Brexit
Brexit – what a shock.
In the Business Post, David McWilliams is beating the drum that the ROI will have to get some of the investment that will be diverted from UK and turn a negative into a positive, being the only English speaking country in the Eurozone. He thinks we need to play on the fact that we are more Anglo-American than European and need to play this card and offer ourselves as a gateway to Europe.
In the Business Post, Stephen Kinsella says that, “Ireland’s fiscal space has been reduced by Brexit. Some of the increases in public services ordinary people recently voted to have increased will not now happen. The problem is that we don’t know what the impact of Brexit will be on our economy.”
“Britain’s departure from the EU will slow Irish economic growth immediately and make us poorer in the future”, according to Dan O’Brien. The Sunday Independent carries a 9-page Brexit supplement this week. Some of the commentary includes; Dan O’Brien on the short and long-term impacts for Ireland, Stephen Donnelly on the risks and opportunities, Colm McCarthy shares his views on further possible exits and Kathy Donaghy writes on the potential impact on our border.
“Stocks badly hit, but many firms say UK vote won’t have a material impact on operations”. This is the view coming from most of the ISEQ’s top-20 covered in the Sunday Indo. While our largest firms benefit from global trading ties, many of our smaller indigenous companies have a material exposure to the UK and may be more significantly affected. The uncertainty will surely be damaging to all.
IDA chief executive Martin Shanahan is taking the initiative and has written to 1,200 multinationals in a campaign to reassure them Ireland is open for business in the wake of Britain’s vote to leave the EU. The letter urges companies with Brexit-related concerns to contact IDA executives. Shanahan has said “the first order of business” was to ensure multinationals understood Ireland’s position. “We are now the only English speaking member of the EU. We don’t know what access the UK will have in the future. What we can say definitively is that we will have access to the EU and we have stability”. This piece was covered in the Sunday Times
Other articles across the various papers cover:
· Sales of AIB and PTSB are likely to be delayed.
· Focus on immigration policy here.
· Likely border strategy.
· The possibility of the entire European project imploding.
· Aer Lingus, BOI, Grafton and Kingspan were the 20+% fallers this week.
· Possible political unrest in the North and a call for a completely united Ireland that could divide a lot of people.
· The need for political unity in the Dáil.
· The possibility of a second vote.
· The consequences for the property market.
· Consequences for pensions.
Sunday Business Post
Apollo and others are said to be looking at buying the state’s 75% stake in Permanent TSB.
Pinemount Finance Limited has invested €3m in Moqom, the Irish-based financial security company.
London and Regional (“L&R”) is looking to exit the Irish market with properties to sell worth just under €100m. It has already divested of the Intercontinental Hotel to John Malone, having paid a reported €15m and sold for over three times this amount. Its two biggest assets are the Irish Nationwide building in Grand Canal and the group of three office buildings in Lower Mount St./Clanwilliam Place. Niall Gunne heads up its operations in Ireland.
Liam Casey’s PCH have lost a contract with Apple and will shed 1,500 jobs, mostly in China, according to the Business Post. It still employs the same amount and Casey previously said he was a customer, supplier and competitor to Apple so maybe it is a sign that some of his other revenue streams are beginning to compete with Apple as it shifts into the connected hardware space. Casey is also active as ever in venture capital with his successes in that sphere including his investment in Stripe and Trustev.
MM Capital have bought Phibsboro Shopping Centre from NAMA for more than €15m.
Boylesports, Paddy Power, Ladbrokes and Sean Graham are said to be running the rule over Hacketts bookmakers. Declan McDonald and Ken Tyrrell of PWC are provisional Liquidators of the business. Paddy Power bought 15 of their better shops last year. Hacketts will close 18 shops and 35 people will lose their jobs. Managing director John Hackett will be one of the largest creditors.
Deloitte are continuing to call for companies to enter into their Best Managed Companies programme.
Brian Moran of Hines who bought the Cherrywood site said that nearly half of the people working in Dublin cannot afford to live in the city. It is sitting on its big site in Cherrywood and arguing for the Government to bring in some help for those who are working in the city and cannot buy. He said it is committed to Ireland and will look to buy some assets as other funds exit.
Mike Flannery, CEO of Richard Barret’s Bartra Homes, said that the new Government should work to complete the body of documentation that was there on social housing and get the space moving with private money. The election has resulted in lost momentum for the space and the crisis is not getting any better.
