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Sunday Business Post
AIB is expected to announce its plans for its troubled mortgage book over the next week. The political pressure may mean it will be hard for them to bundle up and sell to one of the buyout funds. They are said to be looking at many options including mortgage-to-rent schemes and hiving off a troubled unit internally and running the book separately. It has been estimated that there may be nearly €3bn of non-performing mortgage loans on AIB’s books. There is also a feature in the Business Post on “is AIB ready to float?”
Gerry Mallon, head of Ulster Bank, says that the bank has no further plans to sell non-performing mortgage books or any other portfolio sales. They increased their mortgage share from 14% to 18% with €1 billion of new mortgage loans underwritten. Business lending was up 19% last year, it does not quote their market share in this space.
More than 3,300 first-time buyers have applied for the government’s help-to-buy scheme since it opened last month.
The latest Paddy Power Betfair probabilities of who will lead Fine Gael next compared to the Red C probabilities are below:
– Varadkar 50% according to Paddy Power Vs 29% according to Red C poll in Bus Post
– Coveney 31% according to Paddy Power Vs 31% according to Red C poll in Bus Post
– Others 19% according to Paddy Power Vs 40% according to Red C poll in Bus Post
The Red C Party polls reads as follows:
– Fianna Fáil 26% (-1)
– Fine Gael 24% (-)
– Sinn Féin 19% (+5%) yes plus five per cent according to Bus Post.
– Inds 10% (-4%)
– All rest 4% or lower
Olivia Gaynor-Long (wife of Brian Long) is selling St Stephen’s Green Club Residence to her brother Peter Gaynor and John Collins. The pair own Beeftro and food interests in Arnotts and Dundrum town centre.
Michael O’Flynn’s development company sold more than 200 houses in Cork last year and plans to increase that number this year. O’Flynn has shone a light on the numbers of house completions being quoted by the government, which he believes are inflated by the fact they are calculating it based on connections to the grid. Some houses may have connections but aren’t to be completed for some years.
Peter Coppinger of Teamwork fame launched the Saas Ireland network last week consisting of 162 companies. Coppinger and partner Dan Mackey have not taken in any VC investment and plan to grow until €100m in sales before they take in outside investment and may consider an IPO. Coppinger thinks the government could and should do more to help Saas companies.
Scandinavian Airline giant SAS are following Norwegian’s lead by setting up an office in Dublin. They are currently hiring 40 people for its Dublin office and have applied for an Irish air-operator certificate. They have not committed to including Irish routes on their revised schedule with their new bases in London and Spain. They have ordered 30 new A320 Neo aircraft.
Animation entrepreneur, Cathal Gaffney has joined forces with the Briody family to acquire Sean O’Casey’s bar on Marlborough Street and they have plans to acquire more.
Broadhaven is understood to have fully invested its original €200m fund backed by Bain Capital and Dermot Desmond. Bain is understood to be providing the entirety of their new fund and the brief will also include SME funding alongside more traditional asset-backed lending. SMEs which have enjoyed Broadhaven’s backing from the original fund include Louis Fitzgerald pub group, Noyeks Newman (Kitchen manufacturer), Chill Insurance, Shannon Transport & Logistics and Masterlink Logistics. As part of its ramp-up Broadhaven, led by David Cullen, are said to be snapping up a lot of the top talent in town to help execute the strategy for the new fund.
Mandate and TK Maxx are said to be locking horns in a similar vein to Tesco and Mandate. TK MAXX is set to open more shops in Ireland next year, according to the Sunday Times.
A table, in the Business Post breaks out the fees paid by the government to Dublin law firms last year, with Dillon Eustace on top with €3.6m followed by A&L, Mason Hayes & Curran and Beauchamps.
Primark is set to grow from 22 to 29 branches in Germany this year.
The Happy Pear brothers Stephen and David Flynn are offering customers the opportunity to share their success through crowdfunding. They turned over €5.7m last year with half that revenue coming from their fruit and veg shop in Greystones with the majority of the other half coming from the sales of their food range.
It was great to see unemployment numbers drop to 6.8% during the week. Barry J Whyte cautions against getting carried away by one key performance indicator. He highlights that Ireland is forecast to take in €57bn on the income side this year, €7.2bn of which will come from corporate tax against €58bn of expenditure. He said the spending is pretty sure to stay and probably increase but elements of the income could come under pressure. With an outstanding debt of €200bn we need to be sure we are living within our means.
“Dublin risk analysis firm RiskSystems has landed a major contract with one of the world’s largest financial giants, Credit Suisse.”
Barry J Whyte chronicles the success of Ardagh and Paul Coulson ahead of a possible flotation. Coulson controls around 60% of the packaging giant.
