. ,

\' / BANK OF / PRUDENTIAL REGULATION l?rlill AUTHORITY ~

Mutual Societies Annual Return Form (AR30)

For societies registered under the Co-operative and Community Benefit Societies Act 2014

Society name:

SEATON VALLEY CO-OPERATIVE SOCIETY LIMITED

Important information you should read before completing this form

You must use this form if you are a: • registered society (previously referred to as an 'industrial and provident society') • co-operative society • community benefit society registered under the Co-operative and Community Benefit Societies Act 2014.

You must submit this form and the society's accounts within 7 months of the end of your financial year. Failure to submit is an offence for which the society may be prosecuted.

Please note: • we have an information note that may assist you in completing this application • any personal details you give on the form will be placed on the society's public file. • it is important you give accurate and complete information and disclose all relevant information. If you do not, it may take us longer to process your annual return.

Please keep a copy of the form and supporting documents for future reference.

Terms in this form 'FCA', 'PRA', 'us' and 'we' refer to the Financial Conduct Authority or Prudential Regulation Authority. 'You' refers to the person signing the form on behalf of the society. 'The 2014 Act' is the Co-operative and Community Benefit Societies Act 2014

FCA • Mutuals AR 30 - registered societies (F) • Release 3 • July 2014 page 1 BANK OF ENGLAND PRUDENTIAL REGULATION r;Fr J!II AUTHORITY ~

~utual Societies Annual Return Form (AR30)

For societies registered under the Co-operative and Community Benefit Societies Act 2014

Filling in the form

1 If you are using your computer to complete the form:

• use the TAB key to move from question to question and press SHIFT TAB to move back to the previous question; and

• print the completed form and arrange for it to be signed by all relevant individuals.

2 If you are filling in the form by hand:

• use black ink;

• write clearly; and

• arrange for it to be signed and dated by all relevant individuals.

3 If you make a mistake, cross it out and initial the changes; do not use correction fluid. 4 lfyou: • leave a question blank; • do not get the form signed; or • do not attach the required supporting information

without telling us why, we will treat the application as incomplete. This will increase the time taken to assess your application.

5 If there is not enough space on the form, you may use separate sheets of paper. Clearly mark each separate sheet of paper with the relevant question number. Any separate sheets should be signed by the signatories to the form.

6 Email a scanned copy of the signed form and supporting documents to

[email protected]

or send it by post to: Mutuals Team Financial Conduct Authority 25 The North Colonnade Canary Wharf LONDON E14 5HS

7. Please make sure you include: • this form • a set of printed accounts - signed by two members and the secretary (3 signatures in total) • an audit report or accountant's report where required; and • any supporting documents.

FCA • Mutuals AR 30 - registered societies (F) • Release 3 • July 2014 page 2 1 Details of society

1.1 Details of the society

IRegisternumber 116818R

Registered office DELAVAL HOUSE, AVENUE ROAD, address , TYNE & WEAR

NE25 ODS Postcode

1.2 Year end date ( dd/m m/yyyy) See Note 1.2

B1~1121°1 Isl

Committee of management If you are a club you do not need to give a year of birth in questions 1.3-1.6. The names of the members of the Committee at the date on which the return is signed should be entered below in BLOCK CAPITALS.

1.3 Details of Chairman

I Name ITREVOR WAUGH

Address 10 WOODHALL COURT, SEATON DELAVAL, WHITLEY BAY, TYNE & WEAR

Postcode NE25 OBX

I Year of birth 11932 Business occupation and other RETIRED directorships

1.4 Details of Treasurer I Name

Address

Postcode

!Year of birth lyyyy Business occupation and other directorships

FCA • Mutuals AR 30 - registered societies (F) • Release 3 • July 2014 page 3 1 Details of society

1.5 Details of Secretary I Name IDERYCK STOREY

Address 23 TORCROSS WAY

Postcode NE231PG

jYear of birth 11957

Business occupation and other CO. SECRETARY directorships

1.6 Details of Members of the Committee Name Address Year of Business birth occupation and other directorships MARGARET ELAINE 9 BOYNE GARDENS 1933 RETIRED HAILS SHIREMOOR NEWCASTLE ON TYNE NE27 ONH

BRENDA ANNE 38 ELSDON AVENUE 1948 RETIRED MOODY SEATON DELAVAL WHITLEY BAY NE25 OHJ

CHRISTOPHER 33 STAWARD AVE 1948 MOTOR MECHANIC HENDERSON SEATON DELAVAL WHITLEY BAY NE25 OJG

WILLIAM BRITIAIN 14 MILLFIELD STH 1941 RETIRED BEDLINGTON NORTHUMBERLAND NE22 5EE

MARJORIE BOYD 51 STAWARD AVE 1953 STORE MANAGER SEATON DELAVAL WHITLEY BAY NE25 OJG

MALCOLM 42 PLESSEY CRES 1951 RETIRED RUTHERFORD WHITLEY BAY DIRECTOR OF TYNE&WEAR GILSLAND SPA LTD

Please use separate sheets of paper if you need more space, following the instructions provided in section 5 above. Please indicate how many separate sheets of paper you have used I I

Please continue, answering all questions.

