AGM Statement

RNS Number : 5280U

McInerney Holdings PLC

15 May 2008

 

15th May 2008 MCINERNEY HOLDINGS PLC AGM STATEMENT McInerney Holdings plc ('the Group') is holding its Annual General Meeting at 12 noon today in Dublin where the following comments are being made. This statement constitutes the Group's Interim Management Statement for the period to 15 May 2008 as required by the EU's Disclosure and Transparency Directive. The Group is currently facing challenging conditions in both its main markets in the UK and Ireland as a result of a more restrictive credit climate and cautious consumer sentiment. The management team are focusing on prudently managing the business through this operating environment. While the current circumstances prevail, the Directors are taking appropriate steps to deal with the challenging conditions and have put in place measures to ensure the Group maximises its position when the positive fundamental dynamic of the markets return.  Overview Since our Preliminary Results Announcement in early March, market conditions in the UK have weakened materially. The supply of new mortgages has been significantly reduced which is limiting potential house buyers' access to funds to purchase homes. This situation shows little sign of a quick recovery. In tandem, Ireland is beginning to experience a tightening of mortgage availability for the first time in many years. These tightening banking conditions have been sparked by the international credit crunch and global economic uncertainty. Until we see a reversal of these situations, which at this point is not possible to forecast, we anticipate housing output in both markets to be constrained and to run behind the underlying level of demand. Accordingly, the Board deemed it appropriate to take strong cost reduction actions and a programme of cost saving measures across the Group is being undertaken. UK  In the UK, in addition to lending criteria continuing to tighten, negative sentiment caused by conditions in the international financial markets has affected consumer confidence. Our sales on hand are running at 17% less than this time last year. Sales are taking longer to complete due to lengthened timescales for people seeking to secure mortgage finance.  We anticipate a lower level of overall unit completions in the UK in 2008 compared to 2007, but at this stage the full year is difficult to predict. Accordingly, production is being curtailed and new site starts delayed. Our immediate objective is to seek growth from our affordable and social housing operations. This area of our business is performing strongly. Notwithstanding the current challenging conditions, the UK housing market continues to experience a shortage of houses with an estimated 250,000 new homes needed per annum. The UK Government is seeking measures to increase the pace of development and improve financial liquidity in the banking sector. Thus, we anticipate the resumption of a growth path in our private housing division when the current uncertainties over mortgage supply are resolved and more favourable market conditions are reasserted. Our business will be structured to swiftly upscale operations to take advantage of opportunities at that time. Ireland In Ireland, activity levels in late 2007 and early 2008 were at exceptionally low levels and cost saving measures have been in effect since 2007. Our order book is some 18% less than at the same period last year and we expect our Irish output to be behind last year's level. However, we are encouraged by the fact that since Easter the footfall of visitors has improved.   The current overhang of housing stock is being worked through on an industry wide basis. In addition, the supply response of the home building industry in considerably reducing output, which is currently running at less than one-third of previous levels, will restore the fundamentals of house building in Ireland. It is estimated that over 40,000 newly built homes are required for the Irish market annually. Price incentives together with the increases in mortgage interest relief and wages have improved the affordability of homes in Ireland. It is our view that the price correction in the market has now taken place and we expect more favourable market conditions to resume once mortgage availability and consumer sentiment improve. Outlook Our focus will be on maintaining an adequate sales rate through this period and preserving our broad operating capability to ensure that we are in a position to resume growth when mortgage availability returns. We expect to record a profit for the year as a whole, with a loss in the first half of 2008. The result for the full year will be dependent on the trading conditions we experience from now to year end. Demand for housing in both markets will re-emerge and our business structure post rationalisation will enable the Group to rapidly take advantage of the opportunities at that time. Our view remains that our business model offers several advantages when there is a resumption of steady market conditions in both our main markets. This will allow the Group to continue on a strong growth path in the medium term. ENDS FOR INFORMATION: Siobhan Molloy            Tel:     [phone] Weber Shandwick                00 353 86 817 50 66

This announcement has been issued through the Companies Announcement Service of

the Irish Stock Exchange.

 

END

 

 

ISEFKPKKKBKDPPD