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CO-OPERATIVE GROUP
A Summary from 2009 to 2014
Abstract
Bringing together the data from 6 years of financial reports in easily accessible charts
Kat Rose
katrose@live.co.uk
Contents
Executive Summary................................................................................................................................. 3
1. Revenue and Underlying Profits from businesses still owned by the Group ..................................... 5
1.1 How much does each business contribute to the Groups success? ............................................ 5
1.2 Food .............................................................................................................................................. 6
1.3 Funeralcare ................................................................................................................................... 7
1.4 Other Businesses........................................................................................................................... 9
2. The Co-operative Groups Assets 2009 to 2014 ............................................................................... 11
2.1 Measuring Trading Group Assets after the addition of Banking Assets ..................................... 11
2.2 Which Assets does the Group have and how has this changed from 2009 to 2014? ................ 12
2.3 Assets from Initial Asset Statements 2009 to 2013 .................................................................... 12
2.4 Assets from the 2013 Asset Re-statement and 2014 Asset Statement ...................................... 13
3. The Co-operative Groups Liabilities 2009 to 2014 ........................................................................... 15
3.1 Overall Trend 2009 2013 .......................................................................................................... 15
3.2 Overall Trend 2013 2014 .......................................................................................................... 15
4. Noma ................................................................................................................................................. 18
4.1 Context ........................................................................................................................................ 18
4.2 Projects within NOMA ................................................................................................................ 19
4.2.1 One Angel Square................................................................................................................. 19
4.2.2 Two Angel Square ................................................................................................................ 19
4.2.3 Three Angel Square .............................................................................................................. 19
4.2.4 Federation House ................................................................................................................. 19
4.2.5 Hanover Building .................................................................................................................. 19
4.2.6 Plot L..................................................................................................................................... 19
4.2.7 New Public Realm ................................................................................................................ 19
4.2.8 Hotel Indigo .......................................................................................................................... 19
4.2.9 New Century House ............................................................................................................. 20
4.2.10 Redfern............................................................................................................................... 20
4.2.11 Dantzic................................................................................................................................ 20
4.3 NOMA (GP) Limited / NOMA LP .................................................................................................. 20
4.4 NOMA conclusion ....................................................................................................................... 20
5. The Highest Value Re-statements 2009 2014 ................................................................................ 21
5.1 Food ............................................................................................................................................ 21
5.2 Funeralcare ................................................................................................................................. 22
5.3 Travel........................................................................................................................................... 22
5.4 Corporate Costs .......................................................................................................................... 22
6. Executive Pay Pro Rata by Job Role .................................................................................................. 25
1
Executive Summary
The research that led to this report was triggered by a lack of transparency, the area that first drew
my attention was Corporate Costs. Understanding Corporate Costs was not simply a matter of
tracking the Corporate Costs figures across a number of years; the categories were labelled and
relabelled repeatedly over a comparatively short space of time, with no apparent explanation for the
changes made. The overall result was a complicated patchwork of data:
Chart 1a
The information relating to Executive pay was even less transparent, the current practice of listing
pay by Executive name rather than job role, combined with a high turnover of Executives, renders
the information presented very difficult to interpret:
Richard Pennycook
Alistair Asher
Rod Bulmer
Claire Davies
Nick Folland
Paula Kerrigan
Steve Murrells
Pippa Wicks
Sam Walker
Euan Sutherland
Gill Barr
Mark Craig
Andy Haywood
Martyn Hulme
Rebecca Skitt
Peter Marks
Stephen Humes
Wayne Lee
Moira Lees
Martyn Wates
Barry Tootell
Niall Booker
Chart 1b
Dec-14
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
May-14
Apr-14
Mar-14
Feb-14
Jan-14
Dec-13
Nov-13
Oct-13
Sep-13
Aug-13
Jul-13
Jun-13
May-13
Apr-13
Mar-13
Feb-13
Jan-13
Movements within Executive Pay categories render this Executive Pay data even less transparent as
new payments were added to restated pay tables for 2012 and pay awards travelled between
Performance Related Pay and Retention Payment categories. The further I went into the
Co-operative Groups accounts, the more unexplained changes I found:
Why were 10.8m of payments to Executives on gardening leave, or received for factors other than
the work they directly contributed, not recorded in the pay tables?
