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IRISH CONTINENTAL GROUP

PRELIMINARY STATEMENT OF RESULTS
FOR THE SIX MONTHS TO 30TH JUNE 2003

KEY POINTS

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.

At an industry level there is a growing trend of consolidation among the operators on the long sea routes. With our concentration on the more efficient short routes into Ireland we are well placed to benefit from such a restructuring and we look forward to the remainder of the year with confidence.

T.C. Toner, Chairman
12 September 2003

Enquiries: Eamonn Rothwell Tel: 353-1-6075628
Garry O’Dea Tel: 353-1-6075628
Email: info@icg.ie
Website: www.icg.ie