Interim Results
Irish Continental Group PLC
08 September 2005
INTERIM REPORT 2005
Key Points
30 June 2005 30 June 2004
Revenue €139.6m €135.8m
EBITDA €17.1m €15.1m
Profit from Operations €4.3m €2.3m
EPS 6.4c (2.5c)
Net Debt €115.9m €127.0m
Comment
In comment, Chairman, John B. McGuckian stated,
'I am pleased to be able to report on improved profitability in the first half
which is due to the absence of industrial disruption in the period and the flow
through of some of our cost reducing initiatives, particularly in our staff
costs both ashore and seagoing. Many of these cost savings have been offset by
increases in fuel costs which, for the group, were €3.4 million higher than in
the same period in 2004. The passenger market is weaker while the freight market
is stronger. Given the changing patterns of travel behaviour, and the new
sustained higher level of oil prices, we are developing proposals to bring our
cost base to the levels applying internationally'.
Irish Continental Group is a shipping, transport and leisure group principally
engaged in the transport of passengers and cars, roll-on roll-off freight and
container lift-on lift-off freight on routes between Ireland, the UK and
Continental Europe. The Group also offers travel and holiday packages primarily
in France, Britain and Ireland.
PRELIMINARY STATEMENT OF RESULTS FOR THE SIX MONTHS TO 30TH JUNE 2005
RESULTS
The Board of Irish Continental Group plc (ICG) reports that, in the seasonally
less significant first half of the year, the Group recorded EPS of 6.4 cent
compared with a loss per share of 2.5 cent (restated for IFRS) in the
corresponding period in 2004. Revenue for the half year was €139.6 million
(2004: €135.8 million). Profit from operations was €4.3 million, compared with
€2.3 million in the same period in 2004. Finance costs fell from €2.8 million to
€2.6 million resulting in profit before tax of €1.7 million compared with a loss
of €0.5 million in the first half of 2004. The tax charge was €0.2 million
(2004: €0.1 million).
The Board has now decided to redeem one redeemable share per ICG unit for a cash
consideration of 9.91875 cent per redeemable share. This will be paid on 4
November 2005 to shareholders on the register at 14 October 2005. The
consideration per redeemable share represents an increase of 15% on the interim
redemption premium of 8.625 cent paid last year.
OPERATIONAL REVIEW
Ferries Division
The division comprises Irish Ferries, a leading provider of ferry services
between Ireland and both the UK and Continental Europe and the chartering of
multipurpose ferries to third parties.
Revenue in the division was €72.5 million (2004: €71.5 million). Profit from
operations was €2.3 million (2004: €1.8 million). The results benefited from the
absence of industrial action in the period (there had been disruption in
February 2004).
Irish Ferries' core tourist business is car tourism and industry statistics
indicate that the overall tourist car market from the UK to all European
destinations is estimated to have declined by around 5% in the half year, due
principally to additional airline competition. The UK market to Ireland has seen
a similar decline. Our total cars carried were 162,000 (2004: 165,000). Total
passenger numbers were affected by a decline in the foot passenger market and we
recorded a 3% drop in overall passengers to 670,000.
Within this marketplace internet sales continue to develop strongly and this is
leading to savings in distribution costs including a reduction in telephone call
centre activity.
The overall Roll on Roll off freight market continues to grow and we also
continue to grow, with our volumes up 7% to 107,000 units.
We continue to focus on generating cost savings to reflect the competitive
environment in which we are operating. This focus is designed to bring our
labour costs into line with those of our competitors who have had the benefit of
international crewing costs and lower wage inflation rates than Ireland's over
the last number of years. We achieved some benefits from rostering savings on
the Irish Sea routes but these are not sufficient to position the Group to
prosper in the medium term. The model which we have achieved on the French route
(i.e. agency crew at international wage rates) has enabled us to reduce fares on
our French route and offers a way forward for the benefit of the Group as a
whole. We are now engaged in a review process, in an attempt to progress a
sustainable way forward in crewing our Irish Sea vessels. This process is
expected to produce proposals in the coming weeks.
Arising from the sustained rise in world oil prices, which on current trends
will cost the ferries division an additional €6.3m in 2005 (+48%) compared with
2004, we are in the process of increasing our fuel surcharges.
In ship chartering the Pride of Bilbao remains on charter to P&O, servicing
their Spanish destination from Portsmouth while the former Pride of Cherbourg
has been subchartered by P&O, ultimately to Toll Shipping Pty, for service in
New Zealand.
Container and 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 was €67.5 million (2004: €64.7 million). Profit from
operations was €2.0 million compared with €0.5 million in 2004. This was a
substantial improvement in margin, due mainly to the completion of the extension
to our Dublin Container Terminal, but further improvement is necessary.
