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    The Midcounties Co-operative 2020/21 Annual Report and Accounts

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    Contents Who we are................................................................................................................................. 3 What we do ................................................................................................................................ 4 President’s introduction ........................................................................................................ 5 Group Chief Executive’s overview..................................................................................... 6-7 A co-operative response to Covid-19 ............................................................................. 8-11 Trading Group overviews ...................................................................................................... 12-17 Reporting our Steering Wheel ............................................................................................ 18-21 Co-operative Social Responsibility at Midcounties ....... ........................................... 22-23 - Membership matters........................................................................................................ 24-25 - Sustainability........ ................................................................................................................ 26-27 - Connected communities........ ...................................................................................... 28-29 - Colleague engagement, wellbeing and diversity........ ........................................ 30-31 Service Recognition Awards....... ......................................................................................... 32-33 Board of Directors .................................................................................................................... 34 Senior Management Team ................................................................................................... 35 Managing risk ............................................................................................................................. 36-41 Energy and Carbon Reporting ............................................................................................ 42-43 Governance Report ................................................................................................................. 44-53 Remuneration Report ............................................................................................................. 54-71 Statement of directors’ responsibilities ........................................................................... 72-73 Independent auditor’s report to the Members ........................................................... 74-75 Consolidated Statement of Comprehensive Income .............................................. 76 Consolidated Statement of Financial Position ............................................................. 77 Consolidated Statement of Changes in Equity............................................................ 78 Consolidated Statement of Cash Flows ......................................................................... 79 Accounting Policies................................................................................................................. 80-82 Notes to the Financial Statements .................................................................................... 83-123 Regional Communities support ......................................................................................... 124-126 2

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    Who we are Midcounties is a consumer co-operative owned and controlled by its members. We are part of the global co-operative movement and subscribe to co-operative values and principles that govern all co-operatives around the world. Our Purpose is simple but ambitious with co-operative values at its heart: “To be a successful consumer co-operative working towards creating a better, fairer world and to enhance the lives of our colleagues, members, customers, and the communities we serve.” We have four core values that underpin our Purpose and guide the way we work. We live these values every day, every week, every month, every year. DO E S DEMOCRACY To ensure the views of our members are reflected in the way the Society is run. OPENNESS Being open, honest and fair in our dealings with everyone we come into contact with. EQUALITY Recognising the contribution that everyone can make to develop the Society. SOCIAL RESPONSIBILITY Reflecting our responsibilities to the wider community in the way we conduct our business. To bring our Purpose to life we have created an Imagined Future to inspire all our activity and all that we strive to achieve: OUR IMAGINED FUTURE DOE S DEMOCRACY OPENNESS EQUALITY SOCIAL RESPONSIBILITY The Midcounties We put We are an inclusive We are an We are a We are creating a Co-operative is membership at the employer where organisation proud commercially ‘better, fairer world’ part of a thriving heart of all we do colleagues are fully of our heritage, our successful, by building strong global co-operative which is reflected engaged and are independence and sustainable, values local communities. movement, a in how we engage our biggest our local roots. driven business leader, role model with members via a champions. which is trusted by and powerful range of the public, loved by influencer interactions. its members and recognised around supportive of its the world. suppliers. 3

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    What we do We operate a range of businesses in Food, Travel, Healthcare, Funeral, Childcare, Energy, Post Offices, Flexible Benefits and Telecoms. Our heartlands are in Oxfordshire, Gloucestershire, Buckinghamshire, Shropshire, Staffordshire, the West Midlands, Wiltshire and Worcestershire. However, we also trade in the surrounding counties and our businesses in Energy, Childcare, Travel, Flexible Benefits and Telecoms trade across the UK. Here is a snapshot of our activity from the past year: £16m sales from the 23 new Travel Working with 75 Best of our Counties range branches community energy generators £1.2 million paid out in community and 2 million prescription charity giving 7,000 funerals items dispensed to patients carried out Nearly 7,900 722,000 colleagues members 22 nurseries rated ‘outstanding’ by Ofsted HALF BIG DEALS PRICE £2 £827 million 57% uplift gross sales in Fairphone sales 520 trading sites 4

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    President’s introduction Our colleagues have endeavoured to reassure families and the children in their care, all while working in such unusual circumstances. The story is similar for colleagues in our Funeral business. They have had to adapt their care for bereaved families given the changing restrictions for funerals, while working under the pressure of an increased number of funerals and additional health and safety protocols. It is a real testament to their skill, compassion and care that I have received letters from families so grateful for the way they have been supported by our colleagues as they have said farewell to their loved ones in such restricted circumstances. In Travel, the picture has been one of colleagues sharing with their clients the disappointment of cancelled travel plans as the pandemic effectively closed down the sector. Guiding clients through this, sometimes more than once, has been hard and there remains no clear end in sight. Many colleagues have been furloughed for considerable Our financial result reflects the effects of the periods given the drop off in future bookings, whilst others stepped pandemic, with all parts of our trading portfolio into support other trading groups or helped with the huge task of significantly impacted. While not the outcome we refunding customers. In all, a very difficult year for the team. had hoped for at the start of the year, the result is Our recently-formed Utilities group saw colleagues switch to home hard won, and positive in the circumstances. working, ensuring that our front-end service delivery continued. Finally, our central support teams have managed the transitions wrought by Helen Wiseman lockdown seamlessly to make sure essential back-office activities and member services were maintained. I would like to mention, in particular, our HR teams who provided a daily colleague support line with extended hours and mental health support to help colleagues It is a privilege to write this report to our members for the year manage the impacts of lockdown and the pandemic in their lives. 2020/21. I saw messages to and from colleagues who were shielding or Reading our Annual Report and Accounts each year tells us of on furlough expressing solidarity and support, missing their work intertwined stories: the financial reporting which provides a critical colleagues, sharing lockdown survival tips, and inevitably those banana picture of our Society’s future sustainability, and the co-operative bread recipes! reporting demonstrating how we deliver on our vision and values. This year our financial outturn reflects the effects of the These are the real stories of last year. The ones which highlight pandemic, with all parts of our trading portfolio significantly how our colleagues across the Society have demonstrated their impacted. While not the outcome we had aimed for at the start commitment and care for each other, our members and our of the year, given the circumstances, the result is hard won and communities. I would like to thank each and every one of them on positive. your behalf. In Food our sales benefitted as customers chose to shop locally; In a year like no other we have worked hard to do the things we have our Healthcare teams saw a marked increase in demand for always done as a Society, just differently. Our AGM and Half Yearly prescription deliveries; Childcare occupancy was significantly Meetings switched to online, reaching out to almost a thousand restricted due to Covid requirements and changeable demand; members. Like most teams, the Board has used technology to allow it Travel was brought to a standstill for most of the year; our Funeral to function effectively. We have run an increased schedule of meetings numbers reflected the increased death rate; even our Utilities to allow us to maintain oversight of the impact of the pandemic on business was affected with growth in residential broadband, but a our financial stability, our colleagues and our members, ensuring good drop off in business demand. governance, colleague welfare and member interests were always at the heart of our decision making. These are the trading headlines. But how little of the real story of this year they tell us. We have supported our charity partners through our Community Restart Fund to help them rebuild their activities and held virtual coffee I reflect upon the realities for our colleagues in Food: from the mornings to encourage sharing of ideas. Our members too have early weeks of panic buying as lockdown rumours emerged; continued to support our communities – the Home Delivery service embracing new procedures to help prevent the spread of Covid; still has volunteers who have willingly undertaken deliveries to the the increased level of abuse as they bore the brunt of customer vulnerable. While continued contributions to the Foodbank Fund and frustrations; wearing masks day in day out; and of course, caring instore food bank collection points reflect the generosity of so many. for our members and communities as the Home Delivery service which started from scratch reached over 100,000 deliveries at the Finally, I would like to thank our Chief Executive, Phil Ponsonby and year end. his Executive team for their leadership throughout this unprecedented year, and my colleagues on the Board for representing our members In Healthcare, our teams delivered a record number of flu and offering challenge and support in equal measure. vaccinations and continued to support communities reaching out to vulnerable members, giving essential advice to those I hope you read the Annual Report with the same sense of concerned about a full range of health matters amidst rising appreciation and pride that I do; it really is an amazing co-operative public anxiety. that we are all part of. Our Childcare colleagues have continued to play an important part in the lives of so many children, supporting families, especially those of key workers. Our Frontline Hero support fund launched in early 2020 raised £40,000 to help subsidise fees for the children of key workers; and more recently our Helping Hands Helen Wiseman campaign supported families affected by redundancy. President 5

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    Group Chief Executive’s overview The combined impact of the pandemic resulted in a total gross sales reduction of £406m (revenue is down by £31m*), with gross sales one third lower than last year. However, given the many difficulties experienced across our trading operations, it is pleasing to report an operating profit before significant items of £12.7m and overall operating profit of £7.2m, which although lower than last year by £4.8m and £1.7m respectively, is testament to the hard work of colleagues across the Society. As with many businesses, we were supported by Government initiatives through rates relief and the job retention scheme. The latter, worth £7.7m, was primarily used to support our Childcare and Travel operations which were required to close for certain periods during My final and personally most moving reflection the year. While these schemes were welcomed, it is on last year, is the way in which our colleagues worth noting that the budgeted profit shortfall in our have supported the Society in responding to the Travel business alone was greater than the combined extremely difficult challenges we faced. I could value of government support for all our businesses. In addition, we spent around £5m on personal protective not have asked for more or been prouder of how equipment and topping up pay for colleagues who were they stepped up to the challenge. furloughed. Phil Ponsonby It should also be noted that we have revised how we account for foreign currency transactions in our Travel I am pleased to present my report to members for the branches, so now report as sales the commission we 2020/21 year. earn rather than the value of the currency transaction itself. We have also revised the way we account for We began the year on a much firmer footing having funeral prepayment transactions following at review of delivered on our commitment to resolve the very serious this trading division. The net effect has been to reduce situation relating to our Energy business in 2019. And, our funeral plan revenues and also to show any change in despite the uncertainty relating to Brexit, this greater the value of our funeral plan investments each year in our stability had led to a more optimistic outlook for the year profits. Full disclosure is provided in the formal notes to ahead, reflected in the financial targets set by the Board. the accounts. However, those plans and that sense of optimism were significantly curtailed when, within less than two months It is abundantly clear that the pandemic has affected many from the start of our new financial year, the country businesses, but I would specifically highlight the impact entered a nationwide lockdown in response to the on our Travel and Childcare operations. Gross sales in worldwide coronavirus pandemic. Travel, at £44m, were down by £446m on the previous year, we cancelled or amended almost 100,000 bookings Covid-19 has undoubtably had a profound effect on all paying out over £130m in refunds, and approximately one our lives and caused significant disruption to businesses third of bookings were transferred to 2021. Whilst some and the wider economy. Whilst certain non-discretionary colleagues were furloughed, the significant disruption services such as food retail and healthcare have seen for customers with existing bookings meant retaining increases in demand, many discretionary services in place a sizeable complement of our team to deal including non-essential retail, hospitality and leisure have with the many thousands of queries and changes to been very seriously affected, despite the unprecedented bookings. We established a virtual contact centre which levels of financial support provided by the Government. handled over 75,000 calls helping our customers to make amendments. Meanwhile, we took the decision As a multi-faceted organisation we have experienced not to charge fees to parents where their occupational more than many others the very real differences in status prevented them from sending children to our how businesses have been impacted throughout the nurseries. This was the position for the vast majority of pandemic. Whilst we have seen increased demand in our customers and resulted in two thirds of our nurseries Food and Healthcare, our Travel business was brought closing during the first lockdown. We maintained to an abrupt halt, two thirds of our Childcare nurseries operations where the nurseries were on or close to NHS were temporarily closed during the first lockdown, and sites and, whilst occupancy levels were much lower than although our Funeral business was busier than forecast, originally planned, we felt it only right that we play our part the services were heavily restricted leading to a reduction in supporting key workers at these vital locations. in some revenues. Within our Utilities operations we were prevented from signing up new telecoms customers The restrictions placed upon consumers led to significant and were unable to run many of the planned marketing shifts towards digital channels with more people than initiatives to support our energy partnership with Octopus. ever embracing online platforms. Our investments in *Gross Sales to Revenue reconciliation is shown in note 1 on page 84 6

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    this area meant that we were able to respond with active suppliers, in particular reaching out to those most affected online sites in Healthcare, Travel and Utilities, while rapidly by a loss of business in the hospitality sector. developing virtual capabilities for Childcare ‘show arounds’ and Funeral services – a particular change for Funeral, My final and personally most moving reflection on our most traditional business, especially when combined last year, is the way in which our 8,000 colleagues with the changes being introduced by the government’s supported the Society in responding to the extremely consultation into the pre-need market. We were also able difficult challenges we faced. I could not have asked for to pilot new technologies in support of rewarding our more or been prouder of how they stepped up to the members and this exciting new capability will mean major challenge. When most of the country stayed at home, changes for members in the year ahead. our colleagues across our Food, Funeral, Healthcare, and Childcare businesses turned up for work, day in day out, The strategic clarity determined by the Board provided a to support our members, customers, and communities. continued opportunity to divest of non-core assets. This They worked to support each other with colleagues from included several buildings not used for trading operations, the Travel business volunteering to work in food stores some food stores not considered as part of our longer- when their own branches were closed or manning the term requirements and the majority of our pharmacy phonelines day and night to help customers in difficulty. sites, which were sold to smaller independent operators And our Utilities and central support colleagues adapted as we switched our emphasis to digital online services. rapidly and with great agility to working from home These moves ensured we could continue to invest as part to support our trading operations, some of them also of our strategic plans; for example, the integration of the volunteering to work in stores. And with over 1,000 four Budgens supermarkets, the opening of a new Food temporary colleagues taken on to support our food Market at Botley in Oxford and a new convenience store business, it is pleasing to report that a quarter are staying in Bedfordshire. We also took on seven travel branches with us in permanent roles. from the highly respected Carrick travel group and 16 travel branches from Central England Co-operative, a We received so many wonderful messages from great example of co-operation among co-operatives, a members, customers and community groups paying key co-operative principle. tribute to our colleagues and the way so very many of them went way beyond the call of duty, demonstrating The ongoing volatility caused by the pandemic meant how fortunate we are to have the team we do at The we took a prudent approach to preserving capital and Midcounties Co-operative. deliberately delayed the opening of several new food stores, which will now open during the year ahead along We were delighted to be crowned ‘Business of the Year’ with two new Little Pioneers nurseries. This carefully by the eminent sustainability media platform edie.com. considered approach to disposals and investments has led The judges recognised the extent to which our colleagues to the continuation of a strong and supportive relationship had maintained services to all our communities despite with our three main lenders and importantly, negated the the many obstacles in place – in short, that they, need to use any of the Government’s loan schemes. It alongside the Society, had been there for you when you also means that the carrying value of debt at the end of needed them most. the year has not increased over the position at the start of the year, a highly credible performance considering the The year ahead will continue to present challenges; but challenges that have been faced. with the direction from our Board, leadership from my first class Executive team and the incredible dedication of I believe one of our greatest strengths is that in addition our brilliant colleagues, we are well-placed to meet those to being careful with our members’ money, we always challenges and further strengthen the Society in building endeavour to place as much emphasis on delivering and developing new assets and services for our members non-financial activities across the Society. Co-operatives and the generations to come. are uniquely placed to do this and last year, probably more than ever, put this principle to the test. I am extremely proud of the way in which everyone connected to the Society responded. Our Food team made over 100,000 home deliveries to members who were shielding Phil Ponsonby supported by over 1,000 volunteers from our brilliant Group Chief Executive community partners. We provided over £50,000 in support for local foodbanks when they ran short of food, £78,000 to a Community Restart Fund to help those helping others, and with the support of parents raised over £40,000 across our Childcare nurseries to help key workers pay fees. Donating 100 tablet devices to disadvantaged children, mobile phones to schools and toys for Christmas are just some of the further examples to highlight. We continued to recognise the importance of our local communities by introducing new local food 7

