Business Post
The upcoming Budget has been described as the “most complex” Budget, given the requirement of significant opposition buy-in. Some papers speculate that Fianna Fáil will not sanction. The noises from the articles today are positive for business. There is talk of an extension of the amount individuals can invest under EIIS. USC will be reduced by half which should boost disposable income. Minister Coveney will have a lot of capital firepower available for igniting housebuilding.
According to the Business Post, the soundings are that the Capital Gains Tax relief for entrepreneurs will be extended from the current token 20% relief on the first €1m gain to closer to the UK’s 10% on the first £10m. This would be a great catalyst for economic momentum. We see a lot of businesses plateauing where a relief on CGT would allow a vendor monetise their life’s work in a tax efficient way by selling their business. Furthermore, the buyer, often the incumbent PAYE management team, would drive the business on and create a lot more economic momentum for the greater good. We acquired a business from an NI-based entrepreneur and intend to expand it significantly on the Island of Ireland. The vendor suggested to somebody that he would not have sold if the CGT rate was not 10% (he qualified for UK entrepreneurs’ relief).
Donald Trump has drifted from 9/4 last weekend to 100/30 this weekend. The odds this morning suggest Hilary has a 71% chance of winning.
“Irish Water’s workers are costing twice as much as their counterparts in the North, according to a new report.”
There is a hope that technology used on the M50 toll could also be used to pre-clear vehicles for crossing the border.
Michael O’Leary has said that the threat of industrial action from Gardai was “immoral”. Michael Noonan described O’Leary at a Fine Gael fundraiser as Ireland’s “leading altogether decent man”. O’Leary was very critical of how RTE reported the bus strikes and said it is like a “North Korean rat-infested Union Shop”.
There is speculation that two former Gordon Brothers executives could face director disqualification in the High Court over their governance of Clerys.
“The state’s competition watchdog has extended the time it is allowing itself to examine the acquisition of the Celtic Media Group by Independent News & Media.”
John Malone is understood to be using Qualifying Investor Alternative Investment Funds (QIAIF) to hold his hotel investments tax efficiently. The ability to use these structures may be curtailed with measures included in this week’s Budget.
The state is trying to reduce staffing levels in public nursing homes but will meet a lot of resistance from the Irish Nurses and Midwives Organisation. They wanted a higher ratio of nurses to health care assistants. The costs revealed during the week show that the costs in the public nursing homes are significantly higher than those achieved in the private sector.
David McWilliams asks a very good question in light of Theresa May’s recent statements that “if the Tories veer off in a protectionist direction, who will speak for British business?” He questions if the anti-immigrant supporters have thought about the effect of not having the services of “Jamaican nurses, Polish porters or Indian doctors” who have served the NHS so effectively over the years. He thinks there will need to be a lot of state support invested into regions to prop the economy up.
There is an article covering Harcourt Development’s global expansion plans.
Jo Malone is looking to open her second Jo Love’s boutique in Dublin.
AIB has bought a bundle of loans from NAMA which were secured on the ownership of the Hermitage Clinic. The loans were originally worth €40m. The Hermitage has turned operations around as it recorded a €4.2m profit on turnover of €57m last year.
Richard Burrows, the ex-Governor of Bank of Ireland and the chairman of British American Tobacco, has become chairman of AIM-listed Craven House Capital.
Volume 5 of Tony Blair’s former press secretary Alastair Campbell’s memoirs is being published tomorrow, covering the period 2003-2005. Tom Lyons gives us a flavour of what is in it from an Irish viewpoint: details of the Alex Ferguson versus Magnier and McManus dispute, Roy Keane, Blair, Bertie and Celia.
Trinity Biotech has been told by investors to find a buyer.
Michael Fingleton is pressing on with a multi-million development in Montenegro.
There is an interview with Sean Mulryan who launched details of his commercial development on North Wall Quay during the week. He has paid his €2.4bn in full to NAMA and will work with them on joint ventures. Oxley are his finance partner. Róisín Burke has an excellent interview with him. Some good quotes include:
– “We haven’t seen the impact of Brexit in our sales operation three months after it happened”. He said the correction in the higher end of the London market was happening long before Brexit came to town.
– Regarding Ireland and residential development, “We’re finding it very difficult to get land at the appropriate prices to deliver houses that people can afford…this is the biggest problem: housing land at an appropriate price.” This all suggests we need supply measures to solve the current lack of development. The current proposals seem to be more demand-focused than supply-focused.
