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The structural changes to the EII Scheme proposed in Budget 2019, which took effect in January, led to a significant increase in investor interest in EIIS funds. Terry McGrenaghan explains the changes to the scheme and the impact on investors and investees. For three decades, the Employment Investment Incentive Scheme (EIIS) (originally the Business Expansion Scheme (BES)), has provided a vital source of alternative (non-bank) funding for businesses in Ireland. Despite many welcomed reforms to the scheme in recent years, the application of certain EU State Aid rules (GBER) has led to increased complexity, resulting in administrative delays for both investee companies and investors. Budget 2019 proposed significant structural changes to address these issues and streamline the scheme to reaffirm the EIIS as an effective tax relief for investors and a vital source of funding for SMEs. EIIS past and present Since its inception, the EIIS has mainly proved consistent in terms of its offer to qualifying SMEs and investors. Investee companies enjoy an alternative source of finance with no capital repayment until the end of the four-year investment period with the advantage of the investment being equity rather than debt. This coincides with investors receiving an all-income tax shelter for their investment, allowing individuals who have sufficient income tax taxable at 40% to obtain tax relief up to that level. Historically, the EIIS operated on a pre-approval basis, which involved a qualifying company submitting an application to Revenue for review which, in turn, issued tax relief certificates to investors. With the increase in complexity came delays and an inevitable backlog of applications. To address this, Budget 2019 updated the scheme to operate on a self-certification basis, which now requires qualifying companies to self-certify and issue tax relief certificates or statements of qualification directly to investors to enable a claim for tax relief. If required, a company may still apply to Revenue for compliance confirmation but only in relation to specific aspects of the legislation. In addition, investors are now issued redeemable preference shares rather than ordinary shares, which should provide for a more structured exit mechanism and greater security throughout the investment period. These changes to the scheme have recalibrated the EIIS for the opportunity ahead, and both investors and investee companies should be looking closely at how this proven source of funding can play a central role in their financial planning. Opportunity With the Irish economy now the fastest growing in Europe, progressive and innovative SMEs will continue to look at alternatives to traditional funding sources as they develop their growth plans. For example, the 2018 Davy EIIS Fund has raised over €11.5 million and continues to experience significant demand from ambitious companies seeking funding. It is interested in companies with strong growth potential, a well-defined market strategy, and potential to realise the investment after four years along with a capable and industry experienced management team. It’s a prime time for SMEs to look into these funds to grow their future. Terry McGrenaghan ACA is an Assistant Manager with BES Management DAC, the fund manager of The 2018 Davy EIIS Fund.

Jun 21, 2019
News

Artificial intelligence is going to transform business operations and employment in every organisation, not just in Ireland, but the whole world. Darren O’Neill outlines what steps Irish companies should take to unlock AI’s potential. Artificial intelligence (AI) has the potential to transform the Irish economy. Recognising its potential, an overwhelming majority of the respondents we contacted while conducting PwC’s 2019 analysis of AI in business believe it is vital that Ireland puts itself at the forefront of the AI revolution, and should invest in the skills and technology needed to adopt AI successfully. The research, conducted by PwC and the Analytics Institute, shows that the majority of Irish leaders know that AI is going to change their operations in the next five years significantly, or risk losing competitive advantage. To understand where Irish organisations currently stand on AI development and deployment, we surveyed almost a hundred executives and practitioners about their perspectives on the age of automation, and it is clear from our findings that AI needs to be demystified and woven into the change agenda of Irish organisations. Our analysis delivered some fascinating results, identifying six priorities every leader must know to implement AI in their organisation successfully. 1. Understand how AI fits into your business We believe a critical aspect of getting companies to face up to AI is to make it less daunting. The volume of information about AI is overwhelming and might make the uninitiated believe they are facing the rise of the machines or the end of employment. However, the reality is straightforward and should be a source of inspiration for you. Once you understand what AI is, you can begin to see its potential. It can support your business strategy, reduce costs, improve products and services and drive efficiencies at every level. 2. Strategise for your return on investment Implementing AI requires unity of purpose and commitment from across your organisation. It has the potential to be transformative, so stakeholders from across the business need to be involved in developing a strategy that enables its introduction. This transformation needs to deliver real returns, so it is in your best interest to create an approach that will generate maximum value and can scale upwards and across your organisation. 3. Fix the data AI can be used with data and analytics to better manage risk, help employees make better decisions and automate customer operations. The top priority when integrating AI and analytics systems is to identify and extract valuable insights from the totality of the data your business holds, right across the organisation. But our survey highlights a significant challenge. Organisations in Ireland are not providing the foundation that AI needs to be successful – robust, reliable and complete data. Only one in eight respondents said that data labelling and standardisation was a top priority for their business. 4. Build an AI-ready workforce As more tasks become automatable through AI and sophisticated algorithms, jobs are being redefined and recategorised. A third of people worldwide are worried about losing their jobs to automation, but 74% are ready to learn new skills or completely retrain to remain employable in the future. More trained users, developers and data scientists are going to be needed to help integrate AI in businesses. However, the talent impact of AI will not be solved solely from hiring outside of your organisation, from what is already a diminishing pool of skilled talent. You have a built-in talent pool already, and it is in your interest to maximise it. 5. Make AI responsible As AI integrates itself into our daily lives, everyone is asking the same question: can we trust AI? The answer is responsible AI, which incorporates risk mitigation and ethical concerns into algorithms and data sets from the start. Responsible AI means explainable AI, so that algorithms' decisions are transparent or at least auditable. It means a control framework to catch problems before they start. It means teams and processes which look for bias in data and models, and which monitor ways malicious actors could "trick" algorithms. It means considering AI's impact on employment and the environment. And, it means participation in public-private partnerships and transparent self-regulation so that responsible AI becomes the standard. 6. Convergence AI's power grows even greater when it is integrated with other technologies, such as analytics, ERP, the Internet of Things (IoT) and blockchain. Helping advanced, predictive and streaming analytics further evolve with AI is a priority. This convergence can make new data-driven business models more powerful. Conclusion Irish businesses need to be much more proactive in introducing AI. However, with every month that passes, local and global competitors are embracing and embedding AI in their businesses faster, putting them at a competitive advantage which will eventually become unassailable. Put simply: do you want to be AOL or Google? Darren O’Neill is Partner and AI & Analytics Leader in PwC.

