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Southern Co-operatives Limited
44 High Street, Fareham, Hants
PO16 7BN
Member Support
T: 0800 65 20 124
membersupport@southerncoops.co.uk
Made from paper that is recyclable
and biodegradable
T: 01329 223 000
www.thesouthernco-operative.co.uk
Customer Services
T: 0800 58 75 009
custservice@southerncoops.co.uk
Southern Co-operatives Limited
Registered No 1591R (Industrial and
Provident Societies Acts) England
The Southern Co-operative
Annual Review 2009-10
Ghost Ship celebrations - part of the Portsmouth Festivities, June 2009 - sponsored by The Southern Co-operative
A unique local business
A unique local business
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Contents
Welcome to our
Annual Review
2009-10
Internationally agreed
values and principles
In common with co-operative societies across the
world, we share a set of co-operative values and
principles. We strive to ensure these are at the
heart of everything we do.
03
04
06
08
10
12
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20
22
26
28
30
34
35
Welcome to our Annual Review
Our Board of Directors
Chairman’s report
Chief Executive’s report
Heads of trading
businesses and engagement
Retail summary
End of Life Services Summary
co-operative Xest
People, people, people
Our community
Our members
Responsible retailing
Summary of financial statement
Corporate governance
Auditors’ statement
General meetings
The Annual General meeting will be held on Tuesday 25th
May at 7pm at The Hilton Hotel, Eastern Road, Portsmouth
PO6 1UN, preceeded by a divisional meeting which will be
held on Tuesday 18th May at 7pm at The Anthony Minghella
Theatre, The Quay Arts Centre, Sea Street, Newport, Isle of
Wight PO30 5BD.
We are pleased to present a
summary of our activities for
what has been another very
successful year for The Southern
Co-operative.
We hope that our members and
all our stakeholders will find this
report interesting and informative.
Our co-operative
values are:
• Self help – we help people to help themselves
through mutuality
• Self responsibility – we take responsibility and
answer for our actions
• Democracy – we give our members a say in
the way we run our business
• Equality – we wish to encourage the expansion
of membership from a wide range of people;
the conditions of joining are the same for all
We are a unique local business,
owned by our members and at
the heart of our communities.
• Equity – we carry out our business in a way
that is fair and unbiased
By working with others nationally
we are playing a full part in the
revival of the co-operative brand
and the mutual business model.
Our co-operative
principles are:
• Solidarity – we share interests and
common purpose with our members
and other co-operatives
• Voluntary and open membership
• Democratic member control
• Member economic participation
• Autonomy and independence
• Education, training and information
• Co-operation among co-operatives
• Concern for community
We would like to acknowledge the help of all our colleagues
and members who are featured in this Annual Review.
The front cover photograph taken by Emma Caulton, shows
local suppliers Chris and Carol Mason from Hill Farm Orchard.
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Our Board
of Directors
David Blowe
Chairman
special interest in
society governance
Mike Hastilow
Vice Chairman
special interest in
End of Life Services
The Southern Co-operative Board of Directors
is elected democratically by its members and
represents their interests and those of our
co-operative. The Board is responsible for the
governance and strategic direction of our
business.
The members of the Board work closely with
our Leadership Team and, whilst retaining the
essential overview, each director also has
specialist knowledge of different key areas of
the business.
Pauline Lympany
special interest in our
community involvement
and member engagement
Tom Blair
special interest
in finance
Regular Board meetings are held to ensure that
long-term objectives are established, policies
are approved and performance is independently
questioned and monitored. This process
enables our business to operate as a successful
co-operative enterprise.
Any member* can be nominated for election
to the Board and our Directors are elected
from and by the membership on a one
member, one vote basis. The election is
conducted using postal voting and polling
at a registered office on the final day of voting,
which is independently administered by
Electoral Reform Services.
For more details about the Board of Directors
and how to register on the voting database
please visit our website:
www.thesouthernco-operative.co.uk
or contact Member Support.
T: 0800 65 20 124
Neil Blanchard
special interest
in property
Amber Vincent-Prior
special interest in
our colleagues and
their development
Fran Hobson
special interest
in franchising
Steve Toone
special interest in
our new business
co-operative Xest
Glenn Heath
special interest
in retail trading
Silena Dominy
Society Secretary
special interest
in governance
Further details of Directors their attendance
and committee responsibilities appear in our
Annual Report and financial statements which is
available on our website or from our Secretary.
*Directors must meet the qualifications set out
within The Southern Co-operative’s rules.
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Chairman’s
report
Our trading results
Our total sales net of VAT have exceeded £243m - an
increase of nearly 20% on 2008 - which we believe
supports the strategic direction we are taking and the
proven strength of our business model with its focus
on creating value for the long term.
The sales performances for both food and funeral have
continued to be amongst the best in their sectors across
the UK.
Our growth strategy
The challenging economic conditions in 2009 created a
difficult environment for business and The Southern
Co-operative was no exception. During the year we have
looked closely at our trading and investment strategies for
our business to ensure they are the most appropriate for
the post credit crunch world.
Whilst alert to the short term issues in the wider economy,
we have decided to seek to grow our business still further.
We will do this by building on the proven strengths of our
recent trading performance and our ability as a co-operative
business to take a long term view on investment to take
advantage of opportunities created by the economic
downturn.
We will continue moving forward into 2010 with this
strategy that has enabled us to open more than 20 new
co-operative food stores and seven funeral homes over
recent months.
David Blowe, Chairman
“
I would like to recognise
the contribution made by
all our colleagues across
the business
”
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The Southern Co-operative Annual Review 2009-10
We enter 2010, in what remains a challenging economic
climate and a period of further uncertainty for businesses
in an election year, from a position of financial strength
with a clear Strategic Plan in place.
Our new brand strategy
The Board took the strategic decision to adopt the national
co-operative branding for all its food stores and funeral
homes in the spring of 2009 and a roll out programme
immediately commenced. This conversion programme
had delivered some 30% of the stores estate re-branded
by year end with the remainder to be completed by the
first half of 2011.
These changes will enhance our business as we combine
the strength of the new national co-operative brand with
expert local execution delivered through our independent
regional ownership model.
