Business Post
Brexit, Brexit, Brexit. This Thursday is the vote and Betfair’s exchange prices suggest it is 72%-28% in favour of the UK remaining in the EU. Credit insurance, specific measures for individual Irish counties with most exports to Britain, passports on ferries, border control etc. are all being discussed. There is plenty written about the Jo Cox tragedy also. Enda Kenny is quoted on his trip to Britain last week saying “I came here to say to the Irish community and the Irish people, this is the most important vote you will make in 50 years”. The immediate effect of an exit would be the likely devaluation of sterling which will be make it very difficult for any exporters in Ireland and tourism is also an export. The uncertainty is taking its toll on market with the ISEQ posting its worst one week performance last week since February.
“Official files and secret notes reveal that a €7 billion fraud that led to the criminal conviction of three bankers earlier this month was “potentially based on encouragement” from the Central Bank, The Sunday Business Post can reveal. The secret documents reveal how the state had intimate knowledge that the two banks were helping each other out during the financial crisis in order to make their balance sheets appear stronger to investors and the stock market.”
The Revenue Commissioners have increased the use of the 16 sheriffs throughout the country to enforce monies owed to them. They say that this is a last resort when their debtors do not engage with them as there are 8,000 people currently on a phased payment structure.
Minister Coveney has ensured that bin charges will not be increased for 12 months as some firms were planning to increase their gross-take in conjunction with the introduction of the pay-by-weight scheme. The most vociferous against the cap is Greyhound waste which are understood to be considering a legal challenge. The Minister will introduce legislation to enshrine the cap and possibly appoint a regulator.
Bernard Brogan senior has been busy recently, buying up hospitality assets including the Pillo Hotel in Ashbourne and Dundrum House in Tipperary. The Brogans have also invested in IT firm Adaptive. Róisín Burke reveals in The Business Post that one of his backers is James and Mary Wenning, one of the biggest poultry farmers in the US with $2bn revenue. Jeffrey Leo was the link.
Our emissions per individual animal is very low in Ireland but given the amount of animals we have, our total emissions from animals account for 30% of the State’s total emissions; This is compared to the EU average of 10%. We are well behind on our 2020 target which could result in astronomical fines. Michael Creed (Agricultural Minister) is lobbying hard to get a credit for all the forests we have planted against these carbon emissions which could reduce the figure significantly.
Chinese conglomerate HNA which bought Domhnal Slattery’s aviation leasing firm Avolon is hosting a major golf tournament for about 70 guests in Royal Dublin which will include Rory McIlroy, Jack Nicklaus and Danny Willet and possibly Westwood/McDowell/Lowry/Clarke.
The Department of Finance is reviewing the tax law that allows parents to gift homes to children who live in it for more than three years. 740 people availed of this last year and it looks like a tax planning measure for wealthy families where the homes have values of €1m plus. The Minister’s statement suggested that the review is to ensure current practices are in line with the spirit of the law which ensured people were not hammered for tax when they were gifted a house which is their family home.
Tom Lyons does a lot of excellent homework to try and follow the trail of the €34.7bn effective capital injection that the state shouldered by not allowing Anglo and Irish Nationwide to fail. The biggest answer is that €42.8bn of property loans were transferred to NAMA (60% of all NAMA gross loans). NAMA paid €16.8bn for these (i.e. this accounts for €26bn of the €34.7bn hole) and the state might get a few more billion back but that would be the upper end of this estimate. My own view is that “hindsight” clearly would have delayed the sale of a lot of assets particularly in London, tried to get cheaper promissory note funding and tried to burn some bondholders to lessen the weight on our national balance sheet. Mr “Hindsight” would not have scored an own goal against Sweden either.
Tetrarch who acquired the Ulysses portfolio in 2013 has sold off a part of it for €21.5m to a wealthy Irish individual. It contains mainly office and retail previously owned by Liam Carroll. The yield was estimated at c. 8%. Michael McElligott, CEO of Tetrarch, said that “the sale of the River portfolio is part of our continuing strategy to unlock value from our 2013 acquisition of the Ulysses portfolio”
Druids Glen, which is financed by Carval (bought Anglo’s debt to the business) and AIB, manged to have an interim Examiner appointed ahead of a Receiver which was Carval’s preference. AIB supported the Examinership. The three are said to be close to an agreement that will reduce their time in court. Druids Glen was built by PW Resources, an engineering firm with significant operations in Nigeria. Denis Finn and Paul Dignam are the two common directors of PW and Druids Glen.
