrial andProvident Societies Act 1968. Our audit workhas been undertaken so that we might state tothe Society's members those matters we arerequired to state to them in an auditor's reportand for no other purpose. To the fullest extentpermitted by law, we do not accept or assumeresponsibility to anyone other than the Societyand the Society's members, as a body, for ouraudit work, for this report, or for the opinionswe have formed.
Respective responsibilities ofdirectors and auditors
The directors are responsible for preparing theAnnual Report. As described on page 28 thisincludes responsibility for preparing financialstatements in accordance with applicableUnited Kingdom law and accountingstandards. Our responsibilities, asindependent auditors, are established in theUnited Kingdom by statute, the AuditingPractices Board, Co-operatives 's Code ofBest Practice ("the code') and by ourprofession's ethical guidance.
We report to you our opinion as to whetherthe financial statements give a true and fairview and are properly prepared in accordancewith the Industrial and Provident Societies Act1965 to 2002 and the Industrial and ProvidentSocieties (Group Accounts) Regulations 1969.We also report to you if, in our opinion, theSociety has not kept proper accountingrecords and if we have not received afi theinformation and explanations we require forour audit.
We review whether the statement on pages 26and 27 reflects the Society's compliance with
paragraphs 31 and 32 of the code, and wereport if it does not. We are not required toform an opinion on the effectiveness of theSociety's corporate governance procedures orits internal controls.
fve read ine other information contained in iheAnnual Report, including the statement onparagraphs 31 and 32 of the code, andconsider whether it is consistent with theaudited financial statements. We consider theimplications for our report if we become awareof any apparent misstatements or materialinconsistencies with the financial statements.
Basis of audit opinion
We conducted our audit in accordance with
Auditing Standards issued by the AuditingPractices Board. An audit includesexamination, on a test basis, of evidencerelevant to the amounts and disclosures in thefinancial statements. It also includes anassessment of the significant estimates andjudgements made by the directors in thepreparation of financial statements, and ofwhether the accounting policies areappropriate to the group's circumstances,consistently applied and adequately disclosed.
We planned and performed our audit so as toobtain afi the information and explanationswhich we considered necessary in order toprovide us with sufficient evidence to givereasonable assurance that the financialstatements are free from materialmisstatement, whether caused by fraud orother irregularity or error. In forming ouropinion, we also evaluated the overalladequacy of the presentation of information in
the financial statements.
Opinion
In our opinion the financial statements give atrue and fair view of the state of affairs of thegroup and the society as at 3 September 2005and of the income and expenditure of thegroup for the year then ended and have beenproperly prepared in accordance with theIndustrial and Provident Societies Act 1965 to2002 and Industrial and Provident Societies(Group Accounts) Regulations 1969.Men~.KPMG LLPChartered AccountantsRegistered Auditors
26th October 2005
29
statement of accounting policiesbasis of preparation In accordance with FRS9, the Group'e
'1
u
r '-"— ~ . .''" ': ..ui t
c "oI -rcl og". ':w "- ''
O
oe oi toed. iI r, c n r e'.a:—I
= .: -r& a = -.a 'o .—..
Anonr own o
Mn o"na Ow ed
Jc e n
assets leased to the groupAssets acquired under finance leases arecapitaksed and the outstanding future leaseobligations are shown as creditors.
Operating lease rentals are charged to theGroup Revenue Account on a straight linebasis over the period of the lease.
assets leased tocustomersAssets leased to customers under operatingleases are included in the balance sheet asrental assets at cost of acquisition lessdepreciation based on the Group's normalaccounting pohcy. Rental income from theseleases is credited to the Group RevenueAccount on an accruals basis over the periodof the lease.
taxationCurrent —Provision has been made for theestimated bability based on the surplus for theyear at the current rate of corporation tax.
Deferred —Full provision for deferred tax hasbeen recognised in the balance sheet withoutdiscounting. Deferred tax assets arerecognised to the extent that they areconsidered to be recoverable.
stocksStocks are valued at the lower of cost and netrealisable value.
repairsRepair expenditure is charged to the GroupRevenue Account in the year that the cost wasincurred
amount recommended by the Board isinclusive of the amount distributed asdividend points in the year under review.The provision for unredeemed dividend pointsin the Group Balance Sheet is based on thefull redemption value of the dividend pointsand has been shown as a current kability.
The provision for dividend bonus in the GroupBalance Sheet is the amount available fordistribution based on the recommendation ofthe Board of Directors and subject to memberapproval.
cash and liquid resourcesCash, for the purpose of the Group Cash FlowStatement, comprises cash in hand anddeposits repayable on demand, lessoverdrafts payable on demand.
