Investment to double on strong trading result at Rochdale-based United Co-operatives

Peter Marks outside the Rochdale HQ

Investment to double on strong trading result at Rochdale-based United Co-operatives

Highlights for 2005:

• Sales up 10.9% to £2,093m, with like-for-like sales up 5.5%
• Trading profit before exceptional items up 17.1% to £56.4m, with a like-for-like performance of 16.3%
• Pre-tax profits up 7.9% to £35.6m
• Return on capital employed increased to 11.4%
• Profits and sales up 60% since Society formed in September 2002*
• Capital expenditure over £100m for second year, £200m planned for 2006
• Weekly customer numbers pass the 3.3 million mark for the first time
• Distributions up 3.4% to £10.5m, including £2.3m for Employee Share Plan

*  United Co-operatives was created in September 2002 by the merger of United Norwest and Yorkshire co-operatives.

Commenting on the results, Peter Marks, United’s Chief Executive said: “Our results for 2005 demonstrate the strength of United Co-operatives customer offer and our determination to build market share both organically and by acquisition. We expect to invest up to £200 million on acquisitions this year, focussing mainly on the food and pharmacy markets. This investment is double that spent in 2005.”

Mr. Marks continued: “Despite the fact that 2005 was tough for all retailers, we had another excellent year, the third consecutive record performance since our formation in 2002.

“Once again we made strong trading progress, with sales up 10.9% to £2,093m (last year £1,886m) and trading profit up 17.1% to £56.4m (last year £48.2m).  Pre-tax profit rose by 7.9% to £35.6m (last year £33.0m).

“We continue to make advances in all core businesses, with double-digit growth recorded in the food, travel, car and health care groups, and with our funeral operation increasing market share, despite the decline in the death rate.

“Three years after the creation of United Co-operatives, our results show that mergers between strong co-operatives can deliver both better service for customers and impressive improvements in financial performance.  This is a blueprint which I am convinced will be repeated many times over coming years,” Mr. Marks added.

Looking to the future, Peter Marks said: “The coming 12 months look set to be another challenging period for retailers but a combination of organic growth and successful integration of acquisitions, means that we are well placed to continue the excellent progress made in recent years.”

Trading Review

United Co-operatives, based in Rochdale, is the UK’s largest independent co-operative.  It employs 15,500 staff and has five key businesses – Food, Travel, Car Dealerships, Health Care and Funerals.  Its trading operations stretch from Northamptonshire to the Scottish Borders and includes a presence in North Wales and Northern Ireland.
 
In the Food Group, sales passed £920m, up 14.4%.  Highlights for the period included the acquisition of five stores from Wm. Morrison, refurbishment of 160 stores and total store numbers now reaching 520.

Travel, the most diverse business of its kind in the UK, achieved sales of £568m, up 14.6% on the year before.  The Group’s business travel operations were combined to form Co-operative Travel Management, the 15th largest business travel operator in the UK.  The travel homeworking business, Future Travel, overtook the retail division to become the largest part of the Group and Freedom Travel, which gives independent travel operators the chance to benefit from the Society’s buying power, grew sales by 60%.

The Motor Group recorded a sales rise of 20.3% to £311m.  Despite tough trading conditions, fleet sales held up well, with private sales declining in line with the market generally.  Lifetime warranties were launched for the majority of cars offered by the Group.

Health Care, which consists of two pharmaceutical wholesalers and 165 community pharmacies, dispensed more than 11 million prescriptions for the first time. The Group expanded into Yorkshire, Derbyshire, Nottinghamshire, Warwickshire and Northamptonshire.  Sales were up 15.3% to £152m.

Despite challenging trading conditions, which saw the UK death rate at its lowest level on record, Funeral Group increased sales to £37m, a creditable increase of 2.8%.