CO-OPERATIVE boss Richard Pennycook says the business is ready to rebuild its shattered reputation after being confirmed as chief executive.

Mr Pennycook, on a basic salary of £1.3m, accepted the role after the mutual's members voted to approve radical reforms.

He had been standing in as boss since March after predecessor Euan Sutherland walked out claiming the group was ungovernable.

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It had reported a record £2.5bn comprehensive loss for 2013 as it was dragged lower by the near-collapse of its banking arm, but said it had now seen an overall return to profit.

It now owns just 20 per cent of the bank, following a rescue which saw bondholders, including US hedge funds, take majority control of the lender.

He said: "We have taken major steps forward over the last six months, securing governance reform and repairing our balance sheet, but we have much to do to return the group to full financial health and improve the performance of our businesses."

For the six months to July 5, the group saw comprehensive income of £116m, compared to a £1bn loss for the same period last year.

The figures included profits from its farms and pharmacy operations, now sold, plus gains from pensions re-classifications, and last year's major losses from the bank.

Stripping these out, the group saw a £9m pre-tax loss for the first half this year.

Group revenues fell from £5.3bn to £5.1bn.

Supermarkets saw a one per cent rise in like-for-like sales.