Interim
Review
2021

A big driver of this innovation has come from the Society's newly formed Executive Team.

The Board is pleased that the new Executive Team, under the direction of Debbie Robinson, is working well and bringing their leadership, complementary skills and fresh perspectives to drive the Society's future success over the months and years ahead.

In order to survive and thrive a Society needs to be flexible and to grow. In June, the Board took the decision to invest in our Funeral business and acquire most of the funeral operation run by Midcounties Co-operative. We are confident that having a strong co-operative offer in the funeral sector is good for Members and customers. We look forward to welcoming new colleagues from Midcounties to our Central England family. Changes are occurring elsewhere in the funeral industry which will benefit the consumer, and the Society is investing to be ready for the new regulations.

We are also keen to grow our food business and our property team continues to search out and evaluate new sites for acquisition and development. As a result, the Society's trading area is expanding into new areas. Our existing estate continues to be updated and refreshed and whilst we would love to see all stores being refurbished all in one year, we continue to exercise prudence and stay within our budget for store investments.

During the past six months we have seen our new Society Purpose "Creating a sustainable Society for all" being rolled out.

Our Purpose is underpinned by co-operative values and principles and means that all decisions are looked at through four lenses: Financial, Human and Environmental sustainability and Inclusion. Our values and principles don't just apply to our own Society – in May we joined a collective effort by the UK co-operative movement which resulted in a total donation of over £100,000 to support people in India affected by Covid (Principle 7 – Concern for the Community). We have also agreed "one-off" voluntary donations to other co-operatives: £15,000 to the Co-operative College (Principle 5 – Education, Training and Information); and £5,000 to Co-operative Heritage Trust (Principle 6 – Co-operation among Co-operatives). Earlier in the year in March, we led the way in celebrating International Women's Day and holding a Men's Voices event, giving Members the opportunity to discuss in depth issues that mattered to them: mental health, debt and finance management, domestic violence and climate change. We didn't find all the solutions, but the events did provide mutual support to address and inform on issues which might previously have been taboo. And we see this as providing Member education and living our values of self-help, self-responsibility and solidarity.

More recently, the Board has been conducting a recruitment exercise for the position of Society Secretary in preparation for the retirement of Jim Watts who will be stepping down in early 2022. I look forward to providing an update on this important appointment in our Annual Report, where we will also pay tribute to Jim’s long and valued service to our Society.

Finally, I would like to mention our main Co-operative difference.

What we do, the success we have, is done for and on behalf of our Members. We do not have shareholders – only Members who hold a minimum £1 share. This means our surplus goes where our Members want it to go – a Dividend to individuals based on their spend with the Society, to the Community Dividend fund, to support Co-operative Development and campaigning for change at Government levels. This model has worked successfully for over 175 years and has been resilient in good times and bad. Your participation in the Society – from shopping with us, to attending cultural, leisure, educational or social events through to reading this report and attending Annual or Interim meetings and having your say, is part of our continued strength and success.

Thank you.

Jane Avery
SOCIETY PRESIDENT

In July, we were delighted to receive the Co-operative UK's award for the Leading Co-op of the Year.

This is down to a collective effort across our Society, an active Board and Membership and our wonderful colleagues. As a thank you, we have given our colleagues an extra day off in celebration.

We were also awarded three Carbon Trust Standards for reducing our carbon emissions, waste, and water use, for the fourth successive time.

This re-award was achieved by putting in measures such as eco-friendly fridges and industry-defining strategies to tackle food waste such as our link-up with FareShare Midlands. We are building on this progress with additional environmental initiatives over the course of this year including the Too Good to Go app, in-store soft-plastic recycling bins and our Central England Co-operative Green Spaces Community Project.

Safety has been and continues to be our top priority and we have worked together to provide a safe environment to shop and access our goods and services.

Unfortunately, more of our retail colleagues have suffered from unacceptable verbal abuse and aggressive behaviour. We believe that each and every colleague should have the right to go to work and return home safely and we continue to invest in new safety measures including personal protection devices and access to counselling services.

We will continue to campaign for greater legal protection for frontline colleagues as we work with the Co-operative Party and other partners in the movement, Usdaw, the BRC and the ACS to lobby MPs until we see the introduction of new legislation. This will reach Committee Stage in the House of Lords on the 20th October 2021, under the Police, Crime, Sentencing and Courts Bill to bring about lawful protection for retail workers in England in line with those in Scotland, now protected under the Protection of Workers Act 2021.