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    A co-operative response to Covid-19 2020 was a year like no other. Our family of businesses have each been impacted by the pandemic in different ways, but our response has been guided by our co-operative values. Through it all we have focused on doing the right thing by investing in our local suppliers, supporting community groups and the work they do, and enabling members and colleagues to help themselves and each other. Here are just some of the ways our co-operative approach has made a difference during the year. Colleagues Our colleagues have been outstanding, quickly adapting to new ways of working, supporting our members through difficult times and, in the case of some in Travel and Childcare, taking on whole new challenges when redeployed to other trading groups to support an uplift in demand. Thumbs up! To keep morale high during the pandemic we introduced a weekly ‘Thumbs Up’ round up celebrating our colleagues’ Protecting and supporting fantastic efforts, whether big or small. our colleagues through Covid Colleagues have emailed in their own stories or told us about others who Given the diversity of our businesses, we have had colleagues on the front are making a difference to members, line, while others have worked from home, colleagues who have been customers and fellow colleagues. We furloughed and others who have been shielding. We have done our best to have been able to share these across the support them all. For colleagues on site, ensuring they feel safe and protected Society to lift everyone’s spirits. in the workplace has been our priority. All customer-facing colleagues were equipped with PPE and we introduced protection screens, social distancing notices and hand sanitisers in our branches as quickly as we could. The pandemic has also caused significant emotional strain for many and we have done what we can to support our colleagues through this. We set up an Isolation Conversation board for colleagues to engage socially with one another and kept everyone updated daily through our Co-op Colleagues Connect website. We introduced mental health e-learning modules, wellbeing support packages and ‘drop-in’ sessions and have been keeping an eye on colleague wellbeing through manager one-to-ones, by adding the issue to our check-in forms so it’s covered in every catch up. Lobbying for change Colleague view Childcare colleagues have found themselves in the challenging situation of being frontline workers but “In all my years in Travel I’ve never known a without being able to socially distance from the children year like it. We’ve been there for our members they look after. In support of our colleagues, our Childcare through some trying times, from getting those division lobbied the government requesting that: stuck abroad home safely to working in the virtual call centre where we’ve amended, • early years practitioners be prioritised for vaccination rebooked and issued refunds. Like many of alongside other key workers; and my Travel colleagues I was redeployed to a • childcare settings form part of the rollout of mass food store and I spent two weeks at Earlswood asymptomatic testing. helping and supporting them.” For a period, the business funded home-testing for Tracy Sheldon colleagues as the government did not respond. But, from Travel Branch Manager late March nurseries have been included in the broader education mass testing scheme, providing a level of reassurance for colleagues. 8

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    Members We have supported members during the pandemic by doing what we can to ensure our core services remained available, delivering essentials and medicines to those most at risk and providing the chance for members to help one another. Member view “It’s not just a food service, it’s a personal service. It’s done with kindness and thought. They’re very nice people, all of them.” Mrs Mary Langdown Member who received our 100,000th food delivery Delivering compassion During the first lockdown we started a Food Retail home delivery service from scratch, co-ordinating volunteers and community groups to ensure that the most vulnerable people received essential supplies. We mobilised more than 1,000 volunteers to make over 100,000 deliveries to our members. Our Healthcare branches also extended their home delivery service, with over 50% of the 1,000 deliveries being to new patients, including those who were shielding. Childcare support for members Childcare has run two initiatives during the year. The first, the Frontline Hero Support Fund, raised £40,000 to subsidise childcare for keyworker families. The second, our Helping Hands campaign, supported families affected by redundancy brought on by the economic impacts of the pandemic. Member, Nikki Shuter, made use of the Helping Hands scheme when her partner was made redundant. She says, “The scheme gave us six weeks of childcare at reduced rates which was a massive help, as it enabled our child to continue to benefit Award winning co-operation from a place at nursery while taking some of the Our co-operative response to the pandemic was recognised financial pressure off of us.” at the edie Sustainability Leaders Awards – one of the UK’s biggest social sustainability awards. Midcounties was named Business of the Year and won the Social Sustainability & Community Development category in recognition of the support we provide for vulnerable members in our local community, as well as our sustainability activity. Chief Executive Phil Ponsonby said, “Perhaps more than at any other time in our history, the pandemic has shown 2021 the true value of co-operation; people coming together to support each other and tackle big environmental, societal and WINNER community challenges close to home. We are thrilled with this incredible endorsement of what our members, colleagues, Business of the Year customers and partners have achieved together during a The Midcounties challenging year for everyone.” Co-operative 9

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    Update on the impact of Covid-19 Suppliers During the pandemic we actively grew our local supplier base to support local businesses in crisis, increasing our number of suppliers to 200 by the end of 2020. We have worked more closely with them than ever before to support their businesses and to keep our shelves stocked in what has been a very challenging environment. Aldens Oxford-based Aldens was established in 1793 and is now run by the seventh generation of the Alden family. The business supplies universities, restaurants, hotels and pubs with meat. When the pandemic hit in March 2020 Aldens saw an 85% reduction in orders overnight. Once we heard what had happened, we contracted them to supply lamb, pork and chicken across all of our stores in the Cotswolds area that same month, meaning the business could continue to operate. Matthew Alden, Managing Director said, “We are delighted to be working with Midcounties. Together we will work very hard in bringing a great selection of produce to their customers in these challenging times.” Hobbs House Bakery “Overnight during Covid we saw half our business just disappear. All the pubs and restaurants shut, which obviously left us in a bit of a fix. The Co-op came to our rescue to a certain extent, because with all the panic buying bread on the shelves was disappearing faster than they could get in from the supply chain. The Co-op called and said, ‘If you can get your bread delivered as soon as possible we will sell it.’ Within 24 hours we were supplying Just Crisps 87 co-ops for about a 4-week period which for us at that time was a massive lifeline.” Just Crisps is owned by the Froggatt family, which has farmed land in Hill Ridware, Staffordshire, for four Henry Herbert generations. The crisps are stocked primarily in pubs, Hobbs House Bakery restaurants and hotels across the UK meaning the business saw an immediate impact on demand when Covid-19 hit. Anthony Froggatt, founder of Just Crisps, said: “Demand dropped off a cliff pretty much overnight, with orders down about 70%. Our export business to Europe and the US, which represents about 20% of our output, also came to a halt. “We’ve been supplying around 35 Midcounties food stores for a number of years and we’ve always had a very good relationship with them. We told them about our situation A merry Christmas and they offered invaluable support by increasing the for local produce volume of product we sell through them. We’re now in 140 stores and, because we deliver direct, we were able to get The growth in local suppliers has resulted the products on shelves very quickly.” in a much wider range of products for our customers. We increased our locally sourced Christmas range by 40% resulting in a 71% increase (like-for-like) in sales of locally-sourced Christmas products, helping our suppliers see out a difficult year on a positive note. A particular success story was sales of English sparkling wine, from producers such as Poulton Hill in the Cotswolds, with sales increasing by a massive 352% on last year. 10

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    Community The community groups we support do such important work in our local areas it was essential for us to support them as much as we could given so many of them faced funding cuts and changes to how they delivered their services. Our colleagues and members took part in fundraising activities to allow us to deliver immediate financial support to groups that needed it most. Funding for foodbanks Keeping everyone connected In April 2020 foodbanks saw an 89% Our Utilities Group donated 100 tablets increase in demand compared with with free internet access to disadvantaged April 2019, meaning there has been secondary school children within our partner a real need to support this important schools to help keep them learning remotely. resource in our communities. We launched a Foodbank Fund in April The Society also donated smartphones and which generated donations of web conferencing software worth more £50,000 to help keep our 70 foodbank than £5,000 to Elmore Community Services partners’ shelves stocked and keep to help them continue to offer support 2,500 families fed. to hundreds of Oxfordshire residents with complex needs and mental health issues. Boost for community groups Our Community Restart Fund provided over Toys for Christmas £78,000 to help our 67 charity partners rebuild following the Covid-19 crisis. The Society donated £4,000 worth of toys to vulnerable and One group who benefited from this fund was disadvantaged children across its White House Cancer Support based in Dudley. communities this Christmas through To run all services, and pay staff and volunteers, eight local charities as part of our the charity needs to raise approximately £170,000 ongoing work to support those each year. With the majority of their fundraising most in need. activities postponed or cancelled, the charity was in great need of financial support. The Society donated £1,000 to allow them to keep providing emotional support, complementary therapies and exercise to cancer survivors in the area. Connecting young and old Within the Childcare division a longstanding initiative for children to visit their elderly friends at a local nursing home moved online to keep Community view everyone connected. “Like many charities, we are sadly facing Primrose Burchett, Senior Childcare Practitioner, a loss in fundraising income this year, but said, “I’m very pleased that our scheme is going demand for our advanced pre-hospital strong. Although the children can’t see their friends emergency service has not faltered and we face to face we are seeing them virtually which are still tending to ten patients every single the children and the residents enjoy. They do have day. Therefore, it’s support such as this, such a good time and the faces of both light which is greatly appreciated, that makes a up when they see each other. It’s more vital difference to our work. The donation important than ever now.” will enable us to provide critical care to those in desperate need of our help.” Jo Bailey Midlands Air Ambulance Want to know more? Watch our Year in Review video on midcounties.coop 11

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    Trading group overviews Food Retail and Post Offices Gross sales: £680m (2019/20: £614m) Revenue: £612m (2019/20: £554m) Colleagues: 5,105 (2019/20: 4,672) Sites: 307 (2019/20: 313) Our Food Retail business has had a very strong year, benefiting from customers choosing to shop locally during the pandemic. Our Food Retail business has had a very strong year, Our local sourcing team worked hard throughout the benefiting from customers choosing to shop locally year to support smaller suppliers whose businesses during the pandemic. Gross sales have increased by were hit by the virtual closure of the hospitality 11% year on year reaching £680 million for our Food industry, bringing in 33 new suppliers. This allowed stores and Post Offices combined. us to develop new ranges and increase choice within our Food Market stores. We also found that at points We have focused on keeping our colleagues, in the pandemic when there were product shortages, customers and communities safe by investing over our local suppliers were able to step in and deliver £1 million in PPE and social distancing measures. In alternatives quickly – another benefit of the partnership. order to protect the most at-risk members of our communities, we have made more than 100,000 Our Post Offices have had a fantastic second half of home deliveries, introducing a call centre manned by the year following a challenging initial six months when colleagues to co-ordinate this activity. customer numbers dipped by 35% during the first lockdown. Despite seeing a 95% drop in travel money Despite the upheaval we have seen this year, commission and a large decrease in lottery income, we have been able to complete over 70 store we have seen overall commission pass £3 million for development projects, including new stores, refits and the first time, as more and more people posted and enhancements. We opened a new convenience store returned parcels, particularly at Christmas time. in Stewartby, Bedfordshire and continued to grow our successful Food Market portfolio with the transition of four Budgens stores into our Food estate and the opening of a new Food Market in Botley. We have also introduced the PromoPay platform, which allows us to provide member-specific offers and deals without manual intervention. In conjunction with the Member Rewards scheme, this upgrade has increased member trade in Food to 20%. The Best of our Counties range continues to grow in popularity, passing £16 million sales this year. The range, which brings locally-produced food and drink to our customers, is a fundamental part of our growth strategy over the next few years. 12

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    Travel Gross sales: £44m (2019/20*: £489m) Revenue: £21m (2019/20*: £91m) Colleagues: 451 (2019/20: 449) Sites: 78 (2019/20: 57) Despite the impact of the pandemic, the Society has continued to invest in the business for the longer term. Covid-19 has had an enormous impact on the travel This growth and the rebrand has positioned the business industry over the past year, with changing restrictions as the premier national Co-op Travel brand, a strength and all but essential travel cancelled for months at a we will look to build on in 2021. time. So it is no surprise that gross sales for our Travel Group have fallen 91% year on year. To support the new brand we have updated our cooptravel.co.uk website and have been working on However, we are pleased that many of our customers other improvements to the site including the installation have chosen to rebook their holidays, a number of of a faster search function, which launched in the first times in some cases, with Winter 2021/22 and Summer half of 2021. 2022 bookings significantly up year on year. We are also seeing a large number of new bookings for these Looking to other parts of the business, our Consortium seasons, as customer confidence improves with has reduced to 139 members. This is because Central the rollout of the vaccine. To help boost consumer England Co-op was previously a Consortium member confidence further Co-op Holidays, our own tour but its branches now form part of our estate. Meanwhile, operating division, launched ‘The Co-op Holidays our Personal Travel Agents homeworking division has Promise’, guaranteeing a full refund if a holiday needs remained at a similar size to the previous year with 165 to be cancelled and no amendment fees to change self-employed agents. holiday dates. To keep our business running during lockdown we The process of refunding customers for cancelled introduced new ways of working. We launched a holidays has presented a challenge for the industry as Virtual Call Centre, staffed by a dedicated team of a whole given the unprecedented volumes and lack of colleagues set up to work from home, a new online systems in place to handle them at such a large scale. payments service, and video consultations. To protect We set up a refunds team to manage the process and our colleagues and customers, when branches re- were pleased to be placed 12th (out of 70) in the Money opened we introduced protective screens, PPE and an Saving Expert holiday refunds survey last summer. appointment system to support social distancing. We will maintain these new ways of working alongside our Despite the impact of the pandemic, the Society has traditional branch offering while the virus remains a continued to invest in the business for the longer term. threat. We acquired seven branches from Carrick Travel and 16 branches from Central England Co-operative, taking the number of branches operated by the business to 78. We also relocated our Thame and Evesham branches from inside Food stores to high street locations and have begun to rebrand some of our sites as ‘Your Coop Travel’. * Restated prior year, see note 6.1 on page 114 13