Liquid resources are current asset investmentswhich are disposable without curtailing ordisrupting the business and are either readilyconvertible into known amounts of cash at orclose to their carrying values or traded in anactive market. Liquid resources compriseterm deposits of less than one year (otherthan cash).
investmentsQuoted fixed asset investments are includedat cunent market values. Other fixed assetinvestments are stated at cost less provisionfor any permanent diminution in value.Investments held as current assets are statedat the lower of cost and net realisable value.
funeral bondsLiabilities for funeral bonds are based on thetotal commitment at the balance sheet date,
group revenue account
Year Ended 3rd September 20052005 2005
Continuing DisconenuetlOperations Operations
2'000 2'000
2005(52 Weeks)
Total2'000
2004(52 Weeks)
Total2'000
TURNOVER: GROUP AND SHARE OF JOINT VENTURE
Less: Share of Joint Venture Turnover
GROUP TURNOVER
Less: Value Added Tax
GROUP SALES
202,616(1,593 )
201,023(15,820)
185,203
24,059
24,059(1,095)
22,964
226,875(1,593)
(16,915)
208,167
240,230(2,560)
237,670(17,502)
220, 168
Less: Agency share of sales
GROUP NET SALES
Less: Cost of Sales
GROSS PROFITLess: Expenses — Ordinary Trading
Less: Expenses — Member Benefits and Grants
(14,016)
171,187
(114,614)
56,573(40,134 )
16,439
(724 )
22,964
(14,016)
194,151
7,774(10,222)
(2,448)
(26)
64,347(50,356)
13,991
(15,190) (129,804)
(14,232)
205,936
(141,312)
64,624(51,791)
12,833
(676)
GROUP TRADING SURPLUS
Share of Trading Surplus in Associated Company
Share of Trading Surplus in Joint Venture
TOTAL TRADING SURPLUS
Profit on sale of Discontinued Operations
Profit on sale of Fixed Assets
1
1010
15,715g
1,161
1 6,885
2,177
(2,474)
(2,474 )
1,302
13,2419
1,161
14r(11
1,3022,177
12,15712
1,897
1 4,066
246
SURPLUS BEFORE INTEREST
Net Interest Received to/1319,062 (1,172) 17,890
57014,312
257
SURPLUS FOR THE YEAR BEFORE DISTRIBUTIONS
Less: Share Interest
Funeral Benefit
Dividend
SURPLUS FQR THE YEAR BEFORE TAXATION
Taxation
18,460(223)(141)
(2,500)
15,596
(4,175)
14,569(225 )
(144)(2,400)
11,800
(3,450)
SURPI US FOR THE YEAR AFTER TAXATION
Equrty Minority Interest
SURPLUS FOR THE YEAR
TRANSFERRED TQ RESERVES
19
17
11,421
15
11,436
8,350
55
8,405
Discontinued operations compose the activities of the Dairy acd Wrights Motor Group.
The notes on pages 36 to 49 form part of these accounts.
32
As at 3rd Septemder 2005
Notes2005f'000
2004& ogn
Intangiole As etsTangible AssetsInsestment Propert esInvestments
Share of Joint Venture
Share of Gross AssetsShare of Gross Liah iiries
8
81018
6,79655,901
119,6314,593
2,015(1,826) 189
187,110
c o '
5c 3&5
8 588u 28o
8 8052 589 1 818
188 iug
CURRENT ASSETSStocksDebtorsInvestments
Cash at Bank and In Hand
CREDITORSAmounts Due Within One Year:CreditorsDividend
Loans
111021
121213
12,28612,55416,4982,658
29,7263~125
18,0249,201
10,6714, 175
42,071
30,1933,4555,000
38,648
10,642
197,752
CREDITORSAmounts Falling DueAfter More Than One Year:CreditorsLoans
1213
(4,230) (3,561)(125)
PROVISIONS FOR LIABILITIESAND CHARGES
Deferred Taxation 14 (156) (199)
NET ASSETS
FINANCED BY:Share CapitalRevaluation ReserveRevenue Reserve
MEMBERS' FUNDSEquity Minority interest
TOTAL FUNDS EMPLOYED
151617
1819
193,366
10,09763,849
119,696
193,642(276)
193,366
167,700
10,15251,180
106,532
167,864(164)
167,700
The notes on pages sa to 49 form part of these accounts.
