TIDMICGC
7 MARCH 2019
Preliminary Statement of Results for the year ended 31 December 2018
Irish Continental Group (ICG) the leading Irish-based maritime transport
group, reports a solid financial performance for the year ended 31
December 2018.
Highlights
Financial summary
2018 2017 Change
Revenue EUR330.2m EUR335.1m -1.5%
EBITDA (pre non-trading items) EUR68.4m EUR81.0m -15.6%
EBIT (including non-trading items) EUR60.0m EUR89.0m -32.6%
Basic earnings per share 30.4c 44.1c -31.1%
Adjusted earnings per share 23.1c 31.0c* -25.5%
Net (debt)/cash EUR(80.3)m EUR39.6m -
Volume movements
2018 2017
'000 '000 Change
RoRo units 283.7 287.5 -1.3%
Cars 392.7 424.0 -7.4%
Containers shipped (teu) 327.6 321.4 +1.9%
Port lifts 310.0 296.8 +4.4%
* The prior year adjusted earnings per share has been represented to
take account of the tax effect of the non-trading item.
** This preliminary statement contains certain alternative performance
measures including EBITDA, EBIT, and adjusted earnings per share. An
explanation of these measures together with other abbreviated terms is
provided at note 10 on page 27 of the Condensed Financial Statements.
-- EBITDA reduction of EUR12.6 million principally due to disruption in
Irish Ferries schedules arising from technical issues which are now
resolved.
-- Fuel costs increased EUR7.9 million (19.6%) to EUR48.2 million.
-- Jonathan Swift sold in April 2018 for a cash consideration of EUR15.5
million (profit before tax of EUR13.7 million) following the May 2017
sale of the Kaitaki for a cash consideration of EUR45.0 million (profit
before tax of EUR28.7 million).
-- W.B. Yeats cruise ferry delivery delay affected planned schedules in
2018.
-- Year end net debt after total capex of EUR176.1 million was EUR80.3
million, 1.2x EBITDA (pre non-trading items).
-- Shareholder funds increase of 13.0% to EUR252.9 million.
-- Second new cruise ferry investment of EUR165.2 million announced during
the year.
-- Interim dividend increased by 5.0% to 8.56 cent, (2017: 8.15 cent).
Commenting on the results Chairman John B McGuckian said,
2018 was a challenging year operationally but one in which significant
progress was made in the strategic development of the Group. Schedule
disruptions due to technical issues on our vessel Ulysses and the late
delivery of the W.B. Yeats combined to lower our profit performance over
the prior year. Nevertheless, despite these operational difficulties
during 2018 the markets in which we operate remained robust and our long
term strategic plans for the future of our fleet remain intact,
progressing well with the delivery of the W.B. Yeats. Whilst mindful of
the uncertainty created by the proposed exit of the UK from the EU,
trading in the year to date is encouraging.
6 March 2019
Enquiries:
Eamonn Rothwell, Chief Executive Tel: +353 1 607 5628 Email:
Officer info@icg.ie
David Ledwidge, Chief Financial Tel: +353 1 607 5628 Email:
Officer info@icg.ie
Media enquiries:
Q4 Public Relations Tel: +353 1 475 1444 Email: press@q4pr.ie
Results
Financial Highlights
2018 2017 Change
Revenue EUR330.2m EUR335.1m -1.5%
EBITDA (pre non-trading items) EUR68.4m EUR81.0m -15.6%
EBIT* (including non-trading items) EUR60.0m EUR89.0m -32.6%
*Non-trading items EUR13.7 million 31 December 2018 (31 December 2017:
EUR28.7 million)
Irish Continental Group (ICG) produced another resilient performance in
the face of operational difficulties encountered during the year
combined with year on year increased fuel costs as a result of higher
average global oil prices. Revenue for the year decreased by 1.5% to
EUR330.2 million (2017: EUR335.1 million) with revenue growth in the
Container and Terminal operations offset by a decrease in the Ferries
division.
EBITDA for the year decreased by 15.6% to EUR68.4 million (2017: EUR81.0
million) primarily as a result of the technical difficulties with the
Ulysses, increased fuel prices, the late delivery of the W.B. Yeats and
planned reduction in external charter earnings. During the year we
completed the sale of the Jonathan Swift generating a profit on sale
before tax of EUR13.7 million. The ship was sold in April 2018 to
Balearia Eurolineas Maritmas SA for an agreed consideration of EUR15.5
million, payable in cash, which was received on delivery and is being
utilised for general corporate purposes. The Jonathan Swift was replaced
in our fleet by the Dublin Swift which had previously been on external
charter for 11 months in the prior year. Combined with the absence of
charter revenue from the Kaitaki which was sold in May 2017 generating a
profit before tax of EUR28.7 million, external charter revenue earnings
were EUR5.3 million lower than the prior year.
Overall Group operating profit or EBIT was EUR60.0 million (2017:
EUR89.0 million). Net interest charges decreased to EUR0.8 million from
EUR1.3 million representing the lower cost of committed facilities
arranged during the prior year. The taxation charge decreased EUR3.0
million to EUR1.4 million mainly due to a reduction of tax on
non-trading items of EUR3.8 million offset by a higher effective tax
rate on non-tonnage tax activities.
The W.B. Yeats entered service with Irish Ferries on 22 January 2019.
Operating initially on the Dublin/ Holyhead service the vessel is
scheduled to switch to the Dublin/ Cherbourg route during March. The
addition of W.B. Yeats provides the Group with greater route planning
flexibility going forward which will enhance the Group's revenue earning
capability. The Dublin Swift fast craft is expected to recommence the
fast crossing service between Dublin/ Holyhead also in March following
winter layup and the addition of further vehicle deck capacity.
The container vessel MV Ranger remains on time charter to a third party
and is currently trading in North West Europe while the MV Elbtrader, MV
Elbcarrier and MV Elbfeeder remain on time charter to the Group's
container shipping subsidiary Eucon.
The charter agreement on the vessel MV Epsilon was renewed until
November 2020 with an agreement for a further one year option on the
vessel.
The Group contracted for a second new cruise ferry to be built at a
contract price of EUR165.2 million by the German shipyard Flensburger
Schiffbau-Gesselschaft & Co.KG ("FSG") who built the W.B. Yeats and is
scheduled for delivery in late 2020. It is planned that this cruise
ferry will replace the Ulysses on the peak sailings between Dublin --
Holyhead, with the Ulysses becoming the second vessel on that route and
the chartered vessel Epsilon redelivered to her owners. The ship will
give ICG an increase in effective capacity from 200 freight units to 300
freight units on peak sailings. This will allow ICG to continue growing
on the key Dublin -- Holyhead route into the future.
Operational Review
Irish Continental Group operates through two divisions; the Ferries
Division operating under the Irish Ferries brand offering passenger and
RoRo freight services. The division is also engaged in ship chartering
activities with vessels chartered within the Group and to third parties.
The Container and Terminal Division includes the intermodal shipping
line Eucon as well as the division's strategically located container
terminal in Dublin and its terminal operations in Belfast.
Ferries Division
Financial Highlights
2018 2017 Change
Revenue* EUR196.2m EUR212.1m -7.5%
EBITDA (pre non-trading items) EUR53.6m EUR67.3m -20.4%
EBIT** (including non-trading items) EUR47.9m EUR77.8m -38.4%
*Includes intersegment revenue of EUR8.1 million (2017: EUR7.7 million)
**Non-trading items EUR13.7 million 31 December 2018 (2017: EUR28.7
million)
Operational Highlights
2018 2017 Change
Volumes '000 '000
Cars 392.7 424.0 -7.4%
Passengers 1,502.4 1,649.8 -8.9%
RoRo freight units 283.7 287.5 -1.3%
Revenue was 7.5% lower at EUR196.2 million (2017: EUR212.1 million).
EBITDA in the division decreased by 20.4% to EUR53.6 million (2017:
EUR67.3 million) primarily due to higher fuel costs which increased by
EUR4.5 million, late delivery of W.B. Yeats, technical difficulties with
the Ulysses, and a reduction in external charter earnings. The division
generated a profit on the sale of the Jonathan Swift of EUR13.7 million
in the year, having generated a profit on the sale of the Kaitaki in
2017 of EUR28.7 million. These have been reported as non-trading items.
