The Hastings Co-op has seen a drop in profits over the past financial year, though they say it’s their third best year ever recorded.
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Its principal activities are still retail operations in grocery, fresh foods, soft goods, hardware, rural supplies, liquor stores, service stations bulk fuel and hospitality.
At the 102nd annual general meeting on Tuesday November 20, it was announced that the total revenue for the Co-operative was $86,061,097 for the current financial year as compared to revenue of $81,416,752 for the previous financial year.
The profit of the Co-operative for the financial year, after providing for income tax, amounted to $913,760 compared to a profit of $1,215,568 in the previous financial year.
No dividend is recommended to be paid for the financial year ended 30 June 2018. Shareholder reward vouchers issued for the financial year totalled $235,075 and Co-op 100 Vouchers issued for the financial year totalled $42,165.
The Co-op says the overall retail environment remains extremely competitive with reduced margins being experienced across most sectors.
Chairman David Johnson said that the figure of $913,760 was below the budget set by the board.
“Whilst some divisions have made a positive contribution to the Co-operative others have not fared all that well in what continues to be an extraordinarily competitive retail environment. Our flagship Department Store was impacted by significant internal water damage during a storm on Boxing Day 2017, not long after internal modifications had been completed,” said Mr Johnson.
“After many months of negotiations with our insurers, builders finally made a start on the repair and re-placement of flooring and other fixtures and fittings during July 2018. A closure period of 12 to 16 weeks was required to complete the project.”
An upside was the opening of a small shop in Laurieton in August. The Co-op was also inducted into the Port Macquarie Business Chamber’s Hall of Fame in July 2018. The Co-op continues to support local students through the Hastings Education Fund, the Luminosity Youth Summit and Charles Sturt University.
The annual Community Chest grants program continues, and the Co-op has phased out single-use plastic bags and facilitated the installation of reverse vending machines in Wauchope.
During 2017-18 the Co-operative also provided sponsorships in excess of $31,000 as well as providing in-kind donations and space at stores for charity groups to raise much needed funds.
CEO Allan Gordon said his only regret was not to have finalised the repurchase of share requests that have been a major source of angst for members waiting for their money.
“This however is expected to be resolved in the near future and the last of the issues that arose from the freezing of the repurchase of shares in 2011 will have been finalised,” he said.
Mr Gordon said strong competitors in retail have resulted in reduced margins in Co-op stores, especially the supermarkets.
“Increased labour costs and overheads, especially energy costs, in an environment of grocery price deflation has contributed significantly to the decline in performance of all the IGA supermarkets. This is the first year, in many, that we have not experienced sound and above average revenue growth for the supermarkets,” said the chief executive.
“I believe the net profit result of $913,760 (2017 - $1,215,568) in the current environment is a sound result, but not outstanding, and we will need to review a number of our operations to ensure that we identify efficiencies that can be implemented,” said Mr Gordon, adding that the Co-op is entering a transitional phase.
“The direction that the Co-op takes over the coming 24 months will set it up for the next decade. An example of the changes that we are making can be seen in our fuel business. Earlier this year the fuel division was renamed the energy division with a mandate to look at new and emerging energy industries. Whilst we know that the demise of the fossil fuel business is not imminent, over the next 20 years it will see very significant changes with emerging alternatives such as electric vehicles.
“Our main focus for 2018-19 is to secure a business model that will allow the Co-op to grow and enable it to better utilise its current assets. A current list of projects that we have on the horizon include: Sovereign Hills supermarket; the redevelopment of the Cedar Service Station; the development of the Lake Road milk depot and; the development of the bulk fuel site at 229 High Street, Wauchope,” said Mr Gordon.
Hastings Co-op currently has 15 businesses operating in seven very distinct business units: fuel, supermarkets, bottle shops, department stores, hardware and rural supplies, cafes and condiment manufacturing.
To download the 2017-18 Annual Report visit www.hastingscoop.com.au