Why were 1,457m of liabilities for 2013 adjusted from the current to non-current liabilities
category?
Why does the Annual Report say that the Group has entered into an 800m 50/50 joint venture
called NOMA with Hermes Real Estate, when papers at Companies House state that they entered
into that joint venture with the BT Pension Fund in the same month and year?
How much of the expected 400m investment in the NOMA joint venture does The Co-operative
have yet to pay?
And with the range of categories included in Corporate Costs subject to change every few years,
what does constitute a Corporate Cost, especially an Underlying Corporate Cost?
These are the kind of questions that I have only been able to uncover through hours of research, the
evidence for which is included in this report; they are also the kind of questions that Members of a
Co-operative should be able to obtain answers for.
If you have found The Co-operatives Accounts as impenetrable as I did at the start of researching
this report, then you will find answers here that are not readily available elsewhere; but more
importantly you will find questions.
Chart 2
The extent of their significance becomes apparent when the Banks Underlying Profits are removed,
as Food becomes the most significant source of Underlying Profit for the Group.
Chart 3
The impact of the Bank ceasing to contribute to the Groups profits would be more significant in
2013.
1.2 Food
The Food businesss Underlying Profits grew consistently between 2007 and 2010, before declining
consistently between 2010 and 2013. Between 2013 and 2014 the decline in Underlying Profits has
been reduced, the below result has been impacted by the addition of some asset sale Revenue.
Chart 4
The decline in Underlying Profits would have been of greater significance in 2013, because by that
point Food had become the source of the majority of the Groups profits.
Chart 5
The trend in Food Revenues has been symptomatic of a challenging market, this indicates that the
increase in Underlying Profit in 2014 was not caused by an increase in Revenue.
Chart 6
An examination of staff and store numbers over this period provides some indication as to how the
trends of Underlying Profit and Revenue can be so dissimilar, the below table commences from 2010
when these figures first became available.
Year
Food stores
Food
Employees
2010
2,883
2011
2,801
2012
2,816
2013
2,779
2014
2,796
85,000
75,000
72,670
69,482
60,265
Table 2
Between 2010 and 2014 the Group has seen a 3% reduction in its quantity of Food stores and a 29%
reduction of its Food employee numbers. As Revenue has declined, the Group has reduced its cost
base by reducing staffing hours.
1.3 Funeralcare
Funeralcare is less significant in scale than Food, it is the Groups second largest business and
contributes approximately twice the Underlying Profit level of any other business. Funeralcares
Underlying Profits have increased significantly between 2009 and 2014.
Chart 7
Funeralcares Revenue rose steadily between 2009 and 2013, before declining between 2013 and
2014.
Chart 8
The variation between the trends in Underlying Profit and Revenue, between the 2013 and 2014
Annual Reports, is indicative of a reduction in the businesss cost base through a decline in staff to
funeral home ratios.
Year
Funeral
homes
Funeralcare
Employees
2010
2011
2012
2013
2014
865
888
910
926
961
4,084
4,057
4,191
4,230
4,116
Table 3
Between 2010 and 2014 the Group have increased their number of branches by 11%, over the same
period of time their staff numbers have increased by 0.8%. They have increased their quantity of
funeral homes by 96 and have hired the equivalent of 32 more employees during this 5 year period.
The first real terms reductions in staffing levels were made between the 2010 and 2011 Annual
Reports. Funeralcares Underlying Profit levels are significantly lower than those of the Food
business.
2010
2011
2012
2013
Sum of Food (M)
2014
The Food and Funeralcare businesses Revenue levels are more disparate than their profit levels.
2010
2011
2012
2013
2014
Chart 10
Chart 11
Their profits are therefore on a lesser scale than those of Food or Funeralcare.
Chart 12
The smaller scale businesses are facing similar challenges to their larger scale counterparts and some
are recording losses.
