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Profits jump 80pc at North’s biggest firms

Northern Ireland’s biggest companies have seen their profits increase by almost 80pc in 12 months.

This is according to the 2018 ‘Top 100 Companies’ from industry magazine ‘Ulster Business’.

Leading the way was Armagh-based poultry producer Moy Park, which reported a turnover of £1.4bn (€1.57bn) over 12 months.

This is the seventh year in a row that the North’s largest private sector business has topped the list.

Moy Park processes over 280 millions birds a year, in addition to producing around 200,000 tons of prepared foods annually.

It saw its profits increase to £59.7m (€66.9m) last year from £35.7m the previous year.

Chris Kirke, president of Moy Park, said that it was the “great people” within the business that have made it the successful company it is today.

“It is our talented team and our focus on enhancing operations across our facilities, that will ensure we can continue to innovate, thrive and grow,” said Mr Kirke.

Overall, turnover among the Ulster Business Top 100 – now in its 30th year – increased by around 9pc, rising to £23.85bn from £21.88bn, when comparing company accounts year-on-year.

Pre-tax profits for the 100 companies making the list grew by 79pc, rising to £924.9m from £517.5m the previous year.

One of the biggest jumps on the list was from Graham Construction.

During the 12-month period the company saw its revenue soar by more than £200m to £759m.

“This year’s Top 100 Companies list is another clear example of the strength of Northern Ireland’s business landscape, right across the sectors,” John Mulgrew, Ulster Business editor, said.

“The majority of company results have taken place during the ongoing stasis, with a lack of a devolved government in Northern Ireland, which makes the huge surges in profit, and turnover, even more impressive.”

There were more than a dozen new entrants to this year’s list, from right across the business spectrum, including Belfast technology firm Kainos, and Mac Interiors, which is based in Newry.

The Ulster Business Top 100 edition was welcomed by Michael Neill, head of A&L Goodbody in Belfast, which sponsored the list.

“We have been inspired by their drive, determination and resilience, and the example they set to Northern Ireland plc,” Mr Neill said. “We very much look forward to seeing their businesses continue to thrive over the next 12 months.”

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Building costs rapidly rising to Celtic Tiger peak: surveyors

Construction costs will surpass 2006 levels this year and are rapidly approaching the highest levels of the Celtic Tiger bubble, according to new figures from the Society of Chartered Surveyors Ireland (SCSI).

The higher prices have big implications for delivery of the Government’s ‘Ireland 2040’ strategic development plan, in particular for the success and cost of large infrastructure projects.

Higher wages, plus steel and timber costs are driving up the price contractors are seeking to pitch for projects, the SCSI found.

Des O’Broin, president of the SCSI, described the increases as concerning in the shorter term and a challenge for those involved in procurement, especially public procurement which is a fixed-price tender process.

“The current rate of increase is simply not sustainable in the long term,” Mr O’Broin warned.

“The major reason cited by SCSI members for the continuing increase in tender prices is ever-increasing workload, coupled with the skills shortage being experienced by both main contractors and specialist sub-contractors.”

Drivers of higher costs include changes to building regulations and the impact of Sectoral Employment Orders (SEOs), which replaced the old registered employment agreements in the construction industry last year, and set minimum terms for pay, pensions and other benefits employers must provide, he said.

“Labour prices are also rising on foot of the Sectoral Employment Order while the price of steel, timber and other materials, as well as oil, are also increasing,” Mr O’Broin added.

“Other factors contributing to the increase include the application of new Nearly Zero Energy Building regulations – although these will lead to reduced running costs for buildings over their life cycle.

“Further uncertainty around Brexit and tariffs arising from a global trade war are likely to be other contributors” he added.

The Chartered Surveyors said the increases are symptoms of high levels of activity and limited resources.

It will feed into either higher costs, fewer projects, or potentially both, and will inevitably feed concerns of an overheating economy. The SCSI Tender Price Index tracks the bid levels when construction firms pitch for contracts.

