1
Owned by you,
right by you
Our members’ annual report for 2025
For our Co-op, 2025 brought challenge and clarity. We used both to adjust our
plans, and we’re now looking ahead with confidence.
2
Contents
Strategic report
Performance at a glance
Our Co-op
Chair’s introduction
Report from the President of the National
Members’ Council
Chief Executive’s overview
Membership update
Business unit updates
Group financial overview:
Key performance indicators
Chief Financial Officer’s review
Looking ahead
Risk management
Governance report
Governance review
Our directors’ skills and experience
Report of the Remuneration Committee
Report of the Risk and Audit Committee
Report of the Nominations Committee
Directors’ report
Statement of Co-op Board
responsibilities
National Members’ Council: annual
statement
Report of the Scrutiny Committee
Promoting the success of our Co-op
Financial statements
Consolidated financial statements
Notes to the financial statements and
accounting policies
Independent auditors’ report
Glossary
Five-year summary
3
Financial performance at a glance:
an atypical year
for our Co-op
Revenue: £11bn
What it is:
the total value of our sales across all products and services.
How we performed:
a 2.3% decrease versus 2024, reflecting a criminal cyber attack with an
estimated £0.3bn revenue impact – on top of market-wide changes and challenges.
2.3% decrease for 2025 is based on absolute (not rounded) figures: £11,025m in 2025 and £11,279m in 2024
Up to 2022, figures include revenue from the petrol forecourts sold in October 2022. In 2023, the period had an additional week (53)
.
Underlying operating loss: £35m*
What it is:
a performance metric that reflects the profit or loss we’ve made from day-to-day trading
and before paying any financing costs.
How we performed:
a change of £166m against 2024, including the estimated £86m impact of the
cyber attack. We’ve moved from an underlying operating profit to a loss.
(Loss)
/Profit
Underlying loss before tax: £126m*
What it is:
a measure of the underlying operating profit or loss we’ve made from operations,
removing our underlying net finance costs – e.g. the day-to-day interest we pay or earn on our bank
borrowings or lease liabilities.
How we performed:
a £171m change versus 2024, including the estimated £86m impact of the
cyber attack.
11.2
11.5
11.3
11.0
10.7
10.8
10.9
11.0
11.1
11.2
11.3
11.4
11.5
11.6
2021
2022
2023
2024
2025
11.3
100
83
97
131
(35)
(60)
(40)
(20)
0
20
40
60
80
100
120
140
2021
2022
2023
2024
2025
4
(Loss)/
Profit
Loss before tax: £43m
What it is:
a measure of our Co-op’s net profit or loss before deducting tax.
This includes all one-off items totalling £107m for 2025, including £21m of additional costs related
to the cyber attack.
How we performed:
a £204m decrease versus 2024.
(Loss)/
Profit
2022 includes a £319m gain on the disposal of our petrol forecourts. 2024 includes unusually strong returns on funeral plan investments.
Net debt: £317m*
What it is:
a measure of our ‘indebtedness’ as a Group, excluding leases.
How we performed:
we’ve worked hard to reduce the debt we owe in recent years. While the
challenges of 2025 meant we increased our net debt excluding leases by £262m, our debt levels
remain substantially healthier than they were four years ago.
*Please refer to Note 1 and Glossary in our financial statements for a definition of the Group's alternative performance
measures (APMs).
(32)
(48)
(2)
45
(126)
(140)
(120)
(100)
(80)
(60)
(40)
(20)
0
20
40
60
2021
2022
2023
2024
2025
57
268
28
161
(43)
(100)
(50)
0
50
100
150
200
250
300
2021
2022
2023
2024
2025
(920)
(322)
(82)
(55)
(317)
(1,000)
(900)
(800)
(700)
(600)
(500)
(400)
(300)
(200)
(100)
0
2021
2022
2023
2024
2025
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Our Co-op
We are owned by over seven million active members across the UK and we run our Co-op
for their benefit.
In 2025, we made our membership target more ambitious:
2023:
5.0 million active members
2024:
6.2 million active members
2025:
7.2 million active members
2030 goal:
10 million active members, up from our previous target of 8 million
Our
vision
is to co-operate to build more value for these members every day.
What makes our Co-op
different
is that we’re owned by and run for our members. The
more members choose us, the more value we create for our member owners and their
communities.
Our business
Since 1844, we have existed to share value with the members who own our Co-op.
Today, we do this through a family of different businesses, who operate in line with co-
operative Values and Principles.
and buying
The business-to-business
area of our Co-op, where
we supply grocery products
to over 5,600 locations.
This includes franchise
stores, partner stores and
regional co-operatives.
Running retail
stores
We operate over 2,300 of
our own Co-op stores.
We serve communities in
city centres, Scottish
islands, local villages and
other locations across the
UK.
Supporting members
through life
Our Funeralcare, Legal
Services and Insurance
businesses are here to help
members and customers
through life’s ups and
In 2025, we established a Group Commercial and Logistics (GCL) business to better use
our strength as a supplier to other retailers. You can read more about our ambitions in this
area under
Looking Ahead
.
We also partner with like-minded organisations who connect us with communities and
expand our reach. In 2025, we supported 38
Co-op Academies
and continued to act as
naming rights sponsor for
Co-op Live
arena.
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Owned by members, focused on customers
To be a commercially successful co-operative, we must focus on UK consumers and the
value we bring them, both directly and through our partners.
Because we’re owned by members, we can do business differently in each of our markets
– allowing us to really put customers first.
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A note from your chair
Debbie White, Chair
Dear member owners,
By the time this report has been published we will have announced that after almost seven
years, our Group Chief Executive, Shirine Khoury-Haq is leaving our Co-op, and that Kate
Allum has been appointed as Interim Group Chief Executive.
I want to thank Shirine for her leadership and for the significant contribution she has made
to our Co-op, to our communities and to the wider co-operative movement over this
period.
We wish her every success in the future.
I am also grateful to Kate in accepting her new role, while the search begins for a
permanent Chief Executive.
Kate brings with her extensive board-level and Executive
experience, with a strong track record of leading complex organisations through periods
of change and transformation. Her appointment reflects the Board’s confidence in her
ability to lead with clarity, stability and purpose, while continuing to champion the
interests of our members, customers and colleagues.
As you know, 2025 was a challenging year for our Co-op. We successfully navigated
challenging economic conditions and a cyber attack. In doing so, we learned more about
what we need to change and where we need to adapt.
The cost of living continued to shape consumer behaviour. Shopping habits evolved
rapidly. We faced into rising costs of around £150 million, including National Insurance
increases and new Extended Producer Responsibility charges. Global instability created
uncertainty and, in the middle of all this, our Co-op faced a criminal cyber attack. I will
briefly explain what happened because it has a bearing on our results and much of this
report.
In April, we identified malicious activity on our network. We then restricted certain systems
to contain the threat. This kept stores, payments and online services operational, but
impacted product availability, and subsequently, our trading in food stores through the
year. Our financial figures therefore reflect a decline in revenue and an underlying
operating loss for the year
1
. Still, as I reflect on 2025, I am proud of three things.
First, our response as a member-owned organisation. Through the cyber attack, our
colleagues were exceptional: serving communities, prioritising stock for remote areas and
maintaining essential services such as funerals. We partnered with The Hacking Games to
channel young digital talent into positive, ethical careers.
Second, the way we turned challenge into clarity. We worked closely with suppliers and
partners to mitigate the impact on them, and their continued support highlighted the
power of our network. Many people know us for our 2,300 own Co-op stores, but we
1
This is an alternative performance measure. Please refer to Note 1 and Glossary in our financial statements for a definition
of the Group's alternative performance measures (APMs).
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supply close to 8,000 stores in total. This is a key strength for us, and we have now
established our Group Commercial and Logistics division (explained in
Looking Ahead
), to
really use our purchasing power.
Similarly, as we rebuilt from the attack, we saw how quickly consumer buying behaviour
was evolving, particularly in a competitive grocery convenience market. This insight has
helped us evolve the short and medium term plan for our Co-op. We now have a clearer
focus on what shoppers and clients want and expect from us, and we’re taking decisive
action to meet these needs.
Last but by no means least, I’m proud that, even amid hurdles, we strengthened our
democracy and impact. We shared £15 million with causes and communities, while
growing active membership beyond seven million, the highest it has been in over a
decade. This progress gives us the confidence to raise our ambitions, and we’re now
targeting ten million active members by 2030.
Looking forward, the Board is keen to ensure our special Co-op culture remains prevalent
in all our interactions: with our people, our partners, our customers and of course, our
member owners. When we work together toward common goals, we can have a huge
impact for communities and the people we serve.
Thank you for the part you played in our Co-op in 2025. Your support allowed us to
weather the storms we saw.
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Report from the President of the National
Members’ Council
Denise Scott-McDonald, President, National Members’ Council
A warm welcome to our newer members, and a thank you to those longer-standing
members who have been part of our Co-op for some time now.
Throughout 2025, your Council – made up of 100 member owners like you, elected to
represent your interests and to ensure we champion our co-operative Values and
Principles in our work – has heard from thousands of you to understand what you value
about your Co-op and want to see next. We’ve continued to put the voice of our members
at the heart of our decision-making and always will.
In 2025, we heard from you, our members; you told us how the ongoing cost of living
crisis is still affecting you and shared your concerns for the future given increasing divides
in society. In response, we advocated on your behalf for lower prices on essential goods,
continued ethical sourcing within our supply chains and launched our
Hate Divides
Communities, Co-operation Builds Them
campaign, working towards a better, fairer
society for us all.
It’s been brilliant seeing so many new members join us and learn about what being a
member of a co-operative has to offer. We grew yet again by over a million members last
year, reflecting the economic, social and ownership value we provide to members. 2025
saw us develop our new Ownership Hub for members: a one-stop shop to find everything
you need to play a full part in the business you own. Our Co-op belongs to its members
and we’re constantly strengthening how we empower members to engage with and
influence our Co-op to succeed.
It’s impossible to talk about 2025 without talking about the cyber attack our Co-op
suffered during the year. This was an attack that many of our members saw the impact of
first hand, with a challenging recovery for our Co-op.
I’m so proud of the way our Co-op responded. We saw our incredible member owners,
our wonderful and committed colleagues and our Board and Council coming together to
protect and safeguard our Co-op community, and to build back better from the malicious
attack on all of us as owners of our Co-op.
Our Co-op took swift action to protect you, our members, and continued to serve
communities, including our lifeline stores in remote communities through the most
challenging period of our recovery. We took action for the longer term through a
partnership with The Hacking Games to support talented young people to use their digital
skills for good – investing in the future of our Co-op and our country’s resilience in an
increasingly digital world. Our Co-op Difference enables us to do things differently,
looking to the long-term and creating meaningful social value for our members alongside
economic value.
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I would like to say a huge thank you to all of you for continuing to support our Co-op and
for the many messages of support you sent last year. I’m especially grateful to our
fabulous frontline colleagues in our stores and funeral homes who continued to keep our
Co-op open for business.
Though 2025 brought challenges, it also brought some real highs. Last year was the UN’s
second International Year of Co-operatives, and our Co-op – the largest co-operative in
the UK, with over seven million active members and a part of thousands of communities
across all four nations – had a key role to play. Your Co-op hosted the International Co-
operative Alliance’s General Assembly and held a four-day Festival of Co-operation in
Manchester to celebrate the good work co-operatives do across the world and to learn
from each other.
Co-operative models are a better way of doing business and your Council also closely
followed how the Government is proposing to deliver its commitment to double the size
of the co-operative and mutuals sector. Our Co-op is part of the Mutual and Co-operative
Sector Business Council, which brings together some of the leading mutual and co-
operative businesses in the UK plus sector trade associations, to partner with the UK
Government on this – exploring co-operative solutions to some of the big issues facing the
UK today.
Through the autumn, your Council (along with Directors) were out and about in our four
capital cities and in communities across the UK finding out what you like about your Co-op
and what you would like us to do more of. It was great to see so many of you in London,
the area I represent. Thousands more took part in opportunities across the year to have
your voices heard online, in person, in stores and through dedicated ‘Join In’
opportunities. We took all your ideas and suggestions back and you’ll see throughout
2026 how we’ve taken these things on board, and what will happen as a result.
As we head into 2026, I want to thank each and every member for choosing our Co-op
and for continuing to choose us every day.
Thank you to everyone who comes together to make our Co-op difference a reality – from
the member owners who trade with us or work with us, to our colleagues, to the Board
and business leaders and their teams. I especially want to thank my fellow Council
members, our Senate, our two vice-presidents Debbie Williams and Sam Webster and the
Council and Democracy team who support so much of our work to continue to represent
you, our member owners.
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Chief Executive’s overview
Shirine Khoury-Haq, Chief Executive Officer
At work and in life, we go through moments that stretch us and bring us clarity on the
other side. 2025 was one of those moments for our Co-op.
Looking back at the year, I am incredibly proud of our 53,000 colleagues. And, reflecting
on its challenges, I’m clearer than ever that our Co-op has work ahead.
A trajectory knocked
We entered the year with momentum, increasing underlying operating profit
2
by 35% –
from £97m in 2023 to £131m in 2024 – while continuing to reduce our net debt.
This trajectory was knocked as we moved through the year. We experienced market-wide
pressures, including changing convenience shopping behaviour and continued consumer
caution. We also faced £150m in additional costs in the year, including new Extended
Producer Responsibility charges and increases in National Insurance and colleague pay.
These were challenges we were facing alongside other businesses; things we’d predicted
and planned for. On top, we then experienced a criminal cyber attack. This was something
we hadn’t predicted, but were well-placed to handle, and it affected our results in two
ways.
1.
An immediate impact:
when we detected criminal activity on our network, we
restricted systems to contain the threat. This affected stock management and other
processes, resulting in an estimated £285m direct revenue impact and an estimated
£107m impact to profitability.
2.
A tail of impact:
disruption changes habits. Because our stock levels and service
standards in stores were interrupted for several weeks, we saw customers change their
buying behaviour. Our physical stores felt the greatest impact through the year,
whereas other areas of our business (such as online convenience shopping and Life
Services) bounced back quickly.
Overall, for 2025, Group revenue decreased to £11bn from £11.3bn, and we are reporting
a loss for the year. Our statutory operating loss was £57m, and our underlying operating
loss was £35m
2
– we tend to use the latter when we explain our results, because we
believe it helps our members understand the day-to-day trading performance of our Co-
op.
We navigated a difficult year from a far stronger financial position than we have previously
had. Our net debt, excluding leases, stood at £920m in 2021; at the end of 2025, this
figure was £317m. Though this is higher than at the start of the year, it remains
substantially lower than it was historically. We paid off maturing bond debt from cash in
2.
Underlying operating loss is an alternative performance measure, or APM. For definitions and more detail on the
difference between statutory measures and APMs, please read Note 1 and Glossary in our financial statements.
13
December, reflecting our improved financial strength. And strong liquidity at the point of
the incident meant we could act immediately to contain the threat. Reflecting the
challenges of 2025, our credit rating was downgraded one notch toward the end of the
year.
As a Co-op, we’re now focused on regaining the trajectory and strength we had in 2024,
as we keep adapting to changing markets.
Replotting our route
The trials of the year highlighted our assets: our colleagues showed their resilience. Our
Life Services and quick commerce businesses grew despite disruption. Our wholesale
area wasn’t impacted by the attack, but continued to face challenging markets, and our
partners were steadfast through the year – highlighting the strength of our network as a
supplier to other stores.
At the same time, 2025 showed us where we can improve. The tail of changed buying
behaviour we saw in physical stores highlighted the need for a keener customer focus
within our Co-op. We must understand UK consumers inside out and always give them a
reason to choose us over competitors. It’s particularly pressing as we see people buying
less of what they’ve typically gone to convenience stores for, like alcohol and tobacco.
As I write this in 2026, we’ve rolled out a number of changes across our Co-op, and I am
very proud that in all our business areas, we have regained our market share to the level it
was before the attack, and in some business areas, we have surpassed this level.
This takes our Co-op forward in achieving our long-standing ambition: to see real and
sustainable growth in our Co-op by 2030. We’ve established our Commercial and
Logistics division. This is an autonomous buying group where we will buy at scale across
our 8,000-store network, driving greater value for money for customers and members. We
have a new roadmap for reaching 2030, focusing on what people come to our Co-op for:
accessibility, value and our special difference. Finally, we have set ambitious targets to
hold ourselves accountable along the way, including reducing costs within our business.
I’ll say more on this strategic focus in
Looking Ahead
. We expect volatility and stubborn
markets to continue, but the work that’s underway gives us confidence in our ability to
deliver our strategy in the next three to five years.
Sharing value with members
Even in a year of commercial challenges, we have continued to encourage member
participation in our Co-op, and we have worked to have an impact on their behalf.
14
In 2025, we saw a 22% increase in member voting at our Annual General Meeting (AGM)
as we extended voting rights to 1.5 million more people
3
. As more members have had
their say, we have continued to take action for them.
We have recommitted to social value with a new strategy centred on access to
opportunities, a sustainable future and peace and wellbeing, explained in
our Social Value
and Sustainability Report
. Based on input from our members, we also announced our
decision to stop sourcing from countries where there are internationally recognised
human rights abuses and violations of international law. And closer to home, our
On Your
Corner, In Your Corner
campaign called for action to restore the health of UK high streets.
All this was achieved in 2025, the United Nations’ International Year of Co-operatives. In
the autumn budget, the Government reaffirmed its commitment to growing this vital part
of the UK economy. The progress we’ve made in this area shows that co-operative
businesses are so necessary in today’s world, and contributing greatly to members and
communities.
Doing right by colleagues
Almost all of the people who work in our Co-op are members of our Co-op. They own our
business and will push us forward as we rebuild.
At the start of the year, we announced our Rewarding Growth incentive plan. For the first
time,
all
colleagues – in stores, depots, funeral homes and beyond – have the opportunity
to share in our success as we work to grow our Co-op together in the years ahead.
In the year, we also developed a new internal promise, laying out our commitments to
creating a workplace with purpose where all colleagues can thrive and belong.
I believe we have continued to deliver on this promise through the year: maintaining our
30% colleague discount on Co-op products, doubling paid leave for colleagues affected
by pregnancy loss and continuing to invest in colleague safety. We saw a 31% drop in
physical assaults in stores, year-on-year, as we rolled out new measures such as secure
kiosks
4
.
Building a bright future
It’s clear from our results that we experienced a difficult year. But that year is behind us
and, with our adjusted route ahead, our Co-op is looking out with determination.
Demonstrating this confidence, we kept carefully investing through 2025, spending
£318m to make sure we’re fit for the future across our portfolio. We want our stores to
reach their full potential for UK communities, and so we particularly accelerated our
3
2024: 43,009 members voting. 2025: 52,646 members voting.
2,251,936 members eligible to vote in 2024; 3,759,445 eligible in 2025.
4
2024 assaults: 1217. 2025 assaults: 839.
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investment in high streets in the final quarter, opening the doors on 50 Co-op sites, from
brand-new shops to refits and refurbishments.
We’ll now share more on how each business area performed, and how we delivered for
our members. This is our full Co-op promise: we’re owned by you, and we do right by you.
This is what makes us special. It helped us to navigate a tough year, and it’ll continue to
guide our colleagues as our Co-op adapts for a changing world.
Shirine will step down as Chief Executive on 29 March 2026
Spotlight: Backing Britain
Our Co-op began in Rochdale in 1844 as a business run by members, to take action on
their behalf. Today, with a presence in every postal area in the UK, we believe it is more
important than ever to contribute to the nation’s stability and growth ambitions. We’re:
•
Continuing to source from British farmers and agricultural suppliers
•
Spending with UK-based business suppliers
•
Helping other UK firms source energy through Co-op Power
•
Boosting access to training with our Levy Share service
•
Continuing to support Co-op Academies
•
Partnering with organisations like Barnardo’s to support the UK’s young people
•
Supporting the strength and resilience of local communities and high streets.
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Membership update
•
17% increase in active membership, to 7.2m members
5
•
1.7m members joined in the year
•
£3.5bn: how much members spent with us, up by 12%
6
In 2025, our vision to
co-operate to build more value for our members every day
turned
one. We are proud that we’ve stayed true to this objective even through a testing year.
Overall, our goal is to make membership irresistible and indispensable. We want to share
value with our members and the communities they’re part of, but also to help people to
see and feel this value. By doing this, we believe we encourage more people to engage in
the unique model that is our Co-op and its democracy.
In 2025, we advanced this agenda. We continued to grow our membership numbers,
going beyond seven million active members in the year, and increasing our ambitions as
we did so. Our new goal is to reach ten million active members by 2030, up from our
previous target of eight million.
We’re not just reaching more members, we’re reaching different members. In 2025, we
expanded our democracy to younger demographics as we opened stores on university
campuses, continued our presence at UK festivals and reduced the amount that members
need to spend with us in order to vote at our AGM. Our average member age decreased
by a year
7
, and we saw an 11% increase in members under 25 joining – from 344,800 in
2024 to 382,800 in 2025.
5
Active members 2024: 6.19m. 2025: 7.21m.
6
Member spend 2024: £3.09bn. 2025: £3.45bn.
7
Average member age 2024: 51. 2025: 50.
Spotlight:
the International Year of Co-operatives
Through 2025, members joined us in marking the
UN’s International Year of Co-
operatives
.
They joined in through the year to learn more about what co-ops are, from our founding
principles to global co-operation through modern supply chains. In July, along with Co-
operatives UK, we welcomed worldwide co-operators to special events hosted across
Rochdale and Manchester:
The
Festival of Co-operation
.
17
Our vision in 2025
Ownership value
Members own our Co-op and can shape our business. One of our objectives is to
empower our members so that they can have an influence in the business they own, and
we made clear progress here in 2025.
We saw over 52,000 people voting at our Annual General Meeting (AGM), a substantial
increase on 2024 numbers (over 43,000) as we changed our eligibility criteria to extend
voting rights to more members. Members can also get involved in our business through
everyday opportunities on our app, website and in person. We call these moments to ‘Join
In’, and in 2025, 20% more members did so than in 2024
8
.
In October, we held a series of events to engage members with pop-up cafés, local get-
togethers and online conversations, with a 28% rise in physical attendance at pop-ups
against last year
9
.
Aside from these formal moments for participation, it’s vital that we build our members’
priorities into our business throughout the year. To that end, over 37,000 members shared
their views and opinions on the world around them in our Big Member Survey for 2025.
8
Members ‘joining in’ in 2024: 477,453. Members ‘joining in’ in 2025: 574,051.
9
Attendance at pop-ups in 2024: 1421. Attendance at pop-ups in 2025: 1819.
18
Economic value
Our Co-op should offer the best value for everyone who buys from us, not just members.
But owning our business should come with financial benefits. This is one of the ways that
we engage more people in the democracy of our Co-op.
In 2025, we increased value to our members by price-matching a number of everyday
essentials to Aldi – an initiative that reached 40% of baskets. We also ran promotions on
categories that matter most like meals, shared personalised offers and launched Member
Prizes, where members can exclusively enter monthly prize draws.
Members also helped us design what economic value will look like in the years ahead,
giving feedback on an app trial using digital stamps
.
Social value
We act on the things that matter to our members. In 2025, we supported our members’
communities, campaigned on their behalf and contributed to causes they care about.
For all our achievements in this area,
read our Social Value and Sustainability report
, but to
highlight just a few wins:
•
At the end of the year, we’d raised over £6.5m for Barnardo’s since 2023, with a huge
£3m raised in 2025 alone. This was made possible through our colleagues, members,
customers and suppliers working together, from donating at tills to running
fundraising events.
•
An installation of over 6,500 solar panels was completed at our Biggleswade Depot,
generating electricity to support our largest regional distribution centre.
•
We announced a new fund to support sustainable farming practices. By the end of the
year, we had provided over £760,000 of funding with farmers in our supply chain to
support them in reducing emissions and promoting nature on their farms.
•
Our Local Community Fund has now shared £120m since 2016 with causes across the
nation, from sports clubs to local gardens.
•
Based on our members’ priorities, we announced our decision to stop sourcing from
countries where the international community has identified serious risks of community-
wide human rights abuses and violations of international law.
•
Our charity, the Co-op Foundation, supported 135 causes and individuals in 2025.
Through campaigning and funding, the foundation creates opportunities for young
people.
•
We continued to support 38 Co-op Academies, who provide an education based on
co-operative Values and Principles to over 20,000 students.
19
Spotlight:
member activators
Our member activators work across the UK, raising awareness of the value that
membership brings. In 2025, member activators were involved in:
•
130 local events in October, including asking members for feedback on our Co-
op’s products and services.
•
Six local AGM events, inviting members to get involved with the AGM from where
they are.
•
400 events centred on sustainability, including Food Waste Action Week and
Fairtrade Fortnight
20
Our business areas in 2025
Partnering, supplying and buying
Beyond our own stores, we supply other retailers on a
business-to-business
basis,
including:
•
Independent partners: national partners, secondary wholesalers, partners operating
under the Nisa brand and co-branded stores
•
Franchise stores, which look and feel like our own Co-op stores
•
Regional co-operative societies, such as Lincolnshire Co-operative
This is a big part of our business, but also our heritage: Co-op Wholesale Services was
established in 1863.
Wholesale
Over the past two years, this area of our business has not seen the performance we would
have liked. The market has been challenging and our partners, many of whom are
independent stores, have sharply felt the pressures of inflation and consumer caution.
In response, we fundamentally reset our wholesale operation in 2025. Our financial results
for the year reflect continued market challenges, but also significant investment in
repositioning our partner offer as a multi-fascia provider. We now enter 2026 with a clear
proposition and a strong pipeline of partnerships.
Coming through a tough market
Our revenue was £1.30bn, a 2.2% reduction against 2024
10
. Many of our partners are
smaller retailers categorised in the ‘Symbols and Independents’ sector, which contracted
by 1.8% over the year according to Circana
11
. Along with the wider market, this area is
seeing health-driven behaviour change; when tobacco products are removed from our
financial results, our wholesale business grew 1.3%.
Our underlying operating loss for our business-to-business division in the year was £14m,
reflecting both headwinds and strategic investments, explained below. We believe these
investments are now yielding results; we saw year-on-year growth in the final quarter of
10
2024: £1,399m: 2025 £1,387m (including franchise business).
11
Circana data, from the week ended 11 Jan 2025 to the week ended 3 Jan 2026. In this period, the Symbols and
Independents market contracted by 1.8% for value.
21
2025 and outperformed the market for Christmas trade
12
. We’ll now walk you through the
changes we’ve made in order to turn this corner.
Resetting our partner proposition
From early 2025, we repositioned this area of our business. Nisa Retail Limited became
Co-op Wholesale, bringing the business closer to our group and wholesaling heritage,
while keeping the Nisa brand for partners who choose it.
This move reinforced our commitment to the independent retail sector, marking a change
in the way we work with partners. We’re moving to a managed service model to combine
the scale, insight and trust of the Co-op Group with the flexibility of a wholesaling
business. We want to help partners compete for consumers’ everyday shopping ‘missions’,
and in 2025, we rolled out:
•
Data and capability tools to identify the right products, ranges and formats for each
retailer – so partners can better optimise their space and shopping experience.
•
An expanded own-brand range, investing £800,000 in the year to double the number
of Co-op own-brand products available at competitive prices.
•
Pricing and promotional investments on fewer, high-impact deals.
To reflect the breadth of what we now offer, we announced an updated Nisa fascia at the
end of 2025, modernising a much-loved brand with a sharper design to stand out on the
high street.
We’ve also launched an “& Co-op” fascia for established partner brands. Now, these
brands can retain their own identity while also proudly showing that they sell Co-op
goods. Our name continues to offer a strong differentiator to partners with 92% opting to
stock Co-op products.
Strengthening the building blocks
We continued to improve on the fundamentals with availability remaining strong at 97%
and 94% of deliveries to partner stores arriving on time. At the same time, we made
operational changes to drive forward our new commercial proposition, enhancing our
leadership by drawing talent from wholesale environments.
Co-op’s new Commercial and Logistics division will provide our wholesale division greater
autonomy in how we work with suppliers. This will boost our ability to quickly tailor ranges
for independent partners, so they can better compete in fast markets.
Relationship-building based on mutual benefit
12
Data from Circana for the four weeks to 27 Dec 2025; the Symbols and Independents sector showed 2.0% decline for
value and 2.7% decline for volume. In the same period, Co-op Wholesale demonstrated 3.8% growth in value while volume
increased by 1.1%
22
Our goal is to establish the right, mutually beneficial agreements to help both parties
grow.
In 2025, we established significant new business partnerships, building our pipeline for
the years ahead. We onboarded 79 new customers in the year, representing over 170
stores. These relationships are already seeing results; one partner who switched to Co-op
Wholesale in the year has seen a 25% increase in sales of chilled food and sandwiches
13
.
On top of new business, we deepened our existing relationships, signing 15 long-term
agreements with ‘key partners’ – our biggest retail accounts – in the year. Notably, we
renewed and restructured our relationship with Costcutter.
For Co-op, these new and renewed relationships will continue to help us reach wider
markets. For example, we brought Co-op stores to motorway service stations for the first
time in 2025 through our Roadchef partnership and supplied 604 petrol forecourt stores
on a wholesale basis.
Sharing value with all stakeholders
In 2025, we’ve continued to champion member and partner interests – joining the Group’s
campaign for the health of local high streets and sharing over £1m with local causes
through Making A Difference Locally. The charity supports organisations like grassroots
sports schemes and community initiatives, helping to strengthen local ties for partners.
Franchise
Franchise partners expand our reach and give members more opportunities to engage
with the Co-op they own.
In 2025, our franchise operation (included in our wholesale segment) continued to
perform strongly, showing 23% year-on-year growth as we reached £91m in sales. The
compounding rate of growth in our franchise business and strong focus on partnerships
makes it a vital part of our strategy going forward.
We ended the year with 65 franchise stores, with 11 new sites in 2025. The quality of our
new openings has exceeded our expectations, with success in university campus stores in
particular.
We also established a healthy pipeline for the years ahead. We expanded our partnership
with EG on the Move to ten locations and secured new sites in hospitals to enhance our
NHS presence.
Through franchising, our Co-op has expanded in markets like these: petrol stations,
hospitals, universities. These are dynamic locations with an ever-changing group of
consumers. They introduce our products to more people and expand our member base;
in 2025, we recruited 51,000 members through our franchising business alone.
13
Source: Forecourt Trader,
Why Sewell On The Go’s Fresh Approach with Co-op is Paying Off,
December 2025
23
Federal Retail Trading Services (FRTS)
This is a buying group, made up of 13 independent societies and our Co-op Group in
2025. We buy stock together to make use of our combined scale.
Along with other parts of Co-op, this area was impacted by the cyber attack. Revenue was
£2bn; this is a decline of 5.4% against 2024 (£2.1bn), reflecting issues with stock
availability as we restricted systems to contain the threat.
In the spirit of co-operation between co-operatives, our immediate priority was to support
our partners. We proactively and regularly communicated with them and quickly made
operational changes in order to share 350,000 cases of stock with 11 independent
societies through our wholesale network.
We remain truly grateful to our independent society partners for their support through a
time that tested their organisations as well as ours. These steadfast relationships
highlighted to us our strength as a supplier and partner in 2025 – one of the reasons we
created our Group Commercial and Logistics division. Here, we believe a faster speed-to-
market and more efficient model will bring multiple benefits to our partners.
Spotlight:
University of Warwick store
Campus stores are a great example of how franchise arrangements strengthen both our
business and our democratic model.
In September, our biggest campus store opened at the University of Warwick. The new
store focuses on Food to Go, including meal deals, hot food, an instore bakery and fresh
coffee – along with an extended world food range for a diverse student population.
In term time, stores like these are some of the busiest in our network, serving a
combined campus population of 200,000 students. These locations also help us to
introduce young people to Co-op membership with a fresh cohort coming every
academic year. We’re reaching people at a habit-forming time in their lives, with 36% of
members shopping in these stores also actively participating in our Co-op – taking
action in our democracy, like voting or selecting a cause to support.
24
Running retail stores
In our
food retail
business, we entered 2025 with momentum, seeing growth in 2024 and
a promising first quarter. We then experienced challenges that knocked this momentum
and surfaced areas for improvement. We now enter 2026 with a clear path ahead.
Revenue for the period was £7.25bn, representing a 2% contraction against 2024
(£7.40bn) and reflecting a range of external pressures. Market data shows that the sector
contracted in 2025
14
, and we have continued to see shifting shopping behaviour in items
like tobacco and alcohol.
On top of these factors, our revenue reflects our response to the cyber attack noted earlier
in this report. Our food colleagues were outstanding – every store stayed open, and we
prioritised stock for rural communities. But our physical stores experienced the biggest
impact in our Group as we restricted systems to contain the threat, subsequently seeing
different buying behaviour in our food stores as habits had been disrupted.
Underlying operating profit for this area in 2025 was £34m
15
, substantially lower than 2024
(£201m). This reduction was driven by:
•
The trading challenges above
•
Rising costs, including new Extended Producer Responsibility charges (which are fees
for managing waste) and National Insurance increases
•
An increase in stock wastage as systems relearned demand levels
•
Store investment for the future.
Overall, the disruption and market challenges we faced in the year highlighted a need for
a clearer focus on UK consumers, and we’re now rolling out changes to achieve it.
Excluding the estimated direct impact of the cyber attack, our food retail business
demonstrated 1% revenue growth
16
– giving us confidence in the ways we’re adapting to a
changing market.
Strengthening our foundations
Delivering an exceptional retail experience for customers starts with the essentials:
product, promotions, price and place. In the second half of the year, we launched a
programme to strengthen these fundamentals.
Using insight from customer missions, segmentation and in-store data, we’re making sure
the right products reach the right customers in the right way. This includes reducing
14
Circana Convenience data, showing 0.2% value contraction for the total convenience market from the week ending 11 Jan
2025 to the week ending 3 Jan 2026.
15
This is an alternative performance measure. Please refer to Note 1 and Glossary in our financial statements for a definition
of the Group's alternative performance measures (APMs).
16
Food revenue of £7.256m less the £223m estimated impact of the cyber attack on sales.
25
duplication across our ranges and better tailoring our offer by region – for example,
expanding our Halal selection across stores.
Our people are another of our core foundations. We invested an additional £40.3m in
store colleague pay in the year, including a 5% pay rise for over 38,000 frontline
colleagues
17
.
Building value perception
For our Co-op and its customers, value is about both price and products.
On price, we made progress for members in 2025 by price-matching over 100 items to
Aldi and unlocking more savings with personalised offers. We also worked to deliver the
very best value for all shoppers, not just members. For example, in March, our
Big Night In
deal offered exceptional value with two stonebaked pizzas and a tub of Ben & Jerry’s ice
cream for £5, or £6 for non-members.
When it comes to products, we’ve continued to invest in our own-brand, working to lead
the way on quality. We launched 447 new products in the period, 26% more than the
previous year
18
.
Championing our Co-op difference
Retailing responsibly isn’t just the right thing to do, it’s a key differentiator. In 2025, we
made progress based on member and customer priorities.
•
UK agriculture:
we continue to source 100% of our fresh and frozen own-brand meat
from British farmers, including when used as an ingredient. We spent over £700
million with British farmers and suppliers in the year.
•
Fairtrade
: all our own-brand bananas, tea, coffee, roses and cocoa are Fairtrade. By
volume, we remain the world’s top seller of Fairtrade wine.
•
Animal welfare
: this has remained a priority for our Co-op in 2025; we pledged to
implement electrical stunning for all farmed prawns by 2027.
For all our work in this area, read
our Social Value and Sustainability report
for 2025.
Adjusting our offer
As traditional ‘newsagent’ buying behaviour changes, we’re adapting what we do.
In 2025, we continued to innovate, particularly in online convenience shopping (‘quick
commerce’). This area saw 15% growth in the year, and as of 2025, 90% of the UK
population are able to shop with our Co-op in just a few taps. Member prices are now
available at shop.coop.co.uk as well as through all our delivery partners: Uber Eats, Just
Eat and Deliveroo.
17
We increased our Customer Team Member and Post Office Counter Assistant pay from £12.00 to £12.60/hr (a 5%
increase). We also increased our Team Leader and Post Office Supervisor pay from £13.32 to £13.99/hr (5% increase).
18
Product launches in 2024: 355.
26
We expanded our offer in other ways, too, including health and wellness. In August, we
announced a partnership with Holland & Barrett to bring their vitamins and supplements
to our customers’ baskets.
Making the most of our stores
We continued to optimise our estate in 2025. We have over 2,300 Co-op stores, and we
want each one to offer the most value possible to customers and communities.
To achieve this, we trialled new formats, opening five ‘On The Go’ stores in the year:
smaller spaces with hot food and deli options. And we piloted a new sustainable store
model, with an initial opening using 40% less energy than the pre-refit store.
We’re also working to turn our stores into multi-use hubs that bring more to the people
they serve. In 2025, we launched our first in-store banking hub with Cash Access,
providing face-to-face banking services for people who need them. We also expanded
our Co-op Media Network, where we work with partners to spotlight nearly 500 different
brands to customers. Here, we grew revenue nearly 10% to £26.9m (2024: £24.5m).
27
Being there for members for life
Our
Life Services
business is one of the areas that makes our Co-op special. By focusing
on protection, planning and being there in the hour of need, it’s our privilege to support
members and customers at life’s most significant moments.
In 2025, we prioritised choice. As a member-owned business, we should be known for
putting people first; our national scale means we can offer a range of options that really
reflect the many varied lives we serve.
With this in mind, we demonstrated 4.2% revenue growth to £418m (2024: £401m)
with an underlying operating profit of £41m
19
. Removing the direct estimated impact of
the cyber attack, this area demonstrates even stronger growth of 6.9%
20
. This is a
performance we’re proud of, particularly in a year where we’ve navigated challenges
along with the rest of our Group.
Our Life Services business is split across the three segments of Funeralcare, Insurance and
Legal Services.
21
Funeralcare
We provide two types of funerals: ‘at need’, arranged when someone dies, and ‘pre-need’,
arranged ahead of time. In 2025, we made progress in both areas, seeing a 10% increase
in ‘pre-need’ plan sales
22
while simultaneously increasing our portion of the ‘at-need’
market over the year, ending 2025 with a 15% share.
23
We launched a major national advertising campaign,
One Brilliant Life,
focusing on what
we hold at our core: creating services that are as unique as the families we serve. We also
focused on value, with discounts for both members and non-members, unlocking savings
of up to £250 on funeral plans.
We have a promise to ‘take care of everything’, which is reflected in the £12.8m we
invested in our business over the year. This includes:
•
Upgrades to branches and care centres to make sure we’re delivering the high
standards of service families expect.
•
Investments in electric vehicles and charging points.
19
This is an alternative performance measure. Please refer to Note 1 and Glossary in our financial statements for a definition
of the Group's alternative performance measures (APMs).
20
£418m revenue less £11m estimated direct cyber impact.
21
Please refer to Note 1 in our financial statements for a more detailed breakdown of financial results by segment.
22
Pre-need funeral plans sold in 2024: 37,710. 2025: 41,538. As future plans, pre-need sales are not included in our revenue
for 2025.
23
Source: Office for National Statistics & National Records of Scotland Market Calendar Data - 2025 (three month rolling)
with Timecare Adjustment to align with funerals.
28
Along with other areas of our Co-op, the cyber incident tested our strength; we prioritised
funerals and service levels and will always remember how over 3,600 Funeralcare
colleagues went above and beyond through a difficult time.
Now we’re looking to the future, building on the work of 2025 to keep building brand
awareness while maintaining our commitment to honouring brilliant lives.
Legal Services
We’re here to help members and customers to not only understand the law but make the
most of it.
In 2025, our Legal Services business was impacted by the cyber attack but saw reasonable
trade over the course of the year with increased case openings in both probate and estate
planning practice areas.
We invested £1.6m in technology, including AI, supporting teams to manage caseloads
and prioritise meaningful work that progresses client cases.
Partnerships remained vital to our strategy throughout the year; by working closely with
trusted organisations such as Saga, we extended our reach and made sure more people
have access to the legal advice they need. 35% of estate planning clients were referred to
us through a partnership in 2025.
Similarly, charity partnerships allow us to advance our business while also sharing social
value in the world around us. We partnered with charities including Cancer Research,
offering a free will writing service to their supporters to encourage them to leave a
donation – in 2025, this service saw £8.4m pledged in wills.
Insurance
Through our insurance business, we offer the right cover at the right price. It’s a smaller
part of our business, but another important way we can share value with members and
support them through life. Over the year, we saw volume growth of 17% in insurance
policies, with particular growth in motor and life insurance.
Our future focus is clear: we want to put members first, facilitating the best possible prices
and policies for them. To this end, we continued to offer member discounts on all types of
cover. We also built membership into our policy journey online, so people can sign up for
Co-op cover and a Co-op membership all at once. This gives people immediate access to
the best prices while also expanding our democracy: we saw nearly 7,000 members join
this way in 2025.
Finally, we were proud to maintain strong brand trust in this area, reflected in our second-
year running being rated as a
Which?
Best Buy and continued ‘excellent’ TrustPilot scores.
29
Group financial overview
Key performance indicators (KPIs)
We use the following indicators to manage the performance of our Co-op. Being a
profitable business with financial stability is essential in helping our Co-op to meet its
strategic objectives and be there for our members for generations to come. These
measures help us assess and understand this stability.
These KPIs include both the statutory measures we’re required to share under
International Financial Reporting Standards (IFRS) and Alternative Performance Measures
or APMs, which are consistent with how we measure our Co-op’s performance internally
and help our members understand the underlying performance of our business. The
APMs are not meant to replace statutory measures under IFRS.
Our underlying APMs below exclude the incremental cyber costs reported as non-
underlying in our financial statements. Year-on-year variances, excluding the full estimated
cyber impact, are also illustrated below.
As reported
Excl. all
estimated
cyber impact**
Performance measures
2025
2024
Var
(£ / % /pp)
Var
(£ / % / pp)
Total group revenue
£11,025m
£11,279m
(2.3%)
0.3%
Underlying EBITDA*
£327m
£481m
(£154m)
(£68m)
Underlying operating (loss) / profit*
(£35m)
£131m
(£166m)
(£80m)
Underlying (loss) / profit before tax*
(£126m)
£45m
(£171m)
(£85m)
Group net debt*
(£1,495m)
(£1,248m)
(£247m)
(£141m)
Group net debt (excluding leases)*
(£317m)
(£55m)
(£262m)
(£155m)
Return on capital employed
(ROCE)*
(1.2%)
4.7%
(5.9pp)
(3.0pp)
Statutory measures
2025
2024
Var (£ / %)
Var (£ / %)
Total group revenue
£11,025m
£11,279m
(2.3%)
0.3%
Operating (loss) / profit
(£57m)
£151m
(£208m)
(£101m)
(Loss) / profit before tax (PBT)
(£43m)
£161m
(£204m)
(£97m)
* A reconciliation and full glossary of Alternative Performance Measures (APMs) are included in our financial statements.
** APMs represented to exclude the total estimated direct cyber impact, including estimated trading impact to sales of
£285m, associated estimated profit impact of £86m and estimated cash impact of £107m
.
All underlying measures exclude
incremental costs of £21m directly arising as a result of the cyber attack, presented as non-underlying items.
30
Chief Financial Officer’s overview
Rachel Izzard, Chief Financial Officer
I am presenting our results for the period ending 3 January 2026, a year defined by
significant external pressures, structural shifts in customer behaviour and an unforeseen
cyber attack. These challenges impacted our performance, however, our response
demonstrated the resilience of our Co-op.
We continued to face cost inflation, fragile consumer confidence and intense competition,
alongside a sharper-than-expected contraction in the convenience sector during the
second half, particularly within tobacco sales. Despite this, we maintained liquidity
headroom, protected our priorities and delivered key milestones, including the
implementation of our new finance system.
We are taking the necessary actions required to return the Group to a sustainable profit
position, and I would like to thank all our colleagues for their exceptional work in
delivering for our Co-op through a demanding year.
Cyber attack impact
The cyber attack was a one-off criminal event with a material impact on our financial
results. The estimated impact is best understood in two parts.
1. Immediate financial impact:
Non-recurring incremental costs of £21m
: this includes third-party support and other non-
recurring recovery costs. In line with the Group’s policy for non-underlying items, these
have been removed from underlying profit and presented as non-underlying.
Sales and gross margin estimated impact of £285m and £86m respectively:
resulting from
restricted systems, reduced promotional capability, operational inefficiencies and lower
volume throughput. We have estimated these impacts based on our Group forecast for
2025, updated to reflect actual external conditions, such as changes in frequency of
shopping behaviour. These impacts remain within our underlying measures.
The cash impact is the value of the cumulative non-recurring costs and the sales and gross
margin estimated impact.
2. Tail of impact:
Beyond our immediate response to the event, our Co-op saw a tail of impact through the
year. Transient shopping patterns had been disrupted, and cyber containment and
recovery slowed strategic progress, most notably in Food, during a time of fast-moving
market shifts.
The table below summarises the estimated
immediate
impact.
31
In the tables through this document, we will talk to:
•
Statutory profit measures which have no adjustments.
•
Underlying profit measures which exclude the impact of non-recurring cyber costs.
•
Variances to the prior period excluding the total estimated direct impact of the cyber
attack, including the lost trade impact. This is provided to aid understanding and is not
an ongoing statutory or alternative performance measure.
Financial performance
Market conditions became more challenging through the year. Outside of the cyber
attack’s impact, trading was shaped by cost-conscious, value-driven customer behaviour.
We saw an acceleration in the structural decline of the newsagent tobacco mission.
Our Co-op also faced cost increases, including circa £50m of legislative changes driven by
new Extended Producer Responsibility charges and additional National Insurance costs.
Additionally, we invested significantly in colleague pay. In total, we faced circa £150m of
cost headwinds in the year.
Our strong opening liquidity and bank covenant headroom, built up intentionally over the
last three years, enabled us to absorb these challenges with confidence and intent. While
net debt flexed during the period, the Group’s underlying leverage
24
remains at normal
levels for our sector, excluding the estimated impact of the cyber attack. We maintain an
appropriate level of liquidity risk headroom.
24
Total net debt including leases less total estimated cyber impact divided by underlying EBITDA, less EBITDA cyber impact.
Cyber non-recurring
costs (adjusted)
Estimated cyber
trade impact
(not adjusted)
Estimated direct
cyber impact
Total revenue
-
(£285m)
(£285m)
Underlying operating loss
-
(£86m)
(£86m)
Operating loss
(£21m)
(£86m)
(£107m)
Group cash
(£21m)
(£86m)
(£107m)
32
Revenue
2025
2024
Var
Var
(%)
Var (%)
excl.
estimated
cyber
impact
Total Group revenue
£11,025m
£11,279m
(£254m)
(2.3%)
0.3%
Food Retail
£7,256m
£7,403m
(£147m)
(2.0%)
1.0%
Food: non-tobacco
£6,336m
£6,388m
(£52m)
(0.8%)
Food: tobacco
£920m
1,015m
(£95m)
(9.4%)
Business-to-business
£3,351m
£3,475m
(£124m)
(3.6%)
(2.1%)
Wholesale: non-tobacco
£1,017m
£1,005m
£13m
1.3%
Wholesale: tobacco
£279m
£320m
(£42m)
(13.0%)
Life Services
£418m
£401m
£17m
4.2%
6.9%
Group revenue for the year contracted 2.3% versus the prior year, broadly flat after
excluding the estimated direct impact of the cyber attack. Our revenue performance
reflects operational disruption, continued pressure on consumer spending, and a
structural shift in the tobacco market, the latter having a circa 2% drag on group sales.
You can read more about the performance of our business areas in our business unit
updates. I’ve summarised their revenue data in the table above.
Food
revenue was challenging. This area was most impacted by the cyber attack, as
mentioned above, including both the immediate operational impact, and a tail of
changed shopping habits in stores borne from disruption.
Removing the estimated immediate cyber impact, revenue increased by 1.0% – including
a circa 1% tobacco drag in this area. This is a fair result given the convenience market
contraction. We are responding to market changes, growing our quick commerce
business by 15% in the year, and investing in value for shoppers with our Aldi Price Match
offer reaching 40% of baskets.
Within our
business-to-business
segment, there were different trends across our routes
to market. Wholesale continued its strategic reset, restructuring existing contracts and
onboarding new customers. Non-tobacco revenue grew in a contracting market,
supported by the reset and a strong own-brand performance – an early benefit from the
Group Commercial and Logistics changes. Performance improved through the year as the
reset progressed with clear market share growth by year-end.
Revenue from other co-ops
(Federal Retail Trading Services) was down 5.4%, reflecting market contraction, the
tobacco shift and stock pressure during the cyber incident. Our franchising business grew
strongly by 23%, supported by continued expansion into new locations such as hospitals.
33
In
Life Services
, revenue increased 4.2%, or 6.9% excluding the estimated cyber impact.
Here, our member-and-customer-focused offer has translated into at-need market share
gains in Funeralcare, and volume increases in Insurance and Legal Services.
Underlying operating profit or loss (UOP/L)
As described above, underlying operating profit or loss is reported after removing the
incremental costs of the cyber attack. It includes the adverse estimated impact on trading.
2025
2024
As reported
Var (£)
Var (£) excl.
estimated cyber
impact
Group UOP/L
(£35m)
£131m
(£166m)
(£80m)
Food Retail
£34m
£201m
(£167m)
(£91m)
Business-to-business
(£14m)
(£1m)
(£13m)
(£14m)
Life Services
£41m
£41m
£0m
£10m
Support functions
(£96m)
(£110m)
£14m
£14m
Group underlying operating loss was £35m (2024: £131m profit). This is an adverse
variance of £166m, or £80m excluding the estimated trading impact of the cyber attack.
Strong Life Services performance and disciplined central cost control offset the loss from
Wholesale’s turnaround, leaving Food as the material driver of the drop in Group
profitability excluding the estimated cyber impact. Targeted sales and margin
improvements were offset by fast structural changes in Food missions, and the material
level of cost headwinds.
Those cost headwinds in the year were significant at circa £150m, with circa £50m of that
figure, driven by legislative changes such as new Extended Producer Responsibility
charges and National Insurance increases. We also saw wider inflationary pressures and
continued to invest in colleague pay. Keeping absolute operating costs to an increase of
only £86m or 3.2% in this environment was a good result by our team.
Our operating loss was £57m, versus a profit of £151m in 2024.
Underlying net finance costs
2025
2024
Var
Var %
Total underlying net finance costs
(£91m)
(£86m)
(£5m)
5.8%
Non-lease interest costs
(£41m)
(£47m)
£6m
(12.8%)
Non-lease interest income
£14m
£25m
(£11m)
(44.0%)
Lease interest costs
(£64m)
(£64m)
£0m
0.0%
34
Underlying net finance costs were £91m, a 5.8% increase against 2024. Borrowing costs
reduced with gross debt repaid, and interest income reduced with the reduction in gross
cash.
Underlying loss or profit before tax
This combines our underlying operating profit or loss with our underlying finance costs.
As described above, this measure excludes the impact of the non-recurring cyber costs
accounted for within non-underlying items but includes the cyber attack’s estimated
impact on trade.
Group underlying loss before tax as reported was £126m (2024: profit of £45m). This is an
adverse variance of £171m, or £85m excluding the estimated impact of the cyber attack
on trade. The change is driven by the impact of the continued pressure on consumer
spending and a faster-than-expected structural shift in the tobacco market, as well as the
cost headwinds discussed above.
Statutory loss or profit before tax
This combines our underlying profit or loss before tax with the non-cash assessment of
returns from our Funeralcare investment assets and non-underlying items. Statutory loss
before tax for the year was £43m (2024: profit of £161m). This is an adverse variance of
£204m, or £97m excluding the estimated impact of the cyber attack.
Funeral plan returns were broadly flat at £91m, compared to £89m in the prior year. The
returns achieved in both 2024 and 2025 were significantly above the longer-term average
of circa £50m per annum.
Non-underlying items
2025
2024
Var (£)
Non-underlying items
(£22m)
£20m
(£42m)
Cyber attack (incremental costs)
(£21m)
£0m
(£21m)
Impairment charge
(£29m)
(£18m)
(£11m)
Other
£28m
£38m
(£10m)
Non-underlying items
: £22m net costs (2025: £20m net gain) with the £21m (2024: £nil)
incremental costs from the cyber attack being the largest driver in year.
Impairment of assets
: we recorded a net impairment charge of £29m in the period. This
relates primarily to £37m of impairment against food stores where trading cashflow
forecasts do not fully support the asset value of the sites. This is offset by the reversal of
previously recognised impairment on our sub-lease portfolio and one of the floors in our
support centre, following agreement of a sub-let arrangement in the year.
Other:
relates to total lower gains from property disposals and investment property
valuations of £21m (2024: £33m), a reduction in provisions, offset by restructuring
business activity costs in the year (see Note 1 of the financial statements).
35
Cashflow
Cash generation
2025
2024
Var (£)
Var (£) excl.
estimated
cyber
impact
Underlying EBITDA
£327m
£481m
(£154m)
(£68m)
Working capital movement
(£114m)
(£67m)
(£47m)
(£47m)
Pension cash contributions
£72m
£56m
£16m
£16m
Other
(£42m)
(£14m)
(£28m)
(£7m)
Net cash inflow from operating
activities
£243m
£456m
(£213m)
£(106m)
Capex
(£318m)
(£273m)
(£45m)
(£45m)
Lease payments - principal and
interest
(£194m)
(£183m)
(£11m)
(£11m)
Disposal proceeds
£22m
£34m
(£12m)
(£12m)
Other
(£15m)
(£5m)
(£10m)
(£10m)
Net cash generation
(£262m)
£29m
(£291m)
(£184m)
Net cash inflow from operating activities is £243m (2024: £456m), an adverse variance of
£213m, and £106m excluding estimated cyber impact; arising from underlying trade
challenges.
The recovery from the cyber attack and the implementation of our new finance system in
the third quarter caused a temporary adverse impact on working capital. We expect this to
fully unwind in the first half of 2026.
Capital increased to £318m as we took considered choices to continue investments in
customer-facing improvements, efficiency measures and the modernisation of core
systems.
Store footprint and space
Store numbers
As at year-
end 2024
New
Disposals
/(closures)
As at year-
end 2025
Change
Refits and new
stores
Food Retail
2,348
21
(31)
2,338
(0.4%)
4.7%
Franchise
56
11
(2)
65
16.1%
16.9%
Total fascia
2,404
32
(33)
2,403
0.0%
5.0%
Retail space remained flat, with continued focus on pipeline development and store
refresh programmes; 5% of the estate benefited from investment in 2025. Franchise
growth was materially higher year-on-year in line with our strategy. During the year we
trialled new formats, including sustainability-driven refits and ‘Food to Go’ stores.
36
Net debt and cash
Group net debt
2025
2024
Var (£)
Group cash* and short-term investments
£93m
£420m
(£327m)
Revolving credit facility and overdraft
(£52m)
£0m
(£52m)
Bond debt (incl. fair value, excl. accrued interest)
(£353m)
(£470m)
£117m
Other
(£5m)
(£5m)
(£0m)
Net debt (excluding lease liabilities and accrued
interest on amortised debt)
(£317m)
(£55m)
(£262m)
Lease liabilities
(£1,178m)
(£1,193m)
£15m
Net debt (excluding accrued interest on
amortised debt)
(£1,495m)
(£1,248m)
(£247m)
*Excludes £5m restricted cash relating to receipts to be invested in funeral plan investments.
Change in Group net debt in period
2025
2024
Var (£)
Opening net debt
(£55m)
(£82m)
£27m
Net cash generation / (outflow)
(£262m)
£29m
(£291m)
Restricted cash
(£5m)
£0m
(£5m)
Fair value movement on borrowings
£5m
(£2m)
£7m
Closing net debt
(£317m)
(£55m)
(£262m)
The Group’s core net debt (excluding leases) rose in the year to £317m (2024: £55m).
With the cyber attack and challenging trading conditions, liquidity has reduced and net
debt increased, but as a consequence of entering the year strongly, we have maintained
headroom throughout. Our low starting net debt and liquidity reflects the hard work
undertaken in recent years to deleverage, which facilitated our response to the cyber
attack and cost headwinds. We managed the disruption of 2025 entirely through our own
cashflows.
The combination of resetting post cyber and implementing the new finance ERP system,
meant back-office processing slowed. This created a temporary drag on working capital in
the final quarter of the year, and a need to draw £52m on our revolving credit facility at
year-end. We expect this position to fully unwind within the first half of 2026.
The fair value of bond debt decreased by £117m to £353m (2024: £470m), reflecting the
repayment from cash of debt that matured in 2025. At the balance sheet date, we had
£417m of borrowings including accrued interest still to repay, with £362m falling due in
July 2026.
37
At the balance sheet date, we maintain gross liquidity headroom of circa £440m through
cash and short-term investments and undrawn facilities, providing resilience through
continued market volatility.
Balance sheet
Group net assets of £2.1bn remain broadly in line with the prior year-end. The proportion
of liabilities that are current has increased as debt maturity dates have advanced. The
debt that is due within 12 months of £350m, excluding accrued interest, is fully covered
by legally binding and existing refinancing agreements.
Financial ratios
Ratios
2025
2024
Var
Var (%) excl.
estimated
cyber
Leverage covenant ratio*
2.0x
0.2x
(1.0x)
-
Interest cover covenant ratio*
2.2x
2.7x
(0.9x)
-
Return on capital employed (ROCE)
(1.2%)
4.70%
(5.4pp)
(3.0pp)
*Interest cover covenant – the ratio tests Co-op's ability to cover its financing costs from its earnings and represents the ratio
of adjusted EBITDAR over adjusted net underlying finance costs.
Leverage covenant – the ratio compares our borrowings to our earnings, and represents the ratio of Group net debt,
excluding lease liabilities, over covenant EBITDA.
Our banking partners agreed to a short-term amendment to the covenant tests for 2025
and the first half of 2026, reflecting the estimated direct impacts of the cyber attack due to
its one-off nature. Headroom on both has been maintained and exists at the balance sheet
date.
ROCE has declined year-on-year driven by the reduction in earnings.
Financing
On 18 June 2025, the Group agreed a new five-year £350m term loan facility agreement
with six major banking partners, linked to its ambitious sustainability and social impact
targets. The facility remains undrawn at the balance sheet date. The Group intends to use
the term loan to repay its upcoming 2026 bond maturity.
On 7 July 2025, the group entered into £175m of interest rate swap contracts, which will
provide a cashflow hedge against 50% of the new £350m term loan.
Summary
We have faced a year shaped by external pressures, structural market shifts and the
significant impact of the cyber incident which we have approached with continued
financial discipline. Our financial resilience helped us navigate the year and provided a
solid base to build back from.
38
We expect trading conditions and cost pressures to remain challenging. Notwithstanding,
growth in Life Services, progress in Wholesale and recovery in Food give us confidence in
improving performance to sustainable levels of profitability.
39
Looking ahead
Shirine Khoury-Haq
As Debbie has noted in her Chair’s introduction, by the time this report has been
published we will have announced that I will be leaving our Co-op after almost seven
years, and that Kate Allum will become our new Interim Group Chief Executive Officer.
It has been an incredible privilege to lead our Co-op over the past four years.
During that
time, we have faced both opportunities and significant challenges, but I’ve been
consistently struck by the resilience, commitment and care shown by our colleagues
across the organisation.
What has always mattered most to me is the difference that our Co-op makes to our
members and to our communities. This is something I have felt proud to be part of every
day.
We have made important progress together – strengthening our financial position,
improving our business performance, growing Co-op membership and creating
meaningful social difference across the UK.
In Kate, we have a proven and highly experienced leader, who cares passionately about
our Co-op and who will take the business forwards, while a permanent successor is found
by the Board.
Writing in 2026, I am confident in our Co-op’s route ahead – not because we’ve resumed
our path, but because we’ve adjusted it based on what we’ve experienced and learned in
2025. A cyber attack is a shock to any organisation; the one silver lining is the opportunity
to closely examine and improve underlying operations and systems.
As such, we have a clear strategy for the next three to five years. We have outlined actions
and measurements to support the achievement of our vision, while addressing
opportunities that will enable growth in the future.
Our direction is unchanged; our
vision
is to co-operate to build more value for our
members every day. What makes us
different
is that we’re member-owned and member-
run. And our
2030 goal
remains: to realise growth in our business so we can keep sharing
value with our members and their communities.
To do this, we must attract a wide base of UK customers and offer the right products to
them in the right way, while also leaning into the strength of our partnerships and supplier
network.
These are our focus areas going into 2026, as challenging circumstances intensify – with
weak consumer confidence continuing in the UK, and conflict and volatility heightening
across the world.
40
What we’re doing:
Focusing on consumers
Earlier in this report, we outlined our new framework for focusing on consumers.
For all people – members and customers alike – we want our Co-op to be
accessible
.
People should be able to access the Co-op products and services they need, where and
when they need them. This applies to our local presence and our digital experience hand-
in-hand.
We want to be known for
our Co-op difference.
We are not the same as other businesses;
we’re owned by our 7.2 million active members. This means we can make decisions that
other businesses can’t, from our Net Zero goals to our community support.
Lastly, we want to offer
trusted value
. Social value offers a huge differentiator for us, but
we need to get price and quality perception right, too. When people think of Co-op, they
should think of amazing quality and service, responsible sourcing and processes, and
reasonable prices – whether you’re paying for food or a funeral.
Focusing on partnerships
To maximise our scale, increase efficiency and deliver the best value for customers, we
established our
Group Commercial and Logistics division
in the year.
As we’ve mentioned throughout this report, we serve 8,000 locations including our own
stores and partners. This division integrates all the buying, supply chain and logistics
functions that power these stores into one team. Splitting off from our retail business,
Group Commercial and Logistics effectively becomes a major UK buying group in its own
right.
Here, we’ll manage supplier relationships, sourcing and distribution in one place. We
believe this will power future growth for our wholesale and retail businesses by working
to:
✓
Compete on cost through strong supplier partnerships and enhanced efficiency
✓
Increase innovation, bringing new ideas to market faster
✓
Operate more efficiently across all our logistics networks
✓
Enhance our Co-op brand with improved consistency and reliability
✓
Embed ethics, sustainability and co-operation into every partnership
This will help us offer more to existing partners while also attracting new partners.
41
How we’re doing it:
In three steps
1.
Be brilliant at the basics
Our immediate priority is
regaining our firm footing.
This means operating
seamlessly, every time –
whether we’re stocking
shelves or resolving issues.
2.
Innovate our offer
In 2025, we grew our quick
commerce business and
launched a new division.
We’ll continue to respond
to change, and we’ll
continue to explore new
routes to market.
3.
Expand our Co-op
When we look to the
longer-term, we’re
confident that we’ll resume
our trajectory – perhaps
even exploring other
markets where co-
operation could bring
benefits.
Overall, as we look ahead, we do so with clarity and confidence.
2025 highlighted our many strengths, and surfaced areas for improvement. Every
challenge has made us clearer on how to realise our goals and readjust our course.
While we expect the macro-economic environment to continue to be challenging, our Co-
op is as focused as ever on sharing value. By working to first regain our position and then
achieve sustainable growth in the years ahead, we can keep making progress – for
members, for colleagues, for the UK and for generations to come.
42
Risk management
Managing risk well means taking decisions to protect and grow our Co-op.
We have changed our approach to risk, moving from handling risks in siloes to a systems-
based analysis of our Group objectives, risks, controls and assurance (ORCA).
While this approach continues to mature, we have delivered the majority of the
transformation in 2025.
By focusing on ORCA, we have delivered cultural change to make our risk and controls
efforts work for our Co-op.
Our approach to risk
By assessing both external market risks and internal operational risk in the context of
delivering our objectives, we prioritise investment in the right controls to protect and
grow our Co-op.
Our risk management framework
Our Board oversees our risk management framework through the Risk and Audit
Committee (RAC) and regularly considers the status of our Co-op’s risk profile by
reviewing risk mitigation plans and responses to significant and emerging risks.
Each of our principal risks is sponsored by a member of our operating board and they are
responsible for overseeing our response to the risk. This is undertaken with the support
of subject matter experts in the business. Our Business Risk and Assurance
Committee (BRAC) provides challenge to these responses. Risk and control discussions
are escalated to BRAC from within our business and functions.
43
Roles and responsibilities
Our Co-op uses a three-line model to manage risk.
•
First line
– frontline colleagues, managers and leaders manage risk as part of their
day-to-day activities and escalate issues.
•
Second line
– our risk functions provide advice and oversight to help the frontline
manage risk within our risk appetite.
•
Third line
– our Internal Audit team provide independent assurance and challenge.
