Housing Plan

47k new social housing units are planned within five years. In 2015 only 74 local authority houses were built.

Over 26k of these are planned to be built directly via local authority/housing bodies or Part V. 11k are to be acquisitions or purchases from the market and over 10k which will be “acquired from a mix of use of the private sector fund, leasing and NTMA.

The change in Part V will mean that developers will be paid upfront not on completion which will improve the cashflow for builders on developments. The concept of using Government land looks good on paper also. Likewise, fast-tracking some planning by stripping some local authorities of their powers. There may also be some stimulative measures brought in for the budget regarding first time buyers. In the Business Post, Karl Deeter thinks that there is not enough emphasis on the wider rental sector.

With house completions trending 11k for 2016 and 25k suggested as optimum, Michael O’Flynn summarises the anomaly well, he is quoted in the Business Post as saying that people want to buy but cannot and builders want to build but cannot. The Government believe as a result of this lack of funding or red-tape should not be the reason for continued stagnation in the sector. One criticism levelled by experts is that the plan has been drafted by two departments the second being Department of Public Expenditure but that the Department of Finance should have been co-signatures on the report.  Overall there seems to be acceptance of the plan in theory but it will be judged by how it plays out in practice.

The Times say that “Coveney wants to stimulate demand, looking particularly at infrastructure and planning reform.” The core actions to be implemented are; setting up a €200m fund to invest in road, sewage and water infrastructure, allowing schemes of greater than 100 units to go straight to An Bord Pleanala. Other initiatives being considered include a reduction in VAT from 13.5% to 9%.

Sunday Times
Property investor, Bill Nowlan, is to set up a €200m fund to develop high-density housing for an affordable rental scheme. The sites would be state-owned and the completed properties rented to a local housing body at a rent based on the cost of development. Rents to final tenants would be 70% of market rents. The fund will be raised from pension funds and private investors.

“Ammado, a global donation company founded by serial entrepreneur Peter Conlon, is to launch a service that will allow fundraisers to use sports stars to highlight their efforts.”

Debenhams has agreed to a rent deal with Marathon Asset Management, the landlord in four of its stores in Tralee, Waterford, Limerick and Galway. This deal paves the way for the examiner, Kieran Wallace to complete the scheme of arrangement with the company’s creditors.

In a landmark case, a Kildare-based farmer, Thomas Reid, was successful in the Supreme Court during the week in his opposition to a compulsory purchase order of his lands adjoining the Intel factory in Kildare.

Brian Carey highlights the significant rise in corporation tax receipts and questions the sustainability of it. Was it a blip arising from previous tax planning actions by multinationals moving assets to Ireland for tax planning reasons or can it be sustained?

The former head of UTV Ireland, Mary Curtis, is reported to be providing consultancy work for Liberty Global-owned TV3. Liberty Global agreed to acquire UTV Ireland earlier this month. Last week, TV3 also announced that Bill Malone will leave RTE as RTE Two’s channel controller and join TV3 as director of programming.

Dublin football stars, Diarmuid Connolly and Eamonn Fennell have plans to develop a restaurant on Camden St in Dublin’s city centre.

Mars Capital was unsuccessful in the high court for an omnibus order to group legal proceedings relating to 583 borrowers. The firm, which acquired almost 1,500 mortgages from IBRC in 2014, will need to re-enter proceedings for each loan individually.

Marketing Hub Technologies, a Cork-based data analytics specialist, has raised €500k from SSE. The dynamic platform allows retailers to see real-time sales data on product lines and make pricing decisions accordingly. Former Tesco Ireland MD, Tony Keohane, is also an investor and director in the business.

The Wright Venue made a pre-tax loss of €508k last year and had gross profit of €4.6m.

The Denis O’Brien backed hotel development in the Blackpitts area in Dublin is seeking to add 14 more rooms, taking the total to 202. The project is being developed by BAM who is also developing student accommodation on a neighbouring site.

