Archive for April, 2013


Recently on here, we looked at the annual report of AIB UK Loan Management Limited, which is the NAMA-like unit in AIB in the UK and which manages €5bn of loans compared with NAMA’s €74bn. There is a remarkable contrast between AIB’s accounts and NAMA’s with the latter swamped with foreign exchange gains and losses and revaluations of derivatives.

NAMA’s accounts are difficult enough to analyse in the first place with profit overstated by what appeared in the past to be overly optimistic accounting for interest income and impairments but understated by not including profit on disposals until a debtor connection is closed. I know this will sound convoluted to many of you, but suffice to say it is difficult for an accountant to evaluate NAMA’s financial performance. But let’s try.

Last week, NAMA published its unaudited accounts for 2012. We expect to get the audited accounts in June 2013, and in previous years the loss on impairments has leapt between the unaudited accounts and the final version. In 2011 for example, the impairment loss went from €800m in the unaudited accounts to €1,267m in the final audited accounts published in July 2012. In a parliamentary response last week, Minister Noonan said NAMA’s report would be published “in the next two months” so that would indicate June 2013, which means we might see NAMA questioned in the Oireachtas before TDs and senators repair to the beach.

(1) Profit. NAMA turned in a profit of €306m before tax in 2012, the tax charge was €75m and the profit-after-tax was €231m. This is up from €12m before tax in 2011, there was a tax credit in 2011 of €237m and the profit after tax in 2011 was €249m. So, why was profit before tax €294m better in 2012? The main reasons are impairments fell f

(2) Revenue. NAMA generated €1,387m in revenue in 2012, mostly interest on its loans. This compares to €1,283m in 2011. There was an increase in interest income despite the ECB trimming its main rate to 0.75% in July 2012. NAMA says that 100% of its interest income booked on its loans was received in cash. For those of you who followed the “Effective Interest Rate” saga on here before, that might give you some confidence that NAMA is not over-optimistically booking fantasy income. NAMA’s loans fell from €25.6bn in 2011 to €22.7bn at the end of 2012. And it is not immediately obvious on here why interest income increased in all these circumstances.

(3) Costs. NAMA created bonds in 2010 to buy the €74bn of loans from the banks. NAMA paid the banks €32bn for the loans with these bonds. Since 2010, NAMA has redeemed €4.75bn of these bonds using cash generated in its business. The interest charges in NAMA fell in 2012 to €496m from €512m in 2011. NAMA’s admin expenses in 2012 came to €119m compared to €128m in 2011 with the main reason for the decrease being “portfolio management fees” reducing from €16m in 2011 to €5m in 2012 – now these should be receiver costs but NAMA tells us that receiver costs are charged to the companies in which the receivers operate so it is unclear what these costs are.

(4) Cash. At the end of 2012, NAMA had €3.4bn on hand compared with €3.3bn at the end of 2011. NAMA has recently been required by Minister for Finance Michael Noonan to make up to €1bn of credit available to the special liquidation of IBRC, though that should be repaid. And NAMA is required to redeem another €2.75bn in bonds by the end of 2013 – which, with the €4.75bn redeemed to date will bring total redemptions to €7.5bn – because Minister Noonan unilaterally gave that commitment to the bailout Troika last year. NAMA is still generating significant cash so there should not be any immediate concern about its ability to provide investment funding in its projects.

(5) Impairments. NAMA estimated the value of its loans fell by €518m last year, compared with €1,267m in 2011. Both Irish residential and commercial property declined by 5-6% in 2012, which was less of a decline than previous years. UK commercial property fell 4% and residential property was flat. There is not a perfect correlation between property prices and impairment but there is a relationship and the smaller impairment might reflect a lower rate of decline, but the betting on here is the audited impairment will be around €700m.

(6) Salaries. Given the expected interest, you might have expected NAMA to produce salary costs and employee numbers but no, all we have is that NAMA paid the NTMA €36,890,000 in 2012 and the assumption in here is all of that related to staff costs for what would have been about 250 at year end. So very roughly, the average staff cost would be €147,560 which would include employer pension and PRSI costs.

(7) Disposals of loans and property. NAMA says it disposed of €2.8bn of assets in 2012. In 2011, NAMA “approved” disposals of €5.6bn but it says it did not sell any loans during that year. NAMA booked only €188m profit on disposals in 2012 compared to €550m in 2011. NAMA hasn’t indicated what the unrealized profit reserve was at the end of December 2012, remember that NAMA has an accounting policy of not recognizing profits on disposals until all of a specific developers loans are sold/refinanced/repaid.

