Synopsis of Sunday business pages
Sunday Business Post There is a special 48-page pull out of Vincent Browne’s best articles. Some of the “establishment” he challenged most came out in praise of Browne including Leo Varadkar, who said in a video tribute to Browne “I think we are all going to miss seeing you make politicians squirm, miss your powers of elucidation and also your ability to ask the pertinent question that other journalists and broadcasters wouldn’t even think to ask”. The Minister for Housing, Eoghan Murphy, has said regarding planning rules “we have to go higher, particularly in Dublin City, particularly within the canals, and we have to go for increased density.” He will endeavour to put through, whatever laws are needed to achieve the same. Also regarding social housing, he seems to think that the state needs to play a bigger role in delivering it directly themselves. Builders and bankers are said to be putting the government under significant pressure to retain the €20k help-to-buy scheme. Some seem to be denying that it leads to inflation of house prices, while others, such as AIB chief Bernard Byrne, seem to accept it but say that it will help supply, as if prices were lower, supply would be locked due to unfavourable economics. All grants over €500k must be published now so there is focus put on the recipients of large grants from Enterprise Ireland, the IDA and the department of Agriculture. Large companies such as Larry Goodman’s Waterford Proteins, Liebherr, Eli Lilly, Medtronic, CurrencyFair and Voxpro make the list. Hints dropped in recent weeks suggest the increased spending in the next budget will be on increasing the old age pension, reducing tax/USC for middle income earners and increasing spend on water infrastructure. The R&D tax credit cost the state €708m last year. Half of these companies deducted 25% of the R&D spend from their tax bill and the other half did not have sufficient profits and received a cash refund from Revenue. This is being reviewed by the Department of Finance but is a big part of our appeal to multinationals being based in Ireland. Pat McDonagh of Supermacs is considering self-insuring. His premiums have risen 20-40% in recent years. He believes the current systems encourage fraudulent claims because insurance companies decide to settle before court to save costs and then load it into the premium the following year. He said Quinn Insurance was able to deal with claims better than the international players. Supermacs has invested €250k in camera equipment to monitor claims. Frank Connolly is set to publish a book ‘in October which is expected to contain significant revelations concerning the operations of NAMA and the manner in which its disposal of public assets has transformed property ownership and created a new elite in Ireland.” AIB CEO Bernard Byrne, expects to see troubled loans dropping from its current €7.8bn to €3-4bn over next few years. He says that “when we are engaging with the customer we are happy to rightsize debt based on affordability, so we write off debt.” H1 profits this year were reported at €823m up from €753m in H1 last year. John Boyle handed over the reins in Boylesports to his son-in-law Conor Gray during the week. The firm is committed to continued expansion in the UK. Irish postal-technology company Escher’s share price has risen sharply in recent weeks on the back of activist investor Hanover Investors building up a c.25% stake in the company. The Competition and Consumer Protection Commission cleared the sale of John Tuohy and Dave Field’s Nightline to UPS despite some strong submissions suggesting it would weaken competition in the market. The review showed the market share of the packet and parcel market. An Post has a reported 30% share with DHL and UPS next with 10-15%, followed by Nightline, DPD, GLS, TNT and Fastway at 5-10% each. Susan Mitchell has a damning report on drugs that are freely available to public patients in most other EU countries which are not available in Ireland. Stephen Kinsella analyses and discusses the gender pay gap. There is a special on firms around the border and how a border may affect them. There is a feature on how Kerry has become a Fintech hub with Fexco and Monex leading the charge. Jerry Kennelly pays tribute to the father of them all Brian McCarthy who was a pioneer in the 1970s and has built a true global player in Fexco yet stayed local and understated. There is a lot written on the water fiasco during the week and opening up the argument again for water charges. There is a tribute to Robert “Pino” Harris RIP (1941-2017) Ripplecom is creating 20 new jobs in Limerick having completed a €1.2m overhaul of its core and backhaul networks. Anya Cummins, a partner in Deloitte Corporate Finance, writes how “M&A is playing a very important role as the shareholders and management teams of Irish businesses consider how to drive growth and maximise equity value in their business”. Cummins claims that “Cardinal Carlyle Ireland, MML Ireland and Renatus are all providing different solutions and all continuing to drive deal volume in the market. She stresses