The latest quarterly update today shows that prices increased by 3.95pc in the first half of 2018.

The forecasted annual increase for 2018 will be 7.4pc, almost half a percentage point ahead of what the Society predicted at the start of the year.

It means construction prices are on course to be back to the level they were at in the first half of 2006 and just five index points below the peak in the first half of 2007 – which has long been regarded as unsustainable.

“Given the continued rise in tender prices over a relatively short period of time, it will be a concern for contracting authorities receiving tender proposals for national projects that contractors may well run into financial difficulty halfway through – as evidenced in recent school delivery projects,” Mr O’Broin said.

The index shows prices in the first half of 2018 rising fastest in Dublin and the rest of Leinster, but increases were common across all of the regions.

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Counties in the west worst hit as 161 postmasters take redundancy

The west of the country looks set to lose dozens of post offices after it was confirmed 161 postmasters have been granted voluntary redundancy.

An Post said the 161 postmasters’ offices, from among a network of 1,111, were now “likely” to close.

It comes after a leaked document containing a portion of those taking the redundancy showed how rural areas in the west are particularly exposed in comparison to eastern areas.

Of the 110 towns on the document obtained by the Irish Independent, 13 are in Donegal, 12 in Mayo, 10 in both Cork and Galway, and four in Kerry.

This compared to just two areas in the capital, two in Kildare and one in Wicklow. The only county not to have a post office appear on the list was also in the east – Louth.

An Post did not comment on the veracity of the document but said a list would be issued at the end of August once the details had been confirmed with each postmaster.

“Some closures were inevitable in a network that has been largely unchanged for many years,” said Debbie Byrne (inset), head of An Post retail. “We appreciate that these decisions have not been easy for the individual postmasters and we are grateful for their dedication over many years of service in their communities.”

An Post said communities of more than 500 people would have a post office and that 95pc of the population would be within 15km of at least one post office. All island post offices are being retained.

The move has sparked concern among rural representatives about the impact closures will have, especially in isolated areas.

Labour’s Martin Farren, mayor of the Inishowen municipal district in Donegal, said the area had already suffered from the closure of banks.

“It’s going to make an impact on rural Ireland. It’s very worrying,” he said.

Mr Farren pointed out that if all post offices on the peninsula listed in the document closed, it would be an hour round trip for some people to go to a post office. “It would especially affect the older people who go and collect their pensions on a Friday,” he said.

Fianna Fáil communications spokesperson Timmy Dooley said the Government should not be allowing so many post offices in rural Ireland to close.

“An Post and the Government cannot be allowed to use these redundancies as a smokescreen to close the post offices,” he said.

“This would constitute a direct attack on these communities and on rural Ireland.”

He added: “There is a domino effect when it comes to the removal of State services from villages and rural towns.

“Postmasters and mistresses who opt to take the redundancy package are absolutely entitled to do so. They have given years of fantastic service to their local communities,” he said.

A Government senator has also called on Communications Minister Denis Naughton to intervene. Senator Michelle Mulherin raised the issue of the village of Ballindine, in Co Mayo, where the postmistress is retiring.

“I am concerned that the people of Ballindine are being unfairly treated by An Post in its decision to close the post office effective from August 10,” she said.

She said An Post had not given local people an opportunity to come up with alternatives.

“I do not believe this is the way for An Post to do its business.”

In April, An Post announced plans to modernise the post office network following a breakthrough deal with postmasters.

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Increasing rental income sees profits at Ireland’s biggest private landlord more than double

Profits at Ireland’s biggest private landlord, I-RES Reit, more than doubled to €69.5m in the six months to 30 June.

The performance was driven by a 13pc increase in net rental income to €19.3m, according to six month interim results from the group.

I-RES Reit also reported an increase in its EPRA earnings for the period of 9.8pc to €13m.

EPRA earnings measure the underlying operating performance of an investment property company.

