Final Results etc
McInerney Holdings PLC
26 February 2007
McInerney Holdings PLC
26 February 2007
NOT FOR RELEASE, PUBLICATION, TRANSMISSION, OR DISTRIBUTION IN WHOLE OR IN PART,
DIRECTLY OR INDIRECTLY IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, OR
JAPAN.
McInerney Holdings PLC
('McInerney' or the 'Company')
Preliminary Announcement of Financial Results for the Year Ended 31 December
2006
Acquisition of Lancing Homes Limited
and
1 for 5 Rights Issue at €13.00 per share
Ireland, Dublin: McInerney Holdings plc today provides a Preliminary
Announcement of Financial Results for the year ended 31 December 2006, announces
the acquisition of Lancing Homes Limited ('Lancing') for £16.25 million (plus
the assumption of £3 million of debt) and announces a 1 for 5 Rights Issue at
€13.00 per share.
Barry O'Connor, Managing Director of McInerney, commented:
'Our businesses in Ireland, the UK and Spain have performed well in 2006 and
strong progress was achieved across all regions. The Group is well positioned
going into 2007.
We now have a significant operational base in the UK as a result of our
acquisition strategy, continued investment in our land bank and development of
our senior management team. Operationally, we have achieved our objective of
growing our UK home building division to a scale similar to that of our existing
Irish operations.
The acquisition of Lancing further expands our land bank capacity and
consolidates our position in the North East of England.
In order to facilitate our continued growth in the UK, we believe it is now
appropriate to raise additional funds from shareholders to strengthen the
Group's capital base.'
Financial Results for the Year Ended 2006
Key Highlights
• Profit from operations up 22%
• Pre tax profits up 16%
• Basic earnings per share increased by 18%
• Total dividend per Ordinary Share increased by 17%
• UK unit output increased by 49%
• Total private and contracting residential completions up
18%
The Directors are pleased to report an increase in basic earnings per share of
18% to 145.85 cent, as compared to 124.01 cent in 2005. Pre-tax profits
increased by 16% to €58.0 million compared to the 2005 result of €50.1 million.
Profit after tax for the year was €48.6 million compared with €41.1 million for
the full year in 2005, an increase of 18%.
Dividend
The Board recommends a final dividend for the year ended 31 December 2006 of 18
cent per share (2005: 15 cent), up 20%, payable to all shareholders on the
register at the close of business on 16 March 2007. Subject to confirmation at
the Annual General Meeting on 9 May 2007, this final dividend will be paid to
shareholders on 11 May 2007. This brings the total dividend for the year to 28
cent (2005: 24 cent), an increase of 17%. For the avoidance of doubt, New
Ordinary Shares issued pursuant to the Rights Issue will not carry any
entitlement to the final dividend for the year ended 31 December 2006. The
dividend cover remains in line with the Group's stated target of 5 times basic
earnings per share.
Operational Highlights
Strong sales and profitability were achieved across the Group's three core
regions of Ireland, the UK and Spain. The Group completed a total of 2,372
private and contract residential units in 2006 as compared to 2,013 in 2005, an
increase of 18%. In particular, the UK division's growth strategy gained
significant momentum and operationally is now similar in scale to the Irish home
building division. The Group undertook two acquisitions in the UK in 2006 which
extended the division's regional spread in the North and Midlands of England.
The Group's UK operations recorded a 49% volume increase in 2006. The Group has
achieved a comprehensive regional spread of housing operations across Ireland
and the UK. Both the Irish and UK markets continued to demonstrate strong
demand for product consistent with McInerney's portfolio. Hillview continued to
concentrate on its development plans in both the Irish and UK markets and
achieved considerable success in the UK.
Ireland: The Irish house building operation recorded a favourable result with
turnover of €261 million and operating profit of €51 million. The increase was
driven by an improvement in average unit pricing to €285,000 which offset the
reduction in 2006 completions to 1,025 units (2005: 1,138). The Irish land bank
comprised 4,788 plots as at 31 December 2006, of which 1,671 plots had full
planning permission and a further 1,427 plots were in the planning process. The
Group also held further land with potential for 1,240 units for development in
the longer term.
The Group's commercial division, Hillview Developments completed 5,632 sq metres
of industrial units in Ireland in 2006, achieving turnover of €11 million (2005:
€21 million). This compares to 14,217 sq metres of industrial units in 2005.
The Irish contracting business secured significant growth in 2006 with turnover
of €93 million achieved on 309 housing unit completions. The order book on hand
is €156 million compared to €129 million a year ago.
UK: Our objectives to scale up our UK operations and extend our presence across
the North of England were realised in 2006. Operating profit of €22 million was
achieved on turnover of €240 million. Substantial progress was accomplished in
increasing unit output with some 980 private housing units completed, compared
to 658 in 2005, representing an increase of 49%. Average unit pricing
progressed by 8% to €206,000 (£140,000). As per the Board's stated growth
strategy, the UK and Irish divisions are now of equivalent operational scale.
The Group is an expanding home builder in the North of England and the capital
raising announced today is intended to assist our UK business to achieve further
growth going forward.