EBIT decreased by 38.4% to EUR47.9 million (2017: EUR77.8 million),
reflecting the result of non-trading items and the reduction in EBITDA.
Car and Passenger markets
It is estimated that the overall car market, to and from the Republic of
Ireland, fell by approximately 2.0% in 2018 to 790,600 cars, while the
all-island market, i.e. including routes into Northern Ireland, is
estimated to have decreased by 1.8%. Irish Ferries' car carryings were
negatively impacted during the year, at 392,700 cars, (2017: 424,000
cars), down 7.4% on the previous year due to the division's operational
difficulties. In the first half of the year Irish Ferries car volumes
fell by 2.0% while in the second half of the year volumes decreased by
11.1%.
The total sea passenger market (i.e. comprising car, coach and foot
passengers) to and from the Republic of Ireland decreased by 2.9% on
2017 to a total of 3.04 million passengers, while the all-island market
decreased by 2.2%. Irish Ferries' passenger numbers carried decreased by
8.9% to 1.502 million (2017: 1.650 million). In the first half of the
year, Irish Ferries passenger volumes fell by 2.9% and in the second
half of the year, the decrease in passenger numbers was 13.3%.
The second half performance largely reflects the effects of the schedule
disruption on the Dublin/ Holyhead route due to technical difficulties
with the Ulysses and the strategic operational decision not to operate
the fastcraft Dublin Swift over the winter months with effect from 9
October 2018. This decision was made with a view to optimise capacity
while the W.B. Yeats is operating on this route up to mid-March. This
resulted in a combined reduction of -10.8% sailings in the second half
of 2018 versus the prior year.
RoRo Freight
The RoRo freight market between the Republic of Ireland, and the U.K.
and France, continued to grow in 2018 on the back of the Irish economic
recovery, with the total number of trucks and trailers up 3.4%, to
approximately 1,032,400 units. On an all-island basis, the market
increased by approximately 2.5% to 1.86 million units.
Irish Ferries' carryings, at 283,700 freight units (2017: 287,500
freight units), decreased by 1.3% in the year with volumes up 3.2% in
the first half and down 5.6% in the second half.
The performance in the second half reflects the -7% reduction in Freight
capacity offered on the central corridor in 2018 compared to the
previous year due to the schedule disruptions of the Ulysses.
Chartering
Overall external charter revenues were EUR2.1 million in 2018 (2017:
EUR7.4 million), representing a planned reduction in external chartering
in respect of the Kaitaki and Dublin Swift (Ex Westpac Express).
Of our four owned LoLo container vessels, three vessels are currently on
year-long charters to the Group's container shipping subsidiary Eucon on
routes between Ireland and the continent whilst the fourth is on a short
term charter to a third party.
In the prior year the division had generated revenues external to the
group of EUR4.7 million from the charter of the Kaitaki and Dublin Swift
(Ex Westpac Express). The Kaitaki was sold in May 2017 and the Dublin
Swift returned from an external charter in November 2017. During the
year the Dublin Swift underwent an extensive refurbishment programme to
bring her up to Irish Ferries passenger service standards prior to
entering service with Irish Ferries in April 2018. The existing
fastcraft, the Jonathan Swift, was then sold generating a profit on
disposal of EUR13.7 million which is reported as a non-trading item in
the current year.
Container and Terminal Division
Financial Highlights
2018 2017 Change
Revenue* EUR143.3m EUR131.9m +8.6%
EBITDA EUR14.8m EUR13.7m +8.0%
EBIT EUR12.1m EUR11.2m +8.0%
*Includes intersegment revenue of EUR1.2 million (2017: EUR1.2 million)
Operational Highlights
2018 2017 Change
Volumes '000 '000
Containers shipped (teu) 327.6 321.4 +1.9%
Port lifts 310.0 296.8 +4.4%
Revenue in the division increased to EUR143.3 million (2017: EUR131.9
million). The revenue is derived from container shipping operations at
Eucon and container handling activities at our terminals in Dublin and
Belfast. Eucon operates a mix of domestic door-to-door and quay-to-quay
services with 70% (2017: 69%) of shipping revenue generated from imports
into Ireland. With a flexible chartered fleet and slot charter
arrangements Eucon was able to adjust capacity and thereby continue to
meet the requirements of customers in a cost effective and efficient
manner. The terminal operations offer container stevedoring services and
ancillary services internally to Eucon and to third parties. EBITDA in
the division increased to EUR14.8 million (2017: EUR13.7 million) while
EBIT rose 8.0% to EUR12.1 million (2017: EUR11.2 million), reflecting
the increased activity from container shipping operations in Eucon and
container handling activities at our terminals in Dublin and Belfast.
In Eucon overall container volumes shipped increased by 1.9% compared
with the previous year to 327,600 teu (2017: 321,400 teu), with import
volumes up 3.2% and export volumes in line with 2017. The resulting
revenue increase was partially offset by a EUR3.4 million increase in
fuel costs. In April 2018 we added an additional vessel M/v Victoria
which increased the frequency on our Antwerp to Dublin route to 3
sailings per week in each direction.
Containers handled by the Group's terminal operations in Dublin
Ferryport Terminals (DFT) and Belfast Container Terminal (BCT) rose by
4.4% at 310,000 lifts (2017: 296,800 lifts). DFT's volumes grew by 5.6%,
while BCT's volumes increased by 2.8%. The deployment at DFT after a
period of commissioning and testing of two electrically operated rubber
tyred gantries (RTG) incorporating the latest technologies to allow for
remote and semi-automated operations will further improve the efficiency
of our DFT terminal.
Group Finance Review
Cash Flow
A summary cash flow is presented below:
2018 2017
EURm EURm
Operating profit (EBIT)* 60.0 89.0
Non trading items (13.7) (28.7)
Depreciation 22.1 20.7
EBITDA* (pre non-trading items) 68.4 81.0
Working capital movements (3.8) (1.9)
Pension payments in excess of service costs (1.6) (1.1)
Other movements 1.7 0.5
Cash generated from operations 64.7 78.5
Interest paid (1.0) (1.1)
Tax paid (2.2) (5.6)
Capex excluding strategic capex (15.6) (7.9)
Free cash flow before strategic capex* 45.9 63.9
Strategic capex (160.5) (9.1)
Free cash flow after strategic capex (114.6) 54.8
Proceeds on disposal of property, plant and equipment 17.4 44.7
Dividends (23.5) (22.2)
Share issue 0.6 3.3
Settlement of equity plans through market purchase
of shares - (3.0)
Net cash flows (120.1) 77.6
------------------------------------------------------- ------- ------
*Additional information in relation to these Alternative Performance
Measures ("APMs") is disclosed on page 27.
EBITDA for the year was EUR68.4 million (2017: EUR81.0 million). There
was a net outflow of working capital of EUR3.8 million, due to an
increase in receivables of EUR4.6 million and an increase in inventories
of EUR0.6 million, and partially offset by an increase in payables of
EUR1.4 million. The Group made payments, in excess of service costs to
the Group's pension funds of EUR1.6 million. Other net cash inflows
amounted to EUR1.7 million resulting in cash generated from operations
amounting to EUR64.7 million (2017: EUR78.5 million).
Interest paid was EUR1.0 million (2017: EUR1.1 million) while taxation
paid was EUR2.2 million (2017: EUR5.6 million).
Maintenance capital expenditure was EUR15.6 million including the annual
overhaul of vessels, refurbishment of the Dublin Swift and container
fleet renewal. Free cash flow after maintenance capex was EUR45.9
million before expenditure on vessels of EUR160.5 million including the
final instalment on the W.B. Yeats and initial contract deposit on the
second new vessel.
Net debt at year end was EUR80.3 million in comparison to a net cash
position of EUR39.6 million at 31 December 2017.