Additional fuel costs of €1.0 million and €1.5 million in higher ship charter
costs were incurred in the division.
Total containers shipped on continuing routes were down 5% at 231,000 teu
reflecting our concentration on better paying business and a challenging
environment with additional competitive capacity on the Irish Sea.
The cost outlook remains demanding, with increases in both fuel and ship charter
rates. There is a trend towards consolidation in the industry with three of our
competitors acquired during the period.
PRSI REBATE
In 1997 a refund scheme for employer contributions of social costs (PRSI) for
seafarers was introduced, bringing Ireland into line with the practice in many
other EU countries. (In the UK, seafarers in international waters are
effectively exempt from National Insurance). This was introduced for a four year
period up to 2000 and subsequently extended up to 31 December 2003. The Irish
Government announced an extension of the scheme in November 2004 subject to EU
approval which is awaited. A failure to renew this would cost the group in the
region of €2.5m per annum.
MERCHANT NAVY OFFICERS PENSION FUND (MNOPF)
In our 2004 Annual Report we disclosed that the deficit attributable to ICG in
respect of the MNOPF was in the range of £2.7 million to £6.2 million. The
trustees of the MNOPF have now confirmed that the actuarial deficit, as at
September 2005, is calculated at £3.27 million (€4.8 million approximately).
This will be recovered by way of additional contributions, together with
interest, over 9 years. As this is a defined benefit scheme it is intended to
account for it as such under IAS19 subject to receipt of the necessary financial
information from the MNOPF on a timely and regular basis.
FINANCE
Depreciation and amortisation in the half year was €12.8 million (2004: €12.8
million), while EBITDA for the 6 months amounted to €17.1 million (€15.1 million
in 2004). Cash generated from operations was €21.7 million compared to €21.5
million in the corresponding period in 2004. Capital expenditure in the period
was €8.7 million (2004: €8.3 million), mainly maintenance capital expenditure on
our vessels and investment in information technology, principally new passenger
and freight sales systems.
The average interest cost in the period was 4.4% compared with 4.6% in the first
half of 2004. Net debt at the end of the period amounted to €115.9 million. This
compares with €117.9 million at 31 December 2004.
The accounting policies used in the preparation of these interim results conform
to International Financial Reporting Standards (IFRS) in 2005. Information on
the impact of IFRS was previously released on 6th July 2005.
OUTLOOK
The peak tourist season, which is the most important period for us, has followed
the pattern of the first half with growth in freight but weaker car volumes on
the Irish Sea. With our new cost structure on our French route we have been able
to maintain volumes on that route but yields have reduced as we pass on our cost
savings in order to compete against subsidised competitors and increased air
access. Overall our car volumes are down 4% year to date while our roll on roll
off freight volumes are up 7%.
Given the changing patterns of travel behaviour and the higher level of fuel
costs we are committed to developing and implementing our proposals to achieve
staffing costs consistent with international norms.
John B. McGuckian
Chairman
8 September 2005
Enquiries: Eamonn Rothwell Tel: 353-1-6075628
Garry O'Dea Tel: 353-1-6075628
Email:mailto:%20info@icg.ie
Website: http://www.icg.ie/
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2005
Notes 30-Jun 30-Jun 31-Dec
2005 2004 2004
€m €m €m
Continuing operations 139.6 135.8 293.3
Revenue
Cost of sales (118.9) (115.8) (222.6)
20.7 20.0 70.7
Gross profit
(8.3) (8.3) (13.3)
Distribution costs
Administrative expenses (8.4) (9.4) (32.6)
Other operating expenses 0.3 - (1.5)
Exceptional restructuring costs - - (12.4)
4.3 2.3 10.9
Profit from operations
(2.6) (2.8) (5.4)
Finance costs
1.7 (0.5) 5.5
Profit/(loss) before taxation
(0.2) (0.1) (1.1)
Income tax expense
1.5 (0.6) 4.4
Profit/(loss) for the period:
all attributable to equity
holders of the parent
Earnings per ordinary share (cent)
All from continuing operations
- basic 4 6.4 (2.5) 18.7
- diluted 4 6.4 (2.5) 18.6
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
FOR THE SIX MONTHS ENDED 30 JUNE 2004
30 June 30 June 31 Dec
