Co-op won't pay back £66m in business rates relief even as profits surge
The Co-operative Group said on Thursday that it will repay £15.5m in furlough support but will not pay back business rates relief despite reporting a surge in full-year profits.
In the year to 2 January 2021, reported pre-tax profit jumped to £127m from £24m on revenue of £11.5bn, up from £10.9bn in 2019.
Despite the solid performance, Co-op will not be paying back £66m in business rates relief. Justifying its decision, the company noted that as a community-based convenience retailer with a large store estate, it had a "disproportionate increase in costs" associated with remaining open, as compared to larger supermarket businesses.
Allan Leighton, Co-op Group chair, said: "We were grateful for the Government support that allowed us to manage our businesses through the pandemic, particularly our Funeralcare business, which has been working with bereaved families in extraordinarily difficult circumstances, helping them mark the passing of loved ones at a time of national grief.
"The pandemic turned our plans upside down and, while our revenues went up marginally, our costs rose dis-proportionately. We welcomed money from the Government on the basis that it was not a loan and we would not need to pay it back - and we took business decisions accordingly."
Co-op said it had been another good year for the food business, with sales up 3.5% compared to 2019 to £7.8bn, while like-for-like sales rose 6.9%. Meanwhile, the wholesale business saw sales grow to £1.6bn from £1.4bn the year before, with 624 new independent stores signed up by Nisa.
Revenues in the funeralcare business were flat, however, as Covid-related restrictions on gatherings and an increase in costs offset an 11.4% increase in the number of funerals arranged.
"Looking ahead, we see significant uncertainty and must continue to exercise financial prudence," the company said. "The market remains highly competitive and, against the backdrop of a worsening consumer economy, the Co-op is planning for and dealing with continued lockdowns. We continue to rebuild the Co-op’s balance sheet to secure the long-term future of the group."
It was also reported that despite choosing not to pay back business rates relief, Co-op plans to hand annual bonuses to senior executives.
According to Sky News, Co-op’s remuneration committee has decided to reward chief executive Steve Murrells and senior colleagues for their work in 2020. The size of the bonuses was not known but will be disclosed in the group’s annual report in the coming weeks.