CORPORATE DIRECTORY

REGISTERED OFFICE FINANCIERS/BANKERS

Norco Co-operative Limited Rabobank Australia
ARBN 009 717 417 / ABN 17 009 717 417 Level 14, Waterfront Place

CONTENTS
‘Windmill Grove’, 107 Wilson Street 1 Eagle Street, BRISBANE QLD 4000
SOUTH LISMORE NSW 2480 St George Bank
Telephone: 02 6627 8000 Level 12, Waterfront Place
Facsimile: 02 6627 8099 1 Eagle Street, BRISBANE QLD 4000
Web Site: www.norco.com.au
3 Corporate Profile 26 Corporate Governance Statement
4 Facts At A Glance 31 Financial Statements LAWYERS / SOLICITORS
AUDITORS
Addisons Lawyers - SYDNEY NSW 2000
6 Chairman’s Report 51 Independent Auditor’s Report Ernst & Young
Lander & Rogers - SYDNEY NSW 2000
Chartered Accountants
12 Chief Executive Officer’s Report 56 Corporate And Branch Directories Level 51, 111 Eagle Street S+P Walters Solicitors - LISMORE NSW 2480
BRISBANE QLD 4000 Piper Alderman Lawyers - SYDNEY NSW 2000
18 Directors’ Report
25 Auditor’s Independence Declaration

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.
PURPOSE VALUES
Norco’s purpose is to build wealth, security and Norco applies a common set of values to everything it does.
sustainability for our shareholders, business partners These values include:
and employees. We achieve this by:
RESPECT
- maintaining a diverse and strong range of businesses;
- We respect our shareholders, employees, business partners
- being a competitive regional purchaser and supplier and customers - We respect a diversity of views and opinions
of milk; and - We encourage and support people to grow as individuals and
- creating integrated solutions for our partners. 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.

1
 Still rated
Australia’s
favourite
milk

2
Corporate Profile

The celebrations to mark Norco’s 125th year of continuous operations

during 2020 were a major milestone, and whilst we were still able to
celebrate this significant achievement, our program of celebration was
reduced somewhat as a result of the onset and very serious nature of
the Covid-19 pandemic, which continues to affect us all. We paused
to acknowledge a much improved financial result, with an operating
net profit (before significant items) of $5.4m recorded for the 2019/20
financial year.
Under the astute and attentive leadership of Chief Executive Officer
Michael Hampson, the teams at Norco continued to build on the solid
foundations achieved in 2019/20 delivering significant value from the
activity management program and from the sizable growth of our Norco
branded milk sales, for which we thank our loyal and new customers
and consumers. It now seems fitting that for the 2020/21 financial year
and in Norco’s 126th year, we celebrate and reflect on a year of records
and milestones, including:
• Operating net profit (before significant items and before income tax)
for 2020/21 was $12.7m, which is a record for the Co-operative and
$7.3m favourable to 2019/20.
• Net debt lowest in 15 years at $12.2m as at 30 June 2021.
Norco branded milk sales now account for $189.4m in revenue,
• 
representing an annual growth rate of 22.4%.
It is also very pleasing to note that these record results have been
achieved during a period of significant change within both the Board
of Directors and the Senior Executive Team. These personnel changes
have not been disruptive to the business but instead have supported
and enabled a change in culture that enhances performance and
collaboration to bring about further business improvements.
A major motivating factor for our teams in continuing to strive to
achieve exceptional results is to create wealth for our Members who
supply the Co-operative with quality milk to satisfy the fresh drinking
milk market on the east coast of Australia. For two years now, Norco’s
Total Average Member Returns have exceeded 70 cents per litre which
is almost 10 cents per litre higher than what was paid in 2018/19. The
droughts, fires and flooding experienced in recent years have given
way to good seasonal conditions and it is hoped that these kinder
conditions, together with Norco’s highly competitive milk pricing for
the northern dairy industry, provides our Members with the much-
deserved opportunity to make their businesses more resilient for any
potential future shocks.
We have great pleasure in presenting to you the reports of our Chairman
Michael Jeffery and Chief Executive Officer Michael Hampson,
together with the financial reports for the Co-operative for the 2020/21
financial year. The results and commentary contained within this
report are a testament to the changed trajectory the Co-operative is on
and how our 126 year old Co-operative will continue to move forward in
a contemporary way.

3
 facts
at a glance
2020/21

total
revenue

658M
$
2019/20 - $683M 2018/19 - $603M

total
net profit

12.7M
$
before significant items
2019/20 - $5.4M 2018/19 - $1.2M
2020/21

12.0M
$
2019/20
2018/19

after significant items

2019/20 - $4.4M 2018/19 - $0.0M

11.0M
$
after significant items & tax
2019/20 - $4.4M 2018/19 - $0.0M

4
staff total member returns
employed total member supply cents per litre

841 ave base total ave

financial milk step ave total dividend suppliers’ member
year price ups milk pay patronage returns

2020/21 70.01 - 70.01 0.21* 0.61 70.83

Norco Foods 611
Norco Rural 166 2019/20 70.63 - 70.63 0.21 0.76 71.60
Norco Agribusiness 40 2018/19 60.14 - 60.14 0.19 0.76 61.09
Corporate 24
2017/18 57.07 - 57.07 0.27 0.64 57.98
as at 30 June 2021 - includes
permanent, part-time and casual staff 2016/17 57.29 0.13 57.42 0.25 0.51 58.18

total members’
milk intake northern

226
million litres
contract price
financial
year
ave base
milk
price

2020/21 70.48 -
step
ups
cents per litre

ave total
milk pay
total ave
dividend suppliers’ member
patronage returns

70.48 0.24* 0.67 71.39

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
number of 2016/17 57.40 0.13 57.53 0.26 0.51 58.30

member farms

199
2019/20 - 203 2018/19 - 194
southern
contract price cents per litre

ave base total ave

financial milk step ave total dividend suppliers’ member
year price ups milk pay patronage returns
average 2020/21 68.33 - 68.33 0.09* 0.42 68.84
milk production

1,134
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

000’s litres per farm

2019/20 - 1,056 2018/19 - 1,003 *Dividend proposed for consideration at 2021 Annual General Meeting

5
 Chairman’s Report

I am very pleased to report to Members on the events of the 126th year of our Co-operative, a year that can only be
described as one of challenge, uncertainty, change and very pleasingly, some outstanding achievements. The Covid-19
pandemic continued to generate significant disruption during the year, however it is fortunate that many of the changes
implemented within the business during this time have enabled the Co-operative to not only withstand the challenges
and uncertainties faced, but to also rise above these adversities to achieve a record net profit result (before significant
items and before income tax) of $12.7 million. This outcome represents an increase in profitability of $7.3 million over the
previous financial year which is an outstanding result given the disruption experienced throughout the year.

Strategy
A renewed focus from the Board and the Senior Executive Team on developing strategic opportunities and delivering to
the strategic plan, combined with driving cultural change within the business to create value in everything we do, have all
been major contributors to the much-improved result.
In light of the rapidly changing environment in which we do business and our vision to transform the Co-operative
into Australia’s leading dairy business that provides long term value for Members, the Board and the Leadership Team
undertook a refresh of the strategic plan during the year. The key themes from the review are to ensure a more sustainable
future for the Co-operative and our Members through unlocking potential, accelerating performance and creating value in
every aspect of the business.
Based on a strong foundation, as represented in the strategy diagram (see opposite), the review identified six core
components that are key priority focus areas of the business that will lead to Norco becoming Australia’s leading dairy
business providing long term farm gate value for Members.
The Board has provided a very clear mandate to the business, that mandate is one of creating value in everything we
do, sustainably. By providing a clear focus on creating value and improving performance, the Co-operative is in a much
stronger and healthier position to manage the disruption we face in a rapidly changing marketplace and business
environment. Additionally, and very importantly, as a result of positioning the business in a much more robust condition
and when combined with a clear direction and vision, the Co-operative is able to capitalise on opportunities that generate
additional value, creating a more sustainable future for our Members.

People and Safety

Another key focus of the Board has been in the area of People and Safety. The Board considers the health and safety of
our people to be of paramount importance and that we must ensure that the Co-operative provides a safe workplace. The
Directors along with the Senior Executive Team and the broader Leadership Team have all taken an active role in the
introduction of the Safety Walk program. The program involves Directors and senior leaders in the business conducting
regular visits to Norco sites to engage with staff at all levels with the view to improving the safety culture in the workplace.
The Safety Walks have provided a unique opportunity for members of staff at all levels to actively engage and interact
with Directors and leaders in the business through collaboration to improve the identification of risks, the development of
safe solutions and more broadly, a culture of everyone having a valued and recognised contribution. An additional benefit
is that this renewed active engagement and interaction within the business provides for other positive outcomes to be
realised, through fostering an inclusive and collaborative culture of operational excellence to achieve improved results
and the creation of value in every aspect of the Co-operative’s operations.
The Board has placed a high level of importance on investing in people as we continue the journey to transform the
business, to build capability, and to recognise contributions made to the overall success of Norco. The Co-operative’s
ability to attract key talent has improved, which has enabled Norco to welcome additional high calibre leaders into our
ranks. Encouragingly, we have also seen a number of our key talented leaders receive opportunities to broaden their skills
and add additional value to the Norco business. We believe that the people pathway that we have embarked on has led
to considerable change in the overall attractiveness of Norco as an employer of choice, and in turn, an increase in value
captured by the business.