Balance Sheet
A summary balance sheet is presented below:
2018 2017
EURm EURm
Property, plant & equipment and intangible assets 308.1 250.0
Retirement benefit surplus 2.5 8.1
Other current assets 79.0 44.9
Cash and bank balances 124.7 90.3
Total assets 514.3 393.3
Non-current borrowings 204.7 50.0
Retirement benefit obligations 4.2 3.4
Other non-current liabilities 1.0 1.5
Current borrowings 0.3 0.7
Other current liabilities 51.2 113.9
Total liabilities 261.4 169.5
Total equity 252.9 223.8
Total equity and liabilities 514.3 393.3
The total net deficit of all defined benefit pension schemes at 31
December 2018 was EUR1.7 million in comparison to EUR4.7 million surplus
at 31 December 2017. The movement reflects an actuarial loss of EUR8.1
million comprised of actuarial losses on scheme assets in excess of
expected returns of EUR14.7 million, offset by remeasurement gains from
adjustments of scheme liabilities. The principal movement in other
current assets arises from prepayments under the second new build
contracted. The principal movement in other current liabilities relates
to release of an accrual for estimated stage of completion of W.B. Yeats
at 31 December 2017 following delivery of that vessel during the year.
Shareholders' equity increased to EUR252.9 million from EUR223.8 million
at 31 December 2017. The main reasons for the movement were due to a
profit for the financial period of EUR60.0 million, offset by an
actuarial loss arising on retirement benefit schemes of EUR8.1 million
and dividends paid of EUR23.5 million.
Financing
The borrowing facilities available to the Group at 31 December 2018 were
as follows;
Borrowing Facilities
Committed Committed
facilities facilities
Facility Committed drawn undrawn
EURm EURm EURm EURm
Revolving credit 125.0 75.0 - 75.0
Private placement loan
notes 240.2 50.0 50.0 -
Bank term loans 155.0 155.0 155.0 -
Overdraft and other 16.0 16.0 0.6 15.4
536.2 296.0 205.6 90.4
------------------------- -------- --------- ----------- -----------
At 31 December 2018 the Group had total lending facilities of EUR536.2
million available of which EUR296.0 million were committed facilities.
During the year, the Group drew down funding of EUR155.0 million term
loan from facilities provided by the European Investment Bank to fund
the two new cruise ferries including the W.B. Yeats. At 31 December
2018, all the amounts drawn, EUR205.6 million in total, have been
contracted at a weighted average fixed interest rate of 1.60% over the
remaining terms of between 4 and 11 years. In addition to the committed
lines of credit, the Group had arranged uncommitted facilities of
EUR240.2 million with utilisation dates expiring between 1.5 and 5
years.
These facilities together with cash from operations will be used to
support the long-term investment opportunities including the delivery of
the second cruise ferry.
Fuel
2018 2017 Change
Fuel costs EUR48.2m EUR40.3m +19.6%
Group fuel costs in 2018 amounted to EUR48.2 million (2017: EUR40.3
million). The increase in fuel cost was principally attributable to
higher global fuel costs with the average Brent crude price increasing
25% in euro terms over the prior year.
The Group has in place a transparent fuel surcharge mechanism for
freight customers across the Group which mitigated the increase in Euro
fuel costs through increased surcharge revenues. In the reporting period
the Group had not engaged in financial derivative trading to hedge its
fuel costs.
Dividend
During the year the Group paid the final dividend for 2017 of 8.15 cent
per ICG Unit. The Group also paid an interim dividend for 2018 of 4.21
cent per ICG Unit, and the Board is proposing a final dividend of 8.56
cent per ICG Unit, payable in June 2019, making a total dividend for
2018 of 12.77 cent per ICG Unit, an increase of 5.0% on the prior year.
Subject to shareholder approval at the Annual General Meeting, the final
dividend will be paid on 7 June 2019 to shareholders on the register at
close of business on 17 May 2019. Irish dividend withholding tax will be
deducted where appropriate.
Proposed exit of United Kingdom from the European Union
It remains unclear what the timing and manner of the proposed exit of
the United Kingdom from the EU will be. In as much as is feasible we
have engaged with our port operators and regulatory authorities to
minimise the possibility of any port disruptions. It is the Group's view
that over the longer term trade between Ireland and the United Kingdom
will remain strong underpinned by cultural and commercial linkages. The
Group's investment in vessels is designed to provide route planning
flexibility to adapt its schedules to customer demand over the short and
long term.
Fleet
2018 was a significant year in terms of developing our fleet
configuration for the future growth of the business.
In January the Group announced the agreement with FSG for the
construction of a second new cruise ferry for a contract price of
EUR165.2 million. It is intended that this vessel will service the
Dublin/ Holyhead service alongside the existing Ulysses. With capacity
for 1,800 passengers and up to 330 freight units (5,610 lane metres) it
will offer a 50% increase in peak freight capacity compared to Ulysses.
The Dublin Swift replaced the Jonathan Swift on the Dublin/ Holyhead
fastcraft service in April. The Dublin Swift underwent an extensive
refurbishment prior to entering service and offers enhanced passenger
service standards and increased car carrying capacity compared to
Jonathan Swift. In conjunction with the introduction of the Dublin Swift
a decision was made not to operate the fastcraft service during the
winter months both from weather disruption and operational efficiency
perspectives while in anticipation of the W.B. Yeats operating on this
route. Following the introduction of the Dublin Swift, the Jonathan
Swift was sold for a consideration of EUR15.5 million with a profit on
sale of EUR13.7 million reported as a non-trading item.
The Ulysses following a 99% schedule integrity record since joining the
fleet in 2001, suffered a number of technical issues commencing with a 5
week schedule disruption in late June into July and sporadically
thereafter up to December. This required fleet reassignment at short
notice resulting in reduced capacity both during the tourism and freight
peak seasons. Overall schedule integrity in the Ferries division
(excluding fastcraft) fell from 99% recorded in the previous year to
90%. Due to leadtimes on specialist parts temporary repairs to class
regulatory standard were undertaken during 2018 with more extensive
rectification during an extended drydock in early 2019.
The W.B. Yeats was delivered to the Group at Flensburg, Germany.
Following her delivery voyage to Dublin and final commissioning and
certification she entered service with Irish Ferries on 22 January 2019
initially serving Dublin/ Holyhead before transferring to Dublin/
Cherbourg in March. The W.B. Yeats was due to enter service with Irish
Ferries during July 2018 but due to extraordinary circumstances beyond
the Group's control, the delivery of the W.B. Yeats was delayed by the
builder FSG. This necessitated Irish Ferries cancelling the 2018
schedule of this vessel due to the unavailability of a suitable
alternative vessel. Irish Ferries very much regrets the inconvenience
these cancellations caused our customers the majority of whom were
accommodated on alternative Irish Ferries sailings or via landbridge.
The vessel is now in operation bringing new standards of cruise ferry
travel to our customers with capacity for 1,885 passengers and their
cars together with up to 165 freight units. This compares with 1,450
passengers and 60 freight units with the existing Oscar Wilde. We look
forward to developing the revenue growth opportunities with this vessel.
In conjunction with the delivery of the W.B. Yeats, the Group took the
decision to concentrate its year round services to France solely on the
Dublin/ Cherbourg service. This was to facilitate the growth of direct
freight services to France and the majority of our customers who can
access Dublin Port more conveniently via the national motorway network.
While the Group had planned continuing an additional summer only service
out of Rosslare with the Oscar Wilde, this plan unfortunately had to be
cancelled following the National Transport Authority's interpretation of
the EU Regulation covering Sea Passengers discussed below, which is
especially penalising for operations out of peripheral ports like
Rosslare. The Group is exploring other opportunities for deployment of
the Oscar Wilde.
The Epsilon remains on charter with the Group until November 2020 with a
further option period of one year. This vessel alternates seasonally on
routes between Dublin/ Holyhead and Dublin/ France. It is intended to
return this vessel to owners on delivery of the second new vessel.
Legal Challenge to the National Transport Authority interpretation of
the EU Regulation no 1177/2010
Following the National Transport Authority's (NTA) interpretation of the
EU Regulation no 1177/2010 in respect of the cancellations that arose
last year resulting from the delayed delivery by FSG of our new W.B.
