Donegal Investment Group plc (DIG), formally Donegal Creameries, has reported revenues of €80.7m for the 2014 financial year – a 6.9% slide from the previous year. The group’s adjusted operating profit fell by more than 70% from €2.9m in 2013 to €853,000 last year.

The reduction in performance was attributed to the animal feed and seed potato business. Strong harvest yields in Europe resulted in a significant increase in supply of seed and ware potatoes with resultant downward pressure on price.

Profit after tax fell by €2.1m to €2.7m for the year, although when exceptional costs are included, the group made a loss of €1.2m. The group incurred exceptional costs due to legal expenses from DIG’s ongoing shareholder oppression claim, relating to its holding (35%) in Monaghan Middlebrook Mushrooms, along with the restructuring of the group’s speciality dairy business.

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DIG’s net debt increased by €0.9m over the year to €16.7m, primarily due to the exceptional costs outlined above. DIG is recommending a final dividend of nine cent per share, bringing the total dividend to 16 cent.

The company’s produce division, accounting for 41.6% of revenue, recorded an operating loss of €0.8m for 2014 – down from €1.8m profit a year earlier.

The Food-agri and property division recorded an operating profit of €1.95m, an increase of 74% on 2013.

The animal feed business, Smyth’s Daleside Feeds, saw a reduction in both price and volume in comparison with 2013.

During the year, DIG disposed of a number of non-core property assets which generated close to €6m, including the completed sale of 245 acres of the group’s 1,900-acre Grianan Estate outside Letterkenny, along with the sale of Ballyraine Halls student accommodation.

Profits related to its shareholding in Monaghan Middlebrook Mushrooms fell from €2.7m to €1.7m in 2014 due to difficult trading conditions outside Ireland and the UK, coupled with a reduction in EU funding.

Comment

DIG’s 2014 results reflect a challenging year for the group. As with 2014, it is likely it will continue to explore options to release capital from non-core activities.