Losses at North Key Developments widen to €55m

Accumulated losses at development firm North Quay Developments Ltd widened to €55m in 2010, new figures show.

The firm is behind the Bridgewater Shopping Centre in Arklow, Co Wicklow. The figures show the company recorded a pre-tax loss of €18.1m in 2010 and this followed a pre-tax loss of €25.4m in 2009.

The chief factor behind the losses was an impairment charge of €17.9m on investment properties in 2010. This followed an impairment charge of €17.2m in 2009.

The directors’ report confirms that in a post balance sheet event on Oct 7, 2011, the company received correspondence that ownership of its loans had been transferred from the Bank of Ireland to Nama.

The bank loans stood at €93m at the end of Dec 2010, while the firm owed parent firm, North Quay Property Company Ltd, an additional €2.8m.

The loss in 2010 resulted in the company’s accumulated losses increasing to €55.1m, with net current liabilities totalling €97.5m. The abridged figures show the firm recorded a gross profit of €4.6m following a gross loss of €3.7m in 2009. It recorded an operating loss of €14.6m in 2010. Interest on loans amounted to €3.5m.

A note attached to the accounts states: “The company has experienced a further significant downturn in the value of its investment property and stocks. This has resulted in an operating loss of €14.6m, notwithstanding that there was only a marginal decline in income derived from its investment property and stocks.

“The company’s banking facilities have expired and, while it continues to meet its interest commitments, the company has defaulted on a number of capital repayments, mainly as a consequence of the ongoing economic environment in which it operates and facilities are repayable on demand.”

The note states Nama requested the firm prepare a business plan, which is underway. “Accordingly, the company is dependent on the ongoing support of Nama and will continue to require such support until the Irish economy has sufficiently recovered from its downturn to enable a ‘fair value’ sale of the company’s principal asset.”

The note reveals the company “meets its working capital requirements from a combination of its rental income and financial support from its lenders”.

It states: “It has prepared, and submitted to its lenders, cash flow projections and, on the basis that the company will continue to obtain the requisite working capital support from Nama over the next 12 months, the directors have concluded that they have reasonable expectations that the company will continue in operational existence for the foreseeable future and they continue to adopt the going concern basis in preparing the financial statements.”