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Irish Ferries to take further hit of €4m – €5m from ship delay

The announcement from Irish Ferries operator ICG of another delay to the delivery of the W.B. Yeats ship is set to hit earnings at the company by a further €4m – €5m, according to Davy analysts.

The group had already taken a hit of €2.5m in lost revenue from cancellations announced earlier this year.

On the back of this, analysts have reduced their financial year 2018 earnings estimate for ICG to €74m from €78.5m.

However the Stockbroker group added that while the news, which sees the holiday plans of up to 19,000 passengers thrown into disarray, is “disappointing to all concerned” it does not see the setback as material in the context of a 40 year useful life of the ship.

Read more: Ferry delivery delay costs ICG €2.5m
As a result of this Davy is leaving its financial year 2019 earnings forecast for ICG unchanged at €91m.

In April this year a further 2,500 Irish Ferries bookings were disrupted when Irish Ferries cancelled sailings between July 12 and 29. However 95pc of those choose to switch to Irish Ferries’ other cruise ferry, the Oscar Wilde.

Following the latest disruption, all Dublin-Cherbourg sailings up to September 13 have been cancelled. The ship is now set to debut this autumn on its Dublin-Holyhead route.

FSG — Flensburger Schiffbau-Gesellschaft & Co. KG — the German ship builder commissioned to deliver the new vessel said that the setbacks are “due to delays in the delivery of interior components for public areas and on the electrical system installation in the hull and deckhouse”.

Customers affected by the cancellations are being offered €150 voucher—however it can only be used to Ireland-France routes “next year” and not the 2018 season.

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Malin hits a new all-time low with State down 30pc

Shares in State-backed Malin hit an all-time low yesterday to leave taxpayers nursing a loss of 30pc on the initial investment.

Malin’s shares lost 3.45pc in trading yesterday to close at €7, and at one stage plunged below €7 for the first time to hit €6.60.

The State’s Ireland Strategic Investment Fund (ISIF) invested €50m in Malin at the time of its IPO in 2015, at an IPO price of €10 per share.

The company has raised money in a number of subsequent share placings since then, and ISIF has declined to follow its money in at least one, which took place in May 2017.

Last month, Malin CEO Adrian Howd sold almost €300,000 of shares in the company, which was established to invest in innovative life sciences companies.

One its major problems has been the performance of Novan, a flagship initial investment whose share price collapsed after poor results in clinical trials of its lead product, designed for the treatment of severe acne.

With just €14m in cash left on its balance sheet at the end of last year, raising the prospect that the company may not have as much funding as it would like for follow-on investments, Malin raised almost €30m from investors at €8.88 a share in January.

Writing to investors in March, Dr Howd said he was hopeful the company’s balance sheet would be “further augmented by inflows in the year ahead”.

The company also said at that time that it was talking to the European Investment Bank, a long-term lender owned by the EU member states, about “a possible amendment of the terms of our debt facility to better align its structure with our business needs”.

Dr Howd told shareholders the company’s share-price performance in the second half of 2017 was “particularly poor”.

“A key focus of mine is to work with the management team to close the gap between intrinsic value and share price,” he said.

Dr Howd was Malin boss at the time of its €330m IPO in 2015. He later moved to the role of chief investment officer and was replaced by former Elan chief executive Kelly Martin, a founder of the business. Dr Howd reassumed the role of CEO last October after Mr Martin exited, with a severance package of €3.2m in cash.

Another of the key investors in Malin, alongside ISIF, is Woodford Investment Management, run by high-profile London hedge fund manager Neil Woodford. It did not comment yesterday on whether it was a seller. ISIF does not comment on its investments.

Since becoming CEO, Dr Howd has closed the company’s office in the US and said he expects operating spend to be roughly a third lower in 2018, at €12m.

“I have re-positioned the business and its resources on the assets with the greatest source of actionable upside and value for our shareholders,” Dr Howd said earlier this year.

“I also implemented a restructuring of our business to align the infrastructure with the resources required for the current phase of the journey,” he said in the company’s annual report.