The acquisitions of Augusta Developments and Bowey Homes in 2006, gave the Group
access to new regions and product specialities. Augusta's expertise in social
housing gave the Group a presence in the South Midlands and access to a new
market of housing demand. The acquisition of Bowey added to the Group's
landbank and market presence in the North Eastern region. In addition, strategic
organic expansions were undertaken through selected land purchases. In tandem,
the senior management team was augmented to take best advantage of the Group's
increased scale of operations and regional spread. The Group has a progressive
land bank policy, controlling 3,644 plots in the UK as at 31 December 2006, of
which 3,222 have detailed or outline planning. In addition, the Group held
options on longer term strategic land with potential for over 900 units.
The commercial operations, Hillview Developments, also delivered a solid
performance with the completion of 7,476 sq metres of industrial/commercial
units in its UK operations compared to 1,122 sq metres in 2005.
Spain: The Group's Spanish operations completed 53 units in 2006 compared to 35
units in 2005. Operating profit of €4 million on turnover of €30 million was
achieved. Average unit prices were €505,000. Work has commenced on a new
freehold site of 45 units at El Cortesin, a golf urbanisation adjacent to
Estepona. A further site with planning permission for 80 units has recently
been secured at La Cala, near Mijas.
Outlook
The fundamentals and dynamics affecting both the Irish and UK housing markets
offer good potential for the Group going forward. Each division is
strategically positioned with an advantageous geographic footprint and an
appropriate housing portfolio for its target segment. Further benefits should
arise from the full year impact of the businesses recently acquired. We look
forward to continued progress in the year ahead.
Acquisition of Lancing
• House builder specialising in affordable private homes in
the Newcastle and Gateshead regions of North East England.
• Immediately earnings enhancing.
• Brings additional land opportunities in the region and
diversifies product portfolio.
• Recorded profit before tax of £1.5 million for the
financial year ended 28 February 2006.
• Consideration of £16.25 million payable in cash on
completion, plus the assumption of £3 million of debt.
• Expands land bank in the North East of England by 413
units across 4 sites.
• Average price of units is £154,000.
• Three of the four sites are already under construction and
expected to contribute to Group unit completions and earnings from quarter one
of 2007.
Rights Issue
• Approximately €86.8 million (gross) to be raised through a
fully underwritten Rights Issue.
• 6,676,114 New Ordinary Shares to be issued at €13.00 per
share, representing approximately 16.7%, of the enlarged issued share capital.
• The Issue Price of €13.00 per share represents a discount
of 22.4% to the closing price of €16.75 per Ordinary Share on 23 February 2007,
the last dealing day prior to this announcement and a 21.5% discount to that
closing price adjusted for the final dividend announced today.
• Rights Issue fully underwritten by The Governor and
Company of the Bank of Ireland.
• IBI Corporate Finance is acting as sponsor and financial
adviser to McInerney in relation to the Rights Issue.
• The Executive Directors have each irrevocably committed to
take up all their rights under the Rights Issue in respect of their beneficial
interests in Existing Ordinary Shares over which they have control, representing
approximately 11%, of the issued share capital.
• Net proceeds of approximately €83.8 million to be used to
acquire Lancing and to provide capital to expand the Group's land bank in the
UK.
• The Rights Issue is conditional, inter alia, upon: (a) the
Underwriting Agreement having become unconditional in all respects (save for the
condition relating to Admission) and not having been terminated in accordance
with its terms prior to Admission; and (b) Admission of the Nil Paid Rights
having become effective by not later than 8.00 a.m. on 27 February 2007. Davy
is to arrange the sub-underwriting of the Rights Issue.
• A Prospectus containing full details of the Rights Issue
and an accompanying Provisional Allotment Letter which sets out details of each
Qualifying Shareholder's Basic Entitlement will be posted to Shareholders today.
Enquiries:
Telephone:
IBI Corporate Finance Limited
+353 1 637 7800
Tom Godfrey
Brian Farrell
Media:
Weber Shandwick
+353 1 676 0168
Siobhan Molloy
+353 86 817 5066
This summary should be read in conjunction with the detailed announcement which
follows. Section 7 of the full announcement contains the definitions of certain
terms used in this summary and the full announcement. This announcement does not
constitute, or form part of, an offer to sell, or the solicitation of an offer
to subscribe for or buy any of the New Ordinary Shares to be issued in
connection with the Rights Issue.
The Directors of McInerney have taken all reasonable care to ensure that the
information contained in this announcement is, to the best of their knowledge,
in accordance with the facts and contains no omission likely to affect the
import of such information.
IBI Corporate Finance Limited, a subsidiary of The Governor and Company of the
Bank of Ireland (which is regulated in Ireland by the Financial Regulator), is
acting exclusively for McInerney, as sponsor and financial adviser in relation
to the Rights Issue and no one else in relation to the Rights Issue and will not
be responsible to anyone other than the Company for providing the protections
afforded to clients of IBI Corporate Finance or for advising any other person in
relation to the Rights Issue or any other matter referred to in this
announcement.
This announcement is not for release, publication or distribution, directly or
indirectly, in whole or in part, in or into the United States, Canada,
Australia, Japan or their respective territories or possessions or any other
jurisdiction where it would be unlawful to do so ('Excluded Territories').
