Financial News

  • 22 April 2014, 13:22

Co-op Admits 'Disastrous Year' Amid 2.5bn Loss

The embattled Co-operative Group has confirmed a loss of 2.5bn for 2013, in what it described as a "disastrous year".

The loss comes on the back of a 529m figure recorded in its 2012 results.

Interim group chief executive Richard Pennycook said: "2013 was a disastrous year for the Co-operative Group, the worst in our 150-year history.

"Today's results demonstrate that but they also highlight fundamental failings in management and governance at the group over many years.

"These results should serve as a wake-up call to anyone who doubts just how serious the challenges we face are."

It said most of the losses were from "discontinued operations" of its banking arm, which totaled 2.1bn.

Group sales were 10.5bn, down from the 11bn recorded in the previous year.

Profit from its food division were down 8% at 247m but it also recorded a goodwill impairment charge of 226m for its purchase of Somerfield stores.

However, it recorded more encouraging figures for some other divisions.

General insurance profit jumped from 13m in 2012 to 33m last year.

The pharmacy chain, which is being offered for sale, saw profit rise by about a fifth to 33m.

And its funeral services business saw sales up 3% to 370m and profit up 2m to 62m.

Co-operative Group chair Ursula Lidbetter said: "During 2013, it became apparent that our governance had fallen far short of the standards to which we aspire as a co-operative society.

"Now is the time to put that right through fundamental reform - we have to act with urgency if we are to lay the foundations for a stronger, healthier co-operative business in the future."

The group's bank division revealed a 1.5bn capital black hole last year and then in March announced a plan to raise another 400m.

Amid risks of the bank's collapse, the group reduced its stake in the institution to 30% as private equity bondholders provided capital - raising concerns of how it would maintain its 'ethical' stance.