ISIF has said its decision to invest in Malin achieved significant commitments from the company to invest in Ireland.

“These commitments would not have been achieved by private-sector investors and are an example of ISIF’s ability to act as a catalyst for attracting investment into Ireland.”

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Bank of Ireland overhaul bill soars to €1.4bn

Bank of Ireland will pump an extra €500m into an annual “transformation programme” aimed at improving its business systems and overhauling its software platform as the lender attempts to reduce costs and drive efficiencies over the next three years.

The additional cash brings the total investment outlay from 2016-2021 to €1.4bn.

According to a much anticipated strategy plan, released this morning by the bank, the massive €900m reform plan to the IT platform, revealed in 2016 and dubbed Project Omega – but now referred to as the ‘core banking systems’ investment – will require a further €250m, taking the total cost to €1.15bn.

In a statement Bank of Ireland’s new chief executive Francesca McDonagh, said the group was in a “strong financial position” after a “period of restructuring”.

The ambitious growth plans are intended to set the group’s course over the next three, cast off the legacy of the crash and propel the bank into a robust expansion phase.

It has set a target of 20pc growth in its loan book by 2021 and pledged to cut the cost base by €1.7bn over that period.

In setting out her vision for the group, Ms McDonagh, who took over the reins from her predecessor, Richie Boucher, in October, emphasised the bank’s determination “to be the national champion bank in Ireland, with UK and selective international diversification.” That is our “strategic ambition” she said.

Yet while the bank is targeting a 10pc return on tangible equity for investors – a key barometer of profitability – there was little guidance on dividends.

The bank said it intends “over time” to “build towards a payout ratio of around 50pc of sustainable earnings”. But highlighted the money may be diverted elsewhere. “To the extent the Group has excess capital, other means of capital distribution will be considered.”

The bank re-affirmed its commitment to the UK market and predicted income from business banking will account for at least a quarter of the group’s total income by 2021.

However the bank is predicting low-level margin uplift over the same timeframe.

It said its net interest margin – the difference between what a bank earns and what it charges savers – will remain “broadly in line with exit 2017 level of 2.24pc”.

The bank’s capital buffers or core equity tier 1 ratio will be kept “in excess” of 13pc over the next three and half years.

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Dollar rise as Trump and Kim sign ‘comprehensive’ document at landmark summit

The dollar hovered near 3-week highs on Tuesday and Asian shares gained as US President Donald Trump and North Korean leader Kim Jong Un signed a ‘comprehensive’ deal at a historic summit aimed at the denuclearisation of the Korean peninsula.

Trump said the process of denuclearisation would happen “very, very quickly”, adding he had formed a “special bond” with Kim and the relationship with North Korea would be very different.

“The letter that we’re signing is very comprehensive and I think both sides are going to be very impressed with the result,” Trump said after a “really very positive” summit meeting in Singapore.

“A lot of goodwill went into this, a lot of work, a lot of preparation.”

Both leaders are set to hold a press conference later.

The dollar rose against the safe-haven yen, while the Korean won pared gains to stay near a recent two-week trough. Spreadbetters pointed to a firm start for Europe while E-Minis for the S&P 500 also gained 0.1pc.

Kim had earlier said the meeting was “a good prelude to peace”, just months after the two leaders traded insults and tensions spiralled in the region over the reclusive regime’s nuclear programmes.

Yet, there was some unease among investors about the outcome of the talks given the tense relations between the two nations. The combatants of the 1950-53 Korean War are technically still at war, as the conflict, in which millions of people died, was concluded only with a truce.

In Asian equity markets, trading was volatile with Japan’s Nikkei paring early gains to close 0.3pc higher after earlier rising as much as 0.9pc.

MSCI’s broadest index of Asia-Pacific shares outside Japan seesawed between positive and negative territory, and was last up 0.15p.

South Korean shares were a tad weaker while Chinese shares were buoyant after starting in the red.

The blue-chip CSI 300 index jumped about 1.3pc.