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    Childcare Gross sales: £28m (2019/20: £36m) Revenue: £28m (2019/20: £36m) Colleagues: 1,300 (2019/20: 1,343) Sites: 45 (2019/20: 46) With the various restrictions placed upon childcare providers, it has been a year full of changeable demand and occupancy has not yet returned to pre-Covid levels. Our Childcare business has felt the impact of the scheme providing a level of reassurance for colleagues. pandemic throughout the year, resulting in a drop in While this is welcome, it is disappointing that the gross sales of 22% compared to the previous year. remaining points remain unaddressed, considering the With the various restrictions placed upon childcare role the sector has played throughout the pandemic providers, it has been a year full of changeable demand and that our teams cannot socially distance from the and although providers have been allowed to remain children they look after – a unique position. open during the third lockdown, occupancy has not yet returned to pre-Covid levels. When our settings have been open, we have focused on ensuring the safety of our colleagues and the Despite this, we have continued to prioritise supporting children we care for in a number of ways. We made our families – initially through our Frontline Hero mask wearing mandatory for colleagues early on and, Support Fund, launched in the first half of 2020, which before government testing was made available to us, raised £40,000 to help subsidise nursery fees for we registered as a private sector provider for Covid-19 key worker families, and more recently through our testing in order to detect positive cases before Helping Hands campaign supporting families affected colleagues come into work – a move that we fully by redundancy, offering help and guidance, including funded. free and discounted childcare sessions. As we have not been able to show parents around our During the third lockdown, the government has settings in the usual way, we have introduced virtual allowed childcare providers to stay open, despite visits, conducting almost 3,000 to date. In September, schools closing. However, it has offered little financial when restrictions were less stringent, we hosted a support and no protection. We have lobbied to take record-breaking open day where over 1,000 slots were steps to protect the safety and financial sustainability of pre-booked. We have also employed technology to everyone working within the sector, requesting that: keep children in touch with the elderly friends they had previously made in local nursing homes as part of our • early years practitioners be prioritised for vaccination Intergenerational Care initiative. alongside other key workers • childcare settings form part of the rollout of mass The third National Nursery Practitioner Day went ahead asymptomatic testing in October to say thank you to our nursery teams and • targeted funding be provided for settings reliant lift their spirits during what has been a very challenging on private income which have suffered from a fall in year. Parents were encouraged to get involved parental demand. remotely which worked well, and we were pleased to receive high levels of positive feedback, with 741 Initially, we received little engagement from the compliments compared to 291 in the previous month. government, but from late March nurseries have been included in the broader education mass testing 14

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    Utilities Gross sales: £24m (2019/20: £31m) Revenue: £12m (2019/20: £12m) Colleagues: 64 During the year we brought together Co-op Energy, The Phone Co-op and our Flexible Benefits business to form the Utilities trading group. During the year we brought together Co-op Energy, The Phone Co-op website has been refreshed, The Phone Co-op and our Flexible Benefits business making it easier to use and resulting in increased visitor to form the Utilities trading group. We also recruited a numbers and a consistent conversion rate. Off the new Chief Operating Officer, Lizzie Hieron, to drive the back of this work, The Phone Co-op, with our partner new business forward. It is pleasing to report that in its Conversity, won the award for ‘Online Innovation of the first year as a combined entity, Utilities has delivered Year’ at the 2020 Retail System Awards. The business sales of £24 million, ahead of its forecasts. also maintained its Gold Feefo score for a second year. Our Co-op Energy business, which joined forces with At the beginning of 2021 the Flexible Benefits team Octopus Energy in September 2019, is now in a much launched a new salary sacrifice Electric Vehicle offer. more stable position. The partnership has reduced The scheme, offered in partnership with Octopus EV, the risk the business posed to the Society while still is being piloted by colleagues, with the aim of a full allowing us to provide a supply proposition to our rollout to our Flexible Benefits customer base by the members in a way that supports our co-operative end of 2021. values. To start to realise the benefits of a combined Utilities In the second half of the year we re-launched Your trading group, we launched exclusive offers to Co-op Community Power Energy, the UK’s only tariff encourage Energy customers to sign up for our powered by 100% community generated electricity. superfast broadband. The group has also been Operated through our Octopus Energy partnership, maximising the opportunities for cross-promotion by the tariff directly finances community energy co- hosting offers on the Your Co-op Rewards platform, operatives and is one of very few UK tariffs investing in introducing marketing materials at 100 food stores and the construction of new renewable energy projects. adding flyers to our home deliveries. Gas supplied through the tariff is also carbon offset. The co-operativeenergy.coop website has been updated to showcase Community Power, an initiative which has gained positive national coverage. Since the site has been relaunched we have seen a 72% uplift in visits. In keeping with our support for renewables, Your Co-op Energy backed the launch of Ripple Energy – the UK’s first crowdfunded windfarm. We invited customers and members to invest in the wind turbine in exchange for a discount against their home energy bill. Once the windfarm is live in the spring of 2021, savings will be applied to customer accounts. 15

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    Healthcare Gross sales: £21m (2019/20: £29m) Revenue: £20m (2019/20: £28m) Colleagues: 118 (2019/20: 320) Sites: 10 (2019/20: 30) Our pharmacy branches dispensed a total of 2 million prescription items to patients last year and saw a 50% increase in demand for prescription deliveries Healthcare has had a mixed year. Non-prescription essentials through our website. Colleagues from our product sales were marginally ahead, however, other trading groups helped promote these products. prescription fulfilment was down 6%, in line with the The range generated sales of £40,000 during 2020. industry. Overall, gross sales for the group are down 28% year on year, although this is not a like-for-like We are currently undertaking a comprehensive comparison given the decreasing number of branches. review of our digital strategy to ensure it aligns with the Society’s goals and puts members at the heart of Our pharmacy branches dispensed a total of 2 million what we do. While we complete this review, we have prescription items to patients last year and saw a 50% reduced our marketing spend for the site. This has led increase in demand for prescription deliveries during to a 12% drop in website sales, although contribution the first lockdown, peaking at 3,000 per week in April has increased given the reduction in spend. 2020. We were pleased to be able to continue some of our Branches situated within GP surgeries felt the biggest in-branch operations as normal, delivering a record impact of the pandemic, given the move to conduct as number of flu vaccinations and completing our full many GP appointments as possible online. However, NHS allowance of Medicine Use Reviews. our high street locations fared better. The Society launched a campaign during 2020 to Our branches have continued to serve their remove VAT on sunscreen. Our Healthcare website communities throughout, even where that meant is leading this in conjunction with our food and recruiting volunteers and temporary staff to ensure pharmacy branches, and alongside TV medic Dr Hilary patients received their medication on time. Jones. We are also working with other co-operatives and the Co-operative Party to help publicise this To support our colleagues, we have issued over important campaign. 100,000 pieces of PPE, offered a personal risk assessment to all colleagues and ensured that they The lockdowns have slowed the divestment of our have had formal refresher training on Covid-19 branch network. However, by the year end we had policies and procedures every two months. Pharmacy divested 20 of our 30 pharmacies. colleagues qualify as frontline care workers so have been provided with lateral flow Covid-19 testing kits to conduct at home and are in one of the priority groups for the vaccination programme. To support members of our communities who were isolating or unable to access every day healthcare products, we launched a range of distress household 16

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    Funeral Gross sales: £30m (2019/20*: £31m) Revenue: £29m (2019/20*: £30m) Colleagues: 302 (2019/20: 322) Sites: 80 (2019/20: 84) The pandemic has brought about significant spikes in the death rate through the year, resulting in a 9% increase in funerals compared with last year. The pandemic has brought about significant spikes allowing them to provide clients with more choice and in the death rate through the year, resulting in a 9% a more efficient service. increase in funerals compared with last year. However, given the lockdown restrictions in place many clients Taking some of our products online has helped us have opted for simpler services or cremation without support our customers and members during the ceremony alternatives, which has meant both gross pandemic. We have also made a number of other sales and contribution have dipped year on year by 3% changes, from adding protective screens to all and 4% respectively. limousines, to offering 24-hour telephone support, and arranging funerals via video call. To protect our The pre-need market, sector wide, has been colleagues, we have stepped up the use of PPE in significantly impacted by Covid-19. With uncertainty caring for the deceased and offered mental health over employment and the inability to discuss options training to help them deal with the added stresses they face to face, many people have chosen to defer the have encountered during this exceptional period. decision around purchasing this high-value product. Our Stonemasonry team has also been affected A further review of our branch portfolio identified six with colleagues being required to stop work on more branches to be closed. Their funerals have been all but essential services during the first lockdown, consolidated into neighbouring offices. as cemeteries and churchyards were closed. With some restrictions now lifting and the vaccine rollout Although delayed, the Competition and Markets underway, we are hoping to see improved growth in Authority (CMA) and HM Treasury consultations both areas. continued during the pandemic. The CMA consultation for the at-need funeral sector has recently concluded, To support this growth and the need to provide a more with remedies focusing on clarity and openness as comprehensive online offering, our coopfunerals.co.uk well as choice for the client. We await the outcomes website has been refreshed and now offers the to be formalised to understand the detail and impacts. opportunity to purchase pre-need plans and The HM Treasury consultation into the pre-need memorials. Membership offers and proactive social market is now due to conclude in the spring of 2021, media campaigns have helped to drive sales and we with remedies published shortly afterwards and a are already seeing increased traffic to the site. subsequent implementation period of 18 months. We have developed our Remembered from Afar funeral online streaming service, offered through our newly- launched Much Loved remembrance website. This has been well received by loved ones who have not been able to attend a funeral due to Covid restrictions. Behind-the-scenes improvements have also helped smooth the arrangement process for colleagues, * Restated prior year, see note 6.1 on page 114 17

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    Reporting our Steering Wheel As a co-operative we believe there is more to being All our sites have their own Steering Wheel targets. This a successful business than just profits. ensures we are addressing our co-operative aims as a business on a continuous basis right down to site level. So, as well as measuring our financial performance we use our Steering Wheel to measure our performance in On the following pages we report our Society Steering the key areas of co-operation, people, customers and Wheel results and a number of key developments in delivery. Each section of the wheel has a number of these areas. objectives which we monitor on a monthly basis. The financial performance of the Society is included on The Steering Wheel below shows how we have pages 76 to 123. performed on these objectives during the 2020/21 financial year. The sections are coloured red, amber or green to indicate whether they are below target (red), nearly on target (amber), or on or above target (green). CO- CE rong Co-op OP N er a t ER NA ally st ing to m AT I F nci a s ak e IO ifferenc fin nitie a Members N e ing d mu Be Com Growing Imp n Us Trading with tio our ing rovi ra pe ting ou ng P -o rA Co Sales por ss Imp ng rofit ibly ets rovi Sup oti ng A ns spo Be om s tten g Re tte Pr dan i n r ce Tra d oice yer of Ch eam Midcounties Reducing n E m p lo Waste Best Being a Co-operative Providing Op rgy Saving Ene portunities fo r All Doing th ely Com Saf mun DELIV g Pe icat rkin PLE n rfo Wo tio ing r as T a rm Effe r Cre ov ette ings laints Increasing ing ctive Inn atin ly P EO at ts B e g b tin ou geth E g Comp gL ette o rB n RY om plai oya es to r Pr t om Complime ing l Cu Reducin gC rk stom Wo dlin ers Han nts Putting customers first CUSTOMERS 19

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    Reporting our Steering Wheel Co-operation Trade with members Supporting our communities Percentage of trade with members: 20% (last year n/a) Hours volunteered in the community by colleagues: 27,600 (last year: 30,400) We have changed the way we measure this element. We now report on the number of Our volunteering activity has been severely curtailed transactions made with members against the overall because of the pandemic. However, colleagues were number of transactions. We make over 48 million able to complete 27,600 volunteering hours mostly transactions a year, the vast majority in our Food supporting vulnerable members of the community Retail group. We have plans in place to improve our through our home delivery volunteering activity. score, including the launch of our new member rewards scheme. Promoting co-operation Trading responsibly Number of members involved in co-operative activity: Percentage reduction in single use plastic bags: 100% 36,581 (last year: 43,331) (last year: n/a) Given the reduced opportunities to engage with We have changed our measure this year, achieving members face to face during the pandemic, we our target of removing single use plastic carrier bags have focused our engagement activity on virtual across all of our Food stores by introducing events and online surveys, engaging over 36,000 compostable carrier bags. Going forward, this has members in co-operative activity. We look forward eliminated 8 million plastic bags per year. to returning to more normalised levels of engagement as we emerge from lockdown. People Being an employer of choice Providing opportunities for all Percentage colleague turnover as a moving annual total: Percentage of colleagues who have achieved a Level 2 13% (last year: 20%) qualification or above: 88% (last year: 90%) Controllable Colleague Turnover fell significantly this 88% of our colleagues hold at least a level 2 year largely on account of the impact the pandemic qualification or equivalent. While the pandemic has has had on economic activity. We have taken on a affected some ways of learning, our line managers number of temporary colleagues to support our have continued to focus on ensuring that our businesses through the pandemic. They have not colleagues are receiving opportunities to develop been included in the figures to ensure we provide a these qualifications in line with our targets. more representative picture of turnover levels. Communicating effectively Performing at our best Percentage attendance rate at Colleague Council Percentage of colleagues receiving an annual meetings: 98% (last year: 90%) performance review: 66% (last year: 95%) Attendance at Colleague Council meetings has There have been limited opportunities to carry been very high. Given Covid-19 restrictions all out performance reviews face to face due to the Colleague Council meetings have been taking restrictions in place. During the year we place virtually. We have found colleagues have introduced a process of ‘colleague check-ins’, been comfortable to engage effectively online. providing colleagues with a more regular opportunity to discuss their goals, share feedback, and discuss specific areas, such as wellbeing and career development. 20