group cash flow statement
Year ended 3rd September 2005 2005(52 Weeks)
2004(52 Weeks)
NET CASH FLOW FROM
OPERATING ACTIVITIES
Notes
20
6'000
24,685
2'000
16,144
Dividends received from Associates 10
D 9-os .=ce .-" " m J. - '010
2,000
10900
RETURNS ON INVESTMENT AND
SERVICING OF FINANCE
Interest Received —Group
Interest Paid —Group
Dividends paid to minonty shareholders
in subsidiary undertaking
TAXATION
U.K. Corporation Tax Paid
1013
19
510(29)
(3,9K')
388(188)
(49 )
151
(1,625 )
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT
Purchase of Tangible Fixed Assets
Purchase of Fixed Asset Investments
Sale of Tangible Fixed Assets
Sale of Fixed Asset Investments
ACQUISITIONS AND DISPOSALS
Further investment in subsidiary
Acquisition ofSubsidiary Compantes and Businesses
Sale of Subsidiary
Companies and Businesses
DISTRIBUTIONS PAID
CASH INFLOW BEFORE USE OF
I.IQUID RESOURCES AND FINANCING
19
23
(16,555)(357)
1,923
(99)
(1,884)
(14,989)
3,917
(2816)
(11,362)(2,372)
8783,642
(2,895)
(9,214)
(2,895)
(2,696)
775
MANAGEMENT OF LIQUID RESOURCES
(Purchase)/Sale of Current Asset Investments (52127) 726
FINAI4CING
Issue of SharesRedemption of Shares(Decrease)/Increase in Debt
(DECREASE)/INCREASE IN CASH
DURING THE PERIOD
15 3,78515 (3,840)
(5,000)
21
(5,055)
(1,517)
4,128(3,547)
35616
2,117
34The notes on pages 36 to 49 form part of these accounts.
Year ended 3rd September 20052005
(52 Weeks)
'" 04'"2 A cia,
6'000 " 000
Retaineo Su olus fo" tee Yea. 11,436 8 405
Unreal sed Su olu on Reta i..ation of 'ran ng Prcper, esUnrea!ised Surpi„s on Re aluati. i c',nxestrne t Propert es
4.1031 0,294
26 290
25,833 18 05;
Year ended 3rd September 20052005
(52 Weeks)
Surp u ro ne Year before taxaton 15,596
Rea: o" o' propert. re. aiuat o oa -' of cress .e='.Rea. at o- c' n. estment .=-.a uation g- ns o' ore o is, eaDifference oetneer a sto =:-, oeorec eton c"aroe ~ c ne t.aoeprecaccr cnarge or!h, ea -.", = ted o:-e = c. ., ec a-c.n
1.783
{55)
17,324
13.164
notes to the financial statements
1. The Group has two prinopal segments, which are Retail and Investment Property.
of the two segments are:
2005(52 Weeks)
The results
2004(52 Weeks)
Group Net Sales- Retail- Investment Property
Total
199,1119,056
208,167
P.'000
212,4847,684
220, 168
Gross Profit- Retail- Investment Property
Common Costs
Group Trading Surplus
55,2919,056
64,347(51,106)
13,241
56,9407.684
64,624(52,467)
12,157
Net Assets- Retail- Investment Property
Total
73,965119,401
193.366
72,73694,964
167,700
Discontinued OperationsFor companson purposes the 2004result is restated as below:
Net SalesCost of Sales
Gross Profit
2004Continuingoperations
2'000
168,706(1 16,942)
51,764
2004Discontinued
operationsP'000
37,230(24,370)
12,860
2004(52 Weeks)
Total2'000
205,936(141,312)
64,624
Expenses Ordinary Trading
Expenses — Member Benefits and Grants
Group Trading Surplus
(37,760 )(639)
13,365
(14,031)(37)
(1,208)
(51,791)(676)
12,157
36
2. Expenses —Ordinary Trading
Personnel CostsOccupancy CostsHire of Plant —Operating LeasesDepreciation of Owned AssetsDeficit/(Surplus) on Sale of Fixed AssetsAmortisation of Intangible Fixed AssetsAuditors' Fees: Audit
Non AuditDirectors' FeesOther Expenses
Total Expenses —Ordinary Trading
2005(52 Weeks)
2'000
29,7125,708
723,834
27463
2810,452
2004(52 Weeks)
2'000
30,0295,717
773,703
(42)40160
2711,819
51,791
3. Employees2005
(52 Weeks)2004
(52 Weeks)
The Average Number Employed by the Group was
Full-TimePart-Time
Total Average Number Employed
The Costs Incurred in Respect of these Employees were
Number
1,0971,426
2.523
E'000
Number
1.2761,427
2,703
2'000
Wages and SalariesSocial Secunty CostsOther Pension Costs
Total Personnel Costs
26,3911,9011,420
29,712
26.9111,9781.140
30.029
'.I=-tt-
't: R-" =' -' — ' o ea=
=' D
15114
12i2381it5l237
aith Ca .- t' sots0
6011
c"
1„340
223141
5. Profit on sale of Fixed Assets/Discontinued Operations2005
(52 Weeks)2004
(52 Weeks)
2'000 2'000
Continuing operationsProfit on sale of fixed assetsProfit on disposal of businesses
Discontinued operationsProfit on disposal of businessesPension payment due
2,16116
2.177
2,802(1,500)1,302
246
246
6. Taxation
a) Analysis of tax charge in yearCurrent taxUK corporation tax at 30% (2004: 30%)on profits for the year 4,289 2,81 0
Share of taxation in Joint Venture and AssociatesCurrent tax charge for the year
3794,668
5913.401
Deferred TaxOrigination and reversal of timing differencesPension payment dueAdlustments in respect of prior years
Deferred tax credits for the year
Taxation provided in the year
(43)(450)
(493)
4,175
299
(250)
49
3,450
b) Factors affecting tax charge for the yearThe effective rate of tax for the year of 29.9% (2004: 29.2%) is not significantly differentfrom the standard rate of corporation tax in the UK of 30%. The differences in the cunenttax charge are explained below.
