Recent Trends in Corporate Finance in Ireland

Peter Crowley

Chief Executive, IBI Corporate Finance

30 March 2006

2

Contents

I. Introduction

II. Recent Activity in the Irish Market

III. Trends in the Irish Capital Markets

IV. Looking to the Future

V. Summary

VI. About IBI

Section I

Introduction

4

Introduction

Just completed my 6th year as CEO of IBI – a period characterised by unprecedented levels of market activity and record fee levels

In addition to the historic strength in our plc franchise, a growing driver of activity has been the emergence of a healthy mid-market in private company activity. Ted Webb leads our activities in that area.

Activity driven by all the factors evident in the UK market together with specific local factors in particular the confidence generated by 14/15 years of uninterrupted economic growth

5

Key Drivers

Low corporation tax rates

Low CGT

Strength of property market

Period of uninterrupted economic growth

Educated labour force

International trade/open economy

Strong consumer demand (boosted by SSIA spend)

Boost from immigrant population

Irish Economy

Supportive market conditions

Low interest rates

Debt market liquidity and aggressive local banking competition

Availability of private equity

High net-worth investors

Ability to form syndicates

Strong competition for quality assets

Strong management teams

Succession and estate planning

Market consolidation

Diversification

M & A Activity

Section II

Recent Activity in the Irish Market

7

Recent Activity in the Irish Market

5,707

7,364

6,198

4,921

5,723

3,995

10.3

15.6

9.9

8.3

10.7

7.7

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2000 2001 2002 2003 2004 20050.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

€bnISEQM&A Activity (value)

Esat TelecomElan AerFi GroupCRHHibernian GroupHamburg AirportOcean CommunicationsChase de Vere

Eircell Eircom Esat Digfone IN&M GreencoreTSBICCGolden Vale

Jefferson Smurfit Green PropertyElanMusgravesFirst Rate Travel BWG FoodsBIAMGolden Pages

AllfirstElanCRHRiverdeepArnottsDunloe EwartJefferson SmurfitGrafton Group

The Savoy GroupFirst ActiveClondalkin Group CRHTullow OilKerry GroupJarvis Hotels Waterford Wedgewood

Smurfit/KappaDanske Bank Jurys Hotels SuperquinnMeteor CRHThe Savoy GroupKingspan

8

Deal Volumes/Type

Upward trend in volume of deal flow from 2000 to 2004 (140% increase overall) Value of deals continued to rise in 2005 despite lower volume Growing frequency of smaller but still substantial deals now being undertaken (69% of 2005 disclosed deals valued at less than €50m) Private equity/MBO deals now form a much more significant portion of the Irish deal landscape – 23% of deals in 2005 compared to 8%

in 2000

No of Deals

5569

57

87

117

88

5

816

17

26

27

0

20

40

60

80

100

120

140

160

2000 2001 2002 2003 2004 2005

No. of Deals

Private Equity / MBO

Trade Sale

9

Corporate Finance Activity by Sector

2004 By Volume5%

9%

10%8%7%

10%

9%

17%

5%

20%

Media & Publishing Food & Food Services IT & Telecoms Support Services & Logistics

Construction & Property Health & Pharma Financial Services Leisure & TravelRetail & Industrial Oil, Gas & Exploration

2005 By Volume5%

14%

9%

7%9%14%

9%

19%4%

10% The Industrial and Retail sector

accounted for the highest proportion of deals in 2005 (19%), replacing Food and Food Services (down from 20% in 2004 to 10%)

IT and Telecoms sector showing a strong recovery (now up to 14% of deals) after the dot.com crash in the early 2000s

The Financial Services sector is a continuing driver of deal activity (14% of deals) followed by Support Services & Logistics and Leisure & Travel (both at 9%)

10

Deal Types: Cross-Border V Domestic

No of Deals

5570

6172

9784

5

712

32

46

31

0

20

40

60

80

100

120

140

160

2000 2001 2002 2003 2004 2005

No. of Deals

Domestic

Cross border

Due to the open nature of the Irish economy, cross-border deals form the vast majority of transactions in Ireland (74% of deals in 2005). Growth in in-bound activity from 2003 on, indicates strategic buyers comfortable with economic outlook

However, the volume and proportion of domestic and outward bound deals is on the increase with 30 such transactions in 2005 (or 26%), compared to only five in 2000 (8% of total deal activity)