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    Customers Creating loyal customers Complaints Customer Loyalty Index: 86 (last year: 84) Number of customer complaints: 1,840 (last year: 2,783) Our Net Promotor Score increased two points this year. Our trading groups look to implement Complaints have fallen given a reduction in levels the feedback they receive from their customers of trade (particularly in our Travel and Childcare to ensure we continue to provide a high level of businesses), a general reluctance to spend more customer service. Our Food Group introduced a time shopping than is necessary, and, of course, special measure this year to check how safe reflecting the fantastic levels of service our customers have felt while shopping in our colleagues have been able to provide in the very stores. We have been monitoring this closely difficult circumstances of this year. and are pleased with the feedback from our customers and members. Compliments Handling complaints better Number of customer compliments: 22,660 Percentage of customers who agreed we responded (last year: 31,400) well to their complaint: 91% (last year: 70%) We have received fewer compliments this year All of our teams work hard to ensure a positive given a general reluctance on the part of customers resolution for customers when complaints are to spend more time than they need to while received and we are pleased that this hard work shopping. We will work with our trading groups to has been recognised. While we have received increase the opportunities to capture compliments less customer feedback this year it has allowed in the year ahead to ensure we know what our us to focus more closely on each complaint customers like and can continue to implement the received. learnings more widely. Delivery Innovation Working safely Number of ideas implemented having a positive impact Number of accidents/incidents reported as a moving on another Steering Wheel Measure: 20 (last year: 19) annual trend: 438 (last year: 624) Our Innovation programme was put on hold for Covid-19 has impacted accident numbers in part much of the year while we focused on addressing due to the number of colleagues furloughed and the immediate trading issues created by the consequent reduction in working hours, and also pandemic. Despite this, we have been able to thanks to various operational control measures implement 20 new ideas. In the coming year we introduced across the Society to ensure our sites will once again refocus on this measure and remained Covid safe. encourage colleagues to provide ideas that make a tangible positive benefit to our businesses. Saving energy Reducing waste Percentage reduction in greenhouse gas (GHG) emissions Percentage waste reduction across our operations on prior across our operations on prior year: 18% (last year: n/a) year: 5% (last year: n/a) This is a new measure. The Covid-19 restrictions have Following suggestions from members, we have caused a reduction in our GHG emissions, as some of changed the measure this year to concentrate on our operations have been closed for parts of the year reducing the amount of waste we produce, as and there have been far fewer business miles travelled opposed to how much we recycle. We have been by colleagues. However, we have also continued to able to reduce the total waste produced across our engage colleagues in energy saving practices and operations by 5%, by introducing new processes improved the energy efficiency of our trading sites, and encouraging colleague behaviour changes, initiatives which have helped reduce our emissions such as reducing the amount of printing happening levels further. You can find more detail on page 42. across our sites. 21

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    Co-operative Social Responsibility Our social responsibility activity underpins so much of what we do as a co-operative that it feels right to report on this within our Annual Report rather than in a separate Social Responsibility Report. Pete Westall, Chief Values Officer, holds overall accountability for social responsibility to ensure the Society continues to meet its social responsibility objectives, and certain directors take a lead on matters relating to the environment and community: Fiona Ravenscroft sits on the Society’s Environmental Steering Group, and Barbara Rainford and Wendy Willis are the Board’s appointed representatives on the Member Engagement Committee. Business of the Year We were named Business of the Year and received the Social Sustainability & 2021 WINNER Business of the Year The Midcounties Community Development Award at the edie 2021 Sustainability Leaders Awards. Co-operative 100,000 We have co-ordinated over 100,000 home deliveries, bringing essentials to vulnerable members of our communities. We are proud holders of Business in the Community’s Community Mark, recognising our support for local communities. Our Society was named as a Responsible Champion Business Champion 2020 as part of Business in the Community’s annual Responsible Business Awards. £50,000 Members, customers and colleagues 99% We now recycle 99% of our raised £50,000 for our Foodbank Fund. waste across our operations. £80,000 Through the Midcounties Community 8 million We have replaced single use plastic carrier Fund we gave more than £80,000 to bags with compostable bags in all our Food local community groups. stores, saving 8 million plastic bags a year. 22

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    We have once again been awarded the Fair Tax Mark, recognising our commitment to transparency over tax disclosures and paying the right amount of tax. Future We continue to actively develop and grow our 100 We distributed 100 computer tablets to Young Co-operators Network, which aims to vulnerable secondary school students at engage and inspire future co-operators. our partner schools. We are supporting 75 community energy groups through 22,000 our Co-op Community Power Tariff, generating enough renewable energy to power 22,000 homes. We helped to raise almost £50,000 for the NHS Together Campaign working with other co-operative societies, donating £1 for every floral bouquet sold at Christmas. £50,000 £78,000 40 Food waste Through our Community Food waste from our Food and Childcare sites Restart Fund, we donated over goes to anaerobic digestion, producing enough £78,000 to our charity partners. renewable energy to power 40 homes a year. 36,000 SURVEY We engaged with more than 36,000 members We have continued to work with Cal Major, through a range of virtual events and online our Environmental Ambassador, as part of our surveys. 1 Change campaign to tackle single use plastics. 2 tonnes We have cut the amount of single use 2 27,000 Our colleagues have delivered over 27k plastics used in our direct operations 27,000 volunteering hours to support by 2 tonnes per year. local communities. 23

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    Membership matters In what has been a challenging year for us all, we have worked to support members in as many ways as we can, from delivering essentials to members in need to increasing the value and ease of access of member rewards. Members supporting members For example, our Young Co-operators Network hosted One of our main membership initiatives this year has been a joint virtual member event, entitled ‘Climate, COVID facilitating members in supporting one another through what & Fairtrade’, alongside the Fairtrade Foundation, Oxford has been a very challenging time. More than 1,000 members, Fairtrade Coalition and students from Oxford University. community volunteers and colleagues gave their time to To engage our members in taking climate action we have make home deliveries of essential products from our Food also launched an Environmental Footprint campaign, run stores to our most vulnerable members. From March 2020 to in partnership with the WWF, where members are invited to February 2021 our volunteers made over 100,000 deliveries measure their environmental footprint and can pledge to to members in our communities isolating at home. reduce their impact. This initiative has become so much more than just a These activities have been driven by our Member practical delivery service. We set up a call centre, manned by Engagement Committee, which is responsible for members of the CSR and Food Retail teams, to administer monitoring overall member engagement. The Committee the service, and quickly found that these calls also gave has worked closely with management to provide us the chance to assess the wellbeing of our members opportunities for members to become involved with and and provide them with a listening ear, signposting them to influence their co-operative. The Committee now includes further help where required. two representatives from our Young Co-operator Network, improving representation from across our membership Member rewards base. In addition, the Board has agreed to introduce three We are now coming to the end of the pilot phase for Your dedicated positions for Young Members this year, and the Co-op Rewards, our new way to reward members. The first Young Member Election will take place in the autumn. feedback we have received from members during the pilot has been invaluable in helping us develop the programme To ensure we continue to align our goals with our into a proposition we believe will be attractive to members. members’ aspirations, we have taken a new approach to gathering input from members. Using Augmented Launching in summer, members will be able to collect Intelligence (AI) software, we have begun requesting digital stamps on our Your Co-op Rewards app or website. member input on issues and topics, with the software These will unlock access to exclusive member rewards. generating a consensus view. The output provides a sense Members will receive one digital stamp for each £10 spent of direction for the Society to take on issues which matter to with Food or Utilities and there will be additional member our members. We have begun using these insights to shape exclusive offers available on the app. trade and non-trade related membership activity and will continue to do so. Share of the profits We hosted our main membership events online given the Member campaigns restrictions in place on public gatherings. The AGM attracted Working with The Co-operative Party on behalf of our over 600 members (similar to the amount who attended in members we have continued to campaign on a number of 2019) and the Half Yearly Meetings welcomed more than 380 key issues including: members. It was fitting that at our first set of virtual Half Yearly Meetings members voted to move to digital share of the profits • Supporting the national Freedom from Fear campaign payments as part of our ongoing commitment to reduce the and the Retail Workers (Offences) Bill alongside other use of paper across the Society. retailers, USDAW and the Association of Convenience Stores. During Respect for Shopworkers week, our Share of the Profits e-vouchers are available on our new CEO Phil Ponsonby joined a national Freedom from Fear member app. They can be used in our Food, Travel, roundtable event, alongside leaders from the UK’s biggest Childcare, Healthcare and Funeral businesses. Those supermarkets and fellow co-operatives, to address ways members who can’t use e-vouchers will not miss out. We we can tackle the issue of retail crime. will hold their Share of the Profits payment for them or they • Lobbying for early vaccinations for childcare nursery can choose to receive it another way. staff and the provision of additional financial support to the childcare sector. Member engagement • Opposing the temporary relaxation of Sunday trading Over the year we have engaged with over 36,000 laws during the pandemic. members through a range of virtual events, campaigns and • Campaigning for the removal of VAT on sunscreen, conversations. Such activity has been more challenging both publicly and through correspondence with Jesse than usual, but we have embraced new methods of Norman MP. communication, such as online surveys and virtual member events, to keep in close contact. 24

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    Sustainability This year’s sustainability activity has focused on working closely with other co-operatives to address the UN Sustainable Development Goals, increasing the support provided to local power generators through our new Community Energy Tariff, and continuing our 1 Change campaign. Tackling global challenges co-operatively Colleagues Connect, as well as raising external awareness As a co-operative we know that acting together we can through targeted PR. make a real difference. We have put this into action in 2020, by working with co-operatives from across the world to On World Environment Day we received over 100 ideas consider how we can best address the UN Sustainable from members on actions they wanted us to take to defend Development Goals (SDGs). the environment. The ideas were gathered through an online forum and discussed by our Environmental Steering As part of Co-op Fortnight 2020 our CEO, Phil Ponsonby, Group, and have been used to develop our environmental joined other major co-operatives in signing a statement plans moving forwards. outlining our support for the SDGs. Our Society has chosen to focus on SDG 13 concerning Climate Action in Cutting waste collaboration with Euro Co-op (the European Community We have worked closely with our colleagues and members of Consumer Co-operatives) and the International this year to reduce our impact on the environment. We are Co-operative Entrepreneurship Think Tank (ICETT) – a pleased to say that we are now recycling 99% of our waste. group we founded along with several other large global This includes sending food waste from our food stores co-operatives. Through this network we have had the and nursery sites to anaerobic digestion where it is used to opportunity to become involved in a number of exciting produce renewable energy sufficient to power 40 homes initiatives: per year. • Our Chief Values Officer (CVO), Pete Westall, moderated Our members have told us that reducing waste, including the virtual World Co-operative Monitor Launch event, tackling single use plastics, is important to them. As a result with over 200 international co-operators in attendance; we now target waste reduction through our Society Steering the Monitor showcases the work of co-ops around the Wheel. We have reduced the amount of waste produced world in response to the Covid-19 pandemic and features across our operations by 5% compared to the previous aspects of the Society’s co-operative-based activity in year, cutting 200 tonnes of waste. We have achieved this tackling climate change. by increasing colleague awareness, including focused • Our CVO and Co-operative Social Responsibility Manager activity on paper reduction and using digital solutions where were invited to present on our 1 Change programme as possible. Our dynamic food waste programme in Food part of a joint UN/ICA webinar on ‘Co-operatives and Retail has also helped us reduce our waste footprint, helping Climate Action’. minimise waste through a sophisticated reduce-to-clear pricing model. We are also pleased to represent UK co-operatives on the Euro Co-op Sustainability Taskforce, set up to look at how As part of our commitment to tackle single use plastics, we consumer co-operatives tackle sustainability. Being part of replaced all single use plastic carrier bags across our food this group gives us the chance to share best practice ideas stores with compostable bags during the year, eliminating with other co-operatives within Europe. 8 million plastic bags per year from circulation. We have also started trialling re-fillable sections within selected food In addition, our CEO Phil Ponsonby presented a webinar stores, including milk vending machines. at the Association of Convenience Stores’ conference on the sustainability, showcasing the breadth and depth of our Recognition sustainability work in the communities where we trade. We use Business in the Communities’ (BITC) Responsible Business Tracker to monitor our progress against the SDGs. 1 Change Pleasingly, our overall score in 2019/20 was deemed As part of our Climate Action activity and through our 1 ‘outstanding’. We were also one of a small number of Change campaign, we have continued to work with our businesses to be named Responsible Business Champions Environmental Ambassador, Cal Major, to reduce the 2020 at the BITC Awards, in recognition of the way we are amount of single use plastics our colleagues and members uniting our members in tackling single-use plastics. use each year. As a result of our sustainability work and support for our We supported Cal in exploring the course plastic takes local communities, we were delighted to be named from source to sea, as she journeyed along the River Business of the Year at the edie 2021 Sustainability Leaders Severn on her stand-up paddle board. We ran a range Awards. We also received the Social Sustainability & of virtual member engagement activities on each day of Community Development Award from edie at the same her expedition, including zero waste and plastic-bag-free ceremony. pledges, competitions to create artwork from waste plastic and opportunities for members to provide us with feedback on our values-based activities. We drove engagement with the campaign through social media, our website and 26

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    Paddle against plastic Our Environmental Ambassador Cal Major tackled litter in the River Severn as part of her Paddle against plastic campaign. She said: “The whole reason behind this trip is to connect the dots between the plastic we use inland, and that which ends up out to sea, contributing to the huge and often overwhelming marine litter crisis. “It can be difficult to know what we can do to help tackle such an enormous issue, however, all of our lives are linked to the ocean in a number of ways, and especially through our country’s rivers.” On page 42 you’ll find our Energy and Carbon Report. This shows the Society’s current emissions and the actions we are taking to reduce our greenhouse gas output. 27

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    Connected communities Despite the impact of the pandemic, our colleagues completed more than 27,000 community volunteering hours in 2020 giving something back to the communities where we trade. As a Society we supported local foodbanks, provided quick cash injections for community groups impacted by the pandemic and raised funds for the essential work of the NHS. Working with our partners As part of our action against modern slavery, we co- This year, more than ever before, our charity and foodbank founded the Bright Future co-operative – a collaborative partners needed our support. employment scheme that brings charities and businesses together to create jobs for victims of slavery. Our Chief As part of our ongoing focus on working with those who Values Officer, Pete Westall, is also Chair of the Bright Future are helping others, we created a Community Restart Fund board. We have continued our work with them during the which provided more than £78,000 to help our 67 charity year, providing work placements and long-term partners rebuild following the Covid-19 crisis. employment for victims in our Food Retail and Childcare businesses. As well as investing financially in the future of these organisations, we now host regular virtual charity partner Fundraising events to enable our partners to share their experiences and Over the Christmas period we partnered with other co- best practice with one another. A dedicated area of our operative societies and well-known brands to raise funds for website now houses self-help guides for community the NHS. As part of an NHS Together Campaign, the Society organisations, providing ideas and tips on topics such as donated £1 from the sale of every Christmas flower bouquet connecting with businesses and maximising social media sold to support hospitals and healthcare services. This raised opportunities, to help our partners help themselves through over £11,000 from our Society alone, with just under this period. To provide continuity for our partners, we have £50,000 raised by all of the co-operative societies involved. extended our community partnerships by a year into This contributed to the overall £150,000 that was raised January 2022 to support them as they rebuild their through the co-operative Christmas Campaign. programmes. Recognition During the year we also established a Foodbank Fund which We are proud holders of Business in the Community’s received donations from members, customers and the Society Community Mark, recognising our support for local totalling £50,000, and made grants to our foodbank partners communities. in the form of store credits to be used in our food stores. We also welcomed two new Society Charity Partners for 2021/22 as voted for by colleagues. They are the mental health charity Mind and Vitamin Sea, a new charity set up by Cal Major to help people reconnect with nature. Enabling education Despite schooling looking very different during lockdown, we have continued our engagement with our partner schools and education establishments. We hosted a virtual head teachers’ meeting, where heads from our partner schools could share issues and ideas to support each other. Access to computing hardware has been a major barrier to learning for many children during lockdown so, working with our Utilities business, we were pleased to be able to distribute 100 tablets to vulnerable secondary school students in our partner schools to support their schooling Community initiatives To further support vulnerable members of the community we have developed our partnership with Aspire in Oxford to help individuals experiencing homelessness into employment, providing work experience and employment opportunities in our businesses in the Oxford area, as well as helping to develop a social enterprise hub to help and advise those seeking employment. 28