Profit on ordinary activities before taxation 15,596 11,800
Profit on ordinary activities multiplied by standard rateof corporation tax in the UK of 30% (2004: 30%) 4,679 3,540
Effects ofiGains on business disposalsPension payment dueRevaluation gain now realisedPermanent differences between items affecting taxand accounting profitOther timing differences
Current tax charge for the year
(845)
(199)
4,668
267(406)
3,401
38
Fixed Assets —intangible
GoodwillCost as at 4/9/2004AdditionsDisposals
Cost as at 3/9/2005
Amortisation as at 4/9/2004Charged in the Year6 m -a;eri rx aisori al
Total2'000
7,833639(343)
8.129
1,109
(239)
Net Book Value as at 4/9/2004 6,724
8. Fixed Assets —Tangible
a) TradingLand 8
Buildings
UOOO
FixturesFittings &
Plant2'000
Transport
OOOO
RentalAssets
Total
P. OOO
Market Value/Original Cost at 4/9/2004Transfer to Investment PropertiesAdditionsDisposalsRevaluation
Market Value/Original Cost at 3/9/2005
Depreciation as at 4/9/2004i iiargea r ce fo v
D xoosa s
47,888(6,288)2,564
(290)3,617
47,491
-38
23,153
2,508(6,160)
19,501
14 881
5,588
940(3.828)
2,700
3,551
546
66(37)
575
428
77,175(6,288)6,078
(10,315)3,617
70,267
18,860
Ner Bock Vair. r. a, ' -' 9 "GGa .8i1
At Market Value/Cost
r, ' ecsr "c
2005E'000
42,8104 681
9. Fixed Assets —Investment Properties Land & Buildings
Freehold Leasehold2'000 2'000
LandlordsFixtures
2'000Total2'000
Market Value/Onginal Cost as at 4/9/2004
Transfer from Trading PropertiesAdditionsDisposalsRevaluation to 31/1 2/2004Revaluation to 03/09/2004
Market Value/Original Cost as at 3/9/2005
Depreciation as at 4/9/2004Charged in the YearDisposals
Depreciation as at 3/9/2005
88,2906,288
11,277(6,015)5,5274,331
109,698
8,976
138
436
9,550
900
279(35)
1,144
598168
(5)
761
98.1666.288
11.694(6.050)5,5274,767
120,392
598168
(5)
Net Book Value as at 3/9/2005
Net Book Value as at 4/9/2004
109,698
88,290
9.550
8,976
383
302
119.631
97,568
A valuation of investment properties was carried out by Banks, Long & Co., Chartered Surveyors, 15 St Mary' sStreet, Lincoln as at 3rd September 2005. Previously valuations of Lincoln Corn Exchange & Markets (1991)Ltd
were camed out at 31st December each year.