Our risk governance
This year we aligned our risk appetite to our principal risks, so our operating board more
directly manage the risks that most affect our strategy.
In 2025, the RAC, BRAC and operating board members met regularly to look at the risks
affecting our Co-op. They scrutinised our key risks and the activity undertaken by
management to mitigate them. The BRAC considers risks that may affect the achievement
of our strategic objectives. As part of our annual planning exercise, we reflect any changes
to our strategy in our risk profile.
Members of our operating board are individually responsible for managing the principal
risks and mitigating those risks with the support of the appropriate senior leaders.
The Business Risk and Assurance Committee is made up of nominated members of our
operating board, senior leaders from each business unit and key support functions, our
Chief Financial Officer and Director of Risk and Internal Audit. This Committee has
responsibility for monitoring the delivery of plans, assessing emerging risks and,
when required, challenging action taken to keep us within risk appetite.
Our risk appetite
Our risk appetite is set and approved by our Board and reviewed periodically or when
there are significant changes affecting our business. The appetite we used for 2025 was
agreed in November 2024.
When setting our strategy and medium-term business goals, we consider the degree of
risk we are willing to accept to achieve those goals. The level of risk we are willing to
accept will vary depending on the type of risk.
The operating board and senior leaders put monitoring processes into place to make
business decisions, ensuring that we operate within our risk appetite, taking corrective
action where needed. We regularly report to the BRAC and RAC on our position
compared to our agreed risk appetite.
Our principal risks cover the key risk themes we consider to support our decision-making.
Under each principal risk, the operating board member responsible for the risk sets out
the outcomes we are seeking to achieve or avoid in relation to that risk alongside the
44
impact. This guides our leaders in their decision-making to help grow and protect our Co-
op.
Regulatory landscape
The various businesses within our Co-op are each affected in different ways by changes in
regulation. We continuously monitor planned changes to regulation and adapt to meet
new requirements.
The Financial Reporting Council (FRC) have revised the UK Corporate Governance Code
(the “UK Code”) to enhance transparency and accountability of businesses that subscribe
to the Code. Because we are a co-op, we are not required to comply with the UK Code.
However, we believe the general principles of governance set out in the UK Code are key
to running a good business and so we voluntarily comply with the UK Corporate
Governance Code where it can be applied directly to our democratic model and it makes
sense for us to do so.
We have a programme of work in place to prepare for these revisions and
their subsequent implementation, to ensure we comply with the requirements that are
relevant to our business as a co-operative. Read more under
Provision 29: readiness for
changes
.
Co-operative Group Food Limited and Co-op Wholesale Limited:
we comply with the
various codes and regulations that apply to our Food business and Co-op Wholesale
Limited (formerly Nisa Retail Limited).
Co-op Funeral Plans Limited and Co-op Insurance Services Limited
are authorised by the
Financial Conduct Authority.
Co-operative Legal Services
is regulated by the Solicitors Regulation Authority (SRA).
Principal risks and uncertainties
Our principal risks have been assessed using the methodology outlined. They have been
reviewed by our Board and detail the risk exposures that pose the greatest potential
impact to our Co-op. Our principal risks are set out in the tables below.
In addition to our principal risks, there may be risks that are not known to us or some we
may consider not to pose a material threat to our Co-op. We remain flexible and respond
to the risk landscape as it changes.
How our principal risks developed in 2025
In April 2025, we experienced an unprecedented cyber attack causing disruption to the
operations of our business. Throughout the year, we saw continued instability in the
geopolitical environment. This included conflict in the Middle East and Ukraine, as well as
a changing US policy landscape. This macro-economic picture continues to put upward
pressure on costs. It also creates uncertainty for UK consumers, which impacts several of
our principal risks:
45
Technology and cyber threat
In April, we experienced a sophisticated, multi-stage cyber attack. We worked
closely with the National Cyber Security Centre (NCSC) and the National Crime
Agency (NCA), who confirmed the nature of the incident and supported our
response. Their involvement was crucial, given the growing threat of
organised cyber crime targeting UK organisations.
Our layered cyber defence strategy, supported by our incident management
framework, enabled us to contain the attack. Our businesses experienced
disruption, but we remained operational for our members,
customers, colleagues and partners. This was made possible by our continued
investment in security capabilities and regular crisis simulation exercises.
As part of our recovery, we accelerated planned cyber defence investments and
continue to evolve our approach in line with emerging threats.
We remain committed to best practices and national collaboration to ensure our
Co-op stays resilient and secure.
Competitiveness and External Environment
Cost of living pressures continue to impact the finances of our members and
customers, as they seek out value and adapt their shopping habits. This risk
includes societal trends regarding alcohol consumption and tobacco use, a
challenging trading environment and other headwinds such National Insurance
increases.
Supply Chain and Operational Resilience
Challenges remain within the supply chain in terms of sourcing products and
materials for and from our suppliers in the context of our continued recovery from
the interruption to trading caused by the cyber attack.
Execution of Strategy and Change
We have extended our ‘Change’ principal risk to include the execution of
strategies in our business units. These strategies will give us confidence that we
can successfully execute our day-to-day operations while implementing change
initiatives.
Beyond this, the broad extent of our principal risks has remained the same. In our going
concern statement later in this report, our Directors have concluded that the business will
have sufficient funds for the period to 31 December 2027 to adopt the going concern
basis of accounting.
46
All of our principal risks have been considered as part of our viability assessment. Those
marked with V are modelled through the Board-approved plan.
Execution of Strategy and Change
V
Risk description:
our businesses and functions deliver our strategy through the Board-approved plan and
annual objectives. If we do not execute our strategy successfully, we may not deliver value to our members and customers.
Reason for the risk
How we manage it
What has changed
What we plan to do
Number and complexity of
change programmes
Available resources and
capacity for change
There are multiple and
complex dependencies
between change
programmes
Costs are incurred to deliver
change
Our strategy is developed
by our operating board and
agreed with our Board
Where our business requires
improvement, we use an
integrated planning approach
to achieve change through
transformation activity and
continuous improvement.
We have oversight of our
change portfolio
activity with appropriate
governance and robust
controls
Our approach to
change considers member,
customer, partner and
colleague impact and that
changes are fully embedded
with minimal disruption
Long-term planning assesses
and prioritises change choices
and investment decisions that
align with the delivery of our
strategic objectives
Our response to the cyber
attack has deepened our
understanding of the end-to-
end processes in our business
We have maturing portfolio
processes and demand
forecast reporting to ensure
we focus on what has the most
material impact and benefit in
delivering our vision and
strategy
We have introduced
integrated end-to-end change
and business-as-usual
planning
Further embed the
connections between
our overall
strategy, the change portfolio
and our approach to risks and
opportunities much earlier
Improve the way we track
transformational and
functional change that
underpins our Co-op strategy
to ensure we understand and
manage interdependencies
and impacts, and
apply appropriate levels of
governance
Competitiveness and External Environment
V
Risk description:
the competitive and economic landscape in which we operate means that we need to monitor our
growth targets, propositions and competitor behaviour to remain viable and innovative.
Reason for the risk
Consumer
needs, missions and
demographics are changing
rapidly
Cost of living pressures are
reducing household spending
Regulatory and fiscal changes
increase costs and limit our
competitiveness
Rapid digital and AI advances
risk our offer falling behind
what consumers expect
Rivals improve value and
experience faster, making
share gain harder
What we do
Strategic planning and
financial planning
Risk and opportunity
management, including
financial forecasting
Annual planning refresh with
regular reporting and analysis
Undertake market share,
customer behaviour
and
competitor analysis
Sales monitoring and
reporting
Horizon scanning and
frequent assessment of
external conditions
What has changed
We are facing intense
competition in the
convenience market.
Consumers are embracing
new online channels
There is a shift in products
being consumed with an
increased demand for
healthier options. There have
been reductions in tobacco
use and alcohol consumption
Increases to Employers’
National Insurance, alongside
the additional costs of
meeting increasing regulatory
requirements,
What we plan to do
Invest in our customer and
member pricing model
Drive improvements through
our supply chain, enhance
competitiveness and better
support independent retailers
through our Group
Commercial and Logistics
division
Operate efficiently to drive
value competitiveness
Accelerate convenience
growth with store openings
and extended services
47
Agile promotions and
marketing responses
Invest in technology to meet
the changing needs of our
members and customers
Extensive due diligence for
all acquisition activity
Engagement with
Government and industry
working groups
have put pressure on our
price competitiveness
Economic conditions continue
to severely impact real income
for UK households, as well as
significantly increasing our
costs. As a result of these
conditions there is a drive
from consumers to seek out
value
Regularly review our products
and services. For example, we
have grown our quick
commerce business and are
building our healthier ranges
to reflect the changing
demands of consumers
Brand and Reputation
V
Risk description:
we set ourselves high standards in the way we operate our business.
If we’re not perceived to meet these standards, there’s a risk to our reputation. Our Co-op difference means we are owned
by and run for the benefit of our members, and we grow value for them. As a co-operative, we reflect our Values and
Principles in the way we operate our business. We consider wider social and ethical impacts in our decision-making, so that
we can be commercially successful and create sustainable long-term value for our members. If we don’t meet these
standards there is a risk to our reputation.
Reason for the risk
Expectations of our members,
communities and the
customers we serve to deliver
positive social impact
Running our businesses in
accordance with the principles
set out by the International
Co-operative Alliance (ICA)
Scrutiny by the media
Sustained use of third-party
partners to deliver Co-op
branded products and
services
What we do
Create economic value for our
members through the
products and services we
provide
Create social value for the
communities we serve
Create ownership value by
giving our members a say in
how we run our business
Through partnerships, our Co-
op reaches new markets while
giving members more ways to
engage with the business they
own
Report on our ethical priorities
and sustainability progress
through our Social Value and
Sustainability report, charting
our responsible business
performance
and progress
Report progress against both
commercial strategy and
delivery of our vision in our
interim and annual reports
Apply our Ethical Decision-
Making Tool to inform key
business activities and help
make better decisions on
behalf of our members
What has changed
We have continued to embed
our master brand:
owned by
you, right by you.
This is to
emphasise member-
ownership, and to
communicate that we operate
differently to other types of
businesses. In 2025, active
membership has grown by
17% to 7.2m
Our campaigning activity
through the media and
with the Government,
devolved nations and
policing authorities has seen
us shape their approach to
tackling the impacts of retail
crime on shop workers
Our external communications
have established Co-op's
stance on social mobility,
including campaigning to
have social mobility as a
protected characteristic
What we plan to do
Build on our
master brand
owned by you,
right by you
message
Protect our Co-op brand
reputation by focusing on
delivering economic, social
and ownership value to our
members
Deliver commercial value that
attracts new members
and retains our existing ones
Deliver our Co-op’s social
value strategy which will
support
members, colleagues and
customers
Deliver on commitments with
other charity partners in the
communities we serve
Funding and Liquidity
V
48
Risk description:
the Group relies on a combination of cashflow generation and external funding to run its businesses.
A deterioration in economic conditions, a fall in trading performance or unforeseen events could impact the Group’s
liquidity. This would require mitigating action to ensure adequate funding and sufficient available liquidity headroom is
maintained. Such mitigation could include raising additional funds and/or reducing operational expenditure or capital
expenditure.
Reason for risk
Reductions in expected cash
generation
Increases in expenditure
Changes in economic
environment and outlook
Movements in market prices
Changes in tax and tariff
regimes
Access to funding and debt
may be a challenge based on
timing, the market or our
credit rating
What we do
We have a Board-approved
treasury policy in place, which
is actively monitored through
our Treasury Committee
Updates are provided to the
Board covering debt facilities
and liquidity headroom to
ensure adequate capacity to
cover future funding
requirements
Strategic plans supported by
scenario planning
Hedging strategies are in
place to minimise impacts of
interest rate and commodity
movements
What has changed
We operate in a period of
continuing economic and
geopolitical uncertainty,
however, our balance sheet
remains strong
Following the cyber attack in
H1 2025 and the impact on
the Group’s results for the
year, S&P downgraded the
Group by one notch. The
Group had been upgraded by
one notch in 2024
We secured a five-year £350m
committed term loan with our
lenders in June 2025. This
loan will be used to repay our
maturing 2026 bond
From cash, we repaid £112m
of 2025 loan notes that
matured in December
What we plan to do
By July 2026 we will have
repaid all of the old and
expensive debt issued over
ten years ago
In managing our funding and
liquidity risk, we will ensure
that there are sources of new
debt to cover the future
operations of the business
Technology and Cyber Threats
Risk description:
technology risks and cyber threats evolve at speed. Our ability to provide systems which are resilient,
secure by design and run well is critical to serving our members and customers. We rely on Digital, Technology and Data
teams to lead how our Co-op designs, delivers and evolves its capabilities. Disruptions, whether through cyber attacks,
system failures or data loss can significantly impact operations and financial performance, damage our reputation or affect
regulatory compliance.
Reason for the risk
Custody of valuable data
Technology
‑
supported ways
of working
Systems and tools provided
by third-party suppliers
subject to cyber-incidents
Sophisticated and diverse
cyber threat landscape
(including AI)
Increasing data privacy and
data protection regulations.
Member owner, colleague and
customer confidence in
business practices
Increase in cyber-incidents
targeting the retail sector.
What we do
Provide 24/7 security
operation capability with
embedded information
security controls.
24-hour threat and security
event monitoring and
response capability
vulnerability management.
Supplier security due
diligence and assurance, and
regular testing for security
weaknesses
Share best practice and foster
a strong information security
culture
Continually improve security
controls through an ongoing
security improvement
programme
Obtain independent
assessments of our security
posture to define strategy
What has changed
In response to the cyber attack
we accelerated planned cyber
defence investments and
continue to evolve our
approach in line with
emerging threats
Improved protection from
external cyber threats
including increased boundary
controls
Enhanced end user protection
capabilities
We have further matured our
identity solutions
Introduced a phishing
simulation capability
We have improved our Data
Loss Prevention controls
through improved
information, protection and
governance
What we plan to do
Mature our identity and access
management controls
Mature our email security
tooling and implement
enhanced email controls
Introduce controls that
demonstrate to our members
and customers that
communication from the Co-
op is genuine, to reduce
fraudulent activity
Invest in technology
replenishment
Invest in tooling to provide a
unified view of assets in our
overall attack surface
Improve our internal
capabilities on threat
detection
49
Protection of information
owned or managed by our
Co-op
Protection of services that our
Co-op delivers to our
customers, partners and
member owners
Engage with Group leaders to
ensure security controls are
aligned to the business
objectives and risk appetite
Extended cloud security
controls
Implemented additional
security controls into Co-op
Wholesale
People
Risk description:
our ability to attract and retain colleagues with relevant skills and experience while fostering a diverse
and fairer workplace is important to achieve a strong, competitive Co-op. If we do not continue to recruit talent and invest
in our colleagues, then it may impact our operations and our ability to deliver on our strategic plans.
Reason for the risk
Ineffective selection and
assessment processes
Talent attraction
Need for greater diversity
Increased demand for talent
and reduced supply
What we do
Pre-employment screening,
culture fit assessment and
induction for new hires
Ongoing inclusive leadership
behavioural training for all
leaders and managers
Colleague performance
reviews, engagement and
recognition
Talent management reviews
Pay and reward packages are
reviewed regularly to ensure
they remain competitive and
fair
Operate a hybrid working
policy which gives more
choice over how, when and
where our colleagues work
best to balance business and
colleague needs
What has changed
Continued roll out of inclusive
hiring training to hiring
managers
Introduction of diverse
interview panels for some
work level roles
Roll out of All Colleague Code
and
Tackling Non-Inclusive
Behaviours
training
Continued use of talent
forums (
Our People, Our
Talent
) across business units
to drive talent agenda and
mobility and succession
planning, particularly for
senior roles
Launched the Rewarding
Growth Incentive plan for all
colleagues, while making
changes to the senior
leadership bonus and long-
term incentive plan
Testing and preparing for
skills-based organisation
infrastructure, including
mapping all roles in our Co-op
to our skills framework
What we plan to do
Build on our
Ways of Being
and new
Ways of Leading
in
recruitment, performance and
talent processes
Implement skills framework
and Oracle technology to
support talent development
and reskilling as the world of
work changes
Make improvements to the
colleague experience that
reinforce colleague member-
ownership, in line with
Owned
by You, Right by You
Introduce a total reward
benefit platform that will give
colleagues oversight of their
total package and also create
new methods for colleague
recognition
Run development
programmes for specific
minority groups to support the
development and mobility of
diverse internal talent
Misuse and/or Loss of Personal Data
Risk description:
we hold personal information of our members, colleagues and customers. We need to make sure we
protect and manage this responsibly.
Reason for the risk
Member, colleague and
customer confidence
Maintaining trust and
transparency
Compliance with Data Privacy
and Data Protection
Regulations and Standards
What we do
Dedicated
data protection,
data management and
inform
ation security teams provide
challenge, guidance and
oversight
Role-specific mandatory
training and awareness to
manage data protection risks
What has changed
Refreshed governance
framework and suite of
supporting documents to
reflect current legislation and
operational requirements
Evaluation of the implications
of updated Data Protection
Legislation ensuring readiness
and alignment
What we plan to do
Following the cyber attack in
April 2025, we continue to
invest in our security
capabilities and scenario
exercising
Apply, embed and assure
requirements outlined in the
Data Use and Access Act 2025
50
Ability to exercise individuals’
personal data rights and
freedoms
Ensuring personal data is
managed and used lawfully
and ethically to grow the
business
Personal data processed on
our behalf by third parties
and promote ethical data
usage
Data protection impact
assessments for new systems,
processes or business
activities, or changes to
existing ones
Maintain strategic
relationships with Government
bodies and third parties
Strengthened accountability
and escalation mechanisms
through key stakeholder
alignment
Full review of data protection
controls and testing
procedures
Detailed review of all records
of processing activities to
ensure accuracy and
completeness
Expand assurance activities to
provide visibility of risk,
compliance, performance and
areas requiring improvement
Health & Safety and Security
Risk description:
we have a legal duty of care to provide safe environments for colleagues, members and the public.
Failure to uphold this duty, through unsafe practices, inadequate controls or poor response to threats, could result in
serious harm, criminal prosecution, reputational damage and loss of licence to operate.
Reason for the risk
Our legal obligations include
the Health and Safety at Work
Act 1974, RIDDOR 2013 and
other sector-specific
requirements
We operate in environments
where safety, crime
prevention and emergency
preparedness are critical to
protecting people
and maintaining our licence
to operate
What we do
Co-op-wide health, safety and
security frameworks define
how we implement and report
on controls
We monitor and oversee
issues through committees of
subject matter experts
Our performance is published
in our annual Social Value and
Sustainability report
A comprehensive set
of minimum standards drive
the design of management
controls required to mitigate
risks, ensuring consistency
and alignment with legal and
regulatory obligations
We continue to manage risk at
our Co-op through a three-
line model, which provides
clear accountability and
assurance by separating risk
ownership, oversight and
independent audit. This
structure ensures robust
governance and confidence in
our controls
What has changed
Crime in our stores has
reduced across assaults,
burglaries and overall crime.
However, high levels of
shoplifting remain a concern
and impact colleague
wellbeing
Proposed amendments to the
Police Crime Sentencing Bill,
including a standalone
offence for assaulting retail
workers, are currently at the
committee stage in the House
of Lords
Continued investment in
security measures such as
secure kiosks, product
protection and smart cash
solutions
Retail Crime
Action
remains active
alongside our new
Tackling
Retail Crime Together
strategy
What we plan to do
Continue our
Safer
Colleagues, Safer
Communities
programme,
integrating security,
wellbeing, campaigning and
social responsibility
Conduct horizon scanning for
health and safety legislation
changes and share insights
with specialist teams
Enhance health and safety and
crime data systems to improve
intelligence and proactive risk
management
Benchmark crime levels
against sector data when
British Retail Consortium and
Association of Convenience
Stores reports are published
Resume expansion of external
police partnerships targeting
prolific offenders, addressing
capacity challenges that
delayed rollout in the first
quarter
Onboard a new trauma
support provider
to assist colleagues impacted
by crime, accidents and
injuries
Supply Chain and Operational Resilience
V
Risk description:
if we are unable to prevent, adapt to or respond to a major failure or external event to a key part of our
business or supply chain, it could significantly affect the availability and quality of products and services delivered to our
members, colleagues, customers and partners.
Reason for the risk
What we do
What has changed
What we plan to do
51
Unpredictable external events
like severe
weather, pandemics and
significant geopolitical events,
as well as food fraud risks
Efficiency of logistics network
processes, infrastructure and
resource capacity
Challenges post-exit from the
single market and customs
union, structural changes to
the economy, trade deals and
national infrastructure
Supplier capacity and
preparedness for cross-border
processes
Variability in customer and
network demand leading to
supply pressures and service
instability
Established business
disruption planning and
testing, including incident
management processes
Regular disaster recovery
testing and review of IT
service levels to ensure
resilience to external sources
of disruption
Regular strategic review of our
network to meet future
demands and growth
aspirations
Engage with industry working
groups, Government and
information exchanges to
support joint responses with
key stakeholders
Manage goods moving from
Great Britain to Northern
Ireland through the Windsor
Framework’s ‘green lane’
Employ a food authenticity
management system, horizon
scanning for potential
changes in external events
and regulations,
risk mitigation and a robust
product testing programme
Work closely with the National
Crime Agency, the Food
Standards Agency, the Food
Intelligence
Information Network and the
British Retail Consortium to
underpin the integrity of
our products
Processes are in place to
assess supplier performance,
allowing for early intervention
where supply chain processes
are impacted
During the year, we were the
victim of a sophisticated cyber
attack which caused major
disruption to our Food
business operations
We strengthened
Funeralcare’s core processes
to support greater resilience
During the year we introduced
an on-shelf availability solution
to help improve reporting and
insight for our operations and
supply chain
We launched system
improvements designed to
provide better visibility of
store stock levels that
previously relied on twice
yearly stock counts
We worked with our suppliers
to prepare for the delivery of
the delayed deforestation-free
regulation obligations. In
addition, we ensured they
were able to comply with the
further EU labelling
requirements that went live
during the year
We set up the Group
Commercial and Logistics
(GCL) business, a multi-
channel supply platform
We undertook a food stock
availability audit alongside
third-party review of
forecasting and replenishment
to identify improvement
opportunities to create a more
resilient supply chain, and we
have set up a programme of
change to action
improvements in 2026
We have implemented a SAP
system to ensure our core
enterprise resource planning
capability is updated with the
latest technology to improve
resilience and forecast
accuracy
Learnings from how we
managed the cyber attack and
investment in business
resilience capabilities will
ensure we are future-proofed
to maintain critical operations
during systemic shocks
We continue to prepare for
the planned deposit return
scheme legislative changes
including actively providing
feedback to Government on
grocery industry impacts of
proposed legislation design
particularly around devolved
nation complexities
We continue to evolve our
supply chain and logistics
system architecture to help
manage the complexity of our
network and drive forecast
accuracy
We will embed our Group
Commercial and Logistics
(GCL) business, to help build
strong supplier relationships
and more efficient ways of
working to drive better value
and services for our customers
and partners
We will continue to work with
our suppliers to minimise the
supply chain disruption
caused by geopolitical events
Continue our support for
British farmers though our
sustainability fund
Regulatory Compliance
Risk description:
we are subject to laws and regulations. Failure to comply or respond to changes could impact our
reputation through regulatory fines and sanctions, our license to operate and our profitability.
Reason for the risk
New and updated laws and
regulations from the
What we do
Horizon scanning for
emerging changes on the
What has changed
The Employment Rights Act
2025 bolstered employee
What we plan to do
Continue to strengthen
compliance frameworks and
52
Government and the devolved
nations can impact our Co-op
Our businesses provide
financial and legal products
and services which are
regulated by the Financial
Conduct Authority (FCA) and
the Solicitors Regulation
Authority (SRA)
There are codes and
regulations that apply to our
Food business including the
Groceries Supply Code of
Practice (GSCOP)
regulatory landscape,
taking appropriate action and
feeding into consultations
where applicable
We have colleagues with
relevant expertise,
robust processes and controls
to ensure the products and
services we provide comply
with all relevant laws and
regulations
There are processes
and a charter in place to
engage with suppliers and
remain compliant with
GSCOP
Established risk and
compliance capability across
our businesses
Mandatory regulatory and
legislative training for relevant
colleagues
Regular cross-functional
review and monitoring of
regulatory landscape,
including tracking of delivery
plans and assurance reviews
rights including (i) restricting
employer flexibility on zero-
hour contracts and the
practice of ‘fire and re-
hire/replace’; (ii) reducing the
employment period from two
years to six months for unfair
dismissal qualification; (iii)
introduced minimum family
friendly practices and fair pay
requirements; and (iv) added
trade union powers and
reform including the
establishment of
the Fair
Work Agency
From 1 June 2025 single use
and disposable vapes were
prohibited from sale and from
1 October 2026 a new Vaping
Products Duty will be
introduced
Under the Digital Markets,
Competition and Consumers
Act 2024, consumer
protection was extended to
include a further banned
practice of fake reviews.
Further price protection
legislation was introduced
around drip pricing practices
which are misleading as to the
total price payable. The
Competition and Markets
Authority was granted
extended enforcement
powers for both consumer
and competition regulation
horizon scanning in response
to increasing regulatory
requirements on our
businesses. We are vigilant of
new legislative proposals
around High Fat Sugar Salt
products; farming and food
security; environmental
regulation including deposit
return schemes; and food
labelling (for example as
regards EU food import and
export (Windsor Framework)
and deforestation regulations.
We also anticipate further
CMA guidance on the
Controlled Land Order
Preparation is underway to
ensure we comply with the
Financial Reporting Council’s
new disclosure requirements
Pre-need Funeral Plan Obligations
Risk description:
the measurement of our pre-paid funeral plan obligations is sensitive to changes in several factors.
Adverse movements could result in lower-than-expected funds being available, and the business receiving a lower amount
for each funeral plan redemption or result in individual contracts becoming onerous.
Reason for the risk
Changes in the cost of
providing a funeral or
expected inflation on funeral
costs
Underperformance of assets
held to meet funerals
Changes in long-term interest
rates
What we do
Most funds are invested in
whole life insurance policies
with guaranteed minimum
returns
Regular stress testing,
actuarial modelling and
monitoring of risk positions
versus risk appetite
Annual assessment of key
assumptions and annual
actuarial valuation by external
actuaries
Monitoring and oversight by a
senior committee of
What has changed
Investment returns will remain
a risk and opportunity due to
the wider economic and
political climate
Returns in 2025 continued to
be high. They were broadly
flat on 2024, and significantly
above the longer-term
average of circa £50m per
annum.
However, we remain exposed
to the possibility of potential
movements in market
conditions
What we plan to do
Regularly review
and improve the methodology
and assumptions used in our
actuarial models
Continue to monitor the
required levels of funding and
FCA metrics
Continue to monitor our
investment mix against our
risk appetite
53
specialists,
business leaders and advisers
Monitoring of Financial
Conduct Authority (FCA)
reporting requirements (Core
Capital, Liquidity and General
Solvency)
Sustainability
Risk description:
social and environmental factors, at a local and global level, affect the way we run our business
operations, the products and services we provide and our financial performance. If we fail to anticipate and build resilience
across our business and supply chains to respond to the physical and transitional risks of climate change, unethical labour
practices and nature loss, amongst other interlinked factors, we could miss our Net Zero goals and might not achieve our
financial targets. Running our Co-op in a sustainable manner unlocks new opportunities to protect and create value for our
members, customers and the communities we work with.
Reason for the risk
Physical and transitional
climate and nature related
risks impacting supply chains,
livelihoods and economic
growth
Changing political views,
policies and regulations
towards sustainability
impacting long-term planning
Rapid sustainability innovation
and changing expectations
and attitudes of our members,
customers, suppliers and
partners
Living up to our co-operative
Values and Principles in a
highly competitive
environment
The technologies and/or
infrastructures required to
achieve Net Zero are
inaccessible or unaffordable
Increasing risk of human rights
and modern slavery issues in
global supply chains
What we do
Our sustainability risks are
each owned by our Group
leaders. Each risk has
identified controls in place to
mitigate their impact and
likelihood, and we conduct
regular reviews to identity
emerging risk and regulatory
developments
We have a robust human
rights due diligence
programme spanning our full
Co-op that supports our
supplier base in identifying
and tackling human rights
issues, including modern
slavery
Work with suppliers and
partners to continuously test
and learn from leading
sustainability practices and
building supply chain
resilience to adapt and
mitigate for climate change
and nature impacts
Continue to lead and to
actively participate in key
multi-stakeholder initiatives on
sustainability, including the
Government Net Zero
Council, co-chaired by our
CEO
What has changed
We are evolving and
strengthening our risk
management framework that
enables our functions and
businesses to identify and
manage our risks, including
sustainability risks, to grow
and protect more effectively
50% of our Purchased Goods
and Services (Scope 3.1)
emissions are now covered by
suppliers with validated
science-based targets
We continue to deliver
impactful sustainability
investments, including our
new Farming Sustainability
Fund and we have gained
credible third-party
recognition for our
responsible sourcing
programmes
We have completed a review
of Co-op’s most material
nature risks which will inform
our Co-op’s Nature Strategy
What we plan to do
We will continue to evolve our
Sustainability Plan to reflect
changing risks, opportunities
and commercial realities,
ensuring it remains robust and
relevant
We will embed robust
sustainability metrics into our
Group Strategy and
investment frameworks, to
continue to protect and grow
our Co-op in a sustainable
manner
We will strengthen internal
controls, governance and
analysis to drive clear
accountability for our
Sustainability Plan, prioritising
the most impactful and cost-
effective interventions
We will build a clear roadmap
of action, with measurable
targets across our strategic
supply chains, to contribute to
nature’s recovery
Climate-Related Financial Disclosures
As a large organisation, our Co-op is committed to complying with the Government’s
mandate to disclose climate-related financial information. You can find this disclosure in
our
Directors’ Report
.
54
Modern slavery
We have a long-standing commitment to protecting human rights in the UK and overseas.
We welcomed the introduction of the Modern Slavery Act in 2015 and remain committed
to providing an open and honest account of what we are doing to prevent modern slavery
in our supply chains and business. You can read more about our approach to ethical
trading – and how we manage the risks related to tackling our exposure to modern slavery
in our food supply chains – in our
Modern Slavery statement
.
Provision 29 of the UK Corporate Governance Code:
readiness for changes
Revisions to Provision 29 of the Code will require us to include a declaration on the
effectiveness of our material controls.
This declaration will be included in our annual report for the year ending 2
January 2027.
It will set out the process we use to identify and assess these material controls.
There is a programme of work in place to meet the requirements of the provision, and our
Risk and Audit Committee has been updated.
Along with meeting the requirements of the Code, we have sought to make the work of
practical use and benefit to the business. Our definition of key controls has been widened
to include policies, processes and projects.
Emerging risks
Through horizon scanning, we monitor emerging risks and opportunities for our Co-op
and across our businesses and functions where the full extent and implications of a risk
may not be completely understood but needs to be tracked.
We regularly evaluate changes to our risk profile triggered by new or unexpected events
and respond to them at a function, business or group level with the support of our
business continuity and legal teams.
Emerging risk
We protect value and grow by…
Political risks
Intensifying geopolitical tensions persist. A
realignment of global relationships
is creating uncertainty. This instability has the
potential to impact our supply chains and
operations, and our ability to create value for
our members.
Working with suppliers and partners and
having robust business continuity plans in
place. We actively engage with relevant
Government departments and industry
bodies. This helps us to anticipate and
influence policy and regulatory changes that
could impact our operations.
55
The Government continues to introduce legi
slation that will lead to an increase in our
operating costs and is likely to introduce
more.
Economic risks
Global economic volatility continues to pose
risks. While UK inflation has held steady, it
continues to impact household and business
costs. Uncertainty around future tax policy
could further dampen consumer and
business confidence.
Additionally, trade tensions are likely
to contribute to broader
economic pressures across our
markets, suppliers and partners.
These pressures, combined with persistent
supply chain disruptions and subdued
investment, may affect our ability to
generate sustainable value.
Our member-owned model means we can
take a longer-term view than our
competitors; we aim to create a strategically
commercially viable and sustainable
business.
Our financial planning and risk management
processes are designed to absorb volatility
and maintain operational resilience.
We actively engage with trade bodies to
help us stay informed and up to date on
global developments, allowing us to adapt
our strategies to effectively serve all of our
communities.
Social risks
Shifting workforce demographics continue
to present challenges.
A societal focus on wellbeing, inclusion and
flexible working is reshaping employee and
community expectations.
We continue to invest in inclusive and
flexible working practices to attract, recruit,
and retain talent in a competitive labour
market. Our people strategies are designed
to flex and adapt with regards to community
expectations around wellbeing and work-life
balance for all.
Technological risks
Progression in technology accelerates, our
existing ways of operating and working
become outmoded and impact the
opportunities to create value offered by new
technology.
Cyber threats are escalating, reflected in the
rise in nationally significant incidents over
the past year, which has the potential
cause operational disruption.
Emerging technologies such as generative
AI also introduce new risks, including
Our technology governance and risk
frameworks ensure we remain responsive
and fit for purpose in a rapidly evolving
digital landscape.
Key priorities remain safeguarding member
data, maintaining operational continuity, and
adapting to emerging risks such as AI or
generative AI misuse and potential supply
and value chain vulnerabilities.
56
exploitation by threat actors, data misuse
and bias.
Legal and regulatory risks
The increasing burden of regulation and
legislation continues to present risks to our
ability to grow and protect value in a safe
way.
Differing regulation and legislation across
the UK’s devolved nations, and with the EU,
continues to drive up costs for our Co-op
and impacts our ability to protect and grow
value.
Engaging with Government, its agencies and
industry bodies to ensure compliance is
achieved in an effective way.
We have in place a programme of
mandatory training for colleagues
to ensure compliance with existing and
new regulation.
Environmental risks
Climate change and an increase in the
frequency of severe weather events
may impact our capacity to protect and
create sustainable value for our member
owners.
Demonstrating best practice in transitioning
to a clean economy and renewable energy
solutions.
We continue to invest in renewable energy
sources, energy efficiency, waste reduction
and responsible product sourcing and
supplier practices.
57
Governance report
We give members the information they need to play a part in our business and make
informed choices. This section of our report seeks to answer any questions you may have
on the way we’re run – from the people on our Board to our emissions for the year.
58
Introduction to the Governance Report
I am pleased to introduce our 2025 governance report which provides a summary of our
unique governance structure and the key areas considered by our Board and its
Committees during the year.
Our Board
A number of Board changes have taken place during the year and I thought it would be
helpful to summarise these changes in this introduction.
At the start of the year, we welcomed Lord Simon Woolley and Wais Shaifta as
Independent Non-Executive Directors (INEDs), following the departures of Rahul Powar
and Victor Adebowale who stepped down from our Board in February and March 2025
respectively.
Margaret Casely-Hayford reached the end of her term as a Member Nominated Director
(MND), and we welcomed Mitch Oliver who was elected as an MND in May 2025. We were
also delighted that Sarah McCarthy-Fry was re-elected as an MND.
In August 2025, Wais Shaifta stepped down as an INED to join our operating board as
Chief Growth Officer, leaving a vacancy on our Board. Following a robust recruitment
process, we were pleased to welcome Ronny Gottschlich in January 2026. Ronny brings
extensive food retail experience to our Board.
Shirine Khoury-Haq will step down as Chief Executive Officer on 29 March 2026 and Kate
Allum will be take on the role of Interim Chief Executive Officer effective 30 March 2026.
Our AGM
A highlight of our governance agenda is our Annual General Meeting (AGM) as it
provides a fantastic opportunity for us to engage with you, our member owners.
Our 2026 AGM will take place on Saturday 16 May. Members can join us in person at Co-
op Live, online or at one of our twelve local events.
Plans are already well underway and
further details on how to join us, along with our AGM notice, will be made available at
www.co-operative.coop/agm
Looking ahead
I would like to thank all of my Board colleagues for their support during the last year and
for continuing to maintain the highest standards of corporate governance. As a Board, we
will continue to ensure our Executive team deliver against our strategy and plans, ensuring
co-operative Values and Principles remain at the heart of everything we do.
Debbie White
Board Chair
59
Our Board in numbers
Our Board is made up of twelve Directors who are committed to leading by example and
demonstrating strong commitment to co-operative Values and Principles which are the
foundation of our Co-op.
The composition of our Board is made up of Independent Non-Executive Directors
(INEDs), Member Nominated Directors (MNDs) and Executive Directors. The diagrams
below provide an overview of the Board’s composition as at 3 January 2026.
Board gender diversity
Board ethnic diversity
Board balance
Board tenure
46%
36%
18%
INED
MND
Exec
0
1
2
3
4
5
0-3 years
4-6 years
7-9 years
Chair
MND
INED
27%
73%
Men
Women
73%
27%
White
Ethnically Diverse
60
Meeting attendance
Directors’ attendance at scheduled Board and Committee meetings in 2025 is set out
below. Additional meetings of the Board and Committees were also held as and when
circumstances required them to meet at short notice. The table only captures attendance
where Directors attended Committee meetings in their capacity as a Committee member.
The number in brackets show how many meetings each Director could have attended.
When we’re setting meeting dates, we always take into account Directors’ availability.
However, with a large Board, we cannot always find dates all can attend.
Director
Board
Risk and Audit
Committee
Nominations
Committee
Remuneration
Committee
Debbie White
7 (7)
2 (2)
Victor Adebowale
25
0 (2)
2 (2)
Moni Mannings
6 (7)
1 (2)
5 (5)
Margaret Casely-Hayford
26
3 (3)
1 (1)
2 (2)
Luke Jensen
7 (7)
5(5)
Rahul Powar
27
2 (2)
Sarah McCarthy-Fry
7 (7)
5 (5)
1 (1)
Christine Tacon
7 (7)
3(3)
Kate Allum
7 (7)
2 (2)
5 (5)
Shirine Khoury-Haq
7 (7)
Adrian Marsh
7 (7)
5 (5)
5 (5)
Rachel Izzard
7 (7)
Wais Shaifta
28
3 (4)
0 (1)
Simon Woolley
29
6 (7)
2 (3)
Mitch Oliver
30
4 (4)
Denise Scott-McDonald
31
2 (2)
25
Reached the end of their term on 27 March 2025.
26
Reached the end of their term on 17 May 2025.
27
Stepped down from the Board on 25 February 2025.
28
Stepped down from the Board on 18 August 2025.
29
Appointed to the Board on 25 February 2025.
30
Appointed to the Board on 17 May 2025.
31
Not a Director, but is a member of the Nominations Committee by virtue of her role as Council President.
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Our Directors’ skills and experience
All of our Directors, whether INEDs or MNDs, are required to meet strict membership and
eligibility criteria. We look for expertise in running a business of the size and complexity of
our Co-op, as well as a strong commitment to co-operative Values and Principles.
Debbie White
Chair
Appointed as Chair in January 2024
(Independent Non-Executive Director and Chair Designate from August 2023)
Committee Membership
Nominations Committee (Committee Chair from January 2024)
Skills and experience
Debbie is an experienced Non-Executive Director. She is the Senior Independent Director
of Spire Healthcare Group plc and was previously a Non-Executive Director of Howdens
Joinery Group plc. Debbie sits on the boards of Xanitos LLC, PAVmed Inc, Lucid
Diagnostics Inc and APCOA.
Debbie’s executive career most recently included roles as Group Chief Executive of
Interserve Group and Global CEO for healthcare and government at Sodexo. Debbie
started her career as a Chartered Accountant with Arthur Andersen (UK), before joining
AstraZeneca where she held a range of financial roles. She later joined PwC Consulting
where she worked across a number of sectors in a global capacity.
Debbie is Honorary Treasurer and a trustee of Wellbeing of Women, a UK charity which
funds research into women's reproductive and gynaecological health. Debbie is also a
Trustee of Place2Be, a children’s mental health charity with over 30 years’ experience
working with pupils, families and staff in UK schools.
Shirine Khoury-Haq
Chief Executive Officer – Shirine will step down as CEO and Executive Director on 29
March 2026
Appointed as CEO in August 2022
(Interim CEO from March 2022)
Skills and experience
Shirine will be Group CEO until 29 March 2026, and will have acted as a Director on the
Board from August 2019 until 29 March 2026. Shirine joined Co-op in August 2019 as
Chief Financial Officer and later also became Chief Executive Officer of Life Services,
leading Co-op Funeralcare, Insurance and Legal Services.
62
Before joining Co-op, Shirine was Chief Operating Officer for the Lloyd’s insurance
market, comprising more than 50 leading insurance companies operating in over 200
countries. Shirine also led the digital modernisation programme for the wider London
insurance industry.
In addition to holding senior positions at IBM, McDonalds and the insurer, Catlin Group,
Shirine has worked in a number of regulated sectors in the UK and overseas including
retail, IT, pharmaceuticals and consumer goods.
Shirine was previously a Non-Executive Director and Chair of the Audit and Risk
Committee at Persimmon plc and a Non-Executive Director at the Post Office.
Rachel Izzard
Chief Financial Officer
Appointed as CFO and Executive Director in June 2023
Skills and experience
Rachel joined the Board in June 2023 as Group CFO, and has responsibility for Finance,
Property and Sustainability functions.
An experienced board leader, Rachel has a strong background in financial stewardship
and developing and leading teams through complex change to land strategic business
outcomes.
Rachel has over 30 years’ experience in both consumer-facing and business-to-business
organisations, including as CFO and CIO at Aer Lingus, where she played a key role in a
successful turnaround of both customer proposition and financial performance. She was
also CFO of IAG Cargo, co-founding the business following the separation of the cargo
operations of British Airways and Iberia.
Earlier in her career, Rachel also held a range of senior airline leadership roles across
Australia, Asia and North America. She is a Non-Executive Director of Raspberry Pi, having
joined their board in 2022, also chairing their Audit and Risk Committee.
Moni Mannings OBE
Senior Independent Director
Appointed in January 2024
Committee membership
Nominations Committee
Remuneration Committee (Interim Committee Chair from 30 March 2026)
Skills and experience
63
Moni is a qualified solicitor who, until March 2016, held the position of senior partner at
Olswang LLP, an international law firm. With over 30 years of experience in legal practice
as a banking and finance lawyer, Moni established and led Olswang’s international
banking and finance division, and served on the firm's Board for 13 years.
Moni is the Independent Chair of the Honours Diversity and Outreach Committee, Senior
Independent Director at Land Securities Group plc, and a member of The Takeover Panel.
Moni has held Non-Executive Director roles at several major companies including easyJet
plc, Hargreaves Lansdown plc, Investec Bank plc, Polypipe Group plc, Dairy Crest Group
plc, Breedon Group plc, and Cazoo Group Ltd, and served as Deputy Chair of Barnardo’s.
Moni founded EPoC, a network promoting people of colour on boards, and sits on both
the Parker Review Committee and the board of St Mark’s Hospital Foundation charity.
Kate Allum
Member Nominated Director (until 29 March 2026)
Elected in May 2021
Kate will assume the role of Interim Chief Executive Officer and Executive Director
effective 30 March 2026
Committee membership
Nominations Committee (until 29 March 2026)
Remuneration Committee (Committee Chair until 29 March 2026)
Skills and experience
Kate has extensive experience at board level, holding a variety of senior executive and
non-executive leadership roles in the commercial sector, across a wide variety of
companies, cultures and countries.
Kate’s previous executive experience includes serving as Chief Executive of Cedo Limited
and First Milk Limited, the largest UK-owned dairy co-operative. She has also held a
number of non-executive directorships and is currently on the board of Business Stream,
Chair of Ballater Community Trust and Chair of The Scottish SPCA.
Sarah McCarthy-Fry
Member Nominated Director
Elected in May 2019
Committee membership
Risk and Audit Committee
Nominations Committee (from 25 March 2025)
Skills and experience
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As a committed co-operator for over 25 years, Sarah has previously served as a local
Councillor and as a Labour and Co-operative MP, representing Portsmouth North. As a
Government minister in HM Treasury, Sarah was responsible for personal savings policy
and financial inclusion including Credit Unions. As schools minister, she led the
development of apprenticeships policy and partnerships with businesses and schools.
She is a former Finance Director at GKN Aerospace, a global engineering company and a
former Chair of the Employment and Skills Board for the Solent Local Enterprise
Partnership. Sarah is a Trustee and Treasurer of the Parliamentary Outreach Trust.
Adrian Marsh
Independent Non-Executive Director
Appointed in May 2023
Committee membership
Risk and Audit Committee (Chair)
Remuneration Committee
Skills and experience
Adrian is an accomplished Group Finance Director and experienced Non-Executive
Director with multi-sector expertise. Most recently, Adrian was Group Finance Director of
DS Smith plc where he held the position for ten years. Prior to this, Adrian held senior
finance positions at Tesco plc, AstraZeneca plc and Pilkington plc.
Adrian’s previous directorships include John Wood Group, Greenergy International and
WeConnectStudents.com.
Adrian is a Fellow of the Chartered Association of Certified Accountants and a Fellow of
the Association of Corporate Treasurers.
Luke Jensen
Independent Non-Executive Director
Appointed in February 2024
Committee membership
Risk and Audit Committee
Skills and experience
Luke is an established retail leader with a wealth of experience in the global food retail
industry. Luke is Non-Executive Chair (Interim) of NS&I (National Savings & Investments)
and Non-Executive Director of Hana Group, a world leading provider of fresh ‘on the go’
sushi and pan-Asian Cuisine.
65
Luke previously served as CEO of Ocado Solutions where he led the transformation of
Ocado from a UK retail company to a recognised global technology business. He was also
Group Development Director of J Sainsbury’s plc where he was responsible for online and
all customer-facing digital activities. Luke was previously a Non-Executive Director of Asos
plc.
Christine Tacon (CBE)
Member Nominated Director
Elected in May 2024
Committee membership
Risk and Audit Committee (from 25 March 2025)
Skills and experience
Christine is a Chartered Engineer and an environmentalist with a wealth of commercial
expertise and experience. Christine has held many positions at board level, most recently
as Chair of MDS Ltd, a two-year management training scheme in the food industry for
graduates, and Assured Food Standards who operate the Red Tractor Assurance scheme.
During her career, Christine has held positions at Mars and Fonterra, New Zealand’s dairy
co-op. She also led the Co-op’s farming business, the UK’s largest at the time. She has
served as a Non-Executive Director for organisations including the Met Office and the
Natural Environment Research Council. Christine was also appointed as the first Groceries
Code Adjudicator, responsible for regulating the supermarket sector to ensure fair
treatment for suppliers.
Christine is currently Chair of the BBC Rural Affairs Committee. She is also a trustee of the
Farmers Club Charitable Trust and runs the Women in Food and Farming network.
Christine was awarded the CBE in 2004 for her services to agriculture.
Michele (‘Mitch’) Oliver
Member Nominated Director
Elected on 17 May 2025
Committee membership
Remuneration Committee (from 19 February 2026)
Skills and experience
Mitch (she/they) is an experienced Chair, Vice-Chair, Trustee and executive and non-
executive board member in the commercial and not-for-profit sectors.
She is currently the Chair of UN Women UK, leading the Board to deliver the vision that
every woman and girl should have ‘safety, choice and a voice’, influencing stakeholders
66
from the United Nations HQ to the UK Government and working together with the
grassroots UK community.
She was previously Vice Chair at Stonewall, the UK’s largest LGBTQ+ non-governmental
organisation. Mitch is Executive-in-Residence at Oxford University's Saïd Business School
with a focus on Strategy, Brand and ESG. She is also Chair of The Project PT, an inclusive
health and wellbeing local social enterprise which empowers young people at risk
through movement and exercise.
Previously Global VP of Brand and Purpose at Mars, Mitch moved the reputation of Mars
Incorporated into the top quartile of global peer companies. She has a track record of
building billion-dollar brands that stand the test of time.
Lord Simon Woolley
Independent Non-Executive Director
Appointed on 25 February 2025
Committee membership
Risk and Audit Committee (from 25 March 2025)
Nominations Committee (from 19 November 2025)
Skills and experience
Simon is a political and equalities activist and is currently Principal of Homerton College,
Cambridge and the Deputy Vice Chancellor at the University of Cambridge. Simon also
holds an advisory role with The King’s Commonwealth Fellowship Programme and is a
Non-Executive Director of Police Now Ltd and the Youth Futures Foundation.
Previously, Simon served as an Equality and Human Rights Commissioner, as well as
creating and leading the UK Government’s pioneering Race Disparity Unit.
Simon also founded Operation Black Vote, the internationally renowned campaigning
NGO, working with ethnic minorities in the UK to increase understanding of civic society,
participation in Parliament and public life, and to promote equality and human rights.
Ronny Gottschlich
Independent Non-Executive Director
Appointed on 29 January 2026
Skills and experience
Ronny Gottschlich is a seasoned international retail executive and former CEO of Lidl UK
(2010–2016), where he led a major market repositioning that doubled market share and
revenue.
With over 16 years at the Schwarz Group, he has held senior leadership roles across
multiple European markets before founding Heunadel Retail Advisory in 2017. Today, he
67
advises leading retailers globally – from Europe to the Middle East, Asia and Latin America
– and serves on several supervisory boards, bringing a sharp focus on operational
excellence, growth and pragmatic disruption.
Executive biographies
Shirine Khoury-Haq
Chief Executive Officer (until 29 March 2026)
See Board biographies
Kate Allum
Interim Chief Executive Officer (from 30 March 2026)
See Board biographies
Rachel Izzard
Chief Financial Officer
See Board biographies
Dominic Kendal-Ward
Group Secretary and General Counsel
Dom became Group Secretary and General Counsel in May 2022. He originally joined our
Co-op in 2017 as General Counsel of our insurance business. Dom qualified as a solicitor
in 2006. Prior to joining our Co-op, Dom spent 12 years at the international law firm
Linklaters, working for a wide variety of organisations on corporate advice and
transactions. Dom is a Director of Co-operatives UK.
Other Directors and Executive members who have served during the year:
•
Rahul Powar served as an Independent Non-Executive Director until 25 February 2025
•
Lord Victor Adebowale served as an Independent Non-Executive Director until 27
March 2025
•
Margaret Casely-Hayford served as a Member Nominated Director until 17 May 2025
•
Wais Shaifta served as an Independent Non-Executive Director from 25 February 2025
until 18 August 2025
68
Our leadership and governance structure
As a co-operative, we’re owned by and run for our member owners, not a small group of
shareholders. The more members choose us, the more value we create for our member
owners and their communities. With our members being at the heart of our business, our
unique governance structure has been carefully constructed to ensure they remain at the
forefront of our decision-making.
Role of the Board
Our Board is collectively responsible for promoting the long-term success of our Co-op
for the benefit of our members and the communities it serves. It is responsible for setting
the strategy of our Co-op and overseeing its implementation by our operating board, and
it is committed to ensuring the delivery of the Group’s strategic priorities which are
aligned to our purpose and co-operative Values and Principles.
To achieve this, our Board takes decisions at the highest level that are commercially
sensible and meet the needs of our members. The Board is also responsible for ensuring
that effective internal controls and risk management systems are in place.
While there are several matters reserved for Board decision only, the Board is supported
by three Board Committees which the Board has formally delegated certain governance
arrangements to.
Roles of our Committees
Our
Risk and Audit Committee
has oversight of our Co-op’s financial reporting and how
well we are managing risk.
Our
Remuneration Committee
ensures our senior leaders are fairly and appropriately
rewarded, taking into account the wider pay policy across our Co-op.
Our
Nominations Committee
ensures we have the right Independent Non-Executive
Directors and Executive Directors in place and that the Board as a whole works well.
69
Further detail on the responsibilities of each Committee can be found in their respective
reports or in the Committee Terms of Reference which are available on our website.
Executive Team and Operating Board
The Executive team comprise our CEO, CFO and Group Secretary who are collectively
responsible for managing the day-to-day business of the Society. The Executive team form
part of a wider operating board which brings together our most senior leaders and
decision makers, working collaboratively on what we need to do to run our businesses
effectively and at pace.
National Members’ Council
Our National Members’ Council is a democratically elected body of 100 members. The
Council acts as a guardian of our co-operative Values and Principles and as our members’
representative, holding our Board to account for how the business performs. Council
highlights from 2025 can be found in the
Council’s Annual Statement
.
Wider member engagement
Outside of formal governance, there are a number of ways we ensure our member
owners’ views and needs are considered when making decisions:
•
The President of the Council attends Board meetings at least once a year and is also a
member of the Nominations Committee, ensuring the views of the Council are
represented.
•
Co-op leaders attend Council meetings to provide business updates and respond to
questions.
•
The Group Secretary attends Senate meetings.
•
Meetings are held between our Council leadership team and MNDs.
•
Board Directors regularly attend Council meetings and are represented on the
Council's Values and Principles Committee and on the Business Performance
Committee.
•
Members of the Council and the Board together serve on the Member Nominated
Director Joint Selection and Approvals Committee (MNDJC), to ensure the right
candidates are put forward for election by our members.
•
More details on stakeholder engagement can be found in our
Section 172 Report
.
70
Role of our directors
Role
Responsibilities
Chair
The primary job of the Chair is to be responsible for the
leadership of the Board and ensure its effectiveness in all
aspects of its role. The Chair:
•
Takes overall responsibility for composition and
capability of the Board and its Committees
•
Ensures co-operative Values and Principles are at the
heart of what we do and that business decisions are both
ethical and sustainable
•
Continues to develop the relationship with our National
Members’ Council
•
Sets the tone from the top and makes sure business
culture is clear
•
Makes sure the Board effectively holds leadership to
account
The roles and
responsibilities of
the Chair and Chief
Executive are clearly
set out in their role
profiles, which are
approved by the
Board and available
on our website.
Chief Executive
Officer (CEO)
The CEO is responsible for the leadership and the
operational and performance management of our
organisation within the strategy agreed by the Board.
Chief Financial
Officer (CFO)
The CFO supports the CEO and is responsible for managing our organisation’s
funding strategy, financial and non-financial reporting, risk management and internal
controls and leadership of our finance functions.
Senior
Independent
Director (SID)
The SID:
•
Uses her experience to advise, guide and provide feedback to the Chair
•
Deals with any governance-related issues relating to the Board or the Chair’s
performance and any matters which are not appropriate for the Chair to deal
with
•
Leads on the annual Board performance process and is responsible for leading
the Chair’s annual performance review
•
Acts as the Board’s primary point of contact for stakeholder views and regularly
liaises with our Council
Independent
Non-Executive
Directors
(INEDs) and
Member-
Nominated
Directors
(MNDs)
Our INEDs and MNDs provide independent constructive challenge and external
focus to Board discussions using their professional industry knowledge. They help
set our strategy, oversee commercial and financial performance and meet with
members and our Council to hear their views.
71
How our Board operates
The Board and each of its committees have a scheduled forward plan of meetings to
make sure time is allocated to key areas of our Co-op, and to make the best use of the
Board’s time.
The Board had eight scheduled meetings during the year, held in person and in hybrid
formats. During the year, our Board:
•
Focused on strategy, with a number of deep dives on particular topics presented
throughout the year
•
Held closed sessions between INEDs and MNDs alone without Executive Directors or
the Group Secretary present.
Set out below are the highlights of the matters that the Board considered in 2025. Not all
of the matters the Board considered are listed.
January
Technology*
2024 Board evaluation, results and action plan
Wholesale
Peace and Co-operation
March
Annual Results - year ended 4 January 2025
2025 AGM
Membership*
May
Post-investment appraisals (property and non-property)
National Members’ Council President update
Strategy touchpoint
June
People and inclusion*
Co-operatives UK
Co-op Foundation
Key member activity
Strategy touchpoint
July
Food*
B2B*
Strategy touchpoint
September
Financials (interim results and 6+6
forecast)
Life Services*
Strategy touchpoint
Regulations and Board policy review
Director and Council fees
October
Board strategy day*
November
Risk and compliance
Budget and four-year plan
Property and sustainability*
Key * = Deep Dives
72
Decisions of our Board
Our Board takes decisions at the highest level to ensure the long-term success of our Co-
op. It focuses on the future goals for our Co-op and how those goals should be achieved
in a way that is in the best interests of our members as a whole and in line with our
purpose and co-operative Values and Principles.
How those decisions are put into action is a matter for the CEO, the Executive and the
operating board. The Board then monitors progress and holds leadership to account.
Our Board uses an Ethical Decision-Making Tool when making material decisions to
consider the impact on, and impact of, our members and their communities.
Delegated authorities framework and matters reserved for the Board
Our Board has the power to delegate certain decisions. This may, for example, be to
individual Directors or Board Committees. We have a delegated authorities framework
which is reviewed regularly by the Risk and Audit Committee and approved by our Board.
This sets out defined levels of authority for colleagues.
In line with good governance, the Board has reserved a level of decision-making to itself,
which covers areas including Strategy and Management, Group Structure, Capital and
Borrowing and Financial Reporting and Controls. These are recorded formally in a ‘Matters
Reserved for the Board’ document, approved by the Board.
Appointments to our Board
Appointments to our Board, whether as an INED, Executive Director or MND, go through a
rigorous selection process. Our recruitment process for Independent Non-Executive
Directors and Member Nominated Directors is governed by our Rules and Board
Composition Charter which sets out:
•
Certain requirements for our Board’s composition as a whole
•
Levels of knowledge and expertise expected for individual directors
•
Additional requirements for key roles such as Chair and Senior Independent Director.
For INED selections, our Nominations Committee leads the process, and more details can
be found in our Nominations Committee Report.
The Nominations Committee is also responsible for making recommendations to our
Board in respect of Executive Director appointments. No appointments of Executive
Directors were made during 2025.
Our MNDs are voted for and elected directly by our members. The MND Joint Selection
and Approvals Committee (MNDJC), a joint Board and Council Committee, works with an
independent search firm to oversee the selection process and assess the eligibility, skills
and experience of MND candidates who are put forward to a member ballot. Members
then vote for who they would like to see on our Board.
73
The MND election process takes place before the AGM and the results are announced at
the meeting. The 2025 MND election process was supported by Warren Partners, an
executive search firm.
Terms of office and elections
Our INEDs and MNDs have a maximum term of office of nine years.
Our Executive Directors are employed directly by our Co-op and don’t have a maximum
term of office.
They are all subject to election by our members at the first AGM following appointment
and then subject to re-election every three years. The following Directors will stand for
election or re-election at our 2026 AGM:
•
Our newly appointed INED, Ronny Gottschlich
•
Our SID, Moni Mannings. Whilst Moni is not technically due to stand for re-election
until 2027, in accordance with our Rules and governance best practice, members will
be asked to re-elect Moni at our 2026 AGM to help avoid a situation where over half of
our Board (excluding MNDs) are due to stand for re-election in 2027.
•
Following her appointment as Interim CEO on 30 March 2026, Kate Allum will stand
for election as an Executive Director.
Time commitment and conflicts of interest
Conflicts of interest are situations in which Directors have, may have, or could be
perceived to have, divided loyalties on any issue. All Directors have a duty to avoid
conflicts of interests.
Prior to appointment, Directors are asked to disclose any other appointments they have,
and any potential conflicts of interest. We also carry out a number of other background
checks. Directors must also confirm that they will have sufficient time to do the role. This
obligation continues while Directors remain on the Board and is kept under review. A year-
end disclosures exercise is carried out annually and, as part of this, Directors disclose any
changes or updates to their interests.
There are specific provisions in our Rules to cover any real or potential Director conflicts of
interest. There’s also a Board Conflicts Toolkit which gives guidance on what to do in
potential conflict of interest situations.
The Board remains satisfied that each Director is able to allocate sufficient time to perform
their responsibilities effectively.
Board succession and performance
A succession plan is maintained for the Board and Executive. This plan is based on merit
and objective criteria, as well as promoting diversity. Further information on succession
planning can be found in our Nominations Committee report.
74
An evaluation of the Board and its Committees’ performance is conducted annually,
considering composition, diversity and performance. Further detail on our annual
performance review can be found in our Nominations Committee report.
Risk management
Our Board oversees our risk management framework through the Risk and Audit
Committee. It regularly reviews and agrees risk mitigation plans and responses. Our Board
ensures that risk-based policies and practices are consistent with our Purpose and co-
operative Values and Principles.
More information on risk management at our Co-op and our principal risks and
uncertainties can be found under
Risk Management
.
Our commitments to the environment and tackling climate change are long-standing and
we continue to strengthen our governance processes in line with requirements from the
Taskforce on Climate-Related Financial Disclosure. More detail is provided within our
Directors’ Report
.
Additional governance information
Whistleblowing
Our Board remains comfortable that there are sufficient processes in place to enable
colleagues to raise any issues that they feel uncomfortable about, or that are not in line
with co-operative Values and Principles. Further detail can be found in the
Report of the
Risk and Audit Committee.
Board Code of Conduct
Our Board Code of Conduct sets out the standards of behaviour expected from our
Directors. All Directors must follow the code during their term in office.
Directors’ and Officers’ liability insurance
We have Directors’ and Officers’ liability insurance in place which covers Directors against
any legal action taken against them for doing Co-op business. They also receive an
indemnity from our Co-op for specified liabilities which could possibly arise from them
performing their role.
Independent professional advice and Board support
Our Board can seek the advice or assistance of the Group Secretary, Secretariat and the
wider leadership team. We also have procedures in place so that if any of the Directors
feel they need independent professional advice to enable them to perform their duties
properly, they can ask for that advice and, subject to certain limits, our Co-op will pay.
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Our subsidiaries
Our subsidiaries operate within the strategy and direction set by our Board. There are a
number of rules, policies and procedures (particularly relating to governance and
authority levels) which apply across the whole of our Co-op.
There are three subsidiaries which are treated slightly differently: Co-op Insurance
Services Limited and Co-op Funeral Plans Limited (CFPL) are regulated by the Financial
Conduct Authority (FCA). Co-operative Legal Services Limited is regulated by the
Solicitors Regulation Authority (SRA). Each subsidiary has particular areas of responsibility
for which they are accountable to their regulator. Our Co-op retains general oversight of
these businesses but, in order to satisfy their regulatory obligations, they need to keep a
higher level of independence for their conduct and everyday operational decisions.
Our compliance with the UK Corporate Governance Code
The UK Corporate Governance Code (UK Code) applies to large companies with traded
shares.
Because we are a co-op, we are not required to comply with the UK Code. However, we
believe the general principles of governance set out in the UK Code are key to running a
good business.
For us, it’s the right thing for our Co-op to continue to voluntarily comply with the UK
Code where it can be applied directly to our democratic model and it makes sense for us
to do so. A review of the Co-op’s UK Code is undertaken annually with the results
considered by the Risk and Audit Committee. There are a few areas where we have
chosen not to comply with the Code during the year:
•
In accordance with our Rules, our Directors are not subject to annual re-election to
avoid a situation where all our Directors leave the Board at the same time. It ensures
we maintain continuity and allows for staggering and succession planning.
•
We choose not to adopt one of the methods set out in the Code in relation to
workforce engagement, however, we remain satisfied with the other engagement
mechanisms in place. Examples are included in the section ‘Promoting the Success of
our Co-op’.
•
Our INEDs and MNDs chose not to meet during the year without the Chair present as
there were no matters relating to the Chair's performance or arising from the previous
annual evaluation requiring such a discussion. Our SID gathered feedback on the
Chair’s performance directly from Directors as part of one-to-one discussions.
Our compliance with the Co-operative Corporate Governance Code
We annually review our compliance with the Co-operative Governance Code and are
comfortable that our practices remain consistent with it, are appropriate and offer the
necessary protection to our members.
76
Report of the Remuneration Committee
Introduction from the Committee Chair
On behalf of the Remuneration Committee and the Board, I am pleased to present the
Directors’ remuneration report for our 2025 financial year.
I would like to start by thanking our members for their continued engagement and
support with our Co-op’s remuneration matters. At our 2025 AGM, our Executive
Remuneration Report and our Executive Pay Policy motions were both passed by our
members.
The following report outlines the key decisions made by the Committee in the year. It sets
out how we have implemented our Executive Pay Policy in 2025 and how we intend to
implement it for the coming year to align with our strategy. It also provides an overview of
both Executive Director and wider colleague pay for the year.
The report is divided into the following sections:
•
Remuneration at a glance
•
A summary of the key elements of the Executive Pay Policy, which was approved at the
2025 AGM
•
Annual report on remuneration for 2025.
How the Committee works
The Committee is responsible for determining our Co-op’s pay strategy and the specific
remuneration packages for our Executive Directors. It also has oversight of pay practices
in place for our colleagues across our Co-op.
The Committee’s terms of reference are reviewed annually, making changes in line with
corporate governance development and best practice. The Committee’s terms of
reference are available on our website.
