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OWNED
BY YOU.
RIGHT
BY YOU.
OUR MEMBER-OWNER ANNUAL REPORT
AND ACCOUNTS FOR 2024
3
2
Our Members' Annual Report 2024
CONTENTS
STRATEGIC
FINANCIAL
GOVERNANCE
MOST ANNUAL
REPORTS ARE
WRITTEN FOR
CORPORATE
SHAREHOLDERS.
NOT THIS ONE.
OUR CO-OP IS
OWNED BY YOU,
OUR MEMBERS.
By refocusing on member-ownership in 2024, we achieved
a solid ﬁnancial performance in a challenging market.
We delivered meaningful value to you and your communities,
and we continued to strengthen our Co-op to be ﬁt for the future.
GOVERNANCE REPORT
Board and executive biographies
..................................................
54
Governance review
..........................................................................
59
The report of the Remuneration Committee
...............................
70
The report of the Risk and Audit Committee
.............................
90
The report of the Nominations Committee
................................
99
Directors’ report
................................................................................
105
Statement of Co-op Board responsibilities
.................................
119
National Members’ Council: Annual statement
..........................
121
The report of the Scrutiny Committee
..........................................
124
Promoting the success of our Co-op
.............................................
127
STRATEGIC REPORT
Group performance at a glance
.....................................................
04
Our Co-op
...........................................................................................
08
Chair’s introduction
..........................................................................
10
Report from the President of the National
Members’ Council
.............................................................................
12
Chief Executive’s overview
.............................................................
14
Our vision
............................................................................................
17
Group ﬁnancial overview
.................................................................
20
- Key performance indicators
.........................................................
20
- Chief Financial Ofﬁcer’s overview
...............................................
21
Business unit updates
.......................................................................
24
- Food
..................................................................................................
24
- Life Services
.....................................................................................
28
- Business-to-business
.....................................................................
32
Looking ahead
..................................................................................
36
Risk management
............................................................................
44
FINANCIAL STATEMENTS
Consolidated ﬁnancial statement
..................................................
133
Notes to the ﬁnancial statements and accounting policies
......
138
Independent auditors’ report
.........................................................
206
Glossary
...............................................................................................
226
Five-year summary
............................................................................
235
5
4
2023
GROUP PERFORMANCE
AT A GLANCE
Our Members' Annual Report 2024
UNDERLYING OPERATING
PROFIT: 131m
*
What it is:
a performance metric that reﬂects the proﬁt we’ve made
from day-to-day trading and before paying any ﬁnancing costs.
How we performed:
a £34m improvement on 2023 (£97m)
2024
£131
m
2023
£97
m
2022
£83
m
2021
£100
m
REVENUE: £11.3bn
What it is:
the total value of our sales across all products and services. Up to 2022,
these ﬁgures include revenue from the petrol forecourts that we sold in October 2022.
How we performed:
the same as 2023 (£11.3bn)
2023 had 2023 weeks, reﬂected in our revenue with £0.1bn for the 53rd week trading.
2024
£11.3
bn
2022
£11.5
bn
2021
£11.2
bn
£11.3
bn
PROFIT BEFORE TAX: £161m
What it is:
our Co-op’s net proﬁt before deducting tax. This includes all one-off
items, such as the sale of our petrol forecourts in 2022, and unusually strong
returns on our funeral plan investments in 2024.
How we performed:
a £133m improvement on 2023 (£28m)
2024
£161
m
2023
£28
m
2022*
£268
m
2021
£57
m
UNDERLYING PROFIT BEFORE TAX: £45m
*
What it is:
the proﬁt we’ve made from operations less the repayment
of interest on loans and leases. Our day-to-day trading has been
improving, and we’ve reduced our interest repayments.
How we performed:
we’re ‘back in the black’ with a £47m improvement on 2023
(£2m loss)
£45
m
-£2
m
2020
-£32
m
2024
2022
-£48
m
2023
NET DEBT: £55m
*
What it is:
a measure of our ‘indebtedness’ as a Group, excluding leases.
We’ve worked hard to reduce the debt we owe in recent years.
How we performed:
a £27m improvement on 2023 (£82m)
2024
£55
m
2023
£82
m
2022
£322
m
2021
£920
m
*Please refer to Note 1 and Glossary in our ﬁnancial statements for a deﬁnition of the Group's alternative performance measures (APMs).
2023 had 53 weeks and would be £101m excluding this.
*2022 includes £319m gain on the disposal of our petrol forecourts
7
6
WE’RE ON TRACK TO
MEET OUR MEMBERSHIP
TARGET:
MEMBERS OWN OUR CO-OP,
SHAPE OUR BUSINESS FOR
THE BETTER AND POWER
US FINANCIALLY.
The more we grow our member numbers, the more value
we can bring to them – and the more we can increase our
impact on the things that matter to them most.
8
6.2
MILLION ACTIVE
MEMBER-OWNERS
2024
5.0
4.4
MILLION ACTIVE
MEMBER-OWNERS
GOAL FOR
2030
MILLION ACTIVE
MEMBER-OWNERS
2023
MILLION ACTIVE
MEMBER-OWNERS
2022
Our Members' Annual Report 2024
9
8
Our Members' Annual Report 2024
OUR CO-OP
WE ARE 180 YEARS OLD, WITH
6.2 MILLION ACTIVE
1
MEMBER-OWNERS
AND A PRESENCE IN EVERY POSTAL
AREA IN THE UK.
OUR VISION IS TO
CO-OPERATE TO BUILD MORE
VALUE FOR OUR MEMBERS EVERY DAY
IN THE FOLLOWING WAYS:
By delivering value back to members in these ways, we believe
we can grow our Co-op for generations to come.
The way we run our business is also important to us. We set high standards for responsible retailing and service.
And we believe it’s our responsibility to campaign on issues that matter to members, customers and colleagues.
For more on how we ran Co-op responsibly in 2024, read our sister report on
social value and sustainability
.
What makes our Co-op
different
is that we’re
owned by and run for our members. The more
members choose us, the more value we create
for our member-owners and their communities.
Food
We work to deliver
convenience without
compromise, both online and
through our stores.
Business-to-
Business
Our
Wholesale
business
serves partners across nearly
4,000 stores, including many
with the
Nisa
brand. We also
run a
franchise
operation and
supply independent co-ops.
Life Services
Our
Funeralcare
,
Legal
Services
and
Insurance
businesses: here to help
members and customers
through life’s ups and downs.
Ownership value
Members inﬂuence
the decisions we make.
You help pick our leaders,
campaign for change and
shape our products.
Social value
From working with local
causes and communities
to protecting our planet,
we make a positive impact
for you on the issues you
care about.
Economic value
Being a member beneﬁts
you ﬁnancially, including
lower prices and exclusive
offers across our businesses
and partnerships, such as
Co-op Live.
1
Active members are those who have traded with our Co-op in the last twelve months.
11
10
Our Members' Annual Report 2024
Debbie White:
Chair, The Co-op Group
In a year where we ‘reintroduced
Co-op’ to the nation and placed
member-ownership back at the
heart of our organisation, we have
progressed on a number of our key
priorities, despite economic and
political uncertainty.
We have grown our membership
numbers signiﬁcantly and
strengthened member engagement.
We have achieved solid business
results and further strengthened our
ﬁnancial position while introducing
new propositions across all business
areas. We have acted on the
societal issues that most concern
our members, such as retail crime,
the environment, employment and
mental wellbeing.
All of this has been achieved in
a time of challenge and change.
Rather than distracting us from our
new business strategy, many of
the events that unfolded in 2024
underscored its importance.
A general election reinforced the
power of democracy. Democratic
engagement has driven our Co-op
since 1844. In 2024, we found new
ways to involve you, our members, in
the business you own, from shaping
our strategy to developing products.
Across continents, conﬂicts began,
and others continued. Closer to
home, we saw riots and unrest.
“ We were reminded
that harmonious
collaboration is
never a given, and
we responded with
a clear message:
hate divides
communities,
co-operation
builds them
.”
Continued cost of living,
humanitarian and climate crises
highlighted the vital need for
purposeful organisations like
ours; we spent £20 million in 2024
supporting communities and causes
both at home and abroad.
In short, we believe the strategy we
set in 2024 will deliver sustainable
growth because it focuses on the
fundamental power of co-operation,
which is as needed now as it was 180
years ago. Shirine and our 54,000
colleagues have already made good
progress along this road, and I’m
excited by what can be achieved in
the years ahead.
The strength of the co-operative
business model is that we’re run
by members, for the beneﬁt of
members. While being commercially
successful and ﬁnancially
responsible are naturally both key
in making sure our Co-op is here
for generations to come, we also
consider purpose hand-in-hand with
proﬁt. We can make choices that
other businesses can’t, and together,
we can have a positive impact in an
ever-changing world.
Our model is special. Thank you for
playing your part in powering it into
the future.
Debbie White,
Chair, The Co-op Group.
A NOTE
FROM THE
CHAIR
OUR MODEL
IS SPECIAL.
Thank you for playing
your part in powering
it into the future.
In my ﬁrst year as Chair, I’m
pleased to report that our Co-op
has made good progress towards
our long-term ambition of achieving
sustainable growth for the beneﬁt of
our member-owners.
10
13
12
Our Members' Annual Report 2024
In 2024 we welcomed over a million new
members to our Co-op. We’ve continued working
hard to ensure that you, our members, are right at
the centre of our business – whether you’ve been a
member for a long time or have just joined us.
Many of you said you want us to continue focusing
on giving you even more economic value during
the ongoing cost of living crisis. Members have
continued to trade with our Co-op so we can
deliver more Member Prices and better offers
on our great products and services, despite still
operating in tough markets.
This shows what we can do when we come together,
making our Co-op a sustainable, successful and
inclusive business that looks to the future.
Throughout 2024, your Council – member-owners
just like you, elected by you to represent your
interests – has made sure that our Co-op puts
the value we create for our more than six million
members and the things you care about front
and centre of everything we do. At the last AGM,
we proposed a motion to address the cost of
living crisis for our members and their families,
by ensuring that cheap food isn’t poor-quality
food. You, our members, backed that and made it
happen. Because of that, in 2024 our Co-op lowered
Member Prices on 54 items of fruit and veg in our
stores, giving you more nutrition for the pound in
your pocket, as well as more value.
Your Council believes we need to shout from the
rooftops about what makes co-ops different. Over
180 years since we were founded, our ownership
model has never been more relevant. That’s why I
am so proud to see our Co-op put this difference
up front with our
Owned by You, Right by You
campaign, launched in 2024. This highlights our
difference of being member-owned, and how
this means we can make the right decisions in
the interests of our members, not a small group
of shareholders. We have been working with our
Board to deepen the understanding of our Co-op
difference among our colleagues and members.
Because you own us, we, as your Council, have been
championing the value you get in return. Our ﬁrst
Big Members’ Survey in 2024 told us that you also
want us to champion the difference Co-op members
can make together on issues they care about for
people and planet. It was Co-op members who
successfully led the campaign to change the law
to make violence against shopworkers – our Co-op
Colleagues who live and work in our communities –
a standalone offence.
In 2024, we also explored new ways for our members
to shape our Co-op, listening to your priorities to
best represent you, to make sure we are always in
touch and putting your views across to other parts
of our Co-op. Nearly ten times more members got
involved in our pop-up cafés, in our local and interim
results events last autumn than previously, and we
had a 38% increase in the number of members who
voted in our AGM as well.
Looking ahead, the United Nations has declared
2025 to be the International Year of Co-
operatives. Our Co-op is one part of a brilliant
global movement, and I am looking forward to
enthusiastically celebrating all the ways that co-ops
like ours do business in a fairer way.
Finally, I would like to end by saying thank you to
you, our members, for choosing us and truly being
the Co-op difference! I also want to thank our Board
Chair, Debbie and our CEO Shirine, as well as their
fabulous teams. Thanks also to my wonderful Vice-
Presidents, Debbie Williams and Sam Webster, the
members of the Council and our brilliant Council
and Democracy Team for their support. I look
forward to working with all of you in 2025!
Denise Scott-McDonald
President, National Members’ Council
REPORT FROM THE PRESIDENT OF
THE NATIONAL MEMBERS’ COUNCIL
Denise Scott-McDonald:
President, National Members’ Council
15
14
Doing right by members,
colleagues and communities
Our business performance
matters because it powers the
positive impact we can have for
member-owners, their communities
and society. To highlight a few
achievements in this area, in 2024
we invested £92m in lower prices
for members across our Group,
and £20m supporting causes
and communities.
We also invested £96m in
colleague pay, including a 10.1%
pay rise for frontline colleagues
in line with the Real Living Wage.
And we continued our 30%
colleague discount with a gross
investment of £36m.
Absorption of these signiﬁcant,
and important, investments in
an already difﬁcult business
environment should make us
all additionally proud of the
signiﬁcant increase in proﬁt and
reduction in debt we were able to
achieve in the year.
It’s vital that we continue to do
right by our people in ways like
these because it’s primarily our
colleagues, the vast majority of
whom are members themselves,
who are turning our vision into
reality. Together, we’re building a
different kind of workplace, where
everyone is proud to play their
equal part.
For example, we focused on social
mobility, belonging and inclusion
in 2024. In July, we became the
ﬁrst retailer to publish a socio-
economic pay gap report. We
also continued to campaign on
retail crime; we’ve been calling
for
Safer Colleagues and Safer
Communities
since 2018, and in
April, the Government pledged to
make assaulting a retail worker a
standalone criminal offence.
Looking back to move forwards
In 2024, we celebrated 180 years
of co-operation while readying
ourselves for the next 180.
Co-op Live opened in May;
initial teething troubles turned
into sell-out shows through the
year, with exclusive offers and
beneﬁts for Co-op members. We
launched new propositions, like
our new Co-op Media Network,
while working to increase
engagement among our
members. 38% more members
voted on AGM motions as we
made voting through the Co-op
app possible for the ﬁrst time
(2023: 31,130; 2024: 43,061), and
we hope this number will grow
as we continue to encourage
participation.
These are just a few examples of
how our strategy helps us to be fully
ﬁt for the future, while reminding us
of where we’ve come from.
Thank you to our 54,000 colleagues
for embracing change – for all
we’ve already achieved together,
and all we will achieve in the years
ahead. Thank you to our Board and
our Council for championing co-
operation so wholeheartedly and
for supporting me and our leaders
as we delivered for our member-
owners in another challenging
year. Most of all, thank you to our
members for joining us on this
journey and for helping us as we
made choices along the way.
As Denise has mentioned, 2025
is the United Nations Year of
Co-operatives. Similarly, the
Government has pledged to double
the size of this sector in the UK. I
am proud of what we achieved in
2024 while holding our co-operative
business model and values close,
and I am excited about what more
we can achieve as we look forward.
Shirine Khoury-Haq
Chief Executive Ofﬁcer,
The Co-op Group
In January 2024, we announced
our
new vision
, which is to
co-operate to build more value for
our member-owners every day
.
“ What makes our
Co-op
different
is that
we’re owned by and
run for our members.
The more members
choose our products
and services, the more
value we create for our
member-owners and
their communities.”
We created this vision and the
strategy to deliver it in partnership
with member-owners and our
National Members’ Council. In the
summer, we launched our
Owned
by You, Right by You
campaign
to not only bring the value of our
Co-op's membership alive for the
public but to show our nation the
power of co-operation as a unique
and powerful business model.
By the end of 2024, we’d increased
our active member base to 6.2
million. This means we have 22%
more active members than at the
end of 2023, and we’re comfortably
on track to our target of eight
million active members by 2030.
A simpler structure and
a solid performance
With our new vision and Group
strategy in mind, in 2024, we
focused our operations into three
business areas: Food, Life Services
and Business-to-business. These
are areas where we can meet
customer and member needs
today, and develop our Co-op
difference in the years to come.
In each of these areas, we faced
challenging markets in 2024
as people continued to feel
ﬁnancially squeezed. Our
Food
business grew both revenue and
market share – a testament to
the way we’re meeting changing
customer behaviour head-on by
focusing on Member Prices and
‘quick commerce’ options, such as
UberEats, Just Eat and Deliveroo;
we continue to be the number one
grocer on each of these platforms.
Life Services
grew as a whole,
powered by a 24% uplift for Legal
Services. It was a hard year for the
wholesale market; our
Business-
to-business
area saw a reduction
in revenue, but we supported
our partners and we’re conﬁdent
we’ve now sown the seeds for
future growth.
Our Managing Directors for each
area will tell their stories for the
year shortly. But from a Group
perspective, we have performed
well for our member-owners
on our long-term journey to
sustainable, proﬁtable growth.
As Rachel, our Chief Financial
Ofﬁcer, will explain in her update,
we held our 2023 revenue into
2024 as we continued to rightsize
our business and focus on
member value. Simultaneously,
we built on the ﬁnancial discipline
established in the previous years;
our underlying operating proﬁt
grew by over a third to £131m,
and we lowered our net debt
2
a
further 33% to £55m.
TO OUR
MEMBER-
OWNERS,
CHIEF
EXECUTIVE'S
OVERVIEW
Shirine Khoury-Haq:
Chief Executive Ofﬁcer, The Co-op Group
Our Members' Annual Report 2024
2
Excluding leases
17
16
Our Members' Annual Report 2024
3
2024: £3.1bn, 2023: £2.6bn
A year on, I’m hugely proud of all we’ve achieved
here. We can see that people value Co-op
membership; in 2024, over 23,000 people
became members every seven days. On top
of this, 2024 saw our member participation
numbers rise signiﬁcantly. We’re increasing the
number of member-owners who understand,
value and engage with the co-op that they own.
We’re also showing up differently to members
and potential members. Just take our
Owned
by You, Right by You
campaign, our presence at
UK festivals and the member experience we’ve
created at Co-op Live – the UK’s largest live
music venue.
It’s all having an effect. In 2024, over 340,000
members under 25 joined our Co-op, which
is a 66% increase on 2023. (2024: 344,800;
2023: 207,700)
WORKING TO MAKE
MEMBERSHIP
IRRESISTIBLE AND
INDISPENSABLE
In 2023, I said we were
laying the foundations
for a new member-owner
experience at our Co-op.
Our aim was to build more
value for our member-
owners every day, working
to make membership
irresistible
and
indispensable
for them.
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Co-operating
to build more
value for our
member-owners
every day
OUR VISION
IN 2024
Kenyatte Nelson
Chief Membership
and Customer Ofﬁcer
22%
£3.1
bn
INCREASE
ON ACTIVE
MEMBERSHIP
60%
RISE IN
MEMBER
PARTICIPATION
OUR INVESTMENT
IN MEMBER PRICES
IN 2024
£92
m
HOW MUCH
MEMBERS SPENT
WITH US, UP BY 19%
3
19
18
£10 A WEEK
MEMBERS
SAVING ON A
WEEKLY BASKET
IN 2024
5
Scope 1 and 2
Ownership value
Members own our Co-op and have a say in
how we’re run
There are lots of ways for members to shape
our Co-op, like choosing a community cause
or helping us develop products. In 2024,
we rethought many of the ways we engage
members in how our business is run.
For example, in May, we held our AGM at
Co-op Live for the ﬁrst time. Members could
vote using our app, which saw voting numbers
rise by over a third. In November, we held 100
events, like pop-up cafés, to help members
understand more about member-ownership, and
to encourage them to get involved.
Across 2024, 1.74 million members took
ownership action in our Co-op, from inﬂuencing
our strategy to tasting wine and supporting local
projects. Of this number, many members joined
in for two or more activities over the year. This is
how we measure member participation, and it’s
up by 60%.
Economic value
The ﬁnancial beneﬁts of being a member
It’s our responsibility to make sure that being a
member comes with real ﬁnancial beneﬁts.
In our 2024 member survey, members told us that
‘the rising cost of living’ was a top concern. And
so, across our business areas, we invested £92m
in Member Prices and offers through the year.
For example, today, in our Food business,
members can save up to £10 a week based on
an average basket
4
. We launched Member Prices
online in 2024, too.
Social value
We act on the things that matter most to members
‘Concern for community’ has long been a guiding principle for our Co-op, and 2024 was no different.
We supported our members’ communities, campaigned on their behalf and contributed to causes
they care about.
For all our achievements in this area in 2024,
read our Social Value and Sustainability Report
,
but to highlight a few:
224,000
MEMBER
PARTICIPATION
IN 2023
Our Members' Annual Report 2024
358,600
MEMBER
PARTICIPATION
IN 2024
We are the naming rights sponsor for
Co-op Live, which opened in May.
This is the most sustainable venue
in Europe, and also donates
£1 million a year to our Co-op
Foundation to empower young
people and communities.
We found new ways to involve
members in community action.
For example, our
Winner Shares
It All
prize draw saw nearly 1.5
million members taking part for the
chance to win £500 for themselves
and £5000 for their local cause.
Our Local Community
Fund has shared £114m
since starting in 2016
with causes across the
nation and on members’
doorsteps, from sports
clubs to local gardens.
We continued to campaign for
Safer
Colleagues and Safer Communities
in 2024. For example, since 2018,
our colleagues and members have
written over 25,000 letters to MPs
and police calling for change.
In February 2025, we were
delighted to see the Government
publish its Crime and Policing
Bill, which makes assaulting a
shopworker a standalone offence.
We’re focused on
sustainability across
our Co-op.
In 2024, we continued
to reduce the carbon
emissions
5
from running
our business. We’ve now
reduced these emissions
by 61% since 2016,
equivalent to 55,000
households’ emissions.
We continue to proudly support
the Co-op Academies Trust.
In 2024, the trust continued
to change the lives of over
20,000 children from 38
schools across the North,
helping them succeed,
no matter their background.
As of 2024, we’ve raised
£4 million for our charity
partner Barnardo’s, and we’ve
supported 200,000 young
people so far.
2024 was our 30th year stocking
Fairtrade products.
To celebrate, we made all our
fresh-cut roses Fairtrade and
rolled out vibrant new packaging
on Fairtrade products.
4
This reﬂects what a member could save if they shopped from the lines we discount for members and made the most of the promotions and deals we run
for members – for example, regularly buying lunchtime meal deals and shopping with our weekly personalised offers.
OUR CHIEF FINANCIAL
OFFICER’S OVERVIEW
Rachel Izzard:
Chief Financial Ofﬁcer, The Co-op Group
I’m pleased to share our Co-op’s ﬁnancial results for 2024 and walk
you through the numbers. This was a year where we made clear
progress on our journey to sustainable proﬁtable growth, returning
‘back into the black’ and improving key ﬁnancial metrics.
This was delivered with a backdrop of continued market volatility, which
brought challenges for our members, customers and for our Co-op.
As we entered the year, markets were expected to grow. It was believed
that inﬂationary pressure would ease, but that there may be upward
pressure on pay. In reality, consumer demand stayed fragile through
2024, and that upward pressure on pay was joined by wider continuing
higher interest rates and wider cost inﬂation by the end of the year.
We listened to our members and recognised value for money was a
primary concern. More than ever we needed to provide economic
value to them. To do this and ﬁnd the balance with improving our
proﬁtability for the long term, in 2024, we focused on being both cost
and capital effective.
21
20
KEY
PERFORMANCE
INDICATORS
Why are these measures important?
We use the following indicators to manage the
performance of our Co-op. Being a proﬁtable
business with ﬁnancial stability is essential
in helping our Co-op to meet its strategic
objectives and be there for our member-owners
for generations to come. These measures help
us assess and understand this stability.
These KPIs include both the statutory measures
we’re required to share under International
Financial Reporting Standards (IFRS) and
Alternative Performance Measures or APMs.
The APMs are not meant to replace statutory
measures under IFRS.
These APMs are consistent with how we
measure our Co-op’s performance internally,
and they help our members understand the
underlying performance of our businesses,
too. We include more detail on ﬁnancial
performance and these KPIs on page 38.
2024*
2023*
VAR (£m)
Total Group Revenue
£11.3bn
£11.3bn
£0.0bn
Underlying EBITDA
**
£481m
£468m
£13m
Underlying
operating proﬁt
**
£131m
£97m
£34m
Underlying proﬁt / (loss)
before tax (PBT)
**
£45m
(£2m)
£47m
Operating Proﬁt
£151m
£66m
£85m
Proﬁt before tax (PBT)
£161m
£28m
£133m
Group net debt
£1,248m £1,315m
£67m
Group net debt
(excluding leases)
**
£55m
£82m
£27m
Return on Capital
Employed (ROCE)
4.7%
3.4%
1.3%pt
* The 2024 ﬁgures represent the 52-week period ended 4 January 2025 with the 2023
comparatives representing 53 weeks to 6 January 2024.
** A full glossary of Alternative Performance Measures (APMs) and their deﬁnitions is included in
our ﬁnancial statements.
Our Members' Annual Report 2024
GROUP
FINANCIAL
OVERVIEW
REVENUE
2024
2023
Var
Var %
Var %
ex Wk53
Food
£7.4bn
£7.3bn
£0.1bn
1.9%
3.7%
FRTS
£2.08bn
£2.14bn
(£0.1bn)
(3.1%)
(3.1%)
Wholesale*
£1.4bn
£1.5bn
(£0.1bn)
(5.5%)
(4.2%)
B2B
£3.5bn
£3.6bn
(£0.1bn)
(4.1%)
(3.6%)
Funeralcare
£289m
£281m
£8m
2.8%
4.3%
Legal
£84m
£68m
£16m
23.5%
25.4%
Insurance
£28m
£29m
(£1m)
(3.4%)
(3.4%)
Life Services
£401m
£378m
£23m
6.1%
7.5%
Group
£11.3bn
£11.3bn
£0.0bn
0.2%
1.5%
* Wholesale revenue includes sales from our Franchise business.
Revenue
Group sales were ﬂat year on year,
which
reﬂects a combination of factors, including
fragile consumer demand and the fact that
there was one more week in the comparative
year. Our Managing Directors walk through
the performance of our business areas later in
this report, but I’ve summarised the revenue
data in the table to the right.
It’s particularly pleasing to see the
majority of our businesses maintaining
or improving market share in challenging
conditions. Progress in active membership
and areas such as quick commerce and
Legal Services have enabled us to ‘beat
the market’ in key areas.
Challenging conditions continued in
the wholesale and small independent
convenience market, as well as Insurance.
Our result in Food reﬂects volumes returning
to growth with pricing kept low, which we
achieved with a broadly ﬂat store estate. We
continued to carefully manage and right size
our Food space to get the most from every
store, creating a proﬁtable base to grow from.
23
22
Underlying operating proﬁt
Underlying operating proﬁt increased £34m to
£131m. All our colleagues worked hard to achieve
this, offsetting signiﬁcant headwinds and supporting
our material investments.
Our headwinds in the year exceeded £200m for the
second year running, reﬂecting price reductions for
our members and customers of £92m, colleague
pay increases of £96m, and cost inﬂation of £38m,
partially offset by energy costs coming down.
We also continued our investments in the things that
matter to our members, including £36m in the 30%
colleague discount and £20m in our community
work, as well as wider investments in social value,
sustainability and food quality.
In this context, the £34m improvement in underlying
operating proﬁt was a solid step forward improving
our margin by 30 basis points to 1.2% of group sales.
Statutory operating proﬁt improved £85m to
£151m, driven by the underlying improvement and
a reduction in non-underlying items, such as asset
impairments and a handful of favourable asset
disposals.
Underlying proﬁt before tax (PBT)
This combines our underlying operating proﬁt with
the interest on our ﬁnancing, lease debt, and cash
balances. We
returned ‘back into the black’
here,
the ﬁrst time since 2020, with an underlying PBT of
£45m compared to the loss of £2m in 2023; a £47m
improvement. This was the improvement in underlying
operating proﬁt and a £13m improvement in net
underlying interest costs beneﬁtting from our much-
improved net debt position.
Our statutory PBT improved further, up £133m to
£161m, driven by the underlying proﬁt improvement,
plus non-cash improvements in our Funeralcare
investment asset returns (£17m to £102m). This year
returns were strong; around £50m better than the
long-term norm.
Net debt and cash
The above improvements in earnings were achieved
while maintaining a strong balance sheet. As a team,
we’re clear we need to deliver both – continuing our
multi-year progress to sustainable proﬁtability, while
making sure we maintain a healthy balance sheet
to deliver long-term value. This doesn’t mean not
investing; it means investing carefully and at pace
on what matters most, and balancing investment
‘out’ with cash ‘in’ from operations.
Cash generated from operations was in line with
our expectations at £456m. This was lower than
the prior year (2023: £602m), as in 2023 we
implemented tighter working capital controls
resulting in higher cash generation for that year.
Our capital investment in the year was £273m; a
carefully managed increase of £68m against our 2023
spend of £205m. This included investment in the
Food estate across new stores, reﬁts, relocations and
freehold purchases of £82m (2023: £40m).
This careful management enabled us to further reduce
our net debt excluding leases by the £27m generated
from £82m to £55m. Including lease debt our net debt
is £1,248m, down £67m year-on-year.
Financing
As a direct result of the ﬁnancial discipline I’ve outlined,
our credit rating was upgraded by Standard & Poors
in 2024. This means our Co-op has better access to
both rates and lenders. At the end of the year, we
successfully renewed our £400m sustainability-linked
credit facility to 2029, which is currently undrawn and
used for liquidity risk management.
In the ﬁrst half of the year, we used cash to repay
our maturing bond of £204m. This leaves £475m
of borrowings still to repay, with £114m falling due
within a year, and the remainder within two years.
I’m conﬁdent that our improving ﬁnancial health will
let us optimise how, when, and how much we raise
as new ﬁnance to set our Co-op up for the years to
come. In the meantime, our cash and short-term
investments at year-end stand at £420m. Combined
with the undrawn £400m credit facility, we have
sufﬁcient headroom for these volatile times.
Return on capital employed
In our KPIs, we have also included Return On Capital
Employed (ROCE), which helps us track our earnings
relative to the capital deployed. It’s pleasing to see
this improve with a combination of improved proﬁt
and disciplined capital management.
Our Members' Annual Report 2024
CO-OP FASCIA STORE ESTATE AS AT YEAR END
Food
Franchise
2024
2023
2024
2023
Opening estate
2,349
2,377
37
42
Closures
(28)
(31)
(1)
(9)
Openings*
27
3
20
4
Net change to estate
(1)
(28)
19
(5)
Closing estate
2,348
2,349
56
37
Percentage change
(0%)
(1%)
51%
(12%)
Revenue per Store
**
£3.2m
£3.1m
* Openings include six sites where we have contracted with Shell to operate
grocery operations
** Only available for Food for reported revenue
CASH GENERATION
2024
2023
Var
Var %
Net cash inﬂow from operating activities
£456m
£602m
(£146m)
(24.3%)
Capex
(£273m)
(£205m)
(£68m)
33.2%
Disposal proceeds
£34m
£37m
(£3m)
(8.1%)
Net cash inﬂow from funeral plan investments
£20m
£40m
(£20m)
(50.0%)
Lease payments - principal and interest
(£183m)
(£191m)
£8m
(4.2%)
Net bank and loans interest
(£25m)
(£39m)
£14m
(35.9%)
Other
(£2m)
(£4m)
£2m
(50.0%)
Net cash generation
£27m
£240m
(£213m)
(88.8%)
This is a ﬁnancial performance to be proud of.
We improved proﬁtability while maintaining a
healthy balance sheet, investing for our future and
reducing our net debt; a strong performance when
you consider the wider picture of slowing markets
and cost inﬂation.
Building a sustainable, proﬁtable business takes time.
Three years ago, our debt and costs were too high
for a business of our size. Today, we’re prudently
managing our members’ money and generating an
underlying proﬁt before tax for the ﬁrst time in four
years. We can’t stop here; in the short term, we’ll
manage the headwinds in front of us. In the medium
term, we’ll look to further improve our ﬁnancials and
return our Co-op to sustainable levels of proﬁtability.
“ As a close I wanted to say thank
you for the 2024 results to all of our
amazing colleagues, my own team
included. Thank you for your work
getting us to these results, and for
the work on the future proﬁtability
of our Co-op.”
In summary
25
24
FOOD
RETAIL
Matt Hood:
Managing Director, Co-op Food
In 2024, our Food business performed strongly.
We found new ways to deliver convenience
without compromise, and focused on Member
Prices. In doing so, we grew revenue, market
share and most of all, momentum.
This was the second year of our pure convenience
strategy, focusing on value, range and price.
This saw our Food business grow underlying proﬁt
by £28m, outperform the convenience market and
increase market share.
As personal ﬁnances continued to be stretched through
2024, we kept reducing the prices of the products we
know members already buy and rewarding members
with exclusive offers and promotions.
While rightsizing our operations and managing our
store estate carefully, we continued to expand our
routes to market, developing our online convenience
shopping (or ‘quick commerce’) service. We also
invested in future-facing technology to make our
stores and wider business more efﬁcient.
Despite the encouraging numbers, it was a
challenging market and we can never be complacent
about our results. Our focus has already shifted to
growth in 2025 and beyond. We’ll keep focusing on
value in a total sense – price, promotions and value
for our member-owners – while also considering the
wider environment and the topics that matter most to
members, such as British farming and climate change.
As always, all our wins this year are thanks to the hard
work of all our nearly 50,000 Food colleagues, so a big
thank you to them all.
Performance
We continued to grow our market share.
According
to Circana, this stood at 13.7%
6
which is higher than
where we closed 2023 with a share of 13.1%. We also
grew ahead of the wider convenience market; on a
52-week basis, we ‘beat the market’ by 4.9%pt.
7
We
carefully managed our store estate
with 62
reﬁts and six relocations, while complementing our
physical presence with online options. Demand for
our delivery options on shop.coop.co.uk, UberEats,
Just Eat and Deliveroo grew by 48% (2024: 22m
orders; 2023: 15m). This shows that our members and
customers value the convenience of quick commerce,
and we celebrated this in our Christmas TV ad: “we
deliver party food in as little as 20 minutes”.
We innovated in other ways, too.
We launched our
ﬁrst Co-op Flow store in our Castlewood Depot:
a new frictionless shopping experience where
customers don’t need to scan products at a till to
checkout. And we nearly tripled the number of new
products launched compared to the year before
(2024: 362, 2023: 136). For example, we expanded
our Co-op Irresistible pizza range with hot honey and
Kashmiri-style butter chicken.
Keeping our colleagues and members safe in our
stores remained a key priority.
In 2024 we invested
£29m into our stores and communities to create safer
environments for our colleagues, member-owners
and customers.
This year, we invested £66m into Food store
colleague pay. For example, we continued to align
to the real Living Wage by increasing our pay for
customer team members and Post Ofﬁce counter
assistants from £10.90 to £12 an hour (+10.1%). We
also invested £35m into colleague discounts.
We continued to work co-operatively with suppliers
and producers. For example, we came ﬁrst out of
14 retailers ranked by the Grocery Code
Adjudicator for overall compliance with the
Groceries Supply Code of Practice.
6
Circana data: full year 2024.
7
Market share and growth performance against the market are quoted on a ‘like for like’ basis, which excludes week one from the 2023 reporting year and
aligns most closely to calendar weeks. It reports 52 weeks to 4 Jan 2025 vs. 52 weeks to 6 Jan 2024. Figures are quoted as per Circana Convenience Data.
Market share is 13.7% at year-end 2024 versus 13.1% in 2023 – growth of 0.6% year-on-year. We beat the market by +4.9% because our Food business grew
3.3% on a 52-week basis, against a market decline of (1.6)%.
KEY FIGURES
YE 2024
YE 2023
VAR/%
Revenue
£7.4bn
£7.3bn
1.9%
Underlying operating proﬁt
**
£201m
£173m
£28m
Market share
*
13.7%
13.1%
**
0.6%
*Source: Circana Market Convenience Data - 52 weeks to 4 Jan 2025 vs. 52 weeks to 6 Jan 2024. Market share at 6 July 2024 was 13.6% against the reported 14.1% in
our 2024 interim report, representing an amendment in Circana convenience market data subsequent to the issuance of our report
**2023 includes the representation of community reward from Food to costs from supporting functions
Our Members' Annual Report 2024
27
26
Our Members' Annual Report 2024
OF THE £92M WE
INVESTED IN MEMBER
PRICES ACROSS OUR
GROUP, £88M WENT
INTO REDUCING FOOD
PRICES FOR OUR
MEMBER-OWNERS
Social value
In September, we celebrated
30 years of Fairtrade
,
introducing new, bold packaging on some of our
Fairtrade products, while also making all our fresh-
cut roses Fairtrade.
In July we launched our
Future Farming Fund
to
help British farmers adopt sustainable farming
practices. The fund will drive innovation and
promote productivity with a series of on-farm
projects led by members of Co-op’s Beef and
Lamb Farming Group.
Through the year, we continued with our
Apiary
Incubator
scheme, supporting small suppliers
who would otherwise be underrepresented in
the industry, and brands that share our
co-operative values.
Economic value
Of the £92m we invested in Member Prices across
our Group, £88m went into
reducing Food prices for
our member-owners
with Member Prices, Member
Deals and promotions.
This year we also introduced our
boosters
initiative
so member-owners can earn offers, like money off
your next shop, by completing shopping missions
on products you already buy.
Ownership value
This year we continued to work with our member-
owners to take action on the things that matter the
most to them.
In February, following a motion from our 2023 AGM,
we announced a multi-million-pound investment
into our work on
chicken welfare
, with a maximum
stocking density of 30kg/m2 giving many chickens
20% more space than previously.
During our 2024 AGM, members asked our Co-op to
reduce prices on
healthy products
and ingredients.
Since then, we’ve launched our Three Fresh Deals –
giving lower prices on three selected fresh produce
items every trading period.
29
28
Caoilionn Hurley:
Managing Director, Life Services
In 2024, we grew our Life Services business
by continuing to put our member-owners
and clients ﬁrst; helping you navigate life's
challenges with clarity, simplicity and certainty.
LIFE
SERVICES
KEY FIGURES
YE 2024
YE 2023
VAR/%
Revenue
£401m
£378m
6.10%
Funeralcare
£289m
£281m
2.8%
Legal
£84m
£68m
23.5%
Insurance
£28m
£29m
(3.4%)
Underlying operating proﬁt
£41m
£24m
£17m
Funeralcare
(£1m)
(£11m)
£10m
Legal
£27m
£21m
£6m
Insurance
£15m
£14m
£1m
Market share Funeralcare
**
14.7%
14.6%
0.1%
* Source: Ofﬁce for National Statistics & National Records of Scotland Market Data - Dec Year to Date (12 Month rolling)
** Timecare Adjusted | Source File: National Marketshare Summary 2024 Year End (Timecare Adj). Whole market share data isn’t available for Legal and Insurance businesses
Our Life Services business helps clients plan for – and
transition through – life's most important moments.
We provide legal services, insurance, funerals and
funeral plans.
In 2024, we grew revenue overall (2024: £401m; 2023:
£378m), powered by a 24% sales uplift for Legal
Services. We increased market share in our more
established areas of Legal Services and Funeralcare,
alongside cost control. This increased our underlying
operating proﬁt to £41m (2023: £24m).
These are all achievements to be proud of,
particularly given the declining death rate seen
in the UK this year. We focused on offering the
best value for money to members and clients, and
created more choice with new products, including
Direct Cremation funeral plans and renters
insurance, while also improving our existing range,
systems and processes.
Our colleagues remained central to our success
so a big thank you to them all. By upholding the
highest standards of service and care, we also
continued to see high customer satisfaction scores
across our businesses, and external recognition
from bodies such as Trustpilot and the UK Institute
for Customer Service.
Our Members' Annual Report 2024
Ownership value
We’re making it easier
for customers to become
member-owners. As of 2024,
customers can sign up for
Co-op membership as they’re
buying travel insurance.
Over
2,000
member-owners
joined this way, so we’ll roll this
out to more of our range in 2025.
Economic value
In 2024, we launched Member
Prices on our core range of
Insurance products, selected
legal services, funerals and
funeral plans.
We also offered double
discounts and refer-a-friend
incentives on funeral plans.
Social value
We partnered with a number
of charities, including Cancer
Research UK and Mind,
offering a free will writing
service to their supporters
in the hope that they leave a
donation. Donation pledges in
these wills reached
£9.5m
in
2024 (2023: £8.1m).
Co-op Legal Services
We’re here to help our member-owners and
clients to not only understand the law, but make
the most of it.
We achieved year-on-year
revenue growth
of 24%
to £84m (2023: £68m), which was driven by our
practice areas of Probate (2024: 9,370 openings;
2023: 9,171
8
) and Estate Planning (2024: 33,773
openings; 2023: 26,173
8
).
This resulted in a 30% increase in operating proﬁt
compared to last year (2024: £27m, 2023: £21m).
Our focus on
technology
continued in 2024. We
started replacing some of the systems we use to
manage cases, which will improve our processes
and help our colleagues work more efﬁciently.
We also invested in
AI
to speed up Probate
administration tasks, giving our colleagues more
time to resolve clients’ cases quickly; we’ll be
expanding its use across our other practice areas in
the coming years.
This focus on our clients helped us achieve ‘excellent’
scores on Trustpilot: 4.9 out of 5 for Co-op Estate
Planning and 4.6 out of 5 for Co-op Legal Services.
8
On a like-for-like, 52-week basis.
31
30
Co-op Funeralcare
In 2024, we helped more than 90,000 families say
their best goodbye.
We generated £289m in revenue in 2024 (2023:
£281m). This 2.8% growth was supported by
higher revenue from our funeral plans, but our
performance was impacted by a decline in demand;
the death rate was 2.8% lower than in 2023
8
.
Meanwhile, our at-need market share reached
14.7% (2023: 14.6%), and we launched new
Direct
Cremation
funeral plans in response to member
and client feedback – helping us to double our
funeral plan sales year-on-year.
We also continued to
offer our members the
best value for money
. We doubled our members’
usual discount on funeral plans from October
to December, and we invited members to refer
a friend to get even more value back. We also
successfully implemented
Consumer Duty
requirements
for all our closed products while
maintaining high client satisfaction scores for our
funeral services (2024: 98%; 2023: 97%).
Co-op Insurance
We’re here to support our members and our
customers by offering the right cover at the
right price. We offer home, life, motor, travel
and pet insurance, and as of 2024, renters home
insurance and loans.
Overall in 2024, we saw a small reduction in revenue
(2024: £28m; 2023: £29m) – it was a challenging
year for the insurance industry. Market prices were
volatile, which meant many people looking for car
and home insurance ‘shopped around’ for the best
price. This led to a 19% reduction in these policy
sales in 2024 (2024: 119.7k; 2023: 147.8k). Even so,
our policy sales increased overall in 2024 (2024:
279.6k; 2023: 260.4k) with increased demand for
both travel and pet cover.
We’re committed to making sure our members
get the
best
possible
price
, so we made
exclusive Member Prices available on our core
insurance policies.
Our members told us you wanted greater access
to ﬁnance, particularly loans, so in November
we partnered with Aro Finance to help members
compare loan offers from a panel of lenders.
Members were then given
exclusive loan rates
from certain lenders,
depending on
eligibility.
In May, we launched
renters home
insurance
, which
protects all the
things you own that
you’d take with you
if you moved. With
policies starting at
£5 a month and with
no cancellation fee, it
provides the ﬂexibility our
members and customers told
us they were looking for.
Finally, we were delighted to win gold
at the UK Customer Experience Awards
and to be ranked third in the insurance
industry by the UK Institute of Customer Service.
Our Members' Annual Report 2024
8
According to ONS data on a 52-week basis.
33
32
Jerome Saint-Marc:
Managing Director, Business-to-business and Growth
It was a challenging year for the wholesale
market overall. Despite this, we were able to
support our partners by signiﬁcantly lowering
prices for them, while also reaching new
markets. I’m conﬁdent that we’ve now laid the
groundwork that will power growth – for our
business unit and our Co-op as a whole – for
many years to come.
BUSINESS-
TO-BUSINESS
KEY FIGURES
2024
2023
Var £/%
Revenue
£3.5bn
£3.6bn
(4.1%)
FRTS
£2.1bn
£2.1bn
(3.1%)
Wholesale
**
£1.4bn
£1.5bn
(5.5%)
Underlying operating proﬁt
(£1m)
£14m
(£15m)
FRTS
nil
nil
nil
Wholesale
**
(£1m)
£14m
(£15m)
Market share (Nisa only
*
)
11.9%
11.9%
0.0%
* Source: Nisa market share of Circana Symbols & Independents – 52 weeks to 4 Jan 2025 vs. 52 weeks to 6 Jan 2024. Market share at 6 July 2024 was 11.9% against the
reported 12.9% in our 2024 Interims Report, representing an amendment in Circana convenience market data subsequent to the issuance of our report.
** Wholesale revenue includes sales from our Franchise business
Our Members' Annual Report 2024
Our B2B business brings the best of our Co-op to
trusted partners, while giving our members more
opportunities to shop with Co-op.
Within this area, we have
Co-op Franchise
:
independent businesses that use our Co-op
systems, and often look and feel like our owned
stores. Our wholesale business supplies products to
independent shops including many under the
Nisa
brand; these stores stock Co-op products alongside
products bought elsewhere. And our
Federal Retail
Trading
Services
(FRTS) business sources products
and provides logistics services for independent
co-operative societies. So we offer a wide range of
options to our B2B customers.
In 2024, our revenue was £3.5bn, which represents
a 4.1% reduction (2023: £3.6bn). Our operating
loss for 2024 was £1 million (underlying operating
proﬁt 2023: £14m). This performance reﬂects the
wider challenges faced by the wholesale market,
where sales have reduced year-on-year as the cost
of living crisis has continued. Franchise stores and
independent businesses fall under the ‘symbols and
independent’ market, which saw a volume decline of
6.7% through 2024, according to data from Circana.
To break our performance down, our FRTS business
contracted by 3.1%, reﬂecting the market. While we
typically look at our wholesale and franchise business
performance together – as in the table – this year, it’s
useful to separate them. In wholesale, revenues were
down by 5.5% (2024: £1.4bn; 2023: £1.5bn), but we
still leaned in to support our independent customers
who faced more challenges than larger retailers –
we signiﬁcantly lowered our prices to help them
through a challenging year along with the rest of the
convenience market.
Meanwhile, our franchise business grew by more than
30% (revenue 2023: £56m; 2024: £74m); this ﬁgure is
included along with our wholesale revenue in the table
above. We ended 2024 with 56 franchise stores in
various locations including petrol forecourts, hospitals
and universities – a 51% increase on 2023 (37 stores).
This area might only make up a small part of our
revenue today, but it shows what’s possible for B2B
in the future. Overall in 2024, we laid the foundations
that will power growth opportunities ahead for
B2B, while continuing to make a difference for our
communities. I’d like to thank my colleagues for all
the work they’ve done in 2024 to help our business
succeed in years to come.
Ownership value
In 2024, we recruited around
47,000 new Co-op members
through our franchise business.
In particular, we saw double
the proportion of members
shopping at our campus sites,
indicating that more students
are becoming members. (2024:
37%; 2023: 18%.)
Economic value
Our wholesale business
beneﬁts from economies of
scale, meaning many of our
partner-owned stores can offer
the same member deals and
discounts as our Food stores.
As we widen our reach –
opening new Co-op stores
on the UK defence estate and
NHS hospitals – we’re widening
access to Member Prices.
Social value
Nisa’s
Making a Difference
Locally
charity has continued
to deliver for the communities
our retailers serve.
In 2024, the charity donated
over £1m through small
charities and community
groups across the UK. The
charity was presented with
the Outstanding Achievement
Award at the Retail Industry
Awards, too.
35
34
Our Members' Annual Report 2024
Wholesale
Our wholesale business serves independent stores
including many under the Nisa brand. 2024 was a
hard year for many independent retailers as shifts
in consumer demand and changes to legislation
impacted trading. As mentioned, through the year,
we saw volumes decline by 6.7% across the symbols
and independent market
9
.
With that context in mind, in 2024 we focused on
leaning in to support our partners
, enhancing our
proposition to help them remain competitive. As well
as supporting them on price, we continued to supply
our partners with
our own-brand
products. These
items act as a differentiator for independent retailers,
helping them meet demand for quality products
while staying competitive on price. The Co-op own-
brand range we offer through our wholesale business
remained popular in 2024, with 92% of retail partners
buying into the range. And while our overall sales
volumes declined, our own-brand sales remained the
same; this range is as loved and as looked-for as ever.
We also supported partners through our
logistics
network
which has operated at 97.3% availability
(2023: 95.8%), and by
building
relationships
. While
supporting our existing partners, we onboarded
new ones.
By achieving these things despite the challenges
mentioned, we can clearly see the strength of our
wholesale business in a highly competitive market.
Even as volumes declined across the sector, we held
our market share at 11.9%.
Franchise
In our franchise business, we provide our partners
with a full Co-op operating model; they receive our
brand, range, space and technology.
2024 saw substantial revenue growth for our
franchise business. This was powered by store
openings, including new university stores at the
University of Surrey and two in Loughborough,
including a completely cashless service for the
campus demographic. We now serve nearly 150,000
students through our campus sites.
We also launched
seven
new petrol forecourt
stores
in partnership with EG On The Move
across the UK, and in partnership with Compass
Group, we’ve entered
two
completely
new
markets
for
Co-op
. We opened our Co-op’s first ever store
on the UK defence estate in Portsmouth and
entered the NHS market at Nottingham Queen’s
Medical Centre.
Accessing new locations and new audiences is an
example of where our franchise business creates
member value for our Co-op, and a transformed
retail proposition to the communities we serve.
In term time, the university franchise sites are the
busiest Food to Go stores in the whole Co-op, and
there’s a lot we can learn as a Group here about a
demographic who may shop with Co-op for life.
The Federal Retail Trading Services buying group
is made up of 13 independent co-operative
societies and our Co-op. We buy the vast majority
of our food goods for re-sale together to maximise
our buying scale and use members’ money
efﬁciently. Overall, it represents about a quarter of
our volume in Food.
In 2024, we renewed our shared Buying Services
Agreement. Leicester Depot was closed and
this work was integrated into our Co-op Group’s
logistics network. For the ﬁrst time in our history,
all co-operative retail societies that are members
of FRTS are serviced through one network, moving
around 493m cases per year to nearly 3,750 stores.
We continue to explore where our common
co-operative heritage can amplify our positive
impacts, such as working together on campaigning
for shop worker’s rights, more action on retail
crime and promoting the beneﬁts of Fairtrade.
WE CONTINUE TO
EXPLORE WHERE
OUR COMMON
CO-OPERATIVE
HERITAGE CAN
AMPLIFY OUR
POSITIVE IMPACTS
Federal Retail Trading Service
9
Source: % change vs YA - Circana 52 w/e 04 Jan 2025 – Managed Convenience, S&I, Total Convenience. Grocery Mults
37
36
FOR THE
FUTURE,
WE’RE NOT
SLOWING
DOWN
Co-op Annual Report 2024
LOOKING
AHEAD
As you’ve read, in 2024 we set our
strategy – not only for the year, but
for the future.
We are ambitious in our plans
to provide real value to you, our
members, to 2030 and beyond.
And we’ve already made progress
toward these goals: launching
propositions and partnerships,
reaching new markets and working
with our members, to make sure
our membership really reﬂects the
things that you care about.
For the future, we’re not slowing
down. Of course, we recognise the
challenges of a changing landscape
around us. We feel as concerned
about global conﬂict and climate
change as I know many of you, our
members, do. And as we enter
2025, volatility continues; we’re not
immune to the rising costs that all
businesses face today. I’m glad that
because of our business model,
we were able to call an upcoming
difﬁcult economic and trading
environment in early 2022. We
made the changes necessary to put
ourselves on strong ﬁnancial and
operational footing in order to best
ride the storms that all businesses
are now facing.
"Through troubling
times, our Co-op
offers an alternative
way of not just
trading, but being."
Because we’re owned by you, we
can continue to act for you. We’re
looking to the future with a ﬁrmer
ﬁnancial footing and a clear vision.
So we’ll now continue to focus on
delivering value to our members
and creating a stronger, more
sustainable Co-op; a Co-op that
can stay true to itself as the world
moves in unexpected ways; a Co-op
that can keep serving members,
colleagues and communities for
generations to come.
Shirine Khoury-Haq
Chief Executive Ofﬁcer,
The Co-op Group
Our Members' Annual Report 2024
38
FINANCIAL
PERFORMANCE
Our Members' Annual Report 2024
39
FINANCIAL PERFORMANCE
Earlier in this report, Rachel Izzard, our Chief Financial Ofﬁcer, gave an overview of the Group’s performance
during the year.
Rachel touches on our continued ﬁnancial stability, and how we have achieved a solid ﬁnancial performance
given the ongoing challenging market conditions and difﬁcult trading environment of 2024.
In addition to Rachel’s overview, this section of our report provides further commentary on our statutory
results. The comparative ﬁgures in 2023 reﬂect a 53-week period whereas 2024 ﬁgures cover 52 weeks.
SUMMARY OF GROUP FINANCIAL PERFORMANCE
To remind you of our key performance indicators:
£million
2024*
2023*
Var (£m)
STATUTORY PERFORMANCE MEASURES:
Revenue
11,279
11,262
17
Operating proﬁt
151
66
85
Proﬁt before tax (PBT)
161
28
133
ALTERNATIVE PERFORMANCE MEASURES:
Underlying operating profit
131
97
34
Underlying EBITDA
481
468
13
Underlying proﬁt / (loss) before tax
45
(2)
47
Net debt (including leases)
(1,248)
(1,315)
67
Net debt (excluding leases)
(55)
(82)
27
* The 2023 ﬁgures reﬂect the 53-week period to 6 January 2024 whereas the 2024 ﬁgures reﬂect the 52 weeks to 4 January 2025.
OUR GROUP FINANCIAL METRICS
Revenue:
total Group sales of £11.3bn are in line with last year (2023: £11.3bn). Sales in our Food, Funerals
and Legal services businesses have grown in the year, offset by decreases in Federal, Wholesale and
Insurance. More detail is available in the business unit updates we’ve shared.
Operating proﬁt:
at £151m, our operating proﬁt has improved by £85m (2023: £66m), with underlying
operating proﬁtability improving by £34m as described in Rachel’s overview, with a reduction in non-
underlying items of £51m as described below.
Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA):
reﬂects our
underlying operating proﬁt excluding depreciation and amortisation charges, and has improved against the
comparative period at £481m (2023: £468m) broadly reﬂecting the improvement in underlying operating
proﬁt performance.
Our Members' Annual Report 2024
40
Proﬁt before tax (PBT):
at £161m, our PBT is £133m higher than last year (2023: £28m). Driven by the
improvement in our operating proﬁt by £85m higher than the comparative period, with net ﬁnance income
also being £48m favourable to 2023. Overall, we have recorded net ﬁnance income of £10m in the year
(2023: £38m net ﬁnance cost).
A key driver of the movement in net ﬁnance income and expense is the favourable returns on our funeral
plan investments in comparison to last year at £102m (2023: £17m). These investment returns are market-
driven and current period returns are above the long-term average that we would expect, at around £50m
for a typical year.
Other smaller favourable movements have also been seen on the fair value of some of the ﬁnancial
instruments that we hold (such as foreign exchange contracts, commodity derivatives and interest rate
swaps). These gains have, however, been offset by lower pension ﬁnance income (which is £60m lower than
last year) following the buy-in transaction undertaken in 2023 (see the non-underlying interest section below
for further detail).
Net debt (excluding leases):
we closed the year at £55m of core net debt excluding leases (2023:
£82m), representing an improvement from the previous year end position of £27m. Our resilient trading
performance and consistent cost control has continued to achieve strong operating cash generation whilst
maintaining our investment in member pricing and colleague support.
Net debt (including leases):
our lease liabilities reduced by £40m from 2023 year-end being a function
of lease maturities (with the majority of these being under review and in negotiation with our landlords)
and increased discount rates which reduces our lease liability. In conjunction with the above, this saw our
net debt including lease liabilities reduce to £1,248m from the prior year end position of £1,315m – an
improvement of £67m.
FINANCING INCOME AND COSTS
Financing costs / income (£m)
2024
2023
Var
Underlying bank / loan interest
(47)
(56)
9
Interest received
25
25
-
Net underlying lease interest
(64)
(68)
4
Total underlying interest (net)
(86)
(99)
13
Net pension finance income
17
77
(60)
Finance income (funeral plans)
107
17
85
Finance expense (funeral plans)
(18)
(16)
3
Movement on foreign exchange contracts
(1)
(6)
5
Movement on quoted debt
(3)
(10)
7
Movement on interest rate swaps
3
4
(1)
Other non-underlying interest (net)
(9)
(5)
(4)
Total non-underlying interest
96
61
35
Our Members' Annual Report 2024
41
Net underlying interest expense:
at £86m, our net underlying ﬁnancing costs are £13m favourable to
last year (2023: £99m) as we have incurred less interest on our borrowings following the repayment of the
remaining £200m Sustainability Bond in May 2024.
Non-underlying interest:
the net ﬁnance income recorded from non-underlying items increased by £35m,
with signiﬁcant movements including:
• The non-cash returns achieved on our funeral plan investments in 2024 were £102m which is £85m higher
than in the prior year (2023: £17m). The higher returns on the investments were driven by market conditions
and the 2023 performance reﬂected a much lower return than we would expect to see in a typical year of
around £50m. The returns achieved in 2024 are above that longer-term average.
• Net ﬁnance pension income is £60m lower than last year at £17m (2023: £77m). This income is non-cash,
and the reduction in comparison to the prior year reﬂects the signiﬁcant reduction in the net pension
surplus that we hold on our balance sheet following the buy-in transaction undertaken in November 2023,
which saw the value of the pension asset held reduce by around £1bn. The net pension interest recorded in
our Income Statement is a function of the value of the surplus at the start of the period and so will continue
to be lower in the future than it has historically been.
NON-UNDERLYING ITEMS
(£m)
2024
2023
Var
Property disposals and closures
19
9
10
Impairments of assets
(18)
(32)
14
Change in value of investment properties
14
4
10
Other non-underlying items
5
(12)
17
Total non-underlying items
20
(31)
51
* Positive items are gains and negative items are losses.
Property disposals and closures –
we recorded a gain of £19m on the disposal of a small selection of Food
stores and other non-trading properties during 2024, and the proceeds received exceeded the net book value
we were holding for those properties. The comparative ﬁgure in 2023 was a gain of £9m.
Impairment of assets –
we recorded a net impairment of £18m in 2024, primarily in relation to those Food
stores where our latest future trading cashﬂow forecasts do not fully support the asset value of the sites. This is
an improvement from the £32m recorded in the prior year.
Change in value of investment properties –
we recorded a £14m gain on our investment properties primarily
relating to the gain realised on two properties that we disposed of in the year. The comparative ﬁgure in 2023
was a gain of £4m.
Other non-underlying items –
we’ve recorded a net gain of £5m in 2024 (2023: £12m charge). This comprises
a £17m gain relating to a one-off adjustment to eliminate a historic fair value adjustment to certain property,
plant and equipment assets, a £5m charge in relation to legal costs on ongoing legal claims and a further
£7m charge in relation to the recognition of funeral plan liabilities for plans waiting redemption (omitted on
adoption of IFRS 17).
Our Members' Annual Report 2024
42
NET DEBT AND CASHFLOW
Net debt £m
2024
2023
Var
Bank debt
(475)
(677)
202
Lease debt
(1,193)
(1,233)
40
Total debt
(1,668)
(1,910)
242
Group cash & cash equivalents
320
395
(75)
Short-term investments
100
200
(100)
Net debt (excluding leases)*
(55)
(82)
27
Net debt (including leases)*
(1,248)
(1,315)
67
* Our net debt metrics include our short-term investments.
Cash generation
2024
2023
Var
Net cash inflow from operating activities
456
602
(146)
Capex
(273)
(205)
(68)
Disposal proceeds
34
37
(3)
Net cash inﬂow from funeral plan investments
20
40
(20)
Lease payments - principal & interest
(183)
(191)
8
Net bank & loans interest
(25)
(39)
14
Other
(2)
(4)
2
Net cash generation
27
240
(213)
Reconciliation to cash and cash equivalents and net debt
Short-term investments
100
(200)
300
Repayment of borrowings
(204)
(100)
(104)
Accrued interest on amortised debt
2
8
(6)
Net decrease in cash and cash equivalents
(75)
(52)
(23)
Opening core net debt
(82)
(322)
240
Net cash generation
27
240
(213)
Closing core net debt
(55)
(82)
27
Our Members' Annual Report 2024
43
We continued to reduce our overall indebtedness in 2024, closing out the year at £55m of net debt (excluding
lease liabilities). This is a reduction of £27m from year-end 2023. This trend continues on the good progress
with overall net debt reduction at 92% in the last three years.
During 2024, we generated strong net cashﬂows from operating activities of £456m (2023: £602m)
demonstrating a resilient trading performance across our business portfolio and continued focus on cost control.
In 2024, we increased the amount we are spending to invest and grow our Co-op through £273m in capital
expenditure (2023: £205m). Furthermore, in May we repaid the remaining £200m principal on maturity of the
Sustainability Bond in cash without reﬁnancing, which has reduced both our debt and cash balances.
In October our credit rating was upgraded by Standard & Poors (to BB from BB-) reﬂecting our improved
proﬁtability and lower indebtedness. We also extended our £400m sustainability-linked revolving credit
facility to 2029.
OUR BALANCE SHEET
The total net assets of the Group at £2.2bn are similar to last year (2023: £2.0bn).
Signiﬁcant individual line item movements include the reduction in our borrowings following the maturity and
settlement in cash of the remaining £200m 5.125% Sustainability Bond in May 2024 with no reﬁnancing. This
reduction in liabilities is offset by a corresponding reduction in assets held in short-term investments and cash
that were utilised to fund that repayment.
Our funeral plan investments have increased by £68m, which includes the £102m investment plan returns
that we recorded in 2024. Funeral plan liabilities have also reduced by £97m primarily driven by £94m
ﬁnance income (recorded in other comprehensive income) following an increase in the risk-free gilt rate
during the year. This is used to discount future cashﬂows associated with the back-book of funeral plans.
The net pension surplus that we hold on our balance sheet has reduced slightly from the last year-end position
to £325m (2023: £356m). The net pension surplus that we hold on the Group balance sheet is much smaller
now following the buy-in transaction in November of last year. As the majority of the liabilities are now insured
the assets of the scheme move in-line with the liabilities and so we don’t see as much movement as we have
historically. The reduction in the surplus primarily relates to the payments made from the Pace surplus to fund
contributions to our Deﬁned Contribution pension scheme.
Our net deferred tax asset has reduced from £52m asset (2023) to £38m liability at year-end 2024,
mainly driven by a deferred tax charge in the year of £63m and a movement of £26m on our funeral plan
liabilities, taken directly to retained earnings.
Our Members' Annual Report 2024
44
RISK
MANAGEMENT
Our Members' Annual Report 2024
45
RISK MANAGEMENT
Effective risk management is a key component of
growing and protecting our Co-op. Our colleagues
share responsibility for identifying and responding
to risk and making effective decisions that ﬁt with
our co-operative Values and Principles, while
promoting an entrepreneurial approach and
prudent risk culture.
Managing our risks well means we grow and protect
value for our member-owners and their communities.
Our risk management framework gives colleagues a
clear way to identify and manage risks while keeping
us within our risk appetite. Our Board and senior
leaders oversee and manage the risks to our business
by ensuring that our approach to controls, response
plans and resources are effective.
OUR APPROACH TO RISK
We use a standard four-step approach to help
our leaders and colleagues recognise and manage
risk within the risk appetite set by our Board.
This is supported by our risk management
processes and tools, designed to align to our
strategy and objectives.
OUR RISK MANAGEMENT FRAMEWORK
Governance
Our Board oversees our risk management
framework through the Risk and Audit Committee
(RAC) and regularly considers the status of our Co-
op’s Risk Proﬁle by reviewing risk mitigation plans
and responses to signiﬁcant and emerging risks.
Each of our principal risks is owned by a member
of our Operating Board and they are responsible
for overseeing the responses to these risks. This
is undertaken with the support of subject matter
experts in the business. Our Business Risk and
Assurance Committee (BRAC) provides challenge
to these responses. Risk and control discussions
are escalated to BRAC from within our business
and functions.
Roles and responsibilities
Our Co-op uses a three-line model to manage risk.
First line –
frontline colleagues, managers and
leaders manage risk as part of their day-to-day
activities and escalate issues.
Second line –
our risk functions provide advice and
oversight to help the frontline manage risk within
our risk appetite.
Third line –
our Internal Audit team provides
independent assurance and challenge.
OUR RISK GOVERNANCE
Our Board reviews our position against our risk
appetite, the principal risks to our business and
monitors management’s action plans.
In 2024, the Risk and Audit Committee (RAC),
our Operating Board members and the Business
Risk and Assurance Committee (BRAC) met
regularly to look at the risks affecting our Co-op
and have scrutinised our key risks and the activity
undertaken by management to mitigate these.
The BRAC considers risks that may affect the
achievement of our strategic objectives. As part
of our annual planning exercise, we reﬂect any
A
SS
E
S
S
I
D
E
N
T
I
F
Y
M
O
N
I
T
O
R
&
R
E
P
O
R
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A
N
A
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Our Members' Annual Report 2024
46
changes to our strategy in our risk proﬁle.
Members of our Operating Board are individually
responsible for managing the principal risks and
mitigating those risks with the support of the
appropriate senior leaders.
The Business Risk and Assurance Committee is
made up of nominated members of our Operating
Board, senior leaders from each business unit and
key support functions, our Chief Finance Ofﬁcer
and Director of Risk and Internal Audit. This
Committee has responsibility for monitoring the
delivery of plans, assessing emerging risks and,
when required, challenging action taken to keep us
within risk appetite.
OUR RISK APPETITE
Our risk appetite is set and approved by our Board
and reviewed periodically or when there are
signiﬁcant changes affecting our business. Our last
review was undertaken in November 2024.
When setting our strategy and medium-term
business goals, we consider the degree of risk we are
willing to accept to achieve those goals. The level of
risk we are willing to accept will vary depending on
the type of risk.
The Operating Board and senior leaders put into
practice monitoring processes to make business
decisions, ensuring that we operate within our risk
appetite, taking corrective action where needed. We
regularly report to the Business Risk and Assurance
and Risk and Audit Committees on our position
compared to our agreed risk appetite.
We consider the following key areas of risk to support
our decision-making:
Strategic and membership
We are open to taking some risks to achieve
our strategic objectives, provided we do so in a
responsible way that contributes to the growth and
sustainability of our Co-op, and in a way that will
create value for our member-owners, communities,
and colleagues.
Financial and treasury
We adopt a prudent ﬁnancial approach and
avoid risks that would undermine our Co-op’s
ﬁnancial viability.
Operational
Our processes, systems and ways of working
must meet the needs of our stakeholders with
minimum disruption.
Regulation and compliance
We aim to always comply with the laws and
regulations that govern our business.
Brand and reputation
Co-operative Values and Principles are at the centre
of our approach to business and how we engage
with our stakeholders. We consider these Values and
Principles in the decisions we make in the course of
running our business.
REGULATORY LANDSCAPE
The various businesses within our Co-op are each
affected in different ways by changes in regulation.
We continuously monitor planned changes to
regulation and adapt to meet new requirements.
The Financial Reporting Council (FRC) announced
revisions to the UK Corporate Governance Code
to enhance transparency and accountability of
businesses that subscribe to the Code. We have a
programme of work in place to prepare for these
revisions and their subsequent implementation, to
ensure we comply with the requirements that are
relevant to our business as a co-operative.
Co-op Food and Co-op Wholesale Limited
There are various codes and regulations that apply
to our Food business and Co-op Wholesale Limited
(formerly Nisa Retail Limited) we comply with.
Co-op Funeral Plans Limited
and
Co-op Insurance
Services Limited
are authorised by the Financial
Conduct Authority.
Co-operative Legal Services
is regulated by the
Solicitors Regulation Authority (SRA).
Our Members' Annual Report 2024
47
PRINCIPAL RISKS AND UNCERTAINTIES
Our principal risks have been assessed using
the methodology outlined. They have been reviewed
by our Board and detail the risk exposures that pose
the greatest potential impact to our Co-op. Our
principal risks are set out in the tables below.
In addition to our principal risks, there may be
risks that are not known to us or some we may
consider not to pose a material threat to our
Co-op. We remain ﬂexible and respond to the risk
landscape as it changes.
How our principal risks developed in 2024
Through 2024, we saw changes to the geopolitical
environment as conﬂict heightened in the Middle
East. Attacks on shipping in the Red Sea put
pressure on costs, as shipping companies diverted
their cargo ships, adding additional time and costs
to their voyages.
Challenges in the macro-economic environment
are still creating uncertainty for UK consumers. The
impacts of this span several of our principal risks.
The principal risks most impacted are:
Competitiveness and External Environment:
cost
of living pressures continue to impact the ﬁnances
of our member-owners and customers as they seek
out value and adapt their shopping habits.
Supply Chain and Operational Resilience:
challenges remain within the supply chain in
terms of sourcing of products and materials for
and from our suppliers.
Environment and Sustainability:
the urgency
to address climate change remains. The current
geopolitical and economic circumstances have
served to heighten the challenges ahead and have
the potential to impact our ability to meet our
climate commitments over the long term.
Beyond this, the broad extent of our Principal Risks
has remained the same. In our
viability statement
, our
Directors have concluded that the business will have
sufﬁcient funds for the period to 31 December 2027.
All of our principal risks have been considered as
part of our viability assessment. Those marked with
V
are modelled through the Group plan.
CHANGE
Risk description:
we will make changes to the way we operate through our board-approved plan. If our plans are not delivered in an effective way, we will not realise the
beneﬁts of our change programmes.
Reason for the risk
What we do
What has changed
What we plan to do
Number and complexity of
change programmes
Available resources and capacity
for change
Complex dependencies between
change programmes
Cost of change
Ensure oversight of our change portfolio
activity has appropriate governance and
robust controls
Approach to change ensures member,
customer, partner and colleague impact
is considered and effectively managed,
and that changes are fully embedded
without disruption
Long-term planning assesses and
prioritises change choices and
investment decisions that align with the
delivery of our strategic objectives
Continued strengthening of end-to-
end change processes focused on the
effective delivery of strategic outcomes
and risk mitigation in a fast moving and
changeable macro-environment
Maturing portfolio processes and
demand forecast reporting to ensure
we focus on what has the most material
impact and beneﬁt in delivering our
vision and strategy
Introduced integrated end-to-end
change and business-as-usual planning
Richer ﬁnancial reporting that identiﬁes
risks and opportunities earlier
Further embed the connections between
our change portfolio, our overall
strategy and our approach to risks and
opportunities much earlier
Ongoing improvements to the way we
track transformational and functional
change that underpins our Co-op
strategy to ensure we understand and
manage interdependencies and impacts
Mature our approach to integrated
planning to provide the conﬁdence and
assurance we will deliver on our strategy
Our Members' Annual Report 2024
48
COMPETITIVENESS AND EXTERNAL ENVIRONMENT
V
Risk description:
the competitive and economic landscape in which we operate means that we need to monitor our growth targets, propositions, and competitor behaviour
to remain viable and innovative.
Reason for the risk
What we do
What has changed
What we plan to do
New entrants and market competition
Innovation and market disruption
Cost pressures
Market factors, such as the rising cost of
living and inﬂation
Macro-economic and supply chain issues
relating to geopolitical issues
Changes to regulation and Government
policy
Structural changes to the economy post-
exit from the single market and customs
union transition
Social and political uncertainty
Strategic planning and ﬁnancial planning
Risk and opportunity management,
including ﬁnancial forecasting
Annual planning refresh with regular
reporting and analysis
Undertake market share, customer
behaviour and competitor analysis
Sales monitoring and reporting
Horizon scanning and frequent
assessment of external conditions
Agile promotions and marketing
responses
Extensive due diligence for all acquisition
activity
Engagement with Government and
industry working groups
We have started to deliver on our
strategy to deliver our growth ambitions
for 2030 and create economic value,
ownership value and social value for our
member-owners
The Chancellor’s budget introduced
an unexpected increase to Employer’s
National Insurance, alongside the
additional costs of meeting increasing
regulatory requirements. This will put
pressure on our price competitiveness
Economic conditions continue to severely
impact real income for UK households,
as well as signiﬁcantly increasing our
costs, leading many consumers to seek
out value
Changes in consumer behaviour and
expectations have driven greater
participation in online and local shopping
Progress toward our target of eight
million member-owners by 2030
Invest in our member-pricing model
Operate efﬁciently in order to drive value
competitiveness
Accelerate convenience growth with
store openings and extended services
BRAND AND REPUTATION
Risk description:
we set ourselves high standards in the way we operate our business. Our Co-op difference means we are owned by and run for the beneﬁt of our members.
As a co-operative we reﬂect our Values and Principles and consider wider social and ethical impacts within our decision making, so that we can be
commercially successful and sustainable. If we don’t meet these standards there is a risk to our reputation.
Reason for the risk
What we do
What has changed
What we plan to do
Expectations of our member-owners,
communities and the customers we serve
to deliver positive social impact
Running our businesses in accordance
with the principles set out by the
International Co-operative Alliance (ICA)
Scrutiny by the media
Sustained use of third-party partners to
deliver Co-op branded products and
services
Create economic value for our member-
owners through the products and
services we provide
Create social value for the communities
we serve
Create ownership value by giving our
member-owners a say in how we run our
business
Report on our ethical priorities and
sustainability progress through our Social
Value and Sustainability report, charting
our responsible business performance
and progress
Report progress against both commercial
strategy and delivery of our vision in our
interim and annual reports
Apply our Ethical Decision-Making Tool
to inform key business activities and help
make better decisions on behalf of our
member-owners
Established clear messaging for our
masterbrand
Owned by You, Right by
You
. This has reinforced the sense of
ownership our members have and how
we as a business conduct ourselves for
our stakeholders
Our campaigning activity through
the media and with respective UK
Governments has brought about a
change in the law as to how attacks on
retail workers are dealt with
We launched the International
Co-operative Development Fund as part
of our Peace and Co-operation campaign
External communications to establish
Co-op's values for social mobility,
including campaigning to have social
mobility as a protected characteristic
Drive through cultural change required
to support our
Owned by You, Right by
You
message
Protect Co-op brand reputation by
focusing on delivering the three aspects
of member beneﬁt: economic, social and
ownership
Deliver our Co-op’s social value strategy
which will support member-owners,
colleagues and customers
Reach eight million member-owners by
2030 and support growth for our core
businesses – Food, Life Services and
Business-to-business
Deliver on commitments with other
charity partners in the communities we
serve
FUNDING AND LIQUIDITY
V
Risk description:
the Group relies on a combination of external funding and cashﬂow generation to run its businesses. A deterioration in economic conditions may require
our Co-op to take mitigating action to ensure adequate funding and cashﬂows. Such mitigation could include reducing or delaying capital expenditure,
eliminating discretionary costs and/or disposal of non-core assets.
Reason for the risk
What we do
What has changed
What we plan to do
Changes in economic environment and
outlook
Movements in market prices
Changes in tax and tariff regimes
Certain debt markets may not be
accessible during periods when the
group may wish to reﬁnance
We have a Board-approved Treasury
policy in place, which is actively
monitored through our Treasury
Committee
Updates are provided to the Board
covering debt facilities and liquidity
headroom to ensure adequate capacity to
cover future funding requirements
Strategic plans supported by scenario
planning
Hedging strategies are in place to
minimise impacts of interest rate and
commodity movements
We operate in a period of continuing
economic and geopolitical uncertainty,
however our balance sheet remains
strong
The Group received a credit rating
upgrade in 2024 from S&P
Our £400m sustainably-linked revolving
credit facility was successfully extended
out to 2029
Continue to repay or reﬁnance our debt
facilities ahead of any debt maturities to
ensure we maintain adequate liquidity
headroom to cover the future operations
of the business
Our Members' Annual Report 2024
49
TECHNOLOGY AND CYBER THREATS
Risk description:
we electronically store and process data on our member-owners, colleagues, customers and partners. We are reliant on technology to deliver our business
operations so theft of data or a cyber-attack could signiﬁcantly disrupt our business.
Reason for the risk
What we do
What has changed
What we plan to do
Custody of valuable data
Reliance on technology
Sophisticated and diverse cyber threat
landscape (including AI)
Data privacy and data protection
regulations
Member-owner, colleague and customer
conﬁdence
Increase in third-party cyber incidents
Protection of information owned or
managed by our Co-op
Protection of services that our Co-op
delivers to our customers and member-
owners
Provide 24/7 security operation capability
with embedded information Security
controls
24-hour threat and security event
monitoring and response capability
vulnerability management
Supplier security due diligence and
assurance, and regular testing for security
weaknesses
Share best practice and foster a strong
information security culture
Continually improve security
controls through an ongoing security
improvement programme
Obtain independent assessments of our
security posture to deﬁne strategy
Engage with the business to ensure
security controls are aligned to their risk
appetite
Improved protection from external cyber
threats including increased boundary
controls
Enhanced end user compute protection
capabilities
We have further matured our identity
solutions
Introduced a phishing simulation
capability
We have improved our Data Loss
Prevention controls through improved
information, protection and governance
Extended cloud security controls
Implemented additional security controls
into Nisa
Mature our identity and access
management controls
Mature our email security tooling and
implement enhanced email controls
Introduce controls that demonstrate
to our member-owners and customers
that communication from the Co-op is
genuine, to reduce fraudulent activity
Invest in technology replenishment
Invest in tooling to provide a uniﬁed view
of assets in our overall attack surface
Improve our internal capabilities on threat
detection
PEOPLE
Risk description:
our ability to attract and retain colleagues with relevant skills and experience while fostering a diverse and fairer workplace is important to achieving a
strong, competitive Co-op. If we do not continue to recruit talent and invest in our colleagues, then it may impact our operations and our ability to deliver on
our strategic plans.
Reason for the risk
What we do
What has changed
What we plan to do
Ineffective selection and assessment
processes
Talent attraction
Need for greater diversity
Increased demand for talent and reduced
supply
Pre-employment screening, culture ﬁt
assessment and induction for new hires
Ongoing inclusive leadership behavioural
training for all leaders and managers
Colleague performance reviews,
engagement and recognition
Talent management review
Pay and reward packages are reviewed
regularly to ensure they remain
competitive and fair
Operate a hybrid working policy which
gives more choice over how, when and
where our colleagues work best to
balance business and colleague needs
Continued roll out of inclusive hiring
training to hiring managers
Further introduction of talent forums
(
Our
People, Our Talent
) across business
units to drive talent agenda and mobility
Design and planning for refreshed
behavioural framework
Planning for use of Oracle Skills
Integrate refreshed
Ways of Being
and
new
Ways
of
Leading
into recruitment,
performance and talent processes
Implement framework and Oracle
technology that supports talent
development and reskilling as the world
of work changes
Make improvements to the colleague
experience that reinforce colleague
member-ownership, in line with
Owned
by You, Right by You
Implement new Rewarding Growth
Incentive plan for all colleagues and make
changes to senior leadership bonus and
long-term incentive plan
Introduce a total reward beneﬁt platform
MISUSE AND/OR LOSS OF PERSONAL DATA
Risk description:
we hold personal information of our member-owners, colleagues and customers. We need to make sure we protect and manage this responsibly.
Reason for the risk
What we do
What has changed
What we plan to do
Member-owner, colleague and customer
conﬁdence
Data privacy and data protection
regulations
Information processed on our behalf by
third parties
Dedicated Data Protection, Data
Management and Information Security
teams provide challenge, guidance, and
oversight
Role-speciﬁc training and awareness
to manage data protection risks and
promote ethical data usage
Data protection impact assessments
for new systems, processes or business
activities, or changes to existing ones
Maintain strategic relationships with
Government bodies and third parties
Increased accountability through
enriched records of data processing
activity
Further improvements to streamline
governance, reporting, monitoring and
oversight
Targeted assurance plan in place
Bespoke training for colleagues
managing rights requests
Further embed assurance activity over
key data protection controls
Evaluate materiality and practical
implications to our Co-op of key
proposed changes to data protection
related regulation and standards
Enhance suite of reporting to include
trend analysis, risk metrics and emerging
risks
Drive increased ownership and
accountability for personal data to ensure
an appropriate level of data protection
risk and compliance
Our Members' Annual Report 2024
50
HEALTH & SAFETY AND SECURITY
Risk description:
we have a duty of care to protect our colleagues, customers and third parties. Failure to carry out this duty effectively may result in adverse legal, ﬁnancial
and reputational impacts.
Reason for the risk
What we do
What has changed
What we plan to do
Keeping colleagues, members,
customers and visitors to our sites safe
UK health and safety legislation
Size and complexity of our business
Co-op wide health, safety and security
frameworks deﬁne how we implement
and report on controls
We monitor and oversee issues through
committees of subject matter experts
Our performance is published in our
annual Social Value and Sustainability
report
A comprehensive set of minimum
standards outline the controls required to
mitigate risks
We continue to manage risk at our Co-op,
using the well-established three lines of
defence operating model
Across the UK, crime rates within our food
retail network increased in 2024 by 2%.
This is on top of the 42% increase in 2023.
Rising rates of crime, such as violence and
abuse, have been reported across the
UK’s retail sector
Following an increase in violence towards
shopworkers, the Government has
announced it will create a new speciﬁc
offence of assaulting a shopworker
Continued investment in security
measures and equipment such as secure
kiosks, product protection and body-
worn cameras
Improved police performance in relation
to attendance with a 66% attendance rate
in 2024 compared to 20% in 2023, before
we launched our crime action plan
More focus on working collaboratively
with police. Our police partnership
activity increased, and we continue to
support activity of the Home Ofﬁce’s
Retail Crime Steering Group
Campaign on the Government’s
commitment to make assaulting a
shopworker an aggravated offence in
2025. This was part of the King’s Speech
in 2024
Continue our
Safer Colleagues, Safer
Communities
programme of activity
encompassing security, wellbeing,
campaigning and social responsibility
Conduct horizon scanning for future
changes in health and safety legislation,
sharing our ﬁndings with specialist teams
Ongoing health and safety and crime
data enhancements to develop current
system intelligence
We will be able to benchmark our crime
levels against the sector when the British
Retail Consortium and Association of
Convenience Stores crime reports are
published
Expansion of external police partnerships
targeting persistent and proliﬁc offenders
Focus on challenges relating to offender
management in the campaign space.
How do we support breaking the cycle
of crime?
Roll out CCTV alerts, and test and trial of
entry and exit store trial
SUPPLY CHAIN AND OPERATIONAL RESILIENCE
Risk description:
if we are unable to prevent, adapt or respond to a major failure or external event to a key part of our business or supply chain, it could signiﬁcantly affect the
availability and quality of products and services delivered to our member-owners, colleagues, customers and partners.
Reason for the risk
What we do
What has changed
What we plan to do
Unpredictable external events like severe
weather, pandemics and signiﬁcant
geopolitical events, as well as food fraud
risks
Efﬁciency of logistics network processes,
infrastructure, and resource capacity
Post-exit from the single market and
customs union, structural changes to
the economy, trade deals and national
infrastructure
Supplier capacity and preparedness for
cross-border processes
Variability in customer and network
demand leading to supply pressures and
service instability
Established business disruption
planning and testing, including incident
management processes
Regular disaster recovery testing and
review of IT service levels to ensure
resilience to external sources of
disruption
Regular strategic review of our network
to meet future demands and growth
aspirations
Engage with industry working groups,
Government and information exchanges
to support joint responses with key
stakeholders
Post-exit from the single market and
customs union we manage goods moving
from Great Britain to Northern Ireland
through the Windsor Framework’s ‘green
lane’
Food authenticity management system,
horizon scanning of potential change
in external events and regulations, risk
mitigation and a robust product testing
programme
Work closely with the National Crime
Agency, the Food Standards Agency, the
Food Intelligence Information Network
and the British Retail Consortium to
underpin the integrity of our products
We have a process in place to assess
supplier performance, allowing for early
intervention where supply chain process
is impacted
We have worked with our suppliers to
minimise the supply chain disruption
caused by:
- attacks on shipping in the Red Sea
which have put pressure on our costs,
as shipping companies diverted their
cargo ships
- the severe weather that has impacted
our produce supply chain
There are cost implications following the
increases announced for the National
Living Wage and Employer’s National
Insurance
We continue to deliver our multi-
year retail business transformation
programme and Funeralcare’s core
system transformation programme. Both
support greater resilience
A change of government has impacted
timescales of some new regulation
including the EU
Deforestation-free regulation obligations
and EU labelling requirements. We
worked with our suppliers to understand
impacts and preparation required
Use artiﬁcial intelligence systems to
accelerate data analytics
Work in partnership with British Farmers
by implementing funds rewarding them
for carbon emissions reduction and
promoting nature across the beef, lamb
and dairy sectors
Prepare for the planned legislative
changes around waste packaging
Work collaboratively with our suppliers
and Business-to-business partners to
ensure the future safety of our supply
chain through artiﬁcial intelligence and
enhanced processes
We continue to evolve our supply chain
and logistics system architecture to help
manage the complexity of our network
and drive forecast accuracy
Our Members' Annual Report 2024
51
REGULATORY COMPLIANCE
Risk description:
our Co-op is subject to laws and regulations across its businesses. Failure to respond to changes in regulations or stay compliant could affect proﬁtability,
our reputation (through ﬁnes and sanctions from our regulators) and our licence to operate.
Reason for the risk
What we do
What has changed
What we plan to do
New and updated laws and regulations
from the UK Government and the
devolved nations can impact our Co-op
Our businesses provide ﬁnancial and
legal products and services which are
regulated by the Financial Conduct
Authority (FCA) and the Solicitors
Regulation Authority (SRA)
There are codes and regulations that
apply to our Food business including
the Groceries Supply Code of Practice
(GSCOP)
Horizon scanning for emerging changes
on the regulatory landscape, taking
appropriate action and feeding into
consultations where applicable
We have colleagues with relevant
expertise, robust processes and controls
to ensure the products and services we
provide comply with all relevant laws and
regulations
Processes and a charter in place to
engage with suppliers and remain
compliant with GSCOP
Established Risk and Compliance
capability across our businesses
Mandatory regulatory/legislative training
for relevant colleagues
Regular cross-functional review and
monitoring of regulatory landscape,
including tracking of delivery plans and
assurance reviews
Exports to Northern Ireland continue
to be managed through the phased
implementation of the Windsor
Framework with further rollout of EU
labelling introduced in the year
Further improved processes and controls
to ensure compliance with the Controlled
Land Order 2010
A change of government has impacted
timescales of some new regulation
including proposed signiﬁcant changes in
employment practices
Continue to strengthen compliance
frameworks and horizon scanning in
response to increasing regulatory
requirements on our businesses
Preparation underway to ensure we
comply with the Financial Reporting
Council’s new disclosure requirements
PRE-NEED FUNERAL PLAN OBLIGATIONS
Risk description:
the measurement of our pre-paid funeral plan obligations is sensitive to changes in several factors. Adverse movements could result in lower-than-expected
funds being available and the business receiving a lower amount for each funeral or result in individual contracts becoming onerous.
Reason for the risk
What we do
What has changed
What we plan to do
Changes in the cost of providing a funeral
or expected inﬂation on funeral costs
Underperformance of assets held to meet
funerals
Changes in long-term interest rates
Most funds are invested in whole life
insurance policies with guaranteed
minimum returns
Regular stress testing, actuarial modelling
and monitoring of risk positions versus
risk appetite
Annual assessment of key assumptions
and annual actuarial valuation by external
actuaries
Monitoring and oversight by a senior
committee of specialists, business
leaders and advisers
Monitoring of Financial Conduct
Authority (FCA) reporting requirements
(Core Capital, Liquidity and General
Solvency)
Investment returns will remain a risk and
opportunity due to the wider economic
and political climate
Returns have been higher in 2024 than in
2022-23; however, we remain exposed to
the possibility of potential movements in
market conditions
Regularly review and improve the
methodology and assumptions used in
our actuarial models
Ongoing monitoring of the required
levels of funding and FCA metrics
Ongoing review of our investment mix
against our risk appetite
SUSTAINABILITY
Risk description:
the way we run our business operations and the products and services we provide are affected by local and global social and environmental events.
Running our Co-op sustainably is essential to achieving our Co-op’s goals and meeting our ambition of becoming Net Zero for Scope 1 and 2 emissions by
2035 and for Scope 3 emissions by 2040.
Reason for the risk
What we do
What has changed
What we plan to do
Physical and transitional climate-related
risks impacting food sources and
materials, supply chains, livelihoods and
economic growth
Increasing UK and international
environmental policies and regulations,
including carbon prices and tighter
emissions limits
A competitive environment on
sustainability and changing expectations
and attitudes of our members, customers,
suppliers and partners
Living up to our co-operative Values and
Principles
The technologies and/or infrastructures
required to achieve Net Zero are still
unavailable or unaffordable
Increasing risk of human rights and
modern slavery issues in global supply
chains
Our climate risks are each owned by
leaders. Each risk has identiﬁed controls
in place to mitigate the impact, and we
conduct regular reviews to identity risk
and regulatory developments
Work closely with our suppliers to drive
innovation and test opportunities to scale
joint sustainability work
We have a robust human rights due
diligence programme spanning our full
Co-op and supply base that supports our
suppliers in tackling human rights issues
Continue to campaign for climate justice
and inﬂuencing Government for collective
action around climate change
We introduced a new operating model
that enables our functions and businesses
to identify and manage our risks to grow
and protect more effectively
This year we are expanding the scope of
our Climate-related Financial Disclosures
to cover all our group operations
Our board-approved plan includes
dedicated sustainability spend that
enables us to make progress towards
our commitments whilst ensuring a
commercially viable approach
50% of our Category 1 (Scope 3) emissions
are now covered by suppliers with
validated science-based targets
We will review our Sustainability Plan to
continue ensuring our Co-op’s ﬁnancial
planning aligns and supports our climate
commitments
We will incorporate sustainability metrics
into our investment decision-making
frameworks to ensure we invest in the
right work for the Co-op at the right time
to ensure our sustainable and resilient
future
We will deliver our strategy for healthy
and sustainable diets to manage our
proposition in line with consumer
sentiment and sustainability goals
We will continue to lead and to actively
participate in key multi-stakeholder
initiatives on sustainability, including
the relaunched Government Net Zero
Council, co-chaired by our CEO
Our Members' Annual Report 2024
52
CLIMATE-RELATED FINANCIAL DISCLOSURES
As a large organisation, our Co-op is committed to complying with the UK Government’s mandate to disclose
climate-related ﬁnancial information. Details of this disclosure are set out on
page 110
.
MODERN SLAVERY
We have a long-standing commitment to protecting human rights in the UK and overseas. We welcomed
the introduction of the Modern Slavery Act in 2015 and remain committed to providing an open and honest
account of what we are doing to prevent modern slavery in our supply chains and business. You can read
more about our approach to ethical trading, and how we manage the risks related to tackling our exposure to
modern slavery in our food supply chains in our
Modern Slavery statement
.
EMERGING RISKS
We monitor emerging risks and opportunities for our Co-op and across our businesses and functions where
the full extent and implications of a risk may not be completely understood but needs to be tracked.
We regularly evaluate changes to our risk proﬁle triggered by new or unexpected events and respond to them
at a function, business or group level with the support of our business continuity and legal teams.
EMERGING RISK
WE PROTECT VALUE AND GROW BY…
Political risks
The instability in the geopolitical landscape could further
complicate our supply chains and operations, and our ability
to create value for our members. The UK Government has
introduced legislation that will lead to an increase in our
operating costs, and is likely to introduce more.
Working with suppliers and partners and having
robust business continuity plans in place. We
maintain regular contact with relevant Government
departments and industry bodies.
Economic risks
Economic volatility in the world increases the possibility of
future financial instability, which may impact our ability to
protect and grow value and support our member-owners
and their communities. The increase to employers’ National
Insurance payments announced by the Chancellor in the
Autumn Budget will also add significant costs to running our
Co-op, around £50m.
The introduction of the Producer Responsibility Obligations
(Packaging and Packaging Waste) Regulations will impact
our costs by around £30m.
Our member-ownership model means we can take
a longer-term view than our competitors; we aim
to create a strategically commercially viable and
sustainable business.
We are also working in partnership with our suppliers
to look at ways we can reduce or remove packaging.
We have a packaging strategy to reduce the impact
packaging has on planet, people and profit.
Social risks
Changes in demographics and population structures in the UK
may impact our business.
Reviewing our propositions to meet both our
colleagues’ and members’ needs now and in the future.
Technological risks
Progression in technology accelerates, our existing ways of
operating and working become outmoded and impact the
opportunities to create value offered by new technology.
Adopting new technology to improve our operations,
explore opportunities in new markets and deliver
value to our members.
Legal and regulatory risks
Differing regulation and legislation across the UK’s devolved
nations, and with the EU, continues to drive up costs for our
Co-op and impacts our ability to protect and grow value.
Engaging with Government, its agencies and
industry bodies to ensure compliance is achieved in
an effective way.
Environmental risks
Climate change and an increase in the frequency of severe
weather events may impact our capacity to protect and create
sustainable value for our member-owners.
Demonstrating best practice in transitioning to a
clean economy and renewable energy solutions.
Our Members' Annual Report 2024
53
We give members the information they need to play
a part in our business and make informed choices.
This section of our report seeks to answer any questions
you may have on the way we’re run – from the
people on our Board to our emissions for the year.
GOVERNANCE
REPORT
Our Members' Annual Report 2024
54
BOARD BIOGRAPHIES
Debbie White
Chair
Appointed as Chair on 2 January 2024
(Independent Non-Executive Director and
Chair Designate from August 2023)
Committee Membership
Nominations Committee
(Committee Chair from 2 January 2024)
Skills and experience
Debbie is an experienced Non-Executive
Director. She is the Senior Independent
Director of Spire Healthcare Group plc. and
was previously a Non-Executive Director of
Howdens Joinery Group plc. Debbie is also
Audit Committee Chair and Non-Executive
Director of PAVmed, Inc., a US medical
technology company (listed on the
NASDAQ). Debbie is a special adviser to
Angeles Equity Partners and sits on the
Board of Xanitos, Inc, a portfolio company.
Debbie’s executive career most recently
included roles as Group Chief Executive of
Interserve Group and Global CEO for
healthcare and government at Sodexo.
Debbie started her career as a Chartered
Accountant with Arthur Andersen (UK),
before joining AstraZeneca where she held
a range of ﬁnancial roles. She later joined
PwC Consulting where she worked across a
number of sectors in a global capacity.
Debbie is Honorary Treasurer and a trustee
of Wellbeing of Women, a UK charity which
funds research into women's reproductive
and gynaecological health.
Shirine Khoury-Haq
Chief Executive Ofﬁcer
Appointed as CEO in August 2022
(Interim CEO from March 2022)
Skills and experience
Shirine is Group CEO at Co-op and has
been a Director on the Co-op Board since
joining in 2019. Shirine joined Co-op in
August 2019 as Chief Financial Ofﬁcer and
later also became Chief Executive Ofﬁcer of
Life Services, leading Co-op Funeralcare,
Insurance and Legal Services.
Before joining Co-op, Shirine was Chief
Operating Ofﬁcer for the Lloyd’s insurance
market, which comprised more than 50
leading insurance companies operating in
over 200 countries. Shirine also led the
digital modernisation programme for the
wider London insurance industry.
In addition to holding senior positions at
IBM, McDonald’s and the insurer Catlin
Group, Shirine has worked in a number of
regulated sectors in the UK and overseas
including retail, IT, pharmaceuticals and
consumer goods.
Shirine was previously a Non-Executive
Director and Chair of the Audit and Risk
Committee at Persimmon Plc. and a
Non-Executive Director at the Post Ofﬁce.
Rachel Izzard
Chief Financial Ofﬁcer
Appointed as CFO and Executive Director
in June 2023
Skills and experience
Rachel joined the Board in June 2023 as
Group CFO for Finance and Procurement.
Rachel has extensive experience at board
level, holding a variety of senior executive
and Non-Executive leadership roles in the
commercial sector, across a wide variety
of countries.
Prior to this role, Rachel was CFO at
N Brown plc, the UK fashion digital retailer.
Rachel also has 25 years’ experience in
airlines and logistics including as CFO and
CIO of Aer Lingus, during which time the
company achieved a turnaround in both
customer proposition and ﬁnancial results.
Rachel was also CFO at IAG Cargo,
co-founding the business from the divisions
of British Airways and Iberia, and also held a
range of roles overseas in Sydney, Hong
Kong and New York.
Our Members' Annual Report 2024
55
BOARD BIOGRAPHIES
Moni Mannings OBE
Senior Independent Director
Appointed as Senior Independent Director
on 2 January 2024
Committee Membership
Nominations Committee
Remuneration Committee
(from 23 January 2024)
Skills and experience
Moni is a qualiﬁed solicitor. Until March
2016 Moni was a senior partner in
international law ﬁrm Olswang LLP having
enjoyed a career spanning over three
decades in legal practice as a banking and
ﬁnance lawyer. Moni founded and led
Olswang’s International Banking and
Finance Division and served on Olswang’s
Board for 13 years.
Moni is currently Senior Independent
Director Designate at Land Securities
Group plc and a Member of The
Takeover Panel.
Moni has previously served as a Non-
Executive Director of easyJet plc,
Hargreaves Lansdown plc, Investec Bank
plc, Polypipe Group plc, Dairy Crest Group
plc, Breedon Group plc and Cazoo Group
Ltd and was Deputy Chair of Barnardo’s.
Moni founded EPoC (Empowering People of
Colour), a not-for-proﬁt network that seeks
to increase the diversity of boards. She is a
member of the Parker Review Committee
and a trustee on the Board of the St Mark's
Hospital Foundation charity.
Kate Allum
Member Nominated Director
Elected as a Member Nominated Director
in May 2021
Committee Membership
Nominations Committee
Remuneration Committee
(Committee Chair from 18 June 2024)
Skills and experience
Kate has extensive experience at board
level, holding a variety of senior executive
and non-executive leadership roles in the
commercial sector, across a wide variety of
companies, cultures and countries.
Kate is currently the Chair of Court for
the University of the West of Scotland
and the Wild Water Group and is also a
director of Ballater (RD) Limited and Thrive
Ballater Limited.
Previously, Kate was a director of Eurocell
PLC, Billingtons Food Group and Chief
Executive of Cedo Limited and First Milk
Limited, the largest UK-owned dairy
co-operative.
Margaret Casely-
Hayford, CBE
Member Nominated Director
Elected as a Member Nominated Director in
May 2016
Margaret will reach the end of her term on
17 May 2025
Committee Membership
Remuneration Committee
(until 26 March 2025)
Nominations Committee
(until 26 March 2025)
Skills and experience
Margaret is a qualiﬁed lawyer of over 30
years’ standing, was the Director of Legal
Services for the John Lewis Partnership for
nine years and on the Board of the British
Retail Consortium for four years. She is also
a member of the Institute of Directors’
Corporate Governance Advisory Board.
Margaret is an adviser to a number of social
enterprises including the Better Business
Initiative and is a champion of diversity,
equity and inclusion.
Our Members' Annual Report 2024
56
BOARD BIOGRAPHIES
Sarah McCarthy-Fry
Member Nominated Director
Elected as a Member Nominated Director
in May 2019
Due to stand for re-election in May 2025
Committee Membership
Risk and Audit Committee
Nominations Committee
(from 26 March 2025)
Skills and experience
As a committed co-operator for over
30 years, Sarah has previously served as a
local Councillor and as a Labour and
Co-operative Party MP, representing
Portsmouth North. As a Government
Minister in HM Treasury, Sarah was
responsible for personal savings policy and
ﬁnancial inclusion including Credit Unions.
As Schools Minister, she led the
development of apprenticeships policy and
partnerships with Business and Schools.
Sarah is a former Finance Director at
GKN Aerospace, a global engineering
company and a former Chair of the
Employment and Skills Board for the Solent
Local Enterprise Partnership. Sarah is a
Trustee and Treasurer of the Parliamentary
Outreach Trust.
Adrian Marsh
Independent Non-Executive
Director
Appointed as an Independent
Non-Executive Director in May 2023
Committee Membership
Risk and Audit Committee (Chair)
Remuneration Committee
(from 23 January 2024)
Skills and experience
Adrian is an accomplished Group Finance
Director and experienced Non-Executive
Director with multi-sector expertise. Most
recently, Adrian was Group Finance Director
of DS Smith plc where he held the position
for 10 years. Prior to this, Adrian held senior
ﬁnance positions at Tesco plc, AstraZeneca
plc and Pilkington plc.
Adrian is currently a Non-Executive Director
and Audit Chair of John Wood Group.
Adrian’s previous directorships include
Greenergy International and
WeConnectStudents.com.
Adrian is a Fellow of the Chartered
Association of Certiﬁed Accountants
and a Fellow of the Association of
Corporate Treasurers.
Luke Jensen
Independent Non-Executive
Director
Appointed as an Independent Non-
Executive Director on 19 February 2024
Committee Membership
Risk and Audit Committee
(from 19 February 2024)
Skills and experience
Luke is an established retail leader with a
wealth of experience in the global food
retail industry. Luke is currently Executive
Chair at Hana Group SAS, a world leading
provider of fresh ‘on the go’ sushi and
pan-Asian Cuisine. Luke is also a Non-
Executive Director of NS&I (National
Savings & Investments).
Luke previously served as CEO of Ocado
Solutions where he led the transformation
of Ocado from a UK retail company to a
recognised global technology business.
He was also Group Development Director
of J Sainsbury’s plc where he was
responsible for online and all customer-
facing digital activities.
Luke was previously a Non-Executive
Director of Asos plc.
Our Members' Annual Report 2024
57
BOARD BIOGRAPHIES
Lord Simon Woolley
Independent Non-Executive
Director
Appointed as an Independent Non-
Executive Director on 25 February 2025
Committee Membership
Risk and Audit Committee
(from 26 March 2025)
Skills and experience
Simon is a political and equalities activist
and is currently Principal of Homerton
College, Cambridge and the Deputy Vice
Chancellor at the University of Cambridge.
Simon also holds an advisory role with The
King’s Commonwealth Fellowship
Programme, and is a Non-Executive
Director of Police Now Ltd and the Youth
Futures Foundation. Previously, Simon
served as Human Rights Commissioner,
as well as creating and leading the UK
Government’s pioneering Race Disparity
Unit. Simon also founded Operation Black
Vote, the internationally renowned
campaigning NGO working with ethnic
minorities in the UK to increase
understanding of civic society, participation
in Parliament and public life and to promote
equality and human rights.
Christine Tacon CBE
Member Nominated Director
Elected as a Member Nominated Director
on 18 May 2024
Committee Membership
Risk and Audit Committee
(from 26 March 2025)
Skills and experience
Christine is a Chartered Engineer and an
environmentalist with a wealth of
commercial expertise and experience.
Christine has held many positions at board
level, most recently as the Chair of Assured
Food Standards who operate the Red
Tractor Assurance scheme.
During her career, Christine has held
positions at Mars and Fonterra; New
Zealand’s dairy co-op and she also led the
Co-op’s farming business, the UK’s largest
at the time. She has served as a Non-
Executive Director for organisations
including the Met Ofﬁce and the Natural
Environment Research Council. Christine
was also appointed as the ﬁrst Groceries
Code Adjudicator, responsible for
regulating the supermarket sector to ensure
fair treatment for suppliers.
Christine is currently the Chair of MDS Ltd,
a two-year management training scheme in
the food industry for graduates and the
Chair of the BBC Rural Affairs Committee.
She is also a trustee of the Farmers Club
Charitable Trust and runs the Women in
Food and Farming Network. Christine was
awarded the CBE in 2004 for her services
to agriculture.
Wais Shaifta
Independent Non-Executive
Director
Appointed as an Independent Non-
Executive Director on 25 February 2025
Committee Membership
Nominations Committee
(from 26 March 2025)
Remuneration Committee
(from 26 March 2025)
Skills and experience
Wais is an expert in digital growth and
transformation with experience in leading
technology businesses. Wais was previously
CEO of Push Doctor, the largest digital
partner to the NHS. Prior to that, Wais held
executive and leadership positions in group
operations, digital tech, product, business
development, mergers and acquisitions,
and international expansion at Just Eat
and Treatwell.
Wais is an Independent Non-Executive
Director at Reach plc, Snappy Shopper and
the Gym Group, where he is the Chair of the
Remuneration and Sustainability
Committees. Wais is also Senior
Independent Trustee at The Football
Foundation, England’s largest sports charity.
Our Members' Annual Report 2024
58
EXECUTIVE BIOGRAPHIES
Dominic Kendal-Ward
Group Secretary and
General Counsel
Skills and experience
Dom became Group Secretary and General
Counsel in May 2022. He originally joined
our Co-op in 2017 as General Counsel of
our insurance business. Dom qualiﬁed as
a solicitor in 2006. Prior to joining our
Co-op, Dom spent 12 years at the
international law ﬁrm Linklaters, working
for a wide variety of organisations on
corporate advice and transactions.
Dom is a Director of Co-operatives UK.
Shirine Khoury-Haq
Chief Executive Ofﬁcer
See Board biographies
Rachel Izzard
Chief Financial Ofﬁcer
See Board biographies
Other Directors and Executive members who have served during the year:
Four other Directors served during the year before reaching the end of their nine-year term and Rahul Powar stepped down from the Board for
personal reasons after more than six years on the Board:
•
Allan Leighton served as an Independent Non-Executive Director until 18 February 2024.
•
Paul Chandler served as a Member Nominated Director until 18 May 2024.
•
Stevie Spring served as an Independent Non-Executive Director and Chair of the Remuneration Committee until 24 June 2024.
•
Rahul Powar served as an Independent Non-Executive Director until 25 February 2025.
•
Lord Victor Adebowale served as an Independent Non-Executive Director until 27 March 2025.
Our Members' Annual Report 2024
59
GOVERNANCE
REVIEW
CHAIR’S OVERVIEW
I am pleased to present our 2024 Governance Review which sets out detail on our unique governance structure
and the key areas considered by our Board and its Committees during the year.
OUR MEMBER-OWNERS
Member-ownership is the reason our Co-op exists. As mentioned in my earlier note, 2024 was the year we put
members back at the heart of our organisation, achieving solid ﬁnancial results while rising to meet market
challenges and increasing our positive impact.
With this sharpened focus, we exceeded our membership goals in 2024. More member-owners joined our
Co-op, more member-owners traded with our Co-op, and more member-owners engaged with us on the
issues that matter most to them.
Our National Members’ Council (‘Council’), which is 100-strong, acts as our members’ representative,
holding our Board to account for how the business performs and our commitment to co-operative Values
and Principles.
Under the ongoing leadership of Denise Scott-McDonald as President, our Council continues to
demonstrate a balanced approach of support and challenge to our Board. Our Council members
consistently demonstrate their dedication to our Co-op, our member-owners, and our colleagues. We deeply
appreciate their engagement and contributions, and we extend our gratitude to the Council for its ongoing
support and challenge.
Plans for our 2025 Annual General Meeting are well underway. I look forward to meeting as many of you
as possible and value the opportunity to listen to your input and feedback. The meeting will take place on
Saturday, 17 May 2025 and members will be able to join us in person at Co-op Live, online, or at one of our six
new local events. We will keep members updated at
www.co-operative.coop/agm
where we will publish the
AGM notice. If you are an eligible member, please watch for an email or letter with more information.
OUR BOARD AND EXECUTIVE
A number of changes have taken place during the year. At the start of the year, we welcomed Moni Mannings
as our new Senior Independent Director. In February 2024, Luke Jensen joined as an Independent Non-
Executive Director in anticipation of Stevie Spring reaching the end of her term in June 2024. Paul Chandler
reached the end of his term as a Member Nominated Director in May 2024 and we welcomed Christine Tacon
following the AGM in May 2024.
More recently, Rahul Powar and Victor Adebowale (both Independent Non-Executive Directors) stepped down
from our Board (in February 2025 and March 2025 respectively).
Our Members' Annual Report 2024
60
To replace Rahul and Victor, and following a robust recruitment process, we recently welcomed Wais Shaifta
and Lord Simon Woolley to our Board – read more on
page 63
. I look forward to the part our new Directors will
play in helping shape our Co-op’s future.
In May 2025, Margaret Casely-Hayford will reach the end of her term as a Member Nominated Director. I look
forward to welcoming our new Member Nominated Director, following the 2025 MND election process.
OUR BOARD’S EFFECTIVENESS
Reviewing our Board’s own performance is central to ensuring we deliver for our member-owners and
maintaining high standards of corporate governance. Following the external review conducted in 2023, an
internal review was undertaken during 2024, facilitated by our Senior Independent Director, Moni Mannings.
More details on the review process can be found in the Nominations Committee report on
page 99
.
LOOKING AHEAD
I would like to thank all of my Board colleagues for their support during my ﬁrst year as Chair.
We continue to evolve our ways of working with ﬁnancial stability and member ownership central to all our
discussions and decisions.
With our sights ﬁrmly set on ambitious growth, coupled with the Government’s pledge to double the size of
the co-operative sector in the UK, 2025 looks set to be another exciting time for our Co-op and for our Board,
during which we remain committed to maintaining our high levels of corporate governance.
Debbie White
Chair, The Co-op Group
Our Members' Annual Report 2024
61
OUR GOVERNANCE STRUCTURE
Our unique governance structure is carefully constructed and is based on member-ownership. It is deﬁned in
our Rules, which set out a number of formal ways in which our Board, its committees and individual Directors
keep in touch with our Members’ Council, its committees and our member-owners.
Our Board leads our Co-op and takes decisions at the highest level to ensure our Co-op is successful in the
long term. The decisions we take are what we believe to be in the best interests of our member-owners.
Our Board is supported by three committees. They have speciﬁc tasks which they carry out on behalf of the
Board, set out in their written terms of reference:
• Our Risk and Audit Committee has oversight of our Co-op’s ﬁnancial reporting and how well we are
managing risk. The report of our Risk and Audit Committee can be found on
page 90
.
• Our Remuneration Committee ensures our senior leaders are fairly and appropriately rewarded, taking into
account the wider pay policy across our Co-op. The report of our Remuneration Committee can be found
on
page 70
.
• Our Nominations Committee ensures we have the right Independent Non-Executive Directors (INEDs)
and Executive Directors in place and that the Board as a whole works well. The report of our Nominations
Committee can be found on
page 99
.
Our Council is a democratically elected body of 100 members. This Council acts as our member-owners’
representative, holding our Board to account for how the business performs. It also acts as a guardian of our
purpose and co-operative Values and Principles. Council highlights from 2024 can be found in your Council’s
Annual Statement on
page 121
.
There are a number of ways that the Board takes into account the views of the Council, detailed under
Stakeholder Engagement on
page 127
.
OUR BOARD
There are 12 Directors on our Board. We have three categories of Directors: Executive Directors, Independent
Non-Executive Directors (INEDs) and Member Nominated Directors (MNDs).
Director biographies can be found on
page 54
. Members are able to see copies of the Directors’ appointment
letters by contacting the Group Secretary.
MEMBERSHIP
RISK AND AUDIT COMMITTEE
OUR LEADERSHIP
MEMBERS’ COUNCIL
REMUNERATION COMMITTEE
OUR BOARD
NOMINATIONS COMMITTEE
Our Members' Annual Report 2024
62
ROLE OF OUR DIRECTORS
Debbie White, our Chair, is responsible for:
• Leading our Board and making sure it operates well.
• Making sure we have the right Board in place, with the right skills to run a business of the size and
complexity of our Co-op.
• Making sure co-operative Values and Principles are at the heart of what we do, and that business decisions
are both ethical and sustainable.
• Continuing to develop the relationship with our Council.
• Making sure that the Board is made aware of the views of our Council and other stakeholders.
• Setting the Board agenda and managing Board meetings.
• Setting the tone from the top and making sure business culture is clear.
• Making sure the Board effectively holds leadership to account.
Shirine Khoury-Haq (Chief Executive) and Rachel Izzard (Chief Financial Ofﬁcer) are our
Executive Directors
.
They have delegated responsibility for the day-to-day operation of our Co-op and are accountable to our
Board for all elements of our Co-op’s operational and ﬁnancial performance.
Moni Mannings, our
Senior Independent Director (SID)
:
• Uses her experience to advise, guide and provide feedback to the Chair.
• Deals with any governance issues relating to the Board or the Chair’s performance, and any matters which
are not appropriate for the Chair to deal with.
• Takes the lead role in the annual Board evaluation process.
• Takes responsibility for leading the Chair’s annual performance review and acts as the Board’s primary
point of contact for stakeholder views.
• Regularly liaises with our Council.
Our
INEDs
and
MNDs
provide independent and constructive challenge and an external focus to Board
discussions using their professional industry knowledge. They help set our strategy, oversee commercial and
ﬁnancial performance, ensuring co-operative Values and Principles remain at the heart of our Co-op. They also
meet with members and our Council to hear their views.
Dominic Kendal-Ward, our
Group Secretary
, advises the Board on legal, compliance and governance matters
and makes sure there is the right level of information ﬂowing between our Board and our Council, and our
Board and leadership. He supports our Chair with Board procedures and is available to Directors for advice
and assistance.
DIVISION OF RESPONSIBILITIES
The roles and responsibilities of the Chair and Chief Executive are clearly set out in their role proﬁles,
which are approved by the Board and available on our website.
Our Members' Annual Report 2024
63
APPOINTMENTS OF OUR BOARD –
INDEPENDENT NON-EXECUTIVE DIRECTORS (INEDs)
INED appointments are made by our Board following recommendation from the Nominations Committee.
When we need to recruit an INED, the Nominations Committee will lead the process.
During the year, rigorous selection processes were undertaken leading to the appointments of Wais Shaifta
and Lord Simon Woolley. More details on the selection processes can be found in our Nominations Committee
Report on
page 99
.
Following INED (and MND) appointments, the Council Scrutiny Committee considers a report from the Board
and scrutinises the adequacy and objectivity of the process followed. The report of the Scrutiny Committee
can be found on
page 124
.
INEDs have to be elected by members at the ﬁrst AGM following their appointment and are then subject to
re-election by our members at our AGM every three years thereafter.
The UK Corporate Governance Code sets out that all Directors should be subject to annual re-election.
We choose not to comply with this in our Rules to avoid a situation where all the Directors leave the Board at
the same time. It ensures we maintain continuity and allows for staggering and succession planning.
APPOINTMENTS OF OUR BOARD – EXECUTIVE DIRECTORS
The Nominations Committee is responsible for making recommendations to our Board in respect of Executive
Director appointments. No appointments of Executive Directors were made during 2024.
APPOINTMENTS OF OUR BOARD – MEMBER NOMINATED DIRECTORS (MNDs)
MNDs are voted for and elected directly by our members. The MND Joint Selection and Approvals Committee
(MNDJC), a joint Board and Council Committee, works with an independent search ﬁrm to oversee the
selection process and assess the eligibility, skills and experience of MND candidates who are put forward to a
member ballot. Members then vote for who they would like to see on our Board.
The MND election process takes place before the AGM and the results are announced at the meeting.
The MNDJC led on the 2024 and 2025 MND election processes, supported by Warren Partners, an executive
search ﬁrm.
TERMS OF OFFICE
Our
INEDs
and
MNDs
have a maximum term of ofﬁce of nine years.
Our
Executive
Directors
are employed directly by our Co-op and don’t have a maximum term of ofﬁce.
They are however subject to re-election as Directors by our members every three years. Shirine Khoury-Haq,
our CEO, was last elected in 2023; Rachel Izzard, our CFO, was last elected in 2024.
Our Members' Annual Report 2024
64
OUR BOARD’S SKILLS AND EXPERTISE
Our Nominations Committee reviews the skills and expertise we have on our Board to make sure it continues to
be well balanced, diverse, effective and suitable to deliver our vision.
Our Board Composition Charter (BCC) sets out:
• Certain requirements for our Board’s composition as a whole.
• Levels of knowledge and expertise expected for individual directors.
• Additional requirements for key roles such as Chair and Senior Independent Director.
Our Rules and the BCC contain strict membership and eligibility criteria which all of our Board Directors
need to meet. This includes high standards of professional expertise needed to run a business of the size and
complexity of our Co-op as well as a strong commitment to co-operative Values and Principles.
The Board considers that each Director brings relevant and complementary skills, experience and background
to the Board.
BOARD SUCCESSION PLANS
The Board maintains a Board succession plan and is satisﬁed that the plan remains sufﬁciently robust.
Senior leader succession is a matter for the Chief Executive (with the support of our Chief People and
Inclusion Ofﬁcer) in consultation with the Board. Senior leader succession plans were reviewed by our Board
during the year.
BOARD EFFECTIVENESS
In accordance with our governance principles and the requirements outlined in our Rules, the Board conducts
regular performance evaluations.
The Nominations Committee is responsible for overseeing an annual Board effectiveness review. According
to our Rules, this review should be conducted by an external ﬁrm every two years unless the Nominations
Committee and the Chair concur that there is a valid reason to defer. Currently, the Nominations Committee
and the Chair have agreed to conduct external reviews every three years, aligning with best practices in
corporate governance.
An internal review took place in 2024, facilitated by our Senior Independent Director, in accordance with
established governance standards. More details on the review process and outcomes can be found in the
Nominations Committee report on
page 99
.
Our Members' Annual Report 2024
65
HOW OUR BOARD OPERATES
The Board and each of its committees have a scheduled forward plan of meetings to make sure time is
allocated to key areas for our Co-op, and to make best use of the Board’s time.
The Board had eight scheduled meetings during the year, held both in in-person and hybrid formats. During
the year, our Board:
• Focused on strategy, with a number of deep dives on particular topics presented throughout the year.
• Held closed sessions between INEDs and MNDs alone without Executive Directors or the
Group Secretary present.
Set out below are the highlights of the matters that the Board considered in 2024. Not all of the matters the
Board considered are listed.
In addition to the matters shown, every meeting includes strategic, operational and ﬁnancial updates from the
CEO and CFO. Meetings also include updates on health and safety and our business divisions through leader
reports prepared by our Operating Board members.
KEY BOARD ACTIVITY
The agendas for Board meetings are prepared by the Group Secretary in consultation with the Chair, with reference
to the Board forward planner. There is ﬂexibility within the planner to address any arising business matters.
Our Board also regularly provides reports on their meetings to the Council and receives reports from the Council
on its activities.
OCTOBER
• Board
strategy day
NOVEMBER
• Risk and compliance
• Budget and KPIs
• Property and
sustainability
SEPTEMBER
• Financials (interim results
and 6+6 forecast)
• Life Services
• Strategic touchpoint
• Regulations and Board
policy review
• Director and Council fees
JULY
• Food
• B2B
• Strategy touchpoint
JANUARY
• Digital technology
and data
• Funeralcare
• 2023 Board
evaluation, results
and action plan
• AGM planning
• Strategy touchpoint
MARCH
• Annual Results - year
ended 6 January 2024
• Membership
• Community and
member participation
• Talent and succession
planning
• Independent Non-
Executive Director
re-appointment
MAY
• Forward plan
• Post-investment
appraisals (property
and non-property)
• National Members’
Council President
update
• Strategy touchpoint
JUNE
• People and
inclusion
• Co-op Foundation
• Key member
activity
• Strategy
touchpoint
Our Members' Annual Report 2024
66
BOARD ATTENDANCE
Directors’ attendance at scheduled Board and committee meetings is set out in the table below. This does
not include any unscheduled meetings which were held during the year and which were needed at relatively
short notice or any cancelled meetings. It only captures where Directors attended Committee meetings in their
capacity as a Committee member.
The numbers in brackets show how many meetings each Director could have attended. When we’re setting the
Board meeting schedule, we always take Directors’ availability into account but with a larger Board we cannot
always ﬁnd dates all can attend.
Director
Board
Risk and Audit
Committee
Nominations
Committee
Remuneration
Committee
Debbie White (Chair)
8(8)
3(3)
6(6)
Allan Leighton
1
0(1)
Kate Allum
8(8)
3(3)
6(6)
Margaret Casely-Hayford
8(8)
3(3)
6(6)
Paul Chandler
2
3(3)
3(3)
Rahul Powar
3
8(8)
5(5)
6(6)
Sarah McCarthy-Fry
8(8)
5(5)
Shirine Khoury-Haq
8(8)
Stevie Spring
4
4(4)
3(3)
Lord Victor Adebowale
5
7(8)
4(5)
3(3)
Rachel Izzard
8(8)
Adrian Marsh
7(8)
5(5)
5(6)
Moni Mannings
8(8)
3(3)
6(6)
Luke Jensen
6
7(7)
4(4)
Christine Tacon
7
5(5)
Denise Scott-McDonald
8
3(3)
1
Reached the end of their term on 18 February 2024
2
Reached the end of their term on 18 May 2024
3
Stepped down from the Board on 25 February 2024
4
Reached the end of their term on 24 June 2024
5
Reached the end of their term on 27 March 2024
6
Appointed as a Director on 19 February 2024
7
Appointed as a Director on 18 May 2024
8
Not a Director but is a member of the Nominations Committee by virtue of role as Council President
Our Members' Annual Report 2024
67
TIME COMMITMENT AND CONFLICTS OF INTEREST
Conﬂicts of interest are situations in which Directors have, may have, or at least give the impression that they
may have, divided loyalties on any issue. All Directors have a duty to avoid conﬂicts of interest.
Prior to appointment, Directors are asked to disclose any other appointments they have, and any potential
conﬂicts of interest. We also carry out a number of other background checks. Directors also must conﬁrm
they will have sufﬁcient time to do the role. This obligation continues while Directors remain on the Board
and is kept under review.
There are speciﬁc provisions in our Rules which cover any real or potential Director conﬂicts of interest.
The Board remains satisﬁed that each Director is able to allocate sufﬁcient time to perform their
responsibilities effectively.
INDEPENDENCE
It is important that we have Directors on our Board that think objectively and independently. The UK Corporate
Governance Code (UK Code) requires at least half the Board to be considered as independent.
As a co-op we have two different ways of looking at and assessing the independence of our Directors,
as deﬁned within the UK Code and within our Rules and BCC.
The Board considers all our INEDs and MNDs to be independent in character and judgement as per the criteria
set out in the UK Code.
DIVERSITY AND INCLUSION
As a co-op, the guiding values of self-help, self-responsibility, democracy, equality, equity and solidarity
translate through to the balance and diversity we seek for our Board.
Our Board is mindful that diversity of thought brings a richness of debate that is vital to its effectiveness. Those
values are within our Board Diversity and Inclusion Policy, which can be found on our website. The policy was
reviewed during the year by the Nominations Committee.
Our Board supports the recommendations of the Parker Review and FTSE Women Leaders Review to
increase representation of women and people from an ethnic minority on Boards and is pleased to exceed
the recommendations. Our Board is currently made up of eight women (67%) and four men (33%). Five of our
Directors are from ethnic minorities (42%). Our Chair, SID, CEO and CFO are all female.
DECISIONS OF OUR BOARD
Our Board takes decisions at the highest level to ensure the long-term success of our Co-op.
It focuses on the future goals for our Co-op and how those goals should be achieved in a way which is in the
best interests of our members as a whole and in line with our purpose, and co-operative Values and Principles.
How those decisions are put into action is a matter for the Chief Executive Ofﬁcer, the Executive and the
Operating Board. The Board then monitors progress and holds leadership to account.
We do not have the same structure as limited companies, which often have large, institutional investors. We are
a co-op and are very clear that we want to do business in a better way for the beneﬁt of our member-owners
and communities.
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68
When considering future plans, our Board looks at short, medium and longer-term views to try and make
sure our Co-op, and the way it does business, is built on a solid platform for generations to come. To achieve
this, our Board takes decisions at the highest level, consistent with our purpose and co-operative Values and
Principles, that are commercially sensible and meet the needs of our member-owners.
Our Board looks at the interests, views and needs of our wider stakeholders when making decisions of
substance. Our contact with them, as detailed on
page 127
, helps our Board understand these views.
Members’ views are at the heart of our Board’s decision-making process through the use of an Ethical
Decision-Making Tool. This helps our Directors focus on what members are likely to think, whether the
decision will create value and what the potential impact of the decision will be on our members and our wider
communities. Recommendations on material decisions put forward to our Board must include a view on each
of these elements.
MANAGING OUR RISKS
Our Board oversees our risk management framework through the Risk and Audit Committee. It regularly
reviews and agrees risk mitigation plans and responses. Our Board ensures that policies and practices are
consistent with our Purpose and co-operative Values and Principles.
For more information on risk management at Co-op and our principal risks and uncertainties, please see
page 44
.
Our commitments to the environment and tackling climate change are long-standing and we continue to
strengthen our governance processes in line with requirements from the Taskforce on Climate-Related
Financial Disclosure (TCFD). More detail is provided on
page 110
.
DELEGATED AUTHORITIES FRAMEWORK AND
MATTERS RESERVED FOR THE BOARD
Our Board has the power to delegate certain decisions. This may, for example, be to individual Directors or
Board Committees. We have a Delegated Authorities Framework which is reviewed regularly by the Risk and
Audit Committee and approved by our Board. This sets out deﬁned levels of authority for colleagues.
In line with good governance, the Board has reserved a level of decision making to itself, which covers areas
including Strategy and Management, Group Structure, Capital and Borrowing and Financial Reporting and
Controls. These are recorded formally in a ‘Matters Reserved for the Board’, approved by the Board.
COMMUNICATING WITH OUR STAKEHOLDERS
For information on how our Board acted with regard to our key stakeholder groups throughout the year, please
see full details within our Section 172 Statement on
page 127
.
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69
ADDITIONAL GOVERNANCE INFORMATION
Whistleblowing
Our Board remains comfortable that there are sufﬁcient processes in place which enable colleagues to
raise any issues which they feel uncomfortable about, or which are not in line with co-operative Values and
Principles. See
page 98
for further detail.
Board Code of Conduct
Our Board Code of Conduct sets out the standards of behaviour expected from our Directors. All Directors
must follow the code during their term in ofﬁce.
Directors’ and Ofﬁcers’ liability insurance
We have Directors’ and Ofﬁcers’ liability insurance in place which covers Directors against any legal action
taken against them for doing Co-op business. They also receive an indemnity from our Co-op for speciﬁed
liabilities which could possibly arise from them performing their role.
Independent professional advice and Board support
Our Board can seek the advice or assistance of the Group Secretary, Secretariat and the wider leadership
team. We also have procedures in place so that if any of the Directors feel they need independent professional
advice to enable them to perform their duties properly, they can ask for that advice and, subject to certain
limits, our Co-op will pay.
Our subsidiaries
Our subsidiaries operate within the strategy and direction set by our Board. There are a number of rules,
policies and procedures (particularly relating to governance and authority levels) which apply across the whole
of our Co-op.
There are three subsidiaries which are treated slightly differently: Co-op Insurance Services Limited is
regulated by the Financial Conduct Authority (FCA), Co-op Funeral Plans Limited is also FCA regulated and
Co-operative Legal Services Limited is regulated by the Solicitors Regulation Authority. This means they have
particular areas of responsibility for which they are accountable to their regulator. Our Co-op retains general
oversight of these businesses but, in order to satisfy their regulatory obligations, they need to keep a higher
level of independence for their conduct and everyday operational decisions.
Our compliance with the UK Corporate Governance Code
The UK Corporate Governance Code (UK Code) applies to large companies with traded shares.
As we are a co-op, we are not required to comply with the UK Code. However, we believe the general
principles of governance set out in the UK Code are key to running a good business. For us, it’s the right thing
for our Co-op to continue to voluntarily comply with the UK Code where it can be applied directly to our
democratic model and it makes sense for us to do so. A review of our Co-op’s compliance with the UK Code is
undertaken annually with the results considered by the Risk and Audit Committee.
Our compliance with the Co-operative Corporate Governance Code
We have reviewed our compliance with the Co-operative Governance Code, originally published in 2019 by
Co-operatives UK, and are comfortable that our practices remain consistent with it, are appropriate and offer
the necessary protection to our member-owners.
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70
THE REPORT
OF THE
REMUNERATION
COMMITTEE
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71
On behalf of the Remuneration Committee and the Board, I am pleased to present the Directors’ Remuneration
Report for our 2024 ﬁnancial year. This is my ﬁrst report since being appointed as Remuneration Committee
Chair and I would like to thank my predecessor, Stevie Spring, as well as fellow Committee members for their
support since my appointment.
The report is split into two sections:
• Our Co-op’s forward-looking Executive Pay Policy on
page 78
which will apply from 1 January 2025
onwards, subject to our members’ advisory vote at our 2025 AGM.
• The Annual Report on Remuneration on
page 84
which details the remuneration paid to our Executive
Directors in the 2024 ﬁnancial year, and which is subject to our members’ advisory vote at our 2025 AGM.
HOW THE COMMITTEE WORKS
The Committee is responsible for determining our Co-op’s pay strategy as well as the speciﬁc remuneration
packages for our Executive Directors. It also has oversight of pay practices in place for our colleagues across
our Co-op.
The Committee’s terms of reference are reviewed annually, making changes in line with corporate governance
developments, and best practice. The Committee’s terms of reference are available
on our website
.
COMMITTEE MEETINGS
All members of the Committee are Non-Executive Directors of our Co-op. Our Chief Executive and
Chief Financial Ofﬁcer are not members of the Committee, but are invited to attend where relevant,
along with our Board Chair and Risk and Audit Committee Chair. This ensures there is alignment with broader
Board decisions.
In 2024, the Committee held six meetings and the attendance of Committee members is detailed on
page 66
.
INTRODUCTION FROM
THE COMMITTEE CHAIR
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72
OTHER COMMITTEE SUPPORT
The Committee sought independent, external advice through Deloitte, who advised on market trends and
benchmarking for comparable executive roles. Further details are on
page 89
.
EVALUATION OF COMMITTEE EFFECTIVENESS
The performance of the Committee is reviewed annually. The 2024 review followed the same process as the
main Board using the digital evaluation platform BoardClic.
WHAT THE COMMITTEE DID IN THE YEAR
In line with the Committee’s Terms of Reference, the Committee’s time was divided between the following
areas through 2024:
NOVEMBER
• Approve measure and performance
expectations for 2025 bonus plan
• Design of new Long Term incentive plan
• Approve Rewarding Growth incentive plan
• Review inﬂight performance of 2024 bonus plan
• Review of Committee terms of reference
• Update on wider workforce pay
OCTOBER
• Market benchmarking
of Executive Directors’
remuneration
SEPTEMBER
• Committee
effectiveness review
• Review of Executive
pay approach
FEBRUARY
• Assess 2023 performance of Executive
Directors and Operating Board members
• Approve outcome of 2023 bonus plan
• Approve Directors’ Remuneration Report
• Approve payment of 2021 Deferred
Bonus Awards
MARCH
• Approve measure and
performance expectations
for 2024 bonus plan
• Update on wider
workforce pay
JUNE
• Review feedback
and AGM voting
outcomes
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73
2024 BUSINESS PERFORMANCE
AND BONUS OUTCOMES
As discussed earlier in this report, in 2024 we delivered a solid business performance in the context of
a challenging market. Our Food and Life Services business grew, while our Wholesale business faced
challenges. We increased membership numbers, continued to support causes and communities, and built on
the ﬁnancial discipline achieved in previous years to grow our operating proﬁt.
BONUS
With reference to our bonus plan, we assessed 2024 through a balanced scorecard of measures, both ﬁnancial
and non-ﬁnancial.
Our Co-op performed well against the targets that the board set. As a result, our 2024 bonus plan outturn
equated to 66.5%–71.5% of the maximum bonus opportunity available.
Full details of our 2024 bonus plan is detailed on
page 85
along with details of the personal performance
outcomes for each of our Executive Directors.
DEFERRED BONUS PAYMENTS
The second half of our 2022 bonus plan is now due to colleagues still employed by our Co-op and not under
notice at the time of payment.
It will be paid in May 2025 to senior leaders in line with the scheme rules.
Further details of the amounts that were paid and deferred can be found on
page 84
.
SUPPORTING OUR COLLEAGUES
Our colleagues are integral to our Co-op’s success. This year we continued to signiﬁcantly invest in colleague
pay, particularly for frontline colleagues. We remain committed to paying the Real Living Wage to ensure all
colleagues are paid fairly.
In April 2024, we aligned our minimum hourly rates to the Real Living Wage as set by the
Living Wage
Foundation
and we will again during 2025.
We’ve continued to support all our colleagues ﬁnancially:
• Continuing with our 30% colleague discount on own-brand products.
• Offering all colleagues not eligible for our bonus schemes a one-off winter recognition payment of £30
loaded onto colleague membership cards.
• Launching our Rewarding Growth incentive plan. All colleagues are eligible to participate, including
frontline colleagues and customer team members who can earn up to a £1,000 bonus share over three
years.
• As at the end of 2024, over 15,000 colleagues have signed up to the Wagestream app, with 4,800
colleagues now automatically enrolled into saving towards a rainy-day fund, which is a key step in creating
ﬁnancial security and independence.
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74
At the end of 2024, more than 72% of colleagues were members of our pension scheme; 70% of colleagues
were pension members in 2023. Our pension offer compares favourably to competitors’ schemes and is
available to all. We also take the social responsibility and sustainability footprint of our pension investments
seriously – see our
Social Value and Sustainability Report
for more details.
PAY GAP REPORTING
In addition to our statutory reporting of our gender pay gap, we have also chosen to voluntarily report our