10. a) InvestmentsFixed Assets
2005 20042'000 2'000
Current Assets2005 20042'000 2'000
Interest andDividend
2005 20042'000 2'000
Co-operatwe Group (CWS) Ltd.—Corporate Investor Shares
Other I & P Society SharesAssociated Companies (i)
Companies QuotedCompanies UnquotedLocal AuthoritiesMortgagesFuneral Bonds (iii)
Short term Deposits
3816266
1353
2913,608
290
3816566
1353
3773,165
16,248 10,421
250
20408
26
21
22273
225212
Totals
Joint VentureShort Term Deposits
Associated CompanyShort Term Deposits
Total Investments
4,593
4,593
4,239
4,23g
16,498
16,498
10,671
10,671
510
599
388
54
445
40
20052'000
Bal* ' c Bruugilt I-or'A. d
o iara or, rao rg 0 rp s car ri:
Share of Net Interest Received Before Tax
=x I'ayaola
D o ncs R=- ir =c
165
(5)
(10)
i 16
161
a6
2 "00
'1 D bt
Falling DueWithin One Year
2005 20049'000 P.'000
Falling DueAfter One Year
2005 2004f.'000 2*000
Credit Sales
Trade Debtors
Capital Proceeds
Deferred tax relating to pension payment due
Other Debtors and Prepayments
1,386
3,173
7,027
518
1,772
7,051
378
Total Deotors 12 554 9,201
1' ai Creditors
Trade Creditors
Accrued Charges
Pension Liability
VAT
Other Taxation and Social Security
Dividend Stamps and Member Benefits
Corporation Tax
Funeral Bonds
Owing to Joint Venture
Total Creditors
11,709
6,181
1,500
417
392
248
5,055
250
3,974
29,726
16,679
6,508
53
461
530
4,899
250
813
30,193
3,610
4,230
50
350
3,161
3,561
bj Dlvkleltrl
Dividend Bonus
Dividend Approved Not Yet Distributed
Dividend Points Balances on Dividend Cards
1+71
1,497
1,055
1,452
Total Creditor 3,503 3,455
42
13. Loans InterestRate
Falling DueWithin One Year
2005 2004E'000 E'000
Falling DueAfter One Year
2005 2004E'000 E'000
2005E'000
2004E'000
Interest Payable
Pension Fund
Bank
Funeral Bonds
Minority Interests
Owing to Joint Venture
Other Loans
Other Interest Paid
6%Variable
Vanable
12.5%3%Variable 125
1,000
125
14
51
58
66
125 1,000 125 188
Bills of ExchangePayable
Total
4.5% 4,000
125 5.000 125 29 188
The bills of exchange were secured on the Carlton Centre, Lincoln. Interest paid on the bills of exchange iscapita)sad in Investment Properties under development and is not shown as a movement through the GroupRevenue Account. Dunng the year this amounted to E110,484
14. Provisions for Liabihties and Charges2004E'000
Deferred Tax
Deferred tax provisions at the beginning of the year
Movement for the year
199
(43)
150
49
Deferred tax provisions at the end of the year 156
An analysis of the amounts provided are set out below:
Accelerated capital allowances
Other timing differences
(319)475
(562)
761
Deferred tax provisions at the end of the year
15. Siiare Capital2005OOOO
20042' 000
Balance to begin the yearContnbutionsDwidend Bonus Credited to Accounts in the Year
Interest
10,1522,5081,054
223
9,5713,205
698225
Withdrawals
Balance to end the year
13,937(3,840)
10,097
13,699(3,547)
10,152
i) Thewholeofthes arecapia cornh h t I comprises 10,096,648 non equity shares of Ft attracting interest at
the rates below:
Balance60 - 220220 - 21009100 —25002500 — 21,00021,000 —22,50022,500 —910,000210,000 —220,000
Interest RateNil
1.0%1.5%2.0%2.5%3.0%3.5%
ii) Shares are withdrawable on periods of notice from demand to two weeks depending on the
amount.
iii) Every member who has been a member of the Society for not less than six months and holds a
minimum of one share is entitled to one vote.
iv) In the event of a winding up, any balance remaining, after meeting all liabikties will be distributed
subject to the Society's rules.
v) Dividends to members are paid by way of redemption of dividend points and by payments of
dividend into members' share accounts.
vi) The Society has in place a scheme covering total share capital, guaranteed by partners of Andrew
8 Co., the Society's Solicitors, and underpinned by a floating charge on property.
16. Revaluation Reserve TradingProperty
20059'000
InvestmentProperty
20052'000
Total
Balance to begin the year
Revaluation during the year
Transfer of amount equivalent to additional
depreciation on revalued assets
Transfer of realised gains on disposals
Minority Interest
Balance to end the year
31,892
4,105
55
(89)
(2)
19,288
10,294
(1,694)
27,888
51,180
14,399
55
(1,783)
(2)
63,849
44
17. Revenue Reserve
Balance to begin the year
Transfer from Revaluation Reserve
Retained Surplus for the Year
2005(52 weeks)
2'000
106,532
1,728
11,436
2004(52 weeks)
2'000
97,573
554
8,405
Balance to end the year 119.696 106,532
The cumulative total of goodwill wntten off directly against the Group Revenue Reserveamounts to 26,254,000 (2004: 26,254,000).