(8) Non-performing loans were 82% by reference to par value (NAMA acquired €74bn of par value loans and paid €32bn for them). Although this is up from 80% at the end of 2011, it is the same as the previous quarter, which given that NAMA is disposing of what are widely perceived to be the better quality loans is impressive, if correct. However we don’t know the non-performing loans by reference to the original loan agreement and in the previous quarter these were 15%, so NAMA might be masking the deterioration by negotiating new terms and then classifying the loan as performing under the new terms.

(9) NAMA advanced €308m to borrowers in 2012 compared to €304m in 2011. NAMA says it has approved €1.7bn of advances to borrowers so far, but it not exactly clear where NAMA gets the figures to support its claim that it has advanced €1bn to date to its borrowers with the evidence being that it advanced €240m in 2010, €304m in 2011 and €308m in 2012.

When analyzing the accounts for 2012, one thing did strike me – we live in a society agonizing with the effects of the financial crisis, looking for people and companies to blame, and awaiting with trepidation the next dose of bad news; what struck me is that NAMA did quite well in 2012. Here is a brand-new agency of 250 people generating income of €1.4bn, which has a healthy cash balance and apart from the Enda Farrell affair has largely escaped scandal. Here is a  company which generated €300m of pre-tax profits and certainly kept its costs within budget. It won its battle in London against Paddy McKillen, and kept its nose clean in a country where political interference is rife. There is not very much detail in the management accounts and we await the annual report which appears to be scheduled for publication in June 2013.

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When the KNWL helicopter visited 526 Indian Field Road, Greenwich, Connecticut CT 06830 on 17th April, 2013, there didn’t appear to be anyone at home, and subsequent enquiries indicated that the Dunnes had upped-sticks and moved to another house in the neighbourhood.


It seems though that the bankruptcy court still believes the Dunnes to be resident at 526 Indian Field Road because that is the address that notice was sent by the bankruptcy court yesterday (Sunday, 28th April 2013). The notice is partially reproduced above and the full notice is available here.

We don’t know what the notice issued by the court was. We are awaiting Sean’s statement of financial affairs which was supposed to have been filed with the court by last Saturday 27th April, 2013 after an extension was previously obtained. As of 3pm Dublin time today, there is no such filing available from the US court service, PACER.

The certificate of notice which was filed on the US court service today also indicates that several parties including NAMA and Sean’s bankruptcy lawyer were sent unspecified notices.

This is potentially important because the US courts tend to be strict about addresses provided in bankruptcy cases, though there doesn’t appear to be any doubt that on 29th March 2013, when Sean originally filed for bankruptcy he was still at 526 Indian Field Road, but where is he now?

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It isn’t surprising to see the clarification and apology in the “story of what have you” the Irish Times this morning, following that newspaper’s reporting of the NAMA report issued last week. The Irish Times today says sorry to Ronan King, the accountant formerly at BDO and at the helm of Property Industry Ireland.

Last week, the Irish Times claimed that NAMA had obtained a €559,700 judgment against Ronan. This is what Colm Keena’s report said:


In fact what the NAMA report said was that it had initiated a case against Ronan in Q4,2012 and that the relief sought by NAMA was “judgment in the amount of €559,700.71”.


The case hasn’t yet come before the courts, as far as I can see from the Court Service, so it was premature of the Irish Times to claim that judgment had been obtained. This morning, the newspaper says sorry.

Mind you, it remains unclear why the Irish Times is today saying “Nama (sic) has not applied for judgment against Mr King” because the NAMA report indicates that it has sought a judgment. NAMA was asked for comment on the apparent inconsistency but there has not been a response at time of writing.

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It’s been just over a year since Minister for Finance Michael Noonan created a strange new species, the NAMA advisory board which is completely separated from NAMA and which reports directly to the Minister. It has three members – pictured above. The board comprises Michael Geoghegan, the former boss at HSBC whose role at the bank came in for some criticism last year by the US Senate investigation of money-laundering at HSBC, an investigation which resulted in a fine of USD 1.9bn in December 2012. The other two board members are NAMA’s own chairman, Frank Daly and Northern Ireland quango king,  Denis Rooney.

When it was announced in March 2013, Minister Noonan outlined the terms of reference for the NAMA Advisory Board as follows

“Provide advice to the Minister on
The strategy of NAMA as proposed by the board of NAMA
The appointment of directors to NAMA
The remuneration of the senior executives of NAMA
Any further advice the Minister may seek the Group to provide
The advisory group will not have decision making powers under the Act.”[ENDS]

Last week, in the Dail, Minister Noonan was asked about the activity of the NAMA advisory group in the past year. Minister Noonan confirmed that it has met five times to date. Remember the three members don’t get paid but the board has an annual budget of €40,000 for expenses. We don’t learn anything about what the board has actually achieved in the past year, it was previously  reported to have said “NAMA has overcome difficulties and is an effective organisation” Minister Noonan said he is satisfied the NAMA advisory boad “is working effectively and with the progress to date”.