With Revenue and Underlying Profit both bordering on decline, the Assets and Liabilities of the Cooperative Group become more salient.
10
Chart 13
The total value of these Assets (excluding the Total Trading Group category) has increased by
1,059m following this adjustment.
The total value of these Assets (including the Total Trading Group category) has increased by
3,597m following this adjustment. Given the difficulty of separating the effects of the adjustment
from the figures prior to it, Asset figures will be summarised in two parts.
2.2 Which Assets does the Group have and how has this changed from 2009 to 2014?
To establish an overall trend it is first necessary to compare the Groups Asset statements from 2009
through to 2013, then to compare the Groups Asset Re-statement from 2013 with its Asset
Statement from 2014.
Chart 14
The Co-operative Groups Trading Group Assets have declined by 115.8m between 2009 and 2013.
12
A significant decline in the value of these Assets occurred between 2012 and 2013, primarily with
regard to Property, Plant and Equipment, Intangible Assets and Trade and Other Receivables. In
2014 the highest value losses under Property, Plant and Equipment, were 37m of Property and
38m of Plant and Equipment reclassified as assets held for sale; alongside 101m of disposals and
91m of Subsidiary Undertakings disposals (AR2014, p.116). These disposals and reclassifications
contribute 267m of the 313m change. The most significant change to Intangible Assets was the
loss of 504m of Pharmacy licenses with the sale of the Pharmacy and 180m on the amortisation of
the same. With regard to Trade and Other Receivables 14m of the change is derived from the
Non-current category, whilst 503m is from the Current category. Of the 517m reduction, 314m is
from Prepayments and Accrued Income and 155m is from Amounts Receivable from Disposal of
Businesses; these two changes account for 469m of the 517m change.
Notable areas of increased value are Funeral Plans, Investments in Associates and Joint Ventures,
and Deferred Tax Assets.
2.4 Assets from the 2013 Asset Re-statement and 2014 Asset Statement
Chart 15
The total value of the Groups Assets decreased by 138m between 2013 and 2014; this second
decrease in Asset value coincides with an increase in Pension Assets of 837m which resulted from
adjustments to categorisation between the Bank and the Trading Group categories. The Group
ceased to own the majority of the Bank from 20th December 2013, this resulted in a significant
movement of Assets (Annual Report 2013, p. 107).
13
Chart 16
Chart 17
A comparison of the changes between 2013s Statement and 2013s Re-statement, against the
changes between the 2013 Re-statement and 2014 Statement, show few shared areas of increased
value: Cash and Cash Equivalents, and Investments in associates and joint ventures are the only
two areas affected by the Re-statement that also increase their value in the 2014 Annual Report.
14
Chart 18
Chart 19
The Co-operative Groups Trading Group Liabilities declined by 96.7m between 2009 and 2012,
then events relating to the Bank led to an increase in liabilities of 1,746m between the Restatements of 2012 and 2013, from 4,840m to 6,586m.
A comparison of Chart 18 with Chart 19 reveals a common upward trend in the Trading Groups
current liabilities. The reduction of the rate at which current liabilities were increasing, combined
with a substantial change in non-current liabilities from decline to increase, appears to suggest a
switch of some liabilities from the current to the non-current category. The comparison of 2013
15
Total Trading Group Current and Non-current Liabilities as initially reported, with 2013 Total Trading
Group Current and Non-current Liabilities as adjusted, is suggestive of approximately 1.5billion
being moved from current to non-current liabilities.
There is some ambiguity regarding the extent to which the adjustment has been caused by the sale
of the Bank; however, no other explanations are apparent at this point in time: The Group adopted
IFRIC 21 Levies (2013) on 5 January 2014. As the Bank was disposed of in 2013 and is therefore a
discontinued operation, the only restatement from the adoption of the IFRIC has been to transfer
26m from results from operating activities in discontinued operations to loss on sale of
discontinued operations. The income statement and balance sheet have not, therefore, been
restated. The Bank has also restated a number of other items in its 2013 balance sheet within its
2014 annual report. These items have not been adjusted in the Group financial statements as the
net effect is not material. The Co-operative Group Annual Report 2014, p.101.
