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Jersey members of the Channel Islands Co-operative tonight voted to approve a 2% dividend payout for the 2023 financial year – as the CEO was forced to refute accusations that the business had been on a "spending spree".
More than 120 people attended the organisation's Annual Meeting of Members at the Radisson Blu Hotel this evening.
The room erupted in laughter as members were warned that no dividend would be declared if the motion to accept a reduced 2% dividend was not carried.
Over 100 Guernsey members voted to approve the same motion at St Pierre Park Hotel last night.
The 2% dividend for members was proposed earlier this month by the Channel Islands Coop Board, as it confirmed a net loss of £1.8m.
The dividend rate is proposed each year by the retailer and voted on by members at an annual meeting held in May when the firm’s accounts are published.
Members are then invited to vote on the plans.
Pictured: The email sent to CI Coop members announcing the 2% dividend proposals.
The reduced dividend rate was announced on 3 May in an email to members, which said: "In proposing a 2% dividend, we have taken the time to thoroughly review what is in the best interests of our member owners and our ability to sustainably pay a dividend despite the impact on our profits in the last year."
The email also revealed that the CI Coop achieved a turnover of £208.5 million, reflecting an increase of 8.4% over the previous year.
However, the company generated a net loss for the year of £1.8 million, "following payments for dividend, member interest, and revaluation of investment properties".
In February, the Coop warned that it was considering stopping or reducing dividend rates paid out to its thousands of members across the Channel Islands in an "unprecedented" move amid worsening financial performance.
Opening the AMM, the Coop's Chair Jon Bond noted that a “challenging retail environment” had impacted the organisation's financial results.
“We always have our members interest held in focus,” he added.
Mr Bond explained that the proposed dividend reduction had generated “significant discussion in media and social media”.
“We believe in being open and honest,” he said, but explained there had been some "misunderstanding” regarding the impact on member share accounts.
“We could’ve been clearer with our communications,” admitted Mr Bond.
The Chair also confirmed this evening that the Co-op would be honouring the dividend accrued by members who closed their accounts following the announcement of reduced dividend in February.
In his speech, Coop CEO Mark Cox echoed Mr Bond's comments that it had been a year of "shared challenges” across the retail sector.
He said that the Coop had “made every effort to shield members from [price] increases”.
Mr Cox also confirmed that senior employees had not received any bonuses, explaining that it would be "inappropriate" in light of the reduced dividend offering.
The CEO also refuted accusations that the Coop had been on a “spending spree”.
“We must balance the payment of dividend with investment in the long-term future of our Coop,” explained Mr Cox. “We cannot stand still.”
He said that the purchase of seven community pharmacies across Jersey and Guernsey from LloydsPharmacy had been subject to particular criticism.
Pictured: Mark Cox, CEO of the CI Coop,
Mr Cox revealed that the seven pharmacies, which had been independently valued at £4.5m, were purchased by the Coop for just £1.5m.
Of that amount, £700k was spent on the stores, with the rest being spent on stock and integration.
“We haven’t been on a spending spree,” he said.
The CEO also defended spending on advertising, technology, re-branding and new uniforms.
Mr Cox called on members to hold the Coop to account “based on fact, not rumour”.
Urging members to ask questions, he said: “We’ll always be open and transparent with you.”
Mr Cox concluded: “Financial results do not reflect the enormous efforts but in by the extraordinary team here, and that is disappointing.”
A new mobile service agreement between the Coop and Sure was first announced at the Guernsey AMM last night.
Coop Mobile would become a Mobile Virtual Network Operator (MVNO), offering its own range of mobile services, competitive pricing, and product offerings for customers, all transmitted over Sure’s network infrastructure.
Virtual operators are common around the world. In the UK, Tesco Mobile is the largest MVNO with more than 5 million customers.
The launch is subject to regulatory approval of Sure's proposed acquisition of Airtel Vodafone in both islands, and would happen within 12 months of receiving both those approvals.
At the Jersey AMM, Mr Cox described the MVNO plans as a “low-risk cost-effective way to enter local mobile market”.
Although the Coop would use Sure's network infrastructure, Mr Cox said it would offer a “highly competitive mobile service” and “products at our own prices”.
Motion 1: To confirm the Minutes of the Annual Meeting of Members held on 17 May 2023 - carried
Motion 2: To confirm the Minutes of the Special Meeting of Members held on 28 February 2024 - carried
Motion 3: To receive the Board of Directors’ Report for the 53-week period ended 14 January 2024 - carried
Motion 4: To receive the audited Financial Statements for the 53-week period ended 14 January 2024 - carried
Motion 5: To declare the a dividend of 2% in respect of the 53-week period ended 14 January 2024 - carried
Motion 6: To confirm the appointment of Grant Thornton as the Society’s Auditor from the conclusion of the Meeting until the conclusion of the next Annual Meeting of Members - carried
Motion 7: To authorise the Board to fix Grant Thornton’s remuneration - carried
Motion 8: To elect one Jersey Member to the Board of Directors - Matt Chatterley
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