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    Community case study Our Wyre Forest Regional Community team showed the difference our regional community activity can still make during the pandemic. We donated £1,500 from our carrier bag fund to Home-Start Wyre Forest, a family support organisation delivering friendship and help to parents with young children. This was used to provide a virtual Weston-Super-Mare day trip in place of the group’s usual annual beach visit. Over 40 families took part in the event. Each received a sandpit, sand, buckets and spades plus ice-creams and picnic treats to make the day extra special for them. 29

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    Colleague engagement, wellbeing and diversity Over the year we have introduced new wellbeing initiatives to help support our colleagues through the pandemic. We have also continued our work to ensure we recruit and nurture a diverse workforce, embrace and support colleague differences, and represent the communities where we trade. Colleague wellbeing We are also in the process of completing a detailed analysis We launched a mental health e-learning module following of the possible barriers to female progression in our a pilot in Childcare. All managers are completing this to help businesses. them understand the basics of mental health and become more aware of the signs of mental health issues so they can Our Career Framework has been rolled out across the signpost their colleagues to the support we have available. Society. This ensures we have fair pay ranges at every level We have also regularly updated i.Learn, our colleague of the organisation. All our colleagues have access to our learning platform, with a range of mental health resources Career Framework and the associated salary bands so they and are considering introducing Mental Health Champions can plan their development and raise their awareness of across the Society. opportunities. We have also revised our bonus scheme to ensure it is based on Trading Group and Society We have scheduled four mental health drop-in sessions in performance as opposed to individual performance. This Travel to support our colleagues in the virtual call centre has removed the ability for local mangers to influence who have had a particularly challenging year, and those bonus payments based on unconscious bias and has feeling anxious about returning from furlough. We will look helped generate a more collective mindset. to use this model for other Groups. Similarly, we have created a bespoke wellbeing support package to address We have invested in learning and development at all levels, the unique issues faced by our Funeral colleagues. This has ensuring that opportunities for progression are relevant and been developed in partnership with Mental Health at Work accessible; and we have mapped apprenticeship and has been well received. programmes and skills development opportunities to our Career Framework to give colleagues visibility of potential A new wellbeing section has been added to our ‘check-in’ career paths within and across our Trading Groups. templates, used to guide management reviews with colleagues, to ensure we are enquiring on a regular basis Recruiting fairly how our colleagues are coping. We also used our most Our selection processes and interview questions have been recent colleague ‘pulse’ survey to assess levels of wellbeing revised to ensure they are inclusive. The questions are on a broader scale. benchmarked by Employers Network for Equality and Inclusion. The Society has a centralised recruitment team Using our internal website, Colleagues Connect, we have which determines attraction methods, and completes been able to provide support for colleagues throughout the pre-screening and first stage interviews to ensure pandemic and raise awareness of mental health issues, consistency in attraction and selection. including what action they can take if they are worried about their mental health. We use the services provided by We have worked closely to select the right recruitment GroceryAid and Mind to help us. partners to attract senior level roles, ensuring they share our values of equality and inclusivity. This has led to a better Colleague engagement gender balance at shortlisting stage and let us appoint more Our Colleague Council meetings, where colleagues can senior females. share issues and best practice, have continued in a virtual format during the pandemic. We have seen the number of Supporting race equality council reps attending these sessions increase from 90% in As a Society, we want our workforce to be representative of 2019/20 to 98% in the 2020/21. Our monthly pulse surveys the communities in which we trade. To support this we have also generated strong response rates, a sign that recently signed Business in the Community’s (BITC) Race at colleagues have remained engaged during the pandemic. Work Charter. This entails appointing an executive sponsor for race, capturing and publicising ethnicity data and We have encouraged colleagues to get involved with progress, taking a zero-tolerance approach to harassment activities such as the Random Acts of Kindness day, and we and bullying, and action to support ethnic minority career have introduced Thank You Thursdays, where we suggest progression. We have also established a race partnership colleagues send a virtual thank you card to those who have with BITC to support the work we are doing in this area. supported them during the week. We are holding ethnic minority listening groups to Flexible working and progression understand what it feels like to work for the Society and We have partnered with a new Employee Assistance what barriers colleagues might face. In the coming months Provider to gain insights into how work commitments we will be rolling out a 12-month training programme to all impact colleagues given their responsibilities outside of line managers called ‘Let’s talk about race’. This will equip work. As part of this, we launched the Society’s Agile line managers to understand race representation within their Working Policy which provides a framework for consistent own local area and ensure they are comfortable leading and fair practice when considering agile working conversations around race equality. arrangements. 30

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    Service Recognition Awards Pamela Cooper Kineton Food Doreen Balmer Tredworth Food Andrew Shakespeare Franche Road Pharmacy Audrey Warren Newent Food Kelly Ridler-Dutton Newent Food Valerie Hogg Sussex Place Food Alan Tidy Convenience Retail Support Tehmena Farhat St. Johns Pharmacy Georgina Gwilt Copthorne Food Name Store Name Peter Lockey Corporate Comms Andrew Joiner Marston Food Tracey Chrimes Franche Road Pharmacy Douglas Newson High Street Food Jill Hyndman Cinderford Food Denise Mitchell May Day Nursery Keith Melson-James Charlton Kings Food Steven Jones Churchstoke Food Lorraine Whyte High Street Food Emma Griffiths Sedgley Travel Beverley New Groundwell Road Food David Hughes Chipping Norton Food Mavis Ellison Wem Post Office Vicky Blackmore High Street Food James Davidson The Phone Co-op Nigel Holmes Hazlemere Food Zoe Mitchell Crossways Food Faye Sayers Codsall Food Deborah Shea Hanwell Fields Food Kirsten Martin High Street Food Linda Holford Franche Travel Madeline Smith Kinver Food Nicholas Corcoran Chipping Norton Food Stuart Jarvey Eynsham Food Sharon Collins Rodbourne Cheney Food Alison Dean Thame Food Maureen Thomson Kidlington Food Jayne Nightingale Ely Willenhall Funeral Debra Taylor Bath Road Food Glynne Hubbard Knighton Food Angela McGuire Seventh Avenue Food Joanne Hand Blakeley Food David Richards Convenience Retail Support Carol Newton Kingswinford Post Office Debbie Barnett Wem Food Geoffrey Cross Trinders Banbury Funeral Moira Hughes Kingswinford Food Michele Bartley Wem Food Paul Bambrook Thame Food Debbie Whittaker Bloxwich Food Susan Pearson Tipton Food Jayne Vander Stourport Food Tracy Brookes Highley Food Simon Christian Co-operative Memorials Lorna Mitchell Cinderford Food Gail Baker Penkridge Food Patricia Sawyer Crossways Food Debbie Earp Franche Road Food Cheryle Manns Cinderford Food Sarah Munsey Pendeford Food Virginia Beddard Lodge Farm Food Sally Lacey Franche Road Food Anita Tipper Bloxwich Food Joanne Hill Walsall Funeral Emma Harewood Walsall Travel Louise King Parton Road Food Michael Boxall Watery Lane Funeral Kelly Payton Stourport Bridge St Funeral Julie Duce Stourport Food Wendy Wilson Franche Road Food Lynda Lowe Kingswinford Food Juswinder Devi Pharmacy Hub/Online David Kemmett Bourton-on-the-Water Food Andrew Kendry Winchcombe Food Marion Godfrey Gillingham Travel Julie Barratt Reddicap Heath Post Office Marian Moralee Newcastle Nursery Sharron Ayres Rodbourne Cheney Food Philip Wilkes Pharmacy Hub/Online Carolyn Brown Knighton Food Sukie Lawrence Watchfield Food Gemma Edwards Stanford in the Vale Food Tracey Roberts Radbrook Food Nickolas White Supermarkets Retail Support Angela Clement Convenience Retail Support Evelyn Bickley Churchstoke Food Helen Sherwin Lydney Food Julie Coslett Bicton Heath Food Joanne Ireland Coleford Food Louise Edgar-Kerrigan Convenience Retail Support Corinne Goodwin Northway Food Julie Brammer St. Johns Pharmacy Steve Jones Wem Food Sandra Main Salisbury Avenue Food Belinda Davies Headington Food Wendy Hallett Cavendish Square Food Parmjit Mattu Summertown New Food Joanne Greatrex Walsall Wood Nursery Maria Young Long Hanborough Food Stephen Brown Cavendish Square Food Jason Newitt Chinnor Food Karen Belstone Pharmacy Admin Terence South Kidlington Food Stephen Farmer Penkridge Food Helen Owen Pattingham Food Adam Quinton Supermarkets Retail Support Robert Gwilliam Churchstoke Food Julie Sumner Church Stretton Food Claire Cross Littlehampton Nursery Justin Brimson Berkeley Food Amanda Swales Wymans Brook Food Jennifer Varney Ermin Street Food Teresa O'Connor Churchstoke Food Nicola Lloyd Franche Road Food Stephanie Dalton Management Accounts & Tax Kerry Mcinnis Dudley Travel Peter Dubois Management Accounts & Tax Christopher Dixon Franche Road Food Thomas Johnson Copthorne Food Sarah Adams Cinderford Food Joanne Edwards Coleford Food Deborah Simpson Long Hanborough Food Gregory Martial Bicton Heath Food Kathryn Poole Beeston Travel Julie Amos Coleford Food Mark Henderson Supermarkets Retail Support Suzanne Willis Childcare Head Office Susan Davis Bilston Travel Alison Smallwood Penkridge Food Bernadette Connor Insurance and Compliance Andrew Bartlett Woodstock Food Hayley Meer Old Town Food Ingrid Davies Stourport Pharmacy Carol Ash Cowley Centre Food Marie Urch Parton Road Food Katrina Marden Bewdley Food Jill Allman Norton Canes Food Diana Coad The Phone Co-op Carol Bishop Stourport Food Janice Cook Longlevens Food Maria Chilton Stubby Lane Food Gareth Pearce Cavendish Square Philip Johnson Bicester Food Allan Crosby Watery Lane Funeral Dragica Ristic Stonehouse Food Sharon Palmer Wotton-under-Edge Food Heather Price Grove Food Susan Newman Codsall Food Duncan Ikin Pendeford Food Joan Thomas Hazlemere Food Gwendoline Sharpe Kings Sutton Food Stephen Hale Support Services Karl Warrender Coven Food Josephine Shemwell Penkridge Food Kerrie Brain Chipping Norton Travel Deborah Hackett Rugeley Funeral Linda Stanborough Bishops Cleeve Food John Russell Support Services Natalie Sutton Watlington Food Michael Richards Church Street Food Rebekah Brain Colleague Engagement Deborah Novak Kinver Food Barbara Bull Bloxwich Food Julie Hancock Drybrook Food Richard Stockman Cainscross Food April Tyler Highley Food James Hill Watery Lane Funeral James Harford Old Town Food Steven Botwood Co-operative Memorials Julia West Newcastle Nursery Lewis Broyd Steventon Food Leah Creed Cinderford Travel Tracy Whale Oxley Food Helen Bradley Kings Stanley Food Valerie Brown St. Johns Pharmacy Trudie Howells Lydney Post Office Kevin Phillipson Northway Food Christine Homer Coven Food Patricia Jones Co-operative Memorials Keith Butler Knighton Food Sian Lewis Business Improvement Jean White Steventon Post Office Sally Baker Cinderford Food Ilana Wormald Co-operative IT Natalie Maxwell Bourton-on-the-Water Food Jennifer Shorthouse Lichfield Road Food Claire Christopher Knight Read Street Travel Moreton-in-Marsh Food Leanne Frances Green Winchester Reading Nursery Chipping Norton Food Thank you Carol Bagladi Franche Road Food Rosemaire Eddolls High Street Food for your commitment to the Society 32

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    We asked some of our colleagues with Service Recognition Awards to tell us why they were proud to work for the Society. Jean Richard Debbie White Stockman Hackett Post Offices Food Retail Funeral 50 Years 45 Years 25 Years “I started working in the old “I started my career in the old “I started at Rugeley Funeral in 1995, Steventon food store in 1962 then Stonehouse store in 1975 when working just three hours a day, and left in 1965 to have a family before the company was Gloucester and I have never looked back. I enjoy returning in 1970. I’ve seen so Severnside. I then moved over every aspect of arranging funerals, many of our current customers and to Cainscross store in 1996 and I from looking after bereaved colleagues grow up from babies to have been working around many families from beginning to end adults and seen the Society develop different areas of the store since. to suggesting ideas for a unique too, starting as the Oxford Co-op, I’ve worked with many wonderful funeral. When a family contacts us, becoming Oxford & Swindon Co-op colleagues over the years and have they sometimes don’t have any idea then Oxford, Swindon & Gloucester seen many grow and progress. of what they want and it’s our job Co-op and finally Midcounties. I’ve seen a lot of changes in the to talk them through the different The highlight of my time with the Society. I have thoroughly enjoyed options in a sensitive way. Every day Society has to be receiving my 50 working for the Society and hope is different and new challenges arise years’ service award! I love what I do to continue my long service for a for us to overcome – that is the and make sure I treat everyone the while yet.” reason why I have stayed so long.” same, always welcoming them with a smile.” John Ilana Joanne Russell Wormald Greatrex Food Retail Co-operative IT Childcare 25 Years 25 Years 25 Years “I started working for the Society “I started my career within Food “I have worked for Co-op Childcare in 1995, when I moved down from Retail in December 1995 as a for nearly 26 years and still can’t Scarborough to join as an Internal checkout operator. Within a few believe it’s been that long. I really Auditor. I later made a radical months I moved to the Head Office enjoy welcoming new children and career change and decided to (in Walsall at the time) to help keying their parents into the setting, making join Food Retail. My first store was in stocktake books before joining them feel safe in their surroundings. Shrivenham, Swindon and I have the IT department. Over the years I also enjoy seeing babies that since managed eight of our stores. my career has gone from strength I looked after grow into adults. I took the opportunity six years ago to strength and I now work within I now actually work alongside a to become Store Development Food IT as an Application Support staff member who I looked after Manager, to project manage Analyst. I am truly grateful for as a baby.” new and refit stores. Since then, I the career opportunities I’ve had. have launched 41 new stores and When I look back at how much the completed hundreds of projects. I business has grown over the years am very proud of the merchandising and the way the Society is driven by team, who are amazing to work its values and principles it makes me with. I love working for Midcounties very proud to work for Midcounties.” and enjoy the challenge, that every day is different and that every day we can make a difference.” 33