Jun 21, 2019
News

Allies play a crucial role in the careers of LGBTQ+ people. Daniel Turley explains the difference they can make to an LGBTQ+ individual’s working environment. “I moved to Dublin with my girlfriend.” I had just started a job in a Big Four accounting firm, and that was my answer to intrigued colleagues that wanted to learn a bit more about the new guy at work. To anyone that knew me outside of work, this was very clearly not true. For one, I didn’t have a girlfriend; two, I am a gay man. However, when faced with a meeting room of partners, managers, and rugby lads, I choked – I didn’t want to give so much away about myself so soon. Saying “my boyfriend” seemed too controversial and “partner” would be a dead giveaway. My experience is not that uncommon – a Vodafone survey conducted by Out Now noted that 78% of LGBTQ+ individuals had hidden their sexual orientation or gender identity at least once in their life. This was mine. A second coming out Over the coming months, I slowly started to set the record (un)straight. To say that I received a positive reaction is an understatement. The responses were a mix of delight, compassion, and outright confusion – primarily as to why I felt the need to lie in the first place. I wondered that myself. What was clear for me, though, was how lucky I felt. Lucky that I had such a warm reception to my news, and lucky that I worked in a firm that was so supportive of its LGBTQ+ individuals. Management had always made it clear that discrimination would not be tolerated in the firm; however, it was the actions I saw beyond the non-discriminatory practices. I was amazed by the additional support that was on offer – a non-LGBTQ+ partner made efforts to introduce me to other LGBTQ+ leaders in the firm, and significant efforts were made to support LGBTQ+ Pride Month every year. With my firm, I got to walk the Dublin Pride parade, and I did it with a partner in the firm and her kids. Allies When I first joined the firm, the term ‘ally’ was a relatively new concept to me. I hadn’t thought of non-LGBTQ+ individuals in this way until then, but the firm had a network available to LGBTQ+ employees and allies. My experience with the network showed me how much of a difference good allies can make to an LGBTQ+ individual’s working environment. There is no one way for someone to be an LGBTQ+ ally. Allies, like gender, can fall on a spectrum, and all types of ally-ship can be equally valid when coming from the right place. This may take the form of marching in Pride parades, actively identifying and removing discriminatory practices from office culture or wearing rainbow colours. However, I also see significance in quieter forms of ally-ship. Some of the most poignant experiences I have had in the workplace have come from conversations with colleagues who aren’t necessarily familiar with the concept of what it meant for me to be gay. Allies have been there to share their experiences, speak of their LGBTQ+ family members and provide understanding. They have also been there to course correct conversations when necessary. These conversations have proven to be insightful, thoughtful and – most importantly – respectful. (They have also proven to be low-key hilarious. One fella still can’t believe that I am not physically attracted to Kelly Brook, but he’s getting there.) I’ve since moved to a different organisation. This time around, I was gay from the first moment it was relevant to the conversation. My confidence going into a new working environment as myself this time and not as a straight man comes from the inclusivity at my first firm in Dublin and the allies I found within it. Daniel Turley is a Financial Accountant in BioMarin and on the Chartered Accountants Ireland Young Professionals committee.

