Final Results
Irish Continental Group PLC
07 March 2005
PRELIMINARY STATEMENT OF RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2004
Highlights 2004 2003
• Turnover €293.3 million €304.3 million
• EBITDA* €51.5 million €53.4 million
• EBIT* €26.5 million €28.9 million
• Exceptional Charges €11.9 million €4.8 million
• Adjusted EPS* 84.7c 91.4c
* pre exceptional charges
Comment
In comment, Chairman, John B. McGuckian stated,
'ICG has had a resilient performance in 2004 in the face of extremely difficult
competitive conditions. We have taken resolute action to reduce our costs in
this increasingly competitive market place. We are committed to addressing our
cost base going forward. This has cost us both in terms of exceptional charges
and income lost through industrial action. Nevertheless we see this as a start
in reducing our future cost base to give us the ability to compete effectively
in 2005 and beyond '.
PRELIMINARY STATEMENT OF RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2004
RESULTS
Irish Continental Group (plc) ('ICG' or the 'Group') today reports its results
for the year to 31 December 2004. The results are significantly influenced by
the costs incurred in our restructuring programme and the loss of revenue
arising from the industrial dispute in December 2004.
Turnover for the year amounted to €293.3 million (2003: €304.3 million) while
operating profit before tax and before exceptional charges amounted to €26.5
million (2003: €28.9 million). Adjusted EPS (i.e. before exceptional items and
goodwill amortisation) amounted to 84.7cent (2003: 91.4 cent).
The interest charge fell from €6.4 million to €5.4 million arising from our
strong cash flow.
There were exceptional restructuring charges of €11.9 million (2003: €4.8
million) comprising the redundancy cost in respect of the crew of the
Ireland-France vessel, 'Normandy' of €8.2 million and other restructuring costs
of €3.7 million in shore side activities. The Normandy is now crewed by a third
party manning agency at significantly lower cost.
Basic EPS, after taking account of such exceptional charges, was 34.0 cent
(2003: 71.6 cent).
REDEMPTION
The Board has decided to redeem one Redeemable Share per ICG unit for a cash
consideration of 17.25 cent per Redeemable Share. In November 2004 one
redeemable share per ICG unit was redeemed for a consideration of 8.625 cent per
share. This amounts to a total payment to shareholders of 25.875 cent per
Redeemable Share compared with 22.5 cent in the preceding 12 months.
FERRIES DIVISION
The Ferries division comprises Irish Ferries, the leading ferry operator to the
Republic of Ireland, the Group's ship chartering activities, and travel and
holiday services.
Turnover in the division was €164.3 million (2003: €170.2 million) while
operating profit, before exceptional charges, was €24.0 million (2003: €25.3
million). Exceptional charges relating to the restructuring of Irish Ferries
amounted to €9.9m.
Passenger Revenue
Overall passenger numbers were affected by difficult market conditions and by
the effects of industrial disputes in February and December, the latter dispute
being more significant. Market conditions reflected significant additional
airline competition, including low cost carriers.
Total passenger numbers fell 7.4% to 1.59 million while car numbers fell by 5.7%
to 383,000. The total number of sailings operated fell by 7% to 4,662 which
partially offset the revenue loss.
Freight Revenue
In the Roll on Roll off freight market we achieved a record volume of traffic,
up 1.5% to 204,000 trucks carried (with 3% fewer sailings of our conventional
Irish Sea vessels).
During the year we benefited from the closure of P&O's Dublin Mostyn service in
April although this was offset by the full year effect of additional competing
capacity on Dublin Holyhead.
Costs
In the light of the prevailing competitive conditions we focussed our attentions
during the year on cost reductions.
In the first half of the year we successfully concluded our 'Benchmarking'
programme on the Irish Sea routes. This was achieved within the budgeted cost of
€4.8 million (which had been provided for in financial year 2003). This is
generating tangible savings in excess of €2 million per annum.
On the overnight route to France, where staff costs are proportionally much
higher due to the nature of the route we were unable to continue the route with
the existing crew structure. Consequently we have employed a third party crewing
agency to crew the ship and we offered the existing crew relocation to the Irish
Sea or a voluntary severance package. 90% of the staff have left the group under
voluntary severance, which has cost approximately €8.2 million, with the balance
transferring to the Irish Sea. In December 2004 we lost 10 days sailings due to
industrial action on the Irish Sea which was initiated subsequent to the
successful implementation of the severance programme.
