7th Mar 2005 07:02
Irish Continental Group PLC07 March 2005 PRELIMINARY STATEMENT OF RESULTSFOR 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 difficultcompetitive conditions. We have taken resolute action to reduce our costs inthis increasingly competitive market place. We are committed to addressing ourcost base going forward. This has cost us both in terms of exceptional chargesand income lost through industrial action. Nevertheless we see this as a startin reducing our future cost base to give us the ability to compete effectivelyin 2005 and beyond ". PRELIMINARY STATEMENT OF RESULTSFOR THE YEAR ENDED 31 DECEMBER 2004 RESULTS Irish Continental Group (plc) ("ICG" or the "Group") today reports its resultsfor the year to 31 December 2004. The results are significantly influenced bythe costs incurred in our restructuring programme and the loss of revenuearising from the industrial dispute in December 2004. Turnover for the year amounted to €293.3 million (2003: €304.3 million) whileoperating profit before tax and before exceptional charges amounted to €26.5million (2003: €28.9 million). Adjusted EPS (i.e. before exceptional items andgoodwill amortisation) amounted to 84.7cent (2003: 91.4 cent). The interest charge fell from €6.4 million to €5.4 million arising from ourstrong cash flow. There were exceptional restructuring charges of €11.9 million (2003: €4.8million) comprising the redundancy cost in respect of the crew of theIreland-France vessel, "Normandy" of €8.2 million and other restructuring costsof €3.7 million in shore side activities. The Normandy is now crewed by a thirdparty 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 cashconsideration of 17.25 cent per Redeemable Share. In November 2004 oneredeemable share per ICG unit was redeemed for a consideration of 8.625 cent pershare. This amounts to a total payment to shareholders of 25.875 cent perRedeemable Share compared with 22.5 cent in the preceding 12 months. FERRIES DIVISION The Ferries division comprises Irish Ferries, the leading ferry operator to theRepublic of Ireland, the Group's ship chartering activities, and travel andholiday services. Turnover in the division was €164.3 million (2003: €170.2 million) whileoperating profit, before exceptional charges, was €24.0 million (2003: €25.3million). Exceptional charges relating to the restructuring of Irish Ferriesamounted to €9.9m. Passenger Revenue Overall passenger numbers were affected by difficult market conditions and bythe effects of industrial disputes in February and December, the latter disputebeing more significant. Market conditions reflected significant additionalairline 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 whichpartially 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 conventionalIrish Sea vessels). During the year we benefited from the closure of P&O's Dublin Mostyn service inApril although this was offset by the full year effect of additional competingcapacity on Dublin Holyhead. Costs In the light of the prevailing competitive conditions we focussed our attentionsduring 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 isgenerating tangible savings in excess of €2 million per annum. On the overnight route to France, where staff costs are proportionally muchhigher due to the nature of the route we were unable to continue the route withthe existing crew structure. Consequently we have employed a third party crewingagency to crew the ship and we offered the existing crew relocation to the IrishSea or a voluntary severance package. 90% of the staff have left the group undervoluntary severance, which has cost approximately €8.2 million, with the balancetransferring to the Irish Sea. In December 2004 we lost 10 days sailings due toindustrial action on the Irish Sea which was initiated subsequent to thesuccessful implementation of the severance programme. Chartering Both the Pride of Bilbao and Pride of Cherbourg remained on charter to P&Oduring the period. P&O sub-chartered the Pride of Cherbourg to Stena Linesubsequent to the year end and the vessel is now named "Stena Challenger" andcurrently trading in the Baltic. Both charters to P&O are firm until 2007, withcharterer's options to extend. CONTAINER AND TERMINAL DIVISION The division includes our intermodal freight services Eucon, Feederlink andEurofeeders as well as our strategically