ethnicity pay for the last year. This year we were proud to also publish
our socioeconomic pay gap report
.
EXECUTIVE PAY POLICY
Our current Executive Pay Policy is subject to a non-binding advisory member vote at the 2025 AGM.
During 2024, the Committee has worked with our external advisers, Deloitte, to undertake a full review of the
policy. Our Executive Pay Policy must be ﬁt for purpose, helping our Co-op thrive by attracting and retaining
key talent, while ensuring that pay is competitive but not excessive.
The review considered how our Co-op pay approach compares with other similarly sized businesses
within the FTSE 50-150. These are the businesses we compete with for talent; businesses who are similar in
size and complexity.
Following the review, the Committee concluded that changes were needed to our Executive Pay Policy to
better align to the external market and to support our ambitious strategy.
The key ﬁndings of the review concluded that our Executive Pay Policy:
• Didn’t incentivise and reward longer-term delivery within our Senior Leader population, particularly
considering our ambitious growth targets.
• Was out of line with typical best practice in respect to Executive Pay.
• Our total pay was not competitive, particularly in relation to our variable pay approach.
• Our approach was too short-term focused, and we needed an approach to better align senior leaders’
variable pay to Co-op’s long-term performance and results.
Following the review, the Committee have determined that changes are needed to our Executive Pay Policy
to make sure we deliver on our strategy and vision for our members. The changes that will take effect from
2025 are outlined below.
CHANGES TO OUR ANNUAL BONUS PLAN APPROACH
Since 2018, we’ve operated a single bonus plan for our Executive Directors, with performance being
determined against yearly performance targets.
Given our new strategy and ambitious growth targets, the Committee determined that the variable pay
approach was too focused on short-term delivery of in-year performance.
The Committee and our Board believe it’s extremely important that our pay approach encourages and rewards
leaders for taking the necessary future-focused decisions to ensure our Co-op thrives. For this reason, we are
rebalancing our variable pay opportunities for senior leaders across our Co-op.
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75
A BONUS PLAN AND A LONG-TERM INCENTIVE PLAN
From 2025, we continue to operate an annual bonus plan to incentivise and reward delivery of agreed annual
performance measures. Alongside this, we will also launch a long-term incentive plan (LTIP) to incentivise and
reward the delivery of key three-year performance measures.
As part of this change, from 2025 we will be better aligning our Executive Directors’ incentive opportunities to
typical market practice, as we tilt the balance from short-term to longer incentives.
A reduced bonus plan
Under the annual bonus plan, we are reducing the maximum bonus opportunities of Chief Executive,
Chief Financial Ofﬁcer and Group Secretary and General Counsel. Please refer to the Executive Pay Policy on
page 78
for further details.
Previously, 50% of any bonus plan awarded to our Executive Directors was deferred for a period of two
years. The deferred portion of bonus was held as cash and wasn’t subject to any other further performance
conditions, other than being time-bound.
It is the Committee’s view that deferral under the annual bonus plan is no longer necessary, and it will not be
applied to any future bonus plan awards from 2025 onwards. However, all previous bonus plan awards are still
subject to the two-year deferral period.
Further information on the 2025 bonus plan performance measures is detailed on
page 82
.
A new long-term incentive
The new LTIP will reward longer-term performance, and help us retain key talent; any opportunity under the
scheme requires participants to remain with our Co-op for three years.
Our new LTIP will have a ‘base’ level of award with a maximum opportunity. For the Chief Executive, this is up to
200% of salary, only being attained where stretching three-year targets are met.
This allows us to incentivise our Executive Directors to focus on a broader set of holistic performance measures
around economic, social and ownership value. The Committee has also aligned incentives to our sustainability
agenda through the new LTIP. More information on the 2025 LTIP performance measures is on
page 82
.
Full details of the revised Executive Pay Policy can be found on
page 78
.
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76
REWARDING GROWTH
Over the last three years, under Shirine’s leadership, we’ve signiﬁcantly improved the resilience of our Co-op
by focusing on the foundations of our business.
Building on these foundations, we can now move to an exciting growth phase for our Co-op to enable us to
deliver more value for you, our members. We have signiﬁcant growth ambitions, and we want to incentivise
and reward all of our colleagues for the key role they will play in achieving them.
I’m extremely proud and excited to be able to launch, for the ﬁrst time ever, an all-colleague incentive plan:
‘Rewarding Growth’. This will reward all of our colleagues who are members if we meet our growth ambitions
over the next three years.
Each colleague will have a maximum opportunity that can be earned over the next three years.
The ‘maximum opportunity’ (the amount that could be paid out) differs by role and is awarded pro-rata to the
hours a colleague works. For most colleague member owners, it will be up to £1,000, which we’ll pay out if we
meet our ambitions.
This way, if we all work together to grow our Co-op, then all of our colleague member-owners will share in
our success.
Every colleague will participate in Rewarding Growth, including our Executive Directors, please refer to the
Executive Pay Policy on
page 78
for further details
An incentive plan that all colleagues can participate in has been a long-term ambition for the Committee.
It’s really pleasing to see that we’ve been able to put this in place while also aligning our lowest rates of pay to
the Real Living Wage which has and continues to be a signiﬁcant investment for our Co-op.
AGM
On behalf of the Committee, I would like to thank members and our Members’ Council for their input and
engagement this year, and we welcome any comments you may have on this report.
It remains important to us that our members make their views heard and we would ask that you vote prior to
the meeting. In 2025, we will be asking our members to approve the Annual Report on Remuneration and to
approve our new Executive Pay Policy for the next three years. Both votes are advisory.
We look forward to your support for the proposed new Executive Pay Policy and Annual Report on
Remuneration at our 2025 AGM.
Kate Allum
Chair, the Remuneration Committee
LOOKING AHEAD FOR 2025
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77
Our Executive Pay Policy is designed to attract, retain, and motivate the talent our Co-op needs to deliver
our growth strategy. These changes are to strike an appropriate balance between short-term and long-term
sustainable performance for the beneﬁt of our members.
As mentioned, our external advisers, Deloitte, reviewed our remuneration policy by benchmarking FTSE
50-150 ﬁrms. Given our Co-op’s comparative size and complexity, the Committee deemed it appropriate to
position the pay opportunities of our Executive at the median of this comparator group.
The table below summarises the proposed change to the Remuneration Policy along with the rationale for
making the change.
CHANGING OUR EXECUTIVE PAY POLICY:
A SUMMARY
ELEMENT
CHANGES TO POLICY
RATIONALE
Annual bonus
opportunity
Reduced maximum annual bonus opportunities:
-
CEO from 250% to 200% of salary.
-
CFO from 180% to 170% of salary.
-
Group Secretary and General Counsel from 150% to
110%.
Reduced bonus opportunities better
align with external market practice.
Tilts the balance from short-term, in-year
performance to longer-term sustainable
performance, across a broader set
of both financial and non-financial
measures.
Bonus deferral
All unvested bonus awards, up to and including the 2024
scheme, remain subject to a 50% deferral for a period of
two years.
All future bonus awards from 2025 onwards will no longer
be subject to any deferral.
Bonus deferral is not effective in
incentivising longer-term performance.
The new LTIP scheme will be the primary
incentive mechanism for retaining senior
leaders.
LTIP
opportunity
Introduce a long-term incentive plan (LTIP) from 2025 with
annual grants and maximum annual opportunities of:
- CEO: 200% of salary.
- CFO: 170% of salary.
- Group Secretary and General Counsel: 110% of salary.
Addresses market competitiveness
challenges.
Ensures that the rewards for Executive
Directors are aligned to a broader,
holistic set of performance measures.
Supports in retaining and motivating
a high-performing CEO and executive
team.
Rewarding
Growth
incentive plan
opportunity
The Rewarding Growth incentive plan is a one-off all-
colleague plan for a period of three years. This plan is
open to all colleagues and incentivises them to deliver
our growth ambitions. The maximum opportunity over
three years is:
- CEO: £1,650,000 over 3 years.
- CFO: £875,500 over 3 years.
- Group Secretary and General Counsel: £385,000
over 3 years.
To incentivise and reward all colleagues
in delivering our growth ambitions.
Payments under this scheme are
contingent on the business delivering a
material step up in operating profit for
the benefit of members.
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78
We are committed to the following approach to pay:
• We want to pay our Executive at a level which reﬂects the job they do, but we do not want to overpay.
We look at what other similar organisations pay and take this into account.
• We want to reward our Executive for achieving stretching goals as well as for their commitment to our
Co-op vision, difference and co-operative Values and Principles.
• We want a beneﬁts package that reﬂects that.
SUMMARY OF EXECUTIVE PAY POLICY
Our new Executive Pay Policy is summarised below:
OUR EXECUTIVE PAY POLICY
ELEMENT
POLICY AND OPERATION
OPERATION AND PERFORMANCE CONDITIONS
Base salary
Supports the attraction
and retention of the
best talent.
Salaries are normally reviewed annually by the
Committee, with the change being effective on 1 April.
Salary increases take account of:
- Individual performance.
- Role, skills and experience.
- Increases being awarded to other colleagues across
the Co-op Group.
- Salary levels for Executives are benchmarked
against the median of FTSE 50-150 firms.
Base salary is paid four-weekly.
Benefits
Provides market-
competitive and cost-
effective benefits to
support the attraction
and retention of the
best talent.
The company may periodically review benefits
available to colleagues. Executives are generally on
similar terms to other senior leaders.
Benefits may include a car allowance, healthcare,
and insurance benefits. Business expenses are also
reimbursed including any associated tax.
The Committee retains the right to provide
additional benefits depending on individual
circumstance, where considered reasonable and
appropriate, including but not limited to enabling
recruitment, retention or relocation.
Normal benefit provisions apply to
our Executive Directors, including car
allowance, private medical cover and
life insurance.
Pension
To provide a
competitive level of
retirement income
to attract and retain
Executive Directors and
other colleagues.
Pension allowances are set as a percentage of
base salary. The maximum allowance payable
is aligned with the maximum pension benefit
available to the wider colleague population which
is 10% of base salary.
Executive Directors may receive a cash
allowance and/or contribution to a
defined contribution pension scheme.
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79
ELEMENT
POLICY AND OPERATION
OPERATION AND PERFORMANCE CONDITIONS
Annual bonus plan (BP)
Encourages improved
operational and
financial performance
and aligns the interests
of Executive Directors to
those of our members.
BP awards are discretionary and determined by
the Committee following the end of the annual
performance period, reflecting achievement against
targets set.
The maximum BP opportunity is 200% of base salary
for the CEO, 170% for the CFO and 110% for the
Group Secretary and General Counsel.
Up to 25% of the BP is paid for threshold
performance, and 100% is paid for achieving
stretch targets.
The performance measures and
targets for each annual BP cycle will be
set at the start of each year.
Payments will be based on a
combination of business and individual
performance.
The BP includes performance
underpins to ensure the scheme is
affordable and sustainable.
The Committee has discretion to
adjust the formulaic outcomes of the
BP, both upward and downwards
(including to nil) to reflect any
circumstances which the Committee
considers relevant. Any adjustments
will be disclosed in the relevant Annual
Report on Remuneration.
Long-term incentive
plan (LTIP)
The LTIP aims to align
the interests of our
senior leaders, including
our Executive Directors,
with the long-term
interest of members
and customers by
incentivising the
delivery of our strategy.
LTIP awards are discretionary and are typically
granted each year. Any payment under the scheme
will occur at the end of the three-year performance
period, and is subject to the achievement of the
performance conditions.
The maximum annual LTIP opportunity is 200% of
base salary for the CEO, 170% for the CFO and 110%
for the Group Secretary and General Counsel.
Up to 25% of the LTIP is paid for threshold
performance, and 100% is paid for achieving stretch
targets, with straight-line vesting between threshold
and stretch.
The Committee may set performance
conditions and metrics based on
delivering economic, social and
member value.
The Committee has discretion to
adjust the formulaic outcomes of the
LTIP, both upward and downwards
(including to nil) to reflect any
circumstances which the Committee
considers relevant. Any adjustments
will be disclosed in the relevant Annual
Report on Remuneration.
The LTIP includes performance
underpins, to ensure the scheme is
affordable and sustainable.
Rewarding Growth
incentive plan (RGIP)
This is a one-off
scheme to provide all
colleagues with the
opportunity to share in
the Co-op’s long-term
success in growing the
operating profit of the
business over the next
three years.
Performance outturns will be determined by how
much of our growth ambition we’ve achieved in any
of the three performance years.
The maximum opportunity over three years is:
- CEO: £1,650,000 over 3 years.
- CFO: £875,500 over 3 years.
- Group Secretary and General Counsel: £385,000
over three years.
In addition to how much of our growth
ambition we’ve achieved, the scheme
includes performance underpins. For
a Rewarding Growth payment to be
made in any relevant performance
year, all the underpins must be met.
The Committee has discretion to
adjust the formulaic outcomes of the
RGIP, both upward and downwards
(including to nil) to reflect any
circumstances which the Committee
considers relevant.
Any adjustments will be disclosed
in the relevant Annual Report on
Remuneration.
EXISTING AWARDS
The Group will honour any existing annual bonus plan and deferred award commitments, subject to the rules
and performance conditions that apply to those schemes.
Our Members' Annual Report 2024
80
MALUS AND CLAWBACK
Clawback provisions apply to all of our incentive plans and enable the Committee to claim back part or all of a
payment under these arrangements if our Co-op’s results were materially misstated, should have been assessed
materially differently or where an individual ceases to be employed by our Co-op as a result of misconduct.
Malus provisions allow, under speciﬁc circumstances, that the Committee can decide that an award which has not
yet paid out should lapse.
PAYMENTS OUTSIDE POLICY
The Committee reserves the right to make any remuneration payments and payments for loss of ofﬁce
(including exercising any discretions available to it in connection with such payments), notwithstanding
that they are not in line with the proposed remuneration policy set out in this report where the terms of the
payment were agreed (i) before the policy came into effect or (ii) at a time when the relevant individual was
not a Director of the Company and, in the opinion of the Committee, the payment was not in consideration for
the individual becoming a Director of the Company. For these purposes, ‘payments’ includes the Committee
satisfying awards of variable remuneration.
POLICY FOR EXECUTIVE RECRUITMENT
The pay package for any new Executive Director will be set using the same policies that apply to current
executives, benchmarked externally by role. This means that the Committee would set a total pay package
that is aligned to what other similar businesses pay for similar roles, while ensuring that it pays no more
than is necessary to secure the individual. The following additional items of pay may be considered when
recruiting an executive:
• Relocation.
The Committee will consider contributing towards relocation costs for an executive who needs
to move home to be closer to their place of work or stay close to their place of work during the working
week. When applicable, this is provided under a relocation policy that seeks to provide appropriate
ﬁnancial assistance based on the nature of the move and individual circumstances, without encouraging
people to spend long periods away from family.
• Giving up of outstanding incentive awards.
Under exceptional circumstances, the Committee may
consider compensating a new executive for incentive awards lost as a direct result of leaving their previous
employer to join Co-op. The exact type and amount of compensation will vary depending on the incentive
plans operated by the previous employer. Any payments agreed under this policy will be no more
generous than the arrangements lost, will mirror the original terms as far as possible and will typically be
subject to relevant performance criteria.
Our Members' Annual Report 2024
81
POLICY FOR EXECUTIVE LEAVERS
In the event of termination, the Committee will review and approve all payments due to an executive with the
aim of minimising the costs to our Co-op. Payments will be based on contractual and statutory obligations,
including legal fees. Where negotiated, a contribution towards career support may be made.
The notice period in newly recruited Executive Directors’ service contracts will not exceed six months. Current
Executive Directors’ contracts can be terminated by a maximum of six months’ notice. Where it is better for our
Co-op for an individual to remain under a contract of employment but not to work their notice, they are placed
on garden leave and only contractual payments are made. Where an individual is not required to work their
notice and receives a payment in lieu, our Co-op is only obliged to pay base salary. The payment in lieu would
not include any beneﬁts or bonuses.
The Committee can agree that the salary in lieu of the whole or part of the notice period can be paid in
instalments. The Committee has the right to reduce the payments of salary in lieu of notice by the amount of
income from a new role.
The Committee has discretion to determine whether, and to what extent, any part of the deferred BP payment
should be made in respect of the period they have been actively employed. In exercising its discretion, the
Committee will take account of the reasons for leaving, performance and contractual commitments.
FEES FOR NON-EXECUTIVE DIRECTORS
Fees for non-executive Board directors are determined by the Non-Executive Fees Committee of Council.
Fees are described in the Annual Report on Remuneration on
page 84
.
PAY FOR 2025: SUMMARY
ELEMENT
EXECUTIVE DIRECTORS
OTHER COLLEAGUE GROUPS
Salary
Chief Executive, Shirine Khoury-Haq - £825,000 effective 1 Jan 2025
(7.3% increase).
Chief Financial Officer, Rachel Izzard - £525,000 effective 1 April 2025
(3.9% increase).
Group Secretary and General Counsel, Dominic Kendal-Ward -
£356,125 effective 1 April 2025 (1.75% increase).
1.75%: senior leaders.
Pay negotiations with our trade
union partners for all other
colleagues are yet to be concluded
for 2025.
Benefits
Includes colleague discount, life assurance (4x salary),
company car cash allowance (or car), private medical cover.
All colleagues are eligible for
colleague discount and life assurance
(between 1x and 6x salary).
Eligibility for other benefits is
dependent on seniority/work level.
Pension
Pension and/or cash supplement totalling 10% of salary.
Participation in a pension plan
is offered to all colleagues on a
contributory basis. The maximum
contribution is 10% of salary.
Our Members' Annual Report 2024
82
ELEMENT
EXECUTIVE DIRECTORS
OTHER COLLEAGUE GROUPS
Annual
bonus plan
Performance is based 80% on business metrics and 20% on
achievement of personal objectives.
Maximum award opportunities of:
- CEO: 200% of salary.
- CFO: 170% of salary.
- General Counsel: 110% of salary.
MEASURE
WEIGHTING
Operating profit £m
50%
Colleague engagement
10%
Customers
and
members
Member participation
20%
Member perception
More members
Spending more
Personal performance
20%
All colleagues and store managers
are eligible to participate in the
annual bonus plan.
Maximum award varies by role.
LTIP
Awards are subject to a three-year performance period.
The performance metrics are aligned to our strategy.
Maximum award opportunities of:
- CEO: 200% of salary.
- CFO: 170% of salary.
- Group Secretary and General Counsel: 110% of salary.
2025/27 LTIP MEASURES
WEIGHTING
Run our Co-op
efficiently
Return on capital employed (ROCE) %
25%
Grow our Co-op
Gross merchandising value (GMV) £
25%
Our
Member-Owners
Member satisfaction (NPS) %
12.5%
2027 Total Member Spend £m
12.5%
Supporting
our Colleagues
Female representation
WL1-3
2.5%
WL1-5
2.5%
Ethnic minority representation
WL1-3
2.5%
WL1-5
2.5%
More value
Reduce Scope 1&2 emissions
15%
Colleagues in work levels 1-3
participate in this plan.
Maximum award varies by role.
Rewarding
Growth
incentive
plan
Maximum award opportunities over the three years of the plan:
- CEO: £1,650,000 over 3 years.
- CFO: £875,500 over 3 years.
- Group Secretary and General Counsel: £385,000 over 3 years.
All colleagues are eligible to
participate in the Rewarding
Growth incentive plan.
Maximum award varies by role.
For frontline colleagues the
maximum opportunity is £1,000 over
three years.
Recovery
positions
The Executive Director incentive arrangements are all subject to
malus and clawback provisions.
Malus and clawback provisions apply
to the annual bonus plan and LTIP.
Our Members' Annual Report 2024
83
PAY SCENARIO CHARTS
The following charts indicate the level of remuneration that could be received by each member of our
Executive in accordance with the Policy in the ﬁrst ﬁnancial year to which the new Policy applies (i.e. ﬁnancial
year ending 3 January 2026) at different levels of performance.
In theory, our Executive could achieve 100% of the Rewarding Growth opportunity in 2025, and this has been
modelled in the ‘maximum’ opportunity scenarios. However, at target, Executive Directors are expected to only
achieve 10% of their maximum Rewarding Growth opportunity in 2025, which has been modelled in the ‘on
target’ scenario.
Chief Executive Ofﬁcer – Shirine Khoury-Haq
£0k
£1,000k
£2,000k
£3,000k
£4,000k
£5,000k
£6,000k
£7,000k
MINIMUM
ON TARGET
MAXIMUM
Chief Financial Ofﬁcer – Rachel Izzard
£0k
£500k
£1,000k
£1,500k
£2,000k
£2,500k
£3,000k
£3,500k
MINIMUM
ON TARGET
MAXIMUM
Group Secretary and General Counsel - Dominic Kendal-Ward
£0k
£500k
£1,000k
£1,500k
£2,000k
MINIMUM
ON TARGET
MAXIMUM
Fixed Pay
Bonus
LTIP
Rewarding Growth
Our Members' Annual Report 2024
84
WHAT DID OUR EXECUTIVES EARN IN TOTAL DURING THE YEAR?
The table below shows the pay received by our executives during the 2024 ﬁnancial year.
2024 PAY FOR OUR EXECUTIVES IN POST ON 4 JANUARY 2025
ANNUAL REPORT ON REMUNERATION
Fixed Pay
Performance Pay
Name of Executive
Year
Basic salary
£’000
Taxable
benefits
2
£’000
Pension
benefits
3
£’000
Bonus plan
4
£’000
Deferred
bonus plan
5
£’000
Other
7
£’000
Total pay
£’000
Shirine Khoury-Haq
2024
766
5
77
682
372
296
2,197
2023
764
5
76
844
0
0
1,689
Dominic Kendal-Ward
2024
350
14
35
188
65
52
704
2023
342
14
34
226
10
0
626
Rachel Izzard
6
2024
489
14
45
290
0
0
838
2023
260
8
7
179
0
0
454
1
The 2023 financial year ran from 1 January 2023 to 6 January 2024, which is a week longer than the 2024 financial year.
2
Taxable benefits include car, fuel, car cash allowance and healthcare (where applicable).
3
Pension includes Co-op Defined Contribution pension plan or cash allowance in lieu of pension provision.
4
Bonus Plan amounts shown represent 50% of the 2024 bonus plan earned award which is payable May 2025. The other 50% is deferred for two years and paid
subject to still being employed by our Co-op and not under notice and the rules of the Bonus Plan.
5
Deferred bonus awards relate to the 2022 bonus plan.
6
The salary and benefits information shown for Rachel Izzard for 2023 relates to the period since she joined our Executive on 12 June 2023.
7
Due to the fallow year for deferred bonus payments as a result of the Committee exercising discretion to not make any awards under the 2021 bonus, the
Committee decided to put in place a retention arrangement which applied to our Executive Directors and our Directors who were employed during 2021. The
retention bonus vested in December 2024. Any payment was conditional on the Co-op satisfying its banking covenants and the Executive Directors demonstrating
satisfactory performance and remaining employed at the end of the retention period. The conditions of the retention bonus were all met, and the full awards have
now vested. The vested award for Shirine Khoury-Haq is £296k whilst the award for Dominic Kendal-Ward is £52k. Rachel Izzard was not employed at the time of
grant and therefore did not qualify for an award.
Our Members' Annual Report 2024
85
2024 FIXED PAY
Salary
Benefits
Pension
Shirine Khoury-Haq
£768,750
2.5% increase
Beneﬁts package remained
unchanged and includes car
allowance and private healthcare.
Pension or pension
cash allowance of up
to 10% of salary.
Rachel Izzard
£515,000
14.4% increase
Dominic Kendal-Ward
£350,000
No increase
2024 BASE SALARIES (AUDITED)
Shirine Khoury-Haq’s salary was increased by 2.5% on 1 April 2024 to £768,750. Rachel Izzard’s salary was
increased by 14.4% to £515,000 on 1 June 2024. No salary increase was awarded to Dominic Kendal-Ward in
2024 and his salary remained at £350,000 per annum.
2024 BONUS PLAN OUTTURN
The annual bonus plan (BP) outturn is determined by business and ﬁnancial measures and individual
performance including objectives which are designed to support the achievement of our strategic goals.
As detailed in the Chair’s letter, the Committee are satisﬁed that the formulaic annual BP outcomes are
appropriate and reﬂect Co-op’s performance for the year. Details of the achievement against each element of
our 2024 balanced scorecard are provided below:
Outcome
Performance
measure
Weighting
Threshold
(25% payout)
Target
(50% payout)
Stretch
(100% payout)
Actual
performance
Shirine
Khoury-Haq
Rachel Izzard
Dominic
Kendal-Ward
Operating
proﬁt
50%
£110m
£130m
£150m
£135.6m
32%
32%
32%
Colleague
engagement
10%
73%
74%
75%
73%
2.50%
2.50%
2.50%
Member
participation
20%
224,000
242,000
251,000
359,000
20%
20%
20%
Member
perception
51%
52%
53%
54%
Increasing
members
5.25m
5.35m
5.5m
6.19m
Member
spend
£2.902m
£2.981m
£3.088m
£3,183m
Individual
performance
20%
17%
12%
17%
Total % of maximum
71.50%
66.50%
71.50%
Financial performance for 2024 was in line with expectations, with operating proﬁts falling marginally ahead
of target.
Whilst our Co-op continues to have highly engaged colleagues, our 2024 score of 73% has not improved
when compared to our 2023 result. Therefore, the performance for this measure only achieved threshold.
Our performance across our four member metrics exceeded the stretch targets.
Our Members' Annual Report 2024
86
Name of Executive
Bonus Plan award year
Value of deferred bonus award £’000
Expected vesting date
Shirine Khoury-Haq
2024
£682k
Apr/May 2027
2023
£844k
Apr/May 2026
Rachel Izzard
2024
£290k
Apr/May 2027
2023
£179k
Apr/May 2026
Dominic Kendal-Ward
2024
£188k
Apr/May 2027
2023
£226k
Apr/May 2026
The bonus plan rules apply in respect of payments being made.
WHAT DEFERRED BONUS PLAN AWARDS DO OUR EXECUTIVES HOLD?
Awards are made annually under the bonus plan and any payments due are made in cash, with 50% of all
awards paid in two years’ time. The table below shows the value of the deferred award held by executives in
post on 7 January 2025.
PERFORMANCE AND CHANGE IN GROUP CHIEF EXECUTIVE REMUNERATION
The chart and table below illustrate the change in annual operating proﬁt achieved over the last ten years and
compares that with the change to the CEO’s single-ﬁgure value for those years.
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Underlying Operating Proﬁt £'m
£81m
£59m
£65m
£43m
£31m
£100m
£57m
£100m
£97m
£136m
£'000
Shirine Khoury-Haq
-
-
-
-
-
-
£836
£1,571 £1,689 £2,198
Steve Murrells
£2,046 £1,895 £1,485 £2,220 £1,469
-
-
Richard Pennycook
£3,596 £2,373
£872
CEO single ﬁgure
£3,596 £2,373 £2,918 £1,895 £1,485 £2,220 £2,305
£1,571 £1,689 £2,198
Our Members' Annual Report 2024
87
Under the options provided in the guidance to calculate the pay ratio, we’ve opted to use option C. This allows
us to select comparator colleagues for the 25th, 50th and 75th percentiles. All three options would give us a
very similar result, and option C is the most practical given the size and complexity of our payroll systems.
A large proportion of our colleagues work in frontline roles in our stores, and both the 25th percentile and the
median comparators are colleague team members in our Food stores.
The Government pay ratio calculation is based on actual pay received. It therefore can change a lot, as bonus
payments are likely to vary each year, given that they are linked to both business and personal performance.
Year
Method
25th percentile ratio
Median pay ratio
75th percentile ratio
2024
Option C
87:1
84:1
78:1
2023
Option C
74:1
72:1
65:1
2022
Option C
91:1
76:1
62:1
2021
Option C
76:1
71:1
64:1
2020
Option C
122:1
117:1
102:1
2019
Option C
83:1
76:1
62:1
NON-EXECUTIVE DIRECTORS’ REMUNERATION
This section of the report includes details of the payments made to the Non-Executive Directors (NEDs) in
ofﬁce during 2024.
During the year the NED Fees Committee (a committee of the Council) agreed that an annual fee increase
be introduced for NEDs. The increase approved by the NED Fees Committee for 2024 was 2.5%, effective
1 April 2024.
Fees prior to increase
(8 Jan 2024 – 31 Mar 2024)
Fees post increase
(1 Apr 2024 – 4 Jan 2025)
% Increase
Board Chair
£250,000
£256,250
2.5%
Independent Non-Executive Directors (INEDs)
£60,000
£61,500
2.5%
Member Nominated Directors (MNDs)
£60,000
£61,500
2.5%
The following additional fees apply:
Senior Independent Director
£15,000
£15,375
2.5%
Chair of Risk and Audit Committee
£15,000
£15,375
2.5%
Chair of Remuneration Committee
£15,000
£15,375
2.5%
PAY RATIO
Large public companies are required to report the ratio of pay between a ﬁrm’s chief executive compared to
the 25th, median and 75th percentiles of full-time employees.
To calculate each percentile, we’ve sorted all our colleagues in order of their total pay from high to low. We
then split them into four equal groups to work out the percentiles, i.e. if there are 101 colleagues, the 25th
highest paid colleague is used for the 75th percentile, the 51st highest paid colleague for the median and the
75th highest paid colleague for the 25th percentile.
The pay ratios, calculated in line with the Corporate Governance Code guidance, are set out below.
Our Members' Annual Report 2024
88
NON-EXECUTIVE MEMBERS OF OUR BOARD AT 4 JANUARY 2025
Co-op
Board
£'000
Risk and Audit
Committee Chair
£'000
Remuneration
Committee Chair
£'000
Senior Independent
Director
£'000
2024
Total
4
£'000
2023
Total
5
£'000
Debbie White (Chair)
1
255
255
26
Lord Victor Adebowale
61
61
61
Kate Allum
61
8
69
61
Margaret Casely-Hayford
61
61
61
Luke Jensen
2
54
54
-
Sarah McCarthy-Fry
61
61
61
Adrian Marsh
61
15
76
52
Moni Mannings
61
15
76
1
Rahul Powar
61
61
61
Christine Tacon
3
39
39
-
1
No additional fee is paid to the Chair of the Nominations Committee.
2
Luke Jensen was appointed an Independent Non-Executive Director on 19 February 2024.
3
Christine Tacon was appointed a Member Nominated Director on 18 May 2024.
4
The 2024 ﬁnancial year ran over 52 weeks from 7 January 2024 to 4 January 2025.
5
The 2023 ﬁnancial year ran from 1 January 2023 to 6 January 2024, which is a week longer than the 2024 ﬁnancial year.
No additional fees are paid and no other beneﬁts are provided for the Chair or any other NED member of
our Board.
All NEDs are entitled to reimbursement of all reasonable and properly documented travel, hotel and other
expenses incurred in performing their duties, in accordance with the terms of our Directors expenses policy.
None of the NEDs, by virtue of their Board position, participated in any of our Co-op’s incentive plans or
pension schemes, nor did they receive performance-related payments during the period.
The NED letters of appointment are available for inspection on request.
Our Members' Annual Report 2024
89
FORMER NON-EXECUTIVE MEMBERS OF OUR BOARD WHO LEFT
DURING THE 2024 FINANCIAL YEAR
Co-op
Board
£'000
Risk and Audit
Committee Chair
£'000
Remuneration
Committee Chair
£'000
Senior Independent
Director
£'000
2024
Total
4
£'000
2023
Total
5
£'000
Allan Leighton
1
See
note 1
See
note 1
Paul Chandler
2
23
23
61
Stevie Spring
3
28
7
35
76
1
Allan Leighton stepped down as Chair on 1 January 2024 but remained as a Non-Executive Director until 18 February 2024. Allan Leighton waived his fee for the
duration of this appointment, instead this was paid directly by our Co-op to charity. In 2024 it was paid to The Co-operative Community Investment Foundation.
In 2024 the donation was £8,076.
2
Paul Chandler reached the end of his term on 18 May 2024.
3
Stevie Spring reached the end of her term on 24 June 2024.
For details of fees paid to Independent Non-Executive Directors on the boards of subsidiary businesses,
please see the relevant accounts, which are available on request from the Secretary.
MEMBERS OF THE COMMITTEE
Details of the Committee members and their attendance at meetings during 2024 are provided on
page 66
.
Rahul Powar left the Committee in February 2025 when he stepped down from the Board and Margaret
Casely-Hayford left the Committee in March 2025 ahead of reaching the end of her term on the Board in
May 2025. Wais Shaifta was appointed to the Committee in March 2025.
The Chief Executive, the Group Secretary and General Counsel, the Chief People and Inclusion Ofﬁcer and
members of the Reward team are also invited to attend Committee meetings, but are not present when their
own remuneration or terms and conditions are being considered.
Other individuals are invited to attend for speciﬁc agenda items when necessary.
The Committee members are all non-executive. They have no personal ﬁnancial interests in the Committee’s
decisions and they have no involvement in the day-to-day management of our Co-op. Our Board believes
that all members of the Committee are independent for the purpose of reviewing remuneration matters.
INDEPENDENT ADVICE
In carrying out its responsibilities, the Committee has access to independent advice as required. During
2024, the Committee retained Deloitte as its independent remuneration adviser. The fees paid to Deloitte
during this period totalled £64,200 excluding VAT.
Deloitte are a signatory of the Remuneration Consultants’ Code of Conduct, which requires their advice to
be objective and impartial.
The Committee takes legal advice from our Co-op’s internal Legal team and also from external legal advisers.
Our Members' Annual Report 2024
90
THE REPORT
OF THE RISK
AND AUDIT
COMMITTEE
Our Members' Annual Report 2024
91
THE REPORT OF THE RISK
AND AUDIT COMMITTEE
INTRODUCTION FROM YOUR COMMITTEE CHAIR
The Committee had a busy year in 2024, helping to ensure the integrity of our ﬁnancial reporting, the
internal control environment and risk management process. We have seen a number of changes to the
Committee’s members since last year. I’d like to thank Paul Chandler for his contribution to the Committee as
he stepped down from the Board in May 2024 following a nine-year term as a Member Nominated Director
and also Rahul Powar and Victor Adebowale who left the Committee in March 2025. I was delighted to
welcome Luke Jensen to the Committee during the year as well as Lord Simon Woolley and Christine Tacon
who joined the Committee more recently.
A key focus throughout 2024 was our change portfolio and in particular our transformation programme in
Finance. We received updates from programme sponsors and assurance partners on progress against plans,
the key risks facing the programme and management’s response to challenges. We also considered lessons
learned from a previous programme to understand how these learnings were being shared and implemented.
Management has continued to provide the Committee with updates on activity it has taken in response to
corporate governance reforms and the work that is underway to enhance internal control.
We’ve continued to oversee the work of our auditors, external and internal, keeping a particular focus
on IFRS 17 because of the changes it makes to how funeral plans are accounted for and presented in our
annual results. Other key topics we considered through the year include cyber security, sustainability and
climate-related disclosures.
We were pleased that Co-op ranked ﬁrst amongst all 14 designated retailers by suppliers for overall
compliance with the Groceries Supply Code of Practice in the annual Groceries Code Adjudicator survey.
Adrian Marsh
Chair, the Risk and Audit Committee
Our Members' Annual Report 2024
92
RISK AND AUDIT COMMITTEE MEMBERSHIP AND ATTENDANCE
Our Board has a Risk and Audit Committee (‘Committee’) which oversees Co-op’s ﬁnancial reporting and risk
management process. The UK Corporate Governance Code (‘the UK Code’) recommends that there are at least
three independent directors on the Risk and Audit Committee, and we met this recommendation during 2024.
Details of the Committee members and their attendance at meetings during 2024 are provided on
page 66
.
Rahul Powar and Lord Victor Adebowale left the Committee when they stepped down from the Board (February
and March 2025, respectively). They were replaced by Lord Simon Woolley and Christine Tacon in March 2025.
All Committee members are considered by our Board to be independent under the UK Code, providing
objectivity and independent scrutiny.
Our Board is satisﬁed that Adrian Marsh’s relevant and recent ﬁnancial experience means he is qualiﬁed to
be Chair of the Committee.
During 2024, several colleagues regularly attended meetings including the Chief Executive Ofﬁcer, Chief
Financial Ofﬁcer, Group Secretary and General Counsel, Senior Assistant Secretary, Director of Risk and
Internal Audit, Head of Internal Audit and the Head of External Financial Reporting. Our Board Chair also
attended meetings as an observer. Other colleagues attended when asked to do so by the Committee, and
the external auditors attended each session. The Committee also met the Director of Risk and Internal Audit
and the external auditors in private sessions.
WHAT THE RISK AND AUDIT COMMITTEE DOES
The main areas the Committee looks after include the following:
Financial and regulatory reporting
The Committee checks that our Co-op’s Annual Report and Accounts, along with other information
on its ﬁnancial performance, is professionally prepared, and that the report itself is fair, balanced and
understandable. It also reviews our ﬁnancial statements, ensuring management has followed appropriate
accounting standards and made appropriate estimates or judgements. It also assesses compliance with
ﬁnancial and regulatory requirements, including monitoring compliance with the Groceries Supply Code of
Practice (GSCOP).
Risk management and internal controls
The Committee reviews our Co-op’s internal ﬁnancial control framework and internal control systems, and
monitors any weaknesses identiﬁed and how management are remediating them. It reviews how emerging and
principal risks are identiﬁed and assessed and maintains direct oversight of Co-op’s principal risks including
how they are managed and mitigated.
Internal Audit
The Committee monitors the performance of our Internal Audit team. The Committee also reviews the
performance of, and helps to set the objectives of, the Director of Risk and Internal Audit. The Committee also
considers and approves the remit of the Internal Audit team. This includes setting Internal Audit’s assurance
priorities and monitoring the implementation of management’s responses to ﬁndings from Internal Audit reports.
External audit
The Committee reviews and ensures the effectiveness and independence of our external auditors and approves
their fees. It also reviews the ﬁndings of the audit including management’s response to any recommendations.
Climate-related ﬁnancial disclosures and sustainability reporting
The Committee reviews and recommends to our Board the approval of our Social Value and Sustainability Report
and relevant climate-related ﬁnancial disclosures within it, and ensures that the report is independently veriﬁed.
NOVEMBER
• Financial control
• Pensions update
• Transformation programmes update
• External audit Plan and Fee
• Internal Audit activity, assurance priorities,
effectiveness and quality
• Corporate governance reforms
• Data protection
SEPTEMBER
• Financial control
• 2024 Interim Financial Statements
• Tax policy
• GSCOP update
• Funeralcare update
• Risk management and internal control review
• Whistleblowing
• Cyber security risk deep dive
• Internal audit activity, quality and standards
• External audit strategy
FEBRUARY
• Financial control – year-end process and key
judgements
• UK Code compliance
• Groceries Supply Code of Practice (GSCOP)
Annual Report
• Digital technology and data risk deep dive
• Corporate governance reforms
• Whistleblowing
• Internal Audit activity
• Key and emerging risks
• External audit Letter of Engagement and Fees
• Effectiveness review and Terms of Reference
• Task Force on Climate-Related Financial
Disclosures (TCFD)
MARCH
• 2023 Annual Financial
Statements
• External auditor’s full
year report
• 2023 Social Value and
Sustainability Report
• Co-op Funeral Plans
Limited update
• Risk management
and internal control
review
• Insurance renewal
strategy
JUNE
• Financial control
• Treasury update
• External audit
Management Letter
• Effectiveness of
external auditors
• Internal Audit activity
and assurance priorities
• Transformation
programmes update
• Risk deep dives –
change management
and regulatory
compliance
• Data protection
Our Members' Annual Report 2024
93
Other
The Committee also monitors our Co-op’s procedures around whistleblowing, compliance with the Modern
Slavery Act and General Data Protection Regulation (GDPR) and management of pension schemes.
The Committee’s terms of reference give more detail on what it does and can be found on our website:
www.co-operative.coop/investors/rules
. During the year we undertook a review of these terms of reference to
ensure they remain in line with best practice and the UK Code.
KEY ACTIVITY FOR THE COMMITTEE IN 2024
This year an internal review of the Committee’s effectiveness was undertaken. The review followed the
same process as the main Board and Committee reviews using the digital evaluation platform BoardClic.
All Committee members, the external auditors and regular attendees completed a questionnaire covering key
governance questions on the operation of the Committee.
The results were discussed by the Committee at its meeting in February 2025. An action plan has been
devised and progress against this will be monitored by the Committee over the year.
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SIGNIFICANT ISSUES RELATING TO THE FINANCIAL STATEMENTS
When the Committee looked at the 2024 ﬁnancial statements, it considered all key areas of judgement and
estimation. In all cases, it discussed these with management and our external auditor and their impact on the
full year ﬁnancial statements.
Areas of focus
Going concern and viability
Management continues to monitor our borrowings, facilities and banking covenants to ensure that we have
enough ﬁnancial headroom to continue to run our business as a going concern.
The Committee reviewed the appropriateness of adopting the going concern basis in preparing the full year
ﬁnancial statements and assessed whether our Co-op is viable over a longer period. The Committee has
assessed management’s assumptions in ﬁnancial projections, as well as stress testing to reﬂect principal risks
and market conditions, and agree that our Co-op is a going concern.
Property, plant and equipment and right-of-use asset impairment
Our Co-op’s balance sheet includes signiﬁcant intangible assets and property, plant and equipment balances.
The most signiﬁcant of these are in the Food business, the Funeralcare business and at a Group corporate level.
Accounting standards require us to perform an impairment review of indeﬁnite life intangible assets annually, and
other assets where there is an indicator of impairment. As a result of impairment reviews of Food stores, funeral
homes and property, a non-underlying impairment charge in respect of food stores has been recognised within
the full year results. The Committee reviewed management’s impairment assessment and respective outcomes,
and challenged the key assumptions that underpin the calculations, such as the discount and long-term growth
rates, and judgement taken over the impairment of new stores and impairment reversals.
Property, regulatory and legal and self-insurance provisions
Our Co-op makes provisions for probable future liabilities, notably in relation to onerous contracts associated
with leases and dilapidation provisions in respect of our trading and non-trading properties, as well as in
relation to regulation and litigation and self-insurance. These provisions require signiﬁcant judgement and
estimation, in determining whether, and how much, we should account for as a provision. The Committee
reviewed management’s judgement and estimation underpinning these provisions, satisfying itself that
assumptions used, including around future cashﬂows and discount rates, were appropriate.
Accrued supplier income (long-term agreements)
We hold long-term agreements with our suppliers which are inherently complex. The Committee has sought
assurance from management at year-end that our methodology and processes of internal controls are
appropriate to ensure that supplier income has been recognised correctly throughout the year and an accurate
cut-off has been achieved at year-end.
Revenue recognition for funeral plans and contractual service margin (CSM)
The Group adopted the new insurance contract standard (IFRS 17) in 2023. This is applicable to our funeral
plans and covers recognition, measurement, presentation and disclosure of insurance contracts (our funeral
plans). Under IFRS 17 there are complex assumptions that impact the timing and amount of revenue and
proﬁt that is recognised over the life of the funeral plans. Throughout 2024 the Committee has continued to
monitor and challenge the processes, controls and accounting assumptions that underpin revenue and proﬁt
recognition for our funeral plans in line with IFRS 17 including volume of plans and CSM roll-forward.
Valuation of insurance contract liabilities (funeral plans)
As noted above, our funeral plans are covered by IFRS 17 (Insurance Contracts) and the value of the insurance
liability that we hold on our balance sheet to cover the provision of future funerals includes material judgement and
estimation. The Committee has continued to receive reports from management around the continual improvements
being made to process, controls and data to ensure the funeral plan liability is calculated accurately.
Pension scheme IAS19 valuation
Our Co-op has a number of deﬁned beneﬁt pension schemes, of which the Pace scheme is the largest.
Management apply judgement over the underlying assumptions (such as the future growth rate of investments
and the death rate of members of the scheme), which can materially affect the valuation of the pension
schemes. The Committee assessed the key assumptions that underpinned the pension calculations to satisfy
itself that they were appropriate.
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EXTERNAL AUDIT ACTIVITIES
The Committee’s responsibility
The Committee makes recommendations to the Board about the appointment, reappointment, and removal
of the external auditors (and is responsible for any tender process when required). It also approves the
remuneration and terms of engagement of the external auditors and assesses the effectiveness of the
external audit process. Our members have the opportunity to vote on the appointment of the external
auditors at the AGM in line with the UK Code.
During the year, the Committee approved the reappointment of EY as our Co-op’s auditors and approved
their fees. EY provide the Committee with relevant reports, reviews, information and advice throughout the
year. All these activities are set out in the engagement letter.
Independence, objectivity and fees
Our external auditors must be judged to be independent for the audit to be objective, so we have an
External Auditor Independence Policy. We also have a policy about appointing colleagues who used to work
for the external auditors and an approach to be taken when using the external auditors for non-audit work.
The Committee pre-approves all non-audit spend with EY. This spend is capped at 70% of the average audit
fee over the previous three years.
In line with our External Auditor Independence Policy, the external auditors are prohibited from performing
certain tasks including (but not limited to) the following:
• Bookkeeping or preparing accounting records or ﬁnancial statements.
• Designing and implementing ﬁnancial information systems.
• Valuation services.
• Internal Audit services.
• Management functions or some human resource services.
The Committee approved the nature and cost of all non-audit work done by EY for our Co-op and is satisﬁed
that EY’s non-audit work didn’t affect objectivity in carrying out the audit.
Details of the amounts paid to the external auditors during the year for audit and other services are set out in
Note 3 to the ﬁnancial statements.
Effectiveness of auditors
The Committee discussed the effectiveness of EY throughout the year. It reviewed the outputs of an
effectiveness review undertaken by Internal Audit which comprised a survey of Co-op Finance leaders,
Committee members and other key stakeholders on EY’s performance in relation to the 2023 audit. Amongst
other factors the review covered resource, independence and objectivity, communication and quality.
Responses suggested that EY continued to provide a professional, independent and objective service.
Partner rotation
The partner responsible for the 2024 audit is Chris Voogd. This is Chris’s ﬁnal year on our audit. Following a
selection process we have now identiﬁed a successor audit partner whose ﬁrst year will be 2025.
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INTERNAL CONTROL AND RISK MANAGEMENT
We adopt the ‘three lines’ approach to trying to make sure our Co-op does what it says it will do. The ﬁrst line
establishes and maintains appropriate structures and processes for the management of operations and risk
(including controls). The second line provides complementary expertise, support, monitoring and challenge
related to the management of risk. Internal Audit provides independent assurance, as the third line.
Internal controls framework
Our Board has overall responsibility to make sure controls are in place to enable our Co-op to operate in
compliance with policies. The effectiveness of our controls is assessed using the COSO model, a globally
recognised framework for risk management and internal control.
Each Operating Board member was asked to review how well the controls were working for their area of
responsibility and to self-certify the results of their review. This included consideration of the key elements
of internal control in operation, and the key improvement initiatives. The review of the Operating Board
members’ self-assessments forms an important part of the annual review of the systems of risk and control
and outputs from this activity were shared with the Committee.
The Committee also received regular management reports on ﬁnancial control across our Co-op, including
management’s progress on addressing the external auditor’s control recommendations arising from their
2023 audit and complex judgement areas such as IFRS 17 in relation to our Funeralcare business.
Further key components of our internal control framework are:
• Our controls are designed to ensure that risks are appropriately managed. This includes risks around the
completeness and accuracy of accounting for ﬁnancial transactions, as well as for reducing the potential
cost from loss of assets or fraud. Risks and controls are regularly reviewed.
• Policies, procedures and training for colleagues, co-ordinating the way colleagues do things across our
Co-op through regular management meetings and other forums, as well as setting policies for how we
spend our money and making sure that the right approvals are in place.
• A Code of Business Conduct, which sets out how colleagues should act in line with co-operative Values and
Principles with member-owners, customers, other colleagues, suppliers, the community and competitors.
This code tells colleagues how they can report any serious wrongdoing conﬁdentially and several policies
support this code such as anti-fraud and theft, and anti-bribery and corruption.
• Colleagues receive and provide information on strategy and objectives through their reporting lines
and a formal performance measurement process. Colleagues also receive regular business updates
from our Co-op leaders through various channels. We also have an external-facing colleague website:
coop.co.uk/colleagues
.
Risk management
Our Board and senior leaders are responsible for identifying and evaluating our Co-op’s main business risks.
We aim to have systems that manage each risk in an efﬁcient and effective manner. We look at what could go
wrong and how we can stop it happening. This is to protect our members’ interests and our reputation, and
to make sure we comply with regulatory standards and achieve our business objectives.
The Committee has received regular updates from the Group Risk team. This included a review of Group
Key Risks held on our Group Risk Register, which in 2024 included cyber security, beneﬁts realisation of
transformation programmes and delivery of our environmental, social, governance and sustainability
commitments. Updates on our emerging risks have also been reviewed, including potential economic, social
and environmental risks.
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97
The Committee has reviewed risk deep dives on other topics including:
• Digital technology and data – focusing on the risks associated with legacy systems and cyber security, and
establishing plans to mitigate and reduce these risks.
• Change management – how our transformation portfolio and the risks associated with it are being
managed and monitored, and the current risk trend and appetite status in this area.
• Legal and regulatory compliance – the framework in place to manage this risk and an overview of the
controls, monitoring, reporting and horizon scanning mechanisms in place.
INTERNAL AUDIT
Internal Audit is an independent function authorised by our Board through the Committee. Its main role
is to provide professional, objective assurance while providing insight to improve the way our Co-op is
managed and controlled. Internal Audit continued to adopt a ﬂexible, dynamic approach to planning in
2024 and regularly re-assessed Co-op’s assurance priorities. The Committee reviewed and approved
these priorities during the year. At each meeting, the Committee received a report from the Director of
Risk and Internal Audit on:
• The work of Internal Audit and the progress it had made against its assurance priorities.
• The impact on the systems of risk and control from Internal Audit ﬁndings.
• The remediation of any issues arising from Internal Audit reports.
During the year, the Committee reviewed Internal Audit reports covering key processes, systems and
controls, and projects and programmes. The reports have covered a range of different areas and
businesses at our Co-op including care of the deceased, food supply chain resiliency, artiﬁcial intelligence
and property risk management. The Committee also reviewed Internal Audit reports on key people topics
including modern slavery, Co-op’s inclusion strategy and inclusive hiring. The Committee also received
assurance updates on our Finance function’s technology (SAP) transformation programme from both the
Programme team and a third-party independent assurance partner.
The Committee reviewed the Internal Audit charter, which reafﬁrmed the purpose of Internal Audit, and
outputs from Internal Audit’s internal quality review. The Committee is satisﬁed that the Internal Audit
team have appropriate resources and continue to be impactful and effective.
CORPORATE GOVERNANCE REFORMS
In January 2024, the Financial Reporting Council announced revisions to the UK Code. The Committee
considered the changes to the UK Code and intends to be compliant with the new relevant provisions in the
timeframes it sets out. The main substantive change is a new requirement for the Board to make a declaration
in the annual report on the effectiveness of material controls. The Board declaration is required for ﬁnancial
years beginning on or after 1 January 2026, i.e. for ﬁnancial statements Co-op will publish in early 2027. The
Committee has received and reviewed management plans to ensure compliance with this requirement.
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98
ETHICS AND COMPLIANCE
Whistleblowing procedure
To ensure our Co-op follows best practice and co-operative Values and Principles, a whistleblowing
procedure has again been in place during the year to allow colleagues to pass on information about
suspected wrongdoing. We use an external independent party to manage our Speak Up service, which
allows colleagues to raise concerns conﬁdentially should they not wish to talk to someone within our Co-
op. This procedure also allows suppliers to report on any suspected wrongdoing. In addition to Speak Up,
reports can be made direct to colleagues at our Co-op.
We have a procedure for recording and investigating whistleblowing reports and the Committee
reviewed a summary of whistleblowing cases reported throughout the year. The Committee considers the
whistleblowing procedures to be appropriate for our size and scale. The whistleblowing policy is included in
the Code of Business Conduct and is available on our internal colleague hub and our website.
Groceries Supply Code of Practice (GSCOP)
During 2024, our Co-op engaged and worked collaboratively with Mark White, the Groceries Code Adjudicator
(GCA), and we continue to demonstrate our compliance with the Code. The GCA Annual Survey 2024 ranked
Co-op ﬁrst out of 14 retailers for overall Code compliance, with 98% of direct suppliers responding positively
(compared to 96% and a ranking of ﬁfth out of 14 in 2023). We value the supplier feedback given in the GCA
Survey and management uses the outputs to shape its continuous improvement plans.
The Committee has kept compliance under review through regular updates from the Code Compliance
Ofﬁcer. The Committee approved the Annual Compliance Report for submission to the Competition and
Markets Authority, as required by the Groceries (Supply Chain Practices) Market Investigation Order 2009.
A summary of progress in the year is on
page 109
.
Our Social Value and Sustainability Report and CRFD
The Committee has responsibility for reviewing our Co-op’s approach to sustainability reporting and social
impact accounting. We review and recommend the approval of the Social Value and Sustainability Report
to our Board, giving it the same importance and focus as the Annual Report and Financial Statements. Our
Social Value and Sustainability Report is independently assured.
The Committee also received updates on management’s approach to disclosures in accordance with CRFD.
General Data Protection Regulation (GDPR)
The Committee receives regular updates from Co-op’s Data Protection Ofﬁcer to ensure that our Co-op
continues to meet its obligations under GDPR. This included an overview of the effectiveness of Co-
op’s Data Protection Compliance Framework, a view of Co-op’s current overall risk and focus areas for
continuous improvement.
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99
THE REPORT
OF THE
NOMINATIONS
COMMITTEE
Our Members' Annual Report 2024
100
THE REPORT OF THE
NOMINATIONS COMMITTEE
INTRODUCTION FROM THE COMMITTEE CHAIR
I’m pleased to present this year’s report which details the role of our Nominations Committee and the
important work undertaken by our Committee during the year.
In 2024, our Committee focused on Board succession, and the balance of skills, experience, knowledge and
diversity on our Board.
BOARD CHANGES
As detailed earlier in the report, a number of changes have taken place on our Board during the year.
Moni Mannings joined as our Senior Independent Director in January 2024. We welcomed Luke Jensen in
February 2024 as an Independent Non-Executive Director in anticipation of Stevie Spring reaching the end
of her term in June 2024. Kate Allum (Member Nominated Director) took over from Stevie as Remuneration
Committee Chair in June 2024, having already served on the Committee from the start of the year.
During the year Paul Chandler also reached the end of his nine-year term as a Member Nominated Director
and we welcomed Christine Tacon as our newly elected Member Nominated Director in May 2024.
Rahul Powar and Victor Adebowale (both Independent Non-Executive Directors) stepped down from the
Board in February 2025 and March 2025 respectively. Margaret Hayford is due to reach the end of her term as
a Member Nominated Director in May 2025.
Succession activity has therefore remained a focus area for the Committee, as we conducted selection
processes for two new Directors, Lord Simon Woolley and Wais Shaifta, who we were delighted to welcome to
our Board in February 2025. Details on the two recruitment processes are included in the report.
To support ongoing succession activity, the Committee took the opportunity during the year to refresh the
Board Skills Matrix.
INTERNAL BOARD EFFECTIVENESS REVIEW
Following an externally facilitated review in 2023, this year’s review was internal, overseen by our Senior
Independent Director, Moni Mannings. The Committee reviewed its own effectiveness and remained satisﬁed
in this regard.
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101
OTHER AREAS OF ACTIVITY
The Committee also continued to deal with all routine matters, including:
• Assessing whether Directors met the required eligibility and membership criteria.
• Reviewing the composition of our Board Committees.
• Reviewing our Committee Terms of Reference and Board Diversity and Inclusion Policy.
• Recommending the re-appointment of Independent Non-Executive Directors.
Debbie White
Chair, the Nominations Committee
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102
WHAT DOES OUR NOMINATIONS COMMITTEE DO?
Our Nominations Committee:
• Leads the appointment process for Independent Non-Executive Directors (INEDs).
• Checks and approves the qualiﬁcations and commercial experience requirements of INEDs and
Executive Directors.
• Reviews the diversity and experience of our Directors to ensure our Board has a balanced perspective
overall, and can therefore provide effective leadership and oversight.
• Evaluates Board performance.
• Reviews and recommends succession plans for our Board.
• Submits proposals to the Non-Executive Directors’ Fees Committee in respect of the remuneration of our
Co-op Chair, INEDs and Member Nominated Directors (MNDs).
Two areas outside of our Committee’s remit are MND elections and Senior Leader Succession. The Member
Nominated Directors Joint Selection and Approval Committee (MNDJC) oversees the election process for
MNDs, including who is elected by members. Our Board maintains oversight of succession plans for our
senior leaders which were reviewed during the year.
MEMBERSHIP AND ATTENDANCE
Details of the Committee members and their attendance at meetings during 2024 are provided on
page 66
.
Victor Adebowale left the Committee when he stepped down from the Board in March 2025 and Margaret
Casely-Hayford left the Committee ahead of reaching the end of her term on the Board in May 2025. Wais
Shaifta and Sarah McCarthy-Fry joined the Committee in March 2025. Where appropriate, the CEO is also
invited to attend meetings.
The Committee met formally three times during the year. The Committee maintained dialogue outside of
formal meetings to progress Board appointment activity.
TERMS OF REFERENCE
The Committee’s Terms of Reference were reviewed during the year and are available at
www.co-operative.coop/investors/rules
2024 FOCUS AREAS
Board recruitment
The Committee engaged the services of two search ﬁrms during the year – Lygon Group and Russell Reynolds.
The only connection these ﬁrms have with our Co-op is as recruitment consultants and there are no relevant
connections with individual Directors.
Both search ﬁrms met with various stakeholders to understand the role requirements, with candidate briefs
subsequently agreed. The Committee ensured that both processes were formal, rigorous and transparent, and
that they were conducted in line with our Board Diversity and Inclusion Policy. In particular, our Committee
ensured that diverse candidates from a wide variety of backgrounds were included in the shortlists.
The processes included interviews conducted by Committee members (including the Council President).
Candidates also met our CEO.
The Committee was unanimous in recommending to the Board the appointments of Wais Shaifta and Lord
Simon Woolley.
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103
Board Skills Matrix
An effective Board requires the right mix of skills and experience.
To help with ongoing succession planning and recruitment, our Committee introduced a new Board Skills
Matrix using an external platform (Board Outlook) for the ﬁrst time. The skills in the matrix are mapped to
our strategic priorities. This helps our Board to deliver our strategy and allows them to provide appropriate
challenge to our leadership team.
The completed matrix was shared with both the Board and Nominations Committee in January 2025. We
intend to maintain the matrix to help inform future Board succession discussions. The skill categories and
the number of Directors categorised as either ‘advanced’ or ‘expert’ were also shared with the MND Joint
Selection and Approvals Committee to inform MND candidate longlisting.
Board inductions
All new Directors complete a comprehensive induction programme tailored to them. This includes meeting
all members of the Board and Operating Board, meeting other key stakeholders (including the President of
the National Members’ Council) and undertaking visits to our Co-op’s operations.
Building on feedback from both recently appointed Directors and the outputs from the 2023 Board
Effectiveness Review, the Committee oversaw enhancements to the Director Induction Programme to ensure
it remained comprehensive, yet appropriately structured, timely and focused.
Board effectiveness
The Board effectiveness review provides our Board with an opportunity to reﬂect on performance. In line
with best practice, this is carried out annually.
This year we undertook an internal review using a digital evaluation platform called BoardClic to collate
the evaluation data. All Board members and regular attendees completed a questionnaire covering seven
key areas; purpose and strategy; board agenda and meetings; talent and culture; board composition and
dynamics; the chair; information, reporting and risk management; and the relationship with the Council.
The results were discussed by both the Board and Nominations Committee in January 2025, then an action
plan was collated.
The Committee will monitor progress against the action plan. The report and outputs of the review were
shared with the Senate Governance Sub-Committee in March 2025.
A review of each Board Committee was also undertaken and results discussed with the respective
Committees in February 2025. Any Committee-speciﬁc actions will be overseen by each Committee Chair.
Directors’ fees
Our Committee submits proposals to the Non-Executive Directors’ Fees Committee of the Council
regarding any increases to our Non-Executive Directors’ fees.
Following a review of market data and in the context that the Directors' fees had not been reviewed since
2016, a proposal was submitted during the year to increase fees by 2.5%. This was approved by the Non-
Executive Directors’ Fees Committee. You can ﬁnd more detail in the Annual Report on Remuneration on
page 70
.
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104
Re-appointment of Directors
During the year, the Committee considered and recommended to the Board the re-appointment of Rahul
Powar (INED).
The Member Nominated Director Joint Selection and Approvals Committee (MNDJC) was responsible for
the MND election process. This saw Kate Allum being re-elected for an additional term and Christine Tacon
elected in May 2024.
Diversity and inclusion
One of our Committee’s priorities is achieving a diverse and inclusive workplace that is representative of our
membership. We are proud that our Board beneﬁts from gender and ethnic diversity.
We are also pleased to report that our Board continues to exceed the voluntary target set out in the FTSE
Women Leaders Review and the recommendations of the Parker Review.
Diversity and inclusion remained a key area of focus for the Committee during the recent Board recruitment
activity. In accordance with our Board Diversity and Inclusion Policy, both search ﬁrms appointed by the
Committee were signatories to the Enhanced Code of Conduct for Executive Search Firms and both ﬁrms
were given clear direction to create a diverse longlist.
Reviewing our Directors’ eligibility
Our Committee have reviewed the qualifying and commercial experience of our Co-op’s INEDs and
Executive Directors throughout the year, including the Membership Criteria and Eligibility Criteria. The
Committee can conﬁrm that our INEDs and Executive Directors have all met the relevant requirements and
shown continued commitment to co-operative Values and Principles.
During the year the Committee reviewed the independence of the INEDs against the guidance set out in the
UK Corporate Governance Code. The Committee concluded that each of the INEDs contributed effectively
to the operation of the Board and that they should all be considered as independent and objective.
The Directors present their report,
together with the audited ﬁnancial statements
for the period ended 4 January 2025.
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105
DIRECTORS’
REPORT
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106
RESULTS AND DISTRIBUTIONS
The proﬁt before taxation from continuing operations was £161m (2023: £28m). No interim dividend has
been paid for 2024 and members are not being asked to approve any distribution of proﬁts for the year.
GOING CONCERN
As explained fully in the General Accounting Policies section of the ﬁnancial statements, the Directors have
adopted the going concern basis in preparing the ﬁnancial statements. They have a reasonable expectation that
the Group has sufﬁcient liquidity and adequate resources to continue in operational existence for the foreseeable
future, being a period of at least twelve months post the date of approval of these ﬁnancial statements.
In making their assessment, the Directors have considered the Group’s most recent forecasting process and
speciﬁcally the Group’s proﬁtability, cashﬂows, committed funding and liquidity positions for the period to
December 2026. The key assumptions underpinning our forecasts are detailed in the going concern basis of
preparation section of the ﬁnancial statements. Included in these is the reﬁnancing of £200m of the £350m
bond maturing in July 2026. Our Co-op operates with net current liabilities as our working capital cycle means
cash receipts from revenues arise in advance of the payments to suppliers for the cost of goods sold. We also
borrow money from banks and other funding sources, structuring our borrowings with phased maturities to
manage our reﬁnancing risk as well as maintaining sufﬁcient levels of liquidity for our Co-op. As part of the
going concern review, we have ensured that our forecasts demonstrate
compliance with the terms of these
agreements – for example, related banking covenants and facility levels – for the period under assessment.
Although our Co-op has a robust planning process, which reﬂects the continuing economic uncertainty and
headwinds impacting the group, we have performed additional stress testing of the going concern basis
under severe but plausible downside scenarios. The results of our stress testing of severe but plausible
downside scenarios provided a reasonable basis to support the Directors’ conclusion over going concern.
LONGER TERM VIABILITY
The Directors have assessed the viability of the Group and our ability to continue operating and comply
with covenants over a longer three-year period. We believe a three-year period to 31 December 2027 is
appropriate for this viability statement, reﬂecting the dynamic nature of our largest business, Food.
This aligns with other major retailers and is part of the Group Board’s strategic planning process.
This evaluation considered our current position and the impact of principal risks outlined on
page 47
.
The Group’s prospects are assessed primarily through its corporate planning process. This includes an annual
review which considers proﬁtability, the Group’s cash ﬂows, committed funding and forecasted future funding
requirements over three years, with a further year of indicative movements. As part of strategic planning, the
Directors make key assumptions about business performance, reﬁnancing transactions and the availability and
effectiveness of mitigating actions available to the Group. In particular, cash ﬂow forecasting gives visibility of the
Group’s funding headroom, comparing net debt to the level of committed facilities over the planning period.
The Group has continued to strengthen its balance sheet and as at 4 January 2025, had total available liquidity
of £820m, being cash of £420m, including amounts on short term deposit, and £400m of the Group’s Revolving
credit facility (“RCF”) that remained undrawn at year-end. Total available facilities amounted to £862m at year
end. In 2024, we fully repaid the £200m Sustainability Bond and also extended the RCF at £400m for ﬁve years
to 2029. Strong demand from banks and an improved balance sheet led to a ratings upgrade from Standard &
Poors. The RCF includes an accordion feature, allowing a £100m increase with lender agreement.
The Group has sufﬁcient cash in place to repay the 2025 maturities of £111.8m in full at maturity and has
ringfenced funds placed on deposit to cover this. For the £350m bond maturing in July 2026, we plan to
raise £200m in 2025 from the bond market or other sources, with the remaining £150m covered by existing
liquidity, cash or facilities. The funds will be deposited until repayment is required.
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107
As part of strategic planning, the Directors make key assumptions about business performance and stress-
test ﬁnancial scenarios to ensure compliance with facility terms, even under principal risk events.
Key assumptions align with the 2025 full-year outlook but are adjusted for longer-term trends. The viability
statement extends the going concern assessment and downside sensitivities into future years. The modelled
scenarios are severe yet plausible, and reﬂect our principal risks as described on
page 47
. While each of the
principal risks has a potential impact to the business and has been considered as part of the assessment,
only those that represent severe but plausible scenarios were selected for modelling through the Group
plan, as per table below:
When applying these viability sensitivities, there is no breach to our Co-op’s ﬁnancial covenants and there
remains sufﬁcient liquidity headroom through to the end of 2027.
Taking into account the Group’s current prospects and principal risks and uncertainties, the Directors
conﬁrm that they have a reasonable expectation that the Group will be able to continue in operation and
meet its liabilities as they fall due over three years to December 2027.
GREENHOUSE GAS EMISSIONS
In 2024, we have reduced Scope 1 and 2 greenhouse gas (GHG) emissions from running our business by 4%,
compared to 2023. This means that we have now reduced emissions from running our business by 61% since 2016.
We have made signiﬁcant improvements in energy efﬁciency and reduced electricity consumption by
4% and gas consumption by 1% in 2024, compared to 2023. We made improvements in transport route
planning, vehicle ﬁll and fridge plug-in compliance when vehicles are parked in our depots. We also
continued to phase out hydroﬂuorocarbons, replacing them with natural refrigerants.
We have set a new science-based target for Scope 1 and 2 GHG emissions – our Co-op commits to reduce
absolute Scope 1 and 2 emissions by 66% by 2030 from a 2016 base year. This new target is aligned
to limiting the global temperature rise to no more than 1.5°C and has been validated against the most
ambitious designation available through the Science Based Targets Initiative (SBTi) process.
In line with GHG Protocol guidance, we present our Scope 1 and 2 GHG emissions ﬁgures in two ways.
We show GHG emissions if our electricity was counted at UK grid average (known as location-based
reporting). We also account for the emissions associated with our electricity supply contracts (known as
market-based reporting).
Principal risk
Sensitivity applied
Competitiveness
and External Environment
Food sales volumes reduced by 3%
Funeralcare volumes reduced by 1%
Funeralcare average sales price reduced to reﬂect lower average price
and sales mix
Wage and other cost inﬂation
Electricity, gas and fuel price increases
Change
Additional system implementation and transformation costs
Funding and Liquidity
Although management are conﬁdent in our Co-op’s ability to continue to
repay or reﬁnance our debt facilities ahead of any debt maturities, we ensure
we maintain adequate liquidity headroom to cover the future operations of
the business and the uncertainty that the debt markets may not be accessible
during periods when the group may wish to reﬁnance debt.
Our Members' Annual Report 2024
108
2016 ktCO
2
e
2017 ktCO
2
e
2018 ktCO
2
e
2019 ktCO
2
e
2020 ktCO
2
e
2021 ktCO
2
e
2022 ktCO
2
e
2023 ktCO
2
e
2024 ktCO
2
e
649
543
439
393
347
318
288
263
252
Scope 1 and 2 GHG emissions since 2016 – location-based
2016 ktCO
2
e
2017 ktCO
2
e
2018 ktCO
2
e
2019 ktCO
2
e
2020 ktCO
2
e
2021 ktCO
2
e
2022 ktCO
2
e
2023 ktCO
2
e
2024 ktCO
2
e
338
298
250
229
204
197
181
348
343
Scope 1 and 2 GHG emissions since 2016 – market-based
SOURCE
2022 ktCO
2
e
2023 ktCO
2
e
2024 ktCO
2
e
Scope 1 - Refrigeration
66
50
49
Scope 1 - Fuel
95
91
86
Scope 1 - Gas
19
17
17
Scope 2 - Electricity
107
105
100
Scope 1 and 2 – Total (location-based)
288
263
252
Scope 1 and 2 GHG emissions by source – location-based
SOURCE
2022 ktCO
2
e
2023 ktCO
2
e
2024 ktCO
2
e
Scope 1 - Refrigeration
66
50
49
Scope 1 - Transport
95
91
86
Scope 1 - Heating / Generation
19
17
17
Scope 2 - Electricity
1
190
191
Scope 1 and 2 – Total (market-based)
181
348
343
Scope 1 and 2 GHG emissions by source – market-based
SOURCE
2022
GWh
2023
GWh
2024
GWh
Electricity (location-based)
555
507
485
Gas
105
95
94
Fuel
400
391
366
Annual energy consumption (GWh)
2016
2017
2018
2019
2020
2021
2022
2023
2024
Tonnes CO
2
-equivalent
(location-based) GHG
emissions per £m revenue
68.3
57.2
43
36.1
30.2
28.4
25
23.3*
22.3
* 2024 carbon intensity ﬁgure is based on a ﬁgure of 252 ktCO2e (252,458 tCO2e) for Total direct emissions from running our business location-based accounting:
Scope 1 and 2 GHG emissions (ktCO2e) and 2023 £11.3bn revenue
Carbon intensity
Our Members' Annual Report 2024
109
POLITICAL DONATIONS
Like many other businesses of a similar size, our Co-op engages with a wide range of political opinion
formers and decision-makers. We do this to protect, promote and enhance our corporate reputation and to
deliver our campaigning ambitions. Where relevant to our business, we also actively participate in the work
of business trade associations.
Our Co-op is also a subscribing member of The Co-operative Party, which was founded by the co-operative
movement in 1917 to promote its Values and Principles.
The Co-operative Party works to raise awareness of the beneﬁts of co-operative and mutual models. We made
donations totalling £598,600 (2023: £598,600) to The Co-operative Party, in line with our member-owners’
approval at the Annual General Meeting in 2023. This is our ﬁnancial subscription to the Party for 2024.
The Co-operative Party reports donations to the Electoral Commission in accordance with its reporting
obligations as a registered political party under the Political Parties, Elections and Referendums Act
2000. No political donations are made through our Local Community Fund (‘the Fund’) and its terms and
conditions state that the Fund cannot be used for party political purposes.
At the 2024 Annual General Meeting, our members passed a motion for our Co-op to incur political
expenditure, including donations and/or subscriptions to political parties, not exceeding £750,000 in total
for the year commencing 1 January 2025.
GROCERIES SUPPLY CODE OF PRACTICE (GSCOP)
The Groceries (Supply Chain Practices) Market Investigation Order 2009 (the 'Order') and the Groceries
Supply Code of Practice impose obligations on our Co-op and certain other retailers regarding our
relationships with grocery suppliers.
Through 2024, our Co-op’s Risk and Audit Committee maintained and reviewed GSCOP compliance through
regular updates from the Code Compliance Ofﬁcer and senior leaders in our Food business.
The Committee also approved the Annual Compliance Report for submission to the Competition and
Markets Authority as required by the Order. See
page 98
for more details.
Working with the GCA
During 2024, our Co-op engaged and worked collaboratively with Mark White, the Groceries Code
Adjudicator ('GCA') who met with the Chair of the Risk and Audit Committee, the Code Compliance
Ofﬁcer, our CEO, the Managing Director of our Food business, and other managers at various times
throughout the year.
We include the GCA in our supplier newsletter and invite him to our annual supplier conference. We provide
transparency to our suppliers and the GCA on our activities to ensure compliance with the Code.
In 2024, our Co-op once again improved its position in the GCA’s Annual Survey. Suppliers ranked us ﬁrst
out of 14 designated retailers for our overall compliance with the code (2023: 5th). We were delighted to see
that suppliers recognise the beneﬁts of our continuous improvement plans.
Training
We provide GSCOP training to all colleagues who deal with suppliers, not just our Buying teams. In 2024 we
refreshed our training and updated our internal GSCOP guidance. In compliance with the Order, all relevant
colleagues receive a copy of the Code.
In 2024, we trained 2207 colleagues (2023: 1406). The increase was focused on colleagues who have low or
little interaction with suppliers.
Our Members' Annual Report 2024
110
Other actions to enhance compliance
We have an established whole business approach to monitoring compliance with the Code, with regular
reporting and review at various governance forums. We continually look to improve ways of working with
suppliers and enhance Code compliance.
In 2024, two of the ways we did this were:
• Enhancing our SAP system and processes to increase the number of error-free transactions.
• Launching a new supplier ﬁnance queries portal, simplifying four email inboxes into one online portal for
our suppliers and colleagues to use.
Disputes
During 2024, Co-op had no formal disputes under the Code and believes that it has materially complied
with the Code and the Order during the relevant period. We recorded 83 potential supplier issues (2023: 94).
Of these, 22 were raised directly with the CCO and 61 were raised to the business and sent onwards to the
CCO internally by Co-op colleagues.
CLIMATE-RELATED FINANCIAL DISCLOSURE (CRFD)
As an ethically responsible business, we play our part in addressing both the climate emergency, and the
impacts of climate-related risks and opportunities across our operations, physical estate and supply chains.
As a large organisation, our Co-op is committed to complying with the UK Government's mandate to share
Climate-Related Financial Disclosures (CRFD) in line with the Task Force on Climate-Related Financial
Disclosure (TCFD). We have aligned our strategy with the CRFD recommendations, enabling us to identify,
assess and manage our principal climate-related risks and opportunities.
Our disclosures are set out under the four pillars of the CRFD recommendations.
GOVERNANCE
Description of the Group’s governance arrangements in relation to assessing and managing climate-related
risks and opportunities.
We believe that good corporate governance is critical to achieving our sustainability goals and creating value
for our members, customers and the communities we serve. We have evolved our governance structure for
managing our climate-related risks (see diagram below) to align to our Group risk management framework and
support our sustainable growth.
This structure promotes an entrepreneurial approach and prudent risk culture across our Co-op. It enables our
colleagues to identify and respond to climate-related risks and opportunities effectively, and supports our Board
and senior leaders in ensuring that our approach to controls, response plans and resources are effective.
CROSS-FUNCTIONAL WORKING GROUPS
CO-OP BOARD (BOARD)
SUSTAINABILITY LEADERSHIP FORUM
RISK AND AUDIT COMMITTEE (RAC)
OPERATING BOARD
BUSINESS RISK AND ASSURANCE COMMITTEE (BRAC)
Our Members' Annual Report 2024
111
Each of our climate-related risks is owned by senior leaders,
working within and across functional teams.
They have the expertise to understand what is needed to mitigate the risk and to realise opportunities for
our Co-op. Senior leaders share updates and concerns across our Group’s different governance forums and
discuss issues and opportunities in our Sustainability Leadership Forum.
In 2024, we evolved our sustainability steering committee into a Sustainability Leadership Forum (‘SLF’),
comprised of business leaders, department heads and subject matter experts. The SLF is a cross-functional
leadership forum bringing together sustainability ‘spokes’ from across the Group. It is aimed at improving
accountability and ownership of our climate-related risks and opportunities, and to ensure that all activity
ladders up to support our sustainability goals and commitments.
Quarterly sustainability updates are made to our Operating Board, while periodic written reports are provided
to our Group Board (‘Board’) as an opportunity to provide oversight and update on delivery progress.
In November 2024, an additional deep dive was also presented to the Board, covering all elements of
sustainability progress, risks and opportunities, by leaders from across the business.
Our Operating Board, Risk and Audit Committee (RAC), and Business Risk and Assurance Committee
(BRAC) scrutinise our principal risks (including our Sustainability principal risk) and the activity undertaken
by management to mitigate them. These groups monitor the delivery of plans, assess emerging key climate-
related risks and opportunities and, when required, challenge action taken to keep us within risk appetite.
Our Board has ultimate responsibility for risk management in our Co-op. It reviews the principal risks to our
business, including our Sustainability principal risk, which is owned by our Group property and sustainability
director. Our Board also monitors action plans, reﬂecting the importance that our Co-op gives to our
sustainability commitments. Our Board is briefed on material climate-related risks and opportunities on at
least an annual basis. For more information on Co-op’s principal risks see
page 47
.
In 2024-2025, we conducted several internal workshops with subject matter experts from across our Group
to review our climate-related risks and opportunities, and associated controls, and delivered updates to our
Operating Board. From this review, we identiﬁed climate-related issues, risks, opportunities and impacts which
are now being considered in our Co-op’s ﬁnancial and business planning. They will be managed according to
our Group’s risk management framework.
STRATEGY
Sustainability and climate remain a key priority for our Co-op. We have made a commitment to achieve
Net Zero in our operations by 2035 and across our full value chain by 2040 – read
our Social Value and
Sustainability Report
for more details.
We’ve continued to make progress towards delivering our climate commitments, focusing on both the activity
that moves us closer to Net Zero, and the enabling activity and governance that will let us deliver.
A key focus of our performance in 2024 has been collaboration. We won’t achieve our Net Zero commitments
unless we all play our part. So we collaborate with external bodies, our suppliers and like-minded organisations
to build knowledge, innovate and campaign for change. This remains a core focus, and helps us mitigate the
risks that exist now and in the future.
Description of the Group’s principal climate-related risks and opportunities and the respective time periods to
which these risks and opportunities are assessed.
In 2023, we predominantly focused our climate-related ﬁnancial disclosures on our Food business.
We expanded the scope of our disclosures to cover the whole Co-op Group in 2024.
Our Members' Annual Report 2024
112
We conducted a series of comprehensive climate risk and opportunity workshops to review the key climate-
related risks we identiﬁed in 2023, assess any material internal or external changes around those risks and spot
new opportunities. This exercise allowed us to:
• Re-assess the key climate-related risks we identiﬁed in 2023.
• Analyse individual and aggregate risk conditions to assess the materiality and likelihood of physical and
transition risks.
• Discuss the matter in-depth with cross-functional leaders.
We have used the following deﬁnitions of time horizons for the purposes of identifying and managing our
climate-related risks and opportunities:
• Short. Less than 4 years: aligns with our business strategy and ﬁnancial planning.
• Medium. 4-10 years: near-term target of addressing current and emerging climate-related risks and
Net Zero commitment.
• Long term. 10 years or more: aligned with the long-term nature of climate-related risks and our
Net Zero commitment.
Through this exercise, we reconﬁrmed seven physical and transitional inherent risks that could impact the
ﬁnancial position of our Co-op over the medium-term and long-term, aligned to our planning cycles.
This year we have consolidated our Policy and Legal (carbon taxation) and Policy and Legal (liabilities) risks into
an overarching Policy and Legal (compliance and legislative requirements) one. This allows our colleagues and
senior leaders to deliver more coordinated monitoring and respond to related threats and opportunities. Our Raw
Material Unavailability risk has been expanded to a Food Supply Chain Resilience and Raw Material Availability
risk, reﬂecting the change in the scope of our 2024 disclosures, now covering the whole Co-op Group.
Risks
2024-2025
2023-2024
Physical
Food Supply Chain Resilience and Raw
Material Availability (acute/chronic)
Raw Material Unavailability (acute/chronic)
Access to Key Facilities (acute)
Access to Key Facilities (acute)
Transitional
Reputational (public sentiment)
Reputational (public sentiment)
Policy and Legal (compliance and
legislative requirements)
Policy and Legal (carbon taxation)
Policy and Legal (liabilities)
Market (investment sentiment)
Market (investment sentiment)
Market (consumer sentiment)
Market (consumer sentiment)
Technology (asset impairment)
Technology (asset impairment)
Evolution of our key climate-related risks
For each risk, we reassessed its likelihood and impact considering trusted information on social, political, and
economic events shaping climate action. We also reviewed Co-op’s internal research and analytics regarding
our assets, products and services, and data from the quantitative assessments and ﬁnancial modelling we
undertook in 2023.
Our Members' Annual Report 2024
113
From this, we identiﬁed the two climate-related risks with the higher residual risk and therefore most material
impact to our Co-op as Technology and Market (consumer sentiment) and performed in-depth scenario analysis
on both.
We have used two climate pathways within our scenario analysis.
3°C – current policy –
under this scenario, existing policies are implemented to limit global warming. This is a
high global warming scenario with extreme weather events and substation damage to ecosystems. We see a
gradual shift, increasing renewables and growing societal awareness, but no substantial market or policy shift
towards low carbon.
1.5°C – Paris Agreement ambition –
under this scenario, we see aggressive global action to limit warming. This
is a low global warming scenario with limited increase in extreme weather events and damage to ecosystems.
We see an aggressive transition to renewables with rapid technological innovation. There is strong societal
awareness of global warming issues, with proactive policy and market shifts to low carbon.
The remaining transitional and physical risks remain important and are monitored and escalated for further
discussion as needed in alignment to our Group risk management framework.
Description of the actual and potential impacts of the principal climate-related risks and opportunities on the
Group’s business model and strategy.
TECHNOLOGY
In the context of climate change, our Technology risk considers that some of our existing fossil fuel-dependent
assets become unusable over the medium to long term due to technological disruption or obsolescence.
We must consider and adopt the emerging technologies that support a low carbon economy in a proportionate
way. While some of the technology required to meet our Net Zero milestone is currently unavailable or
unaffordable, we expect that new innovations will become progressively more reliable and accessible – from
new compressed natural gas (CNG), electric and hydrogen vehicles to incorporate into our ﬂeets, to the
development of greener alternatives to high global warming potential (GWP) refrigerants.
While current regulation doesn’t prevent our Co-op from using fossil fuel-dependent assets, we know that
continuing to use them won’t help us meet our Net Zero target. We’ll need to phase out most of them to hit Net
Zero in operations by 2035.
We have conducted scenario analysis which sets out the impairment risk over the carrying value of the assets
before the end of their useful lives, under the pathways identiﬁed above. The impairment risk represents the
expected change in fuel availability and therefore economic value for the business.
When considering our assets, there is a signiﬁcantly higher value at risk under the 1.5°C scenario, as action to
reduce greenhouse gas (GHG) emissions would be timelier and much more aggressive than under the 3°C
scenario, which would lead to a much bigger reduction in the fuel availability and a faster transition to greener
technology.
We have also considered plans within the business to help mitigate the Technology risk within our scenario
analysis. We continue to make changes that are helping us to reduce our carbon footprint:
• Our goal is to ﬁt all our stores with
hydroﬂuorocarbon-free (HFC-free), low-carbon refrigeration
alternatives
by 2035. We continuously monitor our progress to ensure we remain on track to deliver our
Net Zero commitment, informed by our science-based targets (SBTs).
Our Members' Annual Report 2024
114
• Funeralcare plans to replace its ﬂeet with greener alternatives
as vehicles come to the end of their useful
lives, within the 2035 horizon for Net Zero in operations. We are also improving the utilisation of our ﬂeet to
reduce its environmental impact.
• We work with our drivers and are implementing improved
navigation systems to reduce fuel consumption
.
We continuously monitor new available ﬂeet options that meet our needs for different sizes of vehicles,
routes, and alternative fuel sources.
Our Co-op is committed to achieving our sustainability ambitions and we continuously monitor technology
trends and forecasted innovations that could allow us to balance economic and environmental pressures over
the short and long-term.
MARKET (CONSUMER SENTIMENT)
Climate change is affecting society and consumer behaviour in multiple ways. Prolonged climate-related events
impact countries’ macroeconomic conditions, from energy costs to commodity prices, and have a knock-on
effect on consumer behaviour in the medium- to long-term time horizon. Consumer demand for low carbon
products and services is expected to increase, particularly across younger generations, and we know that a
change in human behaviour is required to transition to an economy with lower carbon emissions.
Customers may direct their spend towards retailers with a more positive environmental impact and with
increased awareness of – and demand for – sustainable products, there is a risk that our products and services
do not align with consumers’ preferences.
We’ve conducted scenario analysis on the consumer sentiment risk for both 1.5°C and 3°C scenarios. As
expected, the risk is much more signiﬁcant under the 1.5°C scenario across all timeframes. In order to meet a
1.5°C warming scenario, we would need to see widespread global uptake of sustainable products and practices
and a signiﬁcant change in consumer habits, including red meat consumption and food waste.
In our unmitigated scenario, there would be no change in the product mix that we provide. While this could
potentially lead to a signiﬁcant revenue risk within the business, the likelihood of this level of change is
extremely low, especially in the short term. In a scenario where volumes reduced to this scale, Co-op would be
able to mitigate much of this impact through cost savings, so the residual earnings impact is signiﬁcantly smaller.
We also know that our supply chain is dynamic and would be able to pivot to respond to consumer preference
changes, although there may be a lag in response if we do not correctly anticipate consumer trends.
The scenario analysis ﬁndings align with our knowledge of consumer sentiment risks:
• Demand for sustainable and low-carbon-intensive products is growing. However, affordability and other
factors continue to determine customers’ expectations and preference for these products.
• Meat and dairy products are high-carbon-intensive. Understanding, anticipating and adapting to
consumers’ preferences for these products would enable us to manage the risk of a mismatched product
and service offer and to meet customers', members' and societal expectations.
• ‘Carbon neutral’ claims are regularly misunderstood by consumers and raise the risk of greenwashing.
We need to prioritise work that results in absolute reduction in emissions, not just offsetting.
To manage this Consumer Sentiment risk, we have established controls that enable us to keep abreast of, and
to support, technological developments for more efﬁcient farming, and to develop commercial plans to meet
consumer demand based on insights and forecasts up to 2035. Our healthy and sustainable diet strategy is
one example of how we manage our proposition in line with consumer sentiment and in a healthier and more
sustainable direction.
Our Members' Annual Report 2024
115
OPPORTUNITIES
Our Co-op is committed to prioritising action where we can make the most impact. Our Climate Plan, updated
in March 2024, reafﬁrmed our continued focus on clear near-term and science-based targets, and mapped out
the rapid reduction of carbon from our operations and supply chains.
We know that by placing retailer and supplier collaboration and people at the heart of our climate plans, we
protect and sustainably grow our Group, sharing value with our members, customers, communities and planet.
By delivering on our Climate Plan and commitments we enhance our reputation in the market, enabling us
to innovate. We have a ‘test and trial’ approach allowing us to pivot at the right time to maximise economic
and social outcomes for our members. In addition, as part of our investment decisions, we consider potential
opportunities to develop new revenue streams, such as EV charging, to deliver commercial returns.
We are regularly assessing climate-related risks and implementing ways to mitigate them.
Here are some examples.
Investment sentiment
• Fostering greater supplier-retailer collaboration enables us to address common and interdependent
climate-related challenges, reducing costs across the value chain and improving the quality of the products
and services we provide.
• Working with other retailers on mechanisms to gather consistent sustainability data from suppliers
contributes to the subsistence and development of more sustainable farming.
• Taking proactive measures to reduce our carbon footprint and transparently sharing our sustainability
plans provides us with lower capital costs.
Raw material
Investing in responsible sourcing programmes co-created with our suppliers contributes to realising the
ﬁnancial beneﬁts of sustainable practices.
Consumer sentiment
• Anticipating and adapting to the demand for meat-free and less carbon-intensive products enables
us to offer more sustainable and healthier alternatives and create a greater positive net impact on our
environment.
• By taking a proactive approach on less carbon-intensive meat and dairy products, we can improve the
availability and range of plant-based and less carbon-intensive products that we can offer at the right price.
Technology
• Reducing energy and fuel consumption across the Group, from the electriﬁcation of our funeral ﬂeet to the
use of more efﬁcient refrigeration systems, helps us to reduce our operating costs and helps us meet our
sustainability commitments.
• By supporting the development of farming technology with our suppliers, we can improve the availability
of higher-quality products at lower prices to our consumers and members.
Key facilities
By pursuing a more efﬁcient use of our network and facilities we can increase efﬁciencies, reduce costs and
mitigate disruptions for the beneﬁt of our suppliers, partners, customers and members.
Policy and regulation
By continuously and proactively collaborating with Government ofﬁcials and other key stakeholders in the
sustainability ﬁeld, we are best able to monitor and model the impact of policy changes to integrate them into
our business and ﬁnancial planning.
Our Members' Annual Report 2024
116
Analysis of the resilience of the Group’s business model and strategy, taking into consideration different
climate-related scenarios.
During 2023, scenario planning was undertaken with support from our external advisers, DNV, for ﬁve different
climate scenarios. This was to identify the inherent physical and transitional risks that could impact our Co-op
over a ten-year horizon.
The assessment focused primarily on the Food business, which is our most material business unit. We plan to
expand the scope to cover the Group in future years.
In the current year, we have worked on building internal capability to model ﬁnancial risk and forecast future
emissions to inform future business or strategic decisions. This is still in development but has allowed us to
begin to see the impact of mitigation actions over the short, medium and long term. For the purposes of this
disclosure, we are focused on the 3°C and 1.5°C scenarios.
We have undertaken another risk identiﬁcation cycle in the current year, which has given us a clear
understanding of the risks to the business which have not changed materially from the prior year. It has also
helped us understand the ﬁnancial impact if left unmitigated, and the controls which we have in place (either
currently or within our forecasting cycle) to mitigate these impacts. We have also undertaken a prioritisation
exercise, which has highlighted Technology and Market (consumer sentiment) as our most material risks and
focused our modelling on these areas.
Our Net Zero Blueprint aims for Net Zero in Scope 1 and 2 by 2035 and Scope 3 by 2040. This Blueprint and the
targets within it have been validated by the Science Based Targets initiative (SBTi). In our latest forecasting cycle
this year, we have ensured that action within supports our trajectory outlined in the Net Zero Blueprint.
This includes funding to support:
• Decarbonising our ﬂeets across Food, Funerals and E-Commerce.
• Replacing high ﬂuorinated gas (F-GAS) refrigerators in Food and Funerals.
• Energy efﬁciency initiatives across our property portfolio.
• ‘Test-and-learn’ initiatives around our Scope 3 emissions particularly related to meat and dairy suppliers,
decarbonising packaging and reducing food waste.
Our physical risks are more signiﬁcant under the higher global warming scenario (3°C). However, we have strong
mitigations to remain resilient to these risks.
Our key facilities all have business continuity plans which are consistently reviewed to ensure they are up to date
to minimise disruption. Monitoring is also integral for our Raw Material risk, for both our sourcing strategy and
technological developments that could mitigate the risk. We also have a robust contingent supplier process to
protect from extreme weather conditions in certain geographical areas. While we do have a global supply chain,
the above strategy provides resilience even in the more extreme scenario.
Our Members' Annual Report 2024
117
RISK MANAGEMENT
Description of how the Group identiﬁes, assesses and manages climate-related risks and opportunities, and
how these processes are integrated into the Group’s overall risk management framework.
Our Co-op risk management framework
page 44
enables our colleagues across the Group to identify and
manage our climate-related risks within the risk appetite set by our Board.
To manage our climate-related risks, we apply the Group's three-line model:
• First line:
frontline colleagues, managers and leaders manage climate-related risks and opportunities as
part of their day-to-day activities and escalate issues to the Sustainability Leadership Forum.
• Second line:
our risk functions provide advice and oversight to help the Sustainability Leadership Forum
and wider frontline teams manage climate-related risks and opportunities, including those related to legal
and regulatory compliance.
• Third line:
our Internal Audit team provides independent assurance and challenge to ensure we are on
track to meet our climate commitments.
We identify and assess the climate-
related risks that impact how we grow
and protect our Co-op.
We implement controls and enablers
to protect and grow value and monitor
their efﬁcacy.
Sustainability Principal Risk
• Owned by our Property and Sustainability Director
(member of Op Board).
• Reviewed by RAC and our Board.
Key Climate-related Risks
• Owned by business and function leaders.
• Reviewed by BRAC and discussed at the
Sustainability Leadership Forum.
Operational Climate-related Risks
• Owned by individual teams within business units.
• Reviewed by relevant risk forums across our Co-op.
This framework contributes to ensuring that our Co-op has the right risk management plans in place and
enables our senior leaders to integrate climate-risk assessments into our Co-op's ﬁnancial and operational
planning. For example, in 2024, we conducted several internal workshops with subject matter experts from
across our Group to review our climate-related risks, opportunities and associated controls, and update our
Operating Board on our progress.
Our Members' Annual Report 2024
118
DESCRIPTION
GHG PROTOCOL CLASSIFICATION
2016 BASELINE
2024 ACTUAL
CHANGE VS BASELINE (%)
Our operations
Scope 1 and 2
649 ktCO
2
e
252 ktCO
2
e
-61%
Our value chain
Scope 3
5,839 ktCO
2
e
4,333 ktCO
2
e
-26%
METRICS AND TARGETS
Description of the targets used by the Group to manage climate-related risks and to realise opportunities and
of performance against these targets, as well as a description of the key performance indicators (KPIs) used to
assess progress against targets, including the calculations on which these KPIs are based.
Our most important climate metrics relate to our annual greenhouse gas (GHG) emissions in absolute tonnes.
We have made signiﬁcant progress towards reducing our GHG emissions in both our own operations and our
wider value chain (Scopes 1, 2 and 3).
1
Following the latest SBTi Corporate Standard, our validated targets distinguish emissions from energy and industry (E&I) and forestry, land use and agriculture
(FLAG). Our 48% near-term Scope 3 target reﬂects a reduction of 58.8% for E&I emissions and 42.4% for FLAG emissions.
We are committed to reducing our GHG emissions in line with the latest scientiﬁc guidance. Speciﬁcally, we set
science-based targets for GHG reduction across all emission scopes. These targets are in line with the pace of
reduction required to limit global warming to no more than 1.5°C above pre-industrial temperatures.
Our near-term and long-term targets were validated in early 2024 by the Science Based Targets initiative.
Our supplier engagement target has been set in line with advice from lenders and forms the basis of
sustainability-linked ﬁnance, so we have linked our interest rate to achievement of this metric.
A detailed description of how our KPIs are calculated is disclosed in our Basis of Reporting document
which is available online
.
Near-term targets
• Reduce absolute Scope 1 and 2 emissions from Co-op operations by 66% from 2016 to 2030.
• Reduce absolute Scope 3 emissions from Co-op's value chain by 48% from 2016 to 2030
1
.
Long-term targets
• Reach Net Zero Scope 1 and 2 emissions from Co-op operations by 2035.
• Reach Net Zero Scope 3 emissions from Co-op's value chain by 2040.
Supplier engagement target
Ensure that 69% of our purchased goods and services emissions (Scope 3, Category 1) are from suppliers with
independently validated science-based targets by 2030.
Our Members' Annual Report 2024
119
STATEMENT OF CO-OP BOARD
RESPONSIBILITIES IN RESPECT OF THE
ANNUAL REPORT AND FINANCIAL STATEMENTS
The Directors are responsible for preparing the Annual Report in accordance with applicable law and regulations.
The Group accounts have been prepared in accordance with UK-adopted international accounting standards
for the 52-week period ended 4 January 2025 and in conformity with the requirements of the Co-operative and
Community Beneﬁt Societies Act 2014.
The Group ﬁnancial statements are required by law to give a true and fair view of the state of affairs of the Group
and the proﬁt or loss of the Group for that period.
In preparing the Group ﬁnancial statements, the Directors are required to:
• Select suitable accounting policies and then apply them consistently.
• Make judgements and estimates that are reasonable and prudent.
• State whether UK-adopted international accounting standards, in conformity with the requirements of the
Co-operative and Community Beneﬁt Societies Act 2014, have been followed.
• Prepare the ﬁnancial statements on the going concern basis, unless it is inappropriate to presume that the
Group will continue in business.
The Directors are responsible for keeping proper books of account that disclose with reasonable accuracy at
any time the ﬁnancial position of the Group and enable them to ensure that its ﬁnancial statements comply with
the Co-operative and Community Beneﬁt Societies Act 2014. They have general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud
and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and ﬁnancial information
included on the Group’s website. Legislation in the UK governing the preparation and dissemination of ﬁnancial
statements may differ from legislation in other jurisdictions.
The Directors consider that the Annual Report and ﬁnancial statements, taken as a whole, are fair, balanced
and understandable and provide the information necessary for members to assess the Group’s position and
performance, business model and strategy.
Each of the Directors listed on
page 54
conﬁrm that, to the best of their knowledge:
The Group ﬁnancial statements, which have been prepared in accordance with international accounting
standards – UK-adopted international accounting standards, in conformity with the requirements of the
Co-operative and Community Beneﬁt Societies Act 2014 – give a true and fair view of the assets, liabilities,
ﬁnancial position and proﬁt of the Group.
The Strategic Report and Governance Report, contained in the Annual Report and ﬁnancial statements, include
a fair review of the development and performance of the business and the position of the Group, together with a
description of the principal risks and uncertainties that it faces.
In this context, ‘the Group’ means Co-operative Group Limited, and all the companies and societies it owns.
Our Members' Annual Report 2024
120
FINANCIAL STATEMENTS
So far as the Directors are aware, there is no relevant information that has not been disclosed to our auditor.
The Directors believe that all steps that ought to have been taken have been taken to make them aware of any
relevant audit information, and to establish that our auditor has been made aware of that information.
AUDITORS
A resolution to re-appoint EY LLP as auditors of the Group, and to determine their remuneration for the
forthcoming year, was proposed at the 2024 Annual General Meeting and approved.
By Order of the Board
Dominic Kendal-Ward
Group Secretary and General Counsel
Our Members' Annual Report 2024
121
CO-OP NATIONAL MEMBERS’ COUNCIL:
ANNUAL STATEMENT
Our Co-op is owned by you, our members, and we exist to do right by you.
Your National Members’ Council is elected from around the UK to represent and champion your interests and to
ensure our Co-op delivers value for you, our member-owners, and the things you care about.
We make your voice heard, inﬂuence plans and strategies with your views in mind, and hold the Board
to account to ensure our Co-operative Values and Principles are at the heart of what we do. We are the
independent voice of member-owners within Co-op, scrutinising the Board and championing your interests
and the good governance of our Co-op.
In 2024, we have:
• Inspired our
Owned by You, Right by You
campaign to showcase our difference to members and future
members. We are owned by our members, not a small group of shareholders, and because we’re owned by
our members, we can do the right thing by our members.
• Successfully called for Member Prices on healthy products on behalf of our members, leading to lower prices
and offers on 54 fruit and veg items.
• Championed the importance of social value and how our Co-op empowers our members to make a
difference on the things they care about for people and planet when they choose to trade with their Co-op.
• Continued to champion the importance of your voices being heard in how we do things, including our ﬁrst
Members’ Survey, promoting our democratic difference and extending access to our Co-op’s democracy to
over a million more members.
• Increased participation in our democracy, with tens of thousands more members taking part in our Co-op’s
democracy in 2024 compared to the year before, with more to do.
• Empowered member-owners of retail co-operatives to successfully campaign for a change in the law to make
violence against shopworkers a standalone offence.
• Inﬂuenced and shaped a new way to deliver membership to bring member-owners together with their
Co-op locally.
• Provided constructive support and challenge to our Board and our leaders from all business areas to
ensure your voices are heard in the products and services we provide and the value we receive as owners
of our Co-op.
• Worked to hold the business to account and change things which we felt were wrong in the interests of
scrutinising decisions and ensuring good governance.
This section gives an overview of our work in 2024 and although we are proud of the progress our Co-op has
made over the past couple of years, we believe there is so much more to do.
In particular, we will continue in 2025 to champion the importance of delivering and communicating the value
we create for members as the cost-of-living crisis continues. We will also continue to push for greater information
for member-owners about how they can inﬂuence and ﬁnd out more about our Co-op, and for more ways for
member-owners to engage with each other and their elected representatives on Council and Board. Find out
more about your Council
here
.
Working for you
Council is made up of 100 Co-op member-owners from around the UK, including colleagues and people from
other independent co-operatives.
Our Members' Annual Report 2024
122
We form one of the three interlocking wheels of good governance alongside the Board and Operating Board. We are
elected by our fellow member-owners to speak for you, independently, to the Board and senior operational leaders.
We meet regularly with, and provide support and robust challenge to, our Board and Co-op Leaders to put your
needs at the heart of the decisions we make and ensure our Co-op is successful.
Your Council has been focusing on what matters most to you, our member-owners, in 2024:
• Member value at the heart of Co-op.
• Meaningful membership and co-operative education.
• Communicating with, listening to, and engaging our member-owners.
MEMBER VALUE AT THE HEART OF CO-OP
What have we focused on and achieved?
Our vision is to build more value for our member-owners every day. Being a member of our Co-op is different – the
more you trade with your Co-op, the more we can take action together on the things you care about. In 2024, we:
• Inﬂuenced how our Co-op measures and reports our success so that member value is central to what we
identify to be a successful sustainable modern co-operative business, alongside important measures
such as revenue and proﬁt. Our new-look Annual Report celebrates everything our member owners have
achieved together.
• Showcased to our members the value they get and create together with other members on the issues they
care about for people and planet through personalised statements. Our new-look personalised statements
went to member-owners in January.
• Tracked how Member Prices deliver more economic value for our members every day following the
changes made last January compared to previous savings made, with members saving even more on the
everyday products they buy. Members are able to save £10 a week based on a typical basket.
• Asked questions of our Board and business leaders about how our Food, Life Services and Business-to-
business functions are delivering value for our members, supporting the growth of our Co-op and creating
a sustainable successful co-operative for the future.
• Worked with our Board and leaders to develop our new strategy to bring together and showcase the
difference our member-owners can create for the things you care about for people and planet locally,
nationally and internationally – informed by members’ views.
• Provided greater opportunities for members to inﬂuence and ask questions of decision-makers about
how their Co-op is performing and share their ideas with Co-op leaders and other members. This included
consulting members about ways they want to be rewarded for being a member of their Co-op online.
Measuring member value
Reporting member value
Empowering member-owners
Ensuring our Co-op measures
and reports how we create more
value for you as a member-owner
every day, and to show you the
value you get as a Co-op
member-owner.
Enabling member-owners to see
and understand the personal
value you get and give with Co-op
– economic value, social value or
the value of owning a stake in a
successful co-operative business
– and the value our Co-op
members create overall.
Promoting clear and accessible
ways for members to meet with
leaders and have your voices
heard.
Our Members' Annual Report 2024
123
Empowering members to
understand why Co-op
membership is different.
Connecting our 54,000 Co-op
colleagues with our vision and
Co-op difference.
Championing modern co-operative
leadership and creating the next
generation of co-operators.
Putting our Co-op difference at
the heart of how we show up as a
business.
Promoting ‘always on’
conversations between members,
their Co-op and other members.
Knowing our members and what
they care about.
When you become a member of our Co-op, you join more than six million others who have a stake in the business
and shape and inﬂuence not just what we do, but how we do it. In 2024, we:
• Championed and inﬂuenced celebrations for 30 years of Fairtrade and Fairtrade Fortnight, including how
Co-op members make a difference when they choose our range of Fairtrade products.
• Promoted more opportunities for member-owners to ﬁnd out more about their Co-op and co-operatives,
with over 124,000 member-owners taking part in opportunities, including quizzes on our Co-op app about
180 years of Co-op, and what it means to be owned by you.
• Inﬂuenced our new approach to delivering membership locally, better connecting member-owners and
their Co-op with other member-owners where they live through events and local forums.
• Continued to promote our Co-op’s campaigns on social mobility and climate justice and empowered 20,000
members of retail co-ops to successfully call for a change in the law to make violence against shopworkers a
standalone offence, as well as continuing to ask questions about how our Co-op is doing everything possible to
protect our store colleagues from the horriﬁc rise in retail crime being experienced by all retailers nationally.
• Shaped plans for our 54,000 colleagues to connect with our Co-op difference, vision and strategy, helping
them understand how these things create value for member-owners in their role.
• Started to develop plans to support and develop the next generation of modern co-operative leaders.
COMMUNICATING WITH, LISTENING TO, AND ENGAGING OUR MEMBER-OWNERS
What have we focused on and achieved?
180 years after our Co-op was founded, we have never been more relevant. Co-ops are a better, fairer way of
doing business, and as the biggest consumer co-op in the UK, we think we should shout about this loudly and
proudly and show why being owned by our members ensures we can do right by them. In 2024, we:
• Shaped our plan to relaunch our Co-op to the nation through our
Owned by You, Right by You
campaign,
showcasing what makes our Co-op a different way of doing business and why we can do right by our
members because we are owned by you, not a wealthy few.
• Promoted the importance of our decisions being informed by insight on what our members care about,
including our ﬁrst Members’ Survey, to ﬁnd out what was important to members, informing our ﬁrst
Members’ Discussion at our 2024 AGM and shaping our new social value strategy.
• Led a new programme of national, online and local events through the autumn to connect member-owners
with decision-makers and empower them to shape how they want to be rewarded for being a member-
owner in future.
• Represented our Co-op in New Delhi at the International Co-operative Alliance’s Global Congress and
initiated plans for our Co-op to celebrate the second UN International Year of Co-operatives in 2025.
• Broadened access to our formal democracy and empowered more than one million members to take part
by lowering the membership points required to vote or stand for election to our Board and Council.
MEANINGFUL MEMBERSHIP AND CO-OPERATIVE EDUCATION
What have we focused on and achieved?
Our Members' Annual Report 2024
124
REPORT OF
THE SCRUTINY
COMMITTEE
Our Members' Annual Report 2024
125
REPORT OF THE SCRUTINY COMMITTEE
OUR REVIEW OF BOARD APPOINTMENTS AND ELECTIONS
In 2024, Co-op Members elected a new Member Nominated Director, Christine Tacon, and re-elected Kate Allum
as Member Nominated Director to serve a second term. No Independent Non-Executive Director or Executive
Director appointments were approved by the Board in 2024 or scrutinised by the Committee in 2024.
After our Directors are appointed or elected, our Co-op has an extra level of checking so members can have
conﬁdence that processes have been administered fairly and openly in line with our Values and Principles.
This checking is done by the Scrutiny Committee of the National Members’ Council and we’re pleased to
present our report to members for 2024.
More information about our Governance, including Board Members and the selection processes, is set out
earlier in this report.
THE ROLE OF THE SCRUTINY COMMITTEE
The role of the Scrutiny Committee relates to the recruitment and selection processes for Independent Non-
Executive Directors and Member Nominated Directors and checks:
• That the selection process for the ballot is fair, transparent and objective.
• That the background information gathered on the candidates is satisfactory.
In 2024, two Member Nominated Directors were elected by Co-op members.
OUR FINDINGS
The Member Nominated Director Joint Selection and Approval Committee has the primary responsibility for
the selection process of Member Nominated Director candidates and is made up of both members of the
National Members’ Council and Board.
As well as receiving a detailed report from Co-op's search partner on the search and selection process, we
interviewed the Chair of the Committee and posed questions on themes including the search methodology
across the Co-op sector and how the Committee had satisﬁed itself that candidates would have the time
commitment required to interact fully with Council and members.
As a result, the committee can conﬁrm that the selection process leading to the shortlisting of Kate Allum,
John Clarke, John Dalley, Michele ‘Mitch’ Oliver, John Steele and Christine Tacon to go forwards to a ballot
of members was fair, transparent and objective and that all proper background checks were made. Kate
Allum and Christine Tacon were subsequently elected by Co-op Members to the role of Member Nominated
Director.
Whilst we are satisﬁed that there was a contested election of Member Nominated Directors, we hope that
our Co-op continues to attract high-calibre candidates who meet the criteria to stand for election in future. In
particular, we are keen to ensure that our members have the opportunity to vote for a set of candidates who
reﬂect the diversity of our growing member base.
Finally, it was conﬁrmed that all Directors met our Co-op’s trading requirement of 1,000 points. We have also
received assurances from the Group Secretary that all Independent Non-Executive Directors and Member
Nominated Directors are ‘independent’ for the purposes of our Rules.
Our Members' Annual Report 2024
126
COMMITTEE MEMBERSHIP
The Committee Membership for the 2023/4 Council year was:
David Paterson (Chair)
Aimee Higgins
June Morrison
Janson Woodall
Sue Smith (substitute member)
Our Members' Annual Report 2024
127
PROMOTING THE SUCCESS OF OUR CO-OP
SECTION 172(1) STATEMENT AND STAKEHOLDER ENGAGEMENT
REPORTING REQUIREMENT
Our Co-op prepares its Annual Report and Accounts substantially as though it were a company registered
under the Companies Act 2006 (‘the Act’). While it isn’t a requirement for our report to contain a Section
172(1) statement, we’re including one in line with best practice.
The Board has, in good faith, acted in a way that it considers would be most likely to promote the
success of our Co-op for the beneﬁt of members as a whole. In doing this, the Board has recognised the
importance of considering all stakeholders and other matters (as set out in Section 172(1) (a) to (f) of the
Act) when making decisions.
OUR APPROACH
We are conscious of the impacts that our business and decisions have on our direct stakeholders as well as our
wider societal impact. We also understand the importance of developing strong and meaningful relationships.
We know that we can’t ﬁx everything by ourselves, and that working with others is key.
For all key and principal decisions approved by the Board, a discussion takes place around the impact on our
key stakeholders, including our member-owners, our colleagues and our customers. The relevance of each
stakeholder group may vary by reference to the issue in question, so the Board seeks to understand the needs
of each stakeholder group and any potential conﬂicts as part of its decision making.
We have provided below examples of our key stakeholder interests, their concerns and the ways in which the
Board acted with regard to these groups when taking its key strategic decisions during the year.
OUR MEMBERS
Our Co-op is owned by more than six million active member-owners who have a say in how we’re run and
are at the heart of everything we do.
• Our Board uses an Ethical Decision-Making Tool when making material decisions to consider the
impact on, and impact of, our member-owners (and their communities).
• We work together with our member-owners to take action to support our shared vision. Members can
choose how we support local communities, stand with us on campaigns, help develop our products
and services and shape our national partnerships.
• We encourage our member-owners to get involved in our Annual General Meeting (AGM) and
elections, by voting on motions and on who gets to sit on our Board and Members’ Council, as well as
attending the AGM. We also encourage them to stand for election as leaders themselves.
• Our 2024 AGM offered members the chance to put their questions to the Board in real time. Members
were also able to contribute to our ﬁrst Members’ Discussion on the issues that we should look to tackle
as part of our new social value strategy.
Our Members' Annual Report 2024
128
Ahead of our AGM, members helped shape the topics addressed in our ﬁrst Members’ Discussion and
they met live with Council Members online to debate how we could bring our motions to life together if
approved. For the ﬁrst time, following calls from members in a 2023 motion to make our democracy more
accessible, we enabled voting via our Co-op app. This innovation combined with an improved voting
journey and increased participation opportunities led to a 38% increase in voting turnout.
Each year we publish a report that outlines the actions our Board and leadership have taken in response to
motions passed at our AGM.
We reviewed the way our local teams worked to support our connection between membership and local
communities and deliver our Vision. After ﬁve years with some fantastic work delivered by our Member
Pioneers, we evolved the role and in September 2024, our team of 90 full- and part-time
Member
Activators
was launched. They’re working closely with our member-owners, leading the charge in raising
awareness of our membership value, whether it be economic, social or ownership value.
Since then, Member Activators have been hosting local forums with members, showcasing our
sustainability commitments through Fairtrade Fortnight and promoting membership value through
Community Celebrations with member-owners and local groups.
OUR NATIONAL MEMBERS’ COUNCIL
This is a democratically elected body of 100 of our members, acting as our member-owners’ representative
holding our Board to account for how the business performs. It also acts as a guardian for our vision and
co-operative Values and Principles. The Members’ Council met with our Board and the business regularly
during 2024.
In addition to formal routes, there are many informal ways our Board interacts with Council, its committees and
working groups, as well as member-owners around the UK. Examples during 2024 include:
• Attendance at Council sessions to update on developments relating to our Co-op.
• Directors’ Forums, where Board members answer questions from the Members’ Council in relation to our
priorities and how we’re building a successful modern co-operative business.
• Council President attendance at Board meetings.
• Breakout sessions where Council and Board members work together to shape plans.
• Online video updates and communications focused on helping member-owners understand how their vote
makes a difference to our Co-op.
• Our ﬁrst ever interim results-focused events, including online question-and-answer sessions and pop-up
events in capital cities, where we brought our difference and member-ownership to life.
• Board and Council report to each other on meetings and activity.
Our Members' Annual Report 2024
129
OUR CUSTOMERS
We have a continued focus on our member and customer needs, attitudes, and behaviours. Knowing
what our members and customers want, and how we can improve, is intrinsic to our co-operative
Principles. It is also important in delivering our growth plans, and foundational to a ﬁnancially healthy
and successful co-op.
In 2024 our Analytics and Insight teams conducted a wide range of projects to help us better understand
our customers and member-owners. For example, we used trends, proprietary data and macro-
economic analysis to identify the themes impacting consumers up to 2035, enabling us to predict and
prepare for the future.
We have now digitised our customer experience research programmes across our businesses, making it
easier and faster for members and customers to tell us how we did and what we could improve.
OUR COLLEAGUES
Our Board recognises the importance of listening to, and engaging with, our 54,000 colleagues. Our Directors
strongly believe that they cannot fulﬁl their duties without understanding and considering the views of our
colleagues when making decisions.
We have well-established and effective methods of two-way communication with our colleagues. This includes
our Colleague Voice mechanism, which exists at both local and national levels.
In 2024, at least two of our Directors attended our National Colleague Voice listening sessions and this will
continue throughout 2025. In addition, a Member Nominated Director attends our Member Council’s People
and Communities Committee. The members of our Remuneration Committee have oversight of all colleague
rewards and beneﬁts and passionately champion colleague wellbeing. All Directors continue to visit stores,
funeral homes, depots and sites relevant to our delivery of social value.
With the launch of our new Co-op vision, it has never been more important to have engaged colleagues who
feel connected to our Co-op, understand the part they play in it and feel valued for their contribution. It is
fundamental to our Co-op’s ongoing and future success. In 2024, we saw continued improvement in colleague
engagement (as measured in our annual Talkback colleague survey). Despite another turbulent year, our
engagement score improved from 72% to 73% (+1 percentage point improvement on 2023 and +5 percentage
points on 2022).
For all the colleague engagement activities which contributed to this,
read our Social Value and Sustainability report
.
Our Members' Annual Report 2024
130
OUR SUPPLIERS
A strong, trusted and transparent supply chain is integral to our success. Our co-operative Values and
Principles underpin all of our supplier relationships as we continue to balance commerciality with shared
value and communities.
Our Co-op has a range of suppliers, who provide goods and services to support our businesses and
operations. We work closely with our suppliers to ensure that everyone involved in producing our products
is treated fairly. Our Board monitors our relationship with our suppliers in a number of ways, including via
the Risk and Audit Committee on areas such as our compliance with the Groceries Supply Code of Practice
and our approach to sustainability issues.
We continue to work with our suppliers directly and as part of collaborative initiatives to build our
understanding of issues and develop solutions and action plans in response to the many social and
environmental challenges facing our supply chain, from human rights issues to climate change. Our
participation in collaborative initiatives is a key part of our approach as we recognise that we will have a
greater impact working together than on our own.
We have continued to focus on providing support for our suppliers, working collaboratively to protect
those that are most vulnerable, protect workers and continue to champion resilient livelihoods for everyone
in our supply chain.
You can read more about our approach to responsible sourcing in our Social Value and Sustainability
Report. The way we approach modern slavery is detailed in our Modern Slavery Statement.
FAIRTRADE PARTNERS
In 2024 we were incredibly proud to be celebrating 30 years of Fairtrade; three decades of standing
with farmers and workers for fairer terms of trade, supporting them to improve their livelihoods and invest
in their communities.
Read more about
how we work with our suppliers
and the impact we have in Fairtrade communities.
RIGHT BY YOUR COMMUNITY
Our member-owners have a voice in how we spend a share of our proﬁts to support local communities
across the UK. Through member participation and co-operation and by bringing communities together
we’re delivering lasting change for people and the planet, delivering social value for our member-owners
and their communities.
It’s important that we hold true to our Values and Principles, so investing in our local communities remains
at the heart of our membership. We do this through supporting local causes in our members’ communities
and our charity partnerships.
Co-op membership also means member-owners can get involved in opportunities such as supporting our
community activities, campaigning on issues or helping to develop Co-op products.
For examples of how we have engaged with and supported our members’ communities during 2024, read
our Social Value and Sustainability report.
Our Members' Annual Report 2024
131
OTHER CO-OPS
The sixth co-operative principle is that a co-op co-operates, works with and supports other co-ops – which is
just one of the reasons that working closely with other co-ops is so important to us.
We are the major shareholder in Federal Retail and Trading Services Limited (FRTS), which is collectively owned
by our Co-op and Independent Society Members (ISMs), which are all retail co-operatives. Through FRTS, our
Co-op collaborates with ISMs on the management and operation of a centralised buying function.
ISMs are members of our Co-op and are also represented on our Members’ Council.
We are passionate about proactively growing the co-operative economy by promoting, developing and
uniting co-operatives. Throughout 2024, we have continued to share our thoughts, experiences and learnings
with other co-operatives, as well as supporting and engaging with other co-operatives and co-operative
movement bodies in the UK and overseas.
Finally, we were delighted that in her 2024 Mansion House speech the Chancellor of the Exchequer announced
the creation of the Co-operatives and Mutual Sector Business Council, of which Co-op is one of four founding
business members. This Council has been created to work across the sector to engage the UK Government in
support of its manifesto commitment to double the size of the co-operative and mutual sector.
CO-OP ACADEMIES TRUST
We have continued to support the work of the Co-op Academies Trust (CAT), which has 38 academies
operating across the North of England and the Midlands. Our Co-op Academies remain a key part of
our vision.
As sponsor, the Co-op Group is a corporate member of CAT and also appoints all other trust members
from its senior management team. CAT’s members in turn appoint the trustees, who are responsible for the
trust. The Chair of Trustees is a member of the Co-op's management team and is joined by other trustees
drawn from Co-op, as well as from the educational and charity sector.
During 2024, individual Board Directors and senior leaders across all parts of our Co-op visited Co-op
Academies. In February 2024, our Members’ Council visited Co-op Academy Belle Vue in Manchester
which was awarded Outstanding status by Ofsted.
SUSTAINABILITY
Our approach to sustainability is critical in our current and future plans and is embedded in our wider
Vision. We will continue to drive forward our sustainability agenda and our ambitious approach to climate
action, ensuring that we keep focused on protecting people and the planet.
We can’t deliver our commitments alone, so we work with our member-owners, communities,
customers, colleagues and suppliers. You can read more about our Climate Plan and progress in
our Social Value and Sustainability Report
.
Our Members' Annual Report 2024
132
FINANCIAL
STATEMENTS
Our Co-op’s money is our member-owners’ money.
Here, we share our accounting information for 2024 with you.
Co-op Annual Report & Accounts for 2024:
Financial Statements
133
Consolidated income statement
for the 52 week period ended 4 January 2025
2024
2023
Continuing Operations
Notes
£m
£m
Revenue (excluding funeral plans)
2
11,188
11,176
Insurance revenue (funeral plans)
2, 20
91
86
Total Revenue
2
11,279
11,262
Operating expenses (excluding funeral plans)*
3
(11,108)
(11,136)
Insurance service expenses (funeral plans)
20
(81)
(80)
Other income*
5
61
20
Operating profit
1
151
66
Finance income
6
154
126
Finance costs (excluding funeral plans)
7
(126)
(148)
Insurance finance expenses (funeral plans)
7, 20
(18)
(16)
Profit before tax
1
161
28
Taxation
8
(63)
(27)
Profit from continuing operations
98
1
Profit on discontinued operation (after tax)
-
2
Profit for the period
98
3
The comparative figures in 2023 represent the 53 week period ended 6th January 2024.
The accompanying notes on pages 138 - 205 form an integral part of these financial statements.
* The prior period has been represented to show gains on property disposals and revaluations as other income for consistency with the current period where the
amount is material.
Reconciliation to Underlying performance measures (APMs*)
for the 52 week period ended 4 January 2025
2024
2023
Continuing Operations
Notes
£m
£m
Operating profit - as above
1
151
66
Add back / (deduct):
- Property disposals and closures
1
(19)
(9)
- Impairment of non-current assets
1
18
32
- Change in value of investment properties
23
(14)
(4)
- Other non-underlying items
1
(5)
12
Underlying operating profit*
1
131
97
Less underlying net interest on loans and deposits
6, 7
(22)
(31)
Less underlying net interest expense on leases
6, 7
(64)
(68)
Underlying profit / (loss) before tax*
45
(2)
The comparative figures in 2023 represent the 53 week period ended 6th January 2024.
*Refer to Note 1 for a definition of Underlying operating profit and Underlying profit / (loss) before tax. Further detail on the Group's alternative performance
measures (APMs) is given in the Glossary section on page 226.
Co-op Annual Report & Accounts for 2024:
Financial Statements
134
Consolidated statement of comprehensive income / (loss)
for the 52 week period ended 4 January 2025
2024
2023
Notes
£m
£m
Profit for the period
98
3
Items that will never be reclassified to the income statement:
Remeasurement gains / (losses) on employee pension schemes
24
8
(1,310)
Related tax on items above
8
(2)
328
6
(982)
Items that are or may be reclassified to the income statement:
Revaluation gain on properties prior to transfer to Investment properties
23
3
3
Insurance finance income / (expense) on funeral plans
20
94
(37)
Tax on funeral plan liabilities (insurance contracts)
8
(24)
9
73
(25)
Other comprehensive income / (loss) for the period net of tax
79
(1,007)
Total comprehensive income / (loss) for the period
177
(1,004)
The comparative figures in 2023 represent the 53 week period ended 6th January 2024.
The accompanying notes on pages 138 - 205 form an integral part of these financial statements.
Co-op Annual Report & Accounts for 2024:
Financial Statements
135
Consolidated balance sheet
as at 4 January 2025
2024
2023
Notes
£m
£m
Property, plant and equipment
10
1,556
1,543
Right-of-use assets
11
805
827
Goodwill and intangible assets
12
924
917
Investment properties
23
51
40
Investments in associates and joint ventures
5
5
Funeral plan investments
13
1,414
1,346
Pension assets (net pension assets for schemes in surplus)
24
328
359
Trade and other receivables
16
6
7
Finance lease receivables
11
20
21
Deferred tax assets
14
-
52
Total non-current assets
5,109
5,117
Inventories
15
457
440
Trade and other receivables
16
602
595
Finance lease receivables
11
6
8
Short-term investments
17
100
200
Cash and cash equivalents
17
320
395
Total current assets
1,485
1,638
Total assets
6,594
6,755
Interest-bearing loans and borrowings
18
358
470
Lease liabilities
11
1,020
1,054
Trade and other payables
19
9
18
Insurance and re-insurance contract liabilities (funeral plans)
20
932
1,017
Derivatives
26
6
10
Provisions
21
47
55
Pension liabilities (net pension liabilities for schemes in deficit)
24
3
3
Deferred tax liabilities
14
38
-
Total non-current liabilities
2,413
2,627
Interest-bearing loans and borrowings
18
126
218
Lease liabilities
11
173
179
Trade and other payables
19
1,555
1,564
Insurance and re-insurance contract liabilities (funeral plans)
20
77
89
Derivatives
26
3
3
Provisions
21
49
55
Total current liabilities
1,983
2,108
Total liabilities
4,396
4,735
Members’ share capital
22
77
76
Retained earnings
22
2,109
1,935
Other reserves
22
12
9
Total equity
2,198
2,020
Total equity and liabilities
6,594
6,755
The accompanying notes on pages 138 - 205 form an integral part of these financial statements.
Board’s certification
The financial statements on pages 133 - 205 are hereby signed on behalf of the Board pursuant to Section 80 (1) (a) of the Co-operative
and Community Benefit Societies Act.
Shirine Khoury-Haq
-
Chief Executive Officer
Rachel Izzard
- Chief Financial Officer
Dominic Kendal-Ward
- Group Secretary
2 April 2025
Co-op Annual Report & Accounts for 2024:
Financial Statements
136
Consolidated statement of changes in equity
for the 52 week period ended 4 January 2025
Members'
Retained
Other
Total
For the 52 weeks ended 4 January 2025
share capital
earnings
reserves
equity
Notes
£m
£m
£m
£m
Balance at 6 January 2024
76
1,935
9
2,020
Profit for the period
-
98
-
98
Other comprehensive income / (loss):
Remeasurement gain on employee pension schemes
24
-
8
-
8
Tax on remeasurement losses (pension schemes)
8
-
(2)
-
(2)
Insurance finance income (funeral plans)
20
-
94
-
94
Tax on funeral plan liabilities (insurance contracts)
8
-
(24)
-
(24)
Revaluation gain on properties prior to transfer to Investment properties
23
-
-
3
3
Total other comprehensive income
-
76
3
79
Shares issued less shares withdrawn
22
1
-
-
1
Total of items taken directly to retained earnings
1
-
-
1
Balance at 4 January 2025
22
77
2,109
12
2,198
The accompanying notes on pages 138 - 205 form an integral part of these financial statements.
Members'
Retained
Other
Total
For the 53 weeks ended 6 January 2024
share capital
earnings
reserves
equity
Notes
£m
£m
£m
£m
Balance at 31 December 2022
75
2,942
6
3,023
Profit for the period
-
3
-
3
Other comprehensive income / (loss):
Remeasurement loss on employee pension schemes
24
-
(1,310)
-
(1,310)
Tax on items taken directly to other comprehensive income
8
-
328
-
328
Insurance finance income (funeral plans)
20
(37)
(37)
Tax on funeral plan liabilities (insurance contracts)
8
-
9
-
9
Revaluation gain on properties prior to transfer to Investment properties
23
-
-
3
3
Total other comprehensive loss
-
(1,010)
3
(1,007)
Shares issued less shares withdrawn
22
1
-
-
1
Total of items taken directly to retained earnings
1
-
-
1
Balance at 6 January 2024
22
76
1,935
9
2,020
Co-op Annual Report & Accounts for 2024:
Financial Statements
137
Consolidated cash flow statement
for the 52 week period ended 4 January 2025
2024
2023
Group cash flow
Notes
£m
£m
Net cash from operating activities
9
456
602
Cash flows from investing activities:
Purchase of property, plant and equipment
(248)
(182)
Proceeds from sale of property, plant and equipment
24
23
Purchase of intangible assets
(25)
(23)
Disposal of businesses
5
10
Disposal of petrol forecourts
5
4
Purchase of investments for pre-paid funeral plan sales
13
(90)
(73)
Receipts from funds for pre-paid funeral plans performed or cancelled
13
110
113
Purchase of short-term investments
17
(100)
(200)
Proceeds from sale of short-term investments
17
200
-
Dividends received from investments
1
-
Interest received on subleases
2
2
Rent received on subleases *
8
10
Interest received on deposits
28
18
Net cash used in investing activities
(80)
(298)
Cash flows from financing activities:
Interest paid on borrowings
(53)
(57)
Interest paid on lease liabilities
11
(67)
(70)
Repayment of borrowings
18
(204)
(101)
Increase in other borrowings
18
-
1
Payment of lease liabilities *
11
(126)
(133)
Derivative settlements
(2)
3
Share capital
22
1
1
Net cash used in financing activities
(451)
(356)
Net decrease in cash and cash equivalents
(75)
(52)
Cash and cash equivalents at beginning of period
395
447
Cash and cash equivalents at end of period (per balance sheet)
17
320
395
*The comparative figures have been represented to show rent received on subleases gross (and in a new separate line in the table above) whereas previously
they netted off within payment of lease liabilities.
The accompanying notes on pages 138 - 205 form an integral part of these financial statements.
2024
2023
Group net debt (APM*)
Notes
£m
£m
Interest-bearing loans and borrowings
18
(484)
(688)
Lease liabilities
18
(1,193)
(1,233)
Total debt
(1,677)
(1,921)
- Group cash
17
320
395
- Short-term investments
17
100
200
Group net debt
(1,257)
(1,326)
Add back: accrued interest on amortised debt
9
11
Group net debt (excluding accrued interest on amortised debt)*
18
(1,248)
(1,315)
Group net debt (excluding lease liabilities and accrued interest on amortised debt)*
18
(55)
(82)
* Further detail on the Group's net debt APMs (alternative performance measures) is given in the Glossary section on page 226.
Co-op Annual Report & Accounts for 2024:
Financial Statements
138
Notes to the financial statements
1
Operating segments
The Group identifies its operating segments based on its divisions, which are organised according to the different products and services it offers its
customers. The operating segments (and the captions) reported below are based on the periodic results reported into the Chief Operating Decision
Maker which is the Board and where the respective division's results meet the minimum reporting thresholds set out in IFRS 8 (Operating Segments).
Our other holding and support companies are included within costs from supporting functions.