Jun 19, 2019
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For most, figuring out parenting and your career is difficult. It can be even more so if you are an LGBT parent. Peter Keenan-Gavaghan explains how the support from his organisation enabled him and his husband to make the leap into parenthood while growing his career. Balancing a career and a family is always a juggling act. However, when your family does not fit the traditional model, it can also prove to be a minefield for all concerned, especially at work. Societal expectations of parental roles, parental names and second glances are only a few of the factors that need to be thought about before LGBT people become parents. Despite having made the decision to have children early in our relationship, it took my husband and I eight years before our son arrived into the world. With both of us being working professionals, the process of family planning started in the traditional way: how do we balance parenthood, careers and our relationship? We quickly realised that we also needed to consider society. In the end, some of it came down to practicalities, and some came down to our own values, preferences and external supports.  Parental leave One area we had to consider was managing early childcare. My firm gives enhanced paid parental leave regardless of gender and this played a big part in our decision that I would be the stay at home dad for the first seven months of our son's life, with my husband returning to work on a reduced work week. Without the seven-month paid parental leave from my firm, our family would be much different position starting out – and certainly disadvantaged compared to mums going on leave. It’s important that not only the people in an organisation are supportive to LGBT families, but that the support is reflected in the HR policies and procedures. Creating a network We always knew we would need to navigate the potential assumptions from colleagues and clients that there is a ‘mum’ at home. We quickly realised that if social assumptions were to change, we needed to be proud of our family, and not place each other back in the closet. Having same-sex parents is nothing new in Barclays. Indeed, when we were investigating how we would become parents, one of the first ports of call was Barclays LGBT network, Spectrum. There we got a greater understanding of fostering, adoption and surrogacy. The network also holds regular talks on ‘non-traditional' parenting to educate colleagues on how they can become parents and continue to build their career. While nothing would have stopped my husband and me from having our son, the information and support gained from the LGBT network in my organisation eased the process for us (as much as to-be parents can be eased when planning for their first) and normalises families like ours to colleagues and clients. Before going on paternity leave, my team did the traditional baby gift presentation and I was invited to expectant parents’ events. This not only showed support but also demonstrated inclusivity. Talent retention What I have found since going back to work is that I have become more focused and flexible. Because Barclays gave me the information on parental leave, the precious first months with my son, and the flexibility to alter my working hours to the typical parent’s life without judgements or assumptions, they have retained a committed employee and have helped create a happy family. Peter Keenan-Gavaghan is Vice President of Barclays Internal Audit – RFT & Functions Technology.

Jun 17, 2019
News

The deadline for the VAT Compensation Scheme for Charities is right around the corner. Liz Hughes outlines some stumbling blocks to watch out for when making a claim. The deadline – 30 June – for submissions to the VAT Compensation Scheme for Charities is fast approaching. The scheme is designed to reduce the tax burden on the charity sector and is a strong indication of the government’s acknowledgement of the charity sector’s positive role in Irish society. A significant amount of time and effort from the sector went into securing the scheme. While the cap currently sits at €5 million per annum, the scheme will be reviewed after three years. There is potential to increase the fund should it be consistently oversubscribed, and the charity sector is working hard to ensure that this opportunity does not go to waste. For example, Charities Institute Ireland (Cii) has, over the last two months, undertaken a campaign to inform its members on the details of the scheme. Cii is encouraging all members to submit their claims to the scheme in order for the €5 million cap to be exceeded. And, while the window for early submission has passed, any accountants who have charity clients must submit a claim before the deadline of 30 June. Experiences with the scheme As part of the campaign regarding the VAT Scheme, Cii surveyed members on their experiences of the scheme to date. The claims themselves were rather diverse – for example, they ranged anywhere from €15,000 to €190,000 (average €61,000). Everyone’s experience will be different. However, if you are looking to avail of the scheme, it would be good to be aware of some of the following issues: The time taken to prepare claims ranged from two days to two weeks. Many respondents indicated that they had to change their internal systems to capture the required data. There is no official template for the written declaration from an organisation’s CEO/CFO declaring the validity of the claim. (However, the Cii has solved that problem for you here.) Revenue has made a distinction between education and training income. Education income is not regarded as qualifying income whereas training income is considered such. Retail income via a website is not regarded as qualifying income. Due to the differing nature and size of various charities, it is unsurprising that there is a large divergence in experiences, but the feedback from applicants has been positive regarding both the process and Revenue’s assistance with queries. As with all new schemes, teething problems are to be expected. To assist with this, Revenue has indicated there will be a facility at the end of year one to monitor and review any unforeseen operational issues that may arise in the roll-out. With these issues ironed out, there is hope to see the scheme go from strength to strength in the coming years, that the effort from the sector to secure the scheme will be well-rewarded, and that the scheme expands in the future. Liz Hughes is the CEO of Charities Institute Ireland.