The group’s earnings per share increased to 16.5 cents during the six month period, from 7.4 cents in the same period last year.

As a result, the company has announced plans to declare an interim dividend of 2.6 cents per share for the period.

“I-RES has delivered another strong set of results for the six months period to 30 June, achieving excellent operating metrics, underpinned by active property management and asset management, as well as further portfolio valuation uplift,” Margaret Sweeney, CEO of I-RES, said.
We continue to invest in the supply of apartments and houses for rent through a combination of acquisitions and build to let.”

“Rental demand remains strong and the supply of residential accommodation remains constrained resulting in a combination of attractive yields and rental growth.”

Looking forward, Ms Sweeney said that the prospects for growth in the Irish market remain good, and that the structural drivers of demand for private rental residential accommodation (population growth, strong inward investment and economic growth and urbanisation) are likely to underpin demand for “some time to come.”

“This coupled with our modern well located existing asset portfolio and our current development opportunities, offer significant opportunities for future growth,”’ Ms Sweeney said.

Article Source: http://tinyurl.com/kbwqb42

The changing world of aviation

Globally, there are four big trends reshaping the aviation industry, which aviation companies and the Irish government alike must plan for.

For half a century, the largest western airlines had the market for intercontinental air services to themselves. Now, competition for long-haul traffic is fierce, with the ‘Gulf Three’ diverting passengers who would previously have hubbed in Europe or south-east Asia through the Gulf mega-airports.

Some Gulf airlines are offering one-stop services from ‘secondary’ cities in Europe to ‘secondary’ cities in Asia, for example between Birmingham and Melbourne, bypassing London and Sydney. The CEO of Birmingham Airport recently commented that after decades of Dublin providing the largest single block of Birmingham’s passengers, the Dubai services now have more traffic.

In Dubai, the largest single group of disembarking Dublin passengers take flights to India. Similar competition will eventually be offered by China, where aviation development is growing at a dizzying pace. The Asia Pacific market will account for a huge percentage of global aviation growth in the forthcoming decades.

A second source of new competition for the established carriers is the new business model of ‘long haul, low cost’. This business may now be getting a foothold in the market, notably but not only in the form of Norwegian Air, which flies between the US and Ireland (Cork and Dublin airports). This service has already had an impact on transatlantic pricing of other airlines.

These changes are of course partly due to a third trend: constant improvement of aircraft technology that permit lighter aircraft, more fuel-efficient engines, and more seats. Even in the seemingly duller world of air cargo, there are exotic-looking new aircraft like Airbus’ recently unveiled whale-themed Beluga cargo aircraft.

Finally, in the background are the changes that decarbonisation will bring, although in the absence of a global carbon tax, and of an alternative fuel for air travel, it is difficult to foresee much progress in the short term.

Irish aviation trends
Locally, there are also observable changes underway in aviation infrastructure and airline business models. Some of these are the local manifestation of the international trends.

At Dublin airport, plans are being made to add a second runway, to serve airlines capable of connecting Dublin to cities at or beyond the range of the present runway, at least for aircraft with a full passenger load.

Amongst airlines, under IAG ownership, supported by feeder traffic from the east, in particular the UK, and Dublin airport’s ‘pre-clearance’ of US immigration for services to the west, Aer Lingus has greatly expanded its transatlantic services to the US coasts boosting passenger numbers at Dublin airport’s ‘mini hub’.

Also locally, Ryanair is transitioning its business model from ‘ultra’ to low-cost but higher quality than in the past. Ryanair already has well over 100m passengers a year, still only half the passenger-size of the largest US airlines. But it has a huge fleet increase on order to serve its ambition to add a second 100m passengers a year. Very likely, Ryanair judged that it had captured the ultra-low-cost market and needed to improve its service to make itself attractive to business travellers and families.

