Sunday Business Post
There is a 32-page Budget review pull-out section in association with KPMG and there is also a lot written on the Budget in the main paper.
David McWilliams is baffled by the measures introduced in the Budget regarding first-time buyer tax relief. He clearly states there is a supply problem and the state seeks to increase demand. He said it will just serve to increase prices and nothing else. He says that the responsibility should lie with the economists in the department who “are trained economists who should explain to politicians what is likely to happen in a dysfunctional housing market when you introduce tax breaks for first-time buyers.” The price jumps on new homes nationwide post-Budget supports his view that the effect of the relief will just inflate prices.
RSM announce that they have beefed up their corporate finance team with Julian Caplan joining Brian Hyland as a Corporate Finance partner.
The Business Post report that businesses in the North are reporting “increases of up to 15% in trade from south of the border, as sterling continues to lose value against the euro.”
Pyrite has been discovered in ten homes in the Farmleigh Woods development in Castleknock which was built by Menolly Homes in 2006.
Jack Horgan-Jones has an exclusive interview with Mary Mitchell O’Connor. Regarding the 10% CGT relief for entrepreneurs, she says, “I know it is only for €1 million, they want it up to €10million, but there is a commitment in the programme for government so we will deliver on that for them.”
Troy Studios, the new Limerick-based 350,000 sq. ft. film studio, is hoping create up to 750 jobs in the area and attract a number of large-scale US TV productions, similar to Wicklow-based Ardmore Studio’s production of Vikings and Northern Ireland’s production of Game of Thrones. The first production in the new studios in expected to begin next year. Ardmore’s CEO Siún Ní Raghallaigh is a director in Troy Studios.
“AIB has announced a prize worth €200,000 for the winner of its latest Start-Up Academy programme. The academy’s programme of events, beginning in the new year, will include a start-up competition, four summits taking place in Dublin, Cork, Galway and Belfast, and boot camps for entrepreneurs to be held around the country.”
“Irish-owned IT services company Version 1 has completed its fifth British acquisition in three years, acquiring Warwickshire-based JD Edwards specialist Beoley Mill Software. Version 1’s total employee numbers following the acquisition stand at 900 and the deal puts projected revenues for the current financial year at €100 million.”
Meath-based success story Prepaid Financial Services (PFS) is set to create 50 jobs in Ireland, Britain and Malta. PFS provides e-money and banking services to the European market. The business was established eight years ago by MD Noel Moran, who is a finalist in the international category of this year’s EY Entrepreneur of the Year competition. Moran told the Business Post, “We expect to exceed our target of £5 million operating profit for 2016 and our goal is to carry this growth forward into 2017 and beyond”.
Irish start-up InfiniLED, which spun out of the Tyndall Research Institute in Cork, has been bought by Facebook-owned Oculus VR. The acquisition price was suggested to be €60m. It develops innovative lighting technology used in virtual reality devices. The biggest beneficiaries of the sale included Canadian investor IL Investment Group, CEO Joe O’Keefe, COO Padraig Hughes and co-founder Bill Henry.
Irish protein bar maker Fulfil aims to increase sales from 15m bars this year to 40m next year. Launched by Niall McGrath and Tom Gannon in 2014, the business offers eight different flavours and has listings secured in Britain, the Netherlands, Belgium, Sweden, Germany and Ukraine.
Leanna Byrne has an excellent interview with Jim Barry, MD of Mallow-based Barry Group. Founded in 1955, Barry Group is one of Ireland’s leading grocery wholesale groups. It employs 250 people directly and 2,500 through the Carry Out, Cost Cutter and Quik Pick retail franchises it owns. He tells how 61 years ago his Dad came back from working as a mechanic in Britain and set up a fruit and veg stall which provided the platform for the big wholesale group. The latest available accounts in 2010 show turnover of €200m and profit of €3m.
