2016 Annual Report and Financial Statements
Irish Continental Group (ICG) is the leading Irish-based
maritime transport group. We carry passengers and cars,
Roll on Roll off freight and Container Lift on Lift off freight,
on routes between Ireland, the United Kingdom and
Continental Europe. We also operate container terminals in
the ports of Dublin and Belfast.
We aim for continued success in our chosen markets and
focus our efforts on the provision of a reliable, timely and
high quality experience for all our customers.
We will achieve success by anticipating our customers’
needs and matching their requirements with superior
services through constant innovation and the rapid
application of technology.
We measure our success through the quality of our service,
as seen by our customers, which should result in delivering
sustained and profitable growth for the benefit of our
shareholders and staff.
more online www.icg.ie
Contents
01
Strategic Report
The Group
Financial Highlights
Our Group at a Glance
Five Year Summary
Chairman’s Statement
Operating and Financial Review
Our Fleet
Executive Management Committee
Corporate Governance
The Board
Report of the Directors
Corporate Governance Statement
Report of the Audit Committee
Report of the Nomination Committee
Report of the Remuneration Committee
Directors’ Responsibilities Statement
Financial Statements
Independent Auditor’s Report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Financial Position
Company Statement of Changes in Equity
Consolidated Statement of Cash Flows
Company Statement of Cash Flows
Notes to the Financial Statements
Shareholder and other information
Investor Information
Index to the Annual Report
4
6
7
8
10
13
42
45
48
50
53
62
65
67
77
80
85
86
87
88
90
91
93
94
95
154
157
02
Irish Continental Group
2016 Annual Report and Financial Statements
The Group has again
strengthened its strategic
position as the leading maritime
transport provider in the
Republic of Ireland.
Read more from the Chairman’s
Statement on page 10
03
4
6
7
8
10
13
42
45
Strategic
Report*
The Group
Financial Highlights
Our Group at a Glance
Five Year Summary
Chairman’s Statement
Operating and Financial Review
Our Fleet
Executive Management Committee
*As an Irish incorporated Group, The Strategic Report does not constitute a
Strategic report for the purpose of the UK Companies Act 2006 (Strategic Report
and Directors Report) Regulation 2013 and the large and medium –sized Companies
and Groups (Accounts and Reports) (amendment) Regulation 2013, and the
Remuneration Committee Report does not constitute a Remuneration Report for
the purposes of the UK large and medium- sized Companies and
Groups (Accounts and Reports) (amendment) Regulations.
04
The Group
Irish Continental Group (ICG) is
the leading Irish-based maritime
transport group. We carry
passengers and cars, Roll on Roll
off (RoRo) freight and Container
Lift on Lift off (LoLo) freight,
on routes between Ireland, the
United Kingdom and Continental
Europe. We also operate container
terminals in the ports of Dublin
and Belfast. The Ferries division
also carries out ship chartering
activities.
Ferries
Division
Modern fleet of multi-purpose ferries and
LoLo container vessels operating between
the Republic of Ireland and Britain and
Continental Europe, and on charter.
1.6 million passengers carried during 2016
on up to 17 daily sailings.
Key freight positions on short sea routes
between the Republic of Ireland and
Britain.
Inclusive package holidays to the Republic
of Ireland and Britain.
Container and
Terminal Division
Container shipping services between
Ireland and Continental Europe, operating
modern fleet and equipment, as well
as stevedoring and related services for
container traffic at Dublin and Belfast
Ports.
Revenue
Operating Profit
Capital Employed
EBITDA
38%
17%
14%
15%
62%
83%
86%
85%
Ferries Division
Container and Terminal Division
Irish Ferries
Eucon
Dublin Ferryport Terminals
Belfast Container Terminal
Irish Ferries Routes
Eucon Routes
Ports Served By Container Ships:
Belfast, Dublin, Cork, Antwerp, Rotterdam
Belfast
Dublin
Holyhead
Rosslare
Cork
Pembroke
Rotterdam
Antwerp
Cherbourg
Roscoff
2016 Annual Report and Financial StatementsIrish Continental Group 05
Irish Ferries
Eucon
Dublin Ferryport Terminals
Belfast Container Terminal
Irish Ferries Routes
Eucon Routes
Ports Served By Container Ships:
Belfast, Dublin, Cork, Antwerp, Rotterdam
Belfast
Dublin
Holyhead
Rosslare
Cork
Pembroke
Rotterdam
Antwerp
Cherbourg
Roscoff
Revenue
Operating Profit
Capital Employed
EBITDA
38%
17%
14%
15%
62%
83%
86%
85%
Ferries Division
Container and Terminal Division
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 06
Financial Highlights
Revenue
€325.4m
up 1.5%
EBITDA*
€83.5m
up 10.6%
2016
2015
2016
2015
€325.4m
€320.6m
€83.5m
€75.5m
Net Debt*
€37.9m
down 14.4%
2016
2015
€37.9m
€44.3m
Adjusted EPS*
31.4 cent
up 7.9%
2016
2015
ROACE*
34.7 %
down 2.0
percentage points
2016
2015
*Definitions of alternative performance measures are set on page 15
31.4 cent
29.1 cent
34.7%
36.7%
2016 Annual Report and Financial StatementsIrish Continental Group Our Group at a Glance
07
Irish Continental Group is a
customer focussed business
with a pivotal position in the
logistics chain facilitating Ireland’s
international trade and tourism.
Strategic short sea RoRo
routes operated by Irish
Ferries providing a seamless
connection from Ireland to the
UK and Continental motorway
network for the 286,100 RoRo
units carried in 2016.
Reliability underpinned by
investment in maintaining
quality assets ensuring
we meet our customer
expectations, achieving 94%
schedule integrity on our RoRo
services in 2016.
Strategically located container
terminals which handled
288,100 container units during
2016 in Ireland’s main ports of
Dublin and Belfast for shipping
operators providing services
to key continental hub ports
and onwards access to global
markets.
Connected container shipping
services provided by Eucon,
transporting 303,600 teu in
2016 between Ireland and 20
countries throughout Europe
by sea, road, rail and barge.
Always on, always in touch
our shipping and terminal
services operate 24/7, assisted
by investment in modern
booking and tracking systems
to ensure our customers can
keep in touch over a variety of
platforms.
Fastest crossing on the Irish
sea on board the Irish Ferries
Jonathan Swift fastcraft
service with a sailing time of
under 2 hours between Dublin
and Holyhead at speeds of up
to 80 kph.
Key contributor to regional
tourism in Ireland, Irish Ferries
carried 1.6 million passengers
and 414,100 cars during 2016
with research indicating that
car tourists stay longer and
travel outside the main urban
centres.
High standard on-board
experience enjoyed by our
Irish Ferries customers
encompasses quality food,
beverage, entertainment and
accommodation services.
Passengers are never out of
touch with free satellite wi-fi
services.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 08
Five Year Summary
Non Statutory Income Statement Information
Revenue
Other operating expenses and employee benefits expense
Depreciation and amortisation
Non-trading items 2
Interest (net)
Profit before taxation
Taxation
Profit from continuing operations
Discontinued operations
Profit from discontinued operations
Non-trading items2: Gain on disposal of discontinued operations
Total discontinued operations
2016
€m
2015
€m
2014
€m
2013
€m
20121
€m
325.4
(241.9)
(20.9)
62.6
-
(2.2)
60.4
(1.6)
58.8
-
-
-
320.6
(245.1)
(18.3)
57.2
-
(3.1)
54.1
(0.4)
53.7
-
-
-
290.1
(239.6)
(17.8)
32.7
28.7
(4.7)
56.7
(0.7)
56.0
-
-
-
264.7
(215.5)
(19.2)
30.0
-
(6.3)
23.7
(0.4)
23.3
-
3.5
3.5
256.1
(210.3)
(19.3)
26.5
(2.1)
(3.4)
21.0
(0.5)
20.5
0.9
21.0
21.9
Profit for the year
58.8
53.7
56.0
26.8
42.4
EBITDA (including trading from discontinued operations)
83.5
75.5
50.5
49.2
46.5
Per share information:
Earnings per share
-Basic
-Adjusted 3
Dividend per share
Shares in issue:
-At year end
-Average during the year
€cent
€cent
€cent
€cent
€cent
31.4
31.4
28.9
29.1
30.4
15.5
14.6
13.8
18.3
10.9
11.580
11.025
10.5
10.0
10.0
m
188.3
187.5
m
186.4
185.8
m
184.5
184.4
m
184.0
183.7
m
183.4
231.4
1. In 2012, the Group sold its North Sea feeder operations. Accordingly, these operations have been treated as discontinued in 2012.
2. Non-trading items are material non-recurring items that derive from events or transactions that fall outside the ordinary activities of the Group and which individually,
or, if of a similar type, in aggregate, are separately disclosed by virtue of their size or incidence.
3. Adjusted earnings exclude pension interest and non-trading items.
2016 Annual Report and Financial StatementsIrish Continental Group Non Statutory Consolidated Statement of Financial Position
Property, plant and equipment and intangible assets
Retirement benefit surplus
Other assets
Total assets
Equity capital and reserves
Retirement benefit obligation
Other non-current liabilities
Current liabilities
Total equity and liabilities
Non Statutory Consolidated Statement of Cash Flows
Net cash inflow from operating activities
Net cash (outflow)/inflow from investing activities
Net cash outflow from financing activities
Cash and cash equivalents at the beginning of the year
Effect of foreign exchange rate changes
Closing cash and cash equivalents
Net debt
Net Debt / EBITDA
2016
€m
205.1
2.4
84.1
291.6
144.4
15.9
5.3
126.0
291.6
82.1
(55.6)
(7.8)
25.0
(1.5)
42.2
€m
37.9
Times
0.5x
2015
€m
170.9
5.6
67.9
244.4
115.5
10.7
60.0
58.2
2014
€m
154.7
5.4
59.4
219.5
61.3
29.5
71.5
57.2
244.4
219.5
68.2
(34.8)
(28.0)
19.4
0.2
25.0
€m
44.3
Times
0.6x
39.7
10.0
(48.9)
18.5
0.1
19.4
€m
61.3
Times
1.2x
2013
€m
164.3
4.7
68.9
237.9
42.2
41.4
100.7
53.6
237.9
35.6
4.2
(43.7)
22.3
0.1
18.5
€m
93.4
Times
1.9x
09
2012
€m
175.0
3.7
80.0
258.7
18.0
58.3
129.0
53.4
258.7
26.9
13.4
(27.4)
9.5
(0.1)
22.3
€m
116.0
Times
2.5x
Gearing (Net debt as a percentage of shareholders’ funds)
26%
38%
100%
221%
644%
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 10
Chairman’s Statement
2016 Performance
I am pleased to report that 2016
has been another successful
year for the Group, with a
positive operational and
financial performance in both
divisions. The Group has again
strengthened its strategic
position as the leading
maritime transport provider
in the Republic of Ireland.
Revenue for the year grew 1.5%
to €325.4 million (2015: €320.6
million). EBITDA for the year
increased by 10.6% to a record
high of €83.5 million (2015:
€75.5 million). Adjusted EPS,
which excludes the net interest
cost on defined benefit
obligations, was 7.9% higher at
31.4 cent.
The Group has benefited from the
continuing improvement in 2016 of the
economies in our sphere of operations.
The Irish economy has continued to
grow and this has been positive for the
Group with increased carryings across all
business areas. We have also benefited
from the further reduction during 2016 of
fuel prices. These positive benefits have
been partially offset through reduced fuel
surcharges to customers and increased
exchange rate volatility. The Group is a net
receiver of Sterling which means a weaker
Sterling exchange rate has had a negative
effect on year on year comparisons. This
has been a significant headwind for the
group in 2016, as Sterling weakened
materially during our peak summer
season. The weakening of Sterling reduced
our average tourism yields, however this
was partially offset by the reduction in
Sterling denominated costs.
The Ferries division had a strong year
due to increased volumes, reduced fuel
costs and increased chartering activity.
Revenue was 2.9% higher at €209.8 million
(2015: €203.9 million). EBITDA in the
division increased by 11.0% to €70.7 million
(2015: €63.7 million) while EBIT rose by
8.7% at €52.3 million (2015: €48.1 million)
principally due to higher freight and car
volumes, lower fuel costs and increased
chartering activity.
In the Container and Terminal division
EBITDA increased by 8.5% at €12.8 million
(2015: €11.8 million) while EBIT was €10.3
million (2015: €9.1 million). Revenue in the
division grew by 4.8% to €123.9 million
(2015: €118.2 million).
We ended the year in a strong financial
position with net debt at €37.9 million,
down from €44.3 million in the previous
year.
Fleet
On 15 April 2016, ICG announced that it
had entered into an agreement for the
purchase of the High Speed Craft ‘Westpac
Express’ for $13.25 million. The vessel
delivered to the Group on 1 June 2016 was
chartered to a third party and is operating
in Asia.
2016 Annual Report and Financial StatementsIrish Continental Group 11
On 31 May 2016, ICG announced that it
had entered into an agreement with the
German company Flensburger Schiffbau-
Gesselschaft & Co.KG (“FSG”) whereby
FSG has agreed to build a cruise ferry for
ICG at a contract price of €144 million.
This is scheduled for delivery during
2018 and will be financed through a
combination of cash resources and loan
facilities. This new vessel investment
will support the longer term objectives
of our business. The cruise ferry will be
designed to best meet the seasonality
of our business. This flexibility in design
includes the ability to service all of Irish
Ferries existing routes, and will provide
even greater route management options.
The charter-in of the MV Epsilon has been
extended for a further period of two years.
The charter will now expire in November
2018.
KiwiRail, the charterer of MV Kaitaki, has
exercised its option to extend the charter
commencing on the expiry of the current
term for a further term of three years
ending June 2020.
The container vessel MV Ranger remains
on time charter to a third party and is
currently trading in North West Europe
while the MV Elbtrader, MV Elbcarrier and
MV Elbfeeder remain on time charter to
the Group’s container shipping subsidiary
Eucon.
Belfast Harbour
2016 saw the first full year operation
of the combined container terminal at
Victoria Terminal in Belfast Harbour
following the award to the Group in 2015
of the Services Concession to operate the
terminal for a 5 year period. The combined
terminal has operated well and we will
continue to develop both the volumes
through Belfast and the efficiencies of a
single container terminal.
Dividend
During the year the Group paid the final
dividend for 2015 of 7.387 cent per ICG
Unit. The Group also paid an interim
dividend for 2016 of 3.820 cent per ICG
Unit, and the Board is proposing a final
dividend of 7.760 cent per ICG Unit,
payable in June 2017, making a total
dividend for 2016 of 11.580 cent per ICG
Unit, an increase of 5.0% on the prior year.
Corporate Governance
The Board acknowledges the importance
of good corporate governance
practices. We have developed a
corporate governance framework based
on the application of the principles
and provisions of the UK Corporate
Governance Code and the Irish Corporate
Governance Annex. We report on this
framework in the Corporate Governance
Statement on pages 53 to 61.
During the year I led the annual evaluation
of Board performance of which further
details are set out in the Corporate
Governance Statement on page 57. As
Chairman, I am satisfied that the Board
operates effectively to ensure the long
term success of the Group and that each
Director is contributing effectively and
demonstrating commitment to their role.