FCA • Mutuals AR 30 - registered societies (F) • Release 3 • July 2014 page 4 1 Details of society

1. 7 Are any members of the society's committee disqualified as directors under the Company Director Disqualification Act 1986? [8J No D Yes

1.8 Does the society carry out any activity which is regulated under the Financial Services and Markets Act 2000? (e.g. accepting deposits in a form other than withdrawable shares; offering insurance products; undertaking residential mortgage business). If 'yes' please state the society's Financial Services Register firm reference number [8J No D Yes Financial Services Register firm reference number I I

1.9 Is the society a subsidiary of another society? [8J No D Yes

1.10 Does the society have one or more subsidiaries? D No [8J Yes

1.11 Is the society currently accepted by the HM Revenue and Customs as a charity for tax purposes? [8J No D Yes

Please confirm you have attached a copy of the letter from HM Revenue and Customs confirming charitable tax status: DYes

1.12 Is this society a charity registered with the Office of the Scottish Charity Regulator (OSCR)? [8J No D Yes ~ provide your Scottish Charity number below I I

1.13 Is the society registered with one of the following (please tick)? D Homes and Communities Agency D The Welsh Ministers D Scottish Housing Regulator

If so, please provide your register number

FCA • Mutuals AR 30- registered societies (F) • Release 3 • July 2014 page 5 1 Details of society

All societies must answer the following questions:

• if a bona fide co-operative society go to question 1.14

• if existing for the benefit of the community go to question 1.19

Bona fide co-operative society

1.14 How did members benefit from the business, industry or trade of the society during the year?

BY PURCHASING GOODS AND SERVICES FROM THE VARIOUS RETAIL DEPARTMENTS

1.15 Is membership of the society required to obtain the benefits offered by it? D Yes ~ No

1.16 In what way did members participate in an ongoing basis in the society's primary business during the year?

BY PURCHASING GOODS & SERVICES FROM THE SOCIETY BY ATIENDING MEMBERS MEETINGS

1.17 How did members democratically control the society?

BY VOTING IN THE ELECTION OF DIRECTORS

FCA • Mutuals AR 30 - registered societies (F) • Release 3 • July 2014 page 6 1 Details of society

1.18 How did the society use any surplus/profit?

If the society distributed the surplus/profit to members please explain how this was done. NO SURPLUS FOR THE YEAR

Please use separate sheets of paper if you need more space (see section 5 above) Please indicate how many separate sheets of paper you have used. I I

Continue to 2.1

FCA • Mutuals AR 30 - registered societies (F) • Release 3 • July 2014 page 7 1 Details of society

Community benefit society

1.19 Who are the community the society benefited?

1.20 How did the society benefit that community during the year?

1.21 How did the society use any surplus/profit?

Please use separate sheets of paper if you need more space (see section 5 above). Please indicate how many separate sheets of paper you have used. I I

Continue to 2.1

FCA • Mutuals AR 30 - registered societies (F) • Release 3 • July 2014 page 8 2 Statistics

Account details

2.1 You must enter the figures below See notes for help on items E-T. Enter NIL where applicable I Members at beginning of year 12033

I Members ceased during year

I Members admitted during year 14

I Members at end of year 12046

lrurnover for year 10195803

Total of income and expenditure F (receipts and payments added together)

G Net surplus/(deficit) for year -397496

I Fixed .assets 14145034

!current assets 11274136 Total assets (equal to amount in J 5419170 row 0, below)

I Current liabilities 11181054

I Share capital 1523287

I Long-term liabilities 11777679

I Reserves 11937150 Total liabilities, share capital & 0 reserves (K+L+M+N) (equal to 5419170 amount in J above) All societies (excluding clubs) must complete boxes P-T Investments in other registered p 417906 societies la I Loans from members lo Loans from Employees' R 0 Superannuation Schemes is I Dividends on sales lo

Ir I Share interest 13556

FCA • Mutuals AR 30 - co-operative and community benefit societies (F) • Release 3 • July 2014 page 9 2 Statistics

2.2 Names of subsidiaries as defined in sections 100 and 101 of the Co-operative and Community Benefit Societies Act 2014

IR. HINDHAUGH (CHEMISTS) LTD

2.3Names of subsidiaries not dealt with in group accounts (if any) and reasons for exclusions (as approved by the FCA) The society must have written authority from us to exclude a subsidiary from group accounts

FCA • Mutuals AR 30 - registered societies (F) • Release 3 • July 2014 page 10 3 The audit

3.1 Type of audit used for the attached accounts. If the society has used a full professional audit or an accountant's report then the report must be prepared by a registered auditor. ~ Full professional audit ~ Continue to section 4 D Accountant's report ~ Complete questions 3.2 and 3.3 D Lay audit ~ Complete questions 3.2 and 3.3 D Unaudited ~ Complete questions 3.2 and 3.3

3.2 Do the society's registered rules allow the society not to undertake a full professional audit? D No D Yes

3.3 Has the membership passed at a general meeting a resolution allowing the society not to undertake a full professional audit for the year of account in question? (In accordance with section 84 of the Co-operative and Community Benefit Societies Act 2014)

D No D Yes

FCA • Mutuals AR 30 - registered societies (F) • Release 3 • July 2014 page 11 4 Accounts and signature

Accounts

4.1 Date on which the accounts and balance sheet will be/were laid before the AGM (dd/mm/yyyy) ITJ1ITJ1I I I I I

4.2 Has your society produced accounts to the minimum standard required? 18:1 Yes ~ you must confirm that you have attached the accounts and the audit/accountant's report bearing the original signatures of the auditor (if required by law), the secretary and the two committee members. 18:!Attached

D No ~ you must produce accounts to the minimum standard required, see notes for details.

Signature - all societies to complete

4.3 The Secretary of the society must sign and date below

I certify that the information in this form is correct to the best of my knowledge and belief.