Topaz and Bank of Ireland moved to appoint Receivers to various parts of the McCormack fuels business. Tom Kavanagh of Deloitte is working for Topaz. Michael McAteer and Aengus Burns of GT are acting for BOI. Tony McEntee, Liam Mulcahy and Liam McGreal have all just been appointed to the Board and it is assumed they will help work a solution for BOI and Topaz. Mulcahy is commercial director of Topaz.
Minister of State for Tourism Patrick O’Donovan has indicated that the 9% VAT rate will stay in place in the October budget. Any threat to it will probably be removed with the weakening of sterling. He is celebrating as tourism numbers which are 16% up.
Deposify, backed by BOI, the Escher group and EI, is hoping to launch its rental deposit technology in Dublin by the end of the month. It manages how and when deposits are paid and manages disputes.
There is a three-page special on the resurgence of Fianna Fáil.
There is an interview with Ruth Gill, commercial director of sixth-generation family business Gill Communications.
There is a profile on John Delaney and the FAI.
Healthcare 21, run by Cork man Owen Curtin and Tara Kearney, is planning to double turnover of its healthcare supplies distribution business to €100m with a new office in Leeds just opened.
Walsh Whiskey has opened its €25m distillery in Carlow. Italian company Illva Saronno Spa, owners of Tia Maria, own a 50% share in the business.
Obeo, sellers of biodegradable food waste packaging, have raised €350k.
There is a magazine on the challenges and opportunities for the Public Sector.
There is an eight-page special on Cork and businesses in Cork.
Colette Sexton’s intelligence suggests that Johnny Ronan and Hines are no longer front-runners for Larry Goodman’s Setanta Centre, but a Middle Eastern fund are the most likely winning bidder. Mark Kavanagh’s Hardwicke fund and Noel Smyth were also touted as runners in the race for the asset that is expected to reach c.€90m.
Sunday Independent
Debenhams Retail Holdings Ireland, which recently applied for court protection through Examinership, has unsurprisingly applied to the High Court to have at least three of its leases repudiated (cancelled). The company is paying €25m per annum in rent, with upward-only clauses in the relevant leases. The leases are guaranteed by the UK parent company.
Peter Oakes, a former director of the Central Bank, has said that Ireland is facing a global “reputation risk” and needs to demonstrate “greater vigilance” when it comes to anti-money laundering legislation. The comments come after the Sunday Independent revealed that bribes of €114m were funnelled through an Irish Bank. Irish domiciled funds have an estimated €1.8 trillion of net assets here.
JBS, the Brazilian parent company of Northern Ireland-based chicken producer Moy Park Foods, has put in place measures to move its global headquarters to Ireland. The paper reports that the restructuring, announced last month, will see JBS sell of its international business and move its HQ to Ireland ahead of a planned listing on the New York Stock Exchange. Moy Park MD, Janet McCollum, however commented that there was no decision made on where the HQ was to be located.
“Twenty five million small coffee growers produce 73% of the coffee we drink and they are being exploited”. David McKernan, CEO of Java Republic, shared his views on the coffee industry at the world’s biggest coffee event, SCAE World of Coffee Conference, recently held in the RDS. McKernan calls for greater commitment to Fair Trade practices and fair prices for growers.
Taxi drivers’ insurance has risen by as much as 300% this year for rented taxis and 80%-110% for owned taxi cars, according to their representative body. The body is in talks with new operators to enter into the Irish taxi insurance market.
It costs advertisers €40.69 for each click on their link if they wish to appear in the search results for “Online betting” with Google’s AdWords. It is the most expensive phrase for Irish advertisers on Google – the average cost per click in Ireland is €0.38. Second is “Online stock broker”, followed by “Personal injury claim”.
Integrity 360, an Irish IT security firm, is considering an IPO by 2020. The company recently graduated from the Irish Stock Exchange’s IPO Ready programme. The company undertook the programme to allow it to get ready to list quickly when the time is right. The company is looking to achieve its growth ambitions before a possible listing in 2020.
Insurance intermediary, Blue Insurance, posted a c.25% increase in turnover in 2015, reaching €26m and making €2.4m in pre-tax profit. This is unchanged from 2014, but could have been higher was it not for one-off costs in a new premises, IT and the launch of new products. The company is targeting turnover of €35m in 2016. It is also in talks to start offering life cover and health products in the Irish market.