6
 Australia’s Leading Dairy Business
Providing Long Term Farm Gate Value for Members
Future Asset Maximising Norco Enhancing People
Competitiveness Owned Brand Returns Performance
Create competitive advantage Leverage the value of our brand Invest in developing capability across our
across our asset base across products and geographies people to create commercial outcomes

Optimising Raw Diversifying Corporate Activity and

Material Inputs Revenue Streams Industry Rationalisation
Mitigate volatility and optimise our Actively move our business to higher Compliment our core business with
mix and input cost structure margin and value categories investments to improve scale

Foundation of Supportive, Safe and Inclusive Culture, valuing Heritage,

Sustainability and the Community, whilst embracing the future

It is truly encouraging to witness the personal development, the dedication and the contribution that so many have made,
too many to mention in this report but suffice to say the Board recognises the contributions made and the outcomes
achieved.

Members
The focus on people in the Co-operative, as always, extends to our valued Members, which is one of the core advantages
of the Co-operative structure. Having endured several years of crippling drought conditions that required Norco to provide
assistance to Members in many forms, a brief return to more favourable seasonal conditions was abruptly disrupted in
some areas by severe weather events resulting in devastating floods. The damage and challenging conditions experienced
on farm in many cases had to be seen to be believed, horrifying accounts of the events, the loss and devastation experienced
in early 2021 will remain firmly in the minds of this generation of Members for years to come.
Norco’s response started in the lead up to the event as the risk of floods became apparent, early preparations were made
to protect the factory assets and to ensure operations were maintained to provide a continuous supply of product to
customers. The Milk Supply Team and Norco’s tanker contractors co-ordinated emergency collections of milk from farms
to minimise the losses.
The Co-operative’s response was swift and targeted to provide assistance to Members on a number of levels. Norco’s team
of field officers had remained in constant contact with Members throughout the event, and as flood waters receded the
team was deployed to affected areas as soon as access could be gained to assess the impacts and to provide immediate
assistance.
Norco’s Rural / Agri Team secured and delivered emergency fodder supplies to Members and the broader farming
community, in some cases Norco deliveries were amongst the first to reach flood affected areas.
The recovery phase has been a long and difficult journey for our Members and in many cases will be ongoing for a
considerable time to come, the physical and financial impact has been enormous and following years of drought, the
compounding effect of devastating floods has tested the resolve of even our most resilient Members.

7
 “ ... the Co-operative is
in a much stronger
and healthier position to
manage the disruption we
face in a rapidly changing
marketplace and business
environment ”

8
9
10
It is in the tough times such as drought and more recently the floods that the benefits of being a Member of Australia’s
largest and oldest dairy co-operative really come to the fore. Norco has invested heavily in supporting Members through
difficult times which has only been made possible with the continued support of consumers who value our farmers and
the proposition of supporting a 100% farmer owned brand. I am sure everyone involved in the Co-operative appreciates the
ongoing support from consumers and our trading partners.

Board
The Board has welcomed two new Directors in the past 12 months, being Paul Weir and Ken Bryant, both of whom are
Supplier Directors from the Central Region. As advised in last year’s report, Greg McNamara did not seek re-election
(and subsequently resigned from the Board of Directors on 1 October 2020) with Paul Weir being the successful Member
candidate after a ballot was conducted for the Central Region. Paul was declared elected at the 2020 Annual General
Meeting on 11 November 2020. On 27 October 2020, Ms Leigh Shearman resigned from the Board of Directors, which
created a casual vacancy in the Central Region. A ballot was held and on 13 January 2021, Ken Bryant was declared elected
to the Board of Directors. Both Paul and Ken come to the Norco Board as very well-respected dairy farmers who also hold
leadership positions within the wider dairy industry. In the short time both Paul and Ken have been on the Board of
Directors, they have already proven to be valued contributors to Board discussions and decision-making.
The continued engagement of two highly experienced Board consultants, Kerryn Newton and Guy Cowan throughout
the year has added significant value to Board process through their contribution, expertise and participation not just in
every Board meeting but also in the committee meetings and Board discussions. Kerryn’s involvement as a governance
and strategy specialist in Board meetings and the Members, People and Safety Committee has ensured that the Board
continues to provide governance and oversight of the business at the highest levels. Guy has provided a wealth of
knowledge and experience in his areas of expertise of finance and corporate business to both the Board and the Audit and
Risk Management Committee Meetings.
In addition to change occurring in the business during the year, the Board too has experienced significant change, not just
in its composition but also in the way in which it operates. The ongoing Covid-19 pandemic has required the Board to adjust
to a new way of conducting its business, while the Board still meets at every opportunity face to face, travel restrictions
have meant the Board has had to meet using alternative means such as video conferencing and teleconferences. The
workload for the Board has increased significantly during the year as a result of the activity occurring in the Co-operative,
in addition to 17 formal Board meetings occurring, a significant number of informal meetings and general discussions have
occurred involving not only the Directors and the Board consultants but also the Chief Executive Officer and members of
the Senior Executive Team.
I would like to take this opportunity to thank the Members for their continued support and loyalty to their Co-operative,
I also acknowledge the significant contributions of all the Directors, the Board consultants, the members of the Senior
Executive and Leadership Teams and every employee at Norco for a year of hard work and outstanding achievements.
A particular mention needs to be made of the way in which Norco’s Chief Executive Officer, Michael Hampson, with the
support of his very capable Senior Executive Team, have embraced the challenge of delivering change, creating value and
delivering a record result for the 2020/21 financial year, an outstanding achievement. The Board of Directors look forward
to the opportunities being created and an exciting year ahead for Norco and our Members.

MICHAEL JEFFERY
Chairman
Board of Directors

11
 Chief Executive
Officer’s Report

It is with much pleasure that I provide this report to our dairy farmer Members, as we finalise a year of trading with a
record outcome in value created for our Members. 2020/21 was, like the year before, a year like no other. Whilst there was
uncertainty in the markets due to the continuing pandemic, which took aim at the benefits that we wanted to capture, we
continued the structural and cultural change here at Norco in line with our vision. The results that have stemmed from
this change have been very pleasing to see, delivered by our very capable and talented team.
We are truly changing the trajectory of Norco, and looking to build a far more resilient business as we examine the areas
that are not working well, and work together to find the best solution that the collective capability within our business
can muster. We still have much work to do, but the management team is motivated and enthused to bring about further
improvements, and it is also very reassuring to be supported by a Board that is keen to see Norco achieve this vision.
This report presents the outcomes delivered from the change in culture we have achieved, with improved and purposeful
collaboration demonstrated across the business in the way we operate.
Within the Norco community, we have now shown each other, and supported each other to deliver results that were
previously not provided or forecast in any plan or strategy. We did this by motivating our teams around the core principle
of our Co-operative – an unrelenting mission to create value for our Members. The thinking of the past that caused division
and silos was removed, we enabled people to be diverse in their idea generation, show agility even if they failed first, and
to not be shackled by any outdated logic that hampered innovation and the ability of our business to move forward in a
contemporary way. The outcome – the best results posted in the 126 years of our great Co-operative.

Safety
Norco is transforming its safety performance through a major focus on the fundamental workplace behaviours, along with
ensuring that our workplace environment is the safest it can be in terms of what tasks we ask our people to do. We have
invested in hard assets and also in soft assets to bring a change to the safety outcomes at Norco, reducing our lost time
injury frequency rate by over 25%, and reducing our severity rate by 45% also.
Demonstrating leadership in safety within the workplace has been identified as a key initiative to improve safety
performance. During the year we commenced the Safety Leadership Program, where managers from across the entire
business, and the Directors, would visit our sites to perform safety walks. These walks and observations included engaging
in discussions with staff in their workplaces to gain insights into the challenges that are being faced, so we can address
them before an injury occurs. Over the year 89 management safety walks were conducted, driving a considerable level of
change and improvement in housekeeping across our factories, rural stores and mills.
We will continue our improvements in safety as we strive to achieve a zero harm culture and a workplace free from at risk
work behaviours.

Financial Performance
For the year, Norco delivered a net profit before significant items of $12.7m, an improvement of $7.3m over the prior year,
and a record for our 126 year old Co-operative. The improved operating rhythm from our Activity Management Program,
continued growth in our core business, and the savings delivered through our Continuous Improvement initiative which
we commenced with global consulting firm Partners in Performance, took the dairy business profitability to new heights
during the year, improving the divisional contribution from $3.6m in 2018/19 to $16.0m in 2020/21. This increase in
divisional contribution is in addition to the $21.4m paid to Members as higher proceeds for their milk in 2020/21, when
compared to the pay rates of 2018/19.
Our total revenue for 2020/21 was $658.4m, down on the prior year due to reductions in commodity prices and volumes in
our grain trading and feed milling businesses. Our branded milk however, continued to grow with Norco branded milk sales
now accounting for $189.4m in revenue, representing growth of 22.4%.
Whilst our Rural and Agribusiness financial results came down from the highs driven by the drought, our Rural Retail
business for the last six months of the financial year improved on the profit for each of the same months of the preceding
year. The division has commenced a program of growth to gain market share and meet the needs of more consumers.
This included a review of our operating systems and processes to ensure that we are as efficient as possible, and we have

12
For the year, Norco delivered a net profit before significant items of $12.7m, an improvement
of $7.3m over the prior year, and a record for our 126 year old Co-operative. The improved
operating rhythm from our Activity Management Program, continued growth in our core
business, and the savings delivered through our Continuous Improvement initiative which we
commenced with global consulting firm Partners in Performance, took the dairy business
profitability to new heights during the year, improving the divisional contribution from $3.6m
in 2018/19 to $16.0m in 2020/21. This increase in divisional contribution is in addition to the
$21.4m paid to Members as higher proceeds for their milk in 2020/21, when compared to the
pay rates of 2018/19.

