Inside the world of business
Quinn family members still blaming the administrators
ANOTHER WEEK, another interview by a member of the Quinn family.
This time Aoife Quinn, the second youngest daughter of businessman Seán Quinn, and her husband Stephen Kelly, gave the TV interview to Sam Smyth who was standing in for Vincent Browne on his TV3 programme.
On last night’s programme, they repeated the view that everything was okay with Quinn Insurance when the family was kicked out of the business in March 2010.
Kelly said the reason the Insurance Compensation Fund (and, in turn, motor and home insurance policyholders through the Quinn levy) was “being hit” for a possible €1.65 billion was “solely down to the company being managed dreadfully by the administrators”.
Funny, this is in stark contrast to the view of the administrators appointed to the insurer by the Central Bank and the view of the Central Bank itself that the company’s losses are due to decisions taken by the insurer while it was still part of Seán Quinn’s group.
Kelly, who worked in the insurer before and after the appointment of the administrators, said the company had a very good claims model but that the administrators let 400 staff go, which “decimated” that model.
The average workload of a claims handler went from about 50 claims to 100 claims, he said.
Quinn and Kelly, as other family members have done, questioned the Central Bank’s decision to seek the appointment of administrators in 2010 on the insurer’s guarantees on Quinn Group debts, but appeared to ignore the regulator’s concerns about the heavy losses in the UK business of Quinn Insurance.
It is worth putting the cost of the Quinn debacle in perspective.
Taking the debts of €2.88 billion owed to the former Anglo Irish Bank, now State-owned, (and excluding any future recovery on this) on top of the possible €1.65 billion call on the State compensation fund, the total is higher than the Government bailout of Permanent TSB.
This equates to €989 for every Irish citizen.
Business exams a sore subject
WHILE THE students have been partying last night, fewer from this year’s crop opted for business-related subjects in the Leaving Cert, according to statistics published yesterday by the State Examination Commission.
It could be judged as a dent in Ireland’s plan to be a hive of start-up activity.
A total of 55,815 students sat this year’s examinations, with the accounting and economics examinations attracting fewer than 6,000 students each. There was also an increase in the number of students failing business, economics and accounting exams.
Some 17,248 students sat the Leaving Cert business exam at higher and ordinary level this year, down from 18,083 last year.
A total of 6 per cent of students failed the higher-level paper, with 8.3 per cent failing ordinary level.
There was also a drop in the numbers sitting the accounting and economics exams.
A total of 5,605 students sat the accounting exam, a decline from last year’s figure of 5,823, while 4,626 students took the economics exam compared to 4,796 last year.
More than 6 per cent of students failed the higher-level accounting exam, while nearly 16 per cent of students failed the ordinary-level paper. In economics, 6 per cent of students failed the higher-level paper, with 5.8 per cent failing the ordinary-level paper.
The numbers of students obtaining honours grades in all three subjects was also down.
However, applications for business courses are unchanged this year.
This was the boom area during the Celtic Tiger, but demand is now sluggish as job opportunities have tightened. That said, given the criticism that many of the boom-era leaders lacked in-depth knowledge of economics and business, these figures don’t bode well for the future.
Analysts downgrade CRH stock after disappointing interim results
AT THE close of business in Dublin last night, CRH’s shares were down 7.7 per cent on their Monday closing price of €15.51, the day before the building materials giant announced figures for the first six months of the year.
Even on Monday, the stock dipped sharply, almost 2.4 per cent, indicating that investors were not optimistic about what Tuesday might bring.
In all, last night’s close of €14.31 marks a 10.2 per cent drop on last Friday, when the company actually gained a little ground to end the day at €15.928.
On Tuesday, CRH said sales in the first six months of the year were up 5 per cent at €8.6 billion, operating profits were flat at €184 million and earnings before interest, tax and write-offs, a measure of the cash it generates, were down 1 per cent at €568 million.
Three months ago, the company flagged that it expected a result along these lines. On May 9th, CRH said that, following a mixed first four months of trading, it expected earnings to be “close” to last year’s outcome of €574 million.
It repeated this at the following week’s annual general meeting.
In terms of the second half, it’s a case of much the same. CRH said yesterday that it expected earnings for the full year to be similar to 2011, when they were €1.66 billion.
Analysts downgraded the stock. Davy’s Barry Dixon cut his full-year earnings prediction to €1.64 billion from €1.73 billion.
Goodbody gave the group a “reduce” recommendation, while Dolmen tagged it as a “neutral” but with a price target of €13.90.
Dixon points out that based on the firm’s revised predictions, the group is trading at over 18 times earnings, a premium to its peers.
Its strong balance sheet and cashflows could justify this, he says, but it also assumes an improvement in the building materials industry, something about which Davy is sceptical.
Interestingly, dealers in Dublin did not seem to feel that the sell-off of its shares was overdone, but did point out that the falls of the last three days were “about it”, and that CRH was unlikely to lose much more ground.
It’s also worth remembering that the group’s own predictions of its performance tend to err on the side of caution.
QUOTE OF THE DAY
"People think that we have a pot of gold sitting under our beds at home. We do not have a pot of gold" – Aoife Quinn, daughter of bankrupt businessman Seán Quinn
TODAY
Zurich Finance Ireland file their interim results; meanwhile media watchers will be looking to Westminster magistrate’s court where six former News of the World journalists are due to face charges of phone hacking
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