RDS rides out the recessionary storm; Davy learns a thing or two; Ben Dunne searches for online answers
RDS gets over hurdles of 2009
THE ROYAL Dublin Society (RDS), probably best known for its annual staging of the Dublin Horse Show, appears to be weathering the recession, judging by its latest report.
Revenues declined last year by 5.3 per cent but the RDS still managed to post a “surplus” for 2009 of €1.38 million – slightly ahead of 2008. Commercial income fell by 9.8 per cent to €15.7 million, a reflection of a tighter market for exhibitions in the recession and the loss of concert business to the refurbished O2 venue.
But a 50 per cent uplift in revenues from its Simmonscourt office development, which numbers Irish Distillers and Six Nations Rugby among its tenants, provided compensation. The RDS earned just shy of €2.1 million last year from the two office blocks. A 7.4 per cent cut in expenditure also helped to balance the books.
RDS chief executive Michael Duffy described the year as “challenging”.
“As 2009 developed, we saw our trading position get more difficult,” he told me this week.
The society, which was formed in 1731, has planning permission for two additional office blocks, covering 150,000sq feet. But Duffy said these would only proceed if market conditions “pick up” and tenants can be secured in advance of construction.
“We’re not going to build them on a speculative basis,” he said.
The RDS is considering redeveloping its showgrounds, home to Leinster rugby. This could involve the demolition of the Anglesea Stand to boost capacity from about 18,000 to about 22,000. A decision is likely before the end of the year.
“It needs to be redeveloped,” said Duffy. “We are conscious of the need to bring it up to modern spectator comfort standard and we want to make it all-seater.”
The Dublin Horse Show cost €3.89 million to run last year, posting a “small surplus” for the RDS.
The RDS sits on 42-acres of prime development land in Ballsbridge and could have cashed in on this holding at the height of the property boom.
But Duffy said the society had no regrets.
“Absolutely not,” he said. “It’s not even an item for discussion. We’re committed to selling no more land in Ballsbridge.”
EMPG a costly lesson for Davy clients
THESE ARE humbling times for Ireland’s biggest stockbrokers, who stuffed their private clients into a plethora of investments in recent years only to see many of them wiped out.
One such investment was Education Media Publishing Group (EMPG), which is led by Barry O’Callaghan and grew out of two highly leveraged deals that involved the combination of Riverdeep with Houghton Mifflin and Harcourt Publishing.
Davy private clients invested $170 million (€125 million) in what is now EMPG but had their 4.2 per cent equity holding was wiped out recently as part of a restructuring deal by the publisher, which had breached its financial covenants.
This involved its debts being reduced from $7.4 billion to $3.2 billion in a swap for equity, with fresh capital of $650 million.
On March 31st, Davy wrote to its clients to detail EMPG’s woes and apologise for the wipeout in the value of their holdings.
“I am deeply sorry that we ended up at this point,” Davy’s head of private clients, Brian McKiernan, told investors. “We have sought to protect your interests on an ongoing basis and were actively involved . . . in the various restructuring negotiations on your behalf, but we have been unable to alter the ultimate outcome in any significant way.
“We have written down the value within your portfolio to nil, although we hope the remaining interests materialise in time at a higher level.”
This was a reference to their equity holdings in EMPG International, a separate entity not affected by the restructuring and five-year warrants held in EMPG. The warrants could pay out if an “enterprise value” of €10 billion were ever achieved by EMPG.
Dunne talks frankly about website woes
BEN DUNNE has a reputation as a straight talker and for good reason.
This week I contacted him about the latest accounts filed for his chain of fitness centres and, as an addendum, asked how his much-publicised classifieds website, bendunne.com, was faring.
“It’s going nowhere,” he said bluntly.
“What’s gone wrong, Ben?” I enquired.
“If I knew what the problem was, it would be successful,” he replied.
Fair point.
The online business is doing about €700 to €1,000 a week in income, “which is nothing”, according to Dunne.
“If I can’t make something work, I don’t spend all my time with it,” Dunne said, adding that he has no plans to close it just yet.
The Nora Dunne Gallery in Kimmage hasn’t been as fortunate. Dunne closed the art gallery – named after his late sister and situated in a former cricket pavilion beside his Carlisle fitness club – in March after being served with a 30-day order by Dublin City Council.
“They said the lease meant it had to be used as a sports ground and not for the sale of art,” Dunne told me. “So I’d no alternative but to close it.”
Will he challenge the order? “That’s a matter for my legal advisers,” he replied.
Lundin teams up with Belmore
LUNDIN MINING will spend about €2 million this year drilling about 40 new holes on a prospective lead and zinc prospect in Co Clare.
Lundin and Dublin-based Belmore Resources, which holds 10 licences in Co Clare, have teamed up explore the viability of the project, which is close to the Pallasgreen area in Limerick, where Minco/Xstrata and Connemara Resources/Teck Cominco believe they have discovered large lead and zinc-ore bodies.
Belmore director Pat Mahony said results from its latest drilling efforts – about 20 holes – would be released in two to three weeks. “The results will be encouraging,” he told me.
Belmore is a minnow, with a listing on the Plus market in London. Lundin has agreed to spend €14.7 million up to 2016 on the Clare licences, for a 70 per cent stake in the venture.
This has removed the financial risk of exploration from Belmore, which is only burning about €92,000 in cash annually. “We’re fully funded and it will be well down the road before we have to look for funding,” Mahony added.
LITTLE THINGS
The first matches won’t be played until late July and early August but May 14th has been set aside by the IRFU and the FAI for the official opening of the Aviva Stadium.
President Mary McAleese will do the honours and RTÉ will air a documentary that night on the revamp of the old Lansdowne Road, a programme sponsored by Aviva.
The insurer is also toying with the idea of inviting clients and guests to the new stadium on July 11th for a relay of the World Cup final on the Aviva’s big screens.
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UPC Ireland, the cable TV group that owns NTL and Chorus led by Robert Dunn (right), has hired Pembroke Communications to handle its PR.
This followed a tender process involving six agencies. The contract is believed to carry a six-figure value and will involve a major rebranding, with the NTL and Chorus brands being dropped in favour of the UPC name.
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Spare a thought for Aer Lingus boss Christoph Mueller, who has broken a bone in his foot after an accident involving one of his children’s toys. Mueller was on leave this week and has also pulled out of a speaking engagement with the Chartered Accountants Leinster Society on April 21st.
Still, it could be worse, as one Aer Lingus middle manager put it to me this week: “At least he didn’t shoot himself in the foot, like some of his predecessors.”
