In addition to the UK elections, there is a lot written about the public sector pay deal which involves an almost complete restoration of boomtime pay levels by 2020. There is also a focus on the AIB flotation.
Hugh O’Connell has an interview with EU agricultural commissioner Phil Hogan who thinks the role of social media is having a big influence on politicians’ lives.
A number of medical professionals who have had their tax structures involving limited companies deemed as tax avoidance by the revenue are taking a multi-party action against Houlihan Cushnahan, a firm who advised them to put in place the structure.
Leo Varadkar is said to be moving against Michael Noonan’s original plan for €1bn per annum to be set aside for a rainy-day fund and is intending to channel that into infrastructure projects. Ian Guider has a good article about the lack of fiscal space in Ireland on the back of the public sector pay deal last week.
AIB is said to be preparing two loan book sales, one packaging the loans of its 35 biggest borrowers which have fallen into arrears and the second a book of underperforming mortgage debt. It’s said that the results of the UK election will not interfere with its IPO plans.
The family of JP McManus have emerged as the purchasers of a £55m Chelsea pad in 2012 in the exclusive area called The Boltons. Renovations are said to have brought the value to over £100m.
Self-employed fathers’ account for 9% of paternity leave claims, even though 20% of the workforce are self-employed.
Around 22k housing units with planning permission in Dublin are not in construction. This year 18k houses are expected to be built nationally which is a 40% increase on last year using the same measure. The accuracy of the relative amount of the increase is probably sound but the quantum may change depending on the data source. The biggest increases are in areas within half an hour of the M50, in counties like Meath and Kildare.
Emma Maye, daughter of the late Liam Maye, who was a partner in the Dundrum Town Centre, and her husband Alan Hegarty have added a builders’ provider store in Blackrock to their Clondalkin and Newtown outlets. They also own the website Build4less. They also have residential sites with capacity for over a thousand homes. They have been buying up residential and retail/industrial sites in Dublin and Wicklow since 2013. She is interviewed in the Business Post by Róisín Burke.
The Department of Communications has confirmed it will publish the BAI’s report into the proposed acquisition of Celtic Media Group by INM. Both parties pulled out of the deal in recent weeks by mutual consent. The Sunday Times reports that INM was being asked to give a commitment that it would maintain the number of journalists at Celtic Media indefinitely which would have limited INM’s ability to cut costs. In 2015, Celtic Media made €11.3m in turnover and a pre-tax profit of c. €214k.
Providence Resources has bolstered its balance sheet with significant investment from oil giant Total.
Stephen Kinsella writes on the possible implications around Brexit negotiations given the influence DUP will have.
David Webster’s operating company Podium Hospitality is partnering with Sheraton to operate the Pillo hotel near Tayto Park in Ashbourne. Webster’s company, Podium, also has contracts to run Dundrum House in Tipperary, Kilkea Castle, Celbridge Manor and Parkview hotel in Wicklow. The article highlights that 75% of international hotels are operated under local brands and only 25% are in Ireland and a lot less if you take out the Dalata effect.
Denis Naughten is expected to announce details of the updated energy support scheme by July which should be the catalyst required to really make solar energy viable in Ireland and bring more parity to the treatment given to on-shore wind and other forms of renewable energy, including offshore wind.
Editor Ian Kehoe writes how the effective relaxation of the Central Bank rules has just resulted in rising house prices (10% rise in past year) as warned by the paper at the time. He also claims that the sale of land to funds by NAMA has not helped as they are not developers. The OECD has warned that Dublin could be heading for another property bubble. Since the bottom in early 2013, prices have risen by 50%.
Richard Curran in the Sunday Independent also reports on soundings last week from the Irish Fiscal Advisory Board and the OECD which warned of the risks of growth in house building and a potential bubble emerging. Curran highlights that while there is high relative growth it is being judged off a low base and needs to be considered in this context. Controls are in place in the mortgage market which should help reduce the risks of overheating.
