The Ryanair saga: Brian Carey in the Sunday Times writes that Ryanair’s valuation fell €2bn over the course of a week to last Monday. There were two reasons: a European Court of Justice (ECJ) ruling that will allow Ryanair staff to challenge Irish contracts in overseas courts; and second, not having enough pilots to fly its planes in September and October. Chief executive Michael O’Leary believes the ECJ ruling will not cost the airline “one cent”. The airline has put the cost of the pilots’ debacle, including both lost profits and compensation, at €25m. A €25m profit hit, a €2bn valuation dive. This looks like a market overreaction and an opportunity to buy; the airline’s brokers Credit Suisse did just that, repeatedly snapping up shares at €16.50 and lower last week.
The Sunday Independent summarises the company as follows: “Europe’s favourite airline. Lowest cost. Lowest fares. 10% growth. 131 million passengers in 2017. 87 bases. 200 airports… Number one on time. 240 aircraft on order. Always getting better. One billion passengers carried. €41 average fare. Down 13%”. The paper raises the question over whether Ryanair’s current situation is a temporary problem over pilot leave or a systemic challenge resulting from the company’s phenomenal success.
The Sunday Independent reports that nn order to achieve its goal of carrying 200 million passengers by 2024, senior aviation sources estimate that Ryanair will have to hire close to 500 pilots every year. The airline will need to hire 3,300 pilots in total between now and 2024, 600 of which it has already pledged to hire by next May.
Philip Connolly in the Sunday Times has an interesting article on Ryanair and its relationship with its staff.
The Sunday Business Post reports that Colm Barrington, former Chairman of Aer Lingus thinks the issue will be dealt with and will blow over and people will ultimately go with cheaper fares. He said to the Business Post about O’Leary, “It’s a case of Icarus, to a certain extent… Fly too close to the sun and sometimes you will get caught”.
What the Ryanair situation highlights is that there is a global shortage of pilots. All our team at our investee company Simtech work incredibly hard training pilots to feed into this chain and we hope over the years ahead to be part of the solution to get top-class, qualified pilots into the system.
Sunday Business Post The European Parliament's chief Brexit co-ordinator, Guy Verhofstadt, is interviewed in the Business Post. Verhofstadt suggests that funds could be made available to Ireland to deal with the fallout from Brexit. Theresa May’s reference to the unacceptability of a physical North/South border was positive for Ireland last week.
Frontline, ACT, Enterprise Ireland and others have all participated in a €2m funding round for Tandem HR. The company founded by Aisling Tellard, Jim O’Brien and Clare Bonham “has developed technology that allowed organisations reshape how employee performance is managed through driving enhanced coaching and feedback practices.”
The government is set to relax the proposed use of a curtain in small shops to cover over the alcohol they serve.
The latest Sunday Business Post/Red C Poll:
Fine Gael 30% (+3%) Fianna Fáil 26% (+2%) Sinn Féin 16% (-2%) Independents 10% (+2%) Labour 5% (-1%) Ind Alliance 2% (-2%) Solidarity/PBP 4% (-) Soc Dems 4% (+2%) Green 2% (-2%) Renua 1% (-2%)
The Wexford Haulage family, the Nolans, had €2.8m taken from a Swiss bank account and the destination of the funds has been identified as an Isle of Man company which subsequently bought land in Cork. The family has secured an order in the Isle of Man to reveal the identity of the company in question.
Eir is threatening the Communications Minister that it will stall investment in extending fibre to homes if it cannot get an assurance that the investment will not be undermined by the Minister forcing them to sell access to these lines at wholesale rates that will not recover the investment.
Analysts are calling for Aryzta to increase its return on physical bakeries. From 2011 to 2016, the Company has nearly doubled the number of plants but earnings have only seen a 50% increase in that time. Kevin Toland has only just taken on the role of CEO, succeeding Owen Killian.
3fe is focusing on rolling out its wholesale arm and has secured deals in Brazil, US, Australia, Germany and Greece. 3fe has signed up 100 wholesale customers in Ireland. Amazingly, the coffee market continues to grow and is expected to grow by 7%-9% year-on-year in Ireland until 2020.