A €240m overhead power line proposed by Eirgrid in Enda Kenny’s constituency has been scrapped and will more than likely be replaced with an underground option. The need for the overhead line was said to be reduced by less windfarms gaining planning in the area. The only remaining significant proposal for an overhead line requiring a mass of pylons is the North-South interconnector which has a very active group campaigning against it and will get encouragement from this decision. Government Chief Whip Regina Doherty has accused Eirgrid of being “arrogant and disrespectful” in its approach to the North-South interconnector.
Tom Lyons writes that “Solicitors for Coolmore Stud plan on writing to more than 20 booksellers next week, alerting them to a High Court judgement that refused a former employee injunctions preventing its lawyers from warning bookshops against selling a book about the firm.”
Michael Maye, who made his money in telecoms before going into high-end property development, has reportedly agreed a deal with Morgan ,ho bought his original Bank of Scotland (Ireland) loans.
Róisín Burke has a feature on fast-fashion and while the demise of Clerys, Boyers, Austins etc. suggest the game is over, there are lots of players currently actively both in retail and online.
Frontline Ventures are raising a second fund of €50m this year and have lured Stephen McIntyre away from Twitter where he is currently Head of Sales for Europe. It typically plays at seed stage up to €750k and at Series A up to €2m and has had some good successes to-date. Frontline also runs the AIB Discovery Fund which invests €100k at concept stage in companies like Pointy and Drop. Other investments include CurrencyFair, Linked Finance, Boxever and Barricade. Will Prendergast, co-founder, said that McIntyre’s role initially will be to help the companies they invest in scale up.
The Business Post speculate about a possible sale of Racing Post by FL partners
Brian Caulfield has abandoned the transitional fundraising route for VCs and instead has IPO’d Draper Espirit which was the first IPO of 2016 raising €102m during the week on the Irish and London Stock Exchange. Since inception Draper Espirit have invested more than $1bn across 200 businesses. Successful investments here by Draper Espirit include Movidius, Currency Fair and Datahug and they are most famous for investing in Tesla in US. EI and ISIF supported the IPO. The benefit to this model is that there is a constant source of funding and no defined exit; the drawback is that the companies it invests in will be brought into the public eye.
The Small Business Deals, sponsored by Linked Finance, features Seamus Kyne’s Sportlomo which has raised €270k from HBAN’s West by Northwest syndicate and EI, Catering Disposables €4m investment in its HQ, €4.5m investment in Connolly Motor Group in Sligo in inventory. Also “inventory management software designed to help hospitals cut costs has netted Cork company Genesis Automation €6m in funding from IPF partners, a Luxembourg based debt financing provider to the healthcare sector in Europe.” There are a number of smaller deals featured as well.
Patrick Sutton head of progressive Kildare based O’Kelly Sutton identifies four things a strategic plan for SME should contain:
1. Develop a marketing plan with a view to increasing turnover
2. Identify an acquisition target
3. Carry out additional R&D to make product or service best in class
4. Improve profit margins
Remember that a significant acquisition will need a big cheque and existing resources and bank debt may not be sufficient to fund your acquisition ambitions. Remember companies like Ardagh, Kerry, CRH would not be the giants they are without acquiring other companies.
There is a feature on Business Analytics and Big Data.
There is a special on the Deloitte Best managed companies and a call for companies to put themselves forward ahead of the August 5th deadline.
Mainstay Medical raised €30m through a share placement during the week.
In addition to the weekly magazine The Business Post has a glossy Luxury Life magazine which is along the lines of the FT How to Spend It magazine.
Sunday Times
Tayto Park, the Meath-based theme park, made €5.8m in profits last year. Attendances this year are up 15% on the same period last year. Ray Coyle, owner of the park, is planning a €7m investment in the next fiscal year and €14m the year after.
TIFCO, an Irish hotel company backed by Goldman Sachs, and the Spanish group Riu have both submitted bids of over €85m to secure the Gresham Hotel on O’Connell Street. Riu is said to be just ahead with a bid of €91m. Cerberus and Apollo were said to have made a bid but were well off the pace according to the article.
Brian O’Cathain, the outgoing chief executive of Petroceltic, will receive a payout of €266k after securing better compensation terms from new owner Worldview Capital. The initial proposal was to pay 5% of the LTIP but the settlement involves them paying 20%. The takeover of Petroceltic by Worldview was completed on Thursday effectively wiping the original shareholders out and senior management will step down according to the Indo.
Back to the Busines Post, Paul Mercieca, the liquidator to insurer Setanta which collapsed in 2014, has said that the company is spending almost €3m a year to keep claims against the insurer on hold. The company’s remaining assets are worth an estimated €19m with liabilities estimated to exceed €90m.
