Group targeting sustained growth, significant reinvestment and cost containment/efficiencies
Shannon Group plc has delivered significant progress on key objectives set for 2014 and is now embarking on a programme to address group-wide undevestment and improve cost efficiencies, its first annual report has revealed.
The inaugural report covers the four month financial period from the establishment of the Group on 5 September to 31 December 2014. The Group’s four strategic business units – Shannon Airport, Shannon Heritage, Shannon Commercial Properties and the International Aviation Services Centre (IASC) – have, however, been working together throughout 2014, prior to the Group’s official formation.
The Group, which employs over 600 people in high season, recorded a €21.1 million turnover in its first four months and returned a post-tax profit of €600,000, which, Chairman Rose Hynes said, amounted to a satisfactory result given that this period is off-peak for the Airport and Shannon Heritage.
Ms Hynes stated that the Group is working to a five-year strategic plan aimed at continued revenue growth, continued focus on innovation, securing a sustainable cost base through efficiencies and achieving profit growth at each of the four separate business units. The plan also incorporates an ambitious capital investment programme to ensure the Group remains firmly focused on delivering growth opportunities, which will be essential to maintain the competitiveness of the Group’s business.
“Through the generation of sustainable growth and profitability across all of our businesses and by the implementation of our five-year strategic plan, combined with an ongoing focus on innovation, I am confident that Shannon Group will make an enduring positive impact on our communities and the economic landscape of Ireland,” she said.
“Cost containment and improving financial performance through further efficiencies remain an ongoing focus for the Group. Our aim is to establish a more sustainable and robust business model and to improve our profitability across the Group.”
Commenting on the Group results, CEO Neil Pakey, “As we continue our task of building on the momentum and solid achievements of 2014, I believe the combination of our four strategic business units within a single group will unlock opportunities for further co-operation and synergies.
“Taking advantage of these synergies will be important as we strive to enable Shannon Group to fulfil its potential and become an important conduit for stimulating growth across the regional and national economy in the years ahead. It is vital the Groups’ businesses are competitive within the European marketplace. Our transformation must continue to evolve this year with emphasis on change, continuous improvement and improved efficiencies, combined with ensuring we continue to build the platform for the future sustainability of Shannon Group.
“With the creation of our five-year strategic plan, we now have a road map on which to build an exciting and sustainable future.”
Shannon Airport’s profitability for the full financial year 2014 improved considerably, with earnings before interest, taxes, depreciation, and amortisation (EBITDA) of €4.6 million, an increase of 34% on 2013. Addressing historic underinvestment in airport infrastructure also began in 2014 through a €4.4million airport capital expenditure programme. Among these projects were an airport runway overlay upgrade, fire safety upgrade works, a new retail IT system and a new traffic management system.
The airport continued its growth trajectory with a significant increase in passenger numbers (17%) and improvements in connectivity for the second successive year. European traffic showed the largest gains with a 70% increase. Transatlantic traffic continued to perform strongly, increasing by 10% and UK traffic recorded a 5% increase. The Group’s intention to develop a cargo hub at the airport was also boosted this week by Turkish Airlines, through its subsidiary Turkish Cargo, who announced that it is to commence Ireland’s only direct all-cargo air service to North America from Shannon.
Shannon Airport first welcomed Turkish Airlines in early March this year when the airline began making refuelling stops at the airport. Turkish Airlines will now operate a new weekly Shannon–Chicago service on Fridays through its cargo subsidiary Turkish Cargo, significantly boosting options for Irish exporters, from multi-nationals to SMEs.
Shannon Heritage, the company’s heritage visitor attraction business, also experienced a positive year, with an overall 11% increase in visitor numbers in its portfolio of visitor attractions and entertainment venues throughout the wider Shannon region and in Dublin. The company recorded over 637,000 visitors in 2014, with admission numbers to day visitor attractions up over 13%.
Shannon Heritage reported turnover of €11.9 million for the full financial year ended 31 December 2014, a 7.6% increase on the previous year, reflecting its best operational year since 2007. These results show a clear correlation with passenger growth at Shannon Airport.
Shannon Commercial Properties’ operating profit from continuing activities and before impairments for the full financial year 2014 amounted to €0.6 million versus a loss of €1.6 million in 2013. Shannon Commercial Properties also undertook a detailed review of its property portfolio and put in place a business plan to enhance its portfolio commencing with significant investment that is required for the redevelopment of key areas within the Shannon Free Zone (SFZ).
The Group is continuing to address the historic underinvestment in Shannon Commercial Properties’ infrastructure. When the Group inherited the property portfolio there was a low overall building occupancy rate, a challenge that the Group is actively working to resolve. A key initiative in addressing this will be the implementation of a capital investment programme in the years ahead to enable it to have available property solutions for investment and job creation in an improving economy.
IASC has been established to build on the existing network of aviation related services in Shannon in order to continue to grow the existing globally recognised and internationally competitive aviation cluster. The core IASC team was assembled during the year and work is underway to build relationships with international partner companies and key players in the global aerospace industry.