2016 ANNUAL REPORT AND ACCOUNTS WORKING TOGETHER–BUILDING OUR FUTURE www.shannongroup.ie 2 Annual Report and Accounts I 2016 1 CONTENTS 2 About Shannon Group plc 5 Chairman’s Statement and Chief Executive Officer’s Review 12 Investing in our Future 14 Shannon Airport 2016 Aviation Highlights 16 Shannon Group Businesses 22 Shannon Group Welcomes 24 Board of Directors 26 Executive Team 29 Corporate Social Responsibility DIRECTORS’ REPORT AND FINANCIAL STATEMENTS 36 Directors’ Report 45 Statement of Directors’ Responsibilities in respect of the Annual Report and the Financial Statements 46 Independent Auditor’s Report to the Members of Shannon Group plc 47 Consolidated Statement of Profit or Loss 48 Consolidated Statement of Other Comprehensive Income 49 Consolidated Statement of Financial Position 50 Company Statement of Financial Position 51 Consolidated Statement of Changes in Equity 52 Company Statement of Changes in Equity 53 Consolidated Cash Flow Statement 54 Company Cash Flow Statement 55 Notes to the Financial Statements FURTHER INFORMATION 93 Shannon Airport Route Maps – Summer 2017 96 Shannon Group Awards 98 General Business information Annual Report and Accounts I 2016 2 ABOUT SHANNON GROUP PLC Our Vision is to be a customer and value Our Core Values demonstrate the driven success story making a real difference standards and principles that define by attracting more and more people and what we do and how we do it, central businesses to our region. n to these are: • io O s i u • Integrity V r r C • Customer Focus u o O r • Teamwork e • V • Innovation a • Responsibility l u e • Community Engagement s • O u r Mi n Our Mission is to manage and develop our ssio aviation, tourism and property assets, to generate a sustainable commercial return, to drive excellence in safety standards and service to customers and to make a difference to the communities we serve. Shannon Group plc is a commercial semi-state group, comprising three companies, focused on delivering economic benefits for the West of Ireland and the wider national economy. The Group brings together Shannon Airport Authority DAC (‘Shannon Airport’), Shannon Commercial Enterprises DAC (‘Shannon Commercial Properties’) and Shannon Castle Banquets & Heritage Limited (‘Shannon Heritage’). The Group was formally established on 5 Heritage. Today, Shannon Group employs over open up the world for the many leisure and September 2014 following the enactment of the 680 people in high season. business travellers who pass through our airport. State Airports (Shannon Group) Act, 2014. Our position as a key economic driver and enabler Our heritage company provides visitor attractions Shannon Group provides air transport and for growth makes us a vital component in building to give people reasons to visit our region and aviation services at Shannon Airport and its a brighter, more sustainable future for the people stimulates significant annual spinoff tourism environs, supports the growing aviation cluster of our region. revenue. Our property company is providing key business infrastructure to create the at Shannon through the IASC brand, harnesses A well connected airport improves the economic environment to entice foreign direct investment its property and land assets owned by Shannon attractiveness of the region as a place to live, and indigenous jobs to the area. Commercial Properties, and offers visitors a range work, visit and do business and every day we of heritage tourism options through Shannon Annual Report and Accounts I 2016 3 • Capital Expenditure €13.1 Million • Turnover • Profit before tax €67.2 Million €7.3 Million • Passengers 1.748 Million Shannon Group 2016 • Shannon Heritage over 904,000 visitors • Raised for charities €76,000 financial overview 2016 2015 €’000 €’000 Revenue 67,231 65,561 Operating profit as reported (after exceptional items) 7,093 7,049 Investment properties revaluation gains (4,513) (3,611) Other income (including gains on disposal of assets) (253) (1,102) Exceptional items ^ 1,334 901 Adjusted operating profit 3,661 3,237 Depreciation and amortisation 3,916 3,649 EBITDA (before exceptional items and investment property revaluations) 7,577 6,886 ^See page 63 for details of exceptional items Annual Report and Accounts I 2016 4 Annual Report and Accounts I 2016 5 CHAIRMAN’S STATEMENT AND CHIEF EXECUTIVE OFFICER’S REVIEW Annual Report and Accounts I 2016 6 CHAIRMAN’S STATEMENT TOGETHER WE CAN ACHIEVE MORE ANOTHER POSITIVE YEAR of €7.6 million, a 10% increase on 2015, reflecting on providing infrastructure to entice FDI and 2016 was another positive year for Shannon a solid performance and positioning us for further indigenous investment to the region, and Group. We continued to deliver on our objectives growth. improving our customer offering. to increase passengers at Shannon Airport, For Shannon Airport, 2016 was a year of We continued our extensive capital programme, grow visitor numbers to our tourism heritage consolidation of the considerable gains made investing over €13 million across Group companies sites across Ireland and