The Dublin construction group that owns a 34.9% share in Liam Griffin’s hotel group has written down its investment by 65% “in light of prevailing market conditions”.
The Noonan Group has a long association with the Griffin Hotel Group, first joining forces to purchase the Ferrycarraig Hotel in Co Wexford in 1991.
However, accounts filed recently by Noonan Group Holdings Ltd, show the construction group wrote down the value of its investment in the hotel group from €3.89m to €1.3m in the 12 months to the end of September last.
The family majority- owned Griffin Hotel Group led by Liam Griffin — former All-Ireland hurling winning manager with Wexford — operates the five-star Monart Spa Hotel in Co Kilkenny, the four-star Ferrycarraig Hotel and the four-star Hotel Kilkenny.
The most recent accounts filed by the hotel group are for the 12 months to the end of Dec 2010 when it recorded pre-tax losses of €1.5m after revenues declined by 11% from €16.4m to €14.6m.
According to a note attached to the accounts, the directors of Noonan Group property investment subsidiary — Worldview Investments — “feel it is prudent to write down the investment in Griffin Group hotels by 65% in light of prevailing market conditions”.
The €2.5m write-down in Griffin hotels contributed to losses of €11.7m at the Noonan Group in the 12 months to the end of September last.
This followed revenues at the group declining from €2.75m to €1.65m through the group recording a total of 10 house sales in Ireland — this followed the group making 15 house sales in fiscal 2010 when losses of €16.3m were recorded.
The directors’ report states the €11m loss for 2011 “has been materially impacted by an impairment charge of €6.39m reflecting the fall in value of land”.
“Our write-down is a very conservative view, but in current circumstances, it is a realistic measure.
“Even though, we have never revalued our landbank higher than cost, we have now written our landbank down by over 45% cumulatively since 2007.
The report continues: “During the year, we achieved low sales volumes in a difficult selling market. Further price discounts were introduced to entire potential buyer demand.
The directors state that despite the external factors in the economy “we continue to have a sound business with a good product, strong geographic spread and a well established reputation built on quality and we are well positioned to take advantage of any market recovery”.
“Significant cost saving measures continued to be implemented throughout the group resulting in a 31% reduction in administration expenses on last year.
“Overall, administration costs — including directors and administration payroll in the group have been cut by over 84% since 2007. While substantial changes have already taken place in relation to our cost base, the board will continue to see further efficiencies and cost reduction.”
The directors confirm the group’s bank loans were transferred to Nama in Oct 2010. The report states: “The group’s bank loans were transferred to Nama on Oct 20, 2010. Since then, the group has submitted a business plan and an agreed property strategy has been approved by Nama.
“In Oct 2010, the group successfully renewed its bank loan facilities for a two year period and the company continues to perform on all of these facilities.
“In addition, the group has managed to reduce its bank debt by 15% from €41.9m to €35.4m in Sept 2011.
The report continues: “Given the above factors, the directors are confident that the company (and the group) have adequate resources to continue in operational existence for the foreseeable future.”
The Griffin Hotel Group yesterday did not comment on the write-down incurred by the Noonan Group.
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