Chart 20
The following chart illustrates the extent to which the movement of liabilities from the current
liabilities category to the non-current liabilities category has had an affect upon their value. the Total
Trading Group Liabilities for 2013 prior to adjustment were 4,638m and The Total Trading Group
Liabilities for 2013 after the adjustment were 4,638m. The Total Trading Group Liabilities for 2014
were contrary to the trend of previous years as they saw an increase of 982m on the previous year
and totalled 5,620m.
16
Chart 21 (figures derived from Note 24. Interest-bearing loans and borrowings, on p.159 on the 2014 Annual Report)
Whilst Unsecured Bank Loans have been reduced significantly, the majority of the financial liabilities
have been adjusted from current liabilities to non-current liabilities with no apparent change in the
date upon which their repayment is due.
17
4. Noma
4.1 Context
Noma is a joint project that the Co-operative Group launched in March 2011 with an announcement
that they sought another business to assist them in the progression of the project. The official
NOMA website states that:
NOMA is the mixed-use redevelopment project being led by The Co-operative Group. It will
transform Manchesters Northern Gateway into a remodelled and truly mixed use area anchored by
large corporate office occupiers, retail, residential and leisure uses and home to a broad range of
SMEs. NOMA will be built at a cost of 800m over 10-15 years on land owned by The Co-operative
Group in Manchesters northern pocket
NOMA was selected as a unifying name for a new Manchester district after a thorough branding
exercise by specialist consultants Landor. It is a new name for a place, and, over the planned 10 15
year period the people of Manchester will see a distinctive area emerge, worthy of its own name
and identity. While it reflects the sites location, NOMA is not intended to convey a specific meaning
but instead to unify a particular area of central Manchester.
The NOMA scheme was set to cost 800m when announced in 2011. If the Group is still an active
participant in this 10 15 year project, then this is likely to require a significant annual expenditure
from a business whose profit in 2014 was solely derived from sales of its Assets.
The 2012 Annual Report states that: The NOMA redevelopment of 20 acres of Manchester city
centre continued at pace in 2012 (Annual Report 2012, p,22).
Whilst in 2013 the intention to sell a portion of it was clear: In the Trading Group, the assets held for
sale in the current period relate to the sale of buildings, including the CIS Tower and surrounding
land and buildings of the Groups NOMA estate to a joint venture. This sale was deemed as being
highly probable within 12 months at year end. As part of the sale, the CIS Tower will be leased back
to the Group on a 15 year lease with a break clause at year 10 (Annual Report 2013, p,111).
In 2014 the Group still appeared to own a significant part of the Noma scheme: In June 2014,
Estates completed a 50/50 joint venture agreement with Hermes Real Estate to take the
development of the NOMA scheme to its next stage. Over the next ten years, the 800m programme
will create a mixed-use district in the heart of Manchester, including 2.5m sq ft of offices, 1m sq ft of
residential, and 0.5m sq ft of retail and leisure (Annual Report 2014, p,19).
In 2014 The Co-operative held an investment of 31m in the NOMA scheme which it did not appear
to hold in 2013, it also received 1m in income from the scheme in 2014 (Annual Report 2014,
p,125).
The NOMA scheme was far from completion in November 2013, as is evident in a report by
Manchester City Councils Chief Executive which was intended for a meeting of the Council Executive
on 20 November 2013, under Item 14, 4.1: Manchester City Council continues to be a strategic
development partner in delivering the full NOMA scheme. Significant further investment is needed
going forward to realise the vision and the project team continues to consider a range of funding
and development solutions to ensure that the scheme continues to realise its potential and deliver
on its core aims.
The records relating to NOMA are therefore limited by the fact that most of the building work was
still yet to commence in November 2013. The primary asset at that time was One Angel Square and
the Co-operatives shares in that complex have now been sold.
18
4.2.6 Plot L
The NOMA website states that Plot L will offer 455 units with great accessibility to city centre shops,
offices, amenities and transport hubs. This will be a landmark, 36 storey development in our new
urban neighbourhood and will lead the market both in terms of the quality of the design and the
quality of life it will offer residents. Development on site expected Q3 2015, first units ready for
occupation in 2017.
