Sunday Business Post
Minister for Public Expenditure Pascal Donohoe has said that the value of pensions of Public Sector workers will be factored into any negotiations and that previous benchmarking exercises ignored this lucrative value. He has a good quote which says, “The big lesson I have learned over the past number of years managing all of this is that the unaffordable wage increase of today is the average wage cut of tomorrow. And I don’t want to go down that route”. Separately, Donohoe rejects the theory that a reduction in VAT would solve the housing supply problem.
The editorial in the Business Post calls for a review of pension provision across the board. It is not just the cost, but the lack of pension cover among a large part of what will be an aging population.
Siobhán Lennon has been appointed CEO of Sunrise Media. Sunrise Media holds the Business Post and Webprint, the Cork printing plant.
There is lots and lots of commentary about the rent caps. David Ehrlich of IRES REIT, the country’s biggest residential landlord, said that he expected a relaxation of the size criteria rules in conjunction with the rent caps as it does not pay to build apartments currently.
David McWiliams comments on the housing crisis and says that derelict sites need to be used. The Government needs to go back to the 70s when social housing was common and think how Credit Unions’ large deposits can be used for community schemes.
Talks are said to be ongoing about a possible takeover of Oisín Fanning’s San Leon energy by Chinese investors for nearly double the current share price.
Bernard McNamara is doing work for Denis O’Brien on a few developments on sites he owns in the Docklands. McNamara also completed extension works to the K Club.
It is estimated Shannon airport may have 6% less passengers next year, largely driven by Ryanair reducing the Shannon-Stansted service from 16 flights per week to 12 flights per week and also reducing its Beauvais and Memmingen services.
The average wages of the 32 workers at ILFC, the Shannon-based subsidiary of AerCap, rose from $222k last year to $324k this year. The firm owns 11 aircraft. The company also subleased 115 aircraft from other Aercap companies and leased them onward.
MedicX Fund is a £351m healthcare investment property and development fund listed on the LSE. It has three investments under construction worth €29.2m in Mullingar, Crumlin and Rialto. It amended its investment parameters to allow it invest up to 20% of its fund in Ireland and seems focused more on primary care than nursing homes.
The appointment of McKinseys to find cost savings in Digicel has brought it into the news. Ian Guider in the Business Post highlights that the currency exposure is significant given that all its debt is in dollars and its revenues are in the currency of the markets it sells to, e.g. the Haitian gourde has devalued by 20% this year. Guider claims that the value based on peers if viewed as an established player should be 5.5x EBITDA, giving it a value of $6.6bn which just over the debt it carries. However, if it can sell a growth story, it could be valued at 8x EBITDA. In its favour, he says time is on its side as the debt does not mature for a number of years but it sounds like it needs to succeed in wider comms such as fibre/TV to deliver a meaningful equity story.
Jack Horgan-Jones and Hugh O’Connell have a two-page special on where the Project Eagle probe is at.
Law Society president Stuart Gilhooley is interviewed in the Business Post.
Elaine Byrne writes about the big challenges for agriculture on the back of Brexit and how the mainstream media increasingly in a snobbish way ignore farming issues in their coverage. She thinks people forget that food and drink account for 12.3% of our exports and almost 9% of Ireland’s total employment is derived from agriculture. More than 40% of our exports go Britain and Brexit could hurt this hard. Britain buys 84% of Ireland’s poultry exports, 65% of our cheddar exports and 80% of our mushroom crop.
Gillian Bowler’s life is celebrated in the paper (1953-2006). Eileen O’Mara Walsh writes, “a true risk taker with entrepreneurial flair”. Aileen O’Toole writes, “One of the smartest in the business”.
Quote of the week is given to Frank Daly in Nama explaining the destruction of potentially important minutes of Project Eagle minutes. “This is the practice which NAMA operates and which, I understand, applies throughout the public service and elsewhere in line with best practice in corporate governance.”
Magill has not been published since 2009 and Róisín Burke has heard that a relaunch could be in store for the spring. Ian Hyland currently owns the magazine.
Burke comments on the comeback of developer Ray Grehan. Grehan has built Tivoli Place in Dun Laoghaire, eight plush townhouses in Rathgar and 57 homes outside Celbridge.
Ian Guider thinks C&C’s solution of trying to penetrate the UK market by agreeing a distribution for Magners (Bulmers here) with AB InBev is clever. Ailish O’Hora also discusses this partnership in the Sunday Indo. She highlights that at present, Ireland and Scotland account for over 80% of C&C’s profits, with the Bulmers cider and Tennent’s beer brands performing particularly well.
