Sunday 23 October 2016

Business confidential

The billion euro ferry company that pays less tax than Google

The Insider

Published 10/04/2016 | 02:30

Irish Ferries, part of the Irish Continental Group, which is led by Eamonn Rothwell
Irish Ferries, part of the Irish Continental Group, which is led by Eamonn Rothwell

Eamonn "Rottweiler" Rothwell has been paid more by Irish Continental Group than the €1bn-valued ferry company has the taxman over the last 10 years.

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Since 2006, ICG has paid just €9.5m in tax - on average less than €1m per year - off cumulative profits of €364m. That's an effective tax rate of 2.6pc over the decade. Even Google or Facebook pay more tax.

Over the 10-year period, Rothwell earned €11.97m, nearly €2.5m more than the company handed over in corporation tax.

ICG is a funny old beast when it comes to tax. If all its business was conducted in Ireland, it could reasonably be expected to pay 12.5pc on its €364m in earnings since 2006. That'd be €45.5m for the exchequer, not €9.5m. ICG has paid less than one third of what it could have paid in tax if it had done all its business on land in Ireland.

Rothwell and his accountants Deloitte have reduced the tax exposure of the highly profitable company by using the tonnage tax scheme, which was brought in to help Irish shipping back in the 2002 Finance Bill.

This is a tax levied on per day notional profits based on the actual tonnage of ships rather than a simple cut of the profits, the company told me.

It could equally have used up a stack of capital allowances. But not everything comes under the tonnage tax scheme and ICG pays tax in other jurisdictions at rates of between 21 to 23pc as well as Irish company taxes.

The company made a pre-tax profit of €56.7m in 2015 on which ordinary businesses would pay €7.1m. But ICG paid just one tenth of that, handing over €700,000 to the Revenue Commissioners.

Brace yourself…. this is how.

"Tonnage relief" shaved €1.7m off the expected €7.1m bill. Then there was a €3.9m "non-taxable curtailment gain", which related to the staff pension fund value.

Chuck in a bit of "net utilisation of tax losses" worth €100,000 and a hefty €600,000 gain based on rather mysterious "other items" and Hey Presto, the tax bill has been almost vaporised.

Deloitte earned just €100,000 for "tax advisory services" last year. With the ability to make things smaller, Deloitte could give Keith Barry a run for his money.

What's in store for Colm Lyon and the Great Wall of Killiney?

Entrepreneur Colm Lyon has always had a good eye for a deal. He sold his Realex financial services company to US group Global Payments for €115m in March last year.

It was far, far more than many people figured the company was worth. Lyon and his wife are likely to have cleared €85m out of the deal.

Could he be the mystery new owner of a swish pad in Killiney sold for €2.2m last October?

A planning application in the name of "Mr and Mrs Colm Lyon" was made recently to the local authorities. The application seeks to bulk up security on the home by adding electric gates and rebuilding walls around the house.

There are also plans to stick in some new windows and a balcony - presumably for the terrific view of the Sugar Loaf - and to change an old coach house into storage. Presumably Lyon will have to find somewhere to store all the loot?

Sean Reilly gets a little help from old friends to finance housebuilding firm

It really is a small old world. Mega developer Sean Reilly - the guy behind the Watermarque building and the Boland's Mill redevelopment plans - has got some more backers.

The Insider recently revealed that Elkstone Capital, which manages money for high net worth individuals including super model Elle McPherson, had stepped in to help finance Reilly's housebuilding firm McGarrell Reilly and a huge scheme near Ratoath in Meath.

Now it seems that the builder, who was one of the Maple 10, has also got Activate Capital on board. Activate Capital is a joint venture between the state investment fund ISIF and KKR - the UK private equity giant immortalised in the Barbarian at the Gate bestseller.

The State has chipped in €325m with KKR lobbing in another €175m to the fund, which is designed to help finance house building.

Reilly may be already acquainted with his new financiers.

Activate Capital's boss Robert Gallagher was head of corporate banking at Ulster Bank from 2005 to 2011. Ulster Bank were one of Reilly's big lenders, with some of his loans ending up in the 'Project Clear' portfolio bought at a hefty discount by Michael Stanley's Cairn Homes and Lone Star for €503m before Christmas.

Activate chairman Dan O'Connor - a former executive chairman of AIB during the crash - is also in Reilly's rolodex. O'Connor was previously involved with private equity group Anchorage which unsuccessfully tried to buy Reilly's €373m loan book from Nama in 2013.

Part-timer Richard Burrows can bank on €5,000 alarm perk

Richard Burrows is one of the most highly decorated boardroom warriors of the last two decades.

He's made a fortune from roles at Pernod Ricard, British American Tobacco, Rentokil, Carlsberg and as governor of Bank of Ireland during the property madness of the boom. Alcohol, cigarettes, rat poison and toxic loans. It's quite the CV.

Burrows is the probably highest paid part-time Irish director in the world. He gets paid €805,000 a year to chair €95bn cigarette leviathan British American Tobacco - where he's joined on the board by former Greencore boss turned private equity mogul Gerry Murphy.

But the perks are something special too. Burrows got a private healthcare package worth €17,500 - that's three times more expensive than the VHI's Platinum Plan E cover.

He also has a driver costing almost €69,000 plus hotels and accommodation for him and a partner to some of BAT's corporate events.

He got close to €11,000 for flights to commute to the London office from his Dublin home, according to BAT documents.

The most intriguing perk was €5,000 for "home and personal security in the UK and Ireland". But really, what would a former banker need protection from?

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