“The peace on the Korean peninsula could deliver significant benefits to both North and South Korea, including potentially a re-rating for South Korean stocks,” analysts at Singapore’s DBS said in a note.

“The landmark summit meeting should help to remove a major tail risk for the region’s markets and economies,” they added.

“However, it would be prudent to contain excessive optimism, given the enormous gulf between the two Koreas and the costs of reunification.”

Many analysts were uncertain about the overall impact on global economies and markets from the peace talks, with some pointing to a growing risk of an international trade war as a much bigger headwind to world growth.

Just this past weekend, Trump upset the G7’s efforts to show a united front, choosing to back out of a previous joint communique. The action drew criticism from Germany and France, and Trump called Canadian Prime Minister Justin Trudeau “very dishonest and weak.”

However, “markets are generally shrugging off the G7 trainwreck,” said Ray Attrill, head of forex strategy at National Australia Bank.

Instead, they are looking ahead to a busy week.

Tuesday’s North Korea summit will be followed by policy meetings of the US Federal Reserve and the European Central Bank as well as a Brexit bill vote in the British parliament.

The dollar was well bid on Tuesday, up 0.2pc against a basket of major currencies.

The US Federal Reserve is virtually guaranteed to raise interest rates this week while investors are focused on the US monetary policy outlook.

On the safe haven yen, the dollar jumped to a three-week top of 110.49 in early deals. It was last at 110.37.

Helping calm markets were comments from Italy’s new coalition government that it had no intention of leaving the euro zone and planned to cut debt.

The euro stepped back from a three-week high of $1.1840 to be last down 0.2pc at $1.1764.

In commodities, US crude was rose 10 cents to $66.20 per barrel, while Brent climbed 4 cents to $76.49.

Spot gold slipped 0.2pc to $1,297.12 an ounce.

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Three investment mistakes to avoid when building your portfolio

Even the world’s most successful investors admit they sometimes get it wrong. In a recent Time Money article, John Bogle, founder and former CEO of the US investment firm, The Vanguard Group, claimed that one of his biggest mistakes was buying individual stocks for about a dozen years in the 50s and 60s, before he realised he wasn’t getting anywhere.

Investing is far from an exact science – it can be easy to make mistakes, particularly as many investment decisions are often subjectively based on how investors hope or believe a company or fund will perform in future.

In building up their investment portfolios, and in particular their equity portfolios, there are three common investing mistakes which could potentially impact an investor’s returns:

Letting your emotions dictate decisions

Market volatility can be a common source of uneasiness and can drive investors to consider exiting an investment or stock. However, panic-selling can mean you crystallise paper losses and miss out on any potential recovery. Adapting a long-term perspective will help you avoid knee-jerk reactions when markets are volatile. One way to do this might be to look at your portfolio performance less often.

By buying and holding your investments for a period of at least five years (though preferably longer), you may improve your probability of experiencing peak performance periods instead of trying to time the market.

There are other emotions which can also prompt you to make investment mistakes.

For example, a long bull run may make investors over-confident, particularly if their portfolio has made significant gains.

When your confidence starts to grow, keep in mind that past performance should never be seen as a guide to the future, and that market conditions can change overnight.

Surges in confidence may cause you to take unnecessary risks, so remember to consider your approach to risk when you first started investing. Your portfolio may need rebalancing over time as your asset allocation can change because of the way your investments perform.

For example, if you began with 15pc of your portfolio in shares and they have performed well in recent years, you might find they now account for a much greater proportion of your portfolio.

You might therefore decide to reallocate some of your money to other assets to help spread risk.

Simply rebalancing back to the percentages you started with means selling those assets which have done most well and buying those which have done less well.

It reinforces a good ‘sell high and buy lower’ behaviour while not encouraging market timing or pulling all money out of the portfolio.

Trying to time the market

Many are familiar with the stock market adage to buy low and sell high – however, trying to time the market is not always straightforward.

No-one is able to fully decipher the direction markets will move in future and withdrawing at the wrong time could result in the loss of potential future returns.

