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View the article online at http://citywire.co.uk/wealth-manager/article/a746825

Co-op files £2.5bn loss after 'disastrous' 2013

by David Campbell on Apr 17, 2014 at 09:20

Co-op files £2.5bn loss after 'disastrous' 2013

The Co-op has reported a £2.5 billion loss in its much-delayed results for 2013, as the business continued to struggle with a heavy debt load and archaic internal structures.

Interim chief executive Richard Pennycook, standing in following the departure of Euan Sutherland (pictured) last month, said that the 12 month period had been ‘disastrous’ for the group.

‘Today's results demonstrate that but they also highlight fundamental failings in management and governance at the group over many years,’ said Pennycook. He added that the loss was ‘the worst in our 150-year history’.

The heavily-trailed results were driven by losses of £1.44 billion in the banking division and a write-down of the company’s holding in the business, after it was forced to take external capital.

Following the bank’s disastrous purchase of Britannia, including a large portfolio of non-performing loans, the wider Co-operative group also wrote down its acquisition of Somerfield supermarkets.   

The supermarket division also reported lower sales as it disposed of non-core locations to focus on the convenience store market. It also offered a glimmer of light however, with like-for-like sales in this sector up 5.3%, despite overall food sales falling 0.2% in an increasingly challenging market.

Following the exit of Sutherland and the subsequent departure of board member Lord Myners, who had been bought in to draw up a restructuring plan which was ultimately rejected by many other board members, most attention will focus on the tussle over corporate governance, however.

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

‘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 company has pledged to press ahead with his recommendations, which will be put to Co-op members at the general meeting on 17 May.

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