Róisín Burke interviews 74-year-old Donegal builder Pat Doherty, the man behind Harcourt Developments. Harcourt Developments survived the downturn and is back building 240 houses in Citywest, involved in a £5.5bn regeneration of Liverpool’s docklands and a major port redevelopment public private partnership over 19 acres in Bellingham, Washington.
Matt Garvey, group finance director with Glanbia, is also interviewed. Garvey has been with Glanbia since 2013, prior to which he worked with Sara Lee Corporation, a Fortune 150 company based in Chicago. Garvey talks about his career and gives some valuable lessons learned during his career.
Michael Carey of East Coast Bakehouse in Drogheda and the chairman of Bord Bia has said Irish food businesses need to focus on winning new markets after Brexit. “If food exports are to grow from the current €11 billion level to €19 billion by 2025, the Food Wise target, most growth will come from non-British markets, Carey said.” Food Wise is a government strategic plan for the agri-food sector over the next decade.
The government’s mortgage-to-rent scheme has seen a 30% rise in usage this year. There have been 187 completions in the first three quarters of 2016 and a further 434 cases at various stages of approval. Under the scheme, a housing authority will purchase the home of a qualifying home owner who is arrears with their mortgage and the home owner then becomes the tenant and continues to live in the property.
“Dublin-based start-up Available Table is planning a British expansion in 2017.” The business, co-founded by Susan Brown and Paul Haw, which launched last week, allows users to book tables at restaurants, pick a table and pay for the meal. “Restaurants pay €149 plus Vat per month for a listing. It expects to bring on board more than 100,000 users in its first year, said co-founder Paul Haw.”
There are a number of advertisements for EIIS shelter in the Business Post.
Wealth Alliance, the Swords-based financial planning business, won the best financial planning broker at the 2016 Life, Pensions and Investment Awards. The business was founded in 2011 by Brenda Rogan and Jane McAleese after they left Ulster Bank when it shut up its wealth management division.
Founded in 2000, Dermot Desmond-backed biometrics company Daon is working with Uber to provide software that will help expand a programme from Uber requiring drivers to take self-portraits to verify their identities when requesting a ride. The company also won a contract this year to provide software for Mastercard’s Identity Check fingerprint and facial recognition transaction security system, also known as “selfie-pay”.
Tom Lyons writes about the Panda Waste versus Craven House Capital court battle. Craven House Capital are claiming they had an agreement to buy Panda’s holding company and want specific performance of same.
“Dublin-based animation studio Jam Media has signed a deal with Nickelodeon to air its new pre-school animated series Becca’s Bunch globally. Nickelodeon has secured exclusive broadcast rights to the series in the US and pay TV rights for the rest of the world.”
Róisín Burke’s ‘The Week in Business’:
– Merrion Capital looks set to move into Anglo Irish Bank’s old office at Heritage House on St Stephen’s Green.
– The Church of Scientology is establishing a national affairs office on Merrion Square.
– PR guru Conor McClafferty has joined management consultancy firm Merc Partners. McClafferty was previously part of the communications team behind pharma company AstraZeneca when it was battling against a hostile takeover attempt by Pfizer.
– Former Aer Lingus CEO Dermot Mannion is back in Ireland after working in the Middle East. “I am now back in Ireland and am in the early stages of developing my own consultancy practice,” he says, “with a general focus on mentoring and coaching together with my continuing involvement in aviation.”
RTE’s transmission arm, which includes all revenues from its mast and towers, recorded a profit of €10.3m off revenues of €18.8m in 2015.
There are two articles on the problems facing the charity Goal in relation to allegations of fraud in connection with some of the aid it deployed in Syria and about the resignation of its chief executive Barry Andrews.
There is a feature on Kilburn, where so many Irish emigrated to over the years, and what the mood is there post-Brexit.
There is a review of Blas na hÉireann Irish Food Awards and of the GP Awards.
Sunday Indo
The main movers in this year’s Budget:
Self Employed/Entrepreneurs: Increase in the self-employed tax credit to €950 and a reduction in the capital gains tax rate to 10% from 20% on the first €1m received, the standard 33% rate applies thereafter.