If you’re worried about markets taking a sudden dip just after you’ve invested a lump sum, investing regularly can help smooth out market volatility. When you incrementally invest money monthly, you buy more shares when prices are low – and fewer when prices are high, effectively meaning you pay the average price over a fixed period. As you’ve committed to investing regardless of market conditions, this can help remove some of the emotion from your investment decisions.

Failing to diversify

Focusing excessively on one particular asset class, sector or geographical area could mean that if any of these fall in value, it may have a disproportionate effect on the value of your portfolio.

It’s therefore important to ensure your investments are properly diversified. This lessens the potential for losses, as it’s unlikely – although not impossible – that all the main asset classes will lose value at the same time.

Having exposure to a wide range of companies, industries and types of market from different regions around the world means that even if a few of your investments underperform, hopefully some of your other holdings may rise in value, offsetting some or all of your losses.

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ESB plots massive Scottish windfarm

The ESB has unveiled plans for a massive 91 megawatt windfarm in Scotland.

The State-owned electricity business has formed a partnership with wind developer Coriolis Energy and the companies are working on a number of projects in that country.

Renewables trade publication ‘ReNews’ said the ESB has kicked off a scoping process for the farm, with plans for 19 turbines that are 175m tall.

The commercial semi-State ESB is trying to add more renewables into its fuel mix and said it “sees significant opportunity to grow its onshore wind business in Scotland.

“The current ESB strategy has identified the need to continue to grow a generation business of scale in the Republic of Ireland, Northern Ireland and the UK electricity markets so it can compete,” the ESB said.

“Recognising the long-term imperative to decarbonise society, ESB is investing to reduce the carbon intensity of its power generation plant and increase the role of renewable energy.”

The company is also looking to develop projects in solar, waste-to-energy, biomass and offshore wind among other areas.

It recently took a stake in an offshore wind farm off the coast of Suffolk in the east of Britain.

That came after the company last year put out a tender looking for “the provision of renewable energy marine services related to offshore wind farms”.

It said it had a pipeline with multiple projects being looked at.

It has recently appointed a new renewables business development team to work in the UK, with a particular focus on Scotland, to complement its ambitions to grow renewables in Ireland.

The wind sector is seeing a lot of activity, and two large Irish windfarm portfolios have recently been put on the market by their owners.

AMP Capital, the co-manager of the State-backed Irish Infrastructure Fund (IIF), has hired Evercore to oversee the sale of 110 megawatts of windfarms north and south of the Border.

Separately, investment giant BlackRock has put up a portfolio of European windfarms and solar parks.

Windfarms have proved attractive to long-term investors like pension funds in recent times, as they are seen as offering decent returns over a long period of time.

The ESB said it “remains confident” that “onshore wind is one of the lowest cost renewable generation types available on these islands to meet the challenge of reducing the impact of climate change”.

One megawatt of wind energy is estimated to be enough to power around 600 homes, according to the Irish Wind Energy Association.

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Irish investors tender for IPL stock worth €22m

Irish shareholders in IPL Plastics have tendered for shares worth up to CAD$33.4m (€21.9m) in a buyback ahead of its Canadian listing later this month.

The company, formerly known as One51, announced in April that the listing plan would include a share buy-back of up to CAD$50m, which would give investors a clear exit route.

Irish investors face a dilution of their shareholding in the company from 57pc to around 45pc, while the company’s Canadian investors – Caisse de depot et placement de Quebec, and Fonds de Solidarite des travailleurs du Quebec – will see their stakes watered down by around 34pc from 43pc.

Under the buy-back arrangement, the original shareholders in the company, including several co-ops, have the option of selling their shares back to IPL at the time of the IPO or trading out within six months via a grey market in Dublin.

Underwriters insisted on structural lock-in for six months to ensure stability for the shareprice.

Investors can, of course, hold on to their stock after the six-month period.

According to the IPL Plastics documents, more than 2,085,678 Class B common shares (the equivalent of five shares at present) have been tendered under the buy-back option “representing a total redemption price of between CAD$28,156,653 and CAD$33,370,848”. This represents less than 5pc of shareholders.