revitalise our business since 2013 when the airport became independent. in 2016. Since the formation of Shannon Group accommodation to entice investment and jobs Passenger numbers at the airport increased for in September 2014, we have invested almost €30 to the region. the fourth consecutive year with over 1.748 million across a wide range of projects. million flying through the airport, a 2% increase In 2016, Shannon Airport undertook a significant SHANNON GROUP – A CATALYST FOR GROWTH on 2015. Since becoming independent the airport capital investment programme to enhance the The success of Shannon Group and the economic has recorded cumulative passenger growth of passenger experience at the historic terminal success of the West and Mid-West region are over 24%. building. Over €6 million was invested in a undeniably inter-linked. The importance of direct air connectivity to range of airport initiatives including, customer key markets to enable the business community service enhancements, apron reconstruction, Shannon Group is a catalyst for growth in the deliver Foreign Direct Investment (FDI) cannot fire compliance upgrades and energy efficiency region. The airport provides vital access for be overstated. It remains crucial for the projects. tourists and businesses; Shannon Commercial development of the regional economy. We look In 2016, the Group’s property company, Shannon Properties provides quality business forward to working with all of our stakeholders Commercial Properties, which owns 2.6 million accommodation to attract investment and jobs, to continue the development of Shannon Airport sq ft of building space, over 300 buildings and in and Shannon Heritage provides ‘reasons to visit’ and the wider region. excess of 1,600 acres of development land across for overseas visitors each year. The Group directly Shannon Heritage, the largest operator of day counties Clare, Limerick, Tipperary, Offaly and employs over 680 people in high season and and night-time tourist attractions in Ireland, also Kerry, made significant progress delivering its €26 though its activity stimulates employment right saw significant growth in 2016. Visitor numbers million phase one redevelopment of Shannon Free across the region. at Shannon Heritage’s portfolio of owned and Zone. By the end of 2017, Shannon Commercial It directly contributes to Ireland’s economic managed day visitor attractions and evening Properties will have developed over 200,000 sq prosperity and by continuing to deliver on our entertainment venues in Clare, Limerick, Galway ft of state-of-the-art advanced manufacturing, plans, we hope that we can further grow Shannon and Dublin grew by 30%. warehousing and office space. This new business Group’s impact to benefit even more people in In all, over 904,000 people visited the popular accommodation will increase our ability to attract the region. visitor attractions, which include Bunratty Castle investment and jobs to the area. and Folk Park, King John’s Castle and Malahide Shannon Group continues to support and develop NEW SHANNON GROUP CEO TO LEAD Castle and Gardens. Also included in these the International Aviation Services Centre cluster GROWTH STRATEGY figures, for the first time, is the Shannon Heritage of over 50 aviation and aerospace businesses In June 2016, the Board appointed Matthew managed GPO Witness History visitor centre, at Shannon. 2016 saw the award of funding Thomas as CEO of Shannon Group plc. Matthew which opened in Dublin at the end of March 2016 from Enterprise Ireland towards an Enterprise has over 20 years’ experience and a deep and attracted over 160,000 visitors in its first and Incubation Centre, to be located at Shannon knowledge of the aviation industry combined 9 months. Airport House, in Shannon Free Zone, which will with significant commercial expertise. We are open in mid-2017. very fortunate to have secured a chief executive While Shannon Group achieved a solid of Matthew’s ability and proven international performance in 2016, further work is required COLLABORATION AND PARTNERSHIP experience to lead our growth strategy. to ensure continued business improvement by creating cost efficiencies across Group ARE CRUCIAL Looking at the current national and international IMPROVED BUSINESS PERFORMANCE companies. landscape, it is clear that there are economic Shannon Group made steady progress in 2016 challenges ahead. We know that strong regions recording turnover of €67.2 million and EBITDA BUILDING FOR THE FUTURE Much of Shannon Group’s focus in 2016 centred make for a strong national economy. Balanced Annual Report and Accounts I 2016 7 “With the continued commitment of all stakeholders working together, we can help shape a better future for the benefit of the people of this region.” regional development is critical to the economy The launch of ‘Realising our Rural Potential’, the The skills and expertise of the Shannon Group of the region to enable it to unlock and reach its €60 million action plan for rural development, Board have been vital in overseeing the realisation potential.