Home Carers: Tax credit increase to €1.1k
Pension: To increase by €5 per week
DIRT: Rate to be reduced by 2%
Inheritance: Tax-free threshold to increase to €310k
USC: Three lowest rates all reduced and now stand at 0.5%, 2.5% and 5%. The €18,668 threshold has been increased to €18,772.
Help-to-Buy scheme: A rebate of income tax paid over the last four years, up to 5% of the purchase price of a new home, to the value of €400k.
Brookfield Renewable Energy Partners, a Canadian renewable fund, has initiated a process to sell off two wind farms, the 100-megawatt Knockacummer farm in Cork and the 37-megawatt Kill Hill wind farm in Tipperary, for an estimated value of €1bn. Brookfield bought the assets off Bord Gais Energy in 2014 for c.€700m.
Sam McCauley, the executive chairman of the eponymous pharmacy chain, has said the company is open to bringing in a new equity partner. The company opened a new store in Navan last week, bringing the chain to 30 shops and is targeting €90m revenue next year. McCauley is also the feature of this week’s interview.
William Fogarty, a tax lawyer at Maples & Calder, has said that the seven-year Capital Gains Tax (CGT) holiday, introduced by Michael Noonan in 2012, is causing buyers of land to wait until January 1, 2019, before releasing it to the market to avoid incurring a CGT liability.
Richard Curran discusses the Help-to-Buy scheme’s impact on the banks this week. The new scheme will help banks as more customers will be viable for mortgages and developers are incentivised towards new builds as they will get higher prices. At Permanent TSB, c.85% of its loans are mortgages and the figure is 50% at AIB.
“IAG chief executive Willie Walshe has joined Michael O’Leary in seeking some kind of independent review on the economic cost/benefit of the proposed new runway at Dublin Airport. They want to see an independent assessment of the price and have questioned the need for a full 3.2km runway the Dublin Airport Authority (DAA) is proposing”.
Ibec’s head of retail, Thomas Burke, has warned that Irish retailers should brace for more upward pressure on prices amid sterling’s plunge. Unilever, the giant behind well-known brands including Hellmann’s and Pot Noodle, made headlines this week after it sought price rises for products in Musgrave and Tesco stores. Richard Curran also has an article on “Consumers feeling the first chill wind of Brexit” that uses the Unilever example to warn that this may just be the beginning of price increases.
The average cost of fraud to organisations in Ireland has increased from €498k in 2014 to €1.7m with the incidence of cyber-attacks almost doubling since 2012, according to a PwC report.
The Irish Auditing and Accounting Supervisory Authority (IAASA) has warned company directors and their auditors to give special attentions to Brexit implications when preparing upcoming financial statements for companies.
“Local, rather than global, sponsors were the big winners of this summer’s major sporting events, according to a survey of Ireland’s marketing professionals by consultants Onside”. AIB topped the list in terms of best overall sports sponsorship for summer 2016 and Electric Ireland’s sponsorship of Team Ireland at the Olympic Games scored highly.
Denis Naughton, the Minister for Communications, is believed to be proceeding with a tender issue for the collection of the TV licence fee. An Post currently receives c.€12.5m for the collection of the licence, although it makes no profits from the contract. UK outsourcing company Capita has expressed interest in the contract and believes it could bring the evasion level down to 5%, in line with the UK, versus Ireland’s current c.16% evasion rate that costs the broadcasting sector €40m per annum.
Pearse Mee, a veteran Irish software tycoon, has joined the board of cloud accounting firm Accounts IQ. Galway-born Mee was behind Memory Computer, the first computer-related company to float on the Irish Stock Exchange, and AMT-Sybex, a software company sold to Capita for €100m plus a conditional €24m in 2014. Another investor and chairman at Accounts IQ is tech entrepreneur Gerry McKeown, whose McKeown Software business – which also focused on accounting – was sold for £12m in 2001 and is now part of Capita.