Yeats ship, Irish Ferries can confirm that they have taken the first
step in the legal process to challenge this decision in the courts.
Irish Ferries, having notified its customers months in advance, believes
that it took every reasonable action against the backdrop of these
extraordinary circumstances to provide its customers with alternative
travel options, from a no-quibble immediate refund to allow them to make
alternative travel plans, or facilitating alternative sailings and
landbridge (with reimbursement of fuel costs) via the UK. In addition to
offering alternative arrangements or full refunds, a goodwill gesture of
EUR150 discount for a sailing to France this year has already been
provided to all those impacted, and there has been significant take-up
of that discount voucher this year.
Irish Ferries firmly believes that consumer protection should be
reasonable, proportionate and in full compliance with the law. We also
believe that the EU Regulation covering Sea Passengers should be
comparable with other modes of transport. This is not the case under
current EU Regulations as airline passengers have no right to
compensation in the event of cancellations where they have been given a
minimum of 2 weeks' notice whereas, under the NTA interpretation of the
EU Regulation, Sea Passengers have a right to compensation even if 2
years notice is given of a cancellation.
The uncertainty caused by the NTA interpretation of the EU Regulation
covering Sea Passengers has already unfortunately led us to close one
route from Rosslare to France.
We believe it is in the best interests of our customers to protect the
viability of direct links to the Continent which is now all the more
critical against the backdrop of the proposed UK exit from the EU. These
direct links are threatened by what we strongly believe to be the NTA's
incorrect interpretation of the Regulation, and hence the importance of
proceeding with this legal challenge.
Current Trading and Outlook
Following the challenging year operationally in our Ferries Division,
our vessels are now operating on their planned schedules. The newly
introduced W.B. Yeats currently operating on Dublin/ Holyhead will
switch to the Dublin/ Cherbourg service in mid-March in conjunction with
the recommencement of our Dublin Swift fastcraft service on Dublin/
Holyhead.
In the period from 1 January 2019 to 2 March 2019 in the Ferries
Division, Irish Ferries roro freight carryings have increased to 47,500
units, an increase of 10.4% over the same period in the prior year. This
is largely attributable to the increased capacity provided by the W.B.
Yeats on the Dublin/ Holyhead route during the 2019 drydock programme,
assisted by more benign weather conditions than in the same period in
2018.
Irish Ferries tourism volumes were affected by the decision to suspend
the tourism only fastcraft services during the Winter months, together
with a later availability on our booking system of certain sailings
pending final commissioning of the W.B. Yeats. Car volumes at 31,700
cars were down 9.7%, over the similar period in 2018, while passenger
carryings at 119,000 were down 11.3%. The planned winter layup of the
Dublin Swift is instrumental to driving cost savings and operational
efficiencies.
In the Container and Terminal Division the growth trend seen in 2018 has
continued into 2019 with overall container volumes shipped up 7.5%,
while port lifts were up 5.9% in the period from 1 January 2019 to 2
March 2019 compared to the same period in the prior year.
World fuel prices strengthened over 2018, but the current levels in
early 2019 remain at manageable levels with our fuel surcharge
mechanisms partially mitigating the volatility effect.
Whilst mindful of the uncertainty created by the proposed exit of the UK
from the EU, with significantly increased fleet capacity and the new
year-round freight offering on our direct service on the Dublin/
Cherbourg route we are well placed to target volume growth in all our
markets. We look forward to leveraging the revenue generating
opportunities of our recent investments in the W.B. Yeats and Dublin
Swift.
John B. McGuckian
Chairman
Condensed Consolidated Income Statement
for the year ended 31 December 2018
Notes 2018 2017
EURm EURm
Revenue 330.2 335.1
Depreciation and amortisation (22.1) (20.7)
Employee benefits expense (22.8) (22.5)
Other operating expenses (239.0) (231.6)
46.3 60.3
Non-trading items 5 13.7 28.7
Operating profit 60.0 89.0
Finance income 0.2 -
Finance costs (1.0) (1.3)
Profit before taxation 59.2 87.7
Income tax expense 3 (1.4) (4.4)
Profit for the financial year: all attributable
to equity holders of the parent 57.8 83.3
Earnings per ordinary share
-- expressed in cent per share
Basic 30.4c 44.1c
Diluted 30.2c 43.8c
Condensed Consolidated Statement of Comprehensive Income
for the year ended 31 December 2018
2018 2017
Notes EURm EURm
Profit for the financial year 57.8 83.3
Items that may be reclassified subsequently
to profit or loss:
Net settlement of cash flow hedge - 0.2
Exchange differences on translation
of foreign operations (0.1) (0.6)
Items that will not be reclassified
subsequently to profit or loss:
Actuarial (loss)/ gain on defined
benefit pension schemes (8.1) 17.5
Deferred tax on defined benefit
pension schemes 0.1 (0.2)
Other comprehensive (expense)/ income
for the financial year (8.1) 16.9
Total comprehensive income for the
financial year: all attributable
to equity holders of the parent 49.7 100.2
Condensed Consolidated Statement of Financial Position
as at 31 December 2018
2018 2017
Notes EURm EURm
Assets
Non-current assets
Property, plant and equipment 307.7 249.5
Intangible assets 0.4 0.5
Retirement benefit surplus 8 2.5 8.1
310.6 258.1
Current assets
Inventories 3.3 2.7
Trade and other receivables 75.7 42.2
Cash and bank balances 6 124.7 90.3
203.7 135.2
Total assets 514.3 393.3
Equity and liabilities
Equity
Share capital 12.4 12.3
Share premium 19.4 18.9
Other reserves (10.8) (13.1)
Retained earnings 231.9 205.7
Equity attributable to equity holders 252.9 223.8
Non-current liabilities
Borrowings 6 204.7 50.0
Deferred tax liabilities 0.6 0.8
Provisions 0.4 0.5
Deferred grant - 0.2
Retirement benefit obligations 8 4.2 3.4
209.9 54.9
Current liabilities
Borrowings 6 0.3 0.7
Trade and other payables 49.7 112.4
Current income tax liabilities 0.2 0.9
Provisions 1.3 0.5
Deferred grant - 0.1
51.5 114.6
Total liabilities 261.4 169.5
Total equity and liabilities 514.3 393.3
Condensed Consolidated Statement of Changes in Equity
for the year ended 31 December 2018
Share Share Other Retained
Capital Premium Reserves Earnings Total
EURm EURm EURm EURm EURm
Balance at 1 January 2018 12.3 18.9 (13.1) 205.7 223.8
Impact of adopting IFRS 15 at
1 January 2018 - - - (0.1) (0.1)
Restated balance at 1 January
2018 12.3 18.9 (13.1) 205.6 223.7
Profit for the financial year - - - 57.8 57.8
Other comprehensive expense - - - (8.1) (8.1)
Total comprehensive expense for
the financial year - - - 49.7 49.7
Employee share-based payments
expense - - 2.4 - 2.4
Share issue 0.1 0.5 - - 0.6
Dividends (note 4) - - - (23.5) (23.5)
Transferred to retained earnings
on exercise of share options - - (0.1) 0.1 -
0.1 0.5 2.3 26.3 29.2
Balance at 31 December 2018 12.4 19.4 (10.8) 231.9 252.9
Analysed as follows:
Share capital 12.4
Share premium 19.4
Other reserves (10.8)
Retained earnings 231.9
252.9
Other Reserves comprise the following:
Share
Capital Options Translation
Reserve Reserve Reserve Total
EURm EURm EURm EURm
Balance at 1 January 2018 7.3 1.5 (21.9) (13.1)
Employee share-based payments
expense - 2.4 - 2.4
Transferred to retained earnings
on exercise of share options - (0.1) - (0.1)
- 2.3 - 2.3
Balance at 31 December 2018 7.3 3.8 (21.9) (10.8)
Condensed Consolidated Statement of Changes in Equity
for the year ended 31 December 2017
Share Share Other Retained
Capital Premium Reserves Earnings Total
EURm EURm EURm EURm EURm
Balance at 1 January 2017 12.2 15.7 (11.8) 128.3 144.4
Profit for the financial year - - - 83.3 83.3
Other comprehensive (expense)/
income - - (0.4) 17.3 16.9
Total comprehensive (expense)/
income for the financial year - - (0.4) 100.6 100.2
Employee share-based payments
expense - - 1.1 - 1.1
Share issue 0.1 3.2 - - 3.3
Dividends (note 4) - - - (22.2) (22.2)
Settlement of equity plans through
market purchase of shares - - - (3.0) (3.0)
Transferred to retained earnings
on exercise of share options - - (2.0) 2.0 -
0.1 3.2 (1.3) 77.4 79.4
Balance at 31 December 2017 12.3 18.9 (13.1) 205.7 223.8
Analysed as follows:
Share capital 12.3
Share premium 18.9
Other reserves (13.1)
Retained earnings 205.7
223.8