The New Ordinary Shares, the Nil Paid Rights and the Fully Paid Rights have not
been, nor will they be, registered under the Securities Act or under the
securities laws of any state of the United States or any other state, province
or territory of the Excluded Territories and they may not, subject to certain
limited exceptions, be offered or sold directly or indirectly within the
Excluded Territories or to any persons in the Excluded Territories. This
announcement does not constitute or form part of any offer or invitation to sell
or issue, or any solicitation of any offer to buy or subscribe for, New Ordinary
Shares, Nil Paid Rights or Fully Paid Rights in any jurisdiction in which such
offer or solicitation is unlawful.
Prices and values of, and income from, shares may go down as well as up and an
investor may not get back the amount invested. It should be noted that past
performance is no guide to future performance. Persons needing advice should
consult an independent financial adviser.
Certain statements made in this announcement constitute forward-looking
statements. Such statements are based on current expectations and, by their
nature, are subject to a number of risks and uncertainties that could cause
actual results and performance to differ materially from any expected future
results or performance expressed or implied by the forward-looking statement.
Furthermore, these forward-looking statements speak only as of the date of this
announcement.
The information and opinions contained in this announcement are subject to
change without notice and the Company assumes no responsibility or obligation to
update publicly or review any of the forward-looking statements contained
herein.
Preliminary Financial Results for the Year Ended 31 December 2006
MCINERNEY HOLDINGS PLC
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2006
2006 2005
€'000 €'000
Continuing Operations
Revenue 630,064 489,098
Cost of Sales (507,484) (394,478)
Gross Profit 122,580 94,620
Administrative Expenses (49,303) (33,458)
Share of Results from Joint Ventures 1,064 (21)
Profit from Operations 74,341 61,141
Investment Income 570 421
Finance Costs (16,913) (11,502)
Profit Before Tax 57,998 50,060
Tax (9,377) (8,963)
Profit Attributable to Equity Holders of the Parent 48,621 41,097
Earnings Per Share
From Continuing Operations
Basic 145.85c 124.01c
Diluted 140.62c 118.66c
MCINERNEY HOLDINGS PLC
CONSOLIDATED BALANCE SHEET
As at 31 December 2006
2006 2005
€'000 €'000
Non-Current Assets
Goodwill 49,485 22,390
Property, Fixtures & Equipment 7,544 6,188
Investment Property - 183
Interests in Joint Ventures 3,877 4,660
Deferred Tax Assets 1,696 318
62,602 33,739
Current Assets
Inventories 442,093 333,241
Trade & Other Receivables 68,230 52,044
Cash and Cash Equivalents 84,382 62,056
Assets Classified as held for Sale 1,507 2,750
596,212 450,091
Total Assets 658,814 483,830
Current Liabilities
Trade & Other Payables 142,178 126,132
Retirement Benefit Obligation 345 422
Tax Liabilities 19,225 15,795
Provisions 2,500 2,200
Obligations under Finance Leases 398 395
Bank Loans and Overdrafts 42,106 106,058
206,752 251,002
Net Current Assets 389,460 199,089
Non-Current Liabilities
Bank Loans 238,230 66,990
Retirement Benefit Obligation 1,039 1,358
Deferred Tax Liabilities 2,296 2,303
Provisions 4,007 3,301
Other Payables 4,531 3,649
Obligations under Finance Leases 477 412
250,580 78,013
Total Liabilities 457,332 329,015
Net Assets 201,482 154,815
EQUITY
Share Capital 4,173 4,145
Capital Conversion Reserve Fund 62 62
Share Premium Account 17,484 17,180
Equity Reserve 2,328 674
Hedging & Translation Reserves 2,504 (1,524)
Retained Earnings 174,931 134,278
201,482 154,815
Total Equity and Liabilities 658,814 483,830
MCINERNEY HOLDINGS PLC
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2006
2006 2005
€'000 €'000
Profit from Operations 74,341 61,141
Adjustments for:
Depreciation 2,340 1,952
Share of Results from Joint Ventures (1,064) 21
Provision for Fair Value of Share based Payments 591 376
Loss/(Profit) on Disposal of Tangible Assets 10 (48)
Pension Service Costs 420 281
Increase in Provisions 1,006 1,109
Operating Cash Flows before Movements in Working Capital 77,644 64,832
Increase in Inventories (66,948) (63,267)
Increase in Receivables (7,595) (3,233)
Increase in Payables 5,423 8,643
Cash Generated by Operations 8,524 6,975
Taxation Paid (12,148) (7,625)
Interest Paid (16,056) (10,747)
Net Cash from Operating Activities (19,680) (11,397)
Investing Activities
Interest Received 187 134
Dividends Received from Joint Ventures 1,976 2,000
Loans Advanced to Joint Ventures (5,030) (9,270)
Loans Repaid from Joint Ventures 351 5,267
Proceeds on Disposal of Property, Fixtures & Equipment 250 195
Purchases of Property, Fixtures & Equipment (3,157) (1,735)
Employer Contributions to Pension Scheme (346) (421)
Acquisition of Subsidiary (38,133) -
Net Cash Used in Investing Activities (43,902) (3,830)
Financing Activities
Dividends Paid (8,343) (6,629)
Share Capital Subscribed 332 72
Repayments of Borrowings (106,929) (80,183)
Repayments of Obligations under Finance Leases (630) (460)
New Bank Loans Raised 198,789 135,894
Increase in Bank Overdrafts 1,047 258
Net Cash from Financing Activities 84,266 48,952
Net Increase in Cash and Cash Equivalents 20,684 33,725
Cash and Cash Equivalents at Beginning of Year 62,056 26,670
Effect of Foreign Exchange Rate Changes 1,642 1,661
Cash and Cash Equivalents at End of Year
Bank Balances and Cash 84,382 62,056
MCINERNEY HOLDINGS PLC
NOTES TO THE ACCOUNTS
For the year ended 31 December 2006
Business and geographical segments
The Group operates in three markets, Ireland, the UK and Spain. The principal
activities of the Group are Private Housing, Contracting, Commercial Development
and Leisure. The Leisure activities are divided into Club Management and
Freehold Sales. Land sales are also part of each business segment. These
divisions are the basis on which the Group reports its primary segment
information.
