Interim Results
Irish Continental Group PLC
12 September 2003
IRISH CONTINENTAL GROUP
PRELIMINARY STATEMENT OF RESULTS
FOR THE SIX MONTHS TO 30TH JUNE 2003
KEY POINTS
• TURNOVER €145.0 million (2002 : €145.2 million)
• EBITDA €18.2 million (2002 : €20.2 million)
• PROFIT BEFORE TAX €1.9 million (2002 : €3.3 million)
• EPS 5.3 cent (2002 : 10.4 cent)
• PREMIUM ON 7.5 cent (2002 : dividend of 6.84 cent)
REDEMPTION OF
REDEEMABLE SHARES
The Chairman, Tom Toner commented:
'The interim results represent a resilient performance in the context of
geopolitical uncertainty in the early part of the year combined with a weakening
trend in the Irish economy. Trading in the seasonally important summer season
has been encouraging and this, allied with competitors' capacity reductions
arising from industry consolidation, augurs well for the future'
PRELIMINARY STATEMENT OF RESULTS
FOR THE SIX MONTHS TO 30TH JUNE 2003
RESULTS
The Board of Irish Continental Group, plc (ICG), reports that in the seasonally
weaker first half of the year, the Group recorded an operating profit of
€5.5 million, compared with €8.7 million in the same period in 2002. The
interest charge fell from €5.4 million to €3.6 million and profit before tax
was €1.9 million compared with €3.3 million in the first half of 2002. The tax
charge was €0.6 million (2002: €0.5 million) and EPS for the half year was 5.3
cent (10.4 cent in 2002). Turnover for the half year was €145.0 million (2002:
€145.2 million).
Following approval at the AGM in April 2003, the Group has issued 10 redeemable
shares for every one ICG ordinary share on issue. (The ordinary share and the 10
redeemable shares combined comprise an ICG Unit).
The Board has now decided to redeem one redeemable share per ICG unit for a cash
consideration of 7.5c per redeemable share. This will be paid on 7 November 2003
to shareholders on the register at 10 October 2003. Accordingly no interim
dividend will be paid. The consideration per redeemable share represents an
increase of 9.6% on the interim dividend of 6.84 cent paid last year.
OPERATIONAL REVIEW
Ferries and Travel Division
The division comprises Irish Ferries, a leading provider of ferry services
between Ireland and both the UK and Continental Europe; Tara Travel, a travel
services company specialising in travel to Ireland; and the chartering of
multipurpose ferries to third parties.
Turnover in the division was impacted by the translation of sterling and US$
income into a strengthening euro and fell 12% to €80.0 million (from €91.0
million in 2002). Operating profit in the division was €3.6 million 6.2 million
in 2002).
The early months of the year were characterised by world political uncertainty,
which adversely affected consumers'propensity to travel, combined with the
effects of a slowing world economy on the level of Roll on Roll off freight
movements.
In Irish Ferries' core tourist business, car tourism, total cars carried were
unchanged at 174,000. Total passenger numbers were affected by a decline in the
foot passenger market and we recorded a 5.1% drop in overall passengers to
750,500.
Average passenger yields have fallen approximately 2% to €40.49 per passenger.
This is due mainly to the weakness of Sterling versus the Euro and is partially
offset by a higher proportion of car versus foot passengers.
The performance in tourism is resilient when compared with the market as a
whole. The war in Iraq depressed travel in the early part of the year and the
increase in the value of the euro added to the cost of holidaying in Ireland,
particularly for those from the sterling area who comprise a large proportion of
our customers.
In terms of distribution channels, the internet is proving an ever more
effective channel and our year-to-date bookings on the web are up one-third on
the previous year.
In the Roll on Roll off freight market we continue to grow, with our volumes up
5% to 94,700 units, in an overall all-Ireland market which is subdued. There
have been a number of developments in the competitive environment in the RoRo
sector. One competitor on the long routes from Ireland to the UK has been placed
in administration, while another competitor, also on the long routes, has
decided to divest its operations, although this has now been referred to the
Competition Commission in the UK. While demonstrating the extremely competitive
environment these developments also vindicate ICG's strategy of concentrating
capital on the short routes where maximum utilisation of assets can be achieved.
In the meantime, the effect of this competition has been to push freight rates
to an unrealistically low level.
We have commenced a process of consultation with our workforce with the aim of
generating cost savings to reflect this new competitive environment. This
process is designed to bring our labour costs into line with those of our
competitors who have had the benefit of lower wage inflation rates than
Ireland's over the last number of years.
In Tara Travel we continue to rationalise the operation and we have reduced the
overall network of branches from a peak of nine (in 2002) to four, three of
which are in London and a fourth which is a newly relocated outlet in
Birmingham.
