Client Login

Sunday paper overview from Valero Financial

Sunday Business Post

Davys, representing an American buyer, looks set to buy Project Harvest from NAMA. It consists of shopping centres yielding €4.8m per annum in places such as Dungarven, Cashel, Thurles, Westmeath and Johnstown in Navan. Ireland once had the highest supply of shopping centre space per capita in the world and the fact that the big names did not pitch up to pay the €50m guide shows that life outside Dublin is not as easy as life on Grafton Street or Dundrum.

After five successive years of retail rent decline, rents on Grafton Street rents are rising. Rents fell from €460 a square foot in Grafton St in 2007 to €207 last year. Yields have contracted from sub 7% back to 4% greatly increasing capital values. It will be interesting to see what value Dundrum trades at this year.

Greg Kavanagh who has partnered with a number of people in his well-timed buyouts of development land worth hundreds of millions has severed links with Sir John Beckwith and Starwood. They co-developed some of the earlier sites Kavanagh promoted. This leaves him proceeding with M & G Investments as his main backer. In a separate case Kinvara Properties lodged a €2.5 million claim against Kavanagh’s main development vehicle in the High Court. Kavanagh looks set to buy a site in Raheny for €20m.

Broadlake Investments have bought a 30% stake in ConveyorTek, a Lisburn based company that designs, manufactures and services conveyor systems. This is Broadlake’s fifth investment, others include Vita Liberta(Skincare brand) and Dee’s Wholefoods.

It is reported that Ladbrokes is to close 40 of its outlets in Ireland. I still struggle to see how Ladbrokes can rationalise the Irish arm as my understanding is that the majority of its leases are held by its listed UK parent company which will restrict the exit from onerous leases and loss making shops.

Derek Richardson, who got a multi-million payout from the sale of 123.ie in 2010 is injecting more than €6.5m to help keep London Wasps going.

“Patrick Jordan, a former senior executive with business support services firm Siteserv, has emerged as the preferred bidder for Transaero Engineering Ireland (TEI), a cash-strapped aircraft maintenance firm that employs 230 workers in Shannon.” It looks like the company will be liquidated if the conditions set out by Jordan are not met. Mick McAteer in Grant Thornton is examiner. Jordan built up a very successful business, Easy Access, specialising in Scaffolding formwork, sold it to Siteserv in 2006 for a handsome price and stayed on with Siteserv as COO for a period of time.

Vincent Wall is now business editor for Newstalk. Newstalk have a very good breakfast show and Ian Guider did an excellent review of the day’s business pages when he was in the seat at 6.35am and I have no doubt Wall will do similar.

There is a good interview with Conor Whelan, head of Easons. They have accepted that they “won’t see a recovery in the books, news and magazine market”. They are preserving that market and growing other revenue lines. Whelan would not deny or confirm that part of their review of strategic options includes a possible sale. Eason’s latest accounts show turnover of €227m, net profit of €2.3m, 1,00 staff in 62 shops, 15 franchise partners and 230 shareholders.

Susan Mitchell highlights that since Kathleen Lynch was appointed Minister for Older People in 2011, she has failed to come up with a solution to the Fair Deal problem whereby the funding is not sufficient to pay for all those that need a Nursing Home room. She promised a review whereby some Fair Deal patients may pay more, outraged ensued and there has been no concrete action since.

HIQA has deemed a number of state-run nursing homes not fit for purpose and they face a dilemma as they cannot throw these people but by leaving them in it nullifies HIQA’s powers.

McWilliams points out that the recovery of banks and the economy is based on a reliance that property prices will increase. He fears with QE etc. that this will put further pressure upwards and history will repeat itself.

Mark Fielding of ISME has a good article on what SMEs need to do before looking for a loan.

There is a good case study of Bibby Financial’s products allowed HR Food expand when banks were not lending to them in 2009/2010.

There is a pullout on the Deloitte Best managed companies awards.

Sunday Times
Most of BOSI’s loans have been sold off and a €2bn Commercial Property portfolio that will be sold in coming weeks will leave very little loans remaining to be sold off.

Morgan Stanley were managing the sell-off of a portfolio of Permanent TSB commercial property loans. Deutsche, Appollo and Goldmans bid for them.

Kerry Group sold Kerry Spring Water to Michael Walsh and Valerie Troy, two former Kerry executives. They are bringing Kerry to court claiming there was not full disclosure regarding a customer’s plans to terminate their contract which seems to have brought the company into a loss making position.

