8th Mar 2007 10:16
Irish Continental Group PLC08 March 2007 The following announcement has been re-released for clarity. The tables in Note 4 have been reformatted. No material changes have been made. PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006 Highlights 2006 2005 As restatedTurnover €312.1m €298.5mEBITDA* €59.7m €45.8mProfit from operations* €32.2m €18.1mNon recurring items (net) €0.7m •(31.6)mAdjusted EPS** 108.5c 54.1cBasic EPS / (loss) per share 137.4c (67.8)cEquity €178.3m €140.4mNet Debt €113.8m €105.9m * Before non recurring items **Before non recurring items and net expected return on defined benefit pensionassets less liabilities Comment In a comment, Chairman, John B. McGuckian stated, "I am pleased to report on a successful 2006 for the Group. Our performance infreight was positive, while in the car market we performed in line with themarket, which declined 3%. We have reduced our cost base to enable us to competemore effectively in what is a demanding International marketplace". 8th March 2007 PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006 RESULTS Irish Continental Group plc ("ICG" or the "Group") today reports its results forthe year to 31 December 2006. Turnover for the year grew 4.6% to €312.1 million (2005: 298.5 million). EBITDA,before non recurring items, was up 30.3% to €59.7 million (2005 €45.8 million)while trading profit before non recurring items amounted to €32.2 million (2005:€18.1 million). The improvement in EBITDA and operating profit was due to theabsence of industrial action during the period (in comparison with 2005), anincrease in freight revenue and lower costs as a result of the restructuring in2005, partially offset by higher fuel costs (up 12.3% to €32.8 million).Adjusted EPS amounted to 108.5 cent (2005: 54.1 cent restated). There have beentwo changes in accounting policy, details of which are set out in the AccountingPolicies paragraph below. The net interest charge was €5.7 million (2005: €4.7 million) before a netinterest credit from our defined benefit pension schemes of €6.1m (2005: €3.2million). NON RECURRING ITEMS There was a net non recurring credit of €0.7 million compared with a nonrecurring charge of €31.6 million in 2005. This comprised exceptionalrestructuring charges of €3.7 million (2005: €29.1 million) being the balance ofthe severance cost in respect of the crews of the Irish Sea vessels who electedto leave under the voluntary severance and outsourcing programme and othervoluntary severance ashore. This was offset by an exceptional credit of €4.4m inrespect of the refund of seafarers' PRSI. Part of this amount (€2.5 million) hadbeen previously provided against in 2005 as there had been a delay in enactingthe relevant legislation providing for the renewal of the scheme under whichseafarers' PRSI is refunded. Adjusted EPS Within finance charges there is a surplus of expected return on pension schemeassets over interest on pension scheme liabilities of €6.1m (2005: €3.2 million)which the Group considers an adjusting item in relation to EPS as this netinterest credit is for the benefit of the pension fund and is not available tothe Group. Adjusted EPS excludes this net interest credit and also the nonrecurring items set out above. Basic EPS was 137.4 cent (2005: loss of 67.8 cent). A reconciliation of earnings for the purpose of basic and adjusted EPS is setout below: 2006 *2005 •m •mEarnings for the purposes of basic EPS 32.3 (15.8)Non recurring items (0.7) 31.6Expected return on pension assets less interest on pensionliabilities (6.1) (3.2)Earnings for the purpose of adjusted EPS 25.5 12.6 * As restated FERRIES DIVISION The Ferries division comprises Irish Ferries, the leading ferry operator to andfrom the Republic of Ireland, the Group's ship chartering activities, andholiday services. Turnover in the division was €170.0 million (2005: €162.5 million) while profitfrom operations, before restructuring charges, was €28.6 million (2005: €13.9million). Restructuring charges relating to voluntary severance amounted to €3.7million. Despite an 8% reduction in sailings, fuel costs in the division rose9.1% to €20.4 million (2005 €18.7 million). Part of this was due to theimplementation of EU Directive 2005/33/EC, with effect from 22 August 2006,which requires the use of environmentally friendly, but more expensive, lowsulphur fuel on passenger ships. Passenger Revenue Overall