This reflects the increasing scale of Irish companies and the enhanced financial resources available to them

Section III

Trends in Capital Markets

12

Overseas Strategic Acquirers Active in Irish Market

Strategic overseas buyers back in the landscape, attracted by the impressive Irish growth rates; examples include the following:

Company Sector

Emap, UK Media

Johnston Press, UK Media

BT Group, UK IT & Telecoms

Danske Bank, Denmark Financial Services

Landsbanki, Iceland Financial Services

Imprint, UK Support Services

Stericycle, USA Waste

Wolseley, UK Construction

VWR International, USA Healthcare

Smiths Group, UK Industrial & Retail

UTV, UK Media

Certain media driven concerns about overheating of the Irish economy have been allayed for Irish investors

13

Irish Companies Active Overseas

Irish companies are increasingly active in overseas markets; prominent examples include the following:

Company Sector(s)

CRH Construction & Industrial

Kerry Group Food & Foodservices

Bank of Ireland Financial Services

Grafton Group Construction & Industrial

Tullow Oil Oil, Gas & Exploration

Greencore Group Food & Foodservices

Smurfit Kappa Group Industrial

Quinn Group Industrial, Financial Services & Leisure

DCC Healthcare, Industrial, IT, Food & Oil

United Drug Healthcare

Kingspan Construction & Industrial

Alphyra Electronic Payment Processing

Glen Dimplex Industrial

14

Emergence of HNW Investors as Nimble Aggressive Buyers

Irish HNWs have become key players in overseas property transactions and now are also beginning to diversify into non-property related transactions

Acquirer Target

Property

Quinlan Private The Estate

Quinlan Private The Savoy Hotel Group

Sloane Capital Standard Chartered Bank HQ

Quinn Group The Belfry Hotel & Golf Club

Sloane Capital Unilever HQ

BOI Private Banking IT Tower, Brussels

Warren Private Clients Goldman Sachs Building, Fleet St

BOI Private Banking Cité de Retiro, Paris

BOI Private Banking Stuten 12, Stockholm

Non-property

Kayterm Jarvis Hotels

Fruitfield Nestlé Ireland

Barry Family Batchelors

Longhill Investments Maybin Support Services

Select Retail Holdings Superquinn

15

International Private Equity regards Ireland as a 2nd Home Market

The following is a selection of private equity firms who have invested in Ireland:

Madison Dearborn Merrill Lynch

Summit Partners Montague

3i HG

Graphite Barclays

BC Partners Bridgepoint

Warburg Pincus Electra

Cinven Providence

Babcock & Brown

Permira

Alchemy

Legal & General

16

Steady stream of Public to Private Transactions

There has been a relatively high number of take private transactions in Ireland in recent years, notable examples of which include:

Target Sector Value

Jurys Doyle Leisure €1.06bn

Athlone Extrusions Industrial €55m

Alphyra IT and Telecoms €93m

Arnotts Retail €255m

Sherry Fitzgerald Real Estate €25m

Riverdeep IT and Telecoms €320m

Dunloe Ewart Building & Construction €197m

Green Property Building & Construction €1.05bn

Jefferson Smurfit Print & Paper €3.6bn

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Trends in Capital Markets

Company Mkt Cap(€bn)

AIB 7.3BoI 7.0Elan 4.5CRH 4.0Smurfit Group 2.7Irish Life 1.6Kerry Group 1.6Independent News& Media 1.2AWG 1.0NIE 1.1

Company Mkt Cap(€bn)

Elan 17.5AIB 11.5BoI 10.5CRH 10.3Ryanair 5.1IL&P 3.2Smurfit Group 2.7Kerry Group 2.5Anglo Irish 1.3IndependentNews & Media 1.2

Company Mkt Cap(€bn)

AIB 15.7CRH 13.3BoI 12.9Anglo 8.8Ryanair 6.4Elan 4.9IL&P 4.7Kerry Group 3.5Grafton 2.2Eircom 2.1