Committee meetings
All members of the Committee are Non-Executive Directors of our Co-op. Our Chief
Executive and Chief Financial Officer are not members of the Committee, but are invited
to attend where relevant, along with our Co-op Chair. This ensures there is alignment with
broader Board decisions.
In 2025, the Committee held five meetings, and the attendance of the Non-Executive
Directors is detailed
in our governance report
.
77
What the committee did in the year
In line with the Committee’s Terms of Reference, the Committee’s time was divided
between the following areas throughout 2025:
February
Assess 2024 performance of Executive
Directors and nominated operating board
members
Approve outcome of 2024 bonus plan
Approve Directors’ remuneration report
Approve payment of 2022 deferred bonus
plan awards
Agree 2025 objectives for Executive
Directors and nominated operating board
members
March
Approve measure and performance
expectations for 2025 long-term incentive
plan
Update on wider workforce pay
June
Review feedback and AGM voting
outcomes and pay strategy focus areas
Review external market trends and
updates
September
Review business performance against all
incentive measures, including
understanding the impact from the cyber
incident
Update on wider workforce pay
Committee effectiveness review
November
Review measures and performance
expectations for 2026 bonus plan
Review of Committee terms of reference
Other committee support
Under its Terms of Reference, the Committee obtains the advice of external independent
remuneration consultants and is responsible for their selection and appointment. The
Committee appointed Deloitte as its independent remuneration advisors, who advise on
market trends and benchmarking for comparable executive roles. Deloitte’s fees for the
2025 performance year were
£30,150 excluding VAT (2024: £64,200 excluding VAT).
Deloitte are a signatory of the Remuneration Consultant Group’s Code of Conduct, which
requires their advice to be objective and impartial. The Committee is satisfied that the
advice it received during the year was objective and independent, based on the
experience of the Committee Members.
Evaluation of committee effectiveness
78
The performance of the Committee is reviewed annually, along with the Committee’s
terms of reference and its activities of the previous year. The review followed the same
process as the main Board and Committee reviews, using the digital evaluation platform
BoardClic.
2025 business performance and variable pay outcomes
Retailers faced continued challenging economic conditions in 2025. However, for our Co-
op, these challenges were compounded by the cyber attack we faced in the year. While
we were able to contain the threat, our actions to safeguard the business severely
impacted on our ability to meet the needs of our customers and members. Once our
systems were fully operational, we continued to see an impact through the year, largely
due to changed buying behaviour in a fast-paced convenience market.
To ensure pay outcomes appropriately reflect individual and business performance
together with our Co-op’s wider economic, environmental and societal impacts, the
Committee has overriding discretion on Executive Directors’ pay. Additionally, the
Committee has the ability to apply malus, clawback and responsible discretion to override
formulaic outcomes of the incentive schemes.
Our 2025 bonus plan has an affordability underpin which must be met to enable any
payment to be made under the plan. This underpin was not met in 2025, so no awards
were made to our Executive Directors or to other eligible colleagues who participate in
the scheme.
The Rewarding Growth incentive plan was launched at the start of 2025 and is Co-op’s first
incentive that all colleagues can participate in. Its purpose is to incentivise all colleagues
to achieve our ambition of growing our operating profit over three years.
The challenges of 2025 mean that on formulaic assessment, the targets to trigger
payment under this scheme for the year were not met. However, the Committee is keen to
recognise the tremendous hard work and effort of all colleagues in an extremely
challenging and difficult year. The way our colleagues responded with resilience and
professionalism to an unprecedented malicious cyber attack was truly remarkable.
As this is our Co-op’s first all-colleague incentive scheme, we are keen that colleagues are
engaged by this scheme and continue to be motivated and focused on recovery and the
growth of our Co-op over the next two years. The Committee has therefore decided to
exercise discretion, and all qualifying colleagues will receive 10% of their maximum
opportunity under the Rewarding Growth incentive plan to recognise all their efforts
during 2025.
In addition to launching the Rewarding Growth incentive plan in 2025, our Executive
Directors and senior leaders were eligible to join the 2025-27 long-term incentive plan
(LTIP). Any decision around the outturn of this plan will not be made until the end of 2027.
The deferred portion of the 2023 bonus plan has now vested and will be due for payment
to senior leaders in May 2026, in line with the scheme rules. Further details of the amounts
that were paid and deferred can be found below.
79
Looking ahead to 2026
When considering the base salaries for our Executive Directors, the Committee remains
mindful of the increases of the wider colleague population, our fairness principles, as well
as overall affordability. As a result, from 1 April 2026, the salaries for our Executive
Directors and Group Secretary will be increased by 2%, which is less than other colleagues
will receive.
For the 2026 bonus plan and 2026-28 long-term incentive plan, there will be no change to
opportunity levels. The performance measures for the 2026 bonus plan reflect our
increased focus on both building financial stability and customer centricity. The
performance measures for the 2026-28 long-term incentive plan continue to focus on
growing our Co-op and improving outcomes for our members.
Committee changes
Wais Shaifta resigned from the Board as a Non-Executive Director and stepped down from
this Committee with effect from August 2025. He has remained with our Co-op, taking up
the role of Chief Growth Officer.
Non-Executive fees
The Non-Executive Director (NED) Fees Committee consists of independent, elected
member representatives. It reviews Non-Executive Director fees, and the responsibility of
the Remuneration Committee to review Chair fees. The NED Fees Committee determined
that an increase of 1.75% from 1 April 2025 was appropriate, in line with the average
percentage increase for senior leaders, and below the average pay increase for the wider
colleague population.
Wider workforce pay arrangements
The Remuneration Committee considers the pay and conditions of our wider colleagues
when making executive pay decisions. Our remit includes oversight of pay arrangements
across our Co-op and we regularly talk about broader colleague pay in our Committee
meetings. Members of this Committee also review colleague feedback made through our
Talkback surveys and attend colleague listening forums to hear directly from them.
We are proud of the investments we have made and continue to make in colleague pay,
along with the wider benefit package. Our customer team members received a 5% pay
increase in 2025. Since 2021, the hourly rate paid to customer team members has
increased by 33%. Over the same period, the increase in base salary for our CEO has
totalled 10%, as illustrated in the charts below:
80
Customer team member hourly rate progression
% change in pay for customer team members and CEO
In addition to paying all colleagues competitively for their role, we provide them with
additional financial and wellbeing support:
•
Giving colleagues access to a market-leading 30% discount on Co-op own-brand
products.
•
£100 Rewarding Growth incentive plan payment for full-time, front line colleagues who
were employed for all of 2025.
•
A generous pension scheme with a matched contribution of up to 10%. Over 75% of
colleagues are members of the pension scheme, up from 72% at the end of 2024.
Further information is available in
our Social Value and Sustainability Report
.
•
As at the end of 2025, over 14,350 colleagues have signed up to the Stream app, with
4,810 colleagues now enrolled into saving towards a rainy-day fund, which is a key
step in creating financial security and independence.
Pay gap reporting
In addition to our statutory reporting of our gender pay gap, we also chose to voluntarily
report our ethnicity pay alongside our socioeconomic pay gap report.
Closing remarks
The Remuneration Committee remains committed to rewarding our Executive Directors
for acting in the interest of all our members, colleagues and other stakeholders, and for
delivering in line with our Co-op’s purpose, strategy and values.
On behalf of the Committee, I would like to thank our members for their input and
engagement throughout the year. We welcome any comments you may have on this
report and hope to receive your support at the 2026 AGM on our remuneration resolution.
Kate Allum
Chair of Remuneration Committee
Kate Allum will step down from the Committee on 29 March 2026 to assume the role of Interim
Chief Executive Officer. Moni Mannings will become Interim Committee Chair, effective 30 March
2026.
81
Remuneration at a glance
Summary of remuneration decisions for 2025
Element
2025 decisions
Salary
•
Chief Executive (Shirine Khoury-Haq): salary increased to £825,000, effective 1
January 2025 (7.3% increase)
•
Chief Financial Officer (Rachel Izzard): salary increased to £535,000, effective 1
April 2025 (3.9% Increase)
•
Group Secretary and General Counsel (Dominic Kendal-Ward): salary increased
to £356,125, effective 1 April 2025 (1.75% increase)
2025 bonus
plan
The scheme underpins were not satisfied, and therefore there are no bonus awards
for the Executive or other eligible colleagues in relation to the 2025 annual bonus
plan
Rewarding
Growth
incentive
plan
The Remuneration Committee exercised discretion to award all colleagues, including
the Executive, 10% of their maximum Rewarding Growth incentive plan opportunity
for the 2025 performance year
Summary of 2025 remuneration outcomes compared with 2024
A full breakdown of the total remuneration for the Executive is reported in the single figure table
below.
82
Summary of remuneration opportunities for 2026
Element
Executive
Other colleague groups
Salary
•
Kate Allum will be appointed as
Interim Chief Executive Officer,
effective 30 March 2026 with a
salary of £825,000. This
increases to £841,500, effective
1 April 2026 (2% increase)
•
Chief Financial Officer (Rachel
Izzard): £545,700, effective 1
April 2026 (2% increase)
•
Group Secretary and General
Counsel (Dominic Kendal-Ward):
£363,300, effective 1 April 2026
(2% increase)
2%: senior leaders
Pay negotiations with our trade union
partners for all other colleagues are yet to
be concluded for 2026
Benefits
Includes colleague discount, life
assurance (4x salary), company car
cash allowance (or car) and private
medical cover
The Interim CEO will not receive a
company car cash allowance (or car)
All colleagues are eligible for Co-op
discount and life assurance (between 1x
and 6x salary)
Eligibility for other benefits is dependent
on seniority/work level
Pension
Pension and/or cash supplement
totalling 10% of salary
The Interim CEO will not receive a
pension or cash supplement
Participation in a pension plan is offered to
all colleagues on a contributory basis. The
maximum contribution is 10% of salary
Annual bonus
plan
Performance is based on 90%
business metrics and 10% on
achievement of personal objectives
Maximum award opportunities of:
•
CEO: 200% of salary
32
•
CFO: 170% of salary
•
Group Secretary and General
Counsel: 110% of salary
All work level colleagues and store
managers are eligible to participate in the
annual bonus plan
Maximum award varies by role
2026 annual bonus plan measures
Weighting
Operating profit
60%
Colleague engagement
10%
Customers and
members
Food transactions
5%
More active members
5%
32
The Interim CEO will not participate in the annual bonus plan.
83
Member participations
5%
Customer experience
5%
Personal performance
10%
Long-term
incentive
plan
Awards are subject to a three-year
performance period. The
performance metrics are aligned to
our strategy
Maximum award opportunities of:
•
CEO: 200% of salary
33
•
CFO: 170% of salary
•
Group Secretary and General
Counsel: 110% of salary
Colleagues in work levels 1-3 participate
in this plan
Maximum award varies by role
2026/2028 LTIP measure
Weighting
Run our Co-op
efficiently
Return on capital employed (ROCE)
30%
Grow our Co-op
Gross merchandising value (GMV)
30%
Our member
owners
Member net promoter score
10%
Total member spend
10%
Supporting our
colleagues
Female representation
WL1-5
2.5%
Ethnic minority representation
WL1-5
2%
Colleague advocacy /
Proud to work for our Co-op
10%
Sustainability
measure
Reduce Scope 1 and 2 emissions
5%
Rewarding
Growth
incentive
plan
Maximum award opportunities over
the remaining two years of the plan:
•
CEO
34
: Their maximum
opportunity over three years is
£1,650,000 and 10% or
£165,000 was awarded for 2025.
Their remaining opportunity for
the last two years is £1,485,000
•
CFO: Their maximum
opportunity over three years is
£875,500 and 10% or £87,550
was awarded for 2025. Their
remaining opportunity for the
last two years is £787,950.
•
Group Secretary and General
Counsel: Their maximum
opportunity over three years is
All colleagues are eligible to participate in
the Rewarding Growth incentive plan
Maximum award varies by role. For full-
time, front-line colleagues, their maximum
opportunity over three years is £1,000
As 10% will be awarded for 2025, the
remaining maximum opportunity over two
years is £900
33
The Interim CEO will not participate in the long-term incentive plan.
34
The Interim CEO will not participate in the Rewarding Growth incentive plan
84
£385,000 and 10% or £38,500
was awarded for 2025. Their
remaining opportunity for the
last two years is £346,500
Recovery
positions
The Executive Director incentive
arrangements are all subject to
malus and clawback provisions
Malus and clawback provisions apply to
the Bonus Plan and LTIP for colleagues in
work levels 1-3
Pay scenario charts
The chart below provides an illustration of what could be received by each Executive
Director based on the implementation of the Executive Pay Policy for the 2026
performance year. These charts are purely illustrative as the actual values will be
dependent on the business performance at the end of the year. The table below the chart
details the assumptions used in each of these scenarios.
Kate Allum
Interim
Chief Executive Officer
Rachel Izzard
Chief Financial Officer
Dominic Kendal-Ward
Group Secretary and General Counsel
Minimum
Fixed pay only (including base salary, benefits and pension)
Target
Includes fixed pay plus 50% of the maximum annual bonus, 62.5% vesting
of the maximum LTIP, 35% achievement of maximum three-year Rewarding
Growth incentive plan opportunity
Maximum
Includes fixed pay plus 100% of the maximum annual bonus, 100% vesting
of the maximum LTIP, 90% achievement of maximum three-year Rewarding
Growth incentive plan opportunity
Minimum
Target
Maximum
100%
100
100
85
Executive Pay Policy
How we look at Executive pay
We are committed to the following approach to pay:
•
We want to pay our Executive at a level that reflects the job they do, but do not want to
overpay. We look at what other similar organisations pay and take this into account.
•
We want to reward our Executive for achieving stretching goals as well as for their
commitment to our co-operative Values and Principles.
•
We want a benefits package that reflects our co-operative purpose.
Summary of Executive Pay Policy
Our current Executive Pay Policy, which was approved by members at the 2025 AGM is
summarised below:
Element
Policy and operation
Operation and performance
conditions
Base salary
Supports the attraction
and retention of the best
talent
Salaries are normally reviewed annually by
the Committee, with the change being
effective on or around 1 April
Salary increases take account of:
•
Individual performance
•
Role, skills and experience
•
Increases being awarded to other
colleagues across the Co-op Group
Salary levels for Executives are benchmarked
against the median of FTSE 50-150 firms
Base salary is paid four-weekly
Benefits
Provides market
competitive and cost-
effective benefits to
support the attraction
and retention of the best
talent
Co-op may periodically review benefits
available to colleagues. Executives are
generally on similar terms to other senior
leaders
Benefits may include a car allowance,
healthcare and insurance benefits. Business
expenses are also reimbursed including any
associated tax
The Committee retains the right to provide
additional benefits depending on individual
circumstance, where considered reasonable
and appropriate, including but not limited to
enable recruitment, retention or relocation
Normal benefit provisions apply to
our Executive Directors, including
car allowance, private medical
cover and life insurance
86
Pension
To provide a competitive
level of retirement
income to support
attraction and retention
to both Executive
Directors and other
colleagues
Pension allowances are set as a percentage of
base salary. The maximum allowance payable
is aligned with the maximum pension benefit
available to the wider colleague population,
which is 10% of base salary
Executive Directors may receive a
cash allowance and/or
contribution to a defined
contribution pension scheme
Annual bonus plan (BP)
Encourages improved
operational and financial
performance and aligns
the interests of Executive
Directors to those of our
members
BP awards are discretionary and determined
by the Committee following the end of the
annual performance period, reflecting
achievement against targets set
The maximum BP opportunity is 200% of
base salary for the CEO
35
, 170% for the CFO
and 110% for the Group Secretary and
General Counsel
Up to 25% of the BP is paid for threshold
performance, and 100% is paid for achieving
stretch targets
The performance measures and
targets for each annual BP cycle
will be set at the start of each year
Payments will be based on a
combination of business and
individual performance
The BP includes performance
underpins to ensure the scheme is
affordable and sustainable
The Committee has discretion to
adjust the formulaic outcomes of
the BP, both upward and
downwards (including to nil) to
reflect any circumstances which
the Committee considers relevant.
Any adjustments will be disclosed
in the relevant Annual Report on
Remuneration
Long-term incentive
plan (LTIP)
The LTIP aims to align the
interests of our senior
leaders, including our
Executive Directors, with
the long-term interest of
members and customers
by incentivising the
delivery of our strategy
LTIP awards are discretionary and are typically
granted each year. Any payment under the
scheme will occur at the end of the three-year
performance period, and is subject to the
achievement of the performance conditions
The maximum annual LTIP opportunity is
200% of base salary for the CEO
36
, 170% for
the CFO and 110% for the Group Secretary
and General Counsel
The Committee may set
performance conditions and
metrics based on delivering
economic, social and member
value
The Committee has discretion to
adjust the formulaic outcomes of
the LTIP, both upward and
downwards (including to nil) to
reflect any circumstances which
35
The interim CEO will not participate in the annual bonus plan
36
The interim CEO will not participate in the long-term incentive plan
87
Up to 25% of the LTIP is paid for threshold
performance, and 100% is paid for achieving
stretch targets, with straight-line vesting
between threshold and stretch
the Committee considers relevant.
Any adjustments will be disclosed
in the relevant Annual Report on
Remuneration
The LTIP includes performance
underpins, to ensure the scheme is
affordable and sustainable
Rewarding Growth
incentive plan
This is a one-off scheme
to provide all colleagues
with the opportunity to
share in the Co-op’s long-
term success in growing
the operating profit of
the business over the
next three years (2025-
2027)
Performance outturns will be determined by
how much of our growth ambition we’ve
achieved in any of the three performance
years.
The maximum opportunity over three years is:
•
CEO: £1,650,000 over three years
37
•
CFO: £875,500 over three years
•
Group Secretary and General Counsel:
£385,000 over three years
In addition to how much of our
growth ambition we’ve achieved,
the scheme includes performance
underpins. For a Rewarding
Growth incentive plan payment to
be made in any relevant
performance year, all the
underpins must be met
The Committee has discretion to
adjust the formulaic outcomes of
the Rewarding Growth incentive
plan, both upward and downwards
(including to nil) to reflect any
circumstances which the
Committee considers relevant
Any adjustments will be disclosed
in the relevant Annual Report on
Remuneration
Existing awards
The Group will honour any existing annual bonus plan and deferred award commitments,
subject to the rules and performance conditions that apply to those schemes.
Malus and clawback
Clawback provisions apply to all of our incentive plans and enable the Committee to claim
back part or all of a payment under these arrangements if our Co-op’s results were
materially misstated, should have been assessed materially differently or where an
individual ceases to be employed by our Co-op as a result of misconduct.
Malus provisions allow, under specific circumstances, that the Committee can decide that
an award which has not yet paid out should lapse.
37
The interim CEO will not participate in the Rewarding Growth incentive plan
88
Payments outside policy
The Committee reserves the right to make any remuneration payments and payments for
loss of office (including exercising any discretions available to it in connection with such
payments), notwithstanding that they are not in line with the proposed remuneration
policy set out in this report where the terms of the payment were agreed (i) before the
policy came into effect or (ii) at a time when the relevant individual was not a Director of
the Company and, in the opinion of the Committee, the payment was not in consideration
for the individual becoming a Director of the Company. For these purposes, ‘payments’
include the Committee satisfying awards of variable remuneration.
Policy for Executive recruitment
The pay package for any new Executive Director will be set using the same policies that
apply to current executives, benchmarked externally by role. This means that the
Committee would set a total pay package that is aligned to what other similar businesses
pay for similar roles, while ensuring that it pays no more than is necessary to secure the
individual. The following additional items of pay may be considered when recruiting an
executive:
•
Relocation
- The Committee will consider contributing towards relocation costs for an
Executive who needs to move home to be closer to their place of work or stay close to
their place of work during the working week. When applicable, this is provided under
a relocation policy that seeks to provide appropriate financial assistance based on the
nature of the move and individual circumstances, without encouraging people to
spend long periods away from family.
•
Giving up outstanding incentive awards
- Under exceptional circumstances, the
Committee may consider compensating a new Executive for incentive awards lost as a
direct result of leaving their previous employer to join Co-op. The exact type and
amount of compensation will vary depending on the incentive plans operated by the
previous employer. Any payments agreed under this policy will be no more generous
than the arrangements lost, will mirror the original terms as far as possible and will
typically be subject to relevant performance criteria.
Policy for Executive leavers
In the event of termination, the Committee will review and approve all payments due to an
Executive with the aim of minimising the costs to our Co-op. Payments will be based on
contractual and statutory obligations, including legal fees. Where negotiated, a
contribution towards career support may be made.
The notice period in newly recruited Executive Directors’ service contracts will not exceed
six months. The Interim CEO’s contract can be terminated by a maximum of one month’s
notice. Other current Executive contracts can be terminated by a maximum of six months’
notice. Where it is better for our Co-op for an individual to remain under a contract of
employment but not to work their notice, they are placed on garden leave and only
contractual payments are made. Where an individual is not required to work their notice
89
and receives a payment in lieu, our Co-op is only obliged to pay base salary. The payment
in lieu would not include any benefits or bonuses.
The Committee can agree that the salary in lieu of the whole or part of the notice period
can be paid in instalments. The Committee has the right to reduce the payments of salary
in lieu of notice by the amount of income from a new role.
The Committee has discretion to determine whether, and to what extent, any part of the
deferred BP payment should be made in respect of the period they have been actively
employed. In exercising its discretion, the Committee will take account of the reasons for
leaving, performance and contractual commitments.
Fees for Non-Executive Directors
Fees for Non-Executive Board directors are determined by the Non-Executive Fees
Committee of Council. Fees are described below.
90
Annual report on remuneration
What did our Executive earn in total in the year?
The ‘single figure’ table below shows the pay received by our Executive during the 2025
financial year.
Shirine Khoury-Haq
Rachel Izzard
Dominic Kendal-Ward
2025
2024
2025
2024
2025
2024
Fixed pay
Basic salary
£824K
£766K
£530K
£489K
£355K
£350K
Taxable benefits
(1)
£3K
£5K
£14K
£14K
£14K
£14K
Pension benefits
(2)
£82K
£77K
£53K
£45K
£35K
£35K
Total fixed pay
£909K
£848K
£597K
£548K
£405K
£399K
Performance-related pay
Bonus plan
(3)
£0K
£682K
£0K
£290K
£0K
£188K
Deferred bonus plan
(4)
£844K
£372K
£179K
£0K
£226K
£65K
Other
(5)
£0K
£296K
£0K
£0K
£0K
£52K
Rewarding Growth incentive plan
£165K
£0K
£88K
£0K
£39K
£0K
Total variable pay
£1,009K
£1,350K
£266K
£290K
£264K
£305K
Single total figure of
remuneration
£1,918K
£2,197K
£864K
£838K
£669K
£704K
1.
Taxable benefits include car, fuel, car cash allowance and healthcare (where applicable).
2.
Pension includes Co-op Defined Contribution pension plan or cash allowance in lieu of pension provision.
3.
2024 Bonus Plan amounts shown represent 50% of the 2024 bonus plan earned award and was payable May 2025. The other 50% is
deferred for two years and paid subject to still being employed by our Co-op and not under notice and the rules of the Bonus Plan.
Subject to the deferred portion vesting, this will be reported in the single figure table for 2026.
4.
Deferred bonus awards relate to the 2023 bonus plan.
5.
Due to the fallow year for deferred bonus payments as a result of the Committee exercising discretion to not make any awards under the
2021 bonus, the Committee decided to put in place a retention arrangement which applied to our Executive Directors and other leaders
who were employed during 2021. The retention bonus vested in December 2024. Rachel Izzard was not employed at the time of grant
and therefore did not qualify for an award.
2025 base salaries
Shirine Khoury-Haq’s salary was increased by 7.3% on 1 January 2025 to £825,000. Rachel
Izzard’s salary was increased by 3.9% to £535,000 on 1 April 2025. Dominic Kendal-Ward’s
salary was increased by 1.75% to £356,125 on 1 April 2025.
2025 bonus plan
While our Co-op exceeded its target for ‘increasing members’ and achieved its stretch
target for the member participation measure in 2025, the affordability underpins of the
2025 BP were not met. Therefore, no bonus awards were made to our Executive or any
other eligible colleagues under the 2025 BP.
91
Performance
measure
Weight
-ing
Threshold
(25%
payout)
Target
(50%
payout)
Stretch
(100%
payout)
Actual performance achieved
Shirine
Khoury-
Haq
Rachel
Izzard
Dominic
Kendal-Ward
Operating
profit/(loss)
50%
£130m
£150m
£170m
(£35m)
Below threshold
0%
0%
0%
Colleague
engagement
10%
73%
74%
75%
71%
Below threshold
0%
0%
0%
Member
participation
20%
302,000
317,000
331,000
335,900
Stretch
0%
0%
0%
Member
perception
52%
53%
54%
47%
Below threshold
Increasing
members
6.66m
6.97m
7.38m
7.21m
Above target
Member spend
£3,458m
£3,646m
£4,001m
£3,453m
Below threshold
Individual
performance
20%
0%
0%
0%
Total % of
maximum
0%
0%
0%
Rewarding Growth incentive plan
For the 2025 performance year, the Remuneration Committee exercised its discretion to
pay all eligible colleagues 10% of their maximum three-year opportunity in relation to the
2025 performance year. The table below details the Rewarding Growth incentive plan
awards for our Executive. Kate Allum will not participate in the Rewarding Growth
incentive plan as Interim CEO.
The payment of the remaining Rewarding Growth incentive plan opportunity depends on
how much our Co-op can grow our operating profit in 2026 and 2027. As the Rewarding
Growth incentive plan is only in place for three years (2025-27), at the end of 2027 any
remaining opportunities under the plan will lapse.
Maximum three-year
Rewarding Growth incentive
plan opportunity
(£’000)
Rewarding Growth
incentive plan award
for 2025
(1)
(£’000)
Remaining Rewarding
Growth incentive plan
opportunity
(2)
(£’000)
Shirine Khoury-Haq
£1,650k
£165k
£0
Kate Allum
£0
£0
£0
Rachel Izzard
£876k
£88k
£788k
Dominic Kendal-Ward
£385k
£39k
£347k
1
Rewarding Growth incentive plan award for 2025 is equivalent to 10% of the maximum three-year opportunity and is payable in May 2026.
2
The remaining Rewarding Growth incentive plan opportunity is the total potential award which can be earned in the 2026 and 2027
performance years.
What deferred bonus plan does the Executive hold?
Prior to 2025, any bonus awarded to our Executive Directors was subject to a 50% deferral for two
years. The deferred bonus awards relating to the 2023 performance year have been reported in
the single figure table above, while the table below details the unvested deferred awards held by
our Executive Directors.
Bonus plan year
Value of deferred bonus award (£’000)
Vesting date
Shirine Khoury-Haq
2024
£682k
May 2027
Rachel Izzard
2024
£290k
May 2027
Dominic Kendal-Ward
2024
£188k
May 2027
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Unvested long-term incentive plan awards
The measures, weightings and performance targets for the 2025-27 long-term incentive plan (LTIP)
are set out in the table below. The scheme will vest at the end of 2027, with any payments being
made in May 2028. Kate Allum will not participate in the long-term incentive plan as Interim CEO.
Performance measure
Weighting
Grow our Co-op
Gross merchandising value (GMV)
- compound annual growth rate
(CAGR) %
25%
Run our Co-op efficiently
ROCE % -
return on capital employed
25%
Our members
Total member spend
- £
12.5%
MNPS %
-
member net promoter score (as measured over four quarters)
12.5%
Sustainability measures
Scope 1 and 2 emissions -
reduction in CO
2
emissions versus 2016 baseline
15%
Supporting our
colleagues
Diversity
- % female representation (WL1-3)
2.5%
Diversity
- % female representation (WL1-5)
2.5%
Diversity
- % ethnic minority representation (WL1-3)
2.5%
Diversity
- % ethnic minority representation (WL1-5)
2.5%
Long-term incentive plan maximum opportunities held by our Executive at year-end
2025
Award scheme
Maximum award
opportunity at the year-
end (£000)
% of salary
Vesting
date
Shirine Khoury-Haq
2025-27
£1,650k
200%
May 2028
Rachel Izzard
2025-27
£875.5k
170%
May 2028
Dominic Kendal-Ward
2025-27
£385k
110%
May 2028
Chief Executive pay ratio
The following table provides pay ratio data in respect of the CEO’s total remuneration (as reported
in the single figure table above) compared with the remuneration of the 25
th
, 50
th
and 75
th
percentile of UK colleagues.
Year
Method
25
th
percentile ratio
50
th
percentile ratio
75
th
percentile ratio
2025
Option C
72:1
71:1
64:1
2024
Option C
87:1
84:1
78:1
2023
Option C
74:1
72:1
65:1
2022
Option C
91:1
76:1
62:1
2021
Option C
76:1
71:1
64:1
2020
Option C
122:1
117:1
102:1
2019
Option C
83:1
76:1
62:1
Under the options provided in the guidance to calculate the pay ratio, we’ve opted to use
option C. This allows us to select comparator colleagues for the 25
th
, 50
th
and 75
th
percentiles. All three options would give us a very similar result, and option C is the most
practical given the size and complexity of our payroll systems.
A large proportion of our colleagues work in frontline roles in our stores, and both the 25
th
percentile and the median comparators are colleague team members in our Food stores.
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The Government pay ratio calculation is based on actual pay received. It therefore can
change a lot, as bonus payments are likely to vary each year, given that they are linked to
both business and personal performance.
Chair and Non-Executive Director (NED) fees
The fees for the Board Chair, Independent Non-Executive Directors (INED) and Member
Nominated Directors (MNDs) are reviewed each year by the NED Fees Committee (which
is a Committee of the Council). The members of the NED Fees Committee agreed that
from April 2025, the fees for Directors should be increased by 1.75%, which was lower
than the salary increase for the wider colleague population. The table below details the
change in fee structure in 2025.
4 Jan 2025 to
31 Mar 2025
From 1 Apr 2025
%
increase
Board Chair
£256,250
£260,734
1.75%
Independent Non-Executive Directors (INEDs)
£61,500
£62,576
1.75%
Member Nominated Directors (MNDs)
£61,500
£62,576
1.75%
Additional fees
Senior Independent Director
£15,375
£15,644
1.75%
Chair of Risk & Audit Committee
£15,375
£15,644
1.75%
Chair or Remuneration Committee
£15,375
£15,644
1.75%
Non-Executive members of our Board as of 3 January 2026
The table below sets out the fees paid to the Non-Executive Directors during the year.
Non-Executive Directors are not paid a pension and do not participate in any of the
Company’s variable incentive schemes. All Non-Executive Directors are entitled to
reimbursement of all reasonable and properly documented travel, hotel and other
expenses incurred in performing their duties, in accordance with the terms of our
Directors’ expenses policy. The NED letters of appointment are available for inspection on
request.
Committee
memberships
Date of
appointment
2025
2024
NED fees
£’000
Committee
Chair / Snr.
INED fees
£’000
Total
£’000
NED Fees
£’000
Committee
Chair / Snr.
INED fees
£’000
Total
£’000
Kate Allum
1
Nominations
Remuneration
2
May 2021
£62
£16
£78
£61
£8
£69
Luke Jensen
Risk and Audit
Feb 2024
£62
-
£62
£54
-
£54
Moni Mannings
Nominations
Remuneration
Senior INED
2
Jan 2024
£62
£16
£78
£61
£15
£76
Adrian Marsh
Risk and Audit
2
Remuneration
May 2023
£62
£16
£78
£61
£15
£76
94
Sarah McCarthy-
Fry
Risk and Audit
Nominations
May 2019
£62
-
£62
£61
-
£61
Mitch Oliver
-
May 2025
£40
-
£40
-
-
-
Christine Tacon
Risk and Audit
May 2024
£62
-
£62
£39
-
£39
Debbie White
Nominations
3
Aug 2023
-
£260
£260
£255
-
£255
Lord Simon
Woolley
Risk and Audit
Nominations
Feb 2025
£54
-
£54
-
-
-
1
Kate Allum will assume the role of Interim CEO on 30 March 2026.
2
Indicates a Committee Chair or Senior Independent Non-Executive Director.
3
No additional fee is paid to the Chair of the Nominations Committee.
Former Non-Executive Directors who left during 2025 financial year
Committee
memberships
Date of
appointment
2025
2024
NED fees
£’000
Committee
Chair / Snr.
INED fees
£’000
Total
£’000
NED Fees
£’000
Committee
Chair / Snr.
INED fees
£’000
Total
£’000
Lord Victor
Adebowale
Risk and Audit
Nominations
Apr 2016
(Mar 2025)
£14
-
£14
£61
-
£61
Margaret Casely-
Hayford
Nominations
Remuneration
May 2016
(May 2025)
£23
-
£23
£61
-
£61
Rahul Powar
Risk and Audit
Remuneration
Jul 2018
(Feb 2025)
£9
-
£9
£61
-
£61
Wais Shaifta
Remuneration
Feb 2025
(Aug 2025)
£27
-
£27
-
-
-
Dates shown in brackets () indicate the date the stepped down from the Board.
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Co-op performance and change in Chief Executive pay
Reported actuals
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Underlying operating profit/(loss) - £'m
£59m
£65m
£43m
£31m
£100m
£57m
£100m
£97m
£131m
(£35m)
£'000
Shirine Khoury-Haq
-
-
-
-
-
£836
£1,571
£1,689
£2,197
£1,918
Steve Murrells
£2,046
£1,895
£1,485
£2,220
£1,469
-
-
Richard Pennycook
£2,373
£872
CEO – ‘single figure’
£2,373
£2,918
£1,895
£1,485
£2,220
£2,305
£1,571
£1,689
£2,197
£1,918
Member views on remuneration
At the 2025 AGM, members approved motions for both the 2025 Remuneration Policy and the
2025 Directors’ Remuneration Report. The voting results at the 2025 AGM were as follows:
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Report of the Risk and Audit Committee
Introduction from your Committee Chair
In 2025, our Co-op dealt with and responded to an external cyber threat, increasing
competitive pressures and delaying the deployment of our new finance system.
These events had significant potential to impact our Co-op, our member owners and
wider stakeholders. Throughout the year, the Committee has continued to monitor the
integrity of our financial reporting, review and monitor internal controls and risk
management, and oversee the work of our internal and external audit teams.
In April 2025, our Co-op experienced a significant cyber incident that disrupted
operations and exposed vulnerabilities in our resilience framework. The actions of
management helped contain the impact of the incident. The Committee has reviewed the
lessons learned from the attack, as well as the actions taken to strengthen preparedness
and future response. The continuing programmes of activity will remain a priority for us.
Similarly, the Committee continued its oversight of the finance function’s technology (SAP)
programme. We received updates from programme sponsors and assurance partners on
progress against plans, the key risks facing the programme, and management’s response
to challenges.
During the year, the Committee has kept a focus on activity to strengthen governance and
ensure robust risk management. The Committee has considered the progress of
management activity undertaken in response to corporate governance reforms, and to
complete the risk transformation activities that will enhance internal control and ensure
compliance with Provision 29 of the UK Corporate Governance Code when it becomes
applicable for the year ending 2 January 2027.
The creation of a Group Commercial and Logistics division is a major development and is
intended to generate future growth. As management further develops its plans, the
Committee will monitor how these are implemented to ensure that associated regulatory
and operational risks are managed appropriately.
During the year, we were advised of a concern regarding the operation of the
whistleblowing hotline. We engaged PwC to perform a review on our behalf. At its March
meeting, the Committee reviewed the findings and have actioned the recommendation to
improve the early flow of information to the Committee Chair.
I remain very grateful for the support of my fellow Committee members who bring their
diverse and deep range of experiences to the work and deliberations of the Committee.
Adrian Marsh
Chair, Risk and Audit Committee
97
Risk and Audit Committee membership and attendance
Our Board has a Risk and Audit Committee (‘Committee’) which oversees Co-op’s financial
reporting and risk management process. The UK Corporate Governance Code (‘the UK
Code’) recommends that there are at least three independent directors on the Risk and
Audit Committee, and we met this recommendation during 2025.
Details of the Committee members and their attendance at meetings during 2025 are
provided in our
Governance Report
. Rahul Powar and Lord Victor Adebowale left the
Committee when they stepped down from the Board (February and March 2025
respectively). Lord Simon Woolley and Christine Tacon joined the Committee in March
2025.
All Committee members are considered by our Board to be independent under the UK
Code, providing objectivity and independent scrutiny.
Our Board is satisfied that Adrian Marsh’s relevant and recent financial experience means
he is qualified to be Chair of the Committee.
During 2025, colleagues regularly attended Committee meetings, including the Chief
Executive Officer, Chief Financial Officer, Group Secretary and General Counsel, Assistant
Secretary, Director of Risk and Internal Audit, Head of Internal Audit, Director of Financial
Control and Reporting and the Head of External Financial Reporting. Our Board Chair also
attended meetings as an observer. Other colleagues attended when asked to do so by the
Committee, and the external auditors attended each session. The Committee also met the
Director of Risk and Internal Audit and the external auditors in private sessions.
What the Risk and Audit Committee does
Financial and regulatory reporting
The Committee ensures that our Co-op’s annual report and accounts, along with other
information on its financial performance, are professionally prepared, and that the report
itself is fair, balanced and understandable. It reviews our financial statements, ensuring
management has followed appropriate accounting standards and made appropriate key
judgements and estimates. It also assesses compliance with financial and regulatory
requirements, including monitoring compliance with the Groceries Supply Code of
Practice (GSCOP).
Risk management and internal controls
The Committee reviews our Co-op’s internal financial control framework and internal
control systems, and monitors any weaknesses identified and how management are
remediating them. It reviews how emerging and principal risks are identified and assessed
and maintains direct oversight of Co-op’s principal risks, including how they are managed
and mitigated.
98
Internal Audit
The Committee monitors the performance of our Internal Audit team. The Committee
reviews the performance of, and helps to set the objectives of, the Director of Risk and
Internal Audit. The Committee also considers and approves the remit of the Internal Audit
team. This includes setting Internal Audit’s assurance priorities and monitoring the
implementation of management’s responses to findings from Internal Audit reports.
External audit
The Committee reviews and ensures the quality, effectiveness and independence of our
external auditor and approves their remuneration. It reviews the findings of the audit
including management’s response to any recommendations. It also monitors the provision
of non-audit services and associated fees in line with the Group’s policy on non-audit
services.
Climate-related financial disclosures and sustainability reporting
The Committee reviews and recommends to our Board the approval of our Social Value
and Sustainability Report, and relevant climate-related disclosures within it, and ensures
that the report is independently verified.
Other
The Committee also monitors our Co-op’s procedures around whistleblowing, compliance
with the Modern Slavery Act and General Data Protection Regulation (GDPR), and
management of pension schemes.
The Committee’s terms of reference give more detail on what it does and can be found on
our website:
www.co-operative.coop/investors/rules
. During the year we undertook a
review of these terms of reference to ensure they remain in line with best practice and the
UK Code.
99
Key activity for the Committee in 2025
This year, the Committee:
•
Reviewed the financial information we provide to our members. The Committee
ensures this information is prepared professionally; that our annual and interim reports
are fair, balanced and understandable; and that the disclosures and key accounting
judgements and estimates are appropriate.
•
Reviewed the findings of the external audit and management’s response to any
recommendations and received regular updates on financial control.
•
Discussed Co-op’s SAP implementation with the programme team, sponsors and
assurance provider to understand progress and any key risks or challenges to delivery.
•
Received updates from management on the cyber incident, including the impact and
actions taken.
•
Reviewed the ongoing activity to transform risk management and internal controls
optimisation, including measures to ensure compliance with Provision 29 of the UK
Code.
•
Approved Internal Audit’s assurance priorities, reviewed the work of Internal Audit and
progress against priorities, and monitored management’s completion of audit actions.
•
Received updates on key topics including the Groceries Supply Code of Practice
(GSCOP), data protection, sustainability, whistleblowing and modern slavery.
Also, an internal review of the Committee’s effectiveness was undertaken again this year.
The review followed the same process as the main Board and Committee reviews, using
the digital evaluation platform BoardClic.
All Committee members, the external auditors and regular attendees completed a
questionnaire covering key governance questions on the operation of the Committee.
The results were discussed by the Committee at its meeting in February 2026. An action
plan has been devised and progress against this will be monitored by the Committee over
the year.
Significant issues relating to the financial statements
When the Committee looked at the 2025 financial statements, it considered all key areas
of judgement and estimation. In all cases, it discussed these with management and our
external auditor and their impact on the full year financial statements.
100
Areas of focus
Going concern and viability
Management continues to monitor our Co-op’s liquidity, borrowings, facilities and
banking covenants to ensure that we have enough financial headroom to continue to run
our business as a going concern. The Committee reviewed the appropriateness of
adopting the going concern basis in preparing the full year financial statements and
assessed whether our Co-op is viable over a longer period, taking into account the
Group’s cashflow forecasts, current levels of debt and availability of future finance. The
Committee has assessed management’s assumptions in financial projections, as well as
stress testing to reflect principal risks and market conditions, and agree that our Co-op is a
going concern.
Cyber impact
Our Co-op was the victim of a sophisticated cyber attack in April 2025. The Committee has
reviewed management’s assessment of the estimated financial direct impact of the
incident and judgement over the presentation of directly incremental costs as non-
underlying items. The Committee also received reports from management around the
work performed on system recovery and reconstruction of data, as well as controls
established to ensure the accuracy and completeness of our financial records.
Property, plant and equipment and right-of-use asset impairment
Our Co-op’s balance sheet includes significant intangible assets and property, plant and
equipment balances. The most significant of these are in the Food business, including our
food store estate. Accounting standards require us to perform an impairment review of
indefinite life intangible assets annually, and other assets where there is an indicator of
impairment. As a result of the impairment reviews carried out at balance sheet date, a
non-underlying impairment charge in respect of food stores has been recognised within
the full year results. The Committee reviewed management’s impairment assessment and
respective outcomes, and challenged the key assumptions that underpin the calculations,
such as the discount rate and judgement taken over the impairment of new stores and
impairment reversals. The Committee also reviewed the relevant disclosures in the Annual
Report and Accounts.
Property, regulatory and legal and self-insurance provisions
Our Co-op makes provisions for probable future liabilities, notably in relation to onerous
contracts associated with leases and dilapidation provisions in respect of our trading and
non-trading properties, as well as in relation to regulation and litigation and self-insurance.
These provisions require significant judgement and estimation in determining whether,
and how much, we should account for as a provision. The Committee reviewed
management’s judgement and estimation underpinning these provisions, satisfying itself
that assumptions used, including around future cashflows and discount rates, were
appropriate.
101
Accrued supplier income (long-term agreements)
We hold long-term agreements with our suppliers which are inherently complex. The
Committee has sought assurance from management at year-end that our methodology
and processes of internal controls are appropriate to ensure that supplier income has
been recognised correctly throughout the year and an accurate cut-off has been achieved
at year-end.
Valuation of insurance contract liabilities (funeral plans)
Our funeral plans are covered by IFRS 17 (Insurance Contracts) and the value of the
insurance liability that we hold on our balance sheet to cover the provision of future
funerals includes material judgement and estimation. The Committee reviewed
management’s key assumptions including economic assumptions on discount and
inflation rates, calculating using actuarial advice. The Committee continued to receive
reports from management around the continual improvements being made to process,
controls and data to ensure the funeral plan liability is calculated accurately.
Pension scheme IAS19 valuation
Our Co-op has a number of defined benefit pension schemes, of which the Pace scheme
is the largest. Management apply judgement over the underlying assumptions (such as
the future growth rate of investments and the death rate of members of the scheme),
which can materially affect the valuation of the pension schemes. The Committee assessed
the key assumptions that underpinned the pension calculations to satisfy itself that they
were appropriate.
External Audit activities
The Committee’s responsibility
The Committee makes recommendations to the Board about the appointment,
reappointment and removal of external auditors (and is responsible for any tender
process when required). It also approves the remuneration and terms of engagement of
the external auditors and assesses the effectiveness of the external audit process. Our
members have the opportunity to vote on the appointment of the external auditors at the
AGM in line with the UK Code.
During the year, the Committee approved the reappointment of EY as our Co-op’s
auditors and approved their fees. EY provide the Committee with relevant reports,
reviews, information and advice throughout the year. All these activities are set out in the
engagement letter.
Independence, objectivity and fees
Our external auditors must be judged to be independent for the audit to be objective, so
we have an External Auditor Independence Policy. We also have a policy about appointing
102
colleagues who used to work for the external auditors and an approach to be taken when
using the external auditors for non-audit work.
The Committee pre-approves all non-audit spend with EY. This spend is capped at 70% of
the average audit fee over the previous three years.
In line with our External Auditor Independence Policy, the external auditors are prohibited
from performing certain tasks including (but not limited to) the following:
•
Bookkeeping or preparing accounting records or financial statements
•
Designing and implementing financial information systems
•
Valuation services
•
Internal Audit services
•
Management functions or some human resource services.
The Committee approved the nature and cost of all non-audit work done by EY for our
Co-op and is satisfied that EY’s non-audit work didn’t affect objectivity in carrying out the
audit.
Details of the amounts paid to the external auditors during the year for audit and other
services are set out in Note 3 to the financial statements.
Effectiveness of auditors
The Committee discussed the effectiveness of EY throughout the year. It reviewed the
outputs of an effectiveness review undertaken by Internal Audit which comprised a survey
of Co-op finance leaders, Committee members and other key stakeholders on EY’s
performance in relation to the 2025 audit. Amongst other factors the review covered
resource, independence and objectivity, communication and quality. Responses
suggested that EY continued to provide a professional, independent and objective
service.
Partner rotation
In 2025, Colin Brown succeeded Chris Voogd as the partner responsible for the audit.
EY non-compliance with rules related to audit partner rotation requirements
On 27 January 2026, EY advised the Chair of the Risk and Audit Committee that the time
limitations under the UK Financial Reporting Council's Ethical Standard (2019) regarding
rotation of partners had been exceeded. After an internal review, EY had determined that
the partner who led the audit for the 52-week period ended 4 January 2025 had
inadvertently exceeded the period allowed under UK audit partner rotation rules and was
not eligible to serve as lead engagement partner for that audit. On 25 February 2026, EY
presented the RAC an overview of its findings and steps to address the matter. The RAC
103
concluded that EY’s independence and objectivity in respect of the audit for the 52 week
period ended 4 January 2025 had not been compromised.
Risk management and internal controls
Our Board and senior leaders are responsible for identifying and evaluating our Co-
op’s main business risks, supported by systems designed to manage these risks efficiently
and effectively. We proactively assess what could go wrong and implement measures to
prevent it, safeguarding our members’ interests, protecting our reputation, ensuring
regulatory compliance and achieving our business objectives.
To support this, we adopt the ‘three lines’ approach. The first line establishes and
maintains appropriate structures and processes for managing operations and risks,
including controls. The second line provides complementary expertise, support,
monitoring and challenge to strengthen risk management. Internal Audit acts as the third
line, providing independent assurance. Our Board holds overall responsibility for ensuring
that effective internal controls are in place, so our Co-op operates in compliance with
policies.
Throughout 2025, the Committee reviewed key aspects of the Group’s risk management
framework, including updates on principal and emerging risks, alignment of risk appetite
to our principal risks, and a deep dive into the execution of strategy and change risk.
In January 2024, the Financial Reporting Council announced revisions to the UK Code. We
voluntarily comply with the UK Code where it can be applied directly to our democratic
model and it makes sense for us to do so. The Committee intends to be compliant with
the new relevant provisions in the timeframes it sets out. The main substantive change is a
new requirement for the Board to make a declaration in the annual report on the
effectiveness of material controls (Provision 29). The Board declaration will be
made for financial years beginning on or after 1 January 2026, i.e. for financial statements
our Co-op will publish for the period ending 2 January 2027.
The Committee has received management updates on the progress of its programme of
work to transform risk management and internal controls optimisation to ensure
compliance with Provision 29 of the UK Code for the period ending 2 January 2027.
The Committee reviewed management plans for a ‘dummy declaration’ in 2026 and a full
declaration in 2027. In addition, the Committee reviewed and endorsed a plan to
strengthen IT General Controls (ITGCs) including establishing a robust and secure IT
control environment, defining the ITGC framework and controls mapping, and setting a
roadmap to achieve resilience.
The Committee also received regular management reports on financial control across our
Co-op, including management’s progress on addressing the external auditor’s control
recommendations arising from their 2025 audit and complex judgement areas, as
discussed above, under ‘
significant issues relating to the financial statements’.
About our internal control framework
104
•
Our controls are designed to ensure that risks are appropriately managed. This
includes risks around the completeness and accuracy of accounting for financial
transactions, as well as for reducing the potential cost from loss of assets or fraud.
Risks and controls are regularly reviewed.
•
We have policies, procedures and training for colleagues, co-ordinating the way things
are done across our Co-op through regular management meetings and other forums.
We also set policies for how we spend our money and how we make sure that the right
approvals are in place. The Committee received updates on mandatory colleague
training during 2025.
•
Our Co-op has a Code of Business Conduct, which sets out how colleagues should act
with members, customers, other colleagues, suppliers, the community and
competitors, in line with co-operative Values and Principles. This code tells colleagues
how they can report any serious wrongdoing confidentially. Several policies support
this code, such as an anti-fraud and theft policy and an anti-bribery and corruption
policy. These policies are also supported by role-specific mandatory training modules.
•
Colleagues receive and provide information on strategy and objectives through their
reporting lines and a formal performance measurement process. Colleagues also
receive regular business updates from our Co-op leaders through various channels.
We also have an external-facing colleague website: coop.co.uk/colleagues.
Internal Audit
Internal Audit is an independent function authorised by our Board through the
Committee. Its main role is to provide professional, objective assurance and insight to
improve the way our Co-op is managed and controlled. Internal Audit continued to adopt
a flexible, dynamic approach to planning in 2025 and regularly re-assessed Co-op’s
assurance priorities. The Committee reviewed and approved these priorities during the
year. The Committee received reports from the Director of Risk and Internal Audit on:
•
The work of Internal Audit and the progress it had made against its assurance
priorities.
•
The impact on the systems of risk and control from Internal Audit findings.
•
The remediation of any issues arising from Internal Audit reports.
During the year, the Committee reviewed Internal Audit reports covering key processes,
systems and controls, and projects and programmes.
The reports have covered a range of different areas and businesses at our Co-op including
food buying value for money, Franchise brand standards, Funeralcare health and safety
and competition law. The Committee also reviewed several reports on key technology
areas including a ‘purple team’ exercise (a collaborative effort which simulates active
cyberattack scenarios), cloud governance, legacy technology estate management and
technology risk management. The Committee also received updates on our finance
105
function’s technology (SAP) transformation programme from both the programme team
and a third-party independent assurance partner.
The Committee reviewed the Internal Audit charter, which reaffirmed the purpose of
Internal Audit, and outputs from Internal Audit’s external quality assessment, carried out
by the Chartered Institute of Internal Auditors, which assessed the team’s conformance
with the Global Standards and UK Code of Practice. The Committee is satisfied that the
Internal Audit team have appropriate resources and continue to be impactful and
effective.
Ethics and compliance
Whistleblowing procedure
To ensure our Co-op follows best practice and operates in line with co-operative Values
and Principles, a whistleblowing policy has again been in place during the year to allow
colleagues to pass on information about suspected wrongdoing. We use an external
independent party to manage our Speak Up service, which allows colleagues to raise
concerns confidentially should they not wish to talk to someone within our Co-op. This
procedure also allows suppliers to report on any suspected wrongdoing. In addition to
Speak Up, reports can be made directly to colleagues at our Co-op. We benchmarked our
external service provider against competitors in 2025 and re-contracted with the
incumbent supplier.
We have a procedure for recording and investigating whistleblowing reports and the
Committee reviewed a summary of whistleblowing cases reported throughout the year.
The Committee considers the whistleblowing procedures to be appropriate for our size
and scale. The whistleblowing policy is included in the Code of Business Conduct and is
available on our internal colleague hub and our website.
Groceries Supply Code of Practice (GSCOP)
During 2025, our Co-op engaged and worked collaboratively with Mark White, the
Groceries Code Adjudicator (GCA), and we continue to demonstrate our compliance with
the Code. The GCA Annual Survey 2025 ranked Co-op seventh out of 14 retailers for
overall Code compliance, with 96% of direct suppliers responding positively. We value the
supplier feedback given in the GCA Survey and management uses the outputs to shape
its continuous improvement plans.
The Committee has kept compliance under review through regular updates from the
Code Compliance Officer. The Committee approved the Annual Compliance Report for
submission to the Competition and Markets Authority, as required by the Groceries
(Supply Chain Practices) Market Investigation Order 2009. A summary of progress in the
year is available in
our Directors’ Report
.
Our Social Value and Sustainability Report and climate-related financial disclosures
(CRFD)
106
The Committee has responsibility for reviewing our Co-op’s approach to sustainability
reporting and social impact accounting.
We review and recommend the approval of the Social Value and Sustainability Report to
our Board, giving it the same importance and focus as the annual report and financial
statements. Our Social Value and Sustainability Report is independently assured.
General Data Protection Regulation (GDPR)
The Committee receives regular updates from Co-op’s Data Protection Officer to ensure
that our Co-op continues to meet its obligations under GDPR. This included an overview
of the effectiveness of Co-op’s Data Protection Compliance Framework, a view of Co-op’s
current overall risk and focus areas for continuous improvement.
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Report of the Nominations Committee
Introduction from the Committee Chair
I’m pleased to present this year’s report which details the role of our Nominations
Committee and the important work undertaken by our Committee during the year.
In 2025, our Committee focused on Board recruitment, Board performance and
onboarding new Non-Executive Directors.
Board changes
There were several changes to the Board during the year.
Simon Woolley and Wais Shaifta joined the Board as Independent Non-Executive
Directors in February 2025, aligning with the departures of Rahul Powar in February 2025
and Victor Adebowale in March 2025. In August 2025, Wais moved to a leadership role in
the Group, and the Nominations Committee subsequently recruited Ronny Gottschlich as
an Independent Non-Executive Director.
Mitch Oliver was elected as a Member Nominated Director in May 2025 following the
conclusion of the term of office of Margaret Casely-Hayford. Sarah McCarthy-Fry was re-
elected as a Member Nominated Director in May 2025.
Board performance review
The Nominations Committee is responsible for overseeing an annual Board performance
review. According to our Rules, this review should be conducted by an external firm every
two years unless the Nominations Committee and the Chair agree otherwise. Currently,
the Nominations Committee and the Chair have agreed to conduct external reviews every
three years with the next external review due during 2026.
The 2025 Board review was conducted internally using the digital evaluation platform,
BoardClic, and was overseen by our Senior Independent Director, Moni Mannings. The
Committee reviewed its own effectiveness and remained satisfied in this regard.
Director induction
Following feedback from the Board, the Committee reviewed and refreshed the structure
and approach for Director inductions. This ensured inductions remain comprehensive and
that newly appointed Directors are equipped quickly for their role.
Other areas of activity
The Committee also continued to deal with all routine matters, including:
•
Assessing whether Directors met the required eligibility and membership criteria
•
Reviewing the composition of our Board Committees
108
•
Reviewing our Committee Terms of Reference and Board Diversity and Inclusion Policy
•
Recommending the election of Directors.
Debbie White
Chair, the Nominations Committee
109
What does our Nominations Committee do?
Our Nominations Committee:
•
Leads the appointment process for Independent Non-Executive Directors (INEDs)
•
Checks and approves the qualifications and commercial experience requirements of
INEDs and Executive Directors
•
Reviews the diversity and experience of our Directors to ensure our Board has a
balanced perspective overall, and can therefore provide effective leadership and
oversight
•
Evaluates Board performance
•
Reviews and recommends succession plans for our Board
•
Submits proposals to the Non-Executive Directors’ Fees Committee in respect of the
remuneration of our Co-op Chair, INEDs and Member Nominated Directors (MNDs).
Two areas outside of our Committee’s remit are MND elections and senior leader
succession. The Member Nominated Directors Joint Selection and Approval Committee
(MNDJC) oversees the election process for MNDs, including who is elected by members.
Our Board maintains oversight of succession plans for our senior leaders which were
reviewed during the year.
Membership and attendance
Details of the Committee members and their attendance at meetings during 2025 are
provided earlier in this report.
Victor Adebowale left the Committee when he stepped down from the Board in March
2025 and Margaret Casely-Hayford left the Committee ahead of reaching the end of her
term on the Board in May 2025. Wais Shaifta and Sarah McCarthy-Fry joined the
Committee in March 2025. Wais Shaifta subsequently left the Committee in August 2025
and was replaced by Simon Woolley. Where appropriate, the CEO is also invited to attend
meetings.
The Committee formally met twice during the year. The Committee maintained dialogue
outside of formal meetings to progress Board appointment activity.
Terms of Reference
The Committee’s Terms of Reference were reviewed during the year and are available at
www.co-operative.coop/investors/rules
110
2025 focus areas
Board recruitment
The Committee engaged the services of Russell Reynolds during the year to recruit our
new INED, Ronny Gottschlich.
The only connection Russell Reynolds has with our Co-op is as recruitment consultants
and there are no relevant connections with individual Directors.
The search firm met with various stakeholders to understand the role requirements with
candidate brief subsequently agreed. The Committee ensured that the process was
formal, rigorous and transparent, and that it was conducted in line with our Board Diversity
and Inclusion Policy. In particular, our Committee ensured that diverse candidates from a
wide variety of backgrounds were included in the shortlists.
The process included interviews conducted by Committee members (including the
Council President). Candidates also met our CEO.
The Committee was unanimous in recommending to the Board the appointment of Ronny
Gottschlich.
Board Skills Matrix
An effective Board requires the right mix of skills and experience. The Committee
continues to utilise an external platform (Board Outlook) to maintain a Board Skills Matrix.
Succession planning
The Board maintains a Board succession plan and is satisfied that the plan remains
sufficiently robust. Senior leader succession is a matter for the Chief Executive (with the
support of our Chief People and Inclusion Officer) in consultation with the Board. Senior
leader succession plans were reviewed by our Board during the year.
Board inductions
All new Directors complete a comprehensive induction programme tailored to them. This
includes meeting all members of the Board and operating board, meeting other key
stakeholders (including the President of the National Members’ Council) and undertaking
visits to our Co-op’s operations.
The Committee used the experiences of the recently appointed INEDs and MNDs to
further enhance the induction offering and to ensure it remains aligned with the demands
of directorship at a large co-operative.
Board performance
The Board performance review provides our Board with an opportunity to reflect on its
performance. In line with best practice, this is carried out annually. All Board members and
regular attendees completed a questionnaire covering seven key areas; purpose and
strategy; board agenda and meetings; talent and culture; board composition and
111
dynamics; the chair; information, reporting and risk management; and the relationship
with the Council.
The results were discussed by both the Board and Nominations Committee during Q1
2026, with an action plan subsequently collated.
The Committee will monitor progress against the action plan. The report and outputs of
the review are shared with the Senate Governance Sub-Committee.
A review of each Board Committee was also undertaken and results discussed with the
respective Committees during February 2026. Any Committee-specific actions will be
overseen by each Committee Chair.
Directors’ fees
Our Committee submits proposals to the Non-Executive Directors’ Fees Committee of the
Council regarding any increases to our Non-Executive Directors’ fees.
The Committee reviewed those fees and recommended fees payable to Group Board
Directors be increased by a cost-of-living element of up to 1.75%. Further detail can be
found in the Remuneration Report.
Re-appointment of Directors
There were no INEDs due for re-appointment during the year.
The Member Nominated Director Joint Selection and Approvals Committee (MNDJC) was
responsible for the MND election process during 2025. This saw Sarah McCarthy-Fry
being re-elected for an additional term and Mitch Oliver elected in May 2025.
Diversity and inclusion
One of our Committee’s priorities is achieving a diverse and inclusive workplace that is
representative of our membership. We are proud that our Board benefits from gender and
ethnic diversity.
We are also pleased to report that our Board continues to exceed the voluntary target set
out in the FTSE Women Leaders Review and the recommendations of the Parker Review.
Diversity and inclusion remained a key area of focus for the Committee during the recent
Board recruitment activity. In accordance with our Board Diversity and Inclusion Policy,
Russell Reynolds are signatories to the Enhanced Code of Conduct for Executive Search
Firms and were given clear direction to create a diverse longlist.
Reviewing our Directors’ eligibility
Our Committee has reviewed the qualifying and commercial experience of our Co-op’s
Directors throughout the year, including membership criteria and eligibility criteria. The
Committee can confirm that our INEDs, MNDs and Executive Directors have all met the
relevant requirements and shown continued commitment to co-operative Values and
Principles.
112
As a co-op, we have two different ways of looking at and assessing the independence of
our Directors, as defined within the UK Code and within our Rules and Board Composition
Charter.
The Committee considers all our INEDs and MNDs to be independent in character and
judgement as per the criteria set out in the UK Code, and therefore at least half the Board
is considered to be independent.
113
Directors’ report
The Directors present their report, together with the audited financial statements for the
period ended 3 January 2026.
Results and distributions
The loss before taxation from continuing operations was £43m (2024: £161m profit). No
interim dividend has been paid for 2025, and members are not being asked to approve
any distribution of profits for the year.
Going concern
As explained in the General Accounting Policies section of the financial statements, the
Directors have adopted the going concern basis in preparing the financial statements.
They have a reasonable expectation that the Group has sufficient liquidity and adequate
resources to continue in operational existence for the foreseeable future, being a period
of at least twelve months post the date of approval of these financial statements.
In making their assessment, the Directors have considered the Group’s most recent
forecasting process and specifically the Group’s profitability, cashflows, committed
funding and liquidity positions for the going concern assessment period, up to 31
December 2027.
The key assumptions underpinning our forecasts are detailed in the going concern basis
of preparation section of the financial statements. Included in these assumptions is the
raising of additional funding in 2026 of £300m from the bond market, to boost our
liquidity position and to keep our Co-op protected from known and unknown business
risks that may arise in the future. This is removed as a sensitivity in our severe but plausible
downside scenarios.
Our Co-op operates with net current liabilities as our working capital cycle means cash
receipts from revenues arise in advance of the payments to suppliers for the cost of goods
sold. We also borrow money from banks and other funding sources, structuring our
borrowings with phased maturities to manage our refinancing risk as well as maintaining
sufficient levels of liquidity for our Co-op. As part of the going concern review, we have
ensured that our forecasts demonstrate compliance with the terms of these agreements,
for example related banking covenants and facility levels.
Although our Co-op has a robust planning process, which reflects the continuing
economic uncertainty and headwinds impacting the group, we have performed additional
stress testing of the going concern basis under severe but plausible downside scenarios.
The results of our stress testing of severe but plausible downside scenarios provided a
reasonable basis to support the Directors’ conclusion over going concern.,
114
Longer term viability
The Directors have assessed the viability of the Group and our ability to continue
operating and comply with covenants over a longer three-year period. We believe a three-
year period to 31 December 2028 is appropriate for this viability statement, reflecting the
dynamic nature of our largest business, Food.
This aligns with other major retailers and is part of the Group Board’s strategic planning
process. This evaluation considered our current position and the impact of principal risks
outlined on page 46.
The Group’s prospects are assessed primarily through its corporate planning process. This
includes an annual review which considers profitability, the Group’s cash flows, committed
funding and forecasted future funding requirements over three years, with a further year
of indicative movements. As part of strategic planning, the Directors make key
assumptions about business performance, refinancing transactions and the availability
and effectiveness of mitigating actions available to the Group. In particular, cash flow
forecasting gives visibility of the Group’s funding headroom, comparing net debt to the
level of committed facilities over the planning period.
Excluding restricted cash, our cash, excluding restricted cash, at balance sheet date stand
at £93m. Together with £348m of the Group’s revolving credit facility (“RCF”) that
remained undrawn at year end, we maintain gross liquidity headroom of £441m providing
resilience through continued market volatility. At the balance sheet date, we had £417m
of borrowings including accrued interest still to repay, with £362m falling due in June
2026.
The Group intends to use the term loan secured in June 2025 to repay the upcoming
2026 bond maturity of £350m.
As part of strategic planning, the Directors make key assumptions about business
performance and stress-test financial scenarios to ensure compliance with facility terms,
even under principal risk events. Key assumptions align with the 2026 full-year outlook but
are adjusted for longer-term trends. The viability statement extends the going concern
assessment and downside sensitivities into future years. The modelled scenarios are
severe yet plausible, and reflect our principal risks as described on page 46. While each
of the principal risks has a potential impact to the business and has been considered as
part of the assessment, only those that represent severe but plausible scenarios were
selected for modelling through the Group plan, as per the table below:
Principal risk
Sensitivity applied
Competitiveness and External
Environment, Brand and Reputation
Food sales volumes reduced to reflect
impact of customer transactions not
returning to the levels achieved before the
cyber attack and further contraction in the
115
convenience market and food margin
rates.