passenger numbers were affected by competitive market conditions whichwere the result of significant additional airline competition, including lowcost carriers, particularly to regional airports in Ireland. We estimate thatthe overall car market into the Republic of Ireland declined by around 3%. Wereduced frequency of our fast ferry service from six departures a day to four,resulting in a total of 4,221 ferry departures in the year versus 4,588 theprevious year. Our passenger numbers fell 6.4% to 1.39 million while car numbersfell by 3.3% to 354,000. Freight Revenue In the Roll On Roll Off freight market we achieved an increase of 12.6% to237,000 freight vehicles carried. The freight market continues to growreflecting the positive economic backdrop, strong employment and populationgrowth, and buoyant consumer spending. There was however a marked increase incompeting freight capacity to both Liverpool and Holyhead in 2006 with furthercompeting capacity scheduled in 2007. Restructuring of Crew Costs During 2005 we reached agreement with our ships crews on a voluntary severanceprogramme and we recorded an exceptional charge of €29.1 million in 2005 basedon applications for severance at that time. Additional staff have subsequentlyavailed of the severance programme and this has resulted in a further charge of€1.9 million in the 2006 financial year. In addition, we have offered voluntaryseverance to shore based staff in Ireland and this has resulted in a furthercharge of €1.8 million, of which €1.4 million is severance. Within the incomestatement the cost of agency crew is included in Other Operating Expenses ratherthan Employee Benefit Expense. Replacement Vessel for Ireland France Route In January we were pleased to announce the acquisition of a replacement vessel(the Kronprins Harald) for our Ireland France route for an investment ofapproximately €45 million including delivery costs. The vessel has beenchartered back to the vendors, Color Line of Norway, for the 2007 season, andwill transfer to Irish Ferries in late 2007, following which the current vessel"Normandy" will be sold or chartered out. Chartering Both the Pride of Bilbao and Pride of Cherbourg remained on charter to P&Oduring the year. P&O has sub-chartered the Pride of Cherbourg during the yearand the vessel is now named "Challenger" and trading in New Zealand. P&O hasexercised its options to extend both charters to 2010 at the optional charterrates which will result in approximately 20% reduction in charter income in2008, the first full year at the renewed rates. CONTAINER AND TERMINAL DIVISION The division includes our intermodal freight services Eucon, Feederlink andEurofeeders as well as our strategically located container ports in Dublin (DFT)and in Belfast (BCT). Turnover in the division was up 4.5% at €142.1 million compared with €136.0million in 2005 while profit from operations was €3.6 million (2005: €4.2million). Fuel costs within the division were up 18.1% at €12.4 million (2005:€10.5 million) while vessel charter costs also rose, by 7.2% to €32.8 million(2005 €30.6 million). Overall container volumes shipped on continuing routes reduced slightly to458,000 teu (2005: 460,000 teu) while units handled at our owned terminal inDublin, DFT, rose 7.1% to 167,000 lifts (2005: 156,000 lifts.) The recentlyopened Dublin Port Tunnel enhances access to DFT significantly, by linkingDublin Port, which handles 55% of Ireland's imports and 80% of the country'sexports, to the M1 motorway to the North and the M50 orbital motorway around thecapital. Two developments were announced during the year. In October we opened a new50,000 container a year container handling terminal in the Port of Belfast,while in December we announced that, in a €30m expansion of our facility inDublin Port, the investment in which we will share with Dublin Port Company, wewill be increasing capacity, from 2008, from 180,000 lifts to 270,000 lifts p.a. FINANCE EBITDA before non recurring items for the year was €59.7 million (2005: €45.8million). Our net interest payments were €5.7 million and tax payments amountedto €1.7 million. Capital expenditure was €12.0 million while restructuringpayments (including the charge provided for in 2005) totalled €35.4 million. We returned €7.2 million to shareholders via redemption of redeemable shares(2005: €6.3million). Net debt at year end was €113.8 million (2005: €105.9 million). Group