Chartering
Both the Pride of Bilbao and Pride of Cherbourg remained on charter to P&O
during the period. P&O sub-chartered the Pride of Cherbourg to Stena Line
subsequent to the year end and the vessel is now named 'Stena Challenger' and
currently trading in the Baltic. Both charters to P&O are firm until 2007, with
charterer's options to extend.
CONTAINER AND TERMINAL DIVISION
The division includes our intermodal freight services Eucon, Feederlink and
Eurofeeders as well as our strategically located container port in Dublin.
Turnover in the division was €129.8 million compared with €134.8 million in 2003
while operating profit was €2.5 million (2003: €3.6 million).
Overall container volumes shipped rose by 3.3% to 501,000 teu while units
handled at our terminal in Dublin, DFT, rose 10.9% to 145,300 lifts.
Overall however the results were disappointing due to intensely competitive
pricing combined with rising costs for chartered vessels, rising fuel costs, and
the late completion of the development of our new berth by Dublin Port.
There were exceptional charges in the Division of €1.6m relating to the
restructuring of work practices to comply with the Working Time Directive and a
reorganisation in maintenance services.
The expansion programme at DFT was completed in June and this has provided us
with additional capacity with which to grow the terminal business in 2005.
FINANCE
EBITDA before restructuring charges for the year was €51.5 million (2003: €53.4
million). Our interest payments were €6.3 million and tax payments amounted to
€0.5 million. Capital expenditure was €13.5 million while restructuring payments
(including those provided for in 2003) totalled €12.2 million.
We returned €5.5 million to shareholders via redemption of redeemable shares
(2003: €5.0 million including dividends) whilst we also bought back €7.9 million
of equity (2003: €9.1 million the previous year).
As a result of our strong cash flow, net debt at year end was down to €117.9
million. (2003: €125 million).
IFRS
As required by the EU we will be reporting from 1 January 2005 in accordance
with International Financial Reporting Standards (IFRS) rather than GAAP. The
principal area of divergence between IFRS and GAAP are in the accounting for
retirement benefits and pensions. Under IFRS the charge for pension benefits for
current service would have been Euro 2.2 million higher in 2004 than under
SSAP24.
BOARD
There were a number of changes to the Board during the year. In March, Bernard
Somers was co-opted to the Board and he was elected at the following AGM. In
April I succeeded Tom Toner as Chairman upon his retirement. The Board thanks
him for his committed chairmanship since flotation in 1988.
In May the untimely death took place of Alex Mullin, non-executive director, who
had retired from the Group in 2001. Alex was instrumental in the development of
the Group in the 1980's and 1990's particularly by way of his involvement in the
acquisition of B&I Line in 1992. He will be missed.
CURRENT TRADING
The markets in which we operate, passenger and freight transport, remain
extremely competitive. Our task is to ensure both our cost base and our capital
base are appropriate to the markets in which we compete. We are adjusting our
pricing in the passenger market more closely to the airline model, with
simplified 'per person' fares and no restrictions on length of stay.
In the freight markets, both RoRo and LoLo, increased prices are necessary to
reflect the increasing external costs such as fuel, ship chartering and port
costs.
While trading in the seasonally weaker early months of the year is not
significant in the context of performance of the year as a whole, trading in the
first 2 months of the financial year has been in line with last year.
John B. McGuckian,
Chairman,
March 7th 2005
Enquiries:
Eamonn Rothwell, Managing Director, +353.1.6075628
Garry O'Dea, Finance Director +353.1.6075628
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 December 2004
2004 2003
Before
Exceptional Exceptional Total Total
items items
Notes €m €m €m €m
Turnover 1 293.3 - 293.3 304.3
Operating costs 2 (266.8) (11.9) (278.7) (280.2)
______ ______ ______ ______
Operating profit 26.5 (11.9) 14.6 24.1
Net interest payable (5.4) - (5.4) (6.4)
______ ______ ______ ______
Profit on ordinary activities before 21.1 (11.9) 9.2 17.7
taxation
Taxation (1.2) - (1.2) (0.3)
______ ______ ______ ______
Profit retained for the year 19.9 (11.9) 8.0 17.4
______ ______ ______ ______
Basic earnings per share 4 34.0c 71.6c
Diluted earnings per share 4 33.9c 71.3c
Adjusted earnings per share 4 84.7c 91.4c
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 31 December 2004
2004 2003
€m €m
Profit attributable to shareholders of 8.0 17.4
Irish Continental Group plc.