The Board and Management
changes
On 3 March 2016, the Group appointed
David Ledwidge as a Director of the
Company. He has been with ICG for
over 9 years and has played a very
significant part in the development of
the Group which now looks forward to his
contribution at Board level. He has been
Chief Financial Officer of the group since
May 2015.
Fuel
Group fuel costs in 2016 amounted to
€32.2 million (2015: €39.0 million). The
reduction in fuel cost was due to the fall
in global US Dollar oil prices, offset by a
stronger US Dollar versus Euro.
In the reporting period the Group had not
engaged in financial derivative trading
to hedge its fuel costs. The Group has
in place a transparent fuel surcharge
mechanism for freight and container
and terminal customers, linked to the
spot market for fuel oils. In line with the
reduced cost of fuel, surcharge revenues
were lower.
Outlook
Since our last update to the market, in
the Interim Management Statement of
November 2016, trading conditions have
remained favourable. Despite the current
uncertainty surrounding the outcome
of the UK Referendum to leave the EU
and the weakness of Sterling, the Irish
Sea markets continue to perform well.
For the full year 2016 the Ferries Division
recorded strong volume growth of 3.3%
for cars and 5.0% for RoRo freight. In the
Container and Terminal Division overall
container volumes shipped were up 6.0%,
while port lifts were up 15.9%.
Volumes for the year to date up to 22
February are soft reflecting the reversal
of a number of once off benefits in
the same period in early 2016 and are
not significant given the relatively low
volumes at this time of the season.
RoRo volumes are up 1.9% (2016: up 8.5%)
and car volumes are down 1.8% (after a
70.0% drop in the number of fast craft
sailings due to an extended dry dock).
Container volumes are down 0.7% (2016:
up 13.1%). Terminal lifts are down 3.5%
(2016: up 56.6%).
World fuel prices have increased over
the last number of months and they
will be a headwind into 2017, but they
remain at manageable levels and our fuel
surcharge mechanisms remain in place.
The weakening of Sterling versus the Euro
since June 2016 will continue to affect the
Euro value of UK originating revenues.
Due to the ongoing improvement in
the economic outlook in our sphere of
operations, we look forward, to another
year of volume growth in our markets,
but with higher fuel prices and weaker
Sterling. Nonetheless, we expect 2017
to be a year of strong cash generation
and to see the continued strengthening
of our balance sheet. We look forward to
the arrival in 2018 of our new ship which
will bring cost savings and significant
additional earnings potential to the Group
in future years.
John B. McGuckian,
Chairman
Other InformationFinancial StatementsCorporate GovernanceStrategic Report Operating and Financial Review
13
This Operating and Financial Review provides information to shareholders and the
Review should not be relied upon by any other party or for any other purpose.
The Review contains certain forward-looking statements and these statements are
made by the Directors in good faith, based on the information available to them up
to the time of their approval of this report. These statements should be treated with
caution due to the inherent uncertainties, including both economic and business risk
factors, underlying any such forward-looking information.
This Operating and Financial Review has been prepared for the Group as a whole
and therefore gives greater emphasis to those matters which are significant to Irish
Continental Group plc and its subsidiaries when viewed as a whole.
This Operating and Financial Review discusses the following:
Business Model and Strategy
Key Performance Indicators and Summary of 2016 Results
Operating Review
Resources
Environmental and Safety Review
Risk Management
Principal Risks and Uncertainties
Financial Review
Our Fleet
Executive Management Committee
14
15
18
29
32
37
38
40
42
45
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 14
Operating and Financial Review
- continued
Business Model
Irish Continental
Group plc is a
focused provider of
maritime passenger
and freight services
with its principal
operations in North
West Europe. The
Group operates
through two
divisions
Ferries
Division
Principal activities include passenger and RoRo freight shipping
services under the Irish Ferries brand together with ship
chartering activities.
Container and
Terminal Division
Principal activities include LoLo shipping activities under the
Eucon brand and the operation of two container terminals,
Dublin Ferryport Terminals (DFT) and Belfast Container Terminal
(BCT), within the two main ports on the island of Ireland.
Further details on these operations are set out in the Operating
Review on page 18.
Strategy
There are two principal
elements to the Group’s
strategy for delivering value
to shareholders:
Investment in
quality assets in
order to achieve
economies of scale
consistent with a
superior customer
service.
Benchmarking
costs to industry
best practice to
enable the Group to
compete vigorously
in its chosen
markets.
2016 Annual Report and Financial StatementsIrish Continental Group 15
Key Performance Indicators and Summary of 2016 Results
The Group uses a set of headline Key
Performance Indicators (KPIs) to measure
the performance of its operations and of
the Group as a whole which are set out
and defined below.
APM
EBITDA
Description
Benefit of APM
EBITDA represents
earnings before interest,
tax, depreciation and
amortisation.
Eliminates the effects of
financing and accounting
decisions to allow assessment
of the profitability and
performance of the Group.
Certain financial measures used are not
defined under International Financial
Reporting Standards (IFRS). Presentation
of these Alternative Performance
Measures (APMs) provides useful
supplementary information which, when
viewed in conjunction with the Group’s
IFRS financial information, allows for
a more meaningful understanding of
the underlying financial and operating
performance of the Group. These non-
IFRS measures should not be considered
as an alternative to financial measures as
defined under IFRS. Descriptions of the
APMs included in this report are disclosed
below.
EBIT
EBIT represents earnings
before interest and tax.
Measures the Group’s earnings
from ongoing operations.
Free cash flow
Free cash flow comprises
operating cash flow less
capital expenditure.
Assesses the availability to the
Group of funds for reinvestment
or for return to shareholders.
Net debt
Net debt comprises total
borrowings less cash and
cash equivalents.
Measures the Group’s ability to
repay its debts if they were to
fall due immediately.
ROACE
ROACE represents return on
average capital employed.
Adjusted
Earnings Per
Share (EPS)
Adjusted EPS is adjusted to
exclude the net interest cost on
defined benefit obligations.
Non-Financial
APMs
Schedule integrity (the number
of sailings completed versus
scheduled sailings).
EBIT expressed as a percentage
of average capital employed
(consolidated net assets,
excluding net debt and pension
assets / liabilities).
Directors consider Adjusted
EPS comparisons to be a key
indicator of long-term financial
performance and value creation
of a Public Listed Company.
Schedule integrity is an
important measure for Irish
Ferries vessels as it reflects
the reliability and punctuality
of our service. This measure
is meaningful to both our
passenger and freight
customers alike in facilitating
them and their cargo to
arrive on time at their final
destination.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 16
Operating and Financial Review
- continued
Key Performance Indicators and Summary of 2016 Results - continued
The following table sets forth the reconciliation from the Group’s operating profit for the financial year to EBIT, EBITDA, Free Cash
Flow and Net Debt. See note 11 to the financial statement for the calculation of Basic and Adjusted EPS.
Cash Flow
Operating profit (EBIT*)
Depreciation and amortisation
EBITDA*
Working capital movements
Pension payments in excess of service costs
Other
Cash generated from operations
Interest paid
Tax paid
Capex
Free cash flow*
Asset sales
Dividends
Share issue
Interest received
Net flows
Opening net debt
Translation/other
Closing net debt*
The following table sets forth the reconciliation from the Group’s ROACE calculation;
ROACE
Equity
Net debt
Pension liability
Pension asset
Capital employed
Average Capital employed
Operating profit
ROACE
*Definitions of alternative performance measures are set on page 15
2016
€m
62.6
20.9
83.5
4.7
(1.8)
0.1
86.5
(2.3)
(2.1)
(57.0)
25.1
1.3
(21.0)
2.7
0.1
8.2
(44.3)
(1.8)
(37.9)
2016
€m
144.4
37.9
15.9
198.2
(2.4)
195.8
180.4
62.6
34.7%
2015
€m
57.2
18.3
75.5
(1.6)
(2.7)
0.6
71.8
(2.8)
(0.8)
(35.0)
33.2
0.1
(19.9)
3.5
0.1
17.0
(61.3)
-
(44.3)
2015
€m
115.5
44.3
10.7
170.5
(5.6)
164.9
155.8
57.2
36.7%
2016 Annual Report and Financial StatementsIrish Continental Group 17
The calculation and performance of KPIs and a summary of the key financial results for the year is set out in the table below. A
detailed review of the divisional operations is set out in the Operating Review on page 18.
Ferries
Container & Terminal
Inter-segment
Group
Revenue
EBITDA
EBIT
Net pension interest expense
Other finance charges
Net interest
Profit before tax
ROACE
EPS:
EPS Basic
EPS Adjusted
Free Cash Flow
Comment
1
2
3
4
4
5
2016
€m
209.8
70.7
52.3
-
-
-
-
2015
€m
203.9
63.7
48.1
-
-
-
-
2016
€m
123.9
12.8
10.3
-
-
-
-
2015
€m
118.2
11.8
9.1
-
-
-
-
34.3%
37.6%
37.1%
32.7%
-
-
-
-
-
-
-
-
-
-
-
-
2016
€m
2015
€m
(8.3)
(1.5)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2016
€m
325.4
83.5
62.6
2015
€m
320.6
75.5
57.2
-
(0.4)
(2.2)
(2.2)
60.4
(2.7)
(3.1)
54.1
34.7%
36.7%
31.4c
31.4c
28.9c
29.1c
25.1
33.2
Comment:
Financial KPIs
1. EBITDA: Group EBITDA for the year
increased by 10.6%, to €83.5 million (2015:
€75.5 million). The increase in EBITDA
was primarily due to increased revenue
flows, increased chartering activities and
decreased fuel costs which were down
17.4% to €32.2 million (2015: €39.0 million).
EBITDA in the Ferries division increased by
11.0%, to €70.7 million, while the Container
and Terminal division increased by 8.5%,
to €12.8 million.
2. EBIT: Group EBIT for the year increased
by 9.4% to €62.6 million (2015: €57.2
million). The Ferries division increase was
8.7%, while the Container and Terminal
division was 13.2% higher.
3. ROACE: The Group achieved a return on
average capital employed of 34.7% (2015:
36.7%). This decreased return is due to
the increase in EBIT from €57.2 million to
€62.6 million, and an increase in average
capital employed from €155.8 million
to €180.4 million. The Ferries Division
achieved a return on average capital
employed of 34.3% while the Container
and Terminal division achieved 37.1%.
4. EPS: Adjusted EPS (before the
net interest cost on defined benefit
obligations) was 31.4 cent compared with
29.1 cent in 2015. Basic EPS was 31.4 cent
compared with 28.9 cent in 2015. The
reason for the increase in Basic EPS is
due to an increase in profit attributable
to equity holders of the parent to €58.8
million (2015: €53.7 million).
5. Free Cash Flow: The Group’s free cash
flow was €25.1 million (2015: €33.2 million)
or 40% (2015: 58%) of Group operating
profit of €62.6 million (2015: €57.2 million).
The decrease was due to an increase in
cash flows from operating activities, up
€13.9 million to €82.1 million, offset by an
increase in capital expenditure, up €22.0
million to €57.0 million primarily arising
from payment in relation to the new build
and the purchase of the Westpac Express.
Non-Financial KPIs
Schedule integrity: The Ferries division
successfully delivered 94% of scheduled
sailings compared with 93% in the
previous year.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 18
Operating and Financial Review
- continued
Operating Review
Ferries Division
Revenue in the division was 2.9% higher
than the previous year at €209.8 million
(2015: €203.9 million). Revenue in the
first half of the year increased 5.8% to
€91.5 million (2015: €86.5 million), while in
the second half revenue increased 0.8%,
to €118.3 million (2015: €117.4 million).
EBITDA increased to €70.7 million (2015:
€63.7 million) while EBIT was €52.3 million
compared with €48.1 million in 2015. The
increase in profit was driven by increased
freight revenue, lower fuel costs and
increased chartering activity. The division
achieved a return on capital employed of
34.3% (2015: 37.6%).
The Ferries division owns ten vessels in
total and also charters in one vessel as
part of its operations.
Irish Ferries operates four owned and one
chartered-in ferries on routes to and from
the Republic of Ireland. The chartered in
vessel, the MV Epsilon, provides week day
sailings between Dublin and Holyhead
as well as a weekend round trip between
Dublin and Cherbourg in France. Irish
Ferries operated 5,286 sailings in 2016
(2015: 5,200), carrying passengers,
passenger vehicles and RoRo freight.
Utilisation of deck space was enhanced
by the balanced demands of passenger
traffic for day sailings and freight traffic
for night sailings.
In addition to the five vessels operated
by the Ferries division, the MV Kaitaki
remained on charter to KiwiRail during
the period, trading in New Zealand. The
container vessel MV Ranger remains
on time charter to a third party and is
currently trading in North West Europe
while the MV Elbtrader, MV Elbcarrier and
MV Elbfeeder remain on time charter to
the Group’s container shipping subsidiary
Eucon. The HSC Westpac Express which
was delivered to the Group on 1 June 2016
was immediately chartered to a third
party and is operating in Asia.
Fleet Summary:
Operated by Ferries Division
Vessel
Type
Employment
MV Ulysses
Cruise ferry*
Dublin – Holyhead
HSC Jonathan Swift High Speed Ferry
Dublin – Holyhead
MV Isle of Inishmore Cruise ferry*
Rosslare – Pembroke
MV Oscar Wilde
Cruise ferry*
Rosslare – Cherbourg / Roscoff
MV Epsilon
(chartered in)
Ropax*
Dublin – Holyhead / Cherbourg
Chartered out by Ferries Division
Vessel
MV Kaitaki
MV Ranger
MV Elbfeeder
MV Elbtrader
MV Elbcarrier
HSC Westpac
Type
Employment
Cruise ferry*
Charter – 3rd Party
LoLo container vessel Charter – 3rd Party
LoLo container vessel Charter – Inter-Group
LoLo container vessel Charter – Inter-Group
LoLo container vessel Charter – Inter-Group
High Speed Ferry
Charter – 3rd Party
* These vessels have both RoRo freight and passenger capacity.
Irish Ferries Ropax and
Cruise ferry Services
Irish Ferries
High Speed Ferry
Dublin
Holyhead
Rosslare
Pembroke
Cherbourg
Roscoff
2016 Annual Report and Financial StatementsIrish Continental Group Irish Ferries Ropax and
Cruise ferry Services
Irish Ferries
High Speed Ferry
Dublin
Holyhead
Rosslare
Pembroke
Cherbourg
Roscoff
Operating and Financial Review
- continued
21
Irish Ferries’
car carryings
performed
strongly during
the year, at
414,100 cars
(2015: 400,900
cars), up 3.3% on
the previous year.
In 2016, we delivered a comprehensive
programme of marketing and promotional
activity across our key markets of
Britain, Ireland and France. We invested
significantly in our brand, and delivered
compelling and personalised offers to
our customers at times relevant for the
planning and booking of their holidays
and other travel. This approach helped
to improve our brand awareness in these
important markets, and to drive increased
levels of enquiries to our website,
www.irishferries.com, which generated
over 6 million visits, and delivered over
80% of the car and passenger bookings
transacted in the year.