return on average capital employed (before restructuring charges) was12.6% for the year, compared with 7.1% in 2005. PENSIONS Of the Group's defined benefit plans, three were in surplus at year end (€29.9million versus €8.0 million in 2005), while two were in deficit, (€10.1 millionversus €4.9 million in 2005) of which €4.3 million was included within Trade andother payables. Some employees in the Group are members of the Merchant NavyOfficers Pension Fund (MNOPF), a defined benefit multi employer plan which wasaccounted for as a defined contribution scheme in 2005. A liability amounting to€4.3 million was recognised in the balance sheet at 31 December 2005. Sufficientinformation is now available to account for the scheme as a defined benefitscheme rather than as a defined contribution scheme. The estimated share of thenet deficit in the MNOPF, attributable to ICG, amounting to €10.0 million isincluded in the deficit referred to above. In the year to 31 December 2005 therewas a defined contribution charge in relation to the MNOPF, to the IncomeStatement, of €5.0 million, included in Employee benefit expense. In the currentyear there is a credit to the Income Statement in relation to the MNOPF schemeof €0.5 million comprising a service cost of €0.1 million included in Employeebenefit expense and a credit of €0.6 million included within Finance charges. Acharge of €6.0 million has been recognised in the Statement of Recognised Incomeand Expenses in respect of this scheme in 2006. ACCOUNTING POLICIES The restatement of the prior year figures is in respect of the following items: A change in the accounting policy in relation to expired tickets to take accountof change in terms and conditions of sale and this gives rise to a cumulativeincrease in reserves of €1.7 million at 1 January 2005. The impact on profit forthe year is a reduction of €0.3 million (2005: €0.2 million). There is also an accounting policy change in relation to employee benefits. Thepresentation in the current year is for the Expected return on pension schemeassets to be included under Investment Revenue and the Interest on pensionscheme liabilities to be included under Finance Costs. In the prior year, thenet of these two amounts (€3.2 million) was offset against Employee BenefitsExpense. This has now been reclassified to take account of the new accountingpolicy. This had no impact on reported profit before tax. Reclassification of non recurring items: A €2.5 million provision against thereceipt of a PRSI refund in the prior year was included under Other OperatingExpenses in the Income Statement but has been reclassified in the current yearas non recurring and the adjusted EPS for 2005 has been restated accordingly. The basis for the calculation of the adjusted earnings per share has beenchanged in the current year to exclude expected return on pension scheme assetsand interest cost on pension scheme liabilities. Adjusted EPS for 2005 has beenrestated accordingly. CURRENT TRADING The markets in which we operate, passenger and freight transport, remainextremely competitive. Following the 2004 and 2005 restructuring we now have arestructured cost base with which to complete vigorously. 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 eight weeks of the year has been in line with expectations. POTENTIAL OFFER It has been announced today that the Board has received an approach from Mr.Eamonn Rothwell and other senior members of management of the Company (the"Management Team"), that may or may not lead to an offer being made for theCompany at €18.50 per ICG unit. Following the approach from the Management Team the Company constituted anindependent committee of the board of directors comprising Mr. Peter Crowley,Mr. Bernard Somers and myself (the "Independent Directors") and who are beingadvised by NCB Corporate Finance. Should an announcement of a firm intention to make an offer be made pursuant toRule 2.5 of the Irish Takeover Panel Act, 1997, the proposed offer price of€18.50, per ICG unit is at a level which the Independent Directors would intendto recommend to shareholders to accept. A further announcement will be made when appropriate. Under the circumstances, the Directors do not propose to declare a furtherredemption of Redeemable Shares or payment of an ordinary dividend for the yearended 31 December 2006. In the event an offer is not forthcoming from themanagement team it