Iconic Newspapers, owned by Malcolm Denmark, is said to be in pole position to pick up some or all of the regional newspapers owned by Irish Examiner owner Landmark Media. The stable of regional titles include the Cork Evening Echo, the Waterford News & Star, the Western People and the Kildare Nationalist. Iconic own the old Johnston Press titles which include the Limerick Leader and Dundalk Democrat. Iconic Newspapers is expected to engage fully in this process when the expected Examiner sale to the Irish Times goes through.
Goldman Sachs is looking at a possible disposal of its 26 owned or operated hotel interests in Ireland. Goldman invested in Tifco in 2014, which was effectively its hotel vehicle in partnership with the original Tifco owners. The Sunday Times also covers this story.
Bank of Ireland has a commercial feature on its Brexit Roadshow. With support from Enterprise Ireland, Bord Bia, the British and Irish Chamber of Commerce and various other professional firms they will host events around the country with case studies presented by business owners about preparing for Brexit.
Denis Desmond’s 3 Arena hosted 79 gigs in 2016 (versus 78 in 2015) including The Corrs, Adele and Justin Bieber, yet visitors declined from 666k to 554k. Revenue fell from €21m to €19.3m and EBITDA fell from €10.4m to €9.6m.
Niall Norton’s Opennet made €6.9m in 2016 from €98m of revenues. Many of the big global telecom companies use the firm’s software for billing.
The Labour Court ruled that Siemens workers should receive 2.5% pay increases in 2018, 2019 and 2020.
There is an interview with John Leenane in the Business Post. The Nenagh man moved to the US in 2000 with Trintech and went onto work for Paypal, Verisign and dipped his toes in start-ups, as well as venture capital. Leenane now heads up a technology division for multibillion fintech giant First Data and will employ 150 skilled people in Nenagh. First Data has had a base in Clonskeagh for a number of years but it will be interesting to see if First Data get the quality of people expected to live in Nenagh. Hopefully, it will be a great case study.
Dublin Animation company Kavaleer has signed a deal with Nick Jnr for 90 territories in 23 languages for its show Kiva Can Do.
The Department of Finance and KPMG will be asked to appear in front of the Public Accounts Committee in relation to fees being charged by KPMG for the wind down of IBRC. KPMG won a tender run by NAMA for the work.
The Irish government has not notified the European Commission about plans to introduce a sugar tax which it is supposed to do.
The investment company that controls legacy NTR assets paid a dividend of €22m last week. The Roche family would be entitled to €8.5m of it, One 51 €5.3m and Nick Furlong’s Pageant just over €2m.
Jack Horgan Jones focuses on fee-paying schools and as part of a series he interviews the Alexandra College principal Barbara Ennis.
There is an interview with Owen Sharp, head of the Movember organisation.
Tom McGurk has a lovely piece on Jimmy Magee RIP title “Thanks for the memories, Jimmy”
Jerry Kennelly has an excellent article on Junior Entrepreneurship. He regrets that prosperity in this country has significantly reduced the requirement for a lot of teenagers to hold down part-time jobs. He says that kids are being “pressure cooked in a rote learning pot”. He devised the Junior Entrepreneur Programme, which is like a mini Dragons Den for 11-12 year olds. 40,000 kids have completed the programme since inception.
Car sharing company GoCar has invested €3m in its nationwide network this year and is set to invest another €6m.
Inflection Biosciences, which has developed various treatments for cancer and was backed initially by Michael Smurfit, is setting itself up for a €10m fundraising round.
“A new partnership between cleantech firm Airsynergy and energy company Pinergy is expected to generate revenues of €1.5m over the next two years.” Head of Pinergy Enda Gunnell and head of Airsynergy Gerry Butler are featured in the paper. The partnership will fund the finance required for companies looking to take on Air Synergy’s smart poles and microturbines.
Mulrooney sisters Dr Jane and Dr Katherine are bringing their skincare range to China.
There is a regional focus on Galway, an IMI special and a Cyber Security special.
