The Co-operative Group, a British consumer cooperative that operates a range of retail businesses, announced its final results for the 52 weeks ended 4 January 2014 on Thursday, which showed losses of GBP2.5bn for 2013 when compared to losses of GBP529m for 2012, reportedly the worst results in the group’s 150-year history. Group operating loss was GBP148m for 2013, in comparison to profit of GBP142m for the previous year.
According to the group, the losses reflected the impact of its Bank recapitalisation. The Co-operative Bank has losses of GBP2.1bn, which included a trading loss of GBP1.44bn for the year to December, when the group gave control of Co-op Bank to US hedge funds. The group also took another charge of GBP625m when over 70% of the bank’s shares were handed to bond investors.
The results were also impacted by goodwill impairment of GBP226m, which arose on the acquisition of supermarket retailer Somerfield; however the Co-operative Group Food business achieved a robust second-half in like-for-like performance, with an overall 0.6% increase. Full year like-for-like sales in the Food division for the year fell by 0.2%, while LFL sales in core convenience chain rose by 1.6%. The effects of store disposals, a shorter accounting period and price reductions were reflected in lower revenues and underlying operating profits of GBP210m over the full year, which were down from GBP 297m the year before.
Group sales for 2013 were GBP10.5bn for 2013, compared to GBP11.0bn in 2012. Funeral sales were GBP370m, increased from GBP358m the year before, while Pharmacy sales dropped to GBP760m from GBP764min 2012. There was also a fall in General Insurance sales in 2013, which were GBP476m compared to GBP580m in 2012.
As part of the move to meet its obligations under the Bank recapitalisation plan, the trading group syndicate bank facilities have been renegotiated. The group has also reduced its net debt by GBP286m to GBP1.4bn as a result of the disposal and sale and leaseback of property assets and the sale of the remaining motor dealerships.
Capital expenditure was lower at GBP239m in 2013, compared to GBP410m in 2012, which reflected the necessity to provide capital for the Bank and to reduce debt.
Interim Group chief executive of The Co-operative Group, Richard Pennycook, stated: “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.”
Chair of The Co-operative Group, Ursula Lidbetter, commented: “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.”