Bill Wolsey, owner of the Belfast-based hospitality-focused Beannchor, launched a new £7m four-star Steve McQueen-themed hotel called Bullit in Belfast last night. Wolsey is currently seeking out sites in the Republic for the expansion of the Bullit hotel concept and his group’s Little Wing Pizzeria chain, which currently has 6 restaurants in the North. Wolsey currently owns over 40 pubs, a five-star hotel in Belfast and his pizzeria chain. Turnover for the group last year was £18.5m, up 9% year-on-year, with operating profits of £3.2m and a property portfolio valued at c.£40m.
Suwon-based Samsung is estimated to have lost c.$5.3bn as a result of the Note 7 crisis. In addition, shares have slumped by more than 8% this week, wiping c.$20bn from its market value.
The Silicon Valley-based Altocloud, founded by Dragon’s Den star Barry O’Sullivan, plans to increase staff numbers in its Galway office by 20% next year.
Dan O’Brien discusses the confusion around the Exchequer numbers in this week’s column. The state is expected to raise just over €72bn this year, measured by “general government revenue”. That figure is €24bn more than the exchequer receipts frequently cited and more than the state has ever taken in before. Despite this, it will not be enough to close the deficit as the government plans to spend €74.5bn this year. With the return of net migration, rising pay demands in the public sector and general austerity fatigue, public spending pressure is only expected to go up. Meanwhile, demand for tax cuts is also expected.
Much of the negative attention surrounding this year’s Budget has focused on Ireland’s high rate of capital gains tax (CGT). CGT, which is currently 33%, has been cut down to 10% for entrepreneurs on lifetime gains up to €1m. This compares unfavourably with the UK where entrepreneurs pay 10% up to a lifetime ceiling of £10m.
Brian Caulfield, a well-known venture capitalist, comments that, “It’s tokenism. The bottom line is that an entrepreneur selling a business in Ireland is still going to pay more than three times the tax they would pay in the UK.”
Patsy Carney, chief executive of Waterford-based Eirgen Pharma which was sold to Opko for $135m in 2015, says, “It’s going in the right direction. The reduction to 10%, that’s the attractive part. But in terms of the quantum involved being €1m, we’re still quite a distance away from our neighbours in terms of incentive for investment.”
Sunday Times
Property investment groups are lobbying hard this weekend, as they make their final efforts to limit the impact of any changes to the tax status of investment vehicles. Finance minister Michael Noonan is expected to address the tax treatment of property vehicles such as qualifying investor alternative investment funds (QIAIFs) and Irish collective asset management vehicles (ICAVs) in this week’s Finance Bill; he is expected to introduce a withholding tax. The industry is hoping there will be no attempt to tax the structures retrospectively, as the market has already slowed down and these structures have been used as the dominant acquisition vehicles.
Brian Carey this week:
– Carey sides with a lot of other commentators on the recent budget initiative to stimulate the housing sector. He believes “populism was chosen over logic” and cutting VAT on new homes should have been chosen over a first-time buyers grant.
– The share options and CGT regime for start-ups and entrepreneurs was not addressed adequately in the budget and the opportunity to “Brexit proof” the economy was missed, whereby our entrepreneurs and start-ups may go to the UK to avail of entrepreneurs’ CGT relief of 10% on the first £10m gain, as opposed to 10% on the first €1m in the ROI. It was reduced from 20%-10% on the first €1m in the budget, however lobbyists wanted harmony with the UK.
– Carey thinks sterling will stay at current levels or continue to weaken for the foreseeable future. This will impact the export sector, which has 80% of its workforce outside of Dublin.