Top 10 ISEQ Companies

€ 32bn

€ 66bn€ 74bn

-€ 10bn

€ 10bn

€ 30bn

€ 50bn

€ 70bn

€ 90bn

€ 110bn

€ 130bn

€ 150bn

Dec '97 Dec-01 Dec '05

83 companies

68 companies

59 companies

Greater Concentration of Top 10 Companies within ISEQ

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Trends in Capital Markets

ISEQ Index

68.4%

81.7%

78.5%

40.4%

34.0%

45.9%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

Dec '97 Dec-01 Dec '05

Top Ten as % of Total Index

Financial stocks as % of Total

Re-emergence of Concentration on Financial Stocks

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Trends in Capital Markets

Key Leavers

ESAT Telecom

Golden Vale

ICC Bank

Jones Group

Clondalkin Group

Key Leavers

Heitons

Green Property

Arnotts

Jefferson Smurfit

Jurys Doyle

Movement In ISEQ Constituents

21

7

-34

-28

-40

-30

-20

-10

0

10

20

30

1997-2001 2001-2005 Leavers

Joiners

Growth in Net Leavers from the ISE

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Trends in Capital Markets A number of key trends are noticeable in the ISEQ Index in recent

years despite growth in the overall index: Decrease in the number of listed companies A general increase in concentration with the top 10 companies now

accounting for c. 80% of the overall market cap of the index

Steady stream of take privates has disimproved spread of exposure for investors to the Irish economic story. Financials now account for c. 45% of total index

AIM/IEX emerging as a meaningful source of activity and funding Now 33 Irish companies on AIM

Section IV

Looking to the Future

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Likely Active Sectors

Healthcare – driven by infrastructure deficit

Waste / Environmental – consolidation and new technologies

Media / New Internet – impacted by global consolidation

Financial Services – new entrants and disintermediation

Business Services – outsourcing

Retail – consolidation of local operators

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HNW’s to emerge as aggressive non-property investors

Need to diversify from property exposure

Desire for return (and increased interest rates) will focus investors on benefits of equity risk premium in broader corporate deals

Increased sophistication of key players

Wall of liquidity – No repeat of previous boom/bust cycle

High confidence levels and ability to move quickly will give them an edge

24

Crossroads for the ISE?

Ongoing trend of public to privates

Apart from Aer Lingus, few new entrants - possibly Airtricity, Smurfit Kappa in time

Flow of small companies onto IEX/AIM offers some hope

Further concentration of index in the financials not healthy

Position in global exchange consolidation as yet unclear

25

Future Trends / Rules

Irish economic backdrop to remain positive - favour “soft landing” view with low level of accompanying indigestion

Levels of M & A / market activity to remain high – further departures from ISE likely driven by private equity

Biggest potential risk (although limited) is a series of highly levaraged defaults followed by a debt liquidity squeeze

Modest levels of interest rate increases not likely to dampen activity unduly

A drift towards labour market inflexibility through embracing “European-Style” labour laws would cause problems for inward investment

Global liquidity generally and particularly high levels of local market liquidity will continue to drive strong demand/competition for assets

Section V

Summary

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Summary

Irish Stock Exchange at an all-time high Value of deal activity in the market likely to continue at historically high

levels Ireland is still the fastest-growing economy in the EU, although infrastructure

deficiencies and emerging risk of lack of competitiveness remain a concern Concerns that the Irish economy was overheating have disappeared for

international strategic acquirers Certain sectors remain particularly buoyant, e.g. healthcare, Media/IT,

financial services, outsourcing, waste/alternate technologies Increasing number of overseas financial investors/private equity players

looking at Ireland for investment opportunities Irish high net-worth investors looking abroad for property underpinned

opportunities in addition to seeking to diversify away from property investments into trading businesses

Global liquidity equally evident as a market driver in Ireland assisted by particularly high levels of local investor liquidity buoyed by business confidence

The Future Remains Bright

Section VI

About IBI

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Introduction to IBI

IBI is Ireland’s longest-standing corporate finance house with 40 years’ experience in the Irish market

IBI is an independent, wholly-owned subsidiary of Bank of Ireland – Market Cap c.€15 billion

IBI has consistently been ranked the leading corporate finance adviser in Ireland and has advised more companies than any other Irish adviser

Only specialist CF adviser operating on a 32 country basis, North and South

We have significantly expanded our private company/client activities in recent years – seek to bring our public company ethos to a broader range of clients

IBI’s team of 23 experienced professionals has an unparalleled long-term track record in advising on a wide range of complex public and private transactions