Our new
membership strategy
Another fundamental decision taken by the Board in 2009
was to introduce a brand new Share of The Profits scheme
for our members.
The first of these profit distributions will be made in June
2010. Responding to the new strategy, membership has
grown by 31% in the last year with new members coming
from right across the area in which we trade. In addition
more than 90% of our colleagues are now members and
part owners of the business in which they work.
This is at the heart of our new membership strategy and
will reinforce our position as a successful mutually-owned
regional business.
With the additional stores we have acquired or opened
during 2009 we now have 3,225 colleagues in The
Southern Co-operative and I would like to take the
opportunity to welcome all those colleagues who have
joined our co-operative this year.
Our communities
We have always strived to put The Southern Co-operative
at the heart of the communities in which we trade and this
year I am proud to say is no different. Indeed in 2009, we
reaffirmed our strategy to put still greater focus on engaging
with community stakeholders.
Our colleagues have once again become involved in
numerous community activities supporting many good
causes that are important to local people. In addition
through our Community Support Card we are now helping
even more organisations in villages and towns across the
area in which we trade.
Our chosen partner charity for 2009 was the children’s
hospice Naomi House based near Winchester and I am
delighted to report that in the last year we have raised in
excess of £130,000 for this outstanding regional facility.
Our colleagues
As part of our work in the community we have also formed
important and mutually beneficial partnerships with regional
organisations that share our values, including Hampshire
Fare and the Hampshire & Isle of Wight Wildlife Trust.
I would like to recognise the contribution made by all
our colleagues across the business. Their hard work and
commitment has underpinned our success this year and
helped us achieve significant new growth and strong
performance in the core business.
Many of our colleagues also worked in partnership with
others to help make a success of the 2009 Portsmouth
Festivities culminating in our sponsorship of the day-long
Ghost Ship celebrations in Southsea in June.
In particular I would like to thank our colleagues for their
outstanding efforts during the severe weather conditions
experienced in January 2010. The commitment shown
by colleagues at all levels, in some cases involving people
walking several miles to work in the snow, enabled us to
continue to maintain high standards of customer service
throughout the period of the extreme weather.
The following pages of this Annual Review include more detail
about some of the main activities and key moments for the
different areas of our business during 2009-10. A complete
Annual Report and Financial Statements document in full
statutory format is available to download from our website
www.thesouthernco-operative.co.uk or can be obtained free
of charge on request to the Secretary.
David Blowe
Chairman
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Chief Executive’s
report
Trading strength
The total year-on-year sales increase in 2009 was 20%
with the benefit of additional stores and funeral homes and
53 weeks’ trading. On the important food like-for-like
comparison we achieved 9% (excluding petrol) which was
amongst the best in the industry. We also had a record
Christmas with a 9.96% like-for-like food sales increase
for the three weeks ending January 3 2010.
Our colleagues conducted 3,421 funerals during the course
of the year - an increase of 16% - as new funeral homes
were added and branches that were opened in previous
years started to mature.
co-operative Xest is our first home shopping mail order
venture and began trading from scratch in April 2009.
The business operates in the rapidly growing market for
aids to daily living. We are working to bring the trusted
co-operative retailing ethos to this sector, which we believe
has the potential to be a significant part of our business
going forward. I am pleased to report sales in the first eight
months of the new business were in line with expectations.
Interest receivable reduced to £0.9m from £3.6m primarily
reflecting much lower market rates on broadly similar
cash balances.
Total cash flow continued to be strong with net cash flow
from trading activities reaching £13.9m (2009: £15.7m).
Our reported operating profit for 2009 has increased by
66.4% to £9.8m from £5.9m in 2008 with the benefit of
a 53-week trading year.
Mark Smith, Chief Executive
“
Our reported operating
profit for 2009 has increased
by 66.4%
8
”
The Southern Co-operative Annual Review 2009-10
The 2009 profit figures include two significant one-off items.
The requirements of accounting standard FRS17 have
resulted in a one-off increase in profit of £3.8m relating to
technical changes within pension scheme accounting.
The results also include a reduction of profit of £3.1m
reflecting a one-off payment related to the Co-operative
Group’s acquisition of Somerfield.
Adjusted for both of these one-off items, the underlying
2009 profit figure is £9.1m which is an increase of 53.8%
on 2008, on total sales 19.8% higher.
Total property rental income was £2.3m (2009: £2.4m) and
the value of our investment property portfolio stabilised in
2009 as the commercial property market strengthened.
Investment in IT systems
Net assets (excluding pension fund) continue to reflect a
balance sheet without any debt and have risen by 48%,
to £91.3m in 2009.
Recognising that current systems could act as a constraint
on achieving our growth plans we have decided to invest
significant capital into replacing them with the latest
technology on the market.
Strategic direction
Our IT Road Map is how we describe a set of new business
systems which we will implement over the next three years.
The programme is well underway and by the end of this
period a number of major systems our colleagues use every
day will have been replaced.
This is the first full year with our new business structures
and management teams in place. I am pleased to say that
our results reflect the benefits of the changes made at the
end of 2008.
Following a review of all of our strategies during 2009 we
have a new three-year Strategic Plan and we are focusing
on three key strategies:
This is a big commitment, but one we know is absolutely
right to make. The result will be improved customer service,
new ways of working and better information to drive our
business forward in the years ahead.
• increasing the return in our core business
• growing scale for the long term
Financial results
The recent administration of First Quench plc also enabled
us to acquire a further five former Threshers stores that we
will open in 2010.
• creating locally unique behaviours through engagement
Alongside the fundamental decisions to adopt the national
co-operative branding and introduce the new Share of
Profits scheme, we are focused on building local points of
difference in behaviour that will further set us apart from
the competition.
Partnership has been a key focus when engaging with
communities this year. By working with other like-minded
organisations regionally we can each achieve more to our
mutual benefit.
Investment in stores
and funeral homes
The way forward
We remain alert to current trading conditions and in
particular to intense competition in all our markets. We are
working hard to make sure that we continue to deal with the
current difficult economic conditions, whilst also being well
placed to take advantage of the upturn in the economy
when it comes.
As part of this we are investing even more into training and
developing our colleagues. Alongside the new IT systems
this is essential for delivery of our ambitious plans for the
future growth of The Southern Co-operative over the next
three years.