Ian guider marks the end of Richie Boucher’s term as head of Bank of Ireland. He steadied the ship and took the bank out of the red and into the black, secured investment when needed and paid the state what it was owed. He could not have done much more. Michael Murray writes an open letter to the incoming CEO Francesca McDonagh
The Business Post has a very good feature showing various company results including:
- Club Travel had gross profits of €13.5m in 2016. - Randox made a pre-tax profit of £9.6m in 2016 (down from £18.3m the year before). - PJ Carroll turnover fell from €215.3m to €205.6m in 2016. Profits fell from €6.8m to €3.1m.
Ian Kehoe writes about the Smyths Toys success story. He says in light of Toys R Us moving into Chapter 11, Smyths has 79 stores in England and 28 on the island of Ireland and it reported £10 million profits last year from £396.5m sales. Kehoe states that “they must rank among the Musgraves and Dunnes as the wealthiest and most successful families in the world of Irish retail”.
Sunday Independent 10 acres of land has been earmarked for development by Diageo at the iconic St. James’s Gate site in Dublin. Prior to the recession, the land at St. James’s Gate, along with two other Diageo sites, were expected to be sold for €500m. The new development project at St. James’s Gate is expected to include residential, commercial and leisure elements
Silverwood Developments, a corporate vehicle owned by the Dunnes Stores family, has sought planning permission to convert a Dunnes Home Stores on George’s Street into two restaurants.
The Sunday Independent’s Richard Curran highlights the importance of the new trade deals the UK will cut during Brexit negotiations. The European Commissioner for Agriculture, Phil Hogan, has emphasised that EU markets will be protected from cheap beef imports by keeping the volume allowed in through tariff-rate quotas on South American countries like Brazil and Argentina as low as possible. However, a ‘frictionless’ border between Northern Ireland and the Republic could be hard to maintain if South American beef could freely enter Ireland.
Canadian firm Bombardier, which employs around 4,500 in Northern Ireland, could face cut-throat competition in its rail business from China if plans to combine the rail divisions of French company Alstom and Germany’s Siemens materialise. An agreement between the makers of the French TGV and German ICE high-speed rail networks is the latest plot twist in the negotiations surrounding consolidation in the global train industry.
AIB is to publish a report in two weeks’ time covering a range of proposals aimed at alleviating issues associated with the delivery of new housing to the Irish market. Among those consulted by AIB were Joe O’Reilly of Chartered Land and Castlethorn, John Reynolds of Cairn Homes, O’Flynn Group chairman and MD Michael O’Flynn, Green REIT’s Stephen Vernon, and John Mulryan of Ballymore Properties.
There is a piece on Pippa O’Connor’s premium jeans collection, Poco. Poco, which initially signed up for a six-week pop-up store in Dundrum Town Centre in March and was credited with a 12% increase in footfall at the South Dublin shopping centre on its opening weekend, is to return for 10-weeks over the Christmas period.
BWG Group, which operate Spar and Londis stores in Ireland, will invest more than €19m in the roll-out of 50 new Mace stores across the country by 2020. There are currently 165 Mace stores in Ireland, employing some 2,500 people, and the new stores are expected to create an additional 700 full and part-time jobs.
Irish green energy firm, Photonomi Group, will offer a tailored finance package, where savings on electricity, heating and car-running costs will finance one of its HONE systems for heating, electricity, hot water and electric cars. The firm, which aims to offer 2,000 car and home deals over the next year, has entered a partnership with Bank of Ireland, Toyota and BMW to expand the offering aimed at those living in older homes who are interested in driving an electric, hybrid or hydrogen-powered car.
Musgrave MarketPlace has completed a €2.5m upgrade of its 73,000 square foot Robinhood branch in Dublin. In its latest step in a €11m investment plan geared towards transforming its traditional cash and carry business in the digital age, the wholesale supplier is refurbishing branches across the country. A €5m investment in technology, supply chain and marketing has been made to improve the overall customer experience.
Foreign visitors to Britain in July increased 6% on 2016 as a result of the weak sterling following the referendum. By contrast, the number of Britons travelling abroad fell by 2% in the same month. In the first seven-months of 2016, foreign visitors to Britain spent £13.3bn, a 9% increase on the prior year.