Stobart and CityJet are edging closer to a merger, according to informed sources, and a deal is expected by the end of the month. Stobart Group owns 45% of Stobart Air, with Invesco Perpetual holding 40%. The remaining shareholders are Cenkos, a British stockbroker which owns 10%, and Pádraig Ó Céidigh, the original founder, who owns 5%. Falko Regional Aircraft, a US leasing company backed by investment manager Fortress, is believed to be the driving force behind the merger. Under the terms of the airline merger, Falko, the second largest lessor of regional aircraft in the world, may acquire Propius Leasing, the company which leases turboprop aircraft to Stobart Air.
MPSTOR, a Cork tech company backed by former Intel Ireland boss Jim O’Hara and Trintech founder Cyril McGuire, has been bought by Sanmina Corporation, a NADAQ-listed tech company, for €34m. The deal delivered strong returns for investors in MPSTOR, which had raised about $12m in funding to develop data storage software products, Kernel Capital was the biggest investor and owned about 50% of the company.
Cormac Lucey points to a number of fundamental observations on our Budget process this week rather than picking apart who got what. He highlights the fact no balance sheet is presented with the Budget; this is important because alongside our €200bn national debt, the state has an off balance sheet liability of c.€400bn in regard to future pension commitments. We also continue to spend a lot more on health than the rest of the world, even though we have a younger population and our underlying services are challenged. He makes the point that it’s not what we spend is the problem, but how we manage it.
The company that manages the sales and marketing of Tullamore Dew Irish Whiskey, William Grant and Sons Irish Brands, reported a rise in profits of 48.1% to €48.1m last year on the back of rising sales. The family-owned William Grant Group bought Tullamore Dew from C&C for €35m in 2010.
GSK has launched a legal action against rival drug maker Pfizer in a dispute over meningitis vaccine patents. It is understood the dispute relates to antigens used in vaccines for Meningitis B.
The cyber security firm Crowdstrike that identified Russian hackers as being responsible for breaches at the US Democratic National Convention is set to relocate its corporate HQ to Ireland. The company raised €91m in funding in 2015, led by Google’s growth capital arm. Other investors were Accel Partners and Rackspace.
Independent Trustee Company (ITC), which manages more than €1bn of private pensions assets in Ireland, has gained regulatory approval for an offshore operation in Malta. Malta has become an attractive destination for Irish-resident pensioners seeking to avoid Revenue rules that effectively force them to unlock up to 5% of the value of approved retirement funds each year if the funds remain in Ireland. The compulsory drawdown forces pensioners to eat into their capital, increasing the risk of exhausting their savings, because their funds are unlikely to grow by more than 5%; this is not a requirement in Malta.
Pat Walsh’s Bluebay Ireland has backed a management buy-in at IrishRelo, a Co. Kildare-based company that helps to relocate international staff for big employers to Ireland. The deal is believed to be worth over €5m and involves investment in IrishRelo by CFO Tom Gilmore alongside Daniel Sennett, a former Credit Suisse investment banker who has a similar relocations business in Africa. Dan Ennis from Kish Capital has also backed the transaction.
Simon McKeever, the head of the Irish Exporters Association, has warned that Irish businesses will start moving operations to Britain to counter the effects of Brexit, at the cost of Irish jobs. “For companies that have more than 25% of their market in the UK, some are thinking of that they need to start making things there” and “Labour is cheaper and the tax system is friendlier”, according to McKeever.
Local enterprise offices are hosting a one-day event this Wednesday to promote the 10th annual National Women’s Enterprise Day. The events at seven regional centres are designed to encourage more women to avail of enterprise supports.
Martin Keane, the owner of the Oliver St. John Gogarty pub and Blooms hotel in Temple Bar, is supposedly lining up an offer for two city centre buildings being sold by the Central Bank of Ireland. Keane will submit a bid this week for a block at no. 6-8 College Green, on the market for €14m, and a period building at no. 9 College Green, which is expected to sell for over €2m. The buildings adjoin the 100-bedroom Blooms hotel and Keane plans to redevelop the entire block if his bid is successful.