Former Topaz CEO, Sean Moriarty, has been appointed as CEO of Denis O’Brien’s Quinta do Lago golf resort in Portugal. Emmet O’Neill is chairman and is reported to be preparing a five-year development plan for the resort.

A survey by the Consumer Protection Commission found that only 52% of those surveyed knew the interest rate on their mortgage however, 86% knew the cost of their mortgage each month,

Teneo, a US-based corporate advisor which acquired Irish-based PSG Communications last week, is planning to develop its sports division in Europe. Former Irish rugby captain Brian O’Driscoll recently joined Teneo as a Senior Advisor.

Cormac Lucey highlights that despite the recent distractions by Brexit, the Eurozone crisis is not over and that Italy may be its next causality.

Samantha McCaughren interviews Warren Scott, CEO of Quintessential Brands, a European drinks company with big ambitions.

Sandra O’Connell has a great piece today shining a light on the business that have partnered with Irish Private Equity firms recently and the benefits that has brought to their businesses. Those deals profiled include our partnership with David and Andrew Maxwell to acquire and grow Boojum, a chain of Mexican restaurants, Carlyle Cardinal Ireland’s investment in Derry-based eLearning company Learning Pool, MML Growth Capital Partner’s investment to support the management buy-out of Wexford-based Prim-Ed, and Development Capital’s investment in Netwatch. Private Equity bring much more than just cold cash, it brings outside experience, wide business networks and a shared drive to grow the business. David Maxwell, CEO of Boojum, quotes include:
“There was a gap between what the bank would lend us [to acquire Boojum] and what we needed.”

There is a good interview with Tony Judge, founder of Clubs to Hire.

There is coverage of the significant growth in casual dining in the Irish market; a number of international and UK brands are looking to expand into Ireland and indigenous Irish operators looking to grow. Our investee company, Boojum, is opening its seventh restaurant in Ireland this week in Belfast; our second new restaurant this year after our sixth restaurant opened on Lower Abbey St in Dublin in April. We have significant further growth plans ahead.

Sunday Business Post
The Business Post shines a light on activities which show how the big funds, who have made significant profits from buying assets at the bottom of the market, will avoid paying any real Capital Gains Tax. The state will miss the chance to reclaim some of the gains left behind when some of these assets were sold.

HIQA boss, Phelim Quinn, says that the HSE must be held “legally, and morally responsible” for how public funds are spent. “Accountability must lie with the entity that not only provides, but also procures the service.”

“Karl Brophy, the Chief executive of Red Flag, has begun a defamation action against Independent News & Media. Brophy has appointed Paul Tweed, the well-known defamation solicitor, to write to INM seeking an apology and damages in relation to an article published on October 25, 2015”

Dermot Smurfit has been appointed chairman of Menzies distribution which has a market cap of £340m. He is exploring the possibility of creating two separate companies, one for its distribution and the other for aviation services.

Michael Colgan is joining Sean Mulryan’s company as culture and art adviser.

Fine Gael will not be able to pass a budget without the support Fianna Fáil. Fianna Fáil is said to be set to oppose the route Fine Gael are going down with respect to removing tax credits from middle and high earners. This route would be inconsistent with Fine Gael’s stated intent to reduce the marginal tax rate. Emma Kennedy writes in the Markets section how taxing high earners heavily could be detrimental to the wider economy and make Ireland a less appealing place to work and harder to get talent.

“Irish windfarm maintenance expert Optinergy has closed a deal worth up to €10m to acquire its competitor, Lotus Energy Systems, in a deal that will form an Irish heavyweight to go toe-to-toe against international providers operating here.”

Easons, whose profit increased to €2.7m last year from a loss of €1.2m the year before, has warned its 230 shareholders that Brexit and the currency affects will affect the bottom line of the company this year.

Randox Laboratories had a profit of £18.4m in 2015, up from £9.1m the previous year.

