THE BLARNEY Woollen Mills group, owner of some of the best-known indigenous brands in Irish retailing, has insisted its business is in a “very strong” position after auditors KPMG cited material uncertainties that may cast doubt on its ability to continue as a going concern.

In addition to its Blarney Woollen Mills fashion outlets and the Meadows Byrne homeware chain, the Co Cork-based group also runs the Bunratty Castle Hotel.

New filings to the Companies Office indicate the business incurred a loss in the year to January 2008.

Blarney Woollen Mill is owned by members of the Kelleher business family, including former Aer Rianta director Freda Hayes and her brothers, Pat, Frank and Kevin Kelleher.

The group’s unlimited liability status means it is not obliged to file its accounts in public so the scale of its loss in that period is not known. Group finance director Robert Reardon declined yesterday to disclose whether it made a profit or incurred a loss in the fiscal year to January 2009. The loss in the previous year reflected significant depreciation charges. “The business is still very much cash generative,” he said.

Although Blarney Woolen Mills is in breach of some of its banking covenants, it is understood that the business continues to pay interest on its debt. However, the scale of its debt is unknown.

In an “emphasis of matter” note attached to its audit report on the business, KPMG said the group was dependent for working capital on access to bank facilities.

The auditors also said the notes to its accounts for the year to January 2008 include discussion on “the achieveability of the cash flow projections for the group and the key assumptions therein”. The notes also include discussion on “the ability to restructure the group’s borrowings or obtain further covenant waivers on existing loans” before January 31st, 2010.

“These issues, along with other matters set out in Note 1, indicate the existence of material uncertainties that may cast doubt on the group’s ability continue as a going concern.”

However, Mr Reardon adopted a upbeat tone when asked yesterday about the auditor’s report. “The autitors don’t run our business and the group will be there for the foreseeable future. The group is very strong and will continue to trade as normal.”

Asked whether the group would have to restructure its debt, he said: “We have adequate facilities for the foreseeable future.

“Again, from an audit point of view, they’ve got to look at it from their perspective.”