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    Board of Directors Helen Wiseman Heather Richardson Vivian Woodell Steve Allsopp President Vice-President Vice-President Olivia Birch Clive Booker Ellie Boyle Bernadette Connor Vicky Green Irene Kirkman Matthew Lane Paul Mather Kathy Petersen Barbara Rainford Fiona Ravenscroft Wendy Willis 34

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    Senior Management Team The Executive Phil Ponsonby Group Chief Executive Alison Bain Peter Dubois Sara Dunham Clare Moore Chief Marketing Group Chief Financial Chief Officer Travel Chief HR Officer Officer Officer and Leisure Rupert Newman Edward Parker Peter Westall Chief Food Retail Secretary & Head of Chief Values Officer Officer Governance Chief Operating Officers Mark Adams Sally Bonnar Lizzie Hieron Rad Sofronijevic Funeral Childcare Utilities Travel 35

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    Managing risk As a Society we want to manage the risks and uncertainties we believe could stop us from achieving our business objectives and delivering on our co-operative values. Dealing with risk in the right way allows us to create value for our members and communities. We have put in place a monitoring structure to help achieve this and continue to look at ways to improve our risk processes and plans. Our Risk Control and Governance structure Board of Directors Audit & Risk Committee The Executive Board of Directors Audit and Risk Committee The Executive The Board sets the Society’s The Audit & Risk Committee is The Executive takes day-to-day overarching risk appetite and charged with monitoring the responsibility for implementing ensures that risk is appropriately effective operation of the Society’s the Board’s policies on risk managed across the Society. risk management process, management and internal The Board delegates oversight the risks and uncertainties control. It is accountable for the of risk management activities to identified through the Society’s identification and assessment of the Audit & Risk Committee. The risk assessment process, along key risks to the Society and the Committee undertakes a formal with the mitigating actions and adequacy of mitigating control review of the Society’s principal controls in place. As noted, the activity. The Executive Risk risks twice each year. A summary Committee undertakes these Committee regularly reviews of the latest key risks schedule can tasks on a formal basis twice each the Society’s key risks. During be found on the following pages. year. In addition, the Committee 2020, it introduced a new deep- also receives a quarterly update dive review process of the key report from the independent risks facing the trading groups Internal Audit function. and support functions. Issues are escalated to the Board as required. 36

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    Our risk management framework Policies and procedures Our policies and procedures guide colleagues, setting out business-wide standards for minimising risk, adapted to the business area as required. Roles and responsibilities The Society uses the well-recognised ‘three lines of defence’ methodology to manage risk: • First line colleagues, managers and leaders manage risk as part of their day-to-day activities, guided by policies, procedures and training as required • Second line teams, mainly within the support functions, provide guidance, oversight and compliance activities to assist • Internal audit, as the third line, provides independent assurance and challenge. Risk appetite The Board, led by the Audit & Risk Committee, has been developing a risk appetite statement to define a set of risk parameters for the Society as a whole. It is anticipated this work will complete in the first half of 2021. Risk management process We have a standard four-step approach to risk management which helps us recognise and manage risk as part of our day-to-day roles. 1. Identify Risk 2. Assess Risk RISK MANAGEMENT PROCESS 4. Monitor & 3. Mitigate & Report Risk Manage Risk 1. Identify Risk • We identify risks that could impact our business by using our experience and judgement • We regularly update as risks change 2. Assess Risk • We assess the likelihood and impact of the risks we identify • We consider the potential financial and reputational consequences 3. Mitigate & Manage Risk • We manage the risks by ensuring the appropriate mitigation and resources are in place • We regularly adapt as risks evolve 4. Monitor & Report Risk • We regularly monitor and update our risks and mitigation • We regularly report our risks for review and challenge How we managed risk in 2020/21 The Society’s trading groups and support functions regularly review and update their risk registers as part of ongoing management procedures. We continued to develop and refine our risk identification, monitoring and reporting mechanisms to ensure risk is appropriately managed within the Society. Risks are rated using a probability and impact matrix and our Internal Audit activity is based on a risk assessed approach. We have focused on strengthening our risk management procedures across the Society during the year, through training workshops and improved risk assessment methodology and guidance. As noted earlier, the Executive Risk Committee now undertakes a cycle of deep-dive reviews with all of the trading groups and support functions to analyse and challenge Society-wide risks. The output from these reviews is incorporated into the top-level Society risk register which is challenged and approved by the Executive Committee before being reviewed by the Audit & Risk Committee. 37

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    Managing risk Key risks schedule Covid-19 Impact Risk Category: Finance Responsible Exec: Chief Executive Risk Trend: Increased and Operational What changed during What do we plan to do in Risk description Reasons for risk How we mitigate the risk 2020/21 2021/22 • Significant business • Uncertainty • Operating a portfolio of • Travel trading group revenue • Continue to use furlough disruption arising from • Volatility of risk and speed businesses in different markets significantly affected due to and job retention schemes COVID-19, resulting in reduced to react to diversify risk lockdowns and restrictions on • Ongoing review of trading profitability and cash flow • Availability of resources to • Utilisation of the UK international travel group operating models to • Pressure on liquidity and manage disruption government furlough and job • Childcare trading group adapt to anticipated future funding headroom • Risk of ‘knock-on’ retention schemes turnover impacted by levels of activity; execute any consequences • Restructuring to reduce the lockdown/home working and resulting restructuring • Costs of mitigation and fixed cost base and re-align the operational restrictions • Continue to review working change variable costs to the prevailing associated by operating capital and investment projects sales base COVID-19 bubbles to maximise liquidity • Working capital • Funeral operations impacted • Maintain ongoing dialogue improvement projects to by capacity constraints and with banks maximise cash flow by operational restrictions • Maintain Executive led • Proactive communication imposed by COVID-19 COVID-19 contingency with banks to ensure funding • Food Retail experienced planning committee headroom and lending sales growth, but operational covenants maintained performance affected by • Utilised our business restrictions imposed by interruption insurance COVID-19 BREXIT Impact Chief Food Retail Risk Category: Finance Responsible Exec: Risk Trend: Decreased Officer and Operational What changed during What do we plan to do in Risk description Reasons for risk How we mitigate the risk 2020/21 2021/22 • Significant business • Uncertainty • Business wide risk • Executive level Brexit • Maintain close review of disruption and financial cost • Available resources to assessment of key contingency planning logistics, product availability from a no-deal Brexit manage disruption vulnerabilities, with allocated continued throughout 2020 and pricing levels, particularly • Anticipated inflationary • Risk of ‘knock-on’ Executive responsibility • Contingency planning for products sourced from impact from import tariffs and consequences • Regular communication assumed a ‘no-deal’ Brexit the EU devalued sterling reducing • Costs of mitigation and co-ordination with FRTS re • Contingency planning • Further develop our local both profitability and cash flow EU supply chain contingency activities continued until Brexit UK supply base • Pressure on liquidity and planning deal was announced funding headroom • Formulating cost mitigation plans for anticipated tariff and foreign exchange cost inflation • Stock building of non- perishable goods in advance of 31 December deadline • Sourcing alternative UK based suppliers particularly for perishable goods General Data Protection Regulation (GDPR) Secretary and Head of Risk Category: Regulation Responsible Exec: Risk Trend: Stable Governance & Compliance What changed during What do we plan to do in Risk description Reasons for risk How we mitigate the risk 2020/21 2021/22 • Failure to comply with • Inadequate governance of • Data protection policy in • No significant changes • Gap analysis within business GDPR legislation data could lead to reputational place to legislation or our internal areas to be updated damage and significant costs, • Risk assessed GDPR training control framework • Actions to further improve including fines from the for those handling personal governance and fill identified Information Commissioner data gaps of potentially up to of 4% of • GDPR governance annual revenue framework in place 38

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    Reputational Risk Risk Category: Responsible Exec: Chief Executive Officer Risk Trend: Stable Operational & Customer What changed during What do we plan to do in Risk description Reasons for risk How we mitigate the risk 2020/21 2021/22 • Severe operational issue • Serious health & safety • Compliance functions and • Impact of dealing with • A review of the Society causes risk of financial loss and incident senior management apply COVID-19 disruption (covered compliance framework to be reputational damage to brand • Other major operational and oversee a broad suite of elsewhere) undertaken in 2021/22 issue, e.g. theft/loss of data policies to protect the Society • Continuous improvement • Significant non-compliance and comply with legal and of the risk management with policies and procedures regulatory requirements process • Compliance oversight and risk management processes reported biannually to the Audit & Risk Committee Commercial Contracts Secretary and Head of Risk Category: Responsible Exec: Risk Trend: Stable Governance Operational & Customer What changed during What do we plan to do in Risk description Reasons for risk How we mitigate the risk 2020/21 2021/22 • Inadequate/inappropriate • Management of contract • Legal review of contracts • Impact of dealing with • A review of contracting contractual protection leads process could lead to • Procurement policies in COVID-19 disruption (covered arrangements and processes to risk of financial loss and inadequate contractual place elsewhere throughout the Society to be reputational damage protections for the Society • Contract sign-off process undertaken Data Security Risk Category: Responsible Exec: Chief Financial Officer Risk Trend: Stable Information Technology What changed during What do we plan to do in Risk description Reasons for risk How we mitigate the risk 2020/21 2021/22 • Loss or theft of data and • Risk of IT systems and • Business Impact analysis to • IT disaster recovery • Continuously improve IT business interruption due to services not being recovered understand the key systems framework strengthened disaster recovery procedures cyber-attack or inadequate on a timely basis • Documented testing • Improved testing and adapt to both internal IT disaster recovery plans and • Risk of permanent data loss strategy and procedures procedures of IT estate for changes and external threats procedures • Theft risk of valuable and/or • Backup and recovery security weaknesses • Continued focus on identity private data documentation, regularly • Accelerated roll out of and access management • Risk of ransomware and tested Office 365 and improvements of business interruption • Third party disaster recovery security incident monitoring plans in place procedures • Robust firewall protection in place • Security Incident management in place • Patch management and regular penetration testing Failure to Deliver Business Plans Risk Category: Finance Responsible Exec: Chief Financial Officer Risk Trend: Increased & Treasury What changed during What do we plan to do in Risk description Reasons for risk How we mitigate the risk 2020/21 2021/22 • Risk of failure to deliver • Reduced profitability or • Monthly financial reviews • Strengthened quarterly • Continuously improve cash business plan sales growth and lossmaking operations impact give visibility to overall business forecasting and budgeting forecasting procedures to profitability targets banking covenants and ability plan delivery process reduce margin for error and • Failure to manage and to pay share of the profits • Quarterly forecasting • New cost control improve funding efficiency monitor the Society working • Reduced cash flow impacts process Committee established to capital and cash positions on ability to invest, banking • Daily cash flow monitoring review spend and manage covenants, and ability to pay • Agreed headroom is overall targets pension deficit contributions maintained above the Society’s formal facility level • Rigorous capital allocation process • Bank covenant position is reported monthly and regularly forecasted 39

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    Managing risk People Risk Category: People & Responsible Exec: Chief HR Officer Risk Trend: Stable Resources What changed during What do we plan to do in Risk description Reasons for risk How we mitigate the risk 2020/21 2021/22 • A lack of clarity around the • Selection and recruitment • Pre-employment screening, • Broadened the recruitment • Review future talent strategy capabilities needed to deliver processes culture fit assessment and agencies used to access and succession planning to long-term strategy • Talent attraction induction for new hires relevant industry expertise, • Further embed the new • Failing to attract the • Need for greater diversity • Career framework to using the right search partner career framework appropriate skills and capability benchmark reward packages for the appropriate level • Continue to build our talent • Failure to retain the right against the broader labour • Created and implemented a pool people market new career framework • Continue to embed diversity • Improved recruitment and inclusion website • Executive team have • Revised selection materials industry and professional to attract a more diverse expertise to identify missing workforce capabilities • Introduced agile working to expand the talent pool we can attract Travel Duty of Care Chief Officer Travel and Risk Category: Responsible Exec: Risk Trend: Decreased Leisure Operational & Customer What changed during What do we plan to do in Risk description Reasons for risk How we mitigate the risk 2020/21 2021/22 • Failure to ensure the health • Package Travel regulations • Supplier process and • Travel operations • Anticipating the relaxation and safety of customers while require the Tour Operator to ATOL Approved List regularly significantly affected due to of travel restrictions, review under our duty of care ensure passenger safety updated COVID-19 lockdowns and monitoring and diligence • Cost of repatriation and/ • New suppliers to market restrictions on international processes relating to suppliers or moving customers to rigorously assessed travel and destinations another location in the event • Indemnity arrangements • Crisis response team • Review safety management of the FCO banning a travel reviewed annually formed in response to holiday procedures in advance of destination • Existing suppliers monitored sector disruption summer holiday season and reviewed annually • Lower volume of holidays • Tour Operator liability reduced duty of care risk insurance cover exposure • Crisis team to support handling of a major issue IT Capability Risk Category: Responsible Exec: Chief Financial Officer Risk Trend: Stable Information Technology What changed during What do we plan to do in Risk description Reasons for risk How we mitigate the risk 2020/21 2021/22 • Failure to maintain IT • Inability for Society or • Cisco based networks • Improved routing • Further refine our infrastructure and stability Trading groups to continue installed at all main hubs preferences over the inter-site technology roadmap • Future data management business leading to financial • Robust IT resilience at key links; loss of single links at • Food Retail to identify the strategy inconsistent with losses and customer detriment sites reduces routing links risk key sites will now only have a next EPOS solution current Management • Online capability - risk for other sites limited impact on other sites Information/data systems that inadequate IT impacts • Manual process to route the which use these for routing commercial capability leading network traffic if a link fails • Establishing technology to competitive disadvantage roadmap as part of the 5-year and customer losses strategy review • A need to react to market • Hand-Held Terminal (HHT) dynamics and be more agile Replacement Project rolled out with online propositions in Food Retail • Promopay piloted and rolled out to entire Food Retail estate • Accelerated roll out of Office 365 to facilitate remote working 40