Wholesale volume growth held flat to
2025.
Funeralcare volumes reduced as results of
lower-than-expected national death rate
and reduction in market share
Funeralcare average sales price reduced
to reflect increase in sales mix towards
direct cremations.
Execution of Strategy and Change, Supply
Chain and Operational Resilience
Transformation and operating cost out
programme sensitivity.
Funding and Liquidity
Although management are confident in
our Co-op’s ability to continue to repay or
refinance our debt facilities ahead of any
debt maturities, we ensure we maintain
adequate liquidity headroom to cover the
future operations of the business and the
uncertainty that the debt markets may not
be accessible during periods when the
Group may wish to refinance debt
When applying these viability sensitivities, there is no breach to our Co-op’s financial
covenants and there remains sufficient liquidity headroom through to the end of 2028.
Taking into account the Group’s current prospects and principal risks and uncertainties,
the Directors confirm that they have a reasonable expectation that the Group will be able
to continue in operation and meet its liabilities as they fall due over three years to
December 2028.
Greenhouse gas emissions
In 2025, the carbon emissions from running our business continued to reduce by a further
9% compared to 2024. This means that we have now reduced our Scope 1 and 2
emissions by 65% since 2016.
We have made significant improvements in energy efficiency and reduced electricity
consumption by 4% and gas consumption by 13% in 2025, compared to 2024. Despite a
2% reduction in diesel use, emissions from the Food Logistics network rose slightly (0.4%)
due to higher emissions per litre of diesel. We continued to improve vehicle efficiency,
refrigeration plug-in compliance and transport network optimisation to help us drive
down emissions.
In line with Greenhouse Gas (GHG) Protocol guidance, we present our Scope 1 and 2
GHG emissions figures in two ways. We show GHG emissions if our electricity was counted
116
at UK grid average (known as location-based reporting). We also account for the
emissions associated with our electricity supply contracts (known as market-based
reporting).
Scope 1 and 2 GHG emissions since 2016 – location-based
2016
ktCO
2
e
2017
ktCO
2
e
2018
ktCO
2
e
2019
ktCO
2
e
2020
ktCO
2
e
2021
ktCO
2
e
2022
ktCO
2
e
2023
ktCO
2
e
2024
ktCO
2
e
2025
ktCO
2
e
649
543
439
393
347
318
288
263
252
230
Scope 1 and 2 GHG emissions since 2016 – market-based
2016
ktCO
2
e
2017
ktCO
2
e
2018
ktCO
2
e
2019
ktCO
2
e
2020
ktCO
2
e
2021
ktCO
2
e
2022
ktCO
2
e
2023
ktCO
2
e
2024
ktCO
2
e
2025
ktCO2e
338
298
250
229
204
197
181
348
343
338
Scope 1 and 2 GHG emissions by source – location-based
Source
2022
ktCO
2
e
2023
ktCO
2
e
2024
ktCO
2
e
2025
ktCO
2
e
Scope 1 – refrigeration
66
50
49
47
Scope 1 – fuel
95
91
86
86
Scope 1 – gas
19
17
17
15
Scope 2 – electricity
107
105
100
83
Scope 1 and 2 –
total
(location-based)
288
263
252
230
Scope 1 and 2 GHG emissions by source – market-based
Source
2022
ktCO
2
e
2023
ktCO
2
e
2024
ktCO
2
e
2025
ktCO
2
e
Scope 1 – refrigeration
66
50
49
47
Scope 1 – fuel
95
91
86
86
Scope 1 – gas
19
17
17
15
Scope 2 – electricity
1
190
191
190
Scope 1 and 2 –
total
(market-based)
288
348
343
338
Annual energy consumption (GWh)
Source
2022
GWh
2023
GWh
2024
GWh
2025
GWh
Electricity (location-based)
555
507
485
467
117
Gas
105
95
94
82
Fuel
400
391
366
352
Carbon intensity
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Tonnes
CO
2
-
equivalent
(location-
based)
GHG
emissions
per £m
revenue
68.3
57.2
43
36.1
30.2
28.4
25
23.3
22.3
20.1
2025 carbon intensity figure is based on a figure of 230ktCO
2
e (230,289 tCO
2
e) for total direct emissions from running our business, location-
based accounting: Scope 1 and 2 GHG emissions (ktCO2e) and 2025 revenue: £11,027m
Political donations
Like many other businesses of a similar size, our Co-op engages with a wide range of
political opinion formers and decision-makers. We do this to protect, promote and
enhance our corporate reputation and to deliver our campaigning ambitions. Where
relevant to our business, we also actively participate in the work of business trade
associations.
Our Co-op is also a subscribing member of The Co-operative Party, which was founded by
the co-operative movement in 1917 to promote its Values and Principles. The Co-
operative Party works to raise awareness of the benefits of co-operative and mutual
models. In 2025, we made donations totalling £598,600 (2024: £598,600) to The Co-
operative Party, in line with our members’ approval at the Annual General Meeting in
2024.
This is our financial subscription to the Party for 2025. The Co-operative Party reports
donations to the Electoral Commission in accordance with its reporting obligations as a
registered political party under the Political Parties, Elections and Referendums Act 2000.
At the 2025 Annual General Meeting, our members passed a motion for our Co-op to
incur political expenditure, including donations and/or subscriptions to political parties,
not exceeding £750,000 in total for the year commencing 1 January 2026.
Groceries Supply Code of Practice (GSCOP)
The Groceries (Supply Chain Practices) Market Investigation Order 2009 (the Order) and
the Groceries Supply Code of Practice impose obligations on our Co-op and certain other
retailers regarding our relationships with grocery suppliers.
118
Through 2025, our Co-op’s Risk and Audit Committee maintained and reviewed GSCOP
compliance through regular updates from the Code Compliance Officer and senior
leaders in our Food business.
The Committee also approved the Annual Compliance Report for submission to the
Competition and Markets Authority as required by the Order. See
the Report of the Risk
and Audit Committee
for more details.
Working with the GCA
During 2025, our Co-op engaged and worked collaboratively with Mark White, the
Groceries Code Adjudicator (GCA). The GCA met with the Chair of the Risk and Audit
Committee and the Code Compliance Officer.
We include the GCA in our supplier newsletter and invite him to our annual supplier
conference. We provide transparency to our suppliers and the GCA on our activities to
ensure compliance with the Code.
Our Co-op once again showed a strong compliance performance in the GCA’s Annual
Survey. In 2025, 95.94% of suppliers told us that we mostly or consistently comply with the
code (2024: 98.22%). We were pleased to see that suppliers recognised our continued
focus on compliance and improvement plans.
Training
We provide GSCOP training to all colleagues who deal with suppliers, not just the buying
teams. In 2025, we refreshed our training and updated our internal GSCOP guidance. In
compliance with the Order, all relevant colleagues receive a copy of the Code.
In 2025, we trained 2,348 colleagues (2024: 2,207).
Other actions to enhance compliance
We have an established whole-business approach to monitoring compliance with the
Code, with regular reporting and review at various governance forums. We continually
look to improve ways of working with suppliers and enhance Code compliance.
In 2025, some of the ways we did this were:
•
Enhancing our SAP system and processes to increase the number of error-free
transactions.
•
Refreshed our supplier hub and supplier communication strategy to ensure suppliers
are informed and engaged in our business strategy and change initiatives.
Disputes
During 2025, our Co-op had no formal disputes under the Code and believes that it has
materially complied with the Code and the Order during the relevant period. We
recorded 70 (2024: 83) new incidents of alleged breach or reference to potential non-
compliance issues and brought forward seven issues from 2024. Of the issues rasied,14
119
were raised directly with the CCO and 63 were raised to the business and sent onwards to
the CCO internally by Co-op colleagues.
Task force on climate-related financial disclosures (CRFD)
As an ethically responsible business, we play our part in addressing both the climate crisis
and the impacts of climate-related risks and opportunities across our operations, physical
estate and supply chains.
Our Co-op complies with the Climate-Related Financial Disclosures (CRFD) Regulations
2022. We have aligned our strategy with CRFD recommendations to identify, assess and
manage our principal climate-related risks and opportunities.
Our disclosures are set out under the four pillars of the CRFD recommendations.
Governance
Description of the Group’s governance arrangements in relation to assessing and
managing climate-related risks and opportunities.
Effective corporate governance is critical to protect and grow value for our members,
customers and the communities we serve. It helps our Co-op grow while securing our
sustainability commitments.
Our governance structure and risk management framework enable our Co-op to manage
our climate-related risks effectively, ensuring robust controls are in place to achieve our
sustainability ambitions while continuing to exercise sound commercial decision-making.
This structure empowers colleagues at all levels to understand and proactively respond to
climate-related risks and opportunities effectively. Periodic reporting across our enabling
functions, businesses and different governance forums provides assurance to our Board
and senior leaders. This supports them in ensuring that our controls, actions and resources
are effective.
Each of our climate-related risks (below) is owned by a senior leader in our Group with the
expertise to understand what is needed to mitigate the risk and to realise opportunities.
Senior leaders discuss climate-related threats, issues and opportunities across our Group’s
risk management forums and cross-functional working groups and develop co-ordinated
plans of action in our Sustainability Governance Forum.
120
Our Sustainability Leadership Forum (SLF) has evolved into the Sustainability Governance
Forum (SGF), with a stronger focus on decision-making. The SGF consists of Group
leaders who oversee and coordinate sustainability activity across our Co-op. It brings
together business leaders, department heads and function subject matter experts,
connecting the cross-functional ‘spokes’ to strengthen accountability for strategic
decisions on climate-related risks and opportunities. The SGF also oversees our
Sustainability Principal Risk, with business leaders across the Group responsible for the
controls, actions and assurance required to deliver our sustainability plan.
Periodic updates on our principal risks, including sustainability, are provided to the
operating board, Group Board, the Risk and Audit Committee (RAC) and the Business Risk
and Assurance Committee (BRAC). These groups scrutinise our principal risks and the
activity undertaken to mitigate them, monitor the delivery of risk management plans
against our objectives, assess emerging risks and opportunities, including key climate-
related ones, and when required, challenge action taken to keep us within risk appetite.
Our Board has ultimate responsibility for risk management, including the sustainability
principal risk, for our Co-op. Our Board periodically monitors action plans and is briefed
on material climate-related risks and opportunities on at least an annual basis, reflecting
the importance that our Co-op gives to our sustainability commitments. For more
information on Co-op’s principal risks, read our
Risk Management
section above.
Strategy
We continue to prioritise action where our Co-op can make the most impact against, as
well as be impacted by, climate change. Our commitment is to reach Net Zero in our
operations by 2035 and across our full value chain by 2040. We are investing in the
activities and governance needed to achieve these goals. Read
our Social Value and
Sustainability report
for more.
Collaboration is at the core of our climate plan. We won’t achieve our Net Zero
commitments unless we all play our part. We collaborate with external bodies, our
suppliers, like-minded organisations, colleagues and members to build partnerships,
share knowledge, innovate and campaign for change. This collaboration helps us mitigate
climate-related risks and make the most of sustainable growth opportunities.
Description of the Group’s material climate-related risks and opportunities, and the
respective time periods to which these risks and opportunities are assessed.
In 2025, we reviewed our key physical and transition climate-related risks, which have not
materially changed from the previous year. We assessed material internal and external
changes around them and analysed individual and aggregate changes to their materiality
and likelihood. These in-depth analyses, alongside discussions with cross-functional
leaders, enabled us to enhance our controls to mitigate them and to act on opportunities.
The risks will continue to be managed according to our Group’s risk management
framework.
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For the purposes of identifying and managing our climate-related risks and opportunities,
we have used the following definitions of time horizons:
•
Short.
Less than four years: aligns with our business strategy and financial planning.
•
Medium.
Four to ten years: near-term target of addressing current and emerging
climate-related risks.
•
Long-term.
Ten years or more: aligned with the long-term nature of climate-related
risks.
Through this review, we reconfirmed the seven physical and transition inherent climate-
related risks that could impact the financial position of our Co-op over the medium term
and long-term, as outlined below.
In 2025, we considered:
•
Trusted information on social, political and economic activities shaping climate-related
events and actions
•
Data on our Group’s assets, products and services, and their interdependencies with
climate-related developments
•
The risk modelling we undertook in 2023.
From this, we identified the two most material climate-related risks to our Co-op as:
2025-26 (no change from prior year)
Physical
Raw material availability (acute/chronic)
Access to key facilities (acute)
Transition
Reputational (public sentiment)
Policy and legal (compliance and
legislative requirements)
Market (investment sentiment)
Market (consumer sentiment)
Technology (asset impairment)
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•
Technology
•
Market (consumer sentiment).
We have performed in-depth scenario analyses on these, using two climate pathways as
part of our scenario analysis.
3°C by 2100 – current policy –
under this scenario, existing policies are implemented to
limit global warming. This is a high greenhouse gas emissions scenario with extreme
weather events and substantial damage to ecosystems. We see a gradual shift, increasing
renewables and growing societal awareness, but no substantial market or policy shift
towards low carbon.
1.5°C by 2100 – Paris Agreement ambition –
under this scenario, we see aggressive
global action to limit warming. This is a low greenhouse gas emissions scenario, with
limited increase in extreme weather events and damage to ecosystems. We see an
aggressive transition to renewables with rapid technological innovation. There is strong
societal awareness of climate change issues, with proactive policy and market shifts to low
carbon.
The remaining key climate-related transition and physical risks remain important and are
monitored and escalated for further discussion as needed in alignment to our Group risk
management framework.
Description of the actual and potential impacts of the principal climate-related risks and
opportunities on the Group’s business model and strategy.
Technology
In the context of climate change, our Technology risk considers that some of our existing
fossil fuel dependent assets become unusable over the medium to long-term due to
technological disruption or obsolescence.
We must consider and adopt the emerging technologies that support a low carbon
economy in a proportionate way. While some of the technology required to meet our Net
Zero milestones is currently unavailable or unaffordable, we expect that new innovations
will become progressively more reliable and accessible.
For example, we are incorporating new compressed natural gas (CNG), electric and
hydrogen vehicles into our fleets, alongside the supporting infrastructure. We are also
investigating greener alternatives to high global warming potential (GWP) refrigerants.
While current regulation doesn’t prevent the use of fossil fuel dependent assets, we know
that continuing to use them won’t help us meet our Net Zero targets. We’ll need to phase
out most of them to hit Net Zero across operations by 2035.
We have conducted scenario analysis which sets out the impairment risk over the carrying
value of the assets before the end of their useful lives, under the pathways identified
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above. The impairment risk represents the expected change in fuel availability and
therefore economic value for the business.
When considering our assets, there is significantly higher value at risk under the 1.5°C
scenario. In this scenario, action to reduce greenhouse gas (GHG) emissions is timelier
and more aggressive than under the 3°C scenario, which leads to a much bigger
reduction in fuel availability and a faster transition to greener technology.
We have also considered plans within the business to help mitigate the Technology risk
within our scenario analysis. We continue to make changes that are helping us to reduce
our carbon footprint:
•
Our goal is to fit all our stores with
hydrofluorocarbon-free (HFC-free), low carbon,
refrigeration alternatives
by 2035. We continuously monitor our progress to ensure
we remain on track to deliver our Net Zero commitments, informed by our science-
based targets (SBTs).
•
Funeralcare plans to replace its fleet with lower carbon alternatives
as vehicles
come to the end of their useful lives, within the 2035 horizon for Net Zero in
operations. We are also improving the utilisation of our fleet to reduce its
environmental impact.
•
We work with our drivers and are implementing improved
navigation systems to
reduce fuel consumption
. We continuously monitor new available fleet options that
meet our needs for different size of vehicles, routes and alternative fuel sources.
Our Co-op is committed to achieving our sustainability ambitions. We continuously
monitor technology trends and forecasted innovations that could allow us to balance
economic and environmental pressures over the short and long-term.
Market (consumer sentiment)
Climate change is affecting society and consumer behaviour in multiple ways. Prolonged
climate-related events impact countries’ macroeconomic conditions, from energy costs to
commodity prices, and have a knock-on effect on consumer behaviour in the medium to
long-term time horizon. Consumer preference and demand for lower carbon products
and services are expected to increase, particularly across younger generations, and a
change in human behaviour is required to transition to an economy with lower carbon
emissions.
Customers may direct their spend towards retailers with a more positive environmental
impact and with increased awareness of, and demand for, sustainable products. There is
therefore a risk that our products and services do not align with consumers’ preferences.
We’ve conducted scenario analysis on the consumer sentiment risk for both 1.5°C and
3°C scenarios. As expected, the risk is much more significant under the 1.5°C scenario
across all timeframes. In order to meet a 1.5°C warming scenario, we would need to see
widespread global uptake of sustainable products and practices. We would also need to
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see a significant change in consumer habits, including a shift away from red meat and
dairy products (which are carbon intensive) and a reduction in food waste.
In our unmitigated scenario, there would be no change in the product mix that we
provide. While this could potentially lead to a significant revenue risk within the business,
the likelihood of this level of change is extremely low, especially in the short term, and as
affordability and other factors continue to impact customer preferences.
In a scenario where volumes reduced to this scale, our Co-op would be able to mitigate
much of this impact through cost savings, so the residual earnings impact is significantly
smaller. We also know that our supply chain is dynamic and would be able to pivot to
respond to consumer preference changes, although there may be a lag in response if we
do not correctly anticipate consumer trends.
To manage this consumer sentiment risk, we have established controls that enable
continuous insight and benchmarking on market trends. We are also:
•
Collaborating with suppliers to develop healthy and sustainable offerings
•
Horizon scanning for new developments in farm production and technologies
•
Developing proactive category management plans to meet changing consumer
demands.
‘Carbon neutral’ claims are regularly misunderstood by consumers and raise the risk of
greenwashing. We need to prioritise work that results in absolute reduction in emissions,
not just offsetting.
Opportunities
Our Co-op is committed to prioritising action where we can make the most impact. Our
sustainable delivery plan, updated in June 2025, reaffirmed our continued focus on clear
near-term and science-based targets. It also mapped out the rapid reduction of carbon
from our operations and supply chains.
By delivering on our sustainable delivery plan and commitments, we enhance our
reputation in the market and are better able to innovate. Our ‘test and trial’ approach
allows us to pivot at the right time to maximise economic and social outcomes for our
members.
We have also introduced a carbon metric into business cases submitted for consideration
and approval to our investment forums and are exploring how this can be used in
prioritisation exercises in our budgeting and forecasting processes.
In addition, as part of our investment decisions, we consider potential opportunities to
develop new revenue streams (e.g. electric vehicle charging) which deliver commercial
returns.
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We know that by placing retailer and supplier collaboration and people at the heart of our
climate plans, we protect and sustainably grow our Group, sharing value with our
members, customers, communities and planet.
We are regularly assessing our climate-related risks and implementing ways to mitigate
them. Here are some examples.
Investment sentiment
o
Fostering greater supplier-retailer collaboration enables us to address common
and interdependent climate and nature-related challenges, reducing costs
across the value chain and improving the quality of the products and services
we provide.
o
Working with other retailers to agree on a consistent sustainability dataset from
suppliers enables a reduction in complexity of data gathering and facilitates
knowledge sharing across a complex landscape.
o
Taking proactive measures to reduce our carbon footprint and transparently
sharing our sustainability plans provides us with lower capital costs.
Raw material
Building strong relationships with supply chains, as well as having a focus on British
sourcing and Fairtrade programmes, enables better control of risks to the supply
chain and establishes our Co-op as a preferred buyer.
Consumer sentiment
o
Anticipating and adapting to the demand for meat-free and less carbon
intensive products enables us to offer more sustainable and healthier
alternatives and create a greater positive net impact on our environment.
o
By taking a proactive approach on lower carbon intensive meat and dairy
products, we can improve the availability and range of plant-based and less
carbon intensive products at the right price.
Technology
Reducing energy and fuel consumption across the Group, from the electrification
of our funeral fleet to the use of more efficient refrigeration systems, reduces our
operating costs and helps us meet our sustainability commitments. Installation of
solar photovoltaic (PV) systems also provides a level of energy security and
resilience of supply.
Key facilities
By pursuing a more efficient use of our network and facilities, we can increase
efficiencies, reduce costs and mitigate disruptions for the benefit of our suppliers,
partners, customers and members.
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Policy and regulation
By continuously and proactively engaging with Government officials and other key
stakeholders in the sustainability field, we are able to monitor and model the
impact of policy changes to integrate them into our business and financial
planning.
Analysis of the resilience of the Group’s business model and strategy, taking into
consideration of different climate related scenarios.
During 2023, scenario planning was undertaken with support from external advisors for
five different climate scenarios. This was to identify the inherent physical and transition
risks that could impact our Co-op over a ten-year horizon.
The assessment focused primarily on the food business, which is our most material
business unit. We plan to expand the scope to cover the Group in future years.
For the purposes of this disclosure, we are focused on the 3°C and 1.5°C scenarios
explained above.
In 2025, we have continued to assess internal capability to model financial risk and
forecast future emissions to inform future business or strategic decisions. This has
provided greater insight to the impact of mitigation actions over the short, medium and
long-term.
We have undertaken another risk identification cycle in the current year, giving us a clear
understanding of the risks to the business which have not changed materially from the
prior year. It has also helped us understand the financial impact if left unmitigated, and
controls which we have in place (either currently or within our forecasting cycle) to
mitigate these impacts. We have also undertaken a prioritisation exercise, which has
highlighted Technology and Market (consumer sentiment) as our most material risks. We
have focused our modelling on these areas.
Our Net Zero Blueprint aims for Net Zero in Scope 1 and 2 by 2035 and Scope 3 by 2040.
This blueprint and the targets within it have been validated by the Science Based Targets
initiative (SBTi).
In our latest forecasting cycle this year, we have ensured that action within supports our
trajectory outlined in the Net Zero Blueprint. This includes funding to support:
•
Decarbonising our fleets in our food, Funeralcare and e-commerce businesses
•
Replacement of high-fluorinated gas (F-GAS) refrigerators in our food business and
Funeralcare
•
Energy efficiency initiatives across our property portfolio.
•
‘Test and learn’ initiatives around our Scope 3 emissions, particularly related to meat
and dairy suppliers, decarbonising packaging and reducing food waste.
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Our physical risks are more significant under the higher global warming scenario (3°C).
However, we have strong mitigations in place to remain resilient to these risks.
Our key facilities all have business continuity plans which are consistently reviewed to
ensure they are up-to-date to minimise disruption. Monitoring is also integral for our raw
material risk, for both our sourcing strategy and technological developments that could
mitigate the risk. We also have a robust contingent supplier process to protect from
extreme weather conditions in certain geographical areas. While we do have a global
supply chain, the above strategy provides resilience against this, even in the more extreme
scenario.
Risk management
Description of how the Group identifies, assesses and manages climate-related risks and
opportunities, and how these processes are integrated into the Group’s overall risk
management framework.
Our climate-related risks are managed through our risk management framework as
described earlier in this report. This framework enables our colleagues across the Group
to identify and manage our climate-related risks and opportunities within the risk appetite
set by our Board.
This framework contributes to ensure that our Co-op has the right risk management plans
in place and enables our senior leaders to integrate climate-risk assessments into our Co-
op financial and operational planning.
For example, in 2025, we conducted several internal discussion groups with subject
matter experts from across our Group to review our climate-related risks and opportunities
and associated controls, providing assurance to our Sustainability Governance Forum on
our progress.
Metrics and targets
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Description of the targets used by the Group to manage climate-related risks and to realise
opportunities and of performance against these targets, as well as a description of the key
performance indicators (KPIs) used to assess progress against targets, including the
calculations on which these KPIs are based.
Our most important climate metrics relate to our annual greenhouse gas (GHG) emissions
in absolute tonnes. We have made significant progress towards reducing our GHG
emissions in both our own operations and our wider value chain (Scopes 1, 2 and 3).
Description
GHG protocol
classification
2016 baseline
2025 actual
Change vs
baseline (%)
Our operations
Scope 1 and 2
649 ktCO
2
e
230 ktCO
2
e
-65%
Our value chain
Scope 3
5409 ktCO
2
e
3926 ktCO
2
e
-27%
We are committed to reducing our GHG emissions in line with the latest scientific
guidance. Specifically, we set science-based targets for GHG reduction across all
emissions scopes. These targets are in line with the pace of reduction required to limit
global warming to no more than 1.5°C above pre-industrial temperatures.
Our emissions targets were validated in early 2024 by the Science Based Targets initiative
(SBTi). Our supplier engagement target has been set in line with advice from lenders and
forms the basis of sustainability-linked finance, so we have linked our interest rate to
achievement of this metric.
Description
2023 Baseline
2025 Actual
% of Scope 3 Category 1 emissions covered by
suppliers with validated science-based targets
36%
72%
To ensure the accuracy of our GHG emissions reporting over time, we re-baselined our
Scope 3 inventory as methods and data improve.
A detailed description of how our KPIs are calculated is disclosed in our
Basis of Reporting
document
.
Near-term targets
•
Reduce absolute Scope 1 and 2 emissions from Co-op operations by 66% from 2016
to 2030
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•
Reduce absolute Scope 3 emissions from Co-op's value chain by 48% from 2016 to
2030
38
Long-term targets
•
Reach Net Zero Scope 1 and 2 emissions from Co-op operations by 2035
•
Reach Net Zero Scope 3 emissions from Co-op's value chain by 2040
Supplier engagement target
•
Ensure that 69% of our purchased goods and services emissions (Scope 3, Category 1)
are from suppliers with independently validated science-based targets by the end of
2025, rising to 77% by the end of 2026.
38
Following the latest SBTi Corporate Standard our validated targets distinguish emissions from energy and
industry (E&I) and forestry, land use and agriculture (FLAG). Our 48% near-term Scope 3 target reflects a
reduction of 58.8% for E&I emissions and 42.4% for FLAG emissions.
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Statement of Co-op Board responsibilities in
respect of the annual report and financial
statements
The Directors are responsible for preparing the annual report in accordance with
applicable law and regulations.
The Group accounts have been prepared in accordance with UK-adopted international
accounting standards for the 52-week period ended 3 January 2026 and in conformity
with the requirements of the Co-operative and Community Benefit Societies Act 2014.
The Group financial statements are required by law to give a true and fair view of the state
of affairs of the Group and the profit or loss of the Group for that period.
In preparing the Group financial statements, the Directors are required to:
•
Select suitable accounting policies and then apply them consistently
•
Make judgements and estimates that are reasonable and prudent
•
State whether UK-adopted international accounting standards, in conformity with the
requirements of the Co-operative and Community Benefit Societies Act 2014, have
been followed
•
Prepare the financial statements on the going concern basis, unless it is inappropriate
to presume that the Group will continue in business.
The Directors are responsible for keeping proper books of account that disclose with
reasonable accuracy at any time the financial position of the Group and enable them to
ensure that its financial statements comply with the Co-operative and Community Benefit
Societies Act 2014. They have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Group and to prevent and detect
fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and
financial information included on the Group’s website. Legislation in the UK governing the
preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
The Directors consider that the annual report and financial statements, taken as a whole,
are fair, balanced and understandable, and provide the information necessary for
members to assess the Group’s position and performance, business model and strategy.
Each of the Directors listed in our Governance Report confirm that, to the best of their
knowledge:
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•
The Group financial statements, which have been prepared in accordance with
international accounting standards – UK-adopted international accounting standards,
in conformity with the requirements of the Co-operative and Community Benefit
Societies Act 2014 – give a true and fair view of the assets, liabilities, financial position
and profit of the Group.
•
The Strategic Report and Governance Report, contained in the annual report and
financial statements, include a fair review of the development and performance of the
business and the position of the Group, together with a description of the principal
risks and uncertainties that it faces.
In this context, ‘the Group’ means Co-operative Group Limited, and all the companies and
societies it owns.
Financial statements
So far as the Directors are aware, there is no relevant information that has not been
disclosed to our auditor. The Directors believe that all steps that ought to have been taken
have been taken to make them aware of any relevant audit information, and to establish
that our auditor has been made aware of that information.
Auditors
EY LLP have indicated their willingness to continue in office and a resolution for their re-
appointment will be proposed at the forthcoming 2026 Annual General Meeting.
By Order of the Board
Dominic Kendal-Ward
Group Secretary and General Counsel
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Co-op National Members’ Council:
annual statement
Our Co-op is owned by you, our members, and central to our Co-op Difference is doing
right by you.
Your National Members’ Council is elected from across the UK to represent and champion
your interests and to ensure our Co-op delivers value for you, our member owners, and
the things that you care about most.
We act to make your voice heard, influence our Co-op’s plans and strategies with your
views in mind, and hold the Board to account, ensuring that Co-operative Values and
Principles are at the heart of what we do and how we do it. We are the independent voice
of member owners within Co-op, scrutinising the Board and championing your interests
and the good governance of our Co-op. In 2025, we:
•
Continued to ensure that our Co-op responds to our members’ concerns about the
ongoing cost of living crisis, with our Co-op now price-matching key items to Aldi
while delivering Co-op standards.
•
Supported our
Safer Colleagues, Safer Communities
activity, with some key successes
following sustained campaigning and investments in keeping our colleagues and
communities safer in our stores. Violence against retail workers will become a
standalone offence under law, overall levels of crime in our Co-op stores declined by
21% compared to the previous year and the number of violent incidents reduced by
31%.
•
Welcomed over one million new members to our Co-op. We’re recruiting the next
generation of co-operators too, with an 11% increase year-on-year in the recruitment
of members under 25, and helping to shape what Co-op membership provides for our
young members.
•
Successfully influenced the Board to create an Ownership Hub for members to find
information and opportunities to get involved in their Co-op, launched in early 2026.
•
Showcased to our members the value they received by trading with our Co-op
through our end-of-year Co-op Wrapped. Through personalised member
communications, Co-op Wrapped highlighted the economic, social and ownership
value our member owners received in the year.
•
Made sure that our Co-op focused on serving our members – especially in our lifeline
stores where our members rely on us most – in the immediate aftermath of the criminal
cyber attack on our Co-op. We also met with our Board and business leaders on behalf
of our members to raise challenges and gain assurance about our Co-op’s response to
the attack, its impact and the measures taken to protect members.
133
•
Worked with our Board and leaders to develop our future strategy and how we focus
on delivering even more value for you, our members – including making sure you can
get the products and services you need from Co-op, when you need them.
•
Met with thousands of member owners across the UK to hear what you like about your
Co-op and what more you want from us through our dedicated member engagement
events – locally, nationally and online.
•
Made changes so that more than 1.5m more members had the opportunity to vote in
2025, making it easier for our members to exercise their ownership through joint
control of our Co-op. We saw the number of member owners choosing to vote
increase again by 22%.
•
Commissioned a review of how we make sure that member ownership and democracy
in our Co-op focuses on what our members want and need (now and in the future) and
identified changes to the rules and policies of our Co-op to work on with our Board
through 2026.
Although we are proud of the progress our Co-op has made, our ambitions for our
member owners and our Co-op’s future are high. We’re focused on what comes next.
In 2026, we will continue to champion the importance of delivering value, quality and
convenience for our member owners as the cost of living crisis continues, and in the
context of ongoing global volatility. We’ll continue to make our Co-op difference clear
through the causes we support – for example, our
On Your Corner, In Your Corner
campaign seeks to make a real difference to our member owners’ day-to-day lives. We’ll
keep going on our commitments to British sourcing, sustainability and ethical leadership,
and we’ll look for more opportunities to support our communities through the work we do
on social mobility and skills.
We’ll also continue to push for greater information for member owners to help you
engage with and influence our Co-op, whether that’s through our community causes,
participating in our democratic processes or simply having your voice heard about the
choices we make in stores as a consumer co-operative.
We’ll keep making it easier for you to see and feel the value you get as a member owner,
and for you to take part in member conversations about the future of our Co-op, with
other member owners and elected representatives on Council and Board.
Find out more about your Council here
.
Your Council, your voice
The National Members’ Council is made up of 100 Co-op member owners, elected from
across our membership of over seven million active members. Council members come
from all walks of life, including Co-op colleagues and people from other retail societies.
The Council works alongside the Board (our Directors) and operating board (our business
leaders) to help shape the direction of our Co-op and the way we do things. We are
134
elected by our fellow member owners to speak for you to the Board and senior business
leaders, and to ensure our Co-op is delivering value for our members. We meet regularly
to support and challenge our Board and business leaders to ensure your needs are at the
heart of the decisions we make, and that our Co-op is successful for its member owners.
Your Council has focused its work on three key matters for our member owners in 2025:
•
Building member value every day
•
Empowering members, developing leaders
•
Engaging member owners in our Co-op.
What have we achieved this year?
Building member value every day
Measuring member value
Driving a focus on member
value
Empowering member
owners
Ensuring our Co-op
measures and reports how
we create more value for
you as a member owner
every day, and to show you
the value you receive as a
member owner.
Championing our Co-op
difference and working
with the Board and
business leaders to deliver
member value – economic,
social or ownership – to
ensure member value is
considered in every
decision our Co-op makes.
Modernising and
improving our democracy
to support members to
exercise their member
owners’ rights and have
their voices heard.
Our vision is to build more value for our member owners every day. As a member of our
Co-op, every purchase you make with us helps to grow the value of our Co-op, whether
that’s in economic, social or ownership value – supporting us to take action on the things
you care about. In 2025, we:
•
Influenced how our Co-op measures and reports on performance, ensuring that
member value is considered and reported on across our Co-op alongside other
important measures such as revenue and profit. Your Co-op regularly reports to the
Council, as your elected representatives, on how it achieves value for our member
owners in a variety of ways, across different parts of the business, with Council
members championing your interests.
•
Worked with our Board and business leaders to refresh our commercial strategy,
ensuring members remain at the heart of our approach to our Co-op’s ambitions in the
short, medium and longer term, and strengthening our Co-op for the future.
135
•
Influenced the development of new approaches to member rewards, taking part in
trials and focus groups to strengthen the focus on what members want.
•
Scrutinised our Co-op’s sustainability plan for 2025 and the ways in which we set out to
achieve our targets, including our new sustainability hub model.
•
Supported and challenged the business through the development and
implementation of our social mobility, diversity and inclusion strategy, ensuring we’re
working to build value for all of our members, regardless of background.
•
Reviewed the outcomes and impact of our social value strategy, and our Co-op’s
approach to embedding and sharing these.
Empowering members, developing leaders
Supporting members to
find out what it means to be
a co-op
Empowering our people to
lead a modern co-operative
Developing the modern co-
operative leaders of the
future
Making it easier for our
members to learn about
co-operation as a way of
doing business and to see
how the Co-op Difference
benefits them.
Ensuring that our Values
and Principles are
embedded into the culture
of our Co-op – the way we
do things differently.
Empowering our members,
Council and Board to act as
ambassadors for our co-
operative Values and
Principles and the Co-op
Difference.
As a consumer co-operative, our members make the biggest difference in how we run our
Co-op, from individual member owners to colleague members and leaders at all levels.
Our focus on empowering members and developing leaders is a commitment to our Co-
op’s continued success, now and for future generations. In 2025, we:
•
Listened and responded to what members told us through our Big Survey, developing
an online Ownership Hub that acts as a one-stop shop to provide members with all the
information you need to play a full part in the business you own. Our members can
now find resources, information and the latest ways to engage with and influence our
Co-op on the Ownership Hub. This was a direct response to what we heard from
members and the motions passed at the 2025 AGM.
•
Raised awareness of the co-operative difference in partnership with organisations such
as Co-ops UK, hosting the Festival of Co-operation in Manchester as part of the UN’s
second International Year of Co-operation, sharing lessons in co-operation with co-
operatives from around the world and our members.
136
•
Championed a programme of online activities and resources to help members learn
about your Co-op and its difference to empower you to start, use, choose and grow
co-ops across the UK.
•
Responded to members’ concerns around a more divided society and approved our
Co-op’s
Hate Divides Communities, Co-operation Builds Them
campaign.
•
Challenged our Board and business leaders over ethical sourcing of products to
ensure we continue to maintain our standards and values in relation to animal welfare
and farming.
•
Developed a new learning framework (Co-op Journeys) to help to grow the next
generation of modern co-operative leaders, strengthening our Co-op for future years
to come.
Engaging member owners in our Co-op
Championing our member
voice in decision-making
Improving how we
communicate and engage
with our member owners
Growing the co-operative
movement
Ensuring our Co-op listens
to the voices of members
and puts them at the heart
of the decisions we make.
Finding more effective
ways to hold conversations
with member owners and
to strengthen engagement
with our democracy and
governance.
Working with others as part
of a global movement to
show governments a
different, more co-
operative way of doing
business.
Our Co-op belongs to you, its members. It’s jointly owned and democratically controlled,
and your National Members’ Council works to ensure these values are lived every day. As
part of that, we have been strengthening the ways in which we engage with our member
owners.
Whether our Council is raising issues on your behalf or looking to develop our
Co-op for the future, we’re focused on your priorities and your needs. In 2025, we:
•
Met with thousands of members over the year, including national, local and online
events during the autumn to hear what you had to say about our Co-op and the things
that matter to you most. Together with Board directors and business leaders, we met
members across all four nations, with over 1,800 attending our Co-op community
cafés in London, Belfast, Cardiff, Edinburgh and Manchester – an increase of 28% on
the previous year.
•
Pushed for a new two-way member engagement platform to support better, more
dynamic conversations between members and their local elected representatives
within the National Members’ Council. The work on this has started behind the scenes
and we are expecting exciting developments for 2025.
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•
Strengthened our understanding of what members care about through the Big Co-op
Survey and other dedicated insight work, reaching over 37,000 of our members to find
out more about the big things on your minds and your priorities now and in the future.
•
Celebrated Fairtrade Fortnight with members in our stores and our communities, with
over 10,000 member owners attending in-person events and a further 36,800 taking
part online. Our Co-op supported the Fairtrade Foundation’s campaign Do It Fair, Brew
It Fair, with greater promotion in stores, activities within our Co-op Academies and
support for members to petition MPs on workers’ rights in tea supply chains.
•
Developed a new framework for member engagement for the year ahead, driving
more opportunities for members to benefit from their ownership of our Co-op through
a series of ‘touchstone’ points intended to support members to be empowered,
inspired and to belong as part of our Co-op community. We’re working with our
member activator network across the country to reach members and promote the
value of member ownership and opportunities to get involved.
•
Represented our Co-op externally to continue to raise awareness of the power of co-
operatives, engaging with the UK Government on their commitment to double the size
of the co-operative sector and working in partnership with others from across the
sector to develop and advocate for the changes in policy needed to deliver this.
138
Report of the Scrutiny Committee
Our review of Board Appointments and Elections
In 2025, our members elected a new Member Nominated Director, Mitch Oliver, and re-
elected Sarah McCarthy-Fry as Member Nominated Director to serve a third term.
Wais Shaifta and Simon Woolley were appointed as Independent Non-Executive Directors
in February 2025. Wais subsequently stepped down from the Board in August 2025 to
assume the role of Chief Growth Officer for our Co-op.
As part of the process for Director appointments and elections, our Co-op has an extra
level of checking so members can have confidence that processes have been
administered fairly and openly in line with our Values and Principles.
This checking is done by the Scrutiny Committee of the National Members’ Council, and
we’re pleased to present our report to members for 2025.
Further details on our Board and how Directors are appointed can be found in the section
Our Leadership and Governance Structure.
The Role of the Scrutiny Committee
The role of the Scrutiny Committee relates to the recruitment and selection processes for
Independent Non-Executive Directors and Member Nominated Directors. The Committee
checks:
•
The selection process for the ballot is fair, transparent and objective
•
The background information gathered on the candidates is satisfactory.
In 2025, two Member Nominated Directors were elected by our members and two
Independent Non-Executive Directors were appointed by the Board.
Our findings
Member Nominated Directors
The Member Nominated Director Joint Selection and Approval Committee has the
primary responsibility for the selection process of Member Nominated Director
candidates and is made up of both members of the National Members’ Council and
Board.
As well as receiving a detailed report from the Co-op's search partner on the search and
selection process, we interviewed the Chair of the Committee and posed questions on
themes including the search methodology and process.
139
As a result, the committee can confirm that the selection process leading to the
shortlisting of Sarah McCarthy-Fry, Mitch Oliver and Ian Craig to go forward to a ballot of
members was fair, transparent and objective and that all proper background checks were
made.
More broadly, as a committee, we discussed the importance of ensuring that all of our
processes continue to attract suitably qualified candidates from within our membership to
stand for election as a Member Nominated Director. We look forward to taking part in the
review of these processes led by the Member Nominated Director Selection and
Approvals Committee during 2026, in time for the next Member Nominated Director
elections in 2027.
Independent Non-Executive Director
The Member Nominated Director Joint Selection and Approval Committee has the
primary responsibility for the selection process of Member Nominated Director
candidates and is made up of both members of the National Members’ Council and
Board.
For these appointments, the Scrutiny Committee reviews the adequacy of background
checks and information from standard recruitment searches carried out on potential
candidates. We also check the decision made by the Nominations Committee to ensure
that all the criteria have been met (such as skills and experience, and commitment to Co-
operative Values and Principles).
It is important that any appointment is fair, transparent and objective, so we look into this
on behalf of our members to give that extra level of assurance.
The Committee acknowledged the benefits of changes made to the INED search process
and received assurance regarding the application of diversity considerations, including
the balance of skills required for our Board.
We sought and received assurance that the Board had satisfied itself regarding the
capacity of candidates to undertake the INED role and the due diligence search process
undertaken.
The Committee can confirm that they were satisfied that the selection processes that led
to the appointments of Wais Shaifta and Simon Woolley as Independent Non-Executive
Directors were fair, transparent and objective and that all proper background checks were
made.
Finally, we have received confirmation that all Directors met our Co-op’s trading
requirements.
Committee membership
The Committee membership for the 2024/5 Council year was:
David Paterson (Chair)
140
Rachel Ayungunna
June Morrison
Louise Walker
141
Promoting the success of our Co-op
Section 172(1) statement and stakeholder engagement
Reporting requirement
Our Co-op prepares its annual report and accounts substantially as though it were a
company registered under the Companies Act 2006 (‘the Act’). While it isn’t a requirement
for our report to contain a Section 172(1) statement, we’re including one in line with best
practice.
The Board has, in good faith, acted in a way that it considers would be most likely to
promote the success of our Co-op for the benefit of members as a whole. In doing this,
the Board has recognised the importance of considering all stakeholders and other
matters (as set out in Section 172(1) (a) to (f) of the Act) when making decisions.
Our approach
We are conscious of the impacts that our business and decisions have on our direct
stakeholders as well as our wider societal impact. We also understand the importance of
developing strong and meaningful relationships. We know that we can’t fix everything by
ourselves, and that working with others is key.
For all key and principal decisions approved by the Board, a discussion takes place
around the impact on our key stakeholders, including our member owners, our colleagues
and our customers. The relevance of each stakeholder group may vary by reference to the
issue in question, so the Board seeks to understand the needs of each stakeholder group
and any potential conflicts as part of its decision-making.
We have provided below examples of our key stakeholder interests, their concerns and
the ways in which the Board acted with regard to these groups when making its key
strategic decisions during the year.
Our members
Our Co-op is owned by more than seven million active members who have a say in how
we’re run and are at the heart of everything we do.
•
Our Board uses an Ethical Decision-Making Tool when making material decisions to
consider the impact on, and impact of, our member owners and their communities.
•
We work together with our members to take action to support our shared vision.
Members can choose how we support local communities, stand with us on campaigns,
help develop our products and services and shape our national partnerships.
•
We encourage our members to get involved in our Annual General Meeting (AGM)
and elections, by voting on motions and on who gets to sit on our Board and
142
Members’ Council, as well as attending the AGM. We also encourage them to stand for
election as leaders themselves.
•
Ahead of our 2025 AGM, our National Members’ Council tried something different for
its motions drafting process. For the first time, two online events were held in February,
where we brought members and Council members together to discuss themes that
members had raised to shape what our Co-op tackles next.
•
Our 2025 AGM marked a first for Co-op, as we continued to make it easier than ever to
participate by holding six local events around the UK with member activators and
Council members. This meant that members outside of Manchester could feel part of
our event at Co-op Live, with a chance to hear the latest updates on our businesses,
put questions directly to Directors and Co-op leaders through our live Q&A, and take
part in members’ discussions on the issues that matter most.
•
Building on our 2025 AGM and local events, we also held a members’ discussion as
part of our online Q&A for Co-op’s 2025 interim results for the first time. The
discussion focused on three topics that members told us were their top priorities for
our Co-op, including what more they would want to see from our products and
services and how we can support their communities to thrive.
•
In autumn, our local pop-ups were back in capital cities, alongside online
conversations and over 100 local events. We showcased how our Co-op is both on
your corner and in your corner with food tastings, exclusive goodies for members, and
plenty of opportunities to share views and ideas for our businesses to explore. We
increased in-person attendance at pop-ups by 28% and at our local events by an
incredible 105%.
Our member activator network throughout the UK is 87 Co-op colleagues strong and has
been in place for over 18 months. Member activators have been working closely with our
members, leading the charge in raising awareness of economic, social and ownership
value.
In 2025, our member activators have carried out over 300,000 interactions with our
members and colleagues to deliver initiatives on the issues that matter to communities.
Some key highlights from 2025 have been:
•
Running 130 events with our members in October. We asked our members for
feedback on our products and services and ideas on how we can work together locally
•
Delivered over 400 events on our sustainability commitments including Food Waste
Action Week in March and Fairtrade Fortnight in September with over 23,000
interactions with members
•
Promoting membership value through Community Celebrations with member owners
and local groups in November.
143
Our National Members’ Council
Our Members’ Council met with our Board and the business regularly during 2025, during
Council Meetings, committees and working groups. Examples during 2025 include:
•
Director attendance at Council sessions to update on developments relating to our
Co-op
•
Director and leader Q&A sessions where Council members ask questions and hold the
Board to account in relation to our priorities and how we’re building a successful
modern co-operative business
•
Breakout sessions where our Council and Directors work together to shape plans
•
Regular director attendance at Council committees to update on topics within the
committee’s remit. Directors answer questions regarding our KPIs and performance
scorecard to support our refreshed Group strategy. This promotes a unified approach
within our governance structure
•
Council President attendance at Board meetings
•
Online video updates and communications focused on helping members understand
how their vote makes a difference to our Co-op.
Our customers
We continue to embed a customer and member focused culture. As a result, we’re
committed to understanding our customers’ experiences of our products and services,
their wants and needs, and how behaviour is evolving.
Across 2025 we have used the knowledge, skills and expertise of our Advanced Analytics
and Insights teams at every level of our Co-op to ensure decisions are evidence-led.
Example projects which have supported the business this year include:
•
Our biggest ever survey of Co-op members
•
AI enabled exploration of new concepts in stores
•
Understanding the impact of promotions in our stores
•
Detailed analysis to define behaviour-based cohorts within our member base
•
Analysis of performance drivers
•
Econometrics studies.
Within Advanced Analytics and Insights, we have improved our technical capability with AI
tools. We continue to explore the opportunities this offers to cascade insights and data
more interactively, make greater use of unstructured data, and synthesise data from
different sources.
144
Our colleagues
Our Board recognises the importance of listening to, and engaging with, our 53,000
colleagues. Our Directors strongly believe that they cannot fulfil their duties without
understanding and considering the views of our colleagues when making decisions.
We have well-established and effective methods of two-way communication with our
colleagues. This includes our Colleague Voice mechanism, which exists at both local and
national levels.
In 2025, at least two of our Directors attended our National Colleague Voice listening
sessions. This has proven valuable for both the Board and Co-op colleagues, and this will
continue throughout 2026. In addition, a Member Nominated Director attends our
Member Council’s People and Communities Committee. The members of our
Remuneration Committee have oversight of all colleague reward and benefits and
passionately champion colleague wellbeing. All Directors continue to visit stores, funeral
homes, depots and sites relevant to our delivery of social value.
For all the colleague engagement activities that contributed to this,
read our Social Value
and Sustainability report
.
Our suppliers
A strong, trusted and transparent supply chain is integral to our success. Co-operative
Values and Principles underpin all of our supplier relationships as we continue to balance
commerciality with shared value and communities.
Our Co-op has a range of suppliers, who provide goods and services to support our
businesses and operations. We work closely with our suppliers to ensure that everyone
involved in producing our products is treated fairly. Our Board monitors our relationship
with our suppliers in a number of ways, including via the Risk and Audit Committee on
areas such as our compliance with the Groceries Supply Code of Practice and our
approach to sustainability issues.
We continue to work with our suppliers directly and as part of collaborative initiatives. We
work to build our understanding of issues, developing solutions and action plans in
response to the many social and environmental challenges facing our supply chain, from
human rights issues to climate change. Our participation in collaborative initiatives is a key
part of our approach as we recognise that we will have a greater impact working together
than on our own.
We have continued to focus on providing support for our suppliers, working
collaboratively to protect those that are most vulnerable, protect workers and continue to
champion resilient livelihoods for everyone in our supply chain. For example, in 2025 we:
•
Provided £760,000 of funding with farmers in our supply chain to support them in
reducing emissions and promoting nature on their farms.
•
Tracked the carbon reduction activity of our top suppliers and worked with the most
impactful of these suppliers to agree shared plans and progress. As of 2025, the
145
majority of our purchased goods emissions are now from suppliers with validated
science-based targets.
•
Collaborated with Soil Association Exchange (SAX) to support UK wheat farmers to
reduce their impact and improve resilience. We also worked with our Co-op Dairy
Group farmers to participate on a SAX project, to gain deeper insight into their soils
and the habitats on their farms.
•
Continued our focus on building supplier capability on Human Rights and Ethical
Trade. We delivered a Strategic Supplier Forum this year, as well as sponsoring in-
country forums in Spain, Egypt and South Africa. In addition, we continued our
collaborative work with the Food Network for Ethical Trade, Stronger Together and the
Ethical Trading Initiative by hosting stakeholder events in the UK and online.
You can read more about our approach to responsible sourcing
in our Social Value and
Sustainability Report
. The way we prevent modern slavery is detailed in our
Modern
Slavery Statement
.
Fairtrade partners
In 2025, we continued our efforts supporting Fairtrade. For more than three decades
we’ve stood with farmers and workers for fairer terms of trade, supporting them to
improve their livelihoods and invest in their communities. In 2025 we have expanded our
successful Productivity Improvement Programme (PIP) from bananas into our Peruvian
cocoa supply chain. PIP aims to support over 1,100 cocoa producers in increasing their
resilience and livelihoods.
Read more about
how we work with our suppliers
and the impact we have in Fairtrade
communities.
Right by your community
Our members have a say in how we spend a share of our profits to support local
communities across the UK. Through member participation and co-operation, and by
bringing communities together, we’re delivering lasting change for our members and
their communities.
The way we create social value builds on the work of the Rochdale Pioneers in 1844. The
reason our Co-op exists is to deliver value for our members and the communities around
us. This means we
provide access to opportunity and resources for people to thrive in the
communities that we serve and trade with.
We do this by supporting local causes in our members’ communities and charity
partnerships that provide access to opportunities, sustainable futures and peace of mind
and wellbeing.
Co-op membership also means member owners can get involved in opportunities such as
supporting our community activities, campaigning on issues that matter to them or
helping to develop Co-op products.
146
For examples of how we have engaged with and supported our members’ communities
during 2025, read
our Social Value and Sustainability report
.
Other co-ops
The sixth co-operative principle is that a co-op co-operates, works with and supports other
co-ops – which is just one of the reasons that working closely with other co-ops is so
important to us.
We are the major shareholder in Federal Retail and Trading Services Limited (FRTS), which
is collectively owned by our Co-op and Independent Society Members (ISMs). These ISMs
are all retail co-operatives. Through FRTS, our Co-op collaborates with ISMs on the
management and operation of a centralised buying function.
ISMs are members of our Co-op and are also represented on our Members’ Council.
We are passionate about proactively growing the co-operative economy by promoting,
developing and uniting co-operatives. In 2025, we marked the United Nations
International Year of Co-operatives by hosting the International Co-operative Alliance
General Assembly in Manchester involving over 400 delegates from 60 countries. Our
CEO has also played a prominent role in the Co-operatives and Mutuals Leadership Circle
(CM50), a forum which brings together leaders from the world's largest and most
successful co-ops.
We continue to support and fund a wide range of bodies representing different aspects of
the Co-operative movement, including the apex body, Co-operatives UK.
Finally, we have been pleased to support the work of the Co-operatives and Mutual Sector
Business Council, of which our Co-op is one of four founding business members. This
Council was created to work across the sector to engage the UK Government in support
of its manifesto commitment to double the size of the co-operative and mutual sector.
Co-op Academies Trust
We have continued to support the work of the Co-op Academies Trust (CAT), which has 38
academies operating across the North of England and the Midlands. Our Co-op
Academies remain a key part of our vision.
As sponsor, our Co-op is a corporate member of CAT and also appoints all other trust
members from its senior management team. CAT’s members in turn appoint the trustees,
who are responsible for the trust. The Chair of Trustees is a member of the Co-op's
management team and is joined by other trustees drawn from the Co-op as well as from
the educational and charity sector.
During 2025, Directors and senior leaders across all parts of our Co-op visited Co-op
Academies and supported a wide range of enrichment activities benefitting the Trust’s
21,000 students. Our Co-op has continued to provide £1m support for vulnerable
students and community engagement by our academies, as well as wider in-kind support
including from our suppliers.
147
Sustainability
Our approach to sustainability is critical in our current and future plans and is embedded
in our wider vision. We will continue to drive forward our sustainability agenda and our
ambitious approach to climate action, ensuring that we keep focused on protecting
people and the planet.
We can’t deliver our commitments alone, so we work with our member owners,
communities, customers, colleagues and suppliers. You can read more about our Climate
Plan and progress in
our Social Value and Sustainability Report
148
Financial statements
Our Co-op’s money is our members’ money. Here, we share our accounting information
for 2025 with you.
Our Members' Annual Report 2025:
Financial Statements
149
Consolidated income statement
for the 52 week period ended 3 January 2026
2025
2024
Continuing Operations
Notes
£m
£m
Revenue (excluding funeral plans)
2
Insurance revenue (funeral plans)
2, 20
Total Revenue
2
Operating expenses (excluding funeral plans)
3
(11,032 )
(11,115 )
Insurance service expenses (funeral plans)
20
(89 )
(81 )
Other income
5
Operating (loss) / profit
1
(57 )
Finance income
6
Finance costs (excluding funeral plans)
7
(114 )
(126 )
Insurance finance expenses (funeral plans)
7, 20
(20 )
(18 )
(Loss) / profit before tax
1
(43 )
Taxation
8
(4 )
(63 )
(Loss) / profit for the period
(47 )
The accompanying notes on pages 154 - 222 form an integral part of these financial statements.
Reconciliation to Alternative performance measures (APMs*)
for the 52 week period ended 3 January 2026
2025
2024
Continuing Operations
Notes
£m
£m
Operating (loss) / profit - as above
1
(57 )
Add back / (deduct):
- Property disposals and closures
1
(11 )
(19 )
- Impairment of non-current assets
1
- Change in value of investment properties
23
(10 )
(14 )
- Cyber attack (incremental costs)
1
- Other non-underlying items
1
(7 )
(5 )
Underlying operating (loss) / profit*
1
(35 )
Less underlying net interest on loans and deposits
6, 7
(27 )
(22 )
Less underlying net interest expense on leases
6, 7
(64 )
(64 )
Underlying (loss) / profit before tax*
(126 )
*Refer to Note 1 for a definition of Underlying operating (loss) / profit and Underlying (loss) / profit before tax. Further detail on the Group's
alternative performance measures (APMs) is given in the Glossary on page 241.
Our Members' Annual Report 2025:
Financial Statements
150
Consolidated statement of comprehensive (loss) / income
for the 52 week period ended 3 January 2026
2025
2024
Notes
£m
£m
(Loss) / profit for the period
(47 )
Items that will never be reclassified to the income statement:
Remeasurement (losses) / gains on employee pension schemes
24
(3 )
Related tax on items above
8
(2 )
(2 )
Items that are or may be reclassified to the income statement:
Revaluation gain on properties prior to transfer to Investment properties
23
Insurance finance (expense) / income on funeral plans
20
(57 )
Tax on funeral plan liabilities (insurance contracts)
8
(24 )
(43 )
Other comprehensive (loss) / income for the period net of tax
(45 )
Total comprehensive (loss) / income for the period
(92 )
The accompanying notes on pages 154 - 222 form an integral part of these financial statements.
Our Members' Annual Report 2025:
Financial Statements
151
Consolidated balance sheet
as at 3 January 2026
2025
2024
Notes
£m
£m
Property, plant and equipment
10
Right-of-use assets
11
Goodwill and intangible assets
12
Investment properties
23
Investments in associates and joint ventures
Funeral plan investments
13
Pension assets (net pension assets for schemes in surplus)
24
Trade and other receivables
16
Finance lease receivables
11
Total non-current assets
Inventories
15
Trade and other receivables
16
Finance lease receivables
11
Short-term investments
17
Cash and cash equivalents
17
Total current assets
Total assets
Interest-bearing loans and borrowings
18
Lease liabilities
11
Trade and other payables
19
Insurance and re-insurance contract liabilities (funeral plans)
20
Derivative liabilities
26
Provisions
21
Pension liabilities (net pension liabilities for schemes in deficit)
24
Deferred tax liabilities
14
Total non-current liabilities
Overdrafts
17
Interest-bearing loans and borrowings
18
Lease liabilities
11
Trade and other payables
19
Insurance and re-insurance contract liabilities (funeral plans)
20
Derivative liabilities
26
Provisions
21
Total current liabilities
Total liabilities
Members’ share capital
22
Retained earnings
22
Other reserves
22
Total equity
Total equity and liabilities
The accompanying notes on pages 154 - 222 form an integral part of these financial statements.
Board’s certification
The financial statements on pages 149 - 222 are hereby signed on behalf of the Board pursuant to Section 80 (1) (a) of the Co-operative
and Community Benefit Societies Act.
Debbie White
-
Chair
Rachel Izzard
- Chief Financial Officer
Dominic Kendal-Ward
- Group Secretary
27 March 2026
Our Members' Annual Report 2025:
Financial Statements
152
Consolidated statement of changes in equity
for the 52 week period ended 3 January 2026
Members'
Retained
Other
Total
For the 52 weeks ended 3 January 2026
share capital
earnings
reserves
equity
Notes
£m
£m
£m
£m
Balance at 4 January 2025
Loss for the period
(47 )
(47 )
Other comprehensive income / (loss):
Remeasurement losses on employee pension schemes
24
(3 )
(3 )
Tax on remeasurement losses (pension schemes)
8
Insurance finance income (funeral plans)
20
(57 )
(57 )
Tax on funeral plan liabilities (insurance contracts)
8
Total other comprehensive loss
(45 )
(45 )
Shares issued less shares withdrawn
22
Total of items taken directly to retained earnings
Balance at 3 January 2026
22
The accompanying notes on pages 154 - 222 form an integral part of these financial statements.
Members'
Retained
Other
Total
For the 52 weeks ended 4 January 2025
share capital
earnings
reserves
equity
Notes
£m
£m
£m
£m
Balance at 6 January 2024
Profit for the period
Other comprehensive income / (loss):
Remeasurement gain on employee pension schemes
24
Tax on items taken directly to other comprehensive income
8
(2 )
(2 )
Insurance finance income (funeral plans)
20
Tax on funeral plan liabilities (insurance contracts)
8
(24 )
(24 )
Revaluation gain on properties prior to transfer to Investment properties
23
Total other comprehensive income
Shares issued less shares withdrawn
22
Total of items taken directly to retained earnings
Balance at 4 January 2025
22
Our Members' Annual Report 2025:
Financial Statements
153
Consolidated cash flow statement
for the 52 week period ended 3 January 2026
2025
2024
Group cash flow
Notes
£m
£m
Net cash from operating activities
9
Cash flows from investing activities:
Purchase of property, plant and equipment
(265 )
(248 )
Proceeds from sale of property, plant and equipment
Purchase of intangible assets
(53 )
(25 )
Disposal of businesses
Disposal of petrol forecourts
Purchase of investments for pre-paid funeral plan sales
13
(97 )
(90 )
Receipts from funds for pre-paid funeral plans performed or cancelled
13
Purchase of short-term investments
17
(100 )
Proceeds from sale of short-term investments
17
Dividends received from investments
Interest received on subleases
Rent received on subleases
Interest received on deposits
Net cash used in investing activities
(158 )
(80 )
Cash flows from financing activities:
Interest paid on borrowings
(45 )
(53 )
Interest paid on lease liabilities
11
(66 )
(67 )
Repayment of borrowings
18
(112 )
(204 )
Cash inflow from increase in
borrowings
18
Payment of lease liabilities
11
(137 )
(126 )
Derivative settlements
(2 )
(2 )
Share capital
22
Net cash used in financing activities
(310 )
(451 )
Net foreign exchange difference
Net decrease in cash and cash equivalents
(224 )
(75 )
Cash and cash equivalents at beginning of period
Net Cash and cash equivalents at end of period
17
Overdrafts (per balance sheet)
(2 )
Cash and cash equivalents (per balance sheet)
The accompanying notes on pages 154 - 222 form an integral part of these financial statements.
2025
2024
Group net debt (APM*)
Notes
£m
£m
Interest-bearing loans and borrowings
18
(417 )
(484 )
Lease liabilities
18
(1,178 )
(1,193 )
Total debt
(1,595 )
(1,677 )
- Group cash **
17
- Overdrafts
17
(2 )
- Short-term investments
17
Group net debt
(1,504 )
(1,257 )
Add back: accrued interest on amortised debt
Group net debt (excluding accrued interest on amortised debt)*
18
(1,495 )
(1,248 )
Group net debt (excluding lease liabilities and accrued interest on amortised debt)*
18
(317 )
(55 )
* Further detail on the Group's net debt APMs (alternative performance measures) is given in the Glossary on page 241.
** Group cash in our Net debt APM metric excludes £5m of restricted cash relating to receipts to be invested in funeral plan investments.
154
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
Operating segments
The Group identifies its operating segments based on its divisions, which are organised according to the different products and services it
offers its customers. The operating segments (and the captions) reported below are based on the periodic results reported into the Chief
Operating Decision Maker which is the Board and where the respective division's results meet the minimum reporting thresholds set out in
IFRS 8 (Operating Segments). Our other holding and support companies are included within costs from support functions.
Food |
B2B |
Life Services |
Support |
Total |
||||
Retail |
Federal |
Wholesale |
Funeral |
Legal |
Insurance |
functions |
||
2025 |
(e) |
|||||||
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
Revenue from external customers |
7,256 |
1,964 |
1,387 |
309 |
83 |
26 |
- |
11,025 |
Cost of goods and services |
(5,016) |
(1,964) |
(1,211) |
(50) |
(4) |
- |
- |
(8,245) |
Employee benefits expense |
(1,221) |
- |
(19) |
(111) |
(36) |
(5) |
(156) |
(1,548) |
Distribution and other costs and income |
(985) |
- |
(171) |
(141) |
(21) |
(9) |
60 |
(1,267) |
Underlying operating (loss) / profit (c) |
34 |
- |
(14) |
7 |
22 |
12 |
(96) |
(35) |
Property disposals and closures (c) (i) |
- |
- |
- |
- |
- |
- |
11 |
11 |
(Impairment) / reversals of non-current assets |
(37) |
- |
- |
- |
- |
- |
8 |
(29) |
Change in value of investment properties |
- |
- |
- |
- |
- |
- |
10 |
10 |
Cyber attack (incremental costs) (iii) |
(10) |
- |
- |
- |
- |
- |
(11) |
(21) |
Other non-underlying items (c) (iv) |
(4) |
- |
(1) |
(1) |
- |
2 |
11 |
7 |
Operating (loss) / profit (a) |
(17) |
- |
(15) |
6 |
22 |
14 |
(67) |
(57) |
Profit before tax (Funerals only) (f) |
116 |
|||||||
Depreciation and amortisation |
301 |
- |
6 |
31 |
1 |
- |
23 |
362 |
EBITDA* |
284 |
- |
(9) |
37 |
23 |
14 |
(44) |
305 |
Underlying EBITDA* |
335 |
- |
(8) |
38 |
23 |
12 |
(73) |
327 |
Additions to non-current assets (d) |
257 |
- |
7 |
18 |
- |
- |
36 |
318 |
Funeral revenue comprises £102m (2024: £91m) in relation to pre-need funeral plans and £207m (2024: £198m) for at-need funerals.
Wholesale revenue includes sales of £91m (2024: £74m) generated by our franchise business.