Other Reserves comprise the following:
Share
Capital Options Hedging Translation
Reserve Reserve Reserve Reserve Total
EURm EURm EURm EURm EURm
Balance at 1 January 2017 7.3 2.4 (0.2) (21.3) (11.8)
Other comprehensive (expense)/
income - - 0.2 (0.6) (0.4)
Employee share-based payments
expense - 1.1 - - 1.1
Transferred to retained earnings
on exercise of share options - (2.0) - - (2.0)
- (0.9) 0.2 (0.6) (1.3)
Balance at 31 December 2017 7.3 1.5 - (21.9) (13.1)
Condensed Consolidated Statement of Cash Flows
for the year ended 31 December 2018
2018 2017
Notes EURm EURm
Net cash inflow from operating activities 7 61.5 71.8
Cash flow from investing activities
Net proceeds on disposal of property,
plant and equipment 17.4 44.7
Purchases of property, plant and
equipment (176.1) (17.0)
Purchases of intangible assets (0.1) -
Net cash (outflow)/ inflow from
investing activities (158.8) 27.7
Cash flow from financing activities
Dividends paid to equity holders
of the Company (23.5) (22.2)
Repayments of bank borrowings - (77.7)
Repayments of obligations under
finance leases (0.7) (0.7)
Proceeds on issue of ordinary share
capital 0.6 3.3
Settlement of equity plans through
market purchase of shares - (3.0)
New bank loans raised 155.0 49.0
Net cash inflow/ (outflow) from
financing activities 131.4 (51.3)
Net increase in cash and cash equivalents 34.1 48.2
Cash and cash equivalents at the
beginning of the year 90.3 42.2
Effect of foreign exchange rate
changes 0.3 (0.1)
Cash and cash equivalents at the
end of the year 6 124.7 90.3
Notes to the Condensed Financial Statements
for the year ended 31 December 2018
1. Accounting policies
The financial information presented in this report has been prepared
using accounting policies consistent with International Financial
Reporting Standards (IFRSs) as adopted by the European Union and as set
out in the Group's annual financial statements in respect of the year
ended 31 December 2017 except as noted below. The financial information
does not include all the information and disclosures required in the
annual financial statements. The Annual Report will be distributed to
shareholders and made available on the Company's website www.icg.ie in
due course. It will also be filed with the Company's annual return in
the Companies Registration Office. The auditors have reported on the
financial statements for the year ended 31 December 2018 and their
report was unqualified and did not contain any matters to which
attention was drawn by way of emphasis. The financial information for
the year ended 31 December 2017 represents an abbreviated version of the
Group's statutory financial statements on which an unqualified audit
report was issued and which have been filed with the Companies
Registration Office.
Basis of preparation and accounting policies
The financial information contained in this Preliminary Statement has
been prepared in accordance with the accounting policies set out in the
last annual financial statements with the exception of changes in
accounting policy in respect of IFRS 9, Financial Instruments and IFRS
15, Revenue from Contracts with Customers which are described below.
The following standards are effective from 1 January 2018.
IFRS 9 Financial Instruments
In the current period the Group has applied IFRS 9 Financial Instruments
(as revised in July 2014) and the related consequential amendments to
other IFRSs. IFRS 9 introduces new requirements for 1) the
classification and measurement of financial assets and financial
liabilities, 2) impairment for financial assets and 3) general hedge
accounting. Details of these new requirements as well as their impact on
the Group's consolidated financial statements are described below.
a) Classification and measurement of financial assets
The date of initial application (i.e. the date on which the Group has
assessed its existing financial assets and financial liabilities in
terms of the requirements of IFRS 9) is 1 January 2018. Accordingly, the
Group has applied the requirements of IFRS 9 to instruments that have
not been derecognised as at 1 January 2018 and has not applied the
requirements to instruments that had already been derecognised as at 1
January 2018. Comparative amounts have not been restated.
All recognised financial assets that are within the scope of IFRS 9 are
required to be subsequently measured at amortised cost or fair value on
the basis of the entity's business model for managing the financial
assets and the contractual cash flow characteristics of the financial
assets.
The directors of the Company reviewed and assessed the Group's existing
financial assets as at 1 January 2018 based on the facts and
circumstances that existed at that date and concluded that on initial
application of IFRS 9 the impact on the Group's financial assets as
regards classification and measurement was that;
i) Financial assets previously classified as held-to-maturity and
loans and receivables under IAS 39 that were measured at amortised cost
continue to be measured at amortised cost under IFRS 9 as they are held
within a business model to collect contractual cash flows and these cash
flows consist solely of payments of principal and interest on the
principal amount outstanding.
ii) The Group does not hold any financial assets which meet the
criteria for classification at fair value reported in other
comprehensive income or fair value reported in profit and loss.
b) Impairment of financial assets
In relation to the impairment of financial assets, IFRS 9 requires the
application of an expected credit loss model as opposed to an incurred
credit loss model under IAS 39. The expected credit loss model requires
the Group to account for expected credit losses and changes in those
expected credit losses at each reporting date to reflect changes in
credit risk since initial recognition of the financial assets. In other
words, it is no longer necessary for a credit event to have occurred
before credit losses are recognised.
As at 1 January 2018, the directors of the Company reviewed and assessed
the Group's existing financial assets for impairment using reasonable
and supportable information that is available without undue cost or
effort in accordance with the requirements of IFRS 9 to determine the
credit risk of the respective items at the date they were initially
recognised. In respect of trade receivables the Group applied the
simplified approach to measuring expected credit losses using a lifetime
expected loss allowance.
The application of the expected credit loss model has not resulted in
any material change to the previously reported carrying value of
financial assets.
As at 1 January 2018, the directors of the Company reviewed and assessed
the Group's existing financial assets for impairment using reasonable
and supportable information that is available without undue cost or
effort in accordance with the requirements of IFRS 9 to determine the
credit risk of the respective items at the date they were initially
recognised. In respect of trade receivables the Group applied the
simplified approach to measuring expected credit losses using a lifetime
expected loss allowance.
The application of the expected credit loss model has not resulted in
any material change to the previously reported carrying value of
financial assets.
c) Classification and measurement of financial liabilities
IFRS 9 introduced a change in the classification and measurement of
financial liabilities relating to the accounting for changes in the fair
value of a financial liability designated as at FVTPL attributable to
changes in the credit risk of the issuer.
d) General hedge accounting
In accordance with IFRS 9's transition provisions for hedge accounting,
the Group has applied the IFRS 9 hedge accounting requirements
prospectively from the date of initial application on 1 January 2018.
Hedging positions that existed during 2017 and which were closed out by
31 December 2017 were therefore not in scope of the transition
provisions. Prior year amounts have not been restated.
The Group did not have any hedging positions in place at 1 January 2018
which were qualifying hedging relationships previously under IAS 39 and
subsequently under IFRS 9. Therefore the application of IFRS 9 hedge
accounting requirements has had no impact on the results and financial
position of the Group at 1 January 2018 or year ended 31 December 2018.
e) Disclosures in relation to the initial application of IFRS 9
The table below illustrates the classification and measurement of
financial assets and financial liabilities under IFRS 9 and IAS 39 at
the date of initial application, 1 January 2018.