Mark Smith
Chief Executive
We have continued to invest in the future and opened a
further four stores and seven funeral homes during the
year in addition to converting the 18 stores added from
Woolworths and Nearbys Limited at the end of 2008.
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Meet our
heads of trading businesses
and engagement
Our heads of trading are responsible for
our commercial performance
Our head of engagement looks after the
all-important relationships with our stakeholders
Heads of trading from left to right:
Engagement matters
Steve Pearce
Steve is Chief Operating Officer for End of Life Services
and is therefore responsible for all aspects of funeral
activity, floristry, masonry and limousine services.
Our Head of Engagement works with the Chief Executive
across all our trading businesses.
High point of the year
Our record figures are a great achievement, but it’s the
extended care and support we offer after bereavement that
makes us unique, setting us apart from all our competitors
and befitting the values of The Southern Co-operative.
Andrea Dipple
Our new online and mail order operation
co-operative Xest, is headed by Managing Director Andrea.
She has overall responsibility for the development of this
new business specialising in aids for daily living.
High point of the year
The successful launch of our new home shopping business
and the feedback we have received from our customers.
Ted Merdler with Chairman, David Blowe,
at the 2009 Annual Member Convention
Mark Smith
As Chief Executive, Mark heads our Leadership Team.
He has overall responsibility for our operations and the
effective running of The Southern Co-operative. He is
answerable to the Board for overall business performance.
Ted Merdler
Ted is Head of Brand Engagement and Communication
and is responsible for the way we interact with our
members, colleagues and other stakeholders.
High point of the year
Our performance was well ahead of the market in a
challenging year for the economy.
High point of the year
Our partnership with Hampshire and Isle of Wight Wildlife
Trust to deliver the local beef from cattle raised on
endangered native heathland.
Phil Ponsonby
As Chief Operating Officer for Food Retail and Services, Phil
is responsible for all aspects of our food retail business and
a number of the central services functions.
High point of the year
Taking the decision to adopt the national co-operative
branding gives greater brand strength, with a clear identity,
and will enable the business to forge ahead in the future.
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Retail
summary
Strong performance
National brand, local focus
This has been a successful year for our food retail business.
Despite the poor economic environment we all found
ourselves in, we have continued to deliver above market
growth in the core business whilst adding significant new
space. In these trading conditions it is particularly pleasing
to be able to report further growth in food like-for-like sales
that were 9% higher than 2008.
The new national co-operative food brand identity was
piloted at Emsworth and Bognor Regis in April. This was
then rolled out with the commitment of significant capital
expenditure, beginning with the conversion of our
acquisitions from the former Nearby's estate and the
launch of our five former Woolworths stores.
This year we have committed additional capital expenditure
to support the highest possible standards of customer
service. There has also been a significant increase in the
investment made in training and developing our colleagues.
By the end of 2009 we had re-branded 39 stores – some
30% of the estate – and we aim to complete the whole
process by the end of the first half of 2011.
Organic growth is central to our business strategy, and our
reformat program over the last year has seen eight stores
completely refitted, including large stores at Cowes and
Freshwater on the Isle of Wight. Updating and enhancing
our existing stores remains a priority and around 25 stores
will be reformatted in 2010, including important large sites
like Hayling Island.
During the year we also opened two new stores on
‘brownfield’ sites – in Blandford Forum and on Northern
Parade in Portsmouth. We also acquired two stores as
going concern businesses in Bradford-on-Avon and Church
Crookham along with the Post Office at Clevedon which
was relocated into our existing store in the town.
Our development programme will continue at pace as
we are placing significant focus on accelerating store
acquisitions for 2010 as new opportunities arise.
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Retail
summary
Products, products, products
More and more people care about where their food comes
from and place greater importance on locally-sourced
ingredients. We now have local ranges in selected stores
in Hampshire, Isle of Wight, West Sussex and Surrey with
plans in place to extend this to include Dorset and Wiltshire.
An enhanced product range provided by local producers has
inspired a 400% uplift in our turnover on locally-sourced
products compared to last year.
Our reputation and relationship with local producers means
we are able to develop strong partnerships to bring the very
best of local produce to our stores. An example of this has
been our work with Hampshire & Isle of Wight Wildlife Trust
to offer local beef from cattle raised by the Trust on
endangered native heathland in North East Hampshire.
This pilot project in a small number of local stores was a
tremendous success and did a great deal to raise
awareness of our commitment to local products and to
support the conservation grazing projects undertaken by
the Trust.
Within our core ranges we have seen significant sales
increases this year in dairy, produce, butchery and in-store
bakery. There has also been a strong demand for frozen
products, largely fuelled by current economic pressures,
with significant growth in this area reflecting this trend.
We always try to provide our customers with what they want
and this year have undertaken a major review of our
merchandise space with a view to being able to enhance
our range in many of our stores, including more fresh and
own brand products. Three new delicatessens and 15
in-store bakeries were added during the year.
During the year £4.5 million was raised for good causes
through lottery sales in our stores.
Our commitment to Post Offices remains an important part
of our overall trading strategy. Our Post Office estate has
now increased to 45 offices.
Our colleague
Ken Whatsize
Ken, aged 48, has been the Store Manager at
Southea’s Highland Road store for the last four
years. He first joined The Southern Co-operative
back in 1989, working in stores in Hilsea,
Portchester, Leigh Park and Eastney. But after 10
years he decided he wanted a change and left to
work with some of the big names in retail – Lidl,
Asda and Tesco. Just five years later he was back
with no plans to ever venture away again.
“I can say hand on heart that the grass is
definitely not greener on the other side! With the
bigger retailers you are just a number, whereas at
The Southern Co-operative you are a person. It is
much more of a real team.”
Over the past four years Ken has seen his weekly
takings soar by 49% – something he attributes to
the importance of stocking fresh food.
“The buying power that we have with the
co-operative brand means we can offer people
great food and really competitive prices.”
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End of Life Services
summary
Our End of Life Services business has continued to play
an important role at the heart of our communities, not just
in the immediate period after bereavement, but also
through the longer term care that we are proud to provide
for families.