TOTAL CO-OPERATIVE CPL RETURN

(MILK PRICE, DIVIDEND, PATRONAGE, PROFIT)
$0.800 2020/21, $0.761

$0.750

$0.700

$0.650

$0.600

$0.550

$0.500
2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21

Total Co-operative CPL Return chart above: The change in approach that has occurred at Norco has resulted in significantly
Total Co-operative
improved CPL Return
returns being generated chart above:
for our Co-operative The change in approach that has occurred at
Members
Norco has resulted in significantly improved returns being generated for our Co-operative
Members
already changed and renegotiated many supplier terms to unlock further value for the business. NRI has been brought on
as a buying group partner, which has provided us access to more favourable terms with a wide range of suppliers.
Our total revenue for 2020/21 was $658.4m, down on the prior year due to reductions in
With a very mild and wet summer, ice cream sales were slower than expected, however we have been able to bring in
commodity prices and volumes in our grain trading and feed milling businesses. Our
new innovations within our product development team and operations team in the form of continuous improvement to
branded milk however, continued to grow with Norco branded milk sales now accounting for
assist the returns of this business. We have also launched the Hinterland brand of premium ice cream, which has been
$189.4m very
performing in revenue, representing
well in Woolworths, and as agrowth ofrange
result, the 22.4%.
has been extended to now include 11 unique flavour variants.

Whilst our Rural and Agribusiness financial results came down from the highs driven by the
Brand Performance
drought, our Rural Retail business for the last six months of the financial year improved on
The Norco brand continued to grow in Qld and NSW during the year, with an annual growth rate of 22.4% achieved for the
the profit for each of the same months of the preceding year. The division has commenced a
financial year in retail. This growth, when considering the white milk category declined at 2%, is testament to the strength
program
of the brand,ofand
growth to gain
the desire market share
that consumers hold toand meet
buy into thethe
100%needs
Farmerof more
Owned consumers. This
franchise.
included a review of our operating systems and processes to ensure that we are as efficient
Norco full cream milk retained the highly respected and sought after Canstar© award for a second consecutive year, with
as possible,
thousands and weconsumers
of Australian have already changed
awarding and
Norco Full renegotiated
Cream many
Milk top marks supplier
across termsoftotaste,
the categories unlock
freshness,
further
value for value
moneyforandthe business.
packaging NRI
design. Thishas been brought
culminated on as
in Norco full a buying
cream groupapartner,
milk receiving which
five star rating for overall
has provided
satisfaction, us access
making to more
it Australia’s favourable
favourite terms
milk. During with
the year theaRoy
wide range
Morgan of suppliers.
research showed Norco as the second
most trusted key food and beverage brand, which was also the highest rank of any dairy brand in the country.
Our
Withfulla cream and lite
very mild and white
wetmilk productsice
summer, arecream
now ranged
salesin were
major supermarkets
slower thanfrom far northhowever
expected, Qld to the we
far south
coast
haveofbeenNSW. able
We have also grown
to bring a vibrant
in new Route business
innovations withinsouth
our of Sydney, development
product with additional distributors
team and brought on in
Shellharbour
operations and Cooma,
team in thewhere
formmany coffee shops and
of continuous independent supermarkets
improvement to assist theare now stocking
returns of thisour flagship white
business.
and flavoured milks.
We have also launched the Hinterland brand of premium ice cream, which has been

Debt and Funding

Due to the improved financial performance and focused working capital management, we have been able to reduce our
Net Debt (Rabobank funding less cash) from $36.5m at June 2019 to a low of $12.2m at June 2021. This reduction in debt is
also after us investing $12.0m in capital expenditure during 2020/21 to modernise our facilities and to improve the safety
outcomes for our people.

13
 “ We are truly changing
the trajectory of Norco,
and looking to build a far
more resilient business ”

14
15
16
With the reduced core debt from improved business operations and the reduction in the cost of funds, we have also reduced
our borrowing costs by $0.9m since the last year and by $1.1m compared with the 2019 financial year.
Our covenants with our bankers are in the best position that they have been in quite some time. Our leverage ratio is 1.4,
with a covenant requirement of less than 5.5, and our times interest earnings is 14.3, much higher than the covenant of
greater than three. Further, we had over $50m of unused banking facilities at the end of the financial year, which shows
the strong position the Co-operative is in and positions us well for future investments to improve Member value.

Sustainability
Norco is working hard and swiftly to improve its environmental and sustainability credentials, as we move forward in a
world where sustainability and net zero carbon impacts will be expected by a changing consumer.
We have invested in new moulding equipment that enables us to reduce the amount of plastic in our bottles, and increase
the amount of recycled content in the bottles that we manufacture at our bottling plants. We will have transitioned the Our
Finest and Norco 100% Farmer Owned flavoured milk products to 100% recycled PET by November 2021, and we continue
to look at further investments in creating circularity in our packaging requirements.
We are working with both our energy providers and commercial installation partners to install commercial scale solar for
our depots and factories. We aim to continue our efforts on reducing our carbon footprint in line with the expectations of
our customers and the community, and ensure that we reduce our power usage, along with accessing green power across
our facilities.
There have also been considerable efficiencies and reductions of waste realised at our manufacturing facilities, which
provides us with additional cost savings that we can use to fuel further investment in creating a more sustainable supply
chain that will improve the outcome we have on the environment.

Acknowledgement
At Norco we have a great team of people that value their role in supporting our farmers across NSW and Qld. Together this
team has overcome quite significant uncertainties in our markets and delivered this record result for our Members.
These results only come from a united team that have bought into the direction that the business is heading, and believe
in its purpose. We have made quite a few changes in our team over the last 18 months, providing new opportunities for
growth for our talented people, and welcoming additional talent into our business to supplement our core skills and
capabilities. These changes have enabled the results that are now being delivered, and show that we were right to move
in a way that was different to the past, and create a management culture built on trust, supporting each other, striving for
high performance, and not fearing failure.
These changes and results would not have been possible without the support of the entire management team. I am very
grateful for the efforts they go to in delivering improved outcomes for our business. I am equally proud of their many
achievements.
As we know, the culture and tone of the organisation is set by the Board, and the current Board led by Chairman Michael
Jeffery has been extremely supportive of the changes required to achieve the revised operational performance. Having a
Board that is there to support change and try new things is a key to having a high performing organisation that can pivot to
keep returns at sustainable levels, and build a solid business model for the future.
Lastly, I would like to thank the many Members that have offered advice and support over the last few years, as without the
help and hard work of our Members, we wouldn’t be in this great position today.
Be safe.

MICHAEL HAMPSON
Chief Executive Officer

17
 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 2021 and the Auditors’ report.
The Board of Directors currently comprises six supplier Directors which are non-executive positions. During the 2020/21
financial year, the Board engaged the professional services of two external consultants to assist and support Board
process. Ms Kerryn Newton is the Chief Executive Officer of Directors Australia Pty Ltd and commenced working with the
Board as a consultant in July 2020 as Board Governance Advisor, with a focus on Board process and governance. Mr Guy
Cowan commenced his consultancy work with the Board in September 2020. Mr Cowan’s role is that of Corporate Board
Advisor and he has extensive finance and corporate experience in the agriculture, food manufacturing and FMCG sectors
as a non-executive Director.
As part of the standard agenda items for each Board meeting, time is always allocated to strategic and corporate planning
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 ongoing Covid-19 pandemic has
again meant that the Board and management continue to maintain a sharp focus on business performance and strategic
resilience business planning to guide the Co-operative through this difficult and unpredictable period.
The members of the Senior Executive Team are invited to each monthly Board meeting to report on the performance of
their business units and to provide key information on safety, capital projects and other business unit specific matters.
The Directors also continue to be committed to their ongoing professional development. In December 2020, the Board
undertook a comprehensive training session with Ms Laura Hartley of Addisons Lawyers on the Competition and
Consumer Act. The Directors also completed CoR General Awareness training and CoR Awareness – Leadership Teams
training through the LSS on-line training program. During the year the Directors have also had the opportunity to attend,
and represent Norco, at a range of industry events as can be seen from their profiles. This has again been somewhat
disrupted during the 2020/21 financial year with the ongoing Covid-19 pandemic, however Directors have adapted well to
the use of on-line conferencing facilities as a means of participating in industry events.
In conjunction with the Safety Leadership Program introduced within the business, the Directors also wanted to
demonstrate their commitment to this leadership program and like the management team, commenced a program
of visiting sites to conduct safety walks. The Directors not only complete the safety walks but also provide reports on
their observations and make recommendations back to the site managers and general managers of those business units
(through the Chief Executive Officer) so that any safety concerns can be addressed.
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 has 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 PJ Weir and Mr KW Bryant were registered into the Company Directors’ Course
(residential) commencing on 6 September 2021 however this residential course has been deferred at this stage until late
February 2022. Similarly, five of the Directors were also registered into the AICD Finance for Directors course during August
and September 2021 however this course has also been deferred due to Covid-19.

DIRECTORS
All of the six non-executive supplier Directors are Active Members under the Rules of the Co-operative and have a direct
interest in their dairy farms that supply milk produce to the Co-operative.

18
 Michael C Jeffery – Chairman Heath B J Hoffman – Deputy Chairman Kenneth W Bryant – Director

Heath S Cook - Director Matthew T Trace – Director Paul J Weir - Director

Michael C Jeffery – Chairman

Michael Jeffery has been a Director of Norco Co-operative Limited for nine years, having been first elected to the Board on
14 November 2012 and is from the Southern Region. Michael is Chairman of the Board of Directors and is a member of the
Members, People and Safety Committee.
Michael is a member of the Australian Institute of Company Directors and the Governance Institute of Australia. Michael
has completed the AICD Finance for Directors course, the AICD Company Directors Course and holds an Advanced
Diploma in Agriculture.
During May 2021 Michael attended the on-line 2021 Trans-Tasman Dairy Leaders Forum. Michael is a member of the NSW
Dairy Industry Advisory Panel and has also recently been appointed as a member of the NSW Dairy Research Foundation
Council for a three year term.

