Shannon Development's losses increase threefold to €17.2m

PRETAX LOSSES at State agency Shannon Development increased threefold to €17.2 million last year, due mainly to the collapse in the property market.

The regional authority’s 2009 annual report, published yesterday, confirms that the losses increased by 233 per cent from €5.1 million in 2008 to €17.2 million at the end of December last.

The directors’ report states that the company has operated a self-financing model since the 1990s, primarily based on using revenue from its property base to fund its day-to-day operations and economic development projects.

In the eight years prior to last year, the company’s profits from the sale of property assets totalled €68 million, partially funding its operating deficit of €102 million during the same period. However, accounts filed with the annual report show the company’s property sales profits plummeted last year by 71 per cent from €8.5 million to €2.4 million.

The company’s expenditure includes an impairment charge of €4 million on its property portfolio last year. The accounts also show the company’s operating deficit last year rose 28 per cent from €14.4 million to €18.6 million.

This followed the company’s revenues dropping by 11 per cent from €33.7 million to €29.7 million, with rental from companies operating in the region dropping from €17 million to €14.7 million. Income from tourist activities fell from €12.8 million to €10.8 million.

Speaking at the launch of the annual report in Shannon yesterday, chief executive Dr Vincent Cunnane said: “I’m very confident about our future. We have weathered the storm, we weathered the worst of it. We are on our way back. Today’s jobs announcement by Genworth is an announcement about the future.”

Financial services firm Genworth yesterday outlined plans to create 117 jobs at its Shannon base.

Dr Cunnane added: “We have a new financial plan which is to address the deficit and to make sure that we get back to a balanced budget in 2013.”

On the €17.2 million loss, he said: “We were in a happy position to cover those losses, you can’t do that for a long period of time, but you can manage your way out of it.” He said Shannon Development is temporarily loss-making “because we made all our money off property. All the major developers are trouble, but we’re not”.