Interim Statement for 2007
Interim Statement for the six months to 30th June 2007
The Group reports a profit before tax of €9.2million for the first six months of 2007 which compares to €11.2million for the corresponding period in 2006. Private housing profits rose by 97% in the UK and by 15% in Ireland for the first six months as compared to the same period in 2006. Profit after tax was €7.9million as compared to €9.3million in the corresponding period in 2006. Basic earnings per share were 4.11 cent compared to 5.4 cent for the same period in 2006 (as adjusted for the recent rights issue and share split).
An interim dividend of 3 cent gross will be paid on 26th October 2007 to shareholders on the register on 5th October 2007. This is an increase from 2 cent last year (as adjusted for the recent share split), and represents a rebalancing between the interim and final payments.
Operationally, our UK business is now the largest component of the Group and this growth pattern is expected to continue. This is the consequence of our 2001 strategic plan to diversify earnings, relocate capital to the UK and expand and diversify our operations.
UK
The UK housing operation recorded a significant increase in output in the first half of 2007. We completed 446 homes in the first half of 2007, compared to 268 homes for the same period in 2006. Private housing profits were €3.6million compared to €1.8million in the first half of 2006. Based on current activity, it is expected that the strong momentum in the number of unit completions will continue in the second half of the year.
The Group's expansion plans continue to progress. Our acquisition of Lancing Homes in February has been immediately earnings enhancing and its integration is complete. Our geographic spread across the North and Midlands of England now extends to 74 sites. This broadened operational base, combined with a product focus within the construction sector which continues to show strong demand, is anticipated to support continued revenue and profit growth going forward.
In addition, recent reviews of planning strategy initiated by the Government present the Group with further opportunities. McInerney recently pre-qualified as one of a small number of private developers eligible to bid directly for funds from the National Affordable Housing Programme (2008-2011). It is anticipated this will boost our UK social housing division in future years.
The commercial division completed 1,842 sq metres of industrial units in the outer London area compared to 2,376 sq. metres in the first half of 2006. A new site was recently secured at Park Royal.
Ireland
The Group's Irish housing business completed 257 homes in the first half of 2007 compared to 362 homes for the same period in 2006. Private housing profits were €12.2million as compared to €10.7million for the first six months of 2006. The Group anticipates unit completions for the full year to be short of 2006 levels and below target for the year.
The fundamentals of the Irish economy and housing market remain strong although consumer caution became more evident as the period progressed, impacted by the tightening of interest rates. We provide quality, affordable homes and have a significant geographic spread throughout the country. Recent new planning permissions secured provide access to new locations offering good demand for well priced housing product.
We are currently active on 28 sites in Ireland and expect this number to increase next year. Despite a slower pace of demand in the Irish market, we anticipate momentum to return and this, coupled with our favourable planning permissions position, should result in our output increasing in 2008.
The Irish contracting business delivered a good performance and the order book on hand is circa €137million. It is anticipated that this business will benefit from the Government's capital programme for housing.
The Group's commercial division, Hillview Developments sold 1,591 sq. metres of industrial units in the first half of 2007.
Spain
The Spanish market has witnessed a general slowdown. In this context, we are not anticipating growth in the short term. Our Spanish operation completed 17 homes in the first half of 2007 compared to 30 homes for the same period in 2006.
Outlook
In line with our strategic plan, our operations are now very broadly spread through England and Ireland offering an affordable product.
Strong margins are being achieved in Ireland and this combined with increased UK volume output and other activities will offset the Irish volume shortfall.
Our UK business has now achieved substantial critical mass and will continue to become a greater contributor to Group earnings growth. The Directors expect a strong full year result from the UK housing division.
We are confident of another good result for the full year.
Ned Sullivan
Chairman