Big losses at Duffys in 2006

DUFFYS of Gort made significant losses in 2006, according to accounts just filed for the year to 31 October last.

The story has of course taken new twists since then; the company wound down all slaughtering of livestock last month. It still owes over €400,000 to a number of pig producers for animals supplied, while this autumn could see the start of the legal case it is taking against its insurers over the compensation due for a fire at the plant in 2004.

That fire halved its capacity, and worse, largely prevented deboning work from being carried out. The pig farmers owed payment have been told that they will be paid from the proceeds of that insurance compensation, as there is no money left in the company.

Most slaughterings carried out at Duffys in 2006 was of sows. The plant processed about 900 sows per week on behalf of the North South Pig Co-op and up to another 1,000 for its own wholesale business from other pig producers. The North South group is now having its sows slaughtered at abattoirs in Mitchelstown and Ballinasloe and some other pigs at Foyle Meats in Northern Ireland.

Recovery

The Duffy family provided a valued outlet for livestock farmers in the West for many years. However, the Gort operation had a mixed performance in recent years, in what was a tough trading time for many companies. There were big losses in 2002 and 2003. The company operated profitably in 2004 and 2005 - but not enough so to strengthen its balance sheet. The company tried to turn the business around, slaughtering cattle on behalf of Donegal, etc, but 2006 proved to be difficult.

The main company involved and the one which owes payment to pig farmers is Sean Duffy (Exports) Ltd. Its accounts show that gross profit fell to €1.0m last year, dramatically down from the €2.9m of the previous year. The abridged accounts don't show turnover. Total operating costs for the year were almost halved to €1.8m but this was not enough to prevent an operating loss of €687,508, which compared with an operating profit of over €300,000 the year before. After bank interest and tax there was a loss for the year of €734,811 to transfer to the company's balance sheet.

It was already weak going into 2006 with current liabilities exceeding current assets by over €375,000. That deficit rose to €1.2m by the end of 2006. The company's surplus of all assets over all liabilities, or net assets, fell to just €229,920, down from €964,731 in 2005. The company ran out of options in 2006. The other company in the operation, Sean Duffy and Company Ltd, effectively stopped trading in 2004.

The Duffy family announced an intention to sell the operation as a going concern last April, stating that this would be in the best interests of all stakeholders, but so far no sale has been reported.

Pig producers have looked carefully at the company's assets. Its fixed assets stood at €1.6m at the end of 2006 and current assets stood at €3.9m. However, the liabilities side included some €3.4m in bank and similar borrowings. Bank loans were secured by a legal charge over a numbered property folio, letters of guarantee, etc. This company has ultimate control over the other company in the operation, Sean Duffy and Company.

At the end of 2006, the latter had total liabilities of €0.9m, half of which was payment owed to the parent company. Its balance sheet had a deficit of €0.4m.

Sean Duffy (Exports) Ltd 2006 (€)

Gross profit	1,092,312
Operating loss	(687,508)
Pretax loss	(734,811)