The Government Furlough Scheme ended in September, and we are prudently managing our financial affairs to mitigate against the impacts of long Covid in addition to the significant increases in Corporation Tax and National Insurance Contributions.

As reported last year, the first half of 2020 showed a dramatic spike in trading performance after the first lock-down in March 2020. In order to fully represent our underlying financial performance, we have used financial comparisons from both 2020 and 2019 in this report.

Gross sales in the first half of the year increased to £477.9m, up 4.3% on pre-pandemic sales in 2019 of £458.1m (£487.3m in 2020).

Trading profit of £15.7m was up £4.4m compared to 2019, albeit down versus the exceptional trading seen in 2020. We also recorded strong cash generation of £28.8m, continued to invest for future growth with £7.7m of capital expenditure, and distributed £2.1m in dividends to our Members, colleagues, communities and other stakeholders.

Our Board took the decision to invest and grow our funeral business, with the planned transfer of 50 homes and two vehicle logistics centres into our Society, from Midcounties Co-op Funeralcare.

This significant investment brings the size of our Funeral estate to over 180 homes and will allow us to reach a far greater number of Members and customers with more accessible ways to take out a funeral plan or organise a funeral, whether that be by phone or online in the comfort of their own homes, or in person at one of our care centres. We have also launched a Wills and legal services offer to help families gain further peace of mind through planning ahead with a trusted provider. In the coming months, new ways of working will be implemented to ensure we continue to comply with findings from recent CMA investigations and offer the best levels of care to our Members and customers at their time of need. New FCA regulation in the funeral industry is welcomed to ensure customers are treated fairly and honestly but raises operational challenges of trading in a newly regulated environment.

We have opened two new stores in the first half of the year. The new stores are located in Sutton, (Cambridgeshire) and Warsop, (Nottinghamshire), as well as delivering 23 store regeneration projects. The Society has a strong pipeline of further store openings planned over the next 12 months.

The significant changes in shopping behaviour have accelerated the need for the Society to develop new channels to market. Our Home Delivery and Click and Collect services are now available in over 100 stores. Self-scan checkouts and the Scan and Go app implementation continue at pace as we pursue our strategy to provide accessibility, choice and value to our Members and customers.

The strong trading performance in the first half of the financial year is likely to be met by a more challenging second half, as external market factors shape the UK economy and international trade. Brexit issues have been heavily reported in the media and have impacted on the availability of drivers and manufacturing workers. The grounded ship in the Suez Canal exacerbated chain supply problems causing serious product availability issues and inbound delivery delays to suppliers potentially beyond the Christmas trading period and into the new year, resulting in increased costs and subsequent inflation. The prevalence of discounting retailers also continues, with the accompanying demands on our pricing structures.

We have adapted quickly to these changing circumstances with new initiatives including space swaps in our food stores (reducing space given to declining products and giving more space to growing categories) and new ways of merchandising to empower our teams to use all available stock to fill gaps on shelves. ‘Warehouse to Wheels’ has been created, a development programme allowing colleagues to transition from warehouse operations or food stores to LGV class C drivers. We are also working on ways to link up with community organisations to support refugees, and those that have been made redundant following the end of the furlough scheme, to identify suitable skills-based employment opportunities within the Society.

As climate change moves from prediction to reality, this year has witnessed some horrifying natural disasters with floods in Europe and an alarming number of wildfires across the world.

Global power shifts have resulted in devastating scenes in Afghanistan. However, as co-operators, we will continue to make a positive impact to communities at home and overseas. Following the re-establishment of our founding co-operative values and principles, we launched our new Society Purpose, 'Creating a sustainable Society for all', focusing on financial, human, environmental sustainability and an inclusive approach in all we do.

Our new, talented Executive team have the skill, experience and strong ethics and values to inspire and lead our colleagues, to support the fulfilment of their potential, as well as deliver truly co-operative goods and services to our Members and customers.

Jim Watts will be retiring in early 2022 after 36 years of exemplary service to the Society, 10 of which were as our diligent and caring Society Secretary. I would like to personally thank Jim for his outstanding support, wisdom, and wit during my two and half years with the Society, and for his commitment to co-operation and expert guidance in steering Central England Co-operative to be the strong, independent Society it is today.

Thank you.

Debbie Robinson
CHIEF EXECUTIVE