The Sunday Indo also reports on Mulryan calling on the government to release land that it controls in the greater Dublin area and to enter into joint ventures with the country’s house builders in a bid to address the housing crisis.
Back to the Business Post. Brian Cowen, who was at the launch during the week, was quoted as saying that a punitive levy on withholding land, say 5%, is needed to unlock the land supply. He said, “one of the paradoxes that we need to think about I suppose as a result of the crash is people want housing, but no one wants builders. We need to get away from that.” Karl Deeter talks later in the paper about how this may be hard to execute and suggests an alternative land tax; the article needs to be read to be understood.
Enda O’Coineen of Kilcullen Kapital will moor his boat, the Kilcullen Voyager, at 11.15 a.m. from Custom House Quay tomorrow ahead of a 29k nautical mile race around the world.
Vita Liberata recorded losses of £1.3m last year. It is on a growth phase and would not be expected to be recording any significant profits at this stage in its evolution.
Credit Suisse is understood to be frontrunner to buy 100 Lower Mount Street. Ardstone Capital have developed it and are selling it through Savills.
There is a Brexit special with particular focus on the continually falling sterling.
The IMF say that Britain will be the fastest-growing large economy in the world and there has been no official data to suggest a post-Brexit slowing down in economic growth. There are suggestions of interest rate rises in Britain, one of Europe’s biggest banks is fragile and yet as all that news breaks, the euro strengthens significantly.
Accountant and pub financier David L’Estrange, who also owns MacTurcaills, has put more than seven figures into doing up the Bottle Tower in Churchtown, a landmark in that area for generations which has been closed since 2015.
McElhiney’s, the family-run department store in Donegal, has won a global e-commerce award in New York as work on a €2.2m extension to its online sales warehouse nears completion in Ballybofey. The extension will increase capacity to sell stock to 63 countries. General manager Martin McElhiney said the store’s online sales grew threefold last year.
Aryton Group, the health and safety company formerly known as Health & Safety Services, is recruiting 60 new staff for its Cork HQ and new Dublin office. The €500k investment follows a three-year average annual growth rate of over 40%, according to managing director Kieran Linehan, and supports further growth both at home and abroad.
Boran-Mopack, the Tyrone-based manufacturer of supplies and packaging, has invested €2.7m in its Strabane facility amid plans to increase export capacity.
BDO Ireland has established a new tax division to advise clients on international and EU customs trade ahead of Britain’s exit from the EU. The new team will be headed by Carol Lynch, who joins the company from Crannagh & Co.
There is a review of the CIF annual conference and a four-page pensions report.
There is also a focus on Irish SMEs with various contributors.
Ciaran McAreavey, managing director of Close Brother Commercial Finance, highlights SMEs limited access to equity, development capital and debt funding. Close Brothers are helping to close this gap by providing funding through its asset-backed finance products.
Deloitte also have two very interesting pieces in the section which are well worth reading. John Doddy, a corporate finance partner at Deloitte, discusses the funding challenge that currently exists, not just in the Irish SME sector, but in the UK and mainland EU SME sectors. He is quoted saying that, “Overall the SME sector remains over-reliant on debt as a source of funding” and that equity could play a key role in funding growth, while ensuring that the risk profile of the business was sustainable.
In addition, David Shanahan, a tax director at Deloitte, discusses the increasing importance of exports in Irish-owned companies, with exports now accounting for over half of total sales by Irish-owned companies.
Sunday Independent
Curbs on Qualifying Investor Alternative Investment Funds (QIAFs) and Collective Asset-management Vehicles (ICAVs) are expected to be announced in the upcoming finance bill. This has resulted in hundreds of millions worth of property deals being put on hold. Director at TWM Property Solutions, Sean O’Neill, is quoted saying investors remain “very positive” about Ireland, however there was “nervousness” among investors over the potential changes being introduced to QIAFs. CBRE’s Head of Research, Marie Hunt, also warns of the adverse impact that sudden changes may have on the commercial property sector.
Ibec has found that high childcare costs in Ireland mean that a second family income is diminished by an average of 92%. The report makes a number of proposals to help make childcare more affordable, including means-testing for child benefit and greater flexibility in child-to-adult ratios in crèches. Anne Heraty, Ibec president and chief executive of recruitment firm Cpl, was shocked by the report’s findings. Herarty discusses the findings and her views in this week’s interview.
