There has been less column inches given to Budget speculation in recent weeks compared to previous run-ins, perhaps thanks to the Ryanair debacle.
There is plenty of speculation this week regarding what is in store for us on Tuesday. The government is expecting an extra €1bn of fiscal space from new revenue initiatives and general growth.
A summary of the expectations in the Sunday Business Post for this week’s Budget:
- Increase of band of lower tax by c.€1k and reduction in USC. Expectations of €250-€300 per annum benefit for middle earners.
- Cigarette tax hike.
- Increased commercial stamp duty from 2 to 3%.
- Multinationals are expected to be levied with a new charge for transfer of Intellectual Property to Irish income via 80% of income being exempt from 100%.
- The vacant site tax set to come in 2019 may be increased.
- There is expected to be a small increase in the pension and other social welfare payments.
- c.800 extra Gardai and c.500 extra primary teachers are expected to be recruited.
- Health spending is expected to increase by 3% with more expected to go to the NTPF to ease waiting lists.
- There is expected to be reductions in BiK for drivers of company cars which are electric.
- Anybody who bought in 2004 to 2012 will continue to enjoy 75% of their mortgage interest relief for another three years.
- €4bn increase to capital expenditure with half on housing and rest on schools, roads and health facilities.
- Self-employed PAYE credit is set to be increased.
- Plans to double betting tax from 1% to 2% have been cast into doubt by recent comments by the Taoiseach and the 9% special VAT on hospitality is expected to remain untouched.
- It is less clear how CGT will be softened. Options are to reduce overall rate, extend entrepreneurs relief from current €1m at 10% or increase benefits for share options, etc. This is the simplest tax cut whereby if the government give on yield they will get on volume, but let’s see what they’ll do.
- The help-to-buy scheme of €20k for first time buyers is expected to be tweaked rather than abolished.
In the Sunday Indo, Richard Curran discusses suggestions that the Budget could contain a change to the seven-year rule on CGT relief for commercial property purchased between December 2011 and December 2014 which allows purchasers of such property during this period to avoid paying CGT on the sale of that property, once they hold it for seven years. This has been mooted as one of the contributory factors to “land hoarding” of sites suitable for residential development as purchasers of such sites are waiting to sell tax-free after 2019. One suggestion is to allow purchasers during that period to sell the assets tax-free earlier that the seven years in order to encourage them to develop the assets sooner, rather than wait for the seven-year period to elapse. Complications arise, however, as the tax break applies to all commercial property bought during the period, not just those relevant to residential housing or sites, as well as all commercial property bought by Irish individuals and companies in the EU.
Stephen Kinsella summarises the mood about the Budget in the Sunday Business Post with the following quote: “It’s a first in Irish history. We have the contours of the budget months before the actual budget date. Given the scope for new spending, budget day itself should be much ado about almost nothing.”
Sunday Business Post
Martin Shanahan, chief of the IDA, claimed that Connect Ireland has created a total of 544 jobs with a further 398 promised. Connect Ireland claim 2,000 placed and promised and had indicated it would create 5,000 at initiation.
Dermot Desmond’s reported 27.5% ultimate holding in Canadian company Kennady Diamonds increased in value last week on the back of favourable geological results on the diamonds in the site. Both share prices in Kennady Diamonds and Mountain Province Diamonds, in which Desmond has a reported ultimate stake of 24%, have dropped from the peak share price, but results like this are expected to give momentum to the share values.
Gerry Barrett had a victory in having assets being enforced on by Deutsche Bank protected via examinership. Neil Hughes of Baker Tilly Hughes Blake is the examiner. It is suggested that Deutsche Bank paid €97m to NAMA for loans at original face value of €762m. €37.5m has been repaid via asset sales and €10m in cash.
Ryanair pilots in unions such as IALPA are expected to use the current circumstances to force for union recognition.