Financial results
We have invested heavily in our funeral homes and, despite
falling death rates, we are able to report further volume
growth and record sales in this side of the business.
The number of funerals we conducted has increased by
16% supported by record sales in floristry and pre-planned
funeral bonds.
As a result, turnover has continued to increase from
£8.5m to £10.2m with growth coming from both new
and long-established funeral homes.
New brand
As part of the wider Southern Co-operative decision to
adopt the national branding, we have decided to re-brand
all of our funeral homes. Paulsgrove became the pilot for
the new national co-operative funeralcare branding in
May 2009.
This highly recognisable brand carries national strength
which, when combined with our regional expertise in
service delivery, will support the further development of
our business.
New products
This year we have expanded our range of environmentallyfriendly coffins, including one made of wool, and added
eco-friendly wicker and bamboo urns. We have also
launched a new catering service especially designed
for funerals.
New funeral homes
We have continued with our growth strategy and have
added a further seven funeral homes during the year,
and now operate a total of 31.
We remain committed to the highest possible standards
in all our funeral homes and in 2009 we carried out
refurbishments in Leigh Park, Waterlooville, Rowner
and Gosport.
Bereavement care
In conjunction with South Hants Cruse, our aftercare
Bereavement Centre and the extended Friendship Groups
it offers, continues to provide support to many of our clients
long after the funeral service is completed.
This is led by fully-trained and experienced bereavement
counsellor Ingrid McAllister-Derry who has this year received
national recognition for her work. She was nominated by
South Hants Cruse Bereavement Care, as someone who had
made the greatest single contribution to bereaved people in
a group setting in 2009 for which she was invited to receive
thanks at St. James’s Palace where Her Majesty The Queen
was in attendance.
Ingrid’s advice and access to the support groups is made
freely available across all parts of our operating area.
There are now eight support groups and eight Friendship
Groups operating, with numbers increasing all the time.
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The Southern Co-operative Annual Review 2009-10
Our colleague
Ingrid McAllister-Derry
Ingrid began working at a Southern Co-operative
funeral home 13 years ago and she instantly fell
in love with the profession. The rest, as they
say, is history.
Since then, and largely in her own time, she
has studied further in what is a highly
specialised field gaining several qualifications,
including becoming a fully-trained counsellor.
Most notably in 2000, Ingrid started
The Southern Co-operative Bereavement
Centre with the first support group starting
in Portsmouth. This was the first of many
throughout our area. The idea was that, as
well as offering funerals and the care leading
up to the funeral, the business should also
be offering aftercare.
The services are free and also open to anyone
regardless of whether they have purchased a
funeral through The Southern Co-operative.
“It’s a privilege to have been part of the journey
with people who were at their lowest ebb and
watch them rebuild their lives. Some people
have even gone on to run the groups and help
other people.
Palace awards
“I couldn’t have done any of this without the
support of The Southern Co-operative. It has
been fully behind me in this growing venture.
“I was very proud to receive thanks from
The Queen. It shows that others recognise
how important the work is to the families
we support.”
The Southern Co-operative Annual Review 2009-10
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a new business is born
This year saw the launch of co-operative Xest – a new and
innovative business venture for The Southern Co-operative –
offering customers a wide range of products to aid daily
living, which are sold on its easy to use website
(www.co-opXest.com) and through mail order catalogues
with full telephone customer service support.
for delivering the new venture to maturity. While offering
national coverage across the UK, the business reflects its
regional ownership with the operational base and its
customer service centre both located in Hampshire.
Being primarily a home shopping business, this is a
completely new market for The Southern Co-operative and
one where we felt we could really make a difference. We
have looked very closely at how we can change the way
that people shop for those clever products that make life
easier enabling people to retain their personal independence
for longer.
“We are bringing a co-operative ethos and responsible
trading approach to the sector. As part of a successful
co-operative, our customers can have full confidence in who
they are dealing with,” said Andrea. “Our strategy has been
to ‘normalise’ the way these products are sold. People
should enjoy a normal retail experience when shopping for
these items. We also want to extend the range offered to
include innovative and useful products that can be used by
any age group in the community.”
The mission for
co-operative Xest
The new team spent many months researching and selecting
the products they were going to sell. co-operative Xest has
launched with an initial range of 950 products, including
innovative lines like the infrared waste bin and a talking
photo album.
• to enable our customers to live independent, dignified
and more fulfilled lives
• to provide clear and full information about our products
• a commitment to offering value for money
• to enable our customers to shop with complete
peace of mind through our unique one-year
Buy & Try guarantee
It is early days for the business, but the initial indications
are that we are where we hoped to be at this time. We are
particularly encouraged by the number of customers
returning to buy from us again a second and third time.
Many customers have told us that they are pleased with
both the items that they've bought and the service they've
received and you can read what they have to say of their
experiences in the product review sections on our website,
www.co-opXest.com.
Our colleague
David White
Originally a buyer of children’s toys and nursery
products for some of the major names in retail,
David has opted to put his experience to use in
a slightly different sector and age group.
“I was looking for a challenge and I have certainly
found one here. What I like about working for a
business like co-operative Xest is the power and
trust its name evokes. That does mean that
whatever we do has to be right – the products
we offer and the delivery service we provide.
“I have personally researched and selected every
single item we sell. We even have our own studio
where we have created the room sets, so that we
never photograph or promote a product in anything
but its true light. It really does mean we have
full control.
“I would struggle to work anywhere else. It’s a strong
team, with a great deal of support and training, but
most importantly it practises what it preaches. It’s a
great place to be.”
co-operative Xest is run by Managing Director Andrea
Dipple. With a background working for some of the UK’s
major retail brands and direct experience of establishing
and running e-commerce businesses, Andrea is responsible
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People, people, people
As part of our strategy to grow our business, we are
focusing even more on developing our people and the
teams that will deliver our ambitious plans for the future.
This year we have heavily invested in training and
developing our teams across all areas of our operation,
including the launch of important new training initiatives.
One area of significant investment was the roll out of
e-learning systems into all our stores.
During 2009-10 we launched our ‘Horizon Programme’,
which is designed to develop retail management trainees
and provide them with invaluable experience in all areas of
the business within a formal training framework.
