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The Co-Operative Group Annual Report 2012

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The Co-Operative Group Annual Report 2012 The Co-operative Group Annual Report 2012 The Co-operative Group Annual Report 2012 Here for you for life The Co-operative Group Annual Report & Accounts 2012 Our 2012 Headlines Group financial performance Gross sales: Underlying operating profit: Over £100m paid out to and on behalf of members £13.5bn £54m £528m capital investment Food Underlying operating profit: New food stores: £22m £288m 83 invested in Avonmouth (down £30m) distribution centre Banking Group Underlying operating profit/loss: Agreed Heads of Terms Core business: with Lloyds Banking 8.2% £120m profit (down £53m) Group for purchase of increase in primary Non-core business: Verde business, including account openings £377m loss (down £380m) 632 branches Specialist Businesses Underlying operating profit: UK’s first major consumer brand to be 5 £107m awarded an ABS licence hospital outpatient (up £8m) dispensaries opened For a definition of the Trading Group and Banking Group, refer to page 61. For a definition of the core and non-core split in Banking Group, refer to page 64. A reconciliation of underlying operating profit to (loss)/profit before tax can be found on page 65. Overview The Co-operative Group Annual Report & Accounts 2012 1 Here for you for life Performance A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, Governance and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. They are based on the values of self-help, Financials self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others. – International Co-operative Alliance Inside this year’s report: Overview Performance Governance Financials 2 About The Co-operative Group 12 Financial review 30 Board of Directors 54 Consolidated income statement 4 Range of interests 16 Food 32 Management Executive 55 Consolidated statement of 6 Chair’s overview 18 Banking Group 33 Corporate Governance comprehensive income 8 Chief Executive’s overview 20 Specialist Businesses report including the 56 Consolidated balance sheet Remuneration report 10 Group vision and performance 22 Estates 58 Consolidated statement of 53 Independent auditor’s report changes in equity 23 Our people 60 Consolidated statement of 24 Social goals cash flows 26 Principal risks and uncertainties 61 General accounting policies 64 Notes to the financial statements 185 Analysis of profits from regional business activities Directors’ Report This is the Directors’ Report for The Co-operative Group (the ‘Group’) for the 53 weeks In assessing the Group’s main risks and uncertainties, and indication of likely future ending 5 January 2013. It explains in detail how we have performed during 2012 and sets developments, this report (and the wider financial statements) contain statements which, by their out a fair review of the business which includes: a balanced and comprehensive analysis of our nature, cannot be considered indications of likelihood or certainty. The statements are based on performance, the use of financial and non-financial key performance indicators to explain the the knowledge and information available at the date of preparation of the Directors’ Report, and progress we have made, a description of the principal risks and uncertainties and an indication what are believed to be reasonable judgements. None of these statements should be construed of likely future developments. as a profit forecast. In preparing the report, the Group has referred to the guidance issued by the Accounting Standards Board in its Reporting Statement on Narrative Reporting. It is intended to provide members with a greater understanding of the Group, its position in the market and its prospects. The Co-operative Group 2 Annual Report & Accounts 2012 About The Co-operative Group Member owned model Membership lies at the heart of our business. The Co-operative Group believes in open and voluntary membership, democracy and member economic participation. We are owned by our members, we manage our business for their Evolution benefit and share the profits with them. Along with all co-operative societies, The Co-operative Group has its origins in The Co-operative Group is Rochdale, Lancashire. The Rochdale democratically controlled Pioneers Society was famously by its members. established in 1844 based upon the However we differ from most other UK consumer notion of ethical trading and belief that co-operatives in that we have both independent society the profits of the business should be members and individual members. Anyone can become shared amongst members according a member of the Group by subscribing for a £1 share. to their purchases. Currently The Co-operative Group is jointly owned by over 7.6 million individual members and approximately By 1900 there were over 1,400 separate independent 80 independent co-operative societies. We are in business co-operative businesses in the UK, all members of a to serve our members and their communities, and our wider Co-operative Movement. During the 1900s, many business is run for their benefit. We listen to member of these independent societies began to merge. One of opinions and integrate these into our business activities the most significant in recent times was in 2000, when and our social and campaigning agenda. The Co-operative Group was formed following the merger of the Co-operative Wholesale Society and Co-operative The equitable nature of The Co-operative Group is Retail Services. This was followed in 2007 by the exemplified through the opportunity for each and every merger of United Co-operatives with The Co-operative member to get involved in running the business. In addition Group. In 2009 Britannia Building Society merged with to having the right to vote on a one member, one vote The Co-operative Banking Group, the financial services basis, each member has the right to stand for election to arm of The Co-operative Group and in the same year an Area Committee, Area Committee members are in turn The Co-operative Food business acquired Somerfield, elected to Regional Boards and ultimately onto the main a rival food business. Co-operative Group Board – democracy in action. Overview The Co-operative Group Annual Report & Accounts 2012 3 Performance Social goals Other stakeholders In the midst of the current global Although The Co-operative Group is Governance economic crisis, the co-operative model owned and governed by its members, is being seen as increasingly relevant there are other key stakeholders to a more balanced, equitable which are crucial to the co-operative and sustainable economy. The principles upon which the business Co-operative Movement was founded is conducted. Financials to serve a social purpose, as well as The communities in which we work and operate are a commercial one. important to us. We have a presence in every postal area in the UK and our work in these communities is highlighted Co-operative members believe in the ethical values of in our Social Goals report. honesty, openness, social responsibility and caring for others. As an ethical leader, we exist not just to serve Another of The Co-operative Group’s key stakeholders our communities but to contribute to their long term are our people. Our people are vital to our success. good health. Social responsibility is in our DNA. Since From looking after our pensioners, to developing our 2009, we have been benchmarking ourselves against current employees and recruiting apprentices to form the the Corporate Responsibility Index (CRI) operated by next generation of Co-operative leaders, we continually Business in the Community (BitC). The full extent of our focus on our people. Co-operatives provide education ethical credentials and commitment to social goals is and training for their managers and employees so they included on pages 24 and 25. can contribute effectively to the development of their co-operatives. The section on ‘Our people’ on page 23 provides more details on our commitment in this area. Involvement with the wider Co-operative Movement Within the UK, Co-operativesUK is the over-arching co-operative national trade body. The Co-operative Group accounts for around 80% of the total Co-operative Movement in the UK and as such we play a leading role within Co-operativesUK. Co-operation is not limited to the UK. The United Nations designated 2012 its International Year of Co-operatives. The Co-operative Group played an integral role in co-hosting a momentous event in Manchester which was the global culmination of the International Year. The Co-operative Group 4 Annual Report & Accounts 2012 Range of interests The Co-operative Group is the UK’s largest customer-owned business, offering a wide range of services including the following: Trading across Food Banking Group the Group Our large family of We are the 5th largest We are Europe’s most businesses and loyal food retailer in the UK operating sustainable bank*, offering membership base gives us across the whole country in banking and insurance a unique opportunity to offer 2,816 local, convenience services to personal and a wide range of products and medium sized stores. business customers. and services to members Our aim is to be the UK’s We operate through 342 and customers. Our profits leading community high street branches and are shared with each food retailer. 22 corporate banking centres, member, in proportion to telephony and online channels. Find out more how much they trade with See page 16 Find out more us, across all our businesses, See page 18 in any one year. We will continue to encourage and reward our members and customers for trading across the Group. Find out more at www.co-operative.coop * Winner of Europe’s Most Sustainable Bank, awarded by the Financial Times and the International Financial Corporation (part of the World Bank).
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