Heath B J Hoffman – Deputy Chairman

Heath Hoffman has been a Director of Norco Co-operative Limited for seven years, having been first elected to the Board on
12 November 2014 and is a supplier Director from the Northern Region. Heath is 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.
Heath is registered to attend the AICD Finance for Directors course (which has been deferred due to Covid-19).

Kenneth W Bryant – Director

Ken Bryant was elected to the Board of Directors on 13 January 2021, having filled a casual vacancy as a result of the
resignation of Ms L Shearman on 27 October 2020 and is a supplier Director from the Central Region. Ken is a member of
the Members, People and Safety Committee.
Ken is an affiliate member of the Australian Institute of Company Directors.
Since joining the Board in January 2021, Ken has undertaken induction activities and site visits. He attended the on-
line 2021 Trans-Tasman Dairy Leaders Forum in May 2021 and took part in the Mutual Value Measurement masterclass
conducted by the Business Council of Co-operatives and Mutuals in June 2021. Ken is also registered to attend the
AICD Company Directors’ Course (residential) and Finance for Directors course (both of which have been deferred due
to Covid-19). Ken is an executive member of the Far North Coast Dairy Industry Group and has also recently become a
member of the NSW Farmers’ Dairy Committee.

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 Heath S Cook - Director
Heath Cook was elected to the Board of Directors on 27 November 2019 and is a supplier Director from the Southern Region.
Heath is the Chairperson of the Members, People and Safety Committee.
Heath is an affiliate member of the Australian Institute of Company Directors.
During October 2020 Heath completed the AICD Company Directors’ Course (residential) and is currently on a waitlist to
attend the AICD Finance for Directors course. Heath is a member of the NSW Farmers’ Dairy Committee, Chairperson of the
Mid North Coast Subtropical Dairy and National Councillor for Australian Dairy Farmers.

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.
During August 2020 Matthew completed the AICD Company Directors’ Course (residential) and took part in the Mutual
Value Measurement masterclass conducted by the Business Council of Co-operatives and Mutuals in June 2021. Matthew
is also registered to attend the AICD Finance for Directors course (which has been deferred due to Covid-19). Matthew is
Vice President of the Queensland Dairyfarmers’ Organisation and National Councillor for Australian Dairy Farmers.

Paul J Weir - Director

Paul Weir was elected to the Board of Directors on 11 November 2020 and is a supplier Director from the Central Region.
Paul is a member of the Audit and Risk Management Committee.
Paul is a member of the Australian Institute of Company Directors.
Since joining the Board in November 2020, Paul has undertaken induction activities and site visits. He attended the
on-line 2021 Trans-Tasman Dairy Leaders Forum in May 2021 and the AICD Mergers and Acquisitions – “How to prepare
your Board” seminar in June 2021. Paul is also registered to attend the AICD Company Directors’ Course (residential) and
Finance for Directors course (both of which have been deferred due to Covid-19). Paul is currently a farmer member of
Dairy Connect and Chairman of Subtropical Board.

DIRECTOR ELECTIONS – 2020/21

In accordance with the annual rotation of Directors, the Directors due to retire at the 2020 Annual General Meeting were Mr
HBJ Hoffman (Northern Region) and Mr GJ McNamara (Central Region). Mr HJB Hoffman, being eligible, offered himself
for re-election. As reported in the 2020 Annual Report, Mr GJ McNamara resigned from the Board of Directors effective 1
October 2020 and therefore did not seek re-election. There were no nominations received from Northern Region Members
and three nominations received from Central Region Members, being Messrs PJ Weir, KW Bryant and AW (Tony) Wilson.
As a result of the three Central Region Member nominations being received, a postal ballot was held for the Central Region
resulting in Mr PJ Weir being elected for a three year term effective from the 2020 Annual General Meeting on 11 November
2020. Mr HBJ Hoffman was re-elected unopposed for a further three year term also effective from the 2020 Annual General
Meeting.
On 27 October 2020 Ms L Shearman resigned from the Board of Directors creating a casual vacancy in the Central Region
as Ms Shearman’s three year term was not due to conclude until the 2021 Annual General Meeting. The Board of Directors
determined that the casual vacancy would be filled in accordance with the Rules. Central Region Member nominations
were received from Messrs AR Graham and KW Bryant and so a postal ballot was held resulting in Mr KW Bryant being
elected to the Board of Directors on 13 January 2021. In accordance with the Rules, the person who fills a casual vacancy
shall retire at the same time as the Director who vacated office would have done if they had not vacated it and so Mr KW
Bryant is due to retire at the 2021 Annual General Meeting.
The positions of Chairman and Deputy Chairman are voted on annually by the Directors following the Annual General
Meeting.

20
Directors’ Meetings
The number of Board meetings (and meetings of the Audit and Risk Management Committee) and number of meetings
attended by each of the Directors of the Co-operative during the financial year are:

Audit and Risk

As a result of the continuation of the COVID-19 Management
pandemic and the Co-operative’s strict compliance with Directors’ Committee
social distancing rules in the workplace and also public Meetings Meetings
health orders, a number of the Directors’ meetings and A B A B
meetings of the Audit and Risk Management Committee
MC Jeffery 17 17 1 1
were held using on-line conferencing facilities again this
financial year. This is a convenient and effective way for HBJ Hoffman 17 17 9 8
the Board to conduct its business when there are state HS Cook 17 17 3 3
border closures and/or restrictions on travel outside of MT Trace 17 17 9 8
local government areas. PJ Weir 10 10 5 5
During the course of the 2020/21 financial year there were KW Bryant 7 7 - -
also five Directors’ meetings held by teleconference (not
GJ McNamara 6 5 - -
included in the table). Teleconferences are organised to
L Shearman 6 5 - -
discuss and resolve specific issues that cannot be held
over until the next scheduled monthly meeting and A R
 eflects the number of meetings held during the time the
generally the duration of such teleconferences is one Director held office during the year
hour or less. B Number of meetings attended

CORPORATE INFORMATION

Corporate structure
Norco Co-operative Limited is a co-operative limited by shares which is incorporated and domiciled in Australia.
Nature of operations and principal activities
The principal activities of the Co-operative during the financial year were the processing, manufacture and sale of dairy
products, the manufacture and sale of stockfeeds and rural retailing.
Employees
The Co-operative employed 554 full-time, 56 part-time permanent and 231 casual employees at 30 June 2021 (2020 563
full-time, 55 part-time permanent and 242 casual employees).
Results of operations
The net amount of the total comprehensive income for the financial year of the Co-operative after providing for income tax
was $11.0 million (2020: $4.8 million).
Derivatives and other financial instruments
The Co-operative’s activities expose it to changes in interest rates, foreign exchange rates and commodity prices. It is also
exposed to credit, liquidity and cash flow risks from its 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 2020/21 financial year totalled $520,000 (being a dividend rate of 5.0% [five percent] on issued
capital), declared and approved by Members at the 2020 Annual General Meeting, which was held on 11 November 2020.
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 2021 (see page 6).

21
22
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 28 August 2021 Mr MC Jeffery advised that he has been appointed as a member of the NSW Dairy Research Foundation
Council for a three (3) year term. The NSW Dairy Research Foundation Council is the leading and administering organisation
for the Dairy Up research project. This is a collaborative co-investment project to de-risk the NSW dairy industry for
sustainable future growth with Norco being a co-contributor. Mr Jeffery has declared his interest in accordance with
Section 208 of the Co-operatives National Law (NSW) and, in addition, excludes himself from any discussions or decisions
relating to this entity and project. During the 2020/21 year Mr Jeffery also advised that some previous declarations made
in prior periods have now been extinguished, being:
• No longer a member of the dairy Express management committee;
• Stepped down as Deputy Chairman of ST Genetics and resigned from the Board of ST Genetics; and
• No longer an alternate member on the Dairy Connect Farmer Group Board.
On 28 January 2021 Mr HBJ Hoffman advised that his family partnership operates a grain freight business with the
potential for this business to freight grain for Norco Agribusiness Grain Trading. Mr Hoffman has declared his interest

23
 in accordance with Section 208 of the Co-operatives National Law (NSW) and, in addition, excludes himself from any
discussions or decisions relating to this business arrangement.
On 28 January 2021 Mr KW Bryant advised that he is an executive member of the Far North Coast Dairy Industry Group
and on 26 August 2021 Mr Bryant advised that he is a member of the NSW Farmers’ Dairy Committee. Mr Bryant has
declared his interests in accordance with Section 208 of the Co-operatives National Law (NSW) and, in addition, excludes
himself from any discussions or decisions relating to these entities.
On 28 January 2021 Mr HS Cook advised that he is a National Councillor for Australian Dairy Farmers (ADF) and on 29 April
2021 Mr Cook advised that he is a member of the Levy Poll Advisory Committee representing dairy farmers who pay levies
to Dairy Australia, however on 29 September 2021 Mr Cook advised that he has resigned from his position as a member
of the Levy Poll Advisory Committee effective 21 September 2021. Mr Cook has declared his interests in accordance with
Section 208 of the Co-operatives National Law (NSW) and, in addition, excludes himself from any discussions or decisions
relating to these entities.
On 16 December 2020 Mr MT Trace advised that he is a National Councillor for Australian Dairy Farmers (ADF) and on
29 April 2021 Mr Trace advised that he is a member of the Levy Poll Advisory Committee representing dairy farmers who
pay levies to Dairy Australia, however on 29 September 2021 Mr Trace advised that he has resigned from his position
as a member of the Levy Poll Advisory Committee effective 21 September 2021. Mr Trace has declared his interests in
accordance with Section 208 of the Co-operatives National Law (NSW) and, in addition, excluded himself from any
discussions or decisions relating to these entities. Mr Trace also recently advised that a previous declaration made in the
prior period relating to being a Director of Subtropical Dairy has now been extinguished.
On 11 November 2020 Mr PJ Weir advised that he is a farmer member of Dairy Connect and the owner and Director of
Bestspred Pty Ltd. On 16 December 2020 Mr Weir advised that he is the Chairman of Subtropical Board. Mr Weir has
declared his interests in accordance with Section 208 of the Co-operatives National Law (NSW) and, in addition, excludes
himself from any discussions or decisions relating to these entities.
Rounding off of amounts
The amounts in this report and the accompanying financial statements have been rounded to the nearest one thousand
dollars in accordance with the Co-operatives National Law (NSW).
Auditor’s independence declaration to the directors
The Directors received a declaration of independence from the Co-operative’s auditor, Ernst & Young. A copy of that
declaration is included after this Directors’ Report.
Appreciation
The efforts and contribution of our management and staff during the year were greatly appreciated by Directors.