The ‘Always Getting Better’ campaign was clearly a part of this transition to a better quality service. But the airline has met uncharacteristic operational difficulties in pilot scheduling and staff disputes very recently that harm its reputation amongst customers.

Finally, there is the perplexing challenge of managing the impact of Brexit on aviation, on which informed opinions differ. The standard view is that if Britain leaves the EU without a new air services agreement with Brussels, UK flights will not be able to fly between UK and EU airports in either direction. Both the Irish Aviation Authority and European Commission have warned of such a scenario. But some optimists in the UK argue that the UK’s pre-1973 air service agreements will come back into force. Even if so, these 40-year-old agreements provided for air travel in a completely different world.

Notwithstanding the Brexit uncertainty, the future of aviation is buoyant and looks set to provide greater connectivity and choice for Irish passengers. Taking advantage of these global trends and planning for the future of aviation travel in this context will positively shape Ireland’s economic future.

Article Source: http://tinyurl.com/kbwqb42

€1K ‘Granny Grant’ proposed for grandparents who help with childcare in Budget talks

Grandparents who help out with childcare would receive a €1,000 annual payment under plans outlined by Independent ministers in Budget negotiations.

The self-assessed payment would be available to all grandparents who care for their grandchildren for more than 10 hours per week.

In their first negotiations with Finance Minister Paschal Donohoe ahead of the Budget, Shane Ross’s Independent Alliance, which props up the Fine Gael-lead Government, called for its introduction.

It is being described as a “grandparent and grandchild expenses reimbursement scheme”, which could be worth a four-figure sum to those who help mind younger relatives.

Grandparents would apply for the payment through the Department of Social Protection – but would not be required to provide vouched expenses to receive the State cash.

Transport Minister Shane Ross said the scheme would give “serious recognition” of the important childcare role that grandparents play.

“The payment is aimed at recognising that grandparents allow young mothers and fathers re-enter the workforce by giving their children care they would not get anywhere else and which comes at no cost to parents or the State,” Mr Ross told the Irish Independent.

“This is something that should be encouraged and the reward is significant.”

Mr Ross has been calling for the introduction of a payment for grandparents for the past three budgets but Fine Gael has resisted the move.

However, after the group’s meeting with Mr Donohoe, the Alliance specifically named the grandparent grant as a key demand for October’s Budget.

Mr Donohoe has committed to costing the proposal before his next meeting with the Alliance. Mr Ross said he would be “banging down” the Finance Minister’s door over his proposal in the coming weeks.

An Independent Alliance analysis, compiled before the last budget, estimated that almost 70,000 grandparents could be eligible for the grant, costing around €71m a year.

“These grandparents are currently making a key contribution to the Irish economy, resulting in an increased workforce, facilitating a return to employment for parents, who would otherwise be unable to do so,” it stated. “This childcare provision reduces the impact of high childcare costs on young families, whilst providing children with the love and attention of family members.”

The Alliance has also called for the reinstatement of the €850 bereavement grant, which helps with funeral costs.

The group also told the minister to increase the VAT rate on price-gouging hotels. However, they want small hotel and restaurant owners along with the newspaper industry to be able to avail of the lower rate.

The group also looked for an increase in the threshold for inheritance tax and a hike in gambling taxes.

Super Junior Minister Finian McGrath called for greater investment in disability services. This includes increased funding for residential care places and speech and language services.

In a statement issued after the meeting, the Alliance said: “In our first two budgets, we brought stability to the nations’ finances and established firm foundations on which to build the recovery. As we face into our third budget, this responsible approach has put us in a strong position to share the rewards of our economic progress with the citizens of our country while taking steps to avoid a return to the destructive boom and bust policies of the past.”

In a separate meeting with Taoiseach Leo Varadkar, the Alliance demanded to be allowed free votes on contentious issues, such as legislation calling for a boycott of goods from Israel.

No proof of expenses will be needed to claim the payment
The Independent Alliance’s ‘Grandparent and Grandchild Expenses Reimbursement Scheme’ would be operated by the Department of Social Protection.

