Lonely Planet’s Dublin-based international publishing and intellectual property centre was losing money before the pandemic hit and the travel publisher changed hands in 2020. Irish subsidiaries Lonely Planet Global Ltd and its immediate parent BHL Cumberland Ireland Ltd have – only now – just filed accounts for 2019, showing a consolidated loss of €4.6 million that year.

As previously reported, Lonely Planet Global became the “master publisher” of the leading guidebooks and associated publications in 2016, when it acquired brand and content rights for the group outside the Americas.

The Irish company was never intended to maximise its bottom line, instead optimising the so-called green jersey tax structure by amortising the value of its intellectual property and paying intercompany debt interest to its parents against profits declared in Ireland.

However, the figures it has now posted for 2019 went beyond such tax-efficient profit containment. Turnover fell by nearly 10 per cent to €33.4 million, reversing all gains made since 2016. This was all attributable to falling sales of print goods such as guidebooks, while immaterial revenue sources such as royalties and licence fees held steady.

Despite cutting costs by over €800,000, including a slight decrease in salaries among the 26 staff it employed at the time, the Dublin office ended 2019 with a pre-tax loss of €1.4 million. While a key channel to return gains to its US-based parents was intercompany debt interest worth €647,000, losses far outweighed this.

In an attempt to beef up the business, Lonely Planet Global paid a €2.9 million dividend from earlier retained profits to its parent BHL Cumberland Ireland, also in Dublin’s Liberties, to fund the purchase of Swedish-based B2B travel content publisher ArrivalGuides AB.

This, however, proved to be an ill-advised investment. In a post-balance sheet note, BHL Cumberland Ireland reported: “On 21 May 2021, the company disposed of the issued share in ArrivalGuides AB at a loss and as such, the carrying amount of the investment was impaired in 2019, as the directors note that the impairment indicators existed at the reporting period end.”

The back-dated write-off suggests that the Swedish acquisition was a dud before Covid-19 hit. This assessment was made by Lonely Planet’s new owner, Red Ventures. The US-based “platform of digital businesses” acquired the travel publishing group from American tobacco billionaire Brad Kelley in November 2020 after it suffered a severe pandemic impact, laying off staff and closing several international offices.

Although accounts for 2020 or 2021 have yet to be published, post-balance sheet notes in the Irish companies’ accounts show that Kelley took at least a €13.4 million hit on the Irish operation of Lonely Planet when he sold it. This was the amount owed on the loan his US holding company had advanced to the Irish arm of the group to acquire intellectual property and return a slice of profits as interest.

“In 2020, just before the acquisition of the group by Red Ventures, the principal loan amount of €11.1 million (US$12.5 million) was capitalised and reclassed to capital contribution. The interest accrued on the loan of €2.2 million ($2.4 million) was forgiven and waived,” BHL Cumberland Ireland reported.

In the following months, the new owners conducted sweeping changes among the board and management of Lonely Planet’s Irish subsidiaries. These included the departure of well-known journalist Nóirín Hegarty, who had been leading the publisher’s Irish office, and has since returned to the newspaper industry as Ireland editor of The Times and The Sunday Times.

Bennett Construction: Based in Mullingar, but increasingly looking overseas

Irish construction and engineering firms have increasingly been following their customers overseas. this strategy has allowed them to grow their businesses while limiting potential exposure to a decline in the Irish market. Mechanical engineering firms such as Mercury Engineering, Jones Engineering and Winthrop have all experienced exponential growth by exporting their expertise in the data centre industry.

In recent days, we published a deep dive into Collen Construction, a family-owned business dating back to 1810. In 2016, Collen was an Irish-focused business, and the vast bulk of its revenue was generated in the Republic of Ireland, at €123 million, while it only generated €8.1 million in Europe. Last year, this had been turned on its head, and it generated €276 million in Europe compared with €173 in Ireland.

Bennett Construction is another Irish construction business beefing up its international arm, albeit in a less aggressive manner. It had revenues of €84 million from its European business for the year ending March 31, 2021, up from €47 million for the year before.