Within End of Life Services more than 140 of our colleagues
have received training for qualifications ranging from VQs
to foundation degrees, and will continue to benefit from
development programmes in the future.
We have also become one of just three UK food retailers to
offer colleagues the opportunity to gain a Retail Foundation
Degree at Manchester Metropolitan University. We are now
funding 10 places on the course, which develops
management skills in a retail context. Local support days
accompany trips to the campus in Manchester and a
series of work-based assignments, designed to develop
the core themes of business improvement, customer loyalty
and technology.
The Southern Co-operative covers tuition fees and expenses
for the two-year course enabling colleagues to study at
degree level without accruing debt. These new developments
will supplement our long-standing commitment to VQs, and
various personal and management development
programmes.
20
The Southern Co-operative Annual Review 2009-10
Our colleague
Rachel Hessom
Rachel is a student on The Southern Co-operative
Horizon Trainee Manager programme and based at
the Overton community supermarket. “Degree level
studies and full-time work are a demanding
combination but the Retail Foundation Degree is a
fantastic opportunity. There’s a lot of juggling
involved but we receive an immense amount of
support from tutors at the university, our work
colleagues and other key people within The
Southern Co-operative.”
Scott Taviner, Head of Operational Performance,
said: “This is a great opportunity for colleagues
committed to a retail career to develop their
skills and knowledge while continuing to earn a
competitive salary. As well as providing an excellent
opportunity for new management colleagues joining
us, this programme delivers on our commitment
to improving the development of our internal
candidates. We hope that their increased knowledge
of the retail sector will filter through the organisation
and have a positive, wide-ranging effect on the
business as a whole.”
maureen Hibbard
and Sandy Fowler picture
Our colleagues
Maureen Hibberd
and Sandy Fowler
The Southern Co-operative has been in the heart of
Bishop’s Waltham for 52 years – a number which
just happens to equal the combined service records
of two of our best-known colleagues.
Maureen Hibberd and Sandy Fowler have worked at
the store for 31 and 21 years respectively, and over
the years they have seen a lot of change.
“When I was a child I remember coming to the
Co-op with my mother who did her main shopping
here,” says Maureen, who joined The Southern
Co-operative team as a teenager. “These days we
are a top-up convenience store and people are
often surprised at the wide range of products we
stock. They often pop in for a pint of milk and end
up with a full basket.”
Sandy said: “A lot of our older customers come in
every day for a few groceries and a chat. We always
keep an eye out for them – it’s what you do in a
small community store. I also see a lot of people
when I’m out walking the dog and am often asked
about the latest deals.”
Our colleague
Barry Hudson
You could say that Barry Hudson is a Portsmouth
man through and through, but actually after 41
years’ service it’s The Southern Co-operative which
runs through his veins.
The 58-year-old maintenance technician joined
the business from school as a plumber. Now he
is responsible for looking after maintenance in
130 stores.
“I have seen some changes over the years, but
one thing that has remained the same is the strong
ethos of the business. It cares. It employs local
people and gives them a share of the profit back.
“I love my job. I never know from one moment to
the next what I will be doing or where, but as a
result I have worked across the patch and got to
know some amazing people. I don’t think there
are many people who have worked for the same
employer for more than 40 years who can say
that they still love every single day!”
The Southern Co-operative Annual Review 2009-10
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Page 23
Our
community
As an independent and local co-operative we always strive
to make a real difference to the communities we serve.
Community Support
Card scheme
Our Community Support Card has continued to help us do
that little bit extra for local people. Every time a purchase
is made and one of these cards is presented in participating
stores, The Southern Co-operative makes a donation to the
local good cause nominated by that community.
During 2009-10, we are delighted to report that we have
introduced the card for the first time to six new
communities, including our new store in Oxted, Surrey
and to Bishop’s Waltham, where we have traded for more
than 50 years. Some 14 stores were operating the scheme
on an ongoing basis at the end of 2009.
Organisations benefiting from the Community
Support Card this year were:
•
•
•
•
•
Freshwater Inshore Lifeboat and Memorial Hall
Alresford Perins and Sun Hill schools
Manhood Action for Wildlife in Selsey
Stockbridge Scouts
Jake and Lee Tadley Youth Fund
Ongoing schemes during 2010 are raising
money for:
• Bosham Primary School, Bosham Children's Play Area
and Friends of Old Bridge Meadow
• Denmead Infant School and Denmead Community Centre
• Friends of Northwood Cemetery and Cowes Amateur
Operatic and Dramatic Society
• Ashenground Community Centre, Haywards Heath Girl
Guides, Heyworth Primary School, Cancer Journey and
IMPACT Foundation
• Master Park in Oxted
• Mountbatten Activity Centre and George's Trust in Romsey
• Sturminster Boxing Club and Gym and Sturminster
Newton High School
• Birdham C of E Primary School, 1st Birdham Scout
and Cub Group and Wittering Youth Centre
22
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Page 25
Our
community
Our partners
We have worked together with a number of key partners
over the course of the year to bring greater benefit by
pooling our efforts.
• Hampshire Fare
Together with Hampshire Fare’s support we have been
able to work with more than 200 local producers to bring
genuinely local food to new markets. In particular, we have
taken part in various exhibitions and events to inform
people about the local food that is available to them.
As well as our corporate charitable involvement, our
individual stores and funeral homes continued to be
heavily involved in their local communities.
The involvement with charitable causes ranges from
simple donations of vouchers in support of local events,
to fundraising activities in store, to sponsored events by
our colleagues.
• Milestones Museum, Basingstoke
We have been pleased to continue to work with
Milestones and support our ongoing relationship.
• Naomi House
This year we have raised £130,000 for the children’s
hospice Naomi House, our chosen charity of the year.
Amongst other things, we held a dedicated Naomi
House Awareness Week.
Many of our colleagues
took part in a range
of events including It’s a
Knockout and a charity
bike ride.
24
The Southern Co-operative Annual Review 2009-10
Making costumes and taking part in the Bridgemary
Carnival for instance, is an annual event for our Gosport
stores. While, further north, our Lambourn colleagues
also enjoyed getting into the carnival spirit.