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    Health & Safety Risk Category: Responsible Exec: Chief Executive Officer Risk Trend: Increased Operational & Customer What changed during What do we plan to do in Risk description Reasons for risk How we mitigate the risk 2020/21 2021/22 • Health & Safety breach • Keeping colleagues, • Health & Safety Framework, • Impact of COVID-19 and • Continue to refine C365 leading to major incident, members and customers safe and policies and procedures related new safety protocols to achieve full operational injuries or fatalities • UK Health & Safety in place • Further embedding the C365 benefits legislation • Monitoring systems in place Health & Safety Management • Establish a new Health & • Complexity of businesses through internal Health & System Safety Committee to improve Safety Audit programme • Improved safety performance identification of H&S trends oversight and prioritise initiatives • Improved safety compliance monitoring Pension Deficit Risk Category: Finance & Responsible Exec: Chief Financial Officer Risk Trend: Stable Treasury What changed during What do we plan to do in Risk description Reasons for risk How we mitigate the risk 2020/21 2021/22 • Defined Benefit liability is • Changes in interest rates, • Regular monitoring of key • Formal three year Schedule • Ongoing monitoring of key sensitive to changes in several the inflation rate, future life assumptions, funding and risk of Contributions agreed with assumptions, funding and risk factors beyond management’s expectancy, and movements in positions trustees positions control; adverse movements market prices all impact on the • Investment strategy agreed • Continued engagement may require the payment level of the liability with pension trustees with the pension trustees of additional contributions • Diversified portfolio, assets and their advisors to ensure following each formal fully hedged to protect against appropriate strategies are in Valuation increased liability place • Work with pension trustees’ covenant advisor to mitigate impact of additional funding on the Society’s growth strategy Competitiveness Risk Category: Responsible Exec: Chief Executive Officer Risk Trend: Stable Operational & Customer What changed during What do we plan to do in Risk description Reasons for risk How we mitigate the risk 2020/21 2021/22 • Need to ensure our • Pricing pressures • Monitoring of products, • Rationalisation of loss- • Development programme for customer propositions remain • Market cost pressures sales, margins and site level making stores and continued Food and Childcare acquisitions viable and innovative given the • Inefficient operations profitability new store openings in Food • Further Food store competitive landscape. • New entrants and market • Regular market share and Retail rationalisation programme competition competitor analysis • Initiated divestment of our • Continued divestment of our • Innovation and market • Responsive promotions and Pharmacy estate Pharmacy estate dynamics marketing responses • Customer First Programme, • Trial innovative propositions • Quarterly forecasting and Right Range Right Store, within and across trading groups monitoring processes Self-Check outs and Perpetual • Improve data management • Strategic plans include Inventory initiatives capabilities competitor activity mitigations • Continued price monitoring • Explore avenues for cross and matching in Energy and selling Travel 41

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    Energy and Carbon Reporting Carbon reporting for our Society programmes, incorporating aspects from our green property The details below outline the core carbon footprint data for checklist where possible. This includes the introduction of the Society, focused on our direct greenhouse gas emissions. LED lighting, and the continued procurement of green We are reporting this in line with regulations recently electricity across our trading sites. introduced by the government for companies designed to encourage reductions in emissions and better environmental As a result of the Covid-19 pandemic, and as for all practices to help tackle climate change. businesses, we have had to adapt our ways of working by embracing virtual meeting technology. This has reduced our The information provided has been independently validated greenhouse gas emissions from colleague business miles by Sustainability West Midlands, a government backed, very substantially. We will be using the learnings and practices not-for-profit entity that champions the cause of we have adopted to continue to minimise our environmental sustainability in the West Midlands region. impact in this area as lockdown restrictions ease. We are reporting on our ‘scope 1 and scope 2 emissions’. To support broader low carbon initiatives, we have installed These cover energy usage and refrigeration gas emissions electric vehicle charging points at 12 sites. Through our across our trading sites, carbon emissions associated with Utilities business we have also continued to support business miles carried out by colleagues for work purposes community renewable energy. In particular, members and (not including commuter miles), and carbon emissions customers who sign up to our Co-op Community Power associated with transport miles for the delivery of products Tariff are helping to support 75 community energy groups and services that we directly operate. Energy usage across up and down the country producing electricity from solar our trading sites is tracked and reported on a like for like basis. panels on rooftops, to wind turbines on farmland, and hydropower on local rivers. By buying this renewable power Emissions from community energy groups at a fair price and bringing it In 2020/21 the Society emitted 21,101 tonnes of CO2e¹ , to the market, our Co-op Community Power tariff generates compared to 25,684 tonnes in 2019/20, an 18% reduction. enough energy to power 22,000 homes. This is broken down as follows: In addition, all food waste from our food stores and • electricity and gas usage = 13,881 tonnes CO2e (16,937 nurseries goes to anaerobic digestion, producing enough tonnes 2019/20, an 18% reduction) renewable energy to power 40 homes. • refrigerant gas = 6,699 tonnes CO2e (7,690 tonnes 2019/20, a 13% reduction) All the above activity, helped contribute to the Society being • transport emissions (colleague business miles, store-to- awarded Business of the Year in the edie 2021 Sustainability door deliveries, Funeral fleet, etc.) = 521 tonnes CO2e Leaders Awards and being named a Responsible Business (1,056 tonnes 2019/20, a 51% reduction). Champion 2020 by Business in the Community. Overall, our carbon footprint for 2020/21 was 25.27 tonnes Our plans moving forwards per £1 million turnover. During the year we carried out a virtual engagement event with members on World Environment Day asking what Activity ‘1Change’ they would like us to make to further protect the To drive forward reductions in emissions we extended our environment. We received over 100 suggestions. Using this ‘Energy Saving’ Steering Wheel measure to cover all our feedback, we have developed our plans to further drive down direct greenhouse gas emissions. Previously, we had only greenhouse gas emissions. This has included the following: been recording emissions from electricity usage. This has helped ensure that colleagues at all levels of the business - working together with other co-operatives to address have been focused on reducing emissions. ‘Climate Action’ – part of the UN Sustainable Development Goals programme Through our Society’s Environmental Steering Group, which - supporting our members and colleagues to adopt has representatives from across our trading groups and our socially responsible and low carbon lifestyles Board and Member Engagement Committee, we have - driving down our greenhouse gas emissions by sharing continued to engage our colleagues and members in best practice with other Co-ops, in line with the UK’s aim carbon reduction behaviour change and education. to build towards net zero carbon emissions; We have built on our ‘1Change’ campaign to encourage - using the learnings from the Covid-19 pandemic to members and colleagues to track their environmental change behaviours for the long term, including footprint and make pledges to reduce this in their day to day embracing virtual meeting opportunities to reduce lives. We have also continued to engage our sites in energy business miles where possible usage performance reporting and the adoption of daily site - further developing Co-op Community Energy, our joint shut down energy saving procedures. The majority of our venture with Octopus Energy, to help support locally sites have smart meters installed allowing automated meter based energy groups. readings and detailed energy usage data to help shape our energy efficiency programmes. We will be pleased to report the progress we have made in our next Annual Report. We have continued to implement energy-saving programmes as part of our refit and property development ¹ “Carbon dioxide equivalent” or “CO2e” is a term used to describe different 42 greenhouse gases in a common unit.

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    Doors on chillers and LED lighting are just some of the energy-saving changes we are making in our stores. 43

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    Governance Report The Board is pleased to present its governance report to The annual elections to the Board and Member members for the year to 23 January 2021. Engagement Committee allow members to determine who runs their Society. Good governance is an essential foundation for a co-operative society owned by its members. This has Each year the Board holds an Annual General Meeting been a long-held view within the Society, which the and a series of Half Year Meetings for members. These Board seeks to demonstrate by adhering to best provide members with the opportunity to hold the Board co-operative governance practice. to account, and to participate in the formal affairs of the Society by voting on key items. Governance Code This report is prepared in accordance with the The Board views the Society’s member meetings and Co-operative Corporate Governance Code issued by annual elections as fundamental building blocks of good Co-operatives UK in 2019 (the Code). The Code “offers a co-operative governance and takes great care to ensure set of principles that all co-ops can reflect upon and use they are promoted widely and run openly so members to encourage and enable good governance practice – can participate as they wish. operating on a comply or explain basis”. At the end of the 2020/21 financial year, the Society had Contents 722,000 members (2019/20: 701,000). In 2020, 620 The Code is structured into six sections: members attended the AGM (2019: 713 members), and 387 members attended the Half Year Meetings (2019: 350). - Member Voice, Participation and Engagement - Co-operative Leadership and Purpose At the 2020 elections, 15 members put themselves forward - Roles and Responsibilities for the six vacancies on the Board (2019: 17 members, five - Board Composition, Succession and Evaluation vacancies), and five members put themselves forward - Risk, Financial Management and Internal Controls for the three vacancies on the Member Engagement - Remuneration of the Board and Executive Leadership Committee (2019: five members, three vacancies). Votes were cast by 44,985 members (2019: 52,956). This report follows the above structure. There are also short sections on the Society’s approach to political Member engagement and participation engagement and its Supplier Payment Policy. In addition to the above formal governance arrangements, the Society looks to ensure members can 1. Member Voice, Participation and participate in its activity above and beyond transacting with its businesses. Engagement This is effected through a wide-ranging set of As a co-operative, it is natural that the Society believes opportunities. For example, through member surveys, in the primacy of membership. This is demonstrated the ‘your co-op voice programme’, regular member through the various formal governance arrangements activity (albeit curtailed this year due to the restrictions the Society has created; also, less formally by the way in in place on account of the pandemic), the Young which the Society seeks to engage with members and Member Network, through opportunities to engage on take their views into account. Society campaigns, and through the Society’s Regional Community activity. Examples of such activity can be Formal structures found elsewhere in this report. The Society is bound by a set of Rules approved by members. These set out the formal structures for the Society and 2. Co-operative Leadership and Purpose form the cornerstone of its governance arrangements. The concept of membership sits at the heart of the Rules: The Society’s Purpose Statement was approved by members in 2003 and serves as the foundation for the Society’s activity: “The Society is a membership organisation founded on co-operative Values and Principles. Members “To be a successful consumer co-operative working of the Society should exercise the responsibilities towards creating a better, fairer world and to enhance of membership appropriately. This includes a the lives of our colleagues, members, customers, and commitment to Co-operative Values and Principles the communities we serve”. and participation in the affairs of the Society”. The Society’s DOES values are derived directly from the The Board of directors is comprised solely of elected ICA1 Values and Principles and underpin the way the members. The Board has a long-standing Member Society conducts its business. Engagement Committee, again comprised of elected members, responsible for influencing and reviewing the The Imagined Future has membership as a key pillar: Society’s member engagement strategy. “We put membership at the heart of all we do which is ¹ the International Co-operative Alliance – the apex body for reflected in how we engage with members via a range co-operatives globally of interactions”. 44

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    The Blueprint for the Future, adopted by the Board in 2015 The Board is chaired by the President who is supported by brings together the Society’s Purpose, DOES values and two Vice-Presidents. These positions are elected by the Imagined Future: Board each year. “As a co-operative, membership lies at the heart of all The role of President is a crucial one. The President leads that we do: the Board in setting the Society’s strategy and in achieving its - we are a membership-based organisation where objectives and works closely with the Group Chief Executive everyone is treated equally to meet these aims. They also set the tone and culture for - we work hard to ensure members are fully the Board which permeates throughout the Society. engaged democratically in the activity of the Society The Society’s Rules provide that the President cannot be - we want members to enjoy benefits, because an employee of the Society and cannot act for more than they own the Society and particularly, because six consecutive years. The Board is proposing a change to they trade with us.” the Rules at the forthcoming AGM to allow a director to serve as President for a maximum of six years in any rolling To help support and deliver the aspirations in the 12 year period. The Board would not expect to appoint as Blueprint, the Board in conjunction with management President a director who had served less than one term is developing a five year strategic plan that builds on the of office. However, the Rules do not prevent this from current three year planning process. The five year plan has occurring. three key pillars – members, colleagues and communities. The strategy and plans for each of the Society’s trading The Board has ten scheduled meetings throughout the groups and support functions feed directly into this year. It meets on other occasions and in private session overarching strategy. without the presence of management as required. The Board believes in fostering a values-based culture. The table below lists the attendance record of directors at The Society has a Chief Values Officer, an Executive Board and Committee meetings for the year under review. position, whose role is to support the Society in The figures show the number of meetings each director encouraging this in an open and consistent way. actually attended, against (in brackets) the number of Examples of some of the actions taken by the Society to meetings they were eligible to attend. support and enhance its culture during the year can be found elsewhere in this report. Committees Directors Board 1 2 3 4 5 The Board has a set of Guiding Principles which provide the framework and expectations for the way directors Steve Allsopp 11 (11) 5 (5) 5 (5) 4 (4) interact with one another and with others with whom they Ellie Boyle 10 (11) 4 (5) have business. A copy can be found on the ‘governance’ Olivia Birch * 4 (4) pages at www.midcounties.coop. Clive Booker 11 (11) 5 (5) The Board also has a long-standing whistleblowing Bernadette Connor * 4 (4) procedure overseen by the Audit & Risk Committee, that Martin Cook** 7 (7) 4 (4) 2 (2) allows colleagues to raise concerns they may have in Judith Feeney ** 7 (7) 3 (3) confidence. Matters so raised are investigated and follow- up action is taken where required. Patrick Gray ** 7 (7) 2 (2) 3 (3) Vicky Green 11 (11) 5 (5) 3. Roles and Responsibilities Gary Hayes ** 7 (7) Irene Kirkman * 4 (4) 1 (1) The Board’s responsibilities are wide-ranging. It is responsible for setting the Society’s objectives and Matt Lane 11 (11) 5 (5) strategy, monitoring delivery of that strategy by Paul Mather * 4 (4) 1 (1) management, and identifying and managing risk. Kathy Petersen 11 (11) 5 (5) Barbara Rainford 9 (11) 4 (4) In addition, given the distinctive nature of co-operative societies, the Board must ensure the Society remains true Fiona Ravenscroft 11 (11) 4 (4) to its Purpose and adheres to the co-operative values and Heather Richardson 10 (11) 5 (5) 5 (5) principles set out by the ICA. Wendy Willis 11 (11) 4 (4) The Board has a long-standing Member Engagement Helen Wiseman 11 (11) 5 (5) Committee responsible for influencing and reviewing Vivian Woodell 11 (11) 1 (1) the Society’s member engagement strategy. Following this year’s elections, the Committee will comprise nine 1. Audit & Risk 3. Telecoms 5. Member Engagement elected members, three elected ‘young members’ (under 2. Remuneration 4. Pension trustee 30 years of age) and two directors from the Board. * Appointed October 2020 Elections to the Committee are held each year. ** Resigned October 2020 45

