Central Bank Mortgage Rules
The Business Post’s intelligence suggests that the first-time buyers’ grant of €20k may be scrapped in light of the reduction of the requirement to have a 20% deposit rule on houses over €220k to a flat 10%. There is lots written across the papers about the relaxation of the Central Bank rules the consensus seems to be that a supply problem is being fixed by increasing demand.
Sunday Business Post
A Red Sea poll worryingly revealed that 62% of those polled support full public sector pay restoration, even if it means a lower cut to USC.
The political party standings from the most recent Red Sea poll are as follows:
Fine Gael: 25% (no change)
Fianna Fáil: 24% (-2%)
Sinn Féin: 16% (+3%)
AAA-PBP: 5% (-4%)
Independents: 12% (+2%)
Ind Alliance: 4% (-2%)
Soc Dems: 4% (+1%)
Labour 5%: (no change)
Green Party: 3% (no change)
Other: 2%
There continues to be plenty of articles about Frank Cushnahan and NAMA’s Project Eagle.
Senaca has sought court protection through examinership. It provides many forms of security services, including armoured cars for cash-in-transit movements across Europe. In 2014, it had a turnover c.€19m and a gross profit of €4.2m, but an overall net loss. It had debt of €4.5m then. The winding down of construction activity at the Corrib gas terminal in Mayo definitely hit the bottom line of Senaca. The Sunday Times reports that Baker Tilly’s Neill Hughes has been appointed as the examiner.
Jack Horgan-Jones has some revelations about the leaks from NAMA that came via emails sent by Enda Farrell. NAMA revealed to the High Court in 2012 that Farrell had sent more than 30 emails containing sensitive information to parties he should not have. The Business Post have seen the content and who they were sent to.
Aergo has added four new Bombardier Q400 NextGen aircraft to bring its total fleet to 30. Denis O’Brien sold his majority stake in Aergo to CarVal in 2014.
CityJet’s losses narrowed from €30m in 2014 to €10m in 2015. It has an ambition to grow its fleet from 26 to 60 over the next three years. Currently, wet leasing accounts for 50% of its business and that is expected to rise to 80%, whereby it would operate aircraft for the bigger brands. It is also looking to acquire some of the regional arms of big airlines which are being culled. According to the Sunday Times, CityJet is close to signing a new contract with a European airline in the next two weeks, as it drives towards a deal to buy Stobart.
NI energy giant Viridian made £22.5m off £288m turnover last year.
Amanda Pratt of Avoca fame has been commissioned by one of Scotland’s richest families to set up a restoration yard in the grounds of their Dalkeith Palace. She gives a very interesting comment about their motivation to sell Avoca to Aramark.
“We really felt that if it was difficult for six of us to love each other and continue the business, then if the next generation wanted to come in, the complications were only going to get worse.” She also notes that Aramark have been a great buyer and very supportive to her siblings who have remained in the business.
Beutifi is raising €500k to open a London office. Beutifi provides software to beauty salons for booking and their websites.
The Irish Times are offering 15 voluntary redundancies as it seeks to trim its cost base. It recorded an operating loss of €1.1m in 2015 and expects to be cash-positive in 2016.
Brendan McAtamney, CEO of UDG, has expressed a desire to acquire one or two companies in the next year in its core markets of the US, Britain and Japan.
Digital bank N26 has ambitions to grow its share of the Irish current account market significantly. It currently serves the Irish, French, German and Austrian markets. N26 has raised €50m in funding and looks like it will be a coming force in digital banking.
Dominos has kept its stores estate flat at under 47 outlets since 2011. However, it now has ambitions to grow to 75. It achieved €41m sales from 47 stores. Over half of its orders come from digital orders.
There is an exclusive interview with Nicola Sturgeon, Scotland’s First Minister.
The Business Post has secured the services of the former secretary of the Department of Finance, John Moran, for the next three weeks. Some points from his article this week identifying the problems we face in the future include:
– Within 30 years, we are expected to go from under 5m people to 6.7m.
– The over 65 population is expected to be over 1m by 2031. The effect on pensions, increased public sector workers and care demands, etc. will be significant.
– There is very little headroom, if any, for public sector pay increases.
– Dublin ranks 46th of 150 in the most “Liveable Cities” index from the Economist.
– Our universities struggle to make it into the top 100.
– AA Home Insurance estimated that the annual cost of maintaining a home is 45% of the average Industrial wage. 33% is the target figure internationally. The Irish Times concluded in an article last week that the total cost of living is nearly €50k, far in excess of average industrial wage.
– Dublin accounts for more than 40% of our inhabitants; very few other countries’ capitals account for >30% of their population. There is a big Dublin/Rural divide happening. Moran highlights that we can only really grow west as the Irish Sea gets in the way of expanding east.