Signed in accordance with a resolution of the Directors.

MC JEFFERY
Chairman
Lismore, 29 September 2021

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25
 Corporate Governance
Statement
This statement outlines the main corporate governance practices that were in place throughout the 2020/21 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 and the Members, People and Safety Committee. The Members, People and Safety Committee
was established in December 2020 and replaces the former Member Services Committee and Human Resources Committee
but with an expanded Charter, with the role and responsibilities of the Committee described further below. The Board may form
or convene other ad hoc committees for specific purposes such as the Conduct Review Committee.
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 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 by the Board and elected by the members, 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. There are presently no Independent Directors elected to the Board of Directors.
The Board currently engages the professional services of two external consultants to assist and support Board process. Ms Kerryn
Newton is the Chief Executive Officer of Directors Australia Pty Ltd and commenced working with the Board as a consultant
in July 2020 as Board Governance Advisor, with a focus on Board process and governance. Mr Guy Cowan commenced his
consultancy work with the Board in September 2020. Mr Cowan’s role is that of Corporate Board Advisor and he has extensive
finance and corporate experience within the agriculture, food manufacturing and FMCG sectors as a non-executive Director.
During the year both Ms Newton and Mr Cowan have attended Board and Committee meetings as invitees and offer their
knowledge, experience, insight and feedback to assist and elevate Board discussions and Board decision-making processes.
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

26
Corporate Governance Policy Statement and the duties and responsibilities specifically addressed in the Deed Polls.
All current Directors except for Mr PJ Weir and Mr KW Bryant have attended and completed the comprehensive residential
AICD Company Directors’ Course. Both Messrs Weir and Bryant were registered (and fees paid) to attend the residential AICD
Company Directors’ Course commencing on 6 September 2021, however as a result of Covid-19 restrictions, this course has now
been deferred to late February 2022.
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.
Members, People and Safety Committee
The purpose of the Members, People and Safety Committee is to assist the Board in fulfilling its responsibilities regarding
oversight of matters relating to: strategic member and stakeholder engagement; the composition, succession planning and
performance of the Board; the appointment and performance of the Chief Executive Officer; workplace health and safety;
culture; and strategic workforce issues.
The role of the Members, People and Safety Committee is to provide independent advice and recommendations to the Board
with respect to the following areas:
• strategic member and stakeholder engagement;
• strategic issues which have a significant impact on members;
• the composition of the Board;

27
 • the nomination, election and selection of Directors;
• Board and Director induction and professional development;
• Board and senior executive succession planning;
• Board and Director performance evaluation;
• the appointment, performance framework and remuneration of the Chief Executive Officer;
• the remuneration and workforce framework in Norco including incentive arrangements;
• strategic workforce planning and talent management;
• workplace health and safety governance;
• strategic human resource policies including those relating to diversity, performance and remuneration; and
• organisational culture and engagement.
The Committee is comprised of three Directors and meets at least four times per annum.

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 year end forecasts are prepared on a quarterly basis.
• 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 - 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:

28
 • Manual handling.
• Forklift safety.
• Fire safety training.
• Safety data sheets.
In September 2020 the WHS Team implemented a new safety database system which meets the requirements of AS4801 and
ISO45001 to assist in the transition to the international standard for Occupational Health and Safety Management Systems. The
WHS Team is now working on improvements to this system as part of phase two of the project.
Safety
As reported earlier in this Annual Report Norco is committed to the safety and wellbeing of staff across its entire operations.
Demonstrating leadership in safety within the workplace has been identified as a key initiative to improve safety performance.
During the year the Safety Leadership Program commenced, where managers from across the entire business and the Directors,
visit Norco sites to perform safety walks. The managers and Directors not only complete the safety walks but also provide reports
on their observations and make recommendations back to the site managers and general managers of those business units so
that any safety concerns can be addressed.
On a monthly basis, the Board of Directors receives management reports detailing the safety performance and trends for the
business and monitors this information closely. The Board 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 Members, People and Safety Committee when the
Committee meets. As noted previously Norco maintains accreditation against AS4801:2001 Occupational Health and Safety
Management Systems.
Chain of Responsibility (CoR)
In the 2020/21 financial year Norco’s central CoR Safety Management System was fully established which comprises a
comprehensive suite of CoR policies, procedures, guides and forms. This CoR Safety Management System library is available to
all staff who can readily access this information on the Norco Intranet. During the year all sites undertook and completed the
CoR Safe external audit or self-assessments.
On-line safety courses relevant to staff positions that have CoR responsibilities have been completed with 100% compliance,
such as:
• Getting your diary right;
• Coupling / decoupling trailer safely;
• Driving safe at work;
• CoR watching brief;
• CoR awareness for leadership teams, employee drivers, load planners and schedulers, sales and account managers and site
teams;
• Fatigue management for truck drivers; and
• Driver health and wellbeing
It is acknowledged that the Co-operative has ongoing CoR responsibilities and so more courses are currently being brought on
line such as driver induction and there is a cycle of refresher courses that employees will be required to undertake to ensure
their CoR knowledge remains current.
Sustainability and Environmental Social Governance (ESG)
As reported in the Chief Executive Officer’s report, Norco is on a journey to improve its environmental and sustainability
credentials with a business-wide strategy framework under development as we strive to reduce our carbon footprint and also
meet the expectations of customers and consumers alike. 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 employee has a nominated manager or supervisor to whom they may
refer any issue arising from their employment and there is a suite of People and Culture policies and procedures that assist in

29
 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;
• the purchase, development and use of information systems, and other emergencies that may occur; and
• Covid-19 related business risks.

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 regarding governance,
strategy, the business 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 National Law
Legislation;
• Meetings are held at least twice yearly with supplier members. Covid-19 imposed measures resulting in restrictions to
public gatherings and potential difficulty with cross-border travel, has meant that the Board has revised how it meets with
members. There is now one set of face to face meetings organised annually where Directors and management will attend
various locations within the milk supply regions to personally inform members about the affairs of the Co-operative. The
other meetings with members are now conducted as on-line meetings and this has been embraced well by supplier members
and has also allowed for more frequent meetings to be held if required;
• In addition to the meetings with supplier members, a more informal communication network called ‘NorcoNet’ can be
established and run within farming communities in the Norco supply areas. The purpose of ‘NorcoNet’ is to bring small
groups of members and milk suppliers 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, as required, more frequent ad hoc circulars on specific
issues such as Covid-19 business updates;
• As a matter of process, any media releases prepared for media outlets and the public relating to items such as Norco’s financial
performance or the release of new and exciting product offerings, are provided to Members first; and
• 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.
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 difficulties and disruption caused by Covid-19 has meant that contingency plans
needed to be enacted for the 2020 Annual General Meeting which was held across two venues, one in south-east Qld and one
in northern NSW with the use of technology. It is anticipated that the 2021 Annual General Meeting may also be impacted in a
similar way due to Covid-19.
The members are responsible for the election of Directors.

30
Financial Statements

Statement of profit or loss & other comprehensive income

for the year ended 30 June 2021
2021 2020
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 4 658,438 - 658,438 683,426 - 683,426

Other income 5.1 752 - 752 543 - 543

Finance income 210 - 210 474 - 474

Milk payments to suppliers 5.3 (163,257) - (163,257) (155,310) - (155,310)
Cost of sales (327,401) - (327,401) (376,901) - (376,901)
Employee expenses 5.4 (75,385) - (75,385) (72,659) - (72,659)
Depreciation expense 5.5 (11,243) - (11,243) (10,199) - (10,199)
Borrowing costs/finance costs 5.2 (1,785) - (1,785) (2,675) - (2,675)
Occupancy expenses (3,196) - (3,196) (3,759) - (3,759)
Administration and other costs (64,426) - (64,426) (57,482) (305) (57,787)
Gain/(loss) on disposal of
non-current assets 10 - 10 (104) - (104)
Restructure costs - (193) (193) - (192) (192)
Profit/(loss) before tax from
ordinary activities before
income tax expense and
member distributions 12,717 (193) 12,524 5,354 (497) 4,857

Member distributions 7 - (520) (520) - (445) (445)
Profit/(loss) before income
tax 12,717 (713) 12,004 5,354 (942) 4,412

Income tax expense 6 (1,028) 58 (970) - - -
Net profit/(loss) attributable
to members 11,689 (655) 11,034 5,354 (942) 4,412

Other comprehensive income

Other comprehensive
income to be reclassified to
profit or loss in subsequent
periods:
Net gain on cash flow
hedges - - - - 423 423
Other comprehensive
income for the year, net of
tax - - - - 423 423
Total comprehensive
income/(loss) for the year,
net of tax 11,689 (655) 11,034 5,354 (519) 4,835

(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.