is the intention of the Directors to appropriately reviewthis decision in due course. John B. McGuckian,Chairman, March 8th 2007 Enquiries: Eamonn Rothwell Managing Director +353 1 607 5628Garry O'Dea Finance Director +353 1 607 5628 Consolidated Income Statement for the year ended 31 December 2006 As restated Notes Year ended Year ended 31 December 2006 31 December 2005Continuing operations •m •m Revenue 312.1 298.5Depreciation and amortisation (27.5) (27.7)Employee benefit expense (32.9) (60.4)Other operating expenses (219.5) (192.3) Trading profit 32.2 18.1 Non recurring credit / (charge) 2 0.7 (31.6)Profit / (loss) from operations 32.9 (13.5) Investment revenue 18.3 14.1Finance costs (17.9) (15.6) Profit / (loss) before tax 33.3 (15.0) Income tax expense (1.0) (0.8) Profit / (loss) for the year: allattributable to equity holders ofthe parent 32.3 (15.8) Earnings / (loss) per share: allfrom continuing operations 3Basic 137.4 cents (67.8) centsDiluted 136.9 cents - Consolidated Balance Sheet at 31 December 2006 As restated 31 December 2006 31 December 2005 •m •mAssets Non current assetsProperty, plant and equipment 271.0 287.8Intangible assets 2.8 3.3Long term receivable 4.5 4.9Retirement benefit surplus 29.9 8.0 308.2 304.0 Current assetsInventories 0.6 0.6Trade and other receivables 53.5 37.6Derivative financial instruments 0.5 -Cash and cash equivalents 11.0 14.0 65.6 52.2 Total assets 373.8 356.2 Equity and liabilitiesCapital and reservesShare capital 15.9 15.8Share premium 40.6 39.6Other reserves 5.9 5.8Retained earnings 115.9 79.2Equity attributable to equity holders ofthe parent 178.3 140.4 Non-current liabilitiesBank loans 105.3 99.4Obligations under finance leases 5.0 5.3Trade and other payables - 3.7Retirement benefit obligation 10.1 0.6Deferred tax liabilities 5.6 4.9Long term provisions 1.8 2.1Derivative financial instruments - 0.1 127.8 116.1Current liabilitiesBank overdrafts and loans 11.9 11.7Obligations under finance leases 2.6 3.5Trade and other payables 47.8 46.0Current tax liabilities 3.6 4.8Short term provisions 1.8 33.7 67.7 99.7 Total liabilities 195.5 215.8 Total equity and liabilities 373.8 356.2 Consolidated Statement of Recognised Income and Expense for the year ended 31December 2006 As restated Year ended Year ended 31 December 2006 31 December 2005 •m •mGains / (losses) on cash flow hedges 0.6 (0.1) Exchange differences on translation offoreign operations (0.9) 5.8 Actuarial gain on retirement obligations 12.1 3.9 Deferred Tax on Group defined benefitpension schemes (0.5) - Profit / (loss) for the year 32.3 (15.8) Total recognised income and expense forthe year: all attributable to equityholders of the parent - increase /(decrease) in retained earnings 43.6 (6.2) Effect of change in accounting policy 1.5 - Total recognised income and expense forthe year as restated 45.1 (6.2) Consolidated Cashflow Statement for the year ended 31 December 2006 As restated Year ended Year ended 31 December 2006 31 December 2005 •m •mOperating activities Profit / (loss) for the year 32.3 (15.8) Adjustments for:Finance costs (net) (0.4) 1.5Income tax expense 1.0 0.8Retirement benefit obligations - servicecost 3.2 5.2Retirement benefit obligations -payments (1.7) (2.0)Depreciation of property, plant andequipment 26.5 27.0Amortisation of intangible assets 1.1 0.8Amortisation of deferred income (0.1) (0.1)Share-based payment charge 0.4 0.1Gain on disposal of property, plant andequipment (0.2) (0.5)Restructuring programme - payments (35.4) (5.9)Restructuring programme - increase inprovision 3.7 34.4Decrease in other provisions (0.5) (1.1) Operating cash flows before movements 29.9 44.4in working capital Increase in receivables (15.9) (2.4)Increase / (decrease) in payables 2.4 (2.7) Cash generated from operations 16.4 39.3 Income taxes paid (1.7) (1.7)Interest paid (6.0) (5.9) Net cash from operating activities 8.7 31.7 Investing activitiesInterest received 0.3 1.0Proceeds on disposal of property, plantand equipment 0.2 0.6Purchases of property, plant andequipment (11.4) (11.9)Purchases of intangible assets (0.6) (1.6)Net cash used in investing activities (11.5) (11.9) Financing activitiesProceeds on issue of ordinary sharecapital 1.1 -Redemption of redeemable shares (7.2) (6.3)Repayments of borrowings (11.8) (77.9)Repayments of obligations under financeleases (4.0) (4.3)New bank loans raised 19.6 71.8New finance leases raised 2.4 0.2Decrease in