We look forward to reading the sequels with solutions over the coming weeks.
JP Scally, Lidl MD, is interviewed in the Business Post. Lidl now has 147 stores in Ireland and 38 in NI. It has an 11.4% share of the grocery market. It has no ambitions to be the biggest. New stores in Glenageary and Cavan are expected soon. The Westmeath native says that he looks for enthusiasm over any other quality. “Lidl can teach people the majority of skills they need, he says, but ambition and drive is much harder to teach.”
There is a profile on Gay Byrne.
Silver Hill Foods has invested €3m extending its warehouse facilities.
Following its recent opening in Ennis, the Kilkenny Design Shop has opened a new store in Greystones.
There is a management page in association with IMI (the Irish Management Institute).
There is a focus on:
– Cloud Computing.
– Irish Customer Contact and Shared Services Awards.
– Future of Insurance Summit.
– ICT Security.
There is also a Corporate Transactions and Corporate Finance focus. The contributors include:
Katherine Byrne of BDO, who marks the financial services, technology, healthcare, industrial and construction sectors to have the most corporate activity next year.
John Bowe of Mazars says that, “Private Equity can be a good option to allow founder families to successfully exit/de-risk their business and allow management teams to continue the growth story”.
Naoise Cosgrove, managing partner of Crowe Horwath, advises business owners “Don’t wait until the day you want to retire to finalise your exit strategy, the exit process should be well thought out and should be in place two to five years ahead of the planned exit”.
Anya Cummins, corporate finance partner in Deloitte, says that, management buyouts (MBOs) are a win-win solution, whereby, “founding shareholders can extract some capital from the business but may not wish to exit entirely, and management teams are motivated to bring the business to the next level. From a management perspective an MBO presents a great opportunity to own the business they are already running and by allowing them to invest in the business they can deliver an accelerated growth plan”.
John Doddy, also a corporate finance partner in Deloitte, has referred to the fact that 96% of respondents to a survey at Deloitte’s CEO forum are planning for expansion and 84% are expecting revenue growth.
Graham Reid of EY, Griana O’Kelly of Lavelle Solicitors and Luke Mooney of Duff and Phelps also have articles.
Colette Sexton speculates that EY might be the future inhabitants of the old POD nightclub. The Business Post reported previously that, “the Kenny family’s Clancourt developer bought the POD from Dublin nightlife and festivals heavy hitter John Reynolds for some €6 million during the summer”.
Sunday Independent
The Revenue has issued letters to 400 Kerry milk farmers due to strong demand for Co-op shares on an unofficial market. The shares have been issued based on the volumes of milk supplied and Revenue has now decided that they should be counted as trading income and subject to income taxes. Typically, the shares have a nominal value, however unofficial trading has resulted in high prices being paid for the shares. According to the article, the Co-op owns just under 14% of Kerry Group plc, which is worth around €1.6bn. A look-through valuation places a €400 price on the shares, however a discount must be applied for the illiquidity of the shares.
Louis Fitzgerald, one of the country’s leading publicans, has called for a government initiative to bring home Irish workers. Fitzgerald is also the feature of this week’s interview.
Pat McCann, chief executive of Dalata, has said that Dublin hotel rates are too low and this is hindering the supply of new hotels. He is quoted saying: “Out of a basket of 20 European cities, Dublin is number 11 in terms of room rate but number one in occupancy. In my view we will never be able to command the room rates achieved by hoteliers in cities like London or Paris but perhaps that should be our ambition”.
“An investment memorandum prepared by an English businessman for Chinese investors who were prepared to spend at least £1bn acquiring NAMA’s Northern Ireland assets proposed the payment of ‘introducers fees’ of 5% for both the businessman and NAMA’s then Northern Ireland advisor, Frank Cushnahan.” Had the deal gone ahead, both the English businessman and Cushnahan would have netted £50m each according to the article.
Richard Curran’s articles this week:
– As the Central Bank has now loosened its mortgage rules, he questions the need for the help-to-buy scheme, calling it a free money scheme when 75% of first-time buyers have more than the minimum required deposit. His view is reducing the cost of building would be a far better way to implement policy than raising the house prices.
– He commends the Oireachtas committee report on motor insurance released during the week for not pulling any punches and for the ideas for reform presented within it. The sector was accused of hiding key information from public view and engaging in cartel-like behaviour.
– The collapse of Rush Credit Union has brought into question how credit unions are run and has done enormous damage to the reputation of the sector.
Ian Quinn, co-founder of Galway medical devices firm Creganna Medical, has applied for planning permission to convert a retail unit into a café/sandwich bar in the Bottleworks building in Ringsend. The company, Xenium Clarinbridge, is owned by him and his brother Enda and made profits last year of €1.1m, up from €300k a year earlier.