REVENUE 31 December 2006 31 December 2005
External Inter-Segment Total External Inter-Segment Total
Sales Sales €'000 Revenue Sales Sales Revenue
€'000
€'000 €'000 €'000 €'000
Ireland :
Private Housing 257,621 - 257,621 244,575 - 244,575
Developed Sites & Land 3,189 - 3,189 1,951 - 1,951
Construction Contracts 93,288 22,046 115,334 47,293 16,615 63,908
Commercial 11,365 - 11,365 21,134 - 21,134
Commercial Land 2,860 - 2,860 2,667 - 2,667
368,323 22,046 390,369 317,620 16,615 334,235
UK :
Private Housing 198,244 - 198,244 123,087 - 123,087
Developed Sites & Land 8,788 - 8,788 13,543 - 13,543
Construction Contracts 17,128 - 17,128 17,596 952 18,548
Commercial 15,457 - 15,457 2,026 - 2,026
239,617 - 239,617 156,252 952 157,204
Spain :
Club Management 3,309 - 3,309 3,461 - 3,461
Leisure Freehold 26,762 - 26,762 12,446 - 12,446
Developed Sites & Land - - - 751 - 751
30,071 - 30,071 16,658 - 16,658
Eliminations (7,947) (22,046) (29,993) (1,432) (17,567) (18,999)
Total Revenue 630,064 - 630,064 489,098 - 489,098
Inter-segment sales are tendered for on an arm's length basis to ensure cost
efficiencies. The contract sum is agreed at cost plus a commercial margin.
MCINERNEY HOLDINGS PLC
NOTES TO THE ACCOUNTS (CONT'D)
For the year ended 31 December 2006
SEGMENT RESULTS 31 December 2006 31 December 2005
Group Joint Total Group Joint Total
Subsidiaries Segment Subsidiaries Segment
Ventures Ventures
€'000 €'000 €'000 €'000
€'000 €'000
Ireland :
Private Housing 49,347 82 49,429 37,686 (21) 37,665
Developed Sites & Land 1,338 - 1,338 749 - 749
Construction Contracts 816 - 816 1,564 - 1,564
Commercial 2,531 674 3,205 4,572 - 4,572
Commercial Land 812 - 812 275 - 275
54,844 756 55,600 44,846 (21) 44,825
UK :
Private Housing 15,237 (4) 15,233 12,447 - 12,447
Developed Sites & Land 5,290 - 5,290 4,135 - 4,135
Construction Contracts 577 - 577 361 - 361
Commercial 1,152 312 1,464 153 - 153
22,256 308 22,564 17,096 - 17,096
Spain :
Club Management 936 - 936 1,295 - 1,295
Leisure Freehold 3,248 - 3,248 3,500 - 3,500
Developed Sites & Land - - - 260 - 260
4,184 - 4,184 5,055 - 5,055
Total Segment Results 81,284 1,064 82,348 66,997 (21) 66,976
A summary of the above results by activity is as follows :
Private Housing 64,584 78 64,662 50,133 (21) 50,112
Developed Sites & Land 7,440 - 7,440 5,419 - 5,419
Construction Contracts 1,393 - 1,393 1,925 - 1,925
Commercial 3,683 986 4,669 4,725 - 4,725
Club Management 936 - 936 1,295 - 1,295
Leisure Freehold 3,248 - 3,248 3,500 - 3,500
Total Segment Results 81,284 1,064 82,348 66,997 (21) 66,976
Common Costs (8,007) (5,835)
Profit from Operations 74,341 61,141
Investment Income 570 421
Finance Costs (16,913) (11,502)
Profit before Tax 57,998 50,060
Tax (9,377) (8,963)
Profit after Tax 48,621 41,097
MCINERNEY HOLDINGS PLC
NOTES TO THE ACCOUNTS (CONT'D)
For the year ended 31 December 2006
BALANCE SHEET 31 December 2006 31 December 2005
Assets Liabilities Net Assets Assets Liabilities Net Assets
€'000 €'000 €'000 €'000 €'000 €'000
Ireland :
Private Housing 212,607 (100,094) 112,513 173,004 (89,689) 83,315
Commercial 10,748 (1,560) 9,188 9,397 (857) 8,540
223,355 (101,654) 121,701 182,401 (90,546) 91,855
UK :
Private Housing 257,711 (47,353) 210,358 161,287 (32,071) 129,216
Commercial 24,818 (1,045) 23,773 24,899 (523) 24,376
282,529 (48,398) 234,131 186,186 (32,594) 153,592
Spain :
Club Management 9,695 (4,391) 5,304 8,741 (4,022) 4,719
Leisure Freehold 56,373 (15,861) 40,512 43,045 (19,112) 23,933
66,068 (20,252) 45,816 51,786 (23,134) 28,652
Total Operating Assets/ 571,952 (170,304) 401,648 420,373 (146,274) 274,099
(Liabilities)
Total Cash/(Bank 84,382 (280,336) (195,954) 62,056 (173,048) (110,992)
Borrowings)
Unallocated Assets/ 2,480 (6,692) (4,212) 1,401 (9,693) (8,292)
(Liabilities)
658,814 (457,332) 201,482 483,830 (329,015) 154,815
Further details of the Lancing Acquisition
McInerney has today unconditionally contracted to purchase Lancing Homes
Limited, a housebuilder based in South Shields, Gateshead in the North East of
England for £16.25 million in cash, payable on completion plus the assumption of
£3 million of debt. The acquisition will be financed from the proceeds of the
Rights Issue.
