Shannon Tunnel’s €15m two-year loss

THE company operating the Shannon Tunnel lost over €6.7 million in 2013, despite having the benefit of a generous Government subsidy.

The mounting losses of €15 million over a two-year period have prompted calls for Transport Minister, Pascal Donohoe to introduce new measures to attract more traffic for the tunnel.

Irish Hauliers Association president, Eoin Gavin believes the reintroduction of toll-free journeys for heavy goods vehicles (HGV) would result in a number of financial and environment benefits for the company and the Government.

Last November, the total number of HGVs using the Shannon Tunnel jumped by a massive 70%, when former transport minister Leo Varadkar introduced toll-free journeys for trucks, who no longer had to pay €6.10 per journey.

While Minister Varadkar suggested this pilot initiative should be continued, this wasn’t done and trucks started bypassing the tunnel once more.

Mr Gavin stressed there were a number of benefits arising out of the continuation of the initiative, such as increasing traffic volumes for direct routes and removing HGVs from Limerick City.

He pledged the provision of toll-free journeys for HGVs would be one of the issues discussed with Minister Donohoe at a meeting with the IHA next Tuesday.

Direct Route Limerick Holdings Limited incurred a significant loss of €6,708,885 in 2013, after providing for depreciation and taxation, which fell from €8,339,302 in 2012, according to the most recent accounts.

KPMG Audit, 90 South Mall, Cork, has provided an independent auditors’ report to the members of Direct Route Holdings Limited for the year ended December 31, 2013, which comprises of the group profit and loss account, the group and parent companies’ balance sheet and the group cash flow statement.

The company’s consolidated profit and loss account for the year ending December 31, 2013, revealed turnover increased from €20,657,835 in 2012 to €21,421,298 last year. Operating costs also fell from €15,954,232 in 2012 to €14,761,446 a year later.

According to the accounts, the loss on ordinary activities before taxation fell from €8,339,302 in 2012 to €6,708,885 last year.

Net current assets jumped from €10,114, 032 in 2012 to €12,235,994 last year, while the cash at bank and in hand was €24,513,403 last year.

The company balance sheet showed a figure of €54,040 for net assets last year after creditors with amounts falling due after more than one year totalling €54,218,979 were deducted from total assets of €54,273,019.

The consolidated cash flow statement showed that the net cash inflow from operating activities fell from €14,456,589 in 2012 to €11,442,678 last year.

According to notes on the accounts, the directors are aware that the company has reported a loss for the period and is in a net liability position. The company is showing net current assets of €12.2 million; however, these net current assets include restricted cash of €12.6 million.

“The economic downturn has impacted adversely on the company and the industry in which it operates. Traffic volumes are intrinsically linked to economic performance, which creates uncertainty surrounding the company’s future performance.

“Notwithstanding these uncertainties, the directors have assessed the project’s cash requirements and prepared a forecast for the life of the concession.

“This forecast demonstrates, based on the underlying assumptions, that there will be sufficient cash for the project to meet its third party liabilities as they fall due.

“Based on all information currently available, despite some uncertainty regarding the company’s future performance, the directors consider it appropriate to prepare the financial statements on a going concern basis.

“These financial statements do not include any adjustments that would result from the going concern basis of preparation being inappropriate,” KPMG stated.

The accounts revealed the group did not have any employees during the years ended December 31, 2013 and December 31, 2012. The provision of staff to service administration and support activities is rendered by the company’s shareholders who recharge the company on a routine basis for the cost of providing this support.

“There was no remuneration paid to any of the directors of the company. There were no transactions entered into with any of the directors requiring disclosure under the Companies Act.

“No provision has been made for deferred tax as it is unsure when the monetary value of timing differences will reverse,” KPMG added.

Capital grant funding of €181,095,536 for the construction of the tunnel was provided by the National Roads Authority as part of the public private partnership PPP financing initiatives. This grant will be amortised on an annual basis over the concession term of the tunnel to which the funding relates.

However, in the event of a major breach of the PPP contract, the NRA may have the right to terminate the contract and replace the company as the concessionaire of operate the road themselves.

The accounts confirmed that AIB, Lagan Projects Investments Limited, PPP Roadholdings Limited, Spandor, Limited and Strabag AG are all shareholders of Direct Route Limerick Holdings Limited.

By Dan Danaher