Our campaign strategy was to deliver
awareness of our services, using
traditional and innovative media channels
and to create an interest in purchasing
our services online. We used the latest
buying techniques to leverage the best
value in our media spend, and delivered
an integrated campaign across the
relevant markets. Our messaging and
advertising used a wide range of channels
and was compatible with all transactional
platforms, browsers and devices, in
support of our strategy of being available
to our customers whenever they wish to
book, and on whatever device they choose
to do so.
We appreciate that the performance
of tourism source markets is closely
linked to our own performance, and we
continued to work closely with state
tourism agencies in Ireland (Tourism
Ireland and Failte Ireland), Wales (Visit
Wales), and France (Atout France and
Normandy Tourism), to deliver co-
operatively funded advertising and
publicity initiatives.
Car and Passenger Markets
It is estimated that the overall car market,
to and from the Republic of Ireland, grew
by approximately 0.6% in 2016 to 794,100
cars, while the all-island market, i.e.
including routes into Northern Ireland, is
estimated to have grown by 2.0%. Irish
Ferries’ car carryings performed strongly
during the year, at 414,100 cars, (2015:
400,900 cars), up 3.3% on the previous
year. In the first half of the year Irish
Ferries grew its car volumes by 5.5%
while in the second half of the year, which
includes the busy summer holiday season,
volumes grew by 1.8%.
The total sea passenger market
(i.e. comprising car, coach and foot
passengers) to and from the Republic
of Ireland declined by 3.1% in 2016, to a
total of 3.1 million passengers, while the
all-island market decreased by 1.2%. Irish
Ferries’ passenger numbers carried were
down 3.2% at 1.623 million (2015: 1.676
million). In the first half of the year, Irish
Ferries passenger volumes were down
1.9% and in the second half of the year,
which is seasonally more significant, the
decrease in passenger numbers was 4.1%.
Irish Ferries benefited from more benign
weather and therefore more sailings in
2016 as well as the positive performance
of the Irish tourist industry as the
number of cars inbound to Ireland from
other markets exceeds Irish originating
traffic bound for the U.K., France and
further afield. Initiatives by the tourist
industry such as the Wild Atlantic Way
and Ireland’s Ancient East, have been
instrumental in promoting ‘own car’
tourism around the Irish coasts, and
have helped broaden the distribution of
tourists around the Island and across the
seasons. In addition, car and passenger
numbers have been helped by the
reduction in fuel costs. The lower cost
of fuel for consumers has made driving
holidays more attractive to both Irish, UK
and Continental holidaymakers.
*Market figures source: Passenger Shipping Association and Cruise & Ferry
Other InformationFinancial StatementsCorporate GovernanceStrategic Report The freight
market enjoyed
strong growth
in 2016 helped
by favourable
economic
conditions in
the Republic of
Ireland.
24
Operating and Financial Review
- continued
Irish Ferries has also been proactive in the
online environment for freight customers.
In recent years high quality mobile
options have been developed, alongside
the traditional desktop channel, whereby
customers can access our freight
reservations systems with ease. This has
facilitated an increasing proportion of our
business being booked via our website
www.irishferriesfreight.com. We launched
a new freight website for both desktop
and mobile users in the first half of 2016.
Chartering
KiwiRail, the charterer of the MV Kaitaki,
has exercised its option to extend the
charter commencing on the expiry of the
current term for a further term of three
years ending June 2020.
In an extension of the Division’s
chartering activities, four LoLo container
vessels were purchased in late 2015
for a combined cost of €24.2 million.
The vessels are the MV Elbfeeder (built
2008), MV Elbtrader (built 2008) and MV
Elbcarrier (built 2007), each of which
has a capacity of 974 teu (Twenty Foot
Equivalent) and a gross tonnage of 8,246
tons together with the MV Ranger (built
2005) which has a capacity for 803
teu and a gross tonnage of 7,852 tons.
The three Elb vessels are currently on
charter to the Group’s container shipping
subsidiary Eucon on routes between
Ireland and the Continent whilst the
Ranger is on charter to a third party.
Given the commercial value of our
ecommerce site, considerable attention
is paid to ensuring that the associated
systems are available around the clock,
and are robust and secure. We continue
to invest in developing our ecommerce
efficiency, and are continuously updating
our systems and channels as we
determine changes in consumer research
and transaction behaviour.
While we work hard to engage with the
consumer marketplace, we also invest
considerably in partnerships with the
travel trade. In 2016, we were delighted to
be voted ‘Best Ferry Company’ by travel
trade professionals at the ‘Irish Travel
Trade News Awards’, and at the ‘Irish
Travel Industry Awards’. We were also
delighted to be judged ‘Best Cross Sea
Carrier’ at the prestigious GB National
Coach Tourism Awards, as voted by
British based Coach and Group transport
operators.
RoRo Freight
The RoRo freight market between the
Republic of Ireland, and the U.K. and
France, continued to grow in 2016 on the
back of the Irish economic recovery, with
the total number of trucks and trailers up
7.0%, to approximately 952,000 units. On
an all-island basis, the market increased
by around 5.8% to approximately 1.75
million units.
Irish Ferries’ carryings, at 286,100 freight
units (2015: 272,500 freight units), were
up 5.0% in the year with volumes up 5.6%
in the first half and 4.4% in the second
half. The freight market enjoyed strong
growth in 2016 helped by favourable
economic conditions in the Republic
of Ireland. The growth in the freight
market reflects the continued strong
performance by the Irish Economy and
our ongoing focus on our customer needs.
2016 Annual Report and Financial StatementsIrish Continental Group
26
Operating and Financial Review
- continued
Container and
Terminal Division
The Container and Terminal division
includes the intermodal shipping
line Eucon as well as the division’s
strategically located container terminals
in Dublin and in Belfast. Eucon is the
market leader in the sector, operating
a fleet of chartered container vessels
ranging in size from 750 – 1,000 teu
capacity, connecting the Irish ports
of Dublin, Cork and Belfast with the
Continental ports of Rotterdam and
Antwerp. Eucon deploys 3,300 owned and
leased containers (equivalent to 6,300
teu) of varying types thereby offering
a full range of services from palletised,
project and temperature controlled cargo
to Irish and European importers and
exporters.
Revenue in the division increased to
€123.9 million (2015: €118.2 million).
The revenue is derived from container
handling and related ancillary revenues at
Belfast
Dublin
Cork
Eucon Geographical Coverage
Eucon Routes
Dublin Ferryport Terminals
Belfast Container Terminal
Ports Served By Container
Ships: Belfast, Dublin, Cork,
Antwerp, Rotterdam
our terminals and in Eucon from a mix of
domestic door-to-door, quay-to-quay and
feeder services with 70% (2015: 71%) of
shipping revenue generated from imports
into Ireland. With a flexible chartered fleet
and slot charter arrangements Eucon
was able to adjust capacity to meet the
requirements of customers in a cost
effective and efficient manner. EBITDA
in the division increased to €12.8 million
(2015: €11.8 million) while EBIT rose 13.2%
to €10.3 million (2015: €9.1 million) which
included a full year contribution from
the consolidated container terminal in
Belfast.
In Eucon overall container volumes
shipped were up 6.0% compared with
the previous year at 303,600 teu (2015:
286,500 teu). The resulting revenue
increase was offset by a 34.0% increase
in vessel charter costs as the market for
container vessels tightened.
Containers handled at the Group’s
terminals in Dublin Ferryport Terminals
(DFT) and Belfast Container Terminal
(BCT) were up 15.9% at 288,100 lifts (2015:
248,500 lifts). DFT’s volumes were up
1.9%, while BCT’s lifts were up 42.3%.
The increase in Belfast arises from the
full year operation of the consolidated
container terminal at Victoria Terminal 3
(VT3). The process of combining the two
existing container terminals in Belfast was
completed in September 2015.
In November 2016, in recognition of high
quality of service Irish Continental Group
Container and Terminal Division were
awarded the ‘Maritime Services Company
of the Year’ at the 2016 Export Industry
Awards for the second year running.
Denmark
Estonia
Latvia
Lithuania
U.K
Rotterdam
Netherlands
Antwerp
Belgium
Germany
Czech Rep.
France
Switzerland
Austria
Poland
Slovakia
Hungary
Slovenia
Croatia
Romania
Italy
Serbia
Bulgaria
2016 Annual Report and Financial StatementsIrish Continental Group Estonia
Latvia
Lithuania
Belfast
Dublin
Cork
Denmark
U.K
Rotterdam
Netherlands
Antwerp
Belgium
Germany
Czech Rep.
Poland
Slovakia
Hungary
France
Switzerland
Austria
Slovenia
Croatia
Romania
Italy
Serbia
Bulgaria
Eucon Geographical Coverage
Eucon Routes
Dublin Ferryport Terminals
Belfast Container Terminal
Ports Served By Container
Ships: Belfast, Dublin, Cork,
Antwerp, Rotterdam
Operating and Financial Review
- continued
29
The Group, which
has a rich history
and origins
dating back to
1837, has highly
experienced and
competent staff.
Resources
The Group has the following key resources
with which to pursue its objectives:
• A modern owned ferry fleet
• Long term lease hold interests in our
container terminals
• Access to strategically located ports
and slot times
• Recognised brand names
• Experienced, qualified staff
Fleet and terminals
In the Ferries division the Group employed
five owned Ropax ferries during the
year. Four ferries were operated by the
Group, the ‘Oscar Wilde’ (31,914 Gross
tonnage (GT)), delivered 1987, the ‘Isle of
Inishmore’ (34,031 GT), delivered 1997, the
‘Jonathan Swift’ (5,989 GT), delivered 1999
and the ‘Ulysses’ (50,938 GT), delivered
2001. The ‘Kaitaki’ (22,365 GT), delivered
1995, was chartered out on bareboat
charter. In addition, the ‘Epsilon’ (26,375
GT), delivered 2011, was chartered in on
bareboat charter during the year and was
operated by the Group. The charter-in of
the MV Epsilon has been extended for a
further period of two years. The charter
will now expire in November 2018.
In late 2015 four LoLo container vessels
were acquired. Three of the vessels are
utilised within the Group’s container
shipping operations whilst the remaining
vessel is chartered externally to a third
party. The HSC Westpac Express which
was delivered to the Group on 1 June 2016
was immediately chartered to a third
party and is operating in Asia.
The Group has a leasehold over 36 acres
from which it operates its Dublin Port
container facility which comprises 480
metres of berths for container ships,
with a depth of 9 to 11 metres and is
equipped with 3 modern Liebherr gantry
cranes (40 tonne capacity) and 8 rubber
tyred gantries (40 tonne capacity) on a
strategically located site within three
kilometres of Dublin city centre and within
one kilometre of the Dublin Port Tunnel,
providing direct access to Ireland’s
motorway network. In Belfast port the
container terminal operations were
consolidated during 2015 into a single
site at Victoria Terminal which we operate
under a Services Concession Agreement.
The Victoria Terminal comprises a 27 acre
site, equipped with 3 ship to shore gantry
cranes, 3 rail mounted gantry cranes and
3 straddle carriers.
Port access
The Group has access to strategically
located ports in Ireland, the UK and France
in respect of its scheduled ferry services.
A key aspect of such access is appropriate
slot times, which are critical for the
operation of such services.
Recognised brand names
The Group has invested substantially in its
brands: Irish Ferries in the passenger and
RoRo freight market place and Eucon in
the container freight market.
Experienced, qualified staff
The Group, which has a rich history and
origins dating back to 1837, has highly
experienced and competent staff. The
Group has a decentralised structure
giving divisional management substantial
autonomy in the management of their
own divisions. At the end of 2016, the
Group had 302 employees compared
with 316 at the start of the year, located
in Ireland (Dublin, Rosslare and Cork), the
UK (Liverpool, Holyhead, Pembroke and
Belfast) and The Netherlands (Rotterdam).
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 32
Operating and Financial Review
- continued
role played by charities and community
organisations within our communities and
we are happy to help these organisations
achieve their goals. During the year,
Group staff took part in fundraising
activities for the Temple Street Children’s
University Hospital. The Group is also
happy to support its employees with
charitable endeavours of their own. We
work with the Irish Whale and Dolphin
Group by reporting information on
sightings to assist in the conservation
and understanding of cetaceans in the
Irish Sea.
The general health and wellbeing of
employees and customers is of utmost
importance to the Group. We participate
in the tax incentivised ‘Cycle to Work’
scheme, which promotes healthy
commuting whilst reducing pollution.
There is an on-site gym facility at the
Group head office, available to all staff.
During 2016, Irish Ferries introduced a
variety of healthy food and drinks options
on board its vessels. There are updated
menus with a selection of healthy options
marked with the heart symbol and for
each of these items sold, a donation is
made to the Irish Heart Foundation. We
place a large emphasis on supporting
our local economy through the use of
fresh, locally sourced produce on-board
our fleet. Our fruit and vegetables are
supplied by a leading specialist catering
supplier, working with superior growers
and producers throughout Ireland. Our
fish and seafood are locally sourced
and certified as using sustainable and
responsible fishing methods. There are
a range of bespoke breads on-board
provided by a Dublin artisan bakery, while
a local vegetarian restaurant supplies our
fleet with various soups and juices.
Environmental and
Safety Review
Environment
Irish Continental Group recognises that
all forms of transport, including ships,
have an unavoidable impact on the
environment. Ships in particular generate
CO2 emissions, sulphur emissions and the
requirement for waste disposal as well as
other impacts. The Group is committed to
minimising such negative impacts in the
following ways:
CO2 emissions
The volume of CO2 emitted is directly
proportional to fuel consumption. The
Group seeks to minimise such emissions
by reducing fuel consumption as much
as possible consistent with the safe
and efficient operation of the fleet.
This is achieved through technical and
operational initiatives. These technical
initiatives are documented within
each vessels Ship Energy Efficiency
Management Plan. In recent years
initiatives have included various projects;
moving to LED strip lighting; installing
variable frequency drives to motors such
as those fitted to air conditioning systems
as well as limiting main engine power.
Delivery of new generation terminal
equipment at our Dublin container
terminal during 2017 will include
electrically powered zero emissions
mobile gantries, which will set the
standard for future equipment purchases
and further reduce emissions from our
terminal operations. The ship to shore
gantry cranes used in our container
terminal operations at both Dublin and
Belfast are already powered by electricity.
Sulphur emissions
The quantity of sulphur emitted by
the Group’s vessels depends on the
volume and type of fuel consumed.
The permissible sulphur content of fuel
consumed was reduced in recent years
to a maximum of 1.5%, compared with
3.5% previously. Since 2010, in certain
circumstances, only fuel with a maximum
sulphur content of 0.1% may be consumed
whilst passenger vessels are in port.
Under MARPOL* (Annex VI) as from 1
January 2015 this limit of 0.1% now applies
to all vessels whilst operating within
Sulphur Emission Control Areas (SECA’s).
This affects the Group’s operations while
vessels are at sea in the North Sea, and
in the English Channel serving routes
between Ireland and Continental Europe.
