The Midcounties Co-operative has defied tough economic conditions with a 35% increase in trading profit to a record £26 million.

The member-owned community retailer announced its year end results for 2010/11 today and will recommend an increase in its dividend from 1.5p to 1.8p per point to ensure all its members share in the Society's success.

Its food stores, travel branches, pharmacies, funeral homes, childcare nurseries and employee benefits businesses all helped to ring up a 3.4% increase in total gross sales (excluding the figures for its Motor Group, which was sold in January last year).

The regionally focussed retailer also expanded outside its core area by growing its network of nurseries and this summer it will launch its new nationwide Co-operative Energy business supplying electricity and gas to the public. It is the UK's only energy supplier that is owned by and rewards its members.

Chief Executive Ben Reid said the financial results were an outstanding achievement but a Co-operative was about more than making money. He was also proud of its Investors in People Gold Award status, making the Sunday Times' 'Top 25 Best Big Companies to work for' list and gaining the Business in the Community Example of Excellence in Education award for its work with Sutherland Business and Enterprise College.

Ben said: "It has been a very challenging but rewarding year and now we have to focus on the future. There is every indication that the economic climate is going to remain difficult and it is into these conditions we will be launching Co-operative Energy and developing Co-operative Childcare.

"We are really optimistic that both ventures will quickly establish a foothold in the market. It is exciting for a regionally based society to be extending its reach in this way, and we believe that with the continuing engagement of our colleagues and support from our membership we can continue to go from strength to strength.

The annual report for the 52 weeks to 22 January 2011 details:

Trading profit up 35% to £26m (£19.3m 2009/10)

Food (30%) and Pharmacy (23%) showed the largest growth in profits

£2.9m distributed to members as a share of the profits 

Buffer Bear chain of 24 nurseries acquired

In the report President Patrick Gray noted the move to more national activities in the future but said it would not change the Society's community-based values.

"At its heart, Midcounties will remain essentially regionally based, accountable locally to members who shop with us and who live close enough to know their representatives first hand and to turn up and have their say when occasion demands. Underpinned by our success in the market place, this model makes our Society a beacon for the future of the Co-operative Movement," he said.

Midcounties, the second largest independent co-operative in the UK, returned the equivalent of more than £1.2 million back to its local communities through fundraising, grant giving and volunteering. It worked with 1,100 community organisations during the year.

The Society, which employs around 9,000 people, has its headquarters in Warwickshire with trading outlets in Oxfordshire, Gloucestershire, Wiltshire, Shropshire, West Midlands, Worcestershire and across the rest of the UK.

The Board's recommendation to increase the dividend from 1.5p to 1.8p per point for members will be put to the Society's AGM on 14 May.