The increase in European business could not have come at a better time, as it buffered the business from a significant fall in its Irish business from €229.8 million in 2020 to €140.7 million in 2021. Overall, group revenues fell 18 per cent to €224.8 million.

The company said the decline in revenue was “was due to the impact of Covid-19 and lockdown-related site closures during the year. Non-essential site closures continued for a period beyond the year-end and will impact the current year accordingly”.

Pre-tax profits fell slightly from €7 million to €5.7 million. The company, run by brothers Jim and Stephen Bennet, closed out the year with retained profits of €53 million.

The company sought to preserve cash and protect its balance sheet during the pandemic. Indeed, its cash balances swelled from €69.7 million to €113.9 million. It also managed to reduce amounts owed to its debtors from €34.3 million to €6.2 million.

The company has worked on a number of projects in the Dublin docklands, including the Exo office building at Point Square on North Wall Quay, Ireland’s tallest office block. Based in Westmeath, the business is ultimately owned by a Bennett-family controlled vehicle in Malta. It employs 132 people.  

Bought for $400m, how is Decawave performing?

Decawave makes next-generation wireless hardware that is accurate, secure, and energy-efficient. Its semiconductor chips are low-power and can identify the specific location of any object indoors to within centimetres, making it ideal for use in Internet of Things (IoT) applications. They also made the company extremely valuable.

Founded in 2007 by Ciarán Connell and Michael McLaughlin, the company was acquired in January 2020 by Nasdaq-listed Qorvo for $400 million. Given it had raised between $50 million and $60 million through various funding rounds, it was a stunning return.

The company has just filed accounts for the 16-month period ending April 30, 2021. It gives a sense of how it is performing and where it fits into Qorvo’s wider strategy.

The company remains loss-making, but this is in line with its operational plan. After all, developing next-generation wireless is expensive. However, it managed to trim losses significantly – from €12.9 million for the 2019 financial year to just €4 million for the following financial period. This was achieved after a massive hike in revenues – turnover grew from €6.8 million for 2019 to €27.7 million for the following 16 months. Some €6.2 million of this came from sales, licensing and royalties, while the remaining €21.4 million s classified as “sales, service and royalty intercompany revenue”. The company had retained losses at the end of the year of €63.7 million, but due to its funding, it had positive shareholders’ funds of €2.5 million.  

In notes accompanying the accounts, the directors acknowledged that it was loss-making and would need continued shareholder support, but that they expected Decawave to trade profitably in the medium term.

They said the company was increasing “its investment in software and hardware technology and growing its IP product portfolio”. As a result of the Qorvo deal, they said it would continue to “accelerate the development of its second-generation semiconductor products and to address demand in the higher volume consumer market as well as build global engineering and sales teams”.

Headcount fell from 74 people in 2019 to 54 the following year.

Turnover rises but headcount falls at regional supermarket chain

The Caulfield McCarthy Group is one of Ireland’s largest regional retailers. The business controls three Supervalu supermarkets in Cork, Waterford and Kilkenny, and also manages a significant property portfolio, including three shopping centres.

The business previously had even more assets, but the company took the decision to offload a site in Malahide in late 2019 and followed this up with the sale of a leasehold on a supermarket in Cork the following year. The disposals netted the group a profit of €3.3 million and allowed it to pay down bank debt.

The company has just filed accounts for the year ending March 28, 2021. It shows that revenues increased from €56.9 million to €58 million with the company explaining that retailers had benefitted from the pandemic.

Operating profits increased from €2.2 million to €3.5 million. However, pre-tax profits fell significantly – from €4 million to just €546,000. There are two factors behind the fall. First, its interest bill on debt increased from €343,000 to €1.7 million. Secondly, the company had recorded a €3.4 million gain from the sale of property assets in 2020. This was a one-off and bolstered the 2020 accounts.

Headcount decreased from 217 to 180, while the business closed the year with retained losses of €12.7 million. The company’s shareholders, John McCarthy and members of the Caulfield family, are owed €15.8 million in shareholder’s loans, while it has bank debt of a further €17.6 million. Investment properties are valued at €16.7 million, and those properties had rental income of €1.3 million.