31
 Statement of financial position
as at 30 June 2021 2021 2020
Notes $000 $000
Assets
Current assets
Cash and cash equivalents 19.1 5,737 4,686
Trade and other receivables 8 58,591 61,000
Inventories 9 42,119 39,339
Other assets 1,678 1,991
Total current assets 108,125 107,016

Non-current assets
Investments 10 33 3
Property, plant and equipment 11 72,082 66,879
Right-of-use assets 12 17,532 19,628
Intangible assets and goodwill 13 37,038 37,038
Deferred tax assets 6 1,800 -
Total non-current assets 128,485 123,548
Total assets 236,610 230,564

Liabilities
Current liabilities
Trade and other payables 14 94,861 85,460
Interest-bearing loans and borrowings 15 84 1,584
Lease liabilities 12 3,946 3,887
Employee benefit liabilities 16 10,399 9,886
Income tax payable 2,312 -
Total current liabilities 111,602 100,817

Non-current liabilities
Trade and other payables 14 397 397
Interest-bearing loans and borrowings 15 17,895 31,920
Lease liabilities 12 13,971 16,046
Employee benefit liabilities 16 1,585 1,554
Total non-current liabilities 33,848 49,917
Total liabilities 145,450 150,734

Net assets attributable to members 91,160 79,830

Members’ interest 17.1 10,383 10,087

Net assets 80,777 69,743

Equity
Retained earnings 41,690 30,656
Reserves 18 39,087 39,087
Total equity 80,777 69,743

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 2021 Cash flow Asset
Retained hedge revaluation
earnings reserve reserve Total equity
$000 $000 $000 $000

At 1 July 2020 30,656 - 39,087 69,743

Profit for the year 11,034 - - 11,034
Other comprehensive income - - - -
Total comprehensive income for the year 11,034 - - 11,034

At 30 June 2021 41,690 - 39,087 80,777

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

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

32
Statement of cash flows
for the year ended 30 June 2021 2021 2020
Notes $000 $000
Operating activities
Receipts from customers 661,532 684,756
Payments to suppliers and employees (463,571) (509,169)
Interest received 210 474
Interest paid 5.2 (1,785) (2,675)
Milk supplier payments (163,190) (152,372)
Net cash flows from operating activities 19.2 33,196 21,014

Investing activities
Proceeds from sale of property, plant and equipment 1 116
Purchase of property, plant and equipment 11 (12,011) (9,186)
Purchase of investment (30) -
Net cash flows used in investing activities (12,040) (9,070)

Financing activities
Suppliers’ share contribution 17 296 (207)
Distributions paid to members 7 (520) (445)
Payment of principal portion of lease liabilities 19.2 (4,356) (3,537)
Repayments of borrowings 19.2 (15,525) (8,401)
Net cash flows used in financing activities (20,105) (12,590)

Net increase/(decrease) in cash and cash equivalents 1,051 (646)

Cash and cash equivalents at 1 July 4,686 5,332
Cash and cash equivalents at 30 June 19.1 5,737 4,686

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 2021

1. Corporate information
The financial statements of Norco Co-operative Limited and its controlled entities (the “Co-operative”) for the year ended 30 June 2021
were authorised for issue in accordance with a resolution of the directors on 29 September 2021.
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 investments in unlisted entities 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 2021 and the
comparative information presented in these financial statements for the year ended 30 June 2020.
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.
33
 2.2 Changes in accounting policies, disclosures, standards and interpretations
New and amended standards and interpretations
The new and amended Australian Accounting Standards and Interpretations that apply for the first time in 2021, do not materially
impact the financial statements of the Co-operative.
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 2021:
• 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
•A  ASB 2019-5 Amendments to Amendments to Australian Accounting Standards - Disclosure of the Effect of New IFRS Standards Not
Yet Issued in Australia
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 2021. 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;
• It is held primarily for the purpose of trading;
• It is 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

34
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.
(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.,
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.
35
 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.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
• When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not
a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss
• In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint
arrangements, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any
unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised,
except:
• When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in
a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable
profit or loss
• In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint
arrangements, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the
foreseeable future and taxable profit will be available against which the temporary differences can be utilised
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are
re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow
the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the
liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current
tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
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

36
less accumulated depreciation and less any impairment losses recognised. Freehold land is held at cost and is not depreciated.
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 5 - 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 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

37
 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 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:

38
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 2021, there were no swaps that have been designated as
effective interest rate swaps (2020: $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 judgements, 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
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

39
 (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: 2021 2020
$000 $000
Type of goods or service
Sale of goods - Foods 401,583 375,818
Sale of goods - Rural 232,083 280,951
Sale of goods - Milk supply 24,772 26,657
Total revenue from contracts with customers 658,438 683,426

Geographical markets
Australia 653,084 678,926
Other 5,354 4,500
Total revenue from contracts with customers 658,438 683,426

Timing of revenue recognition

Goods transferred at a point in time 658,438 683,426
Total revenue from contracts with customers 658,438 683,426

5. Other income and expenses

5.1 Other income 2021 2020
$000 $000
Rental income 148 131
Sundry income 604 412
752 543

5.2 Borrowing costs/finance cost 2021 2020

$000 $000
Interest on lease liabilities 589 566
Borrowing costs 1,196 2,109
1,785 2,675

5.3 Milk payments to suppliers 2021 2020

$000 $000
Milk payments to Norco member suppliers 158,041 151,450
Milk payments to external suppliers 5,216 3,860
163,257 155,310

5.4 Employee expenses 2021 2020

$000 $000
Salaries and wages (including contractors) 63,460 60,682
Workers compensation 2,525 2,534
Superannuation costs 6,048 5,960
Payroll tax 3,352 3,483
75,385 72,659

40
5.5 Depreciation expense 2021 2020
$000 $000
Plant and equipment 6,289 5,846
Buildings 518 511
Right-of-use assets 4,436 3,842
11,243 10,199

5.6 Administration and other costs

Administration and other costs include the following: 2021 2020
$000 $000
Inventory obsolescence 59 53
Expected credit losses (Note 8) 67 145

6. Income tax expense

The major components of income tax expense for the years ended 30 June 2021 and 2020 are: 2021 2020
$000 $000
Current income tax:
Current income tax charge 2,741 -
Adjustments for current tax of prior periods 29 -

Deferred tax:
Relating to origination and reversal of temporary differences (1,800) -
Income tax expense reported in the statement of profit or loss and other comprehensive income 970 -

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: 2021 2020
$000 $000
Accounting profit before income tax 12,004 4,412

At Australia’s statutory income tax rate of 30% (2020: 30%) 3,601 1,323
Non-deductible amounts 156 316
Movement in temporary differences (2,039) 181
Tax offset (934) -
Other movements in tax 186 (380)
Tax loss movement - (1,440)
970 -
Tax losses
At 30 June 2021, the Co-operative had $nil estimated gross in carry forward losses (Actual 2020: $nil).
There are no available franking credits. 2021 2020
Unrecognised
$000 $000
Deferred tax assets and liabilities
Provision for expected credit losses 819 778
Provision for employee benefits 3,595 3,431
Trademark (819) (819)
Provision for obsolescence 850 506
Property, plant and equipment (2,993) (2,344)
Right-of-use asset (5,260) (5,888)
Lease liability 5,375 5,980
Maintenance spares (808) (695)
Water accrual 95 52
Accruals 946 1,038
1,800 2,039
Deferred tax
Deferred tax relates to the following: Statement of profit or loss
Statement of financial and other comprehensive
position income
2021 2020 2021 2020
$000 $000 $000 $000

Provision for expected credit losses 819 - (819) -

Provision for employee benefits 3,595 - (3,595) -
Trademark (819) - 819 -
Provision for obsolescence 850 - (850) -
Property, plant and equipment (2,993) - 2,993 -
Right-of-use asset (5,260) - 5,260 -
Lease liability 5,375 - (5,375) -
Maintenance spares (808) - 808 -
Water accrual 95 - (95) -
Accruals 946 - (946) -
Deferred tax benefit (1,800) -
Net deferred tax assets 1,800 -

Reflected in the statement of financial position as follows:
Deferred tax assets 1,800 -
Deferred tax assets, net 1,800 -

41
 Reconciliation of deferred tax assets, net 2021 2020
$000 $000
As of 1 July - -
Tax income during the period recognised in profit or loss 1,800 -
As at 30 June 1,800 -

7. Member distributions 2021 2020

$000 $000
Expensed in the year 520 445

8. Trade and other receivables 2021 2020

$000 $000
Trade receivables 60,661 62,832
Allowance for expected credit losses (2,731) (2,593)
57,930 60,239
Other receivables 661 761
58,591 61,000
Set out below is the movement in the allowance for expected credit losses of
trade receivables and contract assets: 2021 2020
$000 $000
As at 1 July 2,593 2,542
Charge for the year (Note 5.6) 67 145
Other 71 (94)
As at 30 June 2,731 2,593

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 91+
Total days days days days
$000 $000 $000 $000 $000
2021 60,661 43,997 11,964 3,077 1,623
2020 62,832 42,607 12,648 4,934 2,643

Receivables past due have been considered for impairment and are partially included in the $2.7m expected credit loss
provision based on management’s expectation of cash to be collected.

