Synopsis of Sunday business pages
Sunday Business Post It is reported that An Post will hold talks with German lender Sparkasse, as the post office business looks to expand its offerings through its branch network. An Post is also considering parcel delivery for online retailers as a way to reduce losses on its core delivery business. Sparkasse is one of the largest mortgage lenders in Germany and operates a community lending model, similar to the credit unions. According to figures obtained by The Sunday Business Post, local authorities have turned down almost 90% of the vacant properties offered to them which could have been used for social housing. Only 241 of the 1,860 properties were accepted. The paper does not go into detail on why the properties were rejected. In the same article, it is reported that Dublin City Council is calling for a change in the model for incentivising developers to develop vacant land. Rather than levy taxes on vacant land, the government should put in place an incentive scheme to encourage private developers to build out derelict sites. A report prepared by UCC economist Seamus Coffey will recommend that the government increase taxes on multinational companies, one means of which will be to introduce a tax on intellectual property assets held in Ireland by multi-national companies. The report has not yet been published and it is not clear what form increased taxes will take. Irish property developers Luke and Brian Comer are reported to be pulling back from a major development project in Uganda. The project, valued at €250m, would have seen the construction of 5,000 new homes and a brand new town. However, due to problems with locals obtaining mortgages, the Irish brothers have withdrawn from the project and have begun selling down lands. The government is set to announce its plans for a mortgage-to-rent scheme for homeowners struggling to repay their mortgage loans. The scheme will likely see the funds take ownership of the home and rent it back to the homeowner under a long-term lease. Homeowners must qualify for social housing and rents would be paid by the local authorities. Dutch company Achmea, which owns Friends First, has appointed investment bank Evercore to advise on the potential sale of the Friends First business. The Department of Finance has revised down its estimates of the government’s potential income from a proposed tax on sugary drinks by €100m; a 70% drop in the expected tax take. Annual tax income is now estimated at €40m. The Business Post reports that Permanent TSB plans announced last week to offer debt write-offs to buy-to-let mortgage holders who hand back the keys of their properties to the bank will be limited to as low as 100 borrowers. No reason is given for the limited scope of the scheme. Irish-based oil and gas exploration firm San Leon has paid its CEO Oisín Fanning €1.7m in 2016. 20% of the salary was paid in cash with the balance paid in shares of San Leon. The company generated a pre-tax profit of €5.7m in 2016. The company has been approached recently by a number of potential buyers and is in talks with China Great United Petroleum. The Sunday Independent reports that “San Leon energy boss Oisin Fanning’s pay package was valued at five times the company’s turnover last year, according to its newly released-annual report.” Letsbuyhealthcare, a new company being launched by David Allen, will give people without private health insurance access to services of private hospitals. The business will allow patients to pay for specific treatments and expects to be able to offer savings through bulk-buying of the services from the hospitals. Sean Quinn is reported to be looking at options to buy back his former cement and plastics businesses, Quinn Industrial Holdings Ltd. Quinn has not formally appointed an advisor yet but is understood have held recent discussions with Mazars. The paper reports a valuation on the business of between €100m and €150m. The historic Boland’s Mills site looks to be coming to the market soon after several parties have made approaches for the building in recent weeks. The site is valued at €11m with a further €10m estimated to be required for its redevelopment. Mark Reynolds of Savills is receiver of the property. AIB is reported to be planning on bringing a non-performing loan portfolio made up of assets in Northern Ireland and Britain to the market soon. The portfolio would have a face value of between €200m and €300m but would likely trade at a significant discount to this. Enterprise Ireland reports that there has been a 20% rise in the number of Irish start-ups seeking their first international customers from the eurozone as opposed to Britain in the first six months of this year versus the same period last year. Larry Goodman’s ABP Foods has taken full control of Tipperary organic beef processor and distributor Good Herdsman. ABP Foods had owned 50% of the company, with one of its original founders, John Purcell, owning the balance. Details of the deal were not reported. Tom Lyons