Gannon records losses of €13.6m

GANNON Homes, the property development firm owned by K Club co-owner Gerry Gannon recorded losses of €13.6 million in 2007.

This compares with a profit of €107,162 in 2006 as the company experienced what it called a “difficult trading period” in 2007.

According to accounts just filed it said the sales process slowed and 2007 was a particularly challenging year for the Irish residential market in general.

“After over a decade of very good conditions, a combination of rising interest rates, uncertainty over stamp duty levels, a tightening of fiscal policies by the banks and a lack of consumer confidence has a detrimental effect on the market,” the accounts read.

“Since the year end this pattern has continued. The difficulties in the global banking sector and Irish economic conditions have further reduced credit availability and consumer confidence, key ingredients of a successful property industry.

“Due to the significant impact these factors have had, the directors feel that a review of key financial indicators is not appropriate.”

Earlier this year Mr Gannon was named in reports as one of the so-called Anglo Golden Circle – a group of 10 investors who were loaned €300m to buy shares in the bank.

The accounts for Gannon Homes Limited show turnover plunged from €111.6m in 2006 to €64m in 2007. A dividend of €416,486 was paid in the year relating to 2005, they showed.

The company said loan facilities provided by Anglo Irish Bank are repayable on demand and it said its relationship with the bank is such that the “directors are confident the bank will continue to extend facilities as required to complete the various projects financed by the bank”.

It also said loan facilities provided by Irish Nationwide Building Society are due for renewal in December 2009 “in the normal course of events”. The directors said they have no reason to believe these facilities will not be renewed.

The directors also said in their report that they are conscious of the “significant tightening of lending by the institutions which occurred in 2007 and has continued since the year end”.

“The directors believe the excellent quality and location of the developments currently on hand will make it possible to realise value for the company, which recognising that this will happen at a reduced margin and over an extended period,” the accounts read.

The directors said they believe that the company has the ability to continue to “carefully” trade through the turbulent conditions.

The accounts said that the carrying value of stock has been reduced by €15.6m to reflect the fall in market values which occurred since the balance sheet date. The provision for financing costs, related to company performance, is reduced by €8,198,000 in consequence for the downturn in the property sector, according to the accounts.

Mr Gannon acquired the K Club golf resort at Straffan, Co Kildare, with businessman Michael Smurfit for €115m in 2005 from the then Jefferson Smurfit Group.

Mr Gannon founded Gannon Homes in 1984 and started out building small residential projects in north Co Wicklow and on the outskirts of Dublin.

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