Pricing details will be released in the week beginning June 18.

The updated prospectus showed that in the first quarter, revenue rose to CAD $148m from CAD$112.5m in the same period 2017. Adjusted earnings before interest and tax fell by 16.8pc to CAD$6.8m in the first quarter.

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Greencore to appoint US chief executive by year end

Greencore, the Dublin-based food group and the world’s largest sandwich maker, is searching for a new chief executive for its US operations as speculation persists about potential takeover interest in the company.

Sources said Greencore will announce the appointment before the end of the year.

News of the latest shake-up comes amid rumours the group has veered into the crosshairs of a private equity suitor.

It is understood Greencore has not fielded any takeover discussions or interest from third parties since late 2011, when the New York buyout firm Clayton Dubilier & Rice came knocking.

But speculation that private equity firms continue to circle flared up again last week across trading desks in London and Dublin, despite the share price rebound since a shock profit warning in March wiped a third off the group’s value.

At that time, Greencore’s chief executive Patrick Coveney announced he would spend half his time across the Atlantic as he sought to restore investor confidence and bolster business by adopting a more hands-on approach to the problem-plagued US division.

Chuck Metzger, chief operating officer of the unit, now holds responsibility for its day-to-day management.

It is not clear whether Mr Metzger is also in the running for the CEO appointment.

According to sources, Mr Coveney’s deeper involvement in the US arm was intended as a temporary measure and a replacement CEO to the US arm is expected to be unveiled within the next six months.

The looming top-tier changes come as investor sentiment in the stock continues to rally after the half-year results in May recorded a 22.6pc jump in revenue to £1.24bn (€1.41bn) – beating market forecasts. While the group chalked up an operating loss of £4.4m (€5.01m), the shares have climbed steadily over the past month, reversing the downward spiral.

The sharp improvement has prompted some to question why a suitor would table an offer now when the chance to swoop on the group at its weakest has passed.

Yet Greencore continues to draw a heavy contingent of short-sellers, who typically borrow stock in a company on the expectation it will fall in value.

In March the short interest climbed to almost 16pc. It has since retreated to 12pc but the group remains one of the most heavily shorted stocks on the FTSE 250 index.

Few in the market doubt private equity companies were crunching the numbers on Greencore earlier this year. Investor sources argue an opportunist may see value in breaking up the company, hiving off its profitable UK arm from the troubled US division.

Low cash generation also continues to weigh on Greencore’s value although many analysts predict this will grow over the next few years as the Peacock acquisition fuels profits.

The group snapped up the food manufacturing business, which caters to branded consumer behemoths like Tyson Foods, Kraft Heinz, Dole and Kellogg’s, for $747.5m (€635m) at the end of 2016, and investors backed the move with a £439.4m (€500.5m) rights issue. But the group has suffered a string of setbacks in its legacy business in the US as new retail ventures failed to gain much traction and factories were left under-utilised.

Greencore has picked up positive momentum recently and has recalibrated its US strategy. Yet Brexit poses considerable cost challenges while a potential supermarket consolidation in the UK threatens to undermine margins.

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Less than a third of people renting their home do it by choice

The scale of the rental trap facing hard-pressed families is revealed in a new report showing that the vast majority of people do not wish to be tenants.

Fewer than a third of tenants rent their homes by choice, according to Threshold’s report, which was released ahead of an event to mark the national housing charity’s 40th anniversary.

The remaining 71pc rent in the private sector because they cannot get social housing, nor can they afford a mortgage to buy a property of their own.

The vast majority (96pc) of tenants found it either difficult or extremely difficult to find rental accommodation.

The huge financial burden facing families is also outlined, as almost half of tenants spend about a third of their take-home pay on rent. Some 14pc say they spend more than half.

Nearly a third (31pc) of tenants had experienced a rent rise in the previous 12 months, with 65pc of those saying the rent had been increased in excess of the 4pc Rent Pressure Zone cap.