West End knitwear, based in Monasterevin, recorded a profit of €2.8m last year helped by a strong dollar. It supplies Dunnes Stores and a lot of the bigger global multiples. It employs 11 staff in its Irish office.

Richard Barrett’s Bartra was said to have the highest bid of €225m for Greg Kavanagh’s New Generation Landbank for sale at the moment. The expected price was rumoured to be €350m. However, others are now said to be looking who were not in the race originally including Lone Star.

Richard Barret’s Bartra is said to be ready to execute his social housing plans now there is certainty arising from the Government’s report.

Noel Furlong’s application to build an Islandbridge apartment complex has been refused and he is appealing to An Bord Pleanála.

Irish toy Company Arklu is looking to raise up to €800k of EIIS funding to help achieve its growth plans later this year.

AIB and Bank of Ireland both passed the most recent European stress tests but their pension deficits are reducing the cushion they have to meet the capital requirements. The deficit in both increased by nearly half a billion in both cases.

David McWilliams says that “If Northern Ireland was asked to pay for itself tomorrow, its budget deficit would be close to 20% of GDP simply to keep the lights on. It has become a type of concubine economy, living off the largesse of Westminster and the Home Counties.” In 1920, 80% of all industrial output on the island of Ireland came from the three counties around Belfast compared to what was described as a “beer and biscuit economy further south”. The industrial output in the South is now ten times greater than that of the North. The labour force in the south is 2.5x that in North yet, the total economic output is 4x. Dublin’s population is 3x that of Belfast. The average income in South is €39.9k compared to €23.7k in North. Maybe it is cyclical and in a hundred years it will swing back again given the competitiveness of the labour force compared to the bloated South.

Niall Harbison is expanding his media business with the launch of Lovin’ Manchester.

Bizimply is opening a new office in Krakow as it targets the Polish and German markets.

Noel Higgins has acquired the master franchise to Quiznos and intends to open 45 outlets over the next six years.

“There was a rare piece of good news for Jeff and Pia Stokes in court last week – but their financial future, and that of their twin sons Christian and Simon, remain murky.”

The Merrion Clinic who are a not-for-profit organisation who reinvest all surplus into R&D had an operating profit of €281k in 2014 on €4m turnover.

Zigguraut, who redeveloped the former Montrose into student accommodation, has acquired two other sites in Dublin and is said to be looking at sites in Cork and Galway.

Róisín Burke has an interview with Michael Dowling, the Limerick man who is CEO of US healthcare operation Northwell Health. He believes up to 40% of people in a hospital should not be there and there needs to be services built around the traditional hospital system. He thinks the situation here where blockers to progress are guaranteed their job and cannot be “fired” as easily as they would be in the US if they are unnecessarily obstructive is not helpful.

Declan Kelly is profiled. His communications firm Teneo has acquired Dublin PR firm PSG.

There is a regional focus on the South-West.

Agile networks “has secured a €5m state contract with Ireland’s National Education and Research Network (HEAnet)

BHSL who convert chicken manure to energy has agreed to a €2.7m US project with the state of Maryland.

Chopped has opened its ninth outlet with a 52-seater in Blanchardstown shopping centre at a cost of €250k. Chopped charges a franchise fee of €20k, 6% of net sales and 2% contribution.

Anya Cummins, who recently joined Deloitte as a Corporate Finance partner having gained extensive experience in a similar role in London, has a good article on M&A activity. She stresses that an acquisition strategy by a firm is a great way to gain access to new skills, customers, markets etc. but there must be complete buy-in from the top and a commitment to integrate. She highlights that the less reliant the business is on the founder the greater the value of the business to an outside buyer. She highlights that a Management Buyout is a great way for founders to exit a business and preserve what they have created and possibly stay in for a stake. In addition to the domestic funds, she mentions funds like Synova Capital who are becoming increasingly active in Ireland for bigger tech type companies.