Panda, one of the country’s largest waste companies, is considering a stock market floatation if its takeover of Greenstar is successful. The combined business would have revenues of €180m and be the biggest operator in the country with 150k residential customers and 30,000 corporate customers. Investec are said to be advising on the deal.
Brian Carey covers the national broadband plan and Smurfit Kappa’s listing on the FTSE 250.
Thompson Aero Seating, a Co. Armagh company that makes seats for airline companies, made £13.7m in pre-tax profits on £64.7m turnover last year.
The Gift Voucher Shop, owner of the One4All gift card, made €4m in operating profit on turnover of €11.3m. An Post has a 53.6% stake in the company.
The Labour Court has ruled that Dublin-based Freshways Food should staff pay a “living wage” of €11.50 an hour. The minimum wage is €9.15. IBEC are concerned about the power the Labour Court are exercising and their promotion of this effective “living wage”. It is not clear if the binding recommendation applies to all staff or the 67 SIPTU staff. Freshways was bought by Diarmuid Shanahan and Garrett Fitzgerald in a MBO out of Kerry in 2014.
Skillsoft, an e-learning group, has laid off more than 50 people at its HQ in Dublin in an effort to cut costs. Charterhouse Capital Partners bought Skillsoft for €1.8bn in 2014.
Jump Juice Bars, the Cork-based smoothie chain, made profits of €750k last year after the takeover of rival Zumo. Jump went from making a loss of €355k in July 2014 to profits of €400k a year later. Conor and Denise Pehlan who sold their chain of pharmacies in 2003 for €22m backed the original management of Jump Juice and this included the support of taking Zumo out of receivership. The original management, Claire and Charlie Scanlon, are also shareholders.
Goldman Sachs has taken control of the Clifton Court Hotel in Dublin via the appointment of Deloitte’s Tom Kavanagh as Receiver.
Deutsche Bank has emerged as the front runner to buy a €900m loan portfolio being sold by Danske bank. Unsecured personal loans make up roughly a third of the portfolio, with the remainder being a mix of owner-occupier and buy-to-let mortgages.
Paul Newman, a property investor, has exited his 15% stake in Aerogen, a Galway-based medical device maker. Aerogen, led by John Power, made pre-tax profits of €10.2m last year on revenues of €40m.
Norwegian Air Shuttle, Europe’s third-biggest budget airline, is facing severe headwinds in its attempts to break into transatlantic travel.
The Secret Scripture, the Jim Sheridan movie, received a tax break worth about €1.6m.
Niall Brady comments on how employees whose pension schemes have been wound up are set to benefit by a policy shift to be announced by finance minister Michael Noonan. Retirees from wound-up schemes will now be allowed access to approved retirement funds.
Excol Oil, a fuel business with 10 filling stations and two heating oil distribution companies, is up for sale via a Receivership sale. Michael McAteer and Aengus Burns of Grant Thornton are receivers. The Sligo-based company, owned by the McCormack family, had revenues of €73.1m in 2014 but made a loss of €118k.
Cormac Lucey has a great piece on the minimum wage debate currently ongoing. He argues that the national minimum wage should be replaced by a series of regional versions.
David Smith reiterates his case for the UK staying in Europe this week
This week’s focus piece is on prize bonds as investors are forced to look at alternatives to get a better return.
Gavin Daly has a good piece on Nick Boyle, founder of Lightsource Renewable Energy. He has plans to expand the business into key markets including India.
There is an informative piece on the growth in stress levels and drug use by London bankers.
There is an interview with Seamus Quinn, founder of My IT Department. The business has €1.6m turnover and employs 18 people.
There have been a number of strong sales recently in Dublin’s suburban pub market, reflecting renewed interest in the market. This is expected to continue according to John Ryan, a director at CBRE.
Cubic Telecom, the Sandyford-based company, is looking at raising up to €35m next year. Cubic Telecom is focused on global connectivity as it looks to capitalise on the current change in the auto industry is undergoing.
Sunday Independent
All mortgage borrowers, whether borrowers from the traditional banks or borrowers of the firms servicing the loans purchased by the hedge funds over the last few years, now carry equal rights. Deputy Governor of the Central Bank, Sharon Donnery pushed for this over the past number of years. There is an excellent interview with Central Bank Deputy Governor, Sharon Donnery by Dearbhail McDonald. She gives very little hope to those who think that the current mortgage restrictions may be lifted and claims that if they were in during boom times we would not have as big a crash as we had in house prices.
DCC will increase the potential bonus available to CEO Tommy Breen to 200% of his salary from 120%. The move was taken by the Remuneration Committee of DCC to bring executive pay in-line with companies of equivalent size. Breen over saw a “Record year of performance and development” last year which saw operating profits reach a record £300.5m His total package was just under €4.5m last year. They spent over £400m stg on acquisitions. Former Ulster Bank CEO and Paddy Power CFO Cormac McCarthy has recently joined the board.
