Interim Results
McInerney Holdings PLC
27 September 2000
McInerney Holdings plc
Interim Statement 2000
Overview
The Directors are pleased to report the Group's interim results for the period
ending 30th June 2000.
A profit before tax of EUR7.639m (IR£6.016m) was recorded. This compares with
EUR7.277m (IR£5.731m) for the corresponding period in 1999.
The 1999 interim results included an exceptional profit of EUR0.596m
(IR£0.469m) relating to the disposal of an office property. Excluding the
contribution from this sale, the profit before tax for the first six months in
1999 was EUR6.681m (IR£5.262m). For the full year of 1999 a profit before tax
of EUR14.155m (IR£11.148m) was achieved which included the exceptional profit
above.
Group turnover in the six-month period increased by 33% from EUR50.339m
(IR£39.645m) to EUR66.711m (IR£52.539m). This increase is mainly due to the UK
subsidiary, William Hargreaves contributing to the half-year results for the
first time. Operating profits increased by 17% from EUR7.547m (IR£5.944m) to
EUR8.859m (IR£6.977m).
Basic earnings per share increased to 18.24 cent (IR14.37p) from 17.32 cent
(IR13.64p) for the same period in 1999. The profit attributable to Group
shareholders was EUR5.785m (IR£4.555m) compared with EUR5.046m (IR£3.974m) for
the first half of 1999.
The Directors are satisfied with these results given the Group is operating in
an environment where commencement of new housing sites have been delayed due
to the slow receipt of planning permissions and other infra-structural
bottle-necks. This is purely a function of the continuing strong growth in the
Irish Economy.
The Directors are particularly pleased to announce that a significant number
of new planning permissions have recently been obtained by the house-building
division. In the year to date we have planning for 2200 units in hand with a
further 1700 units subject to planning appeals.
The Group's commercial division has secured planning for the initial phase of
a major industrial development in west Dublin and for its first development of
industrial units in Cork. The Spanish division has commenced hand-over of
freehold units to purchasers.
The Group is now well placed to step up its activities. Accordingly a strong
second half is expected from all our divisions.
While no interim dividend is proposed, the Directors expect, as in previous
years, to propose a final dividend in 2001 based on the result for the year
ended 31st December 2000.
Review of Operations
The Group's operations are divided into housebuilding, commercial property
division, leisure activities and UK activities.
Housebuilding Division
The number of house completions for the six-month period was 227 compared with
299 for the same period in 1999. As referred to above completions are down due
to delays in the planning process.
A strong underlying demand exists for housing, especially in the first time
buyer market. The key to take best advantage of this demand will be to provide
a good quality product at an appropriate price. The new planning permissions
obtained by the Group are predominantly aimed at the first time buyer's
market. This places the housing division in an excellent position to target
its product in the direction of this buoyant market.
The Group is concerned with the provisions of Part 5 of the Planning and
Development Bill that provides for up to 20% of all new homes being delivered
as social housing. The Group recently outlined its view that this initiative,
whilst attempting to make home ownership more attainable, will in effect only
serve to worsen the market for the first time buyer. The implementation of
similar provisions in the UK housing market only served to push up the price
of building land and reduced the number of first time buyer units being
delivered. These provisions could result in private purchasers effectively
cross-subsidising the public sector.
Commercial Division
Hillview Securities' sales of industrial units in the Tolka Valley Business
Park in Glasnevin and Whitestown Business Park in Tallaght made solid progress
in the first half. Profit recognition will not occur until the second half
when these sales are closed. It is expected that all units at both locations
will be sold by the year-end.
The company recently completed the purchase of a 40-acre site for a major new
industrial park in the north west of Dublin. Situated at Ballycoolin,
adjacent to the M50 motorway, it offers the potential for developing 600,000
sq.ft. of light industrial space. Planning permission has already been
obtained for the first phase development of 125,000 sq.ft. of small industrial
units at the site. In addition, the company has secured planning permission
to develop 65,000 sq.ft. of a similar product at Euro Business Park, Little
Island in Cork. It is planned that construction will commence on both these
new developments in the second half of the year.