Lancing specialises in low cost housing and apartments in Newcastle and
Gateshead. The company reported profit before tax of £1.5 million for the
financial year ended 28 February 2006 on gross assets of £12 million. The
acquisition provides McInerney with additional land bank capacity in the North
Eastern region.
Lancing holds four sites (comprising 413 units), of which three are in
construction. Unit completions and contribution to Group earnings are
anticipated to commence in the first quarter of 2007.
Further details of the proposed Rights Issue
1. Introduction
The Board of McInerney announces today that it proposes to raise approximately
€83.8 million (net of expenses of approximately €3.0 million) by means of a
Rights Issue of 6,676,114 New Ordinary Shares, representing approximately 16.7
per cent. of the enlarged issued share capital. The Rights Issue has been
underwritten in full by The Governor and Company of the Bank of Ireland. IBI
Corporate Finance is acting as sponsor and financial adviser to McInerney in
relation to the Rights Issue.
The Rights Issue will be made to Qualifying Shareholders on the basis of 1 New
Ordinary Share for every 5 Existing Ordinary Shares held at close of business on
the Record Date, and so in proportion to the number of Existing Ordinary Shares
then held.
The Rights Issue Price of €13.00 per New Ordinary Share represents a 22.4 per
cent. discount to the closing price of €16.75 per Existing Ordinary Share on 23
February 2007, the latest practicable date before the announcement of the Rights
Issue and a 21.5 per cent. discount to that closing price adjusted for the final
dividend announced today.
The Executive Directors have irrevocably committed to take up their rights under
the Rights Issue in respect of all of their beneficial interests in Existing
Ordinary Shares over which they have control, representing approximately 11 per
cent. of the issued share capital.
The net proceeds of the Rights Issue are to be used to acquire Lancing and to
provide capital to expand the Group's land bank development in the UK.
2. Information on the Company
McInerney is one of Ireland's leading property development companies, with
divisions specialising in various aspects of the construction market including
construction of private houses, trading in developed sites and land, development
of residential land for third parties and under joint venture, contracting for
third parties and the development of commercial property.
The Group is a long established home builder in Ireland, and an expanding home
builder in the North and Midlands of England. Home building operations
concentrate on quality homes, primarily aimed at the entry level segment of the
market. McInerney has recently expanded into new niche segments such as
affordable housing schemes and golf based residential schemes. The Group also
undertakes contracting and industrial/commercial activities in Ireland and the
UK and leisure projects in Spain.
3. Background to and reasons for the Rights Issue
Since listing on the Irish Stock Exchange and the London Stock Exchange in 1997,
McInerney has grown annual turnover from €66 million in 1997 to €630 million in
2006. Total profits after tax in the period from 1997 to 2006 were €214
million, from which €28 million has been declared in dividends with the balance
retained to support development. Over that period, the number of annual
housing completions grew from 486 units from 27 sites solely in Ireland, to
2,372 units from 96 sites in Ireland, the UK and Spain.
The Group's industrial/commercial business, Hillview Developments Limited, grew
from a start-up in 1997 to a business developing over 13,000 sq metres of
commercial property in Ireland and the UK in 2006. The contracting business in
Ireland grew its turnover from €12 million in 1997 to €93 million in 2006.
At the 1998 year end, the landbank under the control of the Group was
approximately 3,100 units, solely in Ireland. This had increased to in excess
of 9,600 units by the 2006 year end, of which approximately 6,000 are in Ireland
and approximately 3,600 are in the UK.
The Company outlined a strategy for expansion in its 2002 annual report. The
primary objective of this strategy was to achieve substantial growth in its UK
and Spanish businesses, whilst continuing to grow its Irish development
business, resulting in the creation of a balance in size and profit generation
between operations within the subsequent five year period. To date, significant
progress has been made with an increasing proportion of earnings generated
outside of Ireland. McInerney continues to implement this strategy and the
Board believes the Company is on course to achieve its objectives.
The business in Ireland, supported by a positive economic backdrop, continues to
perform solidly. Opportunities to carry on the roll-out of the Group's existing
business model of affordable quality homes and to establish developments in new
locations across the country continue to present themselves. The Group
continues to develop quality leisure houses in premium locations in Spain in
addition to a leisure freehold business, while the management team in the UK has
been focussed on site acquisition opportunities and selective corporate
acquisitions with strong land banks to develop its geographic spread.
