Mr. Neil Pakey:

I thank the Chairman and the Deputies for giving us an opportunity to address the committee. We have been invited to discuss the 2013 annual accounts for the Shannon Free Airport Development Company, or Shannon Development, as it was known until recently. I would like to set out the context to the changes that have occurred within the company since the Government decided in December 2012 to separate Shannon Airport from the Dublin Airport Authority and bring it together with a restructured Shannon Development. Much of last year was spent devising and implementing a major change management programme at Shannon Development to ensure a smooth transition. This involved employees transferring with their functions to Fáilte Ireland, Enterprise Ireland and IDA Ireland, or redeploying to Government agencies and the Civil Service. Other employees chose to exit under a voluntary early retirement or voluntary redundancy scheme. Employees who were engaged in property activities for Shannon Development become part of Shannon Group plc and are now based at Shannon Airport with the rest of the team.

Shannon Development has been renamed Shannon Commercial Enterprises Limited, trading as Shannon Commercial Properties, and is engaged in commercial property management and development. Shannon Commercial Enterprises Limited is now a wholly owned subsidiary of Shannon Group. Shannon Heritage, which was previously a subsidiary of Shannon Development, remains a subsidiary of Shannon Commercial Enterprises. After the enactment of the State Airports (Shannon Group) Act 2014, Shannon Group was incorporated on 29 August 2014. On 5 September 2014, following the transfer of shares under the Act, the company became a subsidiary of Shannon Group plc. Shannon Group is a commercial semi-State company comprising four strategic business units: Shannon Airport, Shannon Heritage, Shannon Commercial Properties and the International Aviation Services Centre.

I will give the committee some background on myself and my management team. In terms of relevant experience, I was employed by Manchester Airport for 14 years, during which time we established our property business, which has now grown in scope to 1.4 million sq. ft. of logistics and warehousing, 1.5 million sq. ft. of offices and 650,000 sq. ft. of manufacturing space. Over that period of time, we developed a sustainable business through further airport investment and acquisitions. When I was employed by a UK airport and property company, Peel Holdings, we invested £80 million in Liverpool Airport and increased traffic levels from 700,000 to 5.5 million passengers per annum, while at the same time developing property assets across the north-west region of England.

I was appointed as chief executive officer of Shannon Airport on 10 June 2013. I was subsequently appointed as chief executive officer of Shannon Development on 1 September 2013. On 5 September 2014, I became chief executive officer of the newly established Shannon Group. During 2014, in preparation for the establishment of Shannon Group, I began the process of assembling our executive management team. Mr. David McGarry was appointed chief financial officer of Shannon Airport on 1 February 2014 and subsequently chief financial officer of Shannon Group on 5 September 2014. Mr. Ray O’Driscoll was appointed managing director of the property division of Shannon Group on 23 April 2014. Ms Mary Considine became the group company secretary of Shannon Group on 5 September 2014.

Today, Shannon Commercial Properties continues to own and manage over 400 buildings and 2,000 acres of land in over 50 locations in the Shannon region.

The property portfolio ranges from prime office buildings and multi-let technology parks to engineering, manufacturing, warehousing and logistics facilities. In addition, Shannon Commercial Properties has a portfolio of fully serviced sites available for sale and development. The largest business park in the portfolio, which is known as the Shannon Free Zone, is the largest multi-sector business park in the Atlantic corridor. A 600 acre business park, it accommodates more than 100 companies. The Shannon Free Zone was established in the 1960s and grew significantly in the following decades, during which it was focused primarily on manufacturing and assembly activities. Many of the buildings in the zone were constructed prior to 1990 and significant investment is now required to bring it to the standards required in today's Ireland.

In addition to the Shannon Free Zone, Shannon Commercial Properties owns and manages technology parks in Limerick, Tralee, County Kerry, Ennis, County Clare, and Thurles, County Tipperary. The company also owns numerous other facilities across counties Clare, Kerry, Limerick, Offaly and Tipperary. In the current depressed property market, the valuation of many of these properties is significantly less than their initial acquisition and construction cost. Many of the properties were developed when the company had a regional development remit and constructed in locations to enable enterprises to create employment locally.

One of my key goals for Shannon Commercial Properties is the redevelopment of our commercial property portfolio in the region around Shannon Airport and other key strategic locations. We now have a new team in place and we are finalising a development strategy for our portfolio. As part of this, we have begun upgrading some existing buildings in the Shannon free zone and we are also evaluating redevelopment opportunities for the zone.

In 2013, the Shannon Development accounts recorded an overall deficit of €1.569 million. This includes costs related to tourism and enterprise activities which no longer form part of the business of Shannon Commercial Properties. The company recorded a €4 million profit on the sale of assets during the year. This was generated through the sales of 11 properties, the largest being the sale of land and buildings at the University of Limerick and the sale of a warehouse building in the national technology park, Limerick. Some €6 million in capital expenditure was invested in property and tourism assets, with the largest investment being spent on revamping King John's Castle. At the end of 2013, the company was debt free with a cash balance of €12 million, a substantial increase in the €7 million cash balance recorded at the end of 2012.

To bring the Chairman and members fully up to date with recent developments, the Shannon Group team has been assembled and we have a collective determination to seek out and maximise the potential of all business opportunities and drive growth and profitability in all areas of our group's activities, including Shannon Commercial Properties. The group is firmly focused on fulfilling our objective of securing a sustainable future for all of our operations and becoming a catalyst for economic growth for the west. We are developing a five year business plan for the group, which is due to go before the Minister for Transport, Tourism and Sport for his approval in December. We are here to help the committee and we will be pleased to discuss the 2013 Shannon Development accounts.