Declan De Lacy of PKF O’Connor Leddy & Holmes expects to get 50c in the pound for creditors of Decobake and that the business will be in a shape to be sold as going concern when all legal issues are out of the way. He believes this is the best way to maximise value. The Sunday Independent reports that a number of parties are interested in acquiring the business. It is unusual to see the incumbent in a SME shifted out and it might reduce the usual assumption among incumbent business owners that they are entitled to stay in the driving seat of the business if there are big creditors not getting paid.
Head of medical augmented reality and fitness software company 3D4Medical, John Moore, has stated his intention to IPO next year. Interestingly, he quotes the cost of excellent iOS developers as $200k in the US, $85k in Ireland but $36k in Russia.
“Barchester Healthcare, the elder care group backed by Irish investors JP McManus and John Magnier, is selling its primary care centre beside its Knightsbridge nursing home in Trim, Co Meath”, according to the Sunday Business Post. It has four long-term leases generating income of €479k a year. There is speculation that the sale of the nursing home and retirement village may follow. The entire entity is suggested to be worth €20m, including a two-acre site.
Anne Hearty’s Trinity Healthcare is said to be in advanced talks to buy Castlemanor Nursing Home in Cavan.
Róisín Burke caught up with the McGettigan family last week as they launched the new McGettigan’s bar in the Bonnington Dublin hotel (formerly the Regency hotel). The patriarch of the family business, Jim, and matriarch, Patricia, are planning to revamp the hotel in Drumcondra with a €10m overhaul. The wider company, with pubs and hotels in Donegal, Limerick, Wicklow, Wexford, Dublin, Cork, Dubai, the Middle East and the US, has refinanced all group debts with Broadhaven and has a clear road in front of them. The group is now being led by chief executive Dennis McGettigan.
“Michael Fitzgerald, the former head of the special investigations unit in AIB, has set up a new business called Fraud Business Solutions (FBS).”
Tom Lyons writes about the ban of any Irish Times journalists contributing to Newstalk shows on foot of an article written by Fintan O’Toole in the Irish Times which enraged the Newstalk hierarchy.
Ciara Meehan pays tribute to our former Taoiseach Liam Cosgrave RIP who passed away during the week.
Mazars has merged with Limerick firm Maguire Caulfield Browne, which brings the Mazars headcount to 400.
There are two big deals announced whereby Sam McCauley chemists has engaged long term contracts with Seabrook Technology and RealWorld Analytics.
There is a three-page special on pensions and a two-page report on the new Data Protection Regulation.
Stephen McCarthy, founder of online auction platform BidX1, is interviewed in the Business Post.
Glenveagh Properties, which is expected to follow in Cairn’s footsteps and tap public markets for €550m this week, is reported to have landed a few choice sites from Cerberus for its portfolio, including the original Chester Beatty Library off Shrewsbury Road in Dublin 4. It has 1,700 sites shovel ready and is expected to complete 1,000 units in its first year. Developer Stephen Garvey of Bridgedale and US private equity giant Oaktree have joined forces to launch Glenveagh. John Mulcahy is chairman, while Justin Bickle will come from Oaktree to lead the company. Glenveagh has swept up some of the brightest property brains in town in recent weeks, including Shane Scully who joins as MD of Glenveagh Living which is a subsidiary which will focus on delivering houses and apartments in joint ventures with state agencies, local authorities, approved housing bodies and institutional investors working in the private-rental market here.
There is an excellent profile by Róisín Burke of legendary private equity veteran Seamus Fitzpatrick of Capvest. Fitzpatrick is from Cavan but one of the most respected private equity players in London. He has not done an interview in the past ten years, this is a profile piece. He is in the news as he is said to be trying to take over One51 again. He founded Capvest more than 20 years ago and has invested €4bn of investor’s money across 150 companies. He went to his local secondary school in Cavan and when he left Ireland with a degree from Trinity he got a job with Morgan Stanley. Barry O’Callaghan of Riverdeep and Jim Barry of NTR were both in Morgan Stanley at the time. He went on to join JP Morgan’s US private equity arm, then Chase Partners, before returning to London to work with BT Capital Partners, the private equity arm of Bankers Trust. Both he and his colleague Randl Shure, who sadly died of cancer in 2011, left to set up Capvest. They started with an initial fund of $1billion with big backing from AIG. Punch Taverns was one of their flagship early deals in 1999 which they made a lot of money in and stayed in until recently. He has had great success in integrating bolt-ons to platform businesses. In addition to their One51 stake here, they also have controlling stakes in Valeo, NI-based pork supplier Karro and the Mater Private. They generally take longer term horizons than the typical 3-5 year private equity plays.