Having experienced strong organic growth and successfully integrated the
acquisitions of William Hargreaves, Charlton Homes, Alexander Developments and
Augusta Developments, in conjunction with the recent acquisition of Bowey Homes,
the Group now has an established business platform across the North and Midlands
of England. The Board believes that the Group's significant investment in
operating infrastructure and geographic expansion leaves it well placed to
accelerate the development of its UK division.
Consistent with its stated strategy, McInerney today announced the acquisition
of Lancing Homes, a housebuilder based in South Shields, Gateshead in the North
East of England for £16.25 million in cash, payable on completion plus the
assumption of £3 million debt outstanding. The acquisition will be financed
from the proceeds of the Rights Issue. Lancing specialises in low cost housing
and apartments in Newcastle and Gateshead. The company reported profit before
tax of £1.5 million for the financial year ended 28 February 2006 on gross
assets of £12 million. The acquisition provides McInerney with additional land
bank capacity within its North Eastern region. Lancing holds four sites
(comprising 413 units), of which three are in construction. Unit completions
and contribution to Group earnings are anticipated to commence in the first
quarter of 2007.
During the period of expansion since the Company's flotation in 1997, McInerney
has had recourse to shareholders for additional capital on only one occasion
(March 1999) when a total of €9.7 million (gross) was raised through a placing
and open offer. The Board believes it is now appropriate to raise additional
funds from shareholders to strengthen the Group's balance sheet by means of the
Rights Issue.
The larger capital base of the Group following the Rights Issue should
facilitate the continued expansion of the business and also enable McInerney to
raise additional bank debt facilities, thus augmenting the Group's capacity to
acquire sites and further accelerate growth. Whilst the level of such
incremental debt will be dependent on prevailing market conditions at the time
of sourcing and development of sites, the Company envisages such debt will be of
a similar profile and gearing level to that currently employed by the Group.
A portion of the funds raised will be used to acquire Lancing. Whilst McInerney
will continue to grow the Irish business, based on the current pipeline of
opportunity, it is anticipated that the primary use of the net proceeds of the
Rights Issue will be to expand its land bank in the UK. This will be achieved
through the acquisition of new sites within the Company's existing regions,
whilst considering further acquisition opportunities should they present
themselves.
A combination of encouraging demographics, high employment and favourable
economic conditions are contributing to steady market demand in each of the
Group's core divisions (Ireland and the UK). This is supported by a depth of
experienced management and continued brand development in the UK. McInerney
continues to see opportunities for extended business growth and the Board
believes the Rights Issue will put the Group in a stronger position to take
advantage of such opportunities.
4. Principal terms of the Rights Issue
McInerney is proposing to raise approximately €83.8 million (net of expenses of
approximately €3.0 million) by the issue of 6,676,114 New Ordinary Shares at a
price of €13.00 per New Ordinary Share. The Issue Price reflects a discount of
22.4 per cent. to the closing price of €16.75 per Ordinary Share on 23 February
2007, the latest practicable date prior to issue of this Prospectus and a 21.5
per cent. discount to that closing price adjusted for the final dividend
announced today. The New Ordinary Shares will be offered to Qualifying
Shareholders on the basis of 1 New Ordinary Share for every 5 Existing Ordinary
Shares held. If a Qualifying Shareholder does not fully take up the offer of
New Ordinary Shares, his shareholding will be diluted by 16.7 per cent. as the
Rights Issue has been fully underwritten.
The New Ordinary Shares will, when issued and fully paid, rank equally in all
respects with the Existing Ordinary Shares, including the right to receive all
dividends or distributions made, paid or declared after the date of this
announcement (except for the avoidance of doubt, the final dividend in relation
to the year ended 31 December 2006 announced today). Entitlements to New
Ordinary Shares will be rounded down and the aggregated fractions will not be
allotted to McInerney Shareholders but will be sold for the benefit of the
Group.
Application has been made to the Irish Stock Exchange and the UK Listing
Authority for the New Ordinary Shares (nil and fully paid) to be admitted to
their respective Official Lists. Application has also been made to the Irish
Stock Exchange and the London Stock Exchange for the New Ordinary Shares to be
admitted to trading on their respective main markets for listed securities. It
is expected that admission of the New Ordinary Shares (nil paid) to the Official
Lists and to trading will become effective and that dealings will commence, nil
paid, in the New Ordinary Shares at 8.00 a.m. on 27 February 2007. The latest
time and date for acceptance and payment in full for the New Ordinary Shares to
be issued pursuant to the Rights Issue by holders of Nil Paid Rights is expected
to be 11.00 a.m. on 20 March 2007.
The Rights Issue is conditional upon the satisfaction of all conditions to the
Underwriting Agreement and Admission.