Grandparents who care for grandchildren for more than 10 hours a week, while their parents are in work, would submit a form to the department seeking payment to reimburse them for childminding expenses.

An Independent Alliance source said expenses could include petrol or food costs related to caring for grandchildren.

However, it is not expected that grandparents will have to provide vouched expenses to receive the State payment.

Similar schemes exist in other countries. In the UK, grandparents can top up their pension pots by applying for national insurance credits if they look after children aged under 12.

Around 100,000 grandparents in the UK are eligible for the scheme.

Article Source: http://tinyurl.com/kbwqb42

Trump and Brexit boost Silicon Docks

The rapid growth of Dublin’s Silicon Docks is being fuelled by a combination of US president Donald Trump’s stance on immigration and ongoing uncertainty in relation to the attitude of the UK authorities to foreign workers post-Brexit.

That’s the message Hibernia Reit CEO Kevin Nowlan says his company has been hearing from its tech-sector tenants as they seek to navigate the twin challenges of doing business both in Trump’s America and in Britain as it prepares to leave the EU.

Referring to the drivers of demand from global technology companies for office space in the Dublin Docklands and beyond, Mr Nowlan said: “We’ve been getting feedback for over a year from our occupiers that they have been having difficulty getting people into the US to work in their organisations.

“And other people are nervous that this is going to happen with the UK post-Brexit.

“That’s one of the drivers that’s coming on with the tech sector in Dublin. It’s only one of them. Dublin is ticking a lot of the boxes for these organisations.

“Brexit is definitely providing a tailwind for Dublin at the moment,” he added.

The Hibernia chief’s observation came in the course of questions from reporters following his company’s AGM yesterday.

While much of the focus in the lead-up to the meeting centred on calls for Hibernia’s shareholders to vote against the re-election of non-executive director Colm Barrington and to oppose salary increases for Mr Nowlan and chief financial officer Tom Edwards-Moss, neither issue gained any traction. Just over 30pc of Hibernia Reit’s stock voted against the company on each of the two proposals.

Regarding the recommendations from proxy advisers, Institutional Shareholder Services and Glass Lewis, Hibernia chairman Daniel Kitchen said the idea that investors should be told how to vote was “nonsense”.

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Hotels face higher costs due to staff shortages

Ireland’s resurgent hotel sector is facing competition for labour that is likely to push up costs for operators as they battle for staff in an economy with falling unemployment, a new study has warned.

The annual Crowe Ireland survey of the country’s hotel sector said that the industry has enjoyed the seventh consecutive year of increased turnover.

It’s now firing on all cylinders across the country, with record profitability, record occupancy and record room rates in all regions.

That also raises the prospect of the special 9pc Vat rate introduced by the Government in the depths of the financial crisis coming under closer scrutiny as budget day approaches.

In a review of the 9pc Vat rate published yesterday, the Department of Finance said it had cost the Exchequer €2.6bn since its introduction in 2011, and was now a “significant deadweight”. The Department said the reduced rate cost €490m in 2017.

The Crowe Ireland survey found that average room rates across the country rose 6.9pc last year compared to 2016.

In Dublin, the average room rate was 6.8pc higher at €136.96. The pace of growth in average Dublin room rates last year was half that recorded in 2016, despite just 237 new rooms coming on stream.

In the southwest and western seaboard, average room rates soared 8pc and 9.7pc respectively to €100.67 and €87.49.

Luxury hotels saw room rates rise 6.2pc to €218.02, a new record. Economy hotels saw the biggest growth in average room rates, which rose 11.8pc last year to €68.43.

The Crowe Ireland survey found that Dublin hotels increased their profits by 12pc. Profits at hotels in the southwest jumped 17.4pc on average, and by 17pc along the western seaboard. At hotels in the midlands and east, profits were 13.9pc higher on average.

