Shannon Development posts pretax losses of €16.5m as sales collapse

PRETAX LOSSES at semi-State agency Shannon Development last year totalled €16.5 million as the company continued to suffer in the wake of the property collapse.

The performance, confirmed in the regional agency’s annual report, followed pretax losses of €17.2 million in 2009.

Shannon Development’s directors concede the company’s target of returning to “financial sustainability” by 2013 has been thrown into question by the economic climate. 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 Shannon region.

Last year, it earned €13.3 million in rental income from its property portfolio, but its income from property sales has collapsed. Between 2001 and 2008, Shannon’s profits from the sale of property assets totalled €68 million.

However, figures in the new accounts show it made a profit of just €755,000 from such sales last year.

The company’s losses included a €4.5 million writedown in property assets and a depreciation charge of €9.3 million. The loss after the depreciation and writedown amounted to €2.3 million.

In their report, Shannon Development’s directors acknowledge it “has experienced major financial challenges due to the economic downturn in the property sector and has taken steps to address these by reducing costs, developing new income sources and controlling capital expenditure programmes”.

The directors state the five-year corporate plan show it returning to financial sustainability and delivering a significant capital investment programme by 2013.

“However, some of the assumptions in the plan concerning the timing of the economic recovery are being revisited in light of events in 2010.”