has a two-page interview with Cork developer Michael O’Flynn. O’Flynn believes that land prices are too high at the moment and the supply of land on the market needs to increase, “Too much housing land is held by people not interested in developing it themselves or making the land available to developers at a reasonable cost.” More needs to be done to bring forward development projects. He notes the risk of overpaying for land is that either house price need to rise or costs need to fall for building out the land to be viable. He thinks that the Central Bank’s mortgages rules are too restrictive and pushing rents up as people can’t afford the deposits needed. He agrees with Fianna Fáil’s call for a lowering of VAT on housebuilding and calls for Irish saving schemes to be set up to fund development projects rather than relying on foreign capital. Morgan Stanley has lowered its share price target on Paddy Power Betfair from £98 per share to £75 per share, claiming that the merger between the two companies has failed to deliver the increase in customers that was expected. A Canadian exploration company, BTU Metals, has plans to begin gold exploration activities in Galway. This follows positive initial testing which suggests possible gold deposits. The National Transport Authority is planning to introduce local bus services in Carlow, Mullingar and Letterkenny and will open the bidding to private operators, as well as Bus Éireann. There is a full-page report on an EU position paper on the Irish border and Brexit. There is a three-page special report on the government's new Strategic Communications Unit (SCU), the key special advisors to Varadkar and how they will interact with the SCU. Colette Sexton interviews broadcaster Pat Kenny. There are focus pieces on credit management, lifelong learning and business in the midlands. John Flynn, managing director of venture capital firm ACT Ventures, speaks with the paper about the firm’s latest €90m fund, ACT V. Investors include ISIF, Enterprise Ireland, AIB and private investors. The fund aims to back 15 to 18 growth companies over the next four years, with up to €7m being invested in each company. He gave the key things he looks for when evaluating a business plan: an entrepreneur with a unique market insight; the ability to attract a world class team; a large, high-growth and timely market opportunity; a competitive offering and strong market entry strategy and a scalable and capital efficient business model. Róisín Burke’s ‘This week in business’ piece: - Former director of programmes at RTE, Tom Carson, has taken up the role as head of commissioning with BBC Scotland. - Burke speaks with Matthew Corrin, founder of the Canadian healthy food business Freshii. Ireland is one of the company’s fastest growing markets. The Irish franchise is run by Dave O’Donoghue and Cormac Manning. Sunday Independent Nama is joining forces with Pat Doherty’s Harcourt Developments for a major house building project in Saggart in south-west Dublin. Planning permission for 459 houses and 67 apartments has been sought, which would make it one of Nama’s largest joint ventures to date. Sky Ireland has established a €2m fund for Irish programming and is seeking ideas from Irish producers for a new show. Samantha McCaughren’s interview this week is with JD Buckley, MD of Sky Ireland. Richard Curran discusses the news this week that the ESB is planning major investment in offshore wind farms and that this is an indication of a change in government thinking on offshore wind power. Curran also suggests that this could be good news for some of the five projects in various stages of gestation off the coast of Ireland. Ireland is looking likely to miss its 2020 renewable energy targets and one industry expert suggested that the only way of meeting them would be to generate 1,00MWs of offshore wind energy. Curran also questions what the future is for bank branches in light of Bank of Ireland’s decision to form a three-tier branch system, with only the top tier of c.50 branches having a full suite of services. As more people use online banking, the need for branches would appear to be lessening, but closing branches can be a sensitive issue, particularly in rural Ireland. Members of Geoscience Ireland, a group comprising of 33 companies including water, minerals and infrastructure development, created a net figure of 226 new jobs in the first half of the year. Combined turnover for the group in 2016 was €830m, with employment numbers now above 3,400. Limerick-based broadband provider Enet sees its partnership with British energy giant SSE on a wholesale fibre broadband network in the west of Ireland as potentially the first of many joint projects between the two companies. Enet chairman, Irish-American businessman David McCourt, states that this is the next step in its ambition to be “a billion dollar company”. It is reported that Enet is already considering major broadband projects in “3 or 4” other European countries. Enet’s strategy is to install the fibre cable