Preliminary Results for 2009
Tuesday, 30 March 2010
MCINERNEY HOLDINGS PLC PRELIMINARY ANNOUNCEMENT
Financial Results for the Year ended 31 December 2009
McInerney Holdings plc (‘the Group' or ‘McInerney') today announces its results for the year ended 31 December 2009.
Overview
The economic and financial backdrop to our business remains challenging. The focus of the Board of Directors (the ‘Board') is to retain the practical support of our funders until a market recovery commences, in addition to cutting costs to a minimum and reviewing all non-cash generative aspects of the business.
Operational Performance
The Group recorded a pre-exceptional loss before tax of €25m in 2009 as compared to a pre-exceptional loss before tax of €47 million in 2008.
The Company undertook a further review of the carrying value of its assets in 2009 and an impairment charge of €156m was taken with the first half results in August 2009. To date, the Group has written down its Irish landbank by over 50% and the UK landbank by almost 40% since mid 2008. This impairment charge does not constitute a cash loss to the Group but has eroded the balance sheet. The write down is a prudent measure and assumes that current trading prices and sales volumes continue for the sales life of the landbank in both markets. A further review of the carrying value of the assets was undertaken with the full year results and no further significant impairment charge has arisen.
No dividend is being proposed for 2009.
Operational Activity
The housing markets in the UK and Ireland were both severely impacted by lack of mortgage availability and poor consumer sentiment. In 2009, the Group completed 744 private and contracting residential units in Ireland and the UK compared to 1,352 in 2008.
The Group completed 582 housing units in the UK in 2009, as compared to 750 in 2008. The 2010 selling season in the UK is showing some signs of improvement and the Group is seeing demand for its social housing units increase. The pipeline of social housing opportunity is now converting into new business in 2010. There are 497 social unit sales on hand as compared to 259 this time last year.
In Ireland, the home building division completed 131 private homes as compared to 296 in 2008. Housing prices have fallen considerably. These low prices are attracting interest and this is beginning to translate into positive demand for good housing at keen prices in key geographical locations. Our housing product specification has been modified on a continuous basis to provide a considerably more affordable quality product aligned to this emerging customer market. The Irish contracting business completed 31 housing units in 2009, as compared to 306 in 2008, reflecting a decrease in local authority housing activity in the market.
Hillview, the commercial division, continued to focus on renting its inventory during 2009. The Spanish business is currently the subject of a reorganisation plan designed to place it on hold until market activity returns.
Credit Facilities
Credit approval has been received for revised banking arrangements for our Irish housing business. The new maturity date will be 31 March 2011. Management is currently engaged in satisfying the preconditions attaching to this facility. Negotiations regarding an extension of our UK banking arrangements are ongoing. The Group's UK revolving credit facility has a maturity date of 31 March 2010 and this has now been extended by one month. The Group continues to be in breach of certain of its Irish and UK banking covenants. Accordingly, the Group continues to depend on the support of its principal banks for its ongoing operational activities. Interim funding measures are in place.
The company today also announces that it is undertaking a review of its strategic alternatives including, inter alia, raising new capital and a restructuring of its current financing commitments. To this end, Goldman Sachs International has been retained as financial advisor to the Group.
A restructuring or new equity raise may involve significant dilution of existing equity holders.
A further update on progress will be available at the AGM on the 12th May 2010.
Outlook
The Board remains focused on continuing to reduce costs and generate cash while reviewing strategies that can benefit the operational capacity and performance of the Group in this continuingly challenging economic environment. A stable funding platform is fundamental for the Group's operations and this is the key priority for the Board and senior management team.
Ned Sullivan
Chairman
ENDS
FOR INFORMATION:
Siobhan Molloy Tel: +353 1 6760168
Weber Shandwick or +353 868175066
Click here for full details: Preliminary Announcement of Financial Results For Year Ended 31 December 2009 (PDF 104KB)