5. Expected Timetable for the Rights Issue
Event Time and Date
Record Date for the Rights Issue 6.00 p.m. on 21 February 2007
Despatch of Prospectus 26 February 2007
Despatch of Provisional Allotment Letters (to Qualifying Non-CREST 26 February 2007
Shareholders only)
Dealings in New Ordinary Shares, nil paid, to commence on the Irish 8.00 a.m. on 27 February 2007
Stock Exchange and the London Stock Exchange ('Ex-Rights Date')
Nil Paid Rights credited to stock accounts in CREST of Qualifying CREST as soon as practicable after 8.00
Shareholders only a.m. on 27 February 2007
Recommended latest time for requesting withdrawal of 4.30 p.m. on 14 March 2007
Nil Paid Rights from CREST
Ex dividend date for final dividend in respect of the year ended close of business on 14 March 2007
31 December 2006
Recommended latest time for depositing renounced 3.00 p.m. on 15 March 2007
Provisional Allotment Letters into CREST
Latest time and date for splitting Provisional Allotment Letters, 3.00 p.m. on 15 March 2007
nil or fully paid
Record date for final dividend in respect of the close of business on 16 March 2007
year ended 31 December 2006
Latest time for registration of renunciation of Provisional 11.00 a.m. on 20 March 2007
Allotment Letters, fully paid
Latest time and date for acceptance and payment in full 11.00 a.m. on 20 March 2007
Admission and commencement of dealings in New Ordinary Shares, 8.00 a.m. on 21 March 2007
fully paid
CREST members accounts credited in respect of New Ordinary Shares by 21 March 2007
in uncertificated form
Despatch of share certificates for New Ordinary Shares in by 28 March 2007
certificated form (Qualifying Non-CREST Shareholders only)
The dates set out in the 'Expected Timetable for the Rights Issue' and mentioned
throughout this announcement may be adjusted by McInerney, in which event
details of new dates will be notified, via a Regulatory Information Service, to
the Irish Stock Exchange, the UK Listing Authority and the London Stock
Exchange. Please note that any Existing Ordinary Shares sold prior to close of
business on 26 February 2007, the Business Day before the Existing Ordinary
Shares will trade ex-rights, will be sold to the purchaser with the right to
receive entitlements under the Rights Issue.
6. Glossary of Technical Terms
The following explanations are not intended as technical definitions, but rather
are intended to assist the reader in understanding certain terms used in this
announcement:
'completion' means a unit in relation to which building work is
substantially complete and ownership has been transferred to
its purchaser and 'completed units' and similar terms should
be construed accordingly;
'held under option' in relation to land, means the Group holds a legally binding
option to purchase that land;
'land bank' means a plot of land owned, controlled or licenced by the
Group;
'social and affordable housing' means housing units which are defined as social or affordable
units under the Planning and Development Act 2000 in Ireland
and section 106 of the Town & Country Planning Act, 1990 in
the UK;
'unit' means a single residential dwelling within a development.
7. Definitions
The following definitions apply throughout this announcement unless the context
otherwise requires or unless it is otherwise specifically provided:
'Admission' the admission of the New Ordinary Shares to the Official
Lists becoming effective in accordance with the Listing
Rules, and the admission of the New Ordinary Shares to
trading on the respective main markets for listed securities
of the Irish Stock Exchange and the London Stock Exchange
becoming effective in accordance with the Listing Rules of
the Irish Stock Exchange and the LSE Admission and Disclosure
Standards respectively;
'Alexander' or 'Alexander Developments' Alexander Developments (North East) Limited;
'Augusta' or 'Augusta Developments' Augusta Developments Limited;
'Australia' the Commonwealth of Australia, its states, territories and
possessions;
'Basic Entitlement' the number of New Ordinary Shares for which a Qualifying
Shareholder is entitled to apply, being 1 New Ordinary Share
for every 5 Existing Ordinary Shares registered in such
Qualifying Shareholder's name at the Record Date;
'Board' or 'Directors' the board of directors of the Company, whose names are set
out in Part 3 of the prospectus;
'Bowey' or 'Bowey Homes' Bowey Homes Holdings Limited;
'Business Day' any day (other than a Saturday or Sunday) on which lending
banks in Dublin and London are open for business;
'Canada' Canada, its provinces and territories and all areas subject
to its jurisdiction and any political subdivision thereof;
'certificated form' not in uncertificated form;
'CREST' the relevant system for the paperless settlement of trades
and the holding of uncertificated securities operated by
CRESTCo in accordance with the 1996 Regulations;
'Davy' Davy, Davy House, 49 Dawson Street, Dublin 2;
'Ex-Rights Date' 27 February 2007;
'Excluded Territories' the United States, Australia, Canada, Japan and any other
jurisdiction where the extension or availability of the
Rights Issue would breach any applicable law;
'Executive Directors' Enda Cunningham, Tommy Drumm, Daniel P. McInerney, Barry
O'Connor and Mark Shakespeare, being the executive directors
of the Company;
'Existing Ordinary Shares' the 33,380,571 Ordinary Shares in issue as at 23 February
2007 (being the latest practicable date prior to publication
of this announcement);
'FSMA' the UK Financial Services and Markets Act 2000;
'Fully Paid Rights' Rights to acquire New Ordinary Shares, fully paid;
'Group' the Company, its subsidiaries and its subsidiary
undertakings;
'Hillview' or 'Hillview Developments' Hillview Developments Limited;
