By Gordon Deegan
Traffic guarantee payments totalling €4.1m by state agency, Transport Infrastructure Ireland (TII) to the firm operating the €800m Limerick tunnel helped the company record an operating profit of €8.5m last year.
New accounts filed by Directroute (Limerick) Ltd show that the firm recorded a 9% decrease in operating profits from €9.4m to €8.5m.
The company recorded the drop in operating profits after traffic guarantee payments reduced from €4.4m to €4.1m and operating payments from the TII reduced from €5.4m to €4m.
Earlier this year, the Dáil’s Public Accounts Committee was told that the State has paid the toll operator €34 million under the terms of a public-private partnership (PPP) contract to compensate for the smaller numbers using it.
A TII official told the committee “conservative estimates” projected further traffic payments of about €150 million over the remainder of the contract.
Toll income in 2017 from the tunnel increased from €13.86m to €14.9m - or €40,821 a day - and the drop in payments from TII contributed to overall revenues at the company declining by 3% from €23.7m to €23m.
The traffic guarantee payments are made when daily traffic volumes don’t exceed 23,000 and they were put in place at the outset of the project in order to attract consortia to bid to build the scheme.
The accounts show that the firm last year recorded pre-tax losses of €7.6m - up 19% on the pre-tax losses of €6.4m in 2016.
However, the pre-tax loss is largely due to the large non-cash depreciation cost of €13.48m incurred last year and finance payments of €15.8m.
According to the directors’ report “the largest expense remains interest repayment on the project funding mainly in the form of bank loans and bonds. Traffic guarantee payments continue in line with the contract and provide a necessary contribution to the project funding”.
The directors state that traffic on the route “increased again in 2017 as motorists continue to recognise the benefits of the tunnel in terms of safety and improved journey times”.
The directors state that “revenues decreased in 2017 due to a reduction in payments received from TII”.
At the end of December 2017, the firm owed €389 m to its creditors -down from the €391m owed to creditors at the end of December 2016.
At the end of December last, the firm had a shareholders’ deficit of €53.3m.
The Limerick tunnel route – which acts as a by-pass to Limerick city - was first opened to traffic in July 2010 and motorists pay €1.90 to use the tunnel.
DirectRoute Limerick is made up of Lagan, Roadbridge, Sisk Contractors, Austrian-based Strabag AG and Meridiam Infrastructure.
The figures show that the toll road and tunnel had a book value of €319m.
A note attached to the accounts states: “The directors are aware that the company has reported a loss for the year.”
“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.”
At the end of the concession period in 2041, the firm will hand back the road to the TII.