directly to each home and then sell access to it wholesale to other retail broadband operators. Parkpnp, a Dublin-based digital start-up founded by Garret Flower who also runs successful bakery distribution business Krust, has launched a €3m funding round. The company has established a “parking spot marketplace” and has exceeded 10,000 users per month in Ireland, as well as signing its first license in the Netherlands. Sean Melly of Powerscourt Capital is leading the raise, which follows an initial €500k fundraise from Enterprise Ireland. The Malton hotel in Killarney, one of the country’s oldest hotels, is set to rebrand and return to its original name, the Great Southern. Gavin McLoughlin has a piece with Derek F Butler, chief executive of SME lender Grid Finance. Grid provides loans through an online marketplace which matches companies seeking finance with individuals seeking to lend money. Other products include invoice discounting, leasing and short-term cashflow loans backed by money owed to the borrower from credit and debit card transactions. The company has secured a €3m equity investment from Luxembourg-based Reech Corporations Group and its latest innovation is a digital pension product targeted at the owners of small businesses. “The Revenue has told tax advisers that it will try to speed up the processing of the Employment and Incentive Investment Scheme (EIIS), which has been bogged down in delays this year.” Dearbhail McDonald has an interview with Michael Smurfit. Sanbra Fyffe, a Dublin plumbing and heating products business, and Herron & Son, a Sligo hardware and agri wholesaler, have partnered with New Zealand water-specialist Hansen to bring a range of new water system products to Ireland. Inventor of healthy dessert Pow-Cow, Niall Moloney, has been accepted onto the prestigious Food X accelerator programme in the US. Irish dockless bike-sharing company Urbo last week announced its expansion into London. The company is currently seeking finance to expand its operations across Europe. Trinity College Professor Daniel Kelly has received €150k from the European Research Council to further develop and commercialise his 3D-printing project, ‘Anchor’. Sean Gallagher’s interview this week is with Eithne Scott Lennon, CEO and owner of Fitzpatrick Castle Hotel in Killiney. After surviving tough times during the recession, the hotel now has 144 staff and revenues of €7.5m. Sunday Times Plans by Permanent TSB to begin offloading its bad loans could cost the state controlled lender up to €600m and require it to return to the stock market for additional capital. In a worst-case scenario, with financial regulators forcing a sale of €4bn of the bank's distressed loans to investment funds, its shares could be worth as little as 65c. This compares with €1.68 currently and €4.50 two years ago, when the state floated 25% of the bank of the stock market, according to Investec. Brian Carey’s Agenda piece: - Carey thinks “the cause of much of the current housing crisis is rooted in the state’s abject failure to provide social and affordable housing over the past 25 years. For an entire generation it abdicated its responsibility, and the growing need for housing was met overwhelmingly through rental supplement allowance. A private sector solution was found to a public sector problem, and not a very good one.” - Central Bank of Ireland governor Philip Lane has told the government to be wary of an overheating economy. - C&C is investing £37m for a 47% stake in Admiral Taverns. Dalata will create 600 jobs in the forthcoming year as the listed group opens new venues and extends existing properties, according to chief executive Pat McCann. Dalata will open two new hotels in Dublin next year, as well as one in Belfast and one in Newcastle in England. It is also extending a number of properties, including a 141-room addition to the Clayton Hotel Dublin Airport. McCann said he was confident the company would find staff, despite the continuing decline in unemployment, which fell to 6.3% in August. He expressed concern, however, about the lack of availability of housing, particularly in Dublin. Ian Guider interviews Pat McCann for the Sunday Business Post. The ESB is looking into claims by Moralltach Global, an investment company based in Malta, that it has secured electricity supply contracts for four waste-to-energy projects planned for Ireland. The claims were made in a prospectus issued last November in connection with a €500k share sale on the National Stock Exchange of Australia, a Sydney market where most listings come from overseas. In the document Moralltach lists its assets as 38 property, energy and other investments in Ireland valued at €650m. Cormac Lucey outlines a number of proposed solutions to the housing crisis: - Densify areas already occupied by housing, i.e. putting more properties into a given space than is currently the case. - Provide a financial boost to the sector by introducing something innovative that will rapidly capitalise the sector, Lucey suggests a Business