For the year ended 31st December 2016
CIÉ Group’s (“the Group”) objectives are to deliver reliable, safe and accessible public transport services in as efficient a manner as possible, while meeting our customers’ needs. This focus also enables the Group to meet its goal of supporting the growth of the Irish economy, and social cohesion, through the provision of quality public transport services. In all matters, the Group
works in collaboration with its shareholder, the Minister for Transport, Tourism and Sport and with the regulator, the National Transport Authority (“NTA”).
Through its subsidiary companies, the Group operates the most comprehensive public transport network within the State. As such, working with the Department of Transport, Tourism and Sport (“DTTaS”) and the NTA, it has the unique capacity to manage cost effective delivery of high quality public transport solutions across Ireland.
The NTA has commenced competitive tender processes for contracts in respect of approximately 10% of bus services currently provided by Dublin Bus and Bus Éireann. Both companies have the capability to successfully deliver the requirements of these contracts. Their tender submissions demonstrate our capacity to provide high quality reliable services at a reasonable cost. However, should either tender submission be unsuccessful we will face the challenge of adjusting our cost base in response to a reduced level of activity. This challenge reinforces the importance of ensuring that, across the Group, costs remain competitive on an ongoing basis.
The Group is pleased to present its 2016 Annual Report, which shows that the number of customer journeys taken across its services has increased by 10.2 million (2.8%), to 251.2 million leading to a €29 million (3.8%) increase in the Group’s fare revenue.
Dublin Bus is Ireland’s largest public transport provider. It is a core element of the Dublin transport network, and its effective operation is central to the economy of the Greater Dublin Area.
During 2016, Dublin Bus grew its service offering to a point where it carried 128.2 million passengers. With the support of the NTA, Dublin Bus put 110 new buses on the road; opened up three new routes serving Dublin City University; and played a key role in supporting 1916 commemoration events in Dublin - carrying over 1.5 million passengers who visited Dublin city centre to enjoy hundreds of events across the capital. The challenge will be to continue to meet growth in demand in an efficient manner.
Despite a very disappointing financial result, Bus Éireann continued its strong focus on the delivery of a safe and efficient network of services for all customers. An additional 1.3 million passengers availed of Bus Éireann’s services, bringing overall passenger numbers to 80.2 million for the year.
Bus Éireann has identified initiatives to improve its cost base though proposals encompassing work practice changes, a rationalisation of its workforce, some commercial route closures and an overall cut to discretionary spends. The co-operation of staff with these proposals has been achieved with the assistance of the Workplace Relations Commission and the Labour Court.
Management intend to implement these cost reduction measures during 2017 and are confident that this will position Bus Éireann to reverse its recent poor financial performance, and provide a foundation for a viable and sustainable business for the long term.
During 2016 Iarnród Éireann grew its Intercity and Commuter (including DART) passenger journeys by 7.8%, and carried 42.8 million people on its trains.
Maintenance of the highest standards of railway safety is a principal focus of Iarnród Éireann. The Company can be justifiably proud of its safety performance during the year.
An essential element in maintaining that safety performance is ensuring that the Railway Service is adequately and sustainably funded.
The Group looks forward to the outcome of the NTA’s public consultation arising from the Rail Review; and are particularly pleased to welcome the government’s improved funding commitment contained in Budget 2017. This will enable Iarnród Éireann to address urgent fleet and infrastructure maintenance requirements, and develop significant safety investment programmes in Automatic Train Protection and train radio upgrades.
CIÉ Tours experienced a record year in 2016, and brought almost 45,000 tourists into Ireland and Great Britain from the US, and beyond. Improved air access and positive perceptions of Ireland as a travel destination contributed to 2016 being one of the most successful years ever for inbound tourism.
CIÉ Tours is successfully meeting the challenges in the industry, which include accommodation shortages in the Dublin region, and is preparing for any impacts that Brexit may have on the free flow of people between Ireland, Northern Ireland and Great Britain.
During the year, CIÉ has actively engaged with the “Rebuilding Ireland” initiative to identify which of its properties might be suitable and attractive for the development of additional housing.
As development activity increases, CIÉ will continue to secure long-term value from the commercialisation of its property portfolio, which ultimately belongs to the State.
All property income is allocated entirely to the Operating Companies thereby reducing the total cost to the State of providing Public Transport Services.
The Group administers the Pension Schemes for all employees of the subsidiary companies.
Despite strong investment returns during the year, the pension deficit increased to €730 million, as the future cost of benefits payable by the Schemes grew substantially. The additional cost of pension provision is driven largely by the impact of pay awards, coupled with the very low interest rate environment.
It is accepted that neither the Group nor the active members of the Schemes have the capacity to eliminate this substantial deficit through increased contributions. An agreed basis must therefore be found to make the changes necessary to eliminate the deficit in the Schemes and thus remove the risk to the future pension benefits of our staff.
Furthermore, the Group’s Pension Schemes are no longer performing in line with the expectations of the Funding Plan agreed with the Pensions Authority in 2013. As a result, a revised plan must be prepared and submitted to the Authority during 2017.
While some progress has been made during 2016 towards developing proposals to de-risk the Schemes, progress has been slow. The challenge in the current year is to re-double our efforts to secure change on an agreed basis. The aim is to reduce the risk to the Schemes and return them to solvency by 2023 - the timeframe determined by the Pensions Authority.
On behalf of the Board, I would like to express my thanks to the Minister for Transport, Tourism and Sport, Mr. Shane Ross and to his predecessor Mr. Paschal Donohoe, and their officials in the DTTaS. Their support to the Group during the year is recognised and appreciated.
The Group works closely with the DTTaS and with the NTA. Collaborative engagement enables us to work with the Shareholder and the Authority to deliver solutions that provide real value to customers. I would like to acknowledge the assistance of the officials of both in this active collaborative process.
CIÉ is fortunate to be in a position to avail of the contribution of its Board Members who provide a valuable blend of expertise and experience to assist in the governance of the organisation. I wish to thank the Board for their service during the year.
In conclusion, I would also like to thank the Board Members and Directors of all the subsidiary companies for their help and support to their respective companies, and to CIÉ. I appreciate their giving of their time to serve on the Boards and on the many vital committees and advisory groups within the Group.