Barry J Whyte interviewed two generations of the Smurfit family and consolidates his finding into an article about “Irish business royalty”. Michael’s dad “Jefferson Smurfit was a driven man gripped by an almost pathological fear of being poor. That fear, palpable if subtly evolved, is what has driven almost all of the subsequent Smurfits.” Michael credits six guiding principles he learnt from his Dad, namely, “loyalty, integrity, respect, safety, teamwork and entrepreneurship”. Dermot, Tony’s uncle, mentored Tony, now CEO of Smurfit Kappa, in the early stages of his career and how to deal with his Dad. They also refer to the wider family meetings they have. There is a good quote on a separate comment piece where Michael said “Smurfits never set out to be the biggest of anything. We set out to be the best”.
There is a profile on Simon Harris.
Dave McDonald of Nova Telecom is setting up a new broadband arm to the business and has already won a €1m contract. Pure Telecom is also in the Done Deal section celebrating a big contract win.
Office supplies company Codex is also celebrating a €7m contract to supply biros to all government departments.
There is an interview with Paul O’Neill, newly-appointed editor of Irish Times, who says his success will be measured by how his team’s content drive digital subscriptions. Paper sales have fallen by 34% between 2011 and 2016.
There is a focus on ICT in retail.
Jack Horgan-Jones has an article on where Quantitative Easing money ended up. Large corporates have been the big winners with low yield bond raises including DAA finance, Ryanair, ESB Finance, Kerry Group, CRH, Gas Network Ireland, Liberty Mutual and other Irish corporates.
Michael Murray writes an open letter to Leo Varadkar which includes why Capital Gains Tax should be dropped. He quotes the 230% increase in CGT takings in 1998, the year after Charlie McCreevy reduced CGT to 20%. In the US and Australia, it has been proven that increased CGT reduces the total take and a reduced rate increases the total take.
Further to last week’s news, Illann Power and Pat Phelan are interviewed about why they closed their fund on the back of a dearth of truly internationally scalable opportunities.
Kitman Labs’s technology is being used by the Lions squad. The Company is backed by a number of rugby players and investors.
Michael Maye is said to be proposing to get British Military prefabs to solve the lack of student accommodation in Galway.
Investment firm FL Partners is reported to be in discussions with the local housing associations in Clonmel and Dundalk with a view to constructing up to 300 social housing units on sites it owns in these areas. The project could be worth up to €50m. FL Partners, run by Neill Hughes and Peter Crowley, is also engaged in house building in South Belfast and Orlando, Florida.
Samantha McCaughren interviews Enda Gunnell, CEO of pay-as-you-go electricity company Pinergy. The business has revenues of €30m and c.30,000 customers which Gunnell expects to double over the next few years. It is now also looking to move into the business electricity market where it will offer sustainable energy solutions, including solar energy and LED lighting. The company is looking to raise between €5m-€10m for this new energy services side of the business.
Staff at Dublin Airport have rejected a €500 voucher as part of a profit share proposal with the DAA. The DAA is facing disquiet with its staff after a recent pay proposal was rejected. The DAA proposed a 4% increase in wages in return for productivity measures, while this received union backing it was rejected by staff. Staff are seeking a pay rise of up to 20%.
The Sunday Independent reports that advisors have been appointed as part of a sales process of the insurance intermediary Blue Insurance. When contacted by the paper, the company’s MD, Ciaran Mulligan, denied the claim and noted that it was looking to expand into the Spanish market next year. In the year-to-December 2015, the company generated operating profit of €2.45m.
Richard Curran draws attention to C&C’s share buyback activity which was reported in its annual report last week. The drinks company spent the company’s cash buying back shares in a market in which its share price was falling. Curran notes Warren Buffet’s caution to share buybacks who warns that the “difference between whether share buybacks are value-enhancing or value-destroying depends on the price paid for the shares.” The Sunday Times reports that C&C has changed executive bonus structures to make it harder for management to achieve awards, following shareholder unrest at the company’s 2016 annual meeting. The company has reduced the amount of share awards given at certain levels from 50% to 25% and increased earnings per share (EPS) targets.
