Limerick tunnel firm posts €8.5m profit as State payments drop

TRAFFIC guarantee payments totalling €4.1m by state agency, Transport Infrastructure Ireland (TII) to the firm operating the €800m Limerick tunnel helped it record an operating profit of €8.5m last year.

New accounts filed by Directroute (Limerick) Ltd show that the firm recorded a 9pc decrease in operating profits from €9.4m to €8.5m – as traffic guarantee payments reduced from €4.4m to €4.1m and TII operating payments dropped from €5.4m to €4m.

Earlier this year, the Dáil’s Public Accounts Committee was told that the State has paid the toll operator €34m under the terms of a public-private partnership (PPP) contract to compensate for the smaller numbers using it. A TII official said “conservative estimates” projected further traffic payments of about €150m over the remainder of the contract.

Toll income in 2017 increased from €13.86m to €14.9m – €40,821 a day – and the drop in payments from TII contributed to overall revenues at the company declining by 3pc from €23.7m to €23m.

The traffic guarantee payments are made when daily volumes don’t exceed 23,000.

The accounts show that the firm last year recorded pre-tax losses of €7.6m – up 19pc 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” and adding that traffic guarantee payments “provide a necessary contribution”.

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 €389m to creditors – down from €391m owed at the end of December 2016.

At the end of December last, the firm had a shareholders’ deficit of €53.3m.

The tunnel route – which acts as a bypass to Limerick city – was opened in July 2010 and motorists pay €1.90 to use it.

Direct Route Limerick is made up of Lagan, Roadbridge, Sisk Contractors, Austria’s Strabag 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 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.