THE Co-op has returned to profit but warned that its members will have to wait until 2018 for a resumption in dividend payments.

The troubled mutual, which last year reported a loss of £2.3 billion due to the near collapse of its banking arm, posted a net profit of £216 million for 2014.

The sale of the farms, pharmacy and Bradford-based Sunwin Services businesses raised £900 million.

Without the disposals the Co-op would, at best, have broken even, chief executive Richard Pennycook said.

He added that the Co-op had completed the rescue phase of its turnaround but said that a resumption of dividend payments was unlikely until after the end of 2017.

Mr Pennycook, a former Morrisons finance director – pictured with non-executive chairman Allan Leighton – said: “The hard work of rebuilding the Co-operative Group for the next generation, and restoring it to its rightful place at the heart of communities up and down the UK, is now under way."

The Co-op is the UK’s largest mutual business, owned by more than eight million members. It is the UK’s fifth-biggest food retailer with almost 2,800 local, convenience and medium-sized stores - with plans to add another 100 this year.

It said its food business delivered a robust performance last year, with like-for-like sales up 0.4 per cent overall as underlying profits increased 1.5 per cent to £251 million.

Debt reduced to £808 million from £1.4 billion a year earlier, despite the cost of boosting the capital strength of its former banking arm, which is now 20 per cent owned by the mutual following a rescue by bondholders.

Former Asda boss Allan Leighton, whose father ran a Co-op store, recently became the society’s first independent non-executive chairman under its reformed governance structure.

Mr Leighton, who also chairs Saltaire-based technology group Pace plc, is working on the establishment of a new board, composed of a majority of independent directors.