Firm’s landbank value down 96.5%

A Cork building firm has written down the value of its landbank by 96.5% or €144m contributing to losses of €130m over the past two years.

Accounts just filed with the Companies Registration Office by Murnane and O’Shea Ltd for 2011 and 2010 show that the firm recorded a loss of €8m last year that followed a loss of €121.9m in 2010.

The figures show that the loss sustained in 2010 arose mainly from a €100m impairment on the company’s landbank that year.

In total, the company has incurred a 96.5% write-down in its landbank which was valued at €149m at the beginning of 2009. At the end of December last, the company’s landbank had a book value of just €5.1m after incurring writedowns totalling €144m.

A note attached to the 2010 accounts describes the €100m writedown as “a prudent measure”.

The firm’s expansion was funded by loans from Anglo Irish Bank and AIB. The amount the company owes in bank loans rose from €124.3m to €132.2m last year and its loans have been transferred to Nama.

The directors’ report states: “The company has drawn down funds from Nama during 2011 and the letter of support for the group has been issued. The directors are working with Nama to achieve all the stated targets and goals.”

The directors say the results for 2011 were expected given the difficult trading conditions experienced by the economy.

Murnane & O’Shea is the main firm in the Murnane & O’Shea group and a spokesman for the Bantry-based group said yesterday: “The underlying indicators for the various companies for 2011 show some positive indicators and we are determined to remain competitive while maintaining the standards for which we have become known.

“Given the harsh trading conditions, the directors are nevertheless satisfied with the results in 2011 and feel that their trading capacity remains strong for the future.”

He said that the company has been in business since 1958 “and have seen many market fluctuations throughout that time. Just like many of our counterparts in business in Ireland today, Murnane & O’Shea has had to restructure the business if we are to move ahead and grow out of this recession.”

The figures show that revenues at the firm last year dropped from €27m to €6m — in 2007 the firm recorded revenues of €111.6m.

The firm recorded a gross loss of €2.3m last year after cost of sales totalled €8.3m. Bank loan interest payments totalling €4.5m added to the company’s losses.

At the end of December, the company had a shareholder’s deficit of €129.6m. The firm’s cash increased marginally during the year from €8.1m to €8.2m.

Numbers employed by the firm have also fallen dramatically with 22 employed last year compared with 351 in 2008. The firm employed 66 in 2010 and staff costs last year reduced from €4.4m to €1.89m.

Concerning the company’s bank loans totalling €132.2m, a note attached to the accounts states: “The repayment terms for all loans area on an interest roll-up, site fine or rental mandate basis.”