Building group McInerney Holdings will not meet profit expectations in the first half of this year, shareholders were told at the company's annual meeting yesterday.

After the meeting, managing director Mr Barry O'Connor said the company's results would not match the results for the first six months of 2000 due to a slowdown in some sectors of the Irish housing market.

But he said the company was not issuing a profit warning for the year. "We're confident we'll have a reasonable year, but it will be biased heavily towards the second half of the year," Mr O'Connor said.

The market had experienced a slowdown since the third quarter of last year, he said. Demand for housing in Ireland had not been uniform since then. Well-located first-time buyer houses continued to sell strongly but house sales dependent on the trade-up market had experienced a slowdown, he said.

Responding to shareholders' questions on the company's borrowings, Mr O'Connor said the company had a very conservative borrowing policy.

"We're a fast-growing company so therefore borrowings have been growing quite quickly," he said. "In our house-building business, we only borrow 50 per cent of the value of the land. Putting it very crudely, the value of the land has to fall 50 per cent before we have a problem."

On the ratio of borrowings to earnings, Mr O'Connor said the company would not borrow more than three-and-a-half times any year's profit.

Mr O'Connor also said the Government's plan to require developers to sell 20 per cent of new sites to local authorities for social housing was creating some uncertainty in the market.

"First of all it makes it very difficult to evaluate what a site is going to give you. When we do a project appraisal or evaluation for a site, we now have to allow for giving 20 per cent of it away at a much reduced price. To get the returns we require, to get the returns on capital to be able to pay the interest, it means we're going to have to charge higher prices," he said.

At the a.g.m., McInerney also announced it had secured a freehold development near Marbella, where it intends to build 250 high-quality apartments over the next three years.

The company did not reveal a figure for the investment but Mr O'Connor described it as modest compared to its Irish operations.