IRISH BANKS MOST IMPROVED AHEAD OF EURO ZONE STRESS TESTS - The financial resilience of banks here has improved more than that of lenders anywhere else in the euro zone since 2010, according to research from law firm Linklaters, reports the Irish Independent. Euro zone banks have raised 35% more capital ahead of the European Central Bank's (ECB) latest stress test than they had set aside before a 2011 review, according to a report published by the law firm. The euro zone's 130 most strategically important banks will be told on October 26 how they have fared in the ECB's landmark review. Banks that fail the tests will be forced to raise fresh capital, from private investors or Governments. In Ireland, the standard core equity tier 1 (CET1) measure used by regulators to judge banks' ability to cope with shocks improved by 8% between 2010 and 2013. That compares to 5% in the next most improved countries including Germany, according to the research. AIB, Bank of Ireland, Permanent TSB and Ulster Bank, as well as an Irish unit of Morgan Stanley, are among the banks waiting for results this month. Linklaters said banks in the euro zone have raised €35 billion ahead of the review, a figure that could rise to nearly €50 billion by the end of the year.
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DRURY PR PAID €1.5m DIVIDEND TO PARENT OMNICOM LAST YEAR - Irish public relations group Drury Porter Novelli paid a dividend of €1.5 million last year to its global parent company, Omnicom, according to its latest accounts. This was the first such payment since 2009 and reflects strong cash generation by the company, writes the Irish Times. Accounts just filed for Drury Communications Ltd show that the group’s turnover last year was stable at €2.5 million. Its operating profit declined by 10 per cent to €423,711 due to higher administrative expenses. A number of exceptional items totalling €1.5 million meant the company closed the year with a pretax loss of €1.1 million. This compared to a surplus in 2012 of €451,600. The bulk of the of the exceptional costs related to a decision by Omnicom to dissolve a related company, DCL Holdings, as part of a restructuring of its companies worldwide. This resulted in an intercompany loan of just under €1.3 million being impaired, with the impact reflected in Drury’s accounts for last year. In addition, Drury’s reserves were reduced by €919,768 to reflect an onerous lease provision relating to a former premises in Clonskeagh.
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LIEBHERR PROFITS DRAGGED LOWER BY COSTS - The Kerry-based Liebherr crane factory dogged by an industrial dispute in the last 12 months saw profits fall sharply as costs surged last year. Liebherr Container Cranes Ltd, based in Killarney, saw net profit dip from €18.3m in 2012 to €5.2m last year, according to the company’s annual results writes the Irish Examiner. The decrease in profitability was driven largely by rising costs, including raw materials, supplies, and purchased merchandise. A €19m increase in other operating expenses, including freight, bad debt provision, and a long-term selling provision of €3.45m, also contributed to the erosion of profitability. Despite the firm’s worsening financial performance, revenue increased by €18m in the year, from €209.9m to €227.8m. All of the company’s core business areas saw a pick-up in activity with revenues from the sale of cranes climbing by €15m; spare parts contributed an additional €1.6m; while servicing and rework saw a similar increase. Finance costs also trebled as foreign exchange losses mounted, totalling €10.9m compared to €2.9m the previous year. Income from other foreign exchange activities also rose, however, offsetting some of the losses incurred. Liebherr’s total tax expense decreased from €2.76m to €831,000.
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IPO BANKS SEEK MEASURE OF SUCCESS - What is the best way to judge the success of an initial public offering? Investors in Rocket Internet probably have a view. They were left counting their paper losses earlier this month, after shares in the German technology company dropped 12.9% on their first day of trading. But for the banks and advisers that bring companies to market, defining success is less clear cut. Their duty is to help companies drum up demand for their shares, and sell them at the highest price - while also providing investors with opportunities for longer-term returns, says the Financial Times. After shares in Royal Mail soared 40% on their first day of trading in London last year, the bankers who worked on the privatisation were accused of short changing the business’s former owners: the UK taxpayer. Royal Mail shares now trade about 18% above the initial IPO price - a valuation that more closely reflects the 10-15% discount put on most companies coming to market. However, achieving a large first-day ‘pop’ in the share price is not what investors want to see, either, if it proves shortlived. After a series of poorly performing European IPOs in the first half of this year, BlackRock - the world’s largest institutional investor - sent an email to the banks that helped price the issues criticising the quality of their offerings. Other investors have said the mixed performance of IPOs in 2014 has vindicated their decision not to invest in them. Aberdeen Asset Management, for example, believes it is simply not possible to carry out the due diligence needed to spot marketing hype from companies and their bankers.
