For the first time in six years, the company contracted by An Garda Síochána to operate the GoSafe speeding camera vans around the country has published detailed accounts. Road Safety Operations Ireland Ltd had last done so for the fifteen months ending in March 2012, attracting media attention for the €2.3 million pre-tax profit it had generated in that first period of operation.

Within weeks of filing its 2012 figures, Road Safety Operations Ireland re-registered as an unlimited company owned by two holding companies in the Isle of Man and became exempt from publishing accounts – until recently. Legislation adopted in application of an EU directive forces unlimited companies to publish accounts from 2018 if they are ultimately owned by limited entities, which is the case for Road Safety Operations Ireland. Belatedly, it has now published a filing for 2018 with more details than ever before.

As previously revealed by The Currency through the accounts of one of its parents, French road concessions manager Egis Projects, the company running the GoSafe speeding cameras again had profits in excess of €2 million in 2018. Yet full accounts for Road Safety Operations Ireland reveal that much larger sums have been flowing to the private investors behind the company: Egis, Co Kerry-based businessman Xavier McAuliffe and Australian technology provider RedFlex.

The Currency understands that Egis, which is majority-owned by the French state, is now unhappy with the Isle of Man holding structure, but it has so far remained in place.

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According to a 2013 report by the Comptroller and Auditor General (C&AG), the Government approved the principle of a tender process by An Garda Síochána to outsource speed detecting cameras as early as July 2005. At the time, an expert report estimated that the system would cost in the region of €4.4 million per year for around 3,000 hours of monitoring each month. This was expected to generate between €40 million and €70 million in speeding fines annually.

“Revenue would fall in subsequent years as compliance with speed limits increased, but would remain in excess of the cost of operating the system,” the C&AG quoted from the 2005 expert report. As the Gardaí went ahead with the procurement process in 2007, annual revenue estimates were revised down to €27 million. “The advice to Government in June 2009 noted the difficulties in accurately estimating this figure but the indications were that the revenue would exceed costs,” the C&AG reported.

In fact, recent freedom of information disclosures from An Garda Síochána show that the force paid €14.7 million for the operation of the GoSafe system and collected €5.6 million in fines detected by the vans for each of 2018 and 2019, leaving the taxpayer with a €9.1 million annual shortfall. 

From family photos to speeding cameras

Listowel, Co Kerry-based Xavier McAuliffe had long experience of photography with his consumer picture printing business Spectra, which had suffered the onslaught of digital cameras. In an earlier interview, Egis Projects Ireland chief executive Steve Preece said McAuliffe was first to know about the opportunity to move into a speeding cameras contract. “He wanted to find a partner that had relationships with the government and especially the road network and procedures. But neither Egis nor Spectra had the technology, so we went to the company RedFlex which was currently operating the technology,” Preece said.

“The guards were under-resourced and it was a decision made at government level to go to the market to see can it be privately run, but still governed and ruled by the actual guards themselves. That’s how the contract came about,” Preece added. “It’s a fixed fee and we have to deliver a certain amount of hours each month.” Speeding fines are issued by Gardaí separately from the company’s accounts.

In 2009, the Government chose the GoSafe consortium formed by McAuliffe, Egis and RedFlex, which subsequently registered Road Safety Operations Ireland and began operations at the end of 2010. 

The company is ultimately owned by Egis Projects SA in France and Naica Ltd in Co Kerry, each with 42 per cent, and RedFlex Traffic Systems with the remaining 16 per cent. Naica itself is ultimately owned by McAuliffe and Ivor Browne, who are also directors of Road Safety Operations Ireland. Browne’s name appeared as Ivor Browne McAuliffe in earlier company filings.

Naica was formed in 2018 and acquired McAuliffe Investments Ltd’s stake in the speeding camera business a few months later. At the end of the year, it booked €511,756 worth of “participating interests/joint ventures shares” as the only fixed asset on its balance sheet. This is equivalent to the share of the previous year’s operating profit from Road Safety Operations Ireland attributable to McAuliffe’s stake.

Profits rose by €1m in 2018

Road Safety Operations Ireland receives a steady annual fee to run the GoSafe service. The €14.7 million paid by An Garda Síochána are for 7,400 enforcement hours and a maximum of 100 survey hours (without fines) per month, according to documents published by the force. This translated into €12 million in revenue excluding Vat for the company in 2018: €11.7 million for monitoring hours during which enforcement occurs; €158,220 for survey hours; and €81,421 for miscellaneous services (GoSafe operators can be requested to attend court hearings, for example). 

An Garda Síochána is the only customer of Road Safety Operations Ireland, which directors acknowledge presents the business with a low risk profile.

The company generated €2.5 million in operating profit in 2018, up more than €1 million on the previous year. This was largely due to a reduction in payroll costs, as it cut staff numbers from 115 to 109, and in management fees – more on these later. Pre-tax profit rose accordingly, to €2.4 million. Road Safety Operations Ireland paid €334,003 in corporation tax, leaving a net profit of just over €2 million. 

This came on top of €3.5 million in retained earnings from previous years, allowing the company to pay out €3.3 million dividends for 2018 – nearly twice as much as the previous year. Egis and McAuliffe each got €1.4 million, and RedFlex received more than half a million. 

In total, the speeding camera company booked nearly €6 million in payments to its parents – exactly half its revenue.

Dividends, however, represent only part of the payments made by Road Safety Operations Ireland to its three parents that year. They all recharged management fees worth €906,398 to RedFlex, €872,748 to McAuliffe and €455,604 to Egis. There were also unspecified “other” payments worth a combined €417,178 to the three ultimate shareholders. In total, the speeding camera company booked nearly €6 million in payments to its parents – almost exactly half its revenue.

In addition, “the company rented a number of depots for housing vehicles throughout the country totalling €267,000 from Karwall Ltd,” the accounts state. Karwall is a company co-owned by McAuliffe, his business partner in the Lyrath Hotel Lorraine Walsh, and members of the Roche family in Kilkenny. Including this amount, McAuliffe companies received €2.6 million in total from Road Safety Operations Ireland in 2018.

“Satisfactory” performance

The company’s balance sheet shows that it had €3.1 million in total equity at the end of that year, and €1.9 million in cash. All its borrowings were under the form of leases used to finance its equipment, with €1.6 million in liabilities being repaid at a rate of just over half a million each year.

In August 2016, An Garda Síochána renewed the GoSafe contract for another six years. This led Road Safety Operations Ireland to launch a round of fresh investment in 2017, acquiring €2 million worth of plant and equipment and €1.4 million of vehicles. All were financed through leases over five to six years. Significant investment stopped in 2018.

“The directors cautiously welcome the recorded profit for the year. However, the directors warn that future years will be challenging given that the main contract for the provision and operation of safety cameras in Ireland for An Garda Síochána is for a fixed term with no opportunity for price increases,” they wrote in accounts for 2018. “Costs in key categories increase faster than inflation and significant future investment in the operation is required to maintain existing standards and to position the company for future opportunities.”

So far, however, directors have described the company’s performance as “satisfactory”.