Wicklow County Council is seeking a developer to acquire a site it owns in Bray and build out a €25m retail development. The site was previously controlled by Ballymore Properties and Wicklow County Council acquired it in 2013 from receivers Grant Thornton.
Foxglove Finance is in the process of raising €1.6m through a ‘mini-bond’ with a 10% return to fund the build out and sale of an unfinished estate in Loughrea, Co. Galway. The company is targeting to fund 350 resi units and raise €20m-€30m in funding within the next 18 months. Foxglove’s principals are former Lisney’s MD
Peter Stapleton, PKF O’Connor, Leddy & Holmes head of corporate recovery Declan de Lacy and financial advisor Paddy Mahony.
Irish money messaging startup Plynk completed a €25m fundraising last week which valued the company at over €50m. The service is linked to users Facebook accounts and allows users to transfer cash via a message similar to a WhatsApp. The company was founded in 2015 by Charles Dowd and Clive Foley.
Both the Sunday Independent and the Sunday Business Post report of the EGM called at Irish exploration company Conroy Gold and Natural Resources where there appears to be a disagreement between Seamus Fitzpatrick of Capvest and other shareholders. Cinema entrepreneur Patrick O’Sullivan, a 27.4% shareholder in the company, has called the EGM where it will be proposed that six of the nine directors are replaced. The company is developing what it believes to be a “multimillion ounce gold exploration target” in Clontibert, Co. Monoghan. It is reported that some shareholders are frustrated with the overly cautious and slow approach to the mines development.
The government is looking into ways of capturing some of the Irish advertising revenue going to Sky TV, estimated at €50m.
An estimated 80% of crane drivers partook in unofficial industrial action in Dublin last week as the rows over pay in the sector worsened. These drivers were unavailable to work last Tuesday due to an outbreak of “crane flu”.
The paper reports that the coalition between the Conservative Party and the DUP has been welcomed by businesses as it heightens the chances of a soft Brexit and a more favourable Irish border outcome.
International prize-winning architect Kevin Roche, who designed Dublin’s Convention Centre, has called for openness to taller buildings in the capital, suggesting that lower level sites could be located where the taller buildings would be less dominant in the skyline.
Dan O’Brien writes this week on his learnings from his recent trip to Asia and Australia. His key take-aways were:
- A rise in China’s spread in the region, in particular with its “One Belt One Road” initiative. O’Brien describes this as an investment programme by China to develop infrastructure along the traditional central Asia to Europe trading routes, both on land and by sea.
- Singapore is a thriving and that it can be a good route for access to the wider region.
- The EU is in the process of negotiating free trade agreements in the region at the moment and it is facing questions on its ability to deliver on commitments after the EU-Canada trade deal nearly came undone because of an attempt by a regional Belgian parliament to block it.
- Last week, Australia reported first quarter 2017 GDP growth, continuing 26 years of uninterrupted growth and calming fears of a recession.
Gavin McLoughlin has a full-page report on the Irish Strategic Investment Fund (ISIF) which includes an interview with ISIF director Eugene O’Callaghan, a review of its influence on activity in the M&A market and discusses whether or not its activity is driving up prices.
Dan White comments that the timing of the IPO of AIB may not be ideal given last week’s emergency bailout of Spanish bank Popular, the unexpected UK election result and the recent weakness in European banking shares. If progressed, the government may have to settle on a lower launch price than originally expected. The price originally expected would have yielded the government €3bn from the sale of 25% of the bank.
Fearghal O’Connor reports on the departure of Kevin Toland from the DAA to head up Aryzta and the challenge that the DAA will now face to find a replacement.
Sean Gallagher interviews husband and wife team Stephen and Ruth Deasy, founders of Bear Coffee Market. The business started from a coffee trolley on the street in Blackrock and now has turnover of €1m and operates from three coffee shops, on the Main Street in Blackrock, Georges Dock in the IFSC and Townsend St in Dublin 2.