the importance of companies to prepare and get good advice, which we in Renatus would agree with. We see a lot of companies poorly advised and not ready for sale or investment. There is one week left to enter for the Deloitte Best Managed Company awards Tero Tiilikainen writes how private equity funding is taking the place of IPOs as options for companies to fund growth and exits. He explains why private equity is a better fit for companies with value-added input and the fact it takes a long-term view. Over the past five years, there have been 56 private equity investments in Ireland. Compare this to 44 companies on the ISEQ. There is a special focus on intellectual property. Sunday Independent RTE has plans for up to 200 redundancies as part of its financial restructuring strategy. The compensation to be paid to employees has yet to be agreed as current proposals are at odds with the Department of Public Expenditure over the level of compensation, RTE is proposing four to six weeks where the department’s preference is for three to five weeks. Kildare Village owner, Value Retail, has applied for planning permission for a €50m extension to the designer outlet retail centre. High Court judge Mr Max Barrett, who granted summary judgement in favour of a Cerberus subsidiary company against three individuals, has himself directed for the case to be reheard after it emerged that the judge was conflicted due to him serving as secretary of IBRC from 2010 to 2012. A report prepared by accountants EY valued Eddie O’Connor’s Mainstream Renewable Power at €338m as at September 30, 2016. This is considerably lower than Mainstream’s own reported estimate of its value of €520.3m. It’s not clear in the article if Mainstream’s valuation is from 2016 or its most recent valuation. Richard Curran’s piece: - Curran weighs up PTSB boss Jeremy Masding’s frank interview during the week with the Irish Independent. Noting some fair remarks on PTSB’s progress dealing with its non-performing loans (NPLs), its return to profit and its cash return to the government - who remains a 75% shareholder. He also notes some areas he disagrees with Masding’s remarks, in particular, Masding’s comment regarding there being sufficient competition in banking in Ireland and further competition in the mortgage market being dangerous, and Masding’s view that PTSB’s final hurdle with its NPLs is in sight - Curran believes that this is a very big hurdle to get over even if it is in sight. The Sunday Business Post reports that Permanent TSB reported a 10% increase in new mortgage lending but the cloud of €2.7bn of home loan arrears was the focus of all journalists during the week when results were announced. At 28% of the total loan book, this is very high. Bank of Ireland is at 7%. Niall Brady, of the Sunday Times, also has a feature piece on Permanent TSB. - Curran reports on mounting speculation that US private equity firm Oaktree Capital Management is preparing to float a new housebuilding company on the Irish stock exchange. - Curran highlights AIB’s decision to abandon its plans to move up to 100 previously outsourced IT jobs to India. The decision comes on the back of regulatory changes in India which may make it less attractive for foreign direct investment. Decobake liquidator Declan de Lacy of PKF O’Connor Leddy & Holmes is reported to have appealed to staff for “their help and cooperation” as he works towards a sale of the company to a new owner rather than a full liquidation. De Lacy was appointed on foot of a high court order of unpaid rates bills to Dublin City Council. Investment company BlackRock and Lightsouce, a solar energy company run by Antrim man Nick Boyle, have signed into a £1bn partnership with the aim of consolidating the solar energy market in the UK and Ireland. AIB chairman Richard Pym, in a recent address to the McGill summer school, has said that the bank will publish plans in the autumn to help tackle the delivery of new housing. There is no mention of the content of the plans. A recent study by search firm Accreate has found that female representation on Irish listed company boards has increased from 8% to 14% since 2013 - disappointingly women make up only 61 of the 423 public company board seats. 38% of ISEQ companies had no women on their board. Under EU rules, by 2020 all publicly listed company boards must have at least 40% of each gender. Ireland has made some slow progress on board balance with a lot more work yet to do. Reinshaw, a precision measurement device maker co-founded by Dubliner David McMurtry, looks set to see sales of €600m for the first time this year. McMurtry has a 36% stake in the business reported to be worth c. €1.2bn. The holders of the Irish franchise of Skechers, Sunil Shah and Paul Gallagher, have reported on concerns being raised by the US owners of the Skechers brand over retail conditions in Ireland, in particular, rising labour costs, rising rents and declining footfall numbers in Irish shopping centres. The pair have plans to add five new stores to their existing 17 and are also looking at opportunities to bring the franchise to new markets