bank overdrafts - (0.2)Net cash used in financing activities 0.1 (16.7) Net (decrease) / increase in cash andcash equivalents (2.7) 3.1 Cash and cash equivalents at thebeginning of the year 14.0 9.2 Effect of foreign exchange rate changes (0.3) 1.7 Cash and cash equivalents at the end ofthe year 11.0 14.0Bank balances and cash Notes to the consolidated financial statements for the year ended 31 December2006 1. Segmental information Turnover Profit Before Tax Net Assets (equity attributable to equity holders)Analysis byclass ofbusiness 2006 * 2005 2006 * 2005 2006 * 2005 •m •m •m •m •m •mFerries andTravel 170.0 162.5 28.6 13.9 284.8 251.0Containerand 142.6 136.4 3.6 4.2 11.7 32.3TerminalIntersegmentturnover (0.5) (0.4) - - - - 312.1 298.5 32.2 18.1 296.5 283.3Nonrecurring - - 0.7 (31.6) - -itemsNetinterest/ - - 0.4 (1.5) (113.8) (105.9)debtUnallocatedliabilities - - - - (4.4) (37.0) 312.1 298.5 33.3 (15.0) 178.3 140.4 Analysis byorigin 2006 2005 •m •mIreland 129.5 124.5United 78.8 92.5KingdomContinentalEurope 103.8 81.5 312.1 298.5 * As restated 2. Non recurring credit / (charge) Year ended As restated Year ended 31 December 31 December 2006 2005 •m •m PRSI rebate credit / (charge) 4.4 (2.5)Restructuring costs (3.7) (29.1) 0.7 31.6 PRSI rebate The credit of €4.4 million represents rebates of Seafarers' PRSI under therelevant scheme. In the prior year, as a result of a delay in enacting therelevant legislation renewing the PRSI scheme, a charge of €2.5 million wascreated against the PRSI rebate recorded as a debtor at 31 December 2004. This€2.5 million was included in other operating expenses in the Income Statement in2005 but has been reclassified as reported in the current years accounts. Restructuring costs The restructuring charge in the current year of €3.7 million, comprises ofredundancy costs in respect of applicants for the severance package announced in2006 in addition to those that were provided for in the prior year. The €29.1million in the prior year relates to the voluntary redundancy package offered toall relevant staff members under the outsourcing programme. 3. Earnings / (loss) per share - all from continuing operations The calculation of basic earnings per share of 137.4 cent (2005: loss per shareof 67.8 cent) is based on a profit after tax of €32.3 million (2005: loss of€15.8 million) and 23.5 million shares (2005: 23.3 million) being the weightedaverage number of shares in issue during the period. Adjusted earnings per share of 108.5 cent (2005: 54.1 cent) is based on profitattributable to shareholders before non recurring costs and before the expectedreturn on defined benefit pension scheme assets and the interest on definedpension scheme liabilities. 4. Statement of changes in equity 2006 Share Share Share Capital Options Hedging Translation Retained Capital Premium Reserve Reserve Reserve Reserve Earnings Total •m •m •m •m •m •m •m •m Balance at 1 January 15.8 39.6 2.2 0.1 (0.1) 3.6 77.7 138.92006 Prior year adjustment-Deferred revenue - - - - - - 1.5 1.5 At beginning of year 15.8 39.6 2.2 0.1 (0.1) 3.6 79.2 140.4as restated Total recognisedincome andexpense for the year - - - - 0.6 (0.9) 43.9 43.6 Share issue 0.1 - - - - - - 0.1Exercise of shareoptions -shares issued at - 1.0 - - - - - 1.0premiumEmployee share optionsexpense - - - 0.4 - - - 0.4Redemption ofredeemableshare capital - - - - - - (7.2) (7.2) 0.1 1.0 - 0.4 0.6 (0.9) 36.7 37.9 Balance at 31 December 15.9 40.6 2.2 0.5 0.5 2.7 115.9 178.32006 Analysed as follows:Share capital 15.9Share premium 40.6Other reserves 5.9Retained earnings 115.9 178.3 4. Statement of changes in equity - continued 2005 Share Share Share Capital Options Hedging Translation Retained Capital Premium Reserve Reserve Reserve Reserve Earnings Total •m •m •m •m •m •m •m •m Balance at 1 January 15.8 39.6 2.2 - - (2.2) 95.7 151.12005 Prior year adjustmentDeferred revenue - - - - - - 1.7 1.7 At beginning of year 15.8 39.6 2.2 - - (2.2) 97.4 152.8as restated Total recognisedincome andexpense for the year - - - - (0.1) 5.8 (11.9) (6.2) Employee share optionsexpense - - - 0.1 - - - 0.1Redemption ofredeemableshare capital - - - - - - (6.3) (6.3) - - - 0.1 (0.1) 5.8 (18.2) (12.4) Balance at 31 December 15.8 39.6 2.2 0.1 (0.1) 3.6 79.2 140.42005 Analysed as follows:Share capital 15.8Share premium 39.6Other reserves 5.8Retained earnings 79.2 140.4 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Irish Cont.