Coulson credits the idea of buying into Ardagh to his colleague, Brendan Dowling. The planned IPO later this quarter would initially involve taking 5% of the company for $300m valuing the entire equity over $6bn. Earnings are currently $1.16bn off turnover of €6.34bn. Recent acquisitions will boost this further. The acquisition of British company Rockware in 1998 catapulted the business from IR£40m sales to IR£230m. All of the growth to-date has been funded with debt. Debt was as high as 8x EBITDA and is down at c.6x now. Coulson is estimated to beneficially own c.60% of the business. His right-hand men Niall Wall and Brendan Dowling, account for probably another 10%. Coulson flirted with an IPO in 2011 and 2015 but pulled it both times.
BMS Finance has invested in Glantus, a Dublin software company led by “veteran” Maurice Healy. The loan has been used to fund the acquisition of Avido and Adest. The business specialises in the supply of software to the manufacturing sector. This is BMS’s eight investment.
Green REIT has ruled out raising any more capital. They claim that post-Brexit enquiries have been higher than expected. Gunne is quoted as saying that of the €4.5bn in commercial deals last year €2.3bn was for eight deals and the majority of the finance for these came from European pension funds. This shows that international pension funds are chasing yield hard in a low-interest rate environment.
There is a full page on the Bus Eireann situation.
Offaly man Brendan Jennings, who is managing partner of Deloitte is interviewed by Leanna Byrne. He started as one of 100 employees 36 years ago and now leads 2,800 staff turning over €250m a year.
Hub Controls has just sealed a €350k deal with Woodies.
“Ronan Daly Jermyn, the Cork headquartered law firm, has entered into a strategic alliance with John McKee, a practice in the Northern Ireland with offices in Belfast and London.”
Sean Prior and Aidan Casey, have raised €1.5m for Design Wizard, which will be a sister company to Wavebreak Media.
Galway Medical device company, Cambus Medical, is forecasting €10m of revenues this year.
There is a focus on the National Power Summit, Audio-visual sector and Marine commerce.
Ferghal O’Connor writes about a faction emerging amongst dairy farmers in Kerry the haves (who have Kerry shares) and the have-nots (who do not have shares). The article chronicles the evolution of the multi-billion business success story from its humble beginnings.
Sunday Independent
Richie Boucher, Bank of Ireland’s Chief Executive Officer, has said that a planned investment of up to €1bn into technology will strengthen its ability to pursue acquisitions. Boucher is quoted saying: “You can’t contemplate material acquisitions unless you have the IT systems that support that”. Last week, Bank of Ireland reported profits of c. €1.1bn for the year ended December, down from €1.2bn the previous year. Boucher also features in this week’s interview piece.
According to provisional figures provided by Finance Minister Michael Noonan, the aircraft-leasing industry in Ireland paid €52m of corporation tax in 2015, a 52% increase from the €34m paid in 2014. A recent Central Bank study shows that revenues grew from €9.4bn to €11.8bn in the industry, during the same period.
Toyota is reported to have spent €1.7m on advertising and marketing in the past 6 months in an effort to get motorists to switch to its hybrid vehicles. Toyota sold 1.3k hybrids in Q1 of 2017, an increase of 128%. Hybrid vehicles in Ireland now make up 3.5% of the market, up from 1.5% last year and diesel sales have dropped to 66% of the market from 71% last year.
Richard Curran’s pieces this week:
– He writes on the passing over of leadership at Kerry Group from Stan McCarthy, Kerry’s current CEO, to Edmond Scanlon which will happen in September and the current state of affairs at Kerry Group, making specific reference to how McCarthy’s successor will handle the co-op and the strategic role of the foods division where revenues are down 10% and trading profits are down 4.7%. The Sunday Times reports how Kerry Group continue to grow their own chief executives. Stan McCarthy, who was hired from the graduate recruitment programme of 1976, will be replaced this year by Edmond Scanlon, hired from the 1996 graduate placement programme.
– He warns of the new letters being sent out by Revenue to over 500k people relating to assets Irish people may have offshore. “The Revenue Commissioners have a long track record of sending out warning letters about undeclared income and getting back buckets of cash from terrified tax evaders.”
– Finally, he discusses transport minister Shane Ross’s suggestion of a new privately-run terminal at Dublin Airport. In Curran’s view, the minister has floated the wrong idea at the wrong time suggesting that it is not a given that it would not be good for consumers and would depend on how the private owners choose to compete with the other two existing terminals.
Bernard Swords, Goodbody Stockbrokers chief investment officer, thinks that CRH and Kingspan are the likely stocks to benefit from the expected uplift in Eurozone-wide infrastructure investment due to recent political developments. Swords also highlights that Kerry Group would be the business to benefit from a stabilisation of economies in the Pacific Rim and a weaker euro.