In ship chartering both the Pride of Bilbao and Pride of Cherbourg (formerly
Isle of Innisfree) remain on charter to P&O, servicing their Spanish and French
destinations from Portsmouth. The Charter revenue is denominated in US Dollar
and Sterling respectively and consequently has been somewhat weaker in Euro
terms.
Container/Terminal Division
The division includes our intermodal freight services Eucon, Feederlink and
Eurofeeders as well as our strategically located container terminal in Dublin,
DFT.
Turnover in the division grew by 20% to €65.0 million, due in part to the
integration of HKCIL (acquired in July 2002) into our Eucon business. Operating
profit was €1.9 million compared with €2.5 million in 2002.
Total containers shipped, including a full six month contribution from the HKCIL
acquisition were up 19.7% to 235,000 teu. On a like-for-like basis the increase
was 4.6%.
The competitive environment remains challenging, with freight rates,
particularly for eastbound (i.e. export) cargo from Ireland, at lower levels
than last year. Some rate increases have been achieved in westbound routes but
these remain inadequate.
We have entered an agreement with BG Freight Line, a subsidiary of Mersey Docks
& Harbour Company, to pool our Ireland - Continent services in order to improve
frequency on our Ireland - Continental container service and to improve customer
service. This vessel sharing agreement ('VSA') comes into place in October and
will also result in cost savings.
In DFT we continue our redevelopment of our centrally located terminal with a
commissioning date for the terminal extension of March 2004. Volumes handled at
the terminal have been affected temporarily by construction work and were 6%
lower at 59,300
units.
FINANCE
Depreciation and amortisation in the half year was €12.7 million (2002: €11.5
million), while EBITDA for the 6 months amounted to €18.2 million (€20.2 million
in 2002). Capital expenditure in the period was €10.1 million (€3.7 million in
2002), the largest element of which is the enhancement of our container
terminal, DFT.
During the period the Group purchased and cancelled 1.2 million shares for a
total expenditure of €7.9 million. This brings the number of shares in issue to
24.0 million compared with 27.0 million at 30th June 2002.
The average interest cost in the period was 4.6% compared with 6.3% in the first
half of 2002. Net debt at the end of the period amounted to €155.8 million. This
compares with €157.4 million at 31 December 2002.
BOARD
We are pleased to announce that Peter Crowley, Chief Executive of IBI Corporate
Finance, has been co-opted to the Board as a non-executive director with effect
from 11 September 2003. Peter brings a wealth of experience to the Board having
joined IBI in 1993 from KPMG Corporate Finance, where he qualified as a
chartered accountant in 1987. Peter, who is 41, left IBI in 1996 to join Sigma
Communications Group as an executive director. He returned to IBI Corporate
Finance as Chief Executive in August 1999. Since that time he has been
responsible for co-ordinating IBI's advice to a wide range of Ireland's leading
public, semi-state and private companies. IBI Corporate Finance is part of Bank
of Ireland Group.
OUTLOOK
The peak tourist season, which is the most important period for us, has been
encouraging with our car volumes up 6% since 1st July, although yields remain
lower than last year. Freight volumes are also up in the second half to date,
although a softening in the Irish economy is placing pressure on trade flows to
and from the island and yields continue to be weaker than last year. The
container freight market in particular remains extremely competitive.
T.C. Toner, Chairman
12 September 2003
IRISH CONTINENTAL GROUP plc
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the 6 months ended 30 June 2003
6 months 6 months 12 months
ended ended ended
30-Jun 30-Jun 31-Dec
2003 2002 2002
(unaudited) (unaudited) (audited)
Notes €m €m €m
Turnover 1 145.0 145.2 325.8
Operating costs (139.5) (136.5) (290.9)
_______ _______ _______
Operating profit before exceptional item 5.5 8.7 34.9
Amortisation of goodwill - - (0.1)
Exceptional item: write down of goodwill - - (1.7)
_______ _______ _______
Operating profit 5.5 8.7 33.1
