Reox ‘expects growth’ despite losses of €30.7m

THE property-to-food group Reox, that is 25% owned by Dairygold in north Cork, recorded huge losses in the year to June 30, 2010, of €30.7 million.

Results from the Companies Office show that figure was up dramatically from the nine months figure to end June 2009 which showed a much modest loss of €2.1m.

The chairman’s statement said the results were split between continuing and discontinued operations.

After the sale of Breeo Foods to Kerry Group in 2009 the group reported that its ongoing food business in the Netherlands had a mixed year.

Westland Salades did well while its Prime Meats business underperformed and was sold to the management in May of last year.

Overall that side of the business made operating profits of €4.1m, better than the €3.1m achieved in 2009.

On the other side of its business under the Alchemy Properties banner difficulties in that sector hit the group hard.

During the year the group had to take a further impairment charge on to its books of €28.5m on top of the €50.2m hit taken in the 2009 accounts.

Reox sold off or wound down the 4Home business which comprised of 12 stores and which ceased trading in October 2009.

Reox made a profit of €399,000 on the disposal of its Prime Meats business while the 2009 accounts showed a profit of €109.2m from Breeo Foods deal that has been absorbed into Kerry Group.

Ironically, Breeo was part of the original Dairygold operations that was hived off when the then chief executive, Jerry Henchy, moved the consumer division, the trading stores and its property assets into a separate group under the Reox banner.

The ambition was to have the group fully listed on the Dublin stock exchange once it had been established as a major player in both the British and Irish markets.

Overall the outlook remains challenging for the group, said acting chairman Eoin McGettigan.

Reox faces huge debts of €65.2m, comprising €33m in a Redeemable Interest Bearing Bond issued to Dairygold and bank borrowings of €32.2m with Ulster Bank.

Reox has agreed a deal on Dairygold’s debt by selling it certain properties valued at €43m, comprising a cash element of €17m and €26m of value that will be offset against amounts due to Dairygold under the terms of the RIBB.

The deal with Dairygold provides some stability gong forward, but the acting chairman notes that significant debt remains that can only be reduced by the disposal of assets.

The property business is the group’s biggest asset and is still a major burden on the group.

However, Reox is expecting to achieve “modest growth in the medium term” provided there is no further worsening in the Irish market in the meantime, the acting chairman said.