The view on here is that if you ever want to see a superfluous quango at work, take a look at the NAMA advisory board.

The parliamentary questions and response are here.

Deputy Pearse Doherty: To ask the Minister for Finance if he will outline the activity over the past year of the National Asset Management Agency Advisory Board comprising persons (details supplied); and if he will outline any recommendations made by that board to him and the subsequent treatment of any such recommendations.

Deputy Pearse Doherty: To ask the Minister for Finance if he will provide an assessment of the utility over the past year of the National Asset Management Agency Advisory Board comprising persons (details supplied).

Minister for Finance, Michael Noonan: I propose to take questions 222 and 223 together.

I met with the group on four occasions in 2012 and once to date in 2013. It is also open to the Chair to contact me as issues arise.

The group’s advice to me primarily relates to the strategy of NAMA as proposed by the board of NAMA; the remuneration of the senior executives of NAMA and any further advice that I may seek on any matter relating to NAMA. The group operates on an informal basis and reports directly to me. Any issues raised are discussed with senior officials within my Department.

The advisory group plays a valuable role and I am satisfied it is working effectively and with the progress to date.

However it is important to note that this group is not a shadow Board nor is it intended to provide a route for me as Minister to get involved in the day to day running of the Agency.

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Nationwide Building Society UK resi property (Apr 2013)
The Troika review is set to end 7th May but might be earlier
Dept of Finance will publish “Stability Programme Update”
“by end of April 2013”
Sean Dunne’s statement of financial affairs due 27th Apr 2013
Monday 29th April 2013
(CSO) Overseas Travel January – March 2013
Tuesday 30th April 2013
(CSO) Milk Statistics March 2013
(CSO) Population and Labour Force Projections 2016-2046
(CSO) Garda Recorded Crime Statistics 2007-2011
2pm Govr of Central bank before Oireachtas EU affairs comm
Central Bank of Ireland publish consol bank stats for Mar 2013
Wednesday 1st May 2013
(CSO) Live Register April 2013
May Day holiday across much of Europe
Thursday 2nd May 2013
ECB interest rate decision and press conference (Bratislava)
10am Committee of Public Accounts, Dublin Docklands
Development Authority (John Tierney)
Friday 3rd May 2013
Industrial Prodn & Turnover Mar 2013 (Provl)/Feb 2013 (Final)
Exchequer Statement for April 2013

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They say a week is a long time in politics; well certainly, two months can be an eternity in media. Just over two months ago, there was a blogpost on here examining the finances of media companies operating in the State and suggesting that they would need an imminent bailout.

Since then, the Thomas Crosbie group has passed through a pre-pack receivership and the future of the Sunday Business Post, now in examinership, remains uncertain as it seeks new investors. The logical tie-up between the SBP and the Irish Times – which doesn’t have a Sunday edition – looked inevitable but this weekend, Tom Lyons is reporting that the Irish Times investment bid might be doomed with its partner, Landmark Enterprises going cool on the enterprise. Minister for Finance Michael Noonan refused to tell us how much had been written off in the receivership/examinership but it was reported that AIB was owed €28m and the betting on here is the debt forgiveness is in excess of €10m.

On Friday last, we had a muddied statement from Independent News and Media which indicated debt forgiveness of €138m from banks including AIB and Bank of Ireland. Funny, not a word about the debt write-off or the atrocious results for 2012, in today’s Sunday Independent. Anne Harris the Sunday Independent editor looks like a rank hypocrite after the criticism the Sindo meted out to rivals which had last year suffered poor results.

We finally found out during the week why RTE has been soft-soaping us with its tendentious interpretation of the  “independent” report from PwC: RTE is set to unveil a deficit of “in excess of €60m” for 2012 and worryingly there was no word on the pension which incurred a loss by itself of €50m in 2011. Unlike private sector media groups that took bets on new enterprises during the boom and funded the bets with other people’s money, RTE didn’t, and its losses are down to a pathetic and incompetent management that has been unable to cut its coat according to its cloth – it pays obscene salaries at one end of the spectrum, and in general looks like a financial basketcase waiting to implode. It is now whinging that Sky is taking €380m of revenue in the Irish market leaving just €420m per annum for RTE, TV3, TG4. It’s called “competition” duckies, and you’ll just need to suck it up.

Meanwhile over at TV3, intensive discussions are presumed to be taking place right now with the Special Liquidator of IBRC to refinance €125m of loans, in a business which is widely believed to be worth only €15m. There has been speculation that a buyer is weighing up a bid for TV3 and that potential buyer is..


