Co-op delivers return to profit after disposals

Business guru Allan Leighton
Business guru Allan Leighton
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THE Co-operative Group has posted a return to profit, but warned that its members will have to wait until 2018 for a resumption in dividend payments.

The troubled mutual, which last year reported a loss of £2.3bn due to the near collapse of its banking arm, benefited from the sale of its farms and pharmacy operations as it posted a net profit of £216m for 2014.

Without the disposals the Co-op would, at best, have broken even, chief executive Richard Pennycook said. He added that the Co-op had completed the rescue phase of its turnaround, but said that a resumption of dividend payments was unlikely, until after the rebuilding phase is completed at the end of 2017.

The Co-op is the UK’s largest mutual business, owned by more than eight million members. It is the UK’s fifth biggest food retailer with almost 2,800 local, convenience and medium-sized stores.

The mutual was brought to its knees by a series of blunders, including the takeover of Britannia building society in 2009, an ill-fated move that resulted in it losing control of its banking arm.

The crises triggered an overhaul of its governance, including the appointment of a new board, led by former Asda chief executive Allan Leighton. Co-op members are also getting the chance to vote on whether the group should continue to make donations to political parties.

The board is asking the members to decide whether they want to continue financially supporting the Co-operative Party, which is the sister party to Labour. In the last Parliament, there were four Yorkshire-based Labour & Co-operative MPs, including the Shadow Chancellor Ed Balls.

Karin Christiansen, general secretary of the Co-operative Party said: “For almost 100 years, the Co-operative Party working with co-operatives, like the Co-operative Group, has made the case for a more co-operative Britain where power and wealth are more evenly shared...

“Members of the Co-op have the chance to vote to maintain this relationship and keep the co-operative at the heart of this fight.

“But, this must be an informed debate. As it stands, the Co-operative Group is not providing members with information about the co-operative movement’s history of political engagement and the work of the party.”

A Co-operative Group spokesman said: “The board is absolutely committed to co-operative democracy and there is no greater demonstration of this than the historic introduction of one member, one vote for this year’s AGM.

“This is a huge step forward from how votes have worked in the past, and provides our members with an opportunity to have a say in how we do business.

“The question on political donations is rightly for our members to decide. The board has put forward a very clear motion: Should the Co-operative make any donations to political parties; should we make donations only to the Co-operative Party; or should we make donations across a range of political parties.

“The members council has also put forward a motion in support of the Co-operative Party, and this motion will be included in the voting packs being sent to 2.9m members.”