Sunday Independent
The Revenue Commissioner Office is inspecting at least 40 Section 110 Special Purpose Vehicles amid claims that the “tax-neutral” law is being abused by companies and funds controlled by offshore entities to avoid paying tax on the purchase of distressed debt and other assets in Ireland. There are now over 2,100 S.110 SPV’s, the number has trebled since 2010 when €74bn worth of bad property debts was transferred to NAMA.

The High Court is seeking the names and addresses of those who received confidential information relating to property developer Michael O’Flynn’s business. The leak arose from former NAMA official Enda Farrell’s misconduct, whom in May last year received a two-year suspended sentence after pleading guilty to eight counts of unlawfully disclosing information.

Michael McGrath, Fianna Fáil spokesman, has called for a review of the financial-services passporting regime after Gibraltar-based Enterprise Insurance went bust leaving thousands of Irish looking for new motor policies. The passporting rules allow insurers that are regulated in one EU member state to sell policies in another. This is the second off-shore insurer to fail recently after Malta-based Setanta Insurance in 2014.

Blueface, a telecoms firm, is set to go on “a huge global expansion” after pulling a planned IPO due to market volatility in Q1 2016. Alan Foy, chief executive, is looking at the US market after walking away from two potential acquisitions in the UK and EU. The company is backed by the Guinness heir, Lord Edward Iveagh. The company plans to open an office in New York in September and will contemplate an equity raise next year.

Hedge fund manager Crispin Odey is shorting Bank of Ireland shares after the Brexit referendum. Bloomberg and Central Bank data reveals he’s shorting around 175m shares, around 0.54% of the bank. Odey had also shorted BOI last summer amidst turmoil over Greece’s debts. He made a killing in the financial crisis after shorting British banks. His EU fund lost 31% up to the middle of April 2016 and George Soros was one of his original backers in the early 90’s.

Bermingham & Company, a Dublin-based accounting firm, issued the audited reports on Console that were filed with the Company Registration Office in 2014 and 2015. The firm’s owner, Padraic Bermingham, has said: “I am satisfied that we have fully complied with our responsibilities in connection with audit reports for 2013 and 2014”. Console is currently being investigated by seven different state agencies and the High Court heard claims last week of forgery involving company documents lodged with the CRO.

Whistleblowers made 44 “protected disclosures” to the Central Bank last year compared to just one report in 2014. The surge follows the introduction of new legislation in 2013 to give whistleblowers protection when making disclosures to the Central Bank and places obligations on certain categories of persons in firms to disclose breaches.

The state-backed Strategic Banking Corporation of Ireland, which also received money from the European Investment Bank and German development bank KfW, is to start taking more risk with SME loans. The SBCI is looking to develop products that would share risk with the lenders it uses. Stats released by the SBCI put the amount drawn by SMEs at €347m, up from €172m as of January last year. The average loan size has gone from €37k, up to €40k, with the largest individual loan worth €4m. Currently, over 8.5k SMEs have borrowed money from the bank.

The Irish Pharmaceutical Healthcare Association has claimed a new four-year agreement on medicine prices could generate savings of €12m a month in the first year of its operation. Drug prices will be subject to an annual review by the HSE, comparing them to a larger basket in the EU, with a clause that holds the cost to the HSE can only fall – not rise.

The sale of NAMA’s Project Tolka, a loan portfolio with a par value of approximately €1.5bn, is likely to be delayed beyond August 31st as efforts continue to maximise its potential sale price. The loans in Project Tolka are mainly accounted for by developers and investors Paddy Kelly, John Flynn and the Dublin-based McCormack family, who control the property investment vehicle Alanis.

PayPal shares dropped as much as 9.2% on Friday due to concerns about the cost implications of a new agreement with Visa. Under the new agreement, PayPal will stop discouraging customers from linking their accounts to Visa cards in exchange for “long-term Visa fee certainty”.

RTE is set to air an in-house TV documentary made entirely on an iPhone 6S Plus as the State broadcaster ramps up investment into mobile technology.

