Morning business news - May 14Tuesday 14 May 2013 10.15
DCC DRIVEN BY GAINS AT ITS LARGEST DIVISION - Distribution and support services group, DCC, has reported a 21% increase in operating profit to €229m for the full year to the end of March. Revenue was up almost 20% at €13 billion. Adjusted earnings per share for the year rose by 26% on a constant currency basis.
Tommy Breen, DCC's chief executive, said the company had a strong year driven by gains at its largest division - energy - where performance was enhanced by a harsher winter than the previous year. "DCC has five businesses. We're looking to grow across all parts. 90% of our business comes from three sectors - energy, IT and healthcare. We'll be looking to deploy further capital into all those businesses and hopefully see growth,'' Mr Breen states.
The company recently switched its sole market listing to the UK. Tommy Breen said the decision had been taken reflecting the fact that over 90% of its business and its shareholder base is outside of Ireland now. "Many of our shareholders were keen to attract more analyst coverage from beyond Ireland. Given our business model, we believed the only realistic way to do that was to seek listing on the FTSE and cancel our Irish listing," he explained. "This has no impact on the business otherwise. We're still incorporated in Ireland, tax resident in Ireland and we're still headquartered in Ireland. It has no impact on our Irish employees,'' he added.
EURO FINANCE MINISTERS TO FOCUS ON TAX AVOIDANCE IN BRUSSELS TODAY - EU finance ministers will discuss tax affairs when they meet in Brussels today as well as banking regulation. The meeting comes at a time of gathering unease across Europe over taxation issues as the debate on austerity continues apace.
Brian Keegan, Taxation Director with Chartered Accountants Ireland, said the focus will likely be on measures against tax evasion or straightforward tax fraud. "At the moment, if an individual opens an account in another EU state, the revenue authorities will tell the appropriate revenue figures in the resident country that the account has been opened. What the commission wants is more detail on other products like life assurance policies but also permission to extend the exchange of information to countries outside the EU like Switzerland and Monaco."
Mr Keegan said it was difficult to judge what kinds of regulations or conclusions might come from such negotiations. "It's very difficult for the 27 member states to agree anything on taxation because it has to have the backing of all 27 countries. I think if there will be progress, it will be made on that savings directive. That would be a landmark result because there hasn't been any measurable progress on tax initiatives in the EU for several years." Mr Keegan said there is political appetite for change given the focus that has been on the losses from tax evasion and tax avoidance in Europe.
MORNING BRIEFS - Building materials group Grafton has reported a slight increase in revenue for the first four months of the year to €677m. UK revenue - when translated into euro - resulted in reduced group turnover for the period. The company said that trading was influenced by adverse weather conditions and continued economic weakness in the Group's markets.
*** Bookmaker Paddy Power has reported strong growth at the company has continued into the first half of this year. In an interim management statement covering the period January 1 to the start of May, it says group revenue was up 20% driven by a near 30% growth in online revenue and retail revenue is up 8%. Mobile now accounts for over 40% of all online revenue at the company. Shares in Paddy Power dropped almost 6% last month from highs of around €70 after Davy stockbrokers slashed its rating to underperform mainly owing to its exposure to the Italian market. But they were back up at almost €68 at the close of business yesterday.
*** Detroit could be the next US city to face possible bankruptcy. The city's emergency financial manager in a report yesterday said the Michigan city ws clearly insolvent. In his first official report, Kevyn Orr pointed out that the city faces a $162m cash shortfall mostly owing on pensions that it can not afford to pay. It also carries a $60m operating deficit. In April, Stockton in California became the largest US city to file for bankruptcy.