Net interest payable (3.6) (5.4) (9.0)
_______ _______ _______
Profit / (loss) on ordinary activities before taxation 1.9 3.3 24.1
Taxation (0.6) (0.5) (3.1)
_______ _______ _______
Profit / (loss) attributable to shareholders
of Irish Continental Group plc 1.3 2.8 21.0
Dividends 2 - (1.8) (5.1)
_______ _______ _______
Profit retained for the period 1.3 1.0 15.9
_______ _______ _______
Basic earnings per share 3 5.3c 10.4c 78.3c
Diluted earnings per share 3 5.3c 10.3c 78.0c
Adjusted earnings per share 3 5.3c 10.4c 85.0c
Dividend 2 - 6.84c 19.7
Redemption of preference shares 2 7.5c - -
STATEMENT OF TOTAL RECOGNISED GAINS & LOSSES
for the 6 months ended 30 June 2003
6 months 6 months 12 months
ended ended ended
30-Jun 30-Jun 31-Dec
2003 2002 2002
(unaudited) (unaudited) (audited)
Notes €m €m €m
Profit / (loss) attributable to
shareholders of
Irish Continental Group plc 1.3 2.8 21.0
Exchange translation adjustment (5.8) (7.7) (9.1)
______ ______ ______
Total recognised (losses) and gains
for the period (4.5) (4.9) 11.9
=====
Prior year adjustment 4 1.7 (4.0)
______ ______
Total recognised gains since the
previous annual report (3.2) 7.9
===== =====
IRISH CONTINENTAL GROUP plc
CONSOLIDATED BALANCE SHEET
at 30 June 2003
30-Jun 30-Jun 31-Dec
2003 2002 2002
(unaudited) (unaudited) (audited)
€m €m €m
Fixed assets
Tangible assets 353.8 373.8 367.9
Financial assets - 0.1 -
_______ _______ _______
353.8 373.9 367.9
_______ _______ _______
Current assets
Stocks 0.9 1.0 0.8
Debtors 54.4 49.8 53.3
Cash at bank and in hand 12.3 36.6 14.6
_______ _______ _______
67.6 87.4 68.7
Creditors
(Amounts falling due within one year)
Bank loans and overdrafts 27.1 26.9 28.4
Trade and other creditors 68.0 69.3 65.8
Proposed dividend - 1.8 3.2
Obligations under finance leases 3.4 2.1 2.3
Taxation and social welfare 2.8 2.1 1.5
_______ _______ _______
101.3 102.2 101.2
_______ _______ _______
Net current liabilities (33.7) (14.8) (32.5)
_______ _______ _______
Total assets less current liabilities 320.1 359.1 335.4
====== ====== ======
Creditors
(Amounts falling due after more than one year)
Bank loans 125.8 157.8 130.1
Obligations under finance leases 11.8 6.8 11.2
Accruals and deferred income 8.7 2.1 8.2
_______ _______ _______
146.3 166.7 149.5
_______ _______ _______
Capital and reserves
Called up share capital 15.6 17.5 16.3
Share premium account 38.5 38.3 38.3
Capital reserves 0.1 0.1 0.1
Capital redemption reserve 2.1 - 1.4
Profit and loss account 117.5 136.5 129.8
_______ _______ _______
Shareholders' funds (equity interests) 173.8 192.4 185.9
_______ _______ _______
320.1 359.1 335.4
====== ====== ======
IRISH CONTINENTAL GROUP plc
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
for the 6 months ended 30 June 2003
6 months 6 months 12 months
ended ended ended
30-Jun 30-Jun 31-Dec
2003 2002 2002
(unaudited) (unaudited) (audited)
€m €m €m
Total recognised (losses)/gains
relating to the period (4.5) (4.9) 11.9
Dividends - (1.8) (5.1)
Capital introduced 0.3 0.8 1.0
Capital repurchased (7.9) - (14.5)
_______ ______ ______
Net (decrease)/increase in
shareholders' funds (12.1) (5.9) (6.7)
_______ _______ ______
Shareholders' funds at beginning
of period 185.9 196.6 196.6
Prior period adjustment - 1.7 (4.0)
_______ ______ ______
Shareholders' funds at beginning
of period as restated 185.9 198.3 192.6
_______ ______ ______
Shareholders' funds at end of period 173.8 192.4 185.9
====== ====== ======
IRISH CONTINENTAL GROUP plc
CONSOLIDATED CASH FLOW STATEMENT
for the 6 months ended 30 June 2003
6 months 6 months 12 months
ended ended ended
30-Jun 30-Jun 31-Dec
2003 2002 2002
(unaudited) (unaudited) (audited)
Notes €m €m €m
Net cash inflow from operating
activities 18.8 31.0 68.5
______ _______ _______
Servicing of finance
Net interest paid (1.9) (2.9) (10.1)
______ ______ ______
Net cash outflow from servicing
of finance (1.9) (2.9) (10.1)
______ _______ _______
Taxation
Net corporation tax paid - (0.2) (0.9)
______ ______ ______
Net cash outflow from taxation - (0.2) (0.9)
______ _______ _______
Investing activities
Purchase of fixed assets (10.1) (3.7) (15.4)
Sale of fixed assets 0.4 0.2 0.2
______ ______ ______
Net cash outflow from investing
activities (9.7) (3.5) (15.2)