Sue O’Neill of Shellcove has been appointed chair of the Small Firms Association, taking over from AJ Noonan.
“Kernal Capital has invested €1.2m in Waste Systems, a Co Tyrone manufacturer of waste segregation machinery.”
T&T Precision Engineering in Cork is investing €1.8m in new machinery over the next three years.
There is a focus on the Aviation Industry Awards
There is a glossy mag on new cars in the Business Post also.
Sunday Independent
“Five of the country’s biggest property developers have demanded the European Commission investigate the “selective” tax treatment afforded by the State to Nama, comparing the case of the so-called ‘bad bank’ to that of US tech giant Apple.” This parallel was contained in a letter sent by lawyers representing Michael O’Flynn, Paddy McKillen, David Daly, Pat Crean and Brian McKeown as part of their “ongoing State aid complaint against Nama”.
A number of international postal organisations have approached An Post to buy the use of its new direct-mail software Admailer. The software “uses census data to allow advertisers to target areas with a high percentage of their target audience within data-protection rules”.
The value of commercial real estate deals in 2016 is expected to be c.€4.3bn, just off the record €4.5bn achieved in 2014. 2016’s total was driven largely from three main deals: the sale of Blanchardstown Town Centre for €950m to Blackstone, the sale of One Spencer Dock to AGC Equity Partners for €242m and the imminent sale of Liffey Valley Shopping Centre to German pension group Bayerische Versorgungskammer for c.€600m. 86% of the total spend was in Dublin and Irish buyers accounted for 33.5% of the market, with US and European purchasers contributing 27% and 32%, respectively.
Richard Curran discusses the planned introduction of a 4% annual cap on rental increases, noting that it is too little, too late for many. Average rents in Dublin rose 15% in 2014, 8.5% in the 12 months to August 2015 and 11.7% in the 12 months to September 2016 and are now 9.3% higher than they were in the peak of the boom. Average house prices in Dublin are still 30% below boom levels, however.
Curran notes that the strengthening dollar is a big boost for Irish plcs who export to the US such as CRH, Kerry Group and Glanbia, with the share price of all three performing strongly in the past couple of months.
Curran also highlights the importance of cross border trade is for Irish meat suppliers, with any tariffs imposed on exports to the UK likely to have a significant detrimental effect. He predicts that if this were to happen, the big meat producers would shift production to the North or Britain, while producers would squeeze prices paid to Irish farmers in order to maintain their margins. The net result of this would be Irish farmers bearing the brunt of the effects, while it could prove very beneficial for British farmers.
MagGrow, a UCD crop-spraying tech spinout, is forecasting sales of €20m next year. The business was co-founded by Gary and David Wickham, who also co-founded the serviced apartment business StayCity. The technology uses magnetism to spray crops more precisely, leading to higher crop yields, reduction in waste of water and fertiliser, improved disease prevention and overall better efficiency. The business has been backed by Enterprise Ireland, as well as friends and family of the founders.
GC Aesthetics, a breast implant manufacturer based in Sandyford and backed by Bill McCabe, breached loan covenants last year. The company aborted a US IPO last year and lost $60m in 2015. It has since reached an agreement with creditors Orbimed Advisors to amend the covenants and strike out the breaches. The company is forecasting revenue growth in 2016 and 2017, following contracts being secured in Brazil, Korea and China.
There is an interesting profile of the deals in the various sectors of the commercial real estate market in 2016, which is well worth a read.
This week’s interview is with Patrick Coveney, chief executive of Greencore, who was also recently appointed as chairman of Core Media.
Ailish O’Hora highlights a series of recent negative events for Ireland’s corporation tax. UCC economist Seamus Coffey recently said it would not be unduly pessimistic to forecast that Ireland could lose up to half of its current corporation tax base if the EU introduces a common consolidated tax base, the UK and US both have announced their intentions to cut their respective corporation tax rates, while Ireland was also ranked number six on a list of tax havens published by Oxfam this week.
Sean Gallagher’s piece this week is with Greg Clarke and Peter Fox of Digicom. The business was set up in 1997, employs 36 people and has an annual turnover of over €8m. The company has two main strands; one side focuses on office print technology, while the other is centred on the supply, installation and servicing of all things audio visual.
