Donegal Investment Group, formally Donegal Creameries, reported a 3.3% increase in sales for the eight months to the end of August 2016. The group is changing its year-end reporting date to the 31 August for future years to reflect better the seasonal performance of its produce and animal feed businesses.

In the eight month period, Donegal reported adjusted operating profits of €1.3m with margins improving to 2.8%. The group reported a pre-tax loss of €545,000, which is primarily a result of €2.5m in legal costs incurred by Donegal as part of the ongoing court case with Monaghan Mushrooms, a company it holds a 35% stake in.

The Wilson family, the majority shareholders in Monaghan Mushrooms, was ordered in 2015 by the Court of Appeal to buyout the 35% minority stake held by Donegal in the business. The case to decide to the value of this 35% shareholding is still being fought through the courts.

Business units

Donegal’s seed potato business, which accounts for almost 30% of total group revenues, saw sales in the eight months to the end of August 2016 increase 8.5% to €13.7m. The division did report a €0.5m operating loss, although this was much improved from the €1.5m loss reported in the same period last year.

The majority (71%) of Donegal’s business is derived from its agri-food and property division, which saw turnover increase 1.3% to €33.3m. This resulted in an operating profit for the division of €2m. The primary driver behind this division is Donegal’s speciality dairy business based in Killygordon, Co Donegal, which produces a range of on-the-go yoghurt products under the Nomadic brand.

According to Donegal, the Nomadic business continues to return double-digit growth, although the group does expect to face some trading challenges in this business from Brexit and the sterling devaluation.

Net debt for Donegal increased €0.6m in the period to stand at €14.9m. The group announced an interim shareholder dividend of 5c per share.

Read more

Full coverage: Donegal Investment Group