Ailish O’Hora of the Sunday Independent has an interesting piece on the potentially damaging effect on Ireland resulting from Europe's focus on the harmonisation of the common consolidated corporate tax base (CCCTB) in the coming years. In April, the Irish Times reported that 10 firms paid almost 40% of Ireland’s corporation tax in 2016, highlighting the damaging effects EU tax rules could have on our country’s finances.
Following the opening of LinkedIn’s new €85m high-spec office building in Dublin, the company’s only piece of real estate outside the US, there is an interview with Sharon McCooey, head of LinkedIn Ireland and Senior Director of International Operations. McCooey reflects on senior positions she held with multinationals prior to becoming LinkedIn’s third employee in Ireland and spearheading its growth over the past seven years into a company employing 1,200 people.
This week, Sean Gallagher’s interview is with innovative healthy-snack firm Ja Broghies. The company was set up in 2016 by Martin Walsh, Damien Carroll and Ronan Keher and now employs 15 staff and has revenues of €2.7m.
Anaeko, a Belfast-based provider of innovative software solutions to global technology companies, has won a multi-million-pound contract to develop and integrate cloud services for a major US-based cloud provider.
Re-Gen Waste has invested £2m in its Newry plant which will enable the company to significantly increase paper exports. The investment, which will bring the total workforce up to 205, is expected to be followed up by a £7m investment within the next three years.
Robodone, a Japanese edtech firm aimed at primary school learning, is being brought to Ireland by Wexford man Trevor Murphy. The technology will bring extra-curricular computing, coding and robotics online learning programmes to primary school children.
Sunday Times Brian Carey’s Agenda piece this week
- Dalata, led by chief executive Pat McCann, is inching his way towards full ownership of the Clarion Hotel Liffey Valley after agreeing on a deal with receiver Martin Ferris to buy 33 suites for €8.6m. Tax investors are now awaiting word from Dalata on an offer for their 62 suites at the west Dublin hotel.
Ireland is home to 850 millionaires, according to Revenue’s latest figures, a 40% increase in just two years, with a recovering economy boosting the ranks of those on seven-figure incomes.
Bank of Ireland finance boss Andrew Keating has claimed that rival AIB spent up to €190m implementing mortgage rate cuts on a mortgage land grab that has delivered just €20m of new business. AIB has opened a lead of 10 points in mortgage market share over its pillar bank rival by aggressively cutting rates, for both existing and new customers.
Cormac Lucey reminds us of that we as a country are returning to the “if we have it we spend it” school of budgetary practice. This has allowed the short-term political interests of those making decisions to trump long-term economic sense. Lucey thinks Fine Gael has buckled to the political insatiable pressures on government to spend more.
More than 1,500 road traffic victims may be forced to settle for less than 90% of what they are owed by Setanta Insurance because legal delays and overheads are steadily eroding its remaining assets.
Joe O’Reilly’s Castlethorn Construction is to enter into a joint venture with Marathon Asset Management, an American investment fund, to build a 340-apartment development at Heuston South Quarter in Dublin. The investment group had looked at a potential sale of the prime development lands, close to Heuston rail station, before deciding to seek a partner to develop the scheme. Marathon paid €120m to Lloyds Banking Group for the loans secured on the Heuston South Quarter development, which included 264 fully let flats, 8,000 sqm of office space and about 7,800 sqm of commercial and retail space.
Sold-out rugby and football internationals helped the Aviva Stadium record an operating profit of €3.1m for 2016.
The IBRC commission of investigation led by Judge Brian Cregan has cost almost €2.4m since the inquiry was established two years ago and will likely cost the taxpayer more than €10m.
Arachas Corporate Brokers, which has been on the acquisition trail since a management buyout earlier this year, is in talks to buy Kidd Insurances, a large wholesale and retail broker.
Arachas chief executive Donal Cronin identified acquisitions as part of its growth strategy after leading the management buyout backed by Sovereign Capital, a British private equity firm, in February.
TransferMate, an online payments business that was co-founded by tech entrepreneur Terry Clune, owner of the Taxback group, was valued at almost €20m in a recent shareholder sale in which a Clune owned company bought out owned by co-founder Barry Dowling.
The luxury goods group Bulgari is locating an international distribution centre in Dublin to serve overseas markets from Ireland.