Retail Excellence Ireland (REI) is believed to be set to renew its lobbying for change in legislation in relation to upward-only rent reviews for retailers. A bill was set to be introduced following the 2011 election but was abandoned as it was thought by the Attorney General to be unconstitutional. REI sees the new rent certainty legislation as an opportunity to revisit this issue.
Samantha McCaughren reveals that steak and bar chain FX Buckleys is set to expand in the New Year and is seeking planning permission to convert a sandwich bar on Baggot Street. The business already has six locations around Dublin. Ralvale, the company owned by the Buckley family, saw sales rise 14% last year, generating operating profits of €1.3m.
Sunday Times
Denis O’Brien extended a €7.8m loan to Communicorp last year, bringing his total investment in the radio to €153m according to the Sunday Times.
The Government has hired Bank of America Merrill Lynch, Deutsche Bank and Davy to advise on the part-sale of AIB.
The Sunday Times reports that almost 10,000 home owners have been overcharged interest for the past 10 years, according to a report from the Central Bank which is due to be published tomorrow.
It is expected that the Office of Public Works (OPW) will agree a 6-year extension to its lease for the Garda-occupied Harcourt Square building on Harcourt Street, bringing an end to litigation between the two parties after the OPW took to the courts to extend the existing lease.
“Independent News and Media planned its recent capital restructuring in order for the quoted media group to clear the way for the payment of dividends to shareholders.” Denis O’Brien is reported to be the largest shareholder with 29.9% of the group.
Insurance companies Standard Life and Royal London may follow Aviva’s lead and move their Irish insurance business into a separate entity which will need to be independently capitalised.
Tesla, the American electric-car manufacturer founded by Elon Musk, is set to open an Irish sales outlet and showroom in Sandyford, Co. Dublin.
Following changes to the thresholds over which deals must be reported to the competition authority, law firm ByrneWallace estimates that there has been a 75% increase in the number of merger notifications in the past two years.
Dr. Pearse Lyons’ Alltech paid a reported €3.2m to take control of Richard Keenan & Co following the appointment of a receiver to the company.
Global Fashion Group, a clothing company which takes brands to emerging markets, has established a new subsidiary in Ireland.
Jalaluddun Kajani, an Irish-based Pakistani-born businessman, is planning a 427-bed hotel close to Dublin airport.
More than a third of personal insolvent practitioners didn’t renew their authorisations this year.
“Sicon group, owner of the Sisk construction business, will return to profit this year after difficulties with big contracts in in Britain resulted in a €24m pre-tax loss in 2015.”
The Temple Bar Hotel has been purchased by a Singapore-based operator, Ascott. The hotel was sold by Pyramid Hotel Group for a reported profit of c.€20m.
Jones Engineering, one of the largest privately-owned businesses in Ireland paid a €36m dividend to its shareholders last year.
Following its purchase of a development site on Cork Street in Dublin, Cairn Homes looks set to enter into the student accommodation market; the site has planning permission for a 192-bed student block.
There is a focus piece of Minister Coveney’s proposals for the property market and Rupert Murdoch’s bid for Sky.
Sandra O’Connell interviews Mark Quick of Nephin Irish Whiskey and also David Briody of Briody Bedding.
Nick Webb’s inside track:
– Greencore paid minimal corporation tax last year, benefiting from accumulated trading losses.
– Garrison Earlsfort’s Irish fund were the backers in Bernard and Alan Brogan’s Pillo Hotel in Ashbourne, Co. Meath.
– Colm Menton and family look set to share €12m after his sale of his Europcar franchise back to Europcar’s owners.
Twitter
€37bn – Total stock of non-performing loans held by Irish banks as of Q3 2016, a year-on-year decline of €15.6bn. @centralbank_ie
€67 per sq ft – The projected cost of office rent in Dublin by 2018, according to new research from @SavillsIreland. @IrishTimesBiz
6.7% – The level at which unemployment is expected to drop to next year, according to @ESRIDublin. @IrishTimesBiz
18,000 – The expected number of houses built next year, according to the @ESRIDublin. @IrishTimesBiz
11% – The percentage of mortgages still in arrears, according to the latest figures from @centralbank_ie. @IrishTimesBiz
€20.20 – The average Irish hourly rate of pay, the second highest in the EU, according to the latest data from @EU_Eurostat. @IndoBusiness
9% – The projected annual growth in construction activity between now and 2020, according to @CIF_Ireland. @IrishTimesBiz
2.8% – The projected GDP growth in 2017, according to @ibec_irl. @IrishTimesBiz