2005 2004 2004
€m €m €m
Exchange differenceson
translation of foreign
operations 5.3 4.3 (2.3)
Actuarial losses on defined
benefit pension schemes (3.1) (4.2) (14.1)
Other - 1.1 1.1
Net income / (expense)
recognised directly in equity 2.2 1.2 (15.3)
Profit for the period: all
attributable to equity holders
of the parent 1.5 0.6 4.4
Total recognised income &
expense for the year 3.7 1.8 (10.9)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2005
Share Share Capital Retained Total
Capital Premium Reserves Earnings
Balance at 1 January 2005 15.8 39.6 2.2 93.0 150.6
Exchange differences on
translation of
foreign arising operations - - - 5.3 5.3
Actuarial loss on defined
benefit pension schemes - - - (3.1) (3.1)
Net income recognised directly
in Equity - - - 2.2 2.2
Profit for the period - - - 1.5 1.5
Total recognised income and
expense for the period - - - 3.7 3.7
Redemption of redeemables hare
capital - - - (4.0) (4.0)
- - - (0.3) (0.3)
Balance at 30 June 2005 15.8 39.6 2.2 92.7 150.3
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2005
Assets Notes 30 June 30 June 31 Dec
2005 2004 2004
€m €m €m
Non current assets 5 301.4 315.0 297.7
Property, plant & equipment
Other intangible assets 0.7 0.3 0.1
Retirement benefit asset - 8.8 -
Other receivables 4.4 3.8 3.6
306.5 327.9 301.4
Current assets 0.9 1.0 0.6
Inventories
Trade & other receivables 38.1 48.5 42.6
Cash and cash equivalents 11.1 16.0 9.2
50.1 65.5 52.4
356.7 393.4 353.8
Total assets
Equity and liabilities
Capital and reserves
Called-up equity share capital 15.8 15.7 15.8
Share premium account 39.6 39.4 39.6
Capital reserves 2.2 2.2 2.2
Retained income 92.7 108.3 93.0
Equity attributable to equity 150.3 165.6 150.6
holders
93.7 100.3 92.3
Non-current liabilities
Bank loans
Obligations under finance leases 6.7 9.3 8.5
Retirement benefit obligation 5.9 - 2.6
Deferred tax liabilities 5.1 5.0 5.1
Provisions 1.6 6.6 6.2
113.0 121.2 114.7
62.1 67.5 56.7
Current liabilities
Trade & other payables
Tax liabilities 4.7 5.7 5.5
Obligations under finance leases 4.1 4.1 4.3
Bank loans & overdrafts 22.5 29.3 22.0
93.4 106.6 88.5
206.4 227.8 203.2
Total liabilities
356.7 393.4 353.8
Total equity and liabilities
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2005
30 June 30 June 31 Dec
2005 2004 2004
€m €m €m
Cash flow from operating activities
Profit / (loss) for the year 1.5 (0.6) 4.4
Adjustments for: 2.6 2.8 5.4
Finance costs (net)
Income tax expense 0.2 0.1 1.1
Pension service cost 2.0 1.3 2.6
Depreciation of property, plant 13.0 13.0 26.3
& equipment
Amortisation of deferred income (0.2) (0.2) (0.2)
Profit on disposal of property, - - (0.1)
plant & equipment
Decrease in provisions (4.3) - (0.7)
14.8 16.4 38.8
Cash flow from operating
activities before movements in
working capital (0.3) (0.3) 0.1
(Increase) / decrease in
inventories
Decrease / (increase) in 4.5 (0.2) 5.7
receivables
Increase / (decrease) in 4.6 6.4 (5.0)
payables
Decrease in pension obligation (1.8) (0.8) (0.5)
Increase in deferred income - - 0.3
21.8 21.5 39.4
Cash generated from operations
(0.9) 0.1 (0.5)
Income taxes paid
Interest paid (2.1) (3.5) (6.9)
Net cash from operating
activities 18.8 18.1 32.0
Investing activities
Interest received 0.3 0.7 0.6
Proceeds on disposal of
property, plant & Equipment 0.1 0.1 0.2
Purchases of property, plant and
equipment (8.1) (8.3) (13.5)
Purchase of intangible assets (0.6) - -
Net cash used in investing
activities (8.3) (7.5) (12.7)
Financing activities
Issue of ordinary share capital - 0.5 0.8
Redemption of redeemable shares (4.0) (3.5) (5.5)
Repurchase of own shares - (6.4) (7.9)
Repayments of borrowings (1.0) - (25.0)
Repayments of obligations under
finance leases (2.2) (1.6) (3.8)
New bank loans raised - 4.0 17.0
New finance leases raised 0.1 1.3 3.0
Decrease in bank overdrafts (0.3) (0.7) (0.4)
Net cash used in financing
activities (7.4) (6.4) (21.8)
Net increase / (decrease) in
cash and cash equivalents 3.1 4.2 (2.5)
Cash and cash equivalents at the
beginning of the year 9.2 12.2 12.2
Effect of foreign exchange rate
changes (1.2) (0.4) (0.5)
Cash and cash equivalents at the
end of the year
Bank balances and cash 11.1 16.0 9.2
NOTES TO THE FINANCIAL STATEMENTS
AS AT 30 JUNE 2005
1. International Financial Reporting Standards
Irish Continental Group plc (ICG) has adopted International Financial Reporting
Standards (IFRS) as its primary accounting basis for all reporting periods
beginning on or after 1 January 2005.