including Hungary, Switzerland, Austria and the Czech Republic. The GAA is the most popular sponsorship opportunity in Ireland with one-in-five sponsorship deals being linked with the GAA, according to sponsorship experts Onside. Sport accounts for the largest proportion of the sponsorship spend with 75% of deals being linked in with sport. FBD is to enter the travel insurance market, adding to its consumer offering already in home, car, life and mortgage protection products. “The US Food and Drug Administration (FDA) will explore cutting the level of nicotine in cigarettes to non-addictive levels, a radical step that would reshape the $130bn (€110bn) American tobacco industry and potentially encourage millions of people to quit smoking.” Dan White has an excellent full-page report on Ryanair’s expansion plans, targeting growth from 131m passengers this year to 200m by 2024. Gavin McLoughlin interviews CEO of OpenJaw Kieron Branagan, a company that makes software for the travel industry. Its main product, “T-Retail” enables airlines to conduct e-commerce. Deloitte tax partner Tom Maguire has a piece in today’s paper on Ireland’s high income tax rates and how this can be a barrier to attracting top talent into the country. Alan O’Neill subs in for Sean Gallagher again this week and visits Kilashee House Hotel in Naas where he interviews Orla McCabe, director of sales and marketing and Dee Nix, general manager. Aine O’Connor interviews Eamonn Cunningham, founder of Sligo menswear store, EJ Menswear. Samantha McCraughen’s Ergo piece: - Gary Healy will take up the role as head of regulatory affairs and public policy at Commission for Communications Regulation (ComReg). - An ECB strategist from Credit Agricole published a celebratory quiz marking five years since ECB boss Mario Draghi said that the bank will “do whatever it takes” to keep the euro alive. - UTV is fitting out a new studio in Belfast’s City Quays 2 which will involve a multi-million-pound investment from owner ITV. Sunday Times Action Health Enterprises, a new healthcare company backed by the investment fund M&G, is currently accelerating its investment in the healthcare sector in Ireland. The fund has c. €250m at its disposal and has already reportedly secured a portfolio of up to 25 primary health care centres. Action Health and its property partner Marlet - which is also backed by M&G - are also said to be advancing plans to build and buy a chain of nursing homes and will commit €100m towards the purchase and development of care homes in Ireland. Aer Lingus is taking the Dublin Airport Authority (DAA) to the High Court and is seeking “substantial compensation” for losses it claims were caused by a breakdown of the airport’s baggage system. Aer Lingus reported a €59m profit in the first half of the year and the carrier wants to expand its transatlantic services from Dublin. Brian Carey covers the proposed license fee increase being sought by RTE. RTE’s competitors are very resistant to the increase and it's not necessarily that they see RTE as undeserving, rather competitors believe RTE use the license fee to subsidise and keep advertising rates low. As the largest provider, RTE sets the bar in radio and television for commercial rate advertising. Kennedy Wilson, a US property group that has been one of the most active buyers of distressed Irish assets, is offering office tenants at its new Capital Dock scheme in Dublin “priority access” to 190 rental apartments at the riverside complex. The approach means that all the apartments in a 23-story tower, which is under construction may be effectively off-limits to ordinary renters. The investment bank JP Morgan has bought one of the office buildings for €125m and the two other blocks are expected to attract blue-chip tenants. Cormac Lucey believes now is the time to “wean us off the monetary methadone of quantitative easing (QE) before we’re addicted”. When the QE tap is being turned down globally, Ireland will likely see borrowing rates slowly rise, currency fluctuation with the UK and US (who experienced significant currency devaluation through QE) and volatility in international asset classes as liquidity is reduced. Stripe, the online payments platform founded by Irish brothers John and Patrick Collison, has acquired the US company Payable for an undisclosed sum. Payable’s technology auto-generates tax forms to make it easier for businesses to pay charges. The end is finally in sight for former clients of Custom House Capital (CHC) after the High Court ruled last week that the remaining funds should be distributed on a pro-rata basis, more than six years after the investment firm collapsed. Arena Group, a newly quoted events equipment provider, has secured a £10m deal with the European Tour for seating and structures at it biggest golf tournaments. The company’s chief executive Greg Lawless led the IPO of Arena in London last Tuesday. The company is valued at £70m following an 11% increase in its share price. Greg Lawless also features as this week’s chief executive interview. The owners of the Hermitage Medical Clinic in West Dublin, including businessman