Group
Original
Previous IAS 39 IFRS 9 IAS 39 IFRS 9 carrying
classification classification carrying amount amount
EURm EURm
Trade and
other Loans and
receivables receivables Amortised cost 42.2 42.2
Cash and
cash Loans and
equivalents receivables Amortised cost 90.3 90.3
Company
Original
Previous IAS 39 IFRS 9 IAS 39 IFRS 9 carrying
classification classification carrying amount amount
EURm EURm
Trade and
other Loans and
receivables receivables Amortised cost 140.6 140.6
Cash and
cash Loans and
equivalents receivables Amortised cost 27.3 27.3
The change in measurement category of the different financial assets has
had no impact on their respective carrying amounts on initial
application. There was no change in the classification and measurement
of financial liabilities on transition to IFRS 9.
The application of IFRS 9 has had no impact on the Condensed
Consolidated Income Statement, Condensed Consolidated Statement of
Comprehensive Income, Condensed Statement of Financial Position and the
Condensed Statement of Cash Flows in the year ended 31 December 2018.
IFRS 15 Revenue from contracts with customers
With effect from 1 January 2018, the Group has adopted IFRS 15 'Revenue
from contracts with customers' applying the modified retrospective
approach for the first application and has not restated the prior year
comparative figures. Using the five-step model, the Group carried out a
review of the main revenue streams applying the requirements of IFRS 15
and ensured that the same revenue recognition principles are being
applied consistently across the Group.
The principal impact for ICG as a transport service provider is that
revenue from the provision of transport services will be recognised over
the performance period of the underlying contract obligations rather
than at the single point of vessel departure. Due to seasonality of the
Group's services and the relatively short journey times the impact on
adoption was a EUR0.1 million reduction in retained earnings as
previously reported at 31 December 2017. In the year ended 31 December
2018, the effect of the change in policy on the Condensed Consolidated
Income Statement was to decrease operating profit by net EUR0.1 million.
There are a number of new standards, amendments to standards and
interpretations that are not yet effective and have not been applied in
preparing the Group Condensed Financial Statements. The principal new
standards, amendments to standards and interpretations, are as follows:
Title Effective date -- periods
beginning on or after
IFRS 16 'Leases' 1 January 2019
IFRS 17 'Insurance Contracts'* 1 January 2021*
IFRIC 23 -- 'Uncertainty over Income Tax 1 January 2019
Treatments'
Amendments to IFRS 9 'Prepayments features 1 January 2019
with Negative Compensation'
Amendments to IAS 28 'Long-term Interests 1 January 2019*
in Associates and Joint Ventures'
Annual improvements to IFRS Standards 2015-2017 1 January 2019*
Cycle
Amendments to IAS 19 'Plan Amendment, Curtailment 1 January 2019*
of Settlement'
Definition of a Business (Amendments to IFRS 1 January 2020*
3)
Definition of Material (Amendments to IAS 1 January 2020*
1 and IAS 8)
*Not yet endorsed by the EU
IFRS 16 Leases
IFRS 16 'Leases' sets out the principle for the recognition, measurement,
presentation and disclosure of leases for both lessee and lessor.
1. As Lessee
IFRS 16 eliminates the classification of leases as either operating
leases or finance leases and introduces a single lessee accounting model
where the lessee is required to recognise assets and liabilities for all
material leases.
The application of IFRS 16 to leases is not expected to have a material
effect on Group net assets, but will have a material effect individually
on gross assets and gross liabilities. The effects on Group profits
before tax is expected to be immaterial with higher depreciation and
interest charges largely offset by a reduction in operating expenses.
The Group's current banking covenants allow for the effect of the
changes arising due to the adoption of IFRS 16.
The Group will adopt the simplified transition approach and will
therefore not restate the comparative period. The estimated effects on
the Group's financial statements on adoption of the standard is
dependent on the contractual terms at date of adoption and the Group's
incremental borrowing costs together with the use of the practical
expedients.
The Group's non-cancellable lease commitments at 1 January 2019 were
EUR70.9 million. The principal leases related to long term leases of
property with outstanding terms of between 77 and 103 years, other port
operating commitments which represent right to use assets and a lease
relating to the charter of a Ro-Pax vessel.
The Group is continuing to finalise its estimate of the incremental
borrowing rate and the assessment of its implementation options under
IFRS 16 prior to reporting its 2019 results but expects to avail of the
practical expedients to exclude short term leases of less than 12 months
duration and low value leases. On that basis the Group's current best
mid-range estimates of the impact of adopting IFRS 16 is as follows;
-- on the opening statement of consolidated financial position an increase
in the carrying value of property plant and equipment of EUR31.1 million
and an increase in liabilities for right to use assets of EUR31.1 million,
having no effect on equity attributable to shareholders
-- on the full year consolidated income statement in 2019, a reduction in
operating expenses of EUR9.4 million with an increase in depreciation of
EUR8.7 million and finance costs of EUR1.0 million, a net decrease in
profit before tax of EUR0.3 million
-- on non IFRS measures to increase Group net debt by EUR31.1 million and
increase 2019 EBITDA by EUR9.4 million
The income statement effects are expected to accrue evenly over the
course of the financial year.
1. As Lessor
The adoption of IFRS 16 is not expected to significantly change the
Group's lessor accounting in respect of bareboat contract revenues and
that element of time charter contract revenues which relate to the right
to use of a vessel.
IFRS 17 Insurance Contracts
The Group is currently evaluating the impact IFRS 17 may have on the
Group financial statements which is currently not expected to be
material.
2. Segmental information
The Board is deemed the chief operating decision maker within the Group.
For management purposes, the Group is currently organised into two
operating segments: Ferries and Container & Terminal.
Revenue has been disaggregated into categories which reflect how the
nature, amount, timing and uncertainty of revenue and cash flows are
affected by economic factors. As revenues are recognised over short time
periods of no more than days, a key determinant to categorising revenues
is whether they principally arise from a business to customer or a
business to business relationship as this impacts directly on the
uncertainty of cash flows.
i) Revenue Analysis
By business segment:
2018 2017
EURm EURm
Ferries
Passenger 109.2 117.9
Freight 76.8 79.1
Charter 10.2 15.1
196.2 212.1
Container and Terminal
Freight 143.3 131.9
Inter segment revenue (9.3) (8.9)
Total 330.2 335.1
----------------------- ----- ------
By geographic origin of booking:
2018 2017
EURm EURm
Ireland 156.7 162.8
United Kingdom 64.3 65.5
Netherlands 60.8 57.9
Belgium 29.9 27.6
France 6.3 7.4
Other 12.2 13.9
330.2 335.1
No single external customer in the current or prior financial year
amounted to 10 per cent of the Group's revenues.
ii) Profit for the financial year
Ferries Container & Terminal Group Total
2018 2017 2018 2017 2018 2017
EURm EURm EURm EURm EURm EURm
Operating
profit 34.2 49.1 12.1 11.2 46.3 60.3
Finance income 0.2 - - - 0.2 -
Finance costs (0.6) (1.2) (0.4) (0.1) (1.0) (1.3)
Non-trading
items 13.7 28.7 - - 13.7 28.7
Profit before
tax 47.5 76.6 11.7 11.1 59.2 87.7
Income tax
expense (0.5) (3.5) (0.9) (0.9) (1.4) (4.4)
Profit for
the financial
year 47.0 73.1 10.8 10.2 57.8 83.3
iii) Operating costs
Ferries Container & Terminal Group Total
2018 2017 2018 2017 2018 2017
EURm EURm EURm EURm EURm EURm
Fuel 33.7 29.2 14.5 11.1 48.2 40.3
Labour costs 24.4 23.6 6.7 6.4 31.1 30.0
Port costs 39.7 40.4 29.4 28.5 69.1 68.9
Other costs 27.6 34.7 72.3 66.6 99.9 101.3
Intersegment
cost (1.2) (1.2) (8.1) (7.7) (9.3) (8.9)
Total operating
costs 124.2 126.7 114.8 104.9 239.0 231.6
iv) Statement of Financial Position
Ferries Container & Terminal Group Total
2018 2017 2018 2017 2018 2017
EURm EURm EURm EURm EURm EURm
Assets
Segment assets 334.4 251.3 55.2 51.7 389.6 303.0
Cash and cash equivalents 94.5 81.2 30.2 9.1 124.7 90.3
Consolidated total
assets 428.9 332.5 85.4 60.8 514.3 393.3
Liabilities
Segment liabilities 31.9 95.3 24.5 23.5 56.4 118.8
Borrowings 204.3 49.8 0.7 0.9 205.0 50.7
Consolidated total
liabilities 236.2 145.1 25.2 24.4 261.4 169.5
3. Income tax expense
2018 2017
EURm EURm
Current tax 1.5 6.5
Deferred tax (0.1) (2.1)
Income tax expense for the year 1.4 4.4
The Company and its Irish tax resident subsidiaries have elected to be
taxed under the Irish tonnage tax method. Under the tonnage tax method,
taxable profit on eligible activities is calculated on a specified
notional profit per day related to the tonnage of the ships utilised.