Buy-to-let landlords will be able to borrow with interest-only payments for up to 10 years under a mortgage deal set to be launched by the specialist lender Dilosk early in 2017.
Jordon Hewson, the 27-year-old daughter of U2 singer Bono, has raised €1.8m to launch Speakable, a technology that aims to get younger people more involved in social issues. The Business Post also covers the story. Its first product is called Action Button, which allows a click to action a petition or donation beside online articles where relevant. It will launch first with the Huffington Post.
Hibernia College, an online education provider for teachers, is working on plans to begin training nurses in Ireland and Britain in response to chronic staff shortages in the profession.
Pre-tax profits at the Sports Surgery Clinic were up to €5.1m last year from €4.3m the previous year. Backers include former soccer player Kevin Moran, Ray Moran (brother of Kevin) and a surgeon at the clinic, as well as businessman Michael Kinsella.
Profits at ClearStream, the Wexford medical devices firm, more than doubled to €26.6m last year. The company specialises in products to clear arterial blockages.
Nick Webb’s inside track:
– Peter Mullen, the Dublin businessman who sold the Thomas Pink shirt company to LVMH for €75m during the 1990’s and then turned Hunter wellie boots into a must-have fashion accessory, has invested in a new UK-based fashion retailer. The retailer Idle Man sells cheap own-brand and other labels to twenty-something menswear buyers.
– Seamus Fitzpatrick’s Capvest is rumoured to have bought Irish domiciled pharma company Mallinckrodt’s nuclear imaging division for €625m, which it will merge into the IBA Molecular (IBAM), the cancer radiation therapy business it bought from SK Capital Partners and Ion Beam Applications last march.
– Ian Curley, the new Ardagh boss, has bought a €4.35m seafront villa in Dalkey.
– KBC Bank Ireland has been fined €1.4m by the Central Bank of Ireland for breaching regulations on loans to “connected persons” such as spouses or partners of the bank.
– Transfermate, the currency transfer group controlled by Taxback’s Terry Clune, is in talks to raise north of €20m from private equity backers. It is valued at between €150m-€200m according to Webb.
Gavin Daly’s interview this week is with Brian McKeon of MKN Property Group. McKeon built through the recession, guided MKN out of NAMA and now just wants a level playing field for developers in the property market.
Tommy Stubbington has a good piece on the pending rise of inflation and what is driving it.
20% – Rise in searches for work in Ireland since the Brexit vote, 3 times the average increase for the rest of the EU, according to @indeed.
10c – The expected increase in the minimum wage agreed to be announced in this week’s Budget. @IndoBusiness
30% – The year-on-year increase in the number of new homes under construction in the first eight months of this year. @IndoBusiness
€20k – The maximum first-time buyers grant allowed on homes worth up to €600k. @IrishTimesBiz #Budget2017
9% – The growth in passengers arriving at Dublin airport for the month of August, the fastest growing airport in the EU. @IndoBusiness
€1.3bn – The cost to the exchequer from the measures announced in the Budget yesterday. @IrishTimesBiz
19% – Amount the euro has appreciated versus the Sterling since the Brexit vote. @IrishTimesBiz
10% – The new rate of capital gains tax for entrepreneurs and start-ups – the ceiling still remains at €1m, well below the UK’s of £10m
2.4% – The projected growth in wages in 2017 by both @centralbank_ie and @ESRIDublin. @IrishTimesBiz
€500m – The estimated annual cost to the exchequer for retaining the tourism VAT rate at 9%. @IrishTimesBiz
€3bn – The total size of the budget package this year, including pre-committed spending increases, tax cuts and budget day announcements
€645 – The current per square metre price of prime rent in Dublin, up 18% year-on-year, according to @CBRE_Ireland. @IndoBusiness
24% – Percentage of houses bought by first-time buyers in 2015, far from the optimum level of 50%, according to the Department of Housing.
€145bn – The UK’s contribution to the EU budget last year, the second-highest contribution, behind Germany’s €181bn contribution.