located container port in Dublin. Turnover in the division was €129.8 million compared with €134.8 million in 2003while operating profit was €2.5 million (2003: €3.6 million). Overall container volumes shipped rose by 3.3% to 501,000 teu while unitshandled at our terminal in Dublin, DFT, rose 10.9% to 145,300 lifts. Overall however the results were disappointing due to intensely competitivepricing combined with rising costs for chartered vessels, rising fuel costs, andthe late completion of the development of our new berth by Dublin Port. There were exceptional charges in the Division of €1.6m relating to therestructuring of work practices to comply with the Working Time Directive and areorganisation in maintenance services. The expansion programme at DFT was completed in June and this has provided uswith additional capacity with which to grow the terminal business in 2005. FINANCE EBITDA before restructuring charges for the year was €51.5 million (2003: €53.4million). 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 millionof equity (2003: €9.1 million the previous year). As a result of our strong cash flow, net debt at year end was down to €117.9million. (2003: €125 million). IFRS As required by the EU we will be reporting from 1 January 2005 in accordancewith International Financial Reporting Standards (IFRS) rather than GAAP. Theprincipal area of divergence between IFRS and GAAP are in the accounting forretirement benefits and pensions. Under IFRS the charge for pension benefits forcurrent service would have been Euro 2.2 million higher in 2004 than underSSAP24. BOARD There were a number of changes to the Board during the year. In March, BernardSomers was co-opted to the Board and he was elected at the following AGM. InApril I succeeded Tom Toner as Chairman upon his retirement. The Board thankshim for his committed chairmanship since flotation in 1988. In May the untimely death took place of Alex Mullin, non-executive director, whohad retired from the Group in 2001. Alex was instrumental in the development ofthe Group in the 1980's and 1990's particularly by way of his involvement in theacquisition of B&I Line in 1992. He will be missed. CURRENT TRADING The markets in which we operate, passenger and freight transport, remainextremely competitive. Our task is to ensure both our cost base and our capitalbase are appropriate to the markets in which we compete. We are adjusting ourpricing in the passenger market more closely to the airline model, withsimplified "per person" fares and no restrictions on length of stay. In the freight markets, both RoRo and LoLo, increased prices are necessary toreflect the increasing external costs such as fuel, ship chartering and portcosts. While trading in the seasonally weaker early months of the year is notsignificant in the context of performance of the year as a whole, trading in thefirst 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, +353.1.6075628Garry O'Dea, Finance Director +353.1.6075628 CONSOLIDATED PROFIT AND LOSS ACCOUNTfor the year ended 31 December 2004 2004 2003 Before Exceptional Exceptional Total Total items items Notes •m •m •m •mTurnover 1 293.3 - 293.3 304.3Operating costs 2 (266.8) (11.9) (278.7) (280.2) ______ ______ ______ ______Operating profit 26.5 (11.9) 14.6 24.1Net interest payable (5.4) - (5.4) (6.4) ______ ______ ______ ______Profit on ordinary activities before 21.1 (11.9) 9.2 17.7taxationTaxation (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 71.6cDiluted earnings per share 4 33.9c 71.3cAdjusted earnings per share 4 84.7c 91.4c CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESfor the year ended 31 December 2004 2004 2003 •m •mProfit attributable to shareholders of 8.0 17.4Irish Continental Group plc.Exchange translation adjustment (2.3) (8.9) ______ ______Total recognised gains for the year 5.7 8.5 ______ ______CONSOLIDATED BALANCE SHEETat 31 December 2004 Notes 2004 2003 •m •mFixed AssetsTangible assets 320.4 334.5 ______ ______ 320.4 334.5 ______ ______Current assetsStocks 0.6 0.7Debtors 46.5 51.6Cash 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 25.5Trade and other creditors 56.2 61.2Obligations under finance leases 4.3 3.4Taxation 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 98.1Obligations under finance leases 8.5 10.2Provision for liabilities and charges 11.3 11.6 ______ _______ 95.1 119.9 ______ _______Capital and reservesCalled up share capital 15.8 15.7Share premium account 39.6 38.9Capital reserves 0.1 0.1Capital redemption reserve 2.1 2.1Profit and loss account 119.0 126.7 ______ ________Shareholders' funds (equity interests) 5 176.6 183.5 ________ ________ 271.7 303.4 ______ ______ CONSOLIDATED CASH FLOW STATEMENTfor the year ended 31 December 2004 Notes 2004 2003 •m •mOperating activitiesNet cash inflow from operating activities 6 39.5 54.4 ______ ______Servicing of financeNet interest paid (6.3) (6.0) ______ ______Net cash outflow from servicing of finance (6.3) (6.0) ______ ______TaxationNet corporation tax paid (0.5) (0.3) ______ ______Capital expenditurePurchase 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 ______ ______FinancingIssue of ordinary share capital 0.8 0.7Repurchase 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 2.8Repayment 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 informationAnalysis by class of business Turnover Profit Before Tax Net Assets 2004 2003 2004 2003 2004 2003 •m •m •m •m •m •mFerries and Travel 164.3 170.2 24.0 25.3 268.2 290.0Container and Terminal 129.8 134.8 2.5 3.6 30.9 30.5Intersegment turnover (0.8) (0.7) - - - - _____ _____ _____ _____ _____ _____ 293.3 304.3 26.5 28.9 299.1 320.5Exceptional 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 •mIreland 123.3 123.8United Kingdom 93.4 101.9Continental Europe 76.6 78.6 ______ ______ 293.3 304.3 ______ ______ 2. Operating costsIncluded in operating costs are the following amounts in respect of exceptional items. 2004 2003 •m •mRestructuring costs 11.9 4.8 ______ ______ 2004During 2004, a review of the profitability of the Ireland-France route wasundertaken which showed that the route could not be viably operated using theexisting crewing structure. Following this review a third party crewing agencywas employed to crew the vessel operating on this route, with redundancy orredeployment to the Irish Sea offered to existing staff. In addition thedecision was taken on 23 February 2005 to close our remaining two UK travelagency shops and an impairment review was performed on the assets. Restructuring also took place in our terminal division where changes in workpractices were agreed to comply with the Working Time Directive, as well asrestructuring in maintenance services arising from the re-equipping of thecontainer terminal. 2003In December 2003 Irish Ferries entered into a process of consultation with itsemployees in order to generate savings in payroll costs through changes in workpractices. The 2003 restructuring charge represents the estimated cost ofproposed 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 May2005, to shareholders on the register at 22 April 2005, for a cash considerationof 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 averagenumber of shares in issue during the period. Diluted earnings per share is computed in accordance with FRS 14 and is based ondiluted weighted average shares in issue of 23.6 million (2003: 24.4 million). Adjusted earnings per share is based on profit attributable to shareholdersbefore exceptional items. 5. Reconciliation of movement in shareholder's funds 2004 2003 •m •mTotal recognised gains relating to the period 5.7 8.5Capital introduced 0.8 0.7Capital 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 •mOperating profit 14.6 24.1Depreciation charges 25.2 24.8Movement in restructuring provision (0.3) 4.8Net grant receipt / (amortisation) 0.1 (0.3)(Profit) / loss on disposal of assets (0.1) 0.1Decrease in prepayment of pension contributions (0.5) (1.6)Movement in working capital:Decrease in stocks 0.1 0.1Decrease / (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 •mDecrease in cash (2.4) (1.4)Decrease in overdraft 0.4 1.5Decrease in debt 8.8 25.1 ______ ______Change in net debt resulting from cash flows 6.8 25.2Translation adjustment 0.3 7.2 ______ ______Net movement 7.1 32.4Opening 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 •mAt 1 January 2004Current assets 12.2 - - - 12.2Creditors 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 6.8Foreign 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 - - - 9.2Creditors 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) ______ ______ ______ ______ ______ This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Irish Cont.