The thoroughbred racehorse seller had to make a special provision of €5.7m against the overdue debts of “previously wealthy and credit-worthy buyers” who failed to pay for purchases, especially in Ireland.
Despite this, Goffs continued paying breeders for the foals and fillies they sold through Goffs, even though they were never paid for the progeny in many cases.
And it emerged yesterday Robert J Goff & Company has also agreed to sell a 26.67% stake in French bloodstock auctioneers Arqana Holdings to Grenfell for €7.5m in cash to shore up its cash reserves. The proposed sale will still leave Goffs with a 5% holding in Arqana.
The transaction, which is subject to shareholder approval at an extraordinary general meeting to take place on October 29, 2010, will, according to the company, help to improve the company’s reserves by €3.1m and provide the financial resources necessary to support the working capital required for the future and to modify its existing banking facilities.
Grenfell, which is controlled by the Aga Khan, holds a 40% shareholding in the Goffs Group.
Goffs chairman Eimear Mulhern said that the proposed sale would “secure” the company’s long-term financial future.
“It is the view of the Goffs’ board and management that the proposal being put before shareholders will secure the financial future of the company and enable us to proceed with confidence to develop the company’s long term potential.”
Goffs annual report records a pre-tax loss of €6.4m for the year ended March 31, 2010. This compares with a pre-tax loss of €3.1m the previous year. Income fell from €17.6m to €14.7m. The company said this reflected a decline in ring turnover from €102m to €81 million.
Ms Mulhern said the financial year to end of March 2010 had been another very difficult trading year for the company, which had been deeply affected by the global economic downturn and the banking crisis in Ireland.
She said the company had taken significant steps to reduce costs and to stabilise the finances of the group. Total operating costs, excluding bad debt provisions, were reduced by almost 23% to €8.6m, down from €11.1m the previous year.