Dermot Desmond’s appeal to the UK Takeover Panel for a second vote regarding the merger of Ladbrokes and Coral was unsuccessful. The appeal was on the grounds of insufficient disclosure around a deal between Ladbrokes and Playtech, the day before the merger was announced which involved Ladbrokes paying up to £75m to Playtech in shares and cash, subject to milestones being met. The UK Takeover Panel ruled that more complete disclosure was unlikely to change the outcome of the shareholders’ vote to approve the merger.
Ex-Goldman Sachs banker – Tim Leissner – involved in a €6bn global embezzlement probe with the Malaysian sovereign wealth fund, 1MDB, reportedly quit Goldman’s after allegedly writing a falsified assurance letter to a European Bank had been requested to fund Malaysian business man, Jho Low, in his acquisition of properties from NAMA.
Dan O’Brien comments on the relationship between the energy and the environment. In Ireland our concern is not only the environmental effects of the energy that we consume but also the long-term sustainability and our energy security. Ireland is one of the most dependent countries in Europe on imported energy. In Ireland, and globally, continued investment is required to develop a sustainable base of renewable energy producers.
INM has “undergone a period of strategic transformation, transitioning online while building a platform-neutral newsroom”. Group Editor-in-Chief, Stephen Rae, has said that this change was necessary in order for Independent.ie to become the largest and fastest-growing news source in Ireland. The site now has a reported 11 million visitors per month.
Mason Hayes and Curran Managing Partner, Declan Black, writes on the “vulture” funds in Ireland and the broadly positive role that they have had in the recovery of the Irish market. The funds provided a market for the Banks to sell non-performing loans and reduce their balance sheets. This has been a significant factor in the recovery of normal lending by the Banks. The funds don’t want to sit and hold the assets long-term. This has resulted in assets (the properties) securing debt being traded and these productive assets being put to positive economic use. The trading of these assets has helped fuel the recovery in the real estate markets. Their willingness and speed to do deals with borrowers has helped people get to a point where their debt burdens are manageable and allows productivity and contribution to the economy.
There is a great in-depth piece on success and growth of Dublin Port and an interview with its CEO, Eamonn O’Reilly.
Sean Gallagher interviews Optimum Results founder Aidan Harte. The Dundalk based business provides management and staff training, performance consultancy and research services.
Former RTE correspondent and Storyful founder, Mark Little, has been appointed as Head of Twitter in Ireland, Twitter’s biggest non-US operation. Adrian Weckler looks at other people who have made the switch from journalism to inside businesses. Irish success stories include:; Aine Kerr, recently appointed as Facebook’s head of journalism partnerships; Daire Hickey, co-founder of the Web Summit; and John Collins, Start-up Intercom.
Richard Curran comments on the missed opportunity to keep EBS independent and having another competitor in a mortgage market with so little competition.
There is an interview with Coffee entrepreneur Brock Lewin whose roaster in Fermoy is gaining a lot of traction.
Richard Curran looks at some of the risks from the “upsides” that may come to Ireland if the UK does vote to leave the EU next week. In particular, Curran comments that the expected flow of inward FDI being diverted to Ireland from the UK may not be straightforward, as countermeasures can be taken by the UK to appease the downsides of being outside the EU and we may lose an ally in our talks with the EU on our corporate tax regime.
Twitter
1.6% – The euro zone GDP growth for 2015 with much of it coming from ECB’s stimulus. @IrishTimesBiz
£96 billion – The UK’s estimated current account deficit. @IrishTimesBiz
42% – Latest implied probability of a “Leave” vote in British referendum based on Betfair exchange odds.
£30 billion – Amount of fiscal measures needed to offset the impact of Brexit on the UK economy according to George Osborne. @IndoBusiness
25% – Increase the Low Pay Commission is likely to recommend to the current minimum wage of €9.15 when it reports next month. @IrishTimesBiz
20% – The percentage of Irish banking revenue accounted for in the UK according to the Central Bank. @IrishTimesBiz
1.2% – Reported drop in the 2018 Irish GDP if Brexit occurs, according to a report by the OECD. @IrishTimesBiz
€4.5bn – Ireland’s trade surplus as of April according to the CSO. @IrishTimesBiz
0.9% – The interest rate on Irish 10-year bonds as of Thursday afternoon. @IrishTimesBiz
60% – The amount of UK’s farming exports sold to the EU. @IrishTimesBiz
£4,300 – The amount UK households will be worse off by if Brexit occurs, according to George Osborne. @IndoBusiness