Agency posts €14m losses

SHANNON Development recorded total recognised losses of €14.37 million last year, while the amount of jobs at the Shannon Free Zone, Clare’s largest industrial centre, declined by 174.

 

The information was included in the Shannon Development Annual Report for 2011, which was published on Tuesday.

According to its consolidated income and expenditure account for the year, Shannon Development recorded a deficit of €11,991,000 last year but the impact of an actuarial loss on pension liability and a deferred pension funding adjustment meant the overall losses came to €14,371,000. This follows a loss of just over €14.5m in 2010 and €8.8m in 2009.

The company balance sheet, as of December 31 last, shows Shannon Development had net assets of €77,592,000. Depreciation of property assets was the biggest factor in the losses, coming to €10,435,000.

Speaking to The Clare Champion, Dr Vincent Cunnane, chief executive of Shannon Development, said when the depreciation is taken out of the equation, the operating loss was actually rather small.

“We had a small operating deficit. Over 10 million of it is a paper loss in terms of depreciation and impairment. When you take it all out, there was a small operating loss.”

He said the overall figure was somewhat misleading because Shannon Development has such a large property portfolio, while the state of the property market has resulted in the impairment of its newer buildings.

“When you take all that out of it and look at the operation and expenditure, we ran a small deficit but a manageable deficit, as such.”

The report states there was a net loss of 174 jobs, despite a significant number of new jobs being created in 2011.

“During the year, 406 new jobs were created at the Shannon Free Zone. While overall employment at the Zone fell 3% year on year, it should be noted that almost 90% of these job losses were the result of downsizing and not closures, enabling Shannon Development to continue working with these companies to identify new market opportunities.

“The company is encouraged by the slowdown in job losses, reporting a net loss of 174 jobs during the year. Jobs in indigenous companies at Shannon Free Zone continued to grow in 2011. In the past two years, indigenous jobs have increased by over 10% from 949 to 1,045.”

Some 7,700 people now work at the Shannon Free Zone but it is understood the proportion of those working part-time has increased over the last few years.

Dr Cunnane said it is very significant that the job losses have been the result of downsizing, rather than companies relocating or closing entirely.

“A lot of efforts over the last number of years have gone into making sure those companies survive, helping them on their R&D, helping them on their training, getting those grants into them and helping them make the hard decisions they’ve to make. When a company is still here, there are opportunities for it to get back on its feet and expand and with expansion will come jobs. But if you lose a company, the opportunity is lost forever essentially.”

One of the positive aspects of the year was the performance of Shannon Heritage, Shannon Development’s tourism and heritage subsidiary, which saw a 5% increase in visitor numbers.

As it stands, it looks like 2012 could be the last year of operations for Shannon Development, as it is set to lose its functions in relation to indigenous enterprise, foreign direct investment and tourism and be combined with Shannon Airport for the creation of a new entity.

While there won’t be any compulsory redundancies, Mr Cunnane said it’s not easy for the staff to continue with their jobs given how uncertain the future is.

“Uncertainty is not a good environment in which to work but it’s business as usual as much as we can, that’s our mantra since these announcements. It’s business as usual until something officially changes. Nothing has officially changed, nothing is before Government and we will continue to do our job in the professional manner that we’ve always done it and yield good results in difficult times.”
The new structure will seek to attract aviation-related industries to Shannon and Dr Cunnane said there’s a lot there to build upon.

“We’re not starting from scratch. Obviously, there are 30 odd companies in that aviation space, between cargo and leasing and engineering services and stuff. There’s a very good base to work from, around a third of companies in the Free Zone are aviation related as it is, so it’s to grow that and to give Shannon Airport and its environs some initiatives that will grow that business in a strong way in a short period of time, while ensuring the passenger side and the cargo side also grows,” he concluded.