I Name IDERYCK STOREY

Signature

~I Phone number 0191 2371010

Email DERYCK.STOREY@SEATONVALLE Y.COOP

ioate 116/12/2015

FCA • Mutuals AR 30 - registered societies (F) • Release 3 • July 2014 page 12 I I

MUTUAL REGISTRATION · I DEPARTMENT

CO-OPERATIVE SOCIETY , ·; 2 2 DEC 2015 I ' I I I CONSOLIDATED I FINANCIAL I I STATEMENTS I for the year ended I 5 September 2015 I I I I I I I I I I I Co-operative Society Limited -~~l!J&J I lhiihJiH+- I Society information I Directors TWaugh MrsMEHails I MsBMoody C Henderson WBrittain MrsMBoyd I M Rutherford I I Chief Executive Officer & Secretary D Storey

I Society registration number 16818R I Registered office Delaval House Avenue Road I Seaton Delaval I NE250DS

Auditors B.H. Accountancy Ltd I Design Works William Street Felling I Tyne and Wear I NElOOJP

Bankers Santander Corporate Banking I Co-operative Bank pie I I I I I I Seaton Valley Co-operative Society Limited I •IHIFiiliiH111e I Contents

I Page I I Directors' Report 1-2 Strategic Report 3-4 I Independent Auditors' Report 5-6 I Consolidated Revenue Account 7 I Consolidated Balance Sheet 8 I Consolidated Cash Flow Statement 9

I Notes to the consolidated financial statements 10-20 I I I I I I I I I I .I ,__l!I Seaton Valley Co-operative Society Limited lhiiPillih+·- I Directors' Report for the year ended 5 September 2015 I The Directors present their report for the year ended 5 September 2015.

I Directors I The directors who served during the year are as stated below: TWaugh MrsMEHails I MsBMoody C Henderson WBrittain I MrsMBoyd - appointed 28 November 2014 M Rutherford - appointed 28 November 2014

I Mr D Storey served as Chief Executive Officer and Secretary to the Society during the year. Mr LR Nendick served as Management Accountant to the Society during the year also. I Statement of directors' responsibilities

I The directors are responsible for preparing the Directors' Report and the consolidated financial statements in accordance with applicable law and regulations.

I Co-operative and Community Benefit Society law requires the directors to prepare consolidated financial statements for each financial year. Under that law the directors have elected to prepare the consolidated financial statements in accordance with Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under Co-operative and Community Benefit Society law I the directors must not approve the consolidated financial statements unless they are satisfied that they give a I true and fair view of the state of affairs of the society and of the profit or loss of the society for that year. In preparing these consolidated financial statements, the directors are required to: I - select suitable accounting policies and apply them consistently; - make judgements and estimates that are reasonable and prudent; - prepare the consolidated financial statements on the going concern basis unless it is inappropriate to I presume that the society will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the society's transactions and disclose with reasonable accuracy at any time the financial position of the society I and enable them to ensure that the consolidated financial statements comply with the Co-operative and Community Benefit Societies Act 2014. They are also responsible for safeguarding the assets of the society I and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. I

I Page 1 I I Seaton Valley Co-operative Society Limited I ~ MHiihi@.+1-911!"'·~ I Directors' Report for the year ended 5 September 2015 I ...... continued I In so far as the directors are aware: - there is no relevant audit information (information needed by the society's auditors in connection with I preparing their report) of which the society's auditors are unaware, and - the directors have taken all the steps that they ought to have taken to make themselves aware of any relevant I audit information and to establish that the society's auditors are aware of that information. I This report was approved by the Board and signed on its behalf by I ~~ TWaugh D Storey I Chairman Secretary Dated: 2 October 2015 Dated: 2 October 2015 I I I I I I I I I

I Page2 I I Seaton Valley Co-operative Society Limited I ~ IHiihMiHlf I --~·e Strategic Report for the year ended 5 September 2015

I Ladies and Gentlemen, The Directors have pleasure in presenting for your consideration and approval their Strategic Report and consolidated financial statements for the year ended 5 September 2015 which incorporates another full year's I trading of the Society's wholly owned subsidiary R. Hindbaugh (Chemists) Limited.

I Business review

I This year covers a full year's trading from the Supermarket and Filling Station at Wheatridge Park compared to only 21 weeks of trade last year. Sales have continued to grow in the Supermarket and the volume of fuel sold at the Filling Station is increasing also. Unfortunately, recent large fluctuations in fuel prices mean that I the sales value has reduced in actual terms as compared to last year on a like-for-like basis.

Overall, however, this year under review has not shown the improvements in the Society's trading I performance that your directors had hoped for. Customer shopping habits have changed and, with the rise of the "discounters" continuing to grow, our gross profit margins have had to become tighter.

I Gross sales for the year (including V.A.T.) amounted to £10,195,803 and from the net turnover arising a gross profit of £1,959,943 (21.29%) was achieved compared to £1,487,368 (22.54%) last year. After deducting trade expenses for the year, which amounted to £2,218,453, your Board is reporting an operating loss of I £258,510.

The final loss for the year after taking into account all other costs amounts to £372,496 compared to the loss I reported last year of £462,971. This loss will be taken from reserves. I Despite the best efforts of all our staff, our trading results for the year are extremely disappointing. Management accounts produced during the year showed that the Society would be unable to trade out of these losses in the short to medium term and that if action was not taken then the Society would cease to trade. This I would result in Seaton Delaval not having a Co-operative presence in the village for the first time in 150 years.