*Details of the Group's APMs (alternative performance measures) including EBITDA can be found in the Glossary on page 241.
Food |
B2B |
Life Services |
Support |
Total |
||||
Retail |
Federal |
Wholesale |
Funeral** |
Legal |
Insurance |
functions |
||
2024 |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
Revenue from external customers |
7,403 |
2,076 |
1,399 |
289 |
84 |
28 |
- |
11,279 |
Cost of goods and services |
(5,056) |
(2,076) |
(1,220) |
(59) |
(8) |
- |
- |
(8,419) |
Employee benefits expense |
(1,181) |
- |
(18) |
(106) |
(35) |
(5) |
(174) |
(1,519) |
Distribution and other costs and income |
(965) |
- |
(162) |
(125) |
(14) |
(8) |
64 |
(1,210) |
Underlying operating profit / (loss) (c) |
201 |
- |
(1) |
(1) |
27 |
15 |
(110) |
131 |
Property disposals and closures (c) (i) |
7 |
- |
1 |
- |
- |
- |
11 |
19 |
Impairment of non-current assets (c) (ii) |
(17) |
- |
(1) |
- |
- |
- |
- |
(18) |
Change in value of investment properties |
- |
- |
- |
- |
- |
- |
14 |
14 |
Other non-underlying items (c) (iv) |
19 |
- |
(1) |
(8) |
- |
- |
(5) |
5 |
Operating profit / (loss) (a) |
210 |
- |
(2) |
(9) |
27 |
15 |
(90) |
151 |
Profit before tax (Funerals only) (f) |
103 |
|||||||
Depreciation and amortisation |
293 |
- |
6 |
29 |
1 |
- |
21 |
350 |
EBITDA* |
503 |
- |
4 |
20 |
28 |
15 |
(69) |
501 |
Underlying EBITDA* |
494 |
- |
5 |
28 |
28 |
15 |
(89) |
481 |
Additions to non-current assets (d) |
194 |
- |
6 |
31 |
- |
- |
42 |
273 |
**Certain costs have been reclassified in the table above between Cost of goods and services and Distribution and other costs and income.
Notes to the financial statements
continued
1
Operating segments
continued
155
Our Members' Annual Report 2025:
Financial Statements
a) Each segment earns its revenue and profits from the sale of goods and provision of services. Transactions between operating segments
excluded in the analysis are £10m (2024: £125m) of sales of goods by Food to Wholesale net of supplier income and £101m (2024: £136m)
of pass through recharges (e.g. payroll and transport costs) made by Food to Wholesale. Food also provides a wholesale service to other
independent co-operative societies on a cost recovery basis. The cost of this service amounting to £159m (2024: £158m) is shown in Cost of
goods and services in the Federal segment, with the corresponding income in Food presented in Distribution and other costs and income
line. In addition, group central cost recharges to other business segments amounting to £210m (2024: £208m) are included within the
Distribution and other costs and income line.
b) The Group's external revenue and non-current assets arise primarily within the United Kingdom. The Group does not have any major
customers who account for 10% or more of revenue. In-line with how information is presented to the Board then underlying segment
operating profit includes an appropriate allocation of central support centre costs which are re-charged to the operating segments.
c) Underlying operating (loss) / profit is a non-GAAP measure of operating (loss) / profit before the impact of non-underlying items, as
detailed in notes (i) - (iv) below. Underlying (loss) / profit before tax includes charges for underlying interest on our borrowings and leases.
The Directors believe that these Alternative Performance Measures ("APMs") help our members understand our Group's and business
segments underlying performance. Further details on the Group's APMs is given in the Glossary section (page 241). The difference between
underlying operating (loss) / profit and operating (loss) / profit includes:
(i) Gains from property and business disposals of £11m (2024: £19m) comprise a £11m gain (2024: £11m gain) on non-trading properties
held in our central supporting function segment and £nil gain (2024: £7m gain) on Food stores and £nil gain (2024: £1m gain) in Wholesale.
(ii) Net impairment charges of £29m (2024: £18m) relate to an impairment charge over our Food stores of £37m (2024: £17m in Food and
£1m in Wholesale) offset by a net £1m impairment reversal relating to our support centre (2024: £nil), and a further reversal of £7m of the
previously recognised impairment on our sub-leased estate (2024:£nil).
(iii) During the period our Co-op was the victim of a cyber attack (April 2025). Our proactive cyber containment, defensive action and
subsequent recovery has impacted our financials in the period across multiple areas.
Incremental, non recurring costs relating to additional
activities and costs incurred as a direct result of the cyber attack totalling £21m (2024: £nil) have been recognised within non-underlying
items. These mainly relate to incremental stock losses (£4m) and stock wastage (£6m) in our Food business (totalling £10m), incremental
third party costs incurred with our professional services partners as well as incremental payroll costs incurred as part of the cyber recovery
process (£11m). Full analysis of the cyber impact on our Co-op is included in the Financial Review section of this report.
(iv) Other non-underlying items totalling a £7m gain (2024: £5m gain) comprises £13m of net gains from releases and charges to legal and
regulatory provisions, a £2m gain following a change in accounting treatment of deferred acquisition costs in our Insurance business, net of
a £8m charge relating to a multi-year business restructuring activity.
d) Additions to non-current assets are shown on a cash flow basis (and exclude funeral plan investments).
e) Federal relates to the activities of a joint buying group that is operated by the Group for itself and other independent co-operative
societies. The Group acts as a wholesaler to the other independent co-operatives and generates sales from this. This is run on a cost
recovery basis and therefore no profit is derived from its activities.
f) The Funeral segment includes the results of our pre-need funeral plan business recorded under IFRS 17 (Insurance Contracts). Underlying
operating profit remains an important performance measure and basis of our segmental reporting, however for the Funeral segment we
consider that this should be reviewed alongside other metrics to understand the performance of the Funeralcare business. As such we have
included profit before tax as an additional metric in the segmental tables for the Funeral business to aid a reader's understanding of the
performance of that business. Additionally, the net cash from operating activities is included in the table below to further aid a reader's
understanding of the performance of that business.
Funerals segment (£m) | 2025 | 2024 |
Operating profit / (loss) | 6 | (9) |
Finance income (funeral plans) | 110 | 102 |
Finance cost (funeral plans) | (20) | (18) |
Finance income (other) | 22 | 30 |
Finance costs (other) | (2) | (2) |
Profit before tax | 116 | 103 |
Net cash from operating activities | 17 | 20 |
156
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
1
Operating segments
continued
g) A reconciliation between Underlying operating (loss) / profit, Underlying (loss) / profit before tax and Loss / (profit) before tax is
provided below:
2025 | 2024 | ||
Continuing Operations | Notes | £m | £m |
Underlying operating (loss) / profit | (35) | 131 | |
Underlying net interest on loans and deposits | 6, 7 | (27) | (22) |
Underlying net interest expense on leases | 6, 7 | (64) | (64) |
Underlying (loss) / profit before tax | (126) | 45 | |
Property disposals and closures | 1 | 11 | 19 |
Impairment of non-current assets (net) | 1 | (29) | (18) |
Change in value of investment properties | 23 | 10 | 14 |
Cyber attack (incremental costs) | 1 | (21) | - |
Other non-underlying items | 1 | 7 | 5 |
Finance income (net pension income) | 6 | 18 | 17 |
Fair value movement on foreign exchange contracts and commodity derivatives (net) | 6 | 1 | (1) |
Fair value movement on interest rate swaps not designated for hedge accounting | 6 | 2 | 3 |
Fair value movement on quoted Group debt | 6 | 1 | (3) |
Finance income (funeral plans) | 6 | 110 | 102 |
Finance costs (funeral plans) | 7 | (20) | (18) |
Other non-underlying finance income | 6 | - | 5 |
Other non-underlying finance interest | 7 | (7) | (9) |
(Loss) / profit before tax | (43) | 161 |
Revenue
2025 | 2024 | |
£m | £m | |
Retail sales | 7,256 | 7,403 |
Provision of services | 316 | 310 |
Insurance revenue (funeral plans) | 102 | 91 |
Wholesale sales (excluding Franchise sales) | 1,296 | 1,325 |
Franchise sales | 91 | 74 |
Federal sales | 1,964 | 2,076 |
Total Revenue | 11,025 | 11,279 |
157
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
2
Revenue
continued
Unless stated otherwise, Revenue is recognised in line with IFRS 15 (Revenue from Contracts with Customers). IFRS 15 defines performance
obligations as a 'promise to provide a distinct good or service or a series of distinct goods or services'. Revenue is recognised when a
performance obligation has been delivered which reflects the point when control over a product or service transfers to a customer.
Revenue is measured based on the consideration set out in the contract with the customer and excludes amounts collected on behalf of
third parties. As noted below; Revenue on funeral plans (our pre-need business) is recognised in line with IFRS 17 (Insurance Contracts).
Sale of goods
The Group recognises revenue when it transfers control over a product to a customer. For goods sold in store, revenue is recognised at the
point of sale. For online or wholesale sales of goods, revenue is recognised on collection by, or delivery to, the customer. Any rebates, VAT
and other sales tax or duty items are deducted from revenue. Included within the Wholesale segment are sales to our franchise stores
(where franchisees operate a food store using the Co-op brand and Co-op supplied products). Co-op act as principal in the arrangement
and recognise income gross in respect of goods supplied by Co-op to the franchisees as well as a franchise fee based on turnover for
provision of the Co-op brand and additional support services.
Provision of services
Provision of services relates to activities in our Funerals (at-need business only), Legal services and Insurance businesses. Revenue is
recognised when separate performance obligations are delivered to the customer.
i) Funerals (at-need);
the only separable performance obligation is the funeral itself and therefore revenue is only recognised when the
funeral is performed (or the funeral plan is redeemed and the funeral is performed). Revenue comprises the amount recoverable from
clients for the provision of funerals and income from crematoria and other services, once those services have been performed or the goods
supplied. Co-op pays certain disbursements (such as burial plots, cremation fees, doctors' fees or ministers' fees) on behalf of its
customers, which are recovered as part of the invoicing process. The charges are passed through to customers at cost with Co-op acting as
an agent in the transaction (as we do not control the goods or services) and therefore no revenue is recognised. Income from memorial
sales is recognised at the point of sale, to the extent that the goods have been supplied. In the supply of monumental masonry, revenue is
recognised at the point the masonry is fitted into place.
ii) Legal Services;
revenue within personal injury and probate is recognised using a fixed milestone methodology which represents the
progression and fulfilment of a case. Milestones have been derived by using the output method, which means consideration on
performance and value transfer to the client. This approach and timing of milestones is reviewed on a regular basis to ensure revenue is
recognised within the appropriate accounting period. Revenue includes income generated on assets (client monies) under management in
respect of the delivery of regulated services.
iii) Insurance;
revenue relates to brokerage commission receivable for products not underwritten by Co-op and the recognition of
income received in advance of services performed under a distribution agreement. Revenue is recognised when performance obligations
are met being the later of the policy inception date and the date on which policy placement is complete, net of expected commission claw
back. Co-op receives commission for the brokerage service it provides on products underwritten by third party insurer partners.
Performance obligations are satisfied at the date on which policy placement is complete and the policy is incepted. The transaction price
recognised as revenue is calculated based on the contracted commission rates payable by the third party insurer which underwrites each
policy and the policy premium. Incremental costs that are directly incurred securing new business (such as aggregator fees from price
comparision websites) are deferred and held on the balance sheet (within Trade and Other Receiveables) as an asset when we expect to
recover those costs through future income on the new business. The deferred costs are subsequently charged to the Income statement on
a systematic basis that is consistent with the revenue that is expected to be earned from the customer of the services to which the asset
relates over the average life of the relationship with the customer.
Funerals (pre-need) Insurance revenue (funeral plans)
The Group adopted IFRS 17 (Insurance Contracts) from 1 January 2023 which specifically applies to the Group's pre-need funeral plans
(including the re-insurance of the payment waiver risk where Group waives the remaining payments if a customer dies during the payment
term subject to conditions). Under IFRS 17 the Group recognises revenue over the contract coverage period (being the duration of the
funeral plan). Further detail as to the accounting policies used to record revenue, recognise profit and value the insurance contract liability
are given in Note 20.
Federal sales - principal versus agent presentation
The Group operates a joint buying group for itself and other independent co-operative societies. The Group acts as a wholesaler to the
other independent co-operatives and generates sales from this. This is run on a cost recovery basis and therefore no profit is derived from
its activities. The Group controls the goods prior to the transfer to the independent co-operatives, and in accordance with IFRS 15, the
Group is acting as the principal in these transactions (as opposed to an agent) and records revenue on that basis. The Group also
administers the invoicing for the supply of certain goods direct from suppliers to the independent co-operative societies. Although the
Group does not have control of the goods, it negotiates the supply contracts and bears the bad debt risk, so is acting as principal under
158
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
Operating expenses
Operating (loss) / profit is stated after (charging) / crediting the following:
2025 | 2024 | |
£m | £m | |
Cost of goods and services recognised as an expense | (8,245) | (8,419) |
Employee benefits expense (see below) | (1,548) | (1,519) |
Impairment of plant, property and equipment and goodwill | (17) | (15) |
Impairment of plant, property and equipment and goodwill (reversals) | - | 7 |
Impairment of right-of-use assets | (23) | (10) |
Impairment of right-of-use assets (reversals) | 3 | - |
Impairment of subleases (reversals) | 8 | - |
Cyber attack (incremental costs) - see Note 1 (c iii) | (21) | - |
Depreciation of plant, property and equipment | (217) | (208) |
Depreciation of right-of-use assets | (112) | (110) |
Amortisation of intangible assets | (33) | (32) |
Charge on allowance for expected credit losses on trade receivables | (3) | (8) |
Credit on allowance for expected credit losses on trade receivables | 1 | 9 |
Subscriptions and donations | (8) | (9) |
2025 | 2024 | |
£m | £m | |
Wages and salaries | (1,346) | (1,355) |
Social security costs | (132) | (97) |
Pension costs - defined benefit schemes | (6) | (6) |
Pension costs - defined contribution schemes | (64) | (61) |
Total employee benefits expense | (1,548) | (1,519) |
Employee benefits expense includes executive directors.
The average number of people employed by the Group in the UK during the year (including executive directors) was:
2025 | 2024 | |
Number | Number | |
Full-time | 16,938 | 17,373 |
Part-time | 36,477 | 37,482 |
Total average employees | 53,415 | 54,855 |
As at the balance sheet date (3rd January 2026) there were 53,131 employees; comprising 16,807 (full-time) and 36,324 (part-time).
159
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
3
Operating expenses
continued
2025 | 2024 | |
Auditor remuneration | £m | £m |
Audit of these financial statements | 3.3 | 3.2 |
Audit of financial statements of subsidiaries | 0.9 | 0.9 |
Non-audit services | 0.1 | 0.1 |
Total fees | 4.3 | 4.2 |
Operating expenses are analysed by nature, as defined by IAS 1 (Presentation of Financial Statements). Payments to charitable organisations
Supplier income
2025 | 2024 | |
Supplier income | £m | £m |
Food - Long-term agreements | 159 | 166 |
Food - Bonus income | 115 | 130 |
Food - Promotional income | 242 | 258 |
Total Food supplier income | 516 | 554 |
Wholesale - Long-term agreements | 21 | 26 |
Wholesale - Bonus income | 13 | 10 |
Wholesale - Promotional income | 73 | 69 |
Total Wholesale supplier income | 107 | 105 |
Total supplier income | 623 | 659 |
Percentage of Cost of Sales before deducting Supplier income | 2025 | 2024 |
Food - Long-term agreements | 3.0% | 3.0% |
Food - Bonus income | 2.1% | 2.4% |
Food - Promotional income | 4.5% | 4.7% |
Total Food supplier income percentage | 9.6% | 10.1% |
Wholesale - Long-term agreements | 1.7% | 2.1% |
Wholesale - Bonus income | 1.1% | 0.8% |
Wholesale - Promotional income | 6.1% | 5.5% |
Total Wholesale supplier income percentage | 8.9% | 8.4% |
All figures exclude any income or purchases made as part of the Federal joint buying group (as supplier income is passed on to Federal
(FRTS) members in the same proportion as the ratio to their cost of sales).
160
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
4
Supplier Income
continued
Supplier income
Supplier income is recognised as a deduction from cost of sales on an accruals basis, based on the expected entitlement that has been
earned up to the balance sheet date for each relevant supplier contract. Where amounts received are in the expectation of future business,
these are recognised in the income statement in line with that future business.
The Group has a mixture of contractual terms with its suppliers. Where our trading terms state that the supplier income is netted against
amounts owing to
that supplier and it is our intention to settle the balances on a net basis then any outstanding invoiced supplier income at
the reporting date is included within trade payables (Note 19). Any
amounts received in advance of income being recognised are included
in accruals and deferred income (Note 19). When we do not have the right of offset (or we do not intend to settle on a net basis) then the
Group classifies outstanding supplier income within trade receivables (Note 15). Where the supplier income is earned but not yet invoiced
to the supplier at the reporting date, this is classified within accrued income (Note 15).
There are three main types of income:
1. Long-term agreements:
These refer to supplier income rebates based on the value of purchases Co-op places with its suppliers.
Typically, these are annual % rebate agreements applied to the purchases Co-op makes from its suppliers. Income is only recognised once
the rebate agreement is in place with the supplier.
2. Bonus income:
These are typically unique payments made by the supplier and are not based on volume. They include payments for
marketing support, range promotion and product development. These amounts are recognised when the income is earned and confirmed
by suppliers. An element of the income is deferred if it relates to a future period.
3. Promotional income:
Rebates based on sales volumes relating to agreed promotional activity. These are retrospective rebates based
on sales volumes.
Other income
2025 | 2024 | |
£m | £m | |
Rental income from non-investment properties | 4 | 7 |
Rental income from investment properties | 3 | 2 |
Gain on property, business disposals and closures (before impairments) | 11 | 19 |
Change in value of investment properties | 10 | 14 |
Impairment reversals of non-current assets | 11 | 7 |
Net gain on other plant and equipment disposals | - | 2 |
Gain on one-off fair value adjustment * | - | 17 |
Total other income | 39 | 68 |
* In the prior year; this related to a one-off adjustment to eliminate an historic fair value adjustment to certain Property, plant and
equipment assets.
Rental income from investment and non-investment properties
Rental income arising from operating leases on both investment and non-investment properties is accounted for on a straight-line basis
over the lease term. Rental income arising on these non-trading properties is shown as Other Income (rather than as Revenue) as the
income does not form an integral part of our core business strategy and operating model. For accounting policies relating to investment
161
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
Finance income
2025 | 2024 | |
£m | £m | |
Underlying finance income: | ||
Interest income from finance lease receivables | 2 | 2 |
Interest receivable on deposits | 14 | 25 |
Total underlying finance income | 16 | 27 |
Non-underlying finance income: | ||
Net pension finance income | 18 | 17 |
Fair value movement on interest rate swaps* | 2 | 3 |
Fair value movement on foreign exchange contracts and commodity derivatives | 1 | - |
Fair value movement on quoted Group debt | 1 | - |
Unrealised fair value movement on funeral plan investments | 110 | 102 |
Other non-underlying finance income** | - | 5 |
Total non-underlying finance income | 132 | 127 |
Total finance income | 148 | 154 |
*The fair value movement noted in the Finance income table above relates to the £105m of interest rate swaps that are not designated for
hedge accounting. The effective portion of the fair value movement on the £175m of swaps designated for hedge accounting has been
reflected in the Hedge Reserve (see Note 22).
** The £5m gain noted in the prior year related to the net impact of a refinement of our actuarial model during that year (following the
adoption of IFRS 17 in 2023) resulting in a one-off adjustment to plan liabilities of £19m (Note 20) and £14m of investments relating to fixed
Finance costs
2025 | 2024 | |
£m | £m | |
Underlying finance costs: | ||
Interest on loans (all repayable within five years) | (41) | (47) |
Interest expense on lease liabilities | (66) | (66) |
Total underlying finance cost | (107) | (113) |
Non-underlying finance costs: | ||
Fair value movement on foreign exchange contracts and commodity derivatives | - | (1) |
Fair value movement on quoted Group debt | - | (3) |
Other non-underlying finance interest | (7) | (9) |
Insurance finance expenses (funeral plans) | (20) | (18) |
Total non-underlying finance cost | (27) | (31) |
Total finance costs | (134) | (144) |
Total interest expense on financial liabilities (including lease liabilities) that are not at fair value through the income statement was £99m
162
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
Taxation
2025 |
2024 |
||
Footnote |
£m |
£m |
|
Current tax credit - current period |
(i) |
- |
- |
Current tax credit - adjustment in respect of prior periods |
- |
- |
|
Net current tax credit - in respect of continuing operations |
- |
- |
|
Net current tax charge - in respect of discontinued operations |
- |
- |
|
Total current tax charge |
- |
- |
|
Deferred tax charge - current period |
(ii) |
(1) |
(74) |
Deferred tax credit - adjustments in respect of prior periods |
(iii) |
(3) |
11 |
Deferred tax charge - impact of rate change (see note below) |
(ii) |
- |
- |
Total deferred tax charge |
(4) |
(63) |
|
Total tax charge reported in the income statement |
(4) |
(63) |
|
Total tax charge |
(4) |
(63) |
The tax on the Group’s net profit before tax differs from the theoretical amount that would arise using the standard applicable rate of
corporation tax of 25.0% (2024: 25.0%) as follows:
2025 |
2024 |
||
Footnote |
£m |
£m |
|
(Loss) / profit before tax from continuing operations |
(43) |
161 |
|
Profit before tax from discontinued operation |
- |
- |
|
Total (loss) / profit before tax |
(43) |
161 |
|
Tax credit / (charge) at 25.0% (2024: 25.0%) |
11 |
(40) |
|
Current tax reconciliation: |
|||
Expenses not deductible for tax (including one-off costs) |
(iv) |
(1) |
(20) |
Depreciation and amortisation on non-qualifying assets |
(v) |
(11) |
(12) |
Capital gains arising on property disposals |
(vi) |
- |
(2) |
Impact on current tax for movement in temporary tax differences (see below) |
1 |
74 |
|
Total current tax charge |
- |
- |
|
Deferred tax reconciliation: (Utilisation) / increase of temporary tax differences - see Note 14 footnote (vii) |
|||
Utilisation of capital allowances in excess of depreciation on qualifying assets |
(7) |
(78) |
|
Utilisation of brought forward tax losses |
(1) |
(1) |
|
Pension timing differences |
13 |
10 |
|
Unwind of restatement adjustment on adoption of IFRS 16 |
(6) |
(5) |
|
IFRS 17 Funeral plan liabilities |
- |
- |
|
Unrealised gains on investment properties, rolled-over gains and historic business combinations |
- |
- |
|
Subtotal of deferred tax reconciling items |
(1) |
(74) |
|
Other deferred tax items: |
|||
Adjustment in respect of previous periods |
(iii) |
(3) |
11 |
Impact of restatement of deferred tax to enacted rate |
(vii) |
- |
- |
Total deferred tax charge |
(4) |
(63) |
|
Total tax charge |
(4) |
(63) |
163
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
8
Taxation
continued
Tax expense on items taken directly to consolidated statement of comprehensive income:
2025 | 2024 | |
£m | £m | |
Actuarial gains and losses on employee pension scheme | 1 | (2) |
IFRS 17 Funeral plan liabilities | 14 | (24) |
Tax on items taken directly to consolidated statement of comprehensive income | 15 | (26) |
Of the £15m tax taken directly to the consolidated statement of comprehensive income, £1m credit (2024: £2m debit) arises on the
actuarial movement on employee pension schemes with the main movement through OCI being the £14m credit in relation to IFRS 17.
There was no movement this year directly to the consolidated statement of comprehensive income in respect of investment properties
revaluations.
Tax policy
We publish our tax policy on our website (https://www.co-operative.coop/ethics/tax-policy) and have complied with the commitments set
out in that policy.
Pillar 2
The OECD has promoted Pillar 2 reform and this has now been introduced into the UK tax system. The new rules are designed to promote
the international actions put forward by the OECD to impose a minimum tax rate of 15%. The Co-op have considered the new rules and
concluded that its prevailing Effective Tax Rate is above 15% and that therefore the Pillar 2 rules have no application in terms of affecting
the Group’s tax cost. This is mainly due to prevailing and integral permanent differences in the Group’s tax calculations which will have the
impact of increasing the accounting Profit Before Tax for the foreseeable future.
Footnotes to Taxation note 8:
i) The Group is not tax-paying in the UK in respect of 2025 (2024: not tax-paying) due to the fact it has offset its current year profits by
utilising some of its brought forward tax attributes. The tax attributes used have mainly been brought forward capital allowances (£366m
gross claimed in 2025) and tax losses (£5m gross utilised in 2025) that offset its taxable profits for the period (2024: £373m gross claimed
and £5m gross utilised). These allowances and losses are explained in more detail in Note 14. The current tax charge nets to £nil.
Outside of the UK, our Isle of Man resident subsidiary, Manx Co-operative Society, a convenience retailing business in the Isle of Man
showed a small profit in 2025, giving rise to a small current tax liability of £0.3m (2024: £0.2m). This is the Group's only non-UK resident
entity for tax purposes, which employs 71 part-time and 128 full-time colleagues out of our total Group headcount figure (2024: 89 part-
time and 147 full-time). All other income in the consolidated income statement is generated by UK activities and all other colleagues are
employed in the UK.
The 2025 revenue of Manx Co-operative Society is £32m (2024: £42m) and all other revenue reflected in the consolidated income
statement is generated by UK trading activities. The net assets of Manx Co-operative Society at 3 January 2026 were £14m (4 January
2025: £16m, compared to net assets of the consolidated Group of £2,108m (2024: £2,198m). The Manx assets represent the only overseas
trading assets within the Group. A full copy of the most recent accounts is available here https://www.co-operative.coop/investors/rules.
The presence of this Isle of Man resident subsidiary has not resulted in any additional tax charge in 2025 over and above that payable to
the Isle of Man authorities stated above. If these activities had been carried out in the UK, these profits would have been included within
the Group's taxable profit prior to the availability of capital allowances and tax losses.
ii) Deferred tax is an accounting concept that reflects how some income and expenses can affect the tax charge in different periods to
when they are reflected for accounting purposes. These differences are a result of tax legislation which require us to make these
adjustments in our annual tax returns. The £4m deferred tax charge mainly relates to the net use of temporary differences in respect of the
movements on pension assets and capital allowances not yet claimed. Note 14 gives further detail on how each deferred tax balance has
moved in the year.
iii) The deferred tax adjustments in respect of prior years is a common adjustment. It reflects the difference between what is known at the
time and reflected in the notes to these accounts and when the final tax returns are submitted to HMRC. In this year, we have made an £3m
credit adjustment in respect of prior years.
164
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
8
Taxation
continued
iv) Some expenses incurred by the Group may be entirely appropriate charges for inclusion in its financial statements but are not allowed
as a deduction against taxable income when calculating the Group's tax liability. Examples of this include some repairs, entertaining costs
and certain legal costs.
v) During the year the Group incurred expenditure on depreciating fixed assets which do not qualify for capital allowances. As this
expenditure will never attract tax relief, this has led to an adjusting difference on the reconciliation.
vi) During the year a number of properties were sold, where the net taxable profit was more than the accounting profit.
vii) It is a requirement to measure deferred tax balances at the substantively enacted corporation tax rate at which they are expected to
unwind. As the enacted deferred tax rate is the same as the current tax rate of 25%, there has been no difference to record this year.
Income tax on the profit or loss for the period is made up of current and deferred tax. Income tax is recognised in the income statement
except to the extent that it relates to items recognised directly in reserves, in which case it is recognised in other comprehensive income.
Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted at the
Reconciliation of operating (loss) / profit to net cash flow from operating activities
2025 | 2024 | |
£m | £m | |
Operating (loss) / profit | (57) | 151 |
Depreciation and amortisation charges | 362 | 350 |
Non-current asset impairments | 40 | 25 |
Non-current asset impairment reversals | (11) | (7) |
Profit on closure and disposal of businesses and non-current assets | (11) | (19) |
Change in value of investment properties | (10) | (14) |
Other non-underlying items * | - | (17) |
Retirement benefit obligations | 72 | 56 |
Increase in inventories | (26) | (17) |
Increase in receivables | (133) | (12) |
Increase / (decrease) in expected credit losses on trade receivables | 2 | (3) |
Increase in insurance contract liabilities (funeral plans) | (4) | (2) |
Increase / (decrease) in payables and provisions | 19 | (35) |
Net cash flow from operating activities | 243 | 456 |
* In the comparative period; Other non-underlying items reflected a £17m non-cash gain relating to a one off adjustment to eliminate an
historic fair value adjustment to certain Property, plant and equipment assets which had not been amortised. This gain was treated as a
non-underlying item in the Income statement.
165
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
Property, plant and equipment
Plant and |
|||
For the period ended 3 January 2026 |
Property |
equipment |
Total |
| £m |
£m |
£m |
|
Cost or valuation: |
|||
At 4 January 2025 |
1,326 |
2,782 |
4,108 |
Additions |
49 |
220 |
269 |
Disposals |
(9) |
(31) |
(40) |
At 3 January 2026 |
1,366 |
2,971 |
4,337 |
Depreciation: |
|||
At 4 January 2025 |
593 |
1,959 |
2,552 |
Charge for the period |
32 |
185 |
217 |
Impairment |
- |
17 |
17 |
Disposals |
(9) |
(31) |
(40) |
At 3 January 2026 |
616 |
2,130 |
2,746 |
Net book value: |
|||
At 3 January 2026 |
750 |
841 |
1,591 |
At 4 January 2025 |
733 |
823 |
1,556 |
Capital work in progress included above |
3 |
78 |
81 |
The impairment charge of £17m (2024: £8m) reflects impairment charges on our Food stores impacted by the underlying performance of
our Food business (see also Critical accounting estimates and judgements section of this note).
Plant and |
|||
For the period ended 4 January 2025 |
Property |
equipment |
Total |
£m |
£m |
£m |
|
Cost or valuation: |
|||
At 6 January 2024 |
1,362 |
2,719 |
4,081 |
Additions |
49 |
188 |
237 |
Disposals |
(81) |
(125) |
(206) |
Transfer to Investment properties (Note 23) |
(4) |
- |
(4) |
At 4 January 2025 |
1,326 |
2,782 |
4,108 |
Depreciation: |
|||
At 6 January 2024 |
634 |
1,904 |
2,538 |
Charge for the period |
27 |
181 |
208 |
Impairment |
6 |
2 |
8 |
Disposals |
(74) |
(128) |
(202) |
At 4 January 2025 |
593 |
1,959 |
2,552 |
Net book value: |
|||
At 4 January 2025 |
733 |
823 |
1,556 |
At 6 January 2024 |
728 |
815 |
1,543 |
Capital work in progress included above |
- |
23 |
23 |
166
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
10
Property, plant and equipment
continued
Critical accounting estimates and judgements
Impairment
An impairment review as at 3 January 2026 has been performed over our Food and Funeralcare estate with a total net impairment charge
amounting to £37m (2024: £18m), relating to £17m for Property, plant and equipment (2024: £8m) and £20m for Right of use assets
(2024: £10m). The impairment charge relates to our Food stores and is driven by the underlying performance of our Food business. Gross
impairment recognised in respect of Property, plant and equipment amounted to £17m (2024: £12m), offset by impairment reversals of
£nil (2024: £3m), whilst the gross impairment relating to right of use assets was £23m (2024: £13m) offset by impairment reversals of £3m
(2024: £4m). The key assumptions in the value in use calculations are:
Assumption | Food Segment | Funeral Segment |
Structure of | Each individual food store is deemed to be an individual | A cash generating unit (CGU) is deemed to be a local network |
a CGU | cash generating unit (CGU). | of interdependent branches, known as a Funeralcare Hub. |
Future cash flows for FY26 and FY27 are derived from | Future cash flows for FY26 and FY27 are derived from Board | |
Board approved plan cash flow assumptions. The plan | approved plan cash flow projections. The plan reflects updated | |
reflects updated growth assumptions following the impact | growth assumptions following the impact of the recent cyber | |
of the recent cyber attack on underlying trading | attack on underlying trading performance and ongoing cost | |
performance and ongoing cost headwinds. | headwinds. | |
For leasehold stores the forecasts are then subject to a | The forecasts and then subject to a long term growth rate of | |
growth rate of 0% for the remainder of the lease period. | 1.02% (2024: 1.07%) reflecting the UK's long-term death rate | |
After the lease period, a long-term growth rate of 1.9% | for the period of the lease and into perpetuity. Where we have | |
(2024: 1.9%) is applied into perpetuity (adjusted for rent | known lease exit dates then the remaining lease terms have | |
expense given the impact of IFRS 16 leases) reflecting the | been used. For freehold branches, the assumed time frame | |
UK's long-term growth rate. Where we have known lease | aligns with the average branch refit cycle. | |
exit dates then the remaining lease terms have been used. | ||
For freehold stores, the assumed time frame for the | Perpetuities are included in cash flows with 1.02% growth | |
growth rate of 0% aligns with the average store refit cycle | (2024: 1.07%) where branches are expected to be operational | |
of 10 years, with cash flows taken to perpetuity at 1.9% | beyond their current lease terms (adjusted for rent expense | |
long-term growth (2024: 1.9%) where stores are expected | given the impact of IFRS 16 leases), or for freeholds, beyond the | |
to be operated beyond the average store refit cycle. Cash | average branch refit cycle. | |
flows include estimated periodic store capital | ||
maintenance costs based on the square footage of the | Cash flows include an appropriate estimate of periodic capital | |
Cash flow | store. | maintenance costs. |
| assumptions | ||
| In general, new stores in their early months of operations | ||
are considered to be on a maturity curve and therefore | ||
excluded from our impairment assessment. Where | ||
appropriate, due to site-specific trading circumstances, | ||
individual such stores are included in the assessment by | ||
exception. Similarly, impairment reversals are considered | ||
after a store has completed a two year recovery period. | ||
The Group is working through the potential impact of the climate related risks and opportunities as identified and disclosed | ||
in our Climate-Related Financial Disclosures (CRFD) report on pages 119 - 129. Our risk assessment and scenario analysis | ||
identified that the most material climate related risks are on technology and consumer sentiment. We have considered | ||
these risks in our assessment of whether any indicators of impairment existed at the balance sheet date, however it was | ||
concluded that the expected climate related risks did not have a material impact on the Group's impairment considerations | ||
at the reporting date. | ||
The board-approved plan underpinning our property, plant and equipment and goodwill impairment assessment, takes | ||
into consideration any incremental costs of climate related actions to mitigate these risks where these are expected to | ||
crystallise within the timeframe of the plan. This represents a developing area with inherent uncertainty which is constantly | ||
evolving. | ||
167
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
10
Property, plant and equipment
continued
Impairment
- continued
Assumption |
Food Segment |
Funeral Segment |
A post tax discount rate has been calculated for impairment |
A post tax discount rate has been calculated for |
|
purposes, with the Food segment's weighted average cost of |
impairment purposes, with the Funeralcare segment's |
|
capital (WACC) deemed to be an appropriate rate, |
weighted average cost of capital (WACC) deemed to be an |
|
subsequently grossed up to a pre-tax rate of 11.4% (2024: |
appropriate rate, subsequently grossed up to a pre-tax |
|
10.3%). The post tax discount rate has been calculated using the rate of 10.2% (2024: 9.7%). The post tax discount rate has |
been calculated using the capital asset pricing model. |
|
capital asset pricing model. |
||
Certain inputs into the capital asset pricing model are not |
Certain inputs into the capital asset pricing model are not |
|
readily available for non-listed entities. As such, certain inputs |
readily available for non-listed entities. As such, certain |
|
have been obtained from industry benchmarks which carries a |
inputs have been obtained from industry benchmarks |
|
Discount |
measure of estimation uncertainty. |
which carries a measure of estimation uncertainty. |
rate and |
||
Sensitivity |
Sensitivity analysis has been performed against the key |
Sensitivity analysis has been performed against the key |
analysis |
assumptions used in our store impairment testing as follows: a) |
assumptions used in our Funeralcare Hub impairment |
a 1% increase or decrease in the long term growth and b) no |
testing as follows: a) a 1% increase or decrease in the long |
|
growth assumed in the first two years of forecasts. The |
term growth rate. The sensitivities have not resulted in a |
|
sensitivities have not resulted in a material movement in the |
material movement in the impairment calculated. The |
|
impairment calculated. The sensitivity analysis performed |
sensitivity analysis performed considers reasonably |
|
considers reasonably possible changes in these key |
possible changes in the discount rate and growth rate |
|
assumptions and was modelled using cashflows that included |
assumptions. Sensitivity analysis has also been performed |
|
and excluded the impact of the cyber attack. Sensitivity analysis |
on our goodwill impairment testing, see note 12. |
|
has also been performed on our goodwill impairment testing, |
||
see note 12. |
Where parts of an item of property, plant and equipment have materially different useful economic lives, they are accounted for as
separate items of property, plant and equipment. Cost includes purchase price plus any costs directly attributable to bringing the assets
to the location and condition necessary for it to be capable of operating in the manner intended by management. Depreciation is
provided on the cost or valuation less estimated residual value (excluding freehold land) on a straight-line basis over the anticipated
working lives of the assets. The estimated useful lives are as follows and where appropriate would also include our assessment of the
expected impact on asset lives of our plan to move to net zero by 2040:
Freehold buildings - 50 years
All properties are measured at cost less accumulated depreciation and impairment losses.
Land is not depreciated
Plant & equipment
Plant and machinery - 3 to 13 years
Vehicles - 3 to 9 years
We no longer include property, plant and equipment in our balance sheet when the Group loses the right to the future economic benefits
For the Food segment, the Group treats each store as a separate cash-generating unit (CGU) for impairment testing of property, plant and
equipment and right-of-use assets. The Group allocates goodwill to groups of cash-generating units, where appropriate. Whilst the
individual food stores represent the CGUs, the lowest level at which internal management monitor the performance of the business is at a
total Food segment level. To meet the requirements of IAS 36 CGUs are grouped together for goodwill impairment testing as described
in note 12.
For the Funerals segment, the Group treats a local network of interdependent branches, known as a Funeralcare Hub, as a separate cash-
generating unit for impairment testing of property, plant and equipment, right-of-use assets and goodwill. Where an individual branch
within a local network is to be closed, the individual branch is defined as the CGU, rather than being included with the network of
interdependent branches. This is because the branch is no longer expected to contribute to the business through cash generated through
its operating activities but instead through any proceeds on disposal.
Notes to the financial statements
continued
10
Property, plant and equipment
continued
Impairment
- continued
Accounting policies
- continued
Impairment - continued
168
Our Members' Annual Report 2025:
Financial Statements
At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment to determine whether there is any
indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset, is estimated
in order to determine the extent of the impairment loss. The recoverable amount for Food and Funeral cash generating units (CGUs) is the
greater of the fair value of the CGU (less costs to sell) and the value in use (VIU) of the CGU. For freehold stores the fair value of the CGUs
(less costs to sell) is estimated using internal valuations based on rateable values or recent market values where known. Where the VIU
estimates are higher than the fair value estimates the VIU estimates have been used in the impairment assessments. The VIU for Food and
Funeral CGUs has been determined using discounted cash flow calculations. Impairment losses are recognised in the income statement.
Where the asset does not generate cash inflows that are independent from other assets, the Group estimates the recoverable amount of the
cash-generating unit (CGU) to which the asset belongs. An impairment loss is reversed if there has been a change in the estimate used to
determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount is returned to what it
169
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
Leases
A. As a lessee
Plant and |
|||
Right-of-use assets |
Property |
equipment |
Total |
£m |
£m |
£m |
|
Balance at 4th January 2025 |
740 |
65 |
805 |
Depreciation charge for the year |
(93) |
(19) |
(112) |
New leases and modifications |
110 |
29 |
139 |
Disposals |
(15) |
- |
(15) |
Net Impairment |
(20) |
- |
(20) |
Balance at 3rd January 2026 |
722 |
75 |
797 |
The net impairment charge of £20m (2024: £10m) comprises a £20m (2024: £10m) impairment charge against food stores where future
cashflow forecasts do not support the carrying value of the right-of-use assets and a £3m (2024: £nil) charge against non-trading properties
net of a reversal of £3m (2024: £nil) of previously recognised impairment for one of the floors in our support centre. In the context of
impairment, the critical accounting estimates and judgements set out in Note 10 (Property, plant and equipment) are also applicable for
right-of-use assets.
Balance at 6th January 2024 |
774 |
53 |
827 |
Depreciation charge for the year |
(89) |
(21) |
(110) |
New leases and modifications |
87 |
33 |
120 |
Disposals |
(20) |
- |
(20) |
Transfer to Investment Properties (Note 23) |
(2) |
- |
(2) |
Impairment |
(10) |
- |
(10) |
Balance at 4th January 2025 |
740 |
65 |
805 |
The Group leases many assets, principally it leases properties for its food retail stores and funeral branches as well as some vehicles and
other equipment. The leases of retail stores are typically between 1 and 20 years in length (2024: 1 and 20 years), and leases of funeral
branches are typically between 1 and 10 years in length (2024: 1 and 10 years). Vehicle and equipment leases are typically between 1 and
4 years in length (2024: 1 and 4 years) and in some cases the Group has options to purchase the assets at the end of the contract term.
Additions to right-of-use assets may vary to the lease liability additions figure noted in the table below due to the accounting treatment of
lease incentives and dilapidation provisions under IFRS 16.
2025 |
2024 |
|
| Lease liabilities |
£m |
£m |
Current |
(191) |
(173) |
Non-current |
(987) |
(1,020) |
Lease liabilities included in the Consolidated balance sheet |
(1,178) |
(1,193) |
2025 |
2024 |
|
| Lease liabilities |
£m |
£m |
At the start of the period |
(1,193) |
(1,233) |
New leases and modifications |
(139) |
(121) |
Disposals |
17 |
35 |
Interest expense |
(66) |
(67) |
Payments |
203 |
193 |
Total lease liabilities |
(1,178) |
(1,193) |
170
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
11
Leases
continued
Extension and termination options
Some leases of retail stores contain extension or termination options exercisable by the Group up to one year before the end of the non-
cancellable contract period. Where practicable, the Group seeks to include extension and termination options in new leases to provide
operational flexibility. The extension and termination options held are typically exercisable only by the Group and not by the lessors. The
Group assesses at lease commencement whether it is reasonably certain to exercise the extension or termination options. The Group
reassesses whether it is reasonably certain to exercise the options if there is a material event or material change in circumstances within its
control. As at 3 January 2026, potential discounted future cash outflows of £176m (2024: £179m) have not been included in the lease
liability because it is not reasonably certain that the Group will exercise the extension option. Included within the lease liability are
discounted future cash outflows of £97m (2024: £102m) where the group holds termination options but it is not reasonably certain to
execute those termination options. In addition, an estimated £71m (2024: £56m) of potential discounted future cash outflows is not
included in the lease liability relating to contracts currently under review for renewal.
Short term leases
The Group recognised rent expense from short-term leases of £3m (2024: £2m).
B. As a lessor
Lease income from lease contracts in which the Group acts as a lessor is as below:
2025 | 2024 | |
£m | £m | |
Operating lease (i) | ||
Lease income | 7 | 8 |
Finance lease (ii) | ||
Finance income on the net investment in the lease | 2 | 2 |
i. Operating lease
The Group leases out its investment properties. The Group classifies these leases as operating leases, because they do not transfer
substantially all of the risks and rewards incidental to the ownership of the assets. The following table sets out a maturity analysis of lease
payments, showing the undiscounted lease payments to be received after the reporting date.
2025 | 2024 | |
£m | £m | |
Less than one year | 5 | 5 |
One to two years | 4 | 4 |
Two to three years | 3 | 4 |
Three to four years | 3 | 4 |
Four to five years | 2 | 4 |
More than five years | 28 | 26 |
Total undiscounted lease payments receivable | 45 | 47 |
ii. Finance lease
The Group also subleases some of its non-occupied leased properties. The Group classifies the sublease as a finance lease, where the
period of the sublease is for substantially the remaining term of the head lease. The following table sets out a maturity analysis of lease
receivables, showing the undiscounted lease payments to be received after the reporting date.
171
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
11
Leases
continued
B. As a lessor
- continued
ii. Finance lease
- continued
2025 |
2024 |
|
£m |
£m |
|
Less than one year |
7 |
6 |
One to two years |
6 |
6 |
Two to three years |
6 |
6 |
Three to four years |
5 |
5 |
Four to five years |
5 |
4 |
More than five years |
19 |
22 |
Total undiscounted lease payments receivable |
48 |
49 |
Less: Unearned finance income |
(10) |
(11) |
Present value of minimum lease payments receivable |
38 |
38 |
Impairment loss allowance |
(3) |
(12) |
Finance lease receivable (net of impairment allowance) |
35 |
26 |
2025 |
2024 |
|
£m |
£m |
|
Current |
6 |
6 |
Non-current |
29 |
20 |
Total finance lease receivable |
35 |
26 |
The average term of finance leases entered into is 10 years (2024: 10 years).
Impairment of finance lease receivables
The Group estimates the loss allowance on finance lease receivables at an amount equal to lifetime expected credit losses. The lifetime expected
credit losses are estimated based upon historical defaults on subleases, the credit quality of current tenants and forward-looking factors.
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use).
Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement
of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease
payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain
ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over
the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be
made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives
receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.
The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of
penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that
do not depend on an index or a rate are recognised as expense in the period on which the event or condition that triggers the payment
occurs. In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement
date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is
increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities
is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the
assessment to purchase the underlying asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those leases that
have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-
value assets recognition exemption to leases that are considered of low value (i.e. below £5,000). Lease payments on short-term leases and
172
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
Goodwill and intangible assets
Computer |
Other |
|||
For period ended 3 January 2026 |
Goodwill |
software |
intangibles |
Total |
£m |
£m |
£m |
£m |
|
Cost: |
||||
At 4 January 2025 |
1,123 |
387 |
43 |
1,553 |
Additions |
- |
59 |
- |
59 |
Disposals |
- |
- |
- |
- |
At 3 January 2026 |
1,123 |
446 |
43 |
1,612 |
Accumulated amortisation and impairment: |
||||
At 4 January 2025 |
383 |
206 |
40 |
629 |
Charge for the period |
- |
32 |
1 |
33 |
Disposals |
- |
- |
- |
- |
At 3 January 2026 |
383 |
238 |
41 |
662 |
Net book value: |
||||
At 3 January 2026 |
740 |
208 |
2 |
950 |
Computer software includes £15m (2024: £25m) of intangible work in progress. Other intangibles relates to acquired customer
relationships arising on acquisition of businesses.
Computer |
Other |
|||
For period ended 4 January 2025 |
Goodwill |
software |
intangibles |
Total |
£m |
£m |
£m |
£m |
|
Cost: |
||||
At 6 January 2024 |
1,126 |
387 |
43 |
1,556 |
Additions |
- |
40 |
- |
40 |
Disposals |
(3) |
(40) |
- |
(43) |
At 4 January 2025 |
1,123 |
387 |
43 |
1,553 |
Accumulated amortisation and impairment: |
||||
At 6 January 2024 |
385 |
215 |
39 |
639 |
Charge for the period |
- |
31 |
1 |
32 |
Disposals |
(2) |
(40) |
- |
(42) |
At 4 January 2025 |
383 |
206 |
40 |
629 |
Net book value: |
||||
At 4 January 2025 |
740 |
181 |
3 |
924 |
The components of goodwill are as follows:
2025 |
2024 |
|
£m |
£m |
|
Food |
720 |
720 |
Other businesses |
20 |
20 |
Total goodwill |
740 |
740 |
173
Our Members' Annual Report
2025:
Financial Statements
Notes to the financial statements
continued
12
Goodwill and intangible assets
continued
Goodwill represents the difference between the cost of the acquisition and the fair value of the identifiable assets, liabilities and contingent
liabilities acquired.
Assets and liabilities accepted under a transfer of engagements are restated at fair value, including any adjustments necessary to comply
with the accounting policies of the Group.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortised but
is tested annually for impairment. In respect of associates, the carrying value of goodwill is included in the carrying amount of the
investment in the associate. Where impairment is required the amount is recognised in the income statement and cannot be written back.
Negative goodwill arising on an acquisition is recognised directly in the income statement.
Computer software
Computer software is stated at cost less accumulated amortisation and impairment. Costs directly attributable to the development of
computer software for internal use are capitalised and classified as intangible assets where they are not an integral part of the related
hardware and amortised over their useful life up to a maximum of seven years. We have considered the impact of guidance issued in
March 2021 by the IFRS Interpretations Committee, which clarified IAS 38 guidance around what costs should and should not be
capitalised specifically in relation to Software as a Service (‘SaaS’) contracts, and concluded that our policy continues to be compliant with
the standard.
Subsequent expenditure
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in
the specific asset to which it relates. All other expenditure is charged to the income statement as incurred.
Amortisation
Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets. Goodwill with
an indefinite useful life is tested for impairment at each balance sheet date. Other intangible assets are amortised from the date they are
available for use. The estimated useful lives are as follows:
• Software development costs: 3 – 15 years
• Other intangible assets: 1 - 10 years
Impairment
Goodwill is tested for impairment at least annually by assessing the recoverable amount of each cash-generating unit (CGU), or group of
cash-generating units, to which the goodwill relates.
Food:
In the Food business, the CGUs to which goodwill has been allocated and the level at which it is monitored is deemed to be the Food
segment as a whole as goodwill arising on acquisitions reflects synergies (principally buying benefits) that benefit the whole business.
Accordingly, impairment testing for all store goodwill balances is carried out using all the food stores as the group of CGUs.
Other businesses:
The majority of goodwill within other businesses is allocated to the Funerals business.
In the Funerals business, a CGU to which goodwill has been allocated is determined as a local network of interdependent branches, known
as a Funeralcare Hub.
Where an individual branch within a local network is to be closed, the CGU attributable to that branch is redefined as being solely that
individual branch on the basis that the branch is no longer expected to contribute to the business through cash generated through its
174
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
Funeral plan investments
Funeral plan investments as per the balance sheet: | 2025 | 2024 |
£m | £m | |
Non-current assets | 1,513 | 1,414 |
Total Funeral plan investments | 1,513 | 1,414 |
Funeral plan investments held by the Group are as follows: | 2025 | 2024 |
£m | £m | |
Fair value through the income statement: | ||
Funeral plan investments | 1,513 | 1,414 |
Total Funeral plan investments | 1,513 | 1,414 |
Funeral plan investments: | 2025 | 2024 |
£m | £m | |
At start of period | 1,414 | 1,346 |
Net plan investments (including ongoing instalments) | 97 | 90 |
Plans redeemed | (97) | (96) |
Plans cancelled | (11) | (14) |
De-recognition of fixed monthly payment plans (FMPs) | - | (14) |
Unrealised fair value movement on funeral plan investments (Note 6) | 110 | 102 |
At end of period | 1,513 | 1,414 |
The funeral plan investments are financial assets which are recorded at fair value each period using valuations provided to Co-op by the
policy provider. The plan values reflect the amount the policy provider would pay out on redemption of the policy at the valuation date with
the main driver being underlying investment performance. The investment strategy is targeted to deliver appropriate returns on the plan
investments over the medium term to match expected inflationary increases in the cost to deliver a funeral. Assets include UK and overseas
equities, gilts, corporate bonds, property and cash. The majority of these investments are held in whole of life insurance policies issued by
The Royal London Mutual Insurance Society Limited. Whilst the main driver of their value is underlying investment performance, some
policies also feature security of initial investment value at death and reduced investment volatility.
Included in the balances above are Low Cost Instalment Funeral Plans (LCIP) of £177m (2024: £140m). This relates to 71,582 (2024: 65,508)
live plans. See note 20 for accounting policy for LCIP's.
The assured benefit between the Group and the customer is judged to represent an insurance contract and as such falls under the scope of
IFRS 17 (Insurance Contracts). In-line with the requirements of IFRS 17 the Group accounts for the LCIPs in the same way as a normal funeral
plan. These plans are assessed annually (gross of any reinsurance) using a liability adequacy test.
175
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
Deferred taxation
Deferred income taxes are calculated on all temporary differences under the liability method using an effective tax rate of 25.0% (2024:
25.0%). Temporary differences arise because sometimes accounting and tax requirements mean that transactions are treated as happening
at a different time for accounting purposes than they are for tax purposes.
2025 |
2024 |
||
Net deferred tax in the balance sheet: |
£m |
£m |
|
Deferred tax asset - continuing operations |
301 |
324 |
|
Deferred tax liability - continuing operations |
(328) |
(362) |
|
Net deferred tax liability |
(27) |
(38) |
|
Comprised of: |
Footnote: |
||
Other temporary differences |
(i) |
(8) |
(3) |
Retirement benefit obligations |
(ii) |
(67) |
(81) |
Capital allowances on fixed assets |
(iii) |
240 |
250 |
Unrealised gains on investment properties, rolled-over gains and historic business combinations |
(iv) |
(143) |
(148) |
Tax losses |
(v) |
18 |
19 |
IFRS 16 adjustment |
(vi) |
34 |
38 |
IFRS 17 Funeral plan liabilities |
(vii) |
(101) |
(113) |
Net deferred tax liability |
(27) |
(38) |
The movements in the net deferred tax (liability) / asset during the period are set out below:
2025 |
2024 |
||
Movement in deferred tax: |
£m |
£m |
|
At beginning of the period |
(38) |
52 |
|
Income statement charge (see Note 8) |
(4) |
(63) |
|
Additions / disposals |
- |
(1) |
|
Reported in other comprehensive income: |
|||
Retirement benefit obligations (see Note 8) |
(ii) |
1 |
(2) |
Items taken directly to Retained earnings: |
|||
IFRS 17 Funeral plan liabilities |
(vii) |
14 |
(24) |
At end of the period |
(27) |
(38) |
176
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
14
Deferred taxation
continued
Footnotes:
i) This amount includes deferred tax liabilities that arose on the acquisition of Nisa Retail Limited in 2018 and the adoption of IFRS 9, also in
2018. These are partially offset by a deferred tax asset in respect of provisions. Expenses that have not yet been incurred are able to be
recorded in the accounts as provisions. However, of these certain expenses don't receive tax relief until they have been paid for and so the
related tax relief is delayed to a future period. During 2025 the amount of expense provisions deferred for tax purposes increased leading
to a slightly smaller net liability being shown.
ii) During the period, the Group's pension scheme surplus decreased by £57m resulting in a decrease in the corresponding deferred tax
liability of £14m. This amount represents the theoretical future tax cost to the Group in respect of the current pension scheme surplus.
iii) A deferred tax asset arises on capital allowances where the tax value of assets is higher than the accounts value of the same fixed assets.
The reason the Group has a higher tax value for these fixed assets is due to the fact the Group has not made a claim to its maximum
entitlement to capital allowances since 2013 due to reduced levels of trading profits in the intervening years. However, impairment,
disposals and depreciation have continued to reduce the accounts value for our assets. The Group expects to use these allowances to
reduce future trading profits.
iv) This amount represents the theoretical amount of tax that would be payable by the Group on (a) the sale of all investment properties, (b)
the sale of properties that have been restated at their fair value on historic mergers and transfers of engagements and (c) the sale of any
property that has had an historic capital gain 'rolled into' its base cost (which is an election available by statute designed to encourage
businesses to reinvest proceeds from the sale of trading properties into new trading properties and ventures). The £5m decrease in the
liability over the year is mainly due to disposal of properties under class (c) above.
v) The Group has incurred trading losses and interest losses that were in excess of taxable profits in the past. These losses can be used to
reduce future trading profits and capital gains which are included in future tax forecasts for the Group. The restriction on the amount of
losses that can be used in any one year post 1 April 2017, being £5m plus 50% of any surplus taxable profits above this amount, is not
expected to limit the use of these losses other than extend the time over which they will be claimed.
The decrease in asset of £1m is in respect of amounts offset against taxable profits this year.
vi) Deferred tax that arose on the adoption of IFRS 16 in 2019 will unwind over a number of years and reduce taxable profits in those future
years. The decrease in asset of £4m is mainly in respect of the unwind during the year.
(vii) These movements relate to the application of IFRS 17 which require us to recognise gains and losses through our Profit Before Tax as
well as through our Other Comprehensive Income. Both of these amounts are treated as taxable and have led to an £14m deferred tax
charge in Other Comprehensive Income.
Deferred tax is provided for, with no discounting, using the balance sheet liability method, providing for temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: the initial recognition of assets or liabilities that affect neither accounting nor taxable profits,
and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The
amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent
that it is probable that future taxable profits will be available to use the asset against. Deferred tax assets are reduced to the extent that it is
177
Our Members' Annual Report
2025:
Financial Statements
Notes to the financial statements
continued
Inventories
2025 | 2024 | |
Inventories include the following: | £m | £m |
Raw materials, consumables and work in progress | 4 | 4 |
Finished goods and goods for resale | 479 | 453 |
Total inventory | 483 | 457 |
The period end inventory provision is £16m (2024: £26m) and a net credit of £10m (2024: net credit of £1m) has been made within
operating expenses in the income statement. There was no inventory pledged as security for liabilities in the current or prior period.
Inventories are stated at the lower of cost, including attributable overheads, and net realisable value. The inventory balance is stated net of
Trade and other receivables
2025 | 2024 | |
£m | £m | |
Non-current | 6 | 6 |
Current | 719 | 602 |
Total trade and other receivables | 725 | 608 |
2025 | 2024 | |
£m | £m | |
Trade receivables | 399 | 344 |
Prepayments | 76 | 42 |
Accrued income | 161 | 152 |
Other receivables | 100 | 79 |
736 | 617 | |
Allowance for expected credit losses | (11) | (9) |
Total trade and other receivables | 725 | 608 |
Trade receivables are non-interest bearing and the Group's standard payment terms are between 7 and 60 days.
Within trade receivables is £95m (2024: £48m) of supplier income that is due from Food and Wholesale suppliers. Accrued income
includes £141m (2024: £131m) in relation to supplier income that has been recognised but not yet billed. As at 2 March 2026 (reflecting
close of Period 2 for the Group), £53m (2024: £44m) of the trade receivables balance had been invoiced and settled and £106m (2024:
£108m) of the accrued income balance has been invoiced and settled.
Other receivables comprises a variety of sundry debtors and includes £18m (2024: £12m) of duty that is automatically applied to goods
shipped to the Channel Islands that is recoverable from HMRC. Additionally there is £8m (2024: £7m) in relation to practice disbursements
incurred in our legal business to progress client cases that will subsequently be recovered as well as £5m (2024:£nil) of deferred
consideration in relation to Investment properties sold during the year
2025 | 2024 | |
£m | £m | |
Opening allowance for expected credit losses | 9 | 12 |
Charge to the income statement | 3 | 8 |
Payments | - | (2) |
Credit to the income statement | (1) | (9) |
Closing allowance for expected credit losses | 11 | 9 |
178
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
16
Trade and other receivables
continued
The Group has applied the expected losses model as defined under IFRS 9 (Financial Instruments) which focuses on the risk that a trade
receivable (including receivables relating to supplier income) will default rather than whether a loss has been incurred. The Group has
applied a simplified approach as allowed under IFRS 9 to use a provision matrix for calculating expected losses for trade receivables. More
Cash and cash equivalents and short-term investments
2025 | 2024 | |
Cash and cash equivalents | £m | £m |
Cash in hand | 48 | 47 |
Cash at banks | 50 | 273 |
Cash and cash equivalents | 98 | 320 |
Cash and cash equivalents (as above) | 98 | 320 |
Bank overdrafts | (2) | - |
Net cash and cash equivalents | 96 | 320 |
Through its primary banking provider, the Group operates a single joint account arrangement covering the parent society (Co-operative
Group Limited) and its subsidiary entities. Under this arrangement, the Group manages all funds through a single joint MASS (Memorandum
Account Statement System) account on behalf of all participating entities, whilst the individual entities have memorandum accounts which
are reflected in the header MASS account. All memorandum balances are grouped together in the single MASS account for the purposes of
applying interest from a Group perspective, but each entity records its own memorandum balance in its individual financial statements. The
entities participating in the joint account arrangement provide a cross-guarantee for all participants in relation to all indebtedness owed to
the bank and all participants are jointly and severally liable with the rest of the Group in the event of a default.
As at 3 January 2026, the joint MASS account had an overall overdrawn net balance of £2m (2024: nil). While the Group has a right of set-off
across our memorandum accounts as part the joint account arrangement, each Group entity reflects their own individual cash position. The
MASS account gross balances comprises positive balances of £699m and overdraft balances of £701m (2024: £421m / (£415m)).
The cash at bank figures include amounts receivable from customers or banks for debit or credit card payment transactions made by
customers of £34m (2024: £36m) in the two days before year-end which don't clear the bank (and show on our bank statement) until the first
working day of the new financial year. In-line with current industry practice; these items are treated as cash equivalents due to their liquidity
(based on the short duration before they clear the bank statement and the insignificant risk of a change in value of the balances).
2025 | 2024 | |
Short-term investments | £m | £m |
Cash deposits with banks (> 3 months) | - | 100 |
Total Short-term investments | - | 100 |
Cash and cash equivalents;
in the consolidated balance sheet comprise cash in hand, cash in transit and cash at bank and short-term
deposits with banks with a maturity of three months or less, which are subject to an immaterial risk of changes in value. Cash and cash
equivalents includes debit and credit card payments made by customers which are receivable from banks and clear the bank within three
days of the transaction date. Cash and cash equivalents also includes £5m (2024: £nil) of restricted cash relating to receipts to be invested
in funeral plan investments (these are included in cash and cash equivalents on a statutory basis but are excluded from our net debt APM
metric (see Glossary for further details)). In the statement of consolidated cash flows, cash and cash equivalents includes bank overdrafts as
they are repayable on demand and deemed to form an integral part of the Group's cash management. Amounts held in trustee-
administered bank accounts of the Group of £9m (2024: £9m), which can only be utilised to meet liabilities in respect of funeral plans, are
classed as Funeral plan investments (see Note 13) and not Cash and cash equivalents.
Short-term investments;
represent surplus cash placed on deposit with banks or other financial institutions for periods of less than twelve
months but more than three months. Balances are held at amortised cost and are included within our net debt calculation as short term
179
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
Interest-bearing loans and borrowings
Non-current liabilities: | 2025 | 2024 |
£m | £m | |
£105m 7.5% Bond Notes due 2026 (fair value) | - | 108 |
£245m 7.5% Bond Notes due 2026 (amortised cost) | - | 250 |
Revolving credit facility (RCF) | 50 | - |
Total (excluding lease liabilities) | 50 | 358 |
Lease liabilities | 987 | 1,020 |
Total Group interest-bearing loans and borrowings | 1,037 | 1,378 |
Current liabilities: | 2025 | 2024 |
£m | £m | |
£109m 11% Final repayment subordinated notes due 2025* | - | 109 |
£20m 11% Instalment repayment notes (final payment 2025)* | - | 3 |
£105m 7.5% Bond Notes due 2026 (fair value) | 106 | - |
£245m 7.5% Bond Notes due 2026 (amortised cost) | 247 | - |
£245m 7.5% Bond Notes due 2026 (amortised cost) ** | 9 | 9 |
Other borrowings | 2 | 2 |
Corporate investor shares | 3 | 3 |
Total (excluding lease liabilities) | 367 | 126 |
Lease liabilities | 191 | 173 |
Total Group interest-bearing loans and borrowings | 558 | 299 |
* The £109m 11% Final repayment subordinated notes and the remaining balance of the £20m 11% Instalment notes were both repaid in full
from cash in December 2025 when they fell due.
** The amortised cost balances in current liabilities includes £9m (2024: £9m) on the 2026 bonds of accruals for interest payments that will
be made within 1 year of the balance sheet date. The total accrued interest on debt held at amortised cost of £9m (2024: £9m) is excluded
from our Group net debt metric (see Group net debt table on page 153). There is a further £4m of accrued interest on the £105m element of
the 2026 bonds that are held at fair value. This is included within Trade and other payables and again is not included in our Group net debt
metric.
Terms and repayment schedule
The Group has a £350m Bond issued in May 2011, repayable in July 2026. This bond currently has an interest rate of 7.5%.
On the 18th June 2025 the Group agreed a five-year £350m Term Loan facility linked to its ambitious sustainability and social impact targets.
The facility remains undrawn at the balance sheet date. The Term Loan provides funding to repay its upcoming 2026 £350m bond which
matures in July 2026. Arrangement fees of £2m have been recognised on the balance sheet (within Prepayments) and are being amortised
over the combined availability period of the loan. On draw down of the Term Loan the fees will be included within the amortised cost
valuation of the borrowings.