But the report insisted that strong profitability is required to spur the €1.5bn investment it says is needed to deliver an extra 11,000 hotel rooms across the country over the next seven years.

Speaking to the Irish Independent, Crowe Ireland partner Aiden Murphy said that payroll cost increases were the most significant threat to the hotel sector’s profitability.

He said that given the reduced unemployment rate in Ireland, the premium that hotels must pay for staff above minimum wage “will have to increase”.

The minimum wage is €9.55 an hour. Last month, the government agreed a recommendation by the Low Pay Commission that the rate rise to €9.80 from next year.

Mr Murphy said that hotels typically pay between €1 and €3 an hour above minimum wage.

“There is a concern that the payroll cost for hotels, which was 34.5pc of revenue in 2017, could return to much higher levels,” he said. “Going back seven years, it would have been as high as 38pc or 39pc.”

Mr Murphy also said that accommodation and other costs in Dublin could push hotel workers to move to hospitality jobs outside the capital.

“There’s a concern for certain staff in Dublin about the cost of living increasing,” he said, pointing out that workers at regional hotels would find the cost of living much lower.

Ireland had a record 9.9 million overseas visitors last year. The figure has been projected to hit 13.7 million by 2025.

Mr Murphy said certainty is needed regarding the 9pc Vat rate.

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DataStax opens first Irish office creating 30 jobs in Cork

DataStax, a US-based data management IT company, is to create 30 jobs in Cork with the opening of its first office in Ireland.

The California-based company, which was founded in 2010, currently has over 500 employees based in multiple US and international locations.

The move into Ireland is a chance for DataStax to expand its back-office operations and opens the possibility for attracting a wider range of talent in Ireland and elsewhere in Europe the company said.

“Our investment in Ireland is further reflection of the reputation held by Ireland in terms of the talent and resources available and will be a key foundation of DataStax’s further growth in both US and international markets” Niall Cotter of DataStax said.

Tánaiste and Minister for Foreign Affairs and Trade, Simon Coveney T.D. described the announcement as “a vote of confidence in Cork’s business ecosystem.”

The move is supported by IDA Ireland, with Mary Buckley, director of IDA Ireland, saying that Cork’s tech infrastructure, talent pool, and supportive academic network has “created a compelling business environment which continues to attract investment from overseas companies in the technology sector.”

Among the companies that DataStax works with are Comcast, eBay, McDonald’s, Microsoft, Safeway, Sony, UBS, and Walmart.

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Europe IPO market up 5pc in first half

The European IPO market posted a 5pc increase in money raised in the first half of 2018, with total proceeds of €21.8bn.

The number of initial public offerings was up 4pc at 168.

The figures are contained in a new report from PwC, which said that after a strong first quarter activity had become subdued in the second quarter – with a 43pc decrease in money raised and a 7pc decrease in IPO numbers compared to the same quarter last year.

Activity this year was boosted by large offerings from health care business Siemens Healthineers, which raised €4.2bn, and Deutsche Bank’s asset manager DWS Group, which raised €1.3bn).

Both of those companies listed on the Deutsche Borse in Frankfurt.

Activity was strong in Dublin in the first half also, where the Irish Stock Exchange was acquired by Euronext and rebranded as Euronext Dublin.

Edtech business, virtual reality education and property investor Yew Grove Reit completed flotations, while Glenveagh Properties and Greencoat Renewables raised fresh capital.

But with geopolitical matters ranging from trade disputes to Brexit posing uncertainty, PwC warned that the market could become more difficult.

“Volatility could well creep back into the markets, potentially unsettling the IPO markets across Europe,” said Denis O’Connor, from PwC Ireland’s transaction services arm.

“Pricing will likely remain a challenge and investors are increasingly selective. That said, we expect to see the volume of IPO activity picking up again in the second half of the year.

“Despite a more subdued second quarter, and the current economic and political outlook, the market is open and deals are being done.”

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