In accordance with the IFRIC guidance on IAS 12 Income Taxes, the
tonnage tax charge is not considered an income tax expense and has been
included in other operating expenses in the Consolidated Income
Statement.
Domestic income tax is calculated at 12.5% of the estimated assessable
profit for the year for all activities which do not fall to be taxed
under the tonnage tax system. Taxation for other jurisdictions is
calculated at the rates prevailing in the relevant jurisdictions. The
income tax expense for the year includes a current tax charge of EUR1.5
million and a deferred tax credit of EUR0.1 million relating to
non-trading items (note 5).
The total expense for the year is reconciled to the accounting profit as
follows:
2018 2017
EURm EURm
Profit before tax 59.2 87.7
Tax at the domestic income tax rate of 12.5% (2017:
12.5%) 7.4 11.0
Effect of tonnage relief (5.6) (5.6)
Net utilisation of tax losses (0.1) (0.3)
Difference in effective tax rates 0.4 0.3
Other items (0.7) (1.0)
Income tax expense recognised in the Consolidated
Income Statement 1.4 4.4
4. Earnings per share
2018 2017
Number of shares '000 '000
Weighted average number of ordinary shares for
the purpose of basic earnings per share 190,037 188,801
Effect of dilutive potential ordinary shares: Share
options 1,405 1,208
Weighted average number of ordinary shares for
the purpose of diluted earnings per share 191,442 190,009
The denominator for the purposes of calculating both basic and diluted
earnings per share has been adjusted to reflect shares issued during the
year and excludes treasury shares.
The earnings used in both the adjusted basic and adjusted diluted
earnings per share have been adjusted to take into account the net
interest on defined benefit pension obligations and the effect of
non-trading items after tax.
The prior year reported adjusted basic earnings per share and adjusted
diluted earnings per share has been represented to include the tax
effect on non-trading items.
The calculation of the basic and diluted earnings per share attributable
to the ordinary equity holders of the parent is based on the following
data:
2018 2017
Earnings EURm EURm
Earnings for the purpose of basic and diluted earnings
per share - Profit for the financial period attributable
to equity holders of the parent 57.8 83.3
Effect of non-trading items after tax (13.7) (24.9)
Effect of net interest (income)/ expense on defined
benefit pension schemes (0.1) 0.2
Earnings for the purpose of adjusted earnings per
share 44.0 58.6
Cent Cent
Basic earnings per share 30.4 44.1
Diluted earnings per share 30.2 43.8
Adjusted basic earnings per share 23.1 31.0
Adjusted diluted earnings per share 23.0 30.8
Diluted earnings per ordinary share
Diluted earnings per Ordinary Share is calculated by adjusting the
weighted average number of Ordinary Shares outstanding to assume the
exercise of all vested share option awards at 31 December. Share option
awards which have not yet satisfied the required performance conditions
for vesting are excluded from the calculation. The dilutive effect of
vested share options is calculated as the difference in the average
market value during the period and the option price expressed as a
percentage of the average market value. Of the 2,399,000 (2017:
1,714,000) vested options at 31 December 2018, the dilutive effect is
1,405,000 ordinary shares (2017: 1,208,000 ordinary shares).
5. Non trading items
On 26 April 2018, the Group completed the sale of the vessel Jonathan
Swift to Balearia Eurolineas Maritimas S.A. for a consideration of
EUR15.5 million. The Jonathan Swift had served the Dublin/ Holyhead
fastcraft service since its delivery in 1999 and was replaced on that
service by the Dublin Swift. As the vessel was used in the Group's
tonnage tax trade no tax liability arose on disposal.
On 17 May 2017, the Group completed the sale of the Kaitaki to KiwiRail
of New Zealand. The Kaitaki had been on charter outside of the Group
prior to its disposal.
These gains on disposal of the vessels are included in the profit for
the period and are disclosed as non-trading items in the Condensed
Consolidated Income Statement.
2018 2017
EURm EURm
Consideration
Total consideration 15.5 45.0
Gain on disposal of vessel
Consideration 15.5 45.0
Disposal costs (0.5) (0.3)
Performance pay associated with disposal (0.2) (0.6)
Net proceeds 14.8 44.1
NBV of vessels disposed (1.1) (15.4)
Gain on disposal 13.7 28.7
Tax payable (2017: 12.5%) - 5.6
Deferred tax credit on disposal of vessel - (1.8)
Tax on disposal - 3.8
Net gain on disposal after tax 13.7 24.9
6. Net cash and borrowing facilities
1. The components of the Groups net cash position at the reporting date and
the movements in the period are set out in the following table:
Bank Loan Origination
Cash Loans Notes Leases fees Total
EURm EURm EURm EURm EURm EURm
At 1 January 2018
Current assets 90.3 - - - - 90.3
Creditors due within
one year - - - (0.7) - (0.7)
Creditors due after
one year - - (50.0) (1.0) 1.0 (50.0)
90.3 - (50.0) (1.7) 1.0 39.6
Cash flow 34.4 - - - - 34.4
Drawdown - (155.0) - - - (155.0)
Repayment - - - 0.7 - 0.7
34.4 (155.0) - 0.7 - (119.9)
At 31 December 2018
Current assets 124.7 - - - - 124.7
Creditors due within
one year - - - (0.3) - (0.3)
Creditors due after
one year - (155.0) (50.0) (0.7) 1.0 (204.7)
124.7 (155.0) (50.0) (1.0) 1.0 (80.3)
The loan drawdown and repayments have been made under the Group's loan
facilities.
ii) The maturity profile and available borrowing and cash facilities
available to the Group at 31 December 2018 are set out in the following
table:
Maturity Profile
Less Between
On-hand than 1 -- 2 Between 2 More than
Facility Undrawn / drawn 1 year years -- 5 years 5 years
EURm EURm EURm EURm EURm EURm EURm
Cash - - 124.7 124.7 - - -
Committed lending
facilities
Bank overdrafts 15.4 15.4 - - - - -
Bank loans 230.0 75.0 155.0 - 3.2 30.9 120.9
Loan notes 50.0 - 50.0 - - - 50.0
Leases 1.0 - 1.0 0.3 0.7 - -
Committed lending
facilities 296.4 90.4 206.0 0.3 3.9 30.9 170.9
Uncommitted lending
facilities
Bank loans 50.0
Loan notes 190.2
Uncommitted lending
facilities 240.2
Bank overdrafts are stated net of trade guarantee facilities utilised of
EUR0.6 million.
Obligations under the Group borrowing facilities have been cross
guaranteed by the parent company and certain subsidiaries but are
otherwise unsecured except for finance lease obligations which are
secured by the lessors' title to leased assets.