Quality Football Ireland (QFIL), an Irish-based sports management firm, is due to net €7.5m following a deal to sell Portuguese midfielder Joao Mario to Inter Milan. The €45m deal is the most expensive in Portuguese football history. QFIL is said to have acquired c.20% of the economic rights to Joao Mario in 2012.
Over 200 marketers and media industry professionals attended Independent News and Media’s event celebrating the “power of print” in Dublin’s Royal Hibernian Academy during the week.
Aramark, the global food and facilities management giant, has invested €1m into a new food hall in Dundrum Town Centre that will employ 60 people. Dundrum Town Centre attracts more than 365k customers every week. Aramark has agreements with Poulet Bonne Femme and Kanoodle that will see them open 5 new outlets each by 2022 and has recently entered into similar agreements with Dublin-based Chopped and health food restaurant chain Freshii.
Arachas Insurance, one of Ireland’s largest non-life insurance brokers, has hired AIB corporate finance to explore a potential sale of the business. According to the Sunday Independent, the company is looking to net €25m from the sale and there could be interest from both trade buyers and private equity firms. Turnover at Arachas rose 9% to €15.1m in 2015. Pre-tax profit rose from €667k in 2014 to €1.05m.
A Revenue crackdown on tax avoidance used by Ireland’s wealthiest has clawed back €36.6m in the past year. The team is currently dealing with over 430 cases as part of a clampdown on individuals and businesses who try to avoid tax through artificial loss relief schemes and artificial capital loss schemes. These schemes are estimated to have dodged €110m in capital gains tax.
Councillors have blocked Tetrarch Capital’s most recent planning submission to build 13 new houses on the Mount Juliet estate. Tetrarch bought Mount Juliet in 2014 and its portfolio includes many of Ireland’s best hotels.
There is a four-page investment guide in this week’s paper.
Golden Discs, one of the last remaining music and movie retailers, and logistics company Exertis have signed a new deal with Tesco to supply to 80 of its stores around Ireland. Stephen Fitzgerald, chief executive at Golden Discs, is featured throughout the article. He thinks that the way people consume content is undergoing enormous change and “has never been more fragmented”. Despite chart-topping DVDs now selling hundreds rather than thousands of copies in Ireland, Fitzgerald thinks there is still opportunity to grow the business through vinyl sales, which is up 200% year-on-year, DVD box sets and newer higher definition DVD formats such as 3D and the latest technology, 4K.
Dan O’Brien has a great piece discussing the jobs growth figures released this week. The rate of employment growth has slowed down in the first two-quarters of 2016, but remained strong at 0.7%. O’Brien questions whether or not an inflection point has been reached and the economy has run out of steam, given that other non-employment indicators are pointing to a further slowdown in the current quarter.
The Irish government has agreed to pay a staging fee of €140m to World Rugby in its bid to host the 2023 Rugby World Cup. The Rugby Council will vote on Ireland’s bid on November 17th, 2017. “If successful, the win could be a game-changer for Irish rugby – and bring a €1bn payday for the country.”
There is a good Q&A piece with Michael Gaynor, the marketing director of Toyota Ireland. Toyota currently has a 10.5% share of the Irish new car market, 47 dealerships around the country and 390k people driving one of its cars. He discusses the company’s Irish performance, trends, branding and the future of motoring.
Sunday Times
Barry O’Callaghan is paying more than €20m for an office block in Leopardstown which the Riverdeep founder plans to turn into the country’s first international school, which will be aimed at the children of multinational executives and diplomats. O’Callaghan is in talks with an academic partner and the former education minister Ruari Quinn is working with him as an adviser.
Brian Carey’s Agenda column this week:
– Post the collapse of Rush Credit Union, Carey discusses the challenges facing credit unions. The car loan, once the bedrock of the credit union, has now been replaced by the personal contract plan (PCP) which now dominates car finance and the pillar banks are now open for and targeting personal loans.
– Stripe, the payments company founded by Limerick brothers John and Patrick Collison, is now worth $9bn, which is nearly double what it was worth in the summer of 2015 when it did its last fundraising round.
The first public hearings into the conduct of the management at Irish Nationwide Building Society are scheduled for this week as part of an ongoing inquiry by the Central Bank of Ireland.
3e, the channel which carries re-runs of programmes such as Xposé, made more than €4m in profit for otherwise loss-making TV3 last year. Losses at TV3 widened to €17m from €7.7m the previous year.
Cormac Lucey reports the ECB’s desire to unwind the special arrangements put in place to set up NAMA has meant that the agency has been under pressure to accelerate disposals.
