Auditors say CIÉ's status as going concern at risk
The rail section of CIÉ recorded a deficit of €22 million after receiving a subvention for current spending of €149 million
Auditors to State transport company CIÉ have warned about the health of the company’s finances and its ability to remain in business.
Auditors PwC stopped short of qualifying CIÉ overdue 2011 accounts but said there exists a “material uncertainty which may cast significant doubt” about its “ability to continue as a going concern”.
The accounts are due to be released later this week.
PwC’s warning is stark given that CIÉ enjoys the implicit backing of the exchequer as a State-owned company.
This warning comes as CIÉ has exhausted its €121 million borrowing facilities and had to seek an early drawdown in the summer of its State subvention for the fourth quarter of this year. In July, the Government made an additional €36 million available to CIÉ to plug its finances this year.
However, the company was put on notice that it would have to introduce a package of measures to resolve the shortfall in its finances.
According to Government sources, CIÉ recorded a deficit, or loss, in 2011 of €6 million in spite of receiving €540 million in State support for current and capital spending. This was an improvement than 2010 when the deficit was €53 million.
Irish Rail recorded a deficit of €22 million after receiving a subvention for current spending of €149 million.
Dublin Bus reported a deficit of €18 million after receiving a subvention of €73 million.
Bus Éireann closed the year in the black, with a €500,000 surplus. But this was after it had received €43 million in State subvention.
PwC said CIÉ faces four key challenges to its ability to continue as a going concern.
These are the ongoing challenging trading environment, with declining passenger numbers; projected trading deficits up to 2014, which give rise to funding requirements; the expiration of current borrowing facilities in 2013; and reductions in the level of State funding.
CIÉ’s State subvention was to have reduced to €235 million this year before the emergency funding was granted in July.
It has been provisionally set at €226.5 million for 2013.
Minister for Transport Leo Varadkar has told CIÉ it cannot be bailed out. Some cost-reduction measures have been agreed in Irish Rail and talks are at an advanced stage within the bus companies, although these severance programmes will require funding. CIÉ is also looking at the sale of assets.
Additional fare increases are also on the way for commuters.