Dan O’Brien sets Brexit aside for a moment and looks at the health of the indigenous Irish export market. O’Brien comments that Ireland would be one of the weakest exporting nations in Europe if all the foreign-owned companies left. Strikingly, these companies accounted for 90% of all exports of goods and services from Ireland last year. He highlights the recently published EI report that revealed the companies it backs grew exports by 10% last year, while Irish exports as a whole grew by more than double this. Also, in the last decade while Irish company’s export receipts have more than doubled, our share of total exports has fallen. “There are plenty of nuggets of positivity about Irish business – but the takeaway is that we would be a trading backwater if it were not for the multinationals”.
Waste management companies and the profits they earn are in the spotlight after the attempted introduction of pay-by-weight charging. The controversy comes as the new system will likely increase waste disposal costs for households. Minister Coveney has agreed a deal to postpone the introduction for a year and also freeze prices, but it will not stop the fight from happening. These are private companies and should be entitled to make a normal profit, however the issue at hand seems to me to be whether the profits earned from the increased costs are fair for the risk or excessive. Irish Water v.2.
Sean Gallagher interviews Tommy Griffith, founder of PEL Waste Reduction Equipment. His company, founded in 2005, manufactures waste reduction equipment for the commercial market. The company employs 23 staff, is based in Mayo and has offices in London and Cleveland, Ohio.
Richard Curran highlights the negatives of a fall in sterling for smaller Irish exporters. A cheaper sterling is good for those buying goods from the UK but bad for Irish businesses selling goods into the UK, which have now got more expensive. This is going to have a hit on SMEs around the county exporting to the UK. While, in theory, we may gain some FDI which was bound for the UK, this is likely going to be focused around our cities and may well be irrelevant to the smaller towns around the country whose exporting SMEs may be hit hard.
Sunday Times
Gavin Daly takes the agenda column this morning. Tony O’Reilly Jr. is looking to Providence Resources shareholders to put more cash into the troubled oil and gas explorer. Providence shares have fallen from an €8 high in 2012 to 15.5c; the entire company is worth less than €22m. O’Reilly appears to have found investors via Cenkos Securities who are prepared to inject €61.3m in fresh funding, which should last a year once all existing obligations are taken into account, but wants current shareholders to participate in the round as well.
Morgan Stanley has slashed €8.6bn off its valuation of Primark, owner of the Penneys chain, citing concern the retailer’s sales might fall this year. Morgan Stanley raises concerns on Primarks marked slowdown in sales over the last 18 months and the move to online shopping. It also raised concerns about its ability to grow rapidly; an average Primark unit is c.45k sq., which is three times the size of a Zara or H&M and they are not easy to source.
Mars Capital, an unregulated mortgage company, bought 1,500 mortgages for just 42% of the par loan value. Mars also bought a second tranche of IBRC mortgages, acquired for 76% of book value, through the sale of the Project Pearl portfolio. Both purchases were through the IBRC liquidation process.
Cormac Lucey suggests the euro currency may be just one recession away from financial breakdown if the dismal share price prediction of Eurozone banks materialises.
Seamus and Padraig Lynch, the owners of broker Chill Insurance, are seeking regulatory approval to introduce a new Qatari-backed motor insurer to Ireland. The move follows sharp contraction in underwriting capacity in Ireland following the collapse of Setanta Insurance and Zenith Insurance exiting its agency agreement with ARB Underwriting in the Irish market.
Clanwilliam Group, a Dublin healthcare technology group, has acquired a majority stake in Epic Solutions in a deal believed to be worth €4m. Cork-based Epic makes electronic healthcare systems used mainly in care homes for the elderly and disabled. Clanwilliam, headed up by former Helix Health founder Howard Beggs, is investing €100m in a consolidation play and have recently bought a significant stake in Analytical Medical Insight in Galway and acquired Bluespier, a British medical software business.
Revenue is ramping up the pursuit of minor tax arrears for small businesses and the self-employed and has increased staff numbers collecting lower debts.
Communicorp, the radio group owned by Denis O’Brien, is seeking the abolition of a €4.9m annual broadcasting levy paid by radio and television stations to fund the Broadcasting Authority of Ireland (BAI).
Ronan Group Real Estate (RGRE), the property group headed by Johnny Ronan, is looking at a large residential and retail scheme in Greystones Co Wicklow. RGRE is also planning hotel developments in Enniskerry and Delgany, also in Wicklow.