Tom Lyons writes on NAMA: “Envisaged by its architect Peter Bacon as a manager of assets, it quickly became a conduit for selling loans and property to a small handful of vulture funds. It could have decided to sell portfolios to shovel-ready developers, a move that could have helped prevent the current housing shortage. Instead, it priced actual developers out of the market by selling in multibillion portfolios.”
Lyons also writes on the amazing success that is Teamwork, the Cork company founded by Peter Coppinger and Dan Mackey, which is one of Ireland’s best home grown technology success stories. Its best solution is its project management software.
Turnover at contractor Ardmac rose from €43m in 2015 to €62.4m in 2016, pushing pre-tax profits from €3.4m to €5.5m.
The Irish arm of McDonalds reported a pre-tax profit of €15.8m last year.
Leanna Byrne interviews the headmaster of Belvedere College.
The Movers & Shakers page features former Sligo Gaelic football star Philip Greene’s move to head up aircraft leasing coverage in HSBC in Dublin.
Beats Medical, founded by Ciara Clancy, is raising €3m in Series A funding. The company makes a smartphone app that provides therapies for people with Parkinson’s and other neurological conditions. It is available directly to customers for €1 per day, but focus is now being put on a B2B aspect by selling directly to hospitals. Beats has been backed by investors such as Sam McCauley and telecoms entrepreneur Sean Melly. Gavin McLoughlin’s interview this week is with 27-year-old Clancy.
The former MD of Booking .com, Rachel Howes, has taken a stake in Ennis-based hospitality company, the Great National Hotels and Resorts Group. Great National was founded in 2010 and claims to be Ireland and the UK’s fastest-growing hospitality group. It provides outsourced services such as marketing, distribution, reservations and yield management to 4-star and 3-star deluxe properties.
Dublin City Council and the IDA are forming plans for an “innovation corridor” in Dublin 8 for the areas of healthcare, technology and medtech, bringing in the Digital Hub and Guinness Enterprise Centre. It will include a newly-developed site at Diageo’s St. James’ Gate, St. James’ Hospital and the National Children’s Hospital.
The Aer Lingus chief operating officer, Mike Rutter, has suggested that the company could lose out on a €1bn aircraft order financed by IAG to another IAG subsidiary, the most likely being new low-cost carrier Level, if Aer Lingus staff continue to demand substantial pay increases. The order for eight new Airbus aircraft is envisioned to double Aer Lingus’ transatlantic traffic to 4.5m passengers and see it hire 800 additional staff by 2020. Fearghal O’Connor has a further article discussing the issue.
Richard Curran suggests Diageo is timing its c.12-acre development of its lands in the Liberties area of Dublin well, as such land could be subject to a hefty bill if a vacant site tax were to be introduced.
Curran also highlights that the European Commission referring Ireland to the European Court of Justice for not collecting the tax owed to the country by Apple is damaging to the country reputationally.
“A Russian billionaire who owns Moscow’s Domodedovo Airport has almost doubled to $650m a loan arranged for him by a low-key Dublin corporate services firm, new filings at the companies office show. Dmitry Vladimirovich Kamenshchik is using the money for the development of a new terminal and a second runway at the Russian airport under its new 2026 masterplan that would see passenger traffic rise to 55 million. An initial $300m loan was facilitated by Cafico International, a corporate services firm based on Dublin’s Fenian Street, which specialises in structured finance.”
The Commerce Department in the US has imposed a further preliminary import duty of 80% on Bombardier C Series aircraft based on Boeing’s case that its Canadian competitor Bombardier sold planes at less than fair value and benefited from unfair subsidies. Bombardier employs over 4,000 workers in its Belfast plants and across the country.