9. Inventories 2021 2020

$000 $000
Raw materials and stores 10,257 11,447
Finished goods and work in progress 34,695 29,580
Provision to net realisable value (2,833) (1,688)
Total inventories at the lower of cost and net realisable value 42,119 39,339

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 2021 2020

$000 $000
Shares
Unlisted corporations - at fair value 33 3

11. Property, plant and equipment 2021 2020

$000 $000
Land and buildings
At cost 29,204 29,022
Accumulated depreciation (7,776) (7,258)
Net carrying amount 21,428 21,764

Plant, equipment and vehicles

At cost 111,909 97,102
Accumulated depreciation (64,718) (58,429)
Net carrying amount 47,191 38,673

Capital expenditure work in progress

At cost 3,463 6,442
Net carrying amount 3,463 6,442

Total property, plant and equipment

At cost 144,576 132,566
Accumulated depreciation (72,494) (65,687)
Net carrying amount 72,082 66,879
42
Reconciliation of carrying amounts at the beginning and the end of the year
2021 2020
$000 $000
Land and buildings
At 1 July 21,764 22,196
Transfers from work in progress 182 79
Depreciation expense (518) (511)
At 30 June 21,428 21,764

Plant, equipment and vehicles

At 1 July 38,673 37,132
Disposals (1) (116)
Transfers from work in progress 14,808 7,503
Depreciation expense (6,289) (5,846)
At 30 June 47,191 38,673

Capital expenditure work in progress

At 1 July 6,442 4,838
Additions 12,011 9,186
Transfers to property, plant and equipment (14,990) (7,582)
At 30 June 3,463 6,442

Total property, plant and equipment

At 1 July 66,879 64,166
Additions 12,011 9,186
Disposals (1) (116)
Depreciation expense (6,807) (6,357)
At 30 June 72,082 66,879

There were no impairment losses recognised in the 2021 or 2020 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) and 12).

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 to 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:
Motor
Property vehicles Total
$000 $000 $000

As at 1 July 2019 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

Additions 1,304 1,036 2,340

Depreciation expense (2,637) (1,799) (4,436)
As at 30 June 2021 14,161 3,371 17,532

Set out below are the carrying amounts of lease liabilities and the movements during the period:
2021 2020
$000 $000
As at 1 July 19,933 18,346
Additions 2,340 5,124
Accretion of interest 589 566
Payments (4,945) (4,103)
At 30 June 17,917 19,933

Current 3,946 3,887

Non-current 13,971 16,046

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 The following are the amounts recognised in profit or loss:
2021 2020
$000 $000
Depreciation expense of right-of-use assets 4,436 3,842
Interest expense on lease liabilities 589 566
Expense relating to short-term leases (included in occupancy expenses) 1,800 2,176
Expense relating to leases of low-value assets (included in occupancy expenses) 1,396 1,584
Total amount recognised in profit or loss 8,221 8,168

The Co-operative had total cash outflows for leases of $8,141,000 in 2021 (2020: $7,863,000). The Co-operative also had non-cash
additions to right-of-use assets and lease liabilities of $2,340,000 in 2021 (2020: $5,124,000).
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:
2021 2020
$000 $000
Extensions options expected to be exercised 12,258 12,173

13. Intangible assets and goodwill 2021 2020

$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 (2020: 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 expected cost increases.
No reasonably possible change in the key assumptions noted would result in an impairment.

14. Trade and other payables 2021 2020

$000 $000
Current
Trade payables 72,936 67,940
Accruals 21,925 17,520
94,861 85,460
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 borrowings 2021 2020

$000 $000
Current
Norco Capital Units 84 84
Term loans - secured - 1,500
84 1,584
Non-current
Term loans - secured 17,895 31,920
17,895 31,920
The Co-operative finance facility with Rabobank was amended in the prior year, the Borrowing Base Facility is scheduled to expire
on 30 September 2022 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 28.
(c) Assets pledged as security
The carrying amounts of assets pledged as security for current and non-current interest-bearing liabilities are:
2021 2020
$000 $000
Property asset charges 72,082 66,879
Trademark 2,729 2,729
Total assets pledged as security 74,811 69,608
There are no specific terms and conditions related to the above pledges.

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(d) Financing facilities
The following financing facilities are available for the Co-operative at 30 June: 2021 2020
$000 $000
Term loan facilities
Used facilities 17,895 33,420
Unused facilities 54,605 35,580
72,500 69,000

Bank guarantees and finance leases

Used facilities 1,308 1,298
Unused facilities 392 402
1,700 1,700

Business credit card facility

Used facilities 35 19
Unused facilities 111 135
146 154

Total finance facilities

Used facilities 19,238 34,737
Unused facilities 55,108 36,117
74,346 70,854

16. Employee benefit liabilities 2021 2020

$000 $000
Current
Employee entitlements 10,399 9,886

Non-current
Employee entitlements 1,585 1,554

17. Members’ interest

17.1 Movements in Members’ interest shares $000

Opening balance - 10,294,000 Members’ shares 10,294

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

Opening balance - 10,087,000 Members’ shares 10,087

Repurchases of cancelled Members’ shares (684)
Subscriptions 980
At 30 June 2021 - 10,383,000 Members’ shares 10,383

17.2 Terms and conditions of Members’ interest

Members’ interest has rights in accordance with the Co-operatives National Law (NSW).

18. 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.

19. Cash and cash equivalents

19.1 Reconciliation of cash
For the purpose of the statement of cash flows, cash and cash equivalents compose of the following at 30 June:
2021 2020
$000 $000

Cash at bank and on hand 5,737 4,686

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 19.2 Cash flow reconciliation 2021 2020
$000 $000
Reconciliation of net profit before tax to net cash flows:
Profit before tax 11,034 4,412

Adjustments for:
Depreciation of property, plant and equipment 6,807 6,357
Depreciation of right-of-use assets 4,436 3,842
Member distribution expense 520 445
Expected credit losses 67 145
Inventory obsolescence 59 53
Net (gain)/loss on disposal of property, plant and equipment (10) 104

Changes in assets and liabilities:

Decrease in trade and other receivables 2,342 787
(Increase)/decrease in inventories (2,839) 2,240
Decrease/(increase) in other assets 313 (712)
Increase in deferred tax assets (1,800) -
Increase in trade and other payables 11,723 2,708
Increase in employee benefit liabilities 544 633
Net cash flows from operating activities 33,196 21,014

Changes in liabilities from financing activities Cash inflows/

2020 (outflows) New leases 2021
$000 $000 $000 $000
Liabilities with cash flows from financing activities
Interest bearing loans and borrowings 33,504 (15,525) - 17,979
Suppliers’ share contribution 10,087 296 - 10,383
Distribution paid to members - (520) - (520)
Lease liabilities 19,933 (4,356) 2,340 17,917
63,524 (20,105) 2,340 45,759

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 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

20. Controlled entities

% equity interest Investment $000
Name Principal activities 2021 2020 2021 2020
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

21. 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 $1,308,000 (2020: $1,298,000)
and are not included as creditors.

22. 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 2021 (2020: $Nil).

23. 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.
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24. Directors and executive disclosures
24.1 Directors
(i) The directors of Norco Co-operative Limited during the financial year were:
Michael Jeffery (Non-Executive)
Heath Hoffman (Non-Executive)
Heath Cook (Non-Executive)
Matthew Trace (Non-Executive)
Greg McNamara (Non-Executive) (a)
Leigh Shearman (Non-Executive) (b)
Paul Weir (Non-Executive) (c)
Kenneth Bryant (Non-Executive) (d)
(a) Resigned as Non-Executive Director effective 1 October 2020
(b) Resigned as Non-Executive Director effective 27 October 2020
(c) Elected Non-Executive Director effective 11 November 2020
(d) Elected Non-Executive Director effective 13 January 2021

24.2 Key management personnel

(i) The executives of Norco Co-operative Limited during the financial year were:
Michael Hampson (Chief Executive Officer)
Sean Southwood (Chief Financial Officer)
Brett Arthur (GM Commercial Foods)
Adrian Kings (GM Manufacturing Foods) (a)
Damon Bailey (GM Rural Agribusiness) (b)
Ben Menzies (GM Strategy & Brands) (c)
Jacque Courtney-Pitman (GM People & Culture) (d)

(a) Appointed GM Manufacturing Foods effective 17 August 2020

(b) Resigned as GM Rural Agribusiness effective 29 January 2021
(c) Appointed GM Strategy & Brands effective 25 March 2021, formerly GM Marketing & Brands
(d) Appointed GM People & Culture effective 20 May 2021

24.3 Compensation of key management personnel and Directors 2021 2020

$ $
Short term - wages and salaries 2,582,817 1,903,501
Termination benefits 76,918 121,130
Superannuation 156,321 140,334
Non-cash 9,877 16,932
Total compensation 2,825,933 2,181,897

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.

24.4 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
Sale of farm supplies and stores to key management personnel and related entities are on the same commercial terms and
conditions as enjoyed by other non key management personnel members.

24.5 Share transactions 2021 2020

Aggregate number of shares held by Co-operative Directors and their related entities at 30 June 424,438 500,847
Aggregate number of shares acquired by Co-operative Directors and their related entities during the year 64,375 29,825

25. Superannuation commitments

All employees participate in an employer sponsored defined contribution/accumulation style superannuation plan. Contributions
by the Co-operative of 9.5% (2020: 9.5%) of employees’ wages and salaries are legally enforceable except employees of the Ice Cream
division who are paid 11% (2020: 11%) superannuation commitments in line with their Enterprise Bargaining Agreement.

26. Auditor’s remuneration

The auditor of Norco Co-operative Limited is Ernst & Young (Australia). 2021 2020
$ $
Amounts received or due and receivable by Ernst & Young (Australia) for:
An audit or review of the financial report 138,300 164,000
Other services
Financial statements compilation 11,700 11,500
150,000 175,500

In the year ended 30 June 2020 an additional initial fee of $17,500 was paid to Ernst & Young (Australia) associated with
additional audit requirements associated with the first-time adoption and audit of AASB 16 Leases.