Promoting the issues we feel strongly about as a
co-operative is also important to our colleagues, and many
have given talks and demonstrations to schools and other
bodies about subjects such as Fairtrade, healthy eating and
our bereavement support services.
• Hampshire and Isle of Wight Wildlife Trust
A number of members and colleagues have enjoyed
taking part in volunteer days working on environmental
projects on Trust land. We have also worked with the
Trust on a number of other joint initiatives during the
year to the benefit of members in both organisations.
• Portsmouth Festivities
Our colleagues really threw themselves into supporting
this event to celebrate the 500th anniversary of Henry
VIII’s accession to the throne and the commissioning of
his favourite warship the Mary Rose. Store managers
worked closely with children from across the city looking
at Tudor diets and preparing for the procession in June
culminating in the impressive burning of the ghost ship.
Taking part in community events is always a great hit with
our colleagues.
Our Southern Co-operative trailer was present at many
high profile events across the South, promoting our ethics,
our products and our community involvement. The annual
Chale Show on the Isle of Wight is a regular event for us
and last year was our first outing at the Garden Show in
Stansted. The Alresford Watercress Fair was a great
success along with the Octoberfest at Milestones Museum.
The types of activity our
colleagues have been
involved with is very varied
• Our Shanklin store raised money for Bembridge Lifeboat
by inviting the RNLI volunteers to bring their boat along
to the store. Children from the local area enjoyed being
shown around the boat and meeting the Lifeboat team.
• Ladies in Portsmouth were treated to an evening of
pampering beauty treatments in exchange for donations
to charity, organised by some of our female colleagues.
• The Help the Heroes charity benefited from funds raised
through a charity event held by Funeral colleagues.
• Many others took part in sponsored activities such as
walks, bike rides, pancake races and climbing Ben Nevis.
• Colleagues from various stores brought cheer to
customers through dressing up activities.
We continue to work closely with the Police and Trading
Standards to help highlight negative issues that affect our
local communities. Stores across Portsmouth were heavily
involved in such a campaign to promote our ‘Think 25’
initiative, designed to raise awareness of underage alcohol
consumption. Colleagues dressed in specially designed
t’shirts and gave out balloons and leaflets to customers.
There were also many opportunities for us to work with
public bodies to promote positive initiatives. For instance
our Freshwater store was involved with a Police and UK
Sailing Association event on the Isle of Wight aimed at
rewarding the best behaved children in schools.
(see photograph on page 22).
The Southern Co-operative Annual Review 2009-10
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Page 27
Our
members
As an independent co-operative, we are owned and
controlled by our members. We are very pleased to report
that following the decision to launch the new membership
strategy, the size of our membership has increased
significantly. At the end of 2009, there were approximately
93,000 members.
Our Annual Members’ Convention was held at the De Vere
Grand Harbour hotel in Southampton where record numbers
of people heard presentations from our Chief Executive and
some of our coporate partners, including Hampshire Fare,
Portsmouth Festivities, Hampshire and Isle of Wight Wildlife
Trust and our charity of the year Naomi House.
We are certainly encouraged by the initial level of interest
from those who have joined our co-operative in the first
few months of the new membership strategy.
Our members also enjoyed a number of organised events
during the year, including a trip to Kew Gardens which
proved very popular. For the first time, we also introduced
our members to some of our local suppliers, with tours
taking place to Lyburn Farm, cheese producers, and
Cresson Creative who make the watercress sausages that
are also sold in selected stores. Further local producer tours
are planned for 2010.
Share of Profits scheme
One of the most significant membership decisions we have
taken this year, was to launch the Share of Profits scheme
to all our members. This exciting new scheme to reward our
members each year by returning part of our profits to them,
based on the amount they spend with the business, is an
efficient modern interpretation of the traditional co-operative
dividend concept from the past.
After a successful trial in stores on the Isle of Wight earlier
in the year, we were delighted to roll out the modern card
based Share of Profits scheme across our estate of food
stores and funeral homes in October 2009.
Members can now apply for their membership cards online
or in their local store. In addition to our own business, the
cards can be used in several thousand co-operative stores
across the UK, irrespective of which co-operative owns the
individual store.
By using seamless reciprocal arrangements with other
co-operatives that operate behind the scenes, our members
are able to benefit from their trade in outlets operated by
others, such as co-operative travel and pharmacy stores.
New methods of communicating with members are currently
being developed, that will accommodate the significant
increase in scale. We are also committed to further
developing the ways in which we engage with our members,
and a number of new initiatives are being developed
including the brand new members’ magazine which was
launched in December 2009.
26
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Responsible
retailing
Our commitment to the environment and trading ethically
is a fundamental goal and quite simply at the heart of
everything we do.
Two Co-operative rosé wines also won prizes at the fourth
annual Fairtrade Wine Committee Awards towards the end
of last year.
Our principles
The world’s first Fairtrade flower food is also now attached
to The Co-operative’s own-brand Fairtrade bouquets.
The flower food is made with Fairtrade sugar from the
Kasinthula Cane Growers in Malawi, which also supplied
The Co-operative’s own-brand bagged sugar products.
It is hugely important to us that we inform our customers
about our values for ethical sourcing, animal welfare, our
Fairtrade products and our commitment to reducing
packaging. We have continued to do this through better
communication and improved in-store signage.
Energy and recycling
Following the success of our energy management systems
we have invested substantial capital in the programme and
have continued to use and purchase 100% green electricity.
Among some of our other initiatives has been to set up
and cultivate local ‘agreements’ with animal farms to use
our food waste reducing the level needing to go to landfill.
Ethical products
and initiatives
Over the last year Co-operative own-brand bacon, gammon,
fresh pork and pre-packed hams (excluding continental
hams) were converted to British in an initiative to support
UK farmers and to raise animal welfare standards.
All own-brand fresh and frozen whole turkeys and turkey
crowns were converted to Elmwood standard for Easter
2009 and from March 2010 all Co-operative fresh plain
turkey products also became Elmwood standard.
Our range of own-brand Fairtrade wines was extended.
