Co-op posts £2.5bn loss after “disastrous” 2013

The Co-op Group today announced a loss of £2.5bn and said 2013 had been a “disastrous” year and the worst in its 150-year history.

The group’s food and funerals business posted a combined operating loss of £148m, down from £142m operating profit for 2012.  

Falling food sales, a loss from the reduction in shareholdings in the banking arm, and a £247m writedown on its Somerfield acquisition compounded the group’s loss.

Heavy investment in the banking arm also hit the group, with the bank posting a loss of £1.3bn last Friday.

Acting chief executive Richard Pennycook said: “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.”

The year 2013 saw the group hit by a wave of scandals. It emerged there was a £1.5bn “black hole”, in their finances, and a subsequent media feeding-frenzy focused on the peccadilloes of the Co-op Bank’s chairman, the Reverend Paul Flowers, who was dubbed the “crystal Methodist” after his alleged drug use was exposed.

Since then a wave of senior figures have left the company including chief executive Euan Sutherland, who made his exit last month after his £3m pay package was leaked. Sutherland claimed the business was “ungovernable”.

This was followed by the departure of Lord Paul Myners, who quit last week after just four months and subsequently said that managers had been “allowed to run amok like kids in a sweet shop”.

Yesterday prosecutors said that Flowers had been charged with three counts of drug possession relating to cocaine, methamphetamine and ketamine.

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