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 27. Information relating to the Norco Co-operative Limited (the Parent) 2021 2020
$000 $000
Information relating to Norco Co-operative Limited:
Current assets 108,125 107,016
Total assets 220,828 214,782
Total liabilities (144,461) (149,745)
Net assets attributable to members 76,367 65,037

Members’ interest 13,608 13,312

Net assets 62,759 51,725

Asset revaluation reserve 31,215 31,215

Retained earnings 31,544 20,510
Total equity 62,759 51,725

Profit of the Parent entity 11,034 4,413

Total comprehensive income of the Parent for the year 11,034 4,836

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 22.
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 21.
Details of any contractual commitments by the Parent entity for the acquisition of property, plant or equipment
The Parent has no commitments as at 30 June 2021 (2020: $Nil).

28. 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: 2021 2020
$000 $000
Financial assets and liabilities
Cash and cash equivalents 5,737 4,686
Net exposure 5,737 4,686

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.
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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 2021. Cash flows for financial liabilities without fixed amount or timing are based on the conditions existing at 30 June
2021.
The remaining contractual maturities of the consolidated entity’s and parent entity’s financial liabilities are presented with an
analysis of the financial assets.
2021 2020
$000 $000
0-1 year 101,119 90,847
1-5 years 28,688 43,384
Over 5 years 3,575 4,979
133,382 139,210

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.
1 to 5 Over
Year ended 30 June 2021 <12 months years 5 years Total
$000 $000 $000 $000
Cash and cash equivalents 5,737 - - 5,737
Trade and other receivables 58,591 - - 58,591
Interest-bearing loans and borrowings - (17,895) - (17,895)
Lease liabilities (3,946) (10,396) (3,575) (17,917)
Trade and other payables (94,861) (397) - (95,258)
Income tax payable (2,312) - - (2,312)
Net maturity (36,791) (28,688) (3,575) (69,054)

1 to 5 Over
Year ended 30 June 2020 <12 months years 5 years Total
$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) (11,067) (4,979) (19,933)
Trade and other payables (85,460) (397) - (85,857)
Net maturity (25,161) (43,384) (4,979) (73,524)

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

29. 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.

49
 Directors’ Declaration
30 June 2021

In accordance with a resolution of the directors of Norco Co-operative Limited, I state that:

In the opinion of the directors:

a) the 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 2021 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) there 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

MC JEFFERY
Chairman
Lismore, 29 September 2021

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 BRANCH DIRECTORY
HEAD OFFICES NORCO RURAL BRANCHES

NORCO CORPORATE ALSTONVILLE HEATHERBRAE

‘Windmill Grove’, 107 Wilson Street 17 Kays Lane 9 Hank Street
SOUTH LISMORE NSW 2480 Russelton Estate HEATHERBRAE NSW 2324
(PO Box 486 LISMORE NSW 2480) ALSTONVILLE NSW 2477 Phone: 02 4988 5300
Phone: 02 6627 8000 Phone: 02 6625 8400 Fax: 02 4988 5399
Fax: 02 6627 8099 Fax: 02 6625 8499 KEMPSEY
NORCO RURAL ARMIDALE 3 Kemp Street
‘Windmill Grove’, 107 Wilson Street, 252 Mann Street WEST KEMPSEY NSW 2440
SOUTH LISMORE NSW 2480 ARMIDALE NSW 2350 Phone: 02 6563 3700
(PO Box 3107 LISMORE DC NSW 2480) Phone: 02 6775 4300 Fax: 02 6563 3799
Phone: 02 6627 8000 Fax: 02 6775 4399 KINGAROY
Fax: 02 6627 8099 BEAUDESERT 97 River Road
NORCO AGRIBUSINESS 9A Thiedeke Road KINGAROY QLD 4610
‘Windmill Grove’, 107 Wilson Street BEAUDESERT QLD 4285 Phone: 07 4336 2400
SOUTH LISMORE NSW 2480 Phone: 07 5542 4500 Fax: 07 4336 2409
(PO Box 3107 LISMORE DC NSW 2480) Fax: 07 5542 4599 KYOGLE
Phone: 02 6627 8000 BELLINGEN Willis Street
Fax: 02 6627 8099 1076 Waterfall Way KYOGLE NSW 2474
MILK SUPPLY BELLINGEN NSW 2454 Phone: 02 6632 5900
‘Windmill Grove’, 107 Wilson Street Phone: 02 6692 3800 Fax: 02 6632 5999
SOUTH LISMORE NSW 2480 Fax: 02 6692 3899 LISMORE
(PO Box 486, LISMORE NSW 2480) BOWRAVILLE 105 Wilson Street
Phone: 02 6627 8032 51 Carbin Street SOUTH LISMORE NSW 2480
Fax: 02 6627 8095 BOWRAVILLE NSW 2449 Phone: 02 6627 8266
Phone: 02 6564 5400 Fax: 02 6627 8094
NORCO FOODS Fax: 02 6564 5499 MACKSVILLE
BUNDABERG Tilly Willy Street
96 Mount Perry Road MACKSVILLE NSW 2447
NORCO MILK – LABRADOR BUNDABERG QLD 4670 Phone: 02 6598 8700
Cnr Pine Ridge Road & Gold Coast Highway Phone: 07 4326 3500 Fax: 02 6598 8799
LABRADOR QLD 4215 Fax: 07 4326 3599
(PO Box 530, SOUTHPORT QLD 4215) MURGON
Phone: 07 5511 7200 CASINO 21 Lamb Street
Fax: 07 5511 7298 136 Dyraaba Street MURGON QLD 4605
CASINO NSW 2470 Phone: 07 4168 3060
NORCO MILK – RALEIGH Phone: 02 6661 2100 Fax: 07 4168 2996
North Street Fax: 02 6661 2199
RALEIGH NSW 2454 MURWILLUMBAH
Phone: 02 5641 6100 COFFS HARBOUR 17 Buchanan Street
Fax: 02 5641 6198 25 Wingara Drive MURWILLUMBAH NSW 2484
COFFS HARBOUR NSW 2450 Phone: 02 6671 3600
ICE CREAM BUSINESS UNIT Phone: 02 6691 2800 Fax: 02 6671 3699
Union Street Fax: 02 6691 2899
SOUTH LISMORE NSW 2480 STUARTS POINT
(PO Box 486, LISMORE NSW 2480) DUNGOG 906 Stuarts Point Road
Phone: 02 6627 8000 Stroud Road STUARTS POINT NSW 2441
Fax: 02 6627 8102 DUNGOG NSW 2420 Phone: 02 6569 0955
Phone: 02 4999 2600 Fax: 02 6569 0983
Fax: 02 4999 2699 TAREE
NORCO AGRIBUSINESS – NORCO GAYNDAH 3 Grey Gum Road
STOCKFEEDS AND NORCO GRAIN 59 Dalgangal Road TAREE NSW 2430
GAYNDAH QLD 4625 Phone: 02 5594 2500
NORCO STOCKFEEDS Phone: 07 4140 8542 Fax: 02 5594 2599
Krauss Avenue Fax: 07 4140 8572 TENTERFIELD
SOUTH LISMORE NSW 2480 GLEN INNES 449 Rouse Street
Phone: 02 6627 8299 165 Lang Street TENTERFIELD NSW 2372
Fax: 02 6627 8298 GLEN INNES NSW 2370 Phone: 02 6736 7300
NORCO STOCKFEEDS Phone: 02 6739 7400 Fax: 02 6736 7399
2814 Murgon – Gayndah Road Fax: 02 6739 7499 TOOWOOMBA
WINDERA QLD 4605 GLOUCESTER 22 Carrel Drive
Phone: 07 4168 6300 Cnr Church & Phillip Streets HARRISTOWN QLD 4350
Fax: 07 4168 6399 GLOUCESTER NSW 2422 Phone: 07 4637 3300
NORCO GRAIN – TOOWOOMBA Phone: 02 6558 9600 Fax: 07 4637 3399
22 Carrel Drive Fax: 02 6558 9666 WAUCHOPE
HARRISTOWN QLD 4350 GRAFTON 4/6 Wallace Street
Phone: 07 4637 3313 19 Queen Street WAUCHOPE NSW 2446
Fax: 07 4637 3399 GRAFTON NSW 2460 Phone: 02 5514 0334
Phone: 02 6641 3400 WOOLGOOLGA
Fax: 02 6641 3499 16 Featherstone Drive
GYMPIE WOOLGOOLGA NSW 2456
11 Station Road Phone: 02 6690 4800
GYMPIE QLD 4570 Fax: 02 6690 4899
Phone: 07 5481 4600
Fax: 07 5481 4699

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 CORPORATE DIRECTORY
REGISTERED OFFICE FINANCIERS/BANKERS
Norco Co-operative Limited Rabobank Australia
ARBN 009 717 417 / ABN 17 009 717 417 Level 14, Waterfront Place

CONTENTS
‘Windmill Grove’, 107 Wilson Street 1 Eagle Street, BRISBANE QLD 4000
SOUTH LISMORE NSW 2480 St George Bank
Telephone: 02 6627 8000 Level 12, Waterfront Place
Facsimile: 02 6627 8099 1 Eagle Street, BRISBANE QLD 4000
Web Site: www.norco.com.au
3 Corporate Profile 26 Corporate Governance Statement
4 Facts At A Glance 31 Financial Statements LAWYERS / SOLICITORS
AUDITORS
Addisons Lawyers - SYDNEY NSW 2000
6 Chairman’s Report 51 Independent Auditor’s Report Ernst & Young
Lander & Rogers - SYDNEY NSW 2000
Chartered Accountants
12 Chief Executive Officer’s Report 56 Corporate And Branch Directories Level 51, 111 Eagle Street S+P Walters Solicitors - LISMORE NSW 2480
BRISBANE QLD 4000 Piper Alderman Lawyers - SYDNEY NSW 2000
18 Directors’ Report
25 Auditor’s Independence Declaration

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.