Financial Diary - October 1978
OLD JURY'S : ONE of the biggest property coups was pulled off this year by, of all people, the Pembroke Estate. This latter of. course is best known for its ground rerit activities but in the last three years has become involved in property developpment, possibily because of the large number of people taking advantage of their Legal right to buyout their own ground landlord.
Lord Pemborke has channnelled these funds into an office block in Ballsbridge but much more speculatively he picked up the old Jury's Hotel premises in Dame St. which had been lying idle for four years when Jury's moved out to the Inter Can. in Ballssbridge.
Pembroke paid £780,000 for old Jury's at the beginning of this year but in one move has more than recouped its total outlay. The rere portion of the Dame St. premises which had been newly built in the mid sixties has been sold to Conor McCarthy's Swan Ryan Interrnational Group for £1.03 milllion, and will be-refurbished as a Grade A Hotel.
The old front part of the premises in Dame St. has also been sold as a development site to a bank for £Vzm. In total then Lord Pembroke has made a profit of £740,000 on an outlay of not much more than this in less than one year"
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E.S.B.
To cut prices by 71(z% and in the same year produce a record profit of £4.1m is good going by any standards. This is what the E.S.B. achieved last year helped along by an 8V4 % rise in consumption.
The major factor which made this achievement possible was the fall in the value of the dollar. By slightly delaying passing this benefit on to consumers, the E.S.B. managed a £5.6m turnaround in its net results from a loss of £1 Vzm in the previous year to a profit of £4.1m last year.
These figures however grossly understate the E.S.B.'s real position. The fact is that the E.S.B. actually made a profit of £22.9m last year. It reduced this to a more modest looking £4.1m by writing off £18.9m under the heading of loan amortisation. This later item however represents double counting at the most naive accounting level.
The E.S.B. of course is at present trying to prevent An Board Gais from charging a full value energy related price for its allocation of Kinsale Gas. It says that this "might result in a 5% to 6% rise in the cost of electricity." This is complete nonsense as Kinsale Gas will only account for 7% of the E.S.B.'s total fuel input.
By An Bard Gais relating the price charged for this to oil, it cannot have any effect on E.S.B. prices.
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R.T.E.
The head of R.T.E. news, Wesley Boyd, recently told overseas students that journaalists needed a healthy suspicion about all sources of information. He went on to say that "many sources were propagandist, other were disshonest and only a few were impartial and objective."
This brought to mind the very different way Irish tourism is presented by the relatively academic Organisaation for Economic CooOperation and Development and our own semi-State agency, Bard Failte.
O.E.C.D. puts Irish tourism receipts for i 977 at £150 million. To fill out the I~. picture it naturally also callculates the amounts spent abroad by Irish residents. This came to a tidy little £110 million. The net Balance of Payments effect thus comes to £40 million.
Bord Failte on the other hand concentrate attention on . gross tourist receipts including that spent on carriers. This throws up an impressive lookking £23:3 million. Bard Failte makes no mention of the tourist money flowing out of the country although it does give an estimate of incoming carrier receipts which broadly reconciles its figures with those ofO.E.C.D.
Considering that the Government hand out to Bord Failte came to over £lOm last year, the net payments benefit of only £40m is hardly impresssive and certainly does not justify Joe Malone's comment "that the Irish tourist industry could feel well satisfied with its perrformance. "
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MARKS & SPENCERS
The one thing that Irish Life needs to make a success of its huge £lOm Moore St. development is a. really big crowd pulling anchor tenant. The ideal tenant for its 120,000 sq. ft. department store was Marks & Spencers.
Unfortunately Michael Lucey let this one slip through his fingers. Instead Marks & Spencers have been tied up in what was originally' supposed to be a C. & A. store in Mary St. This location is off the prime Henry St. area and is certainly no better than a central spot in Irish Life's developmen t.
Lucy's problem now is to find some other anchor tenant. The most prestigious one he could get is C. & A. itself but having pulled out of opening its Mary St. store it would be a peculiar twist if they would now come in with Irish Life.
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SMURFIT
With less than 10% of Jefferson Srnurfit's equity capital held by the family, Continental Can's 21% stake was an increasing threat to Smurfit's freedom of action.
Smurfit's main thrust is now being directed towards expanding its American base, Continental Can's home market. This has already led to one head on collision which could really only be solved by C.C. taking over Smurfit or actually selling out.
This explains C.C.'s sell-off but perhaps it is not too upset for it has made £16 million on the deal having bought in for £2 million six years ago. It has sold out now to ten British and Irish institutions for £18 million. Michael Smurfit now has absolutely no one to threaten his absolute power.
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IRISH WIRE
Jim Flavin must clearly have some inside information about exactly what is going on in Irish Wire Products, the small Limerick' based screw manufacturer.
No information has been released about Irish Wire Products since Northgate's subsidiary Irish Base Metals bought a. 29%% stake in a h controversial deal last year ~ whch upstaged Maurice .... Buckley and Mike Smurfit.
Flavin's D.C.C. has bought an 11% stake in Irish Wire at around lOOp a share. Withhout knowing Northgate's intentions, this move would be foolhardy. But if he does know then buying with this priviliged information is sailing very close to the wind.