RTE is seeking 250 redundancies as part of a restructuring plan following €20m of losses in a worsening advertising market. RTE has warned its staff that a better redundancy package will not be offered amid suggestions that some staff were waiting for an improved offer.
Samantha McCaughren has a feature with Dara Deering, executive director and head of retail banking at KBC Bank Ireland.
Simon Rowe has an article on the potential for Irish exporters to take on the Asian markets, particularly the huge markets of China and Japan. Such opportunities have been boosted by the scrapping of trade barriers and increased direct air connectivity, which could be extended further as Chinese carrier Hainan Airlines is preparing to launch a direct Dublin-Beijing route.
It was announced during the week that Dublin-founded health food company Freshly Chopped has signed a six-figure deal to launch the business in Cyprus as it looks to expand across Europe. The franchise outlets in Cyprus will be in addition to the 30 existing outlets across Ireland.
Sean Gallagher’s feature this week is with Peter Keeling, founder of medtech company Diaceutics. The company, which employs 55 staff and has a turnover of c.€9m, helps patients and pharmaceutical companies globally by improving their patient testing via their real-world data and worldwide laboratory network. The company was set up in 2005 in the Regional Business Development Centre on the campus of the Institute of Technology in Dundalk, and now has offices in Belfast and New Jersey.
Gallagher is also event director of the 'Your Business Live' SME showcase which has been announced to take place in the RDS in April.
It has emerged that CRH may face competition from US construction materials company Summit Materials for the takeover of supplier Ash Grove Cement. It is understood that Summit has bid $3.7bn-$3.8bn versus the $3.5bn offer by CRH. The founder of Summit is Tom Hill, who is a former head of CRH’s US operations. The Sunday Times also reports on this story.
Profits at the Marker Hotel in Dublin were up 25% last year to €3m, with turnover rising 9% to €18.8m. The hotel is owned by Brehon Capital / Tetrarch Capital and the Swiss-based Spitzer family.
Paddy McKillen’s Hume Street Management, which provides management services to the Maybourne Hotel Group (London’s Claridge’s, Connaught and Berkeley), earned £5m in fees last year. The hotels were acquired by the Qatar sovereign wealth fund in 2015 after a very public wrestle between McKillen and the Barclays brothers.
ISIF has invested $5m as part of a $26m funding round into Nautilus Data Technologies, a US technology business that specialises in floating data centres and which has plans to open an Irish operation.
Refrigerated truck tracking company Blue Tree Systems has been acquired by US-based Orbcomm for $42.6m in a cash and share deal. Blue Tree Systems was owned by CEO Charlie Cahill, co-founder Karl Lusted and the Ulster Bank Diageo/Investec Ventures VC fund. Jonathan Simmons of Investec Corporate Finance advised Blue Tree on the sale.
Brian Carey’s Agenda piece:
- As Aer Lingus’ transatlantic business continues to grow, the airline is piling the pressure on the DAA to invest more into Dublin Airport and build more stands and additional taxiways or risk Aer Lingus’ owners IAG basing transatlantic aircraft in other airports. Dublin Airport has the fifth-highest number of transatlantic seats in Europe, behind only London Heathrow, Paris, Frankfurt and Amsterdam.
Despite turnover at Unilever’s Irish arm falling by €12m to €217.9m, it made profits of €5m in 2016, up by €1.9m on the previous year. Unilever’s Irish consumer products include HB ice cream and Lyons Tea.
Panda Waste has acquired a second UK-based waste company, Cheshire-based WSR Recycling, as it continues its expansion into the UK. This follows the acquisition of Dorset-based New Earth Solutions last year.
The share price of Oisín Fanning’s San Leon rose 10% last week as the Nigerian government began to make payments due to the company. $7m of a payment was made with $86m still outstanding.
