Co-op bounces back, returns to profit

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Co-op bounces back, returns to profit

The Co-operative Group returned to profit past year as it bounced back from a massive writedown of its stake in the Co-operative Bank and cost-cutting measures began to pay off.

A pre-tax profit of £72m was made after a £132m loss was posted previous year, the latter figure reflecting an increase in finance costs due to changes in the value of its bonds and a write-down in the carrying value of its 20 per cent stake in the Co-op Bank.

Co-op almost collapsed in 2013 after problems in its banking unit.

Revenue was flat on £9.5bn with £7.1bn coming from food sales, £1.7bn from wholesale sales to independent societies, £343m from funeral and life planning and £496m from gross written insurance premiums.

As well as its 2,500 food stores, the group, the largest co-operative in the United Kingdom, has insurance and funeral businesses and runs 12 Academy schools. On a like-for-like basis, food sales rose 3.4% and core convenience sales edged up 4.3%.

The Co-op cut its debt to £775mln from £885mln.

Active membership increased by 15% to 4.6 million with total joining since its member relaunch reaching 1.2 million. "All our businesses have performed well and we have increased profits and reduced debt, while continuing to invest for colleagues, members and customers", the group's chief executive Steve Murrells said.

"It is vital that our Co-op continues to innovate and be relevant to meet the changing needs of our stakeholders".

"To really succeed as a Co-op we need to be even more successful commercially and our community efforts need to be concentrated on the things that matter to people".

Co-op, in recovery mode since 2013 when a crisis in its banking unit almost brought it to its knees, posted underlying pretax profit of £65 million, up 25%, boosted by cost cutting.

Given its plans for investment, the company said it does not expect any surplus profits being available for distribution in 2018.

Last November the Co-op agreed to buy wholesaler Nisa for up to £137.5mln but the deal is awaiting regulatory approval. Probate is the legal process for proving the validity of a will of a deceased person.

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