| Food | Federal | Wholesale | Funeral | Legal | Insurance | Support | Total
2024 |  | (e) |  |  |  |  | functions |
| £m | £m | £m | £m | £m | £m | £m | £m
Revenue from external customers | 7,403 | 2,076 | 1,399 | 289 | 84 | 28 | - | 11,279
Cost of goods and services (j) | (5,056) | (2,076) | (1,220) | (35) | (8) | - | - | (8,395)
Employee benefits expense (j) | (1,181) | - | (18) | (106) | (35) | (5) | (174) | (1,519)
Distribution and other costs and income (j) | (965) | - | (162) | (149) | (14) | (8) | 64 | (1,234)
Underlying operating profit / (loss) (c) | 201 | - | (1) | (1) | 27 | 15 | (110) | 131
Property disposals and closures (c) (i) | 7 | - | 1 | - | - | - | 11 | 19
Impairment of non-current assets (c) (ii) | (17) | - | (1) | - | - | - | - | (18)
Change in value of investment properties | - | - | - | - | - | - | 14 | 14
Other non-underlying items (c) (iii) | 19 | - | (1) | (8) | - | - | (5) | 5
Operating profit / (loss) (a) | 210 | - | (2) | (9) | 27 | 15 | (90) | 151
Profit before tax (Funerals only) (g) |  |  |  | 103 |  |  |  |
Depreciation and amortisation | 293 | - | 6 | 29 | 1 | - | 21 | 350
EBITDA (f) | 503 | - | 4 | 20 | 28 | 15 | (69) | 501
Underlying EBITDA (f) | 494 | - | 5 | 28 | 28 | 15 | (89) | 481
Additions to non-current assets (d) | 194 | - | 6 | 31 | - | - | 42 | 273