New wines included a Rosé from the Mendoza Vineyards
in Argentina, where the Fairtrade project works to improve
living standards, providing sports clubs and a crèche,
supporting local schools and developing a park for the
local community. We also introduced a new Sauvignon Blanc
wine box from Chile where the Fairtrade premium is used
for new crèches, school renovation and healthcare
programmes. These products join wines from, for instance,
the Du Toitskloof co-operative in South Africa and La Riojana
co-operative in the Famantina Valley in Argentina.
28
The Southern Co-operative Annual Review 2009-10
In terms of packaging, our own-brand 35cl vodka bottle was
switched from glass to plastic (PET), to reduce its impact on
the environment. This means an annual saving, through
co-operatives across the UK, of 270 tonnes of glass – the
equivalent of 60 African elephants, and reduces the energy
needed to transport the bottles and provide a safer
alternative to glass. This also results in a significant CO2
saving of around 69 tonnes.
Co-operatives nationally are also supporting the Love Food
Hate Waste campaign by switching the emphasis of their
promotional offers – particularly on perishable goods such
as fruit and veg – from BOGOFs (Buy One Get One Free) to
half-price offers. By doing so, we hope to further reduce
food waste in the home by helping customers buy what
they actually need, rather than doubling up on items they
don’t necessarily want simply to take advantage of the
promotional deals.
We are proud to report that we have a growing offering of
ethically-sourced products:
• We continue to be fully committed to supporting Fairtrade
• All our shell eggs are free range
• Our paper products use only fully recycled material and
are FSC accredited
• All our fish and fish products are rigorously checked to
ensure they are sourced responsibly
The Southern Co-operative Annual Review 2009-10
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Page 31
Summary
of Financial Statement
This summary financial statement does not contain sufficient information to
allow as full an understanding of the results of the group and state of affairs
of the group, as would be provided by the full annual financial statements
Group profit and loss account
For the 53 weeks ended 30th January 2010
Turnover
Less Value Added Tax
Sales
Cost of sales
Gross profit
Trading expenses
Operating exceptional items
Impairment of investment properties
Other operating income
Trading profit
Exceptional items
Investment income and interest receivable
Profit on ordinary activities before interest payable
Interest payable
2010
£’000
2009
£’000
261,470
(18,442)
220,170
(17,239)
243,028
(167,574)
202,931
(138,844)
75,454
(66,558)
742
70
103
64,087
(57,900)
(426)
134
9,811
882
5,895
(1,357)
3,628
10,693
(503)
8,166
(315)
Group balance sheet
At 30th January 2010
Fixed assets
Intangible assets
Tangible assets
Investments
Current assets
Stocks
Debtors and prepayments
Investments
Cash at bank
Creditors
Amounts falling due within one year
Net current assets
Total assets less current liabilities
Creditors
Amounts falling due after more than one year
2009
£’000
£’000
15,766
50,095
7,960
73,821
£’000
13,367
41,637
6,572
61,576
10,145
6,303
11,004
22.577
50,029
9,045
5,030
10,306
30,696
55,077
(20,360)
(18,489)
29,669
36,588
103,490
98,164
(11,310)
(9,520)
Profit for the year before minority interest
Minority interest
10,190
(23)
7,851
(55)
Profit for the year before distributions
Distributions
10,167
(327)
7,796
(140)
Provisions for liabilities and charges
Other provisions
Deferred tax
(677)
(168)
(1,083)
(435)
Profit for the year before tax
Taxation
9,840
(3,152)
7,656
(3,285)
Net assets excluding pension deficit
91,335
87,126
6,688
4,371
Pension scheme
Pension deficit
(2,146)
(6,225)
Net assets including pension deficit
89,189
80,901
Financed by:
Share capital
Reserves
Revaluation reserve
Other reserves
940
86,279
211
401
1,050
78,109
6
401
87,831
1,358
89,189
79,566
1.335
80,901
Balance to reserves
Group statement of total recognised gains and losses
Profit for the financial year
Unrealised loss on revaluation of investment properties
Unrealised gain/(loss) arising from new valuation in respect of retirement benefits
Pension fund related deferred tax
Total losses and gains recognised since the last annual report
6,688
(200)
2,336
(654)
8,170
4,371
(2,457)
(10,041)
2,811
(5,316)
Members’ funds
Minority interest
30
2010
£’000
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Summary
of Financial Statement
Group summary of cash flow
Five-year summary
2010
£’000
2009
£’000
Net cash inflow from operating activities
13,902
15,713
Number of members (‘000)
Returns on investments and servicing of finance
Taxation
Capital expenditure and financial investment
Acquisitions
308
(2,966)
(13,788)
(5,464)
302
(3,316)
17,129
(4,997)
Turnover
Depreciation and amortisation
Trading profit
Retained profit to reserves
(8,008)
24,831
(111)
(127)
(8,119)
24,704
For the 53 weeks ending 30th January 2010
Net cashflow (outflow)/inflow before financing
Financing
(Decrease)/increase in cash in period
2006
£’000
2007
£’000
2008
£’000
2009
£’000
2010
£’000
99
85
78
71
93
261,470
6,616
9,811***
6,688
158,753
3,392
4,099*
18,082
179,437
4,242
6,404*
6,031
198,101
5,262
6,676
7,071
220,170
5,323
5,895**
4,371
Fixed assets
Net current assets
48,057
34,811
55,753
32,814
61,547
33,550
61,576
36,588
73,821
29,669
Total assets less current liabilities
82,868
88,567
95,097
98,164
103,490
Long term liabilities including pension liabilities
(7,822)
(5,178)
(8,751)
(17,263)
(14,301)
Net assets excluding pension liabilities
75,088
80,406
85,543
87,126
91,335
Share capital
Reserves
Members funds
Minority interest
1,492
72,407
73,899
1,147
1,310
80,865
82,175
1,214
1,169
83,127
85,066
1,280
1,050
78,109
79,566
1,335
940
86,279
87,831
1,358
Reconciliation of net cashflow to movement in net funds
(Decrease)/increase in cash
(8,119)
Movement of net funds
Net funds as at 24 January 2009
Net funds as at 30 January 2010
(8,119)
30,696
22,577
Analysis of net funds
Cash at bank and cash in hand
Total
10
9
8
7
6
5
4
3
2
1
0
32
24,704
24,704
5,992
30,696
As at 24th Jan 09
£’000
Cash Flow
£’000
As at 30th Jan 10
£’000
30,696
30,696
(8,119)
(8,119)
22,577
22,577
Material transactions included in the trading profit results disclosed above:
*Onerous lease obligation of £1.4m in 2006 and a related credit in of £1m in 2007
**Downward property revaluation and pre-opening costs for co-operative Xest.com of £1.3m in total
***Past service credit and a one-off payment related to the Co-operative Group’s acquisition of Somerfield £0.7m credit in total
Group trading profit £million
06
07
08
09
10
The Southern Co-operative Annual Review 2009-10
275
250
225
200
175
150
125
100
75
50
25
0
Net assets excluding
pension liabilities £million
Turnover £million
Gross capital expenditure £million
90
20
80
16
60
12
40
8
4
20
0
06
07
08
09
10
06
07
08
09
10
0
06
07
08
09
10
The Southern Co-operative Annual Review 2009-10
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Corporate
Auditors’ statement
on the summary financial statement
governance
Corporate governance
and best practice
The Board oversees the work of our Leadership Team in implementing
strategy and monitors performance against targets. In addition it ensures
that our actions comply with all relevant regulation.