Property developer Johnny Ronan has sought planning permission for a 141-bedroom hotel in Enniskerry, Co. Wicklow, close by to the Ritz-Carlton hotel, which was a Treasury Holdings development.
Lone Star has bought thousands of mortgages from Irish Nationwide mortgages and believes they are worth up to €90m more than the discounted price it paid for them.
Igloo Glass, a Dublin start-up, is preparing to launch a new heat absorbing technology that can replace ice. The new glass technology allows liquid to maintain its temperature for a consistent period of time by drawing heat out of the liquid.
Ospona Technologies, a Dublin drug development company which has already raised €65m in funding, is finalising another €10m round from existing investors.
The American maker of Velcro, the ubiquitous fastener, has invested €450k and taken a strategic stake in Stay-hold, a Dublin company that invented a plastic “wall” to stop objects moving around in car boots.
The Teeling Whiskey Company has linked up with a boutique Chinese winery to finish an aged single malt in red wine casks which will give the Dublin whiskey a local flavour and association in its foray into the high-end Chinese drinks market.
Turnover at Max Benjamin will be up by 40% to €3.8m this year as the Irish candle company reaps the benefits of a rapid international expansion. The business was founded by brothers Mark and David Van den Bergh a decade ago and manufactures all its products in Enniskerry, Co. Wicklow.
Belgian infrastructure company Tinc is to conclude its first deal in Ireland, having agreed to invest €30m in a wind project in Co. Offaly.
Shareholders in Steripack, one of Ireland’s most successful mid-sized manufacturing companies, are to receive €12.5m as part of a share buyback programme. Earlier this year, Arvcan Holdings, which is controlled by Garrett Moore, Barry Moore and Aidan O’Brien, sold Steripack’s specialist medical and pharmaceutical packaging business to the American corporation Bemis in a deal reported to be north of €70m.
A new Kilkenny beer made by the descendants of the Smethwick brewing family has received backing from Michael Meade, a managing director of Citi who has led a $1m funding round into Sullivan’s Brewing Company.
Horseware Products, a Co. Louth maker of horse rugs and clothing riders, recorded profits of €2.3m and revenues of €40.4m last year.
Longboat Analytics, a tech start-up serving the clinical trials market has raised €3.8m. The funding was led by former Firecrest Clinical boss Gerard Ryan, who is also chairman of the company.
The BB Coffee & Muffins owners plan to double its outlets across the UK and Ireland to 100 by 2020.
Harland and Wolff has secured a “multimillion-pound contract” with the wind farm developer Scottish Power Renewables, which will support 200 jobs.
Ipcom, a private equity-backed Belgium company, has acquired Thermal Insulation Distributors (TIDL), a supplier of insulation products to the building and industrial sector.
Cerberus is transferring the management of a €250m portfolio of residential mortgages and personal loans, acquired this month from Danske Bank, to outsourcing specialist Capita.
Nick Webb’s inside track:
– Suggestions that the Central Bank is giving the cold shoulder to UK investment banks considering a move to Ireland could be showing a major lack of ambition according to Webb.
– The Sligo-based Orreco, a sports tech company, has just appointed John Moloney, Glanbia’s chief executive, consumer goods boss Colin Gordon and Kevin Tolan from the US. They join golfers Pádraig Harrington, Graeme McDowell and former rugby player Keith Wood on the board.
– John Climax and Ronan Lambe who have invested over €23m to date in DS Biopharma, which invented a cure for forms of non-alcoholic liver disease, have recently spun out part of the business in a new vehicle called Afimmune.
– Greg Turley of Cartrawler fame has just capitalised his personal investment company with €20.3m and has recently backed Mozio, a San Francisco-based travel tech firm.
Niall Brady’s Business Focus piece covers the Central Bank and its relaxation of the mortgage deposit rules.
The business interview this week is with Cyril McGuire and is a very interesting read.
30% – Potential drop in EU exports to the UK post-Brexit as a result of tariffs being imposed, according to research by the @ESRIDublin.
1.4% – The projected growth in the UK economy next year, down from the previous forecast of 2.2%, according to the British government.
10% – The deposit amount that will be needed by first-time buyers to buy a home, regardless of the property price. @IrishTimesBiz
7.5% – Ireland’s unemployment rate in the 12 months to October; employment levels have now increased for 16 successive quarters. @CSOIreland
7.3% – The annual rate of inflation for residential property prices, according to the latest figures from @CSOIreland. @IrishTimesBiz
0.6% – The projected growth in Northern Ireland’s GDP next year, the slowest growing regional economy in the UK, according to @PwCIreland.
1% – The interest rate on 10-year Irish sovereign debt; it has increased threefold since the start of October. @examinerbiz