In relation to the Irish Sea the next change
in permissible sulphur content under
MARPOL* is scheduled for 2020 when the
limit is due to reduce from 1.5% to 0.5%.
Waste disposal / other
We continue to minimise the impact
of waste disposal through consistent
compliance with MARPOL* (73/78). We use
an oil recovery system to recycle all waste
oil from our ships. Our bulk purchasing
reduces the number of deliveries and
packaging, and we segregate all waste
cardboard packaging for recycling. The
painting of the underwater hulls of all our
ferries is with tin-free, non-toxic paints
to avoid the release of harmful agents
into the sea. We also minimise to the
best of our ability wave generation to
minimise disturbance of coastal habitats
while we strive to be at the forefront in
promoting customer awareness of the
marine environment. Energy Efficiency
Awareness Training is undertaken for all
crew to highlight obvious areas where
they can contribute to power savings and
power shower heads have been installed
in a number of cabins within the fleet
together with tap flow restrictors which
has significantly reduced the fleet’s water
consumption.
The greater use of electrically powered
equipment at our container terminals,
together with other noise suppression
initiatives assists in reducing the
noise levels from our operations in the
immediate port environment.
Community and Wellness
Irish Continental Group continues to take
an active interest in the communities
within which it operates. Each separate
business unit assists in local initiatives
through sponsorship and organised
events. We recognise the important
* MARPOL – the International Convention for the Prevention of Pollution from Ships.
2016 Annual Report and Financial StatementsIrish Continental Group Operating and Financial Review
- continued
35
Irish Continental
Group ensures
that its
management
systems instil a
safety culture
throughout
all aspects of
operations both
ashore and
afloat.
ships are operated in compliance with the
International Safety Management Code
(ISM Code), which is the international
standard for the safe management and
operation of ships and for pollution
prevention. Irish Continental Group is also
in full compliance with the International
Ship and Port Facility Security code
requirements (ISPS Code).
It is a priority for the Group to ensure that
all those who work within its structures
are provided with a high level of safety
and quality training. Information for the
promotion of a Health and Safety culture
and its attendant responsibilities is made
available. Instruction and training in
the appropriate and relevant matters is
followed so that all are enabled to work
safely and to also contribute towards a
safer working environment.
In addition to the Group’s own internal
verification procedures, we are subject to
inspection by the relevant National and
International Statutory bodies, which are
charged with the responsibility to monitor
all regulated operations to ensure that all
the specific requirements are compliant.
During 2016, the on-board management
of the Irish Ferries ships was performed
by Matrix Ship Management Limited,
Cyprus, on behalf of Irish Continental
Group. There is an on-going monitoring
and reporting system in place to ensure
that at all times the Group is aware of all
relevant statutory legislation applicable
to its business and the Group seeks to
achieve the highest level of compliance
with such legislation in all its activities.
Safety
It is a matter of priority for the Group,
given the nature of our operations that
the wellbeing of all those who work within
the Group or travel on-board our vessels
are safeguarded through adherence to
statutory health and safety standards and
international maritime regulations.
The Safety, Health and Welfare at Work
Act, 2005, impose certain requirements
on employers and the Group has taken
the necessary action to comply with the
Act, including the adoption of safety
statements in appropriate locations. On
occasions where incidents occur in the
workplace the Group may be subject
to investigation by the appropriate
regulatory authority and in cases where
the Group is found to be in breach of
regulations the Group may be subject to
enforcement action.
Irish Continental Group ensures that
its management systems instil a
safety culture throughout all aspects
of operations both ashore and afloat.
Management is responsible for ensuring
that health and safety issues are
identified, monitored, reviewed and
developed. The Group ensures that there
are appropriate policies and procedures
in place with targets and monitoring
of performance. Regular audits ensure
continued compliance to these high
standards are maintained.
Irish Continental Group ensures that
all its ships are designed, operated
and maintained in compliance with the
International Convention for the Safety
of Life at Sea (SOLAS) to ensure the
safety of our crew, our passengers and
the cargo that is to be transported on
our ships is safely stowed and carried in
compliance with these regulations and in
accordance with best practice. In addition
Irish Continental Group ensures that its
Other InformationFinancial StatementsCorporate GovernanceStrategic Report Risk Management
The ICG Board holds overall responsibility
for the Group’s risk management and
internal control systems, including
the setting of acceptable risk levels to
achieve its strategic objectives. The
design and management of the Group
control systems are bound by these risk
parameters set by the Board.
The nature of the Group’s business,
which is primarily the operation of ships
and provision of related services, is such
that operational safety is paramount.
Significant risks include risks to
operational safety as well as financial
risks. Controls systems to address risks
to operational safety are designed to
minimise the effects of known risks to
tolerances within the risk appetite set
by the Board. This strong safety culture
contributes to the strong overall risk
culture of the Group. Our Group Risk
Management function comprises an
Operations Risk Manager for the Ferries
Division and a Group Marine and Safety
Manager. The Group Risk Management
function reviews key business processes
and controls. In addition to the Group
Risk Management function is the Group
Internal Audit function, both of which are
key components of the risk management
framework set out below.
The Group adopts a ‘three lines of
defence’ risk management framework
incorporating Divisional Management
(first line of defence), Group Risk
Management and other oversight
functions (second line of defence) and
Internal Audit (third line of defence). This
model allows for input across all levels of
the business to help manage current risks
and to keep abreast of emerging risks.
The first line functions design and
execute the application of internal
controls measures on a daily basis. The
second line functions undertake oversight
and compliance roles and includes
the Group Risk Management function
who reports directly on risk matters
to the Audit Committee. The third line,
consisting of the Group Internal Audit
function, performs independent oversight
of the first two lines and reports directly
to the Audit Committee on matters
Chairman
Board of Directors
Audit
Committee
Chief
Executive
Remuneration
Committee
Nomination
Committee
Executive Management Team
Business Functions
Divisional Boards
Company Secretary
ICG Board
Risk Management
Function Reporting
Audit Committee
Internal Audit
Reporting
External Audit
Group Risk
Register
Other external Bodies
(Port State Authorities,
SOLAS, MARPOL, etc.)
1st Line of Defence
(Divisional
Management)
2nd Line of Defence
(Risk Management
& Group Oversight
Functions)
3rd Line of Defence
(Internal Audit
Function)
37
of internal control, compliance and
governance.
The Group maintains a risk register which
identifies the nature and extent of the
risks faced by each business unit and
the Group overall, covering financial,
operational, and compliance controls
and risk management. These risks are
prioritised in terms of likelihood of
occurrence, estimated financial impact
and the Group’s ability to reduce the
incidence and impact on business
operations should any risk materialise.
This prioritisation is determined through
the use of a traffic light scoring system.
Risks are coloured green, amber or
red in order of seriousness. The risk
register is reviewed on a regular basis by
management. Reporting by management
on the identified principal risks is
covered within the regular Board meeting
agenda and this forms the basis of the
continuous risk monitoring process. The
Board separately conducts an annual
assessment of the significant risks and
uncertainties facing the Group (set out
on page 38 to 39) and the adequacy of
the monitoring and reporting system
maintained by management. No material
weaknesses were noted by the Board
during the year.
The Audit Committee has been delegated
by the Board with the task of assessing
the Group’s internal control and risk
management systems. This assessment
is carried out through the review of
regularly produced reports by the Group
Risk Management function and Group
Internal Audit. The Audit Committee also
reviews the risk register co-prepared
by individuals within the three lines of
defence. Full details of the activities
performed by the Audit Committee can
be found on page 62 to 64. The risks and
uncertainties set out on page 38 to 39
are broadly unchanged from the previous
year.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 38
Operating and Financial Review
- continued
Principal Risks and Uncertainties
Risks
Description of risk
Mitigation
Safety and
business
continuity
The Group is dependent on the safe operation of
its vessels and plant and equipment. There is a risk
that any of the Group’s vessels could be involved
in an incident which could cause loss of life and
cargo, and cause significant interruption to the
Group’s business. The business of the Group is also
exposed to the risk of interruption from incidents
such as mechanical failure, or other loss of critical
port installations or vessels, or from labour disputes
either within the Group or in key suppliers, for
example ports or fuel suppliers.
IT systems
The maintenance of adequate IT systems,
networks and infrastructure to support growth and
development may be disrupted by internal system
failures, outages at third-party service providers
or by environmental events, such as storms or
flooding.
In mitigation, the Group ensures that management
systems within its compass instil a safety culture
throughout all aspects of operations both ashore
and afloat through the application of appropriate
policies and procedures in place. Regular audits
ensure continued compliance to these high
standards are maintained. The Group insures its
vessels and plant and equipment against loss and
damages. The Group also carries insurance in
respect of third party liabilities in line with industry
practice and international conventions. The Group
does not carry insurance for business interruption
due to the cost involved relative to the insurable
benefits. The operation of vessels of the type listed
by the Group is subject to significant regulatory
oversight by flag state, port state and other
regulatory authorities.
IT standards and policies have been subject to on-
going review to ensure they conform to appropriate
best practices.
Third-party technologies and service providers are
regularly appraised to ensure the infrastructure in
place is effective and reliable.
IT disaster recovery and crisis management plans
are in place and tested.
Information
security and
cyber threats
There is an ever-increasing risk of cybercrime
globally. Online bookings made by customers
carry an inherent risk of financial loss and loss of
personal data.
Dedicated IT personnel with the appropriate
technical expertise are in place to oversee IT
security.
Commercial
and market risk
The passenger market is subject to prevailing
economic conditions, the strength of Sterling
relative to the Euro (which impacts on both
incoming demand to Ireland and on translation of
Sterling revenues) and to the competitive threat
from short-haul and regional airlines. The freight
market is subject to general economic conditions
and in particular the level of international trade in
North West Europe together with overall capacity
offerings. Given the mobile nature of ships there is
also the risk of additional capacity arising in any of
the Group’s trading areas at relatively short notice.
The Group employs various applications to protect
its systems and networks from security breaches.
The Group adopts a dynamic pricing approach and
utilises pricing initiatives in the passenger market
to mitigate against these risks. The Group has
commercial arrangements with freight customers
which mitigate the immediate effects of additional
market capacity but in the medium term the Group is
exposed to the dilution of its customer base.
2016 Annual Report and Financial StatementsIrish Continental Group 39
Risks
Commodity
price risk
Description of risk
In terms of commodity price risk the Group’s
vessels consume heavy fuel oil (HFO), marine diesel
/ gas oil (MDO/MGO) and lubricating oils, all of which
continue to be subject to price volatility. The Group
must also manage the risks inherent in changes to
the specification of fuel oil which are introduced
under international and EU law from time to time.
Financial risks
Financial risk arises in the ordinary course of
business, specifically the risk of default by debtors,
availability of credit insurance, fluctuations in both
foreign exchange rates and interest rates, and
availability of financing.
Mitigation
The Group’s policy has been to purchase these
commodities in the spot markets and to remain
unhedged. Bunker costs of the Container and
Terminal division are offset to a large extent by the
application of prearranged price-adjustments with
our customers. Similar arrangements are in place
with freight customers in the Ferries division. In
the passenger sector, changes in bunker costs are
included in the ticket price to the extent that market
conditions will allow.
Details on mitigation of these financial risks are set
out on page 40 under financial risk management.
Retirement
benefit
schemes
The Group’s defined benefit obligations are exposed
to the risks arising from changes in interest and
inflation rates, life expectancy, and changes in the
market value of investments.
These risks are mitigated through balanced
investment strategies and supported by appropriate
employer funding through on-going and deficit
contributions.
The Group monitors its exposure to the MNOPF and
maintains a dialogue with the Trustees via MNOPF
employer group.
In addition to normal risks attributable to the
Group’s defined benefit obligations, the Group is
exposed to the risk attributable to its membership
of the multi-employer scheme, the Merchant
Navy Officer Pension Fund (MNOPF), where the
participating employers have joint and several
liability for the obligations of the scheme. This
means the Group is exposed, with other performing
employers, to a pro rata share of the obligations
of any employers who default on their obligations.
The Group is also exposed to the risk of a
discontinuance basis debt arising (a “Section 75
debt”) if it ceases participation in the MNOPF. This
would be a larger sum than the on-going deficit
share and represents a contingent liability.
Outcome of the UK Referendum vote, June 2016
On 23 June 2016, the UK voted in favour of leaving the EU. As a result, there exists a high level of economic and political uncertainty
in the region. This uncertainty could impact on Group risks through the creation of opportunities and threats, however, the impact
cannot be reliably measured at this time. The Group continues to monitor closely any developments.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 40
Operating and Financial Review
- continued
Financial Review
Results
Revenue for the year amounted to
€325.4 million (2015: €320.6 million)
while operating profit amounted to €62.6
million compared with €57.2 million in
2015. Principal variations on the prior
year include the increase in revenue by
€4.8 million (1.5%), a decrease in group
wide fuel costs which were €6.8 million
lower at €32.2 million (2015: €39.0 million),
partially offset by increased variable
costs. This resulted in profit before tax
from continuing operations of €60.4
million (2015: €54.1 million).
Taxation
The tax charge is €1.6 million compared
with a charge of €0.4 million in 2015. The
corporation tax charge of €2.0 million
(2015: €0.7 million) comprises Irish and UK
corporation tax. Certain activities qualify
to be taxed under tonnage tax (which is
an EU approved special tax regime for
qualifying shipping activities) in Ireland.
Deferred tax credit was €0.4 million in
2016 (2015: €0.3 million).
Earnings per share
Adjusted EPS (before the net interest cost
on defined benefit obligations) was 31.4
cent compared with 29.1 cent in 2015.
Basic EPS was 31.4 cent compared with
28.9 cent in 2015. The reason for the
increase in Basic EPS is due to an increase
in profit attributable to equity holders of
the parent to €58.8 million (2015: €53.7
million).
Cash flow and investment
EBITDA for the year was €83.5 million
(2015: €75.5 million). There was a net
inflow of working capital of €4.7 million,
due to a decrease in receivables of €1.4
million partially offset by an increase in
inventories of €0.4 million and an increase
in payables of €3.7 million. The Group
made payments, in excess of service
costs to the Group’s pension funds of €1.8
million. Cash generated from operations
amounted to €86.5 million (2015: €71.8
million).
Interest paid was €2.3 million (2015:
€2.8 million) while taxation paid was
€2.1 million (2015: €0.8 million). Interest
received amounted to €0.1 million (2015:
€0.1 million).
Capital expenditure was €57.0 million
(2015: €35.0 million) which increased
primarily due to the company entering
into an agreement for the construction
of a new ferry and also includes the
purchase of the fastcraft “Westpac
Express”. On 31 May 2016, ICG announced
that it had entered into an agreement
with the German company Flensburger
Schiffbau-Gesselschaft & Co.KG (“FSG”)
whereby FSG has agreed to build a cruise
ferry for ICG at a contract price of €144
million. This is scheduled for delivery
during 2018 and will be financed through
a combination of cash resources and loan
facilities. This new vessel investment
will support the longer term objectives
of our business. The cruise ferry will be
designed to best meet the seasonality
of our business. As per the agreement,
ICG has paid 20% of the contract price of
the vessel to FSG. The remaining 80% is
payable upon delivery of the vessel. The
purchase of the Westpac Express was
agreed in April 2016 for $13.25 million. The
vessel was delivered to the company in
June 2016 and immediately chartered out
to a third party. It has remained on charter
since delivery. The charter-in of the MV
Epsilon has been extended for a further
period of two years. The charter will now
expire in November 2018. Also included
in capital expenditure is the annual refits
of the vessels and new containers to
enhance the Eucon fleet of equipment.