Corporate governance is all about the way an organisation is managed at
senior level in order to achieve its objectives while meeting required
standards of business conduct. The review of our governance arrangements
continues to be a focus for our Board of Directors.
The Board has three sub-committees – the Audit Committee and the
Remuneration and Appointments Committee – to ensure proper scrutiny
and accountability of our activities, and the Chair’s Committee – to ensure
that the Board may react efficiently and quickly to arising opportunities.
More information about our Board and its sub-committees can be found
in our fuller Annual Report and Financial Statements document.
Our operating standards are monitored to ensure that they meet best
practice recommendations for consumer co-operatives, where appropriate.
Below are some key features of our corporate governance arrangements.
Our members
As The Southern Co-operative is a member-owned democratic organisation,
members are essential to its co-operative success. Our Board strongly
acknowledges this and encourages both membership take-up and activity,
providing opportunities for Members to participate in the governance of the
business, to help our communities and to enjoy the full range of benefits
that membership brings. In addition to the formal governance of the Annual
General Meeting and elections for the Board of Directors, opportunities are
available for members to meet us informally and our interaction with
members at all levels is valued.
The separate responsibilities of the Chairman of the Board of Directors
and the Chief Executive are clearly defined within the Society’s Rules. Our
Chairman, like all our directors, is a non-executive director. While leading
the Board and ensuring its effectiveness, he has no involvement in the
operational management of the business.
Potential future
directors programme
The Secretary
The Board welcomes contested elections and encourages member
participation in the electoral process. Because member involvement
is central to our co-operative identity, the Board is keen to attract the
potential directors of tomorrow from among our members.
The Southern Co-operative operates a Potential Future Directors
Programme to provide sponsored training and support for our members
who may be interested in standing for election to the Board of Directors
within the foreseeable future. It also aims to ensure a continued pool of
candidates with a broad range of skills required to support the future
success of the business and to protect our mutual status.
Each year we invite nominations from members in the election for the
Board of Directors. Members can vote for candidates either through our
postal voting system or in person, with election results announced at the
Annual General Meeting. The process is publicised on the The Southern
Co-operative’s website and in stores.
34
The Chairman and
the Chief Executive
Our Chief Executive has direct charge of the business on a day-to-day
basis and is accountable to the Board for the performance of the business
and for compliance with Society Rules.
Directors have access to the advice and services of the Secretary including
advice on governance. According to Society Rules, the appointment and
removal of the Secretary are matters for the full Board.
The Leadership Team
Reporting to the Chief Executive, our Leadership Team provides the
commercial leadership to ensure we meet our strategic objectives while
managing risk effectively.
Internal control
We have examined the summary financial statement which comprises the
group profit and loss account, group statement of total recognised gains
and losses, group balance sheet and group summary of cash flow.
This report is made solely to the Society’s members, as a body, in
accordance with section 9 of the Friendly and Industrial and Provident
Societies Act 1968. Our 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 auditors’ 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, for our audit report, or for the opinions we
have formed.
Basis of opinion
We conducted our work in accordance with bulletin 1999/6 The Auditors’
Statement on the Summary Financial Statement issued by the Auditing
Practices Board for use in the United Kingdom. Our report on the Society’s
full annual financial statements describes the basis of our audit opinion on
those financial statements.
Opinion
In our opinion, the summary financial statement is consistent with the full
annual accounts, of Southern Co-operatives Limited for the period ended
30th January 2010 and complies with the applicable requirements of
section 9 of the Friendly and Industrial and Provident Societies Act 1968,
and the regulations made thereunder.
Deloitte LLP
Chartered Accountants and Registered Auditors
Southampton, UK
13 April 2010
Respective responsibilities
of directors and auditors
The directors are responsible for preparing the annual review and summary
of financial statement in accordance with applicable United Kingdom law.
Our responsibility is to report to you our opinion on the consistency of the
summary of financial statement within the annual review with the full
annual accounts and its compliance with the relevant requirements of
section 9 of the Friendly and Industrial and Provident Societies Act 1968
and the regulations made thereunder.
We also read the other information contained in the annual review as
described in the contents section, and consider the implications for our
report if we become aware of any apparent misstatements or material
inconsistencies with the summary of financial statement.
Our arrangements are consistent with the principles outlined in
‘Internal Control Guidance for Directors on the Combined Code’
(the Turnbull Guidance).
Control procedures
The Board of Directors
We have implemented procedures to ensure, as far as possible, complete
and accurate accounting, and to limit our potential exposure to loss of
assets or fraud.
Our Board meets regularly to establish long-term objectives and approve
policies to achieve those objectives. They act in the best interests of the
Southern Co-operative and its members and ensure that our operations are
in line with co-operative values and principles.
Risk management
The Southern Co-operative Annual Review 2009-10
Independent auditors’
statement to the members
of Southern Co-operatives
Limited
We operate a risk management process that identifies key risks facing
each part of our business. We consolidate our risk assessments and report
to the Audit Committee on how we are managing the material risks we face.
The Southern Co-operative Annual Review 2009-10
35