Despite their desire to get out of renting, some 70pc of tenants have been renting for five years or longer and 44pc still expect to be renting in five years’ time.

Threshold CEO John-Mark McCafferty said: “It is extremely worrying, but not surprising, that almost all of those surveyed said they had difficulty in finding rental accommodation.

“Nearly half of those surveyed were working, but the fact that 14pc of tenants are spending more than half of their take-home pay on rent shows that renting is becoming out of reach for many people.”

Threshold’s chair, Dr Aideen Hayden, said: “A home is not just where you live, it is a place of sanctuary, offering protection from the stresses and strains of daily living. The current insecurity for tenants in the private rented sector means that they can’t look ahead and plan, they can’t put down roots.
“For families living in the private rental sector, worrying about a possible eviction and move at short notice plays havoc with children’s lives and their school attendance.”

Threshold’s tenant sentiment survey involved more than 300 tenants who had used its services nationally. It was carried out in April.

Threshold is marking its 40th anniversary with a series of events. The first, at the Mansion House this evening, will be addressed by UN Special Rapporteur on adequate housing Leilani Farha and Housing Minister Eoghan Murphy.

Mr Murphy said: “Ireland is experiencing a housing shortage and a homeless crisis and tackling this is the Government’s number one priority.

“Threshold’s homelessness-prevention work is central to this aim. We have developed a strategy to improve the private rented sector. Rebuilding Ireland is working and we will continue to identify means by which to address this issue.”

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Yahoo escapes Irish fine in biggest ever email breach

Yahoo has escaped a fine from the Irish Data Protection Commissioner after the watchdog found against it for a giant email data breach that affected 500 million Yahoo email users.

Instead, the tech giant has been ordered to change its data security and processing systems, on pain of court enforcement.

The breach occurred in 2014 and was reported to the office of the Irish Data Protection Commissioner (DPC) in September 2016, when Yahoo says it became aware of it. Some 39 million EU citizens were affected by the email breach, with 500 million affected overall.

The DPC’s office said it will issue no fine or other punitive measure, because the events took place before the introduction of the General Data Protection Regulation (GDPR), which came into force last month.

If the same event occurred now, a company found to be in breach would face fines of up to €20m or 4pc of global turnover under new penalties introduced by the GDPR. Yahoo’s European headquarters are in Dublin’s Point Village in the docklands.

“The DPC has notified Yahoo that it requires it to take specified and mandatory actions within defined time periods,” said a spokesman for the DPC.

“The DPC will be closely supervising Yahoo’s timely compliance with these required actions.”

According to the DPC, the breach involved the unauthorised copying and taking, “by one or more third parties”, of material contained in approximately 500 million user accounts from Yahoo in 2014. It is the largest breach which has been investigated by the DPC, the spokesman said.

The DPC added that a separate breach dating back to 2013 was not investigated because, at the time the breach occurred, “Yahoo EMEA was not a data controller within the meaning of the Data Protection Acts and therefore Yahoo EMEA was not subject to the jurisdiction of the DPC”.

Nevertheless, the company fell short of data protection law, according to the regulator.
“Yahoo’s oversight of the data processing operations performed by its data processor did not meet the standard required by EU data protection law and as given effect or further effect in Irish law,” according to the watchdog’s assessment of the tech company’s behaviour.

“Yahoo relied on global policies which defined the appropriate technical security and organisational measures implemented by Yahoo. Those policies did not adequately take into account Yahoo’s obligations under data protection law. Yahoo did not take sufficient reasonable steps to ensure that the data processor it engaged complied with appropriate technical security and organisational measures as required by data protection law.”

The DPC went on to say it has ordered Yahoo to take “specified and mandatory actions to bring its data processing into compliance with EU data protection law”. These actions include that Yahoo “should ensure that all data protection policies which it uses and implements take account of the applicable data protection law and that such policies are reviewed and updated at defined regular intervals”.

The DPC also directed Yahoo “to update its data processing contracts and procedures associated with such contracts to comply with data protection law”. The move comes as companies try to integrate new data control requirements contained in the GDPR.

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