Funeral revenue comprises £91m (2023: £86m) in relation to our pre-need funeral plan business and £198m (2023: £195m) for at-need funerals.
Food provides a wholesale service to other independent co-operative societies on a cost recovery basis. The cost of this service amounting to £158m (2023:
£134m) is shown in Cost of goods and services in the Federal segment, with the corresponding income in Food presented in Distribution and other costs and
income line. In addition, group central cost recharges to other business segments amounting to £208m (2023: £208m) are included within the Distribution and
other costs and income line.

| Food | Federal | Wholesale | Funeral | Legal | Insurance | Support | Total
2023 | (h) | (e) |  |  |  |  | functions |
|  |  |  |  |  |  | (h) |
| £m | £m | £m | £m | £m | £m | £m | £m
Revenue from external customers | 7,262 | 2,142 | 1,480 | 281 | 68 | 29 | - | 11,262
Cost of goods and services (j) | (5,000) | (2,142) | (1,290) | (32) | (7) | - | - | (8,471)
Employee benefits expense (j) | (1,116) | - | (17) | (106) | (30) | (4) | (159) | (1,432)
Distribution and other costs and income (j) | (973) | - | (159) | (154) | (10) | (11) | 45 | (1,262)
Underlying operating profit / (loss) (c) | 173 | - | 14 | (11) | 21 | 14 | (114) | 97
Property disposals and closures (c) (i) | 9 | - | (1) | - | - | - | 1 | 9
Impairment of non-current assets (c) (ii) | (20) | - | (1) | - | - | - | (11) | (32)
Change in value of investment properties | - | - | - | - | - | - | 4 | 4
Other non-underlying items (c) (iii) | 9 | - | - | - | - | - | (21) | (12)
Operating profit / (loss) (a) | 171 | - | 12 | (11) | 21 | 14 | (141) | 66
Profit before tax (Funerals only) (g) |  |  |  | 13 |  |  |  |
Depreciation and amortisation | 314 | - | 8 | 27 | 1 | - | 21 | 371
EBITDA (f) | 485 | - | 20 | 16 | 22 | 14 | (120) | 437
Underlying EBITDA (f) | 487 | - | 22 | 16 | 22 | 14 | (93) | 468
Additions to non-current assets (d) | 151 | - | 5 | 19 | - | - | 30 | 205