Jun 14, 2019
News

The sustainability market is not only for those looking for products to help save the earth and better the lives of the less fortunate but also for those looking into sustainability investments. Craig Bonthron outlines seven companies that are working for their investors as well as the planet and the people on it. While we can’t single-handedly save the planet, it’s fair to say a lot of us are looking at ways to improve the way we treat the world, and the same can be said for the investment industry. Now, more than ever, there is pressure on investment managers to invest responsibly. Here is a list of companies who are either leading the sustainable sector or fast-approaching it. Leaders Tesla Tesla’s technical leadership, pace of innovation, scale advantage and the strategic culs-de-sac faced by its competition make it highly likely that Tesla will remain the global leaders in pure electric vehicle production for years to come (it had >80% market share Q4 2018). This was cemented further by the launch of the Tesla Model 3; the first affordable (under €45,000), mass-produced, long-range, electric vehicle available globally. Shimano Shimano is the global market share leader of bicycle gears and brakes, and a trusted brand, synonymous with quality and reliability. Decades of focused research and retesting in extreme conditions make this a brand that captures a significant share of the market profits. A recent move into e-Bike drive chains has followed the same pattern, and it is now positioned to offer the best product in this market too. Illumina Worth around $40 billion, Illumina are the global share leader in the genetic diagnostic tools or ‘genomics’ market. Whether it is a basic 23andMe ancestry test, a population study, or a highly sophisticated analysis of specific cancer genes, an Illumina machine has likely been used. The cost of genomics is coming down rapidly, and Illumina is the key enabler. Improvers Everbridge Software-as-a-service is a monthly subscription-based business model which is hosted in the ‘cloud’ (like Netflix or Spotify). Everbridge uses the same model, but does something much more important – it saves lives, and money, during and after a crisis. Unlike traditional one-way emergency communications systems, its success is leveraged on a scalable cloud-based notification engine and contact database. Everbridge is the best-in-class global player with the broadest suite of solutions and a long list of blue-chip and government clients. Insulet Insulet is a manufacturer of an innovative tubeless ‘pump patch’ called OmniPod – the only product of its type that has been approved by the FDA and European health care systems. The device, made for diabetics, is small, robust and water-proof and replaces multiple daily injections, providing 24-hour delivery of insulin. Insulet has dramatically increased access to this product in recent years by investing in its distribution and manufacturing capacity, while also getting approval across the majority of health care providers and insurers in the US and Europe. I believe that it is in the early stages of its growth and expect profitability to improve meaningfully as the business scales. Hotel Chocolat Hotel Chocolat decided to invest heavily in its supply chain (the cocoa growers), while also building out its retail distribution network. By doing so, it has an extremely high-quality source of sustainably grown cocoa and is maintaining the business of the overseas growers, without having to pay away margins to any middle-men. Green Dot Green Dot was founded in the late 1990s to serve the unbanked population in the US, and its founder did this with the invention of pre-paid debit cards. Without the incumbent legacy issues associated with traditional bricks and mortar banks, this business built technology capabilities to support store-branded cards for retailers such as Walmart and now supports around 100,000 retail stores in the US. Fast forward 20 years and Green Dot have developed a ‘banking-as-a-service’ platform which enables other banks and partners to distribute its products. Such a platform is not just a robust economic model that serves shareholders, but also dramatically improves financial inclusion and allows those previously excluded from the system to build credit ratings and gain access to the typical financial services the privileged take for granted. Craig Bonthron is an investment manager of Global Sustainable Equity Fund at Kames Capital. Past performance is not a guide to future returns. Outcomes, including the payment of income, are not guaranteed. A version of this article was originally published in The FM Report.

Jun 13, 2019