Dan O’Brien covers public pay this week, his comments are based on a study conducted by three University College Cork economists. The study examines what happened to wages and income inequality in the public and private sectors from 2008 to

• One in four public sector workers who were on the lowest incomes didn’t experience a reduction pay for the period, but in fact enjoyed considerable gains. This brings into question the “restoration” arguments being made by trade union representatives.
• In the 2008-2010 period, median wages fell from €739 to €721. The percentage drop for the public sector was 6.5% versus 2.3% for the private sector.
• In the 2011-2013 period, median weekly earnings in the public sector rose by 5% versus 3.5% in the private sector.
• Over the sample period, income inequality rose in the private sector, whereas in the public sector income inequality actually declined.

This week’s interview is with Irish-American telecom operator David McCourt.

Ryanair shares are down 6% in Dublin last week ahead of its Q1 results tomorrow.

The sentence hearing of John Bowe, former head of capital markets at Anglo-Irish Bank, Willie McAteer, Anglo’s former finance director and Denis Casey, former Irish Life and Permanent chief executive, is tomorrow. The role of the financial regulator is set to fall centre stage at the hearing.

This week’s focus covers how crucial networking is for every woman in business. The article includes advice given by Investec head of treasury, Aisling Dodgson, EY assurance partner Julie Fenton, UCD Smurfit School MBA programme director Orla Nugent and Eir’s human resources chief Orla Coughlan. The article also cites some staggering statistics on the gender gap.

The collapse of Lowcostholidays, which disrupted the travel plans of up to 15k Irish holidaymakers, has illuminated big gaps in travel-trade regulation. Apparently, the company sent at least four emails to travel agents advertising its 60% off sale in the week before it collapsed. UK customers are expected to receive average compensation of just £7.50 each.

RTE’s dependency on the licence fee is being called into question as the 2015 annual report shows €178.9m of revenues came from the fee, in comparison it brought €155.4m in commercial revenues for the period. RTE announced last week that it posted a €2.8m after-tax deficit in 2015 with the expectation of another deficit being posted for 2016.

German-owned Largo Foods, the owner of crisp brands Tayto, King, Hunky Dory and Perri, has over 52% of the €80m Irish crisp market. This hasn’t deterred the Keogh family, which in the space of just five years has taken a 5.5% market share, according to the most recent Nielsen and Scantrack report.
Twitter

€10 – The recommended minimum wage by the @lpcminimumwage that is to be reviewed tomorrow by the Government. Source: @examinerbiz

£10bn – The annual UK contribution to the EU budget. @examinerbiz

21% – The percentage of borrowers that could save money by switching mortgages, according to the @centralbank_ie. @IrishTimesBiz

€10.4bn – Total value of corporate bonds purchased by the @ecb in the five-week-old stimulus plan. @IrishTimesBiz

6% – The boost in property prices experienced by those living near Luas or Dart stations, according to research by @daftmedia @IrishTimesBiz

2.9% – @DeutscheBank forecast for Irish GDP growth next year, down from 5% this year. @IrishTimesBiz

69% – Ireland has hit the 2020 EU target employment level four years early; Ireland’s current employment rate is 68.8%. @IndoBusiness

€5.35bn – The budget for Housing Minister @simoncoveney’s “Rebuilding Ireland” plan, €2.2bn higher than the previous plan. @IrishTimesBiz

€0.10 – The proposed increase in the minimum wage by the Low Pay Commission, the equivalent of €4 per week. @IrishTimesBiz

0% – The proposed UK corporation tax rate by the London-based Adam Smith Institute. @IndoBusiness

€244bn – The size of the Irish economy, up from €193bn a year earlier, according to figures released by @CSOIreland. @IrishTimesBiz

€347m – Amount of loans given to SMEs by @SBCIreland to date; the amount has doubled in the last 6 months. @IndoBusiness

€6bn – The amount of tourist spending in Ireland for 2015, a rise of 16% year-on-year, according to @Failte_Ireland. @IndoBusiness