The 2024 figures represent the 52 week period ended 4th January 2025 with the comparative figures in 2023 representing the 53 week period ended 6th
January 2024. See overleaf for explanatory footnotes (a) - (j) including (h) detailing the re-presentation of Community reward in 2023 from the Food segment to
Costs from supporting functions and (j) detailing the introduction of additional cost lines in-line with recent IFRIC guidance (July 2024).
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
1
Operating segments
continued
139
a) Each segment earns its revenue and profits from the sale of goods and provision of services, mainly from retail activities. Transactions between
operating segments excluded in the analysis are £125m (2023: £272m) of sales of goods by Food to Wholesale net of supplier income and £136m
(2023: £149m) of pass through recharges (e.g. payroll and transport costs) made by Food to Wholesale.
b) The Group's external revenue and non-current assets arise primarily within the United Kingdom. The Group does not have any major customers
who account for 10% or more of revenue. In-line with how information is presented to the Board then underlying segment operating profit includes
an appropriate allocation of central support centre costs which are re-charged to the operating segments.
c) Underlying operating profit / (loss) is an Alternative performance measure (APM) as defined in the Glossary section on page 226. The difference
between underlying operating profit / (loss) and operating profit / (loss) includes the following items:
(i) Gains from property and business disposals of £19m (2023: £9m) comprise of a £7m gain (2023: £9m gain) on Food stores and £1m gain (2023:
£1m gain) in Wholesale disposals, and a £11m gain (2023: £1m loss) on non-trading properties sold during the year.
(ii) Net impairment charges of £18m (2023: £32m) relate to £17m of Food stores net impairment charge (2023: £20m) and £1m for Wholesale (2023:
£1m), with £nil impairment relating to supporting functions (2023: £11m). The impairment charge relates to £8m (2023: £11m) in respect of
Property, plant and equipment and £10m (2023: £21m) of Right-of-use assets (refer to notes 10 and 11).
(iii) Other non-underlying items totalling a £5m gain (2023: £12m charge) comprising; a £17m gain relating to a one off adjustment to eliminate an
historic fair value adjustment to certain Property, plant and equipment assets, a £5m charge in relation to legal costs incurred in respect of ongoing
legal claims and a £7m charge in relation to the recognition of funeral plan liabilities for plans waiting redemption (omitted on adoption of IFRS 17).
d) Additions to non-current assets are shown on a cash flow basis (and exclude funeral plan investments).
e) Federal relates to the activities of a joint buying group that is operated by the Group for itself and other independent co-operative societies. The
Group acts as a wholesaler to the other independent co-operatives and generates sales from this. This is run on a cost recovery basis and therefore
no profit is derived from its activities. In the current period revenue in the Federal segment includes £2m (2023: £207m) of sales at nil margin for
goods supplied to AFS (Arthur Foodstores Limited - the entity that was sold to Asda as part of the disposal of our petrol forecourt estate in October
2022).
f) Details of the Group's APMs (alternative performance measures) including EBITDA can be found in the Glossary on page 226.
g) The Funeral segment includes the results of our pre-need funeral plan business recorded under IFRS 17 (Insurance Contracts). Underlying
operating profit remains an important performance measure and basis of our segmental reporting, however for the Funeral segment we consider
that this should be reviewed alongside other metrics to understand the performance of the Funeralcare business. As such we have included profit
before tax as an additional metric in the segmental tables for the Funeral business to aid a reader's understanding of the performance of that
business

Funerals segment (£m) | 2024 | 2023
Operating loss | (9) | (11)
Finance income (funeral plans) | 102 | 17
Finance cost (funeral plans) | (18) | (16)
Finance income (other) | 30 | 25
Finance costs (other) | (2) | (2)
Profit before tax | 103 | 13
Net cash from operating activities | 20 | 36

h) Following a change to our membership proposition, Community rewards are now included within Costs from supporting functions whereas
previously they were included within the Food segment. The comparative tables above have been represented to reflect this change seeing £19m
(2023) of costs moved from Food to Costs from supporting functions.
j) The tables on the previous page include three new lines in both the current and prior periods for individually material operating expense line
items. This is In-line with the recent IFRIC guidance (July 2024) issued in relation to IFRS 8 (Operating Segments). There are no individual cost or
income categories within the 'Distribution and other costs and income' aggregated balance that are assessed as being material for individual
disclosure.
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
1
Operating segments
continued
140
k) A reconciliation between Underlying operating profit, Underlying profit / (loss) before tax and Profit before tax (continuing operations) is
provided below:

Continuing Operations |  | 2024 | 2023
Notes | £m | £m
Underlying operating profit |  | 131 | 97
Underlying net interest on loans and deposits | 6, 7 | (22) | (31)
Underlying net interest expense on leases | 6, 7 | (64) | (68)
Underlying profit / (loss) before tax |  | 45 | (2)
Property disposals and closures | 1 | 19 | 9
Impairment of non-current assets | 1 | (18) | (32)
Change in value of investment properties | 23 | 14 | 4
Other non-underlying items | 1 | 5 | (12)
Finance income (net pension income) | 6 | 17 | 77
Fair value movement on foreign exchange contracts and commodity derivatives (net) | 7 | (1) | (6)
Fair value movement on interest rate swaps | 6 | 3 | 4
Fair value movement on quoted Group debt | 7 | (3) | (10)
Finance income (funeral plans) | 6 | 102 | 17
Finance costs (funeral plans) | 7 | (18) | (16)
Other non-underlying finance income | 6 | 5 | 1
Other non-underlying finance interest | 7 | (9) | (6)
Profit before tax (continuing operations) |  | 161 | 28

2
Revenue

| 2024 | 2023
| £m | £m
Retail sales | 7,398 | 7,284
Member reward on sale of goods | 5 | (22)
Provision of services | 312 | 295
Insurance revenue (funeral plans) | 91 | 86
Member reward earned on provision of services | (2) | (3)
Wholesale sales | 1,399 | 1,480
Federal sales | 2,076 | 2,142
Total Revenue | 11,279 | 11,262

The 2024 figures represent the 52 week period ended 4th January 2025 with the 2023 comparatives representing 53 weeks to 6 January 2024.
Historically, member rewards were earned at 2% of member spend on selected Co-op products and services. Member rewards earned were recognised as a
reduction in sales at the point they were earned. Following a change to our membership proposition (including the introduction of exclusive member pricing
deals) these rewards were no longer earned from 24 January 2024 with any unused reward being recognised within revenue in the income statement based on
an assessment of future redemption rates. Please also refer to Note 30 (Membership and community reward).
Notes to the financial statements
continued
Co-op Annual Report & Accounts for 2024:
Financial Statements
2
Revenue
continued
141
Accounting policies
Unless stated otherwise, Revenue is recognised in line with IFRS 15 (Revenue from Contracts with Customers). IFRS 15 defines performance
obligations as a 'promise to provide a distinct good or service or a series of distinct goods or services'. Revenue is recognised when a performance
obligation has been delivered which reflects the point when control over a product or service transfers to a customer. Revenue is measured based
on the consideration set out in the contract with the customer and excludes amounts collected on behalf of third parties. As noted below; Revenue
on funeral plans (our pre-need business) is recognised in line with IFRS 17 (Insurance Contracts).
Sale of goods
The Group recognises revenue when it transfers control over a product to a customer. For goods sold in store, revenue is recognised at the point of
sale. For online or wholesale sales of goods, revenue is recognised on collection by, or delivery to, the customer. Any rebates, VAT and other sales
tax or duty items are deducted from revenue. Included within the Wholesale segment are sales to our franchise stores (where franchisees operate a
food store using the Co-op brand and Co-op supplied products). Co-op act as principal in the arrangement and recognise income gross in respect
of goods supplied by Co-op to the franchisees as well as a franchise fee based on turnover for provision of the Co-op brand and additional support
services.
Provision of services
Provision of services relates to activities in our Funerals (at-need business only), Legal services and Insurance businesses. Revenue is recognised
when separate performance obligations are delivered to the customer.
i) Funerals (at-need);
the only separable performance obligation is the funeral itself and therefore revenue is only recognised when the funeral is
performed (or the funeral plan is redeemed and the funeral is performed). Revenue comprises the amount recoverable from clients for the
provision of funerals and income from crematoria and other services, once those services have been performed or the goods supplied. Co-op pays
certain disbursements (such as burial plots, cremation fees, doctors' fees or ministers' fees) on behalf of its customers, which are recovered as part
of the invoicing process. The charges are passed through to customers at cost with Co-op acting as an agent in the transaction (as we do not control
the goods or services) and therefore no revenue is recognised. Income from memorial sales is recognised at the point of sale, to the extent that the
goods have been supplied. In the supply of monumental masonry, revenue is recognised at the point the masonry is fitted into place.
ii) Legal Services;
revenue within personal injury and probate is recognised using a fixed milestone methodology which represents the
progression and fulfilment of a case. Milestones have been derived by using the output method, which means consideration on performance and
value transfer to the client. This approach and timing of milestones is reviewed on a regular basis to ensure revenue is recognised within the
appropriate accounting period. Revenue includes income generated on assets (client monies) under management in respect of the delivery of
regulated services.
iii) Insurance;
revenue relates to brokerage commission receivable for products not underwritten by Co-op and the recognition of income received
in advance of services performed under a distribution agreement. Revenue is recognised when performance obligations are met being the later of
the policy inception date and the date on which policy placement is complete, net of expected commission claw back. Co-op receives commission
for the brokerage service it provides on products underwritten by third party insurer partners. Performance obligations are satisfied at the date on
which policy placement is complete and the policy is incepted. The transaction price recognised as revenue is calculated based on the contracted
commission rates payable by the third party insurer which underwrites each policy and the policy premium.
Funerals (pre-need) Insurance revenue (funeral plans)
The Group adopted IFRS 17 (Insurance Contracts) from 1 January 2023 which specifically applies to the Group's pre-need funeral plans (including
the re-insurance of the payment waiver risk where Group waives the remaining payments if a customer dies during the payment term subject to
conditions). Under IFRS 17 the Group recognises revenue over the contract coverage period (being the duration of the funeral plan). Further detail
as to the accounting policies used to record revenue, recognise profit and value the insurance contract liability are given in Note 20.
Member rewards
In the comparative periods Member and Community rewards were earned at 2% of member spend on selected Co-op products and services.
Following a change to our membership proposition (including the introduction of exclusive member pricing deals) these rewards were no longer
earned from 24 January 2024. Members have been able to redeem their rewards throughout 2024 with any unused reward recognised within
revenue in the income statement based on an assessment of future redemption rates. Member rewards earned as part of our membership offer
were recognised as a reduction in sales at the point they were earned with a corresponding liability being held on the balance sheet. The liability
was then reduced when the rewards were redeemed. The Community reward on member's spend was recognised as an operating expense in the
income statement when it was earned. Member pricing deals are treated as a reduction in the transaction price of the product and hence a
reduction in revenue.
Federal sales - principal versus agent presentation
The Group operates a joint buying group for itself and other independent co-operative societies. The Group acts as a wholesaler to the other
independent co-operatives and generates sales from this. This is run on a cost recovery basis and therefore no profit is derived from its activities.
The Group controls the goods prior to the transfer to the independent co-operatives, and in accordance with IFRS 15, the Group is acting as the
principal in these transactions (as opposed to an agent) and records revenue on that basis.
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
142
3
Operating expenses
Operating profit is stated after (charging) / crediting the following:

| 2024 | 2023
| £m | £m
Cost of goods and services recognised as an expense* | (8,395) | (8,471)
Employee benefits expense (see below)* | (1,519) | (1,432)
Impairment of plant, property and equipment and goodwill | (8) | (11)
Impairment of right-of-use assets | (10) | (21)
Depreciation of plant, property and equipment | (208) | (225)
Depreciation of right-of-use assets | (110) | (106)
Amortisation of intangible assets | (32) | (40)
Charge on allowance for expected credit losses on trade receivables | (8) | (10)
Credit on allowance for expected credit losses on trade receivables | 9 | 8
Subscriptions and donations | (9) | (7)
Community reward earned** | (1) | (20)

* As part of our response to the recent IFRIC guidance (July 2024) issued in relation to IFRS 8 (Operating Segments); certain costs in these line items have been
represented in the prior year between categories to better reflect their nature for segmental reporting. See also Note 1 footnote (j). Furthermore, certain income
categories have been represented within Other Income (Note 5) rather than Operating expenses.
** Following a change to our membership proposition (including the introduction of exclusive member pricing deals) these rewards were no longer earned from
24 January 2024.
Employee benefits expense

| 2024 | 2023
| £m | £m
Wages and salaries* | (1,355) | (1,280)
Social security costs | (97) | (87)
Pension costs - defined benefit schemes | (6) | (6)
Pension costs - defined contribution schemes | (61) | (59)
Total employee benefits expense | (1,519) | (1,432)

* As part of our response to the recent IFRIC guidance (July 2024) issued in relation to IFRS 8 (Operating Segments); certain costs in these line items have been
represented in the prior year between categories to better reflect their nature for segmental reporting. See also Note 1 footnote (j).
Employee benefits expense includes executive directors.
Employee numbers
The average number of people employed by the Group in the UK (including executive directors) during the year 52 week period ended 4th January
2025 (2023: 53 week period ended 6th January 2024) was:

| 2024 | 2023
| Number | Number
Full-time | 17,373 | 17,899
Part-time | 37,482 | 39,205
Total average employees | 54,855 | 57,104

As at the balance sheet date (4th January 2025) there were 54,030 employees; comprising 17,195 (full-time) and 36,835 (part-time).
Remuneration of key management
We regard the Board and Executive as our key management personnel and details of their remuneration can be found on pages 70 - 89.
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
3
Operating expenses
continued
143

Auditor remuneration | 2024 | 2023
| £m | £m
Audit of these financial statements | 3.0 | 4.2
Audit of financial statements of subsidiaries | 0.8 | 0.8
Non-audit services | 0.1 | 0.1
Total fees | 3.9 | 5.1

Accounting policies
Operating expenses are analysed by nature, as defined by IAS 1 (Presentation of Financial Statements). Payments to charitable organisations or
colleague members are treated as charges in the income statement.
4
Supplier income

Supplier income | 2024 | 2023
£m | £m
Food - Long-term agreements | 166 | 162
Food - Bonus income | 130 | 74
Food - Promotional income | 258 | 260
Total Food supplier income | 554 | 496
Wholesale - Long-term agreements | 26 | 32
Wholesale - Bonus income | 10 | 12
Wholesale - Promotional income | 69 | 72
Wholesale supplier income | 105 | 116
Total supplier income | 659 | 612

| % | %
Percentage of Cost of Sales before deducting Supplier income |  |
Food - Long-term agreements | 3.0% | 3.0%
Food - Bonus income | 2.4% | 1.4%
Food - Promotional income | 4.7% | 4.8%
Total Food supplier income percentage | 10.1% | 9.2%
Wholesale - Long-term agreements | 2.1% | 2.4%
Wholesale - Bonus income | 0.8% | 0.9%
Wholesale - Promotional income | 5.5% | 5.3%
Total Wholesale supplier income percentage | 8.4% | 8.6%

All figures exclude any income or purchases made as part of the Federal joint buying group (as supplier income is passed on to Federal (FRTS) members in the
same proportion as the ratio to their cost of sales).
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
4
Supplier Income
continued
144
Accounting policies
Supplier income
Supplier income is recognised as a deduction from cost of sales on an accruals basis, based on the expected entitlement that has been earned up
to the balance sheet date for each relevant supplier contract. Where amounts received are in the expectation of future business, these are
recognised in the income statement in line with that future business.
The Group has a mixture of contractual terms with its suppliers. Where our trading terms state that the supplier income is netted against amounts
owing to
that supplier and it is our intention to settle the balances on a net basis then any outstanding invoiced supplier income at the reporting
date is included within trade payables (Note 19). Any
amounts received in advance of income being recognised are included in accruals and
deferred income (Note 19). When we do not have the right of offset (or we do not intend to settle on a net basis) then the Group classifies
outstanding supplier income within trade receivables (Note 15). Where the supplier income is earned but not yet invoiced to the supplier at the
reporting date, this is classified within accrued income (Note 15).
There are three main types of income:
1. Long-term agreements:
These refer to supplier income rebates based on the value of purchases Co-op places with its suppliers. Typically, these
are annual % rebate agreements applied to the purchases Co-op makes from its suppliers. Income is only recognised once the rebate agreement is
in place with the supplier.
2. Bonus income:
These are typically unique payments made by the supplier and are not based on volume. They include payments for marketing
support, range promotion and product development. These amounts are recognised when the income is earned and confirmed by suppliers. An
element of the income is deferred if it relates to a future period.
3. Promotional income:
Rebates based on sales volumes relating to agreed promotional activity. These are retrospective rebates based on sales
volumes.
The inventory balance is stated net of any supplier income value on goods not sold at year-end.
5
Other income

| 2024 | 2023
| £m | £m
Rental income from non-investment properties | 7 | 6
Rental income from investment properties | 2 | 3
Gain on property, business disposals and closures (before impairments) * | 19 | 9
Change in value of investment properties * | 14 | 4
Net gain on other plant and equipment disposals * | 2 | 1
Gain on one-off fair value adjustment ** | 17 | -
Total other income | 61 | 23

* We have assessed the presentation of certain classes of similar items, and represented these amounts into the Other income category (previously they were
presented in Operating expenses (Note 3)).
** Relates to a one-off adjustment to eliminate an historic fair value adjustment to certain Property, plant and equipment assets.
Accounting policies
Rental income from investment and non-investment properties
Rental income arising from operating leases on both investment and non-investment properties is accounted for on a straight-line basis over the
lease term. Rental income arising on these non-trading properties is shown as Other Income (rather than as Revenue) as the income does not form
an integral part of our core business strategy and operating model. For accounting policies relating to investment properties, refer to Note 23.
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
145
6
Finance income

| 2024 | 2023
| £m | £m
Underlying finance income: |  |
Interest income from finance lease receivables | 2 | 2
Interest receivable on deposits | 25 | 25
Total underlying finance income | 27 | 27
Non-underlying finance income: |  |
Net pension finance income | 17 | 77
Fair value movement on interest rate swaps | 3 | 4
Unrealised fair value movement on funeral plan investments | 102 | 17
Other non-underlying finance income* | 5 | 1
Total non-underlying finance income | 127 | 99
Total finance income | 154 | 126

* Following adoption of IFRS 17 in the previous year; we have further refined our actuarial model during the year resulting in a one-off adjustment to plan
liabilities of £19m (see Note 20). Furthermore, £14m of investments relating to fixed monthly payment plans (FMPs) have been de-recognised during the year
(see Note 13).
7
Finance costs

| 2024 | 2023
| £m | £m
Underlying finance costs: |  |
Interest on loans (all repayable within five years) | (47) | (56)
Interest expense on lease liabilities | (66) | (70)
Total underlying finance cost | (113) | (126)
Non-underlying finance costs: |  |
Fair value movement on foreign exchange contracts and commodity derivatives | (1) | (6)
Fair value movement on quoted Group debt | (3) | (10)
Other non-underlying finance interest | (9) | (6)
Insurance finance expenses (funeral plans) | (18) | (16)
Total non-underlying finance cost | (31) | (38)
Total finance costs | (144) | (164)

Total interest expense on financial liabilities (including lease liabilities) that are not at fair value through the income statement was £104m (2023: £117m).
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
146
8
Taxation

|  | 2024 | 2023
| Footnote | £m | £m
Current tax credit - current period | (i) | - | 1
Current tax credit - adjustment in respect of prior periods |  | - | -
Net current tax credit - in respect of continuing operations |  | - | 1
Net current tax charge - in respect of discontinued operations |  | - | (1)
Total current tax charge |  | - | -
Deferred tax charge - current period | (ii) | (74) | (29)
Deferred tax credit - adjustments in respect of prior periods | (iii) | 11 | 3
Deferred tax charge - impact of rate change (see note below) | (ii) | - | (2)
Total deferred tax charge |  | (63) | (28)
Total tax charge reported in the income statement |  | (63) | (27)
Total tax charge attributable to a discontinued operation |  | - | (1)
Total tax charge |  | (63) | (28)

The tax on the Group’s net profit before tax differs from the theoretical amount that would arise using the standard applicable rate of corporation
tax of 25.0% (2023: 23.5%) as follows:

|  | 2024 | 2023
| Footnote | £m | £m
Profit before tax from continuing operations |  | 161 | 28
Profit before tax from discontinued operation |  | - | 3
Total profit before tax |  | 161 | 31
Tax charge at 25.0% (2023: 23.5%) |  | (40) | (7)
Current tax reconciliation: |  |  |
Expenses not deductible for tax (including one-off costs) | (iv) | (20) | (9)
Depreciation and amortisation on non-qualifying assets | (v) | (12) | (10)
Capital gains arising on property disposals | (vi) | (2) | (1)
Impact on current tax for movement in temporary tax differences (see below) |  | 74 | 27
Total current tax charge |  | - | -
Deferred tax reconciliation: (Utilisation) / increase of temporary tax differences - see Note 14 footnote (vii) |  |  |
Utilisation of capital allowances in excess of depreciation on qualifying assets |  | (78) | (10)
Utilisation of brought forward tax losses |  | (1) | (1)
Pension timing differences |  | 10 | (20)
Unwind of restatement adjustment on adoption of IFRS 16 |  | (5) | (4)
IFRS 17 Funeral plan liabilities |  | - | 5
Unrealised gains on investment properties, rolled-over gains and historic business combinations |  | - | 1
Subtotal of deferred tax reconciling items |  | (74) | (29)
Other deferred tax items: |  |  |
Adjustment in respect of previous periods | (iii) | 11 | 3
Impact of restatement of deferred tax to enacted rate | (vii) | - | (2)
Total deferred tax charge |  | (63) | (28)
Total tax charge |  | (63) | (28)

Notes to the financial statements
continued
Co-op Annual Report & Accounts for 2024:
Financial Statements
8
Taxation
continued
147
Tax expense on items taken directly to consolidated statement of comprehensive income:

| 2024 | 2023
| £m | £m
Actuarial gains and losses on employee pension scheme | (2) | 328
IFRS 17 Funeral plan liabilities | (24) | 9
Tax on items taken directly to consolidated statement of comprehensive income | (26) | 337

Of the £26m tax taken directly to the consolidated statement of comprehensive income, £2m debit (2023: £328m credit) arises on the actuarial movement on
employee pension schemes with the main movement through OCI being the £24m debit in relation to IFRS 17. There was no movement this year directly to the
consolidated statement of comprehensive income in respect of investment properties revaluations.
Based on legislation previously passed, the corporation tax rate increased from 19% to 25% with effect from 1 April 2023. To the extent the above deferred tax
assets and liabilities are expected to crystalise after this date they should be valued using 25%. The bulk of the deferred tax assets and liabilities, as shown in
Note 14, are expected to crystalise over a much longer time frame, being mainly the retirement benefit obligations, capital allowances on fixed assets and
unrealised gains on investment properties, rolled-over gains and historic business combinations. As the rate of corporation tax will be 25% for all periods after
the period end, it is appropriate to recognise deferred tax at that rate.
Tax policy
We publish our tax policy on our website (https://www.co-operative.coop/ethics/tax-policy) and have complied with the commitments set out in that policy.
Pillar 2
The OECD has promoted Pillar 2 reform and this has now been introduced into the UK tax system. The new rules are designed to promote the international
actions put forward by the OECD to impose a minimum tax rate of 15%. The Co-op have considered the new rules and concluded that its prevailing Effective
Tax Rate is above 15% and that therefore the Pillar 2 rules have no application in terms of affecting the Group’s tax cost. This is mainly due to prevailing and
integral permanent differences in the Group’s tax calculations which will have the impact of increasing the accounting Profit Before Tax for the foreseeable
future.
Footnotes to Taxation note 8:
i) The Group is not tax-paying in the UK in respect of 2024 due to the fact it has offset its current year profits by utilising some of its brought forward tax
attributes. The tax attributes used have mainly been brought forward capital allowances (£373m gross claimed in 2024) and tax losses (£5m gross utilised in
2024) that offset its taxable profits for the period. These allowances and losses are explained in more detail in Note 14. The current tax charge nets to £nil.
Outside of the UK, our Isle of Man resident subsidiary, Manx Co-operative Society, a convenience retailing business in the Isle of Man showed a small profit in
2024, giving rise to a small current tax liability of £0.2m (2023: £0.1m). This is the Group's only non-UK resident entity for tax purposes, which employs 89 part-
time and 147 full-time colleagues out of our total Group headcount figure. All other income in the consolidated income statement is generated by UK activities
and all other colleagues are employed in the UK.
The 2024 revenue of Manx Co-operative Society is £42m and all other revenue reflected in the consolidated income statement is generated by UK trading
activities. The net assets of Manx Co-operative Society at 4 January 2025 were £16m, compared to net assets of the consolidated Group of £2,198m. The Manx
assets represent the only overseas trading assets within the Group. A full copy of the most recent accounts is available here https://www.co-
operative.coop/investors/rules. The presence of this Isle of Man resident subsidiary has not resulted in any additional tax charge in 2024 over and above that
payable to the Isle of Man authorities stated above. If these activities had been carried out in the UK, these profits would have been included within the Group's
taxable profit prior to the availability of capital allowances and tax losses.
ii) Deferred tax is an accounting concept that reflects how some income and expenses can affect the tax charge in different periods to when they are reflected
for accounting purposes. These differences are a result of tax legislation which require us to make these adjustments in our annual tax returns. The £73m
deferred tax charge mainly relates to the net use of temporary differences in respect of the movements on pension assets and capital allowances not yet
claimed. Note 14 gives further detail on how each deferred tax balance has moved in the year.
iii) The deferred tax adjustments in respect of prior years is a common adjustment. It reflects the difference between what is known at the time and reflected in
the notes to these accounts and when the final tax returns are submitted to HMRC. In this year, we have made an £11m credit adjustment in respect of prior
years.
iv) Some expenses incurred by the Group may be entirely appropriate charges for inclusion in its financial statements but are not allowed as a deduction
against taxable income when calculating the Group's tax liability. Examples of this include some repairs, entertaining costs and certain legal costs.
v) During the year the Group incurred expenditure on depreciating fixed assets which do not qualify for capital allowances. As this expenditure will never attract
tax relief, this has led to an adjusting difference on the reconciliation.
vi) During the year a number of properties were sold, where the net taxable profit was more than the accounting profit.
vii) It is a requirement to measure deferred tax balances at the substantively enacted corporation tax rate at which they are expected to unwind. As the enacted
deferred tax rate is the same as the current tax rate of 25%, there has been no difference to record this year.
Accounting policies
Income tax on the profit or loss for the period is made up of current and deferred tax. Income tax is recognised in the income statement except to the extent
that it relates to items recognised directly in reserves, in which case it is recognised in other comprehensive income. Current tax is the expected tax payable on
the taxable income for the period, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of
previous years.
Co-op Annual Report & Accounts for 2024:
Financial Statements
148
Notes to the financial statements
continued
9
Reconciliation of operating profit to net cash flow from operating activities

| 2024 | 2023
| £m | £m
Operating profit | 151 | 66
Depreciation and amortisation charges | 350 | 371
Non-current asset impairments | 25 | 37
Non-current asset impairment reversals | (7) | (5)
Profit on closure and disposal of businesses and non-current assets | (19) | (10)
Change in value of investment properties | (14) | (4)
Other non-underlying items * | (17) | -
Retirement benefit obligations | 56 | (9)
Increase in inventories | (17) | (7)
(Increase) / Decrease in receivables | (12) | 13
Increase / (Decrease) in expected credit losses on trade receivables | (3) | 1
Increase in insurance contract liabilities (funeral plans) | (2) | (28)
(Decrease) / Increase in payables and provisions | (35) | 174
Net cash flow from operating activities before net cash flow from discontinued operations | 456 | 599
Net cash flow from operating activities relating to discontinued operations | - | 3
Net cash flow from operating activities | 456 | 602

* Other non-underlying items reflect a £17m non-cash gain relating to a one off adjustment to eliminate an historic fair value adjustment to certain Property,
plant and equipment assets which had not been amortised. This gain has been treated as a non-underlying item in the Income statement. See also Note 1 c)
(iii).
Accounting policies
Refer to note 17 for details of the accounting policy for Cash and cash equivalents.
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
149
10
Property, plant and equipment

For the period ended 4 January 2025 | Property | Plant and | Total
|  | equipment |
| £m | £m | £m
Cost or valuation: |  |  |
At 6 January 2024 | 1,362 | 2,719 | 4,081
Additions | 49 | 188 | 237
Disposals * | (81) | (125) | (206)
Transfer to Investment properties (Note 23) | (4) | - | (4)
At 4 January 2025 | 1,326 | 2,782 | 4,108
Depreciation: |  |  |
At 6 January 2024 | 634 | 1,904 | 2,538
Charge for the period | 27 | 181 | 208
Impairment | 6 | 2 | 8
Disposals * | (74) | (128) | (202)
At 4 January 2025 | 593 | 1,959 | 2,552
Net book value: |  |  |
At 4 January 2025 | 733 | 823 | 1,556
At 6 January 2024 | 728 | 815 | 1,543
Capital work in progress included above | - | 23 | 23

* The disposal values for both Cost and Accumulated depreciation noted in the table above include £135m of fully written down assets that are no longer in use
(these were identified as part of a cleanse of the fixed asset register with a nil impact on net book value). Furthermore, the disposal of accumulated depreciation
line includes a £17m gain relating to a one off adjustment to eliminate a historic fair value adjustment to certain Property, plant and equipment assets. This gain
has been treated as a non-underlying item in the Income statement. See also Note 1 c) (iii).
The net impairment charge of £8m (2023: £11m) primarily reflects fluctuation in the performance of our Food stores, also impacted by an increase in the pre-tax
discount rate (see also Critical accounting estimates and judgements section of this note).

For the period ended 6 January 2024 | Property | Plant and | Total
|  | equipment |
| £m | £m | £m
Cost or valuation: |  |  |
At 31 December 2022 | 1,359 | 2,619 | 3,978
Additions | 19 | 143 | 162
Disposals | (11) | (43) | (54)
Transfer to Investment properties (Note 23) | (5) | - | (5)
At 6 January 2024 | 1,362 | 2,719 | 4,081
Depreciation: |  |  |
At 31 December 2022 | 609 | 1,738 | 2,347
Charge for the period | 26 | 199 | 225
Impairment | 5 | 6 | 11
Disposals | (6) | (39) | (45)
At 6 January 2024 | 634 | 1,904 | 2,538
Net book value: |  |  |
At 6 January 2024 | 728 | 815 | 1,543
At 31 December 2022 | 750 | 881 | 1,631
Capital work in progress included above | - | 26 | 26

Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
10
Property, plant and equipment
continued
150
Critical accounting estimates and judgements
Impairment
An impairment review as at 4 January 2025 has been performed over our Food and Funeralcare estate with a total net impairment charge
amounting to £18m (2023: £32m), relating to £8m for Property, plant and equipment (2023: £11m) and £10m for Right of use assets (2023: £21m).
Gross impairment recognised in respect of Property, plant and equipment amounted to £12m (2023: £14m), offset by impairment reversals of £3m
(2023: £3m), whilst the gross impairment relating to right of use assets was £13m (2023: £23m) offset by impairment reversals of £4m (2023: £2m).
The key assumptions in the value in use calculations are:

Assumption | Food Segment | Funeral Segment
Structure of a | Each individual food store is deemed to be an individual CGU. | A CGU is deemed to be a local network of interdependent branches,
CGU |  | known as a Funeralcare Hub.
| Future cash flows for FY25 and FY26 are derived from Board | Future cash flows for FY25 and FY26 are derived from Board approved
| approved four-year plan cash flow assumptions. | four-year plan cash flow projections.
| These forecasts are based on the approved forecasts for FY25 - | These forecasts are based on budget for FY25, four-year plan for FY26
| FY26 and then subject to a long term growth rate of 0% for the | and then subject to a long term growth rate of 1.07% (2023: 1.9%)
| remainder of the lease period. Growth rate of 1.9% (2023: 1.9%) is | reflecting the UK's long-term death rate (2023: reflecting the UK's long-
| applied into perpetuity (adjusted for rent expense given the impact | term growth rate) for the period of the lease and into perpetuity. Where
| of IFRS 16 leases), after the lease period, reflecting the UK's long- | we have known lease exit dates then the remaining lease terms have been
| term growth rate. Where we have known lease exit dates then the | used. For freehold branches, the assumed time frame aligns with the
| remaining lease terms have been used. For freehold stores, the | average branch refit cycle.
| assumed time frame aligns with the average store refit cycle of 10 |
| years, with cash flows taken to perpetuity at 1.9% growth (2023: | Perpetuities are included in cash flows with 1.07% growth (2023: 1.9%)
| 1.9%) where stores are expected to be operated beyond the | where branches are expected to be operational beyond their current
| average store refit cycle. Cash flows include estimated periodic | lease terms (adjusted for rent expense given the impact of IFRS 16 leases),
| store capital maintenance costs based on the square footage of the | or for freeholds, beyond the average branch refit cycle.
| store. |
Cash flow |  | Cash flows include an appropriate estimate of periodic capital
assumptions | New stores in their first two years of operations are considered to be maintenance costs.
| on a maturity curve and therefore excluded from our impairment |
| assessment. Similarly, impairment reversals are considered after a |
| store has completed a two year recovery period. |
| The Group is working through the potential impact of the climate related risks and opportunities as identified and disclosed in our Climate-
| Related Financial Disclosures (CRFD) report on pages 110 - 118. Our risk assessment and scenario analysis identified that the most material
| climate related risks are on technology and consumer sentiment. We have considered these risks in our assessment of whether any indicators of
| impairment existed at the balance sheet date, however it was concluded that the expected climate related risks did not have a material impact
| on the Group's impairment considerations at the reporting date.
| The board-approved four year plan underpinning our goodwill impairment assessment, takes into consideration any incremental costs of
| climate related actions to mitigate these risks where these are expected to crystallise within the timeframe of the plan. This represents a
| developing area with inherent uncertainty which is constantly evolving.

Impairment
- continued
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
10
Property, plant and equipment
continued
151

Assumption | Food Segment | Funeral Segment
| A post tax discount rate has been calculated for impairment | A post tax discount rate has been calculated for impairment purposes,
| purposes, with the Food segment's weighted average cost of | with the Funeralcare segment's weighted average cost of capital
| capital (WACC) deemed to be an appropriate rate, subsequently | (WACC) deemed to be an appropriate rate, subsequently grossed up
| grossed up to a pre-tax rate of 10.3% (2023: 9.6%). The post tax | to a pre-tax rate of 9.7% (2023: 11.6%). The post tax discount rate has
| discount rate has been calculated using the capital asset pricing | been calculated using the capital asset pricing model.
| model. |
|  | Certain inputs into the capital asset pricing model are not readily
| Certain inputs into the capital asset pricing model are not readily | available for non-listed entities. As such, certain inputs have been
| available for non-listed entities. As such, certain inputs have been | obtained from industry benchmarks which carries a measure of
| obtained from industry benchmarks which carries a measure of | estimation uncertainty.
Discount rate and | estimation uncertainty. |
Sensitivity analysis |  | Sensitivity analysis has been performed against the key assumptions
| Sensitivity analysis has been performed against the key | used in our Funeralcare Hub impairment testing as follows: a) a 1%
| assumptions used in our store impairment testing as follows: a) a | increase or decrease to the discount rate and b) a 1% increase or
| 1% increase or decrease to the discount rate and b) a 1% increase decrease in the long term growth rate. The sensitivities have not
| or decrease in the long term growth rate. The sensitivities have | resulted in a material movement in the impairment calculated. The
| not resulted in a material movement in the impairment calculated. sensitivity analysis performed considers reasonably possible changes
| The sensitivity analysis performed considers reasonably possible | in the discount rate and growth rate assumptions.
| changes in the discount rate and growth rate assumptions. |
|  | Sensitivity analysis has also been performed on our goodwill
| Sensitivity analysis has also been performed on our goodwill | impairment testing, see note 12.
| impairment testing, see note 12. |

Accounting policies
Where parts of an item of property, plant and equipment have materially different useful economic lives, they are accounted for as separate items of property,
plant and equipment. Cost includes purchase price plus any costs directly attributable to bringing the assets to the location and condition necessary for it to be
capable of operating in the manner intended by management. Depreciation is provided on the cost or valuation less estimated residual value (excluding
freehold land) on a straight-line basis over the anticipated working lives of the assets. The estimated useful lives are as follows and where appropriate would also
include our assessment of the expected impact on asset lives of our plan to move to net zero by 2040:
Property
Freehold buildings - 50 years
All properties are measured at cost less accumulated depreciation and impairment losses.
Land is not depreciated
Plant & equipment
Plant and machinery - 3 to 13 years
Vehicles - 3 to 9 years
We no longer include property, plant and equipment in our balance sheet when the Group loses the right to the future economic benefits associated with the
asset. For property, this usually happens when we have exchanged contracts on an unconditional basis to sell it.
Impairment
For the Food segment, the Group treats each store as a separate cash-generating unit for impairment testing of property, plant and equipment and right-of-use
assets. The Group allocates goodwill to groups of cash-generating units, where appropriate. Whilst the individual food stores represent the cash generating
units, the lowest level at which internal management monitor the performance of the business is at a total Food segment level. To meet the requirements of IAS
36 CGUs are grouped together for goodwill impairment testing as described in note 12.
For the Funerals segment, the Group treats a local network of interdependent branches, known as a Funeralcare Hub, as a separate cash-generating unit for
impairment testing of property, plant and equipment, right-of-use assets and goodwill. Where an individual branch within a local network is to be closed, the
individual branch is defined as the CGU, rather than being included with the network of interdependent branches. This is because the branch is no longer
expected to contribute to the business through cash generated through its operating activities but instead through any proceeds on disposal.
At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset, is estimated in order to determine the extent of the
impairment loss. The recoverable amount for Food and Funeral cash generating units (CGUs) is the greater of the fair value of the CGU (less costs to sell) and the
value in use (VIU) of the CGU. For freehold stores the fair value of the CGUs (less costs to sell) is estimated using internal valuations based on rateable values or
recent market values where known. Where the VIU estimates are higher than the fair value estimates the VIU estimates have been used in the impairment
assessments. The VIU for Food and Funeral CGUs has been determined using discounted cash flow calculations. Impairment losses are recognised in the
income statement.
Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit
(CGU) to which the asset belongs. An impairment loss is reversed if there has been a change in the estimate used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset’s carrying amount is returned to what it would have been, net of depreciation or amortisation, if
no impairment loss had been recognised.
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
152
11
Leases
A. As a lessee

Right-of-use assets | Property | Plant and | Total
|  | equipment |
| £m | £m | £m
Balance at 6th January 2024 | 774 | 53 | 827
Depreciation charge for the year | (89) | (21) | (110)
Additions | 87 | 33 | 120
Disposals | (20) | - | (20)
Transfer to Investment Properties (Note 23) | (2) | - | (2)
Impairment | (10) | - | (10)
Balance at 4th January 2025 | 740 | 65 | 805
Balance at 1st January 2023 | 821 | 61 | 882
Depreciation charge for the year | (93) | (13) | (106)
Additions | 79 | 5 | 84
Disposals | (12) | - | (12)
Impairment | (21) | - | (21)
Balance at 6th January 2024 | 774 | 53 | 827

The Group leases many assets, principally it leases properties for its food retail stores and funeral branches as well as some vehicles and other
equipment. The leases of retail stores are typically between 1 and 20 years in length (2023: 1 and 20 years), and leases of funeral branches are
typically between 1 and 10 years in length (2023: 1 and 10 years). Vehicle and equipment leases are typically between 1 and 4 years in length
(2023: 1 and 4 years) and in some cases the Group has options to purchase the assets at the end of the contract term. Additions to right-of-use
assets may vary to the lease liability additions figure noted in the table below due to the accounting treatment of lease incentives and dilapidation
provisions under IFRS 16.
In the context of potential impairment, the critical accounting estimates and judgments set out in Note 10 (Property, plant and equipment) are also
applicable for right-of-use assets. Impairment of £10m (2023: £21m) comprises £10m (2023: £11m) against food stores where future cashflow
forecasts do not support the carrying value of the right-of-use assets. The prior year includes a £10m charge in the Corporate centre primarily
against the value of the right-of-use asset held for our Support Centre at Angel Square.

Lease liabilities | 2024 | 2023
| £m | £m
Current | (173) | (179)
Non-current | (1,020) | (1,054)
Lease liabilities included in the Consolidated balance sheet | (1,193) | (1,233)

Lease liabilities | 2024 | 2023
| £m | £m
At the start of the period | (1,233) | (1,306)
Additions | (121) | (90)
Disposals | 35 | 30
Interest expense | (67) | (70)
Payments | 193 | 203
Total lease liabilities | (1,193) | (1,233)

Notes to the financial statements
continued
Co-op Annual Report & Accounts for 2024:
Financial Statements
11
Leases
continued
153
Extension and termination options
Some leases of retail stores contain extension or termination options exercisable by the Group up to one year before the end of the non-cancellable
contract period. Where practicable, the Group seeks to include extension and termination options in new leases to provide operational flexibility.
The extension and termination options held are typically exercisable only by the Group and not by the lessors. The Group assesses at lease
commencement whether it is reasonably certain to exercise the extension or termination options. The Group reassesses whether it is reasonably
certain to exercise the options if there is a material event or material change in circumstances within its control. As at 4 January 2025, potential
discounted future cash outflows of £179m (2023: £165m) have not been included in the lease liability because it is not reasonably certain that the
Group will exercise the extension option. Included within the lease liability are discounted future cash outflows of £102m (2023: £96m) where the
group holds termination options but it is not reasonably certain to execute those termination options. In addition, an estimated £56m of potential
discounted future cash outflows is not included in the lease liability relating to contracts currently under review for renewal.
Short term leases
The Group recognised rent expense from short-term leases of £2m (2023: £2m).
B. As a lessor
Lease income from lease contracts in which the Group acts as a lessor is as below:

| 2024 | 2023
| £m | £m
Operating lease (i) |  |
Lease income | 8 | 9
Finance lease (ii) |  |
Finance income on the net investment in the lease | 2 | 2

i. Operating lease
The Group leases out its investment properties. The Group classifies these leases as operating leases, because they do not transfer substantially all
of the risks and rewards incidental to the ownership of the assets. The following table sets out a maturity analysis of lease payments, showing the
undiscounted lease payments to be received after the reporting date.

| 2024 | 2023
| £m | £m
Less than one year | 5 | 5
One to two years | 4 | 4
Two to three years | 4 | 4
Three to four years | 4 | 3
Four to five years | 4 | 2
More than five years | 26 | 31
Total undiscounted lease payments receivable | 47 | 49

ii. Finance lease
The Group also subleases some of its non-occupied leased properties. The Group classifies the sublease as a finance lease, where the period of the
sublease is for substantially the remaining term of the head lease. The following table sets out a maturity analysis of lease receivables, showing the
undiscounted lease payments to be received after the reporting date.
B. As a lessor
- continued
ii. Finance lease
- continued
11
Leases
continued
Notes to the financial statements
continued
Co-op Annual Report & Accounts for 2024:
Financial Statements
154

| 2024 | 2023
| £m | £m
Less than one year | 6 | 8
One to two years | 6 | 8
Two to three years | 6 | 7
Three to four years | 5 | 6
Four to five years | 4 | 5
More than five years | 22 | 22
Total undiscounted lease payments receivable | 49 | 56
Less: Unearned finance income | (11) | (14)
Present value of minimum lease payments receivable | 38 | 42
Impairment loss allowance | (12) | (13)
Finance lease receivable (net of impairment allowance) | 26 | 29

| 2024 | 2023
| £m | £m
Current | 6 | 8
Non-current | 20 | 21
Total finance lease receivable | 26 | 29

The average term of finance leases entered into is 10 years (2023: 9 years).
Impairment of finance lease receivables
The Group estimates the loss allowance on finance lease receivables at an amount equal to lifetime expected credit losses. The lifetime expected
credit losses are estimated based upon historical defaults on subleases, the credit quality of current tenants and forward-looking factors.
Accounting policies
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use assets are
measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any
lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use
assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term.
The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on
an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option
reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to
terminate. The variable lease payments that do not depend on an index or a rate are recognised as expense in the period on which the event or condition that
triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in
the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced
for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in
the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those leases that have a lease term of 12
months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases
that are considered of low value (i.e. below £5,000). Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-
line basis over the lease term.
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
155
12
Goodwill and intangible assets

For period ended 4 January 2025 | Goodwill | Computer | Other | Total
|  | software | intangibles |
| £m | £m | £m | £m
Cost: |  |  |  |
At 6 January 2024 | 1,126 | 387 | 43 | 1,556
Additions | - | 40 | - | 40
Disposals | (3) | (40) | - | (43)
At 4 January 2025 | 1,123 | 387 | 43 | 1,553
Accumulated amortisation and impairment: |  |  |  |
At 6 January 2024 | 385 | 215 | 39 | 639
Charge for the period | - | 31 | 1 | 32
Disposals | (2) | (40) | - | (42)
At 4 January 2025 | 383 | 206 | 40 | 629
Net book value: |  |  |  |
At 4 January 2025 | 740 | 181 | 3 | 924

Computer software includes £25m (2023: £18m) of intangible work in progress. Disposals (both Cost and Accumulated depreciation) in Computer software
includes £40m of fully written down asset value disposed in relation to certain legacy group entities which were wound down during the year.

For period ended 6 January 2024 | Goodwill | Computer | Other | Total
|  | software | intangibles |
| £m | £m | £m | £m
Cost: |  |  |  |
At 31 December 2022 | 1,131 | 361 | 43 | 1,535
Additions | - | 26 | - | 26
Disposals | (5) | - | - | (5)
At 6 January 2024 | 1,126 | 387 | 43 | 1,556
Accumulated amortisation and impairment: |  |  |  |
At 31 December 2022 | 387 | 176 | 38 | 601
Charge for the period | - | 39 | 1 | 40
Impairment | (2) | - | - | (2)
At 6 January 2024 | 385 | 215 | 39 | 639
Net book value: |  |  |  |
At 6 January 2024 | 741 | 172 | 4 | 917

Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
12
Goodwill and intangible assets
continued
156
Goodwill
The components of goodwill are as follows:

| 2024 | 2023
| £m | £m
Food | 720 | 721
Other businesses | 20 | 20
Total goodwill | 740 | 741

The goodwill within other businesses principally relates to the goodwill recognised in the Funeral and Legal Services businesses.
Critical accounting estimates and judgements
Goodwill impairment and sensitivity testing
For the Food goodwill impairment review, the Food segment's future cash flow projections have been taken from the Board-approved plan, taken
into perpetuity and discounted to present value at a pre-tax rate of 10.3% (2023: 9.6%). A long-term growth rate of 1.9% has been applied beyond
the board-approved plan period FY25 - FY28 (2023: 1.9%).
Sensitivity analysis has been performed on these assumptions, testing for a 1% increase
in discount rate and a 1% decrease in long term growth rate, with resulting cash flows remaining well in excess of the current carrying value.
For the Funerals goodwill impairment review, average selling price increases, wage and cost inflation have been applied in line with the
assumptions in the Board-approved plan. Although inherently uncertain this also includes our best estimate of future death rates. Cash flows have
been projected based on the Board-approved plan and into perpetuity from year four and discounted back to present value using a pre-tax
discount rate of 9.7% (2023: 11.6%). A long term growth rate of 1.07% has been applied beyond the board-approved period, reflecting the UK's
long term death rate (2023: 1.9%). Sensitivity analysis has been performed with the discount rate increased by 1% and a 1% decrease in long term
growth rate, with resulting cash flows remaining well in excess of the current carrying value.
The Group is working through the potential impact of the climate related risks and opportunities as identified and disclosed in our Climate-Related
Financial Disclosures (CRFD) report on pages 110 - 118. Our risk assessment and scenario analysis identified that the most material climate related
risks are on technology and consumer sentiment. We have considered these risks in our assessment of whether any indicators of impairment
existed at the balance sheet date, however it was concluded that the expected climate related risks did not have a material impact on the Group's
impairment considerations at the reporting date. The Board-approved plan underpinning our goodwill impairment assessment, takes into
consideration incremental costs of climate related actions to mitigate these risks where these are expected to crystallise within the timeframe of the
plan. This represents a developing area with inherent uncertainty which is constantly evolving.
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
12
Goodwill and intangible assets
continued
157
Accounting policies
Goodwill
Goodwill represents the difference between the cost of the acquisition and the fair value of the identifiable assets, liabilities and contingent
liabilities acquired.
Assets and liabilities accepted under a transfer of engagements are restated at fair value, including any adjustments necessary to comply with the
accounting policies of the Group.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortised but is tested
annually for impairment. In respect of associates, the carrying value of goodwill is included in the carrying amount of the investment in the
associate. Where impairment is required the amount is recognised in the income statement and cannot be written back.
Negative goodwill arising on an acquisition is recognised directly in the income statement.
Acquisition costs are expensed to the income statement when incurred.
Computer software
Computer software is stated at cost less accumulated amortisation and impairment. Costs directly attributable to the development of computer
software for internal use are capitalised and classified as intangible assets where they are not an integral part of the related hardware and
amortised over their useful life up to a maximum of seven years. We have considered the impact of guidance issued in March 2021 by the IFRS
Interpretations Committee, which clarified IAS 38 guidance around what costs should and should not be capitalised specifically in relation to
Software as a Service (‘SaaS’) contracts, and concluded that our policy continues to be compliant with the standard.
Subsequent expenditure
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure is charged to the income statement as incurred.
Amortisation
Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets. Goodwill with an
indefinite useful life is tested for impairment at each balance sheet date. Other intangible assets are amortised from the date they are available for
use. The estimated useful lives are as follows:
• Software development costs: 3 – 10 years
• Other intangible assets: 1 - 10 years
Impairment
Goodwill is tested for impairment at least annually by assessing the recoverable amount of each cash-generating unit (CGU), or group of cash-
generating units, to which the goodwill relates.
Food:
In the Food business, the CGUs to which goodwill has been allocated and the level at which it is monitored is deemed to be the Food segment as a
whole as goodwill arising on acquisitions reflects synergies (principally buying benefits) that benefit the whole business. Accordingly, impairment
testing for all store goodwill balances is carried out using all the food stores as the group of CGUs.
Other businesses:
The majority of goodwill within other businesses is allocated to the Funerals business.
In the Funerals business, a CGU to which goodwill has been allocated is determined as a local network of interdependent branches, known as a
Funeralcare Hub.
Where an individual branch within a local network is to be closed, the CGU attributable to that branch is redefined as being solely that individual
branch on the basis that the branch is no longer expected to contribute to the business through cash generated through its operating activities but
instead through any proceeds on disposal.
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
158
13
Funeral plan investments
Funeral plan investments as per the balance sheet:

| 2024 | 2023
| £m | £m
Non-current assets | 1,414 | 1,346
Total Funeral plan investments | 1,414 | 1,346

Funeral plan investments held by the Group are as follows:

| 2024 | 2023
| £m | £m
Fair value through the income statement: |  |
Funeral plan investments | 1,414 | 1,346
Total Funeral plan investments | 1,414 | 1,346

Funeral plan investments:

| 2024 | 2023
| £m | £m
At start of period | 1,346 | 1,369
Net plan investments (including ongoing instalments) | 90 | 73
Plans redeemed | (96) | (95)
Plans cancelled | (14) | (18)
De-recognition of fixed monthly payment plans (FMPs)* | (14) | -
Unrealised fair value movement on funeral plan investments (Note 6) | 102 | 17
At end of period | 1,414 | 1,346

* £14m of investments relating to fixed monthly payment plans (FMPs), previously included in the funeral plan investment value, have been de-recognised during
the year. In refining the IFRS 17 Insurance Contract cashflows the sum assured for these contracts has been incorporated in the calculation of the Reinsurance
Liability cashflows so these balances are now recognised within the Reinsurance Contract Liabilities. See also note 20.
The funeral plan investments are financial assets which are recorded at fair value each period using valuations provided to Co-op by the policy provider. The plan
values reflect the amount the policy provider would pay out on redemption of the policy at the valuation date with the main driver being underlying investment
performance. The investment strategy is targeted to deliver appropriate returns on the plan investments over the medium term to match expected inflationary
increases in the cost to deliver a funeral. Assets include UK and overseas equities, gilts, corporate bonds, property and cash. The majority of these investments are
held in whole of life insurance policies issued by The Royal London Mutual Insurance Society Limited. Whilst the main driver of their value is underlying investment
performance, some policies also feature security of initial investment value at death and reduced investment volatility.
See Note 26 for further detail on the accounting policy for funeral plans.
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
159
14
Deferred taxation
Deferred income taxes are calculated on all temporary differences under the liability method using an effective tax rate of 25.0% (2023: 25.0%).
Temporary differences arise because sometimes accounting and tax requirements mean that transactions are treated as happening at a different
time for accounting purposes than they are for tax purposes.

Net deferred tax in the balance sheet: |  | 2024 | 2023
|  | £m | £m
Deferred tax asset - continuing operations |  | 324 | 395
Deferred tax liability - continuing operations |  | (362) | (343)
Net deferred tax (liability) / asset |  | (38) | 52
Comprised of: | Footnote: |  |
Other temporary differences | (i) | (3) | (5)
Retirement benefit obligations | (ii) | (81) | (89)
Capital allowances on fixed assets | (iii) | 250 | 315
Unrealised gains on investment properties, rolled-over gains and historic business combinations | (iv) | (148) | (145)
Tax losses | (v) | 19 | 21
IFRS 16 adjustment | (vi) | 38 | 43
IFRS 17 Funeral plan liabilities | (vii) | (113) | (88)
Net deferred tax (liability) / asset |  | (38) | 52

The movements in the net deferred tax (liability) / asset during the period are set out below:

Movement in deferred tax: |  | 2024 | 2023
|  | £m | £m
At beginning of the period |  | 52 | (258)
Income statement charge (see Note 8) |  | (63) | (28)
Additions / disposals |  | (1) | 1
Reported in other comprehensive income: |  |  |
Retirement benefit obligations (see Note 8) | (ii) | (2) | 328
Items taken directly to Retained earnings: |  |  |
IFRS 17 Funeral plan liabilities | (vii) | (24) | 9
At end of the period |  | (38) | 52

Finance Act 2021 enacted an increase in the main rate of corporation tax to 25% to take affect from 1 April 2023. As the temporary differences which would give
rise to a corporation tax charge at the point they unwind, will fall after the increase in rate to 25%, the appropriate rate at which to charge deferred tax, is also
25%. Due to the Group's improved performance during the year, the Group has utilised deferred tax assets to the extent that the net deferred tax balance is now
a net deferred tax liability of £38m (2023 net deferred tax asset was £52m).
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
14
Deferred taxation -
continued
160
Footnotes:
i) This amount includes deferred tax liabilities that arose on the acquisition of Nisa Retail Limited in 2018 and the adoption of IFRS 9, also in 2018.
These are partially offset by a deferred tax asset in respect of provisions. Expenses that have not yet been incurred are able to be recorded in the
accounts as provisions. However, of these certain expenses don't receive tax relief until they have been paid for and so the related tax relief is
delayed to a future period. During 2024 the amount of expense provisions deferred for tax purposes increased leading to a slightly smaller net
liability being shown.
ii) During the period, the Group's pension scheme surplus decreased by £32m resulting in a decrease in the corresponding deferred tax liability of
£8m. This amount represents the theoretical future tax cost to the Group in respect of the current pension scheme surplus.
iii) A deferred tax asset arises on capital allowances where the tax value of assets is higher than the accounts value of the same fixed assets. The
reason the Group has a higher tax value for these fixed assets is due to the fact the Group has not made a claim to its maximum entitlement to
capital allowances since 2013 due to reduced levels of trading profits in the intervening years. However, impairment, disposals and depreciation
have continued to reduce the accounts value for our assets. The Group expects to use these allowances to reduce future trading profits.
iv) This amount represents the theoretical amount of tax that would be payable by the Group on (a) the sale of all investment properties, (b) the sale
of properties that have been restated at their fair value on historic mergers and transfers of engagements and (c) the sale of any property that has
had an historic capital gain 'rolled into' its base cost (which is an election available by statute designed to encourage businesses to reinvest
proceeds from the sale of trading properties into new trading properties and ventures). The £4m increase in the liability over the year is mainly due
to disposal of properties under class (c) above.
v) The Group has incurred trading losses and interest losses that were in excess of taxable profits in the past. These losses can be used to reduce
future trading profits and capital gains which are included in future tax forecasts for the Group. The restriction on the amount of losses that can be
used in any one year post 1 April 2017, being £5m plus 50% of any surplus taxable profits above this amount, is not expected to limit the use of
these losses other than extend the time over which they will be claimed.
The decrease in asset of £1m is in respect of amounts offset against taxable profits this year.
vi) Deferred tax that arose on the adoption of IFRS 16 in 2019 will unwind over a number of years and reduce taxable profits in those future years.
The decrease in asset of £5m is mainly in respect of the unwind during the year.
(vii) These movements relate to the application of IFRS 17 which require us to recognise gains and losses through our Profit Before Tax as well as
through our Other Comprehensive Income. Both of these amounts are treated as taxable and have led to an £24m deferred tax charge in Other
Comprehensive Income.
Accounting policies
Deferred tax is provided for, with no discounting, using the balance sheet liability method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary
differences are not provided for: the initial recognition of assets or liabilities that affect neither accounting nor taxable profits, and differences
relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax
provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or
substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits
will be available to use the asset against. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will
be realised.
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
161
15
Inventories

Inventories include the following: | 2024 | 2023
£m | £m
Raw materials, consumables and work in progress | 4 | 4
Finished goods and goods for resale | 453 | 436
Total inventory | 457 | 440

The period end inventory provision is £26m (2023: £27m) and a net credit of £1m (2023: net charge of £17m) has been made within operating expenses in the
income statement. There was no inventory pledged as security for liabilities in the current or prior period.
Accounting policies
Inventories are stated at the lower of cost, including attributable overheads, and net realisable value. The inventory balance is stated net of any
supplier income value on goods not sold at year-end.
16
Trade and other receivables

| 2024 | 2023
| £m | £m
Non-current | 6 | 7
Current | 602 | 595
Total trade and other receivables | 608 | 602

| 2024 | 2023
| £m | £m
Trade receivables | 344 | 351
Prepayments | 42 | 43
Accrued income | 152 | 118
Other receivables | 79 | 102
| 617 | 614
Allowance for expected credit losses | (9) | (12)
Total trade and other receivables | 608 | 602

Trade receivables are non-interest bearing and the Group's standard payment terms are between 7 and 60 days.
Within trade receivables is £48m (2023: £84m) of supplier income that is due from Food and Wholesale suppliers. Accrued income includes £131m (2023:
£96m) in relation to supplier income that has been recognised but not yet billed. As at 1st March 2025 (reflecting the close of Period 2 for the Group), £44m
(2023: £77m) of the trade receivables balance had been invoiced and settled and £108m (2023: £87m) of the accrued income balance has been invoiced and
settled.
The table below shows the movement in the allowance for expected credit losses for trade and other receivables:

| 2024 | 2023
| £m | £m
Opening allowance for expected credit losses | 12 | 11
Charge to the income statement | 8 | 10
Payments | (2) | (1)
Credit to the income statement | (9) | (8)
Closing allowance for expected credit losses | 9 | 12

The Group has applied the expected losses model as defined under IFRS 9 (Financial Instruments) which focuses on the risk that a trade receivable (including
receivables relating to supplier income) will default rather than whether a loss has been incurred. The Group has applied a simplified approach as allowed under
IFRS 9 to use a provision matrix for calculating expected losses for trade receivables. More information on credit risk and the use of a provision matrix is
provided in Note 25 which outlines our approach to financial risk management.
Accounting policies
Refer to Note 26 Financial Instruments for the accounting policies relating to trade receivables and allowances for expected credit losses.
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
162
17
Cash and cash equivalents and short-term investments

Cash and cash equivalents | 2024 | 2023
£m | £m
Cash in hand | 47 | 53
Cash at banks | 273 | 342
Cash and cash equivalents | 320 | 395

The Group has a right of set-off across our bank accounts as part of a pooling arrangement with our principal bank. The Cash at banks figures include amounts
receivable from customers or banks for debit or credit card payment transactions made by customers of £36m (2023: £37m) in the two days before year-end which
don't clear the bank (and show on our bank statement) until the first working day of the new year.

