Shares in food group Donegal Creameries have been temporarily suspended from trading on the Irish Stock Exchange pending publication of its delayed results for last year.
The suspension, at Donegal's own request, comes in the wake of its failure "for reasons outside its control" to file annual financial results for 2004 before a stock exchange deadline of April 30th.
Donegal expects to file the results before the end of the month and will apply at that stage to have the suspension lifted.
The company has already warned the market that those results will be "substantially" below expectations as a result of poor conditions in the dairy and potato sectors and lower than expected income from asset sales. It reiterated the view yesterday that the results would be in line with this guidance.
The company blames the delay in filing the 2004 results on issues beyond its control that have emerged in the accounts of Monaghan Middlebrook Mushrooms.
Donegal owns 23 per cent of Monaghan as a result of Monaghan's merger last May with Carbury Mushrooms, in which Donegal held a 52.5 per cent stake.
Monaghan has been unable to send its own results to Donegal because of financial issues that have emerged in the financial statements of Carbury Mushrooms for 2003. Three issues have emerged: a write-off of bad debt in the British market; understated sums for trade creditors and accruals at the end of 2003; and an impairment to the value of fixed assets at its site in Gateforth due to rationalisation of compost production.
It is understood that Donegal learned of such issues only shortly before it expected to receive results from Monaghan. Had these issues been known, they would have resulted in a negative profit effect of €2.6 million in Carbury's financial statements for 2003 and, as a result, a negative profit effect of €1.365 million at Donegal given its 52.5 per cent share of the company at that time.
A spokesman for Donegal said the company was confident that it would be able to file its 2003 results before June. "That is their intention. They are hoping to publish by the end of this month. They have set themselves a deadline of submitting the results by the end of May, 2005."
Donegal said a voluntary suspension was in the best interests of shareholders and would ensure an orderly market at all times in its shares.
The stock closed last Friday at €4.25, 40 cent below the closing rate before its profit warning on January 25th. The warning led Goodbody and house broker NCB to reduce pre-tax profit forecast for 2004 to €2 million.