Spanish Division
The focus on rentals at the Group's Four Seasons Country Club at Marbella
continues to pay dividends. The company has started developing a new phase of
28 apartments in three blocks to augment its rental pool at the resort. It is
planned to complete the first block of 12 apartments by next summer.
Construction of the freehold development of 72 apartments at Carib Playa is
progressing well. Over 40 of the units are already sold with 30 units expected
to close during the second half of the year. This will provide a strong
contribution to the Spanish operations. Carib Playa is due for completion by
summer 2001. The Group is confident of securing a new site for further
freehold leisure development in the latter half of this year.
UK Division
William Hargreaves, acquired in 1999 as a small turnaround opportunity,
continues to develop, though slowly, under McInerney's guidance. Working with
the company's management team to improve operating and financial controls is
bringing positive results. The Group has commenced its investment programme at
the company with the purchase of three small sites for housing development.
The Group will continue to seek further acquisition opportunities in the UK
marketplace.
Outlook
The Group looks forward to another strong full year result. The new planning
permissions obtained provide an excellent bank of housing sites for future
development. We are pleased with the continuing strong progress of our
commercial activities in Ireland. The Group's diversification into freehold
in Spain offers exciting new growth opportunities and a base in the UK market
is now established.
The Interim Report will be circulated to shareholders shortly.
R.B. Ferris
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the period ended 30 June 2000
30 June 30 June 31 December
2000 1999 1999
EUR'000 EUR'000 EUR'000
(unaudited) (unaudited) (audited)
TURNOVER INCLUDING GROUP SHARE
OF JOINT VENTURES
Continuing Operations 67,947 50,367 101,307
Acquisitions - - 9,878
--------------------------------------------
67,947 50,367 111,185
Less: Share of Turnover of
Joint Ventures (1,236) (28) (1,519)
--------------------------------------------
GROUP TURNOVER 66,711 50,339 109,666
COST OF SALES (52,945) (39,347) (86,655)
--------------------------------------------
GROSS PROFIT 13,766 10,992 23,011
Administrative Expenses (5,405) (3,468) (8,519)
--------------------------------------------
Group Operating Profit
Continuing Operations 8,361 7,524 14,696
Acquisitions - - (204)
--------------------------------------------
8,361 7,524 14,492
Share of Operating Profits in Joint Ventures
Continuing Operations 498 23 155
Acquisitions - - 95
--------------------------------------------
TOTAL OPERATING PROFITS INCLUDING
JOINT VENTURES 8,859 7,547 14,742
Surplus on disposal of Investment
Properties 191 596 1,580
Interest Payable and Similar
Charges (1,411) (866) (2,167)
--------------------------------------------
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION 7,639 7,277 14,155
Taxation Charge arising on
Ordinary Activities (1,854) (2,231) (3,423)
--------------------------------------------
PROFIT ON ORDINARY ACTIVITIES
AFTER TAXATION 5,785 5,046 10,732
Proposed Dividend - - (804)
--------------------------------------------
PROFIT RETAINED FOR THE YEAR 5,785 5,046 9,928
============================================
BASIC EARNINGS PER SHARE c. 18.24 c. 17.32 c. 35.31
FULLY DILUTED EARNINGS PER
SHARE c. 17.36 c. 16.34 c. 33.39
CONSOLIDATED BALANCE SHEET
As at 30 June 2000
30 June 31 December
2000 1999
EUR'000 EUR'000
(unaudited) (audited)
FIXED ASSETS
Intangible Assets 5,814 6,042
Tangible Assets 4,955 4,934
---------------------------
Financial Assets
Joint Ventures: Share of Gross Assets 10,137 9,004
Share of Gross Liabilities (9,635) (9,020)
Loans 1,899 2,383
---------------------------
2,401 2,367
---------------------------
TOTAL FIXED ASSETS 13,170 13,343
---------------------------
CURRENT ASSETS
Stocks 92,321 64,995
Debtors 18,869 12,613
Cash at Bank and in Hand 9,645 11,793
---------------------------
120,835 89,401
---------------------------
CREDITORS (Amounts falling due within one year)
