The Co-op Group, based in Manchester, said its operating profit rose 32% to £148 million on revenues up 3% to £9.5 billion in the year to December 31.

However, the mutual recorded a loss before tax of £132 million amid a £74 million increase in finance costs due to changes in the value of its bonds — and a writedown in the value of its 20% shareholding in the troubled Co-operative Bank from £140 million to zero.

“Following the group’s decision to reduce the carrying value of the stake at the half year to £140 million, we have reviewed the fair value at the year-end and reduced the value to £Nil,” said the Co-op Group.

“Given that the bank is in a sale process, the consideration to be received for our share is obviously volatile and potentially has a large range of options and we believe this is a prudent valuation.

“We are supportive of the process the bank is going through to find a secure home for members who use their services.”

In Co-op Food, sales rose 1% to £7.1 billion with operating profit up 4% to £203 million.

Owned by its members, The Co-operative Group operates 3,800 outlets and has more than 69,000 employees.

The group’s active membership grew to around 4 million at the year end with 350,000 members already recruited in 2017.

Underlying profit before tax fell from £81 million to £59 million due to increased investments.

Co-op chairman Allan Leighton said: “This was an exceptional year for the Co-op and these results show the success of all the work to rebuild.

“We’ve invested in our brand, our businesses and our colleagues and now we can clearly see the benefits – a big jump in membership, better sales and increasing market share.

“The Co-op is now better for members, better for colleagues and better for communities up and down the UK.

“This investment was made in a disciplined fashion and within our agreed debt profile.

“All of this was achieved while staying true to our purpose, as evidenced by the millions we are paying out to local causes.”

Co-op Group chief executive Steve Murrells said: “We’ve made great progress in rebuilding our Co-op, with all our businesses delivering strong performances.

“While much remains to be done, our Rebuild plans have really started to deliver value for our customers, our members and their communities.

“That is exactly what the Co-op should be doing.

“Against this backdrop, 2017 sees us turning our attention to the next phase of our development. Our ambition will remain the same – championing a better way of doing business in communities up and down the country.

“We will continue to take our existing businesses forward and ensure they are ready for the digital age, but we will also look wider than our current markets.

“We are exploring how we can enter markets that are not serving people well and challenging existing providers.

“To do that we are thinking again like the original Rochdale Pioneers.

“They were true pioneers in every sense of the word – disruptors in markets and agitators for change.

“There’s never been a more exciting time in the Co-op’s history and we are confident that we’ll continue to thrive.”