“The Cabinet has agreed to increase the minimum wage by 10c to €9.25 an hour, resisting calls to make a more significant increase to the current rate in this week’s Budget, according to a number of sources.”
An Post is set to save €500k annually from a new ban on postal staff using company vans to travel to and from work. The company has informed 900 of its 3,000 drivers that they can no longer use their vehicle as a company car.
David McLaughlin, son of well-known Dublin stockbroker Kyran McLaughlin, has been hired by AIB to lead its private banking unit. McLaughlin, an UCD graduate, will join from Royal Bank of Canada where he has headed its Irish private banking offering.
Chuck Feeney’s Atlantic Philanthropies has invested c.$2.5m in Irish pharmaceuticals start-up Neuropath Therapeutics, a company which aims to develop treatments for central nervous system disorders. Neuropath is listed on the Trinity College Dublin website as a campus company and its directors are James Peter Downey and Julie Anne Kelly. Feeney has invested c.$1.2bn in Ireland through Atlantic since 1987 and this investment is likely to be one of the last investments made by Feeney through Atlantic as it aims to conclude all of its operations by 2020.
Martin Dunphy, the Waterford finance entrepreneur, has invested several million euro, through his London-based investment firm Ascot Capital Partners, in UK-based fintech start-up WeSwap. WeSwap allows travelers to save money on currency exchange and swap it with others who have the corresponding currency. WeSwap has over 200k users, has partnered with the likes of Expedia and Skyscanner and is growing by up to 25% per month. The company is set to raise an additional €4m in a crowdfunding round that will begin next week.
Terry Clune’s currency transfer business Transfermate is in talks with potential investors about selling a minority equity stake in the business. Transfermate is seeking capital to fund further growth which is said to be on track to hit 40% this year in terms of revenue. Sinead Fitzmaurice, CFO and co-founder, told the Sunday Indo that its “five-year plan focuses on aggressively expanding our global sales force…funded through an equity growth partner with experience in aggressive global scale of financial services and IPO preparation”.
Page 2 of the Sunday Indo captures another deal for Conor Barry and the team at XMS Capital. This time XMS have sold Ruskin Air Management for Johnson Controls Inc – the most recent inhabitant of Cork since they merged with Tyco last month. The Ruskin deal marks an impressive run for XMS with the Bemis / Steripack and Physio Control / Heartsine deals completed in the last 12 months.
Margaret Donnelly, the former editor of Agriland, has joined Independent News and Media and will be focusing on a new digital farming product called Farm Ireland.
“Arnotts, the Dublin department store, is to launch beauty brand Mac next month, the first time the international beauty label has been available outside of Brown Thomas in Ireland. It represents the latest co-operation between Brown Thomas and Arnotts which are now both owned by the Selfridges Group.”
Richard Curran writes on how the government is “playing high-stakes poker” with the Central Bank over mortgage lending rules. Noonan is due to announce up to €20k in a help-to-buy scheme in this upcoming Budget. Curran views this as a roundabout incentive to make building more profitable by passing on the ultimate benefit to the builder in the form of higher house prices. An interesting point made by Curran is how this measure is “unashamedly” using exchequer funds to help people get around the Central Bank guidelines.
Curran also discusses the rumoured tie-up between KBC and Ulster Bank. Brian Carey in the Sunday Times also discusses the issue. In comments during the week, RBS chief executive Ross McEwan didn’t rule out acquisitions, which could mean he casts his eyes over Permanent TSB and KBC. Carey thinks the high level of impaired loans in both banks (23% at PTSB and 45% at KBC), coupled with the cost of merger and integration, may be too high a barrier.
Back to the Indo. Curran also writes on the complexities surrounding Brexit that Enda Kenny and the current government now face.
Friday’s sterling “flash crash”, driven by nervous investors dumping the British currency in advance of a so-called “hard Brexit”, saw the euro climb to 92p at one point and parity could be just months away, says Dan White.
This week’s focus pieces cover the driving forces of increased motor insurance costs and the importance of getting women back into the workforce. Both are well worth a read.
“It’s probably fair to say that the next 12 months will be the busiest in the IRFU’s history”, according to Padraig Power, the director of commercial marketing at the IRFU. Rugby’s increasing popularity has led to commercial success off the pitch with the IRFU’s turnover hitting €76.1m and profits reaching €7.3m in the year to the end of April 2016.