4.2.10 Redfern
Listed on the NOMA website as An Art Deco style building fronting on the new public realm to be
refurbished for the residential market and retail/leisure space on the ground floor. It is also
registered to 1 Angel Square, its company no. is 07475676 and it is currently a non-trading business.
The Co-operative did apply to have this company struck-off the register of companies at Companies
House, with a filing date of the 18th August 2015.
4.2.11 Dantzic
Listed on the NOMA website as A later addition to neighbouring Federation Building, Dantzic offers
short term let opportunities for businesses looking for interesting creative and studio space. Long
term options for Dantzic include office, retail and residential refurbishment. It is registered to 1
Angel Square, its company no. is 07465066 and it is currently a non-trading business.
20
5.1 Food
Food Retails Net Revenue for 2009 was adjusted from 7,516m to 7,173m. It is not clear why this
adjustment of 343m was made between the initial 2009 report and its subsequent restatement,
when The Co-operatives year end for reporting purposes is three months before the release of their
Annual Report. The following years Re-statement was 33m lower than the initial statement when
none of the years that followed saw any restatement higher than 4m.
Chart 22
The deal to buy Somerfield was completed in 2008 as reported by BBC News, the change in Revenue
for that acquisition was recorded under 2009. No change was reported for 2008, with Net Revenue
for 2008 both stated and re-stated at 4,526.8m. The fluctuation in the value of Foods Net Revenue
occurred in the two years following the acquisition. The change in Revenue between the statement
and restatement for 2010 may also have been influenced by the sale of 82 Food stores and loss of
10,000 staff members in the Food business between 2010 and 2011.
Chart 23
21
The adjustment of 19m in underlying segment operating profit from the Food business between
the 2012 statement which set it at 288m and the 2012 restatement of it at 269m cannot be
explained with the current available data. The 2012 'Revenue excluding internal sales' figure was
recorded at 7,442m in both the Statement and the Restatement, Additions to non-current assets
was recorded at 194m in both the Statement and the Restatement, Depreciation was recorded at
-225m in both the Statement and the Restatement and significant items do not tend to be recorded
in Underlying Profit; the cause of this 19m adjustment remains unclear.
Significant items ceased being recorded by business under Operating segments in 2013, in 2013
Operating loss was introduced in its place. Operating profit or loss are significant figures, but the
loss of the Significant items category prevents any analysis of its impact on the business after that
point. The 19m gap between the underlying segment operating profit from the Food business
statement and restatement is not elucidated by this change either. The Operating profit of 183m
in the 2012 Restatement is equal to the underlying segment operating profit from the 2012
statement with the Significant items (net) removed.
Though no conclusion can be drawn from this because of the absence of Significant items (net)
(2012 Restatement), as that missing category may or may not contain the missing 19m. The
restatement of all businesses profits following events at the Bank is a possible cause of this.
5.2 Funeralcare
The restatement of Revenue from external customers in 2012 is 10m lower than the initial
statement of 2012 Revenue from external customers, I have found no explanation for this.
5.3 Travel
A comparison of the 2012 Additions to non-current assets category between its statement in 2012
and restatement a year later reveals footnote e in the restatement. Footnote e of page 75 in the
2013 Annual Report states that Depreciation and amortisation includes amortisation of deferred
income relating to the Co-operative Travel brand; it does not state the value of this deferred income
amortisation is or to which business(es) it has been attributed.
Chart 24
22
This is a piecemeal summary of the trend in Underlying Corporate Costs but it does convey the
general nature of their movements.
It is evident from the previous chart that Corporate Costs is not a particularly transparent area to
chart, through enquiries I have managed to obtain the following information in verifiable reports.