Arising from the cash flows set out above
and dividend payments of €21.0 million,
share issues of €2.7 million and other net
cash inflows of €0.1 million, net debt at
year end was €37.9 million (2015: €44.3
million).
Dividend
During the financial year a final dividend
of 7.387 cent per ICG Unit was paid for the
financial year ended 31 December 2015
and also an interim dividend of 3.820 cent
per ICG Unit was paid for the financial year
ended 31 December 2016. The Board is
proposing a final dividend of 7.760 cent
per ICG Unit in respect of the financial
year ended 31 December 2016.
Pensions
The Group has four, separately funded,
company sponsored defined benefit
obligations covering employees in
Ireland, the UK and the Netherlands. The
Group also participates in the UK based
industry-wide scheme, the Merchant
Navy Officers Pension Fund (MNOPF) in
which participating employers share joint
and several liability. Aggregate pension
assets in the four company-sponsored
schemes at year end were €274.8 million
(2015: €263.7 million), while combined
pension liabilities were €288.3 million
(2015: €268.8 million). The discount rate
for Euro liabilities has decreased from
2.2% to 1.7% while the rate for Sterling
liabilities has decreased from 3.75% to
2.5%. Of the Group’s four schemes, two
were in surplus at year end (€2.4 million
versus €5.6 million in 2015), while two
were in deficit (€15.9 million versus €10.2
million in 2015). In addition, the Group’s
share of the deficit in the industry wide
scheme, the MNOPF, based on the last
actuarial valuation as at 31 March 2012, is
€nil (2015: €0.5 million).
Financial risk management
The funding of the Group’s activities
is managed centrally. In funding its
operations the Group uses a mixture of
financial instruments: bank borrowings,
finance leases and cash resources.
The Group has the following facilities with
its lenders; a €37.7 million amortising
term loan facility and a €40.0 million
multi-currency revolving credit facility
together with a €15.0 million overdraft and
trade guarantee facility. The amortising
term loan facility is secured on certain of
the Group’s vessels while the revolving
credit and overdraft facilities are cross
guaranteed within the Group. The floating
interest rate on the amortising facility
was swapped for a fixed interest rate
for the full term following drawdown in
2012. The interest rate on the revolving
credit facility is based on EURIBOR
2016 Annual Report and Financial StatementsIrish Continental Group 41
such that 98% (2015: 20%) of the Group’s
bank borrowings are due to mature within
one year. The Group is in negotiations with
a number of lenders and the Directors
expect replacement facilities to be
available to the Group on normal terms
and covenants.
David Ledwidge,
Chief Financial Officer
plus a variable margin related to overall
group debt levels relative to EBITDA. The
principal covenants under the agreement
are a maximum Group net debt level by
reference to EBITDA and interest cover.
The Group was compliant with these
covenants at 31 December 2016.
The Group’s current committed bank
facilities under the above arrangements
amount to €92.7 million (2015: €105.7
million). Total amounts utilised at 31
December 2016 amounted to €78.4 million
(2015: €66.4 million). The Group draws
under its revolving facility to fund its
seasonal working capital requirements.
The Group had finance lease liabilities of
€2.4 million at 31 December 2016 (2015:
€3.6 million).
The principal objective of the Group’s
treasury policy is the minimisation of
financial risk at reasonable cost. To
minimise risk the Group uses interest
rate swaps and forward foreign currency
contracts. The Group does not trade in
financial instruments.
Interest rate management
The Group borrows in required currencies
at both fixed and floating rates of interest,
exposing it to interest rate risk. The
Group’s policy is to fix interest rates on
a proportion of the Group’s medium to
long term debt exposure in individual
currencies, having regard to current
market rates and future trends. The Group
uses interest rate swaps to hedge interest
rate exposure. The Group also leases
certain items of plant and equipment
under finance leases where the interest
rates are fixed at the contract date. At 31
December 2016, 50% (2015: 78%) of the
Group’s gross debt was at fixed rates with
a weighted average repricing period of
0.9 years (2015: 1.9 years). The weighted
average fixed rate of interest is 3.5%
(2015: 3.5%). Debt interest cover, for the
year was 28 times (2015: 21 times).
Currency management
The Euro is the most prevalent currency
impacting the Group. The Group also
has significant Sterling and US Dollar
cash flows. The Group’s principal policy
to minimise currency risk is to match
foreign currency assets and liabilities and
to match cash flows of like currencies.
The Group also reduces transactional
currency risk in US Dollars through the
use of forward exchange contracts. This
minimises currency exposure in relation
to fuel, insurance costs and container
leasing costs. Sterling revenues and
expenses are netted, with excess Sterling
revenues on hand to purchase Dollars to
settle Dollar costs.
Commodity price management
Bunker oil costs constitute a separate
and significant operational risk, partly
as a result of historically significant
price fluctuations. Bunker costs of the
Container and Terminal division are offset
to a large extent by the application of
prearranged price-adjustments with our
customers. Similar arrangements are
in place with freight customers in the
Ferries division. In the passenger sector,
changes in bunker costs are included in
the ticket price to the extent that market
conditions will allow. Bunker consumption
was 110,100 tonnes in 2016 (2015: 107,600
tonnes). The cost per tonne of HFO fuel
in 2016 was 19% lower than in 2015 while
MGO was 21% lower.
Credit risk
The Group’s credit risk arising on its
financial assets is principally attributable
to its trade and other receivables
and the finance lease receivable. The
concentration of credit risk in relation to
trade and other receivables is limited due
to the exposure being spread over a large
number of counterparties and customers.
Liquidity
It is Group policy to invest surplus cash
balances on a short term basis. At year
end 100% (2015: 100%) of the Group’s cash
resources had a maturity of three months
or less. Net debt at 31 December 2016 was
€37.9 million (2015: €44.3 million) made up
of borrowings of €80.1 million (2015: €69.3
million) which is offset by cash and cash
equivalents of €42.2 million (2015: €25.0
million). The Group’s main borrowing
facilities are due to mature during 2017
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 42
Our Fleet
MV Ulysses
Year Delivered:
Gross Tonnage:
Lane metres:
Car capacity:
Passenger capacity:
2001
50,938
4.1km
1,342
1,875
MV Isle of Inishmore
Year Delivered:
Gross Tonnage:
Lane metres:
Car capacity:
Passenger capacity:
MV Kaitaki
Year Delivered:
Gross Tonnage:
Lane metres:
Car capacity:
Passenger capacity:
1997
34,031
2.1km
855
2,200
1995
22,365
1.7km
600
1,650
MV Oscar Wilde
Year Delivered:
Gross Tonnage:
Beds:
Car capacity:
Passenger capacity:
1987
31,914
1,376
580
1,458
HSC Jonathan Swift
Year Delivered:
Gross Tonnage:
Speed:
Car capacity:
Passenger capacity:
MV Epsilon (chartered in)
Year Delivered:
Gross Tonnage:
Lane metres:
Beds:
Passenger capacity:
1999
5,989
39 knots
200
800
2011
26,375
2.8km
272
500
HSC Westpac
Year Delivered:
Gross Tonnage:
Speed:
Car capacity:
Passenger capacity:
New build
2016
8,403
35 knots
251
900
Expected Delivery:
Gross Tonnage:
Speed:
Car Capacity:
Passenger Capacity:
Mid 2018
50,000
22.5 knots
1,216
1,885
2016 Annual Report and Financial StatementsIrish Continental Group 43
MV Ranger
Built:
Capacity:
MV Elbfeeder
MV Elbtrader
2005
803 TEU
Built:
Capacity:
2008
974 TEU
Built:
Capacity:
2008
974 TEU
MV Elbcarrier
Built:
Capacity:
MV Endurance (chartered in)
MV Jork Reliance (chartered in)
2007
974 TEU
Built:
Capacity:
2005
750 TEU
Built:
Capacity:
2007
803 TEU
Other InformationFinancial StatementsCorporate GovernanceStrategic Report Executive Management Committee
45
Eamonn Rothwell BComm, MBS, FCCA, CFA UK
Chief Executive Officer
Eamonn Rothwell, aged 61, has been a Director for 30 years
having been appointed as a non-executive Director in 1987
and subsequently to the position of Chief Executive Officer in
1992. He is a Director of Interferry European Office A.I.S.B.L. He
is a former Director of The United Kingdom Mutual War Risks
Association Limited, Interferry Inc and The United Kingdom
Mutual Steam Ship Assurance Association (Bermuda) Limited.
He is a past executive Director of stockbrokers NCB Group. Prior
to that, he worked with Allied Irish Banks plc and Bord Fáilte
Eireann (The Irish Tourist Board).
David Ledwidge ACA, BSc (Mgmt)
Chief Financial Officer
David Ledwidge, aged 37, was appointed to the Board on 3 March
2016. David joined the Group in 2006 from professional services
firm Deloitte where he qualified as a chartered accountant. He
has held various financial positions within the Group, including
Group Risk Accountant, and most recently as Finance Director of
Irish Ferries. He was appointed to his current role as Group Chief
Financial Officer in May 2015.
Andrew Sheen
Sc. BEng(Hons). CEng. FIMarEST. FRINA.
Managing Director – Ferries Division
Andrew Sheen, aged 45, a chartered engineer, has been involved
in shipping for over 26 years and has worked with Irish Ferries
in a variety of Operational Roles for over 11 years. He re-joined
ICG from the UK Maritime & Coastguard Agency and has been
a Director of Irish Ferries since 2013. He was appointed to his
current role as Managing Director of the Ferries Division in
March 2015. He is currently Vice President of the Irish Chamber
of Shipping.
Declan Freeman FCA
Managing Director - Container and Terminal Division
Declan Freeman, aged 41, joined the Group in 1999 from
professional services firm Deloitte where he qualified as
a chartered accountant. He has worked in a number of
financial and general management roles in the Group up to
his appointment as Managing Director of Eucon in 2011. He
was appointed to his current role as Managing Director of the
Container and Terminal Division in 2012.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 46
Irish Continental Group
2016 Annual Report and Financial Statements
47
Corporate Governance
is concerned with how
companies are directed and
controlled.
Read more from the Corporate
Governance Statement on page 53
Corporate
Governance
The Board
Report of the Directors
Corporate Governance Statement
Report of the Audit Committee
Report of the Nomination Committee
Report of the Remuneration Committee
Directors’ Responsibilities Statement
48
50
53
62
65
67
77
48
The Board
The Group’s non-executive Directors are:
John B. McGuckian BSc (Econ)
Chairman
John B. McGuckian, aged 77, has been a Director for 29 years
having been appointed as a non-executive Director in 1988
and Chairman in 2004. He has a wide range of interests, both
in Ireland and internationally. He is a Director of Cooneen
Textiles Limited. He is a former Director of a number of listed
companies and he has previously acted as the Chairman of;
the International Fund for Ireland, the Industrial Development
Board for Northern Ireland, UTV Media plc (where he was also
a member of the Remuneration Committee) and as Senior
Pro-Chancellor and Chairman of the Senate of the Queen’s
University of Belfast.
Catherine Duffy BA LegSc, DipLeg Stds
Independent Director
Catherine Duffy, aged 55, has been a Director for 5 years having
been appointed to the Board in 2012. Catherine is the Chairman
of law firm A&L Goodbody and a Senior Partner in its Banking
and Financial Services Department. Catherine is a member and
a former Chair of the International Legal Advisory Panel to the
Aviation Working Group of Unidroit. She was previously a non-
executive Director of Beaumont Hospital and a member of the
first Advisory Group to the Irish Maritime Development Office,
a government sponsored organisation set up to promote and
assist the development of Irish shipping and shipping services.
Committee Membership: Audit Committee, Nomination Committee (Chairperson)
and Remuneration Committee
Brian O’Kelly BBS, FCA
Senior Independent Director
Brian O’Kelly, aged 54, has been a Director for 4 years having
been appointed to the Board in 2013. Brian is Co-Head of
Investment Banking in Goodbody having previously been
Managing Director of Goodbody Corporate Finance. He is an
executive director of Ganmac Holdings, the parent company
of Goodbody. Brian qualified as a Chartered Accountant with
KPMG and was subsequently a Director of ABN AMRO Corporate
Finance. He is a member of the Listing Committee of the Irish
Stock Exchange.
Committee Membership: Audit Committee, Nomination Committee, and
Remuneration Committee (Chairperson)
John Sheehan FCA
Independent Director
John Sheehan, aged 51, was appointed to the Board in October
2013. John holds a senior position with Ardagh Group, a leading
operator in the global glass and metal packaging sector with
operations principally in Europe and North America. John has
over 20 years of experience at management level with exposure
to international acquisition and development projects. He was
formerly Head of Equity Sales at NCB Stockbrokers, now part of
Investec Bank, where he spent thirteen years in a range of roles
and directly covered various industry sectors including transport
and aviation. John qualified as a Chartered Accountant with PwC.
Committee Membership: Audit Committee (Chairperson), Remuneration Committee,
Nomination Committee
2016 Annual Report and Financial StatementsIrish Continental Group
49
The Group’s executive Directors are:
The company secretary is:
Eamonn Rothwell BComm, MBS, FCCA, CFA UK
Chief Executive Officer
Eamonn Rothwell, aged 61, has been a Director for 30 years
having been appointed as a non-executive Director in 1987
and subsequently to the position of Chief Executive Officer in
1992. He is a Director of Interferry European Office A.I.S.B.L. He
is a former Director of The United Kingdom Mutual War Risks
Association Limited, Interferry Inc and The United Kingdom
Mutual Steam Ship Assurance Association (Bermuda) Limited.
He is a past executive Director of stockbrokers NCB Group. Prior
to that, he worked with Allied Irish Banks plc and Bord Fáilte
Eireann (The Irish Tourist Board).
Committee Membership: Nomination Committee
Thomas Corcoran BComm, FCA
Company Secretary
Thomas Corcoran, aged 52, joined the
Company in 1989 from the international
professional services firm PwC, where he
qualified as a Chartered Accountant. He
has held a number of financial positions
within the Group and is currently Group
Financial Controller. He was appointed
Company Secretary in 2001.
David Ledwidge ACA, BSc (Mgmt)
Chief Financial Officer
David Ledwidge, aged 37, was appointed to the Board on 3 March
2016. David joined the Group in 2006 from professional services
firm Deloitte where he qualified as a chartered accountant. He
has held various financial positions within the Group, including
Group Risk Accountant, and most recently as Finance Director of
Irish Ferries. He was appointed to his current role as Group Chief
Financial Officer in May 2015.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 50
Report of the Directors
The Directors present their Report
together with the audited financial
statements of the Group for the financial
year ended 31 December 2016.