With this in mind, during March 2015 your directors took the decision to start talks with the Scottish Midland I Co-operative Society Limited ("Scotmid") with a view of proposing a Transfer of Engagements to that Society. A first Members Meeting took place on 31 July 2015 to vote on this proposal and over 97% of members in attendance voted in favour of the Transfer of Engagements. A second confirmatory Members Meeting was held on 21 August 2015 where the members present voted unanimously in favour of the Transfer I of Engagements.

I As a result, and with effect from 4 October 2015, Seaton Valley Co-operative Society Limited will become a part of the Scottish Midland Co-operative Society Limited. This merger will bring benefits to all of our I members and the local community alike and will ensure a continued Co-operative presence in Seaton Delaval. I

I Page3 I I I Seaton Valley Co-operative Society Limited

CO-Of"CRAJMSOCICTY I Strategic Report for the year ended 5 September 2015 I ...... continued The directors wish to express their thanks to the Board and their Executive of Scotmid in their help with this I transfer and wish the enlarged Society every success in the future. To all members of staff of Seaton Valley Co-operative Society Limited, the directors wish to record their thanks and appreciation for all their hard work and dedication and are confident that they will continue to be I an asset to Scotrnid in the future. I To all members who have suffered bereavement we extend our sympathy. This report was approved by the Board and signed on its behalf by I I .f!J'_~ TWaugh D Storey I Chairman Secretary Dated: 2 October 2015 Dated: 2 October 2015 I I I I I I I I I

I Page4 I I I ~ Seaton Valley Co-operative Society Limited l"!!i9~ ;;.;.; IP ililhiii i W I Independent Auditor's Report to the members of Seaton Valley Co-operative Society Limited

We have audited the consolidated financial statements of Seaton Valley Co-operative Society Limited for the I year ended 5 September 2015 which comprise the Consolidated Revenue Account, the Consolidated Balance Sheet, the Consolidated Cash Flow Statement and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United I Kingdom Generally Accepted Accounting Practice).

This report is made solely to the society's members, as a body, in accordance with Part 7 of the Co-operative I and Community Benefit Societies Act 2014. Our audit work has been undertaken so that we might state to the society's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the society and the society's members as a body, for our audit work, for this report, or for the opinions we have I formed.

I Respective responsibilities of directors and auditors As explained more fully in the Statement of Directors' Responsibilities set out in the Directors' Report on pages 1 - 2, the directors are responsible for the preparation of the consolidated financial statements and for I being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the consolidated financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical I Standards for Auditors.

I Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the consolidated financial statements sufficient to give reasonable assurance that the consolidated financial statements are free from I material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the society's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the I overall presentation of the consolidated financial statements. In addition, we read all the financial and non-financial information in the Directors' Report and in the Strategic Report to identify material inconsistencies with the audited consolidated financial statements and to identify any information that is I apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies I we consider the implications of our report. I Opinion on consolidated financial statements In our opinion the consolidated financial statements:

give a true and fair view of the state of the group's affairs as at 5 September 2015 and of its loss for I the year then ended; have been properly prepared in accordance with United Kingdom Generally Accepted Accounting I Practice; and have been prepared in accordance with the requirements of the Co-operative and Community I Benefit Societies Act 2014.

I Pages I I I Seaton Valley Co-operative Society Limited l!I;;.;.;;PPIHH·w I Independent Auditor's Report to the members of Seaton Valley Co-operative Society Limited I ...... continued Emphasis of Matter - Going Concern I In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the disclosure made in note 24 to the financial statements concerning the Society's ability to continue as a going concern. The Society incurred a net loss of £372,496 during the year ended 5 September 2015 and this is in addition to previous losses incurred. Despite these conditions, however, and along with the other matters I explained in note 24 to the financial statements, these indicate that the Society's trade and can still be regarded as a going concern for accounting purposes. The financial statements do not include the adjustments that I would result if the Society was unable to continue as a going concern.

I Opinion on other matters prescribed by the Co-operative and Community Benefit Societies Act 2014. In our opinion the information given in the Directors' Report and the Strategic Report for the financial year for which the consolidated financial statements are prepared is consistent with the consolidated financial I statements.

I Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Co-operative and Community Benefit I Societies Act 2014 requires us to report to you if, in our opinion:

adequate accounting records have not been kept, or returns adequate for our audit have not been I received from branches not visited by us; or the consolidated financial statements are not in agreement with the accounting records and returns; or I certain disclosures of directors' remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit. I I

I Bryan Howarth BSc FCA (senior statutory auditor) Design Works For and on behalf of B.H. Accountancy Ltd, Statutory Auditor William Street Chartered Accountants and Registered Auditors Felling I Tyne and Wear Dated: 2 October 2015 NElOOJP I I

I Page6 I I I Seaton Valley Co-operative Society Limited

CO-Ol'CRAIIVCSOCl[TV I Consolidated Revenue Account for the year ended 5 September 2015

I Continuing Continuing Acquisitions Total Operations Operations I 2015 2014 2014 2014 Notes £ £ £ £

I Gross sales 10,195,803 5,092,757 2,078,300 7,171,057 Less: Value added tax (991,172) (335,801) (237,639) (573,440)

I Turnover 2 9,204,631 4,756,956 1,840,661 6,597,617 I Cost of sales (7,244,688) (3,449,879) (1,660,370) (5,110,249)

I Gross profit 1,959,943 1,307,077 180,291 1,487,368 Administrative expenses 3 (2,219,476) (1,421,776) (475,524) (1,897,300) I Other operating income 6 1,023 3,750 3,750

I Operating loss (258,510) (110,949) (295,233) (406,182)

Investment income 7 600 2,322 2,322 I Other interest receivable & similar income 8 119 2,783 2,783 I Loss on ordinary activities before interest (257,791) (105,844) (295,233) (401,077) I Interest payable & similar charges 9 (139,705) (82,633) I Loss on ordinary activities before taxation (397,496) (483,710) Tax on loss on ordinary activities 10 25,000 20,739

I Loss for the year 21 (372,496) (462,971)

I There are no recognised gains or losses other than the profit or loss for the above two financial years. I I The notes on pages 10 to 20 form an integral part of these financial statements.