Bank Loans and Overdrafts 35,768 19,444
Trade and Other Creditors 54,801 43,356
---------------------------
90,569 62,800
---------------------------
NET CURRENT ASSETS 30,266 26,601
---------------------------
TOTAL ASSETS LESS CURRENT LIABILITIES 43,436 39,944
---------------------------
CREDITORS (Amounts falling due after more than one year)
Bank Loans 5,479 6,287
Other Creditors 343 1,818
---------------------------
5,822 8,105
---------------------------
PROVISIONS FOR LIABILITIES AND CHARGES
Deferred Taxation 844 921
---------------------------
36,770 30,918
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FINANCED BY:
CAPITAL AND RESERVES
Called up Share Capital 3,964 3,955
Capital Conversion Reserve Fund 62 62
Share Premium Account 16,293 16,271
Revaluation Reserve 243 371
Profit and Loss Account 16,208 10,259
---------------------------
TOTAL SHAREHOLDERS' FUNDS - ALL EQUITY 36,770 30,918
===========================
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 June 2000
30 June 31 December
2000 1999
EUR'000 EUR'000
(unaudited) (audited)
Net Cash Inflow /(Outflow) from operating
activities (11,118) 2,159
---------------------------
DIVIDENDS RECEIVED FROM JOINT VENTURES 18 38
---------------------------
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest Received 22 165
Interest Paid (1,376) (2,072)
Interest element of Finance Lease payments (13) (13)
---------------------------
(1,367) (1,920)
---------------------------
---------------------------
TAXATION (4,377) (1,836)
---------------------------
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of Tangible assets (744) (960)
Sale of Tangible Assets 598 4,520
Investment in Financial Assets (29) 188
---------------------------
(175) 3,748
---------------------------
ACQUISITION OF SUBSIDIARY UNDERTAKING - (5,953)
---------------------------
EQUITY DIVIDENDS PAID (804) (542)
---------------------------
Net Cash Outflow before Financing (17,823) (4,306)
---------------------------
FINANCING
Share Capital Subscribed 31 9,114
Repayment of Loans (13,174) (15,044)
Proceeds from Borrowings 28,228 18,307
---------------------------
Capital Element of Finance Lease Rentals 128 (143)
---------------------------
15,213 12,234
---------------------------
Increase/(Decrease) in cash in year (2,610) 7,928
===========================
NOTES TO THE INTERIM REPORT
For the period ended 30 June 2000
1. Basis of preparation of Interim Financial Information
The Interim Financial Information has been prepared on the going concern
basis, and on the basis of the other accounting policies set out in the
Group's published accounts for the year ended 31 December 1999.
2. Segmental Analysis of Turnover and Profit
30 June 30 June 31 December
2000 1999 1999
EUR'000 EUR'000 EUR'000
TURNOVER
Private Housing 34,715 39,460 77,647
Land & Sites 447 1,276 1,614
Contracts 6,211 7,761 13,086
Leisure 1,270 1,446 2,762
Commercial 6,157 396 4,679
UK Construction 17,911 - 9,878
---------------------------------------
GROUP TURNOVER 66,711 50,339 109,666
=======================================
PROFIT BEFORE INTEREST AND TAXATION
Private Housing 6,491 7,027 13,560
Land & Sites 409 303 140
Contracts 1,124 637 1,307
Leisure 380 568 1,172
Commercial 1,347 422 2,016
UK Construction 59 - (204)
---------------------------------------
Segment Profits 9,810 8,957 17,991
Share of Operating Profits in
Joint Ventures 498 23 250
Common Costs (932) (709) (1,569)
Costs incurred in on-going
Development/Acquisition Activities (326) (128) (350)
Net Interest Payable (1,411) (866) (2,167)
---------------------------------------
PROFIT BEFORE TAXATION 7,639 7,277 14,155
=======================================
3. Taxation
The taxation charge for the period is estimated based on the results for the
period.
4. Reconciliation of movement in Group Shareholders' Funds
EUR'000
(unaudited)
Opening Shareholders' Funds as at 1 January 2000 30,918
Retained Profit for the Period 5,785
Proceeds of new Share Subscription 31
Currency Translation Adjustment 36
-----------
Closing Shareholders' Funds as at 30 June 2000 36,770
===========
During the period 10,000 options were exercised at a price of 44c per share.