Chart 25
These categories are added or removed from the reported Corporate Costs categories for various
reasons, once they are removed the changes in Corporate Costs are less significant:
Chart 26
As these figures do not appear to be published together elsewhere, they have been included here:
2012 Actuals
(m)
Corporate Costs without costs from
Estates/ Banking/ Other Businesses
-111
Table 4
23
2013 Actuals
(m)
-192
2014 Actuals
(m)
-149
The increase in value of the adjustments made to Corporate Costs has been more consistent than
the increase in Corporate Costs:
Chart 27
As these figures do not appear to be published together elsewhere, they have been included here:
2012
Other
Costs (m)
Adjustments to Corporate
Costs from Estates/
Banking/ Other Businesses
(36)
(40)
(49)
2014 Other
Costs (m)
(61)
Table 5
The full range of items which constitute Underlying Corporate Costs cannot be identified from the
available data.
24
Year
2012
2012
2012
2012
In/Left Post
relates to holding
that role whilst
on the Executive
In-post
In-post
In-post
Left
Officer Role
Bank CEO
CEO
CEX Food
CEX Food
Officer
Name
Barry Tootell
Peter Marks
Steve Murrells
Sean Toal
2012
Remuneration
as Stated in
2012 (000)
595
1332
360
237
2012
Remuneration
as Re-stated
in 2013 (000)
642
1332
606
N/A
Martyn Wates
970
970
Stephen Humes
577
611
2012 In-post
CEX Specialist
Businesses
Chief Finance
Officer
2012 In-post
Chief Information
Officer
Andy Haywood
320
454
2012
2012
2012
2012
In-post
In-post
In-post
Left
Mark Craig
Moira Lees
Wayne Lee
Richard Bide
213
393
70
303
222
393
70
N/A
2012 In-post
2012 In-post
Managing Director
Co-op Estates
Marketing Director
Martyn Hulme
Gill Barr
376
351
376
402
2012 In-post
Table 6
In total these adjustments result in an increase of the Remuneration figures disclosed of 521,000,
some of this amount can be accredited to pension payments which only started to be included from
the 2012 Re-statements; other contributory elements are less readily identified.
25
Chart 28
At first glance this might appear to suggest that the Chief Executive Officer took a reduction in pay
relative to the amount that his predecessor received; however, his predecessor was the CEO for his
entire time in office during 2014, whilst the 2014 CEO in-post was only the CEO for a portion of 2014.
Chart 29 *EAS - Equivalent Annual Salary, this figure is calculated by dividing the years salary by the number of weeks worked in
that year using the week start and finish dates in use for PAYE, that answer is then multiplied by 52.
To understand what has truly occurred between 2013 and 2014 it is necessary to unpack roles
conflated under the name of the 2014 CEO In-post. The in-post CEO served as the Chief Finance
Officer between the 1st Jan and 11th March 2014, he served his first full day as the Interim CEO on
the 12th March, before he officially became the new CEO on the 4th September 2014.
It is not possible to calculate the Basic Pay level for the 2014 In-post CEO, the Basic Pay level for the
Chief Financial Officer in 2014 has not been supplied. It is possible to calculate the approximate pay
levels from which his salary was derived.
26
Officer Role
Equivalent
Weekly
Emoluments x
Equivalent Weeks CEO InAnnual
Post held
Emoluments Officer Role
(000)
for (000)
Weeks CEO
In-post held
Officer Role Original
for in 2014 Officer Role
In-post CFO
10.4
2013
Acting CEO
25.2
2014
Total
Emoluments
Equivalent Paid to
Weekly
Originial
Emoluments Emolument
(000)
Recipient (000)
CFO 2013
488
488.0
400
888
400.0
1,627
1627.0
17
95.7
4,976
4976.4
52
95.7
2,901
2901.1
52
55.8
Weeks
Worked by
Originial
Emolument
Recipient
46.9
1267
27
15.9
400
25.2
The approximate figure of 2.901m for the interim/new Chief Executive Officers Average Equivalent
Annual Emoluments are 257,000 less than his predecessors In-post Equivalent Annual Emoluments
for 2013; however the previous Chief Executive Officers Equivalent Annual Emoluments for 2013
included A payment of 1m to Euan Sutherland as compensation for incentive scheme awards that
he forfeited on resignation from his previous employer. It is unlikely that Mr Sutherland would have
received that 1m compensation again the following year, he was in-post for a portion of 2014 and
did not receive any compensation for incentive scheme awards that he forfeited on resignation
from his previous employer for that portion of that year.