I Page7 I I I ~ Seaton Valley Co-operative Society Limited ~IHIFIINIHH·w I Consolidated Balance Sheet as at 5 September 2015

I 2015 2014 Notes £ £ £ £ Fixed assets I Intangible assets 11 9,700 19,400 Tangible assets 12 4,118,750 4,306,612 Investments 13 16,584 16,584

I 4,145,034 4,342,596 Current assets Stocks 516,937 545,428 I Debtors 14 329,877 365,991 Investments 15 401,322 722 I Cash at bank & in hand 26,000 37,586 1,274,136 949,727 Creditors: amounts falling I due within one year 16 (1,181,054) (944,332) I Net current assets 93,082 5,395 Total assets less current liabilities 4,238,116 4,347,991

I Creditors: amounts falling due 17 (1,777,679) (1,883,910) after more than one year

I Provisions for liabilities 18 (25,000) I Net assets 2,460,437 2,439,081 Capital and reserves Share capital 20 523,287 129,435 I Revenue account 21 1,937,150 2,309,646 2,439,081 I Shareholders' funds 22 2,460,437 The financial statements were approved by the Board of Directors and were signed on its behalf by I

TWaugh MrsMEHails D Storey I Chairman Vice Chairman Secretary I Dated: 2 October 2015 Dated: 2 October 2015 Dated: 2 October 2015 I The notes on pages 10 to 20 form an integral part of these financial statements.

I Page8 I I I Seaton Valley Co-operative Society Limited Ill!'"·~~ I lhiihiliil+··e Consolidated Cash Flow Statement I for the year ended 5 September 2015 2015 2014 I Notes £ £ Reconciliation of operating loss to net cash outflow from operating activities I Operating loss (258,510) (406,182) Depreciation, amortisation etc. 212,883 189,817 Decrease in stocks 28,491 (206,978) I Decrease in debtors 20,375 1,721,762 Decrease in creditors (49,011) 24,188 I Net cash outflow from operating activities (45,772) 1,322,607 I Cash flow statement Net cash outflow from operating activities (45,772) 1,322,607 Returns on investments and servicing of finance 25 (138,986) (77,528) I Taxation 25 15,739 (15,739) Capital expenditure 25 (15,321) (2,627,184)

(184,340) (1,397,844) I Management of liquid resources 25 (400,600) 111,321 Financing 25 428,049 1,105,243 I Decrease in cash in the year (156,891) (181,280) Cash at bank & in hand less overdrafts at 7 September 2014 (161,883) 19,397 I Cash at bank & in hand less overdrafts at 5 September 2015 (318,774) (161,883) I Reconciliation of net cash flow to movement in net funds (Note 26) Decrease in cash in the year (156,891) (181,280) Cash inflow from increase in debts and lease financing 99,494 (914,415) I Cash outflow from increase in liquid resources 400,600 (111,321) Change in net funds resulting from cash flows 343,203 (1,207,016) I New finance leases & hire purchase contracts (181,368) Movement in net funds in the year 343,203 (1,388,384) Net debt at 7 September 2014 (2,153,264) (764,880)

I Net funds at 5 September 2015 (1,810,061) (2,153,264) I I

I Page9 I I I Seaton Valley Co-operative Society Limited l!i. Notes to the consolidated financial statements for the year ended 5 September 2015 t;.;.q: ililhiii I W I 1. Accounting policies

1.1. Accounting convention I The consolidated statutory financial statements are prepared in accordance with the requirements of the Co-operative and Community Benefit Societies Act 2014 and under the historical cost convention and I also comply with financial reporting standards of the Accounting Standards Board. The Society prepares its consolidated financial statements financial statements to the first Saturday in September each year. The current period is for the 52 weeks ended 5 September 2015 compared with a I period of 52 weeks ended 6 September 2014.

1.2. Gross sales & other income I Gross sales include income from cash sales and goods sold on credit to customers. All other sources of income are accounted for on an accruals basis except for dividends which are accounted for on a I receipts basis. 1.3. Goodwill All goodwill is initially recorded at cost and is written off in equal annual instalments over its estimated I useful economic life of 10 years. An impairment review is carried out on an annual basis and where goodwill is identified as being impaired a provision is made and charged in the Revenue Account as I appropriate. 1.4. Tangible fixed assets & depreciation All fixed assets are initially recorded at cost. Depreciation is provided at rates calculated to write off I the cost less residual value of each asset over its expected useful life, as follows:

Freehold land not provided I Freehold buildings 2.5% straight line Plant, fixtures & fittings 10% - 20% straight line I Motor vehicles 25% straight line 1.5. Leasing Assets obtained under hire purchase contracts and finance leases are capitalised as tangible assets and I depreciated over the shorter of the lease term and their useful lives. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to the profit and loss account so as to produce constant periodic rates of I charge on the net obligations outstanding in each period.

1.6. Investments I Fixed asset investments are stated at cost less provision for permanent diminution in value. Current asset investments are stated at the lower of cost and net realisable value.