Exchange translation adjustment (2.3) (8.9)
______ ______
Total recognised gains for the year 5.7 8.5
______ ______
CONSOLIDATED BALANCE SHEET
at 31 December 2004
Notes 2004 2003
€m €m
Fixed Assets
Tangible assets 320.4 334.5
______ ______
320.4 334.5
______ ______
Current assets
Stocks 0.6 0.7
Debtors 46.5 51.6
Cash at bank and in hand 9.2 12.2
______ _______
56.3 64.5
______ ________
Creditors
(Amounts falling due within one year)
Bank loans and overdrafts 39.0 25.5
Trade and other creditors 56.2 61.2
Obligations under finance leases 4.3 3.4
Taxation and social welfare 5.5 5.5
______ _______
105.0 95.6
______ ______
Net current liabilities (48.7) (31.1)
______ ______
Total assets less current liabilities 271.7 303.4
_________ _________
Creditors
(Amounts falling due after more than one year)
Bank loans 75.3 98.1
Obligations under finance leases 8.5 10.2
Provision for liabilities and charges 11.3 11.6
______ _______
95.1 119.9
______ _______
Capital and reserves
Called up share capital 15.8 15.7
Share premium account 39.6 38.9
Capital reserves 0.1 0.1
Capital redemption reserve 2.1 2.1
Profit and loss account 119.0 126.7
______ ________
Shareholders' funds (equity interests) 5 176.6 183.5
________ ________
271.7 303.4
______ ______
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2004
Notes 2004 2003
€m €m
Operating activities
Net cash inflow from operating activities 6 39.5 54.4
______ ______
Servicing of finance
Net interest paid (6.3) (6.0)
______ ______
Net cash outflow from servicing of finance (6.3) (6.0)
______ ______
Taxation
Net corporation tax paid (0.5) (0.3)
______ ______
Capital expenditure
Purchase of fixed assets (13.5) (8.9)
Sale of fixed assets 0.2 0.1
______ ______
Net cash outflow from investing activities (13.3) (8.8)
______ ______
Equity dividends paid - (3.2)
______ ______
Net cash inflow before financing 19.4 36.1
______ ______
Financing
Issue of ordinary share capital 0.8 0.7
Repurchase of ordinary share capital (7.9) (9.8)
Redemption of redeemable shares (5.5) (1.8)
Drawdown of loans 17.0 -
Inception of finance leases 3.0 2.8
Repayment of amounts borrowed (25.0) (25.4)
Capital element of finance lease payments (3.8) (2.5)
______ ______
Net cash outflow from financing (21.4) (36.0)
______ ______
(Decrease) / increase in cash 7 (2.0) 0.1
______ ______
1. Segmental information
Analysis by class of business
Turnover Profit Before Tax Net Assets
2004 2003 2004 2003 2004 2003
€m €m €m €m €m €m
Ferries and Travel 164.3 170.2 24.0 25.3 268.2 290.0
Container and Terminal 129.8 134.8 2.5 3.6 30.9 30.5
Intersegment turnover (0.8) (0.7) - - - -
_____ _____ _____ _____ _____ _____
293.3 304.3 26.5 28.9 299.1 320.5
Exceptional items & goodwill - - (11.9) (4.8) - -
Net interest/debt - - (5.4) (6.4) (117.9) (125.0)
Unallocated liabilities - - - - (9.3) (12.0)
Construction in progress - - - - 4.7 -
_____ _____ _____ _____ _____ _____
293.3 304.3 9.2 17.7 176.6 183.5
_____ _____ _____ _____ _____ _____
Analysis by origin
2004 2003
€m €m
Ireland 123.3 123.8
United Kingdom 93.4 101.9
Continental Europe 76.6 78.6
______ ______
293.3 304.3
______
______
2. Operating costs
Included in operating costs are the following amounts in respect of exceptional items.
