Donegal Investment Group, formerly 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 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 buy out the 35% minority stake held by Donegal in the business. The case to decide 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 reported 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.