Expansion Scheme-type incentive (where individual investors can get an income-tax deduction for their investments). - Reduce and rationalise the slice of building costs (c. 40%) taken by government. - Streamline planning by amalgamating local planning departments. - Replace the myriad of regulations with a requirement that builders/developers insure themselves against the regulated risks. - Support the development of a permanent rental sector. - Abolish stamp duty on property sales and recoup the lost revenue from an increase in the local property tax. - Reclaim a significant swath of Dublin Bay and build a new high-density suburb there that would support high level public services and amenities. An internal share restructuring reveals the equity in the Kenny family’s Clancourt Holdings, one of the few property companies to survive the downturn fully, is now worth €477m, up from €200m just two years ago. Couche Tard, the Canadian owner of the Topaz petrol station chain, is exporting a Mexican food franchise developed here called Cantina to Norway. Receiver Grant Thornton is expected to bring to market a valuable development site in Howth. The Techrete and Teeling Motors sites were bought for a combined €62m in 2007 — one of the highest prices paid for a development site in Co Dublin during the boom. Boxever, a Dublin software group that counts Aer Lingus and Emirates among its clients, is raising up to €6.5m to broaden its business into the financial services sector. The company’s software allows businesses to gather and manage large amounts of customer information and generate personalised offers. The company has already raised about €15m from investors including the Dublin-based Frontline Ventures and the American group Polaris Partners. Oaktree Capital Management, a US investment fund, has taken control of about 180 apartments and a number of commercial properties from Irish developer John Lally, whose assets include apartments in Kilmainham in Dublin, the Strand scheme in Limerick City and the Jolly Mariner “marina village” in Athlone. The Jeanie Johnston, a €15m replica famine ship, may be on the move to a new berth alongside the Epic museum on the North Dublin quays. Targeted Investment Opportunities (TIO), a joint venture between Oaktree Capital Management and Irish family owned builder Bennett Construction, has plans for a 241-bedroom aparthotel and nine storey office block at Nos 91-94 North Wall Quay, beside the 3Arena and Point Village complex. San Leon Energy is in talks to raise debt funding amid a cash crunch that caused auditors to flag its ability to continue in business. The AIM-listed company said it may borrow up to €20m from “a UK-based institution” to shore up its finances and has a separate option to extend a £15m (€16.5m) debt facility with hedge fund YA Global. The new loans “may be required to help fulfil the group’s immediate cash flow requirements in the period from September 2017 to December 2018”. Profits at Topflight, one of the country’s biggest tour operators, rose to €2.2m last year, reversing a loss of €206,500 the previous year. The company’s core trade of sun and ski packages was strongly profitable and it also got a €582,474 boost thanks to foreign exchange rates. Dublin-based Topflight also runs a school tours business, Topflight for Schools. Revenues were €47.2m in the financial year to the end of last October, up from €45.6m in the previous year. GameAccount Network (GAN), a Smurfit family-backed developer of casino games software, has issued a fresh batch of options to executives in the company. Dermot Smurfit Jr has been granted options over 1.8m shares at an exercise price of 25p. The options represent almost 2.6% of the company. Fashion retailer H&M made a €2.7m pre-tax profit in Ireland last year, up from €2.1m the previous year. CloudKPI, an Irish software start-up that services fast growing SaaS (software as a service) companies, is raising €600k to expand in Silicon Valley. Nick Webb’s Inside Track: - Suretanks’s Patrick Joy, a former entrepreneur of the year, has invested in Way2Pay, a smart mobile payment app for schools and clubs. - Former Petroceltic boss Brian O’Cathain is back in the exploration business a year after a boardroom battle saw the Iseq-listed resources company taken over by activist shareholder Worldview. He has just joined the board of the AIM-listed Eland, which is active in Nigeria and West Africa. - Scott Weavers-Wright, who co-founded mother and baby product retailer Kiddicare .com before selling it to Morrisons in 2011 for £70m, has emerged as a backer of Wexford tech firm Scurri, which has developed an online shipping platform for big ecommerce players. Brian Carey has a feature article, “Racing's Toughest Hurdle”, which covers the ongoing funding row between bookmakers and the horse racing industry. This week’s chief executive interview is with Niall Fitzgerald, the former Unilever boss. Sandra O’Connell has an insightful piece on the challenges faced by entrepreneurs when their companies begin to scale.