Results for the year and Business
Developments
Details of the results for the financial
year are set out in the Consolidated
Income Statement on page 85 and in
the related notes forming part of the
financial statements. The fair review of
the development of the business of the
Company and its subsidiaries is set out
in the Operating and Financial Review on
pages 13 to 41. This includes a description
of the principal activities, principal risks,
uncertainties, alternative performance
measures and environmental and
employee matters.
Research and Development
The Group actively monitors
developments in ship design and ship
availability with an emphasis on product
improvement and achievement of
economies of scale.
Dividend
Dividends paid during the year ended
31 December 2016 are set out in the
Consolidated Statement of Changes in
Equity on page 88 for the Group and the
Company Statement of Changes in Equity
on page 91 for the Company.
In June 2016, a final dividend of 7.387
cent per ICG Unit was paid in respect of
the financial year ended 31 December
2015. In October 2016, an interim dividend
of 3.820 cent per ICG Unit was paid in
respect of the financial year ended 31
December 2016.
The Board is proposing a final dividend
of 7.760 cent per ICG Unit to be paid in
respect of the financial year ended 31
December 2016 in June 2017.
The Company has adopted a progressive
dividend policy the aim of which is to
gradually increase or at least maintain the
annual total dividend per share over the
medium term. Any dividend is declarable
at the discretion of the Directors
following assessment of the Company’s
performance, its cash resources and
distributable reserves.
Board of Directors
The Board members are listed on pages
48 to 49 of this report.
In accordance with the Articles of
Association, one third of the Directors
are required to retire from office at each
Annual General Meeting of the Company.
However, in accordance with the
provisions contained in the UK Corporate
Governance Code, the Board has decided
that all Directors should retire at the
2017 Annual General Meeting and offer
themselves for re-election. Biographical
details of the Directors are set out on
pages 48 to 49 of this report and the
result of the annual board evaluation is
set out on page 57.
Accounting Records
The directors believe that they have
complied with the requirements of
Section 281 to 285 of the Companies Act
2014 with regard to maintaining adequate
accounting records by employing
accounting personnel with appropriate
expertise and by providing adequate
resources to the finance function. The
accounting records of the Company are
maintained at the Company’s registered
office, Irish Continental Group plc,
Ferryport, Alexandra Road, Dublin 1,
Ireland.
Going Concern
The Financial Statements which report
Group net current liabilities of €41.9
million (current assets €84.1 million less
current liabilities €126.0 million) have
been prepared on the going concern
basis. The Directors report that they
have satisfied themselves at the time
of approving the financial statements
that the Group and Company are going
concerns, having adequate financial
resources to continue in operational
existence for the foreseeable future.
In forming this view the Directors have
considered the future cash requirements
of the Group’s business in the context
of the current economic environment
outlook, the principal risks and
uncertainties facing the Group (pages 38
to 39), the Group’s 2017 budget plan and
the medium term strategy of the Group,
including capital investment plans. The
Directors noted the existing loan facilities
mature in September 2017 and have
considered likely borrowing facilities
that will be available to the Group based
on discussions with lenders. The future
cash requirements have been compared
to bank facilities which are available or
expected to be available to the Group and
Company on normal terms and covenants
to ensure the Group and Company will be
in a position to discharge their liabilities
as they fall due.
Viability Statement
The Directors have assessed ICG’s
viability over a three-year timeframe.
Three years was selected as the Directors
believe that this reflects an appropriate
timeframe for performing assessments
of future performance given the dynamic
nature of our markets as regards the
competitive landscape, economic activity
and capital investment lead-times.
In making their assessment, the Directors
took account of ICG’s current financial
and operational positions and contracted
capital expenditure. They also assessed
the potential financial and operational
impacts, in severe but plausible scenarios,
of the principal risks and uncertainties
and the likely degree of effectiveness of
current and available mitigating actions
as set out on pages 38 and 39. It was
further assumed that the existence of
functioning financial markets with bank
lending available to the Group on normal
terms and covenants.
Based on this assessment, the Directors
have a reasonable expectation that the
Company and the Group will be able to
continue in operation and meet all their
liabilities as they fall due over the next
three years.
Directors’ Compliance Statement
The Directors acknowledge that they are
responsible for securing compliance by
the Company with its Relevant Obligations
2016 Annual Report and Financial StatementsIrish Continental Group 51
Number of Units
Issued
28,092,842
24,878,118
13,132,741
13,216,947
7,547,874
7,122,375
6,229,035
% of
Units
14.9%
13.2%
7.0%
7.0%
4.0%
3.8%
3.3%
with International Financial Reporting
Standards (IFRS) as adopted by the
European Union. The Group has adopted
all of the new and revised Standards and
Interpretations issued by the International
Accounting Standards Board (IASB) and
the International Financial Reporting
Interpretations Committee (IFRIC) of the
IASB that are relevant to its operations
and effective for accounting periods
beginning on 1 January 2016 and that
have been adopted by the European
Union.
Principal Risks and Uncertainties
The Group has a risk management
structure in place which is designed to
identify, manage and mitigate the threats
to the business. The key risks facing the
Group include operational risks such as
risks to safety and business continuity,
information security, commercial and
market risks, combined with the risk of
increased supply of shipping capacity due
to the mobility of assets and financial and
commodity risks arising in the ordinary
course of business. Further details of
risks and uncertainties are set out on
pages 38 to 39.
Substantial Shareholdings
The latest notifications of interests of
3% or more in the share capital of the
Company received by the Company on or
before 3 March 2017 were as follows:
Beneficial Holder as Notified
Eamonn Rothwell
Wellington Management Company, LLP
Marathon Asset Management, LLP
Ameriprise Financial Inc.
BlackRock Inc.
Bank of Montreal
FMR
as defined within the Companies Act, 2014
(the “Relevant Obligations”).
The Directors confirm that they have
drawn up and adopted a compliance
policy statement setting out the
Company’s policies that, in the Directors’
opinion, are appropriate to the Company
respecting compliance by the Company
with its Relevant Obligations.
The Directors further confirm the
Company has put in place appropriate
arrangements or structures that are,
in the Directors’ opinion, designed to
secure material compliance with its
Relevant Obligations. For the year ended
31 December 2016, the Directors have
reviewed the effectiveness of these
arrangements and structures during the
financial year to which this Report relates.
In discharging its obligations under the
Companies Act 2014 as set out above
the Directors have relied on the advice
of persons employed by the company
or retained by it under a contract for
services, who the directors believe to have
the requisite knowledge and experience
to advise the company on compliance
with its relevant obligations.
Disclosure of information to
statutory Auditors
In accordance with the provisions of
Section 330 of the Companies Act 2014,
each of the persons who are Directors of
the Company at the date of approval of
this report confirms that:
• So far as the Directors are aware,
there is no relevant audit information,
as defined in the Companies Act
2014, of which the statutory Auditor is
unaware; and
• The Directors have taken all the steps
that they ought to have taken as a
Director to make themselves aware
of any relevant audit information
(as defined) and to ensure that the
statutory Auditor is aware of such
information.
International Financial Reporting
Standards
Irish Continental Group presents its
Financial Statements in accordance
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 52
Report of the Directors
- continued
Directors, Secretary and their Interests
The interests of the Directors and Secretary of the Company and their spouses and minor children in the share capital of the
Company at 31 December 2016 and 1 January 2016 all of which were beneficial, were as follows:
Director
John B. McGuckian
Eamonn Rothwell
Catherine Duffy
David Ledwidge
Brian O’Kelly
John Sheehan
Company Secretary
Thomas Corcoran
31/12/2016
ICG Units
01/01/2016
ICG Units
31/12/2016
Share Options
01/01/2016
Share Options
296,140
296,140
-
-
28,092,842
27,680,000
2,200,000
3,200,000
-
51,623
41,740
15,000
-
33,708*
41,740
15,000
-
-
300,000
550,000*
-
-
-
-
113,081
46,040
440,000
540,000
*At date of appointment to the Board on 3 March 2016.
ICG Units are explained on page 154 of this report.
Auditors
In accordance with Section 383(2) of the
Companies Act 2014, the auditor, Deloitte,
Chartered Accountants and Statutory
Audit firm, continue in office and a
resolution authorising the directors to fix
their remuneration will be proposed at the
forthcoming AGM.
Corporate Governance
The Group applies the principles
and provisions of The UK Corporate
Governance Code (“the Code”) as adopted
by the Irish Stock Exchange (ISE) and the
UK Financial Services Authority and of the
Irish Corporate Governance Annex (“the
Annex”) issued by the ISE. A corporate
governance statement is set out on pages
53 to 61 and are incorporated into this
report by cross reference.
Key Performance Indicators
The Group uses a set of headline key
performance indicators (KPIs) to measure
the performance of its operations. These
alternative performance measures are set
out on pages 15 to 17 and are incorporated
into this report by cross reference.
Future Developments
The Group maintains a pivotal position
in facilitating Ireland’s international
trade and tourism and is operationally
geared to the economic recovery in
Ireland. The Group has seen the benefits
of this recovery continue into the early
weeks of 2017 which, notwithstanding
a weakening in Sterling and assuming
current oil prices, the Group is well placed
and looks forward in 2017, in the absence
of unforeseen developments to further
growth. On 31 May 2016, ICG announced
that it had entered into an agreement
with the German company Flensburger
Schiffbau-Gesselschaft & Co.KG (“FSG”)
whereby FSG has agreed to build a cruise
ferry for ICG at a contract price of €144
million. This is scheduled for delivery
during 2018. This new vessel investment
will support the longer term objectives
of our business. The cruise ferry will be
designed to best meet the seasonality of
our business.
Events after the Reporting Period
The Board is proposing a final dividend
of 7.760 cent per ICG Unit in respect of
the results for the financial year ended 31
December 2016.
There have been no other material events
affecting the Group since 31 December
2016.
Annual Report and Financial
Statements
This Annual Report together with the
Financial Statements for the financial
year ended 31 December 2016 was
approved by the Directors on 3 March
2017. The Directors consider that the
Annual Report and Financial Statements,
taken as a whole, is fair balanced
and understandable and provide the
information necessary for shareholders to
assess the Group’s position, performance,
business model and strategy.
Annual General Meeting
Notice of the Annual General Meeting,
which will be held on Wednesday 17 May
2017, will be notified to shareholders in
April 2017.
On behalf of the Board
Eamonn Rothwell
David Ledwidge
Director
Director
3 March 2017
Registered Office: Ferryport, Alexandra
Road, Dublin 1, Ireland.
2016 Annual Report and Financial StatementsIrish Continental Group Corporate Governance Statement
53
Dear Shareholder,
Corporate Governance is concerned with how companies are directed and controlled.
Your Board acknowledges the importance of, and is committed to maintaining high
standards of corporate governance practices. We strongly believe that good corporate
governance is essential to sustainable growth and maintenance of shareholder value.
The Board sets the tone for governance practices across the whole Group.
The Group applies the principles and provisions of The UK Corporate Governance
Code (“the Code”) issued by the Financial Reporting Council and the Irish Corporate
Governance Annex (“the Irish Annex”) issued by the Irish Stock Exchange. We are
reporting against the September 2014 edition of the Code. The Corporate Governance
Report explains how the Group has applied the principles set out in the Code and the
Annex.
The Board welcomed Mr David Ledwidge, Chief Financial Officer, on his appointment to
the Board on 3 March 2016. Your Board currently comprises two executive and four non-
executive Directors. Further details on Board composition is set out on pages 48 and
49. The annual board evaluation which I led concluded that the Board was as a whole
operating effectively for the long term success of the Group.
The Group meets the criteria of a smaller company under the equivalence thresholds
contained in the Irish Annex, but as a strengthening of our corporate governance
practices, I have committed to an externally assisted evaluation during 2017 as part of a
triennial cycle.
While the Board, having considered the independence criteria contained in the Code,
assessed me to be independent at the time of my appointment as Chairman, I stepped
down from the Nomination Committee as certain of our shareholders apply differing
criteria for assessing independence. The reports from the Committee chairmen are set
out on pages 62 to 76.
The 31.3% against vote in relation to the advisory resolution tabled at the 2016 AGM on
the report of the Remuneration Committee was noted by the Board. The Remuneration
Committee were requested to conduct a review of the existing framework, their report
is set out on pages 67 to 76.
The business conditions we face create opportunities and challenges going forward
and I look forward to continuing open and constructive debate and the strengthening of
our corporate governance practices to assist in the future growth of the Group.
John B. McGuckian
Chairman
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 54
Corporate Governance Statement
- continued
Corporate Governance Framework
The corporate governance structure at ICG is set out below.
Chairman
Board of Directors
Company Secretary
ICG Board
Audit
Committee
Chief
Executive
Remuneration
Committee
Nomination
Committee
Executive Management Team
Business Functions
Divisional Boards
Compliance with the UK Corporate
Governance Code and Irish Annex
The Company is committed to the
principles of corporate governance
contained in the UK Corporate
Governance Code issued in September
2014 by the Financial Reporting Council
(“the Code”), as adopted by the Irish Stock
Exchange (ISE), for which the Board is
accountable to shareholders. The Irish
Corporate Governance Annex (“the Irish
Annex”) issued by the ISE also applies
to the Group. Under the interpretative
provisions of the Irish Annex, the Group
was regarded as a smaller company under
the Code throughout 2016.
The Board considers that, having
explained in this Statement, throughout
the period under review the Group has
been in compliance with the provisions
of the Code and the requirements set
out in the Annex. The Report of the
Remuneration Committee at page 67
to 76 explains why in relation to one
Director a notice period in excess of one
year may apply in limited circumstances
and why the Group has not introduced
clawback provisions in relation to
performance awards during the period.
The Remuneration Committee has
recommended a new clawback policy
under the revised framework for any
future performance awards.
The Code can be viewed on the Financial
Reporting Council’s (FRC) website (www.
frc.org.uk) and the Annex on the ISE
website (www.ise.ie).
Risk Management
Function Reporting
Audit Committee
Internal Audit
Reporting
External Audit
Group Risk
Register
Other external Bodies
(Port State Authorities,
SOLAS, MARPOL, etc.)
1st Line of Defence
(Divisional
Management)
2nd Line of Defence
(Risk Management
& Group Oversight
Functions)
3rd Line of Defence
(Internal Audit
Function)
2016 Annual Report and Financial StatementsIrish Continental Group 55
Leadership
The Board is collectively responsible
for the long-term success of the Group
through provision of leadership within
a framework of prudent and effective
controls which enables risk to be
assessed and managed. Pursuant to the
Articles of Association, the Directors of
the Company are empowered to exercise
all such powers as are necessary to
manage and run the Company, subject to
the provisions of the Companies Act 2014.
To discharge this responsibility the Board
has adopted the following operational
framework;
Schedule of matters reserved for
Board decision: The Board has a formal
schedule of matters specifically reserved
to it for decision, which covers key
areas of the Group’s business including
approval of financial statements,
budgets (including capital expenditure),
acquisitions or disposals, dividends and
share redemptions, board appointments
and setting the risk appetite. Certain
additional matters are delegated to
Board Committees, of which additional
information is set out later in this report.
Board Committees: During the year
ended 31 December 2016, there were
three standing Board Committees with
formal terms of reference; the Audit
Committee, the Nomination Committee
and the Remuneration Committee.