Willis Towers Watson, the multinational services firm, is growing its Irish presence and plans to hire an additional 40 people to its 300-strong workforce in Ireland.
A new €235m fund targeting Irish and UK SMEs was launched two weeks ago by H2 Equity Partners, a UK-based private equity firm with offices in London and Amsterdam. The funds mandate is to make investments of between €5m and €30m, but will go up as far as €100m and will invest on a deal-by-deal basis. H2 are looking for businesses making at least €2m to €3m profit all the way up to €30m in profitability. Cathal Turley, H2’s investment manager, adds “We’re expecting to roll up our sleeves and take active roles in the profit improvement plan. We don’t just attend board meetings and measure performance against budget. We’re looking to actually work alongside management and provide extra bandwidth.” They have an excellent track record in backing companies with complex issues.
The welcome announcement of the H2 Equity Partners fund comes in the same week that David Cullen’s Broadhaven as mentioned above, have announced they will be raising a new investment fund which will also have an SME lending focus. There is now an abundance of existing and pending funding being made available for SMEs. Recent reports that the UK Business Growth Fund is looking to establish in Ireland and likely launch a sizeable fund which could lead to deployment pressure in the upper end of the Private Equity market.
The Independent Broadcasters of Ireland have warned the Broadcasting Authority of Ireland, the body which represents commercial stations, that the sector is “in danger of extinction”. In 2008, media spend on Irish radio accounted for 17% of all media spend while digital media was c. 7%. In 2016, radio’s share is expected to be c. 6% of the overall media spend while digital has increased to c. 34%.
Mediolanum, the Italian banking giant, is in talks with the Central Bank over performance fees due to Irish-domiciled funds using a fee structure not allowed in Italy and being out of line with the Irish financial regulators own investor guidelines, which are non-binding. The Irish arm has €34bn under management, generated fee income of €26.5m and increased headcount by 25% last year.
BoyleSports, the betting chain, is set to spend €250k on rebranding the 9 shops it bought from Bambury Bookmakers in time for Cheltenham. BoyleSports now owns 215 shops in the Republic and 3 in the North and is headed by John Boyle. The article reports that Paddy Power Betfair control c. 40% of the Irish market with 252 shops, BoyleSports controls 25% with 215 shops and Ladbrokes has c.13% with 142 shops.
In an attempt to mitigate currency risk, which has hit revenues and profits for the Group, Digicel, the Irish-owned telecoms company, is working with local suppliers. Digicel operates in 31 countries in the Caribbean and Asia Pacific regions and recently announced plans to cut 25% of its workforce. The Sunday Times, reports Digicel has committed to reducing its debt ratio – which is reportedly about six times annualised EBITDA – to four times by March 2018. In order to do so, Digicel will look to reduce operating costs by $100m per annum as part of an internal plan called 2030.
There is a commercial report in this week’s paper on Moneycorp, Ireland’s fastest-growing foreign exchange service provider. The London-headquartered company has branches in Dublin, Spain, France and the US and currently employs 800 people. The Irish branch is headed up by Bryan McSharry and Richie Morrissey who credit the company’s success to superior technology, more competitive FX rates and excellent customer service.
Dearbhail Mc Donald has a piece this week on the Commercial Court, a part of Ireland’s legal system which fast-tracks big business disputes. She discusses the ongoing disputes between Frank Gleeson and fellow shareholders in the newly merged Mercantile and Capital Bars Group and how Greg O’ Gorman is suing his mother, Marian O’Gorman the Kilkenny Group founder. This week’s focus piece also focuses on the legal dispute between Frank Gleeson and shareholders in the newly merged company.
Dan White has a piece this week on how Glanbia’s restructuring of its Irish business into a separate company controlled by its co-op pressures Kerry Group to do the same. Last week, Glanbia announced that it sold a 60% stake in its Dairy Ireland business to Glanbia co-op for €112m. Additionally, both companies reported earnings last week with Kerry Group reporting a 7% increase in after-tax profits and Glanbia reporting an 11% increase in after-tax earnings.
Sunday Times
The Dublin-headquartered distribution group, DCC is to put its environmental service division up for sale with a price expectation of €200m. DCC Environmental had revenues of £153.5m and operating profits of £15.2m in the year to March 2016.
Brian Carey’s agenda piece this week:
– Carey also reports on Digicel and its debt reduction and cost saving plans. With looming debt maturities, Carey thinks Digicel could take a leaf out of Ardagh’s book and float 5%-10% of the company, which would reduce its debt ratio without selling much of the family silver.
– In its first year under AIG ownership, Aer Lingus delivered operating profits of €233m, representing a 113% increase on the previous year.