The investment management company that runs the €1.1bn quoted property group Green REIT, has been paid €75m in fees and shares since it floated in Dublin four years ago.
Revenues at Openet, Ireland’s biggest homegrown software group, fell by €4.23m to €98.4m last year, accounts reveal. The telecoms software company said the decline was mainly down to lower-margin sales in the US. Profits were flat at €6.9m. Openet’s software is used by large telecoms and cable companies, including AT&T, Verizon and Eir, to handle complex billing and rating transactions. The company employed 689 people during the year, up from 670.
The DAA has pulled a tender to operate a 402-bedroom hotel at Terminal 2 after the airport authority’s talks with its preferred bidder ended. It is understood that Windward Management, headed by Patrick Coyle and financing partners Invesco, pulled out of the tender process in recent weeks. According to one industry source, the tender was difficult to “stack up financially”, with a number of bidders pulling out of the process at a relatively early stage. DAA appointed Savills Hotels & Leisure to seek expressions of interest for the development and operation of the new hotel, under a so-called finance, build, operate and transfer model.
The US investment bank Goldman Sachs is believed to have made a dramatic late entry in the bidding for Danske Bank’s €1.8bn book of performing loans, teaming up with fellow bidder Pimco, an American fund manager. The two US institutions are expected to battle with a Bank of Ireland-led consortium for the book when bids close this Wednesday. Bank of Ireland and Goldman Sachs have already bought commercial loans from Danske Bank, while Cerberus has acquired non-performing personal and mortgage loans. The loan sales mark the final stages in Danske Bank’s withdrawal from retail banking in Ireland.
Not surprisingly for a fledgeling restaurant, losses at the Smith & Wollensky steak restaurant in London - Europe’s first - hitched up to almost £2m (€2.25m) last year. New York-based businessmen Maurice Regan and Michael Breslin appear to own 73% of the London restaurant through their EMI-MR investment vehicle. A further 24% is held by Danu, which is controlled by Mickey O’Rourke, Mark O’Meara and Leonard Ryan of Setanta Sport fame. Danu owns 80% of the Smith & Wollensky chain in the US. A source close to the owners said that trading in 2017 was up 25% year-on-year.
Clanwilliam, a Dublin healthcare technology group, has acquired a majority stake in New Zealand-based HealthLink, the consideration was not disclosed.
ITX Re, the Dublin-based reinsurance arm of Inditex, the world’s largest fashion retailer, recorded pre-tax profits of €26.3m in 2016, down €1.2m on the previous year.
Ardagh Holdings share price suffered a dip last week but recovered most of the lost ground after it was announced chief executive Ian Curley was to leave the company after just a year.
Profits at Citibank Holdings Ireland were up last year by 65%, to €787m, as the US bank moved more money through Dublin.
Nick Webb’s Inside Track :
- Workplace communication app Slack was valued at $220m three years ago, last week it raised $250m from Softbank and Accel, on a valuation of $5.1bn. - Kealan Lennon’s Cleverbug, a social media greetings company, has won the Retail Week tech start-up of the year award in the UK. - Dominic Murphy has left KKR to set up his own boutique investment house, 8C Capital. The fund is looking to raise €1bn to invest in healthcare and consumer industries. - Brown Bag Films’ Cathal Gaffney and Gary Brown, chairman of ad agency Target McConnells, have invested in a new traditional music bar Piper’s Corner on Dublin’s Marlborough Street.
This week’s chief executive interview is with Paul McKenna founder of the Mac Group.
Tullamore Dew, the Irish whiskey brand owned by William Grant & Sons, last week launched its biggest global campaign yet, Beauty of Blend, which will be featured in 20 countries on TV and digital formats.
Other news The 2017 Entrepreneur campaign launched last week in collaboration with Mediaplanet Ireland. We’re supporting the campaign and fast-growing business, and pleased to be informing entrepreneurs of the huge opportunities that currently exist in a prospering Ireland.
We’ve contributed to the campaign, as part of the expert advice and inspirational stories from entrepreneurs who have scaled their business from scratch. Whether you’re looking for advice on Brexit, exporting help or financial assistance, this can be found on their site - http://bit.ly/2wE3xs8
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