Short-term investments | 2024 | 2023
£m | £m
Cash deposits with banks (> 3 months) | 100 | 200
Total Short-term investments | 100 | 200

Accounting policies
Cash and cash equivalents;
in the consolidated balance sheet comprise cash in hand, cash in transit and cash at bank and short-term deposits with
banks with a maturity of three months or less, which are subject to an immaterial risk of changes in value. Cash and cash equivalents includes debit
and credit card payments made by customers which are receivable from banks and clear the bank within three days of the transaction date.
In the statement of consolidated cash flows, cash and cash equivalents includes bank overdrafts as they are repayable on demand and deemed to
form an integral part of the Group's cash management.
Amounts held in trustee-administered bank accounts of the Group of £9m (2023: £8m), which can only be utilised to meet liabilities in respect of
funeral plans, are classed as Funeral plan investments (see Note 13) and not Cash and cash equivalents.
Short-term investments;
represent surplus cash placed on deposit with banks or other financial institutions for periods of less than twelve months
but more than three months. Balances are held at amortised cost and are included within our net debt calculation as short term investments.
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
163
18
Interest-bearing loans and borrowings
Non-current liabilities:

| 2024 | 2023
| £m | £m
£109m 11% Final repayment subordinated notes due 2025** | - | 109
£20m 11% Instalment repayment notes (final payment 2025)** | - | 3
£105m 7.5% Bond Notes due 2026 (fair value) | 108 | 105
£245m 7.5% Bond Notes due 2026 (amortised cost) | 250 | 253
Total (excluding lease liabilities) | 358 | 470
Lease liabilities | 1,020 | 1,054
Total Group interest-bearing loans and borrowings | 1,378 | 1,524

Current liabilities:

| 2024 | 2023
| £m | £m
£200m 5.125% Sustainability Bond due 2024 (amortised cost) * | - | 202
£109m 11% Final repayment subordinated notes due 2025** | 109 | -
£20m 11% Instalment repayment notes (final payment 2025)** | 3 | 2
£245m 7.5% Bond Notes due 2026 (amortised cost) *** | 9 | 9
Other borrowings | 2 | 2
Corporate investor shares | 3 | 3
Total (excluding lease liabilities) | 126 | 218
Lease liabilities | 173 | 179
Total Group interest-bearing loans and borrowings | 299 | 397

* The remaining £200m principal on the Sustainability bond noted in the comparative period matured on 17 May 2024 and was repaid in full with cash.
** The £109m 11% Final repayment subordinated notes and the £20m 11% Instalment notes are both due in December 2025 and as such any remaining principal
or interest has been classified within current liabilities in 2024 in the tables above (whereas in 2023 the majority of the liabilities were classified within non-current
liabilities with only any interest or capital repayments due <1 year classified within current liabilities). Interest on the £109m (11% Final repayment subordinated
notes 2025) is settled annually in December such that any interest accrual as at the current and comparative balance sheet dates is not material for disclosure in
the table above. The £2m balance noted in the prior year represents the repayment of capital instalment due < 1 year on the £20m 11% Instalment repayment
notes.
*** The amortised cost balances in current liabilities includes £9m on the 2026 bonds of accruals for interest payments that will be made within 1 year of the
balance sheet date. These balances are excluded from our net debt metric as defined in the Glossary on page 226.
See Note 25 for more information about the Group’s exposure to interest rate and foreign currency risk, and Note 26 for a breakdown of the Group's borrowings
by the three-level fair value hierarchy (which reflects different valuation techniques) as defined within IFRS 13 (Fair Value Measurement).
Notes to the financial statements
continued
Co-op Annual Report & Accounts for 2024:
Financial Statements
18
Interest-bearing loans and borrowings -
continued
164
Reconciliation of movement in net debt
Net debt is a measure that shows the amount we owe to banks and other external financial institutions less the cash that we have, any short-term
deposits and any short-term investments that we hold. Some of our bond borrowings are held as financial liabilities at fair value through the income
statement. The fair value movement on these liabilities is shown under non-cash movements in the tables below.

For period ended 4 January 2025 |  |  |  |  |
| Start of period | Non cash movements |  | Cash flow | End of
|  | New leases | Other |  | period
| £m | £m | £m | £m | £m
Interest-bearing loans and borrowings: |  |  |  |  |
- current | (218) | - | (112) | 204 | (126)
- non-current | (470) | - | 112 | - | (358)
Lease liabilities: |  |  |  |  |
- current | (179) | (18) | (169) | 193 | (173)
- non-current | (1,054) | (103) | 137 | - | (1,020)
Total debt | (1,921) | (121) | (32) | 397 | (1,677)
Group cash and short term investments: |  |  |  |  |
- cash | 395 | - | - | (75) | 320
- short-term investments | 200 | - | - | (100) | 100
Group net debt | (1,326) | (121) | (32) | 222 | (1,257)
Less: interest accrued on amortised debt | 11 | - | 34 | (36) | 9
Group net debt (excluding accrued interest) | (1,315) | (121) | 2 | 186 | (1,248)

See the Glossary on page 226 for further details of the Group's net debt APM metric. The £9m of interest accruals will be paid within 1 year (and is shown in the
Current liabilities table on the previous page).
The main movements in Other non cash movements include: (i) Loans and borrowings; reclassification from non-current to current for instruments falling due <1
year and non-cash fair value and amortised cost movements (ii) Leases; the annual accrual of interest and reclassification from non-current to current for that
portion of the lease liability falling due <1 year as the leases unwind / mature.

For period ended 6 January 2024 |  |  |  |  |
| Start of period | Non cash movements |  | Cash flow | End of
|  | New leases | Other |  | period
| £m | £m | £m | £m | £m
Interest-bearing loans and borrowings: |  |  |  |  |
- current | (17) | - | (203) | 2 | (218)
- non-current | (763) | - | 194 | 99 | (470)
Lease liabilities: |  |  |  |  |
- current | (182) | (12) | (178) | 193 | (179)
- non-current | (1,124) | (68) | 138 | - | (1,054)
Total debt | (2,086) | (80) | (49) | 294 | (1,921)
Group cash: |  |  |  |  |
- cash | 447 | - | - | (52) | 395
- short-term investments | - | - | - | 200 | 200
Group net debt | (1,639) | (80) | (49) | 442 | (1,326)
Less: interest accrued on amortised debt | 11 | - | 43 | (43) | 11
Group net debt (excluding accrued interest) | (1,628) | (80) | (6) | 399 | (1,315)

Details of the Group's bank facilities are shown in Note 26.
Notes to the financial statements
continued
Co-op Annual Report & Accounts for 2024:
Financial Statements
18
Interest-bearing loans and borrowings -
continued
165
Terms and repayment schedule
The Group has a £350m Bond issued in May 2011, repayable in May 2026. This bond currently has an interest rate of 7.5%.
The Group also has two subordinated debt instruments in issue: £109m 11% final repayments notes due December 2025 and £20m 11% instalment repayment
notes, with final repayment in December 2025. The value of the remaining instalments outstanding on the £20m 11% instalment repayment notes was £3m as at
4 January 2025.
On the 29 November 2024, the Group concluded an amendment and extension exercise on its Revolving Credit Facility, with a facility size of £400m and a 5 year
term maturing in November 2029. The facility was undrawn as at 4 January 2025.
We have two key covenants under the amended RCF facility as follows:
Interest cover covenant
– the ratio tests Co-op's ability to cover its financing costs from its earnings, and represents the ratio of adjusted EBITDA over adjusted
net underlying finance costs.
Leverage covenant
– the ratio compares our borrowings to our earnings, and represents the ratio of Group Net Debt, excluding lease liabilities, over adjusted
EBITDA.
Both covenants had sufficient headroom at 2024 year end.
Further details of the Group's remaining banking facilities are given in Note 25.
Corporate investor shares
Corporate investor shares represent borrowings the Group has with other co-operative societies. The borrowings are split into Variable Corporate Investor
Shares (VCIS) and Fixed Corporate Investor Shares (FCIS). The VCIS are repayable on demand and the FCIS are fixed term borrowings. As at 4 January 2025,
Corporate Investor Shares borrowings were £3m (2023: £3m).
Accounting policies
The Group measures its interest-bearing loans and borrowings in two main ways:
1) Fair value through the income statement. Debt is restated as its fair value each period with the fair value movement going through the income
statement. The hedged portion of the quoted Bond debt is accounted for in this way. This is because the Group has used interest rate swaps to
hedge the impact of movements in the interest rate and the movement in the fair value of the quoted debt is partially offset by the fair value
movement in the interest rate swaps (notes 6, 7 and 26). The unhedged portion of the quoted Bond debt is accounted for at amortised cost in
accordance with IFRS 9. This approach applies to those borrowings taken out prior to the adoption of IFRS 9 in 2018. Any subsequent borrowings
are measured at amortised cost as noted below.
2) Amortised cost. Borrowings are recognised initially at fair value, which equates to issue proceeds net of transaction costs incurred. Borrowings
are subsequently stated at amortised cost. Any difference between proceeds net of transaction costs and the redemption value is recognised in the
income statement over the period of the borrowings using the effective interest rate method. The effective interest rate is calculated when
borrowings are first taken out and is the rate that exactly discounts the estimated future cash payments associated with the borrowings to the value
when they are initially recognised.
For more general information on accounting policies on financial instruments, refer to Note 26.
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
166
19
Trade and other payables

| 2024 | 2023
| £m | £m
Current | 1,555 | 1,564
Non-current | 9 | 18
Total trade and other payables | 1,564 | 1,582

| 2024 | 2023
| £m | £m
Trade payables | 1,083 | 1,050
Value Added Tax, PAYE and social security | 12 | 33
Accruals | 364 | 360
Deferred income | 29 | 36
Other payables | 76 | 103
Total trade and other payables | 1,564 | 1,582

Further details on the maturity profile of trade and other payables can be found in Note 25.
Deferred income includes £15m (2023: £27m) in relation to the marketing and distribution arrangement entered into with Markerstudy Insurance Services Ltd
(remaining term of 2 years and 4 months) following the sale of our Insurance underwriting business (CISGIL). Accruals includes capital expenditure accruals of
£30m (2023: £36m), payroll accruals of £149m (2023: £142m) as well as standard cost accruals of £185m (2023: £182m).
Where our trading terms state that the supplier income is netted against amounts owing to
that supplier and it is our intention to settle the balances on a net basis
then any outstanding invoiced supplier income at the reporting date is included within trade payables. Trade payables includes £33m (2023: £29m) of supplier
income receivable that has been offset against amounts owed to those suppliers.
The Group operates a supplier financing arrangement with Prime Revenue, under which suppliers can obtain accelerated settlement on invoices from the finance
providers signed up to the programme. The Group settles these amounts in accordance with each supplier's agreed payment terms (which typically range
between 30 to 60 days) and the payment terms of the suppliers participating in the scheme are similar to those that are not participating. At the balance sheet
date; the Group’s trade creditors balance includes £53m (2023: £56m) relating to payments due to Co-op suppliers under these arrangements and the suppliers
have already taken payments of £42m (2023: £44m) in respect of those balances from the third-party finance provider. During the year ended 4 January 2025,
the maximum facility was £108m (2023: £108m).
Access to the supplier finance scheme is by mutual agreement between the bank and supplier, where the supplier wishes to be paid faster than standard Group
payment terms. The Group is not party to this contract. The scheme has no cost to the Group as the fees are paid by the supplier directly to the bank. The bank
has no special seniority of claim to the Group upon liquidation and would be treated the same as any other trade payable. As the scheme does not change the
characteristics of the trade payable, and the Group’s obligation is not legally extinguished until the bank is repaid, the Group continues to recognise these
liabilities within trade payables and all cash flows associated with the arrangements are included within operating cash flow as they continue to be part of the
normal operating cycle of the Group.
Accounting policies
Refer to Note 26 Financial instruments for the accounting policies relating to trade payables.
Co-op Interim Report 2024:
Financial Statements
Notes to the financial statements
continued
167
20
Insurance and re-insurance contracts (funeral plan liabilities)

Insurance contract liabilities (by nature) | Liabilities for remaining coverage |  |
|  |  | Liabilities for | Total
2024 | Excluding loss | Loss | claims incurred |
| component | component |  |
| £m | £m | £m | £m
Insurance contract liability as at 6 January 2024 | 1,097 | 1 | - | 1,098
Insurance revenue | (91) | - | - | (91)
Insurance service expenses: |  |  |  |
Incurred claims and other expenses* | (13) | - | 89 | 76
Amortisation of insurance acquisition cashflows | 3 | - | - | 3
Losses on onerous contracts and reversals of those losses | - | 2 | - | 2
Insurance service result | (101) | 2 | 89 | (10)
Insurance finance expenses (Income statement) | 18 | - | - | 18
Insurance finance income (Other comprehensive income) | (95) | - | - | (95)
Total changes in Statement of comprehensive income | (178) | 2 | 89 | (87)
Cashflows: |  |  |  |
Premiums received less premiums refunded | 91 | - | - | 91
Claims and other expenses paid | - | - | (85) | (85)
Insurance acquisition flows | (9) | - | - | (9)
Total cashflows | 82 | - | (85) | (3)
Insurance contract liability as at 4 January 2025 | 1,001 | 3 | 4 | 1,008

* Following adoption of IFRS 17 in the previous year we have further refined our actuarial model during the year resulting in a one-off adjustment to
plan liabilities. The corresponding gain has been recognised in Finance Income (Note 6).

Insurance contract liabilities (by nature) | Liabilities for remaining coverage |  |
|  |  | Liabilities for | Total
2023 | Excluding loss | Loss | claims incurred |
| component | component |  |
| £m | £m | £m | £m
Insurance contract liability as at 31 December 2022 | 1,073 | - | - | 1,073
Insurance revenue | (86) | - | - | (86)
Insurance service expenses: |  |  |  |
Incurred claims and other expenses | - | - | 77 | 77
Amortisation of insurance acquisition cashflows | 2 | - | - | 2
Losses on onerous contracts and reversals of those losses | - | 1 | - | 1
Insurance service result | (84) | 1 | 77 | (6)
Insurance finance expenses (Income statement) | 16 | - | - | 16
Insurance finance expense (Other comprehensive income) | 36 | - | - | 36
Total changes in Statement of comprehensive income | (32) | 1 | 77 | 46
Cashflows: |  |  |  |
Premiums received less premiums refunded | 63 | - | - | 63
Claims and other expenses paid | - | - | (77) | (77)
Insurance acquisition flows | (7) | - | - | (7)
Total cashflows | 56 | - | (77) | (21)
Insurance contract liability as at 6 January 2024 | 1,097 | 1 | - | 1,098

Notes to the financial statements
continued
Co-op Interim Report 2024:
Financial Statements
20
Insurance and re-insurance contracts (funeral plan liabilities)
continued
168

Insurance contract liabilities (by component) | Estimates of | Risk | Contractual | Total
| present value of | adjustment | service margin |
2024 | future cashflows |  | (CSM) |
| £m | £m | £m | £m
Insurance contract liability as at 6 January 2024 | 934 | 55 | 109 | 1,098
Changes that relate to current services: |  |  |  |
CSM recognised for service provided | - | - | (3) | (3)
Risk adjustment for the risk expired | - | (4) | - | (4)
Experience adjustments | 8 | - | - | 8
Changes that relate to future services: |  |  |  |
Contracts initially recognised in the period | (9) | 1 | 8 | -
Changes in estimates that adjust the CSM | 37 | 13 | (65) | (15)
Changes in estimates that do not adjust the CSM | 2 | - | - | 2
Insurance service result | 38 | 10 | (60) | (12)
Insurance finance expenses (Income statement) | 15 | 1 | 2 | 18
Insurance finance income (Other comprehensive income) | (73) | (21) | - | (94)
Total changes in Statement of comprehensive income | (20) | (10) | (58) | (88)
Cashflows: |  |  |  |
Premiums received less premiums refunded | 91 | - | - | 91
Claims and other expenses paid | (85) | - | - | (85)
Insurance acquisition flows | (8) | - | - | (8)
Total cashflows | (2) | - | - | (2)
Insurance contract liability as at 4 January 2025 | 912 | 45 | 51 | 1,008

Insurance contract liabilities (by component) | Estimates of | Risk | Contractual | Total
| present value of | adjustment | service margin |
2023 | future cashflows |  | (CSM) |
| £m | £m | £m | £m
Insurance contract liability as at 31 December 2022 | 896 | 55 | 122 | 1,073
Changes that relate to current services: |  |  |  |
CSM recognised for service provided | - | - | (6) | (6)
Risk adjustment for the risk expired | - | (4) | - | (4)
Experience adjustments | 3 | - | - | 3
Changes that relate to future services: |  |  |  |
Contracts initially recognised in the period | (12) | 1 | 11 | -
Changes in estimates that adjust the CSM | 21 | (1) | (20) | -
Changes in estimates that do not adjust the CSM | 1 | - | - | 1
Insurance service result | 13 | (4) | (15) | (6)
Insurance finance expenses (Income statement) | 13 | 1 | 2 | 16
Insurance finance expense (Other comprehensive income) | 33 | 3 | - | 36
Total changes in Statement of comprehensive income | 59 | - | (13) | 46
Cashflows: |  |  |  |
Premiums received less premiums refunded | 63 | - | - | 63
Claims and other expenses paid | (77) | - | - | (77)
Insurance acquisition flows | (7) | - | - | (7)
Total cashflows | (21) | - | - | (21)
Insurance contract liability as at 6 January 2024 | 934 | 55 | 109 | 1,098

Co-op Interim Report 2024:
Financial Statements
Notes to the financial statements
continued
20
Insurance and re-insurance contracts (funeral plan liabilities)
continued
169

Re-insurance contract liabilities (by nature) | Assets for remaining coverage | Amounts |
| Excluding loss | Loss recovery | recoverable on | Total
2024 | recovery | component | insured claims |
| component |  |  |
| £m | £m | £m | £m
Net re-insurance contract liability as at 6 January 2024 | 8 | - | - | 8
An allocation of re-insurance premium | 2 | - | - | 2
Amounts recoverable from re-insurers for incurred claims: |  |  |  |
Amounts recoverable for incurred claims and other expenses* | (6) | - | (2) | (8)
Net income from re-insurance contract held | (4) | - | (2) | (6)
Re-insurance finance income (Income statement) | - | - | - | -
Re-insurance finance income (Other comprehensive income) | 1 | - | - | 1
Total changes in Statement of comprehensive income | (3) | - | (2) | (5)
Cashflows: |  |  |  |
Premiums paid (net of commission) | (4) | - | - | (4)
Amounts received | - | - | 2 | 2
Total cashflows | (4) | - | 2 | (2)
Net re-insurance contract liability as at 4 January 2025 | 1 | - | - | 1

* Following adoption of IFRS 17 in the previous year we have further refined our actuarial model during the year resulting in a one-off adjustment to plan liabilities.
The corresponding gain has been recognised in Finance Income (Note 6).
LCIPs can be paid for by instalments over between 2 and 25 years or they can be paid off in full at any time during this period without any penalties. If the plan
holder dies before the instalments have been made in full (and provided that the plan has been in place for at least 12 months or the cause of death was as a result
of an accident) then the funeral will still be provided by the Group and the customer will not have to settle the outstanding balance on any instalments and the
balance of any monies owed will be waived. Any outstanding amounts owed to the Group (the difference between the full value of the plan and the amount paid
up to death by the customer) are covered by an assured benefit from a third party insurer. The assured benefit is between the Group and the third party insurer
and has nothing to do with the customer. The Society continues to apply instalment monies received against customers' individual funeral plans until such time as
a plan is redeemed and or cancelled. The assured benefit between the Group and the 3rd party is judged to represent an insurance contract and as such falls
under the scope of IFRS 17 (Insurance Contracts).

Re-insurance contract liabilities (by nature) | Liabilities for remaining coverage |  |
| Excluding loss | Loss recovery | Amounts | Total
2023 | recovery | component | recoverable on |
| component |  | insured claims |
| £m | £m | £m | £m
Net re-insurance contract liability as at 31 December 2022 | 8 | - | - | 8
An allocation of re-insurance premium | 1 | - | - | 1
Amounts recoverable from re-insurers for incurred claims: |  |  |  | -
Amounts recoverable for incurred claims and other expenses | - | - | (1) | (1)
Net income from re-insurance contract held | 1 | - | (1) | -
Re-insurance finance income (Income statement) | - | - | - | -
Re-insurance finance income (Other comprehensive income) | 1 | - | - | 1
Total changes in Statement of comprehensive income | 2 | - | (1) | 1
Cashflows: |  |  |  |
Premiums paid (net of commission) | (2) | - | - | (2)
Amounts received | - | - | 1 | 1
Total cashflows | (2) | - | 1 | (1)
Net re-insurance contract liability as at 6 January 2024 | 8 | - | - | 8

Notes to the financial statements
continued
Co-op Interim Report 2024:
Financial Statements
20
Insurance and re-insurance contracts (funeral plan liabilities)
continued
170

Re-insurance contract liabilities (by component) | Estimates of | Risk | Contractual |
| present value of | adjustment | service margin | Total
2024 | future cashflows |  |  |
| £m | £m | £m | £m
Net re-insurance contract liability as at 6 January 2024 | 7 | - | 1 | 8
Changes that relate to current services: |  |  |  |
Contractual service margin recognised for service provided | - | - | - | -
Risk adjustment for the risk expired | - | - | - | -
Experience adjustments | - | - | - | -
Changes that relate to future services: |  |  |  |
Contracts initially recognised in the period | - | - | - | -
Changes in estimates that adjust the contractual service margin | (4) | (1) | (1) | (6)
Re-insurance service result | (4) | (1) | (1) | (6)
Re-insurance finance income (Income statement) | - | - | - | -
Re-insurance finance expense (other comprehensive income) | - | 1 | - | 1
Total changes in Statement of comprehensive Income | (4) | - | (1) | (5)
Cashflows: |  |  |  |
Premiums and similar expenses paid | (4) | - | - | (4)
Amounts received | 2 | - | - | 2
Total cashflows | (2) | - | - | (2)
Net re-insurance contract liability as at 4 January 2025 | 1 | - | - | 1

Re-insurance contract liabilities (by component) | Estimates of | Risk | Contractual |
| present value of | adjustment | service margin | Total
2023 | future cashflows |  |  |
| £m | £m | £m | £m
Net re-insurance contract liability as at 31 December 2022 | 8 | - | - | 8
Changes that relate to current services: |  |  |  |
Contractual service margin recognised for service provided | - | - | - | -
Risk adjustment for the risk expired | - | - | - | -
Experience adjustments | - | - | - | -
Changes that relate to future services: |  |  |  |
Contracts initially recognised in the period | - | - | - | -
Changes in estimates that adjust the contractual service margin | (1) | - | 1 | -
Re-insurance service result | (1) | - | 1 | -
Re-insurance finance income (Income statement) | - | - | - | -
Re-insurance finance expense (other comprehensive income) | 1 | - | - | 1
Total changes in Statement of comprehensive Income | - | - | 1 | 1
Cashflows: |  |  |  |
Premiums and similar expenses paid | (2) | - | - | (2)
Amounts received | 1 | - | - | 1
Total cashflows | (1) | - | - | (1)
Net re-insurance contract liability as at 6 January 2024 | 7 | - | 1 | 8

Co-op Interim Report 2024:
Financial Statements
Notes to the financial statements
continued
20
Insurance and re-insurance contracts (funeral plan liabilities)
continued
171

| Contracts using | All other | Total
Contractual service margin | the fair value | contracts |
(2024) | approach |  |
| £m | £m | £m
Contractual service margin as at 6 January 2024 | 85 | 24 | 109
Changes that relate to current services: |  |  |
Contractual service margin recognised for service provided | (2) | (1) | (3)
Changes that relate to future services: |  |  |
Contracts initially recognised in the period | - | 8 | 8
Changes in estimates that adjust the contractual service margin | (49) | (16) | (65)
Sub-total | (51) | (9) | (60)
Insurance finance expenses | 1 | 1 | 2
Contractual service margin as at 4 January 2025 | 35 | 16 | 51

Plans sold prior to 2020 were fair valued at transition.

| Contracts using | All other | Total
Contractual service margin | the fair value | contracts |
(2023) | approach |  |
| £m | £m | £m
Contractual service margin as at 31 December 2022 | 105 | 17 | 122
Changes that relate to current services: |  |  |
Contractual service margin recognised for service provided | (5) | (1) | (6)
Changes that relate to future services: |  |  |
Contracts initially recognised in the period | - | 11 | 11
Changes in estimates that adjust the contractual service margin | (16) | (4) | (20)
Sub-total | (21) | 6 | (15)
Insurance finance expenses | 1 | 1 | 2
Contractual service margin as at 6 January 2024 | 85 | 24 | 109

| Profitable | Onerous |
New business | contracts issued | contracts issued | Total
(2024) | £m | £m | £m
Insurance contracts: |  |  |
Estimate of present value of future cashflows, excluding insurance acquisition costs | 65 | - | 65
Estimate of insurance acquisition cashflows | 9 | - | 9
Estimate of present value of future cash outflows | 74 | - | 74
Estimate of present value of future cash inflows | (84) | - | (84)
Risk adjustment | 1 | - | 1
Contractual service margin | 9 | - | 9
Profit / (loss) on contracts at initial recognition | - | - | -

Notes to the financial statements
continued
Co-op Interim Report 2024:
Financial Statements
20
Insurance and re-insurance contracts (funeral plan liabilities)
continued
172

New business | Profitable | Onerous | Total
(2023) | contracts issued | contracts issued |
| £m | £m | £m
Insurance contracts: |  |  |
Estimate of present value of future cashflows, excluding insurance acquisition costs | 39 | - | 39
Estimate of insurance acquisition cashflows | 6 | - | 6
Estimate of present value of future cash outflows | 45 | - | 45
Estimate of present value of future cash inflows | (56) | - | (56)
Risk adjustment | 1 | - | 1
Contractual service margin | 11 | - | 11
Profit on contracts at initial recognition | 1 | - | 1

Insurance revenue | 2024 | 2023
| £m | £m
Amounts relating to changes in liabilities for remaining coverage : |  |
Contractual service margin recognised for services provided | 3 | 6
Change in risk adjustment for non financial risk for risk expired | 4 | 4
Expected incurred claims and other insurance service | 81 | 73
Recovery of insurance acquisition cash flows | 3 | 3
Total insurance revenue | 91 | 86

Insurance revenue | 2024 | 2023
| £m | £m
Contracts using the fair value approach | 75 | 74
All other contracts | 16 | 12
Total insurance revenue | 91 | 86

Plans sold prior to 2020 were fair valued at transition.

Contractual service margin maturity | 2024 | 2023
| £m | £m
- Less than 1 year | 3 | 6
- 1 to 2 years | 3 | 5
- 2 to 3 years | 3 | 5
- 3 to 4 years | 3 | 5
- more than 4 years | 39 | 88
Total | 51 | 109

Fulfilment cashflows | 2024 | 2023
| £m | £m
- Less than 1 year | 64 | 59
- 1 to 2 years | 67 | 61
- 2 to 3 years | 67 | 62
- 3 to 4 years | 67 | 62
- 4 to 5 years | 67 | 61
- more than 5 years | 1,454 | 1,402
Total | 1,786 | 1,707

The figures in the table above are undiscounted and exclude cashflows relating to re-insurance as these are not material.
Notes to the financial statements
continued
Co-op Interim Report 2024:
Financial Statements
20
Insurance and re-insurance contracts (funeral plan liabilities)
continued
173
Critical accounting estimates
Under IFRS 17 (Insurance Contracts) the Group's funeral plan liabilities reflect the current estimate of the present value of the future cashflows to
provide the funeral. These are calculated using actuarial advice and are based on a range of assumptions and estimates. The assumptions used are
management's best estimates chosen from a range of possible actuarial assumptions which may not necessarily be borne out in practice.
The main actuarial assumptions include estimates in relation to discount rates, future costs to deliver a funeral including inflation and expense
assumptions, mortality rates, risk adjustments and plan cancellation rates. The insurance contract liability calculation is most sensitive to changes in
the discount rate and inflation assumptions and further detail on these items is noted below.
Discount rates
- the Group applies a bottom-up approach to derive the discount rate such that our insurance contract liabilities (funeral plans) are
calculated by discounting expected future cash flows at a risk free rate, plus an illiquidity premium (credit spread). The risk free rate has been
derived by reference to market yields on sterling-denominated high quality corporate bonds of appropriate duration consistent with the funeral
plans at that date (UK Gilt curve at the valuation date converted from continuous to annual rates). The illiquidity premium is determined by
reference to observable market rates (assessed as 20% of the average credit spread on 10-15 year A rated and 10-15 year AA rated bonds at the
valuation date (allowing for the part of the credit spread that relates to default risk and that the liabilities are not perfectly illiquid).
Inflation
- the rate of inflation is set based on the Bank of England Forward Inflation Curve at the valuation date converted from continuous to
annual. From 2022 onwards a reduction of 25 basis points has been applied to allow for high levels of demand for inflation linked gilts increasing
inflation expectations. Years 2023 to 2026 have been adjusted to reflect managements' view based on experience of funeral cost inflation.

Financial assumptions |  |  | 2024 | 2023
|  | Year 1 | 4.14% | 3.55%
|  | Year 2 | 4.21% | 3.02%
|  | Year 3 | 4.25% | 2.99%
| Risk free rate - UK Gilt curve | Year 4 | 4.37% | 3.10%
Discount rate |  |  |  |
|  | Year 5 | 4.54% | 3.29%
|  | Year 10 | 5.65% | 4.76%
|  | Year 15 | 5.97% | 5.04%
| Illiquidity premium (credit spread) |  | 0.13% | 0.16%
|  | Year 1 | 4.46% | 3.22%
|  | Year 2 | 3.42% | 3.33%
|  | Year 3 | 3.23% | 3.30%
Inflation rate | Bank of England curve less 25 bps plus management view | Year 4 | 3.12% | 3.18%
|  | Year 5 | 3.08% | 3.09%
|  | Year 10 | 3.17% | 3.25%
|  | Year 15 | 3.16% | 3.20%

Further details of the Group's approach to financial risk management are noted in Note 25 (Financial risk management) covering: credit risk, interest rate risk,
foreign currency risk and liquidity risk.
Co-op Interim Report 2024:
Financial Statements
Notes to the financial statements
continued
20
Insurance and re-insurance contracts (funeral plan liabilities)
continued
174
Sensitivities
The following sensitivity analysis shows the impact on insurance contract liabilities and profit before tax for reasonably possible movements in the
key financial assumptions noted on the previous page with all other assumptions held constant.
The combination of assumptions will have a material effect in determining the ultimate impacts, but to demonstrate the impact due to changes in
each assumption, assumptions have been changed on an individual basis. It should be noted that movements in these assumptions are non-linear.
The discount rate sensitivity noted below covers the risk free rate plus the illiquidity premium (see discount rate derivation noted overleaf).

Change in Insurance contract liability - £m | 2024 | 2023
Discount rate - decrease of 1.0% | 105 | 126
Inflation rate - increase of 1.0% | 109 | 130
Fulfilment costs - increase of 5% | 51 | 55
Mortality stress +20% | 24 | 16

Change in Profit before tax - £m | 2024 | 2023
Discount rate - decrease of 1.0% | - | -
Inflation rate - increase of 1.0% | (58) | (6)
Fulfilment costs - increase of 5% | (3) | (3)
Mortality stress +20% | (1) | (1)

Discount rate
- the impact of a change in discount rate flows through other comprehensive income (OCI) rather than the Income statement and so doesn't
impact Profit before tax (PBT) in either 2024 or 2023.
Inflation
- changes to our inflation assumptions are deemed to be non-financial, as the ultimate inflationary cost risk does not relate to financial market indices,
and to the extent that they can be covered are first charged to the contractual service margin (CSM) buffer rather than direct to the Income statement. As the
modelled sensitivity increase in insurance liability of £109m is larger than the CSM of £51m, the CSM would initially be extinguished and the remaining £58m
would be taken as an onerous charge to the Income statement. Our assessment is that this is likely to be only a 1 in 20 year likelihood event.
Fulfilment costs
- changes to our fulfilment cost assumptions are deemed to be non-financial, as the ultimate inflationary cost risk does not relate to financial
market indices, and to the extent that they can be covered are first charged to the contractual service margin (CSM) buffer rather than direct to the Income
statement. As the CSM would be reduced by the modelled sensitivities, the impact to PBT noted in the table above, reflects 1 year's impact across the 20 year
CSM period.
Mortality
- changes to our mortality assumptions are deemed to be non-financial, as the ultimate mortality cost risk does not relate to financial market indices,
and to the extent that they can be covered are first charged to the contractual service margin (CSM) buffer rather than direct to the Income statement. As the CSM
would be reduced by the modelled sensitivities, the impact to PBT noted in the table above, reflects 1 year's impact across the 20 year CSM period.
Co-op Interim Report 2024:
Financial Statements
Notes to the financial statements
continued
20
Insurance and re-insurance contracts (funeral plan liabilities)
continued
175
Accounting Policies
Summary of material accounting policies:
In applying the insurance standard and the requirements of IFRS 17 the Group has adopted a variety of accounting policies in relation to the
accounting for funeral plans and the waiver insurance on instalment plans. The Group has elected to use the General Measurement Model
(GMM) under IFRS 17 to measure the liability for remaining coverage. A summary of the material accounting policies is noted below:
Initial recognition
- an insurance contract is defined as a contract under which the Group accepts significant insurance risk from another party
by agreeing to compensate that party if it is adversely affected by a specified uncertain future event. The new standard applies to all of the
Group’s funeral plans and also covers the re-insurance of the payment waiver risk on instalment plans.
Level of aggregation and onerous contracts
- the aggregation of insurance contracts determines the ‘unit of account’ to be used when
applying IFRS 17 which affects the allocation of the contractual service margin (CSM) to insurance revenue and the level at which onerous
contracts are identified. IFRS 17 specifically requires that portfolios of re-insurance contracts are separately held from portfolios of insurance
contracts issued. The aggregation requirements of IFRS 17 arrange insurance and re-insurance contract cash flows into buckets based on two
stages or levels:
·
Portfolio level:
(1) by primary risk type and (2) whether contracts are managed together.
·
Group level:
(1) by time of issuance (one-year issuing period); and (2) by degree of expected profitability at initial recognition.
Application by Co-op:
Portfolio level:
The following IFRS 17 portfolios were identified for the Group's consolidated financial statements:
·
Pre-need funeral plans - (insurance contracts issued)
·
Premium waiver on underlying Instalment plans – (re-insurance contracts held)
Group level:
Time of issuance - Cohort year. IFRS 17 requires a portfolio of contracts to be divided into annual ‘cohorts’ or shorter time buckets.
A group of contracts may not include contracts issued more than one year apart. Co-op allocates cohorts by annual periods based on the
financial year of issue.
Group level:
Degree of profitability at initial recognition. IFRS 17 requires portfolios of contracts issued in a given cohort year to be assessed by
‘sets’ for the purpose of determining whether contracts are onerous or have no significant possibility of becoming onerous. The Group
determines the sets based on assessed similarities in pricing and margin and expected sensitivity to future changes in financial and non-financial
assumptions over the coverage period. Losses on onerous contracts are taken to the Income statement as incurred.
Fulfilment Cashflows:
IFRS 17 requires insurance liabilities to be measured at a current fulfilment value. Fulfilment cashflows cover:
(A)
best estimates of future cashflows;
(B)
an adjustment for the time value of money (i.e. discounting) and financial risks associated with the future cash flows; and
(C)
a risk adjustment for non-financial risk.
(A) Best estimate of future cashflows - IFRS 17 requires an explicit, unbiased and probability weighted estimate (i.e. expected value) of the
present value of the future cash outflows less the present value of the future cash inflows that will arise as the entity fulfils insurance contracts,
including a risk adjustment for non-financial risk.
For the Group these cashflows mainly comprise; premiums received from customers for pre-paid plans and LCIPs, premiums paid or repayable
to re-insurers, internal and external direct fulfilment costs of delivering funerals on behalf of the policy holder, amounts recoverable from re-
insurers and insurance acquisition cash flows attributable to the portfolio of contracts.
(B) An adjustment for the time value of money (i.e. discounting) and financial risks associated with the future cash flows; - a key component of
IFRS 17 is the need to reflect the time value of money when estimating insurance cash flows, and the financial risks related to those cash flows.
The Group applies a bottom-up approach to derive the discount rate based on a risk free rate plus an illiquidity premium. Risk free rates are
determined by reference to the yields of highly liquid AAA-rated sovereign securities (UK Gilts). The illiquidity premium is determined by
reference to observable market rates. The discount rate used to determine the finance costs relating to funeral plans, uses the discount rate at
initial recognition of the funeral plan cohort.
(C)
A risk adjustment (RA) for non-financial risk - this reflects the compensation Co-op requires for bearing the uncertainty about the amount
and timing of the cash flows that arise from non-financial risk as the Group fulfils insurance contracts. The risk adjustment reflects an amount that
Co-op would rationally pay to remove the uncertainty that future cash flows will exceed the expected value amount. IFRS 17 does not prescribe
any methodologies for calculating the RA but instead outlines principles that the technique used to quantify the RA will need to adhere to. The
RA is important because it is a component of the fulfilment cash flows and therefore impacts the profitability classification of funeral plans. The
release of the RA over time is a key component of revenue, along with the contractual service margin. Co-op estimate the RA using a confidence
level (probability of sufficiency) approach at 70%.
Accounting Policies -
continued
Notes to the financial statements
continued
Co-op Interim Report 2024:
Financial Statements
20
Insurance and re-insurance contracts (funeral plan liabilities)
continued
176
Insurance acquisition cashflows
- IFRS 17 requires expenses that are “directly attributable” to issuing and fulfilling insurance contracts to be
included in the measurement of insurance contracts. This includes insurance acquisition cash flows, which are defined as cash flows arising from the
costs of selling, underwriting, and starting a group of insurance contracts (issued or expected to be issued) that are directly attributable to the
portfolio of insurance contracts to which the group belongs. The classification and reporting of expenses under IFRS 17 involves the following 3
steps:
1) Classification of all expenses into one of the following categories:
·
Directly attributable acquisition (direct costs of acquiring new funeral plans such as internal salaries or external commission paid);
·
Directly attributable maintenance (direct costs of servicing already acquired funeral plans such as costs of handling claims or policy changes);
·
Non-directly attributable expenses.
2) Allocation of directly attributable expenses into IFRS 17 Portfolios and then to current and future cohort groups of contracts.
3) Amortisation of each group of directly attributable acquisition costs in a manner consistent with the revenue earning pattern of the related
contracts in the group. Directly attributable maintenance and non-directly attributable expenses are fully expensed when incurred.
When estimating fulfilment cash flows, the Group allocates fixed and variable overheads directly attributable to the fulfilment of insurance contracts.
This requires management judgement and is undertaken in-line with our normal internal processes for allocating central overheads to cost centres.
We also make an assessment as to the amount of maintenance costs such as claims handling, policy administration and associated overheads.
Contractual Service Margin (CSM) and Coverage units
- the CSM for a group of insurance contracts at the end of each reporting period
represents the unearned profit relating to future service to be provided under the contracts in the group and is calculated using a roll-forward
approach. The five items that are included in the CSM roll forward are:
·
the effect of new contracts added to the group;
·
interest accretion on the carrying amount of the CSM;
·
the change in fulfilment cash flows relating to future service (limited by the amount of CSM);
·
the effect of any currency exchange differences on the CSM; and
·
the amounts recognized as insurance revenue because of the transfer of services in the period (“amortization of CSM”).
The concept of "coverage units" was introduced in IFRS 17 as a means of reflecting the pattern of services provided under a group of contracts and
recognizing revenue from CSM (effectively "amortization" of CSM) according to that pattern. The number of coverage units in a group is based on
the quantity of service provided by the contracts in the group. For each group of contracts, we are required to consider the quantity of service and
its expected coverage period.
Co-op have determined that it is appropriate to measure coverage units based on the maximum expected funeral benefit per period of all the
contracts in the IFRS 17 group. The maximum expected pay-out represents the total funeral benefit per period of all contracts expected to be in
force in the group for that period. For portfolios of Premium waiver reinsurance contracts, the coverage units will be based on the maximum
expected recoverable per period.
Experience adjustments:
Experience variances represents the expected expenses, claims and amortisation of acquisition cash flows which are reported as part of the
insurance service revenue. This is offset with the actual expenses and claims incurred in the period and recovery of acquisition cash flows.
Low Cost Investment Plans (LCIPs):
LCIPs can be paid for by instalments over between 2 and 25 years or they can be paid off in full at any time during this period without any penalties.
If the plan holder dies before the instalments have been made in full (and provided that the plan has been in place for at least 12 months or the
cause of death was as a result of an accident) then the funeral will still be provided by the Group and the customer will not have to settle the
outstanding balance on any instalments and the balance of any monies owed will be waived. Any shortfall (the difference between the full value of
the plan and the amount paid up to death by the customer) are covered by an assured benefit from a third party insurer. The assured benefit is
between the Group and the third party insurer and has nothing to do with the customer. The Society continues to apply instalment monies received
against customers' individual funeral plans until such time as a plan is redeemed and or cancelled.
The assured benefit between the Group and the 3rd party is judged to represent an insurance contract and as such falls under the scope of IFRS 17
(Insurance Contracts).
Accounting Policies -
continued
Notes to the financial statements
continued
Co-op Interim Report 2024:
Financial Statements
20
Insurance and re-insurance contracts (funeral plan liabilities)
continued
177
Presentation and Disclosures:
The Group has elected to apply certain disclosure policies as permitted under IFRS 17:
1) The change in the risk adjustment (RA) for non-financial risk is disaggregated between insurance service result and insurance finance expense in
the Income statement;
2) Income and expenses from a group of reinsurance contracts is presented as a single amount;
3) The Group has elected to disaggregate that element of finance income / expense that arise due to changes in the discount rate and record the
impact of those changes in other comprehensive income (OCI) rather than in the Income statement. The discount rate used to determine the
finance costs relating to funeral plans, uses the discount rate at initial recognition of the funeral plan cohort.
4) Changes to our inflation assumptions are deemed to be non-financial, as the ultimate inflationary cost risk does not relate to a financial market
indices, and to the extent that they can be covered are first charged to the CSM buffer rather than direct to the Income statement.
The table below summarises where the financial impact of a change in the assumptions used in the actuarial calculations would be reflected in our
financial statements:

Assumption | Financial Statement Impact
Discount rate | Consolidated statement of comprehensive income
Fulfilment costs | Consolidated income statement
Inflation rate | Consolidated income statement
Risk adjustment | Consolidated income statement
Maintenance costs | Consolidated income statement
Mortality rates | Consolidated income statement
Cancellation rates | Consolidated income statement

Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
178
21
Provisions

| 2024 | 2023
| £m | £m
Non-current | 47 | 55
Current | 49 | 55
Total provisions | 96 | 110

| Uninsured | Property | Regulatory & |
2024 | claims | provisions | Legal | Total
| £m | £m | £m | £m
At beginning of the period | 38 | 29 | 43 | 110
Credit to income statement | (3) | (11) | - | (14)
Charge to income statement | 17 | 6 | - | 23
Payments | (17) | (5) | (1) | (23)
At end of the period | 35 | 19 | 42 | 96

| Uninsured | Property | Regulatory & |
2023 | claims | provisions | Legal | Total
| £m | £m | £m | £m
At beginning of the period | 38 | 41 | 14 | 93
Credit to income statement | (1) | (6) | (1) | (8)
Charge to income statement | 18 | 4 | 33 | 55
Payments | (17) | (10) | (3) | (30)
At end of the period | 38 | 29 | 43 | 110

Uninsured claims
This provision relates to potential liabilities arising from past events which are not covered by insurance. It includes a wide variety of known claims
and potential claims from accidents in our depots and stores. The provision includes an assessment, based on historical experience, of claims
incurred but not reported at the period end. The claims are expected to be settled substantially over the next three years.
Property provisions
Property provisions are held for onerous contractual obligations for leasehold properties that are vacant or not planned to be used for ongoing
operations. The provisions represent the least net cost of exiting from the contracts. Provisions include an assessment of dilapidation and return of
lease obligations, and other service costs that are explicitly excluded from the measurement of lease liabilities in accordance with IFRS 16. The Group
considers that where it has entitlement to possession of a property, even if vacant, it retains a statutory obligation to pay the related business rates
that have been determined to be levies as defined in IFRIC 21. Accordingly, the estimate of the least net costs of exiting from the contracts excludes
future business rates which instead under IFRIC 21 are recognised when the event that triggers the payment of the levy arises (as a periodic cost).
Property provisions are expected to be utilised over the remaining periods of the leases which range from 1 to 97 years. In each of the current and
comparative years, sensitivity analysis has been performed in relation to the provision, testing for a 2% increase in inflation related to costs expected
to be incurred; this sensitivity does not lead to a material additional provision being calculated. The sensitivity analysis performed considers
reasonably possible changes in the inflation assumption.
Critical accounting estimate and judgement
Regulatory & Legal
These provisions relate to costs from a number of past events that are expected to be incurred within the next one to five years. Typically, these cover
potential or on-going legal or regulatory claims and represent management's best estimate of expected future cashflows.
The likely outcome in a legal or regulatory claim may be uncertain and difficult to predict based on the evidence and circumstances involved. This
means there may be considerable inherent uncertainty with an assessment as to whether a present obligation as a result of a past event has arisen at
the balance sheet date. No separate disclosure is made of the detail of such claims, the assumptions used to calculate the amount provided or the
uncertainties relating to the range of possible outcomes considered, because in management's view, to do so could seriously prejudice our position.
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
21
Provisions
continued
179
Accounting policies
A provision is recognised in the balance sheet when the Group has a legal or constructive obligation as a result of a past event, and it is probable
that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the
expected future cash flows at a discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks
specific to the liability.
Note:
The Producer Responsibility Obligations (Packaging and Packaging Waste) Regulations 2024, passed into law on 11 December 2024, which
may affect UK organisations that supply or import packaging. The Regulations require certain “producers” to pay disposal and administration fees
(pEPR fees) to cover a proportion of the cost of recovery and recycling of their packaging. The clarification issued by the Department for Environment,
Food and Rural Affairs (DEFRA) confirms that an obligation for pEPR fees does not arise until an entity has been a producer in the year beginning 1
April 2025. Therefore, no obligation arises before this date. Our preliminary interpretation of the Regulations is that Co-op meets the definition of
‘producer’ in the context of the regulations. Thus, the full liability for the assessment year ending 31 March 2026 would be recognised as of 1 April
2025, as the obligation would be met at that point in time.
22
Members' share capital and reserves

| 2024 | 2023
| £m | £m
Individual shares of £1 each | 69 | 67
Corporate shares of £5 each | 8 | 9
Share capital | 77 | 76
Other reserves | 12 | 9
Retained earnings | 2,109 | 1,935
Total Retained earnings and Other reserves | 2,121 | 1,944
Total Capital resources | 2,198 | 2,020

Members’ share capital (Issued and paid-up value)
Members’ share capital is made up of corporate and individual shares. The rights attached to shares are set out in the Society’s rules. Shares held by Independent
Society Members (corporate shares) are not withdrawable and are transferable only between Independent Society Members with the consent of the Society’s
Board. Shares held by individual members (individual shares) are withdrawable on such period of notice as the Society’s Board may from time to time specify.
IFRIC 2 (Members' Shares in Co-operative Entities and Similar Instruments) determines the features that allow shares to be classified as equity capital. As the
Board has an unconditional right to refuse redemption of both classes of shares, both corporate and individual shares are treated as equity shares.
Both classes of share maintain a fixed nominal value with corporate shares attracting a limited rate of interest. Under the Society's current rules, voting for
Independent Society Members is in proportion to trade with the Society, with Independent Society Members totalling 21.9% (2023: 21.9%) of the vote at the
Annual General Meeting. Each individual member has one vote with individual members totalling 78.1% (2023: 78.1%) of the vote at the Annual General Meeting.
For individual shares, new members are required to contribute a minimum of £1 when they join the Society. Each member has 1 individual share although
contributions of up to £100,000 per member are allowed. No interest is earned on member capital. Members can withdraw money from their share account upon
request (to a minimum of £1) or they can withdraw their £1 when they leave the Society. Individual member share capital increased by £1.6m in the period being
the net of new member contributions of £1.6m and withdrawals of £nil. We have 6.2m (2023: 5.0m) active members (see also Note 30 Membership and
community reward).
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
22
Members' share capital and reserves -
continued
180

| Revaluation |
Other reserves (2024) | Reserve | Total
| £m | £m
Balance at 6 January 2024 | 9 | 9
Balance at 4 January 2025 | 12 | 12

Revaluation reserve - property, plant and equipment
This reserve relates to the surplus created following the revaluation of certain assets in previous periods. Any surplus relating to a revalued asset is transferred to
retained earnings at the point the asset is disposed of.
Distribution of reserves in the event of a winding-up
The Society’s rules state that any surplus in the event of a winding-up shall be transferred to one or more societies registered under the Co-operative and
Communities Benefit Act 2014. Such societies must be a member of Co-operatives UK Limited and have the same or similar rule provisions in relation to surplus
distribution on a dissolution or winding-up as we have. If not transferred to another society in this way, the surplus shall be paid or transferred to Co-operatives
UK Limited to be used and applied in accordance with co-operative principles.
Capital management
The Group defines capital as its share capital and reserves. The Group's policy is to maintain a strong base and to be more prudent than industry 'normal' levels
as it is not able to raise equity externally. The Group still recognises the need to maintain a balance between the potential higher returns that might be achieved
with greater borrowing levels and the advantages and security coming from a sound capital position.
The Group manages capital to make sure we have the right balance between investing in the future growth of the Group and making member and community
payments. The Group has invested in future growth through cash capital expenditure additions of £273m (2023: £205m) and still kept within its net debt limits.
Total member funds increased during the period by £178m (2023: decreased £1,003m). The decrease in the prior year primarily related to the accounting
impact of the buy-in transaction undertaken by the pension Trustee with Rothesay Life Plc, a specialist UK Insurer, to insure scheme benefits through a bulk
annuity insurance policy helping to insure the Group against the primary investment and longevity risks it is exposed to.
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
181
23
Investment properties

| 2024 | 2023
| £m | £m
Valuation at beginning of period | 40 | 40
Disposals | (12) | (12)
Transfer from Property, plant and equipment (Note 10) | 4 | 5
Transfer from Right of use assets (Note 11) | 2 | -
Revaluation gain recognised in the Consolidated income statement | 14 | 4
Revaluation gain recognised in the Consolidated statement of other comprehensive income | 3 | 3
Valuation at end of period | 51 | 40

Accounting policies
Properties held for long-term rental yields that are not occupied by the Group or properties held for capital growth are classified as investment
properties. Investment properties are freehold land and buildings and right-of-use assets. These are carried at fair value which is determined by
either independent valuers or internally each year on a three-year cyclical basis in accordance with the RICS Appraisal and Valuation Manual. Fair
value is based on current prices in an active market for similar properties in the same location and condition. Any gain or loss arising from a
change in fair value is recognised in the income statement.
If we start to occupy or trade from one of our investment properties, it is reclassified as property, plant and equipment, and its fair value at the
date of reclassification becomes its cost for subsequent accounting purposes. Other disclosures required by IAS 40 (Investment Properties) are
not considered to be material.
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
182
24
Pensions

| 2024 | 2023
| £m | £m
Pension schemes in surplus | 328 | 359
Pension schemes in deficit | (3) | (3)
Closing net retirement benefit surplus | 325 | 356

Defined benefit (DB) plans
The Group operates three funded DB pension schemes all of which are closed to future accrual. This means that colleagues can no longer join or
earn future benefits from these schemes. The assets of these schemes are held in separate trustee-administered funds to meet future benefit
payments.
The Group's largest pension scheme is the Co-operative Group Pension Scheme (‘Pace’) which accounts for approximately 81% of the Group's
pension assets. The DB section of Pace ('Pace Complete') closed to future service accrual on 28 October 2015. As of November 2023, the vast
majority of PACE's liabilities are covered by insurance policies. Further information is provided below.
Defined contribution (DC) plans
Since the closure of the DB schemes, the Group provides all colleagues with DC pension benefits through the DC section of Pace. Colleagues are
able to select the level of contributions that they wish to pay. The contribution paid by the Group varies between 1% and 10% of pensionable salary
depending on the contribution tier that the scheme member has selected. Contributions are based on the scheme member’s basic pay plus any
earnings in respect of overtime, commission and shift allowance.
The Pace DC section provides benefits based on the value of the individual colleague’s fund built up through contributions and investment returns.
The Group has no legal or constructive obligation to pay contributions beyond those set out above. There is therefore no balance sheet items for DC
pension benefits except for any accrued contributions.
Balance sheet position for DB plans
The table below summarises the net surplus in the balance sheet by scheme. Following an insurance "buy-in" transaction in Pace in the prior year the
vast majority of Pace's liabilities are now covered by insurance policies.
Buy-in transactions
In November 2023, the Pace Trustee completed a “buy-in” transaction with Rothesay Life Plc, a specialist UK insurer, to insure scheme benefits
through a bulk annuity insurance policy. Through this transaction, and in conjunction with pre-existing partial “buy-ins” with Aviva (completed in
January 2020 and May 2020), and Pension Insurance Corporation (PIC, completed in February 2020), this means that the Group Section of Pace, and
by extension the Group as Principal Employer, is insured against the primary investment and longevity risks it is exposed to. As a result of these four
separate insurance transactions, the Pace scheme will receive regular payments from Rothesay, Aviva and PIC to fund all future pension payments.
The insurance contracts are assets of the Pace scheme, and the Pace scheme has retained all responsibility to meet future pension payments to
pensioners. The salary increase link that remains, as applied to pre 2006 benefits since April 2022, is excluded from the Insurance transactions, as are
some costs related to GMP equalisation. This ongoing exposure means that the buy-ins don’t cover all the Pace liabilities, but the Group’s remaining
exposure is very small and, at the year-end, there is a surplus remaining in Pace of £229m (2023: £283m). The size of the ongoing liability exposure
from the salary link and the uninsured GMP equalisation costs is small relative to this surplus.

| 2024 | 2023
| £m | £m
Schemes in surplus: |  |
The Co-operative Group Pension Scheme (Pace) | 229 | 283
Somerfield Pension Scheme | 71 | 68
United Norwest Co-operatives Employees' Pension Fund | 28 | 8
Total schemes in surplus | 328 | 359
Schemes in deficit: |  |
Other unfunded obligations | (3) | (3)
Total schemes in deficit | (3) | (3)
Total schemes (net) | 325 | 356

Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
24
Pensions
continued
183
Non-Pace schemes
The United and Somerfield schemes use segregated liability driven investment (LDI) mandates which hold government and corporate bonds, along
with derivatives. These investments increase (decrease) in value when yields on government bonds fall (rise), and are designed to have similar
interest rate and inflation sensitivities to the schemes’ liabilities so that the funding position is protected against movements in interest rate and
inflation expectations. The schemes’ liabilities are in aggregate broadly fully hedged against movements in yields on government bonds. Against a
backdrop of market uncertainty, AA corporate bonds, used to discount the liabilities
increased over the year, whilst inflation expectations also
increased but by a lesser extent.
Recognition of accounting surplus
Any net pension asset disclosed represents the maximum economic benefit available to the Group in respect of its pension obligations. The Group
has carried out a review of the provisions for the recovery of surplus in its pension schemes. This review concluded that the Group can recoup the
benefits of the surplus via a right to refunds and this is reflected in the balance sheet position.
Pace - nature of scheme
As Pace represents around 81% of the Group's pension assets, further information has been included on Pace below. Benefits accrued in Pace
between 6 April 2006 and 28 October 2015 are calculated based on an individual’s average career salary. Benefits accrued prior to 6 April 2006 are
linked to final salary until scheme members end their pensionable service. The Somerfield and United schemes are exposed to additional risks from
Pace, predominantly investment, inflation and longevity. More detail is set out below.
Pace - multi-employer provisions following sectionalisation
Pace is a multi-employer scheme but following sectionalisation of the scheme in 2018, the Group accounts only for the Co-op section of Pace.
CFSMS, a subsidiary of the Group, participates in the Group's section with a material share of accrued DB obligations. There are other participating
employers in the Group section which include Group subsidiaries, non-associated and associated entities, but these do not have a material share.
Non-associated entities account for pension contributions in respect of the scheme on a DC basis.
Legislative framework for DB schemes - pension scheme governance
As required by UK legislation, the Group's three DB schemes are run by Trustee boards which operate independently from the Group. The Trustees
are responsible for the development and implementation of appropriate policies for the investment of the scheme assets and for negotiating scheme
funding with the Group. The Trustees consult with the Group in developing investment strategy and delegates the responsibility for implementing
and monitoring the strategy to Investment Committees.
Each trustee board has professional independent trustee representation, and some boards require pension scheme member representation. The
Pace trustee board comprises Independent Trustee Services Limited (part of Independent Governance Group, a professional trustee firm) and the
chair of Independent Trustee Services Limited (appointed as an individual), with this appointment having been agreed by the Co-op and Co-
operative Bank. The other two trustee boards each comprise independent, professional trustee directors via representatives from Independent
Trustee Services Limited, as well as Co-op appointed trustee directors, and member-nominated trustee directors. The chair of each board is
appointed by the trustee directors.
Legislative framework for DB schemes - scheme funding regime
Under the scheme specific funding regime established by the Pensions Act 2004, trustees of DB pension schemes have to undertake a full actuarial
valuation at least every three years. The purpose of the valuation is to determine if the scheme has sufficient assets to pay the benefits when these fall
due. The valuation targets full funding (scheme assets equal to the value of pension liabilities) against a basis that prudently reflects the scheme’s risk
exposure. The basis on which DB pension liabilities are valued for funding purposes differs to the basis required under IAS19. The Group may
therefore be required to pay contributions to eliminate a funding shortfall even when a surplus is reported in the IAS19 disclosure. Any shortfall in the
assets directly held by the Group’s DB schemes, relative to their funding target, is financed over a period that ensures the contributions are
reasonably affordable to the Group.
Contributions of £1.5m were paid over in the 2024 financial year in respect of the United Norwest scheme expenses (total 2023 contributions: £15m).
Deficit contributions to all schemes have now ceased due to the fact that recent actuarial funding valuations showed all the schemes were in surplus
at the relevant valuation date. All scheme funding valuations target a more prudent level of funding than the target stipulated under IAS19 which is
included in these financial statements. Therefore the funding levels are not comparable and it is possible to have a surplus under IAS19 and yet still
be required to pay deficit contributions. We also cannot use a surplus in one scheme to offset the requirement to pay cash contributions to fund a
deficit in another scheme under a different trust. The contribution risk has also fallen following the buy-in transaction.
The average duration of the liabilities at 4 Jan 2025 on an IAS19 basis is approximately 14 years. The benefits expected to be paid from the schemes
take the form of a cash lump sum paid at retirement followed by a stream of pension payments.

The effective date of the last full valuations of the schemes are shown below: |
The Co-operative Pension Scheme (‘Pace’) | 5 April 2022
Somerfield Pension Scheme (‘Somerfield Scheme’) | 31 March 2022
United Norwest Co-operatives Employees’ Pension Fund (‘United Fund’) | 31 January 2023

24
Pensions
continued
Legislative framework for DB schemes - scheme funding regime
continued
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
184
On 16 June 2023, the High Court issued a ruling in respect of Virgin Media v NTL Pension Trustees II Limited. Whilst this case could have application
to other schemes, based on our current understanding the decision reached was based on specific circumstances and related to an amendment
which was worsening benefits and so it is unclear as to its wider application in many instances for our schemes. There was a Court of Appeal hearing
that took place in the Summer of 2024 and the appeal was overturned.
This area of law is subject to a high degree of uncertainty and the Virgin
Media case only addressed the specific question and circumstances that were put to the Court. Further legal cases are to be heard in 2025 and we
note the possibility of amending legislation to clarify matters.
In the meantime, with support from our legal advisors, the Co-op Group have carried out a high-level desktop review of deeds across our 3 legacy
DB Pension Schemes; Pace, United & Somerfield, to consider potential exposure from the Virgin Media case. Our legal advisors have considered 54
separate deeds between 1997 and 2016 and from this identified 2 deeds where a change was made where they expect actuarial confirmation (or
similar assurance) would have been required but was not appended to the deed or immediately obvious from the content of the deed that it had
been obtained. However, given there was no single prescribed format, appropriate assurance may well have been obtained. This could give rise to
some further analysis but, given the ongoing uncertainty regarding the application of the Virgin Media case, no further work has been undertaken at
this time. As such, the Co-op acknowledges that some potential uncertainties remain, and future developments will be kept under review by the Co-
op. While uncertainties remain, management's analysis supports the view that the possible exposure would not be material.
Our pension scheme Trustee Boards & the Co-op have always had in place comprehensive procedures and practices to ensure compliance with all
legal and regulatory requirements, including taking appropriate external advice whenever any changes have been made.
Risks associated with DB pension schemes
The liability associated with the pension schemes is material to the Group. Following the buy-in transaction the cash funding risk is now considered to
be relatively low. The Group and Trustees work together to address the associated pension risk - in particular, steps have been taken to materially
reduce the investment risk in the schemes. The Group has removed its exposure to these risk in the Pace Scheme via the four separate insurance buy-
in contracts. The key risks in relation to the DB schemes are set out below, alongside a summary of the steps taken to mitigate the risk:

Risk description | Mitigation
Risk of changes in contribution requirements - When | The closure of the DB schemes has reduced the exposure of the Group to changes in
setting the contributions that are paid to a scheme, the | future contributions, as did the subsequent Pace Insurance buy-in contracts. In addition,
Group and Trustee are required to consider the funding | the Group and Trustee have taken steps to reduce the volatility of the funding level (as
level at a specified valuation date. The funding level at | set out below). The Group monitors the funding level of the schemes in order to
future valuation dates is uncertain and this leads to | understand the likely outcome of valuations and the Trustee is required to obtain
uncertainty in future cash requirements for the Group. | agreement from the Group to funding assumptions and deficit recovery contributions.
Interest rate risk - Pension liabilities are measured with | Through its insurance buy-in contracts Pace has minimal further exposure. The
reference to yields on bonds, with lower yields increasing | Somerfield and United schemes invest in liability-driven investment (LDI) products which
the liabilities. The schemes are therefore exposed to the | increase (decrease) in value when yields on government bonds fall (rise), providing
risk of falls in interest rates. | protection against interest rate risk. Across all schemes, approximately 98% of the
| liability is currently protected from movements in yields on government bonds. LDI
| involves investing in assets which are expected to generate cashflows that broadly mirror
| expected benefit payments from the scheme.
Risk associated with volatility in asset value - The | Given Pace’s liabilities are almost fully insured, assets are expected to move in line with
market value of the assets held by the pension schemes, | liabilities meaning Pace has minimal further exposure. For the Somerfield and United
particularly the assets held in return-seeking assets such as | schemes this risk has been mitigated by reducing the exposure of the pension schemes
equity, can be volatile (and, for example, may be affected | to those asset classes which have the most volatile market values. In particular, the
by environmental, social or corporate governance (“ESG”) | schemes have limited allocation to return-seeking assets such as equity. In addition, the
failures at investee companies and/or sovereign states - | Trustees of the Co-op’s pension schemes have responsible investment policies in place,
including the physical and transition risks of climate | and aligned with those policies exclude specific investments (where appropriate and
change). This creates a risk of short-term fluctuations in | viable). Management of ESG risks is considered when appointing investment managers
funding level. | and in their ongoing monitoring, and the schemes’ equity assets are explicitly managed
| with a consideration of such risks, including climate change.
Inflation risk - Many of the benefits paid by the schemes | Through its insurance buy-in contracts Pace has minimal further exposure. The
are linked to inflation. Therefore, the pension liabilities | Somerfield and United schemes invest in liability driven investment products which
reflect expectations of future inflation with higher inflation | increase (decrease) in value when expectations of future inflation rates increase (fall),
leading to higher liabilities. | thus providing protection against inflation risk. Across all schemes, approximately 97% of
| the liability is currently protected from movements in inflation.
Risk associated with changes in life expectancy - | Through its insurance buy-in contracts Pace has minimal further exposure, and risk has
Pensions paid by the schemes are guaranteed for life, and | substantially passed to the buy-in insurance providers. The remaining risk is now mainly
therefore if members are expected to live longer, the | in respect of the credit risk associated with those buy-in insurance providers (with the
liabilities increase. | mitigation that the buy-in insurance providers have strong credit ratings). The Somerfield
| and United schemes' funding targets incorporate a margin for prudence to reflect
| uncertainty in future life expectancy.

Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
24
Pensions
continued
185
Critical accounting estimates
For IAS 19 disclosure purposes, DB obligations are determined following actuarial advice and are calculated using the projected unit method. The assumptions
used are the best estimates chosen from a range of possible actuarial assumptions which may not necessarily be borne out in practice. For the insurance buy-ins
under Pace, we apply the assumptions to derive the liability and then set the asset value to match this liability, with separate calculations to derive the salary link
and GMP equalisation liabilities.

Financial assumptions | 2024 | 2023
Discount rate | 5.54% | 4.76%
RPI inflation rate | 3.39% | 3.32%
Pension increases in payment (RPI capped at 5% p.a.) | 3.17% | 3.12%
Future salary increases | 3.64% | 3.57%

The discount rate has been derived by reference to market yields on sterling-denominated high quality corporate bonds of appropriate duration consistent with
the schemes at that date.
Demographic assumptions
The Group has used best estimate base mortality tables which reflect the membership of each scheme. Allowance has been made for future
improvements in line with the Continuous Mortality Investigation (CMI) 2022 projections and a long-term future improvement rate of 1.25% p.a.
(2022: CMI 1.25% p.a.).
For illustration, the average life expectancy (in years) for mortality tables used to determine scheme liabilities for Pace is as follows. These are broadly
similar to the life expectancies used for other schemes.

Life expectancy from age 65 | 2024 | 2023
Male currently aged 65 years | 20.5 | 20.7
Female currently aged 65 years | 22.3 | 22.5
Male currently aged 45 years | 21.3 | 21.8
Female currently aged 45 years | 23.4 | 23.8

Sensitivities
The measurement of the Group’s DB liability is particularly sensitive to changes in certain key assumptions, which are described below. The methods used to carry
out the sensitivity analysis presented below for the material assumptions are the same as those the Group has used previously. The calculations alter the relevant
assumption by the amount specified, whilst assuming that all other variables remained the same. This approach is not necessarily realistic, since some
assumptions are related: for example, if the scenario is to show the effect if inflation is higher than expected, it might be reasonable to expect that nominal yields
on corporate bonds will also increase. However, it enables the reader to isolate one effect from another. It should also be noted that because of the interest rate
and inflation hedges, changes in the liability arising from a change in the discount rate or price inflation would be expected to be largely mitigated by a change in
assets. It’s impossible to predict future discount rates or inflation with any real certainty and so the sensitivities shown are for illustration purposes only and in
reality more material movements could be experienced.

Sensitivities | 2024 | 2023
£m | £m
Change in liability from a 0.5% decrease in discount rate | 366 | 428
Change in liability from a 0.5% increase in RPI inflation | 227 | 264
Change in liability from a 0.25% increase in long-term rate of longevity improvements | 34 | 42

Changes in the present value of the defined benefit obligation (DBO) | 2024 | 2023
| £m | £m
Opening defined benefit obligation | 5,857 | 5,543
Interest expense on DBO | 270 | 261
Remeasurements: |  |
a. Effect of changes in demographic assumptions | (37) | (95)
b. Effect of changes in financial assumptions | (558) | (51)
c. Effect of experience adjustments | (11) | 491
Benefit payments from plan | (298) | (292)
Closing defined benefit obligation | 5,223 | 5,857

Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
24
Pensions
continued
186

Changes in the fair value of the plan assets | 2024 | 2023
| £m | £m
Opening fair value of plan assets | 6,213 | 7,124
Interest income | 287 | 338
Return on plan assets (excluding interest income) | (598) | (966)
Administrative expenses paid from plan assets | (6) | (6)
Employer contributions | 2 | 15
Pace DC contributions* | (52) | -
Benefit payments from plan | (298) | (292)
Closing fair value of plan assets | 5,548 | 6,213

* From March 2024, following the completion of the final Insurance transaction in 2023, the Trustee of the Pace DB Scheme have agreed to use part of the
surplus to partially fund employer contributions to the Pace DC Scheme. This is made possible because the Pace DB and DC Schemes form the same Trust.
These payments do not affect the obligations made in respect of defined benefit payments.
The fair value of the plan assets at the period end were as follows.
The assets have been split to show those which have a quoted market price in an active market
and those which are unquoted.

Fair value of plan assets | 2024 | 2024 | 2024 | 2023 | 2023 | 2023
| Quoted | Unquoted | Total | Quoted | Unquoted | Total
| £m | £m | £m | £m | £m | £m
Equity instruments | 25 | - | 25 | 40 | - | 40
Liability driven investments | 370 | - | 370 | 434 | - | 434
Investment grade credit assets | 345 | - | 345 | 329 | - | 329
Illiquid / other credit assets | - | 89 | 89 | - | 95 | 95
Cash and cash equivalents | 266 | - | 266 | 310 | - | 310
Insurance buy-in contracts | - | 4,453 | 4,453 | - | 5,005 | 5,005
Fair value of plan assets | 1,006 | 4,542 | 5,548 | 1,113 | 5,100 | 6,213

*In the prior year; the alternative investments consisted of private equity, private debt and inflation-linked property.

Amounts recognised in the balance sheet | 2024 | 2023
| £m | £m
Present value of funded obligations | (5,220) | (5,854)
Present value of unfunded liabilities | (3) | (3)
Fair value of plan assets | 5,548 | 6,213
Net retirement benefit asset | 325 | 356

Amounts recognised in the income statement and other comprehensive income | 2024 | 2023
| £m | £m
Interest expense on defined benefit obligations | (270) | (261)
Interest income on plan assets | 287 | 338
Administrative expenses and taxes | (6) | (6)
Total recognised in the income statement | 11 | 71
Remeasurement gains / (losses) on employee pension schemes | 8 | (1,310)
Total recognised in other comprehensive income | 8 | (1,310)
Total | 19 | (1,239)

Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
24
Pensions
continued
187
Accounting policies
The Group operates various defined contribution and defined benefit pension schemes for its colleagues as stated above. A defined contribution
scheme is a pension plan under which the Group pays pre-specified contributions into a separate entity and has no legal or constructive obligation
to pay any further contributions. A defined benefit scheme is a pension plan that defines an amount of pension benefit that a colleague will receive
on retirement. In respect of the defined benefit pension scheme, the pension scheme surplus or deficit recognised in the balance sheet represents
the difference between the fair value of the plan assets and the present value of the defined benefit obligation at the balance sheet date. The
calculation of the defined benefit obligations is performed annually by qualified actuaries (and half-yearly for Pace) using the projected unit credit
method. Plan assets are recorded at fair value. When the calculation results in a potential asset for the Group, the recognised asset reflects the
present value of the economic benefits that will arise from the surplus in the form of any future refunds from the plan or reductions in future
contributions to the plan. Obligations for contributions to defined contribution plans are expensed as the related service is provided. Prepaid
contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
Remeasurements of the surplus / liability of each scheme (which comprise actuarial gains and losses and asset returns excluding interest income)
are included within other comprehensive income. Net interest expense and other items of expense relating to the defined benefit plans are
recognised in the income statement. Administrative costs of the plans are recognised in operating profit. Net interest expense is determined by
applying the discount rate used to measure the defined benefit obligation at the beginning of the year to the net defined asset / liability at that
point in time taking into account contributions within the period.
The Insurance transactions entered into by the Co-op, in respect of its pension arrangements, are assets of the Co-op pension schemes and the
schemes have retained all responsibility to meet future pension payments to pensioners. Insurance annuities are recorded at the same value as the
liabilities to which they relate and movements in liabilities will be offset by an equivalent movement in the insurance annuity asset. These
movements are recorded through items in other comprehensive income.
The premium cost of the Rothesay transaction (in the prior period) was greater than the value of the liabilities secured. As with previous insurance
contracts entered into, this was a buy-in transaction where the scheme retains the responsibility for paying pensions and therefore the loss was
recorded through other comprehensive income.
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
188
25
Financial risk management
The main financial risks facing the Group are set out below. Overall Group risks and the strategy used to manage these risks are discussed in the
Principal Risks and Uncertainties section on pages 47 - 51.
Credit risk
Credit risk arises from the possibility of customers and counterparties failing to meet their obligations. Management has a credit policy in place and
the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed for all customers requiring credit over a certain
amount. The Group does not require security in respect of financial assets. The majority of businesses in the Group have cash-based rather than
credit-based sales and so customer credit risk is relatively small.
The Group will ensure that it earns an appropriate return on its invested cash, whilst ensuring that there is minimal risk over the security of that cash.
Investments are only allowed with the Group's syndicate banks or counterparties that have a credit rating of Investment Grade. Transactions involving
derivative financial instruments are with counterparties with whom the Group has signed an ISDA agreement (a standard contract used to govern all
over-the-counter derivatives transactions). Management has no current reason to expect that any counterparty the Group has invested with will fail to
meet its obligations.
Funeral Plan funds are invested in whole-of-life insurance policies which pay out a lump sum when the insured person dies. Any provider of these
policies to the Group must be authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential
Regulation Authority. There are also some funds relating to plans taken out prior to 2002 that are held in interest-bearing trustee-administered bank
accounts which can only be utilised to meet liabilities in respect of funeral plans.
At the balance sheet date there were no material concentrations of credit risk. Information regarding the age profile of trade receivables is shown in
Note 16. The carrying value of all balances that attract a credit risk, which represents the maximum exposure, is set out below:

| Carrying | Carrying
| amount | amount
| 2024 | 2023
| £m | £m
Trade and other receivables (excluding prepayments and accrued income) | 414 | 434
Interest rate swaps | (6) | (9)
Foreign exchange contracts and commodity swaps (net) | (3) | (4)
Funeral plan investments | 1,414 | 1,346
Finance lease receivables | 26 | 29
Cash | 320 | 395
Short-term investments | 100 | 200

Interest rate risk and hedging
Interest rate risk arises from movements in interest rates that impact the fair value of assets and liabilities and related finance flows. The Group adopts
a policy of ensuring that 50-100% of its exposure to changes in interest rates on borrowings is on a fixed rate basis. The fixed proportion as at 4
January 2025 was 77% (at 6 January 2024: 84%). Interest rate swaps, denominated exclusively in Sterling, have been entered into to achieve an
appropriate mix of fixed and floating rate exposure within the Group’s policy. At 4 January 2025, the Group had interest rate swaps with a notional
contract amount of £105m (at 6 January 2024: £105m).
The Group does not designate interest rate swaps, forward foreign exchange contracts, and commodity swaps as hedging instruments. Derivative
financial instruments that are not hedging instruments are classified as held for trading by default and so fall into the category of financial assets at
fair value through the income statement. Derivatives are subsequently stated at fair value, with any gains and losses being recognised in the income
statement. See Note 26.
The net fair value of swaps at 4 January 2025 was a net liability of £6m (2023: net liability of £9m) comprising assets of £nil (2023: £nil) and liabilities
of £6m (2023: £9m). These amounts are recognised as fair value derivatives on the face of the Consolidated balance sheet.
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
25
Financial risk management
continued
189
Foreign currency risk
The Group is exposed to foreign currency risk on purchases that are denominated in a currency other than sterling. The key currencies giving rise to
this risk are Euros and US Dollars.
The Group manages the impact of market fluctuations on its currency exposures and future cash flows by undertaking rolling foreign exchange
hedges. These are executed on a monthly basis in a layered approach based on forecast requirements.
At 4 January 2025, the Group had forward currency transactions in Euros and US Dollars with a notional contract amount of £73m (2023: £64m).
Liquidity risk
This is the risk that the Group will not have sufficient monies to fund its future operations and meet its borrowing obligations. The Group has diverse
sources of financing through its cash, short-term investments, credit facilities and bonds. These are managed to ensure appropriate flexibility and
headroom over the short, medium and long term.
As at 4 January 2025, the Group had available cash and cash equivalents and short-term investments of £420m (2023: £595m) together with
committed borrowing facilities totalling £862m (2023: £1,107m). These are detailed below:

| 2024 | 2023
Bank facilities as at 4 January 2025 | Expiry | Facility | Undrawn | Expiry | Facility | Undrawn
|  | £m | £m |  | £m | £m
Cash and cash equivalents |  |  | 320 |  |  | 395
Short-term investments |  |  | 100 |  |  | 200
Cash and cash equivalents and short-term investments |  |  | 420 |  |  | 595
Revolving Credit Facility * | Nov 2029 | 400 | 400 | Mar 2026 | 443 | 443
£300m 5.125% Sustainability Bond ** | May 2024 | - | - | May 2024 | 200 |
£109m 11% Final repayment subordinated notes | Dec 2025 | 109 | - | Dec 2025 | 109 |
£20m Instalment repayment notes | Dec 2025 | 3 | - | Dec 2025 | 5 |
£350m 7.5% Bond notes | July 2026 | 350 | - | July 2026 | 350 |
Total debt facilities |  | 862 | 400 |  | 1,107 | 443
Total cash and cash equivalents, |  |  |  |  |  |
short-term investments and debt liquidity |  |  | 820 |  |  | 1,038

*On the 29 November 2024, the Group concluded an amendment and extension exercise on its Revolving Credit Facility. The facility size is £400m and matures
on 29 November 2029. The facility was undrawn as at 4 January 2025.
** The remaining £200m principal on the Sustainability bond matured on 17 May 2024 and was repaid in full from the Group's surplus cash.
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
25
Financial risk management
continued
190
The following are the maturities of financial liabilities as at 4 January 2025. The contractual cashflows noted include payments of interest and
principal:

| Carrying Contractual |  | 1 - 2 | 2 - 5 | More than
2024 | amount | cash flows | <1 year | years | years | 5 years
| £m | £m | £m | £m | £m | £m
Non-derivative financial liabilities |  |  |  |  |  |
£109m 11% Final repayment subordinated notes 2025 | (109) | (121) | (121) | - | - | -
£20m Instalment repayment notes (final payment 2025) | (3) | (3) | (3) | - | - | -
£105m 7.5% Bond 2026 (fair value) | (108) | (121) | (8) | (113) | - | -
£245m 7.5% Bond 2026 (amortised cost) | (259) | (281) | (18) | (263) | - | -
Lease liabilities | (1,193) | (1,509) | (194) | (179) | (438) | (698)
Trade and other payables | (1,564) | (1,564) | (1,532) | (21) | (7) | (4)

The following are the maturities of financial liabilities as at 6 January 2024. The contractual cashflows noted include payments of interest and
principal:

| Carrying | Contractual |  |  |  | More than 5
2023 | amount | cash flows | < 1 year | 1 - 2 years | 2 - 5 years | years
| £m | £m | £m | £m | £m | £m
Non-derivative financial liabilities |  |  |  |  |  |
£300m Sustainability Bond 2024 (amortised cost)* | (202) | (205) | (205) | - | - | -
£109m 11% Final repayment subordinated notes 2025 | (109) | (133) | (12) | (121) | - | -
£20m Instalment repayment notes (final payment 2025) | (5) | (6) | (3) | (3) | - | -
£105m 7.5% Bond 2026 (fair value) | (105) | (129) | (8) | (8) | (113) | -
£245m 7.5% Bond 2026 (amortised cost) | (262) | (299) | (18) | (18) | (263) | -
Lease liabilities | (1,233) | (1,666) | (192) | (180) | (437) | (857)
Trade and other payables | (1,582) | (1,582) | (1,544) | (20) | (14) | (4)

* The remaining £200m principal on the Sustainability bond noted in the comparative period matured on 17 May 2024 and was repaid in full with cash.
Sensitivity analysis
Interest rate risk
The valuations of the Group’s quoted debt and interest rate swaps have been determined by discounting expected future cash flows associated with
these instruments at the market interest rate yields as at the Group’s year end. This is then adjusted by a +1% increase to the interest rate yield curve
and a 1% reduction in the interest rate yield curve to show the impact of changes in interest rates on the value of our debt and swaps. At 4 January
2025 and 6th January 2024, if Sterling (GBP) market interest rates had been 1% higher / lower with all other variables held constant, there would have
been no material impact to post-tax profit. Profit is generally less sensitive to movements in GBP interest rates due to the level of borrowings held at
fixed rates as described in the Interest rate risk and hedging section.
Foreign exchange risk
At 4 January 2025 and 6 January 2024, if both the Euro and US dollar had strengthened or weakened by 10% against sterling (GBP) with all variables
held constant, there would have been no material impact to post-tax profit.
Guarantees
In the course of conducting its operations, the Group is required to issue bank guarantees and bonds in favour of various counterparties. These
facilities are provided by the Group’s banking syndicate and as at 4 January 2025 the total amount of guarantees / bonds outstanding was £24m
(2023: £17m).
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
191
26
Financial instruments, derivatives and valuation of financial assets and liabilities
Derivatives
Derivatives held for non-trading purposes for which hedge accounting has not been applied are as follows:

| 2024 | 2023
| Contractual/ | Fair value | Fair value | Contractual | Fair value | Fair value
| notional | assets | liabilities | / notional | assets | liabilities
| amount |  |  | amount |  |
| £m | £m | £m | £m | £m | £m
Interest rate swaps | 105 | - | (6) | 105 | - | (9)
Foreign exchange contracts | 73 | - | (2) | 64 | - | (2)
Commodity swaps (diesel) | 20 | - | (1) | 20 | - | (2)
Total recognised derivative liabilities) | 198 | - | (9) | 189 | - | (13)

The interest rate swaps mature in 2026 and as such are held in non-current liabilities. The majority of the foreign exchange contracts and diesel swaps mature
within 1 year so are shown in current liabilities.
The following summarises the major methods and assumptions used in estimating the value of financial instruments reflected in the annual report and
accounts:
a) Financial instruments at fair value through the income statement
Investments in funeral plans
Where there is no active market or the investments are unlisted, the fair values are based on commonly used valuation techniques (refer to
accounting policy (section iv) of this note for further details.
Derivatives
Forward exchange contracts, such as the Group's interest rate swaps have been determined by discounting expected future cash flows associated
with these instruments at the market interest rate yields as at the Group’s year end. The Group's derivatives are not formally designated as hedging
instruments but under IFRS 9 (Financial Instruments) they are used to match against a proportion of the 2026 Bond liabilities carried at fair value
through the income statement, showing as a gain of £3m in 2024 (2023: £4m gain) see Note 6.
The Group enters into forward contracts for the purchase of energy from third party suppliers for use by the Group. Energy contracts for own use are
not required to be accounted for as derivatives. We adopt a layered hedging procurement policy for energy contracts over a period of 3 years to a
maximum of 80% of Group forecast demand. At the 2024 year end we had 78% electricity (2023: 68%) and 64% gas (2023: 54%) coverage of our
forecast demand for 2025.
Fixed rate sterling bonds
The fixed rate sterling bond values are determined in whole by using quoted market prices.
b) Interest-bearing loans and borrowings - amortised cost
These are shown at amortised cost which presently equate to fair value or are determined in whole by using quoted market prices. Fair value
measurement is calculated on a discounted cash flow basis using prevailing market interest rates.
c) Receivables and payables
For receivables and payables with a remaining life of less than one year, the nominal amount is deemed to reflect the fair value, where the effect of
discounting is immaterial. For further details see the Accounting Policy section at the end of this note.
Notes to the financial statements
continued
Co-op Annual Report & Accounts for 2024:
Financial Statements
continued
26
Financial instruments, derivatives and valuation of financial assets and liabilities
192
The table below shows a comparison of the carrying value and fair values of financial instruments for those liabilities not carried at fair value.

| Carrying value | Fair value | Carrying value | Fair value
Financial liabilities | 2024 | 2024 | 2023 | 2023
| £m | £m | £m | £m
Interest-bearing loans and borrowings (held at amortised cost) | 376 | 384 | 583 | 581

The table below analyses financial instruments by measurement basis:

| Fair value | Amortised | Total
2024 | through income | cost |
| statement |  |
| £m | £m | £m
Assets |  |  |
Other investments (funeral plans) | 1,414 | - | 1,414
Trade and other receivables | - | 414 | 414
Cash and cash equivalents | - | 320 | 320
Short-term investments | - | 100 | 100
Total financial assets | 1,414 | 834 | 2,248
Liabilities |  |  |
Interest-bearing loans and borrowings | 108 | 376 | 484
Derivative financial instruments | 9 | - | 9
Trade and other payables | - | 1,171 | 1,171
Total financial liabilities | 117 | 1,547 | 1,664

| Fair value | Amortised | Total
2023 | through income | cost |
| statement |  |
| £m | £m | £m
Assets |  |  |
Other investments (funeral plans) | 1,346 | - | 1,346
Trade and other receivables | - | 434 | 434
Cash and cash equivalents | - | 395 | 395
Short-term investments | - | 200 | 200
Total financial assets | 1,346 | 1,029 | 2,375
Liabilities |  |  |
Interest-bearing loans and borrowings | 105 | 583 | 688
Derivative financial instruments | 13 | - | 13
Trade and other payables | - | 1,186 | 1,186
Total financial liabilities | 118 | 1,769 | 1,887

The following table provides an analysis of financial assets and liabilities that are valued or disclosed at fair value, by the three-level fair value
hierarchy as defined within IFRS 13 (Fair Value Measurement):

• Level 1 | Fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2 | Fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable
| for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3 | Fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not
| based on observable market data (unobservable inputs).

As pricing providers cannot guarantee that the prices they provide are based on actual trades in the market then all of the corporate bonds are classified as Level
2.
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
continued
26
Financial instruments, derivatives and valuation of financial assets and liabilities
193
Valuation of financial instruments

2024 | Level 1 | Level 2 | Level 3 | Total
| £m | £m | £m | £m
Assets |  |  |  |
Financial assets at fair value through the income statement |  |  |  |
- Funeral plan investments | - | - | 1,414 | 1,414
- Derivative financial instruments | - | - | - | -
Total financial assets at fair value | - | - | 1,414 | 1,414
Liabilities |  |  |  |
Financial liabilities at fair value through the income statement |  |  |  |
- Fixed rate sterling 2026 bond | - | 108 | - | 108
- Derivative financial instruments | - | 9 | - | 9
Total financial liabilities at fair value | - | 117 | - | 117

Funeral plan investments are classified as level 3 under the IFRS 13 hierarchy. Level 3 fair value measurements are those derived from valuation
techniques that include inputs that are not based on observable market data (unobservable inputs). The vast majority of our funeral plan investments
are held in Whole of Life (WoL) insurance policies. The plan investments are financial assets which are recorded at fair value each period using
valuations provided to Co-op by the policy provider. The plan values reflect the amount the policy provider would pay out on redemption of the
policy at the valuation date with the main driver being underlying market and investment performance.
The value of the 2026 bonds carried at amortised cost is disclosed in Note 18. The equivalent fair value for the unhedged proportion of the 2026
bonds that are now carried at amortised cost would be £252m (2023: £245m).
There were no transfers between Levels 1 and 2 during the period and no transfers into and out of Level 3 fair value measurements. For other
financial assets and liabilities of the Group including cash, trade and other receivables / payables then the notional amount is deemed to reflect the
fair value.

2023 | Level 1 | Level 2 | Level 3 | Total
| £m | £m | £m | £m
Assets |  |  |  |
Financial assets at fair value through the income statement |  |  |  |
- Funeral plan investments | - | - | 1,346 | 1,346
Total financial assets at fair value | - | - | 1,346 | 1,346
Liabilities |  |  |  |
Financial liabilities at fair value through the income statement |  |  |  |
- Fixed rate sterling 2026 bond | - | 105 | - | 105
- Derivative financial instruments | - | 13 | - | 13
Total financial liabilities at fair value | - | 118 | - | 118

Interest rates used for determining fair value
Third-party valuations are used to fair value the Group’s bond and interest rate derivatives. The valuation techniques use inputs such as interest rate
yield curves with an adequate credit spread adjustment.
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
continued
26
Financial instruments, derivatives and valuation of financial assets and liabilities
194
Accounting policies
Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the contractual provisions
of the instrument. The Group classifies its financial assets and liabilities as either:
• fair value through the income statement; or
• at amortised cost.
A) General Recognition
i) Recognition of financial assets
Financial assets are recognised on the trade date which is the date it commits to purchase the instruments. Loans are recognised when the funds are
advanced. All other financial instruments are recognised on the date that they are originated. The classification of financial assets at initial
recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. The Group
initially measures a financial asset at its fair value, with the exception of trade receivables that don’t contain a material financing component or where
the customer will pay for the related goods or services within one year of receiving them. For financial assets which are not held at fair value through
the income statement, transaction costs are also added to the initial fair value. Trade receivables that don’t contain a material financing component
or where the customer will pay for the related goods or services within one year of receiving them are measured at the transaction price determined
under IFRS 15 (Revenue from Contracts with Customers). See accounting policies for revenue and IFRS 15 in Note 2.
ii) Recognition of financial liabilities
The Group recognises all of its financial liabilities at amortised cost and all derivative financial liabilities are classified as FVTPL. Financial liabilities
costs, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accrual basis in the income
statement using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in
the period in which they arise.
The Group’s non-derivative financial liabilities comprise:
• Borrowings
• Trade and other payables
• Lease liabilities
ii) Derecognition of financial assets and financial liabilities
Financial assets and liabilities are derecognised (removed from the balance sheet) when:
• the rights to receive cash flows from the assets have ceased; or
• the Group has transferred substantially all the risks and rewards of ownership of the assets.
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. When an existing liability is replaced
by the same counterparty on substantially different terms or the terms of an existing liability are substantially modified, the original liability is
derecognised and a new liability is recognised, with any difference in carrying amounts recognised in the income statement.
B) Financial Assets
i) Loans and receivables (amortised cost)
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market which we do
not intend to sell immediately or in the near term. These are initially measured at fair value plus transaction costs that are directly attributable to the
financial asset. Subsequently these are measured at amortised cost. The amortised cost is the initial amount at recognition less principal repayments,
plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount,
less impairment provisions for incurred losses.
ii) Funeral plans (fair value through the income statement)
Funeral plans
When a customer takes out a funeral plan the initial plan value is recognised as an investment asset in the balance sheet. The investments are held in
insurance policies or cash-based trusts and attract interest and bonus payments throughout the year dependent upon market conditions. The plan
investment is a financial asset, which is recorded at fair value each period through the income statement using valuations provided by the insurance
policy provider or reflecting the trust cash balances.
The obligation to deliver the funeral is treated as an insurance contract liability under accounting standard IFRS 17 (Insurance Contracts) and held
separately on our balance sheet. The standard applies to all of the Group’s funeral plans (including the re-insurance of the payment waiver on
instalment plans) and is effective from 1 January 2023. See Note 20 for details of the Group's Insurance contract and Re-insurance contract liabilities
and associated accounting policies.
B) Financial Assets
- continued
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
continued
26
Financial instruments, derivatives and valuation of financial assets and liabilities
195
iii) Funeral benefit options (FBOs) - (amortised cost)
FBOs are attached to Guaranteed Over 50’s life insurance plans (GOFs) sold by the Group’s third party insurance partners. An FBO is the assignment
of the sum-assured proceeds of a GOF policy to Funeralcare for the purposes of undertaking their funeral. In exchange the GOF customer is awarded
a discount on the price of the funeral.
No revenue is recognised by the Group at the point of assignment and instead an element of the costs that have been incurred in obtaining the FBO
are deferred onto the balance sheet. These are then expensed at the point of redemption when the revenue is recognised. Any plans that are
cancelled are written off at the point at which Funeralcare are made aware of the cancellation. A separate provision is also made to cover the
expected cancellations of FBOs. No investment or liability is recognised for FBOs as the option does not guarantee a funeral and the liability for
which remains with the insurance partner. Any difference between the funeral price and the sum assured at the point of redemption is the liability of
the deceased estate or whoever takes responsibility for arranging the funeral.
iv) Trade receivables - (amortised cost)
An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based
on days past due for groupings of various customer segments with similar loss patterns (for example, by business division, customer, coverage by
letters of credit or other forms of credit insurance).
The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at
the reporting date about past events, current conditions and forecasts of future economic conditions. Generally, trade receivables are written-off if
past due for more than one year and are not insured or subject to enforcement activity. The maximum exposure to credit risk at the reporting date is
the carrying value of each class of financial assets disclosed in trade and other receivables (Note 16).
v) Lease receivables - (amortised cost)
- refer to Accounting Policy section of Note 11 (Leases).
vi) Financial Assets - Credit risk, liquidity risk and impairment of financial assets
a) Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The
Group is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks
and financial institutions, foreign exchange transactions and other financial instruments.
Credit risk from balances with banks and financial institutions is managed by the Group’s Treasury department in accordance with the Group’s policy.
Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit
limits are monitored regularly based on Board approved Treasury Policy, with changes to the credit limits being reported monthly to the Treasury
Committee. The limits are set to minimise the concentration of credit risk. Financial assets held at fair value through the income statement are
primarily held in low-risk investments.
b) Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans, bonds
and leases.
c) Impairment of financial assets carried at amortised cost
The amount of the impairment loss on assets carried at amortised cost is recognised immediately through the income statement and a corresponding
reduction in the value of the financial asset is recognised through the use of an allowance account. A write-off is made when all or part of an asset is
deemed uncollectable or forgiven after all the possible collection procedures have been completed and the amount of loss has been determined.
Write-offs are charged against previously established provisions for impairment or directly to the income statement. Any additional recoveries from
borrowers, counterparties or other third parties made in future periods are offset against the write-off charge in the income statement once they are
received. Provisions are released at the point when it is deemed that following a subsequent event the risk of loss has reduced to the extent that a
provision is no longer required.
Notes to the financial statements
continued
Co-op Annual Report & Accounts for 2024:
Financial Statements
continued
26
Financial instruments, derivatives and valuation of financial assets and liabilities
196
C) Financial Liabilities
Financial liabilities are classified according to the substance of the contractual arrangements entered into.
i) Trade and Other Payables - (amortised cost)
Trade and other payables are recognised initially at fair value, are not interest bearing and are subsequently measured at amortised cost.
ii) Fixed rate Sterling bonds - (fair value through the Income Statement)
The fixed rate sterling bond values are determined in whole by using quoted market prices.
iii) Interest-bearing loans and borrowings - (amortised cost)
Interest-bearing bank loans and overdrafts are recorded initially at fair value, which is generally the proceeds received, net of direct issue costs.
Subsequently, these liabilities are held at amortised cost using the effective interest rate method. Transaction costs are amortised on a straight-line
basis over the life of the facility they relate to.
iv) Lease liabilities - (amortised cost) -
refer to Accounting Policy section of Note 11 (Leases)
.
v) Derivatives - (fair value through the income statement)
The Group uses derivative financial instruments to provide an economic hedge to its exposure to interest rate risks arising from operational,
financing and investment activities. In accordance with its Treasury policy, the Group does not hold or issue derivative financial instruments for
trading purposes.
Derivatives entered into include interest rate swaps, foreign exchange contracts, commodity (diesel) swaps and energy contracts. Derivative
financial instruments are measured at fair value and any gains or losses are included in the income statement. Fair values are based on quoted
prices and where these are not available, valuation techniques such as discounted cash flow models are used.
Interest payments or receipts arising from interest rate swaps are recognised within finance income or finance costs in the period in which the
interest is incurred or earned.
Notes to the financial statements
continued
Co-op Annual Report & Accounts for 2024:
Financial Statements
197
27
Commitments and contingencies
Commitments:
a)
Capital expenditure that the Group is committed to but which has not been accrued for at the period end was £10m (2023: £22m).
Contingent liabilities:
b) i)
In common with other retailers, the Group has received Employment Tribunal claims from current and former food store colleagues alleging
their work is of equal value to that of distribution centre colleagues and differences in pay and other terms are not objectively justifiable. The
claimants are seeking the differential in pay (and other terms) together with equalisation going forward. There are currently circa 5,200 claims (2023:
circa 4,700 claims) and it is anticipated that this number will rise, though it is not possible to predict the point to which this may increase or the rate of
increase.
These equal pay claims are initiated in the Employment Tribunal and claimants will need to succeed in three stages to succeed. The first stage
concerns whether the roles of store colleagues can be compared with those of warehouse colleagues. In light of European and Supreme Court
decisions, Co-op Group has conceded that it will not contest this point. The second and third stages are concerned with an equal value assessment
between comparator roles and if this is shown to be the case, a subsequent consideration of Co-op Group’s material factor defences (which are the
non-discriminatory reasons for any pay differential). It is expected this litigation will take a number of years to reach final resolution.
The claims are still at an early stage; the number of claims, merit, outcome and impact are all highly uncertain. No provision has been made as it is not
possible to assess the likelihood nor quantum of any outcome. There are substantial factual and legal defences to the claims and the Group intends
to defend them robustly.
The Group closely monitors the progress of other group claims made by store workers against large grocery and other retailers where the basis of the
claims are similar to those made against us.
b) ii)
In early February 2023 a claim was issued against Co-operative Group Limited and certain of its subsidiaries (Co-operative Group Food Limited,
Co-operative Foodstores Limited and Rochpion Properties (4) LLP) by the liquidators of The Food Retailer Operations Limited in connection with
transactions which took place in 2015 and 2016 relating to the Somerfield supermarket business acquired by Co-op in 2009.
The amount claimed is approximately £450m plus further unquantified amounts of interest and costs. Co-op strongly disputes both liability and the
quantum of the claim.
28
Related party transactions and balances

|  | 2024 | 2023
| Relationship | £m | £m
Subscription to Co-operatives UK Limited | (i) | 0.8 | 0.7

i) The Group is a member of Co-operatives UK Limited.
The Group’s Independent Society Members (ISMs) include consumer co-operative societies which, in aggregate, own the majority of the corporate
shares with rights attaching as described in Note 22. The Co-operative Group has a 76% shareholding in Federal Retail and Trading Services Limited
which is operated as a joint buying group by the Group for itself and other independent co-operative societies. The Group acts as a wholesaler to the
other independent co-operatives and generates sales from this and the arrangement is run on a cost recovery basis and therefore no profit is derived
from its activities. Sales to ISMs, on normal trading terms, were £2,076m (2023: £2,142m) and the amount due from ISMs in respect of such sales was
£151m at 4 January 2025 (2023: £142m). No distributions have been made to ISMs based on their trade with the Group in either the current or prior
periods.
Transactions with directors and key management personnel
A number of small transactions (such as the purchase of funeral services) are entered into with key management in the normal course of business and
are at arm's length. Key management are considered to be members of the Executive and directors of the Group. Key management personnel
transactions noted in the year are £nil (2023: £1,000). Other than the compensation set out in the Remuneration Report, there were no other
transactions greater than £10,000 with the Group's entities (2023: £nil). Total compensation paid to key management personnel is shown below.

| 2024 | 2023
Key management personnel compensation | £m | £m
Short-term employee benefits | 4.1 | 3.6
Post-employment benefits | 0.2 | 0.1
Other long-term benefits | 0.3 | 0.3
Total | 4.6 | 4.0

Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
198
29
Principal subsidiary undertakings
All of the principal subsidiary undertakings as at the period end are registered in England and Wales and their principal place of business is the UK.
See Accounting Policies and Basis of Preparation section on page 200 for a Group structure diagram.

| Society holding % | Nature of business
Co-operative Group Holdings (2011) Ltd | 100 | Property management
Co-operative Group Food Ltd | 100 | Food retailing
Co-operative Foodstores Ltd | 100 | Food retailing
Nisa Retail Ltd | 100 | Food wholesaling
Co-op Insurance Services Limited | 100 | Insurance (marketing)
Funeral Services Ltd | 100 | Funeral directors
Co-op Funeral Plans Ltd | 100 | Funeral plan services
Co-operative Legal Services Ltd | 100 | Legal services
Rochpion Properties (4) LLP | 100 | Holds property

Notes
i) All of the above have been fully consolidated into the Group's accounts. There are no non-controlling interests in any of these entities.
ii) All of the principal subsidiaries are audited by EY LLP.
iii) All transactions between entities are in the usual course of business.
iv) A full list of all Group subsidiary entities can be found at: https://www.co-operative.coop/investors/rules
Co-op Annual Report & Accounts for 2024:
Financial Statements
Notes to the financial statements
continued
199
30
Membership and community reward

| 2024 | 2023
Members | m | m
Active members (unaudited) | 6.2 | 5.0

TBC - to consider removing the table and wording below

Membership and community rewards (within the income statement) | £m | £m
Member reward earned | (3) | 25
Community reward earned | 1 | 20
Total reward | (2) | 45