I 1.7. Stock Stock is valued at the lower of cost and net realisable value after making due allowance and provisions I for obsolete and slow moving stock. 1.8. Pensions The pension costs charged in the financial statements represent the contribution payable by the society I during the year.

I Page 10 I I I Seaton Valley Co-operative Society Limited Notes to the consolidated financial statements for the year ended 5 September 2015 I =IHiihNihH·e ...... continued

I 1.9. Deferred taxation Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an I obligation to pay more, or a right to pay less or to receive more, tax.

1.10. Financial instruments I Financial instruments are classified and accounted for, according to the substance of contractual arrangement, as either financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its I liabilities.

1.11. Going concern I The financial statements have been prepared on a going concern basis due to the decisions taken as outlined in Note 24. I

2. Turnover I The total turnover of the Society for the year has been derived from its principal activities wholly undertaken in the UK. However this turnover arises from a variety of different sources. The directors have considered the requirement to disclose in more detail the level of turnover on a source-by-source basis but believe that in order to do so would be seriously prejudicial to the interests of the Society. As I a result, this information has not been disclosed and therefore, for the same reasons, this extends to an I analysis of stock holdings at the balance sheet date.

I 3. Administrative expenses 2015 2014 £ £ I Personnel expenses (Note 4) 1,572,919 1,338,447 Directors' fees (Note 4) 6,050 5,280 Occupancy costs 375,615 252,668 I Amortisation of intangible assets 9,700 75,490 Depreciation of owned tangible assets 137,306 74,224 Depreciation of tangible assets under finance leases 50,381 24,608 I Auditors' remuneration (Note 5) 22,700 18,982 Other expenses 44,805 107,601 I 2,219,476 1,897,300 I I

I Page 11 I I I Seaton Valley Co-operative Society Limited Notes to the consolidated financial statements for the year ended 5 September 2015 I ...... continued I 4. Employees 2015 2014 Number of employees The average monthly numbers of employees during the year were: I Full-time 43 34 Part-time 66 64 I 109 98

Personnel costs 2015 2014 I £ £

Wages & salaries 1,392,574 1,182,703 I Social security costs 80,930 73,004 Other costs 99,415 82,740 I 1,572,919 1,338,447

Directors' remuneration 2015 2014 I £ £

Remuneration & other emoluments I Director's fees 6,050 5,280 I 6,050 5,280

5. Auditors' remuneration 2015 2014 I £ £

Auditors' remuneration - audit of the financial statements 18,875 16,725 I Auditors' remuneration - other fees 3,825 2,257 I 22,700 18,982

6. Property income 2015 2014 I £ £ Rent receivable 23,807 26,435 I Expenses (7,288) (7,190) Depreciation (15,496) (15,495) I 1,023 3,750 I

I Page 12 I I I Seaton Valley Co-operative Society Limited Notes to the consolidated financial statements for the year ended 5 September 2015 I •;;.;.;;;:;;.;;;.;+- ...... continued

I 7. Income from investments 2015 2014 £ £

I Income from unquoted investments 600 2,322 I 8. Interest receivable and similar income 2015 2014 I £ £ I Bank interest receivable 119 2,783

I 9. Interest payable & similar charges 2015 2014 £ £

Bank interest & commission 28,244 11,539 I Bank loan & finance interest 107,905 67,756 Share interest paid 3,556 3,338 I 139,705 82,633

I 10. Tax on loss on ordinary activities

Analysis of charge in period 2015 2014 I £ £ Current tax I UK corporation tax (15,739) Total current tax charge (15,739)

I Deferred tax Timing differences, origination and reversal (25,000) (5,000) I Total deferred tax (25,000) (5,000) I Tax on loss on ordinary activities (25,000) (20,739) I I

I Page 13 I I I Seaton Valley Co-operative Society Limited l,I Notes to the consolidated financial statements for the year ended 5 September 2015 I IHIF1ild·I+- ...... continued ,I 11. Intangible fixed assets Goodwill Total £ £ Cost I At 7 September 2014 979,294 979,294

At 5 September 2015 979,294 979,294

I Amortisation At 7 September 2014 959,894 959,894 I Charge for year 9,700 9,700 At 5 September 2015 969,594 969,594

Net book values I At 5 September 2015 9,700 9,700 I At 7 September 2014 19,400 19,400

I 12. Tangible fixed assets Freehold land Plant, fixtures Motor & buildings & fittings vehicles Total Cost £ £ £ £ I At 7 September 2014 4,214,455 1,129,496 5,700 5,349,651 Additions 13,286 2,035 15,321 I At 5 September 2015 4,227,741 1,131,531 5,700 5,364,972 Depreciation· At 7 September 2014 510,007 533,032 1,043,039 I 0 Charge for the year 78,538 123,220 1,425 203,183 I At 5 September 2015 588,545 656,252 1,425 1,246,222 Net book values At 5 September 2015 3,639,196 475,279 4,275 4,118,750 I At 6 September 2014 3,704,448 596,464 5,700 4,306,612

Included above are assets (other than freehold land & buildings) held under finance leases or hire I purchase contracts with a total net book value of £134,345 (2014 - £227,704) after charging depreciation in the year of £50,381 (2014 - £24,608).