INM, the listed media group, has reportedly held talks with senior management at Cork-based Landmark Media Investments about the future of the Irish Examiner newspaper. Landmark, advised by KPMG, is considering a deal with INM as one a number of options, which is looking at ways to deal with a €21m debt level.
Cormac Lucey reports this week on Bill Gates call for “robots to be taxed” as swathes of workers ae becoming replaced by technology and robots. There is an article later in the paper on the same topic, man versus machine.
Google is planning to apply for a licence from the Central Bank that would allow it to provide financial services throughout Europe from Dublin. Google has run its payments services for Europe, but it set up a new company called Google Payment Ireland last week. Google is also reportedly looking for more office space in Dublin – where it already employs more than 6k full-time staff and contractors.
Covanta, the US company behind Dublin’s €500m waste-to-energy incinerator, has forecast the facility will make profits of €60m a year.
Irish savers last year suffered the lowest deposit rates since records began, according to the Credit Suisse Global Investment Returns Yearbook.
Finbarr Filan, a brother of former West Life singer, Shane Filan, and a candidate for Renua in the last general election, is seeking an insolvency deal to restructure his personal debts.
Enterprise Ireland continues to support Irish enterprise. All 31 local enterprise offices across the country are to stage more than 380 events between March 5th and 10th as part of local enterprise week. The events are hoping to attract 14.5k budding entrepreneurs.
Financier Alan McIntosh, a director of house builder Cairn Homes, has invested €6m in the company behind the Radisson Blu hotel at Dublin airport.
Gene Murtagh, chief executive of the quoted building products group Kingspan, has sold €4.2m worth of shares last week. Kingspan’s share price has risen from €8 in 2010 to close at €29.90 last week.
Permanent TSB suspended legal action against all delinquent borrowers last year, fearing it might have contributed to their difficulty by wrongly taking them off tracker mortgages.
Eurotrek Raleigh Ireland, a European-wide distributor of bikes based in Dublin, booked an operating loss of €972k last year down marginally on the previous year’s losses of €1.1m. Eurotrek said it had confirmation from William Sutcliffe, its ultimate controlling party that it would continue to give financial support if required.
Soundwave, a Dublin start-up that was acquired last year by Spotify, reduced its accumulated losses by more than €1.3m in 2016.
Steorn, the Dublin-based company that raised €23m from investors to develop a “perpetual energy” device, will hold a creditors’ meeting on Tuesday to appoint a liquidator. The company will be wound up after failing to produce its energy device or a planned mobile phone with an everlasting battery.
Nick Webb’s inside track this week:
– Webb reveals some of Simon Coveney’s historical political donors. Cork developer John Barry, financier Brendan Mullin, the Musgrave family, legal firm Ronan Daly Jermyn, meat baron Gerry Purcell and hotelier and Four Star Pizza owner Michael Holland have all made donations over the years.
– Global Fitness which owns Crunch Fitness has reported a €24.8m shareholder deficit, which Webb believes relates to the purchase of the former Virgin Megastore on Aston Quay which was turned into a gym.
– Shares in Trinity Biotech, a NASDAQ-listed medtech company, dropped 50% last October after its heart attack test kit was knocked by the FDA. The company has suffered another setback, a Paris-based scientist has registered a €85k judgement against a subsidiary company.
Gavin Daly’s business focus piece examines how ConnectIreland came unstuck and why IDA, chief executive Martin Shanahan has pulled the plug on the job creation initiative.
The business interview is with Stripe founder Patrick Collison this week.
Sandra O’Connell has an excellent piece on venture capital and private equity and how new investment and partnership can help take a company to the next level.
c. 200k – The increase in employment since the final quarter of 2012, the low point in the labour market cycle. @examinerbiz
14.7% – The percentage of non-performing loans held by Irish banks, the highest in the Eurozone. @examinerbiz
€850m – The value of hotel sales in Ireland last year, according to @SavillsIreland. @IndoBusiness
3.4% – @EU_Commission’s projected growth rate for the Irish economy in 2017. @IrishTimesBiz
c. 33% – The percentage of Irish hotels that have changed hands since 2011, representing combined sales value of €2.4bn. @SavillsIreland.
€7.35bn – Ireland’s corporation tax take in 2016, 80% of which came from foreign multinational enterprises, according to @IRLDeptFinance.
6.8% – The unemployment rate for January of this year, the lowest level since mid-2008, according to @CSOIreland. @IndoBusiness
€340m – Total debit card spending outside of the Republic by Irish consumers in November, a 32% year-on-year increase. Source:@examinerbiz
3.5% – Growth in consumer spending in 2016, slowing somewhat in Q4 from the 4.2% growth seen in first 9 months of year. Source:@IndoBusiness