Aine O’Connor interviews Shane Crilly, founder of Base Wood-fired pizza.
Samantha McCaughren’s Ergo piece:
- McCaughren highlights what might have been if AIB had been in a position to hold onto its stakes in Polish lender Bank Zachodni WBK and US lender M&T Bank - both assets are today worth more than double what AIB sold them for.
- An Post picked up two awards last week at the World Post and Parcel Awards in Paris. Notably, it won the awards for both e-commerce and innovation for its marketing product AdMailer.ie.
- Radio business Wireless Group, which was acquired last year by Rupert Murdoch’s News UK and Ireland, has appointed Francis Currie as its new programming director. Currie joins from Virgin Radio in the UK.
- Irish med-tech company 3D4Medical has signed a deal with Sky TV which will use its technology to enhance programming discussions on sports injuries, etc.
- The Chinese family who own the Kingsley Hotel in Cork are planning an expansion of the hotel with the addition of 63 rooms. The family is also reported to be considering an expansion of Fota Island Hotel in Cork which they also own.
Eoghan Murphy, the junior minister with responsibility for financial services, has accused other countries of engaging in “regulatory arbitrage” in order to win business from the insurance industry post-Brexit. Insurers must have EU bases in place by March 2019 in order to allow them to continue writing business in the EU and the Central Bank is refusing to licence insurers looking to use Dublin as a “brass plate” location in order to operate in the EU.
Stockbrokers are expecting interest from as much as 90k people in the upcoming floatation of AIB shares. Meaning that their clients would be willing to commit as much as €800m - €900m to purchasing shares. This amount far exceeds the expected 10% - 15% allocation that has been earmarked for retail investors.
Avobone, which was involved in a venture with San Leon in Poland, has secured a court order forcing San Leon Energy, the London-listed oil and gas group led by Oisín Fanning, to pay a €23m debt.
Pageant Holdings, the Irish investment group, sold roughly a third of its 9.9% stake in Datalex, the listed travel software company, last week after a surge in the company’s stock price. Pageant netted over €10m from the share sale. Datalex’s largest shareholder is Dermot Desmond’s IIU which has a reported 27.1% shareholding.
Gavin Daly’s Agenda piece this week:
- Gavin points out that purpose built student accommodation (PBSA) offers higher investment yields than residential property. According to CBRE research, PBSA operators can take in the same rent in an academic year (37 - 41 weeks long) as a full-year rent in the wider residential market and then PBSA operators can take in overseas students in summer months for additional rent. At present, there are c. 81k students in Dublin but just 10.5k of dedicated student beds. There are 13 student accommodation sites under construction in Dublin, with 4.3k bed spaces between them, 8 other schemes with 1.5k beds have planning permission and another 2.3k beds are at earlier stages of the planning process.
- Gavin expects capital gains tax (CGT) receipts to be trending upwards as a result of large gains on share sales from Ryanair’s Michael O’Leary, Kingspan’s Eugene Murtagh and other bosses at the likes of Paddy Power Betfair and Hibernia Reit. Last year, the government received €822m in CGT, 39.4% ahead of forecasts and the take so far this year has been €119.4m, 3.7% ahead of expectations.
SHS Group, the Northern Ireland company owned by the Sloan and Salters families, had sales of £379.4m last year and made a pre-tax profit of £21.1m. The company owns a range of brands including WKD alcopop, Shloer and Merrydown cider and also has a distribution business.
BHSL, the Limerick-based biomass heating company, with former Kerry Group CEO Denis Brosnan as its chairman and former ESB boss Padraig McManus as a director, is reported to have a strong sales pipeline and expects to be profitable next year. The company had accumulated losses of €13.1m in the year-end to June 2016 as it invested in its growth. This year it raised a reported €8m to fund the expansion of a new system that converts poultry manure into fuel. We understand the company was advised in its fundraising by Focus Capital Partners, led by Martin Higgins and Robert Adams.