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    The Board receives a regular set of information to ensure it Each Committee has set terms of reference. These are can monitor the Society’s activity and performance with an reviewed by the Board on an annual basis. Details of the appropriate level of scrutiny. At each of its meetings it receives Committees can be found elsewhere in this report. The reports from management on trading and other matters, chairs of each committee are available at the AGM to reviews the performance of the Society and considers papers answer questions from members. presented for decision or information. In addition, the Board discusses and approves the Society’s strategy and annual The Board has delegated the day-to-day management budgets at appropriate points during the year. of the Society to the Group Chief Executive who is responsible for the execution of the Society’s strategy The Society’s Rules include certain duties and within the framework laid down by the Board. The Board responsibilities that are the sole preserve of the Board. recognises and appreciates the key role played by the In addition, the Board has a formal schedule of matters Group Chief Executive and is clear that his relationship with reserved for its decision. The schedule is reviewed on the Board is fundamental to the success of the Society. an annual basis. The Rules and the schedule include, for example, all matters concerning the determination The Board also recognises the role played by the and general operation of the Society’s Rules (subject to Secretary. The Secretary helps the Board meet its member approval), the appointment and removal of the objectives and acts as a fulcrum between management Group Chief Executive and the Secretary, and the approval and the Board. The Secretary is appointed by the Board of all funding arrangements, property acquisitions and and all directors have access to his advice. capital spend above certain thresholds. 4. Board Composition, Succession and As part of the election process, candidates for the Board Evaluation are apprised of the nature of the role of a co-operative director, the type of skills a director needs and the time The Board comprises 16 directors elected by and from commitment involved. the Society’s members. The Board believes this to be an appropriate size in a co-operative context to ensure The Code states that additional external appointments democratic accountability and a diversity of member should not be undertaken by directors without the prior representation while still allowing for effective decision taking. approval of the Board. The Board does not support this provision, as it believes directors are capable of As the Board believes in the primacy of member control and judging for themselves whether they can take on other the democratic process, the Society operates a set of well- appointment(s), conscious of the time commitment established procedures providing for the annual election of required to be given to the Society. members to the Board. The elections are administered by Civica Election Services2 to ensure due process is followed. The Society’s Rules set out certain safeguards to ensure They have been contested for at least the last 20 years. the Board retains a balance and is not dominated by any Terms of office for directors are for three years. one set of individuals. For example, a director, their partner or close family member cannot serve in a managerial Given the above, and that members have routinely position for a business which competes in a material way elected directors with a broad mix of skills, insight and with the Society, and no more than four directors can be experience, the Board does not believe it is right for the Society employees (or former employees who have left Society to follow a number of provisions in the Code. In the Society within the last three years). particular, the Board has not looked to: The Board has a policy on conflicts of interest. The - limit the number of terms of office a director can Secretary maintains a register to record any conflicts serve before standing down declared by directors and members of the Executive - introduce a documented succession plan and other senior management. Formal updates to the - set up a Search Committee register are requested at the end of each financial year, - provide for independent non-executive and individuals are charged with informing the Secretary appointed directors in the Society’s Rules. at the first opportunity of any potential or actual conflicts should they arise in the interim. In addition, at each Nonetheless, recognising the Code states that a director Board meeting, directors and those attending are asked should stand down after a period of nine consecutive to declare any interests they may have in relation to the years in office, the Board is proposing Rule changes at business on the agenda. the forthcoming AGM that prescribe measures the Board must take to encourage members to stand for election in The table at the end of this Report shows the directorships the event that, for two consecutive elections, the number and other formal positions declared by directors and of candidates standing for election is less than one and a members of the Executive and senior management. half times the number of vacancies. During the year the Board had three committees – the The Society’s election procedures seek to ensure that a Member Engagement Committee, the Audit & Risk sufficient level of information on the candidates standing Committee and the Remuneration Committee. for election is provided to members to allow them to 2 the UK’s leading provider of ballot and election services 46

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    make an informed choice on their vote. The nature of the - monitoring and reviewing the effectiveness of the information provided is reviewed at least every three years Society’s Audit & Risk function by the Board, and feedback is gathered from members after - reviewing the Society’s whistleblowing each election on the level of the information provided. procedures. The current arrangements for the induction of new Significant decisions by the Committee are referred to the directors involve meetings with the Society’s Secretary Board for consideration. and members of the Executive and a series of site visits. Additionally, new directors are encouraged to visit The Committee has the right to report to members if the Co-operatives UK, Co-operative Group and the Rochdale Board overrides a decision or recommendation it has made. Pioneers Museum to gain an insight into the wider co-operative movement. A full induction pack is also Between four and six directors can serve on the provided. Committee. Terms of office are for two years and Committee members can serve for up to three terms The Board is aware of the need for directors to be kept before having to stand down for at least a year. Only informed of the strategic issues facing the Society and its directors can serve on the Committee. The President of businesses, as well as more detailed operational matters. the Society and any director who is a current employee of As such, the Board has adopted a training programme the Society or has been so within the previous 12 months comprising: cannot serve on the Committee. The Board reviews the Committee’s terms of reference on an annual basis. - quarterly Board information sessions aimed at giving directors a better depth of understanding Professional advice is available to the Committee if on business/operational items required. - more open Board sessions held twice a year to discuss broader issues that influence the Society The Committee receives training either during its - courses provided by Co-operatives UK/ scheduled meetings or at separate training sessions. In Co-operative College open to all directors addition, the Committee is given updates on relevant - relevant training opportunities for directors on matters at its meetings, and presentations from specific Committees. management on significant issues as they arise. In addition, the Group Chief Executive keeps the Board The Committee met five times during 2020/21. The Board advised of matters affecting the Society at each Board is apprised of the Committee’s proceedings at the next meeting and more frequently if required. Board meeting following a Committee meeting. The Committee’s minutes are also made available to the Board. During the year, the Board undertook a review of its performance. To follow up on its evaluation of Board At least once a year the Committee meets the external effectiveness linked to individual director review auditor and the Society’s Head of Internal Audit, Risk & undertaken in 2019, the Board is looking to develop a Compliance without management present. In addition, team-oriented assessment of performance for 2021. the Chair of the Committee maintains a dialogue with the external auditor and the Head of Internal Audit, Risk & 5. Risk, Financial Management and Compliance between Committee meetings. Internal Controls The Group Chief Financial Officer, Head of Finance, and This section of the Code concerns itself with the Head of Internal Audit, Risk & Compliance attend the structures, procedures and processes a co-operative has Committee’s meetings. The Society’s Secretary or his in place to ensure sound financial management, internal nominee acts as Secretary to the Committee. control and risk review. Within the Society, this activity is governed through the Audit & Risk Committee. The To ensure auditor independence and objectivity is section also contains provisions concerning withdrawable safeguarded, the Committee has a policy of awarding share capital, dividends and share interest payments. project work that requires the expertise of an audit firm to a firm other than the Society’s auditors unless there is a very strong reason to use the Society’s auditors. Audit & Risk Committee The Audit & Risk Committee operates under terms of The spend on non-audit work undertaken by the reference approved by the Board. The terms include: Society’s auditors is monitored carefully. All non-audit engagements costing over £10,000 require formal - monitoring the integrity of the Society’s financial approval. Should the value of non-audit work undertaken statements exceed the annual audit fee, then all subsequent non- - reviewing the effectiveness of the Society’s audit related engagements require specific approval. internal control and risk management systems - monitoring and reviewing the work of During the year, fees amounting to £64,000 were paid the Society’s external auditors and assessing their to the Society’s auditor for non-audit work (2019/20: independence £9,000). 47

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    The Society and its auditors have both adopted a policy Measures taken include physical controls, segregation whereby the audit engagement partner does not conduct of duties and reviews of processes by management, the Society’s audit for more than five years. the Internal Audit, Risk & Compliance function, and the external auditors. Auditor review In 2020, the Society undertook a review of its external In addition, it is also Society policy that all members audit provision led by the Committee. Five audit firms of the Board are also directors of the Society’s trading were approached for the initial tender and three were put subsidiaries to ensure appropriate control. forward to the final assessment stage. Following a detailed selection process, BDO was appointed as auditor to the Monitoring Society. The incumbent auditor had acted as the Society’s The Society’s Internal Audit, Risk & Compliance function auditor for more than 20 years, so in accordance with carries out independent reviews of the Society’s operational best practice, was not invited to tender for the audit. and financial control environments. A risk-based approach is used to identify areas for attention. These are prioritised Internal control and risk management into an annual Internal Audit plan. Reports containing This section sets out the Society’s approach to internal assurance ratings, key findings and action plans to improve control and the measures taken to review its effectiveness. controls are issued to management. Responsibility and timescales for remedial actions are agreed with The Code charges the Board to review the effectiveness management and evidence of completion is provided of the Society’s system of internal control and risk to Internal Audit for review. Monthly progress reports are management and to report formally on this review each issued to the Executive, providing visibility of the actions year to members. that are outstanding, in particular those which have been deferred or are overdue. The Board is responsible for the Society’s system of internal control and for reviewing its effectiveness. The A summary of significant matters is reported to each meeting system is designed to manage rather than eliminate the of the Audit & Risk Committee for review and decision. risk of failure to achieve the Society’s objectives and can only provide reasonable, not absolute, assurance against Review processes material misstatement or loss. The processes used by the Audit & Risk Committee to review the effectiveness of the Society’s system of internal The Board is of the view that the controls and processes control include the following: within the Society are appropriate for an organisation of its size and complexity. - review of the external and internal audit work plans Internal control framework - consideration of reports from the Internal Audit & The Board has adopted an internal control framework Risk function and the external auditors on with the following key elements: the system of internal control - discussion with management of the actions taken - an organisational structure with clearly defined to resolve issues identified in such reports lines of responsibility, delegations of authority and - review of the effectiveness of the Society’s risk reporting requirements management processes. - policies for expenditure with set authorisation levels – for example, larger capital projects and Opinion acquisitions and disposals require Board approval The Audit & Risk Committee has reviewed the operation - a comprehensive system of financial reporting – and effectiveness of the Society’s internal control system actual results together with comparisons to during the year under review. budget are reported regularly to the Board throughout the year The Committee considers that the external auditor is - Board review and approval of the annual budget sufficiently independent of the Society, in accordance with and plans for each business group and support the ethical requirements relevant to the audit of financial function statements in the UK including the Financial Reporting - policies and procedures for the reporting and Council’s Ethical Standard, and that the external auditor resolution of suspected fraudulent activities has adequately fulfilled its responsibilities in accordance - a risk management process designed to monitor with these requirements. The Committee believes the audit the major risks facing the Society. evidence provided to the external auditor was sufficient and appropriate to allow the external auditor to form an Control procedures adequate opinion on the true and fair view of the state of The Society’s control procedures are designed to ensure the Society’s affairs. that appropriate levels of control are maintained, complete and accurate accounting of financial transactions is Risk management assured, and the potential exposure to loss of assets or The Board and the Executive have primary responsibility fraud is limited. for identifying and controlling the key risks facing 48

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    the Society. In this regard, the Society operates a risk The Society recognises the important role that the management process that aims to identify the key risks Co-operative Party has played, and continues to play, in in each business group and support function. The risks promoting the interests of co-operation in the political are reviewed by both the Executive and the Audit & Risk sphere and, with the endorsement of members as Committee. Where weaknesses in controls are identified expressed at successive Annual Meetings, provides action is taken to implement control mechanisms. Matters financial support for the work of the Party. are reported to the Board as appropriate. The Society also seeks to engage with other political More broadly, the Board and the Executive consider the organisations which are active in its core trading area and risks impacting on the Society from a strategic perspective which share its objective of working towards a society at appropriate intervals, and are working to create a risk based on democracy, equal opportunities and social appetite framework to help guide decision making. justice; and an economy where co-operative ownership plays an important and growing role in generating An overview of the Society’s risk management structure prosperity, genuine consumer choice and sustainable and key risks can be found earlier in this Annual Report. community development.” Withdrawable share capital, distributions, The Co-operative Party share interest In keeping with the above, the Society has been a long- The Society complies with the Code on Withdrawable standing supporter of the Co-operative Party, the formal Share Capital issued by Co-operatives UK. In particular, the political arm of the Co-operative Movement. The Party interest rate payable on share accounts and share bonds aims to promote the principles of co-operation and all is set at what is felt to be the lowest rate sufficient to forms of co-operative organisation within political circles obtain the necessary funds from members committed to and is supported by the Society. furthering the Society’s objectives. The Party has a close and enduring relationship with the In line with co-operative principles, dividend/share of the Labour Party. This includes a formal electoral agreement profits payments are paid in equitable proportion to a which allows Co-operative Party candidates to stand as member’s trade with the Society. Labour and Co-operative representatives in General and Local elections. The Society’s Rules provide that any surplus arising from a solvent dissolution of the Society would either be Campaigns Fund transferred to a member(s) of Co-operatives UK with In 2014, members approved the creation of a Campaigns similar Rule provisions as to the distribution of surplus Fund. The Fund is intended to support campaigning on dissolution, or would be paid or transferred to activity (primarily within the Society’s core trading area) Co-operatives UK. that promotes co-operation in the political arena and supports the objectives and priorities of the Society. 6. Remuneration of the Board and Executive Leadership The Fund is open to applications from any political organisation, including the Co-operative Party, active in A full report on the activities of the Remuneration the Society’s heartland areas whose aims are sympathetic Committee is set out in the Remuneration Report found to the Society and the co-operative model. elsewhere in this Annual Report. At the 2020 Annual General Meeting members approved The Committee’s primary role is to provide robust, a distribution of £45,000 to the Campaigns Fund (2019: independent governance on the remuneration of £60,000). members of the Executive. It also provides high level input and oversight into the Total Reward Strategy being During the year the Fund made grants to the Co-operative developed for all Society colleagues. Party nationally, the Society’s three local Co-operative Party Councils and seven other campaigning bodies. POLITICAL ENGAGEMENT The Board would welcome applications from The Board recognises that co-operatives often seek to campaigning bodies to the Fund. The Secretary should be advance co-operation in national, local and international life contacted in the first instance. through political engagement. Recognising this, members have approved a statement on political engagement: SUPPLIER PAYMENT POLICY “The Midcounties Co-operative supports in letter and spirit The Society’s policy is to agree terms of payment as part the Principles set out in the Statement of Co-operative of the commercial arrangements with suppliers and to Identity of the International Co-operative Alliance and the pay according to those terms once an invoice is received. Governance Code of Co-operatives UK to embrace all Trade creditor days for the year were 21 days (2019/20: 20 who accept the responsibilities of membership without days). gender, social, racial, political or religious discrimination. 49

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    CONCLUDING REMARKS The sound governance of any organisation is critical to ensure it has a clarity of purpose and appropriate levels of accountability, transparency and control. This is particularly so for a co-operative society where members entrust the control and direction of their society to a board of elected directors. The Board is fully aware of the responsibilities and obligations imposed upon it by its elected status and the prerequisites of the co-operative ethos. It believes this report demonstrates the importance it attaches to good governance and illustrates that the measures it has taken are befitting of a true co-operative enterprise. On behalf of the Board Helen Wiseman – President Edward Parker – Secretary & Head of Governance 1 May 2021 50

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