Sunday Times
Bank of Ireland is offering generous pension top-ups to encourage former employees to surrender their pension rights by opting out of the defined pension scheme before they retire. Nearly 6.4k former employees remain in the BOI scheme as deferred members, accounting for 19% of its funding liability. The move is the latest attempt by the lender to curb its growing pension deficit which has jumped by €450m since the start of the year to reach €1.2bn.
Brian Carey has some quality insights again this week:
– A recent review of the gambling sector by the UK’s Gambling Commission is to examine a ban on bookmakers advertising before 9pm and also bookies’ use of social media. Paddy Power Betfair has been a pioneer in the use of both TV and social media advertising; its share price was down 5% on Friday on news of the review. The real focus of the UK review will be fixed odds betting terminals (FOBT’s), which have fuelled growth in the high street retail shops in recent years. Paddy Power Betfair earns just 6% of group revenues from gaming machines, compared to 40% at William Hill and more than 35% at Ladbrokes/Coral. The clampdown and critical eye on the gaming industry is part of prime minister’s Theresa’s May’s campaign to put her government more on the side of the ordinary Joe Soap rather than big business.
– The book of Quantum, which is the bible of personal injury awards, was published last week, giving some insight into the reasons for the recent spike in insurance premiums but fell well short of justifying the jump in premiums according to Carey. An interesting out take was that whiplash claims account for more than 80% of motor insurance claims and awards in Ireland are three times those in Britain. The UK is now moving to ban cash compensation for whiplash injuries.
– Carey raises the question as to whether it is appropriate for KPMG to examine the sale of Clerys by Gordon Brothers to Natrium, which was owned by Deirdre Foley’s D2 Capital and Cheyne Capital, as the firm was liquidator of Clerys, special liquidator of IBRC and an acquisition adviser to Natrium.
An Irish pharma start-up that is working on treatments for Alzheimer’s and Multiple Sclerosis has raised more than €45m from investors, including cash from Howard Schultz, the founder of Starbucks. The company aims to uncover new genetic factors behind chronic incurable conditions and will work closely with Irish universities and research bodies.
The management team that broke up and sold the former Quinn manufacturing group was paid almost €6m in dividends after the €700m asset sell-off last year. Paul O’Brien, chief executive of Aventas, the former Quinn operations, received €2.5m, chairman Mike Tighe was paid €1.27m, while CFO Paul Donnelly and COO Kieran Leonard were paid c.€1m each.
Cormac Lucey sees some storm clouds on the horizon for Ireland and is in agreement with economic growth predictions being revised down. The outlook for global trade remains weak and he also thinks “the current political backdrop in the developed world suggests poor prospects for the Transatlantic Trade and Investment Partnership and for further trade Liberalisation”. This is not good news for us given our dependence on multi-nationals. With the EU taking a harder stance on our tax regime and the prospect a hard Brexit, there may be more difficulties ahead.
Consumer credit is growing for the first time since the financial crash and has lagged a consumer spending recovery that has been ongoing since 2012, according to the Central Bank. The typical profile of lending includes major purchases like cars, furniture and electrical items.
L’Oréal is opening a shop on Grafton Street, replacing a Three Mobile phone shop.
KPMG and Deloitte have emerged as winners from the tracker mortgage scandal, picking up appointments from the 5 mainstream lenders to oversee redress schemes for customers who unfairly lost tracker mortgages. KPMG has been appointed by AIB, Ulster and PTSB, while Deloitte has been appointed to Bank of Ireland and KBC. KPMG was reportedly paid €8.6m by PTSB last year, mostly for its role in overseeing a limited inquiry that led to tracker loans being restored to fewer than 1,400 customers.
Lioncourt Homes, a UK housebuilder backed by David Andrews and Michael Tunney, made €10m operating profit in the year to March 2016 as building work ramped up significantly. Its long-term development portfolio includes four strategic sites with potential for 3k homes. Lioncourt Homes is run by Colin Cole, a former director of Westbury Homes.
The Dublin Commissioner for start-ups has lobbied the government for a new CGT regime for the owners of all companies under 5 years old. The government has said it will reduce the CGT rate to 10% for gains of up to €10m for companies set up from 2017. Niamh Bushnell, the Commissioner for start-ups, is lobbying hard for the measure to be applied retrospectively for companies set up in the last 5 years in order to box off the clear incentive for start-ups based here to move elsewhere to obtain more sympathetic CGT supports for start-ups.