Reconciliation of Movements in
Members Funds
Retained Surplus for the year
Other recognised Gains and Lossesrelating to the year
Minonty share of Group Revaluation Surplus
Movement on Share Capital
11,436
14,399
(2)
(55)
8,405
9,663
(11)
581
Net additions to Members' Funds
Opening Members' Funds
Closing Members' Funds
25,778
167,864
193.642
18,638
1 49,226
167,864
19. Minority Interests
Balance to begin the year
Share of losses for the year
Share of revaluation
Debentures repaid
Dividend paid
Minority interest transferred to Group
Balance to end the year
(164)
(15)2
(24)
(75)
(276)
(71)
(55}11
(49)
(164)
20. Reconciliation of Operating Surplus to Cash
Inflow from Operating Activities
Trading Surplus
Depreciation Charges
Loss/(Surplus) on Sale of Fixed Assets
Amortisation Charges
Decrease in Stocks
Decrease/(Increase) in Debtors
Decrease in Creditors
13,241
3,834
5r337
4,124
(2,341 )
12,157
3,703
(42)
401
1,013
(914)
(174)
Cash Inflow from Operating Activities 24,685 16,144
45
21 Analysis of Net Funds At 4/9/04
6'000
Cash Flow
2'000
Other Non At 3/9/05
Cash ChangesF'000 OOOO
Cash in hand and at bank 4,1 75 (1,517) 2,658
Detit due atter one year
Debt due within one year
Current asset investments
(125)
(5,000)
(5,125)
10,671
5,000
5,000
5,827
125
(125) (125)
(1 25)
16,498
Totals9,721 9.310 19 031
22. Reconciliation of Net Cash Flow
to Net Funds
(Decrease)/increase in cash in the period
Cash outflow/(inflow) from decrease/(increase) in debt
Cash outflow/(inflow) from squid resources
Change in Net Funds resulting from cash flows
Net Funds at the start of the period
Net Funds at the end of the period
2005(52 weeks)
f.'000
(1,517)
5,000
5,827
9,310
9,721
19,031
2004(52 weeks)
2'000
2,117
(35)
(726)
1.356
8,365
9,721
23. Acquisitions and Disposals
During the period, the Group acquired the assets and goodwill of various businesses. The
costs associated are as follows:-
Fixed Assets
Stock
Goodwill
Total Cash Consideration
2005
1,217
The Group also disposed of its dairy business. The following net assets were disposed
from the dairy together with some smaller disposals.
Fixed Assets
Stock
Goodwill
Profit on disposal
Total Cash Consideration
OOOO
2,549
429
104
2,818
46
24. Pension Scheme
2OGS
3=
2=
The assets in the scheme and the expected rate of return were:
Long termrate ofreturn
expectedat 3/9/05
Valueat 3/9/05
OOOO
Long termrate ofrehirrl
expectedat 4/9/04
Valueat 4/9/04
2'000
Long termrate ofreturn
expectedat 6/9/03
Valueat 6/9/03
UOOO
Equities
Bonds
Other
6.0%45%
4.25%
36,2173,9636,153
9.0%1225%
4$%4,124
4,316
9.5%5.0%4.5%
4,1533,521
Total market value of assetsPresent value of scheme liabilities
Deficit in the scheme
Related deferred tax asset
Net pension liability
(54,321)
(5,592)
37,100
(44,147)
(7,047)
2,114
(4,933)
(4~41 )
(fk245)
2,474
(5,771)
Advantage has been taken of the transitional arrangements as outlined in Financial Reporting Standard 17 (Retirement
Benefits), and the pension liability as detailed above is not included in the nst assets of the Society as at 3rd September 2005
47
Pension Scheme
Had the transitional arrangements not included been adopted then the amounts in the
results for the year would be as set out below:
Year ending Year ending
3/9/05 4/9/046'000 O'OOO
Analysis of amount charged to operating profit:
Current service cost
Gains and lasses on any settlements or curtailments
Total Operating Charge
1,209
600
1,809
1,456
1,456
Analysis of the amount credited to other finance income:
Expected return on pension fund assets
Interest an pension fund liabilities
Net Return
3,013
(2,548)465
2,885
(2,344)541
Analysis of amount recognised in the Statement of
Total Recognised Gains and Losses:
Actual return less expected return on pension fund assets
Expenence gains and losses ansing on the fund liabilities
Changes in assumptions underlying the present value of
fund liabilities
Actuarial (loss)/gam recognised
4,149313
(6,993)
(2,531)
(215)
(2,680)
3,880
985
Movement in deficit dunng the year:
Deficit in scheme at beginning of the year
Current service costContributians paid ta pension fund
Contributions provided for
Gains and losses on any settlements or curtailments
Other finance income
Actuarial (lass)/gain
Deficit in scheme at end of the year
P,047)
(1,209)
1,434
1,500
(600)
(2 5311
(7,988)
(8,245)
(1,456)1,128
541
985
(7,047)
History of experience gains and losses
Difference between the expected and actual return on scheme assets:
Amount
% of fund assets
Experience gains and losses on scheme liabilities
Amount
% of the present value of scheme liabilities
4,149
3131%
(215)
(1%)
(2,680)6%
i
'I
48
Total amount recognised in the Statement of TotalRecognised Gains and Losses:
Amount
% of present value of scheme liabilities(~f)
(5%)985
(2%)
20058 000
Within One Year
In Two to Five Years
Over Five Years
Total Annual Commitments
75
511
38
77
270
385
These leases are subject to rent reviews.
