Co-op’s £124m profit after its selling spree

THE Co- op Group edged back into profit last year, but only after selling its farms and pharmacies.

Richard Pennycook, the troubled mutual’s chief executive, claimed it had ‘ turned the corner’ after almost collapsing in 2013.

The group made a £124m profit, bouncing back from a £255m loss the previous year.

Including a £2bn hit from the Co- op Bank, the group made a £2.3bn loss during 2013.

Pennycook said the mutual raised £900m from offloading its chain of chemists and farms.

This helped to slash its debts from £1.4bn to £800m.

The Co-op’s annual report, also released yesterday, showed that Pennycook received £2.5m in pay and perks last year.

Pennycook said that having ‘nearly failed’ in 2013, the group was ‘now set firmly on a journey of recovery’.

But he warned that the group’s 8.5m members would not be paid a dividend during the three-year rebuilding phase of the turnaround, which lasts until 2017.

The Co- op Group lost control of the Co-op Bank in December 2013 as part of a rescue package to prop up the stricken lender, which had been left reeling by a drugs scandal involving its chairman Paul Flowers. It is now heavily reliant on food and is focusing on its smaller convenience stores as more customers abandon their weekly shop to buy little and often instead. Last year the group sold 37 large shops and opened 82 new convenience stores.

Sales crept up by just 0.4pc over the year, but jumped 3.2pc in its convenience stores – above the UK average of 2pc.

There was little sign of a turnaround in the general insurance business, which posted a £7m loss, down from a £36m profit in 2013.

The Co- op’s funeral care business also had a difficult year, after fewer people died in the UK.