Liams Last Post : COrporate news a plenty , mostly ok, Ireland Negotiations continue...

Good Afternoon,

 

Today was a busy day for corporate results with United Drug , Paddy Power , Irish Life and  Greencore all with news.

 

United Drug numbers were in line , no great surprise and flat earnings in prospect for next year after the increased financing costs and the expense involved in building out the Medco JV. Longer term as this one grows away from Ireland and earnings growth resumes it might get a bit more exciting.

 

Paddy Power also upgraded their current year numbers on the back of strong trading and uk online customer acquisition growth. Ireland was mentioned as continuing to deteriorate. I do like this stock and their clear strategy. Also the fact that the management track record of managing the Irish business through the toughest of times successfully whilst growing and gaining scale in their international operations. The New South Wales court case loss was not such a big issue for the market today. looks like this will be appealed further. While the underlying performance is strong , the short term could see a headwind when the Irish government outlines their final plans for a turnover tax, Certainly Paddy Power are expecting it and so there is a liklihod that earnings will be flat next year as a result of the impact of this tax. Personally this is probably a very cautious view but 2010 had the world cup and favourable sports results.

 

Irish Life presented their story also today. Hard for them to be upbeat. The market looking at the increased exposure to the ECB and all the attendant fears. Irish Life are hostages to the wholesale markets which are closed so dependent entirely on the government guarantee for liquidity. Their plans to help improve their loan to deposit base are effectively impossible to execute with the current uncertainty.

 

Greencore and Northern foods announced an interesting equal merger of the two companies. The news sent both companies shares sky rocketing .Greencore had been really underperforming as the market wondered what it was going to forgiven the apparent real disappointment at the pace of their USA developments.  Some suggested that a counter bidder might emerge for Northern Foods. Northern Foods shareholders will receive 0.4479 of new Greencore Share for every Northern Foods Share held by them. The Synergies are expected to be approximately £40million per annum (c. £15millin from overhead cost savings, c. £20million from purchasing and supply chain improvements and c. £5million from financing and tax efficiencies) and is expected to be realised in three years. Letters of intent supporting the merger have been received by shareholders holding 30.29% of Greencore and 11.81% of Northern Food's existing share capital. Greencore and Northern Foods shareholders will, on a fully diluted basis hold approximately 50% of the enlarged share capital each. Overall the Groups expect that the merger will provide the ability to drive cost efficiencies and combine both their Foods complementary customer basis.

 

 And so on to our neighbours in the UK and their very nice chancellor George Osborne who has stood right up to the plate with unequivocal support for Ireland. Good On him.

In a sign of the tension gripping Ireland today, a hoaxer posing as an Irish television reporter nearly precipitated a crisis inside the embattled Irish coalition government today.

As members of the Dáil filed into parliament in Dublin's Kildare Street this morning, someone holding an RTE microphone asked them what they thought about the resignation of Irish health minister Mary Harney. This sparked rumours that the coalition's majority had been slashed to just two TD's.

However, the "reporter" was actually from RTE comedy show Republic of Telly, and Harney had not resigned. Alas, the jolly jape didn't go down well with MPs, or RTE's own political correspondent, who we understand has now filed an official complaint...

And so it goes on and the Irish people await the arrival of the IMF and EFSF delegation tomorrow. Meanwhile the Guardian Ireland correspondent writes Irish government sources said today that the size of the rescue package for Ireland's banking system has been underestimated because one of the Irish banks had undervalued the amount of money needed to save it.

They said the scale of the cash injection needed to shore up the Allied Irish Bank was even greater than what the financial institution had first told the government.  On the basis of this the AIB statement due on Friday may not be quite what he market was originally expecting…

Have a good evening,

Liam

 

 

 

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

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