Greetwell Developments Ltd.
LAGAT Ltd.
Gadsby's of Southwell Ltd.
Net Sales
2005(52 Weeks)
OOOO
Balance Owingto/(from)
the Group2005
2'000
(3,974)
1,166
Net Sales
2004(52 Weeks)
2'000
24
1,022
Balance Owingto/(from)
the Group2004
2'000
(1,813)
1,220
historic comparative statement
Sept 200152 Weeks
Sept 200253 Weeks
Sept 200352 Weeks
Sept 200452 Weeks
Sept 200552 Weeks
Membership 133,078 138,862 147,054 142,289 149.096
Revenue AccountTurnover
Depreciation
Trading Surplus
Members Benefits
Dwidend
Trans. to Reserves
Balance SheetIntangible Assets
Total Tangible Assets
Total Fixed Investments
Net Current Assets
Long Term Creditors
Liabilities/Charges
Net Assets
Share Capital
Reserves
Minority Interest
P.'000
213,059
3,466
8,549
391
1,810
5,823
2,932
109,842
4,217
5,028
359
961
120,699
5,691
115,159
(151)
2*000
223,842
3,404
10,530
792
1,950
6,475
4,246
119,236
4,382
7,772
711
947
133,978
8,307
125,809
(138)
P.'000
219,702
3,489
12,044
845
2,250
10,428
5,013
138,734
6,178
581
1,201
150
149,155
9,571
139,655
(71)
2'000
237,670
3,703
12,157
676
2,400
8,405
6,724
155,883
5,555
3,423
3,686
199
167,700
10,152
157,712
(164)
2'000
225.082
3.834
13,241
750
2.500
11i436
6.796
175 532
4,782
10,642
4,230
156
193,366
10,097
183,545
(276)
Comparative amounts have been restated where appropriate.
An analysis ot continuing and discontinued operation is shown on pages 32 4 36 for 2005 & 2004 respectively.
50
Minutes of the Half Yearly Meetingheld on Wednesday 25th May 2005at 7.00 p.m. at The Lawn, UnionRoad, Lincoln
PresentTerry Wilmer, President of the Society in theChair, 51 members in attendance.
MinutesThe Minutes of the Central Annual GeneralMeeting held on Wednesday 24th November2004 were signed as a correct record of theproceedings.
Directors Half Yearly ReportThe President presented the Directors' Half
Yearly Report for the six months ended 5thMarch 2005. The President highlighted theSociety's trading performance. He reportedan increase in gross turnover for the Group of1% to 2117,650,000 and an increase in totalsurplus (before member benefits andexceptional income) to 28,077,000.f4,339,000 was allocated to reserves from
revenue in the half year and total reserves atthe half year end stood at 2167,578,000.Membership of 146,384 was reported anddetails were given of the Society's communityand membership programmes. The motion toreceive the Directors' Half Yearly Report wasapproved unanimously.
Declaration of Result of ElectionThe Returning Officer declared the result ofthe Election for six Directors as follows:—
Foster, Ronald DavidParker, StuartNeal, SueTranter, MargaretHorne, Allen
Romney, Julia
379 votes318 votes314 votes290 votes532 votes487 votes
The number of votes cast in the election was874.
The President thanked the members, his VicePresident, fellow directors and staff for theirsupport during his term of office.
The following candidates were thereforeelected to serve on the Board of Directors forthe ensuing two years; Horne Allen, RomneyJulia, Foster Ronald David, Parker Stuart, Neal
Sue, Margaret Tranter.
b' meetings
GAINSBOROUGHThe Weston Rooms, Hickman Street
Gainsborough on Tuesday 15th November
2005 at 7.00pm
NEWARKTown Hall, Market Square, Newark on
Wednesday 16th November 2005 at 7.00pm
SPALDINGSouth Holland Centre, Market Place,
Spalding on Thursday 17th November 2005 at
7.00pm
GRIMSBYHotel Elizabeth, Littlecoates Road, Grimsby
on Monday 21st November 2005 at 7.00pm
HORNCASTLEHorncastle Golf and Country Club, West
Ashby, Horncastle on Tuesday 22nd
November 2005 at 7.00pm
L(NCOLNThe Lincoln Suite, The Lawn, Union Road,
Lincoln on Wednesday 23rd November 2005
at 7.00pm
annual general meeting
AGENDA
1.To confirm the minutes of the Annual
General Meeting held November 2004 (Half
Yearly Meeting 25 May 2005 for Lincoln
AGM only).