If the 1m of compensation for leaving his previous employer is deducted from his predecessors Inpost Equivalent Annual Emoluments for 2013, the current Chief Executives approximate In-post
Equivalent Annual Emoluments for 2014 are 743,100 higher than those of his predecessor in 2013.
Year
2014 In-post
2013 In-post
Officer Name
Group General
Council
Group General
Council
Weeks in
Office
Alistair Asher
1,186
52
Alistair Asher
1,479
27
Table 8
In 2013 the Group General Council received a retention payment of 475,000 which he did not
receive in 2014. In 2014 his Equivalent Annual Basic Pay was 62,000 higher than the year before.
In/Left Post relates to holding that
role whilst on the Executive
Officer Role
Year
2014 In-post
2013 In-post
Officer Name
Group General
Council
Group General
Council
Table 9
27
Weeks in
Office
Alistair Asher
534
52
Alistair Asher
472
27
Chart 30
The Marketing Directors Equivalent Annual Basic Pay has increased to a lesser extent.
Chart 31
28
Chart 32
It is clear from this that his Equivalent Annual Basic Pay has increased relatively steadily between
2010 and 2012 whilst his Remuneration levels have been more volatile.
Chart 33
Year
2014
In-post
2013
In-post
Officer Role
CEX External
Affairs
CEX External
Affairs
Officer
Name
Equivalent Annual
Total Emoluments
(*EAS 000)
Weeks in
Office
Nick Folland
1,307
52
Nick Folland
1,392
34
Table 10
The withdrawal of the 2013 retention scheme has signalled a reduction in his total Equivalent Annual
Emoluments; as with other Officers, this pattern has not been replicated in his Equivalent Annual
Basic Pay:
29
Year
2014
In-post
2013
In-post
Officer Role
CEX External
Affairs
CEX External
Affairs
Officer
Name
Weeks in
Office
Nick Folland
524
52
Nick Folland
405
34
Table 11
Chart 34
In this instance, the Chief Information Officers Equivalent Annual Basic Salary has increased by
84,000 whilst his total Equivalent Annual Emoluments have returned to their 2012 level in 2014.
Chart 35
30
2013
28.0
19
2012
36.0
19.1
2011
36.1
18.9
2010
35.7
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
Estates Revenue
Chart 36
The Equivalent Annual Remuneration for the Managing Director of Estates increased by 25,000
between 2010 and 2012, it then increased by 309,000 between 2012 and 2013. 300,000 of that
increase was a part of the Retention Programme, 9,000 was not recorded as such.
Chart 37
Between 2010 and 2014 the Equivalent Annual Basic Pay of the Managing Director of Co-operative
Estates increased by 109,000 from his starting salary.
Chart 38
31
Chart 39
The Chief Executive of Foods Equivalent Annual Remuneration fell from 1,089,000 in 2010 to
927,000 in 2011, his successors Equivalent Annual Remuneration fell from 564,000 in 2011 to
447,000 in 2012, then his successor was paid a higher Equivalent Annual Remuneration to leave his
present employer and halt the decline in underlying profits.
Chart 40
32
Equivalent Annual Basic Pay has increased for each Chief Executive of Food between when they
started their role and when they concluded it during this period.
Chart 41
Year
2014 In-post
2013 In-post
Officer Name
Chief Executive
of Retail
Steve Murrells
Chief Executive
of Retail
Steve Murrells
Weeks in
Office
1,767
52
1,615
52
Table 12
Between 2013 and 2014 the Chief Executive of Retails Equivalent Annual Remuneration has not
decreased as others Equivalent Annual Remuneration has. The Chief Executive of Retail did receive
a Performance Related Payment in 2014 whilst in 2013 he received no Performance Related
Payment; however, the pay award he received from the Retention Programme in 2013 does share
some similarities with that which he received as a Performance Related Payment in 2014. The Chief
Executive of Retails Equivalent Annual Basic Salary has increased over this period.
