Trading Update

RNS Number : 1278M

McInerney Holdings PLC

23 January 2009

 

Friday, 23 January 2009 MC INERNEY HOLDINGS PLC TRADING UPDATE FOR YEAR ENDED 31 DECEMBER 2008 Ireland, Dublin: McInerney Holdings plc ('the Group') today released a trading update for the year ending 31 December 2008. The Group's preliminary financial results for 2008 will be announced on 23 March 2009.  •    In 2008, total private and contracting residential completions for the Group in Ireland, UK and Spain were 1,359 units [2007: 2,414]. The total number of housing deposits (Ireland, UK and Spain) on hand as at 31 December 2008 was 589 [2007: 655].  •    Total completions in the UK were 750 units in 2008 [2007: 1,400]. At year end, there were 459 deposits on hand [2007: 452]. 61% of these deposits relate to units expected to be completed in the current year [2007: 85%]. •    In Ireland, private house completions were 296 in 2008 [2007: 594]. Entering 2009, the Irish division had 224 deposits on hand [2007: 282]. 32% of these deposits relate to units expected to be completed in the current year [2007: 49%]. •    The Irish contracting business completed 306 housing units in 2008 [2007: 391].  In 2008, market conditions in Ireland and the UK were extremely challenging and deteriorated as the year progressed. Within this environment, the Group's priorities remained focussed on reducing its cost base, optimising its working capital, reducing debt and increasing social housing output. The Group delivered against each of these objectives during 2008 and a significant debt reduction has, as anticipated in the Interim Statement, been achieved in the second half of the year. In August 2008, the Group confirmed it had agreed a revised banking covenant structure for its Irish banking facilities and that constructive progress was continuing in relation to its UK banking facilities. The Group now reports that a new banking structure has been agreed in principle with its existing banking relationships in the UK. The covenants are structured in a manner more appropriate to the Group's focus on cash collection and sales rather than earnings. As part of the revised structure, the maturity date is to be extended to 31 March 2010. The Group remains on target to sign a revised agreement prior to the announcement of its 2008 preliminary results in March.  It is the Group's view that, as the current difficult trading environment continues, an improvement in the housing markets can not be expected in the short term. The Group believes it is prudent, therefore, to undertake a further review of the carrying value of the land bank, based on further house price discounting. This will be finalised as part of the preliminary results announcement and will result in a further material impairment charge, reflecting the deterioration in market conditions since the 2008 first half year results. Given the persistent negative market conditions and, in particular, their continuing decline throughout the last quarter, the Group now anticipates that the full year trading result will be impacted by further impairment provisions and will be behind current market expectations. The further interest rate reductions recently implemented are to be welcomed. They should be beneficial to the housing market in the medium term. However, other factors are adversely affecting demand within our housing markets. Access to mortgage finance continues to be constrained while low consumer sentiment prevails driven by economic uncertainty. Measures to improve liquidity in the financial system are critical to assist the availability of funds for home buyers.   The Group's priority in the current economic conditions remains focused on cash generation, debt reduction and the prudent management of the business.  ENDS FOR INFORMATION: Siobhan Molloy                Tel: [phone] Weber Shandwick            or [phone]

This announcement has been issued through the Companies Announcement Service of

The Irish Stock Exchange

 

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