McInerney reports €206.5 million loss

Troubled house builder Mcinerney reported pre-tax losses of €206.5 million for 2008, compared to a profit of €58 million a year earlier.

The group recorded an operating loss before tax of €47 million last year, versus operating profit of €58 million in 2007.

After a review of the value of its assets, it took an impairment charge of €82.5 million and wrote down the value of the goodwill on its UK acquisitions of €39.7 million.

"The group's initial entry and expansion in the UK was planned to create a new revenue stream and to counterbalance an anticipated national decline in Irish housing output as indicated by demographic forecasts," chairman Ned Sullivan said in a statement.

"However, the unprecedented global financial downturn from early 2008 caused UK housing demand to go into an unpredicted decline, contrary to fundamental market economic indicators," added Mr Sullivan.

Earlier this month the group announced it had signed a revised loan deal with its major lenders in the UK.

The facility contains a revised convenant structure which is based on cash collection rath than earnings, which McInerney said was "more appropriate" for current market conditions.

McInerney warned today that if the building sectors in the UK and Ireland deteriorate beyond its current forecasts it could lead to the group breaching of its bank covenants.

"If any covenant breaches were to occur then the lenders may be able to request early repayment of all outstanding borrowings," it said.

"These circumstances represent a material uncertainty that may cast doubt on the group's ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business."

McInerney said it completed 1,359 private and contracting residential units in Ireland, the UK and Spain as compared to 2,414 in 2007.

In Ireland, the home building division completed 296 houses as against 594 in 2007.

The group said that while the recession will further impact on its activities this year, new measures introduced by the Irish and British governments to provide financing for first-time house buyers would help boost demand for homes.

"Combined with historically low interest rates and discounted house prices, this should have a positive impact in the medium term on housing demand," said Mr Sullivan.