Full details of the accounting policies adopted by the Group on implementation
of IFRS, and on the impact on the reported results and balance sheet of the
Group at 31 December 2004 and 30 June 2004 of the transition to IFRS, were
published on 6 July 2005 and are available on the Group's website www.icg.ie.
2. Segmental information: Analysis by class of business
6 months ended 12 months ended
30 June 2005 30 June 2004 31 Dec 2004
Revenue Profit Revenue Profit Revenue Profit
€m €m €m €m €m €m
Ferries & Travel 72.5 2.3 71.5 1.8 164.3 20.8
Container and Terminal 67.5 2.0 64.7 0.5 129.8 2.5
Intersegment (0.4) - (0.4) - (0.8) -
Net Interest - (2.6) - (2.8) - (5.4)
Exceptional items - - - - - (12.4)
139.6 1.7 135.8 (0.5) 293.3 5.5
3. Redemptions of preference shares / dividend
The Company has decided to redeem one redeemable share per ICG unit on 4
November 2005 to shareholders on the register at 14 October 2005, for a cash
consideration of 9.91875c per redeemable share (2004: 8.625c). No interim
dividend will be paid.
4. Earnings per share
6 months 6 months 12 months
to 30 June to 30 June to 31 Dec
2005 2004 2004
Basic earnings per share 1.5 (0.6) 4.4
Earnings (profit / (loss) after
tax)
Weighted average shares in issue 23.3 23.7 23.5
during the period
Earnings / (loss) per share 6.4 (2.5) 18.7
(cent)
Diluted earnings per share
Earnings (profit / (loss) after
tax) 1.5 (0.6) 4.4
Diluted weighted average shares
in issue during the period 23.4 23.9 23.6
Earnings / (loss) per share
(cent) 6.4 (2.5) 18.6
Adjusted earnings per share -
basic
Earnings (profit / (loss) after
tax) before exceptional item 1.5 (0.6) 16.8
Weighted average shares in issue 23.3 23.7 23.5
during the period
Earnings / (loss) per share 6.4 (2.5) 71.5
(cent)
Adjusted earnings per
share-diluted
Earnings (profit / loss after
tax) before exceptional item 1.5 (0.6) 16.8
Diluted weighted average shares
in issue during the period 23.4 23.9 23.6
Earnings / (loss) per share
(cent) 6.4 (2.5) 71.2
5. Property, plant and equipment
Assets Ships Property Plant & Vehicles Total
under €m €m equipment €m €m
construction €m
€m
Cost or valuation 4.8 365.9 23.6 55.7 2.4 452.4
At 1 January 2005
Additions 1.3 7.0 - 0.1 0.3 8.7
Disposals (5.1) - (0.4) (5.5)
Exchange adjustment (1.5) 16.1 - 0.3 - 14.9
At 30 June 2005 4.6 383.9 23.6 56.1 2.3 470.5
- 113.8 6.5 33.1 1.3 154.7
Accumulated depn
At 1 January 2005
Charge for period - 10.8 0.2 1.8 0.2 13.0
Disposals - (5.1) (0.3) (5.4)
Exchange adjustment - 5.9 - 0.9 - 6.8
At 30 June 2005 - 125.4 6.7 35.8 1.2 169.1
4.8 252.1 17.1 22.6 1.1 297.7
Net book amounts
At 1 January 2005
At 30 June 2005 4.6 258.5 16.9 20.3 1.1 301.4
At 30 June 2005 the Group has entered into commitments to the value of €3.7m for
the purchase of fixed assets.
6. Provisions
At 31 December 2004 the Group carried a provision of €4.5 million in respect of
restructuring payments. This has been used in the 6 months to 30 June 2005.
Accordingly at 30 June 2005 the balance on this provision stands at €nil.
7. Net debt
Cash Overdrafts Loans Leases Total
€m €m €m €m €m
At 31 December 2004 9.2 - - - 9.2
Current assets
Creditors due within one year - (0.3) (21.7) (4.3) (26.3)
Creditors due after one year - - (92.3) (8.5) (100.8)
9.2 (0.3) (114.0) (12.8) (117.9)
Cash flow 3.1 0.3 1.0 2.2 6.6
Foreign exchange rate changes (1.2) - (3.2) (0.2) (4.6)
11.1 - (116.2) (10.8) (115.9)
11.1 - - - 11.1
At 30 June 2005
Current assets
Creditors due within one year - - (22.5) (4.1) (26.6)
Creditors due after one year - - (93.7) (6.7) (100.4)
11.1 - (116.2) (10.8) (115.9)
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