In addition the Board will establish
ad-hoc sub-committees to deal with
other matters as necessary. All Board
committees have written terms of
reference setting out their authorities and
duties delegated by the Board. The terms
of reference are available, on request,
from the Company Secretary and on the
Group’s website.
Details on the role of the committees and
the work undertaken in the period under
review are set out on pages 62, 65 and 67
respectively.
Roles of Chairman and Chief Executive:
The roles of Chairman and Chief Executive
are separate, set out in writing and
approved by the Board.
The Chairman: John B. McGuckian has
served as Chairman of the Board since
2004 and is responsible for leading the
Board ensuring its effectiveness through;
• Setting the board’s agenda and
ensuring that adequate time is
available for discussion.
• Promoting a culture of openness and
debate by facilitating the effective
contribution of non-executive
directors in particular and ensuring
constructive relations between
executive and non-executive
directors.
• Ensuring that the directors
receive accurate, timely and clear
information.
• Ensuring effective communication
with shareholders.
Chief Executive: The Board has
delegated the management of the Group
to the Executive Management, through
the direction of Eamonn Rothwell who
has served as Chief Executive since 1992.
The Chief Executive is responsible for
implementing Board strategy and policies
and closely liaises with the Chairman and
manages the Group’s relationship with its
shareholders.
Senior Independent Director: The
Board having considered his experience
has appointed Brian O’Kelly as the
Senior Independent Director. The Senior
Independent Director acts as a sounding
board for the Chairman and serves as
an intermediary for the other directors
if necessary. Mr O’Kelly is also available
to shareholders if they have concerns
which have not been resolved through the
normal channels of Chairman and Chief
Executive or for which such contact is
inappropriate.
Non-Executive Directors: Non-Executive
Directors through their knowledge and
experience gained outside the Group
constructively challenge and contribute
to the development of Group strategy.
Non-executive directors scrutinise the
performance of management in meeting
agreed goals and objectives and monitor
the reporting of performance. They
satisfy themselves on the integrity of
financial information and that financial
controls and systems of risk management
are robust and defensible. Through
their membership of Committees
they are responsible for determining
appropriate levels of remuneration of
executive directors and have a prime
role in appointing and, where necessary,
removing executive directors, and in
succession planning.
Company Secretary: The Company
Secretary provides a support role to
the Chairman and the Board ensuring
good information flows within the
board and its committees and between
senior management and non-executive
directors, as well as facilitating induction
and assisting with professional
development as required and advising
the board through the chairman on
governance matters. Thomas Corcoran
has served as Company Secretary since
2001.
Meetings: The Board agrees a schedule
of regular meetings each calendar year
and also meets on other occasions if
necessitated with contact between
meetings as required in order to
progress the Group’s business. Where a
director is unable to attend a meeting,
they may communicate their views to
the Chairman. The Directors receive
regular and timely information in a form
and quality appropriate to enable the
Board to discharge its duties. Non-
executive Directors are expected to
utilise their expertise and experience to
constructively challenge proposals tabled
at the meetings. The Board has direct
access to the executive management
who regularly brief the Board in relation
to operational, financial and strategic
matters concerning the Group.
Director attendances at scheduled
meetings are set out on page 56. The
Chairman also holds meetings with the
non-executive Directors without the
executive Directors present and the non-
executive Directors also meet once a year,
without the Chairman present.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 56
Corporate Governance Statement
- continued
Attendance at scheduled Board meetings during the year ended 31 December 2016 was as follows:
Member
J. B. McGuckian (Chair)
E. Rothwell
C. Duffy
D. Ledwidge
B.O’Kelly
J. Sheehan
A
9
9
9
8
9
9
B
9
9
9
8
9
9
Tenure
29 years
30 years
5 years
Appointed on 3 March 2016
4 years
3 years
Column A: the number of scheduled meetings held during the year where the Director was a member of the Board.
Column B: the number of scheduled meetings attended during the year where the Director was a member of the Board
Effectiveness
Composition: The Board comprises of
two executive and four non-executive
Directors. Details of the professional
and educational backgrounds of each
director encompassing the experience
and expertise that they bring to the
Board are set out on page 48 to 49. The
Board believes that it is of a size and
structure, and that the Directors bring an
appropriate balance of skills, experience,
independence and knowledge, to enable
the Board to discharge its respective
duties and responsibilities effectively,
with no individual or group of individuals
dominating the Board’s decision making.
Each of the non-executive Directors has
a broad range of business experience
independent of the Group both
domestically and internationally.
Independence: All of the non-executive
Directors are considered by the Board to
be independent of management and free
of any relationships which could interfere
with the exercise of their independent
judgement. In considering their
independence, the Board has taken into
account a number of factors including
their length of service on the Board, other
directorships held and material business
interests.
Mr McGuckian has served on the Board
for more than nine years since his first
appointment. Notwithstanding this tenure
the Board as advised by the Nomination
Committee, considers Mr. McGuckian
to be independent. Mr McGuckian has a
wide range of interests and experience
both domestically and internationally.
The Board has considered the knowledge,
skills and experience that he contributes
and assesses him to be both independent
in character and judgement and to be
of continued significant benefit to the
Board. Mr McGuckian was also assessed
to be independent at the date of
appointment as Chairman in 2004.
election at the Annual General Meeting.
The terms and conditions of appointment
of non-executive Directors appointed
after 2002 are set out in their letters of
appointment, which are available for
inspection at the Company’s registered
office during normal office hours and
at the Annual General Meeting of the
Company.
Development and Induction: On
appointment, Directors are given the
opportunity to familiarise themselves with
the operations of the Group, to meet with
executive management, and to access
any information they may require. Each
Director brings independent judgement
to bear on issues of strategy, risk and
performance. The Directors also have
access to the executive management
in relation to any issues concerning the
operation of the Group.
The Board recognises the need for
Directors to be aware of their legal
responsibilities as Directors and it
ensures that Directors are kept up to
date on the latest corporate governance
guidance, company law developments
and best practice.
Catherine Duffy is a Chairman at law
firm A&L Goodbody from whom the
Company has received legal services in
their capacity as legal advisors to the
Company. Details of the expense incurred,
which were on an arm’s length basis at
standard commercial terms, are set out at
note 31 to the Financial Statements. In her
role at A&L Goodbody, Catherine has not
been involved in providing advice to the
Company. The Board, as advised by the
Nomination Committee, has considered
the relationship and does not consider it
to affect Catherine’s independence as a
non-executive director of the Company.
Appointments: All Directors are
appointed by the Board, following a
recommendation by the Nomination
Committee, for an initial term not
exceeding three years, subject to annual
re-election at the Annual General Meeting.
Non-executive Directors are deemed
to be independent on appointment and
this status is reviewed annually, prior
to recommending the resolution for re-
election. Under the Articles each director
is subject to re-election at least every
three years but in accordance with the
Code the Board has agreed that each
Director will be subject to annual re-
2016 Annual Report and Financial StatementsIrish Continental Group 57
Access to Advice: There is a procedure
for Directors in the furtherance of their
duties to take independent professional
advice, at the expense of the Group, if
they consider this necessary. The Group
carries director liability insurance which
indemnifies Directors in respect of legal
actions that may be taken against them in
the course of discharging their duties as
directors.
All Directors have access to the advice
and services of the Company Secretary,
who is responsible to the Board for
ensuring that Board procedures are
followed and that applicable rules and
regulations are complied with.
Performance Evaluation: The Board
conducts an annual self-evaluation of the
Board as a whole, the Board processes,
its committees and individual Directors.
The purpose of the evaluation process
include identification of improvements
in Board procedures and to assess
Directors suitability for re-election.
The process led by the Chairman, is
forward looking in nature. All Directors
are provided with a self-assessment
questionnaire for consideration which
encompasses aspects including board
effectiveness, the composition of the
Board, the content and running of Board
and Committee meetings, corporate
governance, risk and crisis management,
and succession planning. Within this
process, the non-executive Directors,
led by the Senior Independent Director,
carry out an evaluation of the Chairman’s
performance. The performance of
individual directors is assessed by the
Chairman following discussions, held
by the Chairman, with directors on an
individual basis. During the period the
Group qualified to be treated as a smaller
company under the Code and the process
has not been externally facilitated. The
process is continuous, with a follow up
of previous recommendations at each
review.
During the year the Chairman reported
to the Board on the outcome of the
evaluation process which indicated
that the Board as a whole was operating
effectively for the long-term success
of the Group and that each Director
was contributing effectively and
demonstrating commitment to the role.
Separately, the Senior Independent
Director reported that the Chairman was
providing effective leadership of the
Board.
Notwithstanding qualifying to be treated
as a smaller company, as a strengthening
of its Corporate Governance practices, the
Board has agreed that the 2017 evaluation
will be externally facilitated on a triennial
cycle.
Accountability
The Board is committed to providing
a fair, balanced and understandable
assessment of the Company’s position
and prospects to shareholders through
the annual report, the interim statement
and any other public statement issued
by the Company. The Directors have
considered the Annual Report based on a
review performed by the Audit Committee
and have concluded that it represents
a fair, balanced and understandable
assessment of the Company’s position
and prospects.
The Board has described its business
model on page 14 setting out how the
Company generates value over the longer
term and the strategy for delivering the
objectives of the Company.
The Board has overall responsibility for
determining the Group’s risk appetite
but has delegated responsibility for the
review, design and implementation of
the Group’s internal control system to
the Audit Committee. These systems
are designed to manage rather than
eliminate the risk of failure to achieve
business objectives, and can only provide
reasonable, and not absolute, assurance
against material misstatement or loss.
In accordance with Guidance on Risk
Management, Internal Control and
Related Financial and Business Reporting
(September 2014) issued by the FRC, the
Board confirms that there is a continuous
process for identifying, evaluating, and
managing the significant risks faced by
the Group, that it has been in place for the
period under review and up to the date of
approval of the financial statements, and
that this process is regularly monitored
by the Board. The report of the Audit
Committee is set out on pages 62 and 64
and the risk management framework and
processes are set out on pages 38 and 39.
No material weaknesses in internal
controls were reported to the Board
during the year.
Taking account of the Company’s current
position and principal risks the Directors
have set out in the Viability Statement
on page 50 their assessment of the
prospects for the Company.
Remuneration
The Board has delegated the approval
of remuneration structures and levels
of the executive Directors and senior
management to the Remuneration
Committee whose report is set out at
pages 67 to 76.
Communications with
Shareholders
The Board promotes good
communications with shareholders
and the Group commits resources
to shareholder communication
commensurate with its size. Other than
during close periods and subject to the
requirements of the Takeover Code, when
applicable, the Chief Executive and the
Chief Financial Officer have a regular
dialogue with its major shareholders
throughout the year and report on
these meetings to the Board. The Senior
Independent Director is also available on
request to meet with major shareholders.
The Board encourages communications
with shareholders and welcomes their
participation at all general meetings
of the Company. The Board notes that
31.3% of the proxy votes held by the
Board at the 2016 AGM held on 13 May
2016 on the advisory resolution to
receive and consider the Report of the
Remuneration Committee for the year
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 58
Corporate Governance Statement
- continued
ended 31 December 2015 were cast
against the resolution. The Company has
engaged with our major shareholders
and their advisers to understand their
concerns. Having considered these
concerns, the Board has reviewed
Committee composition and the
Remuneration Committee has undertaken
a review of the remuneration framework
which is reported in the Report of the
Remuneration Committee on pages 67
to 76.
Regular formal updates are provided
to shareholders and are available on
the Group’s website. During 2016 these
included Trading Updates, the Half-Yearly
Financial Report, and the Annual Report
and Financial Statements together with
investor presentations. Irish Continental
Group’s website, www.icg.ie, also provides
access to other corporate and financial
information, including all regulatory
announcements and a link to the current
ICG Unit price.
Arrangements will be made for the
2016 Annual Report and 2017 Annual
General Meeting Notice to be available
to shareholders 20 working days before
the meeting and for the level of proxy
votes cast for and against each resolution
and the number of abstentions, to be
announced at the meeting. Further details
on the procedures applicable to general
meetings are set out on page 59.
Further investor relations information
is available on pages 154 to 156 of this
report.
Matters pertaining to Share Capital
The information set out below is required
to be contained in the Report of the
Directors under Regulation 21 of the
European Communities (Takeover Bids
(Directive 2004/25/EC)) Regulations
2006 (S.I. 255/2006). The information
represents the position at 31 December
2016.
For the purposes of Regulations 21(2)
(c), (e), (j) and (k) of the European
Communities (Takeover Bids (Directive
2004/25/EC)) Regulations 2006 (S.I.
255/2006), the information given under
the following headings: (i) Substantial
Shareholdings page 51; (ii) Share Option
Plans page 74; (iii) Long Term Incentive
Plan page 73; (iv) Service Contracts page
74; and (v) Share-based Payments page
134, (vi) Borrowings page 120 are deemed
to be incorporated into this statement.
Share capital
The authorised share capital of the
Company is €29,295,000 divided into
450,000,000 ordinary shares of €0.065
each (Ordinary Shares) and 4,500,000,000
Redeemable Shares of €0.00001 each
(Redeemable Shares). The Ordinary
Shares represent approximately 99.85%
and the Redeemable Shares represent
approximately 0.15% of the authorised
share capital. The issued share capital of
the Company as at the date of this Report
is 188,309,390 Ordinary Shares. There are
no Redeemable Shares currently in issue.
Ordinary Shares and Redeemable Shares
(to the extent Redeemable Shares are in
issue) are inextricably linked as an ICG
Unit. An ICG Unit is defined in the Articles
of Association of the Company as “one
Ordinary Share in the Company and
ten Redeemable Shares (or such lesser
number thereof, if any, resulting from the
redemption of one or more thereof) held
by the same holder(s)”.
The rights and obligations attaching to
the Ordinary Shares and Redeemable
Shares are contained in the Articles of
Association of the Company.
The Directors may exercise their power
to redeem Redeemable Shares from
time to time pursuant to the Company’s
Articles of Association where there are
Redeemable Shares in issue.
The structure of the Group’s and
Company’s capital and movement during
the year are set out in notes 18 and 19 to
the financial statements.
Restrictions on the transfer of
shares
Save as set out below there are no
limitations in Irish law on the holding of
ICG Units and there is no requirement to
obtain the approval of the Company, or of
other holders of ICG Units, for a transfer
of ICG Units. Certain restrictions may
from time to time be imposed by laws
or regulations such as those relating to
insider dealing.
Transfers of Ordinary Shares and
Redeemable Shares can only be
effected where the transfer involves
a simultaneous transfer of the other
class of shares with which such shares
are linked as an ICG Unit. An ICG Unit
comprised one Ordinary Share and nil
Redeemable Shares at 31 December 2016
and 31 December 2015.
ICG Units are, in general, freely
transferable but the Directors may
decline to register a transfer of ICG Units
upon notice to the transferee, within two
months after the lodgement of a transfer
with the Company, in the following cases:
(i) where the transfer of shares does not
involve a simultaneous transfer of the
other class of shares with which such
shares are linked as an ICG Unit;
(ii) a lien is held by the Company; or
(iii) in the case of a purported transfer
to or by a minor or a person lawfully
adjudged not to possess an adequate
decision making capacity;
(iv) unless the instrument of transfer is
accompanied by the certificate of the
shares to which it relates and such
other evidence as the Directors may
reasonably require; or
(v) unless the instrument of transfer is in
respect of one class only.