UTV has shown that it is the healthiest media group operating on the island of Ireland, or at least the healthiest media group that provides separate accounting for the island. We have preliminary results for 2012 – see above – which indicate the company is healthy enough to actually pay a dividend. Dividend? Yes, we have gotten so used to deficits, losses, bailouts and debt forgiveness, we forget that private companies exist to make a profit for their shareholders.

News International which publishes the Sunday Times and the Sun may be profitable but we don’t have separate accounting. Sky, according to RTE, has Irish revenue of €382m per annum which is presumably profitable. The Irish Daily Mail reported revenues of €19m in 2012 and profit of just over €1m last week.

It is surprising on here that the Irish Times is not suffering more but its main folly during the boom, the purchase of MyHome.ie has largely been written down to a negligible value in the Irish Times accounts. Mind you, the group still thinks its premises are worth €32m and there is a nasty pension liability of €44m and in 2011, the last year for which annual accounts are available, the group made a full recognized loss of €23m, though €21m of that was related its pension obligations. Last October, 2012 Tourism Ireland which comes under the auspices of Minister Varadkar on this side of the Border and Minister Arlene Foster in Northern Ireland paid a stonking €495,000 to the Irish Times for the Ireland.com domain name. Because the Irish Times isn’t burdened with unwisely-acquired enterprises and borrowings, it has been able to adjust to the challenging reality quicker than its rivals on Talbot Street, but if IN&M successfully completes its restructuring, then IN&M’s core business will be financially healthier than the Irish Times’s.

Johnston Press, a British newspaper publisher, which publishes a number of regional newspapers including the Limerick Leader is just as indebted as IN&M and last year turned in a loss before tax of GBP 6.8m (€8m).

Denis O’Brien’s Communicorp continues to teeter on the wrong side of profitability but it is disposing of overseas radio stations and is close to break-even on its operations where shoe-string budgets and obsessional cost control have borne results, though it still is stumbling along under massive debt.

What do the next two months hold for the Irish media landscape? Who knows but here is what the crystal ball on here is suggesting – the print media think their offerings are good enough to allow a limited paywall but the luvvies may be in for a dose of reality when push comes to shove. The Herald, which has become a morning newspaper this year, looks doomed and will either merge with the Independent or the Irish Daily Star. The Independent looks set for a merger with the Sunday Independent. And will the Belfast Telegraph move closer to the Independent? It seems unimaginable that the Sunday Business Post won’t end up with the Irish Times despite the apparent cooling of Landmark’s pursuit of a bid to rescue the title out of examinership. RTE will post a gigantic loss and communications minister Pat Rabbitte will try to put the legislative machinery in place for a broadcast charge, which when collected with the household charge should make an additional €30m available which RTE will need to curtail its deficit.  UTV may take control of TV3 which will be no bad thing for viewers. It’s hard to see the regional newspapers surviving in their present numbers. But, this is all in the realm of the crystal ball.

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I say “overseas”, but in 2012 we managed to spend €648,614 on a so-called “secretariat” in Belfast and €537,962 in the exotic city of ….Armagh! This week, the Tanaiste and Minister for Foreign Affairs provided details of the €52m cost of running our diplomatic missions across the globe in 2011 and 2012. The results are intriguing, with us spending more in each of Mozambique, Zambia and Uganda than we did in Germany. We spent more in Vietnam than we did in India. And we spent more in Lesotho – small landlocked impoverished mountainous expanse  in southern Africa – than we did in Brazil or Mexico. We spent more in Iran than we did in Latvia. We spent more in Sierra Leone than we did in Cyprus. And 2012 saw the final costs coming in for Vatican City, with that mission controversially closed.

There are a few countries in which we don’t have representation which look like odd omissions – New Zealand, Venezuela, Chile, Jordan, Bahrain, Peru, Colombia, Libya, Pakistan, former Yugoslavian states except for Slovenia, Caribbean countries generally, former USSR countries except for Russia, central America except for Mexico and all of  the smaller Pacific islands.

It should be stressed that the figures EXCLUDE two major expense headings, the cost of diplomats sent from Ireland and the capital cost of buildings and we know that there have been some rebuilding works that have attracted criticism in the past. Hopefully these omissions will be rectified in the near future so that we can get a total picture of how we spend our money on diplomatic missions.

You can see the PQ which revealed the informationhere where there is a split by city and expense heading.

UPDATE: 7th May, 2013. An Tanaiste and Minister for Foreign Affairs Eamon Gilmore has now confirmed the salaries and allowances paid to Irish staff in 2011 and 2012 together with the capital expenditure on diplomatic Missions. In 2012, €20,367,563  was paid in salaries and  €8,709,948 in allowances and €878,604 in capital expenditure.

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