Glendalough Irish Whiskey, a distillery with Brian O’Driscoll as one of its backers, lost more than €500k last year. The company received a €3.5m investment from Canadian drinks distributor Mark Anthony Brands and it paid €2m to buy out existing shareholders.
According to Neil Keenan, a partner at ByrneWallace, new accounting rules that came into effect last week as part of the Companies (Accounting) Act 2017, will make it “almost impossible” for companies to hide their finances behind unlimited company structures in future. According to Vision-Net, the number of unlimited companies in Ireland stood at c. 4.5k last August.
Rathmond Ireland, which trades as the Aussie BBQ restaurants, was granted examinership status “with some considerable hesitation” due to company’s failure to pay c. €160k in tax. The company currently has two restaurants, one on South Richmond Street in Dublin and the other in the Square shopping centre in Tallaght, and made sales of €1.9m in 2016. Dessie Morrow of Baker Tilly Hughes Blake was appointed as examiner.
Holmes Education Group, an Australian education provider, has acquired the English Language Academy for an undisclosed sum as part of its Oxford House College language school business, which has 16 centres in five countries. The company’s long-term goal is to enter the Irish private higher-level education market and could set up a 3rd level institution in the coming years.
Nord Anglia, the Hong-Kong-based education group, is considering plans for a second Irish school following unprecedented demand for its first school. According to the Andrew Fitzmaurice, the company’s chief executive officer, there have been more than 400 expressions of interest for places at the €20k-a-year school which will be open from September 2018 in Leopardstown.
Following AIB, KBC has become the second mortgage provider to reject applications from borrowers seeking exemptions from the Central Bank’s lending criteria. KBC expects to account for 15% of all mortgage lending this year.
This week’s paper features an interview with Hibernia College’s owner Seán Rowland.
There is a full-page discussion on Brexit.
This week’s “How I Made It” piece features Jim O’Mahony, the former chief executive of the Golden Vale dairy group who purchased Kinsale Bay Food Company in 2014.
Nick Webb’s Inside Track:
- Aldgate Development, led by Niall Molloy, is planning an office scheme that will consist of four office blocks on the old FAAC Electronics site in Sandyford. Aldgate bought the site for €10m.
- John Purdy, who netted c. €20m from the sale of his stake in Fenergo in 2015, has invested €250k in the CFF Film Fund which is run by Elaine Gill, who ran the successful film fund at Anglo Irish Bank for a number of years.
- RXI Ventures, a Dublin company set up by Liam Nagle the ceo of Norbrook Laboratories and chairman of Sicon, has gone into voluntary liquidation with a €2.5m surplus to be divided amongst equal shareholders Nagle and Geraldine Kelly.
In other news
We opened our 10th Boojum store on Mespil Road this week, across from the Maxol petrol station. It is widely known that our burritos make you stronger, faster, brighter and more attractive and if you work anywhere near Baggot Street, it is in your own interest to include it as part of your daily diet.
@RenatusCapital tweets this week:
0.2% - The year-on-year increase in inflation for the month of May, according to the latest figures from @CSOIreland. @IrishTimesBiz
29.9% - Year-on-year increase in the volume of residential building in the first quarter of 2017, according to @CSOIreland. @IrishTimesBiz
76.4k - The total number of mortgages in arrears in the first 3 months of this year, equivalent to 10% of all mortgages. @centralbank_ie.
2.6m - The number of passengers that travelled through Dublin Airport in May, a year-on-year increase of 5%. @IrishTimesBiz
10.5% - The rise in house prices in the year to the end of April, according to the latest @CSOIreland figures. @IndoBusiness
70 - Number of construction cranes visible in Dublin City Centre on June 1st, an increase of 36 since Feb 2016, according to @IrishTimesBiz.
€5.2bn - The level of foreign direct investment into Ireland in 2016, a year-on-year increase of 4%, according to @fDiMagazine. @examinerbiz
4.3% - The projected growth in Ireland's GDP, according to Friends First an increase from its forecast of 3.3% at the beginning of the year.
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