2. To receive the Directors' Report, Auditors'
Report and Annual Accounts
3. To consider the recommendation of the
Board of Directors for a final dividend of
50p for every 21 of dividend points received
in the year to 3rd September 2005.
4 To consider the recommendation of the
Board of Directors that the basic rate of
issue of dividend points continues at 1% of
the value of qualifying purchases.
5. To consider the resolution that KPMG LLP
be and are hereby reappointed Auditors of
the Somety to hold office from the
conclusion of the Lincoln Annual General
Meeting until the conclusion of the next
Annual General Meeting at which accounts
are laid before the Somety, at aremuneration to be fixed by the Directors.
Questions must be submitted in accordance
with Special Rule Vlf (d) and General Rule 73.
See standing orders inside back cover of
annual report.
Members must produce their Share Book or
Dividend Card to gain entry to these meetings.
Any Member present who holds a minimum Et
share capital and been a Member of the
Society for 6 months shall have one vote.
Please note: To use Dividend Card as proof of
voting entitlement, the minimum balance of 21
must have been in the Member's Share
Account on Saturday 5th November 2005.
52
The Order of business at every general or special meeting of the Society shall be in accordance with the printed agenda of
business issued with the notice of the respective meeting (or any amendment thereof approved by the Directors).
2. Except in the case of a special general meeting called upon the requisition of members, the agenda of every meeting shall
be made out in the form and order approved by the Directors and shall include only such business as is decided upon by
the Directors.
All notices of motion for consideration at any general meeting must be first submitted to the Directors in writing, signed
by the member giving the notice, not later than twenty one days prior to the date of the first district meeting. Any
amendments to any proposal on the agenda at any general meeting must be received by the Society at least seven days
prior to the first district meeting.
4. No member shall be allowed to speak more than once on any motion except the mover of resolutions, who shall be
allowed a reply and no member shall speak after the reply immediately after which the question shall be put from the
chair.
5. No member shall be allowed to speak for more than five minutes, except the mover, who may speak for ten minutes and
take five minutes in reply.
The same agenda shall be put before the members at the district and the central meetings. Where the agenda contains a
motion and an amendment or amendments thereto voting shall take place as if both the motion and amendments were
substantive motions and on consolidation of the votes at all the meetings if both motion and an amendment or
amendments are carried, the motion or amendment which has the greater number of votes recorded in its favour shall be
declared carried, and if the votes in favour are equal such one of those receiving such equal votes as had the largest
majority shall be declared carried.
Any member who has not spoken to the question before the meeting may at any time during the course of the debate
move "That the question be now put". Such motion must be made without any accompanying speech and must be
forthwith put without amendment or debate, and should such motion be adopted, the chairman shall, subject to the right
of reply of the mover of the question under discussion, at once put the question.
8. Any member choosing to speak upon any question whatsoever must rise in his place and address himself to the chairman.
When two or more members rise at the same time, the chairman shall indicate the member who is to speak first.
9. Whenever the chairman rises to speak, no member shall continue standing, nor shall any member rise until the chairman
resumes his seat
10. A member shall confine his speech strictly to the motion under discussion, or to the amendment or to a question of order.
11. The chairman may call attention to continued irrelevance, tedious repetition, or any breach of order on the part of a
member and may direct such member to discontinue his speech.
12. Any one or more of these standing orders may be suspended at any meeting by the vote of a two-thirds majority of
members present at the meeting. The decision of the chairman upon any point of order shall be final.
Members wishing to ask a question at any members meeting of the Society must submit the question in writing to the Secretary
at least 48 hours before the relevant meeting.
How Votes shall be taken —The minimum number of members required to demand a ballot vote at meetings shall be 40 or atleast 50 per cent of members present and entitled to vote if less than 80 members be in attendance.
Complaints by Members —A member who has any complaint to make as to the quality, quantity, or price of any goods or services
supplied by the Society, or the conduct of any officer or employee of the Society, shall send the particulars of such complaint tothe board who shall inquire into and decide upon them, subject to an appeal from any such decision to an ordinary meeting ofmembers; but no such complaint shall be brought before any such meeting except on appeal.