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| Co-op Group loses £2.5bn after 'fundamental failings in management and governance' | Co-op Group loses £2.5bn after 'fundamental failings in management and governance' |
| (35 minutes later) | |
| The Co-operative Group has reported losses of £2.5bn after the most "disastrous year" in the mutual organisation's 150-year history. | |
| The group, which has lurched from crisis to crisis and has lost a string of bosses along the way, admitted the huge losses were due to "fundamental failings in management and governance at the group over many years". | |
| Richard Pennycock, interim chief executive, said: "These results should should serve as a wake-up call to anyone who doubts just how serious the challenges we face are". | Richard Pennycock, interim chief executive, said: "These results should should serve as a wake-up call to anyone who doubts just how serious the challenges we face are". |
| Ursula Lidbetter, the Co-op's chairman, admitted that the organisation's senior management had "fallen far short" of acceptable standards and said the group must introduce fundamental reforms "with urgency". | Ursula Lidbetter, the Co-op's chairman, admitted that the organisation's senior management had "fallen far short" of acceptable standards and said the group must introduce fundamental reforms "with urgency". |
| "During 2013, it became apparent that our governance had fallen far short of the standards to which we aspire as a co-operative society," she said. "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." | "During 2013, it became apparent that our governance had fallen far short of the standards to which we aspire as a co-operative society," she said. "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." |
| Lord Myners, the former City minister who was drafted in to review the group's governance, dramatically quit last week after he said it became clear that the Co-op's board would not accept his reforms. | Lord Myners, the former City minister who was drafted in to review the group's governance, dramatically quit last week after he said it became clear that the Co-op's board would not accept his reforms. |
| Myners has accused former Co-op management of making "catastrophically inept decisions over and over again". | Myners has accused former Co-op management of making "catastrophically inept decisions over and over again". |
| "The reason the Co-op is in such a mess is because former managers were allowed to run amok like kids in a sweet shop," he said in the Daily Mirror as the public row over the future of the gorup becomes increasingly bitter. | "The reason the Co-op is in such a mess is because former managers were allowed to run amok like kids in a sweet shop," he said in the Daily Mirror as the public row over the future of the gorup becomes increasingly bitter. |
| Myners wants to replace the Co-op's complex board structure and replace it with that of a more traditional listed company. His proposals have been opposed by the Co-op's regional boards, which will lose a lot of power if his reforms are made. The reforms will be put to a vote on 17 May. | |
| Most of the group's losses stem from the Co-op Bank, which was found to have a £1.5bn capital hole last year. Total losses related to the bank came in at £2.1bn. | Most of the group's losses stem from the Co-op Bank, which was found to have a £1.5bn capital hole last year. Total losses related to the bank came in at £2.1bn. |
| The company also wrote down the value of its Somerfield supermarket chain by £226m. | |
| Britain's largest union, Unite, which represents 1,200 Co-op employees, said the results should leave people in no doubt of the need for reform to save jobs and secure the group's future. | Britain's largest union, Unite, which represents 1,200 Co-op employees, said the results should leave people in no doubt of the need for reform to save jobs and secure the group's future. |
| Earlier in the week, the union wrote to Co-op's regional board members urging them to back Lord Myners' reforms. | Earlier in the week, the union wrote to Co-op's regional board members urging them to back Lord Myners' reforms. |
| Unite's Adrian Jones said: "Today's figures are deeply disappointing and do not reflect the hard work of ordinary Co-op workers who have been working hard to make the group a success against a backdrop of uncertainty. | Unite's Adrian Jones said: "Today's figures are deeply disappointing and do not reflect the hard work of ordinary Co-op workers who have been working hard to make the group a success against a backdrop of uncertainty. |
| "The vast majority of our members embrace the unique ethos of the Co-op, but feel that their livelihoods are playing second fiddle to the internal power struggles of whether to reform the Co-op Group's structures. | "The vast majority of our members embrace the unique ethos of the Co-op, but feel that their livelihoods are playing second fiddle to the internal power struggles of whether to reform the Co-op Group's structures. |
| "Today's results should sharpen minds and leave people in no doubt of the need for reform to secure jobs and the Co-op Group's future." | "Today's results should sharpen minds and leave people in no doubt of the need for reform to secure jobs and the Co-op Group's future." |
| Roger Barker, director of corporate governance at the Institute of Directors, said the Co-op's problems had not arisen because of its status as a mutual organisation but because of weak corporate governance. | |
| "The scale of value destruction over the last few years has been catastrophic. Without major changes to its governance model, the Co-operative Group will struggle to survive over the medium term. This is a huge concern for the 90,000 people employed by the Group. It also threatens the objective of creating an economy with a diversity of corporate structures, less focused on the ubiquitous PLC and Limited company models." |