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Introduction to IBI

IBI is the leading Irish Corporate Finance house having consistently advised on more transactions in the Irish market than any other player

Rated No. 1 Irish Corporate Finance

Advisor

2005

Rated No. 2 Irish Corporate Finance

Advisor

2004

Rated No. 1 Irish Corporate Finance

Advisor

2003

Rated No. 1 Irish Corporate Finance

Advisor

2002

" IBI Corporate Finance was the Merger and Acquisitions adviser with the most deals under its belt last year. It was involved in fourteen deals with more than €1.7bn, according to mergers &

acquisition intelligence source, Mergermarket"

(RTE Radio, 6 January 2006)

No. 1 Adviser in Irish transactions

31

IBI Credentials – Transaction Experience

Unrivalled track record of sound advice in high-profile transactions

Private Equity

Govt/Semi-State

Take-overs & Buyouts

IPO

“Sell-Side”/ Public Offers

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Sample Public Company Deals

Adviser to Jurys Doyle Hotel Group plc on the €1.25bn offer by JDH

Acquisitions plc

Adviser to Heiton Group plc on the €353m

recommended offer by Grafton Group plc

Adviser to Bank of Ireland Group on its

US$184m acquisition of 71.5% of Guggenheim

Alternative Asset Management

Acted for Unidare plc in relation to the €55m Class 1 disposal of

Daalderop BV, capital distribution and related

party transaction

Adviser to Jurys Doyle Hotel Group plc on the

€260m Class 1 disposal of the Jurys Ballsbridge Hotel, the Towers and

the Berkeley Court apartments to Padholme

Acted as joint lead manager of the C&C

Group plc €398m Global Offer and listing on the Irish and London Stock

Exchanges

Adviser to Kayterm plc on the Stg£159m

recommended offer for Jarvis Hotels plc

Adviser to the Independent Committee of the Board of Arnotts

plc on the €257.3m recommended offer by Nesbitt Acquisitions Ltd

Adviser to Renlin Ltd, the management team's

bidding vehicle, on the €25.8m MBO of Sherry FitzGerald Group plc

Adviser to Green Property plc on the

€1.05bn recommended offer by Rodinheights Ltd

Adviser to the Independent Directors of

the Board of Jefferson Smurfit Group plc on the

€3.6bn takeover by Madison Dearborn

Partners

Adviser to Murryhill Ltd on its Stg£35.2m

recommended cash offer for PGA European Tour

Courses plc

Adviser to e Island plc on its €3bn offer for eircom

plc

Adviser to Golden Vale plc on the €253m

recommended offer by Kerry Group plc

Adviser to Ryanair plc on its €379.8m flotation on Dublin and NASDAQ

Stock Exchanges

33

Sample Private Company Deals

Adviser to Kandel Ltd on its €90m disposal to

Investcorp Techhnology Ventures & InfoNXX

Adviser to Eason Electronic Ltd on its disposal to Alphyra

Group plc

Adviser to Donegal Highland Radio Ltd on its €7m disposal to Scottish Radio Holdings plc/Emap

plc

Adviser to Sigma Communications Group

Ltd on its €29.5m disposal of Sigma

Wireless Technologies Ltd to US-based PCTEL

Inc

Adviser to CR2 on its management buy-out

and private equity fundraising

Adviser to Premier Group on its €9m acquisition of Nigel Lynn Associates

Ltd

Adviser to Brindley Media Group on its

disposal to Aegis Group plc

Adviser to Portmarnock Hotel & Golf Links Ltd on

its €70m disposal to Capel Ltd

Adviser to Kish Media Ltd (Channel 6) in a

private equity fundraising of €14m

Adviser to Bank of Scotland (Ireland) Ltd and Barry's Tea on the

€62m acquisition of Batchelors

Sale of Newhill Ltd and co-investment by

Newhill's shareholders in the Electra Partners

Europe-backed acquisition of BWG,

valued at €321m

Adviser to Treaty Radio Ltd on its €15.7m

acquisition by UTV plc

Adviser to City Hopper Airports Ltd on the

disposal of Wolverhampton Airport Ltd to a consortium led by Mar Properties Ltd

Adviser to SHS Group Ltd on its Stg£36.7m

recommended offer for Merrydown plc

Advisers to management on the buyout of Maybin Support Services on the acquistion by Longhill

Investment Ltd