October 2017

NEWS
BUSINESS
Co-op Group interim
results: Operating
profits down £21m
as it makes return to
members
The Co-operative Group has reported
a fall in operating profit from £72m in
2016 to £51m in its 2017 interim results,
which it says reflects “the continuing
rebuild of businesses”.
Underlying profit before tax was down
48% to £14m (2016: £27m). The Group
said profits were in line with a strategy of
investing in its businesses and returning
£35m to members and their communities
through its rewards scheme. They also
reflected a fall in insurance profits.
u Profit before tax rose 47% to £25m
(2016: £17m), reflecting a number of oneoffs
and non-trading items and a strong
performance from core businesses, said
the report.
u Group revenues were stable at £4.6bn,
with food reporting like-for-like sales
up 3.5%, its 14th consecutive quarter of
growth; core convenience like-for-like
sales rose 4.5%.
u Reported food sales fell 1.2% to £3.48bn
but were 0.7% higher year-on-year when
excluding the sales from the 298 stores
sold to McColl’s.
u Funeralcare revenues rose 1.2% to
£166m with market share increasing to
16.4%, supported by growth of Simple
Funeral offer.
u Insurance Net Earned Premiums fell
21% to £164m, in line with plans and due
to the purchase of additional reinsurance
to support its claims position during a
business transformation.
u Legal Services sales up 9.1% to £12m
due to strong growth in probate and estate
planning sales.
Debt was maintained well below the
£900m guidance level at £680m.
The Group said its investment
programme had opened 34 food stores
and 27 funeral homes in the first half,
FINANCE
Group offloads final shares in Co-op Bank
Following a four-year journey, the Co-op Group has fully offloaded its remaining stake
in the Co-operative Bank, leaving the financial institution with zero co-op ownership.
The Group sold 80% of its shares to hedge funds in 2013 as part of a stock market
flotation to rescue the Bank following the discovery of a £1.5bn capital hole. Its
remaining 20% was reduced to 1% on 1 September as part of a £700m rescue package
to recapitalise the Bank. That final 1% has now been sold off to an existing shareholder
for £5m; this profit will be included in the Group’s full annual results for 2017.
Speaking on BBC Breakfast, Steve Murrells, Co-op Group chief executive, said that
while the Group played a “key part” in the future of the Bank over the summer, it was
now “up to the Bank to show it can continue with its ethical stance that it has had in
the past”.
As part of the new arrangements, the Group has agreed on principles to split the
total pension liabilities of Pace and to remove the Bank’s obligation to support the
Group’s share of the Pace pension scheme liabilities. The Group says it will see the
relationship agreement between the Group and Bank “naturally fall away and come
to a formal end in 2020”.
and it had enhanced the use of digital
technology for member interactions.
Members now account for 33.4% of
food sales at the half year, up from 20.6%
in June 2016, the report added. The
Group recruited more than half a million
members in the first half of year, taking
active membership to 4.5 million people
across the UK.
The report said “significant Co-op
member value” had been generated, with
£29m invested in member rewards and
£6m going to over 4,000 local causes.
In terms of recruitment, the executive
team now has more women than men for
the first time. Across the business, 333
apprentices were recruited in the first half
of 2017, taking the total number hired in
the last two years to 1,400. The Group
plans to recruit a total of 1,000 apprentices
in 2017.
Chair Allan Leighton said: “It’s been an
important six months for the Co-op Group,
in which we have been able to give back
to our members and their communities
far more than we have for many years.
We have also continued to lead the way
in ethical commerce and campaigning
on the issues that matter to our members,
from championing Fairtrade to tackling
loneliness and modern-day slavery.
“We can be proud of what’s been
achieved, but we want to remain
ambitious. The goal now is to spread the
word further, while also deepening the
relationship with our members and their
communities.”
Looking ahead, the report warned
inflation would hit the Food business,
denting consumers’ spending power and
increasing competition in the sector.
“Our focus will remain on making the
shopping experience for our members and
customers even better,” it added.
6 | OCTOBER 2017