7. Net cash inflow from operating activities
2018 2017
EURm EURm
Operating activities
Profit for the financial year 57.8 83.3
Adjustments for:
Finance costs (net) 0.8 1.3
Income tax expense 1.4 4.4
Retirement benefit schemes -- current service cost 1.7 1.8
Retirement benefit schemes -- curtailment gain (0.5) -
Retirement benefit schemes -- payments (2.8) (2.9)
Depreciation of property, plant and equipment 21.9 20.5
Amortisation of intangible assets 0.2 0.3
Amortisation of deferred grant - (0.1)
Share-based payment expense 2.4 1.1
Gain on disposal of property, plant and equipment (15.1) (29.1)
Decrease/ (increase) in provisions 0.7 (0.2)
Operating cash flow before movements in working capital 68.5 80.4
Increase in inventories (0.6) (0.4)
Increase in receivables (4.6) (2.6)
Increase in payables 1.4 1.1
Cash generated from operations 64.7 78.5
Income taxes paid (2.2) (5.6)
Interest paid (1.0) (1.1)
Net cash inflow from operating activities 61.5 71.8
Working capital movements exclude accruals of EURnil million (2017:
EUR64.6 million) relating to vessel work in progress balances not yet
paid and prepayments in line with contractual terms for works not yet
undertaken of EUR28.9 million (2017: EURnil). Movements in these accrual
and prepayments are included as Purchases of Property Plant and
Equipment in the Condensed Consolidated Statement of Cash Flows.
8. Retirement benefit schemes
The principal assumptions used for the purpose of the actuarial
valuations were as follows:
2018 2017
Sterling Euro Sterling Euro
Discount rate 2.65% 1.80% 2.35% 1.80%
Inflation rate 3.45% 1.50% 3.40% 1.60%
Rate of increase of pensions 0.60% -- 0.70% --
in payment 3.15% 0.70% 3.10% 0.80%
Rate of pensionable salary 0.00% -- 0.00% --
increases 1.00% 1.00% 0.95% 1.00%
The average life expectancy used in all schemes at age 60 is as follows:
2018 2017
Male Female Male Female
Current retirees 26.3 years 29.0 years 26.3 years 29.0 years
Future retirees 28.7 years 31.2 years 28.6 years 31.2 years
The amount recognised in the balance sheet in respect of the Group's
defined benefit obligations, is as follows:
Schemes with Schemes with
Liabilities Liabilities
in in
Sterling Euro
2018 2017 2018 2017
Equities 9.2 10.5 91.2 117.6
Bonds 13.4 13.8 93.3 95.2
Diversified funds - - 35.3 24.9
Property 0.3 0.3 19.4 18.7
Other 1.2 1.3 1.0 1.1
------- ------------ -------- ------------
Market value of scheme
assets 24.1 25.9 240.2 257.5
Present value of scheme
liabilities (22.4) (23.8) (243.6) (254.9)
------- ------------ -------- ------------
Surplus/ (deficit) in schemes 1.7 2.1 (3.4) 2.6
The movement during the year is reconciled as follows:
2018 2017
Movement in retirement benefit schemes net (deficit)/
surplus EURm EURm
Opening surplus/ (deficit) 4.7 (13.5)
Current service cost (1.7) (1.8)
Curtailment gain 0.5 -
Employer contributions paid 2.8 2.9
Net interest income/ (cost) 0.1 (0.2)
Actuarial (loss)/ gain (8.1) 17.5
Other - (0.2)
Net (deficit)/ surplus (1.7) 4.7
Schemes in surplus 2.5 8.1
Schemes in deficit (4.2) (3.4)
Net (deficit)/ surplus (1.7) 4.7
9. Related party transactions
Transactions between the company and its subsidiaries, which are related
parties, have been eliminated on consolidation.
During the year ended 31 December 2018 the material transactions between
Irish Continental Group plc and its key management personnel were the
remuneration of employees and Directors, the participation in Group
dividends on the same terms available to shareholders generally, and the
provision of professional services at arm's length basis.
10. General information
The Condensed financial statements in this preliminary announcement do
not constitute full statutory financial statements ("Financial
Statements"), a copy of which is required to be annexed to the annual
return to the Companies Registration Office. A copy of the financial
statements in respect of the financial year ended 31 December 2018 will
be annexed to the annual return for 2019. The auditors have made a
report, without any qualification on their audit, of the financial
statements in respect of the financial year ended 31 December 2018 and
the Directors approved the financial statements in respect of the
financial year ended 31 December 2018 on 6 March 2019. A copy of the
financial statements in respect of the year ended 31 December 2017 has
been annexed to the annual return for 2018 filed at the Companies
Registration Office.
The financial statements have been prepared in accordance with IFRS as
adopted by the European Union and therefore the Group's financial
statements comply with Article 4 of the IAS Regulations. The
consolidated financial statements have also been prepared in accordance
with the Companies Acts 2014, and the Listing Rules of Euronext Dublin
and the UK Listing Authority.
The financial statements have been prepared on the historical cost basis
except for the revaluation of certain financial instruments.
Certain financial measures set out in our Preliminary Statement of
Results for the year ended 31 December 2018 are not defined under
International Financial Reporting Standards (IFRS). Presentation of
these Alternative Performance Measures ("APMs") provides useful
supplementary information which, when viewed in conjunction with the
Company's IFRS financial information, allows for a more meaningful
understanding of the underlying financial and operating performance of
the Group. These non-IFRS measures should not be considered as an
alternative to financial measures as defined under IFRS. Descriptions of
the APMs included in this report are disclosed below.
APM Description Benefit of APM
----------------- ---------------------------------------------- ------------------------------
EBITDA EBITDA represents earnings before Eliminates the effects
interest, tax, depreciation and amortisation. of financing and accounting
decisions to allow assessment
of the profitability
and performance of the
Group.
----------------- ---------------------------------------------- ------------------------------
EBIT EBIT represents earnings before interest Measures the Group's
and tax. earnings from ongoing
operations.
----------------- ---------------------------------------------- ------------------------------
Free cash flow Free cash flow comprises operating Assesses the availability
before strategic cash flow less capital expenditure to the Group of funds
capex before strategic capex which comprises for reinvestment or for
expenditure on vessels excluding annual return to shareholders.
overhaul and repairs, and other assets
with an expected economic life of
over 10 years which increases capacity
or efficiency of operations.
----------------- ---------------------------------------------- ------------------------------
Net debt Net debt comprises total borrowings Measures the Group's
less cash and cash equivalents. ability to repay its
debts if they were to
fall due immediately.
----------------- ---------------------------------------------- ------------------------------
Terms and abbreviations
---------------------------------------------------------------------------------------
teu 20 foot equivalent unit, an industry standard measurement for container
ships.
----------- --------------------------------------------------------------------------
RoRo unit Roll on, Roll off freight unit of any length either accompanied or
unaccompanied carried on Ropax ferries.
----------- --------------------------------------------------------------------------
LoLo unit Lift on, Lift off container unit of any size.
----------- --------------------------------------------------------------------------
Ropax A cruise ferry capable of carrying both passengers and RoRo freight.
----------- --------------------------------------------------------------------------
Non-trading Non-trading items are material non-recurring items that derive from
item events or transactions that fall outside the ordinary activities of
the Group and which individually, or, if of a similar type, in aggregate,
are separately disclosed by virtue of their size or incidence.
----------- --------------------------------------------------------------------------
ICG Unit ICG Unit is a stock exchange trading unit of ICG equity with each unit
comprising one ordinary share and up to ten redeemable shares (if any
in issue).
----------- --------------------------------------------------------------------------
11. Events after the Reporting Period
The Board is proposing a final dividend of 8.56 cent per ICG unit in
respect of the results for the year ended 31 December 2018.
The W.B. Yeats was delivered in December 2018 and began sailings on the
22nd January 2019.
There have been no other material events affecting the Group since 31
December 2018.
12. Board Approval
This preliminary announcement was approved by the Board of Directors of
Irish Continental Group plc. on 6 March 2019.
13. Annual Report and Annual General Meeting
The Group's Annual Report and notice of Annual General Meeting, which
will be held on Friday 17 May 2019, will be notified to shareholders in
April 2019.
(END) Dow Jones Newswires
March 07, 2019 02:00 ET (07:00 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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