Property investment firm IPUT has bought back Gardner House at Wilton Terrace in Dublin for an estimated €55m-€60m from Kennedy Wilson. The purchase price is a lot less than the €83m IPUT received when it sold the same building in 2006 to a consortium including developer Gerry Conlon and businessmen Colum and Ciarán Butler.
Property fund Lone Star is seeking planning permission for a mixed housing development in Portmarnock, Co. Dublin. The application for fast-track planning seeks permission for 102 houses and 96 apartments.
Signature Capital, an Irish retail property investment firm, is set to buy the properties leased to the Avoca stores in Rathcoole, Co. Dublin and Kilmacanogue, Co. Wicklow from Aramark on behalf of private investors. Signature Capital was founded in 2004 by former Investec directors Ciaran McNamara and Enda Woods.
Seamus Fitzpatrick’s CapVest has made “an indicative and conditional offer” approach to One51 regarding a possible cash offer of €2.50 per share. The approach does not constitute a formal offer to purchase the shares and is reported to be heavily qualified. Any potential deal will need the support of the company’s two largest shareholders, Dairy co-ops, which owns 26% of One51, and the Canadian pension fund CDPQ, which owns 25% of One51. The Sunday Independent also reports on the story. The reported offer price of €2.50 per share is well above the last traded share price of €2.
Dublin-based VC fund Investec Ventures is raising a new €75m fund to invest in early-stage technology companies. It currently manages the Ulster Bank Diageo Fund, which was launched nine years ago. This fund has exited five of its 20 investments, and returned almost 80% of the total fund value from these five exits. Exits have included Fenergo, Britebill and, recently, Blue Tree Systems.
Online education company Shaw Academy has raised more than €1m in equity funding in five days on Crowdcube. The Irish company is targeting a €2.5m equity fundraise in total. Shaw Academy, run by CEO James Egan, was set up in 2013 and now employs more than 180 staff between Dublin and India and has more than 250k new students per month.
Paul Lynch, former CFO of Applegreen, has exercised his share options and has taken up a €6.1m stake in the business. Lynch left the business in July of this year and was replaced by Niall Doran.
Glencar Medical, founded by John Drumm and chaired by former HSE boss Brendan Drumm, is set to buy a primary healthcare centre in Tralee for €17m. Glencar manages the primary healthcare assets of Valley Healthcare, a fund set up by the government’s Irish Infrastructure Fund and Australia-based AMP Capital.
Philip Connolly interviews Declan O’Connor, managing director of BHSL Hydro. O’Connor’s company, based in Limerick, is an agri-tech business that has developed a unique patented system to convert untreated poultry manure into energy for heating, cooling and electricity generation to meet the energy needs of the farms. To date it has secured €12m in funding and counts some of Ireland’s corporate heavyweights as its directors, including former Kerry Group chief Denis Brosnan, former ESB chief Padraig McManus, veteran corporate financier David Hickey and former Supreme Court judge Fidelma Macken. Focus Capital Partners are corporate finance advisers to the company.
John Collinridge has an interesting piece on the acquisition of Monarch by Greybull Capital in 2014, its subsequent rescue refinancing last year after Brexit and the terrorist attacks in Turkey and Egypt and its ultimate collapse into administration on October 2nd this year.
Sandra O’Connell discusses the opportunities for Irish companies in China.
Nick Webb’s Inside Track:
- Tech investor Bill McCabe is reported to be backing a the construction of 69 houses in Carrigaline, Co. Cork.
- Greenlight Medicines, an Irish pharma company researching medicinal applications of cannabinoids, has raised research grants from a number of agencies including Science Foundation Ireland, Northern Ireland’s Department of Employment and Learning and the Irish Research Council.
- Former Tory MP James Wharton has joined Irish PR and lobby group Hume Brophy.
- Emma Buckley, former TV presenter, and business partner Andy Dowling, former head chef with Avoca, have received €100k in funding for her food delivery start-up, Gourmet Fuel. Buckley’s business designs and delivers personalised healthy meals. She received funding from Skellig Chocolate entrepreneurs Colm and Nicola Healy.
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