SHS, the Northern Ireland drinks group owned by the Sloan and Slater families that owns WKD alcopops and Merrydown cider, increased its reported profits by 21% last year to £13.7m (€15m).
The owners of Outsource Services Group (OSG), led by chief executive Malcolm Hughes, took a dividend of €6.8m before selling the business in May. The loss-adjusting, claims handling and recruitment company was sold to Vericlaim, part of the US claims management group Sedgwick, for an undisclosed sum. It was reportedly close to a sale in 2010, when bids from a number of parties, including the quoted recruiter CPL Resources, put a value of over €25m on the business – the recent sale is thought to have realised less.
RTE has taken a near 20% stake in VT Networks, which is developing a network to power the internet of things revolution in Ireland. VT Networks, founded by Mark Bannon and Will Ferguson, raised €1.2m in January from investors including Dome Telecom’s Dara O’Mahony, Kentz co-founder Noel Kelly, former Accenture boss Mark Ryan and Suretank’s Patrick Joyce.
Zhang Yuesheng, a Chinese billionaire, has emerged as a major buyer of Irish bloodstock, after securing deals for almost 70 horses in the past month. The businessman is working with agents BBA Ireland to build up his stable of Irish horses. Yulong Investments bought 68 horses at the Goffs September sale, varying in price from €2k-€200k. They expect to buy a further 20 at the next sale, with most of the horses to return to China for racing and some to remain in Ireland for training.
There are more positive retail signs emerging: Kurt Geiger, the upmarket shoe and accessory brand, increased its sales in Ireland by 18% last year, with operating profits rising sevenfold to €765k.
Populis Ireland, a Dublin tech company which employed more than 130 staff at its peak, is to be wound down. The business sold online advertising.
Hibernia REIT is seeking shareholder approval for backdated changes to the performance fee paid to its management. The company wants the calculation of the fee to include changes in the value of development assets, which are currently excluded. An extraordinary meeting will be held on the 26th of October to vote on the matter.
Nick Webb’s Inside Track this week:
– JP McManus will miss this week’s Alfred Dunhill Links Championship Pro-Am at Carnoustie in Scotland, but his son Kieran will be deputising for him. JP has won a record two individual and two team events previously. Dermot Desmond and sons are also set to play.
– Musgraves has seen two senior executives depart: Adrian Grey, head of HR, and Tony Maher, the group head of transformation.
– Former NAMA adviser Michael Geoghan is now an unofficial and unpaid adviser to Sean Mulryan’s Ballymore Properties.
Philip Connolly has a good article on the post-Brexit currency storm that has hit us and the hard road ahead for Enterprise Minister Mary Mitchell to deal with it.
Gavin Daly’s interview this week is with Martin McVicar, chief executive of Combilift, whose childhood ambitions were to become a farmer; he now hopes to elevate Combilift into a €1bn company.
Clodagh Cavanagh, managing director of Abbey Machinery, shares some insights from her career and how she has successfully taken on the role is what is now a third generation family business.
7.6% – The annual increase in house prices in the period to end of September, according to @daftmedia. @IrishTimesBiz
3.6k – The number of properties available to rent nationwide on August 1st, a decrease of 85% since 2009. @IndoBusiness
3.5% – @MerrionCapital’s latest forecast for Irish GDP for 2016, down from 4.8% in its previous outlook. @examinerbiz
19% – The year-on-year increase in the number of house completions in the eight months to August. @examinerbiz
€48k – The deposit required for a three-bed property in Dublin, up from €25k as a result of the new lending rules. @IrishTimesBiz
€33.4bn – The exchequer returns for the nine month period to September, an increase of 5.7% year-on-year. @IrishTimesBiz
7.9% – The unemployment rate for September, a decrease from the 8.2% recorded in August. @IrishTimesBiz
£0.90 – @UBS’s projected euro/sterling exchange rate by the end of the year. @IrishTimesBiz
€350 – The annual increase in take-home pay for workers on €70k as a result of the proposed 0.5% cut in USC tax in this year’s budget.
2.3% – The expected average increase in wages this year, according to @Irishjobsie. @IrishTimesBiz
1.7% – The projected GDP growth for the Eurozone in 2016, less than half Ireland’s projected 4.9% growth rate, according to the @IMFNews.