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: info@icg.ie
Website: www.icg.ie
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2005
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