'IBI Corporate Finance' IBI Corporate Finance Limited, of 40 Mespil Road, Dublin 4;
'Ireland' the island of Ireland, excluding Northern Ireland, and the
word 'Irish' shall be construed accordingly;
'Irish Listing Rules' the Listing and Admission to Trading on the Irish Stock
Exchange - Requirements of the Irish Stock Exchange;
'Irish Stock Exchange' The Irish Stock Exchange Limited;
'Issue Price' €13.00 per New Ordinary Share, being the price at which each
New Ordinary Share is to be issued;
'Japan' Japan, its possessions and territories and all areas subject
to its jurisdiction and any political subdivision thereof;
'Lancing' or 'Lancing Homes' Lancing Homes Limited;
'Listing Rules' the Irish Listing Rules and/or where appropriate the UK
Listing Rules;
'London Stock Exchange' London Stock Exchange plc;
'McInerney' or the 'Company' McInerney Holdings plc, a company incorporated in Ireland
with company number 253811 and having its registered office
at 29 Kenilworth Square, Rathgar, Dublin 6;
'New Ordinary Shares' 6,676,114 new Ordinary Shares to be issued by McInerney
pursuant to the Rights Issue;
'Nil Paid Rights' rights to acquire New Ordinary Shares, nil paid;
'Official List(s)' the official list of the Irish Stock Exchange and/or, as
appropriate, the official list maintained by the UK Listing
Authority;
'Ordinary Share(s)' ordinary shares of nominal value €0.125 each in the capital
of the Company;
'Overseas Shareholder(s)' shareholders who are resident in, or who are citizens of, or
who have registered addresses in territories other than
Ireland or the United Kingdom;
'prospectus' the document comprising a prospectus relating to the Company
for the purposes of the Rights Issue and the admission to
trading of New Ordinary Shares on the respective main markets
of the Irish Stock Exchange and the London Stock Exchange;
'Provisional Allotment Letter' the provisional allotment letter accompanying the prospectus
in which Qualifying Non-CREST Shareholders may apply for New
Ordinary Shares provisionally allotted to them pursuant to
the Rights Issue;
'Qualifying CREST Shareholders' Qualifying Shareholders whose Existing Ordinary Shares are in
uncertificated form;
'Qualifying Non-CREST Shareholders' Qualifying Shareholders whose Existing Ordinary Shares are in
certificated form;
'Qualifying Shareholder(s)' holders of Existing Ordinary Shares on the register of
members of the Company on the Record Date, with the exception
of certain Overseas Shareholders;
'Record Date' 6.00 p.m. on 21 February 2007;
'Regulatory Information Service' or 'RIS' one of the regulatory information services authorised by the
Irish Stock Exchange and/or the UKLA to receive, process and
disseminate regulated information from listed companies;
'Rights' rights to acquire New Ordinary Shares in the Rights Issue;
'Rights Issue' the proposed issue by way of Rights of 6,676,114 New Ordinary
Shares to Qualifying Shareholders on the terms and subject to
the conditions set out in the prospectus and in the
Provisional Allotment Letter;
'Securities Act' the Securities Act 1933 of the United States (as amended);
'Shareholder(s)' holders of Ordinary Shares;
'Spain' The Kingdom of Spain, its possessions and territories and all
areas subject to its jurisdiction and any political
subdivision thereof;
'Sponsor' IBI Corporate Finance, in its capacity as sponsor to
McInerney under the Listing Rules;
'subsidiary undertakings' shall have the meaning given by the European Communities
(Companies: Company Accounts) Regulations 1992;
'subsidiary' shall be construed in accordance with the Act;
'UK' or 'United Kingdom' the United Kingdom of Great Britain and Northern Ireland;
'UK Listing Authority' or 'UKLA' the UK Financial Services Authority acting in its capacity as
the competent authority for the purposes of Part VI of FSMA;
'UK Listing Rules' the Listing Rules of the UK Listing Authority;
'uncertificated' or in 'uncertificated form' Ordinary Shares recorded on the register of members of the
Company as being held in uncertificated form in CREST and
title to which, by virtue of the CREST Regulations, may be
transferred by means of an instruction issued in accordance
with the rules of CREST;
'Underwriting Agreement' the agreement dated 26 February 2007 between the Company, The
Governor and Company of the Bank of Ireland, IBI Corporate
Finance and the Executive Directors, whereby The Governor and
Company of the Bank of Ireland has agreed to underwrite the
Rights Issue, the principal terms of which are summarised in
paragraph 12 of Part 11 of the prospectus;
'US' or 'United States' the United States of America, its territories and
possessions, any state of the United States of America, the
District of Columbia and all other areas subject to the
jurisdiction of the United States of America.
Notes:
(i) Unless otherwise stated in this announcement, all reference to
statutes or other forms of legislation shall refer to statutes or forms of
legislation of Ireland. Any reference to any provision of any legislation shall
include any amendment, modification, re-enactment or extension thereof
(ii) The symbols '€' and 'c' refer to euro and euro cent.
respectively, the lawful currency of Ireland pursuant to the provisions of the
Economic & Monetary Union Act 1998. The symbols Stg£ or £ or p refer to
sterling, the lawful currency of the United Kingdom.
(iii) Words importing the singular shall include the plural and vice
versa and words importing the masculine gender shall include the feminine or
neuter gender.
This announcement has been issued through the Companies Announcement Service of
the Irish Stock Exchange
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 17th May 2024
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