On the 29 November 2024, the Group amended and extended its Revolving Credit Facility (RCF) for a 5 year term maturing in November
2029. The facility has a maximum limit of £400m, of which £45m is carved out as an overdraft facility. As at 3 January 2026, £50m of the
facility had been drawn (2024: £nil). Furthermore, the joint MASS account had an overall overdrawn net balance of £2m (2024: £nil) which is
shown in net cash and cash equivalents (see Note 17).
Total interest-bearing loans and borrowings excluding interest on debt | 2025 | 2024 |
held at amortised cost: | £m | £m |
Interest-bearing loans and borrowings*** | 408 | 475 |
*** Represents the gross debt figure (excluding lease liabilities and accrued interest) used in the Group's Net debt APM (see page 153).
180
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
18
Interest-bearing loans and borrowings -
continued
Reconciliation of movement in net debt
Net debt is a measure that shows the amount we owe to banks and other external financial institutions less the cash that we have, any short-
term deposits and any short-term investments that we hold. Some of our bond borrowings are held as financial liabilities at fair value through
the income statement. The fair value movement on these liabilities is shown under non-cash movements in the tables below.
For period ended 3 January 2026 | Non cash movements | Cash flow | End of | ||
Start of period | New leases | Other | period | ||
£m | £m | £m | £m | £m | |
Interest-bearing loans and borrowings: | |||||
- current | (126) | - | (353) | 112 | (367) |
- non-current | (358) | - | 358 | (50) | (50) |
Lease liabilities: | |||||
- current | (173) | (23) | (198) | 203 | (191) |
- non-current | (1,020) | (116) | 149 | - | (987) |
Total debt | (1,677) | (139) | (44) | 265 | (1,595) |
Group cash and short term investments: | |||||
- cash * | 320 | - | (227) | 93 | |
- overdrafts | - | - | - | (2) | (2) |
- short-term investments | 100 | - | - | (100) | - |
Group net debt | (1,257) | (139) | (44) | (64) | (1,504) |
Less: interest accrued on debt held at amortised cost | 9 | - | 32 | (32) | 9 |
Group net debt (excluding accrued interest) | (1,248) | (139) | (12) | (96) | (1,495) |
* Group Cash used in our Net debt APM metric excludes £5m of restricted cash relating to premium receipts to be invested in funeral plan
investments. Further detail on the Group's net debt APM metric can be found in the Glossary on page 153. The £9m of interest accruals will
be paid within 1 year (and is shown in the Current liabilities table on the previous page).
The main movements in Other non cash movements include: (i) Loans and borrowings; reclassification from non-current to current for
instruments falling due <1 year and non-cash fair value and amortised cost movements (ii) Leases; the annual accrual of interest and
reclassification from non-current to current for that portion of the lease liability falling due <1 year as the leases unwind / mature.
For period ended 4 January 2025 | Non cash movements | Cash flow | End of | ||
Start of period | New leases | Other | period | ||
£m | £m | £m | £m | £m | |
Interest-bearing loans and borrowings: | |||||
- current | (218) | - | (112) | 204 | (126) |
- non-current | (470) | - | 112 | - | (358) |
Lease liabilities: | |||||
- current | (179) | (18) | (169) | 193 | (173) |
- non-current | (1,054) | (103) | 137 | - | (1,020) |
Total debt | (1,921) | (121) | (32) | 397 | (1,677) |
Group cash: | |||||
- cash | 395 | - | - | (75) | 320 |
- short-term investments | 200 | - | - | (100) | 100 |
Group net debt | (1,326) | (121) | (32) | 222 | (1,257) |
Less: interest accrued on amortised debt | 11 | - | 34 | (36) | 9 |
Group net debt (excluding accrued interest) | (1,315) | (121) | 2 | 186 | (1,248) |
Details of the Group's bank facilities are shown in Note 26.
181
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
18
Interest-bearing loans and borrowings -
continued
Banking covenants
We have two key covenants under our banking facilities as follows:
Interest cover covenant
– the ratio tests Co-op's ability to cover its financing costs from its earnings, and represents the ratio of adjusted
EBITDAR over adjusted net underlying finance costs.
Leverage covenant
– the ratio compares our borrowings to our earnings, and represents the ratio of Group Net Debt, excluding lease
liabilities, over covenant EBITDA.
Our banking partners agreed to a short-term alleviation to the covenant tests for 2025 and the first half of 2026, reflecting the estimated
direct impacts of the cyber attack due to its one-off nature. Both covenants had sufficient headroom at 2025 year end. Further details of
covenant EBITDA and EBITDAR are given in the Glossary.
Further details of the Group's remaining banking facilities are given in Note 25.
See Note 25 for more information about the Group’s exposure to interest rate and foreign currency risk, and Note 26 for a breakdown of
the Group's borrowings by the three-level fair value hierarchy (which reflects different valuation techniques) as defined within IFRS 13 (Fair
Value Measurement).
Corporate investor shares
Corporate investor shares represent borrowings the Group has with other co-operative societies. The borrowings are split into Variable
Corporate Investor Shares (VCIS) and Fixed Corporate Investor Shares (FCIS). The VCIS are repayable on demand and the FCIS are fixed
term borrowings. As at 3 January 2026, Corporate Investor Shares borrowings were £3m (2024: £3m).
The Group measures its interest-bearing loans and borrowings in two main ways:
1) Fair value through the income statement. Such debt is restated as its fair value each period with the fair value movement going through
the income statement. The £105m of the Group's derivatives that mature in 2026 are not formally designated as hedging instruments but
under IFRS 9 (Financial Instruments) they are used to match against a proportion of the 2026 Bond liabilities carried at fair value through
the income statement. The impact of movements in the fair value of the quoted debt partially offsets any fair value movement in the interest
rate swaps (notes 6, 7 and 26). The £175m of interest rate swaps that mature in 2030 have been formally designated as hedging
instruments for hedge accounting under IFRS 9 and will provide a cashflow hedge against 50% of the new £350m term loan when it is
drawn in July 2026.
The remaining portion of the quoted Bond debt is accounted for at amortised cost in accordance with IFRS 9 (see below). This approach
applies to those borrowings taken out prior to the adoption of IFRS 9 in 2018.
2) Amortised cost. Borrowings are recognised initially at fair value, which equates to issue proceeds net of transaction costs incurred.
Borrowings are subsequently stated at amortised cost. Any difference between proceeds net of transaction costs and the redemption value
is recognised in the income statement over the period of the borrowings using the effective interest rate method. The effective interest rate
is calculated when borrowings are first taken out and is the rate that exactly discounts the estimated future cash payments associated with
the borrowings to the value when they are initially recognised.
182
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
Trade and other payables
2025 | 2024 | |
£m | £m | |
Current | 1,622 | 1,555 |
Non-current | 2 | 9 |
Total trade and other payables | 1,624 | 1,564 |
2025 | 2024 | |
£m | £m | |
Trade payables | 1,155 | 1,083 |
Value Added Tax, PAYE and social security | 15 | 12 |
Accruals | 355 | 364 |
Deferred income | 16 | 29 |
Other payables | 83 | 76 |
Total trade and other payables | 1,624 | 1,564 |
Further details on the maturity profile of trade and other payables can be found in Note 25.
Deferred income includes £7m (2024: £15m) in relation to the marketing and distribution arrangement entered into with Markerstudy
Insurance Services Ltd (remaining term of 1 year and 4 months) following the sale of our Insurance underwriting business (CISGIL). Accruals
includes capital expenditure accruals of £27m (2024: £30m), payroll accruals of £127m (2024: £149m) as well as standard cost accruals of
£201m (2024: £185m).
Where our trading terms state that the supplier income is netted against amounts owing to
that supplier and it is our intention to settle the
balances on a net basis then any outstanding invoiced supplier income at the reporting date is included within trade payables. Trade
The Group operates a supplier financing arrangement with Prime Revenue, under which suppliers can obtain accelerated settlement on
invoices from the finance providers signed up to the programme. The Group settles these amounts in accordance with each supplier's
agreed payment terms (which typically range between 30 to 60 days) and the payment terms of the suppliers participating in the scheme
are similar to those that are not participating. At the balance sheet date; the Group’s trade creditors balance includes £39m (2024: £53m)
relating to payments due to Co-op suppliers under these arrangements and the suppliers have already taken payments of £33m (2024:
£42m) in respect of those balances from the third-party finance provider. During the year ended 3 January 2026, the maximum facility was
£108m (2024: £108m). The facility was reduced to £88m at the end of June 2025.
Access to the supplier finance scheme is by mutual agreement between the bank and supplier, where the supplier wishes to be paid faster
than standard Group payment terms. The Group is not party to this contract. The scheme has no cost to the Group as the fees are paid by
the supplier directly to the bank. The bank has no special seniority of claim to the Group upon liquidation and would be treated the same as
any other trade payable. As the scheme does not change the characteristics of the trade payable, and the Group’s obligation is not legally
extinguished until the bank is repaid, the Group continues to recognise these liabilities within trade payables and all cash flows associated
with the arrangements are included within operating cash flow as they continue to be part of the normal operating cycle of the Group.
183
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
Insurance and re-insurance contracts (funeral plan liabilities)
Insurance contract liabilities (by nature) |
Liabilities for remaining coverage |
|||
| Excluding loss |
Loss |
Liabilities for |
||
| component |
component |
claims incurred |
Total |
|
2025 |
£m |
£m |
£m |
£m |
Insurance contract liability as at 4 January 2025 |
1,001 |
3 |
4 |
1,008 |
Insurance revenue |
(102) |
- |
- |
(102) |
Insurance service expenses: |
||||
Incurred claims and other expenses |
87 |
87 |
||
Amortisation of insurance acquisition cashflows |
5 |
- |
- |
5 |
Losses on onerous contracts and reversals of those losses |
- |
(3) |
- |
(3) |
Insurance service result |
(97) |
(3) |
87 |
(13) |
Insurance finance expense (Income statement) |
20 |
- |
- |
20 |
Insurance finance expense (Other comprehensive income) |
57 |
- |
57 |
|
Total changes in Statement of comprehensive income |
(20) |
(3) |
87 |
64 |
Cashflows: |
||||
Premiums received less premiums refunded |
109 |
- |
- |
109 |
Claims and other expenses paid |
- |
- |
(86) |
(86) |
Insurance acquisition flows |
(13) |
- |
- |
(13) |
Total cashflows |
96 |
- |
(86) |
10 |
Insurance contract liability as at 3 January 2026 |
1,077 |
- |
5 |
1,082 |
Insurance contract liabilities (by nature) |
Liabilities for remaining coverage |
|||
Excluding loss |
Loss |
Liabilities for |
||
2024 |
component |
component |
claims incurred |
Total |
£m |
£m |
£m |
£m |
|
Insurance contract liability as at 6 January 2024 |
1,097 |
1 |
- |
1,098 |
Insurance revenue |
(91) |
- |
- |
(91) |
Insurance service expenses: |
||||
Incurred claims and other expenses |
(13) |
- |
89 |
76 |
Amortisation of insurance acquisition cashflows |
3 |
- |
- |
3 |
Losses on onerous contracts and reversals of those losses |
- |
2 |
- |
2 |
Insurance service result |
(101) |
2 |
89 |
(10) |
Insurance finance expenses (Income statement) |
18 |
- |
- |
18 |
Insurance finance income (Other comprehensive income) |
(95) |
- |
- |
(95) |
Total changes in Statement of comprehensive income |
(178) |
2 |
89 |
(87) |
Cashflows: |
||||
Premiums received less premiums refunded |
91 |
- |
- |
91 |
Claims and other expenses paid |
- |
- |
(85) |
(85) |
Insurance acquisition flows |
(9) |
- |
- |
(9) |
Total cashflows |
82 |
- |
(85) |
(3) |
Insurance contract liability as at 4 January 2025 |
1,001 |
3 |
4 |
1,008 |
184
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
20
Insurance and re-insurance contracts (funeral plan liabilities)
continued
Insurance contract liabilities (by component) | Estimates of | Risk | Contractual | Total |
present value of | adjustment | service margin | ||
2025 | future cashflows | (CSM) | ||
£m | £m | £m | £m | |
Insurance contract liability as at 4 January 2025 | 912 | 45 | 51 | 1,008 |
Changes that relate to current services: | ||||
CSM recognised for service provided | - | - | (9) | (9) |
Risk adjustment for the risk expired | - | (5) | - | (5) |
Experience adjustments | 3 | - | - | 3 |
Changes that relate to future services: | ||||
Contracts initially recognised in the period | (15) | 1 | 14 | - |
Changes in estimates that adjust the CSM* | (87) | (3) | 91 | 1 |
Changes in estimates that do not adjust the CSM | (3) | - | - | (3) |
Insurance service result | (102) | (7) | 96 | (13) |
Insurance finance expense (Income statement) | 18 | 1 | 1 | 20 |
Insurance finance expense (Other comprehensive income) | 52 | 5 | - | 57 |
Total changes in Statement of comprehensive income | (32) | (1) | 97 | 64 |
Cashflows: | ||||
Premiums received less premiums refunded | 109 | - | - | 109 |
Claims and other expenses paid | (86) | - | - | (86) |
Insurance acquisition flows | (13) | - | - | (13) |
Total cashflows | 10 | - | - | 10 |
Insurance contract liability as at 3 January 2026 | 890 | 44 | 148 | 1,082 |
*The uplift in CSM is mainly driven by a reduction in fulfillment costs (£30m) and an improved inflation curve (£60m).
Insurance contract liabilities (by component) | Estimates of | Risk | Contractual | Total |
present value of | adjustment | service margin | ||
2024 | future cashflows | (CSM) | ||
£m | £m | £m | £m | |
Insurance contract liability as at 6 January 2024 | 934 | 55 | 109 | 1,098 |
Changes that relate to current services: | ||||
CSM recognised for service provided | - | - | (3) | (3) |
Risk adjustment for the risk expired | - | (4) | - | (4) |
Experience adjustments | 8 | - | - | 8 |
Changes that relate to future services: | ||||
Contracts initially recognised in the period | (9) | 1 | 8 | - |
Changes in estimates that adjust the CSM | 37 | 13 | (65) | (15) |
Changes in estimates that do not adjust the CSM | 2 | - | - | 2 |
Insurance service result | 38 | 10 | (60) | (12) |
Insurance finance expenses (Income statement) | 15 | 1 | 2 | 18 |
Insurance finance income (Other comprehensive income) | (73) | (21) | - | (94) |
Total changes in Statement of comprehensive income | (20) | (10) | (58) | (88) |
Cashflows: | ||||
Premiums received less premiums refunded | 91 | - | - | 91 |
Claims and other expenses paid | (85) | - | - | (85) |
Insurance acquisition flows | (8) | - | - | (8) |
Total cashflows | (2) | - | - | (2) |
Insurance contract liability as at 4 January 2025 | 912 | 45 | 51 | 1,008 |
185
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
20
Insurance and re-insurance contracts (funeral plan liabilities)
continued
Liabilities for remaining coverage | ||||
Re-insurance contract liabilities (by nature) | Excluding loss | Loss recovery | Amounts | |
recovery | component | recoverable on | Total | |
| 2025 | component | insured claims | ||
£m | £m | £m | £m | |
Net re-insurance contract liability as at 4 January 2025 | 1 | - | - | 1 |
An allocation of re-insurance premium | 2 | - | - | 2 |
Amounts recoverable from re-insurers for incurred claims: | ||||
Amounts recoverable for incurred claims and other expenses | - | (2) | (2) | |
Net income from re-insurance contract held | 2 | - | (2) | - |
Re-insurance finance income (Income statement) | - | - | - | - |
Re-insurance finance income (Other comprehensive income) | - | - | - | - |
Total changes in Statement of comprehensive income | 2 | - | (2) | - |
Cashflows: | ||||
Premiums paid (net of commission) | (3) | - | - | (3) |
Amounts received | - | - | 2 | 2 |
Total cashflows | (3) | - | 2 | (1) |
Net re-insurance contract liability as at 3 January 2026 | - | - | - | - |
LCIPs can be paid for by instalments between 2 and 25 years or they can be paid off in full at any time during this period without any
penalties. If the plan holder dies before the instalments have been made in full (and provided that the plan has been in place for at least 12
months or the cause of death was as a result of an accident) then the funeral will still be provided by the Group and the customer will not
have to settle the outstanding balance on any instalments and the balance of any monies owed will be waived. Any outstanding amounts
owed to the Group (the difference between the full value of the plan and the amount paid up to death by the customer) are covered by an
assured benefit from a third party insurer. The assured benefit is between the Group and the third party insurer and has nothing to do with
the customer. The Group continues to apply instalment monies received against customers' individual funeral plans until such time as a plan
is redeemed and or cancelled. The assured benefit between the Group and the 3rd party is judged to represent an insurance contract and as
such falls under the scope of IFRS 17 (Insurance Contracts).
Liabilities for remaining coverage | ||||
Re-insurance contract liabilities (by nature) | Excluding loss | Loss recovery | Amounts | |
recovery | component | recoverable on | Total | |
2024 | component | insured claims | ||
£m | £m | £m | £m | |
Net re-insurance contract liability as at 6 January 2024 | 8 | - | - | 8 |
An allocation of re-insurance premium | 2 | - | - | 2 |
Amounts recoverable from re-insurers for incurred claims: | - | |||
Amounts recoverable for incurred claims and other expenses | (6) | - | (2) | (8) |
Net income from re-insurance contract held | (4) | - | (2) | (6) |
Re-insurance finance income (Income statement) | - | - | - | - |
Re-insurance finance income (Other comprehensive income) | 1 | - | - | 1 |
Total changes in Statement of comprehensive income | (3) | - | (2) | (5) |
Cashflows: | ||||
Premiums paid (net of commission) | (4) | - | - | (4) |
Amounts received | - | - | 2 | 2 |
Total cashflows | (4) | - | 2 | (2) |
Net re-insurance contract liability as at 4 January 2025 | 1 | - | - | 1 |
186
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
20
Insurance and re-insurance contracts (funeral plan liabilities)
continued
Re-insurance contract liabilities (by component) | Estimates of | Risk | Contractual | Total |
| present value of | adjustment | service margin | ||
| 2025 | future cashflows | |||
£m | £m | £m | £m | |
Net re-insurance contract liability as at 4 January 2025 | 1 | - | - | 1 |
Changes that relate to current services: | ||||
Contractual service margin recognised for service provided | - | - | - | - |
Risk adjustment for the risk expired | - | - | - | - |
Experience adjustments | - | - | - | - |
Changes that relate to future services: | ||||
Contracts initially recognised in the period | - | - | - | - |
Changes in estimates that adjust the contractual service margin | 1 | - | (1) | - |
Re-insurance service result | 1 | - | (1) | - |
Re-insurance finance income (Income statement) | - | - | - | - |
Re-insurance finance expense (other comprehensive income) | - | - | - | - |
Total changes in Statement of comprehensive Income | 1 | - | (1) | - |
Cashflows: | ||||
Premiums and similar expenses paid | (3) | - | - | (3) |
Amounts received | 2 | - | - | 2 |
Total cashflows | (1) | - | - | (1) |
Net re-insurance contract liability as at 3 January 2026 | 1 | - | (1) | - |
Re-insurance contract liabilities (by component) | Estimates of | Risk | Contractual | Total |
present value of | adjustment | service margin | ||
2024 | future cashflows | |||
£m | £m | £m | £m | |
Net re-insurance contract liability as at 6 January 2024 | 7 | - | 1 | 8 |
Changes that relate to current services: | ||||
Contractual service margin recognised for service provided | - | - | - | - |
Risk adjustment for the risk expired | - | - | - | - |
Experience adjustments | - | - | - | - |
Changes that relate to future services: | ||||
Contracts initially recognised in the period | - | - | - | - |
Changes in estimates that adjust the contractual service margin | (4) | (1) | (1) | (6) |
Re-insurance service result | (4) | (1) | (1) | (6) |
Re-insurance finance income (Income statement) | - | - | - | - |
Re-insurance finance expense (other comprehensive income) | - | 1 | - | 1 |
Total changes in Statement of comprehensive Income | (4) | - | (1) | (5) |
Cashflows: | ||||
Premiums and similar expenses paid | (4) | - | - | (4) |
Amounts received | 2 | - | - | 2 |
Total cashflows | (2) | - | - | (2) |
Net re-insurance contract liability as at 4 January 2025 | 1 | - | - | 1 |
187
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
20
Insurance and re-insurance contracts (funeral plan liabilities)
continued
Contracts using | All other | Total | |
Contractual service margin | the fair value | contracts | |
(2025) | approach | ||
£m | £m | £m | |
Contractual service margin as at 4 January 2025 | 35 | 16 | 51 |
Changes that relate to current services: | |||
Contractual service margin recognised for service provided | (7) | (2) | (9) |
Changes that relate to future services: | |||
Contracts initially recognised in the period | - | 14 | 14 |
Changes in estimates that adjust the contractual service margin | 66 | 25 | 91 |
Sub-total | 59 | 37 | 96 |
Insurance finance expenses | - | 1 | 1 |
Contractual service margin as at 3 January 2026 | 94 | 54 | 148 |
Plans sold prior to 2020 were fair valued at transition.
Contracts using | All other | Total | |
Contractual service margin | the fair value | contracts | |
(2024) | approach | ||
£m | £m | £m | |
Contractual service margin as at 6 January 2024 | 85 | 24 | 109 |
Changes that relate to current services: | |||
Contractual service margin recognised for service provided | (2) | (1) | (3) |
Changes that relate to future services: | |||
Contracts initially recognised in the period | - | 8 | 8 |
Changes in estimates that adjust the contractual service margin | (49) | (16) | (65) |
Sub-total | (51) | (9) | (60) |
Insurance finance expenses | 1 | 1 | 2 |
Contractual service margin as at 4 January 2025 | 35 | 16 | 51 |
Profitable | Onerous | Total | |
New business | contracts issued | contracts issued | |
| (2025) | £m | £m | £m |
Insurance contracts: | |||
Estimate of present value of future cashflows, excluding insurance acquisition costs | 72 | - | 72 |
Estimate of insurance acquisition cashflows | 12 | - | 12 |
Estimate of present value of future cash outflows | 84 | - | 84 |
Estimate of present value of future cash inflows | (99) | - | (99) |
Risk adjustment | 1 | - | 1 |
Contractual service margin | 14 | - | 14 |
Profit / (loss) on contracts at initial recognition | - | - | - |
188
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
20
Insurance and re-insurance contracts (funeral plan liabilities)
continued
New business | Profitable | Onerous | |
| (2024) | contracts issued | contracts issued | Total |
£m | £m | £m | |
Insurance contracts: | |||
Estimate of present value of future cashflows, excluding insurance acquisition costs | 65 | - | 65 |
Estimate of insurance acquisition cashflows | 9 | - | 9 |
Estimate of present value of future cash outflows | 74 | - | 74 |
Estimate of present value of future cash inflows | (84) | - | (84) |
Risk adjustment | 1 | - | 1 |
Contractual service margin | 9 | - | 9 |
Profit on contracts at initial recognition | - | - | - |
Insurance revenue | 2025 | 2024 |
£m | £m | |
Amounts relating to changes in liabilities for remaining coverage : | ||
Contractual service margin recognised for services provided | 9 | 3 |
Change in risk adjustment for non financial risk for risk expired | 5 | 4 |
Expected incurred claims and other insurance service | 84 | 81 |
Recovery of insurance acquisition cash flows | 4 | 3 |
Total insurance revenue | 102 | 91 |
Insurance revenue | 2025 | 2024 |
£m | £m | |
Contracts using the fair value approach | 78 | 75 |
All other contracts | 24 | 16 |
Total insurance revenue | 102 | 91 |
Plans sold prior to 2020 were fair valued at transition.
Contractual service margin maturity | 2025 | 2024 |
£m | £m | |
- Less than 1 year | 9 | 3 |
- 1 to 2 years | 8 | 3 |
- 2 to 3 years | 8 | 3 |
- 3 to 4 years | 8 | 3 |
- more than 4 years | 115 | 39 |
Total | 148 | 51 |
Fulfilment cashflows | 2025 | 2024 |
£m | £m | |
- Less than 1 year | 62 | 64 |
- 1 to 2 years | 68 | 67 |
- 2 to 3 years | 68 | 67 |
- 3 to 4 years | 67 | 67 |
- 4 to 5 years | 66 | 67 |
- more than 5 years | 1,419 | 1,454 |
Total | 1,750 | 1,786 |
The figures in the table above are undiscounted and exclude cashflows relating to re-insurance as these are not material.
189
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
20
Insurance and re-insurance contracts (funeral plan liabilities)
continued
Critical accounting estimates
Under IFRS 17 (Insurance Contracts) the Group's funeral plan liabilities reflect the current estimate of the present value of the future
cashflows to provide the funeral. These are calculated using actuarial advice and are based on a range of assumptions and estimates. The
assumptions used are management's best estimates chosen from a range of possible actuarial assumptions which may not necessarily be
borne out in practice.
The main actuarial assumptions include estimates in relation to discount rates, future costs to deliver a funeral including inflation and
expense assumptions, mortality rates, and plan cancellation rates. The insurance contract liability calculation is most sensitive to changes in
the discount rate and inflation assumptions and further detail on these items is noted below.
Discount rates
- the Group applies a bottom-up approach to derive the discount rate such that our insurance contract liabilities (funeral
plans) are calculated by discounting expected future cash flows at a risk free rate, plus an illiquidity premium (credit spread). The risk free
rate has been derived by reference to market yields on sterling-denominated high quality corporate bonds of appropriate duration
consistent with the funeral plans at that date (UK Gilt curve at the valuation date converted from continuous to annual rates). The illiquidity
premium is determined by reference to observable market rates (assessed as 20% of the average credit spread on 10-15 year A rated and
10-15 year AA rated bonds at the valuation date (allowing for the part of the credit spread that relates to default risk and that the liabilities
are not perfectly illiquid).
Inflation
- the rate of inflation is set based on the Bank of England Forward Inflation Curve at the valuation date converted from
continuous to annual. From 2022 onwards a reduction of 25 basis points has been applied to allow for high levels of demand for inflation
linked gilts increasing inflation expectations.
Fullfilment costs
- the Group applies an absorbed fulfilment cost, based on methodology consistent with IAS37, calculated for each year.
Mortality
- an average 111% loading is applied to the English Life Tables 2017 (“ELT17”). This reflects that mortality rates are deemed to
be approximately 10% heavier than those shown in ELT17. The basis is consistent with the mortality analysis used for 2024 (which indicated
a 112% loading), adjusted by a 2% reduction to allow for two years of expected future mortality improvements. An allowance for future
longevity improvements of 1% per annum is also included.
Financial assumptions | 2025 | 2024 | ||
Year 1 | 3.75% | 4.14% | ||
Year 2 | 3.83% | 4.21% | ||
Year 3 | 4.07% | 4.25% | ||
Risk free rate - UK Gilt curve | Year 4 | 4.36% | 4.37% | |
| Discount rate | Year 5 | 4.67% | 4.54% | |
Year 10 | 5.86% | 5.65% | ||
Year 15 | 6.18% | 5.97% | ||
Illiquidity premium (credit spread) | 0.12% | 0.13% | ||
Year 1 | 3.02% | 4.46% | ||
Year 2 | 2.76% | 3.42% | ||
Year 3 | 2.60% | 3.23% | ||
Inflation rate | Bank of England curve less 25 bps plus management view | Year 4 | 2.55% | 3.12% |
Year 5 | 2.58% | 3.08% | ||
Year 10 | 3.01% | 3.17% | ||
Year 15 | 3.21% | 3.16% |
Further details of the Group's approach to financial risk management are noted in Note 25 (Financial risk management) covering: credit
risk, interest rate risk, foreign currency risk and liquidity risk.
190
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
20
Insurance and re-insurance contracts (funeral plan liabilities)
continued
Sensitivities
The following sensitivity analysis shows the impact on insurance contract liabilities and profit before tax for reasonably possible movements
in the key financial assumptions noted on the previous page with all other assumptions held constant.
The combination of assumptions will have a material effect in determining the ultimate impacts, but to demonstrate the impact due to
changes in each assumption, assumptions have been changed on an individual basis. It should be noted that movements in these
assumptions are non-linear.
The discount rate sensitivity noted below covers the risk free rate plus the illiquidity premium (see discount rate derivation noted overleaf).
Change in Insurance contract liability - £m | 2025 | 2024 |
Discount rate - decrease of 1.0% | 100 | 105 |
Inflation rate - increase of 1.0% | 104 | 109 |
Fulfilment costs - increase of 5% | 50 | 51 |
Mortality stress +20% | 27 | 25 |
Change in Profit before tax - £m | 2025 | 2024 |
Discount rate - decrease of 1.0% | - | - |
Inflation rate - increase of 1.0% | (5) | (58) |
Fulfilment costs - increase of 5% | (3) | (3) |
Mortality stress +20% | (1) | (1) |
Discount rate
- the impact of a change in discount rate flows through other comprehensive income (OCI) rather than the Income statement
and so doesn't impact Profit before tax (PBT) in either 2025 or 2024.
Inflation
- changes to our inflation assumptions are deemed to be non-financial, as the ultimate inflationary cost risk does not relate to
financial market indices, and to the extent that they can be covered are first charged to the contractual service margin (CSM) buffer rather
than direct to the Income statement. As the CSM would be reduced by the modelled sensitivities, the impact to PBT noted in the table
above, reflects 1 year's impact across the 20 year CSM period.
Fulfilment costs
- changes to our fulfilment cost assumptions are deemed to be non-financial, as the ultimate inflationary cost risk does
not relate to financial market indices, and to the extent that they can be covered are first charged to the contractual service margin (CSM)
buffer rather than direct to the Income statement. As the CSM would be reduced by the modelled sensitivities, the impact to PBT noted in
the table above, reflects 1 year's impact across the 20 year CSM period.
Mortality
- changes to our mortality assumptions are deemed to be non-financial, as the ultimate mortality cost risk does not relate to
financial market indices, and to the extent that they can be covered are first charged to the contractual service margin (CSM) buffer rather
than direct to the Income statement. As the CSM would be reduced by the modelled sensitivities, the impact to PBT noted in the table
above, reflects 1 year's impact across the 20 year CSM period.
191
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
20
Insurance and re-insurance contracts (funeral plan liabilities)
continued
Summary of material accounting policies:
In applying the insurance standard and the requirements of IFRS 17 the Group has adopted a variety of accounting policies in relation
to the accounting for funeral plans and the waiver insurance on instalment plans. The Group has elected to use the General
Measurement Model (GMM) under IFRS 17 to measure the liability for remaining coverage. A summary of the material accounting
policies is noted below:
Initial recognition
- an insurance contract is defined as a contract under which the Group accepts significant insurance risk from
another party by agreeing to compensate that party if it is adversely affected by a specified uncertain future event. The new standard
applies to all of the Group’s funeral plans and also covers the re-insurance of the payment waiver risk on instalment plans.
Level of aggregation and onerous contracts
- the aggregation of insurance contracts determines the ‘unit of account’ to be used
when applying IFRS 17 which affects the allocation of the contractual service margin (CSM) to insurance revenue and the level at which
onerous contracts are identified. IFRS 17 specifically requires that portfolios of re-insurance contracts are separately held from
portfolios of insurance contracts issued. The aggregation requirements of IFRS 17 arrange insurance and re-insurance contract cash
flows into buckets based on two stages or levels:
·
Portfolio level:
(1) by primary risk type and (2) whether contracts are managed together.
·
Group level:
(1) by time of issuance (one-year issuing period); and (2) by degree of expected profitability at initial recognition.
Application by Co-op:
Portfolio level:
The following IFRS 17 portfolios were identified for the Group's consolidated financial statements:
·
Pre-need funeral plans - (insurance contracts issued)
·
Premium waiver on underlying Instalment plans – (re-insurance contracts held)
Group level:
Time of issuance - Cohort year. IFRS 17 requires a portfolio of contracts to be divided into annual ‘cohorts’ or shorter time
buckets. A group of contracts may not include contracts issued more than one year apart. Co-op allocates cohorts by annual periods
based on the financial year of issue.
Group level:
Degree of profitability at initial recognition. IFRS 17 requires portfolios of contracts issued in a given cohort year to be
assessed by ‘sets’ for the purpose of determining whether contracts are onerous or have no significant possibility of becoming onerous.
The Group determines the sets based on assessed similarities in pricing and margin and expected sensitivity to future changes in
financial and non-financial assumptions over the coverage period. Losses on onerous contracts are taken to the Income statement as
incurred.
Fulfilment Cashflows:
IFRS 17 requires insurance liabilities to be measured at a current fulfilment value. Fulfilment cashflows cover:
(A)
best estimates of future cashflows;
(B)
an adjustment for the time value of money (i.e. discounting) and financial risks associated with the future cash flows; and
(C)
a risk adjustment for non-financial risk.
(A) Best estimate of future cashflows - IFRS 17 requires an explicit, unbiased and probability weighted estimate (i.e. expected value) of
the present value of the future cash outflows less the present value of the future cash inflows that will arise as the entity fulfils insurance
contracts, including a risk adjustment for non-financial risk.
For the Group these cashflows mainly comprise; premiums received from customers for pre-paid plans and LCIPs, premiums paid or
repayable to re-insurers, internal and external direct fulfilment costs of delivering funerals on behalf of the policy holder, amounts
recoverable from re-insurers and insurance acquisition cash flows attributable to the portfolio of contracts.
(B) An adjustment for the time value of money (i.e. discounting) and financial risks associated with the future cash flows; - a key
component of IFRS 17 is the need to reflect the time value of money when estimating insurance cash flows, and the financial risks
related to those cash flows. The Group applies a bottom-up approach to derive the discount rate based on a risk free rate plus an
illiquidity premium. Risk free rates are determined by reference to the yields of highly liquid AAA-rated sovereign securities (UK Gilts).
The illiquidity premium is determined by reference to observable market rates. The discount rate used to determine the finance costs
relating to funeral plans, uses the discount rate at initial recognition of the funeral plan cohort.
192
Our Members Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
20
Insurance and re-insurance contracts (funeral plan liabilities)
continued
Accounting Policies -
continued
(C)
A risk adjustment (RA) for non-financial risk - this reflects the compensation Co-op requires for bearing the uncertainty about the
amount and timing of the cash flows that arise from non-financial risk as the Group fulfils insurance contracts. The risk adjustment reflects
an amount that Co-op would rationally pay to remove the uncertainty that future cash flows will exceed the expected value amount. IFRS
17 does not prescribe any methodologies for calculating the RA but instead outlines principles that the technique used to quantify the RA
will need to adhere to. The RA is important because it is a component of the fulfilment cash flows and therefore impacts the profitability
classification of funeral plans. The release of the RA over time is a key component of revenue, along with the contractual service margin. Co-
op estimate the RA using a confidence level (probability of sufficiency) approach at 70%.
Insurance acquisition cashflows
- IFRS 17 requires expenses that are “directly attributable” to issuing and fulfilling insurance contracts to
be included in the measurement of insurance contracts. This includes insurance acquisition cash flows, which are defined as cash flows
arising from the costs of selling, underwriting, and starting a group of insurance contracts (issued or expected to be issued) that are
directly attributable to the portfolio of insurance contracts to which the group belongs. The classification and reporting of expenses under
IFRS 17 involves the following 3 steps:
1) Classification of all expenses into one of the following categories:
·
Directly attributable acquisition (direct costs of acquiring new funeral plans such as internal salaries or external commission paid);
·
Directly attributable maintenance (direct costs of servicing already acquired funeral plans such as costs of handling claims or policy
changes);
·
Non-directly attributable expenses.
2) Allocation of directly attributable expenses into IFRS 17 Portfolios and then to current and future cohort groups of contracts.
3) Amortisation of each group of directly attributable acquisition costs in a manner consistent with the revenue earning pattern of the
related contracts in the group. Directly attributable maintenance and non-directly attributable expenses are fully expensed when incurred.
When estimating fulfilment cash flows, the Group allocates fixed and variable overheads directly attributable to the fulfilment of insurance
contracts. This requires management judgement and is undertaken in-line with our normal internal processes for allocating central
overheads to cost centres. We also make an assessment as to the amount of maintenance costs such as claims handling, policy
administration and associated overheads.
Contractual Service Margin (CSM) and Coverage units
- the CSM for a group of insurance contracts at the end of each reporting period
represents the unearned profit relating to future service to be provided under the contracts in the group and is calculated using a roll-
forward approach. The five items that are included in the CSM roll forward are:
·
the effect of new contracts added to the group;
·
interest accretion on the carrying amount of the CSM;
·
the change in fulfilment cash flows relating to future service (limited by the amount of CSM);
·
the effect of any currency exchange differences on the CSM; and
·
the amounts recognized as insurance revenue because of the transfer of services in the period (“amortization of CSM”).
The concept of "coverage units" was introduced in IFRS 17 as a means of reflecting the pattern of services provided under a group of
contracts and recognizing revenue from CSM (effectively "amortization" of CSM) according to that pattern. The number of coverage units
in a group is based on the quantity of service provided by the contracts in the group. For each group of contracts, we are required to
consider the quantity of service and its expected coverage period.
Co-op have determined that it is appropriate to measure coverage units based on the maximum expected funeral benefit per period of all
the contracts in the IFRS 17 group. The maximum expected pay-out represents the total funeral benefit per period of all contracts
expected to be in force in the group for that period. For portfolios of Premium waiver reinsurance contracts, the coverage units will be
based on the maximum expected recoverable per period.
Experience adjustments:
Experience variances represents the expected expenses, claims and amortisation of acquisition cash flows which are reported as part of
the insurance service revenue. This is offset with the actual expenses and claims incurred in the period and recovery of acquisition cash
flows.
Notes to the financial statements
continued
20
Insurance and re-insurance contracts (funeral plan liabilities)
continued
Accounting Policies -
continued
193
Our Members' Annual Report 2025:
Financial Statements
Low Cost Investment Plans (LCIPs):
LCIPs can be paid for by instalments over between 2 and 25 years or they can be paid off in full at any time during this period without any
penalties. If the plan holder dies before the instalments have been made in full (and provided that the plan has been in place for at least 12
months or the cause of death was as a result of an accident) then the funeral will still be provided by the Group and the customer will not
have to settle the outstanding balance on any instalments and the balance of any monies owed will be waived. Any shortfall (the difference
between the full value of the plan and the amount paid up to death by the customer) are covered by an assured benefit from a third party
insurer. The assured benefit is between the Group and the third party insurer and has nothing to do with the customer. The Society
continues to apply instalment monies received against customers' individual funeral plans until such time as a plan is redeemed and or
cancelled.
The assured benefit between the Group and the 3rd party is judged to represent an insurance contract and as such falls under the scope of
IFRS 17 (Insurance Contracts).
Presentation and Disclosures:
The Group has elected to apply certain disclosure policies as permitted under IFRS 17:
1) The change in the risk adjustment (RA) for non-financial risk is disaggregated between insurance service result and insurance finance
expense in the Income statement;
2) Income and expenses from a group of reinsurance contracts is presented as a single amount;
3) The Group has elected to disaggregate that element of finance income / expense that arise due to changes in the discount rate and
record the impact of those changes in other comprehensive income (OCI) rather than in the Income statement. The discount rate used to
determine the finance costs relating to funeral plans, uses the discount rate at initial recognition of the funeral plan cohort.
4) Changes to our inflation assumptions are deemed to be non-financial, as the ultimate inflationary cost risk does not relate to a financial
market indices, and to the extent that they can be covered are first charged to the CSM buffer rather than direct to the Income statement.
The table below summarises where the financial impact of a change in the assumptions used in the actuarial calculations would be
reflected in our financial statements:
Assumption |
Financial Statement Impact |
Discount rate |
Consolidated statement of comprehensive income |
Fulfilment costs |
Consolidated income statement |
Inflation rate |
Consolidated income statement |
Risk adjustment |
Consolidated income statement |
Maintenance costs |
Consolidated income statement |
Mortality rates |
Consolidated income statement |
Cancellation rates |
Consolidated income statement |
194
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
Provisions
2025 |
2024 |
|
£m |
£m |
|
Non-current |
51 |
47 |
Current |
20 |
49 |
Total provisions |
71 |
96 |
| Uninsured |
Property |
Regulatory & |
||
| 2025 |
claims |
provisions |
Legal |
Total |
£m |
£m |
£m |
£m |
|
At beginning of the period |
35 |
19 |
42 |
96 |
Credit to income statement |
- |
- |
(15) |
(15) |
Charge to income statement |
20 |
- |
2 |
22 |
Payments |
(17) |
(2) |
(13) |
(32) |
At end of the period |
38 |
17 |
16 |
71 |
| Uninsured |
Property |
Regulatory & |
||
| 2024 |
claims |
provisions |
Legal |
Total |
£m |
£m |
£m |
£m |
|
At beginning of the period |
38 |
29 |
43 |
110 |
Credit to income statement |
(3) |
(11) |
- |
(14) |
Charge to income statement |
17 |
6 |
- |
23 |
Payments |
(17) |
(5) |
(1) |
(23) |
At end of the period |
35 |
19 |
42 |
96 |
Uninsured claims
This provision relates to potential liabilities arising from past events which are not covered by insurance. It includes a wide variety of known
claims and potential claims from accidents in our depots and stores. The provision includes an assessment, based on historical experience,
of claims incurred but not reported at the period end. The claims are expected to be settled substantially over the next three years.
Property provisions
Property provisions are held for onerous contractual obligations for leasehold properties that are vacant or not planned to be used for
ongoing operations. The provisions represent the least net cost of exiting from the contracts. Provisions include an assessment of
dilapidation and return of lease obligations, and other service costs that are explicitly excluded from the measurement of lease liabilities in
accordance with IFRS 16.
The Group considers that where it has entitlement to possession of a property, even if vacant, it retains a statutory obligation to pay the
related business rates that have been determined to be levies as defined in IFRIC 21. Accordingly, the estimate of the least net costs of
exiting from the contracts excludes future business rates which instead under IFRIC 21 are recognised when the event that triggers the
payment of the levy arises (as a periodic cost).
Property provisions are expected to be utilised over the remaining periods of the leases which range from 1 to 97 years. In each of the
current and comparative years, sensitivity analysis has been performed in relation to the provision, testing for a 2% increase in inflation
related to costs expected to be incurred; this sensitivity does not lead to a material additional provision being calculated. The sensitivity
analysis performed considers reasonably possible changes in the inflation assumption.
Critical accounting estimate and judgement
Regulatory & Legal
These provisions relate to costs from a number of past events that are expected to be incurred within the next one to five years. Typically,
these cover potential or on-going legal or regulatory claims and represent management's best estimate of expected future cashflows.
195
Members Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
21
Provisions
continued
Regulatory & Legal
- continued
The likely outcome in a legal or regulatory claim may be uncertain and difficult to predict based on the evidence and circumstances
involved. This means there may be considerable inherent uncertainty with an assessment as to whether a present obligation as a result of a
past event has arisen at the balance sheet date. No separate disclosure is made of the detail of such claims, the assumptions used to
calculate the amount provided or the uncertainties relating to the range of possible outcomes considered, because in management's view,
to do so could seriously prejudice our position.
A provision is recognised in the balance sheet when the Group has a legal or constructive obligation as a result of a past event, and it is probable
that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the
expected future cash flows at a discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks
Members' share capital and reserves
2025 |
2024 |
|
£m |
£m |
|
Individual shares of £1 each |
71 |
69 |
Corporate shares of £5 each |
8 |
8 |
Share capital |
79 |
77 |
Other reserves |
12 |
12 |
Cashflow hedge reserve* |
- |
- |
Retained earnings |
2,017 |
2,109 |
Total Retained earnings and Other reserves |
2,029 |
2,121 |
Total Capital resources |
2,108 |
2,198 |
*The Group has designated £175m of interest rate swaps as hedging instruments to be used for hedge accounting under IFRS 9 (see Note 26). The
trade date of the swaps was the 7 July 2025 (with the effective date of the trade aligning with the proposed drawn down date on the new term loan
in July 2026).
Members’ share capital is made up of corporate and individual shares. The rights attached to shares are set out in the Society’s rules. Shares
held by Independent Society Members (corporate shares) are not withdrawable and are transferable only between Independent Society
Members with the consent of the Society’s Board. Shares held by individual members (individual shares) are withdrawable on such period of
notice as the Society’s Board may from time to time specify. IFRIC 2 (Members' Shares in Co-operative Entities and Similar Instruments)
determines the features that allow shares to be classified as equity capital. As the Board has an unconditional right to refuse redemption of
both classes of shares, both corporate and individual shares are treated as equity shares.
Both classes of share maintain a fixed nominal value with corporate shares attracting a limited rate of interest. Under the Society's current
rules, voting for Independent Society Members is in proportion to trade with the Society, with Independent Society Members totalling 21.9%
(2024: 21.9%) of the vote at the Annual General Meeting. Each individual member has one vote with individual members totalling 78.1%
(2024: 78.1%) of the vote at the Annual General Meeting.
For individual shares, new members are required to contribute a minimum of £1 when they join the Society. Each member has 1 individual
share although contributions of up to £100,000 per member are allowed. No interest is earned on member capital. Members can withdraw
money from their share account upon request (to a minimum of £1) or they can withdraw their £1 when they leave the Society. The Society's
rules allow for the removal of a member from the share register if the member hasn't made any qualifying purchases with the Group for
three consecutive years. Five years after any such removal then the share capital would be forfeited to the Society. Individual member share
capital increased by £1.5m in the period being the net of new member contributions of £1.5m and withdrawals of £nil. We have 7.2m (2024:
196
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
22
Members' share capital and reserves -
continued
| Revaluation |
Cashflow |
||
Other reserves (2025) |
Reserve |
Hedge Reserve |
Total |
| £m |
£m |
£m |
|
Balance at 4 January 2025 |
12 |
- |
12 |
Balance at 3 January 2026 |
12 |
- |
12 |
Revaluation reserve - property, plant and equipment
This reserve relates to the surplus created following the revaluation of certain assets in previous periods. Any surplus relating to a
revalued asset is transferred to retained earnings at the point the asset is disposed of.
Cashflow hedge reserve - interest rate swaps
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in the
Cashflow Hedge Reserve within equity. The amount accumulated in the hedge reserve account is limited to the extent that the cumulative
gain / loss on the hedging instrument doesn't exceed the cumulative change in fair value of the expected cashflows of the hedged item.
Any gain or loss relating to hedge ineffectiveness is recognised immediately in profit and loss. Amounts accumulated in equity are
reclassified to Retained earnings in the period when the hedged item affects profit or loss (the gain or loss relating to the effective portion
of the interest rate swaps hedging variable rate borrowings is recognised in profit or loss within finance costs at the same time as the
interest expense on the hedged borrowings).
Distribution of reserves in the event of a winding-up
The Society’s rules state that any surplus in the event of a winding-up shall be transferred to one or more societies registered under the
Co-operative and Communities Benefit Act 2014. Such societies must be a member of Co-operatives UK Limited and have the same or
similar rule provisions in relation to surplus distribution on a dissolution or winding-up as we have. If not transferred to another society in
this way, the surplus shall be paid or transferred to Co-operatives UK Limited to be used and applied in accordance with co-operative
The Group defines capital as its share capital and reserves. The Group's policy is to maintain a strong base and to be more prudent than
industry 'normal' levels as it is not able to raise equity externally. The Group still recognises the need to maintain a balance between the
potential higher returns that might be achieved with greater borrowing levels and the advantages and security coming from a sound
capital position.
The Group manages capital to make sure we have the right balance between investing in the future growth of the Group and making
member and community payments. The Group has invested in future growth through cash capital expenditure additions of £318m (2024:
197
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
Investment properties
2025 |
2024 |
|
£m |
£m |
|
Valuation at beginning of period |
51 |
40 |
Disposals |
(11) |
(12) |
Transfer from Property, plant and equipment (Note 10) |
- |
4 |
Transfer from Right of use assets (Note 11) |
- |
2 |
Revaluation gain recognised in the Consolidated income statement |
10 |
14 |
Revaluation gain recognised in the Consolidated statement of other comprehensive income |
- |
3 |
Valuation at end of period |
50 |
51 |
The table above shows the reconciliation of Investment Properties (held at fair value level 3) from the start of the period to the end of the period.
There were no transfers between Levels 1 and 2 during the period and no transfers into and out of Level 3 fair value measurements.
A 5% movement in the fair value of the investment properties would result in a £3m (2024: £3m increase / decrease) in the carrying value of the
investment properties with a corresponding movement to the Change in value of investment properties in the Income statement.
Properties held for long-term rental yields that are not occupied by the Group or properties held for capital growth are classified as
investment properties. Investment properties are freehold land and buildings and right-of-use assets. These are carried at fair value (level
3 under IFRS 13 hierachy) which is determined by either independent valuers or internally each year on a three-year cyclical basis in
accordance with the RICS Appraisal and Valuation Manual. Fair value is initially based on observable inputs (such as current prices in an
active market for similar properties in the same location and condition) but may include subsequent adjustments (unobservable inputs) to
those valuations to reflect site specific conditions not reflected in the market value (such as the precise progression of planning or access
permission applications). Significant increases (decreases) in those unobservable input adjustments would result in a significantly higher
(lower) fair value of the Investment Properties. Any gain or loss arising from a change in fair value is recognised in the income statement.
If we start to occupy or trade from one of our investment properties, it is reclassified as property, plant and equipment, and its fair value at
the date of reclassification becomes its cost for subsequent accounting purposes. Other disclosures required by IAS 40 (Investment
198
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
Pensions
2025 |
2024 |
|
£m |
£m |
|
Pension schemes in surplus |
270 |
328 |
Pension schemes in deficit |
(3) |
(3) |
Closing net retirement benefit surplus |
267 |
325 |
Defined benefit (DB) plans
The Group operates three funded DB pension schemes all of which are closed to future accrual. This means that colleagues can no longer
join or earn future benefits from these schemes. The assets of these schemes are held in separate trustee-administered funds to meet future
benefit payments.
The Group's largest pension scheme is the Co-operative Group Pension Scheme (‘Pace’) which accounts for approximately 80% of the
Group's pension assets. The DB section of Pace ('Pace Complete') closed to future service accrual on 28 October 2015. As of November
2023, the vast majority of PACE's liabilities are covered by insurance policies. Further information is provided below.
Defined contribution (DC) plans
Since the closure of the DB schemes, the Group provides all colleagues with DC pension benefits through the DC section of Pace.
Colleagues are able to select the level of contributions that they wish to pay. The contribution paid by the Group varies between 1% and
10% of pensionable salary depending on the contribution tier that the scheme member has selected. Contributions are based on the
scheme member’s basic pay plus any earnings in respect of overtime, commission and shift allowance.
The Pace DC section provides benefits based on the value of the individual colleague’s fund built up through contributions and investment
returns. The Group has no legal or constructive obligation to pay contributions beyond those set out above. There is therefore no balance
sheet items for DC pension benefits except for any accrued contributions.
Balance sheet position for DB plans
The table below summarises the net surplus in the balance sheet by scheme. Following an insurance "buy-in" transaction in Pace in 2023 the
vast majority of Pace's liabilities are now covered by insurance policies.
Buy-in transactions
In November 2023, the Pace Trustee completed a “buy-in” transaction with Rothesay Life Plc, a specialist UK insurer, to insure scheme
benefits through a bulk annuity insurance policy. Through this transaction, and in conjunction with pre-existing partial “buy-ins” with Aviva
(completed in January 2020 and May 2020), and Pension Insurance Corporation (PIC, completed in February 2020), this means that the
Group Section of Pace, and by extension the Group as Principal Employer, is insured against the primary investment and longevity risks it is
exposed to. As a result of these four separate insurance transactions, the Pace scheme will receive regular payments from Rothesay, Aviva
and PIC to fund all future pension payments.
The insurance contracts are assets of the Pace scheme, and the Pace scheme has retained all responsibility to meet future pension payments
to pensioners. The salary increase link that remains, as applied largely to pre 2006 benefits since April 2022, is excluded from the Insurance
transactions, as are some costs related to GMP equalisation. This ongoing exposure means that the buy-ins don’t cover all the Pace liabilities,
but the Group’s remaining exposure is very small and, at the year-end, there is a surplus remaining in Pace of £170m (2024: £229m). The size
of the ongoing liability exposure from the salary link and the uninsured GMP equalisation costs is small relative to this surplus.
2025 |
2024 |
|
£m |
£m |
|
Schemes in surplus: |
||
The Co-operative Group Pension Scheme (Pace) |
170 |
229 |
Somerfield Pension Scheme |
66 |
71 |
United Norwest Co-operatives Employees' Pension Fund |
34 |
28 |
Total schemes in surplus |
270 |
328 |
Schemes in deficit: |
||
Other unfunded obligations |
(3) |
(3) |
Total schemes in deficit |
(3) |
(3) |
Total schemes (net) |
267 |
325 |
199
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
24
Pensions
continued
Non-Pace schemes
The United and Somerfield schemes use segregated liability driven investment (LDI) mandates which hold government and corporate
bonds, along with derivatives. These investments increase / (decrease) in value when yields on government bonds fall (rise), and are
designed to have similar interest rate and inflation sensitivities to the schemes’ liabilities so that the funding position is protected against
movements in interest rate and inflation expectations. The schemes’ liabilities are in aggregate broadly fully hedged against movements in
yields on government bonds. Against a backdrop of market uncertainty, AA corporate bonds, used to discount the liabilities
increased over
the year, whilst inflation expectations also increased but by a lesser extent.
Recognition of accounting surplus
Any net pension asset disclosed represents the maximum economic benefit available to the Group in respect of its pension obligations. The
Group has carried out a review of the provisions for the recovery of surplus in its pension schemes. This review concluded that the Group can
recoup the benefits of the surplus via a right to refunds and this is reflected in the balance sheet position.
Pace - nature of scheme
As Pace represents around 80% of the Group's pension assets, further information has been included on Pace below. Benefits accrued in
Pace between 6 April 2006 and 28 October 2015 are calculated based on an individual’s average career salary. Benefits accrued prior to 6
April 2006 are linked to final salary until scheme members end their pensionable service. The Somerfield and United schemes are exposed
to additional risks from Pace, predominantly investment, inflation and longevity. More detail is set out below.
Pace - multi-employer provisions following sectionalisation
Pace is a multi-employer scheme but following sectionalisation of the scheme in 2018, the Group accounts only for the Co-op section of
Pace. CFSMS, a subsidiary of the Group, participates in the Group's section with a material share of accrued DB obligations. There are other
participating employers in the Group section which include Group subsidiaries, non-associated and associated entities, but these do not
have a material share. Non-associated entities account for pension contributions in respect of the scheme on a DC basis.
Legislative framework for DB schemes - pension scheme governance
As required by UK legislation, the Group's three DB schemes are run by Trustee boards which operate independently from the Group. The
Trustees are responsible for the development and implementation of appropriate policies for the investment of the scheme assets and for
negotiating scheme funding with the Group. The Trustees consult with the Group in developing investment strategy and (as appropriate)
delegates the responsibility for implementing and monitoring the strategy to Investment Committees.
Each trustee board has professional independent trustee representation, and some boards require pension scheme member representation.
The Pace trustee board comprises Independent Trustee Services Limited (part of Independent Governance Group, a professional trustee
firm) and the chair of Independent Trustee Services Limited (appointed as an individual), with this appointment having been agreed by the
Co-op and Co-operative Bank. The other two trustee boards each comprise an independent, professional trustee director (via a
representative from Independent Trustee Services Limited), as well as Co-op appointed trustee directors, and member-nominated trustee
directors. The chair of each board is appointed by the trustee directors.
Legislative framework for DB schemes - scheme funding regime
Under the scheme specific funding regime established by the Pensions Act 2004, trustees of DB pension schemes have to undertake a full
actuarial valuation at least every three years. The purpose of the valuation is to determine if the scheme has sufficient assets to pay the
benefits when these fall due. The valuation targets full funding (scheme assets equal to the value of pension liabilities) against a basis that
prudently reflects the scheme’s risk exposure. The basis on which DB pension liabilities are valued for funding purposes differs to the basis
required under IAS19. The Group may therefore be required to pay contributions to eliminate a funding shortfall even when a surplus is
reported in the IAS19 disclosure. Any shortfall in the assets directly held by the Group’s DB schemes, relative to their funding target, is
financed over a period that ensures the contributions are reasonably affordable to the Group.
Contributions of £1.5m were paid over in the 2025 financial year in respect of the United Norwest scheme expenses (total 2024
contributions: £1.5m). Deficit contributions to all schemes have now ceased due to the fact that recent actuarial funding valuations showed
all the schemes were in surplus at the relevant valuation date. All scheme funding valuations target a more prudent level of funding than the
target stipulated under IAS19 which is included in these financial statements. Therefore the funding levels are not comparable and it is
possible to have a surplus under IAS19 and yet still be required to pay deficit contributions. We also cannot use a surplus in one scheme to
offset the requirement to pay cash contributions to fund a deficit in another scheme under a different trust. The contribution risk has also
fallen following the buy-in transaction.
The average duration of the liabilities at 3 Jan 2026 on an IAS19 basis is approximately 14 years. The benefits expected to be paid from the
schemes take the form of a cash lump sum paid at retirement followed by a stream of pension payments.
The effective date of the last full valuations of the schemes are shown below: | |
The Co-operative Pension Scheme (‘Pace’) | 5 April 2022 |
Somerfield Pension Scheme (‘Somerfield Scheme’) | 31 March 2022 |
United Norwest Co-operatives Employees’ Pension Fund (‘United Fund’) | 31 January 2023 |
Notes to the financial statements
continued
24
Pensions
continued
Legislative framework for DB schemes - scheme funding regime
continued
200
Our Members' Annual Report 2025:
Financial Statements
On 16 June 2023, the High Court issued a ruling in respect of Virgin Media v NTL Pension Trustees II Limited that brought into question the validity of
amending deeds that didn’t carry section 37 actuarial certification. During 2024, the Co-op undertook some initial analysis of historic deeds which
showed a small number of instances where actuarial confirmation (or similar assurance) would have been required but was not appended to the deed
or immediately obvious from the content of the deed that it had been obtained (though it remains possible certification was undertaken and exists
elsewhere). The government has recognised this potential issue and has now moved to provide for a legislative solution to validate historic scheme
changes and this is expected to come into force later in the year. Consequently, no further work is being undertaken at this time. We will review the
legislation when final and assess whether section 37 certification can be retrospectively applied or not.
Our pension scheme Trustee Boards & the Co-op have always had in place comprehensive procedures and practices to ensure compliance with all
legal and regulatory requirements, including taking appropriate external advice whenever any changes have been made.
Risks associated with DB pension schemes
The liability associated with the pension schemes is material to the Group. Following the buy-in transaction the cash funding risk is now considered to
be relatively low. The Group and Trustees work together to address the associated pension risk - in particular, steps have been taken to materially
reduce the investment risk in the schemes. The Group has removed its exposure to these risk in the Pace Scheme via the four separate insurance buy-
in contracts. The key risks in relation to the DB schemes are set out below, alongside a summary of the steps taken to mitigate the risk:
Risk description | Mitigation |
Risk of changes in contribution requirements - When | The closure of the DB schemes has reduced the exposure of the Group to changes in |
setting the contributions that are paid to a scheme, the | future contributions, as did the subsequent Pace Insurance buy-in contracts. In addition, |
Group and Trustee are required to consider the funding | the Group and Trustee have taken steps to reduce the volatility of the funding level (as |
level at a specified valuation date. The funding level at | set out below). The Group monitors the funding level of the schemes in order to |
future valuation dates is uncertain and this leads to | understand the likely outcome of valuations and the Trustee is required to obtain |
uncertainty in future cash requirements for the Group. | agreement from the Group to funding assumptions and deficit recovery contributions. |
Interest rate risk - Pension liabilities are measured with | Through its insurance buy-in contracts Pace has minimal further exposure. The |
reference to yields on bonds, with lower yields increasing | Somerfield and United schemes invest in liability-driven investment (LDI) products which |
the liabilities. The schemes are therefore exposed to the | increase (decrease) in value when yields on government bonds fall (rise), providing |
risk of falls in interest rates. | protection against interest rate risk. Across all schemes, approximately 98% of the liability |
is currently protected from movements in yields on government bonds. LDI involves | |
investing in assets which are expected to generate cashflows that broadly mirror | |
expected benefit payments from the scheme. | |
Risk associated with volatility in asset value - The | Given Pace’s liabilities are almost fully insured, assets are expected to move in line with |
market value of the assets held by the pension schemes, | liabilities meaning Pace has minimal further exposure. For the Somerfield and United |
particularly the assets held in return-seeking assets such as | schemes this risk has been mitigated by reducing the exposure of the pension schemes |
equity, can be volatile (and, for example, may be affected | to those asset classes which have the most volatile market values. In particular, the |
by environmental, social or corporate governance (“ESG”) | schemes have limited allocation to return-seeking assets such as equity. In addition, the |
failures at investee companies and/or sovereign states - | Trustees of the Co-op’s pension schemes have responsible investment policies in place, |
including the physical and transition risks of climate | and aligned with those policies exclude specific investments (where appropriate and |
change). This creates a risk of short-term fluctuations in | viable). Management of ESG risks is considered when appointing investment managers |
funding level. | and in their ongoing monitoring, and the schemes’ equity assets are explicitly managed |
with a consideration of such risks, including climate change. | |
Inflation risk - Many of the benefits paid by the schemes | Through its insurance buy-in contracts Pace has minimal further exposure. The |
are linked to inflation. Therefore, the pension liabilities | Somerfield and United schemes invest in liability driven investment products which |
reflect expectations of future inflation with higher inflation | increase (decrease) in value when expectations of future inflation rates increase (fall), |
leading to higher liabilities. | thus providing protection against inflation risk. Across all schemes, approximately 97% of |
the liability is currently protected from movements in inflation. | |
Risk associated with changes in life expectancy - | Through its insurance buy-in contracts Pace has minimal further exposure, and risk has |
Pensions paid by the schemes are guaranteed for life, and | substantially passed to the buy-in insurance providers. The remaining risk is now mainly |
therefore if members are expected to live longer, the | in respect of the credit risk associated with those buy-in insurance providers (with the |
liabilities increase. | mitigation that the buy-in insurance providers have strong credit ratings). The Somerfield |
and United schemes' funding targets incorporate a margin for prudence to reflect | |
uncertainty in future life expectancy. |
201
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
24
Pensions
continued
Critical accounting estimates
For IAS 19 disclosure purposes, DB obligations are determined following actuarial advice and are calculated using the projected unit
method. The assumptions used are the best estimates chosen from a range of possible actuarial assumptions which may not necessarily be
borne out in practice. For the insurance buy-ins under Pace, we apply the assumptions to derive the liability and then set the asset value to
match this liability, with separate calculations to derive the salary link and GMP equalisation liabilities.
Financial assumptions | 2025 | 2024 |
Discount rate | 5.65% | 5.54% |
RPI inflation rate | 3.14% | 3.39% |
Pension increases in payment (RPI capped at 5% p.a.) | 2.99% | 3.17% |
Future salary increases | 3.39% | 3.64% |
The discount rate has been derived by reference to market yields on sterling-denominated high quality corporate bonds of appropriate
duration consistent with the schemes at that date.
Demographic assumptions
The Group has used best estimate base mortality tables which reflect the membership of each scheme. Allowance has been made for future
improvements in line with the Continuous Mortality Investigation (CMI) 2024 projections and a long-term future improvement rate of 1.00%
p.a. (2024: CMI 2023 with long term future improvement rate of 1.00% p.a.).
For illustration, the average life expectancy (in years) for mortality tables used to determine scheme liabilities for Pace is as follows. These are
broadly similar to the life expectancies used for other schemes.
Life expectancy from age 65 | 2025 | 2024 |
Male currently aged 65 years | 20.8 | 20.5 |
Female currently aged 65 years | 22.7 | 22.3 |
Male currently aged 45 years | 21.6 | 21.3 |
Female currently aged 45 years | 23.5 | 23.4 |
Sensitivities
The measurement of the Group’s DB liability is particularly sensitive to changes in certain key assumptions, which are described below. The
methods used to carry out the sensitivity analysis presented below for the material assumptions are the same as those the Group has used
previously. The calculations alter the relevant assumption by the amount specified, whilst assuming that all other variables remained the
same. This approach is not necessarily realistic, since some assumptions are related: for example, if the scenario is to show the effect if
inflation is higher than expected, it might be reasonable to expect that nominal yields on corporate bonds will also increase. However, it
enables the reader to isolate one effect from another. It should also be noted that because of the interest rate and inflation hedges, changes
in the liability arising from a change in the discount rate or price inflation would be expected to be largely mitigated by a change in assets.