I Included in freehold land & buildings are a minority proportion of properties held by the Society but which are currently surplus to its requirements for the purposes of its main trading activites. As this represents a non-significant proportion of its property portfolio the directors confirm that the accounting I treatment of these properties should be consistent with that of its trading premises. I

I Page 14 I I I Seaton Valley Co-operative Society Limited Notes to the consolidated financial statements for the year ended 5 September 2015 I CO-Of'[RAlM SOCl[TY ...... continued I 13. Fixed asset investments Co-operative Other Group (CWS) Registered I Ltd Societies Total £ £ £ Cost I At 7 September 2014 14,845 1,739 16,584 I At 5 September 2015 14,845 1,739 16,584 Net book values I At 5 September 2015 14,845 1,739 16,584 At 6 September 2014 14,845 1,739 16,584

I The Society owns 100% of the issued Ordinary share capital of R. Hindbaugh (Chemists) Limited, a company incorporated in England, which operates as a separate pharmacy business in Ashington, Northumberland. This I company is therefore treated as a subsidiary for consolidation purposes. The Society also owns 408 Colleague Shares in Royal Mail Group Ltd acquired at nil cost. In May 2008, I Royal Mail Group Ltd valued this shareholding at £665. I 14. Debtors 2015 2014 I £ £ Pharmacy debtors 154,417 156,853 Trading club & members' debts 548 179 I Other debtors 25,312 V.A.T. recoverable 13,537 21,194 Prepayments & accrued income 161,375 162,453

I 329,877 365,991

I Trading club & members' debts are stated after providing for bad & doubtful debts of £468 (2014: £2,067). I I I

I Page 15 I I I Seaton Valley Co-operative Society Limited Notes to the consolidated financial statements for the year ended 5 September 2015 I •;;.;.;;;:;;;;;.; .... , ...... continued

15. Current asset investments Co-operative Scottish Midland I Group (CWS) Co-operative Ltd Society Ltd Total I £ £ £ Cost At 7 September 2014 722 722 I Additions 600 400,000 400,600 At 5 September 2015 1,322 400,000 401,322 I Net book values At 5 September 2015 1,322 400,000 401,322 I At 6 September 2014 722 722 The investments in Co-operative Group (CWS) Ltd are in the form of Corporate Investor Shares. During the year, the Society acquired a £400,000 investment in Scottish Midland Co-operative Society Limited I which was financed by the issue of 400,000 new shares to Scottish Midland Co-operative Society Limited. This transaction, therefore, was cash-neutral to both Societies. I 16. Creditors: amounts falling due 2015 2014 I within one year £ £ Bank overdrafts 344,774 199,469 Bank loans 69,588 60,780 I Other loans 133,691 Net obligations under finance leases and hire purchase contracts 45,342 47,413 Trade creditors 487,667 470,073 I Social security & other taxes 22,528 32,289 Holiday pay 15,679 28,299 I Sundry creditors & accrued expenses 61,785 106,009 1,181,054 944,332

I All bank loans and overdrafts are secured by fixed and floating charges and a debenture over the Society's freehold property and assets. In addition, there are cross guarantees between the Society and its subsidiary. The finance lease and hire purchase contract liabilities are also secured upon the assets I concerned. At the balance sheet date the aggregate amount of secured liabilities was £2,237,383 (2014: £2,191,572).

I All bank loans and finance leases are repayable by monthly installments. The Society was advanced a new bank loan in April 2014 of £1,820,000 which was used, in part, to consolidate all existing bank indebtedness as existed at that time. This loan is repayable over 5 years, interest only for the first six I months, before reverting to a standard repayment loan. The Society was also advanced a new finance lease of £181,368 during last year repayable over 4 years. I

I Page 16 I I I Seaton Valley Co-operative Society Limited l!I Notes to the consolidated financial statements for the year ended 5 September 2015 I iHIFfii:iiHH·e ...... continued I 17. Creditors: amounts falling due 2015 2014 after more than one year £ £

Bank loans 1,693,482 1,759,220 I Net obligations under finance leases and hire purchase contracts 84,197 124,690 I 1,777,679 1,883,910 Bank loans Repayable in one year or less, or on demand (see note 16) 69,588 60,780 I Repayable between one and two years 73,185 69,588 Repayable between two and five years 1,620,297 1,689,632 I 1,763,070 1,820,000 Net obligations under finance leases and hire purchase contracts Repayable within one year (see note 16) 45,342 47,413 I Repayable between one and five years 84,197 124,690 I 129,539 172,103

18. Provisions for liabilities Deferred I taxation (Note 19) Total I £ £ At 7 September 2014 25,000 25,000 I Movements in the year (25,000) (25,000) At 5 September 2015 I

19. Provision for deferred taxation 2015 2014 I £ £

Accelerated capital allowances 25,000 I Provision for deferred tax 25,000

I Provision at 7 September 2014 25,000 Deferred tax credit in revenue account (25,000) I Provision at 5 September 2015 I

I Page 17 I I I Seaton Valley Co-operative Society Limited lW Notes to the consolidated financial statements for the year ended 5 September 2015 I ~-~-IHIIPiiili:H:e ...... continued I 20. Share capital 2015 2014 £ £ Balance brought forward 129,435 119,975 I Contributions 460,446 61,838 Interest 3,556 3,338 Withdrawals (70,150) (55,716) I Balance carried forward 523,287 129,435

In addition to the normal share transactions with its members, the Society issued 400,000 shares to I Scottish Midland Co-operative Society Limited during the year.