2004 2003
€m €m
Restructuring costs 11.9 4.8
______ ______
2004
During 2004, a review of the profitability of the Ireland-France route was
undertaken which showed that the route could not be viably operated using the
existing crewing structure. Following this review a third party crewing agency
was employed to crew the vessel operating on this route, with redundancy or
redeployment to the Irish Sea offered to existing staff. In addition the
decision was taken on 23 February 2005 to close our remaining two UK travel
agency shops and an impairment review was performed on the assets.
Restructuring also took place in our terminal division where changes in work
practices were agreed to comply with the Working Time Directive, as well as
restructuring in maintenance services arising from the re-equipping of the
container terminal.
2003
In December 2003 Irish Ferries entered into a process of consultation with its
employees in order to generate savings in payroll costs through changes in work
practices. The 2003 restructuring charge represents the estimated cost of
proposed changes as at 31 December 2003.
3. Redemption of redeemable shares
The company has decided to redeem one redeemable share per ICG unit on 20 May
2005, to shareholders on the register at 22 April 2005, for a cash consideration
of 17.25 cent per redeemable share. Accordingly no dividend will be paid.
4. Earnings per share
The calculation of basic earnings per share is based on a profit of €8.0m (2003:
€17.4m) and 23.5 million shares (2004: 24.3 million) being the weighted average
number of shares in issue during the period.
Diluted earnings per share is computed in accordance with FRS 14 and is based on
diluted weighted average shares in issue of 23.6 million (2003: 24.4 million).
Adjusted earnings per share is based on profit attributable to shareholders
before exceptional items.
5. Reconciliation of movement in shareholder's funds
2004 2003
€m €m
Total recognised gains relating to the period 5.7 8.5
Capital introduced 0.8 0.7
Capital repurchased (7.9) (9.8)
Capital redeemed - premium paid on redemption (5.5) (1.8)
______ ______
Net decrease in Shareholders' Funds (6.9) (2.4)
Shareholders' Funds at beginning of year 183.5 185.9
______ ______
Shareholders' Funds at end of year 176.6 183.5
______ ______
6. Reconciliation of operating profit to cash inflow from operating activities
2004 2003
€m €m
Operating profit 14.6 24.1
Depreciation charges 25.2 24.8
Movement in restructuring provision (0.3) 4.8
Net grant receipt / (amortisation) 0.1 (0.3)
(Profit) / loss on disposal of assets (0.1) 0.1
Decrease in prepayment of pension contributions (0.5) (1.6)
Movement in working capital:
Decrease in stocks 0.1 0.1
Decrease / (increase) in debtors 5.8 (1.3)
(Decrease) / increase in creditors (5.4) 3.7
______ ______
Net cash inflow from operating activities 39.5 54.4
______ ______
7. Reconciliation of net cash flow to movement in net debt
2004 2003
€m €m
Decrease in cash (2.4) (1.4)
Decrease in overdraft 0.4 1.5
Decrease in debt 8.8 25.1
______ ______
Change in net debt resulting from cash flows 6.8 25.2
Translation adjustment 0.3 7.2
______ ______
Net movement 7.1 32.4
Opening net debt (125.0) (157.4)
______ ______
Closing net debt (117.9) (125.0)
______ ______
8. Analysis of net debt
Cash Overdrafts Bank loans Leases Total
€m €m €m €m €m
At 1 January 2004
Current assets 12.2 - - - 12.2
Creditors due within one year - (0.7) (24.8) (3.4) (28.9)
Creditors due after one year - - (98.1) (10.2) (108.3)
Cash inflow/(outflow)
from financing (2.4) 0.4 8.0 0.8 6.8
Foreign exchange rate changes (0.6) - 0.9 - 0.3
______ ______ ______ ______ ______
At 31 December 2004 9.2 (0.3) (114.0) (12.8) (117.9)
______ ______ ______ ______ ______
Analysed as:
Current assets 9.2 - - - 9.2
Creditors due within one year - (0.3) (38.7) (4.3) (43.3)
Creditors due after one year - - (75.3) (8.5) (83.8)
______ ______ ______ ______ ______
At 31 December 2004 9.2 (0.3) (114.0) (12.8) (117.9)
______ ______ ______ ______ ______
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