It’s impossible to predict future discount rates or inflation with any real certainty and so the sensitivities shown are for illustration purposes
only and in reality more material movements could be experienced.
2025 | 2024 | |
| Sensitivities | £m | £m |
Change in liability from a 0.5% decrease in discount rate | 348 | 366 |
Change in liability from a 0.5% increase in RPI inflation | 222 | 227 |
Change in liability from a 0.25% increase in long-term rate of longevity improvements | 32 | 34 |
Changes in the present value of the defined benefit obligation (DBO) | 2025 | 2024 |
£m | £m | |
Opening defined benefit obligation | 5,223 | 5,857 |
Interest expense on DBO | 280 | 270 |
Remeasurements: | ||
a. Effect of changes in demographic assumptions | 25 | (37) |
b. Effect of changes in financial assumptions | (183) | (558) |
c. Effect of experience adjustments | 46 | (11) |
Benefit payments from plan | (313) | (298) |
Closing defined benefit obligation | 5,078 | 5,223 |
202
Our Members Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
24
Pensions
continued
Changes in the fair value of the plan assets | 2025 | 2024 |
£m | £m | |
Opening fair value of plan assets | 5,548 | 6,213 |
Interest income | 298 | 287 |
Return on plan assets (excluding interest income) | (116) | (598) |
Administrative expenses paid from plan assets | (6) | (6) |
Employer contributions | 2 | 2 |
Pace DC contributions* | (68) | (52) |
Benefit payments from plan | (313) | (298) |
Closing fair value of plan assets | 5,345 | 5,548 |
* From March 2024, following the completion of the final Insurance transaction in 2023, the Trustee of the Pace DB Scheme have agreed to
use part of the surplus to partially fund employer contributions to the Pace DC Scheme. This is made possible because the Pace DB and DC
Schemes form the same Trust. These payments do not affect the obligations made in respect of defined benefit payments.
The fair value of the plan assets at the period end were as follows.
The assets have been split to show those which have a quoted market
price in an active market and those which are unquoted.
Fair value of plan assets | 2025 | 2025 | 2025 | 2024 | 2024 | 2024 |
Quoted | Unquoted | Total | Quoted | Unquoted | Total | |
£m | £m | £m | £m | £m | £m | |
Equity instruments | 23 | - | 23 | 25 | - | 25 |
Liability driven investments | 388 | 5 | 393 | 370 | - | 370 |
Investment grade credit assets | 175 | - | 175 | 345 | - | 345 |
Illiquid / other credit assets | - | 132 | 132 | - | 89 | 89 |
Alternative assets | - | 84 | 84 | - | - | - |
Cash and cash equivalents | 205 | - | 205 | 266 | - | 266 |
Insurance buy-in contracts | - | 4,333 | 4,333 | - | 4,453 | 4,453 |
Fair value of plan assets | 791 | 4,554 | 5,345 | 1,006 | 4,542 | 5,548 |
Amounts recognised in the balance sheet | 2025 | 2024 |
£m | £m | |
Present value of funded obligations | (5,075) | (5,220) |
Present value of unfunded liabilities | (3) | (3) |
Fair value of plan assets | 5,345 | 5,548 |
Net retirement benefit asset | 267 | 325 |
Amounts recognised in the income statement and other comprehensive income | 2025 | 2024 |
£m | £m | |
Interest expense on defined benefit obligations | (280) | (270) |
Interest income on plan assets | 298 | 287 |
Administrative expenses and taxes | (6) | (6) |
Total recognised in the income statement | 12 | 11 |
Remeasurement (losses) / gains on employee pension schemes | (3) | 8 |
Total recognised in other comprehensive income | (3) | 8 |
Total | 9 | 19 |
203
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
24
Pensions
continued
The Group operates various defined contribution and defined benefit pension schemes for its colleagues as stated above. A defined
contribution scheme is a pension plan under which the Group pays pre-specified contributions into a separate entity and has no legal or
constructive obligation to pay any further contributions. A defined benefit scheme is a pension plan that defines an amount of pension
benefit that a colleague will receive on retirement. In respect of the defined benefit pension scheme, the pension scheme surplus or deficit
recognised in the balance sheet represents the difference between the fair value of the plan assets and the present value of the defined
benefit obligation at the balance sheet date. The calculation of the defined benefit obligations is performed annually by qualified actuaries
(and half-yearly for Pace) using the projected unit credit method. Plan assets are recorded at fair value. When the calculation results in a
potential asset for the Group, the recognised asset reflects the present value of the economic benefits that will arise from the surplus in the
form of any future refunds from the plan or reductions in future contributions to the plan. Obligations for contributions to defined
contribution plans are expensed as the related service is provided. Prepaid contributions are recognised as an asset to the extent that a
cash refund or a reduction in future payments is available.
Remeasurements of the surplus / liability of each scheme (which comprise actuarial gains and losses and asset returns excluding interest
income) are included within other comprehensive income. Net interest expense and other items of expense relating to the defined benefit
plans are recognised in the income statement. Administrative costs of the plans are recognised in operating profit. Net interest expense is
determined by applying the discount rate used to measure the defined benefit obligation at the beginning of the year to the net defined
asset / liability at that point in time taking into account contributions within the period.
The Insurance transactions entered into by the Co-op, in respect of its pension arrangements, are assets of the Co-op pension schemes
and the schemes have retained all responsibility to meet future pension payments to pensioners. Insurance annuities are recorded at the
same value as the liabilities to which they relate and movements in liabilities will be offset by an equivalent movement in the insurance
annuity asset. These movements are recorded through items in other comprehensive income.
The premium cost of the Rothesay transaction (in the prior period) was greater than the value of the liabilities secured. As with previous
insurance contracts entered into, this was a buy-in transaction where the scheme retains the responsibility for paying pensions and
204
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
Financial risk management
The main financial risks facing the Group are set out below. Overall Group risks and the strategy used to manage these risks are discussed in
the Principal Risks and Uncertainties section on pages 46 - 53.
Credit risk arises from the possibility of customers and counterparties failing to meet their obligations. Management has a credit policy in
place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed for all customers requiring credit
over a certain amount. The Group does not require security in respect of financial assets. The majority of businesses in the Group have cash-
based rather than credit-based sales and so customer credit risk is relatively small.
The Group will ensure that it earns an appropriate return on its invested cash, whilst ensuring that there is minimal risk over the security of
that cash. Investments are only allowed with the Group's syndicate banks or counterparties that have a credit rating of Investment Grade.
Transactions involving derivative financial instruments are with counterparties with whom the Group has signed an ISDA agreement (a
standard contract used to govern all over-the-counter derivatives transactions). Management has no current reason to expect that any
counterparty the Group has invested with will fail to meet its obligations.
Funeral Plan funds are invested in whole-of-life insurance policies which pay out a lump sum when the insured person dies. Any provider of
these policies to the Group must be authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and
the Prudential Regulation Authority. There are also some funds relating to plans taken out prior to 2002 that are held in interest-bearing
trustee-administered bank accounts which can only be utilised to meet liabilities in respect of funeral plans.
At the balance sheet date there were no material concentrations of credit risk. Information regarding the age profile of trade receivables is
shown in Note 16. The carrying value of all balances that attract a credit risk, which represents the maximum exposure, is set out below:
Carrying |
Carrying |
|
amount |
amount |
|
2025 |
2024 |
|
£m |
£m |
|
Trade and other receivables (excluding prepayments and accrued income) |
488 |
414 |
Interest rate swaps |
(2) |
(6) |
Foreign exchange contracts and commodity swaps (net) |
(2) |
(3) |
Funeral plan investments |
1,513 |
1,414 |
Finance lease receivables |
35 |
26 |
Net cash and cash equivalents |
96 |
320 |
Short-term investments |
- |
100 |
Interest rate risk and hedging
Interest rate risk arises from movements in interest rates that impact the fair value of assets and liabilities and related finance flows. The
Group adopts a policy of ensuring that 50-100% of its exposure to changes in interest rates on borrowings is on a fixed rate basis. The
proportion of our debt on a fixed rate (including the impact of interest rate swaps) as at 3 January 2026 was 61% (at 4 January 2025: 77%).
Interest rate swaps, denominated exclusively in Sterling, have been entered into to achieve an appropriate mix of fixed and floating rate
exposure within the Group’s policy. At 3 January 2026, the Group had interest rate swaps with a notional contract amount of £280m (at 6
January 2024: £105m).
The Group entered into £175m of interest rate swaps on the 7 July 2025 which will be used as a cashflow hedge for the new £350m 5 year
term loan agreed in June 2025. The swaps have been designated as a cashflow hedge for hedge accounting under IFRS 9 whereby the
Group pays a fixed rate of interest and receives a variable rate based on Sterling Overnight Index Average (SONIA). An economic
relationship exists with the new term loan where the interest charged is linked to SONIA. The trade date of the swaps was the 7 July 2025
(with the effective date of the trade aligning with the proposed drawn down date on the new term loan in July 2026).
The £105m of interest rate swaps that mature in 2026 are not designated as hedging instruments. Derivative financial instruments that are
not hedging instruments are classified as held for trading by default and so fall into the category of financial assets at fair value through the
income statement. Derivatives are subsequently stated at fair value, with any gains and losses being recognised in the income statement.
See Note 26.
The net fair value of swaps at 3 January 2026 was a net liability of £2m (2024: net liability of £6m) comprising assets of £nil (2024: £nil) and
liabilities of £2m (2024: £6m). These amounts are recognised as fair value derivatives on the face of the Consolidated balance sheet.
205
Our Members' Annual Report Accounts for 2025:
Financial Statements
Notes to the financial statements
continued
25
Financial risk management
continued
The Group does not designate its forward foreign exchange contracts and commodity swaps as hedging instruments.
The Group is exposed to foreign currency risk on purchases that are denominated in a currency other than sterling. The key currencies
giving rise to this risk are Euros and US Dollars.
The Group manages the impact of market fluctuations on its currency exposures and future cash flows by undertaking rolling foreign
exchange hedges. These are executed on a monthly basis in a layered approach based on forecast requirements.
At 3 January 2026, the Group had forward currency transactions in Euros and US Dollars with a notional contract amount of £97m (2024:
This is the risk that the Group will not have sufficient monies to fund its future operations and meet its borrowing obligations. The Group has
diverse sources of financing through its cash, short-term investments, credit facilities and bonds. These are managed to ensure appropriate
flexibility and headroom over the short, medium and long term.
As at 3 January 2026, the Group had available cash and cash equivalents and short-term investments of £96m (2024: £420m) together with
committed borrowing facilities totalling £1,100m (2024: £862m). These are detailed below:
| 2025 |
2024 |
|||||
Bank facilities as at 3 January 2026 |
Expiry |
Facility |
Undrawn |
Expiry |
Facility |
Undrawn |
£m |
£m |
£m |
£m |
|||
Cash and cash equivalents* |
96 |
320 |
||||
Short-term investments |
- |
100 |
||||
Cash and cash equivalents and short-term investments |
96 |
420 |
||||
£109m 11% Final repayment subordinated notes** |
- |
Dec 2025 |
109 |
|||
£20m Instalment repayment notes** |
- |
Dec 2025 |
3 |
|||
£350m 7.5% Bond notes |
July 2026 |
350 |
- |
July 2026 |
350 |
|
Revolving Credit Facility |
Nov 2029 |
400 |
350 |
Nov 2029 |
400 |
400 |
£350m 5 year term loan *** |
July 2030 |
350 |
350 |
- |
- |
- |
Total debt facilities |
1,100 |
700 |
862 |
400 |
||
| Total cash and cash equivalents, |
796 |
820 |
||||
short-term investments and debt liquidity |
||||||
* Cash and cash equivalents includes £5m (2024: £nil) of restricted cash relating to receipts to be invested in funeral plan investments (these are
included in cash and cash equivalents on a statutory basis but are excluded from our net debt APM metric (see Glossary for further details)).
Furthermore, cash and cash equivalents includes a £2m overdraft (see Note 17).
** The £109m subordinated notes and the remaining £3m of the Instalment repayment notes were paid back in full from cash in December 2025 in
line with their maturity dates.
*** On the 18th June 2025 the Group agreed a five-year £350m Term Loan facility. The facility remains undrawn at the balance sheet date. The Term
Loan provides funding to repay its upcoming 2026 £350m bond which matures in July 2026.
206
Our Members' Annual Report
2025:
Financial Statements
Notes to the financial statements
continued
25
Financial risk management
continued
The following are the maturities of financial liabilities as at 3 January 2026. The contractual cashflows noted include payments of interest and
principal:
2025 |
Carrying Contractual |
1 - 2 |
2 - 5 |
More than |
||
amount |
cash flows |
<1 year |
years |
years |
5 years |
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Non-derivative financial liabilities |
||||||
£105m 7.5% Bond 2026 (fair value) |
(106) |
(113) |
(113) |
- |
- |
- |
£245m 7.5% Bond 2026 (amortised cost) |
(256) |
(263) |
(263) |
- |
- |
- |
Revolving credit facility (RCF) |
(50) |
(50) |
- |
- |
(50) |
- |
Lease liabilities |
(1,178) |
(1,611) |
(213) |
(199) |
(439) |
(760) |
Trade and other payables |
(1,624) |
(1,624) |
(1,621) |
(2) |
(1) |
- |
Derivative financial liabilities |
||||||
Interest rate swaps (not designated for hedge accounting |
(2) |
(2) |
(2) |
- |
- |
- |
Interest rate swaps (designated for hedge accounting) |
- |
1 |
- |
- |
- |
- |
Foreign exchange contracts - inflow (gross settled) |
- |
98 |
73 |
25 |
- |
- |
Foreign exchange contracts - outflow (gross settled) |
- |
(98) |
(73) |
(25) |
- |
- |
Commodity swaps |
(2) |
(1) |
(1) |
- |
- |
- |
* The £109m subordinated notes and the remaining £3m of the Instalment repayment notes were paid back in full from cash in December 2025 in
line with their maturity dates.
2024 |
Carrying |
Contractual |
More than 5 |
|||
amount |
cash flows |
< 1 year |
1 - 2 years |
2 - 5 years |
years |
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Non-derivative financial liabilities |
||||||
£109m 11% Final repayment subordinated notes 2025* |
(109) |
(121) |
(121) |
- |
- |
- |
£20m Instalment repayment notes (final payment 2025)* |
(3) |
(3) |
(3) |
- |
- |
- |
£105m 7.5% Bond 2026 (fair value) |
(108) |
(121) |
(8) |
(113) |
- |
- |
£245m 7.5% Bond 2026 (amortised cost) |
(259) |
(281) |
(18) |
(263) |
- |
- |
Lease liabilities |
(1,193) |
(1,509) |
(194) |
(179) |
(438) |
(698) |
Trade and other payables |
(1,564) |
(1,564) |
(1,532) |
(21) |
(7) |
(4) |
Derivative financial liabilities |
||||||
Interest rate swaps (not designated for hedge accounting |
(6) |
(7) |
(5) |
(2) |
- |
- |
Interest rate swaps (designated for hedge accounting) |
- |
75 |
53 |
22 |
- |
- |
Foreign exchange contracts - outflow (gross settled) |
- |
(78) |
(55) |
(23) |
- |
- |
Commodity swaps |
- |
- |
- |
- |
- |
- |
Sensitivity analysis
Interest rate risk
Interest rate risk is the risk that the fair value or future cashflows of a financial instrument will fluctuate because of changes in market interest
rates. The Group's borrowings are on a mixture of fixed and floating interest rates, and there is interest rate risk on the floating rate
borrowings, this includes the Group's Revolving Credit Facility and the £105m element of the 2026 Bond.
The valuations of the Group’s debt and interest rate swaps that are held at fair value have been determined by discounting expected future
cash flows associated with these instruments at the market interest rate yields as at the Group’s year end. This is then adjusted by a +1%
increase to the interest rate yield curve and a 1% reduction in the interest rate yield curve to show the impact of changes in interest rates on
the value of our debt and swaps. At 3 January 2026 and 4 January 2025, if Sterling (GBP) market interest rates had been 1% higher / lower
with all other variables held constant, there would have been no material impact to post-tax profit. Profit is generally less sensitive to
movements in GBP interest rates due to the level of borrowings held at fixed rates as described in the Interest rate risk and hedging section.
207
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
25
Financial risk management
continued
Foreign exchange risk
At 3 January 2026 and 4 January 2025, if both the Euro and US dollar had strengthened or weakened by 10% against sterling (GBP) with all
variables held constant, there would have been no material impact to post-tax profit.
Guarantees
In the course of conducting its operations, the Group is required to issue bank guarantees and bonds in favour of various counterparties.
These facilities are provided by the Group’s banking syndicate and as at 3 January 2026 the total amount of guarantees / bonds outstanding
Financial instruments, derivatives and valuation of financial assets and liabilities
2025 |
2024 |
|||||
Contractual/ |
Fair value |
Fair value |
Contractual |
Fair value |
Fair value |
|
notional |
assets |
liabilities |
/ notional |
assets |
liabilities |
|
amount |
amount |
|||||
£m |
£m |
£m |
£m |
£m |
£m |
|
Interest rate swaps (not designated for hedge accounting) |
105 |
- |
(2) |
105 |
- |
(6) |
Interest rate swaps (designated for hedge accounting) |
175 |
- |
- |
- |
- |
- |
Foreign exchange contracts |
97 |
- |
- |
73 |
- |
(2) |
Commodity swaps (diesel) |
16 |
- |
(2) |
20 |
- |
(1) |
Total recognised derivative liabilities |
393 |
- |
(4) |
198 |
- |
(9) |
£105m of the interest rate swaps mature in 2026 and as such are held in current liabilities. The remaining £175m mature in 2030 and are
The following summarises the major methods and assumptions used in estimating the value of financial instruments:
Investments in funeral plans
Where there is no active market or the investments are unlisted, the fair values are based on commonly used valuation techniques (refer to
accounting policy (section iv) of this note for further details.
Derivatives
Forward exchange contracts, such as the Group's interest rate swaps have been determined by discounting expected future cash flows
associated with these instruments at the market interest rate yields as at the Group’s year end. The £105m of the Group's derivatives that
mature in 2026 are not formally designated as hedging instruments but under IFRS 9 (Financial Instruments) they are used to match against a
proportion of the 2026 Bond liabilities carried at fair value through the income statement, showing as a gain of £2m in 2025 (2024: £3m
gain) see Note 6. The £175m of interest rate swaps that mature in 2030 have been formally designated as hedging instruments for hedge
accounting under IFRS 9 and will provide a 50% cashflow hedge when the new £350m term loan is drawn in July 2026.
The Group enters into forward contracts for the purchase of energy from third party suppliers for use by the Group. Energy contracts for own
use are not required to be accounted for as derivatives. We adopt a layered hedging procurement policy for energy contracts over a period
of 3 years to a maximum of 80% of Group forecast demand. At the 2025 year end we had 78% electricity (2024: 78%) and 62% gas (2024:
64%) coverage of our forecast demand for 2026. The Group also enters into long-term power purchase arrangements (PPAs) with various
green energy producers (on-shore and off-shore wind and solar). The Group is currently targeting to source around 30% of its wholesale
electricity requirements under green PPAs and all energy received under the green PPAs is entirely for Co-ops’ own-use. There is no excess
or unused electricity, and the Group does not resell any electricity it receives.
The PPAs are treated as executory contracts as they are
assessed as not meeting the accounting criteria for a joint arrangement (IFRS 11 Joint arrangements), a lease (IFRS 16 Leases) or derivative
financial instruments (IFRS 9 Financial Instruments). As executory contracts costs are recognised in the Income statement as incurred and no
asset / liability is recognised in the Consolidated balance sheet.
Fixed rate sterling bonds
b) Interest-bearing loans and borrowings - amortised cost
These are shown at amortised cost which presently equate to fair value or are determined in whole by using quoted market prices. Fair value
measurement is calculated on a discounted cash flow basis using prevailing market interest rates.
c) Receivables and payables
For receivables and payables with a remaining life of less than one year, the nominal amount is deemed to reflect the fair value, where the
effect of discounting is immaterial. For further details see the Accounting Policy section at the end of this note.
208
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
continued
26
Financial instruments, derivatives and valuation of financial assets and liabilities
The table below shows a comparison of the carrying value and fair values of financial instruments for those liabilities not carried at fair value.
Carrying value |
Fair value |
Carrying value |
Fair value |
|
| Financial liabilities |
2025 |
2025 |
2024 |
2024 |
£m |
£m |
£m |
£m |
|
Interest-bearing loans and borrowings (held at amortised cost) |
311 |
311 |
376 |
384 |
The table below analyses financial instruments by measurement basis:
Fair value |
Amortised |
Total |
|
2025 |
through income |
cost |
|
statement |
|||
£m |
£m |
£m |
|
Assets |
|||
Other investments (funeral plans) |
1,513 |
- |
1,513 |
Trade and other receivables |
- |
488 |
488 |
Cash and cash equivalents |
- |
96 |
96 |
Short-term investments |
- |
- |
- |
Total financial assets |
1,513 |
584 |
2,097 |
Liabilities |
|||
Interest-bearing loans and borrowings |
106 |
311 |
417 |
Derivative financial instruments |
4 |
- |
4 |
Trade and other payables |
- |
1,253 |
1,253 |
Total financial liabilities |
110 |
1,564 |
1,674 |
Fair value |
Amortised |
Total |
|
2024 |
through income |
cost |
|
statement |
|||
£m |
£m |
£m |
|
Assets |
|||
Other investments (funeral plans) |
1,414 |
- |
1,414 |
Trade and other receivables |
- |
414 |
414 |
Cash and cash equivalents |
- |
320 |
320 |
Short-term investments |
- |
100 |
100 |
Total financial assets |
1,414 |
834 |
2,248 |
Liabilities |
|||
Interest-bearing loans and borrowings |
108 |
376 |
484 |
Derivative financial instruments |
9 |
- |
9 |
Trade and other payables |
- |
1,171 |
1,171 |
Total financial liabilities |
117 |
1,547 |
1,664 |
hierarchy as defined within IFRS 13 (Fair Value Measurement):
• Level 1 |
Fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or |
liabilities. |
|
• Level 2 |
Fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are |
observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). |
|
• Level 3 |
Fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that |
are not based on observable market data (unobservable inputs). |
As pricing providers cannot guarantee that the prices they provide are based on actual trades in the market then all of the corporate bonds
are classified as Level 2.
209
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
continued
26
Financial instruments, derivatives and valuation of financial assets and liabilities
Valuation of financial instruments
2025 |
Level 1 |
Level 2 |
Level 3 |
Total |
£m |
£m |
£m |
£m |
|
Assets |
||||
Financial assets at fair value through the income statement |
||||
- Funeral plan investments |
- |
- |
1,513 |
1,513 |
- Derivative financial instruments |
- |
- |
- |
- |
Total financial assets at fair value |
- |
- |
1,513 |
1,513 |
Liabilities |
||||
Financial liabilities at fair value through the income statement |
||||
- Fixed rate sterling 2026 bond |
- |
106 |
- |
106 |
- Derivative financial instruments |
- |
4 |
- |
4 |
Total financial liabilities at fair value |
- |
110 |
- |
110 |
Funeral plan investments are classified as level 3 under the IFRS 13 hierarchy. Level 3 fair value measurements are those derived from
valuation techniques that include inputs that are not based on observable market data (unobservable inputs). The vast majority of our funeral
plan investments are held in Whole of Life (WoL) insurance policies. The plan investments are financial assets which are recorded at fair value
each period using valuations provided to Co-op by the policy provider. The plan values reflect the amount the policy provider would pay out
on redemption of the policy at the valuation date with the main driver being underlying market and investment performance.
A 5% movement in the fair value of the funeral plan investments would result in a £76m (2024: £71m) increase / (decrease) in the carrying
value of the investments with a corresponding movement to the net fair value gains / (losses) on financial assets in the income statement.
The value of the 2026 bonds carried at amortised cost is disclosed in Note 18. The equivalent fair value for the unhedged proportion of the
2026 bonds that are now carried at amortised cost would be £247m (2024: £252m).
There were no transfers between Levels 1 and 2 during the period and no transfers into and out of Level 3 fair value measurements. For
other financial assets and liabilities of the Group including cash, trade and other receivables / payables then the notional amount is deemed
to reflect the fair value.
2024 |
Level 1 |
Level 2 |
Level 3 |
Total |
£m |
£m |
£m |
£m |
|
Assets |
||||
Financial assets at fair value through the income statement |
||||
- Funeral plan investments |
- |
- |
1,414 |
1,414 |
Total financial assets at fair value |
- |
- |
1,414 |
1,414 |
Liabilities |
||||
Financial liabilities at fair value through the income statement |
||||
- Fixed rate sterling 2026 bond |
- |
108 |
- |
108 |
- Derivative financial instruments |
- |
9 |
- |
9 |
Total financial liabilities at fair value |
- |
117 |
- |
117 |
Interest rates used for determining fair value
Third-party valuations are used to fair value the Group’s bond and interest rate derivatives. The valuation techniques use inputs such as
210
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
continued
26
Financial instruments, derivatives and valuation of financial assets and liabilities
Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the contractual
provisions of the instrument. The Group classifies its financial assets and liabilities as either:
• fair value through the income statement; or
• at amortised cost.
A) General Recognition
i) Recognition of financial assets
Financial assets are recognised on the trade date which is the date it commits to purchase the instruments. Loans are recognised when the
funds are advanced. All other financial instruments are recognised on the date that they are originated. The classification of financial assets
at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing
them. The Group initially measures a financial asset at its fair value, with the exception of trade receivables that don’t contain a material
financing component or where the customer will pay for the related goods or services within one year of receiving them. For financial assets
which are not held at fair value through the income statement, transaction costs are also added to the initial fair value. Trade receivables that
don’t contain a material financing component or where the customer will pay for the related goods or services within one year of receiving
them are measured at the transaction price determined under IFRS 15 (Revenue from Contracts with Customers). See accounting policies for
revenue and IFRS 15 in Note 2.
ii) Recognition of financial liabilities
The Group recognises financial liabilities at either amortised cost or at fair value. See section C) Financial liabilities for further detail. All
derivative financial liabilities are classified as FVTPL. Financial liabilities costs, including premiums payable on settlement or redemption and
direct issue costs, are accounted for on an accrual basis in the income statement using the effective interest rate method and are added to
the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
The Group’s non-derivative financial liabilities comprise:
• Borrowings
• Trade and other payables
• Lease liabilities
Financial assets and liabilities are derecognised (removed from the balance sheet) when:
• the rights to receive cash flows from the assets have ceased; or
• the Group has transferred substantially all the risks and rewards of ownership of the assets.
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. When an existing liability is
replaced by the same counterparty on substantially different terms or the terms of an existing liability are substantially modified, the original
B) Financial Assets
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market which
we do not intend to sell immediately or in the near term. These are initially measured at fair value plus transaction costs that are directly
attributable to the financial asset. Subsequently these are measured at amortised cost. The amortised cost is the initial amount at recognition
less principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that
211
Our Members Annual Report
2025:
Financial Statements
Notes to the financial statements
continued
continued
26
Financial instruments, derivatives and valuation of financial assets and liabilities
B) Financial Assets -
continued
Funeral plans
When a customer takes out a funeral plan the premiums received are recognised as an investment asset in the balance sheet. The
investments are held in insurance policies or cash-based trusts and attract interest and bonus payments throughout the year dependent
upon market conditions. The plan investment is a financial asset, which is recorded at fair value each period through the income statement
using valuations provided by the insurance policy provider or reflecting the trust cash balances.
The obligation to deliver the funeral is treated as an insurance contract liability under accounting standard IFRS 17 (Insurance Contracts) and
held separately on our balance sheet. The standard applies to all of the Group’s funeral plans (including the re-insurance of the payment
waiver on instalment plans). See Note 20 for details of the Group's Insurance contract and Re-insurance contract liabilities and associated
accounting policies.
iii) Funeral benefit options (FBOs) - (amortised cost)
FBOs are attached to Guaranteed Over 50’s life insurance plans (GOFs) sold by the Group’s third party insurance partners. An FBO is the
assignment of the sum-assured proceeds of a GOF policy to Funeralcare for the purposes of undertaking their funeral. In exchange the GOF
customer is awarded a discount on the price of the funeral.
No revenue is recognised by the Group at the point of assignment and instead an element of the costs that have been incurred in obtaining
the FBO are deferred onto the balance sheet. These are then expensed at the point of redemption when the revenue is recognised. Any
plans that are cancelled are written off at the point at which Funeralcare are made aware of the cancellation. A separate provision is also
made to cover the expected cancellations of FBOs. No investment or liability is recognised for FBOs as the option does not guarantee a
funeral and the liability for which remains with the insurance partner. Any difference between the funeral price and the sum assured at the
An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates
are based on days past due for groupings of various customer segments with similar loss patterns (for example, by business division,
customer, coverage by letters of credit or other forms of credit insurance).
The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is
available at the reporting date about past events, current conditions and forecasts of future economic conditions. Generally, trade
receivables are written-off if past due for more than one year and are not insured or subject to enforcement activity. The maximum exposure
v) Lease receivables - (amortised cost)
vi) Financial Assets - Credit risk, liquidity risk and impairment of financial assets
a) Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial
loss. The Group is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including
deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.
Credit risk from balances with banks and financial institutions is managed by the Group’s Treasury department in accordance with the
Group’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each
counterparty. Counterparty credit limits are monitored regularly based on Board approved Treasury Policy, with changes to the credit limits
being reported monthly to the Treasury Committee. The limits are set to minimise the concentration of credit risk. Financial assets held at fair
value through the income statement are primarily held in low-risk investments.
b) Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans,
bonds and leases.
212
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
continued
26
Financial instruments, derivatives and valuation of financial assets and liabilities
The amount of the impairment loss on assets carried at amortised cost is recognised immediately through the income statement and a
corresponding reduction in the value of the financial asset is recognised through the use of an allowance account. A write-off is made when
all or part of an asset is deemed uncollectable or forgiven after all the possible collection procedures have been completed and the
amount of loss has been determined. Write-offs are charged against previously established provisions for impairment or directly to the
income statement. Any additional recoveries from borrowers, counterparties or other third parties made in future periods are offset against
the write-off charge in the income statement once they are received. Provisions are released at the point when it is deemed that following a
C) Financial Liabilities
Financial liabilities are classified according to the substance of the contractual arrangements entered into.
i) Trade and Other Payables - (amortised cost)
Trade and other payables are recognised initially at fair value, are not interest bearing and are subsequently measured at amortised cost.
ii) Fixed rate Sterling bonds - (fair value through the Income Statement)
The fixed rate sterling bond values are determined in whole by using quoted market prices.
iii) Interest-bearing loans and borrowings - (amortised cost)
Interest-bearing bank loans and overdrafts are recorded initially at fair value, which is generally the proceeds received, net of direct issue
costs. Subsequently, these liabilities are held at amortised cost using the effective interest rate method. Transaction costs are amortised on
a straight-line basis over the life of the facility they relate to.
iv) Lease liabilities - (amortised cost) -
refer to Accounting Policy section of Note 11 (Leases)
.
v) Derivatives - (fair value through the income statement)
The Group uses derivative financial instruments to provide an economic hedge to its exposure to interest rate risks arising from operational,
financing and investment activities. In accordance with its Treasury policy, the Group does not hold or issue derivative financial instruments
for trading purposes.
Derivatives entered into include interest rate swaps, foreign exchange contracts, commodity (diesel) swaps and energy contracts. Derivative
financial instruments are measured at fair value and any gains or losses are included in the income statement. Fair values are based on
quoted prices and where these are not available, valuation techniques such as discounted cash flow models are used.
Interest payments or receipts arising from interest rate swaps are recognised within finance income or finance costs in the period in which
the interest is incurred or earned.
vi) Derivatives - (designated for hedge accounting under IFRS 9)
The fair value of derivative financial instruments designated in hedge relationships are disclosed in the tables at the start of this Note. At
inception of the hedge relationship, the Group formally documents the economic relationship between the hedging instrument and the
hedged item, the Group's risk management objective and strategy for undertaking the hedge transactions and whether the instrument is
effective in offsetting changes in the fair value or cashflows of the hedged item attributable to the hedge risk, which is when the hedging
relationships meet all of the following hedge effectiveness requirements:
- there is an economic hedge relationship between the hedged item and the hedging instrument;
- the effect of credit risk does not dominate the value changes that result from that economic relationshp; and
- the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedge item that the Group actually
hedges and the quantity of the hedging instrument that the Group actually uses to hedge the quantity of the hedged item.
The Group uses the hypothetical derivative method to determine the changes in the fair value of the hedged item. The Group assess the
hedge effectiveness using the Dollar-offset methodology by comparing the changes in the fair value of a hypothetical derivative reflecting
the terms of the floating rate borrowing with the changes in the fair value of the derivatives used to hedge the exposure. The Group
determines the hedge ratio by comparing the notional amount of the derivatives with the principal of the designated portion of the
borrowing.
The effective portion of the gain or loss on the hedging instrument is recognised in Other Comprehensive Income in the hedging reserve,
while any ineffective portion is recognised immediately in the Consolidated Income Statement. The hedging reserve is adjusted to the
lower of the cumulative gain or loss on the hedging instrument and the cumulative change in the fair value of the hedged item. Amounts
accumulated in equity are reclassified to Retained earnings within the Statement of changes in equity in the periods when the hedged item
affects profit or loss (the gain or loss relating to the effective portion of the interest rate swaps hedging variable rate borrowings is
213
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
Commitments and contingencies
a)
b) i)
In common with other retailers, the Group has received Employment Tribunal claims from current and former food store colleagues
alleging their work is of equal value to that of distribution centre colleagues and differences in pay and other terms are not objectively
justifiable. The claimants are seeking the differential in pay (and other terms) together with equalisation going forward. There are currently
circa 5,900 claims (2024: circa 5,200 claims) and it is anticipated that this number will rise, though it is not possible to predict the point to
which this may increase or the rate of increase.
These equal pay claims are initiated in the Employment Tribunal and claimants will need to succeed in three stages to succeed. The first
stage concerns whether the roles of store colleagues can be compared with those of warehouse colleagues. In light of European and
Supreme Court decisions, Co-op Group has conceded that it will not contest this point. The second and third stages are concerned with an
equal value assessment between comparator roles and if this is shown to be the case, a subsequent consideration of Co-op Group’s material
factor defences (which are the non-discriminatory reasons for any pay differential). It is expected this litigation will take a number of years to
reach final resolution.
The claims are still at an early stage; the number of claims, merit, outcome and impact are all highly uncertain. No provision has been made
as it is not possible to assess the likelihood nor quantum of any outcome. There are substantial factual and legal defences to the claims and
the Group intends to defend them robustly.
The Group closely monitors the progress of other group claims made by store workers against large grocery retailers where the basis of the
claims are similar to those made against us.
b) ii)
In early February 2023 a claim was issued against Co-operative Group Limited and certain of its subsidiaries (Co-operative Group Food
Limited, Co-operative Foodstores Limited and Rochpion Properties (4) LLP) by the liquidators of The Food Retailer Operations Limited in
connection with transactions which took place in 2015 and 2016 relating to the Somerfield supermarket business acquired by Co-op in 2009.
The amount claimed is approximately £450m excluding interest and costs. Co-op strongly disputes both liability and the quantum of the
claim.
The trial on this matter was held between 12 January 2026 and 27 February 2026 and judgment is awaited. The Group’s legal advice is that it
Related party transactions and balances
2025 |
2024 |
||
Relationship |
£m |
£m |
|
Subscription to Co-operatives UK Limited |
(i) |
0.8 |
0.8 |
i) The Group is a member of Co-operatives UK Limited.
The Group’s Independent Society Members (ISMs) include consumer co-operative societies which, in aggregate, own the majority of the
corporate shares with rights attaching as described in Note 22. The Co-operative Group has a 76% shareholding in Federal Retail and
Trading Services Limited which is operated as a joint buying group by the Group for itself and other independent co-operative societies. The
Group acts as a wholesaler to the other independent co-operatives and generates sales from this and the arrangement is run on a cost
recovery basis and therefore no profit is derived from its activities. Sales to ISMs, on normal trading terms, were £1,964m (2024: £2,076m)
and the amount due from ISMs in respect of such sales was £187m at 3 January 2026 (2024: £151m). No distributions have been made to
ISMs based on their trade with the Group in either the current or prior periods.
Transactions with directors and key management personnel
A number of small transactions (such as the purchase of funeral services) are entered into with key management in the normal course of
business and are at arm's length. Key management are considered to be members of the Executive and directors of the Group. Key
management personnel transactions noted in the year are £nil (2024: £nil). Other than the compensation set out in the Remuneration Report,
there were no other transactions greater than £10,000 with the Group's entities (2024: £nil). Total compensation paid to key management
personnel is shown overleaf.
214
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
continued
28
Related Party transactions and balances
2025 |
2024 |
|
| Key management personnel compensation |
£m |
£m |
Short-term employee benefits |
3.8 |
4.1 |
Post-employment benefits |
0.2 |
0.2 |
Other long-term benefits |
0.3 |
0.3 |
Total |
4.3 |
4.6 |
Principal subsidiary undertakings
All of the principal subsidiary undertakings as at the period end are registered in England and Wales and their principal place of business is the UK.
See Accounting Policies and Basis of Preparation section on page 216 for a Group structure diagram.
Society holding % |
Nature of business |
|
Co-operative Group Holdings (2011) Ltd |
100 |
Property management |
Co-operative Group Food Ltd |
100 |
Food retailing |
Co-operative Foodstores Ltd |
100 |
Food retailing |
Co-op Wholesale Ltd* |
100 |
Food wholesaling |
Co-op Insurance Services Limited |
100 |
Insurance (marketing) |
Funeral Services Ltd |
100 |
Funeral directors |
Co-op Funeral Plans Ltd |
100 |
Funeral plan services |
Co-operative Legal Services Ltd |
100 |
Legal services |
Rochpion Properties (4) LLP |
100 |
Property management |
Notes
i) All of the above have been fully consolidated into the Group's accounts. There are no non-controlling interests in any of these entities.
ii) All of the principal subsidiaries are audited by EY LLP.
iii) All transactions between entities are in the usual course of business.
iv) A full list of all Group subsidiary entities can be found at: https://www.co-operative.coop/investors/rules
215
Our Members' Annual Report 2025:
Financial Statements
Notes to the financial statements
continued
Membership
2025 | 2024 | |
Members | m | m |
Active members (unaudited) | 7.2 | 6.2 |
Further detail on our membership proposition can be found in the 'Membership update' section in the front-half of this report (page 16). Full
There are no material post balance sheet events noted for disclosure in the 2025 Annual Report and Accounts for the 52 week period ended 3
216
Our Members' Annual Report 2025:
Accounting policies and basis of preparation
Group’s registered office is 1 Angel Square, Manchester, M60 0AG , and the trading locations of all stores and branches can be located on
The Group accounts have been prepared in accordance with UK adopted international accounting standards for the 52 week period ended
3 January 2026. As permitted by statute, a separate set of financial statements for the Society are not included.
The accounts are presented in pounds sterling and are principally prepared on the basis of historical cost. Areas where other bases are
applied are explained in the relevant accounting policy in the notes. Amounts have been rounded to the nearest million. The accounting
policies set out in the notes have been applied consistently to all periods presented in these financial statements, except where stated
otherwise. The accounts are prepared on a going concern basis. See later section on ‘
Climate Change Considerations
In preparing the Group's Consolidated Financial statements management has considered the impact of climate change covering both the
financial statements and the disclosures included in the Strategic report. This included an assessment of the potential impact of, and
associated responses to, climate change, and how that could impact the non-current assets that we hold as well as our expectations of
future trading conditions. This assessment did not identify any requirement to shorten asset lives of the Group’s asset base and neither did it
identify any material impact on the valuation of the Group’s assets or liabilities. Where material the Group has included the impact of
climate change within its forecasts, impairment reviews and assessments of going concern and viability. Further detail is given later in this
section under 'Material accounting judgements, estimates and assumptions in relation to climate change.' The Group will keep this
assessment under review and continue to monitor developments in the future.
The financial statements consolidate Co-operative Group Limited , which is the ultimate parent society, and its subsidiary undertakings. The
Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. The Group's consolidated results include those of The Manx Co-operative Society on
that basis. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control
commences until the date that control ceases.
The diagram below shows the composition of the Group and its principal subsidiaries. Further details can be found in Note 29 (Principal
subsidiary undertakings). A full list of subsidiaries that make up the Group for the purposes of these financial statements can be found at:
http://www.co-operative.coop/investors/rules
Co-operative Group Ltd
Co-operative Group Holdings (2011) Ltd
Rochpion Properties (4) LLP
Co-operative Group Food Ltd
Funeral Services Ltd
Co-op Wholesale Ltd**
Co-operative Foodstores Ltd
Co-op Funeral Plans Ltd *
Co-op Insurance Services Ltd
Co-operative Legal Services Ltd
Direct holding
Indirect holding
All shareholdings are 100% owned unless otherwise stated.
* Co-op Funeral Plans Ltd is owned 33% by Co-operative Group Ltd and 67% by Co-operative Group Holdings Ltd.
217
Our Members' Annual Report 2025:
Accounting policies and basis of preparation
Accounting dates
The Group and its main trading subsidiaries prepare their accounts to the first Saturday of January unless 31 December is a Saturday.
These financial statements are therefore prepared for the 52 weeks ended 3 January 2026. Comparative information is presented for the
52 weeks ended 4 January 2025. Since the financial periods are virtually in line with calendar years, the current period figures are headed
2025 and the comparative figures are headed 2024.
Co-operative Insurances Services Limited and certain small holding companies have prepared accounts for the period ended 31
December 2025. This differs from the Group and the other subsidiaries. For the period ending 3 January 2026, there are no material
transactions or events which need to be adjusted for to reflect the difference in reporting dates.
Non-underlying items and non-GAAP (Generally Accepted Accounting Procedures) measures
Non-underlying items include costs relating to activities such as large restructuring programmes and costs or income which would not
normally be seen as costs or income relating to the underlying principal activities of the Group.
Two non-GAAP measures of performance are presented to help the reader understand the underlying profitability of the Group: (i)
underlying operating profit / (loss) and (ii) underlying profit / (loss) before tax. These are shown in the table at the bottom of the income
statement and we show the adjustments between these measures and operating profit. In calculating these non-GAAP measures, property
and business disposals (including individual store impairments), the change in value of investment properties and other non-underlying
items are adjusted for. Further detail on the Group's Alternative Performance Measures (APMs) can be found in the Glossary on page 241.
Financial assets and financial liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable
The preparation of financial statements that comply with IFRS requires management to make judgements, estimates and assumptions that
affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the
results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates.
In assessing the Group’s judgements and sources of estimation uncertainty, consideration has also been given to the impact of climate
change risk. Details are shown at the end of this section.
Key judgements:
In the process of applying the Group’s accounting policies, management has made the following key judgements which have the most
material impact on the consolidated financial statements:
•
Determining the lease term of contracts with extension and termination options (Note 11)
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend
the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain
not to be exercised.
The Group has the option, under some of its leases to lease the assets for additional terms of 5 to 10 years. The Group applies judgement
in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all relevant factors that create an
economic incentive for it to exercise the renewal. After the commencement date, the Group reassesses the lease term if there is a material
event or change in circumstances that is within its control and affects its ability to exercise (or not to exercise) the option to renew.
•
Cyber attack (Note 1)
As disclosed earlier in this document, our Co-op was the victim of a cyber attack in April 2025. Actual costs that we have incurred in
relation to the Cyber attack that are assessed as being directly incremental costs of the incident
have been treated as non-underlying
items for our underlying profit metrics (APMs). Such costs mainly relate to incremental stock losses and stock wastage in our Food
business, incremental third party costs incurred with our professional services partners as well as incremental payroll costs incurred as part
of the cyber recovery process. Any Cyber related costs that are not assessed as being directly incremental costs of the incident have not
been treated as non-underlying for the purposes of our APMs. No adjustments have been made for lost opportunity items (such as sales
or margin) due to the Cyber attack. The assessment and classification of costs as non-underlying is a key judgement and reflects both the
scale of the financial impact (which is assessed as being material for the Group) and nature of the costs incurred (being directly
incremental costs of the incident). This assessment has been applied consistently and is in-line with the Group's accounting policies.
218
Our Members' Annual Report 2025:
Accounting policies and basis of preparation
Key judgements
- continued
•
Provisions (Note 21)
– a provision is recognised in the balance sheet when the Group has a legal or constructive obligation as a result of
a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material,
provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the
time value of money and, where appropriate, the risks specific to the liability. Regulatory and legal provisions are typically held in relation
to on-going legal or regulatory claims and material assumptions and estimates are made in relation to the estimation of future cash flows
and the discount rate applied. The likely outcome in a legal or regulatory claim may be uncertain and difficult to predict based on the
evidence and circumstances involved. This means there may be considerable inherent uncertainty with an assessment as to whether a
provision exists at the balance sheet date. No separate disclosure is made of the detail of such claims, the assumptions used to calculate
the amount provided or the uncertainties relating to the range of possible outcomes considered, because in management's view, to do so
could seriously prejudice our position.
The Group takes into account the potential impact of climate change on its legal and constructive obligations, such as potential changes in
regulations related to carbon emissions, environmental liabilities and natural disasters. The Group also considers the potential impact of
climate change on the costs of complying with environmental regulations and the costs of natural disasters. The Group has reviewed its
provisions and concluded that no adjustments need to be made for climate change risks, nor that any new provisions need to be
recognised for climate-related matters.
Key accounting estimates and assumptions
:
In the process of applying the Group’s accounting policies, management has made the following key accounting estimates and
assumptions which have the most material impact on the consolidated financial statements:
• Insurance contract liabilities (Note 20)
Under IFRS 17 (Insurance Contracts) the Group's funeral plan liabilities reflect the current estimate of the present value of the future
cashflows to provide the funeral. These are calculated using actuarial advice and are based on a range of assumptions and estimates. The
assumptions used are management's best estimates chosen from a range of possible actuarial assumptions which may not necessarily be
borne out in practice.
The main actuarial assumptions include estimates in relation to discount rates, future costs to deliver a funeral including inflation and
expense assumptions, mortality rates, risk adjustments and plan cancellation rates. The insurance contract liability calculation is most
sensitive to changes in the discount rate and inflation assumptions and further detail on these items is noted below.
Discount rate
- the Group applies a bottom-up approach to derive the discount rate such that our insurance contract liabilities (funeral
plans) are calculated by discounting expected future cash flows at a risk free rate, plus an illiquidity premium (credit spread). The risk free
rate has been derived by reference to market yields on sterling-denominated high quality corporate bonds of appropriate duration
consistent with the funeral plans at that date (UK Gilt curve at the valuation date converted from continuous to annual rates). The illiquidity
premium is determined by reference to observable market rates (assessed as the average credit spread on 10-15 A rated and 10-15 year
AA rated bonds at the valuation date). See Note 20 for sensitivity analysis.
Inflation
- the rate of inflation is set based on the Bank of England Forward Inflation Curve at the valuation date converted from continuous
to annual. From 2022 onwards a reduction of 25 basis points has been applied to allow for high levels of demand for inflation linked gilts
increasing inflation expectations. Years 2025 to 2028 have been adjusted to reflect managements' view based on experience of funeral
cost inflation. See Note 20 for sensitivity analysis.
Fullfilment costs
- the Group applies an absorbed fulfilment cost, based on methodology consistent with IAS37, calculated for each year.
See Note 20 for sensitivity analysis.
Mortality
- an average 111% loading is applied to the English Life Tables 2017 (“ELT17”). This reflects that mortality rates are deemed to
be approximately 10% heavier than those shown in ELT17. The basis is consistent with the mortality analysis used for 2024 (which indicated
a 112% loading), adjusted by a 2% reduction to allow for two years of expected future mortality improvements. An allowance for future
longevity improvements of 1% per annum is also included. See Note 20 for sensitivity analysis.
•
Pensions (Note 23)
– the Group’s defined benefit pension obligations are determined following actuarial advice and are calculated
using the projected unit method. The assumptions used are the best estimates chosen from a range of possible actuarial assumptions
which may not necessarily be borne out in practice. The most material assumptions relate to the determination of the discount rate, future
salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation and its long-term nature,
the Group’s defined benefit obligation is highly sensitive to changes in these assumptions. Further details of the financial and demographic
assumptions that have been used are shown in Note 24 along with associated sensitivities to those assumptions.
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Our Members' Annual Report 2025:
Accounting policies and basis of preparation
Key accounting estimates and assumptions
- continued:
•
Impairment of non-financial assets (Notes 10, 11 & 12)
- the carrying amount of non-financial assets (such as property, plant and
equipment, right-of-use assets, goodwill and intangibles) are reviewed at each balance sheet date and if there is any indication of
impairment, the asset's recoverable amount is estimated.
The recoverable amount is the greater of the fair value of the asset (less costs to sell) and the value in use of the asset. An impairment loss
is recognised whenever the carrying amount of an asset or its cash-generating unit (CGU) exceeds its estimated recoverable amount. For
property assets the fair value less costs to sell are measured using internal valuations based on the rental yield of the property.
This review is performed annually or in the event where indicators of impairment are present. At 3 January 2026, the Group has
considered whether general uncertainty in the wider macro-economic environment including the cost-of-living crisis, rising inflation,
energy price increases, and the on-going conflicts in Ukraine and the Middle East has the potential to represent a significant impairment
indicator.
Despite the difficult trading conditions and associated additional costs of serving our customers the Group’s main business areas have
proven resilient and the performance of the Group’s cash-generating units has remained strong. Therefore, management concluded that
the impact of the factors noted on the longer term outlook for these cash generating units did not constitute an indicator of material
impairment and hence a full impairment test across all CGUs was not required. This judgement is unchanged from 4 January 2025. An
impairment assessment has been performed over our Food and Funeralcare estate where indicators of impairment have been identified
as disclosed in Note 10.
The Group estimates the value in use of an asset by projecting future cash flows into perpetuity and discounting the cash flows (DCF)
associated with that asset at a pre-tax rate of between 10-12% (2024: 9-11%) dependent on the business. The key assumptions used to
determine the recoverable amount for the different CGUs, and the sensitivity analysis that is undertaken, are disclosed and further
explained in Notes 10 and 12.
Material accounting judgements, estimates and assumptions in relation to climate change
In assessing the Group’s judgements and sources of estimation uncertainty, consideration has been given to the impact of climate change
risk. Aside from areas noted below climate change risks do not have any impacts on the Group’s other judgements or sources of
estimation uncertainty.
Impairment of non-current assets
As described in notes 10 and 12, our impairment assessment over the Group's property, plan and equipment, right of use assets and
goodwill, has taken into consideration any climate related risks identified through our risk assessment process. Our assessment concluded
that the expected climate related risks did not have a material impact on the Group's impairment considerations at the reporting date. The
Board-approved plan underpinning our impairment assessments, takes into consideration any incremental costs of climate related actions
to mitigate these risks where these are expected to crystallise within the timeframe of the plan. This represents a developing area with
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Our Members' Annual Report 2025:
Accounting policies and basis of preparation
Key accounting estimates and assumptions
- continued:
The Group has considered the following standards and amendments that are effective for the Group for the period commencing 5
January 2025 and concluded that they are either not relevant to the Group or do not have a significant impact on the financial statements:
• Amendments to IAS 21 - Lack of Exchangeability
Standards, amendments and interpretations issued but not yet effective
Certain new accounting standards and interpretations have been published that are not mandatory for 5 January 2025 reporting periods
and the Group has not early adopted the following standards and statements. Unless noted the adoption of these standards is not
expected to have a material impact on the Group’s accounts:
• Amendments to IFRS 9 and IFRS 7 - Classification and Measurement of Financial Instruments*
• Amendments to IFRS 9 and IFRS 7 - Contracts Referencing Nature-dependent Electricity*
• Annual Improvements to IFRS Accounting Standards - Volume 11*
• IFRS 18 - Presentation and Disclosure in Financial Statements**
• IFRS 19 - Subsidiaries without Public Accountability: Disclosures**
• Amendments to IAS 21 - Transition to a hyperinflationary presentational currency**
*Applicable for reporting periods on or after 1st January 2026. **Applicable for reporting periods on or after 1st January 2027.
The Group is currently reviewing the likely impact of IFRS 18 on its statutory reporting which may change the format and presentation of
the Consolidated Income statement and certain disclosure notes including the requirement for a dedicated disclosure note for
management performance measures (MPMs). Furthermore, the Group is also reviewing the likely impact of the amendments to IFRS 9 with
specific reference to the timing and date of derecognition of finanical assets and liabilities with particular reference to receipts and
payments settled via electronic transfer. This may impact the valuation and categorisation between line items in the Conslidated Balance
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Our Members' Annual Report 2025:
Accounting policies and basis of preparation
The financial statements are prepared on a going concern basis as the directors have a reasonable expectation that the Group has
sufficient liquidity and adequate resources to continue in operational existence for the foreseeable future, being a period of at least 12
months post the date of approval of these financial statements.
In assessing the Group’s ability to continue as a going concern, the directors have considered the Group’s most recent forecasting
process and specifically the Group’s profitability, cashflows, covenant compliance and the Group’s liquidity position for the going
concern assessment period, up to 31 December 2027. Our Co-op operates with net current liabilities as our working capital cycle means
cash receipts from revenues arise in advance of the payments to suppliers for the cost of goods sold. We also borrow money from banks
and other funding sources, structuring our borrowings with phased maturities to manage our refinancing risk as well as maintaining
sufficient levels of liquidity for our Co-op. As part of the going concern review, we have ensured that our forecasts demonstrate
compliance with the terms of these agreements, for example related banking covenants and facility levels.
As part of strategic planning, the directors make key assumptions about business performance and stress-test financial scenarios to
ensure compliance with facility terms, even under principal risk events. Although our Co-op has a robust planning process, which reflects
the continuing economic uncertainty and headwinds impacting the group, we have performed additional stress testing of the going
concern basis under severe but plausible downside scenarios which also align to our principal risks. The results of our stress testing of
severe but plausible downside scenarios provided a reasonable basis to support the directors’ conclusion over going concern. Although
the cyber attack has had a material impact on our full year results, the group continues to have sufficient liquidity throughout the going
concern assessment period.
In arriving at the conclusion of the appropriateness of the going concern assumption, the directors have considered the following:
1. Review and challenge management’s base case forecast:
The directors have considered the Group’s cash flow forecasts and profitability projections for the period to December 2027 (“Base
Case”). Co-op’s base case forecast takes into consideration the continued uncertainty in the convenience market. The Board has reviewed
and approved these plans.
The key assumptions in the plan are:
a. Growth in volume and margin rate.
b. This growth is tempered with impact of continued cost headwinds on payroll, and goods not for resale inflation, being offset by
assumed significant operating cost savings.
c. Rebuilding the balance sheet through working capital improvement, reducing net debt.
d. The new £350m loan facility secured in June 2025 will be drawn down for the purpose of repaying the £350m bond debt maturing in
July 2026. The plan assumes the raising of additional funding in 2026 of £300m from the bond market, to boost our liquidity position and
to keep our Coop protected from known and unknown business risks that may arise in the future.
2. Ensure compliance with the terms of our bank facility agreements and covenant compliance:
The potential scenarios which could lead to our Co-op not being a going concern are: a. Not having enough liquidity to meet our debt
liabilities as they fall due; and/or b. A breach of the financial covenants implicit in our bank revolving credit facility.
As at 3 January 2026, the Group had gross liquidity headroom of £441m, being cash of £93m excluding restricted cash, and headroom of
£348m on the Group’s Revolving credit facility (“RCF”). The Base case has sufficient liquidity and bank covenants headroom over the
going concern period, with the tightest point for liquidity headroom at period 6 2027, and tightest point for EBITDA at period 6 2026 to
breach covenants. The Group has been in compliance with all covenants applicable to its facilities through the period and is forecast to
continue to be in compliance for going concern assessment period up to December 2027.
A definition of our banking covenants is provided in Note 18. Further details on capital management, financial instruments, and risk
exposures are provided in Note 27 to the financial statements.
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Our Members' Annual Report 2025:
Accounting policies and basis of preparation
Going concern basis of preparation
- continued:
3. Assess downside scenarios against the base case:
The directors have also considered the impact on forecasted performance of severe but plausible downside scenarios (“Downside Case”),
including (but not limited to) the following:
a. reduction in trade volumes, margin rate and market share in our Food business;
b. market share, product mix and death rate sensitivities in our Funeralcare business;
c. reduction in the growth and cost efficiency assumptions in our Wholesale business;
d. operating cost out programme non delivery;
e. exclusion of the additional funding of £300m assumed in the base plan.
The downside sensitivities identified do not risk the validity of our Co-op as a going concern even before applying the mitigating actions
considered below. We have also considered a severe but plausible combination of the sensitivities happening concurrently and we still
have liquidity and covenant headroom over the going concern assessment period.
Whilst out of line with our strategic ambition, there are several options and management mitigating actions within the business' control
we could exercise, if the above risks materialised, or in the unlikely scenario of a cash outflow arising from an adverse legal matter
outcome or an unpredictable event occurring similar to the cyber attack in 2025. Options include (but not limited to) our Co-op’s ability to
control the level and timing of its capital expenditure programme, apply cost control measures across both variable and overhead
budgets and sale and lease back opportunities.
4. Conduct reverse stress testing:
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CO-OPERATIVE GROUP LIMITED
Opinion
In our opinion:
Co-operative Group Limited’s group financial statements (the “financial statements”) give a true
and fair view of the state of the group’s affairs as at 3 January 2026 and of the group’s loss for the
52-week period then ended;
The Group financial statements have been properly prepared in accordance with UK adopted
international accounting standards;
The Group financial statements have been prepared in accordance with the requirements of the
Co-operative and Community Benefit Societies Act 2014.
We have audited the financial statements of Co-operative Group Limited (‘the group’) for the 52-week
period ended 3 January 2026 which comprise:
Group
Consolidated balance sheet as at 3 January 2026
Consolidated income statement for the 52-week period then ended
Consolidated statement of comprehensive income for the 52-week period then ended
Consolidated statement of changes in equity for the 52-week period then ended
Consolidated statement of cash flows for the 52-week period then ended
Related notes 1 to 31 to the financial statements, including material accounting policy information
The financial reporting framework that has been applied in their preparation is applicable law and UK
adopted international accounting standards.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of
the group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern
basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the
directors’ assessment of the group’s ability to continue to adopt the going concern basis of accounting
included:
Confirming our understanding of management’s going concern assessment process, including
the cash forecast for the going concern period which covers 21 months from the date of
224
approval of the financial statements to December 2027 and considered the existence of any
significant events or conditions beyond this period.
Verifying model inputs against board-approved forecasts. We challenged the appropriateness
of the key assumptions in management’s forecasts, including revenue and margin growth,
comparing to historical forecasting accuracy.
Challenging management over the completeness of key factors and the downside scenarios
identified, considering other factors impacting the group, such as the impact of significant cost
pressures including increased national living wage costs and other accounting estimates.
Assessing the plausibility of the downside scenarios and whether these were appropriately
severe in light of the group’s performance, focusing on Food performance in 2026 to date, and
the possibility that the financial objective of the cost out programme is not met. We performed
sensitivity analyses on the assumptions to assess the impact on headroom, including the
possibility of a cash outflow resulting from an adverse legal matters outcome.
Testing the clerical accuracy of cash flow calculations, evaluating the appropriateness of the
methodology applied by management, including forecast liquidity under base and downside
scenarios.
Obtaining and inspecting the agreement for the £350m term loan issued in June 2025, which
remains undrawn at year end, to be used to repay the maturing bond in July 2026. We
assessed the continued availability of facilities to the group through the going concern period
and ensured the completeness of the covenants identified by management. We inspected the
short-term covenant alleviation agreement reflecting the estimated direct impacts of the cyber
security incident due to its one-off nature. There is forecast covenant compliance in 2026,
even without the alleviation.
Engaging an EY debt advisory specialist who concluded the group had realistic prospects of
accessing the capital markets if required before July 2026. However, given this is uncommitted
as at the date of approval of the financial statements, we excluded the £300m assumed by
management in their model, from the EY modelling, but noted sufficient covenant and liquidity
headroom even excluding the facility.
Evaluating the mitigating factors which are within the control of the group, including a review of
the feasibility of capital expenditure reductions. We excluded an assumed sale and leaseback
mitigation included in management’s model, given it was only partially in the control of
management, but noted this did not make a significant difference to the forecast covenant and
liquidity headroom.
Reviewing management’s reverse stress testing in order to identify and understand the
likelihood of factors that would lead to the group running out of all available liquidity during the
going concern period.
Reviewing the group’s going concern disclosures included in the annual report in order to
assess that the disclosures are consistent with the basis upon which the directors have
concluded, and in conformity with the reporting standards.
Key observations arising with respect to our evaluation of management’s going concern assessment:
The group has net current liabilities of £980m (2024: £498m), which is common in the retail industry
due to the working capital cycle. The group has net debt £1,504m (2024: £1,257m). Of the debt held
by the group it is only the revolving credit facility and term loan which requires compliance with
covenant tests. These covenants are tested twice per year.
Cash generated from operating activities was £243m (2024: £456m) and was lower than the prior
period mainly due to the weaker operating profit performance of the group following the cyber security
incident in the period.
We identified the following significant assumptions made by management which have influenced their
going concern assessment:
225
Food retail sales volumes and gross margin.
The financial success of the planned cost out programme.
Forecast working capital improvements during 2026.
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the group’s ability to
continue as a going concern for a period of 21 months from the balance sheet date to December
2027.
In relation to the group’s reporting on how they have applied the UK Corporate Governance Code, we
have nothing material to add or draw attention to in relation to the directors’ statement in the group
financial statements about whether the directors considered it appropriate to adopt the going concern
basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
However, because not all future events or conditions
can be predicted, this statement is not a guarantee as to the group’s ability to continue as a going
concern.
Overview of our audit approach
Audit scope
We performed an audit of the complete financial information of four
components and audit procedures on specific balances for a further two
components. We also performed specified audit procedures on certain
accounts on one additional component. We performed central procedures
on the group financial statement line items as detailed in “Tailoring the
scope” section below.
Key audit
Revenue recognition
matters
Accrued supplier income – long term agreements (LTA)
Valuation of insurance contract liabilities
Impairment of Food property, plant & equipment and right of use assets
Cyber security incident
Materiality
Overall group materiality of £45m which represents 0.5% of Adjusted
Revenue.
Adjusted Revenue is calculated as group revenue less revenue generated
by the Federal Joint Buying group (Federal per Note 1 of the accounts).
Federal relates to the activities of a joint buying group that is operated by
the group for itself and other independent co-operative societies. The
group acts as a wholesaler to the other independent co-operatives and
generates sales from this. This is run on a cost recovery basis and
therefore no profit is derived from its activities. As the group earns no profit
on the arrangement, we consider Adjusted Revenue to be a relevant
performance benchmark for measuring the value of the group's activities
from which it derives an economic benefit.
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An overview of the scope of the group audit
Tailoring the scope
Our audit scoping is in line with the requirements of ISA (UK) 600 (Revised). We have followed a risk-
based approach when developing our audit approach to obtain sufficient appropriate audit evidence on
which to base our audit opinion. We performed risk assessment procedures, with input from our
component auditors, to identify and assess risks of material misstatement of the group financial
statements and identified significant accounts and disclosures. When identifying components at which
audit work needed to be performed to respond to the identified risks of material misstatement of the
group financial statements, we considered our understanding of the group and its business
environment, the potential impact of climate change, the applicable financial framework, the group’s
system of internal control at the entity level, the existence of centralised processes, applications and
any relevant internal audit results.
We determined that centralised audit procedures can be performed on components in the following
audit areas:
Key audit area on which procedures were
Component subject to central procedures
performed centrally
Right-of-use assets and lease liabilities
Food, Wholesale, Funeralcare, Corporate, Legal,
and Co-operative Group Holdings (2011) (CGH)
Pension assets and liabilities
Food and Corporate
Taxation, including deferred tax assets and
Food, Funeralcare, Corporate
liabilities
Employee benefits expense
Food, Wholesale, Funeralcare, Corporate, Legal,
and Insurance
Interest-bearing loans and borrowings
Corporate and CGH
Derivative financial instruments
Corporate and CGH
We then identified four components as individually relevant to the group due to materiality or financial
size of the components (“full scope components”) relative to the group:
Food
Wholesale
Funeralcare
Corporate
We then identified two additional components (“specific scope component”) as individually relevant to
the group based on the materiality of specific accounts relative to the group (Legal and Insurance).