21. Equity Reserves Revenue I account Total £ £

I At 7 September 2014 2,309,646 2,309,646 Loss for the year (372,496) (372,496) I At 5 September 2015 1,937,150 1,937,150

22. Reconciliation of movements in shareholders' funds 2015 2014 I £ £

Loss for the year (372,496) (462,971) I Additions to share capital 460,446 61,838 Withdrawals from share capital (70,150) (55,716) I Interest added to share capital 3,556 3,338 Net addition to shareholders' funds 21,356 (453,511) Opening shareholders' funds 2,439,081 2,892,592

I Closing shareholders' funds 2,460,437 2,439,081

I 23. Related party transactions During the period under review the Society purchased services from Henderson Motor Engineers Ltd totalling £296 (2014: £177). Mr C Henderson, a director of the Society, has an interest in this business. The transactions were made on normal commercial terms. At the balance sheet date and amount of I £NIL (2014: £177) remained payable and is included within creditors.

24. Post balance sheet events I During the year under review, the directors of Seaton Valley Co-operative Society Limited proposed to undertake a Transfer of Engagements to Scottish Midland Co-operative Society Limited in order to safeguard the future of the Society's trade which would otherwise have been under threat due to its I financial situation. This proposal was put before the members of the Society at two special meetings held during the year and, at each meeting, those members present voted in favour of the proposal. All of the required documentation has been submitted to the Financial Conduct Authority with an I implementation date set at 4 October 2015.

I Page 18 I I I Seaton Valley Co-operative Society Limited Notes to the consolidated financial statements for the year ended 5 September 2015 I CO-Of'[AAIMSOCICTV ...... continued I 25. Gross cash flows 2015 2014 £ £ a) Returns on investments & servicing of finance I Interest & dividends received 719 5,105 Interest paid (139,705) (82,633) I (138,986) (77,528) b) Taxation (corporation tax repaid/(paid)) 15,739 (15,739) I c) Capital expenditure Payments to acquire tangible assets (15,321) (2,627,184)

d) Management of liquid resources I Receipts from withdrawals of investments 113,643 Payments to acquire investments (400,600) (2,322) I (400,600) 111,321 e) Financing Net contributions/(withdrawal) of share capital 393,852 9,460 I New bank loans 1,820,000 New finance leases 181,368 Other new short term loans 133,691 I Bank loan repayments (56,930) (877,933) Capital element of finance lease contracts . (42,564) (27,652) I 428,049 1,105,243

I 26. Analysis of changes in net funds Opening Cash Other Closing balance flows changes balance £ £ £ £ I Cash at bank & in hand 37,586 (11,586) 26,000 Overdrafts (199,469) (145,305) (344,774) I Cash balances (161,883) (156,891) (318,774) I Liquid resources (Note 15) 722 400,600 401,322 Debt due within one year (60,780) 60,780 (69,588) (69,588) Debt due after one year (1,759,220) (3,850) 69,588 (1,693,482) I Finance leases and hire purchase contracts (172,103) 42,564 (129,539) I Debts due (Notes 16 & 17) (1,992,103) 99,494 (1,892,609) Net funds (2,153,264) 343,203 (1,810,061) I

I Page 19 I I I Seaton Valley Co-operative Society Limited Notes to the consolidated financial statements for the year ended 5 September 2015 I CO-Of'CRA11VC SOCIHY ...... continued

I 27. Retirement Benefits

The Society operates a funded defined benefit pension scheme in respect of some of its employees in I conjunction with the Allendale Co-operative Society Limited. The Scheme's title is "The Seaton Valley and Allendale Co-operative Societies Pension Plan" and Seaton Valley Co-operative Society Limited is the principal employer. The Scheme is established as a retirement and death benefits scheme under a I definitive trust deed dated 31 March 1984 and an Annual Report is produced to 4 June each year. I The following Society employees held key positions as Trustees within the Scheme: Mr M Rutherford - Director I Mr D Storey - Chief Executive Officer & Secretary The total plan membership at 4 June 2015 was as follows:

I - Seaton Valley Co-operative Society Limited: Deferred pensioners - 13, Pensioners - 16, Total - 29. - Allendale Co-operative Society Limited: Deferred pensioners - 6, Pensioners - 6, Total - 12. I - Total membership: 41. A full actuarial valuation was carried out at 4 June 2013 by a qualified independent actuary using the projected unit method and the main assumptions are those regarding the yield likely to be earned by the I fund over the very long term future and the rate at which pensionable salaries are expected to rise. The valuation revealed that the previous deficit has been eliminated.

I The accrual of future service benefits under the scheme ceased on 4 October 2008. Members no longer contribute and both Societies have previously agreed to pay additional contributions for ten years from October 2008. Since the most recent valuation, both Societies have agreed to continue with this course I of action due to the recent volatile nature of financial markets over recent years.

The Pensions Regulator has made no directions under Section 231 (2) of the Pensions Act 2004 as to the I funding of the Scheme.

The Society has considered the requirements of the Accounting Standard - Financial Reporting I Standard 17 (FRS 17). Due to the nature of the Scheme (more than one participating employer) the Society is unable to identify its own share of the underlying assets and liabilities in the Scheme on a consistent and reasonable basis. Whilst FRS 17 requires significant disclosures relating to defined benefits schemes the standard acknowledges the existence of "multi-employer schemes" and determines I that in the circumstances stated the employer should account for the contributions to the Scheme as if it I were a defined contributions scheme. The pension costs charged in the financial statements are based on the contributions payable for the year and amounted to £61,236 (2014: £62,362). At the balance sheet date, there were contributions paid in I advance of £4,262 (2014: £5,240) which are included within debtors. The auditors' remuneration for the audit of the pension scheme financial statements for the year amounted to £1,500 (2014: £1,475). I Each participating employer pays 50% of the total audit costs.

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