In the comparative period Member and Community rewards were earned at 2% (4% in total) of member spend on selected Co-op products and
services. Following a change to our membership proposition (including the introduction of exclusive member pricing deals) these rewards were no
longer earned from 24 January 2024. Members have been able to redeem their rewards throughout 2024 with any unused member reward being
recognised within revenue in the income statement based on an assessment of future redemption rates.
Further detail on our membership proposition can be found in the 'Our Vision' section ('Working to make membership irresistible and
indispensable') on page 16 in the front-half of this report. Full details of our overall investment in our communities can be found in our Co-operate
Report.
31 Events after the reporting period
There are no material post balance sheet events noted for disclosure in the 2024 Annual Report and Accounts for the 52 week period ended 4
January 2025.
Co-op Annual Report & Accounts for 2024:
Accounting policies and basis of preparation
200
Accounting policies and basis of preparation
General information
Co-operative Group Limited ('the Group’) is a registered co-operative society (525R) domiciled in England and Wales. The address of the
Group’s registered office is 1 Angel Square, Manchester, M60 0AG, and the trading locations of all stores and branches can be located on
our website https://www.coop.co.uk/store-finder.
Basis of preparation
The Group accounts have been prepared in accordance with UK adopted international accounting standards for the 52 week period ended
4 January 2025 and in conformity with the requirements of the Co-operative and Community Benefit Societies Act 2014. As permitted by
statute, a separate set of financial statements for the Society are not included.
The accounts are presented in pounds sterling and are principally prepared on the basis of historical cost. Areas where other bases are
applied are explained in the relevant accounting policy in the notes. Amounts have been rounded to the nearest million. The accounting
policies set out in the notes have been applied consistently to all periods presented in these financial statements, except where stated
otherwise. The accounts are prepared on a going concern basis. See later section on ‘
Going Concern’.
Climate Change Considerations
In preparing the Group's Consolidated Financial statements management has considered the impact of climate change covering both the
financial statements and the disclosures included in the Strategic report. This included an assessment of the potential impact of, and
associated responses to, climate change, and how that could impact the non-current assets that we hold as well as our expectations of
future trading conditions. This assessment did not identify any requirement to shorten asset lives of the Group’s asset base and neither did it
identify any material impact on the valuation of the Group’s assets or liabilities. Where material the Group has included the impact of
climate change within its forecasts, impairment reviews and assessments of going concern and viability. Further detail is given later in this
section under 'Material accounting judgements, estimates and assumptions in relation to climate change.' The Group will keep this
assessment under review and continue to monitor developments in the future.
Basis of consolidation
The financial statements consolidate Co-operative Group Limited, which is the ultimate parent society, and its subsidiary undertakings. The
Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial
statements from the date that control commences until the date that control ceases.
The diagram below shows the composition of the Group and its principal subsidiaries. Further details can be found in Note 29 (Principal
subsidiary undertakings). A full list of subsidiaries that make up the Group for the purposes of these financial statements can be found at:
http://www.co-operative.coop/investors/rules
Co-operative Group Ltd
Co-operative Group Holdings (2011) Ltd
Rochpion Properties (4) LLP
Co-operative Group Food Ltd
Funeral Services Ltd
Nisa Retail Ltd
Co-operative Foodstores Ltd
Co-op Funeral Plans Ltd *
Co-op Insurance Services Ltd
Co-operative Legal Services Ltd
Direct holding
Indirect holding
All shareholdings are 100% owned unless otherwise stated.
* Co-op Funeral Plans Ltd is owned 33% by Co-operative Group Ltd and 67% by Co-operative Group Holdings Ltd.
Co-op Annual Report & Accounts for 2024:
Accounting policies and basis of preparation
201
Accounting dates
The Group and its main trading subsidiaries prepare their accounts to the first Saturday of January unless 31 December is a Saturday.
These financial statements are therefore prepared for the 52 weeks ended 4 January 2025. Comparative information is presented for the
53 weeks ended 6 January 2024. Since the financial periods are virtually in line with calendar years, the current period figures are headed
2024 and the comparative figures are headed 2023. The comparative amounts are not entirely comparable with the results of 2024, as they
are based on a longer period.
Co-operative Insurances Services Limited and certain small holding companies have prepared accounts for the period ended 31
December 2024. This differs from the Group and the other subsidiaries. For the period ending 4 January 2025, there are no material
transactions or events which need to be adjusted for to reflect the difference in reporting dates.
Non-underlying items and non-GAAP (Generally Accepted Accounting Procedures) measures
Non-underlying items include costs relating to activities such as large restructuring programmes and costs or income which would not
normally be seen as costs or income relating to the underlying principal activities of the Group.
Two non-GAAP measures of performance are presented to help the reader understand the underlying profitability of the Group: (i)
underlying operating profit / (loss) and (ii) underlying profit / (loss) before tax. These are shown in the table at the bottom of the income
statement and we show the adjustments between these measures and operating profit. In calculating these non-GAAP measures, property
and business disposals (including individual store impairments), the change in value of investment properties and other non-underlying
items are adjusted for. Further detail on the Group's Alternative Performance Measures (APMs) can be found in the Glossary on page 226.
Offsetting
Financial assets and financial liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right
to do so and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
Material accounting judgements, estimates and assumptions
The preparation of financial statements that comply with IFRS requires management to make judgements, estimates and assumptions that
affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the
results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates.
In assessing the Group’s judgements and sources of estimation uncertainty, consideration has also been given to the impact of climate
change risk. Details are shown at the end of this section.
Key judgements:
In the process of applying the Group’s accounting policies, management has made the following key judgements which have the most
material impact on the consolidated financial statements:
•
Determining the lease term of contracts with extension and termination options
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend
the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not
to be exercised.
The Group has the option, under some of its leases to lease the assets for additional terms of 5 to 10 years. The Group applies judgement
in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all relevant factors that create an
economic incentive for it to exercise the renewal. After the commencement date, the Group reassesses the lease term if there is a material
event or change in circumstances that is within its control and affects its ability to exercise (or not to exercise) the option to renew.
Key accounting estimates and assumptions:
In the process of applying the Group’s accounting policies, management has made the following key accounting estimates and
assumptions which have the most material impact on the consolidated financial statements:
• Insurance contract liabilities (Note 20)
Under IFRS 17 (Insurance Contracts) the Group's funeral plan liabilities reflect the current estimate of the present value of the future
cashflows to provide the funeral. These are calculated using actuarial advice and are based on a range of assumptions and estimates. The
assumptions used are management's best estimates chosen from a range of possible actuarial assumptions which may not necessarily be
borne out in practice.
The main actuarial assumptions include estimates in relation to discount rates, future costs to deliver a funeral including inflation and
expense assumptions, mortality rates, risk adjustments and plan cancellation rates. The insurance contract liability calculation is most
sensitive to changes in the discount rate and inflation assumptions and further detail on these items is noted below.
• Insurance contract liabilities (Note 20)
-continued
Co-op Annual Report & Accounts for 2024:
Accounting policies and basis of preparation
Key accounting estimates and assumptions
- continued:
202
Discount rate
- the Group applies a bottom-up approach to derive the discount rate such that our insurance contract liabilities (funeral
plans) are calculated by discounting expected future cash flows at a risk free rate, plus an illiquidity premium (credit spread). The risk free
rate has been derived by reference to market yields on sterling-denominated high quality corporate bonds of appropriate duration
consistent with the funeral plans at that date (UK Gilt curve at the valuation date converted from continuous to annual rates). The illiquidity
premium is determined by reference to observable market rates (assessed as the average credit spread on 10-15 A rated and 10-15 year
AA rated bonds at the valuation date).
Inflation
- the rate of inflation is set based on the Bank of England Forward Inflation Curve at the valuation date converted from continuous
to annual. From 2022 onwards a reduction of 25 basis points has been applied to allow for high levels of demand for inflation linked gilts
increasing inflation expectations. Years 2024 to 2027 have been adjusted to reflect managements' view based on experience of funeral
cost inflation.
•
Pensions (Note 23)
– the Group’s defined benefit pension obligations are determined following actuarial advice and are calculated
using the projected unit method. The assumptions used are the best estimates chosen from a range of possible actuarial assumptions
which may not necessarily be borne out in practice. The most material assumptions relate to the determination of the discount rate, future
salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation and its long-term nature,
the Group’s defined benefit obligation is highly sensitive to changes in these assumptions. Further details of the financial and demographic
assumptions that have been used are shown in Note 24 along with associated sensitivities to those assumptions.
•
Impairment of non-financial assets (Notes 10, 11 & 12)
- the carrying amount of non-financial assets (such as property, plant and
equipment, right-of-use assets, goodwill and intangibles) are reviewed at each balance sheet date and if there is any indication of
impairment, the asset's recoverable amount is estimated.
The recoverable amount is the greater of the fair value of the asset (less costs to sell) and the value in use of the asset. An impairment loss is
recognised whenever the carrying amount of an asset or its cash-generating unit (CGU) exceeds its estimated recoverable amount. For
property assets the fair value less costs to sell are measured using internal valuations based on the rental yield of the property.
This review is performed annually or in the event where indicators of impairment are present. At 4 January 2025, the Group has considered
whether general uncertainty in the wider macro-economic environment including the cost-of-living crisis, rising inflation, energy price
increases, and the on-going conflicts in Ukraine and the Middle East has the potential to represent a significant impairment indicator.
Despite the difficult trading conditions and associated additional costs of serving our customers the Group’s main business areas have
proven resilient and the performance of the Group’s cash-generating units has remained strong. Therefore, management concluded that
the impact of the factors noted on the longer term outlook for these cash generating units did not constitute an indicator of material
impairment and hence a full impairment test across all CGUs was not required. This judgement is unchanged from 6 January 2024. An
impairment assessment has been performed over our Food and Funeralcare estate where indicators of impairment have been identified as
disclosed in Note 10.
The Group estimates the value in use of an asset by projecting future cash flows into perpetuity and discounting the cash flows (DCF)
associated with that asset at a pre-tax rate of between 9-11% (2023: 9-12%) dependent on the business. The key assumptions used to
determine the recoverable amount for the different CGUs, and the sensitivity analysis that is undertaken, are disclosed and further
explained in Notes 10 and 12.
•
Provisions (Note 21)
– a provision is recognised in the balance sheet when the Group has a legal or constructive obligation as a result of
a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material,
provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the
time value of money and, where appropriate, the risks specific to the liability. The most material provision for the Group relates to
regulatory and legal provisions typically in relation to on-going legal or regulatory claims and material assumptions and estimates are
made in relation to the estimation of future cash flows and the discount rate applied. The likely outcome in a legal or regulatory claim may
be uncertain and difficult to predict based on the evidence and circumstances involved. This means there may be considerable inherent
uncertainty with an assessment as to whether a provision exists at the balance sheet date. No separate disclosure is made of the detail of
such claims, the assumptions used to calculate the amount provided or the uncertainties relating to the range of possible outcomes
considered, because in management's view, to do so could seriously prejudice our position.
The Group takes into account the potential impact of climate change on its legal and constructive obligations, such as potential changes in
regulations related to carbon emissions, environmental liabilities and natural disasters. The Group also considers the potential impact of
climate change on the costs of complying with environmental regulations and the costs of natural disasters. The Group has reviewed its
provisions and concluded that no adjustments need to be made for climate change risks, nor that any new provisions need to be
recognised for climate-related matters.
Co-op Annual Report & Accounts for 2024:
Accounting policies and basis of preparation
203
Material accounting judgements, estimates and assumptions in relation to climate change
In assessing the Group’s judgements and sources of estimation uncertainty, consideration has been given to the impact of climate change
risk. Aside from areas noted below climate change risks do not have any impacts on the Group’s other judgements or sources of
estimation uncertainty.
Impairment of non-current assets
As described in notes 10 and 12, our impairment assessment over the Group's property, plan and equipment, right of use assets and
goodwill, has taken into consideration of any climate related risks identified through our risk assessment process. Our assessment
concluded that the expected climate related risks did not have a material impact on the Group's impairment considerations at the
reporting date. The Board-approved plan underpinning our impairment assessments, takes into consideration any incremental costs of
climate related actions to mitigate these risks where these are expected to crystallise within the timeframe of the plan. This represents a
developing area with inherent uncertainty which is constantly evolving.
Pension assets
Risk associated with volatility in asset value - the market value of the assets held by the pension schemes, particularly the assets held in
return-seeking assets such as equity, can be volatile (and, for example, may be affected by environmental, social or corporate governance
(“ESG”) failures at investee companies and/or sovereign states - including the physical and transition risks of climate change). This creates
a risk of short-term fluctuations in funding level. Through its insurance buy-in contracts Pace has minimal further exposure. For the
Somerfield and United schemes this risk has been mitigated by reducing the exposure of the pension schemes to those asset classes
which have the most volatile market values. In particular, the schemes have limited allocation to return-seeking assets such as equity. In
addition, the Trustees of the Co-op’s pension schemes have responsible investment policies in place, and aligned with those policies
exclude specific investments (where appropriate and viable). Management of ESG risks is considered when appointing investment
managers and in their ongoing monitoring, and the schemes’ equity assets are explicitly managed with a consideration of such risks,
including climate change.
New and amended standards adopted by the Group:
The Group has considered the following standards and amendments that are effective for the Group for the period commencing 7 January
2024 and concluded that they are either not relevant to the Group or do not have a significant impact on the financial statements:
• Amendments to IAS 1 - Classification of Liabilities as Current or Non-current
• Amendments to IAS 1 (Practice statement 2) - Non-current Liabilities with Covenants
• Amendments to IFRS 16 - Lease liability in Sale and Leaseback
• Amendments to IAS 7 and IFRS 7 - Supplier Finance Arrangements
Standards, amendments and interpretations issued but not yet effective
Certain new accounting standards and interpretations have been published that are not mandatory for 7 January 2024 reporting periods
and the Group has not early adopted the following standards and statements. Unless noted the adoption of these standards is not
expected to have a material impact on the Group’s accounts:
• Amendments to IAS 21 - Lack of Exchangeability*
• Amendments to IFRS 9 and IFRS 7 - Classification and Measurement of Financial Instruments**
• Annual Improvements to IFRS Accounting Standards - Volume 11**
• IFRS 18 - Presentation and Disclosure in Financial Statements***
• IFRS 19 - Subsidiaries without Public Accountability: Disclosures***
*Applicable for reporting periods on or after 1st January 2025.
**Applicable for reporting periods on or after 1st January 2026.
***Applicable for reporting periods on or after 1st January 2027.
The Group is currently reviewing the likely impact of IFRS 18 on its statutory reporting as well as any potential impact from the amendments to IFRS 9 and IFRS 7
in relation to credit and debit card payments made by customers which are receivable from banks and clear the bank within three days of the transaction date
(as disclosed in Note 17).
Co-op Annual Report & Accounts for 2024:
Accounting policies and basis of preparation
204
Going concern basis of preparation
The financial statements are prepared on a going concern basis as the directors have a reasonable expectation that the Group has
sufficient liquidity and adequate resources to continue in operational existence for the foreseeable future, being a period of at least 12
months post the date of approval of these financial statements.
In assessing the Group’s ability to continue as a going concern, the directors have considered the Group’s most recent forecasting
process and specifically the Group’s profitability, cashflows, committed funding and liquidity positions for the
period to 31 December
2026. Our Co-op operates with net current liabilities as our working capital cycle means cash receipts from revenues arise in advance of
the payments to suppliers for the cost of goods sold. We also borrow money from banks and other funding sources, structuring our
borrowings with phased maturities to manage our refinancing risk as well as maintaining sufficient levels of liquidity for our Co-op. As
part of the going concern review, we have ensured that our forecasts demonstrate compliance with the terms of these agreements, for
example related banking covenants and facility levels, for the period under assessment.
As part of strategic planning, the Directors make key assumptions about business performance and stress-test financial scenarios to
ensure compliance with facility terms, even under principal risk events. Although our Co-op has a robust planning process, which reflects
the continuing economic uncertainty and headwinds impacting the group, we have performed additional stress testing of the going
concern basis under severe but plausible downside scenarios, and reflect our principal risks. The results of our stress testing of severe but
plausible downside scenarios provided a reasonable basis to support the Directors’ conclusion over going concern.
In arriving at the conclusion of the appropriateness of the going concern assumption, the directors have considered the following:
1. Understand what could cause our Co-op not to be a going concern in relation to facility headroom and covenant compliance:
The Group successfully extended its revolving credit facility (“RCF”) in November 2024 at £400m for 5 years to the end of November
2029. In making their assessment, the directors have considered a wide range of information relating to present and future conditions,
including future forecasts of profitability; cashflow and covenant compliance; and available capital resources. The potential scenarios
which could lead to our Co-op not being a going concern are: a.
Not having enough liquidity to meet our debt liabilities as they fall due;
and/or b. A breach of the financial covenants implicit in our bank revolving credit facility.
As at 4 January 2025, the Group had total available liquidity of £820m, being cash of £420m, including amounts on short term deposit,
and headroom of £400m of the Group’s Revolving credit facility (“RCF”) that remained undrawn at year end. Total available facilities
amounted to £862m at year end.
The Base case has sufficient liquidity and bank covenants headroom over the going concern period, with the tightest point for liquidity
headroom at period 9 2026, and tightest point for EBITDA at period 6 2025 to breach covenants.
A definition of our banking covenants is provided in Note 18. Further details on capital management, financial instruments, and risk
exposures are provided in Note 27 to the financial statements.
2. Review and challenge management’s base case forecast, including key choices:
The directors have also considered the Group’s cash flow forecasts and profitability projections for the period to December 2026 (“Base
Case”). Co-op’s base case forecast takes into consideration the continued uncertainty in the market, and has also been adjusted for the
impacts of the UK chancellor’s autumn budget to provide a more accurate base case for going concern sensitivities. The Board has
reviewed and approved these plans. The key assumptions in the plan are:
a.
Growth in price, volume and profit, whilst keeping net debt steady.
b.
This growth is tempered with impact of continued cost headwinds on payroll, goods not for resale inflation, and expected increase in
packaging costs, being offset by margin and operating cost efficiencies.
c.
Whilst the impact of Chancellor's budget is market-wide, base case has been adjusted to quantify the national insurance and other
impacts along with mitigations of these headwinds.
d.
Our healthy balance sheet position will allow us to repay the £112m 2025 subordinated notes and for the £350m bond maturing in
July 2026, we plan to raise £200m in 2025 from the bond market or other sources, with the remaining £150m covered by existing
liquidity, cash, or facilities. The funds will be deposited until repayment is required.
The Base Case has sufficient liquidity and bank covenant headroom over the going concern period, with all bank covenant conditions
met.
Co-op Annual Report & Accounts for 2024:
Accounting policies and basis of preparation
Going concern basis of preparation
- continued:
205
3. Assess downside scenarios against the base case:
The directors have also considered the impact on forecasted performance of severe but plausible downside scenarios (“Downside
Case”), including (but not limited to) the following: a reduction in trade volumes in our Food and Funeralcare business, increase in
energy costs which covers unhedged energy prices, wage and other costs inflation.
The downside sensitivities identified do not risk the validity of our Co-op as a going concern even before applying the mitigating actions
considered below. We have also considered a plausible combination of the sensitivities happening concurrently where the validity
remains protected. Even in the unlikely scenario of all the sensitivities happening simultaneously we still have liquidity and covenant
headroom over the Going concern period.
Whilst out of line with our strategic ambition, there are several options within the business' control we could exercise, if the above risks
materialised and Co-op management wanted to implement mitigating actions. Options include our Co-op’s ability to control the level
and timing of its capital expenditure programme, saving a minimum of £25m per annum and applying cost control measures across both
variable and overhead budgets. In addition, we have flexibility in the level of pass-through of energy and cost inflation to the end
customer.
4. Conduct reverse stress tests to identify risks to liquidity and covenant headroom and assess their likelihood and mitigations:
Our going concern approach assesses risks to our forecasts through severe but plausible downside scenarios and mitigation options. A
reverse stress test identifies the point where the model fails. Following our modelling, we consider this scenario to be remote.
206
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CO-OPERATIVE GROUP LIMITED
Opinion
In our opinion:
•
Co-operative Group Limited’s Group financial statements (the “financial statements”) give a true
and fair view of the state of the Group’s affairs as at 4 January 2025 and of the Group’s profit for
the 52-week period then ended;
•
the Group financial statements have been properly prepared in accordance with UK adopted
international accounting standards in conformity with the requirements of the Co-operative and
Community Benefit Societies Act 2014.
We have audited the financial statements of Co-operative Group Limited for the 52-week period ended
4 January 2025 which comprise:
Group
Consolidated balance sheet as at 4 January 2025
Consolidated income statement for the 52-week period ended 4 January 2025
Consolidated statement of comprehensive income for the 52-week period ended 4 January 2025
Consolidated statement of changes in equity for the 52-week period ended 4 January 2025
Consolidated statement of cash flows for the 52-week period ended 4 January 2025
Related notes 1 to 31 to the financial statements, including material accounting policy information
The financial reporting framework that has been applied in their preparation is applicable law and UK
adopted international accounting standards in conformity with the requirements of the Co-operative
and Community Benefit Societies Act 2014.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion
.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern
basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the
directors’ assessment of the Group’s ability to continue to adopt the going concern basis of accounting
included:
207
•
We confirmed our understanding of the Group’s going concern assessment process including
the review process over the going concern model and management’s related Board
memorandum.
•
We assessed the adequacy of the going concern assessment period and considered whether
any events or conditions foreseeable after the period indicated a longer review period was
required.
•
As set out in the 'Directors’ report, the Group plans to repay the £350m bond maturing in July
2026 by raising £200m in 2025 from the bond market or other sources, and by using £150m
from existing cash or facilities. We utilised our Debt Advisory specialists to assess the
likelihood of the Group refinancing the bond.
•
We checked the arithmetical accuracy of the cash flow forecasts, including the base case and
downside scenarios, covering the going concern assessment period prepared by management
and used by the Board in its assessment.
•
We obtained copies of all facility agreements and understood the terms and conditions
including those related to covenant test ratio requirements. We re-performed the calculation of
headroom in respect of the financial covenant test ratios under the base case and by applying
sensitivity analysis to assess compliance under severe but plausible downside scenarios.
•
For the Group’s downside scenarios, we considered whether they reflected severe but
plausible changes in key assumptions and adequately reflected our assessment of
management’s historical forecasting accuracy.
•
We assessed management’s ability to execute feasible, mitigating actions, if applicable, to
respond to the downside scenarios, based on our understanding of the group and the sector.
•
We obtained summaries of the climate-related expenditure within the going concern period,
checked whether the related cashflows were appropriately incorporated into the model and
checked that the model appropriately reflected the Group’s climate-related commitments.
•
We assessed the appropriateness of the going concern disclosures in describing the risks
associated with the group’s ability to continue as a going concern for the review period.
Key observations arising with respect to our evaluation of management’s going concern assessment:
The Group has net current liabilities of £358m (2023: £470m), which is common in the retail industry
due to the working capital cycle. The Group has net debt (excluding leases) of £55m (2023: £82m). Of
the debt held by the Group it is only the undrawn revolving credit facility which requires compliance
with covenant tests. These covenants are tested twice per year.
Cash generated from operating activities was £456m (2023: £602m) and was lower than the prior
period mainly as a result of the working capital cycle being stabilised compared with the material
strengthening in the prior period offset by an increase in the operating profit generated by the Group.
We identified the following significant assumptions made by management which have influenced their
going concern assessment:
•
Food retail like for like sales volumes.
•
The impact of cost headwinds (for example employer’s NI increases and continuing cost
inflation)
208
•
The repayment of the 2025 bond, part of the 2026 bond and the refinancing of the remainder
of the 2026 bond.
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the Group’s ability to
continue as a going concern for a period to 31 December 2026.
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
However, because not all future events or conditions
can be predicted, this statement is not a guarantee as to the Group’s ability to continue as a going
concern.
Overview of our audit approach
Audit scope
•
We performed an audit of the complete financial information of four
components and audit procedures on specific balances for a further two
components. We also performed specified audit procedures on certain
accounts on one additional component. We performed central procedures
on the following Group financial statement line items:
o
Right-of-use assets and lease liabilities
o
Pension assets and pension liabilities
o
Taxation, including deferred tax assets and liabilities
o
Employee benefits expense
o
Key audit
•
Revenue recognition;
matters
•
Accrued supplier income;
•
Valuation of insurance contract liabilities – liability for remaining coverage;
•
Impairment of Food property, plant & equipment and right of use assets;
and
•
Group IT environment
Materiality
•
Overall Group materiality of £46m which represents 0.5% of Adjusted
Revenue
Adjusted Revenue is calculated as Group revenue less revenue generated by the
Federal Joint Buying Group (Federal per Note 1 of the accounts). Federal relates to the
activities of a joint buying group that is operated by the Group for itself and other
independent co-operative societies. The Group acts as a wholesaler to the other
independent co-operatives and generates sales from this. This is run on a cost recovery
basis and therefore no profit is derived from its activities. As the Group earns no profit
on the arrangement, we consider Adjusted Revenue to be a relevant performance
benchmark for measuring the value of the Group's activities from which it derives an
economic benefit.
209
An overview of the scope of the group audit
Tailoring the scope
In the current year, our audit scoping has been updated to reflect the new requirements of ISA (UK)
600 (Revised). We have followed a risk-based approach when developing our audit approach to obtain
sufficient appropriate audit evidence on which to base our audit opinion. We performed risk
assessment procedures, with input from our component auditors, to identify and assess risks of
material misstatement of the Group financial statements and identified significant accounts and
disclosures. When identifying components at which audit work needed to be performed to respond to
the identified risks of material misstatement of the Group financial statements, we considered our
understanding of the Group and its business environment, the potential impact of climate change, the
applicable financial framework, the Group’s system of internal control at the entity level, the existence
of centralised processes, applications and any relevant internal audit results.
We determined that centralised audit procedures can be performed on components in the following
audit areas:
Key audit area on which procedures were
Component subject to central procedures
performed centrally
Right-of-use assets and lease liabilities
Food, Wholesale, Funeralcare, Corporate, Legal, and
Co-operative Group Holdings (2011) (CGH)
Pension assets and liabilities
Food and Corporate
Taxation, including deferred tax assets and liabilities
Food, Funeralcare, Corporate
Employee benefits expense
Food, Wholesale, Funeralcare, Corporate, Legal, and
Insurance
We identified three components as individually relevant to the Group due to relevant events and
conditions underlying the identified risks of material misstatement of the group financial statements
being associated with the reporting components, and their financial size relative to the Group:
•
Food
•
Wholesale
•
Funeralcare
We identified one component (Corporate) as individually relevant to the Group due to financial size of
the component relative to the Group.
For those individually relevant components, we identified the significant accounts where audit work
needed to be performed at these components by applying professional judgement, having considered
the Group significant accounts on which centralised procedures will be performed, the reasons for
identifying the financial reporting component as an individually relevant component and the size of the
component’s account balance relative to the Group significant financial statement account balance.
We identified two additional components as individually relevant to the Group based on the materiality
of specific accounts relative to the Group (Legal and Insurance).
We then considered whether the remaining Group significant account balances not yet subject to audit
procedures, in aggregate, could give rise to a risk of material misstatement of the Group financial
statements. We selected one component of the Group to include in our audit scope to address this risk
(CGH).
Having identified the components for which work will be performed, we determined the scope to
assign to each component.
Of the seven components selected, we designed and performed audit procedures on the entire
financial information of four components (“full scope components”). For two components, we designed
210
and performed audit procedures on specific significant financial statement account balances or
disclosures of the financial information of the component (“specific scope components”). For the
remaining one component, we performed specified audit procedures to obtain evidence for one or
more relevant assertions.
Our scoping to address the risk of material misstatement for each key audit matter is set out in the Key
audit matters section of our report.
Involvement with component teams
In establishing our overall approach to the Group audit, we determined the type of work that needed to
be undertaken at each of the components by us, as the Group audit engagement team, or by
component auditors operating under our instruction.
A planning event was held with representatives from all full and specific scope component teams
which involved discussing the audit approach with the component teams.
During the current year’s audit cycle, the primary team also performed the work on the Wholesale,
Corporate, Insurance, and CGH components as an integrated team. Food and Funeralcare
component teams worked in the same office location as the primary team when on-site in the Co-
operative Group Head Office in Manchester. This allowed the Group audit partner to meet with the
component teams during the performance of the audit, discuss the audit approach with them and any
issues arising from their work, meeting with local management, and attending closing meetings. The
Group audit team interacted regularly with the component teams where appropriate during various
stages of the audit, reviewed relevant working papers and were responsible for the scope and
direction of the audit process. Where relevant, the section on key audit matters details the level of
involvement we had with component auditors to enable us to determine that sufficient audit evidence
had been obtained as a basis for our opinion on the Group as a whole.
This, together with the additional procedures performed at Group level, gave us appropriate evidence
for our opinion on the Group financial statements.
Climate change
Stakeholders are increasingly interested in how climate change will impact
Co-Operative Group
Limited
. The Group has determined that the most significant future impacts from climate change on
their operations will be from Food supply chain resilience, raw material availability and reduced access
to key facilities (depots & data centres). The material future transition risks arising from climate change
are potential damage to consumer sentiment in the market and impairment of technological assets as
a result of negative impacts from the transition to a more sustainable business.
These are explained on pages 110-118 in the required Climate Related Financial Disclosures and on
pages 47 to 51 in the principal risks and uncertainties. The climate commitments are further explained
on pages 111 to 113. All of these disclosures form part of the “Other information,” rather than the
audited financial statements. Our procedures on these unaudited disclosures therefore consisted
solely of considering whether they are materially inconsistent with the financial statements, or our
knowledge obtained in the course of the audit or otherwise appear to be materially misstated, in line
with our responsibilities on “Other information”.
In planning and performing our audit we assessed the potential impacts of climate change on the
Group’s business and any consequential material impact on its financial statements.
The Group has explained in the Accounting Policies and Basis of Preparation and in Note 10 and Note
12 their articulation of how climate change has been reflected in the financial statements and cash
flow forecasting, including how this aligns with their commitment to the aspirations of the Paris
211
Agreement to achieve net zero emissions by 2040. Significant judgements and estimates relating to
climate change are included within section “Material accounting judgements, estimates and
assumptions in relation to climate change”.
Our audit effort in considering the impact of climate change on the financial statements was focused
on evaluating management’s assessment of the impact of climate risk, physical and transition, their
climate commitments, the effects of material climate risks disclosed on page 110-118 and the
significant judgements and estimates disclosed within section “Material accounting judgements,
estimates and assumptions in relation to climate change”. We assessed whether this impact has been
appropriately reflected in asset values where these are impacted by future cash flows and associated
sensitivity disclosures (see notes 10, 12 and 25), following the requirements of UK adopted
international accounting standards.
As part of this evaluation, we performed our own risk assessment,
supported by our climate change internal specialists, which included a review of the most recent
Sustainability Report produced by the Group and a review of “Co-op’s Climate Plan” updated in March
2024, to determine the risks of material misstatement in the financial statements from climate change
which needed to be considered in our audit.
We also challenged the Directors’ considerations of climate change risks in their assessment of going
concern and viability and associated disclosures. Where considerations of climate change were
relevant to our assessment of going concern, these are described above.
Based on our work, we have not identified the impact of climate change on the financial statements to
be a standalone key audit matter. However, we have considered the impact on one existing key audit
matter:
Impairment of Food property, plant & equipment and right of use assets
. Details of the impact,
our procedures and findings are included in our explanation of the key audit matter below.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period and include the most significant assessed
risks of material misstatement (whether or not due to fraud) that we identified. These matters included
those which had the greatest effect on: the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team. These matters were addressed in the context
of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide
a separate opinion on these matters.
Risk
Our response to the risk
Revenue recognition
Applicable to all material revenue streams
2024: £11,279m (2023: £11,262
o
We obtained an understanding of and documented the key
million)
processes and controls used to record revenue transactions by
performing a walkthrough of the processes.
The timing of when revenue is
recognised is relevant to the
o
We performed data analysis procedures over revenue, comparing
reported performance of the Group.
results with our expectations and corroborating differences. In
There remains opportunity through
particular, we performed procedures in the month preceding and
management override of controls to
subsequent to the period-end.
misstate revenue throughout the
period.
o
We tested whether the Group’s revenue recognition policy is in line
with the criteria in IFRS 15: Revenue from Contracts with
This is an existing risk of fraud in
Customers.
line with our prior period audit. We
have determined the risk to affect
212
Risk
Our response to the risk
overstatement in the current period,
o
We performed testing over post-closing adjustments.
reflecting the risk that management
could override controls to enhance
Food – Store revenue
reported performance.
o
We tested journals relating to instances where stores recognise
The key areas where management
revenue outside the normal automated store EPOS process and
override may arise relate to
ensured that there is no duplication of stores within the population or
fictitious and erroneous journals to
unusual amounts of revenue recognised.
overstate revenue throughout the
year across all components
o
We performed journal analysis to identify sales journals that have
not resulted in cash receipts and tested a sample of these to
This year, the risk includes fraud or
supporting evidence to ensure revenue has been recognised
error in the assumptions used within
correctly.
the calculations of the CSM roll-
forward and the expected claims
o
We challenged unusual adjustments made in relation to “non-polled”
and expenses populations within the
store data adjustments by comparing these against averages for
Funeralcare component.
those stores.
Refer to the Audit Committee Report
Funeralcare
(pages 91-98); Accounting policies
(page 200); and Note 2 of the
In conjunction with our actuarial colleagues, we:
Consolidated
Statements
(page
140).
o
Tested journals which have been posted to revenue which do not
follow the expected flow of transactions.
o
Agreed the expected claims and expenses recognised for the period
to the change in the liability for the remaining coverage,
investigating any unusual or material reconciling items.
o
Reconciled the amount of insurance acquisition cash flows included
in revenue to the amount included in insurance costs, investigating
any unusual or reconciling items.
o
Tested key assumptions within the Liability for Remaining Coverage
and specific to demographic assumptions applied within the model,
assessed whether these are balanced compared to industry
practice.
o
Tested the demographic assumptions applied within the model to
assess whether these are balanced and appropriately reflect recent
experience.
o
Evaluated the definition of the coverage units and the
appropriateness of the release pattern input into the CSM model.
o
Recalculated the total CSM release to confirm that this is in line with
the requirements of the standard.
o
Reconciled the movement in the CSM to the relevant accounts in
the Income Statement and changes in fulfilment cashflows relating
to future services discounted at appropriate rates and aggregation
level in the reserving models tested as part of the fulfilment
cashflows.
o
On a sample basis, tested the completeness and accuracy of the
policy data used in the models by agreeing this to source systems
and previously audited information. For new data requirements, we
tested a sample of key data points back to source information.
213
Risk
Our response to the risk
Wholesale and Legal Services
o
We tested journals to revenue and other transactions to the revenue
account that do not follow the expected critical path from revenue to
debtors to cash to identify any material instances of misallocation
between periods.
Insurance
o
We tested the appropriateness of the release of deferred
consideration into revenue during the period by testing the
assumptions of the backbook model.
o
We tested a sample of front book revenue transactions to third party
commission statements.
Key Observations to the Risk and Audit Committee
Revenue has been recognised appropriately in accordance with IFRS 15: Revenue from Contracts with
Customers. The revenue from pre-need funeral plans has been recognised in accordance with IFRS 17:
Insurance Contracts. We have concluded that the CSM calculation model is appropriate and the related release
of CSM is fairly stated in accordance with IFRS 17. We have not identified instances of management override of
controls in relation to revenue.
How we scoped our audit to respond to the risk
We performed full scope audit procedures over this risk in five components (Food, Wholesale, Funeralcare,
Legal, and Insurance) which covered 100% of the Group revenue balance.
The primary audit team issued Group audit instructions to the component teams which included specific
substantive procedures to address the risk of material misstatement in relation to revenue recognition. The
primary audit team reviewed the component team’s key revenue and journal entry workpapers which were
executed in line with the Group audit instructions.
Risk
Our response to the risk
Accrued supplier income
o
We obtained an understanding of the key processes used to record
supplier income by performing a walkthrough of the processes and
Supplier income accrued at
the relevant controls which respond to the significant risk identified.
period-end
2024: £131m (2023: £96m)
o
We held enquiries with management to understand supplier
arrangements entered in the period, to assess risks of material
The Group receives money back
from suppliers, specifically in the
misstatement due to unusual contract arrangements or terms.
Food and Wholesale divisions. This
supplier income is categorised as
o
We obtained a list of accrued supplier income by contract and
bonus income, promotional income
management’s reconciliation of the balance per the listing to the
and long-term agreements (LTAs).
balance per the general ledger. We tested material reconciling
The terms of agreements with
items.
suppliers can be complex and
varied, including performance
conditions or promotional periods
o
We issued direct requests for a sample of third-party suppliers to
that span the Group’s period end.
confirm the terms of arrangements and/or sales volumes used.
214
Risk
Our response to the risk
We reassessed our risk in the
Using responses to these requests, we recalculated accrued
current period for all three supplier
supplier income. We obtained invoices that the group raised to its
income streams to reflect a specific
suppliers and agreed them back to the associated remittance advice
risk to accrued supplier income at
and/or to bank statement where settled post year end.
the year-end.
o
We assessed the profiling of supplier income with respect to the
Due to the complexity and
level of purchases throughout the current and prior period to identify
judgement in relation to LTA
income, there is a risk that a
unusual or unexpected trends. We investigated discrepancies.
misstatement in the calculation of
income may occur either
o
We have extracted the journals data impacting accrued supplier
accidentally or purposefully through
income. We analysed the data to search for items that did not follow
management override of controls.
our expected posting patterns. We tested unusual journals which
could be indicative of management override of controls.
Bonus income and promotional
income relates to short-term
We tested that management’s allocation of supplier income earned
marketing support or promotions
o
jointly with other independent societies through the member buying
which are less complex and settled
group was applied appropriately.
through offset in the period. The
risk of misstatement therefore
relates to their fraud risk focussed
solely related to the posting of
fictitious journals to the income
stream.
Refer to the Audit Committee
Report (pages 91-98); Accounting
policies (page 200); and Note 16 of
the Consolidated Financial
Statements (pages 161).
Key Observations to the Risk and Audit Committee
We did not identify any material misstatements through either management override, error or manipulation of the
period-end figures for accrued supplier income related to LTA, Bonus income, and Promotional income.
How we scoped our audit to respond to the risk
We performed full scope audit procedures over this risk in two components (Food and Wholesale) which
covered 100% of the Group accrued supplier income balance.
The primary audit team issued Group audit instructions to the component teams which included specific
substantive procedures to address the risk of material misstatement in relation to accrued supplier income. The
primary audit team reviewed the component team’s key accrued supplier income workpapers which were
executed in line with the Group audit instructions.
215
Risk
Our response to the risk
Valuation of insurance contract
This risk relates to the Funeralcare business.
liabilities - Liability for
Remaining Coverage
In conjunction with our actuaries, we:
Liability for Remaining Coverage
•
Performed walkthroughs to obtain an understanding of the
2024: £1,004m (2023: £1,098m)
modelling, policyholder data flows and assumption setting
process and identify internal controls in place.
The risk related to the valuation of
the Liability for Remaining
•
Compared management’s model validation results with the
funeral plan product terms and conditions and management’s
Coverage is focused on the present
IFRS 17 valuation policies. For a selection of policies, performed
value of future cash flows
an independent recalculation of the best estimate liabilities and
(PVFCFs), the risk adjustment and
compared the results to the output of the cashflow model used by
the loss component.
management.
The risk is significant due to the
•
Assessed the results of management’s analysis of movements in
complexity of the models used to
insurance contract liabilities to corroborate the model changes in
estimate the insurance liabilities,
the period.
the degree to which insurance
liabilities are sensitive to economic
•
Gained an understanding of the rationale for amounts calculated
outside of the core actuarial models. For a sample of such
and non-economic assumptions set
calculations, assessed the appropriateness of the applied
by management and the
methodology and tested that the calculation has been performed
calculations being contingent on
appropriately.
the completeness and accuracy of
the data.
•
Agreed the reconciliation of the plan master file to the input into
the valuation model to verify that all in-force plans are properly
We believe the specific risk factors
included in the valuation process.
contributing to the assessment of
the risk as significant include the
•
Tested the underlying data back to source administration system,
following:
verifying that the key data fields have been correctly and
consistently applied period to period.
•
Models are not designed
appropriately for their
•
Challenged management’s methodology for splitting expenses
between acquisition and maintenance expenses and then
purpose and do not reflect
agreeing the spit of attributable and non-attributable costs under
and/or model product
IFRS 17, agreeing a sample of expenses back to source
terms and conditions
information.
effectively.
•
Tested the actuarial model to ensure the expense assumptions
•
Unusual adjustments to
were applied appropriately within the model.
liabilities outside of the
core actuarial models.
•
Evaluated the appropriateness of the discount rate selected by
management and compared the information used to determine
•
Key plan data utilised by
the illiquidity premium to the characteristics of the liabilities.
the models is not
complete and accurate.
•
Challenged the results of management’s experience analyses
including the mortality and cancellations, to assess whether these
reflected recent experience appropriately and that they support
•
Judgment is involved in
the adopted non-economic assumptions.
setting economic
assumptions, particularly
•
Benchmarked the significant assumptions against those of other
discount rates (including
comparable industry participants in our wider assumptions
the illiquidity premium)
benchmarking review.
and in determining non-
economic assumptions,
•
Performed procedures to test that the assumptions used in the
the most significant of
year end valuation were consistent with the board approved
which are expenses.
basis.
Therefore, there is a risk
216
Risk
Our response to the risk
of management override
•
Tested the application of the methodology used to derive the risk
in this area; and
adjustment, including the scope of non-financial risks and key
judgements applied when updating the calibration result.
Compared management’s approach to the wider market, where
•
Finally, IFRS 17 explicitly
applicable, particularly where adjustments are applied to the
requires that a risk
calibration to reflect external events and by applying our industry
adjustment (‘RA’) be
knowledge and experience.
included above the best
estimate cashflows within
•
Considered the adequacy of the disclosures in the financial
the liability for remaining
statements.
coverage. IFRS 17 does
not specify the estimation
•
Tested the transition of customer data which has been migrated to
technique that should be
the new system as part of the CST transition, ensuring the
used to determine the risk
completeness and accuracy of the data on the new system.
adjustment, so
management must
develop an appropriate
estimation technique.
Therefore, due to the
inherent judgment
required to determine both
an appropriate technique
and the relevant inputs,
we consider the RA to be
susceptible to
management bias.
This risk has remained unchanged
from the prior year.
Refer to the Audit Committee
Report (pages 91-98); Accounting
policies (page 200); and Note 20, of
the Consolidated Financial
Statements (pages 167-177).
Key Observations to the Risk and Audit Committee
The liability for remaining coverage including risk adjustment is fairly stated in accordance with IFRS 17.
How we scoped our audit to respond to the risk
We performed full scope audit procedures over this risk in Funeralcare component which covered 100% of the
Group liability for remaining coverage balance.
The primary audit team issued Group audit instructions to the component team which included specific
substantive procedures to address the risk of material misstatement in relation to liability for remaining coverage
balance.
The primary audit team reviewed the component team’s key
liability for remaining coverage
workpapers which were executed in line with the Group audit instructions.
217
Risk
Our response to the risk
Impairment of Food property,
o
We performed a walkthrough to obtain an understanding of the
plant & equipment and right of
controls addressing the impairment model and the assessment of
indicators of impairment for Food PPE and RoUA.
use assets
We obtained management’s impairment indicator workings for non-
PPE 2024: £1,325m (2023:
o
amortisable store level assets. For those with indicators of
£1,315m)
impairment, we obtained the Group’s impairment model. We
RoU Assets 2024: £686m, (2023:
confirmed the integrity of data inputs including store-level cash
£702m)
contribution data, listings of stores which were refitted or new in
2023 or 2024 and the carrying values of PPE. We also re-performed
There is a risk of misstatement
any manual calculations to check these for accuracy.
when performing an impairment
assessment, due to challenges in
o
We challenged the composition and accuracy of the cashflow
forecasting for the future effects of
projections and assessed management’s forecasting accuracy by
comparing to previous outturn. We considered making adjustments
the macro-economic environment.
to forecasts where judgement was applied, such as for new and
These factors can result in a
loss-making stores in the Food component, as well as macro-
material decline in the valuation of
economic impact on profits.
a wide range of assets at a food
store level.
o
We tested the key assumptions (such as growth rates, discount
rates and perpetuity rates) by corroborating the data inputs to
We reassessed our risk in the
external sources and working with EY Valuation Specialists to
current period in respect of
compare the key assumptions to external benchmarks.
impairment and removed the
Corporate balances from the key
o
We performed a sensitivity analysis on the key inputs into the
calculation by assessing the impact reasonably possible changes on
audit matter given the past
these inputs would have on the overall headroom within the
impairments taken on Corporate
calculations.
assets and the remaining net book
value of the assets related to this
o
We challenged management where the forecast was based on
component being less susceptible
historical trading that was not representative of store performance,
to the impairment risk.
such as if the store was closed for a number of months or where
‘break even’ profitability was assumed in the value in use
The macro-economic environment
calculation.
is challenging, where the
subsequent effect of these issues
o
We read the disclosures related to key assumptions and assessed
whether reasonably possible changes to key assumptions could
could lead to a material decline in
give rise to an impairment.
the valuation of long-life assets.
The food retail component is most
closely impacted by the macro-
economic environment. Given the
material value of the balances
within this component we consider
this risk to affect the Food stores
Property, Plant & Equipment (PPE)
and Right of use Assets (RoUA).
Refer to the Audit Committee
Report (pages 91-98); Accounting
policies (page 200); and Notes 10
& 11 of the Consolidated Financial
Statements (pages 149-154).
Key Observations to the Risk and Audit Committee
218
Risk
Our response to the risk
The impairment charge in respect of the Food store portfolio appropriately reflects changes in forecast
performance. The disclosures related to the impairment assessments and related sensitivities are in accordance
with the requirements of IAS 36 “Impairment of Assets”.
How we scoped our audit to respond to the risk
We performed full scope audit procedures over this risk in Food component which covered 85% of the Group
property, plant & equipment and 86% of the Group right of use assets balances.
The primary audit team issued Group audit instructions to the component teams which included specific
substantive procedures to address the risk of material misstatement in relation to impairment of Food property,
plant & equipment and right of use assets. The primary audit team reviewed the component team’s key
impairment workpapers which were executed in line with the Group audit instructions.
Risk
Our response to the risk
Group IT Environment
o
We understood the IT systems, the level of integration between
systems and the ability to rely on IT general controls for the key
With over 600 IT platforms and
systems impacting the recording of transactions and the
presentation of the financial statements.
applications in use, the Group’s IT
Systems are complex. This
o
We enhanced the testing of unusual journals posted as part of the
complexity, together with the impact
financial close process due to limitations in the Group’s IT systems
of sub-optimal system integration
to address the risk of inappropriate journals.
and automation results in significant
dependence on manual
o
In response to the limitations in the systems which affect the
workarounds and a high volume of
applications and databases within the scope of our audit, we
monthly key account
performed the following audit procedures over information provided
reconciliations.
to us by the Group:
Due to the number of IT systems
1)
Testing a sample of transactions within the data processed by
the IT systems to underlying source documentation to ensure
used in the preparation of the
that the extracted data is accurate.
financial statements, a significant
amount of audit effort is directed
2)
Testing the data extracted from the IT systems to the general
towards our response to the risks
ledgers to ensure accuracy.
present from manual workarounds
and the high volume of account
3)
Reconciling trial balance movements in the period to the list of
reconciliations.
journals posted to ensure completeness.
Accordingly, we have identified the
4)
Observing and testing the input parameters being entered to
Group IT Environment as an area of
ensure appropriateness of the data extracted from the IT
audit focus and a Key Audit Matter.
systems for the intended purpose.
This is an existing risk consistent
5)
Recalculating the computations and categorizations performed
with our prior period audit.
by the IT systems for a sample of transactions in the extracted
data reports to ensure the data was accurate.
o
Due to the lack of systems integration and the presence of manual
interventions we tested a higher number of reconciling items in both
complex and non-complex areas of accounting.
o
In relation to the Funeralcare system transition we involved our IT
specialists to assist with the performance of procedures in respect
219
Risk
Our response to the risk
of the data transition and to assess the controls which were in place
around the transition.
o
In preparation for the system transition, we involved our IT
specialists to perform an assessment of the controls in place around
the transition and governance process.
Key Observations to the Risk and Audit Committee
We completed additional substantive testing to mitigate the risk of material misstatement due to limitations in the
functionality of certain of the Group’s IT systems and IT general controls and did not identify material
misstatements.
How we scoped our audit to respond to the risk
All audit work performed to address this key audit matter was undertaken by the primary audit team.
In the prior period, our auditor’s report included a key audit matter in relation to the Revenue
recognition in respect of the release of CSM. In the current period, we have removed this as a
standalone key audit matter and included it within the revenue recognition key audit matter, given the
risk is associated with the release of CSM being susceptible to management override of controls. The
procedures required in respect of the CSM roll forward have been included within the Revenue
recognition key audit matter.
We have modified our risk assessment for supplier income to focus on accrued supplier income at the
year-end rather than a risk over supplier income recognition throughout the year. Supplier income
recognition related to Long-Term Agreements and Promotional income follows a similar trend to the
recognition of cost of goods sold and is settled throughout the year. Bonus income recognition tends to
lag behind, resulting in a higher proportion of accrued bonus income recognised in the last quarter of
the year. The risk of material overstatement of supplier income resides in the unbilled, accrued income
existing at the year end.
We have reassessed our risk of impairment of property, plant and equipment and right-of-use assets
and retained the significant risk of material misstatement for the Food component given the significant
amount of estimation uncertainty within the cash flow forecasts underpinning the impairment modelling
while removing the Corporate balances from the key audit matter given the
net book value of the
assets related to this component being less material to the overall property, plant and equipment and
right of use asset categories in the financial statements.
In the prior period, our auditor’s report also included a key audit matter in relation to the Transition to
IFRS 17. This risk is no longer relevant as the accounting standard was implemented in the prior
period.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of
identified misstatements on the audit and in forming our audit opinion.
220
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably
be expected to influence the economic decisions of the users of the financial statements. Materiality
provides a basis for determining the nature and extent of our audit procedures.
We determined materiality for the Group to be £46 million (2023: £45 million), which is 0.5% (2023:
0.5%) of Adjusted Revenue. Revenue is a key performance indicator used by management to monitor
the Group’s performance and the figure which we believe to be relevant to the members when
assessing the performance of the Group. We considered Adjusted Revenue to be a relevant
performance metric on which to base our materiality calculation. Adjusted Revenue is defined in
'Materiality' summary in the 'Overview of our audit approach' section above.
In concluding on this benchmark, we considered that the primary users of the financial statements
were the Member-owners. Providing goods, services and social value for Member-owners and their
communities, are important indicators of the success of the Society and a function of revenue. This
benchmark is consistent with the prior period.
•
Starting point - £11,279 million total third party
Starting
revenue
basis
•
Remove £2,076 million of revenue generated by
the Federal Joint Buying Group
Adjustments
•
Totals £9,203 million adjusted revenue
•
Materiality of £46m (0.5% of adjusted revenue)
Materiality
During the course of our audit, we reassessed initial materiality and materiality based on the final
figures used per the financial statements and this has not led to any change in our materiality levels.
Performance materiality
The application of materiality at the individual account or balance level.
It is set at an amount to
reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s IT environment,
our assessment of the Group’s overall control environment, conversations with the Group risk and
internal audit functions and the number and magnitude of audit misstatements identified in the prior
period, our judgement was that performance materiality should be restricted to 50% (2023: 50%) of
our planning materiality, namely £23m (2023: £22.5m).
Audit work was undertaken at component locations for the purpose of responding to the assessed
risks of material misstatement of the Group financial statements. The performance materiality set for
each component is based on the relative scale and risk of the component to the Group as a whole and
our assessment of the risk of material misstatement at that component. In the current year, the range
of performance materiality allocated to components was £4.6m to £19.5m (2023: £4.5m to £19.1m).
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in
excess of £2.3m (2023: £2.3m), which is set at 5% of planning materiality, as well as differences below
that threshold that, in our view, warranted reporting on qualitative grounds.
221
We evaluate any uncorrected misstatements against both the quantitative measures of materiality
discussed above and in light of other relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual report, other than the financial
statements and our auditor’s report thereon.
The directors are responsible for the other information
contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent
otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the
course of the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether this gives
rise to a material misstatement in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of the other information, we are required
to report that fact.
We have nothing to report in this regard.
Matters on which we have been requested to report in accordance with our
engagement letter
The directors have instructed us to express an opinion on whether, based on the work undertaken in
the course of the audit, the information given in the Corporate Governance Statement on page 69 is in
compliance with the following provisions: Section 2 provision 3, Section 5 provisions 1, 3, 5 and 6 of
the Co-operative Corporate Governance Code issued in November 2019 (‘the Code’).
We have nothing to report in this regard.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and its environment obtained in the
course of the audit, we have not identified material misstatements in the strategic report or the
directors’ report.
We have nothing to report in respect of the following matters in relation to which the Co-operative and
Community Benefit Societies Act 2014 requires us to report to you if, in our opinion:
• The Society has not kept proper books of account; or
• The Society has not maintained a satisfactory system of control over its transactions; or
• The financial statements are not in agreement with the books of account; or
• We have not received all the information and explanations we require for our audit
Corporate Governance Statement
222
ISAs (UK) require us to review the directors’ statement in relation to going concern, longer-term
viability and that part of the Corporate Governance Statement relating to the Group’s compliance with
the provisions of the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following
elements of the Corporate Governance Statement is materially consistent with the financial
statements, or our knowledge obtained during the audit:
• Directors’ statement with regards to the appropriateness of adopting the going concern basis of
accounting and any material uncertainties identified set out on page 106;
• Directors’ explanation as to its assessment of the Group’s prospects, the period this assessment
covers and why the period is appropriate set out on pages 106 to 107;
• Directors’ statement on fair, balanced and understandable set out on page 119;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks
set out on page 47;
• The section of the annual report that describes the review of effectiveness of risk management and
internal control systems set out on page 92; and
• The section describing the work of the audit committee set out on pages 92 to 98.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on
pages 119 to 120, the
directors are responsible for the preparation of the financial statements and for being satisfied that
they give a true and fair view,
and for such internal control as the directors determine is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group
’s
ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Explanation as to what extent the audit was considered capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud.
The
risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for example, forgery or
223
intentional misrepresentations, or through collusion.
The extent to which our procedures are capable
of detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those
charged with governance of the Group and management.
•
We obtained an understanding of the legal and regulatory frameworks that are applicable to
the Group and determined that the most significant are the direct laws and regulations relating
to elements of company law and tax legislation, and the financial reporting framework i.e., UK-
adopted international accounting standards in conformity with the requirements of the Co-
operative and Community Benefit Societies Act 2014. Our considerations of other laws and
regulations that may have a material effect on the financial statements include the Groceries
Supply Code of Practice (GSCOP), FCA Disclosure Guidance and Transparency Rules (DTR),
the UK Corporate Governance Code 2018, Health and Safety at Work Act 2015, National
Minimum Wage Act 1998, Food Hygiene Regulations 2006, Money Laundering Regulations
2019, Network and Information Systems (NIS) Regulations 2018 and The Funeral Plan:
Conduct of Business sourcebook (FPCOB) issued by the Financial Conduct Authority (FCA).
•
We understood how Co-operative Group Limited is complying with those frameworks by
making inquiries of management, internal audit, and those responsible for legal and
compliance matters. We also read correspondence between the Group and various UK
regulatory bodies; inspected minutes of the Board and Risk and Audit Committee; and gained
an understanding of the Group’s approach to governance. This final point was demonstrated
by the board of directors’ approval of the governance framework and the Risk and Audit
Committee's review of the risk management framework and internal control processes, as
delegated by the board of directors. Throughout the above procedures we noted that there
was no contradictory evidence to the enquiries held.
•
We assessed the susceptibility of the Group’s financial statements to material misstatement,
including how fraud might occur by the entity, or that might otherwise seek to prevent, deter or
detect fraud. We also considered areas of significant judgement including complex
transactions, performance targets, economic or external pressures and the impact that these
have on the control environment. Where the risk was considered to be higher, we performed
audit procedures to address each identified fraud risk, refer to the Key Audit Matters section
for further details. We used an internal fraud analyser on Funeralcare component, which
compares the general ledger data to the characteristics from a database of fraud schemes, to
identify journal entries that exhibit common characteristics. Using the internal fraud analyser,
we reviewed the areas of the financial statements that could be more susceptible to fraud and
assessed whether this was consistent with our risk assessment procedures. Then applying
filters and using our professional judgement, we analysed the underlying journal detail. For
those entries in the journal detail determined to be higher risk we selected items for testing.
•
Based on this understanding we designed our audit procedures to identify non-compliance
with such laws and regulations. For laws and regulations having a direct impact on the
financial statements, we considered the extent of compliance with those laws and regulations
as part of our procedures on the related financial statement items. For both direct and other
laws and regulations, our procedures involved; making enquiries with those charged with
governance, senior management and internal legal counsel for their awareness of non-
compliance with laws and regulations, inquiring about policies that have been established to
prevent non-compliance with laws and regulations by officers and employees, inquiring about
224
the Society’s methods of enforcing and monitoring compliance with such policies, inspecting
significant correspondence with regulatory authorities and making inquiries with external legal
counsel. We communicated relevant items from these procedures to the relevant component
teams who performed sufficient and appropriate audit procedures on these areas,
supplemented by audit procedures performed at the Group level.
•
The Group has disclosed in Note 27 that a claim has been received in respect of an historic
transaction relating to certain former Somerfield stores. We inspected documentation
prepared by management, the in-house legal counsel and management’s external legal
advisors both at the time of the transaction and in the current period. We discussed the nature
of the claim and the basis for the disclosure presented in Note 27 with management, the
external legal advisors and members of the Risk and Audit Committee.
•
The Group has disclosed in Note 27 that employment tribunal claims have been received in
respect of current and former food store colleagues alleging their work is of equal value to that
of distribution centre colleagues and differences in pay and other terms are not objectively
justifiable. We inspected documentation prepared by management, the in-house legal counsel
and management’s external legal advisors. We also discussed the nature of the claim and the
basis for the disclosure presented in Note 27 with management, the external legal advisors
and members of the Risk and Audit Committee.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at
https://www.frc.org.uk/auditorsresponsibilities.
This
description forms part of our auditor’s report.
Other matters we are required to address
Following the recommendation from the audit committee we were appointed by the Society on 21 May
2016 to audit the financial statements for the 52-week period ending 31 December 2016 and
subsequent financial periods.
The period of total uninterrupted engagement including previous renewals and reappointments is 9
periods, covering the years ending 52-week periods ending 31 December 2016, 5 January 2019, 4
January 2020, 2 January 2021, 1 January 2022, 31 December 2022, 4 January 2025 and two 53-week
periods ending 6 January 2018 and 6 January 2024.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group and
we remain independent of the Group in conducting the audit.
The audit opinion is consistent with the additional report to the Risk and Audit Committee.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Section 87 of the
Co-operative and Community Benefit Societies Act 2014 and our engagement letter dated 20
February 2024.
Our audit work has been undertaken so that we might state to the Society’s members
those matters we are required to state to them in an auditor’s report and for no other purpose.
To the
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Society and the Society’s members as a body, for our audit work, for this report, or for the opinions we
have formed.
225
Ernst & Young LLP
Statutory Auditor
Manchester
2 April 2025
Co-op Annual Report & Accounts for 2024:
Glossary
226
Glossary
There are lots of technical words in our accounts which we have to use for legal and accounting reasons. We’ve set out some definitions in
the glossary table in the pages that follow to help a reader understand some of the difficult phrases accountants like to use. When a word is
in bold in the glossary that means you can also find the definition of that word in the glossary table as well.
In 2023 we adopted a new accounting standard for insurance contracts (which relates to our funeral plans) and consequently we added in
some new definitions to the glossary to help with the new terminology. However, insurance accounting is very complicated and diffcult to
explain in simple terms. As such; it may help a user to also refer to the accounting policies for funeral plans on page 175 (which gives a
holistic view of the approach taken) when considering some of the definitions noted in the glossary for insurance contracts and funeral
plans.
Before the main Glossary table, we initially define and explain some of the Alternative Performance Measures (APMs) that we use
throughout the Annual Report and Accounts.
Alternative Performance Measures (APMs)
Our Annual Report and Accounts includes various references to Alternative Performance Measures (APMs). These are financial ratios and
metrics that are not defined by International Financial Reporting Standards (IFRS) and as such they may not be comparable with the APMs
that are reported by other entities.
We include our APMs in the Annual Report and Accounts as we think they give useful information to our members to help them understand
the underlying performance and financial health of our Co-op. The APMs are not meant to replace statutory measures under IFRS.
The table below explains how the APMs are calculated and why we think they are useful measures to our members. Where possible we also
call out the nearest equivalent IFRS measure and cross-refer to the section of the financial statements where we reconcile the APM to the
respective IFRS measure.
The Group's primary APM is Underlying operating profit / (loss) before tax.
APM
Definition and Purpose:
Underlying operating profit reflects our operating profit before the impact of property and business disposals,
impairment of non-current assets within our businesses, the change in the value of investment properties, any
losses on onerous contracts and other non-underlying items.
We exclude the impact of these items from our underlying operating profit metric as they are not generated by
Underlying
our day-to-day trading and may also be either non-recurring or inherently volatile in nature and fluctuate year on
operating profit /
year.
(loss)
Closest IFRS equivalent:
Operating Profit.
Where reconciled in the financial statements:
In the 'Underlying profit before tax (APM)' table below the Consolidated Income Statement. A Divisional split is
shown in the Segmental tables in Note 1 (Operating segments).
Definition and Purpose:
Our underlying PBT figure is simply our underlying operating profit (as calculated above) less our net underlying
interest (being the day-to-day interest we pay or earn on our bank borrowings and lease liabilities).
Other interest income or expense such as our net interest income or expense on funeral plans is either not
generated by our day-to-day trading or is not considered by management in the day-to-day running of the
Underlying profit /
business and may also be either non-recurring or inherently volatile in nature and fluctuate year on year. Such
(loss) before tax
items are not included in our underlying PBT metric so our members can see how our core underlying businesses
(PBT)
are performing.
Closest IFRS equivalent:
Profit before tax.
Where reconciled in the financial statements:
Note 1 (Operating segments) sub-section (k).
Co-op Annual Report & Accounts for 2024:
Glossary
227
Alternative Performance Measures (APMs)
continued
APM
Definition and Purpose:
EBITDA is calculated by adding back depreciation and amortisation charges to Operating profit. Operating profit
is stated before interest charges and taxation.
EBITDA
EBITDA is a non-GAAP measure of performance which helps us and our members to understand the operating
(Earnings before interest,
profits our business segments are generating before capital investment and interest charges.
taxation, depreciation and
amortisation)
Closest IFRS equivalent:
There is no close equivalent to this measure under IFRS.
Where reconciled in the financial statements:
The derivation is noted in the Segmental tables in Note 1 (Operating segments).
Definition and Purpose:
Underlying EBITDA is calculated by adding back depreciation and amortisation charges to Underlying operating
profit. Underlying operating profit is another one of our APMs and is defined in the table above. It is stated before
interest charges and taxation.
Underlying EBITDA is a non-GAAP measure of performance which helps us and our members to understand the
underlying operating profits our business segments are generating before capital investment and interest
Underlying EBITDA
charges.
Closest IFRS equivalent:
There is no close equivalent to this measure under IFRS.
Where reconciled in the financial statements:
The derivation is noted in the Segmental tables in Note 1 (Operating segments).
Definition and Purpose:
Net debt is made up of our of bank borrowings and overdrafts off-set by our cash balances, short-term
investments and short-term deposits. The figure excludes any interest accruals on those bonds held at amortised
cost (which is recorded as debt (<1 year) under IFRSs).
Group Net debt
The metric provides a useful assessment of the Group’s indebtedness which in turn reflects the strength of our
(excluding accrued interest
balance sheet and the financial resources available to us to employ and direct on behalf of our members.
on amortised debt)
Closest IFRS equivalent:
Interest bearing borrowings less cash and cash equivalents.
Where reconciled in the financial statements:
Group net debt table below the Consolidated statement of cashflows.
Definition and Purpose:
Net debt is made up of our of bank borrowings and overdrafts off-set by our cash balances, short-term
investments and short-term deposits. The figure excludes any lease liabilities and interest accruals on those
bonds held at amortised cost (which is recorded as debt (<1 year) under IFRSs).
Group Net debt
The metric provides a useful assessment of the Group’s indebtedness before taking into account lease liabilities
(excluding lease liabilities
which in turn reflects the strength of our balance sheet and the financial resources available to us to employ and
and accrued interest on
direct on behalf of our members.
amortised debt)
Closest IFRS equivalent:
Interest bearing borrowings less cash and cash equivalents.
Where reconciled in the financial statements:
Group net debt table below the Consolidated statement of cashflows.
Co-op Annual Report & Accounts for 2024:
Glossary
228
Alternative Performance Measures (APMs)
continued
APM
Definition and Purpose:
Like-for-like sales growth relates to growth in sales at those Food stores that have been open for more than one
year (with any sales from stores that have opened or closed in the year being removed from the calculation and
prior year figures). The calculation includes VAT on sales.
For Wholesale; the like-for-like metric relates to those partners (stores) that have been with Co-op for more than
one year (with any sales from partners who have left in the year being removed from the calculation).
The measure is used widely in the retail sector as a relative indicator of current trading performance versus the
Like-for-like sales
prior year. It is also helpful to our members in comparing our underlying performance and growth against the
wider market as well as against other retailers (as it removes the impact that opening and closing stores may have
on absolute sales levels).
Closest IFRS equivalent:
There is no close equivalent to this measure under IFRS.
Where reconciled in the financial statements:
Not applicable as there is no close equivalent to this measure under IFRS.
Definition and Purpose:
Return on capital employed is a performance measure of our Co-op. It's calculated as the ratio of returns
achieved to capital employed in achieving those returns. This is based on the underlying operating profit we
make in the year divided by the net operating assets we have. Net operating assets are calculated as the total
Group net assets shown in the Consolidated Group Balance sheet adjusted for our Pension surplus (net of
deferred tax) less net debt (including lease liabilities) less net funeral plan assets and liabilities.
ROCE
(Return on capital
The metric provides a useful assessment of how effectively and efficiently our Co-op is employing the assets and
employed)
capital it has to generate returns for our members.
Closest IFRS equivalent:
There is no close equivalent to this measure under IFRS.
Where reconciled in the financial statements:
Not applicable as there is no close equivalent to this measure under IFRS.
Co-op Annual Report & Accounts for 2024:
Glossary
229
Glossary
Accounting surplus
When a pension scheme has more
assets
than the amount it expects to pay out in the future (the
present
(pensions)
value
of its
liabilities
) then it has an accounting surplus.
When we’ve performed a service but haven’t billed the customer yet, we hold the amount due on the
Accrued income
balance sheet
as accrued income. Once we bill the customer the balance is then moved to
receivables
.
Costs that relate wholly to issuing and fulfilling
insurance contracts (funeral plans)
. This includes the
Acquisition cashflows
costs of selling, underwriting, and starting a group of insurance contracts such as internal salaries or
(funeral plans)
external commission paid.
Amortisation
Similar to
depreciation
, but for
intangible assets
.
This is an amount on our
balance sheet
where we expect to get some sort of benefit in the future. It could
Asset
be a building we use or are planning to sell, some cash or the amount of money a customer owes us.
Sometimes we have to sell things. When we’ve decided to make a large
disposal
before the year-end but
Assets held for sale
the asset hasn’t been sold yet, we have to show it in this line on the
balance sheet
and reduce its value
(
impairment
) if appropriate.
When we have significant influence over a company (usually by owning 20-50% of a company’s shares
Associate
and/or having a seat on its Board), we call that company an associate.
Balance sheet
This shows our financial position – what
assets
we have and the amounts we owe (
liabilities
).
We have an agreement in place with a collection of banks (known as our Banking Syndicate) that gives us
Banking Syndicate
quick access to borrowings should we need them.
Benefit payments (pensions)
This is the amount our pension funds pays out to pensioners.
Each year we produce a financial forecast for our Co-op covering financial performance (
Income
statement
), financial position (
Balance sheet
) and forecasted
Cashflow
s. The forecast (or plan) covers the
Board-approved plan
coming 3 years in detail, with an additional 4th year projection. It is refreshed annually and challenged and
approved by our Board. We use the plan as the basis for some of our key judgements including Going
concern and viability assessment, and
impairment
assessments.
These are our debt instruments (loans from banks) that we pay interest on to fund our businesses’
Bond Notes
operations.
When we spend money on items that will become
assets
(such as property or IT systems) this is shown as
Capital expenditure
capital expenditure. The costs are not shown in the
income statement
of the year it’s spent – instead the
costs are spread over the life of the
asset
by
depreciation
or
amortisation
.
Cash flow statement
This shows how much cash has come in or gone out during the year and how we’ve spent it.
A CGU is the smallest identifiable group of assets that generate cash inflows that are largely independent
of the cash inflows from other assets or groups of assets. For our Food business this is defined as an
Cash Generating Unit (CGU)
individual store, and for our Funeral’s business this is defined as a regional care centre and the funeral
branches which it serves as they are heavily interrelated.
We group the
funeral plans
that we issue in to certain buckets depending on their type, how they are
Cohort
managed (risk profile), when they are issued and if we expect to make a profit or a loss on them. Within this
(funeral plans)
framework we use an annual horizon to bucket plans into a so called 'cohort' year.
Where we’ve committed to spend money on something (such as building projects) in the future but we’re
Commitments
not technically liable to pay for it at the
balance sheet
date as it has not been incurred yet, we don’t put
the amount on the
balance sheet
but we disclose the amount in the commitments note.
Comprehensive income
This is our profit for the year plus
other comprehensive income
.
As this report is based on the financial performance and position of many
societies
and companies
Consolidated
around
the Group
, we have to add up all those entities and the total is the consolidated position.
This is an amount that we might get in the future. Unless it’s almost certain that we’ll get the amount, we’re
Contingent asset
not allowed to put it on the
balance shee
t but we show the amount in the
commitments
and
contingencies note.
This is an amount that we might have to pay in the future. If it’s only possible, rather than probable, that
we’ll have to pay the amount, then we won’t show the amount on the
balance sheet
but we show the
Contingent liability
amount in the commitments and contingencies note and disclose relevant details of the contingent
liability.
These are costs we’ve incurred in advance of being entitled to receive payment from a customer under a
Contract assets
contract, such as costs incurred in setting up a
funeral plan
. We hold these on the
balance sheet
until
we’ve delivered all the services to our customer and are entitled to receive payment.
This is where a customer has paid us in advance of them receiving goods or services under a contract (for
Contract liabilities
example, a
funeral plan
). We have to hold this on the
balance sheet
until the customer receives the
service they’ve paid for.
Co-op Annual Report & Accounts for 2024:
Glossary
230
Glossary
continued
Contractual service margin
The unearned
profit
relating to the future service to be provided under an
insurance contract
(i.e. the
(CSM) (funeral plans)
profit margin we expect to earn over the life of the
insurance contract
/
funeral plan
).
This is money that other
societies
invest with us and we pay them interest on it. The
societies
can get their
Corporate investor shares
money back at any time.
Coverage period
A means of reflecting the pattern of services provided under a group of contracts (specifically relates to
(funeral plans)
funeral plans
and the time period covered by a group of
funeral plans
and how revenue is recognised).
The number of coverage units in a group is based on the quantity of service provided by the contracts in
Coverage unit
the group (specifically relates to our
funeral plans
and the time period covered by a group of
funeral
(funeral plans)
plans
and how revenue is recognised).
This is an increase in income / reduction in costs on the
income statement
or an increase in a
liability
/
Credit
reduction in an
asset
on the
balance sheet
.
Current
An
asset
or
liability
that is expected to last for less than a year.
Current tax
This is the amount we expect to pay in tax for the year based on the profits we make.
Debenture
This is a type of loan that we’ve issued and are paying interest on.
This is a decrease in income / increase in costs on the
income statement
or a decrease in a
liability
/
Debit
increase in an
asset
on the
balance sheet
.
Debt
Loans that we’ve issued and are paying interest on.
This is an amount we’ll be paying to a seller for businesses we’ve bought or an amount we’ll be getting
Deferred consideration
from a buyer for businesses that we’ve sold.
Occasionally we receive monies (or recognise
deferred consideration
following the sale of a business) in
advance of when we will actually perform the service we are being paid for. When this happens we hold a
Deferred income
liability
(deferred income) on our
balance sheet
until the point at which we perform the service at which
point we extinguish the
liability
and recognise the income.
Sometimes our
assets
and
liabilities
are worth more or less on our
balance sheet
than they are for tax
Deferred tax
purposes. The tax on the difference in value is called deferred tax and can be an
asset
or
liability
depending on whether the value is greater in the
balance sheet
or for tax purposes.
This is a pension scheme where an amount is paid out to an employee based on the number of years
Defined benefit schemes
worked and salary earned.
Defined contribution
This is a pension scheme where an amount is paid into the scheme and at retirement the employee draws
schemes
on the amount that has been invested over the years.
Some
assets
the Co-op will have for a while (such as vehicles). When we buy them the cost goes on our
Depreciation
balance sheet
and then
depreciation
spreads the cost of the
asset
evenly over the years we expect to use
them in the
income statement
.
These are financial products where the value goes up or down based on an underlying
asset
such as
Derivatives
currency, a commodity or interest rate.
When we sell a large business, we report its results at the bottom of the
income statement
so that it’s
Discontinued operations
easier for readers to see the performance of
the Group’s
other continuing businesses.
This is the amount that we are
discounting
by. It’s a percentage and varies based on what we expect
Discount rate
interest rates or inflation to be in the future.
Every year the amount that we’re
discounting
is going to be worth more as we get nearer to paying or
Discount unwind
receiving it. We have to put that increase in value (the
discount unwind
) through our
income statement
.
When we have to pay or receive cash in the future then we reduce the value of that cash at the balance
Discounting
sheet date because cash we pay or receive in the future is going to be worth less than it is now – mainly
because of inflation.
Disposals
When we have sold an
asset
.
This is
operating profit
excluding any
depreciation
or
amortisation
. The letters stand for earnings before
EBITDA
interest, tax,
depreciation
and
amortisation
(see APM section at the start of the Glossary for further
details).
This is the average tax rate we pay on our profits. This might be different to the standard corporation tax
Effective tax rate (ETR)
rate, for example, if we aren’t allowed to deduct some of our costs for tax purposes.
This is the difference between the
assets
we own and the
liabilities
we owe – theoretically, this is how
Equity
much money would be left for our members once every
asset
is sold and every
liability
is paid.
Expected credit losses
This is an estimate of the amount of our
receivables
which will not be repaid.
There are some things on our
balance sheet
which we have to revalue every year. This includes some of
Fair value movement
our
debt
,
investment properties
, our pension schemes and
funeral plan investments
. The change in
value is called the fair value movement.
Co-op Annual Report & Accounts for 2024:
Glossary
231
Glossary
continued
Federal relates to the activities of a joint buying group that is operated by
the Group
for itself and other
independent co-operative societies.
The Group
acts as a wholesaler to the other independent co-operatives
Federal
and generates sales from this. This is run on a cost recovery basis and therefore no profit is derived from its
activities. This is separate to our
Wholesale
business.
These are usually the interest we pay on our
debt
, but can also be other things such as the
fair value
Finance costs
movement
on our
debt
or the
discount unwind
of
liabilities
.
This mainly relates to the interest on our pension assets and the
unrealised gains on funeral plan
Finance income
investments
, but can also be other things such as the
fair value movement
on our
debt
or the
discount
unwind
of
receivables
.
A finance lease is a way of providing finance. Effectively a leasing company (the lessor or owner) buys the
Finance lease
asset for the user (usually called the hirer or lessee) and rents it to them for an agreed period.
Financial Conduct
The FCA regulates the financial services industry in the UK.
Authority (FCA)
Financial instruments
A collective term for
debt
or
derivatives
that we have.
Financial Reporting Council
The FRC regulate auditors, accountants and actuaries and they set the UK’s Corporate Governance and
(FRC)
Stewardship codes.
Sometimes we agree to partner with independent food retailers in a mutually beneficial arrangement
whereby Co-op supply the retailer with goods and retail expertise and support (including Co-op branding)
Franchise
through a franchising agreement but we do not own the store or business and it is still run by the
independent retailer.
Fuel
Refers to fuel sales generated from our petrol forecourts (which were sold in 2022).
For
funeral plans
these cashflows mainly comprise; premiums received from customers for
pre-paid plans
Fulfilment cashflows
and
LCIPs
, premiums paid or repayable to re-insurers, direct internal and external costs of delivering
(funeral plans)
funerals, amounts recoverable from re-insurers and costs of acquiring new
insurance contracts
(
funeral
plans
).
Our customers may not want their family to pay a large single sum for a funeral when he or she dies.
Funeral plans
Therefore, the customer can pay for it gradually or in lump sums over a number of years and
the Group
will
invest that money to cover the costs of the funeral when it is needed.
When a customer gives us money for their funeral in the future, we invest this money. The balance of these
Funeral plan investments
investments is held on the
balance sheet
.
GAAP stands for Generally Accepted Accounting Principles. This is the common set of accounting principles,
standards and procedures that companies must follow. Sometimes, companies want to provide different
GAAP
measures to help readers understand their accounts (such as underlying profit - APM section of the Glossary)
where there isn’t a standard definition – these measures are called
Non-GAAP
measures.
The GMM model is the overarching approach that we use to account for our
funeral plans
(insurance
General Measurement
contracts)
under the new insurance accounting standard (
IFRS
17). There's a choice of 3 approaches but the
Model (GMM)
GMM approach is the default choice and most appropriate to our funeral plans as they cover a specific risk
(funeral plans)
over an extended period of time.
Bonds (loans) issued by the UK Government and listed on the Stock Exchange. These are considered to have
(UK) Gilts
a very low risk of default and are highly liquid (so can be easily traded in an active market) so they are used to
help determine a risk free borrowing rate for use in
discounting
.
When we buy a business or a group of
assets
, sometimes we pay more for it than what its
assets
less
Goodwill
liabilities
are worth. This additional amount we pay is called
goodwill
and we put it on our
balance sheet
.
(the) Group
This is Co-operative Group Limited and all companies and
societies
that it owns.
Sometimes we want to protect ourselves in case we have to pay more in the future for something. This could
Hedging
happen if the value of the pound falls so we have to pay more when buying something abroad or if interest
rates go up. We take out
derivatives
to protect us from this and this process is known as hedging.
International Accounting Standards.
The Group
use these as the accounting rules. There are many different
IAS
IAS
s that cover various accounting topics (e.g. IAS 38 is for
intangible assets
).
International Financial Reporting Interpretations Committee. These are interpretations of
IAS
s or
IFRS
s that
IFRIC
the
Group
also has to abide by.
Co-op Annual Report & Accounts for 2024:
Glossary
232
Glossary
continued
International Financial Reporting Standards. Similar to
IAS
, but cover different subjects (e.g. the standard
IFRS
on
insurance contracts
that we apply to our
funeral plans
is known as IFRS 17.
Sometimes our
assets
fall in value. If a store, branch, business or investment is not doing as well, we have
Impairment
to revalue it and record the downward change in value as a cost in our
income statement
.
This not only shows our income as the name suggests, but also what our costs are and how much profit
Income statement
we’ve made in the year.
A contract under which
the Group
accepts significant
insurance risk
from another party by agreeing to
Insurance contract
compensate that party if it is adversely affected by a specified uncertain future event. Our
funeral plans
(funeral plans)
are insurance contracts.
The risk Co-op are exposed to in an
insurance contract
when we agree to compensate a policy holder if a
Insurance risk (funeral plans)
specified uncertain event occurs. For our
funeral plans
the risk relates to the uncertain cost of delivering
the funeral at some unknown point in the future.
We have
assets
at the Co-op that we can’t see or touch which are shown separately to other
assets
. These
Intangible asset
include things like computer software and
goodwill
.
We like to know what interest we’re going to be paying in the future so we can manage our businesses
effectively. We enter into arrangements with banks so that we can do this – for example, if we have debt
Interest rate swaps
where the interest rate can vary, we can buy an interest rate swap which means that instead we’ll pay a
fixed rate of interest. The value of these swaps can go up or down depending on how the market expects
interest rates to change in the future.
Inventories
This represents the goods (the stock) we’re trying to sell. The cost of this is shown on our
balance sheet
.
Investment grade credit
Refers to assets (such as bonds) where the credit rating by Standard and Poor's is BBB or higher.
assets
Properties that we don’t trade from, and which we might rent out or hold onto because the value might go
Investment properties
up, are called investment properties.
Invoice discounting is an arrangement with a finance company so that we can be paid for amounts we are
Invoice discounting facility
owed on invoices earlier than the date our customers are due to pay us.
Low cost instalment plans (LCIPs) - this is where customers can take out a
funeral plan
but pay for it over
LCIPs
monthly instalments of between 2 and 25 years.
This represents the
discounted
future payments we are due to make to suppliers in exchange for the right
Lease Liability
to use their equipment or property.
Liability
This is an amount on our
balance sheet
which we’ll have to pay out in the future.
The measure of year-on-year sales growth for stores that have been opened for more than one year. This is
a comparison of sales between two periods of time (for example, this year to last year), removing the
Like-for-like sales
impact of any store openings or closures. See also the APM section at the start of the Glossary for further
details.
People can trade some of our
debt
such as our bonds on the financial markets. When this is the case, it’s a
Listed debt securities
listed debt security.
Maintenance cashflows
Direct costs of servicing already acquired funeral plans such as costs of handling claims or policy changes.
(funeral plans)
Member payments
This is an amount we’ve paid our members in the year and approved at the AGM such as dividends.
These are the benefits that members have earned for themselves during the year as part of the 2%
Member rewards
membership offer.
Net assets
Same as
equity
.
Net debt
This is the
debt
we have less any cash (or cash equivalents) that we might have.
Net operating assets is calculated as the total Group
net assets
shown in the Consolidated Group
Balance
Net operating assets
sheet
adjusted for our Pension surplus (net of
deferred tax
) less
net debt
(including
lease liabilities
) less
net
funeral plan
assets and liabilities.
Non-current
An
asset
or
liability
that is expected to last for more than one year.
GAAP stands for Generally Accepted Accounting Principles. This is the common set of accounting
principles, standards and procedures that reporting entities must follow. Sometimes, reporting entities
Non-GAAP measure
want to provide different measures to help readers understand their accounts (such as underlying profit)
where there isn’t a standard definition – these measures are called non-GAAP measures.
Non-recurring charges or gains in our Income statement that are not regular in size or nature and would
Non-underlying items
otherwise cloud the underlying profitability of
the Group
are stripped out within our
non-GAAP
measures
. This could include a large
impairment
or a large restructuring exercise.
Co-op Annual Report & Accounts for 2024:
Glossary
233
Glossary
continued
A contract that the Group holds where we think we will lose money on it over it's life (so any profit we make
will not cover the costs we will incur). As soon as we think we have an onerous contract then we prudently
Onerous contracts
recognise the full expected loss immediately (rather than waiting for it to happen over the course of the
contract).
When we close a store we sometimes still have to pay running costs until the lease runs out (such as rates).
When this happens, we make a
provision
for the amount of the running costs we will have to pay in future
Onerous leases
and hold this on the
balance sheet
. Rental costs are excluded from this
provision
now we have adopted
IFRS
16 (Leases) as those costs are included in the
lease
liability
.
This is our profit before we have to pay any interest to our lenders or tax to the tax authorities. It is also stated
Operating profit
before any net finance income / (costs) from
funeral plans
.
This is an accounting term for the different businesses we have. When the financial performance of one of
Operating segments
our businesses is reviewed separately from the other businesses by our Board, we call that business an
operating segment and its sales and profit are disclosed in Note 1 as a separate segment.
Sometimes we have unrealised
fair value movements
on long term
assets
and
liabilities
. The
income
Other comprehensive
statement
is meant to show the performance during the year, so to avoid this being distorted by these big
income
changes, they are shown separately as other comprehensive income.
Parent
This is the owner of a
subsidiary
.
Payables
Another name for
liabilities
.
PAYE
Pay As You Earn. A tax which is paid on wages.
If a customer dies after 12 months of taking out a
funeral plan
and their
instalments
are up to date (or the
Payment waiver risk
death is an accident < 12 months) then Co-op will still honor the plan without requiring the remaining
(funeral plans)
instalments
to be settled. Co-op manage this risk through a
re-insurance
arrangement with a 3rd party
insurer who will cover the cost (risk) in such circumstances.
This is the interest that we’re allowed to show in our
income statement
and is the
discount rate
used to
Pension interest
discount
the pension
liabilities
multiplied by the pension surplus or deficit last year.
Performance obligations
These are promises to provide distinct goods or services to customers.
We bucket up our
funeral plans (insurance contracts)
into certain groupings for accounting and reporting
Portfolio
purposes. We make the distinction of 2 portfolios - one for our funeral plans and one for our
re-insurance
(funeral plans)
contracts (the
payment waiver
on
LCIPs
).
When we pay in advance for a cost which relates to services that will be received over a future period of time
Prepayment
(for example, rent or insurance), we hold that cost on our
balance sheet
as a prepayment and then spread
the cost over the period of the service.
Present value
This is the value of a future cost or income in today’s money and is arrived at by
discounting
.
This is a
liability
, but one where we’re unsure what the final amount we have to pay will be and when we’ll
Provisions
have to settle it. We use our best estimate of the costs and hold that on the
balance sheet
.
Realised gains
This is when we sell an
asset
for a profit.
Receivables
When someone owes us some money, we hold that amount as a receivable on our balance sheet.
If a customer dies after 12 months of taking out a
funeral plan
and their
instalments
are up to date (or the
Re-insurance
death is an accident < 12 months) then Co-op will still honor the plan without requiring the remaining
(funeral plans)
instalment
s to be settled. Co-op manage this risk through an arrangement with a 3rd party insurer who will
cover the cost (risk) in such circumstances. This is known as a re-insurance arrangement.
This is a company or person that is closely linked to the Co-op. It’s usually a member of our Board or
Related party
Executive or their close family plus companies such as our
associates
and
joint ventures
.
Remeasurement gains /
There are lots of assumptions that are used when valuing pensions. If those assumptions change this can
losses on employee pension
have a big effect on the size of the pension
asset
or
liability
. So that we don’t distort the
income statement
,
schemes
this effect is shown in
other comprehensive income
.
This is a type of loan (subordinated debt instrument), which we repay either in instalments or in a lump sum
Repayment notes
at the end of the loan.
Reserves
This is the amount of
equity
we have, but excluding any
share capital
.
Sometimes we change the numbers that we showed in last year’s accounts. We may have changed where or
Restated
how we record certain things or it could be that we have corrected an error. There are strict rules around
what can be changed and when we make changes we explain why in the accounting policies.
This is all the profits we’ve made since the beginning of time for the Co-op that have not yet been paid out
Retained earnings
to members.
Retirement benefit
Another term for our pension
liabilities
.
obligations
Co-op Annual Report & Accounts for 2024:
Glossary
234
Glossary
continued
Return on plan assets
This is the income our pension
assets
have generated in the year.
(pensions)
When we revalue a property upwards, we’re not allowed to put this
unrealised gain
through our
income
Revaluation reserve
statement
or within
retained earnings
as law dictates that this can’t be distributed to members until the
property is sold. It’s then ring-fenced as a specific reserve.
Revolving Credit Facility
This is money that our lenders have agreed we can borrow if we need to. It works a bit like an overdraft.
(RCF)
This is an
asset
that we don’t own legally, but which we lease from another party. The
asset
represents the
Right of use asset (ROU)
value the Co-op has in being able to use the
asset
over the length of a lease contract.
This reflects the compensation Co-op requires for bearing the uncertainty about the amount and timing of
Risk Adjustment
the cash flows that arise from non-financial risk as the Group fulfils its
funeral plans (insurance contracts)
.
(funeral plans)
The risk adjustment reflects an amount that Co-op would rationally pay to remove the uncertainty that
future cash flows will exceed the expected value amount.
Return on capital employed. This is based on our underlying profit we make in the year divided by the
net
ROCE
operating assets
we have.
This is when an
asset
is sold to a third party and then immediately leased back under a lease agreement.
Sale and leaseback
For the Co-op, this usually relates to the sale of a building such as a store.
When an item on our balance sheet varies in value from year to year based on some estimates that we
Sensitivity analysis
make, we show a sensitivity analysis which shows you how much the asset or liability would change by if
we were to change the estimate.
We further sub-divide or
funeral plans (insurance contracts)
issued in a given
cohort
year into ‘sets’ to
Sets
see if they are expected to make a profit or a loss. Sets are based where the funeral plans have similar
(funeral plans)
pricing and margin expectations.
This is the amount of money that our members have paid us to become members less any amounts that
Share capital
we’ve repaid to them when they cancel their membership.
The Co-operative Group Limited is a registered co-operative society. We sometimes refer to our collective
Society
whole as ‘
the Group
’ or ‘the Society’ and the terms are broadly interchangeable.
Subsidiary
This is a company or
society
that is owned by another company.
Sometimes our agreements with suppliers mean they will give us money back based on the amount of
Supplier income
their products we buy and sell. We call this supplier income.
This is the net day-to-day interest we incur or receive on our bank borrowings and
lease liabilities
and is
what management consider in the day-to-day running of our Co-op. Non-underlying interest are those
Underlying interest
items that are not generated by our day-to-day trading or are not considered by management in the day-
to-day running of the business (such as the interest on
funeral plan liabilities
or the
fair value
movement
on
the Group’s
quoted
debt
and
interest rate swaps
).
An
asset
may have gone up in value, but we’ve not sold it. If this is the case, the profit from the gain is
Unrealised gains
unrealised as we’ve not sold the
asset
yet.
The
funeral plan investments
which we hold on behalf of our customers attract interest and bonus
Unrealised gains – funeral
payments each year (depending upon market conditions). The gains or losses in the
fair value
of the plan
plans
investments is recognised within finance income /costs each year.
The Group’s operating segment
(trading Division) that sells direct to other retailers (rather than to
Wholesale
individual members of the public). This primarily relates to the business we operate after we bought Nisa
but it also includes any franchise stores. Wholesale is separate to our
Federal
segment.
These are
assets
that we’re in the middle of building. They’re on our
balance sheet
as we’ve spent money
Work in progress
already building them, but they aren’t ready for us to use them yet so we’re not
depreciating
them.
Co-op Annual Report & Accounts for 2024:
Five year summary (unaudited)
235
Five year summary (unaudited)
£m
2024
2023
2022
2021
2020
Revenue
Food
7,403
7,262
7,805
7,671
7,765
Federal
2,076
2,142
1,895
1,756
1,813
Wholesale
1,399
1,480
1,439
1,386
1,577
Funerals
289
281
275
264
272
Legal
84
68
46
39
37
Insurance (marketing and distribution)
28
29
24
34
6
Other businesses & Costs from Support functions
-
-
-
1
2
Total Revenue
11,279
11,262
11,484
11,151
11,472
Underlying profit / (loss) profit before tax
Food
201
173
139
156
350
Wholesale
(1)
14
22
7
6
Funerals
(1)
(11)
(1)
12
16
Legal
27
21
8
5
4
Insurance (marketing and distribution)
15
14
8
15
(2)
Other businesses & Costs from Support functions
(110)
(114)
(93)
(95)
(139)
Underlying operating profit
131
97
83
100
235
Underlying net interest expense on lease liabilities
(64)
(68)
(76)
(76)
(72)
Underlying interest
(22)
(31)
(55)
(56)
(63)
Underlying profit / (loss) before tax
45
(2)
(48)
(32)
100
EBITDA (i)
Underlying operating profit (above)
131
97
83
100
235
Depreciation (plant, property and equipment)
208
225
244
254
250
Depreciation (right-of-use assets)
110
106
119
122
113
Amortisation
32
40
27
29
17
Underlying EBITDA (i)
481
468
473
505
615
Insurance (underwriting business) - (iii)
Revenue
-
-
-
12
273
Underlying PBT
-
-
-
(1)
19
Profit on discontinued operation
-
2
67
13
5
Other performance items
Profit after tax - continuing operations
98
1
258
32
72
ROCE (i)
4.7%
3.4%
2.6%
2.5%
6.5%
Balance sheet items
Total assets
6,594
6,755
7,994
9,180
8,986
Group net debt (excluding leases)
(55)
(82)
(322)
(920)
(550)
Group net debt (including leases)
(1,248)
(1,315)
(1,628)
(2,436)
(1,975)
Total equity
2,198
2,020
3,023
2,939
2,669
Net debt: EBITDA ratio (excluding leases)
0.11
0.18
0.68
1.82
0.89
Net debt: EBITDA ratio (including leases)
2.59
2.81
3.44
4.82
3.21
Total pension assets
5,548
6,213
7,124
11,452
11,708
Total pension liabilities
(5,223)
(5,857)
(5,543)
(9,194)
(9,854)
Total net pension surplus
325
356
1,581
2,258
1,854
Business-specific measures
Total Food like-for-like sales increase
3.3%
4.7%
3.2%
-2.9%
6.9%
Number of Food stores
2,348
2,349
2,377
2,584
2,613
Total Food sales area ('000 sq ft) (ii)
7,592
7,592
7,685
8,276
8,407
Number of at-need funerals sold
91,581
95,924
93,867
90,731
100,943
Number of pre-need funerals sold
37,710
17,032
16,774
44,751
42,497
Number of funeral homes
812
812
818
830
840
Notes:
(i) See the Glossary on page 227 for definition. Calculation for 2021 and earlier is not restated for IFRS 17.
(ii) Quoted excluding petrol forecourt area but including in-store space at those sites with a petrol forecourt. We sold our forecourt stores in Oct 2022.
iii) Our Insurance underwriting business was held as a discontinued operation from 2018 and was sold on 3 December 2020.