Cork builder’s landbank falls €43m

CORK construction firm, Murnane & O’Shea has written down the value of its landbank by more than €43 million, but it said 2011 is looking more positive than previous years.

The 30% writedown on the land resulted in the company reporting pre-tax losses of €51m in 2009 compared with a profit of €1.5m in 2008.

The Bantry-based property developers and building contractors said the move is in response to current economic conditions in the construction industry and called it a “prudent measure”. It said that the impairment charge does not constitute a cash loss to the group but it has eroded the balance sheet.

The directors were paid considerably less in the year, with remuneration falling from €1.6m to €960,218.

Staff numbers in the year fell from 351 to 225 at the end of 2009 while staff costs were down from €13.4m to €10.6m. The company now employs 150 people.

However, the company said that given the current economic climate and the effect it is having, in particular on the construction sector, the directors are satisfied with the results.

In a statement the company said: “The group, which transferred to NAMA in 2010, continues to trade effectively in the current negative environment, with 2011 looking more positive than previous years.

“In line with the overall trends, the group have had to take a considerable writedown on the value of its assets, but this does not impact on our trading capacity and we are working well with our staff, our customers and our contractors.”

The management and directors are committed to ensuring the future success of the group by continuing to construct only the “highest quality developments” and also maintaining their “high level of standards in all activities in which the group is engaged”.

The directors said they have taken measures to preserve cash and secure the appropriate bank finance.

“While the directors acknowledge that the current challenges faced by the group represent a material uncertainty going forward, they nevertheless have a reasonable expectation that the group will have adequate resources to continue in the operational existence for the foreseeable future,” the latest accounts for the company read.

“The directors believe that the various companies in the group will be in a position to remain competitive in the current market while still providing the highest level of product and service.”

Turnover at the company was down from €92m to just over €42m in 2009.

The company has entered into contracts to purchase lands to the value of €15.5m for which no provision has been made in the financial statements. The directors do not recommend payment of a final dividend.