In/Left Post relates to holding that
role whilst on the Executive
Officer Role
Year
2014 In-post
2013 In-post
Officer Name
Chief Executive
of Retail
Steve Murrells
Chief Executive
of Retail
Steve Murrells
Weeks in
Office
729
52
642
52
Table 13
The Chief Executive of Retails Equivalent Annual Remuneration is also affected by the compensation
he has received for costs related to his appointment, with 75,000 of compensation for the incentive
scheme awards that he forfeited upon leaving his previous employer and 63,000 for relocation
expenses forming part of his Remuneration package.
33
Chart 42
The factors which determined the Equivalent Annual Remuneration levels, do not appear to have
affected Equivalent Annual Basic Pay levels between 2010 and 2012 in the same manner.
Chart 43
34
Chart 44
It is not clear why the Group Secretarys Equivalent Annual Basic Pay for 2014 declined to below the
2010 pay level for that role, this change has not resulted in a similar decline of Equivalent Annual
Total Remuneration.
Chart 45
Retention Payments and Performance Related Pay feature heavily in these figures, there does
appear to be some correlation between the two.
35
Chart 46
Chart 47
The majority of these payments were awarded between 2013 and 2014, as demonstrated in Chart
48.
36
Chart 48
The disclosure legislation change of 2012 brought greater transparency, as it led to payments such as
pension-based awards being stated in pay tables for the first time. Inconsistency of disclosure has
hindered this research by reducing the comparability between the years stated Remuneration
figures; however, the increase in disclosure caused by legislative changes is a progressive
improvement.
8. Conclusion
Now you know what I know, which is primarily how much the average Member of this Co-operative
is not allowed to know about the business they own. After calculating the growth of Equivalent
Annual Salaries, charting the progress of the NOMA Joint Venture, and observing the adjustments of
large sums of money, the following questions remain:
Why were 10.8m of payments to Executives on gardening leave, or received for factors other than
the work they directly contributed, not recorded in the pay tables?
Why were 1,457m of liabilities for 2013 adjusted from the current to non-current liabilities
category?
Why does the Annual Report say that the Group has entered into an 800m 50/50 joint venture
called NOMA with Hermes Real Estate, when papers at Companies House state that they entered
into that joint venture with the BT Pension Fund in the same month and year?
How much of the expected 400m investment in the NOMA joint venture does The Co-operative
have yet to pay?
And with the range of categories included in Corporate Costs subject to change every few years,
what does constitute a Corporate Cost?
37
I cant give you these answers, only you can get more answers and to get them you, I, everyone who
reads this, needs to call on The Co-operative to introduce greater transparency into their accounts.
The area most lacking in clarity is that of restatements, to address this the Annual Reports
need to include both the pre and post-restatement figures for every restatement and an
explanation for each change.
Corporate Costs are another area that is lacking in clarity, so the criteria for them need to be
standardised. Each time an item is moved into or out of Corporate Costs, whether total
Corporate Costs or Underlying Corporate Costs, its value should be stated and the reason for
its movement explained.
Partnerships can have a serious impact on the expenditure of the Co-operative Group;
therefore, if the Group either gains, loses or contributes more money from/to a joint
venture than from its smallest wholly owned venture, that ventures results should be
reported in the same manner as those of the wholly owned businesses.
Executive Pay tables should include both all significant payments received by the Executive
in that year and all significant payments received by former members of the Executive in
that year. The reason why the reported figures for 2012 had to be restated was that the
statutory minimum of reporting was provided prior to the regulatory change. Any payment
totalling more than 1,000 should be included in the Executive Pay tables, whether for a
current or former member of the Executive.
Gardening Leave payments are a particular cause for concern, 3.5m has been spent on
Gardening Leave and Continued Employment after Stepping Down between 2011 and
2014, this suggests that the time may have come to review the terms that are being
proposed on some of these contracts.
Principle 2 is Democratic Member Control, how can Members of this co-operative have any control
over it when so many questions remain and when accountability is limited by the amount of
information which Members cannot readily obtain?
38
KAT ROSE
September 2015
39