Shorelark makes €4.4m loss

THE company established by businessman Bernard McNamara to develop the four-star Radisson Blu hotel in Galway recorded combined pre-tax losses of €4.4 million last year and in 2009.

According to accounts just filed by Shorelark Ltd for 2010 and 2009, the company recorded a pre-tax loss of €210,267 last year and €4.2m in 2009.

The hotel is operated on Shorelark’s behalf on a day-to-day basis by the Rezidor Group and the group was last year paid €903,054 in respect of management charges and marketing.

The returns show that a contributory factor to the 2009 loss by Shorelark was impairments totalling €1.7m, including a property write-down of €1.5m.

The returns show that Mr McNamara resigned as a director of the company on February 16 of this year. In January of last year, Mr McNamara admitted that he was “broke” and had debts of around €1.5 billion.

The returns confirm that Shorelark continues to be dependent on the continued support of NAMA and the directors “are of the opinion that the company will continue to receive the support of NAMA to enable it to continue trading”.

According to a note attached to the accounts, “the hotel continues to generate operating profits before rent despite the difficult environment facing the hospitality sector. The directors are optimistic that the profitability of the hotel will continue despite the poor economic conditions that continue to prevail”.

The returns state that “the company in line with many other companies involved in the hospitality and property sectors, is trading through extremely difficulty conditions, but continues to work proactively with its shareholders and NAMA”.

The directors’ report states that the directors “are reviewing their plans to ensure a return to profitability and the future expansion of the company”.

The company’s accumulated losses at the end of December last stood at €10.3m.

The two sets of accounts were signed off on August 10 and 11 and the figures show that Shorelark paid €2.2m in rent to Mr McNamara and fellow director, Jerry O’Reilly last year after the two agreed to waive 50% of the rent due to them in 2010.

The company entered a 20-year lease with the two for the 282 room Galway hotel in 2001 and at the end of last year the company owed €5.8m to McNamara and O’Reilly.

The figures show that Shorelark Ltd owed €5.1m to Michael McNamara & Co at the end of the year after paying the company €250,001 in 2010 — last November, NAMA placed Michael McNamara & Co in receivership.

In total, Shorelark owed €7.8m to group undertakings.

Auditors for Shorelark, Howarth Bastow Charleton state that “the financial statements have been prepared on a going concern basis, the validity of which depends upon continued financial support from NAMA to enable the company to realise amounts for its property related assets in excess of their carrying value and to continue to trade”.