______ _______ _______
Acquisitions
Purchase of subsidiary undertakings - - (3.8)
______ ______ ______
Net cash outflow from acquisitions - - (3.8)
______ _______ _______
Equity dividends paid (3.2) (3.1) (5.0)
______ _______ _______
Net cash inflow before financing 4.0 21.3 33.5
______ _______ _______
Financing
Issue of ordinary share capital 0.3 0.8 1.0
Repurchase of ordinary share capital (7.9) - (14.5)
Repayment of amounts borrowed - - (26.2)
Inception of finance leases 2.8 - 5.9
Capital element of finance lease payments (1.2) (1.0) (2.2)
______ _____ _____
Net cash (outflow) / inflow from financing (6.0) (0.2) (36.0)
______ _____ _____
(Decrease) / increase in cash 5 (2.0) 21.1 (2.5)
______ _______ ______
IRISH CONTINENTAL GROUP plc
NOTES TO THE INTERIM STATEMENT
for the 6 months ended 30 June 2003
1. Segmental
information
6 Months 6 Months 12 Months
ended ended ended
30-Jun-03 30-Jun-02 31-Dec-02
Turnover Profit Turnover Profit Turnover Profit
€m €m €m €m €m €m
>> Analysis by class
of business
Ferries & Travel 80.0 3.6 91.0 6.2 204.5 31.2
Container and
Terminal 65.0 1.9 54.2 2.5 122.0 3.7
Intersegment - - - - (0.7) -
Net Interest - (3.6) - (5.4) - (9.0)
Goodwill - - - - (1.8)
______ ______ ______ ______ ______ ______
145.0 1.9 145.2 3.3 325.8 24.1
===== ===== ===== ===== ===== =====
>> Analysis by origin
6 Months 6 Months 12 Months
ended ended ended
30-Jun-03 30-Jun-02 31-Dec-02
€m €m €m
Ireland 55.2 52.9 134.7
United Kingdom 51.4 59.5 112.2
Continental Europe 38.4 32.8 78.9
______ ______ ______
145.0 145.2 325.8
===== ===== =====
It is not practicable to analyse trading profit by geographical area. Turnover
excludes intra Group transactions and value added tax.
2. Redemption of preference shares / dividend
The company has decided to redeem one redeemable share per ICG unit on 7
November 2003 for a cash consideration of 7.5c per redeemable share. Accordingly
no interim dividend will be paid.
The interim dividend paid in 2002 of 6.84 cent has no associated tax credit.
3. Earnings per share
The calculation of basic earnings per share is based on a profit of
€1.3m (2002: profit of €2.8m) and 24.6m shares (2002: 26.9m) being the weighted
average number of shares in issue during the period.
Diluted earnings per share is computed in accordance with FRS14 and is based on
diluted weighted average shares in issue of 24.7m.
Adjusted earnings per share is based on profit attributable to shareholders
before goodwill and exceptional items.
4. Prior period adjustment
FRS 19 was implemented during 2002 and comparative figures were restated
accordingly. In accordance with FRS19, a full provision for deferred tax is
recognised, without discounting, on all timing differences that have originated,
but not reversed, at the balance sheet date.
5. Reconciliation of net cash flow to movement in net debt
6 months 6 months 12 months
ended ended ended
30-Jun-03 30-Jun-02 31-Dec-02
Notes €m €m €m
Increase / (decrease)
in cash (2.3) 20.5 (0.3)
(Increase) / decrease
in overdraft 0.3 (0.4) (2.2)
Decrease / (increase)
in debt (1.6) 1.0 22.5
_____ ______ ______
Change in net debt
resulting from cash
flows (3.6) 21.1 20.0
Translation
adjustment 5.2 8.9 9.6
_____ ______ ______
Net movement 1.6 30.0 29.6
Opening net debt (157.4) (187.0) (187.0)
_____ ______ ______
Closing net debt (155.8) (157.0) (157.4)
===== ===== =====
6. Analysis of net
debt
Cash Overdrafts Loans Leases Total
€m €m €m €m €m
At 31 December 2002 14.6 - - - 14.6
Current Assets - (2.2) (26.2) (2.3) (30.7)
Creditors due within
one year - - (130.1) (11.2) (141.3)
Creditors due after
one year (2.3) 0.3 - (1.6) (3.6)
Cash flow - - 5.3 (0.1) 5.2
Foreign exchange rate
changes ______ ______ ______ ______ _____
12.3 (1.9) (151.0) (15.2) (155.8)
===== ===== ===== ===== =====
At 30 June 2003
Current Assets 12.3 - - - 12.3
Creditors due within
one year - (1.9) (25.2) (3.4) (30.5)
Creditors due after
one year - - (125.8) (11.8) (137.6)
______ ______ ______ ______ _____
12.3 (1.9) (151.0) (15.2) (155.8)
===== ===== ===== ===== =====
Copies of the Interim Statement are being sent to all shareholders. Copies may
be obtained from the registered office of the Company, Ferryport, Alexandra
Road, Dublin 1, or at www.icg.ie.
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