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Irish Continental Group

Interim Results
For The Period Ended 30 June 2006

Highlights

Comment In comment, Chairman, John B. McGuckian, stated:

“We have achieved a solid result in challenging circumstances. Our labour cost savings and capacity management have compensated for a demanding trading environment.”

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 2006

Results
The Board of Irish Continental Group plc (ICG) reports that, in the seasonally less significant first half of the year, the Group recorded EBITDA of €18.5 million compared with €17.1 million in the same period in 2005.  Revenue for the half year was €141.9 million (2005: €139.6 million). Profit from operations was €5.5 million, compared with €4.3 million in the same period in 2005. Finance costs were up slightly at €2.8 million.  Profit before tax was €2.7 million compared with €1.7 million in the first half of 2005. The tax charge was €0.2 million (2005: €0.2 million).  EPS was 10.6c compared with 6.4c in 2005. 

The Board has now decided to redeem one redeemable share per ICG unit for a cash consideration of 10.92 c per redeemable share. This will be paid on 27 October 2006 to shareholders on the register at 13 October 2006. The consideration per redeemable share represents an increase of 10% on the interim redemption premium of 9.91875 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 €72.3 million (2005: €72.5 million). Profit from operations was €4.3 million (2005: €2.3 million).

Irish Ferries’ core tourist business is car tourism and this market has been affected by substantial additional airline competition in recent years. We have reduced frequency of our fast ferry from three to two round trips a day.  This represents a reduction of frequency for passengers (but not freight) of 10%.  Our total cars carried were down 10% at 145,000 (2005: 162,000), which is in line with our reduction in capacity.  Total passenger numbers were down 11%. 

The overall Roll on Roll off freight market continues to develop and we also continue to grow, with our volumes up 3% to 110,000 units. (There was no reduction in frequency in our conventional vessels).

Our initiative to reduce our crewing costs to internationally competitive levels generated savings in line with expectations in the half year.  Fuel costs remained high and were €2 million more in Irish Ferries than in the same period last year, although we are recovering a substantial portion of the increase via surcharges.

In ship chartering the Pride of Bilbao remains on charter to P&O, servicing their Spanish route from Portsmouth while the former Pride of Cherbourg has been subchartered by P&O, ultimately to Toll Shipping Pty, for service in New Zealand.

Restructuring

During the half year we completed the restructuring of our crewing arrangements.  Our vessels are now principally crewed by third party crewing agencies at internationally competitive cost levels.  The severance costs involved on this amounted to a net €29.1million, which was taken as an exceptional charge against the 2005 results.  The figure is net of a rebate of the statutory redundancy element of the severance package of €4.1million.  Application has been made to the appropriate authorities for the refund of this rebate.

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 €70.2 million (2005: €67.5 million). Profit from operations was €1.2 million compared with €2.0 million in 2005. Additional fuel costs of €2.0 million and €1.8 million in higher ship charter costs were incurred in the division.

Total containers shipped on continuing routes were down 1% at 227,000 teu.,while the number of units lifted at our stevedoring facility in Dublin (DFT) was up 1% at 79,000 lifts.

Finance

Depreciation and amortisation in the half year was €13.0 million (2005: €12.8 million), while EBITDA for the 6 months amounted to €18.5 million (€17.1 million in 2005). Capital expenditure in the period was €8.4 million (2005: €8.7 million), mainly maintenance capital expenditure on our vessels and investment in information technology. The average interest cost in the period was 4.6% compared with 4.4% in the first half of 2005. Net debt at the end of the period amounted to €132.4 million. This compares with €105.9 million at 31 December 2005, the increase due mainly to the severance programme.

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, influenced by our reduction in frequency.  Overall our car volumes are down 12% year to date while our Roll on Roll off freight volumes are up 3%.

New competing freight capacity coming on stream in the second half may affect our ability to grow our freight business, against a backdrop of expected market growth. Overall we expect a challenging revenue environment in the second half mitigated by the flow through of our cost savings.

John B. McGuckian
Chairman
7 September 2006

Enquiries: Eamonn Rothwell
Tel: +353-1-6075628

Garry O’Dea
Tel: +353-1-6075628

Email: info@icg.ie
Website: www.icg.ie

Consolidated Statement Of Changes In Equity
For The Six Months Ended 30 June 2006

Notes To The Financial Statements
As At 30 June 2006

1.  Accounting policies

These June 2006 interim consolidated financial statements are for the six months ended 30 June 2006. The interim financial report has been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) and the accounting policies and methods of computation used in the interim financial statements are consistent with those used in the Group 2005 Annual Report, which is available at www.icg.ie.

The figures included in the financial statements for the six months ended 30 June 2006 and 30 June 2005 are unaudited. The full year figures for the twelve months ended 31 December 2005 were extracted from the audited financial statements for that year.

2.  Segmental information: Analysis by class of business

3. Redemptions of preference shares / dividend

The Company has decided to redeem one redeemable share per ICG unit on 27 October 2006 to shareholders on the register at 13 October 2006 for a cash consideration of 10.92 cent per redeemable share (2005: 9.91875cent).  No interim dividend will be paid.

4.  Earnings / (loss) per share

5. Property, plant and equipment

At 30 June 2006 the Group has entered into commitments to the value of €1.3 million for the purchase of fixed assets.

6. Intangible assets

7. Provisions

At 31 December 2005 the Group carried provisions of €35.8 million in respect of restructuring payments, claims provision and deferred grant.  €33.1 million has been used in the 6 months to 30 June 2006.  Accordingly at 30 June 2006 the balance on these provisions stands at €2.7 million.

8. Net debt

9. Tax

Corporation tax for the interim period is estimated based on the best estimates of the weighted average annual corporation tax rate expected to apply for the full financial year.

10. Retirement benefit schemes

Retirement benefit scheme valuations have been updated at the half year to reflect management's best estimates of scheme assets and schemes liabilities. Scheme assets have been valued as per investment managers valuations at 30 June 2006. Scheme liabilities have been estimated using the same assumptions as at 31 December 2005 except that the discount rate has been increased to 4.75% in line with the underlying long term interest rate and European AAA rated bonds.

11. Related party transactions

Transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation.

 
12. Board approval

This interim report was approved by the Board of Directors of Irish Continental Group plc on 6 September 2006.