Mary Mitchell O’Connor, the new Jobs, Enterprise and Innovation minister, has been told by officials in her department that cost cutting in Enterprise Ireland (EI) could jeopardise EI’s job creation targets. Headcount at EI has fallen by 200 since 2011. EI is now being asked to fund more of its operations form investment returns rather than government funding. Companies supported by EI employed more than 192k people last year. It is targeting 12k new jobs this year and €22bn in exports.
Galway couple Michael and Mary Hoare, who owe more than €5.6m to AIB, have been declared bankrupt after the High Court rejected their claims that the bank had given assurances it would not seize their family home or farm.
Indigenous film and TV projects availing of Section 481 tax breaks last year had an average budget of €1m – the lowest since 2008.
The Ballybane wind farm in West Cork has received the biggest single investment under the employment and investment scheme (EIIS) so far this year, having raised €1.3m, following on from €3m last year.
Nick Webb’s Insight Track covers the departure of Andrew Murphy from Slainte Healthcare; Murphy was the founder and chief executive and still owns about 25% of the business. Serial investor David Nash holds a c.63% stake in the business.
John O’Shea, the Republic of Ireland centre back, is getting into the housing game in the UK with some former colleagues and is planning to redevelop a site in Nottingham in the UK.
Euro Car Parks chief executive, Dave Cullen, is taking part in the Volvo Round Ireland race with his J109 performance yacht, aptly named Euro Car Parks. Euro Car Parks is also looking for adventure on the business front and is actively looking for acquisitions.
Simon Duke’s Business Focus piece covers the Brexit, not surprisingly, and is well worth reading.
Liberty Insurance who acquired Quinn Insurance have yet to make any money on its investment, despite having invested €300m. New chief executive Tom McIlduff said, “we started with a strategy to build the brand and grow the business without realising the market was in decline”. Of the 1,500 that were on the payroll when Liberty bought the business, only 400 remain. McIlduff sees the business breaking even this year and returning to profit in 2017.
The business interview is with Tim Kelly this week, who is another under the radar Irish success story in the UK. Kelly left school at 16 and is now chairman of Kelly Communications which has annual revenues of £150m in the UK. Kelly’s core business is installing cable and broadband in homes. It also installs signalling for the London underground, lottery machines for Camelot, rental bikes for the London bike scheme and charging stations for electric cars. Kelly Communications were part of the consortium bidding to roll out the Irish National Broadband Plan, headed by venture capital company Granahan McCourt and telecoms company eNet.
Paul Jacob, owner of Smart Storage, the under the stairs drawer storage unit business, is going from strength to strength since his appearance on Dragon’s Den and investment by Norah Casey. Turnover is forecast at €3.5m this year and €7.5m next year. Headquartered in Wicklow, the business has satellite operations in Manchester, Bristol, Birmingham, Stevenage and Crawley, all in the UK. Developer clients include Flynn & O’Flaherty, Westin Homes Ireland and Hartford Homes in the UK.
5% – 6% – The amount UK GDP would reduce by if Brexit occurs, according to George Osborne. @IndoBusiness
£10bn – The pro-Brexit estimate of the UK’s net annual contribution to the EU budget. @IrishTimesBiz
€1.69bn – The amount that Ireland contributed to the EU budget in 2014. @IrishTimesBiz
€900m – The amount of “fiscal space” Finance Minister Michael Noonan will have on budget day. @IrishTimesBiz
7.6% – The expected unemployment level by the end of this year, according to the ESRI. @IndoBusiness
€20bn – The value of exports posted by Enterprise Ireland-affiliated companies in 2015, 37% of which go to the UK. @IrishTimesBiz
€3bn – The estimated cost to Ireland between 2017 and 2018 of a UK “Leave” vote, according to the Department of Finance. @IrishTimesBiz
2nd – Dublin has the second highest cost of living in the EU. @IrishTimesBiz
77% – Latest implied probability of a “Remain” vote in the British referendum, according to @BetfairExchange odds.
11,000 – The forecast number of houses to be built in 2016, down from 11,600 in 2015. @examinerbiz
52% – Percentage of the UK that voted in favour of leaving the EU. @IndoBusiness
1.6% – The forecast hit to Irish GDP over two years in the event of Brexit, according to the ESRI. @IrishTimesBiz
9.4% – The GBP/USD rate fell 9.4% in morning trading, after the UK votes to leave the EU. @IndoBusiness