For the above individually relevant components, we identified the significant accounts where audit
work needed to be performed at these components by applying professional judgement, having
considered the group significant accounts on which centralised procedures will be performed, the
reasons for identifying the financial reporting component as an individually relevant component and
the size of the component’s account balance relative to the group significant financial statement
account balance.
We then considered whether the remaining group significant account balances not yet subject to audit
procedures, in aggregate, could give rise to a risk of material misstatement of the group financial
227
statements. We selected one further component (“specified audit procedures component”) of the
group to include in our audit scope to address these risks (CGH).
Having identified the components for which work will be performed, we determined the scope to
assign to each component.
Of the seven components selected, we designed and performed audit procedures on the entire
financial information of four components (“full scope components”). For two components, we designed
and performed audit procedures on specific significant financial statement account balances or
disclosures of the financial information of the component (“specific scope components”). For the
remaining one component, we performed specified audit procedures to obtain evidence for one or
more relevant assertions.
Our scoping to address the risk of material misstatement for each key audit matter is set out in the key
audit matters section of our report.
Involvement with component teams
In establishing our overall approach to the group audit, we determined the type of work that needed to
be undertaken at each of the components by us, as the group audit engagement team, or by
component auditors operating under our instruction.
During the current year’s audit cycle, the primary team performed the work on the Wholesale,
Corporate, Insurance, and CGH components as an integrated team. Food and Funeralcare
component teams worked in the same office location as the primary. The Legal component team is
based in a different office location, however, we maintained regular discussions with them throughout
the audit. This allowed the group audit partner to be involved in discussions with the component teams
on the audit approach and any issues arising from their work, meeting with local management, and
attending key meetings. The group audit team interacted regularly with the component teams where
appropriate during various stages of the audit, reviewed relevant working papers and were responsible
for the scope and direction of the audit process.
Where relevant, the section on key audit matters
details the level of involvement we had with component auditors to enable us to determine that
sufficient audit evidence had been obtained as a basis for our opinion on the group as a whole.
This, together with the additional procedures performed at group level, gave us appropriate evidence
for our opinion on the group financial statements.
Climate change
Stakeholders are increasingly interested in how climate change will impact the group. The group has
determined that the most significant future impacts from climate change on their operations will be
from raw material availability and reduced access to key facilities (depots & data centres). The
material future transition risks arising from climate change are potential damage to consumer
sentiment in the market and impairment of technological assets as a result of negative impacts from
the transition to a more sustainable business.
These are explained on pages 119-129 in the required Climate Related Financial Disclosures and on
pages 44-53 in the principal risks and uncertainties. They have also explained their climate
commitments on pages 120-122.
All of these disclosures form part of the “Other information,” rather
than the audited financial statements. Our procedures on these unaudited disclosures therefore
consisted solely of considering whether they are materially inconsistent with the financial statements
or our knowledge obtained in the course of the audit or otherwise appear to be materially misstated, in
line with our responsibilities on “Other information”.
In planning and performing our audit we assessed the potential impacts of climate change on the
group’s business and any consequential material impact on its financial statements.
228
The group has explained in Accounting Policies and Basis of Preparation and in Note 10 and Note 12
their articulation of how climate change has been reflected in the group financial statements and cash
flow forecasting, including how this aligns with their commitment to the aspirations of the Paris
Agreement to achieve net zero emissions by 2040.
Significant judgements and estimates relating to
climate change are included in section “Material accounting judgements, estimates and assumptions
in relation to climate change”.
Our audit effort in considering the impact of climate change on the financial statements was focused
on evaluating management’s assessment of the impact of climate risk, physical and transition, their
climate commitments, the effects of material climate risks disclosed on pages 119-129 and the
significant judgements and estimates disclosed in section “Material accounting judgements, estimates
and assumptions in relation to climate change”. We assessed whether these have been appropriately
reflected in asset values where these are impacted by future cash flows and associated sensitivity
disclosures (see notes 10, 12 and 25, following the requirements of UK adopted international
accounting standards.
As part of this evaluation, we performed our own risk assessment, supported
by our climate change internal specialists, which included a review of the most recent Sustainability
Report produced by the group and a review of “Co-op’s Climate Plan” updated in March 2024, to
determine the risks of material misstatement in the financial statements from climate change which
needed to be considered in our audit.
We also challenged the directors’ considerations of climate change risks in their assessment of going
concern and viability and associated disclosures. Where considerations of climate change were
relevant to our assessment of going concern, these are described above.
Based on our work, whilst we have not identified the impact of climate change on the financial
statements to be a standalone key audit matter, we have considered the impact on the existing key
audit matter: Impairment of Food property, plant & equipment and right of use assets.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial statements of the current period and include the most significant assessed
risks of material misstatement (whether or not due to fraud) that we identified. These matters included
those which had the greatest effect on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These matters were addressed in the context
of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide
a separate opinion on these matters.
Risk
Our response to the risk
Revenue recognition
Applicable to all material revenue streams
2025: £11,025m (2024: £11,279m)
Gained an understanding of the process by performing
a walk through and assessing the design effectiveness
Refer to the Accounting policies (page 157);
of the key controls within the revenue process. Our
and Note 2 of the Consolidated Financial
audit took a fully substantive approach in this area.
Statements (page 156)
We performed analytical procedures over revenue,
The timing of when revenue is recognised is
comparing
results
with
our
expectations
and
relevant to the reported performance of the
corroborating differences. In particular, we performed
group. There remains a risk of management
procedures in the month preceding and subsequent to
override of controls, including recording
the period-end.
fictitious and erroneous journals, to overstate
revenue throughout the year across all
In response to limitations in the IT systems, we tested
components.
transactions to source documentation to ensure the
extracted data is accurate. We performed focused
tests to reconcile key revenue streams from source
229
Risk
Our response to the risk
The risk includes fraud or error in the
systems to general ledger, to ensure the data flow
assumptions used within the calculations of
through all relevant interfaces is complete and
the IFRS 17 expected claims and expenses
accurate.
within the Funeralcare component.
Food
This is an existing risk of fraud in line with
our prior period audit except for the Revenue
We tested a sample of journals relating to instances
recognition in respect of the Funeralcare
where stores recognise revenue outside the normal
contractual service margin (CSM) roll
automated store EPOS process.
forward.
In the current year, we have
removed this element given the CSM roll
For store revenue, we performed journal analysis to
forward amount is immaterial to the total
identify sales journals that did not follow the expected
revenue in the financial statements.
critical path from revenue to cash and tested a sample
to supporting evidence to ensure revenue had been
recognised correctly. All material outliers in this period
have been vouched to supporting evidence.
For Federal revenue, we vouched a sample of revenue
to external third- party confirmations from independent
society members.
Funeralcare
We performed sample testing over the at-need
revenue. This included system generated and manual
journals. We selected our samples using a lower
testing threshold and tested these items to third party
evidence.
In addition to the above, we perform procedures over
expected claims and expenses. These are underpinned by
actuarial assumptions and data. Therefore in addition to
the procedures within the valuation of insurance contract
liabilities key audit matter, we:
Agreed insurance revenue recognised for the period to
the change in the liability for the remaining coverage,
investigating any unusual or material reconciling items.
The expected claims and expenses are modelled by
the
outsourced
actuarial
service
provider.
We
continued to rely on the baselining of the actuarial cash
flow model performed in prior years and tested any
developments to the model in the period. We also
tested the analysis of movement as part of our testing
over the present value of future cash flows.
We reviewed the estimates and considered for
evidence of management bias by evaluating the
judgments and decisions made by management in
making the estimates, considering the rationale and
support provided by management and consistency of
significant
assumptions
with
other
relevant
information.
230
Risk
Our response to the risk
Wholesale and Legal
We performed journal analysis to identify journals to
revenue that did not follow the expected flow of
transactions from revenue to debtors to cash. We
tested a sample of these to supporting evidence.
Insurance
We agreed a sample of revenue to third party
confirmations.
We tested the appropriateness of the assumptions in
relation to the recognition of revenue.
Key observations communicated to the Audit Committee
Revenue has been recognised appropriately in accordance with IFRS 15: Revenue from Contracts with
Customers. The revenue from pre-need funeral plans has been recognised in accordance with IFRS 17:
Insurance Contracts. We have not identified instances of management override of controls in relation to
revenue.
How we scoped our audit to respond to the risk
We performed audit procedures over this risk in five components (Food, Wholesale, Funeralcare, Legal,
and Insurance). All audit work performed to address this risk was undertaken by the component audit
teams.
The primary audit team issued group audit instructions to the component teams which included specific
substantive procedures to address the risk of material misstatement in relation to revenue recognition.
The primary audit team reviewed the component team’s key revenue and journal entry workpapers
which were executed in line with the group audit instructions.
231
Risk
Our response to the risk
Accrued supplier income – Long term
We performed a walk through and assessed the
agreement (LTA)
design effectiveness of key controls in place within the
supplier income process.
2025: £59m (2024: £69m)
We held enquiries with management to understand
Refer to the Audit Committee Report (page
any new supplier arrangements entered in the period,
101); Accounting policies (page 160); and
including any unusual contract arrangements or terms.
Notes 4 and 16 of the Consolidated Financial
Statements (pages 159 and 177)
For a sample of accrued supplier income, we issued
direct requests to third party suppliers to confirm the
The group receives material discounts,
terms of arrangements and sales volumes used. This
incentives and rebates (fixed amounts and
provides direct external third party evidence without
volume-based) from its suppliers. These vary
relying on information generated from the group’s IT
in complexity across the Food and Wholesale
systems.
divisions of the group.
The terms of
agreements with suppliers can be complex
We performed ‘look-back’ procedures by testing a
and varied. High levels of manual intervention
sample of credit notes received post year end to
raise the risk of an error occurring in the
assess whether any related to arrangements in 2025,
calculation of income, either accidentally or
to assess whether income was recorded in the correct
purposefully through management override of
period.
controls.
Using data extracted, we analysed the correlation
The risk focuses on LTA supplier income
between income statement and balance sheet
which
is
the
most
complex
supplier
accounts to identify any unusual or unexpected trends.
arrangement,
specifically
the
risk
of
We tested a sample of outliers to corroborating
overstatement in the calculation of accrued
evidence.
supplier
income
through
management
override of controls at the year-end. This is
We assessed the adequacy of the group’s financial
where supplier income has been recognised
statement disclosures with respect to supplier income
but remains unbilled at year end.
and their compliance with accounting standards.
Continued challenging economic conditions
may affect consumer spending patterns.
Movement in buying habits, for example
volume mix between branded and own brand
goods, may have an impact on rates at which
rebates are earned. Given the downturn in
Food retail performance in the year, lower
sell-through volumes may also impact the
supplier arrangements.
This is an existing risk of fraud. In the current
year, we have reassessed our risk and have
focused on year
-
end accrued income
associated with LTA only, as these represent
the most complex supplier arrangements.
Bonus income and promotional income
relate to short
-
term marketing support or
promotions, which are less complex and are
typically settled through in
-
period offsets.
and therefore, present a lower level of risk.
232
Risk
Our response to the risk
Key observations communicated to the Audit Committee
Testing performed over the supplier income recognised in the Food and Wholesale divisions has not
identified any material misstatements.
How we scoped our audit to respond to the risk
We performed full scope audit procedures over this risk in two components (Food and Wholesale). All
audit work performed to address this risk was undertaken by the component audit teams.
The primary audit team issued group audit instructions to the component teams which included specific
substantive procedures to address the risk of material misstatement in relation to accrued supplier
income. The primary audit team reviewed the component team’s key accrued supplier income
workpapers which were executed in line with the group audit instructions.
Risk
Our response to the risk
Valuation of insurance contract liabilities
In conjunction with our actuarial audit team, we performed
process walkthroughs to obtain an understanding of the
Liability for Remaining Coverage 2025:
actuarial assumption setting process, plan data flows,
£1,082m (2024: £1,004m)
results analysis and model output, and identified relevant
controls in place.
Refer to the Audit Committee Report (page
101); Accounting policies (page 191 to 193);
To address the risk that data utilised within the models was
and Note 20 of the Consolidated Financial
not complete and accurate, we:
Statements (pages 183 to 190)
Agreed the reconciliation of the plan master file to the
The risk related to the valuation of the Liability
input into the valuation model to verify that all in-force
for Remaining Coverage is focussed on the
plans are included in the valuation process.
present value of future cash flows (PVFCFs),
the contractual service margin (CSM) and the
Tested
the
underlying
data
back
to
source
risk adjustment.
administration system, verifying that key data fields
have been correctly and consistently applied period to
The risk is significant due to the judgment
period.
required in the selection of assumptions and
the calculations being contingent on the
Tested the actuarial model to ensure the expense
completeness and accuracy of the data.
assumptions were applied appropriately within the
model.
We
believe
the
specific
risk
factors
contributing to the assessment of the risk are:
To address the risk over actuarial assumptions, we:
Key data utilised within the models is not
Evaluated the appropriateness of the discount rate
complete and accurate.
selected
by
management
and
compared
the
information used to determine the illiquidity premium to
Significant judgment is applied in the
the characteristics of the insurance related liabilities.
selection of economic (e.g. discount
rates, inflation) and non-economic (e.g.
Tested the results of management’s experience
mortality,
cancellation
/
lapses
and
analyses, including mortality and cancellations, to
expenses) assumptions about the extent,
assess whether these support the non-economic
timing and nature of future cash flows
assumptions.
233
Risk
Our response to the risk
which
results
in
complexity
in
the
Assessed management’s methodology for splitting
measurement of the liability.
expenses between acquisition and maintenance
expenses, including the split of attributable and non-
Judgement
in
determining
the
risk
attributable costs under IFRS 17, agreeing a sample of
adjustment.
expenses back to source information.
Judgements
in
the
recognition
and
Benchmarked significant assumptions against those of
subsequent
measurement
of
CSM,
other comparable industry participants in our wider
including but not limited to, experience
assumptions benchmarking review.
adjustments, coverage unit determination
and the pattern of release of loss
Performed procedures to test the assumptions used in
components.
the year end valuation were consistent with the
approved basis.
In the previous year the risk expanded to
modelling, assumptions and data. This year, In addition, we also performed the following procedures:
we have narrowed the risk to assumptions
and data on the basis that modelling does not
Tested the roll forward of the CSM for each group of
involve significant judgement, nor have we
contracts in management’s CSM tool, using our
identified any significant modelling errors
independent CSM tool.
historically.
Tested the application of the methodology used to
derive the risk adjustment, including the scope of non-
financial risks and key judgements applied when
updating the calibration result. We also compared
management’s approach to the wider market, where
applicable, particularly where adjustments are applied
to the calibration to reflect external events and by
applying our industry knowledge and experience.
Verified that the valuation practices are consistently
applied.
Considered the adequacy of the disclosures in the
financial statements.
Key observations communicated to the Audit Committee
The liability for remaining coverage including risk adjustment is fairly stated in accordance with IFRS 17
and the assumptions and data used for deriving the estimate are reasonable.
How we scoped our audit to respond to the risk
We performed full scope audit procedures over this risk in the Funeralcare component. All audit work
performed to address this risk was undertaken by the component audit team.
The primary audit team issued group audit instructions to the component team which included specific
substantive procedures to address the risk of material misstatement in relation to liability for remaining
coverage balance. The primary audit team reviewed the component team’s key liability for remaining
coverage workpapers which were executed in line with the group audit instructions.
234
Risk
Our response to the risk
Impairment of Food property, plant &
We assessed the design effectiveness of the key
equipment and right of use assets
controls in place within the Food store impairment
process. Our audit took a substantive approach.
PPE
2025:
£1031m
(2024:
£979m)
RoU Assets 2025: £484m (2024: £472m)
We evaluated management’s assessment of the
Impairment charge 2025 : £37m (2024 :
existence of impairment indicators. This included
£17m)
challenging the completeness of this assessment,
ensuring
management
has
considered
all
Refer to the Audit Committee Report (page
appropriate indicators across the group.
100); Accounting policies (pages 167 to 168
and page 171); and Notes 1, 10 and 11 of the
Within the impairment model, we confirmed the
Consolidated Financial Statements (page 154
integrity of data inputs including store-level cash
to 156, 165 to 167 and 169-171)
contribution data, listings of stores which were
refitted or new, and the carrying values of PPE. We
Under IAS 36, the group is required to
also re-performed any manual calculations to check
complete an impairment review of its store
these for accuracy.
portfolio where there are indicators of
impairment,
or
reversal
of
impairment.
We tested the assumptions within the cashflow
Judgement is required in identifying indicators
projections,
including
assessing
management’s
of
impairment
and
there
is
significant
forecasting accuracy by comparing to previous
estimation around future assumptions of the
outturn. We considered any adjustments made to
store portfolio.
forecasts where judgement was applied, such as for
cyber impact on performance, or new stores.
There is a risk of misstatement when
performing an impairment assessment, due
We tested assumptions (such as growth rates,
to challenges in forecasting for the future
discount rates and perpetuity rates) by corroborating
effects of the macro-economic environment.
the data inputs to external sources and worked with
These factors can result in a material decline
EY Valuation Specialists to calculate an independent
in the valuation of a wide range of assets at a
range for comparison.
food store level.
We evaluated the adequacy of the disclosures in
With an extended period of a challenging
respect of key assumptions, including sensitivity
macroeconomic environment and the impact
analysis.
of the cyberattack on performance, the risk
has increased in the current year.
Key observations communicated to the Audit Committee
The assumptions used in the impairment assessments are reasonable. The impairment charge relating
to Food stores is considered reasonable.
How we scoped our audit to respond to the risk
We performed full scope audit procedures over this risk in Food component. All audit work performed
to address this risk was undertaken by the component audit team.
The primary audit team issued group audit instructions to the component teams which included
specific substantive procedures to address the risk of material misstatement in relation to impairment
of Food property, plant & equipment and right of use assets. The primary audit team reviewed the
component team’s key impairment workpapers which were executed in line with the group audit
instructions.
235
Risk
Our response to the risk
Cyber security incident
Our approach focused on the following procedures:
Refer to the Chief Financial Officer’s Review
Together with our IT specialists, we inspected key
(pages 30-31); the Audit Committee Report
management specialist reports following the incident,
(page 100); Note 1 of the Consolidated
to evaluate the actions taken by the group in
Financial Statements (page 155) and
response to the cyber security incident.
Accounting policies and basis of preparation
(page 217)
On a sample basis, we critically assessed the £21m
of non-underlying costs presented as non-underlying
In April 2025, the group was subject to a cyber
items, to evaluate whether they are incremental and
security incident. The group took the decision
directly attributable to the cyber security incident.
to temporarily restrict access to their systems
and interfaces to minimise disruption.
We performed additional journal entry testing over
any identified areas of increased risk of management
The attack gave rise to several accounting
override of control.
considerations including: directly attributable
incremental costs; the adequacy of related
We inspected correspondence with regulators, to help
disclosures in the financial statements and
determine the likelihood of any potential risk of future
including any potential liabilities, such as
liabilities
regulatory fines or legal claims.
We inquired of the group’s internal and external legal
This is a new risk arising from the cyber
counsel, to establish any potential risk of future
security incident that occurred in the year.
liabilities.
This event is considered a key audit matter
because in the context of the financial
With the support of an EY data privacy specialist, we
statements as a whole and the extent of audit
considered the appropriateness of the recognition of
effort devoted to this area, this is considered
any potential provision, or contingent liability, in
to be one of the areas which had the greatest
response to the risk of a regulatory fine or other
effect on our group audit overall.
potential claims.
We assessed the adequacy and appropriateness of
disclosures in the Annual Report and Accounts.
Key observations communicated to the Audit Committee
The treatment of directly attributable incremental costs is in line with the group's accounting policy.
The judgment made by the directors that a contingent liability disclosure is not required for the potential
of future liabilities is appropriate.
How we scoped our audit to respond to the risk
All audit work performed to address this risk was undertaken by the primary audit team and supported
by EY professionals with specialist skills.
In the prior period, we included a key audit matter in relation to the “Group IT Environment”. This is no
longer reported as a separate key audit matter in our audit opinion, as any relevant IT audit
procedures are now included within each of the individual key audit matters above.
236
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of
identified misstatements on the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably
be expected to influence the economic decisions of the users of the financial statements. Materiality
provides a basis for determining the nature and extent of our audit procedures.
We determined materiality for the group to be £45 million (2024: £46 million), which is 0.5% (2024:
0.5%) of Adjusted Revenue.
Revenue is a key performance indicator used by management to monitor
the group’s performance and the figure which we believe to be relevant to the members when
assessing the performance of the group. We considered Adjusted Revenue to be a relevant
performance metric on which to base our materiality calculation. Adjusted Revenue is defined in
'Materiality' summary in the 'Overview of our audit approach' section above.
In concluding on this benchmark, we considered that the primary users of the financial statements
were the Member-owners. Providing goods, services and social value for Member-owners and their
communities, are important indicators of the success of the Society and a function of revenue. This
benchmark is consistent with the prior period.
• Starting point - £11,025m
Starting
• Total third party revenue
basis
• Removed £1,964m of revenue generated by the
Federal Joint Buying Group
Adjustments
• Totals £9,061m adjusted revenue
• Materiality of £45m (0.5% of adjusted revenue)
Materiality
During the course of our audit, we reassessed the initial materiality based on the final figures in the
financial statements and this has not led to any change in our materiality levels.
Performance materiality
The application of materiality at the individual account or balance level.
It is set at an amount to
reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the group’s overall control and
IT environment, conversations with the group risk and internal audit functions and the number and
magnitude of audit misstatements identified in the prior period, our judgement was that performance
materiality should be restricted to 50% (2024: 50%) of our planning materiality, namely £22.5m (2024:
£23m).
Audit work was undertaken at component locations for the purpose of responding to the assessed
risks of material misstatement of the group financial statements. The performance materiality set for
each component is based on the relative scale and risk of the component to the group as a whole and
our assessment of the risk of misstatement at that component.
In the current year, the range of
performance materiality allocated to components was £4.5m to £19.2m (2024: £4.6m to £19.5m).
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
237
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in
excess of £2.2m (2024: £2.3m), which is set at 5% of planning materiality, as well as differences below
that threshold that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality
discussed above and in light of other relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual report, other than the financial
statements and our auditor’s report thereon.
The directors are responsible for the other information
contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent
otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the
course of the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether this gives
rise to a material misstatement in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of the other information, we are required
to report that fact.
We have nothing to report in this regard.
Matters on which we have been requested to report in accordance with our engagement letter
The directors have instructed us to express an opinion on whether, based on the work undertaken in
the course of the audit, the information given in the Corporate Governance Statement on page 75 is in
compliance with the following provisions: Section 2 provision 3, Section 5 provisions 1, 3, 5 and 6 of
the Co-operative Corporate Governance Code issued in November 2019 (‘the Code’).
We have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Co-operative and
Community Benefit Societies Act 2014 requires us to report to you if, in our opinion:
The Society has not kept proper books of account; or
The Society has not maintained a satisfactory system of control over its transactions; or
The financial statements are not in agreement with the books of account; or
We have not received all the information and explanations we require for our audit
Corporate Governance Statement
ISAs (UK) require us to review the directors’ statement in relation to going concern, longer-term
viability and that part of the Corporate Governance Statement relating to the group’s compliance with
the provisions of the UK Corporate Governance Code specified for our review.
238
Based on the work undertaken as part of our audit, we have concluded that each of the following
elements of the Corporate Governance Statement is materially consistent with the financial
statements, or our knowledge obtained during the audit:
Directors’ statement with regards to the appropriateness of adopting the going concern basis of
accounting and any material uncertainties identified set out on page 113.
Directors’ explanation as to its assessment of the group’s prospects, the period this assessment
covers and why the period is appropriate set out on pages 113 to 115.
Directors’ statement on fair, balanced and understandable set out on page 130.
Board’s confirmation that it has carried out a robust assessment of the emerging and principal
risks set out on page 44.
The section of the annual report and accounts that describes the review of effectiveness of risk
management and internal control systems set out on pages 103 to 104.
The section describing the work of the audit committee set out on pages 97 to 106.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 130-131, the
directors are responsible for the preparation of the financial statements and for being satisfied that
they give a true and fair view, and for such internal control as the directors determine is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Explanation as to what extent the audit was considered capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud.
The
risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for example, forgery or
intentional misrepresentations, or through collusion.
The extent to which our procedures are capable
of detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those
charged with governance of the company and management.
239
We obtained an understanding of the legal and regulatory frameworks that are applicable to
the group and determined that the most significant are the direct laws and regulations relating
to elements of Society and tax legislation, and the financial reporting framework UK adopted
international accounting standards in conformity with the requirements of the Co-operative and
Community Benefit Societies Act 2014. Our considerations of other laws and regulations that
may have a material effect on the financial statements include the Groceries Supply Code of
Practice (GSCOP), FCA Disclosure Guidance and Transparency Rules (DTR), the UK
Corporate Governance Code 2024, the Health and Safety at Work Act 2015, the National
Minimum Wage Act 1998, Food Hygiene Regulations 2006, Money Laundering Regulations
2019, UK General Data Protection Regulation, the Funeral Plan: Conduct of Business
sourcebook (FPCOB) issued by the Financial Conduct Authority (FCA), and SRA Standards
and Regulations issued by the Solicitors Regulation Authority (SRA).
We understood how Co-operative Group Limited is complying with those frameworks by
making inquiries of management, internal audit, those charged with governance and those
responsible for legal and compliance matters. We also read correspondence between the
group and various UK regulatory bodies; inspected minutes of the Board and Risk and Audit
Committee; and gained an understanding of the group’s approach to governance. Where the
risk was considered to be higher, together with our EY specialists, we reviewed the results of
specialist investigations and external legal counsel. Throughout the above procedures we
noted that there was no contradictory evidence to the enquiries held.
We assessed the susceptibility of the group’s financial statements to material misstatement,
including how fraud might occur by the entity, or that might otherwise seek to prevent, deter or
detect fraud. We also considered areas of significant judgement including complex
transactions, performance targets, economic or external pressures and the impact that these
have on the control environment. Where the risk was considered to be higher, we performed
audit procedures to address each identified fraud risk, refer to the Key Audit Matters section
for further details. We used an internal journal entry fraud risk analyser on Food, Funeralcare,
and Corporate components as a direct response to the risk of management override of
controls. Using the analyser, we reviewed the areas of the financial statements that could be
more susceptible to fraud and assessed whether this was consistent with our risk assessment
procedures. Then using our professional judgement, we analysed the underlying journal detail.
For those entries in the journal detail determined to be higher risk we selected items for
testing.
Based on this understanding we designed our audit procedures to identify non-compliance
with such laws and regulations. For laws and regulations having a direct impact on the
financial statements, we considered the extent of compliance with those laws and regulations
as part of our procedures on the related financial statement items. For both direct and other
laws and regulations, our procedures involved; making enquiries with those charged with
governance, senior management and internal legal counsel for their awareness of non-
compliance with laws and regulations, inquiring about policies that have been established to
prevent non-compliance with laws and regulations by officers and employees, inquiring about
the Society’s methods of enforcing and monitoring compliance with such policies, inspecting
significant correspondence with regulatory authorities and making inquiries with external legal
counsel. We communicated relevant items from these procedures to the relevant component
teams who performed sufficient and appropriate audit procedures on these areas,
supplemented by audit procedures performed at the group level.
The group has disclosed in Note 27 that a claim has been received in respect of an historic
transaction relating to certain former Somerfield stores. We inspected documentation
prepared by management, the in-house legal counsel and management’s external legal
advisors both at the time of the transaction and in the current period. We discussed the nature
of the claim and the basis for the disclosure presented in Note 27 with management, the
external legal advisors and members of the Risk and Audit Committee.
The group has disclosed in Note 27 that employment tribunal claims have been received in
respect of current and former food store colleagues alleging their work is of equal value to that
240
of distribution centre colleagues and differences in pay and other terms are not objectively
justifiable. We inspected documentation prepared by management, the in-house legal counsel
and management’s external legal advisors. We also discussed the nature of the claim and the
basis for the disclosure presented in Note 27 with management, the external legal advisors
and members of the Risk and Audit Committee.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities.
This
description forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Section 87 of the
Co-operative and Community Benefit Societies Act 2014 and our engagement letter dated 20
February 2024.
Our audit work has been undertaken so that we might state to the Society’s members
those matters we are required to state to them in an auditor’s report and for no other purpose.
To the
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Society and the Society’s members as a body, for our audit work, for this report, or for the opinions we
have formed.
Ernst & Young LLP
Statutory Auditor
Manchester
27 March 2026
Our Members' Annual Report 2025:
Glossary
241
Glossary
There are lots of technical words in our accounts which we have to use for legal and accounting reasons. We’ve set out some definitions in
the glossary table in the pages that follow to help a reader understand some of the difficult phrases accountants like to use. When a word is
in bold in the glossary that means you can also find the definition of that word in the glossary table as well.
In 2023 we adopted a new accounting standard for insurance contracts (which relates to our funeral plans) and consequently we added in
some new definitions to the glossary to help with the new terminology. However, insurance accounting is very complicated and diffcult to
explain in simple terms. As such; it may help a user to also refer to the accounting policies for funeral plans on page 191 (which gives a
holistic view of the approach taken) when considering some of the definitions noted in the glossary for insurance contracts and funeral
plans.
Before the main Glossary table, we initially define and explain some of the Alternative Performance Measures (APMs) that we use
throughout the Annual Report and Accounts.
Alternative Performance Measures (APMs)
Our Annual Report and Accounts includes various references to Alternative Performance Measures (APMs). These are financial ratios and
metrics that are not defined by International Financial Reporting Standards (IFRS) and as such they may not be comparable with the APMs
that are reported by other entities.
We include our APMs in the Annual Report and Accounts as we think they give useful information to our members to help them understand
the underlying performance and financial health of our Co-op. The APMs are not meant to replace statutory measures under IFRS.
The table below explains how the APMs are calculated and why we think they are useful measures to our members. Where possible we also
call out the nearest equivalent IFRS measure and cross-refer to the section of the financial statements where we reconcile the APM to the
respective IFRS measure.
The Group's primary APM is Underlying operating profit / (loss) before tax.
APM
Definition and Purpose:
Underlying operating profit reflects our operating profit before the impact of property and business disposals,
impairment of non-current assets within our businesses, the change in the value of investment properties, any
losses on onerous contracts and other non-underlying items.
We exclude the impact of these items from our underlying operating profit metric as they are not generated by
Underlying
our day-to-day trading and may also be either non-recurring or inherently volatile in nature and fluctuate year on
operating profit /
year.
(loss)
Closest IFRS equivalent:
Operating Profit.
Where reconciled in the financial statements:
In the 'Underlying profit before tax (APM)' table below the Consolidated Income Statement. A Divisional split is
shown in the Segmental tables in Note 1 (Operating segments).
Definition and Purpose:
Our underlying PBT figure is simply our underlying operating profit (as calculated above) less our net underlying
interest (being the day-to-day interest we pay or earn on our bank borrowings and lease liabilities).
Other interest income or expense such as our net interest income or expense on funeral plans is either not
generated by our day-to-day trading or is not considered by management in the day-to-day running of the
Underlying profit /
business and may also be either non-recurring or inherently volatile in nature and fluctuate year on year. Such
(loss) before tax
items are not included in our underlying PBT metric so our members can see how our core underlying businesses
(PBT)
are performing.
Closest IFRS equivalent:
Profit before tax.
Where reconciled in the financial statements:
Note 1 (Operating segments) sub-section (k).
Our Members' Annual Report 2025:
Glossary
242
Alternative Performance Measures (APMs)
continued
APM
Definition and Purpose:
EBITDA is calculated by adding back depreciation and amortisation charges to Operating profit. Operating profit
is stated before interest charges and taxation.
EBITDA
EBITDA is a non-GAAP measure of performance which helps us and our members to understand the operating
(Earnings before interest,
profits our business segments are generating before capital investment and interest charges.
taxation, depreciation and
amortisation)
Closest IFRS equivalent:
There is no close equivalent to this measure under IFRS.
Where reconciled in the financial statements:
The derivation is noted in the Segmental tables in Note 1 (Operating segments).
Definition and Purpose:
Underlying EBITDA is calculated by adding back depreciation and amortisation charges to Underlying operating
profit. Underlying operating profit is another one of our APMs and is defined in the table above. It is stated before
interest charges and taxation.
Underlying EBITDA is a non-GAAP measure of performance which helps us and our members to understand the
underlying operating profits our business segments are generating before capital investment and interest
Underlying EBITDA
charges.
Closest IFRS equivalent:
There is no close equivalent to this measure under IFRS.
Where reconciled in the financial statements:
The derivation is noted in the Segmental tables in Note 1 (Operating segments).
Definition and Purpose:
Underlying EBITDA as defined above, adding back administrative pension costs and after deducting rental
expenditure incurred on operating leases in line with pre-IFRS 16 standards.
Covenant EBITDA is in line with our banking facilities covenant metric requirements and definitions.
Covenant EBITDA
Closest IFRS equivalent:
There is no close equivalent to this measure under IFRS.
Where reconciled in the financial statements:
Not applicable as there is no close equivalent to this measure under IFRS.
Definition and Purpose:
Adjusted EBITDAR is calculated as covenant EBITDA defined above, after adding back rental expenditure
incurred on operating leases in line with pre-IFRS 16 standards.
Adjusted EBITDAR is in line with our banking facilities covenant metric requirements and definitions.
Adjusted EBITDAR
Closest IFRS equivalent:
There is no close equivalent to this measure under IFRS.
Where reconciled in the financial statements:
Not applicable as there is no close equivalent to this measure under IFRS.
Our Members' Annual Report 2025:
Glossary
243
Alternative Performance Measures (APMs)
continued
APM
Definition and Purpose:
Net debt is made up of our of bank borrowings and overdrafts off-set by our cash balances, short-term
investments and short-term deposits. The figure excludes any interest accruals on those bonds held at amortised
cost (which is recorded as debt (<1 year) under IFRSs). The Group cash balance in our Net debt APM metric
excludes any restricted cash relating to receipts to be invested in funeral plan investments.
Group Net debt
(excluding accrued
The metric provides a useful assessment of the Group’s indebtedness which in turn reflects the strength of our
interest on amortised
balance sheet and the financial resources available to us to employ and direct on behalf of our members.
debt)
Closest IFRS equivalent:
Interest bearing borrowings less cash and cash equivalents.
Where reconciled in the financial statements:
Group net debt table below the Consolidated statement of cashflows.
Definition and Purpose:
Net debt is made up of our of bank borrowings and overdrafts off-set by our cash balances, short-term
investments and short-term deposits. The figure excludes any lease liabilities and interest accruals on those
bonds held at amortised cost (which is recorded as debt (<1 year) under IFRSs). The Group cash balance in our
Net debt APM metric excludes any restricted cash relating to receipts to be invested in funeral plan investments.
Group Net debt
The metric provides a useful assessment of the Group’s indebtedness before taking into account lease liabilities
(excluding lease
liabilities and accrued
which in turn reflects the strength of our balance sheet and the financial resources available to us to employ and
interest on amortised
direct on behalf of our members.
debt)
Closest IFRS equivalent:
Interest bearing borrowings less cash and cash equivalents.
Where reconciled in the financial statements:
Group net debt table below the Consolidated statement of cashflows.
Definition and Purpose:
Like-for-like sales growth relates to growth in sales at those Food stores that have been open for more than one
year (with any sales from stores that have opened or closed in the year being removed from the calculation and
prior year figures). The calculation includes VAT on sales.
For Wholesale; the like-for-like metric relates to those partners (stores) that have been with Co-op for more than
one year (with any sales from partners who have left in the year being removed from the calculation).
The measure is used widely in the retail sector as a relative indicator of current trading performance versus the
Like-for-like sales
prior year. It is also helpful to our members in comparing our underlying performance and growth against the
wider market as well as against other retailers (as it removes the impact that opening and closing stores may have
on absolute sales levels).
Closest IFRS equivalent:
There is no close equivalent to this measure under IFRS.
Where reconciled in the financial statements:
Not applicable as there is no close equivalent to this measure under IFRS.
Definition and Purpose:
Return on capital employed is a performance measure of our Co-op. It's calculated as the ratio of returns
achieved to capital employed in achieving those returns. This is based on the underlying operating profit we
make in the year divided by the net operating assets we have. Net operating assets are calculated as the total
Group net assets shown in the Consolidated Group Balance sheet adjusted for our Pension surplus (net of
deferred tax) less net debt (including lease liabilities) less net funeral plan assets and liabilities.
ROCE
(Return on capital
The metric provides a useful assessment of how effectively and efficiently our Co-op is employing the assets and
employed)
capital it has to generate returns for our members.
Closest IFRS equivalent:
There is no close equivalent to this measure under IFRS.
Where reconciled in the financial statements:
Not applicable as there is no close equivalent to this measure under IFRS.
Our Members' Annual Report 2025:
Glossary
244
Glossary
Accounting surplus
When a pension scheme has more
assets
than the amount it expects to pay out in the future (the
present
(pensions)
value
of its
liabilities
) then it has an accounting surplus.
When we’ve performed a service but haven’t billed the customer yet, we hold the amount due on the
Accrued income
balance sheet
as accrued income. Once we bill the customer the balance is then moved to
receivables
.
Costs that relate wholly to issuing and fulfilling
insurance contracts (funeral plans)
. This includes the
Acquisition cashflows
costs of selling, underwriting, and starting a group of insurance contracts such as internal salaries or
(funeral plans)
external commission paid.
Amortisation
Similar to
depreciation
, but for
intangible assets
.
This is an amount on our
balance sheet
where we expect to get some sort of benefit in the future. It could
Asset
be a building we use or are planning to sell, some cash or the amount of money a customer owes us.
Sometimes we have to sell things. When we’ve decided to make a large
disposal
before the year-end but
Assets held for sale
the asset hasn’t been sold yet, we have to show it in this line on the
balance sheet
and reduce its value
(
impairment
) if appropriate.
When we have significant influence over a company (usually by owning 20-50% of a company’s shares
Associate
and/or having a seat on its Board), we call that company an associate.
Balance sheet
This shows our financial position – what
assets
we have and the amounts we owe (
liabilities
).
We have an agreement in place with a collection of banks (known as our Banking Syndicate) that gives us
Banking Syndicate
quick access to borrowings should we need them.
Benefit payments (pensions)
This is the amount our pension funds pays out to pensioners.
Each year we produce a financial forecast for our Co-op covering financial performance (
Income
statement
), financial position (
Balance sheet
) and forecasted
Cashflow
s. The forecast (or plan) covers the
Board-approved plan
coming 3 years in detail, with an additional 4th year projection. It is refreshed annually and challenged and
approved by our Board. We use the plan as the basis for some of our key judgements including Going
concern and viability assessment, and
impairment
assessments.
These are our debt instruments (loans from banks) that we pay interest on to fund our businesses’
Bond Notes
operations.
When we spend money on items that will become
assets
(such as property or IT systems) this is shown as
Capital expenditure
capital expenditure. The costs are not shown in the
income statement
of the year it’s spent – instead the
costs are spread over the life of the
asset
by
depreciation
or
amortisation
.
Cash flow statement
This shows how much cash has come in or gone out during the year and how we’ve spent it.
A CGU is the smallest identifiable group of assets that generate cash inflows that are largely independent
of the cash inflows from other assets or groups of assets. For our Food business this is defined as an
Cash Generating Unit (CGU)
individual store, and for our Funeral’s business this is defined as a regional care centre and the funeral
branches which it serves as they are heavily interrelated.
We group the
funeral plans
that we issue in to certain buckets depending on their type, how they are
Cohort
managed (risk profile), when they are issued and if we expect to make a profit or a loss on them. Within this
(funeral plans)
framework we use an annual horizon to bucket plans into a so called 'cohort' year.
Where we’ve committed to spend money on something (such as building projects) in the future but we’re
Commitments
not technically liable to pay for it at the
balance sheet
date as it has not been incurred yet, we don’t put
the amount on the
balance sheet
but we disclose the amount in the commitments note.
Comprehensive income
This is our profit for the year plus
other comprehensive income
.
As this report is based on the financial performance and position of many
societies
and companies
Consolidated
around
the Group
, we have to add up all those entities and the total is the consolidated position.
This is an amount that we might get in the future. Unless it’s almost certain that we’ll get the amount, we’re
Contingent asset
not allowed to put it on the
balance shee
t but we show the amount in the
commitments
and
contingencies note.
This is an amount that we might have to pay in the future. If it’s only possible, rather than probable, that
we’ll have to pay the amount, then we won’t show the amount on the
balance sheet
but we show the
Contingent liability
amount in the commitments and contingencies note and disclose relevant details of the contingent
liability.
These are costs we’ve incurred in advance of being entitled to receive payment from a customer under a
Contract assets
contract, such as costs incurred in setting up a
funeral plan
. We hold these on the
balance sheet
until
we’ve delivered all the services to our customer and are entitled to receive payment.
This is where a customer has paid us in advance of them receiving goods or services under a contract (for
Contract liabilities
example, a
funeral plan
). We have to hold this on the
balance sheet
until the customer receives the
service they’ve paid for.
Our Members' Annual Report 2025:
Glossary
245
Glossary
continued
Contractual service margin
The unearned
profit
relating to the future service to be provided under an
insurance contract
(i.e. the
(CSM) (funeral plans)
profit margin we expect to earn over the life of the
insurance contract
/
funeral plan
).
This is money that other
societies
invest with us and we pay them interest on it. The
societies
can get their
Corporate investor shares
money back at any time.
Coverage period
A means of reflecting the pattern of services provided under a group of contracts (specifically relates to
(funeral plans)
funeral plans
and the time period covered by a group of
funeral plans
and how revenue is recognised).
The number of coverage units in a group is based on the quantity of service provided by the contracts in
Coverage unit
the group (specifically relates to our
funeral plans
and the time period covered by a group of
funeral
(funeral plans)
plans
and how revenue is recognised).
This is an increase in income / reduction in costs on the
income statement
or an increase in a
liability
/
Credit
reduction in an
asset
on the
balance sheet
.
Current
An
asset
or
liability
that is expected to last for less than a year.
Current tax
This is the amount we expect to pay in tax for the year based on the profits we make.
Debenture
This is a type of loan that we’ve issued and are paying interest on.
This is a decrease in income / increase in costs on the
income statement
or a decrease in a
liability
/
Debit
increase in an
asset
on the
balance sheet
.
Debt
Loans that we’ve issued and are paying interest on.
This is an amount we’ll be paying to a seller for businesses we’ve bought or an amount we’ll be getting
Deferred consideration
from a buyer for businesses that we’ve sold.
Occasionally we receive monies (or recognise
deferred consideration
following the sale of a business) in
advance of when we will actually perform the service we are being paid for. When this happens we hold a
Deferred income
liability
(deferred income) on our
balance sheet
until the point at which we perform the service at which
point we extinguish the
liability
and recognise the income.
Sometimes our
assets
and
liabilities
are worth more or less on our
balance sheet
than they are for tax
Deferred tax
purposes. The tax on the difference in value is called deferred tax and can be an
asset
or
liability
depending on whether the value is greater in the
balance sheet
or for tax purposes.
This is a pension scheme where an amount is paid out to an employee based on the number of years
Defined benefit schemes
worked and salary earned.
Defined contribution
This is a pension scheme where an amount is paid into the scheme and at retirement the employee draws
schemes
on the amount that has been invested over the years.
Some
assets
the Co-op will have for a while (such as vehicles). When we buy them the cost goes on our
Depreciation
balance sheet
and then
depreciation
spreads the cost of the
asset
evenly over the years we expect to use
them in the
income statement
.
These are financial products where the value goes up or down based on an underlying
asset
such as
Derivatives
currency, a commodity or interest rate.
When we sell a large business, we report its results at the bottom of the
income statement
so that it’s
Discontinued operations
easier for readers to see the performance of
the Group’s
other continuing businesses.
This is the amount that we are
discounting
by. It’s a percentage and varies based on what we expect
Discount rate
interest rates or inflation to be in the future.
Every year the amount that we’re
discounting
is going to be worth more as we get nearer to paying or
Discount unwind
receiving it. We have to put that increase in value (the
discount unwind
) through our
income statement
.
When we have to pay or receive cash in the future then we reduce the value of that cash at the balance
Discounting
sheet date because cash we pay or receive in the future is going to be worth less than it is now – mainly
because of inflation.
Disposals
When we have sold an
asset
.
This is
operating profit
excluding any
depreciation
or
amortisation
. The letters stand for earnings before
EBITDA
interest, tax,
depreciation
and
amortisation
(see APM section at the start of the Glossary for further
details).
This is the average tax rate we pay on our profits. This might be different to the standard corporation tax
Effective tax rate (ETR)
rate, for example, if we aren’t allowed to deduct some of our costs for tax purposes.
This is the difference between the
assets
we own and the
liabilities
we owe – theoretically, this is how
Equity
much money would be left for our members once every
asset
is sold and every
liability
is paid.
Expected credit losses
This is an estimate of the amount of our
receivables
which will not be repaid.
There are some things on our
balance sheet
which we have to revalue every year. This includes some of
Fair value movement
our
debt
,
investment properties
, our pension schemes and
funeral plan investments
. The change in
value is called the fair value movement.
Our Members' Annual Report 2025:
Glossary
246
Glossary
continued
Federal relates to the activities of a joint buying group that is operated by
the Group
for itself and other
independent co-operative societies.
The Group
acts as a wholesaler to the other independent co-operatives
Federal
and generates sales from this. This is run on a cost recovery basis and therefore no profit is derived from its
activities. This is separate to our
Wholesale
business.
These are usually the interest we pay on our
debt
, but can also be other things such as the
fair value
Finance costs
movement
on our
debt
or the
discount unwind
of
liabilities
.
This mainly relates to the interest on our pension assets and the
unrealised gains on funeral plan
Finance income
investments
, but can also be other things such as the
fair value movement
on our
debt
or the
discount
unwind
of
receivables
.
A finance lease is a way of providing finance. Effectively a leasing company (the lessor or owner) buys the
Finance lease
asset for the user (usually called the hirer or lessee) and rents it to them for an agreed period.
Financial Conduct
The FCA regulates the financial services industry in the UK.
Authority (FCA)
Financial instruments
A collective term for
debt
or
derivatives
that we have.
Financial Reporting Council
The FRC regulate auditors, accountants and actuaries and they set the UK’s Corporate Governance and
(FRC)
Stewardship codes.
Sometimes we agree to partner with independent food retailers in a mutually beneficial arrangement
whereby Co-op supply the retailer with goods and retail expertise and support (including Co-op branding)
Franchise
through a franchising agreement but we do not own the store or business and it is still run by the
independent retailer.
Fuel
Refers to fuel sales generated from our petrol forecourts (which were sold in 2022).
For
funeral plans
these cashflows mainly comprise; premiums received from customers for
pre-paid plans
Fulfilment cashflows
and
LCIPs
, premiums paid or repayable to re-insurers, direct internal and external costs of delivering
(funeral plans)
funerals, amounts recoverable from re-insurers and costs of acquiring new
insurance contracts
(
funeral
plans
).
Our customers may not want their family to pay a large single sum for a funeral when he or she dies.
Funeral plans
Therefore, the customer can pay for it gradually or in lump sums over a number of years and
the Group
will
invest that money to cover the costs of the funeral when it is needed.
When a customer gives us money for their funeral in the future, we invest this money. The balance of these
Funeral plan investments
investments is held on the
balance sheet
.
GAAP stands for Generally Accepted Accounting Principles. This is the common set of accounting principles,
standards and procedures that companies must follow. Sometimes, companies want to provide different
GAAP
measures to help readers understand their accounts (such as underlying profit - APM section of the Glossary)
where there isn’t a standard definition – these measures are called
Non-GAAP
measures.
The GMM model is the overarching approach that we use to account for our
funeral plans
(insurance
General Measurement
contracts)
under the new insurance accounting standard (
IFRS
17
). There's a choice of 3 approaches but the
Model (GMM)
GMM approach is the default choice and most appropriate to our funeral plans as they cover a specific risk
(funeral plans)
over an extended period of time.
Bonds (loans) issued by the UK Government and listed on the Stock Exchange. These are considered to have
(UK) Gilts
a very low risk of default and are highly liquid (so can be easily traded in an active market) so they are used to
help determine a risk free borrowing rate for use in
discounting
.
When we buy a business or a group of
assets
, sometimes we pay more for it than what its
assets
less
Goodwill
liabilities
are worth. This additional amount we pay is called
goodwill
and we put it on our
balance sheet
.
(the) Group
This is Co-operative Group Limited and all companies and
societies
that it owns.
Sometimes we want to protect ourselves in case we have to pay more in the future for something. This could
Hedging
happen if the value of the pound falls so we have to pay more when buying something abroad or if interest
rates go up. We take out
derivatives
to protect us from this and this process is known as hedging.
Hedge accounting is a type of accounting treatment the Group can chose to adopt when certain criteria are
met which better allows us to reflect the hedging activity the Group undertakes in our
Income Statement
.
For the Group this relates to the
interest rate swaps
we hold that help us hedge cashflow interest rate risk
Hedge Accounting
that we are exposed to on our floating rate
borrowings
. When it works as intended (so when it is fully
effective), hedge accounting removes the volatility we would otherwise see in our
Income statement
from
fair value movements
on the swaps.
Our Members' Annual Report 2025:
Glossary
247
Glossary
continued
International Accounting Standards.
The Group
use these as the accounting rules. There are many
IAS
different
IAS
s that cover various accounting topics (e.g. IAS 38 is for
intangible assets
).
International Financial Reporting Interpretations Committee. These are interpretations of
IAS
s or
IFRS
s that
IFRIC
the
Group
also has to abide by.
International Financial Reporting Standards. Similar to
IAS
, but cover different subjects (e.g. the standard
IFRS
on
insurance contracts
that we apply to our
funeral plans
is known as IFRS 17.
Sometimes our
assets
fall in value. If a store, branch, business or investment is not doing as well, we have
Impairment
to revalue it and record the downward change in value as a cost in our
income statement
.
This not only shows our income as the name suggests, but also what our costs are and how much profit
Income statement
we’ve made in the year.
A contract under which
the Group
accepts significant
insurance risk
from another party by agreeing to
Insurance contract
compensate that party if it is adversely affected by a specified uncertain future event. Our
funeral plans
(funeral plans)
are insurance contracts.
The risk Co-op are exposed to in an
insurance contract
when we agree to compensate a policy holder if a
Insurance risk (funeral plans)
specified uncertain event occurs. For our
funeral plans
the risk relates to the uncertain cost of delivering
the funeral at some unknown point in the future.
We have
assets
at the Co-op that we can’t see or touch which are shown separately to other
assets
. These
Intangible asset
include things like computer software and
goodwill
.
We like to know what interest we’re going to be paying in the future so we can manage our businesses
effectively. We enter into arrangements with banks so that we can do this – for example, if we have debt
Interest rate swaps
where the interest rate can vary, we can buy an interest rate swap which means that instead we’ll pay a
fixed rate of interest. The value of these swaps can go up or down depending on how the market expects
interest rates to change in the future.
Inventories
This represents the goods (the stock) we’re trying to sell. The cost of this is shown on our
balance sheet
.
Investment grade credit
Refers to assets (such as bonds) where the credit rating by Standard and Poor's is BBB or higher.
assets
Properties that we don’t trade from, and which we might rent out or hold onto because the value might go
Investment properties
up, are called investment properties.
Invoice discounting is an arrangement with a finance company so that we can be paid for amounts we are
Invoice discounting facility
owed on invoices earlier than the date our customers are due to pay us.
Low cost instalment plans (LCIPs) - this is where customers can take out a
funeral plan
but pay for it over
LCIPs
monthly instalments of between 2 and 25 years.
This represents the
discounted
future payments we are due to make to suppliers in exchange for the right
Lease Liability
to use their equipment or property.
Liability
This is an amount on our
balance sheet
which we’ll have to pay out in the future.
The measure of year-on-year sales growth for stores that have been opened for more than one year. This is
a comparison of sales between two periods of time (for example, this year to last year), removing the
Like-for-like sales
impact of any store openings or closures. See also the APM section at the start of the Glossary for further
details.
People can trade some of our
debt
such as our bonds on the financial markets. When this is the case, it’s a
Listed debt securities
listed debt security.
Maintenance cashflows
Direct costs of servicing already acquired funeral plans such as costs of handling claims or policy changes.
(funeral plans)
Member payments
This is an amount we’ve paid our members in the year and approved at the AGM such as dividends.
These are the benefits that members have earned for themselves during the year as part of the 2%
Member rewards
membership offer.
Net assets
Same as
equity
.
Net debt
This is the
debt
we have less any cash (or cash equivalents) that we might have.
Net operating assets is calculated as the total Group
net assets
shown in the Consolidated Group
Balance
Net operating assets
sheet
adjusted for our Pension surplus (net of
deferred tax
) less
net debt
(including
lease liabilities
) less
net
funeral plan
assets and liabilities.
Non-current
An
asset
or
liability
that is expected to last for more than one year.
Our Members' Annual Report 2025:
Glossary
248
Glossary
continued
GAAP stands for Generally Accepted Accounting Principles. This is the common set of accounting
principles, standards and procedures that reporting entities must follow. Sometimes, reporting entities want
Non-GAAP measure
to provide different measures to help readers understand their accounts (such as underlying profit) where
there isn’t a standard definition – these measures are called non-GAAP measures.
Non-recurring charges or gains in our Income statement that are not regular in size or nature and would
Non-underlying items
otherwise cloud the underlying profitability of
the Group
are stripped out within our
non-GAAP measures
.
This could include a large
impairment
or a large restructuring exercise.
A contract that the Group holds where we think we will lose money on it over it's life (so any profit we make
will not cover the costs we will incur). As soon as we think we have an onerous contract then we prudently
Onerous contracts
recognise the full expected loss immediately (rather than waiting for it to happen over the course of the
contract).
When we close a store we sometimes still have to pay running costs until the lease runs out (such as rates).
When this happens, we make a
provision
for the amount of the running costs we will have to pay in future
Onerous leases
and hold this on the
balance sheet
. Rental costs are excluded from this
provision
now we have adopted
IFRS
16 (Leases) as those costs are included in the
lease
liability
.
This is our profit before we have to pay any interest to our lenders or tax to the tax authorities. It is also stated
Operating profit
before any net finance income / (costs) from
funeral plans
.
This is an accounting term for the different businesses we have. When the financial performance of one of
Operating segments
our businesses is reviewed separately from the other businesses by our Board, we call that business an
operating segment and its sales and profit are disclosed in Note 1 as a separate segment.
Sometimes we have unrealised
fair value movements
on long term
assets
and
liabilities
. The
income
Other comprehensive
statement
is meant to show the performance during the year, so to avoid this being distorted by these big
income
changes, they are shown separately as other comprehensive income.
Parent
This is the owner of a
subsidiary
.
Payables
Another name for
liabilities
.
PAYE
Pay As You Earn. A tax which is paid on wages.
If a customer dies after 12 months of taking out a
funeral plan
and their
instalments
are up to date (or the
Payment waiver risk
death is an accident < 12 months) then Co-op will still honor the plan without requiring the remaining
(funeral plans)
instalments
to be settled. Co-op manage this risk through a
re-insurance
arrangement with a 3rd party
insurer who will cover the cost (risk) in such circumstances.
This is the interest that we’re allowed to show in our
income statement
and is the
discount rate
used to
Pension interest
discount
the pension
liabilities
multiplied by the pension surplus or deficit last year.
Performance obligations
These are promises to provide distinct goods or services to customers.
We bucket up our
funeral plans (insurance contracts)
into certain groupings for accounting and reporting
Portfolio
purposes. We make the distinction of 2 portfolios - one for our funeral plans and one for our
re-insurance
(funeral plans)
contracts (the
payment waiver
on
LCIPs
).
The Group enters into long-term power purchase arrangements (PPAs) with various green energy producers
(on-shore and off-shore wind and solar) where the Group buys electricity that has been generated in a green
Power Purchase Agreement
way. These PPAs help us with our green energy use targets. We use all the energy in our stores and depots
(so we don't sell any energy on to others).
When we pay in advance for a cost which relates to services that will be received over a future period of time
Prepayment
(for example, rent or insurance), we hold that cost on our
balance sheet
as a prepayment and then spread
the cost over the period of the service.
Present value
This is the value of a future cost or income in today’s money and is arrived at by
discounting
.
This is a
liability
, but one where we’re unsure what the final amount we have to pay will be and when we’ll
Provisions
have to settle it. We use our best estimate of the costs and hold that on the
balance sheet
.
Realised gains
This is when we sell an
asset
for a profit.
Receivables
When someone owes us some money, we hold that amount as a receivable on our balance sheet.
If a customer dies after 12 months of taking out a
funeral plan
and their
instalments
are up to date (or the
Re-insurance
death is an accident < 12 months) then Co-op will still honor the plan without requiring the remaining
(funeral plans)
instalment
s to be settled. Co-op manage this risk through an arrangement with a 3rd party insurer who will
cover the cost (risk) in such circumstances. This is known as a re-insurance arrangement.
This is a company or person that is closely linked to the Co-op. It’s usually a member of our Board or
Related party
Executive or their close family plus companies such as our
associates
and
joint ventures
.
Our Members' Annual Report 2025:
Glossary
249
Glossary
continued
Remeasurement gains /
There are lots of assumptions that are used when valuing pensions. If those assumptions change this can
losses on employee pension
have a big effect on the size of the pension
asset
or
liability
. So that we don’t distort the
income
schemes
statement
, this effect is shown in
other comprehensive income
.
This is a type of loan (subordinated debt instrument), which we repay either in instalments or in a lump
Repayment notes
sum at the end of the loan.
Reserves
This is the amount of
equity
we have, but excluding any
share capital
.
Sometimes we change the numbers that we showed in last year’s accounts. We may have changed where
Restated
or how we record certain things or it could be that we have corrected an error. There are strict rules
around what can be changed and when we make changes we explain why in the accounting policies.
This is all the profits we’ve made since the beginning of time for the Co-op that have not yet been paid out
Retained earnings
to members.
Retirement benefit
obligations
Another term for our pension
liabilities
.
(pensions)
Return on plan assets
This is the income our pension
assets
have generated in the year.
(pensions)
When we revalue a property upwards, we’re not allowed to put this
unrealised gain
through our
income
Revaluation reserve
statement
or within
retained earnings
as law dictates that this can’t be distributed to members until the
property is sold. It’s then ring-fenced as a specific reserve.
Revolving Credit Facility
This is money that our lenders have agreed we can borrow if we need to. It works a bit like an overdraft.
(RCF)
This is an
asset
that we don’t own legally, but which we lease from another party. The
asset
represents the
Right of use asset (ROU)
value the Co-op has in being able to use the
asset
over the length of a lease contract.
This reflects the compensation Co-op requires for bearing the uncertainty about the amount and timing of
Risk Adjustment
the cash flows that arise from non-financial risk as the Group fulfils its
funeral plans (insurance contracts)
.
(funeral plans)
The risk adjustment reflects an amount that Co-op would rationally pay to remove the uncertainty that
future cash flows will exceed the expected value amount.
Return on capital employed. This is based on our underlying profit we make in the year divided by the
net
ROCE
operating assets
we have.
This is when an
asset
is sold to a third party and then immediately leased back under a lease agreement.
Sale and leaseback
For the Co-op, this usually relates to the sale of a building such as a store.
When an item on our balance sheet varies in value from year to year based on some estimates that we
Sensitivity analysis
make, we show a sensitivity analysis which shows you how much the asset or liability would change by if
we were to change the estimate.
We further sub-divide or
funeral plans (insurance contracts)
issued in a given
cohort
year into ‘sets’ to
Sets
see if they are expected to make a profit or a loss. Sets are based where the funeral plans have similar
(funeral plans)
pricing and margin expectations.
This is the amount of money that our members have paid us to become members less any amounts that
Share capital
we’ve repaid to them when they cancel their membership.
The Co-operative Group Limited is a registered co-operative society. We sometimes refer to our collective
Society
whole as ‘
the Group
’ or ‘the Society’ and the terms are broadly interchangeable.
Subsidiary
This is a company or
society
that is owned by another company.
Sometimes our agreements with suppliers mean they will give us money back based on the amount of
Supplier income
their products we buy and sell. We call this supplier income.
This is the net day-to-day interest we incur or receive on our bank borrowings and
lease liabilities
and is
what management consider in the day-to-day running of our Co-op. Non-underlying interest are those
Underlying interest
items that are not generated by our day-to-day trading or are not considered by management in the day-
to-day running of the business (such as the interest on
funeral plan liabilities
or the
fair value
movement
on
the Group’s
quoted
debt
and
interest rate swaps
).
An
asset
may have gone up in value, but we’ve not sold it. If this is the case, the profit from the gain is
Unrealised gains
unrealised as we’ve not sold the
asset
yet.
Our Members' Annual Report 2025:
Glossary
250
Glossary
continued
The
funeral plan investments
which we hold on behalf of our customers attract interest and bonus
Unrealised gains – funeral
payments each year (depending upon market conditions). The gains or losses in the
fair value
of the plan
plans
investments is recognised within finance income /costs each year.
The Group’s operating segment
(trading Division) that sells direct to other retailers (rather than to
Wholesale
individual members of the public). This primarily relates to the business we operate after we bought Nisa
but it also includes any franchise stores. Wholesale is separate to our
Federal
segment.
These are
assets
that we’re in the middle of building. They’re on our
balance sheet
as we’ve spent money
Work in progress
already building them, but they aren’t ready for us to use them yet so we’re not
depreciating
them.
Our Members' Annual Report 2025:
Five year summary (unaudited)
251
Five year summary (unaudited)
£m
2025
2024
2023
2022
2021
Revenue
Food
7,256
7,403
7,262
7,805
7,671
Federal
1,964
2,076
2,142
1,895
1,756
Wholesale
1,387
1,399
1,480
1,439
1,386
Funerals
309
289
281
275
264
Legal
83
84
68
46
39
Insurance (marketing and distribution)
26
28
29
24
34
Other businesses & Costs from Support functions
-
-
-
-
1
Total Revenue
11,025
11,279
11,262
11,484
11,151
Underlying (loss) / profit
before tax
Food
34
201
173
139
156
Wholesale
(14)
(1)
14
22
7
Funerals
7
(1)
(11)
(1)
12
Legal
22
27
21
8
5
Insurance (marketing and distribution)
12
15
14
8
15
Other businesses & Costs from Support functions
(96)
(110)
(114)
(93)
(95)
Underlying operating (loss) / profit
(35)
131
97
83
100
Underlying net interest expense on lease liabilities
(64)
(64)
(68)
(76)
(76)
Underlying interest
(27)
(22)
(31)
(55)
(56)
Underlying (loss) / profit before tax
(126)
45
(2)
(48)
(32)
EBITDA (i)
Underlying operating (loss) / profit (above)
(35)
131
97
83
100
Depreciation (plant, property and equipment)
217
208
225
244
254
Depreciation (right-of-use assets)
112
110
106
119
122
Amortisation
33
32
40
27
29
Underlying EBITDA (i)
327
481
468
473
505
Insurance (underwriting business) - (ii)
Revenue
-
-
-
-
12
Underlying PBT
-
-
-
-
(1)
Profit on discontinued operation
-
-
2
67
13
Other performance items
(Loss) / profit after tax - continuing operations
(47)
98
1
258
32
ROCE (i)
-1.2%
4.7%
3.4%
2.6%
2.5%
Balance sheet items
Total assets
6,516
6,594
6,755
7,994
9,180
Group net debt (excluding leases)
(317)
(55)
(82)
(322)
(920)
Group net debt (including leases)
(1,495)
(1,248)
(1,315)
(1,628)
(2,436)
Total equity
2,108
2,198
2,020
3,023
2,939
Net debt: EBITDA ratio (excluding leases)
0.97
0.11
0.18
0.68
1.82
Net debt: EBITDA ratio (including leases)
4.57
2.59
2.81
3.44
4.82
Total pension assets
5,345
5,548
6,213
7,124
11,452
Total pension liabilities
(5,078)
(5,223)
(5,857)
(5,543)
(9,194)
Total net pension surplus
267
325
356
1,581
2,258
Business-specific measures
Number of Food stores
2,338
2,348
2,349
2,377
2,584
Number of at-need funerals sold
92,548
91,581
95,924
93,867
90,731
Number of pre-need funerals sold
41,538
37,710
17,032
16,774
44,751
Number of funeral homes
806
812
812
818
830
Notes:
(i) See the Glossary on page 243 for definition. Calculation for 2021 and earlier is not restated for IFRS 17.
(ii) Our Insurance underwriting business was held as a discontinued operation from 2018 and was sold on 3 December 2020.