Larry Goodman and developer Sean Mulryan, are planning a 62-bed extension to the hospital. The Hermitage currently has 112 in-patient beds, 37 day-beds and seven operating theatres. Permanent TSB has returned €5m of the €23m received from the government for taking over the business of Newbridge Credit Union in Co Kildare in 2013, raising hopes it will cost a lot less to wind down the bust lender. Festival Republic, the music promoter behind the annual Electric Picnic festival in Co Laois, made profits of €7.8m last year, an 80% increase on the previous year. The Lucey Fund, an Irish tech investor, has bought out the cyber-security firm PixAlert in a deal valuing the business at €2.4m. AIB plans to offer retail investors the chance to gift their shares to charity despite criticism of a similar scheme at Bank of Ireland being considered “insensitive”. Crownway Capital, an investment company headed by John Gallagher, is set to be a major winner in the proposed takeover of wholesale broadband provider Enet. Crownway is selling its holding as part of the sale of a majority stake to the Irish Infrastructure Fund (IIF), a joint venture between Irish Life and the Australian investment company AMP Capital. It has been reported but not confirmed that Enet will be valued at as much as €200m in the IIF transaction. Crownway holds a 10% stake in Enet indirectly through Granahan McCourt Dublin. Granahan McCourt held a 53% stake in Enet, with Oak Hill Advisors, a US private equity company, holding the remaining 47%. Ornua, the former Irish Dairy Board, which makes Kerrygold butter, has agreed terms to settle a legal dispute over the sale of a rival product in the US. Ornua had been pursuing the US company, Old World Creamery, for selling butter under the name Irishgold in the US. Ray Coyle, owner of the Tayto Park theme park, has finalised plans for his latest installation in the Co Meath countryside of a €24m solar farm. The recent listing of builder Cairn Homes on the main market of the Irish Stock Exchange (ISE) and the flotation of AIB has helped push the value of shares of the ISEQ Index to more than €100bn. Neil Hughes of Baker Tilly has been appointed interim examiner to the Kilkenny printer Koverto, which was founded by Walter Lanigan in 1987. A Silicon Valley firm Aiqudo has acquired Sophia, a Belfast tech company, as part of a $5.2m funding deal with Dublin fund Atlantic Bridge. Harcourt Life Assurance, which specialises in buying and running down closed insurance books, reported profits of €14.9m last year. Gavin Daly’s Inside Track: - Daire Hickey, a co-founder of the Web Summit, is teaming up with Mark O’Toole, a technology public relations guru, to establish a PR management consultancy service that will provide a platform to Irish tech companies in the US. - The former chief executive of Independent News and Media, Gavin O’Reilly, has been appointed chairman of Wemersive, an end-to-end, 360-degree, virtual-reality software solutions and services company. - The Club Company, a British golf course firm previously acquired by Niall McFadden with the help of Anglo Irish Bank for £96m before going into liquidation, could be for sale for £400m. Lonestar is the current owner having bought the debt for £65m. - Conroy Gold has hired IBI Corporate Finance to “adequately investigate and consider the suitability” of two directors nominated to its board by disgruntled shareholder Patrick O’Sullivan. Other news We are very proud to pass on a big congratulations to one of our team, David Byrne, who placed 1st in Ireland and 3rd in the world in his most recent set of ACCA exams. Well done David. Twitter @RenatusCapital tweets this week: 18k - The number of new homes @CIF_Ireland expects to be built this year, well below @ESRIDublin's estimated demand of 30-35k per annum. €133.3bn - The total value of products manufactured in Ireland during 2016, a year-on-year increase of 15%, according to @CSOIreland. 0.7% - The year-on-year decrease in UK real wages for the three months to May, according to @ONS. @IndoBusiness 0.3% - Growth in the UK's GDP in the three months to June, a minor increase from the 0.2% increase in the first quarter, according to @ONS. 1.9% & 1.7% - The projected growth in the euro zone economy for 2017 and 2018, respectively, according to the @IMFNews. @IrishTimesBiz €3.6bn - The amount of money lent to non-financial and non-real estate SMEs in Q1'17, a year-on-year increase of 32%. @centralbank_ie €405k - The current average house price in Dublin, a year-on-year increase of c. 10%, according to @GeoDirectory_ie. @IndoBusiness 4.4% - Year-on-year increase in the tonnage of exports that have gone through @DublinPortCo in the first 6 months of the year. @IndoBusiness 1.7% - Projected growth in the UK economy this year, according to the IMF, 0.3% below its previous prediction made in April. @IrishTimesBiz 15% - The projected increase in Dublin's hotel room stock over the next 3 years, the equivalent of 3k extra hotel bedrooms. @CISireland c. €12k - Average spend by Irish motorists on UK used cars in the first half of 2017, a year-on-year increase of 32%, according to Fexco.