Amgen, who make Enbrel to treat Arthritis and two drugs to prevent infection during chemotherapy seem to have significant plans to expand in Ireland in the old Pfizer plant they bought in Dun Laoighre and some greenfield sites.

The Times report that Lonsdale are looking to sell CJ Fallon, they bought it in 2013 for €25-30m and had backing from Sir Brian Souter, the founder of Stagecoach. They bought it when there was no appetite to buy and the availability of money for deals this size is more plentiful at the moment and they are probably happy to take their profit. The evolution onto ipads etc. will be interesting in years to come and the effect this will have on traditional publishing companies such as CJ Fallon.

Brian Carey calls for the suspension of trading the 0.2% of shares in AIB that the Government do not own and are available to buy on the stock market. The current share price values the business at €50bn when the real value is in the low to mid teens billions.

Brian Carey highlights that net of the Australian business, Independent News and Media are trading at 3.5x their Irish profits which looks quite cheap on the face of it.

Littlewoods Ireland arm made €3.3m last year.

The Buckley brothers who own Greyhound waste have stepped down as directors and their management team will be directors of the company.

Padraic Rhatigan is taking on Goldman Sachs in court. They are trying to either take ownership of the Radisson Blu hotel or get more than par value of loan and he is just asking that they settle for the par value which they bought for a reported 10% discount.

David Duffy’s sign-off interview with AIB. With the €300m a year cost saving programme complete and most recent €1.1bn profit figure the bank is now healthy enough to pass onto private hands and enter into a phase of growth.

Sunday Independent
The three active Irish banks Ulster, BOI and AIB retuned profits of €3bn between them However, Net Lending reduced by €17bn highlighting that banks are not fully recycling the money paid back to them. This figure may be inflated by loan sell-offs from Ulster but what is definite is the banks are being repaid a lot more than they are lending out. This raises questions as to where the QE money and SBCI money will be placed.

11890’s traditional business is declining fast and they are turning their attention to growing their web monitoring services part of the business.

Fenergo, the financial software company backed by former Norkom chief, Paul Kerley, is looking to raise €10m in funding. The €4m placed in 2013 valued the company at €20m and it has grown significantly since.

David McCourt head of US telecoms giant Granahan McCourt is planning to relocate the European HQ of his telecoms empire to Dublin. McCourt has already joined forces with a Buffet board member, Walter Scott, John Gallagher of Doyle hotel group and Oakhill advisors to buy Enet and Airspeed Telecom. His main plan is to bring fast broadband to areas of the world who do not currently have fast broadband.

Richard Curran reflects on the success of Paddy Power who made €167m last year and Andy McCue’s strategy of sticking to the knitting and expanding organically seems very sound while tidying up a cash-heavy balance sheet. This involves a near €400 million distribution to shareholders. Shareholders will receive just over 10% of the value of their shares in cash. Current value of holdings of the major players based on this week’s all-time high share price according to the Indo include:
Patrick Kennedy €35.3m
David Power €287m
John Corcoran €112m
Stewart Kenny €29.7m
Some of the aforementioned would have taken a lot off the table already.

Curran focuses on the ISEQ and how it has risen from 2,074 in February 2009 to 6,017 today. It peaked at 9,854 in 2007. Companies like Anglo and McInerneys would have been in the ISEQ in 2007 so like for like it probably is closer to peak than it appears.

Curran highlights that IAG are making progress in convincing government to sell. This is supported by Paddy Power who have shortened IAG to take over Aer Lingus to 4/7 which means it is more probable than possible the takeover will happen.

FBD are nursing a loss of just under €5bn in 2014 compared to a €53m profit in 2013, not helped by the worst storms we had in 15 years.

Finally, I’d like to finish with an excellent paragraph in Ivan Yates’ column yesterday in the Indo:
“Parallel lives
Ministers and mandarins in Merrion Street are mystified and miffed at our lack of joy in their endless good news pronouncements. The fastest-growing GDP growth rates in Europe only affect 170,000 employed in manufacturing industry, whereas 1.8 million workers depend on the domestic economy for prosperity. Rising house prices of 30pc may be a bonanza for banks and Nama, but only mean high rents or unattainable mortgages for most folk.
This week’s hyped hoopla related to February Exchequer returns – up 16pc, plus €925m on last year. So, we are all paying more taxes… Yippee. The reason why majority of us are not yet ready for high fives is because take home pay depends on pay rises and tax cuts. Only when these appear, can you expect fist pumps from Joe and Josephine.”