ICG Units held in certificated form are
transferable upon production to the
Company’s Registrars of the original
share certificate and the usual form
of stock transfer or instrument duly
executed by the holder of the shares.
2016 Annual Report and Financial StatementsIrish Continental Group 59
ICG Units held in uncertificated form are
transferable in accordance with the rules
or conditions imposed by the operator
of the relevant system which enables
title to the ICG Units to be evidenced and
transferred without a written instrument
and in accordance with the Companies
Act, 1990 (Uncertificated Securities)
Regulations 1996 (S.I. 68/1996) and
Section 1085 of the Companies Act 2014.
The rights attaching to Ordinary Shares
and Redeemable Shares comprised in
each ICG Unit remain with the transferor
until the name of the transferee has been
entered on the Register of Members of
the Company.
No person holds securities in the
Company carrying special rights with
regard to control of the Company. The
Company is not aware of any agreements
between holders of securities that may
result in restrictions in the transfer of
securities or voting rights.
The powers of the Directors
including in relation to the issuing
or buying back of by the Company
of its shares
Under the Articles of Association of the
Company, the business of the Company
is to be managed by the Directors who
may exercise all the powers of the
Company subject to the provisions of the
Companies Acts 2014, the Memorandum
and Articles of Association of the
Company and to any directions given
by members at a General Meeting. The
Articles further provide that the Directors
may make such arrangements as may
be thought fit for the management
of the Company’s affairs including
the appointment of such attorneys or
agents as they consider appropriate and
delegate to such persons such powers
as the Directors may deem requisite or
expedient.
At the Company’s Annual General Meeting
held on 13 May 2016, member resolutions
were passed whereby
(i) the Company, or any of its
subsidiaries, were authorised to make
market purchases of up to 15% of the
issued share capital of the Company.
(ii) the Directors were authorised until
the conclusion of the next Annual
General Meeting, to allot shares up to
an aggregate nominal value of 33.33%
of the then present issued Ordinary
Share capital and the present
authorised but unissued Redeemable
Share capital of the Company,
equivalent to 62,223,963 ICG Units.
In line with market practice, members will
be asked to renew these authorities at the
2017 Annual General Meeting.
General Meetings and
Shareholders Voting and other
Rights
Under the Articles of Association, the
power to manage the business of the
Company is generally delegated to the
Directors. However, the members retain
the power to pass resolutions at a General
Meeting of the Company which may
give directions to the Directors as to the
management of the Company.
The Company must hold a General
Meeting in each year as its Annual General
Meeting in addition to any other meetings
in that year and no more than fifteen
months may elapse between the date
of one Annual General Meeting and that
of the next. The Annual General Meeting
will be held at such time and place as the
Directors determine. All General Meetings,
other than Annual General Meetings, are
called Extraordinary General Meetings.
Extraordinary General Meetings shall
be convened by the Directors or on
the requisition of members holding,
at the date of the requisition, not less
than five percent of the paid up capital
carrying the right to vote at General
Meetings and in default of the Directors
acting within 21 days to convene such a
meeting to be held within two months,
the requisitionists (or more than half of
them) may, but only within three months,
themselves convene a meeting.
No business may be transacted at any
General Meeting unless a quorum is
present at the time when the meeting
proceeds to business. Three members
present in person or by proxy and entitled
to vote at such meeting constitutes a
quorum.
The holders of ICG Units have the right to
receive notice of, attend, speak and vote
at all General Meetings of the Company.
In the case of an Annual General Meeting
or of a meeting for the passing of a
Special Resolution or the appointment
of a Director, 21 clear days’ notice at the
least, and in any other case 14 clear days’
notice at the least (assuming that the
members have passed a resolution to
this effect at the previous year’s Annual
General Meeting), needs to be given in
writing in the manner provided for in the
Articles to all the members, Directors,
Secretary, the Auditor for the time being
of the Company and to any other person
entitled to receive notice under the
Companies Act.
Voting at any General Meeting is by a
show of hands unless a poll is properly
demanded. On a show of hands, every
member who is present in person or by
proxy has one vote regardless of the
number of shares held by a shareholder.
On a poll, every member who is present in
person or by proxy has one vote for each
share of which he/she is the holder. A poll
may be demanded by the Chairman of
the meeting or by at least three members
having the right to vote at the meeting or
by a member or members representing
not less than one-tenth of the total voting
rights of all the members having the right
to vote at the meeting or by a member or
members holding shares in the Company
conferring a right to vote at the meeting,
being shares on which an aggregate sum
has been paid up equal to not less than
one-tenth of the total sum paid up on all
the shares conferring that right.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 60
Corporate Governance Statement
- continued
Deadlines for exercising voting
rights
Voting rights at General Meetings of
the Company are exercised when the
Chairman puts the resolution at issue to
the vote of the meeting. A vote decided
on a show of hands is taken forthwith.
A vote taken on a poll for the election
of the Chairman or on a question of
adjournment is also taken forthwith and
a poll on any other question is taken
either immediately, or at such time (not
being more than 30 days from the date
of the meeting at which the poll was
demanded or directed) as the Chairman
of the meeting directs. Where a person is
appointed to vote for a member as proxy,
the instrument of appointment must be
received by the Company not less than
48 hours before the time appointed for
holding the meeting or adjourned meeting
at which the appointed proxy proposes to
vote, or, in the case of a poll, not less than
48 hours before the time appointed for
taking the poll.
Shareholders Rights (Directive
2007/36/EC)
The holders of ICG Units have the right
to attend, speak, ask questions and vote
at General Meetings of the Company.
The Company, pursuant to Section
1105 of the Companies Act 2014 and
Regulation 14 of the Companies Act 1990
(Uncertificated Securities) Regulations
1996 (S.I. 68/1996), specifies record
dates for General Meetings, by which
date members must be registered in the
Register of Members of the Company
to be entitled to attend and vote at the
meeting.
Pursuant to Section 1104 of the
Companies Act 2014, a member, or a
group of members who together hold
at least 3 per cent of the issued share
capital of the Company, representing at
least 3 per cent of the total voting rights
of all the members who have a right to
vote at the meeting to which the request
for inclusion of the item relates, have the
right to put an item on the agenda, or to
modify an agenda which has been already
communicated, of a General Meeting. In
order to exercise this right, written details
of the item to be included in the General
Meeting agenda must be accompanied
by stated grounds justifying its inclusion
or a draft resolution to be adopted at the
General Meeting together with evidence
of the member or group of members
shareholding must be received, by the
Company, 42 days in advance of the
meeting to which it relates.
The Company publishes the date of its
Annual General Meeting on its website
www.icg.ie on or before 31 December of
the previous financial year.
Rights to dividends and return of
capital
Subject to the provisions of the
Company’s Articles of Association, the
holders of the Ordinary Shares in the
capital of the Company shall be entitled to
such dividends as may be declared from
time to time on such shares. The holders
of the Redeemable Shares (if any) shall
not be entitled to any dividends.
On a return of capital on a winding up of
the Company or otherwise (other than
on a conversion, redemption or purchase
of shares), the holders of the Ordinary
Shares shall be entitled, pari passu with
the holders of the Redeemable Shares
(if any) to the repayment of a sum
equal to the nominal capital paid up or
credited as paid up on the shares held
by them respectively. Thereafter, the
holders of the Ordinary Shares shall be
entitled to the balance of the surplus of
assets of the Company to be distributed
rateably according to the number of
Ordinary Shares held by a member. The
Redeemable Shares shall not confer
upon the holders thereof any rights to
participate further in the profits or assets
of the Company.
Rules concerning amendment
of the Company’s Articles of
Association
As provided in the Companies Act 2014,
the Company may, by special resolution,
alter or add to its Articles of Association.
A resolution is a special resolution when
it has been passed by not less than 75%
of the votes cast by members entitled to
vote and voting in person or by proxy, at
a General Meeting at which not less than
21 days’ notice specifying the intention
to propose the resolution as a special
resolution, has been duly given.
Rules concerning the appointment
and replacement of Directors of
the Company
Other than in the case of a casual
vacancy, Directors of the Company are
appointed on a resolution of the members
at a General Meeting, usually the Annual
General Meeting.
No person, other than a Director retiring
at a General Meeting is eligible for
appointment as a Director without a
recommendation by the Directors for
that person’s appointment unless, not
less than six or more than 40 clear days
before the date of the General Meeting,
written notice by a member, duly qualified
to be present and vote at the meeting,
of the intention to propose the person
for appointment and notice in writing
signed by the person to be proposed of
willingness to act, if so appointed, shall
have been given to the Company.
The Directors have power to fill a casual
vacancy or to appoint an additional
Director (within the maximum number
of Directors fixed by the Articles of
Association of the Company (as may be
amended by the Company in a General
Meeting)) and any Director so appointed
holds office only until the conclusion of
the next Annual General Meeting following
their appointment, when the Director
concerned shall retire, but shall be eligible
for reappointment at that meeting.
2016 Annual Report and Financial StatementsIrish Continental Group 61
Each Director must retire from office
not later than the third Annual General
Meeting following their last appointment
or reappointment. In addition, one third
of the Directors for the time being (or if
their number is not three or a multiple of
three, then the number nearest to one
third), are obliged to retire from office at
each Annual General Meeting on the basis
of the Directors who have been longest in
office since their last appointment.
(vi) if he is removed from office by notice
in writing served upon him signed
by all his co-Directors; if he holds
an appointment to an executive
office which thereby automatically
determines, such removal shall be
deemed an act of the Company and
shall have effect without prejudice to
any claim for damages for breach of
any contract of service between him
and the Company; or
(vii) if he is convicted of an indictable
offence not being an offence
under the Road Traffic Act, 1961 or
any statutory provision in lieu or
modification thereof.
Notwithstanding anything in the Articles
of Association or in any agreement
between the Company and a Director, the
Company may, by Ordinary Resolution of
which the required notice has been given
in accordance with Section 146 of the
Companies Act 2014, remove any Director
before the expiry of their period of office.
The Company has adopted the provisions
of the UK Corporate Governance Code
in respect of the annual election of all
Directors. All Directors will retire at the
forthcoming Annual General Meeting and
following review are being recommended
for re-election.
A person is disqualified from being a
Director, and their office as a Director
ipso facto vacated, in any of the following
circumstances:
(i)
if he is adjudicated bankrupt or
being a bankrupt has not obtained a
certificate of discharge in the relevant
jurisdiction; or
(ii) if in the opinion of a majority of his co-
Directors, the health of the Director is
such that he or she can no longer be
reasonably regarded as possessing an
adequate decision-making capacity
so that he may discharge his duties;
or
(iii) if he ceases to be, or is removed as
a Director by virtue of any provision
of the Acts or the Articles, or he
becomes prohibited by law from being
a Director or is restricted by law in
acting as a Director; or
(iv) if he (not being a Director holding
for a fixed term an executive office
in his capacity as a Director) resigns
his office by notice in writing to the
Company; or
(v) if he is absent for six successive
months without permission of the
Directors from meetings of the
Directors held during that periods and
the Directors pass a resolution that
by reason of such absence he has
vacated office; or
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 62
Report of the Audit Committee
Dear shareholder,
I am pleased to present the report of the Committee for the year
ended 31 December 2016.
The Committee plays an important role in ensuring the
Company’s financial integrity for shareholders through oversight
of the financial reporting process, including the risks and
controls in that process. This report sets out how the Committee
fulfilled its duties under its Terms of Reference, the UK Corporate
Governance Code, the Irish Annex and legislation.
The Committee has reviewed the critical accounting judgements
and key sources of estimation applied in preparing these
financial statements and have reported to the Board on these.
The Committee also performed a review of this annual report
including both the financial and non-financial information
to ensure that the report presents a fair, balanced and
understandable assessment of the Group’s position and
prospects and that it also provides the information necessary for
shareholders to assess the Group’s strategy, business model and
performance.
The Committee reported to the Board on the on-going
monitoring of the effectiveness of the Group’s systems of risk
management and internal control.
John Sheehan
Chair of the Audit Committee
Composition
The Audit Committee membership is set
out in the table below which also details
attendance and tenure.
Member
A
B
Tenure
J. Sheehan (Chair)
C. Duffy
B.O’Kelly
3
3
3
3
3
3
3 years
5 years
4 years
Column A: the number of scheduled
meetings held during the year where the
Director was a member of the Committee.
Column B: the number of scheduled
meetings attended during the year
where the Director was a member of the
Committee.
The members of the Committee as
a whole have competence relevant
to the sector in which the Company
operates by reason of their experience
as directors of the Company and bring
significant professional expertise to
their roles on this Committee. The Board
has determined that all appointees are
independent and that Brian O’Kelly and
John Sheehan have recent and relevant
financial experience. The members
biographies are set out on pages 48 to 49.
The Company Secretary acts as secretary
to the Committee.
The Committee invites the Chief
Executive, Chief Financial Officer, other
senior management, Internal Auditor and
External Auditor to attend meetings from
time to time. The Committee meets with
the Internal Auditor and External Auditor
alone at least once a year.
The scheduled meetings take place on
the same day as Board meetings. The
Chairman provides updates to the Board
on key matters discussed and minutes are
circulated to the Board.
Role and Responsibilities
The role, responsibilities and duties
of the Audit Committee are set out in
written terms of reference which were last
reviewed by the Board in December 2016.
The terms of reference are available on
the Group’s website www.icg.ie.
2016 Annual Report and Financial StatementsIrish Continental Group 63
The principal responsibilities of the
Committee cover the following areas;
• Supporting the Board in fulfilling
its responsibilities in relation to
the integrity of financial reporting
and advises whether the Annual
Report and Financial Statements,
taken as a whole, is fair, balanced
and understandable and provides
the information necessary for
shareholders to assess the Group and
Company’s position, performance,
business model and strategy.
• Monitor the effectiveness of the
Company’s internal controls and
financial risk management systems,
including the internal audit function.
• Managing the relationship with
the External Auditor, including
consideration of the appointment
of the External Auditor, the level of
audit fees, and any questions of
independence, provision of non-audit
services, resignation or dismissal.
The Committee discusses with the
External Auditor the nature and scope
of the audit and the findings and
results.
• Overseeing the operation of the
Group’s whistleblowing procedures.
Work Performed
The work undertaken by the Committee
during the period under review comprised
of the following;
Financial Reporting
The Committee reviewed the Group’s Half
Yearly Financial Report for the six months
ended 30 June 2016, the Statement of
Results and Annual Report & Financial
Statements, for the financial year ended
31 December 2016 and the two Trading
Statements issued during the year. These
reviews considered:
• The appropriateness of the Group’s
accounting policies and practices;
• The consistency of the Group’s
accounting policies and their
application;
• The clarity and completeness of
disclosures and compliance with
financial reporting standards,
legislative and regulatory
requirements;
• Whether these reports, taken
as a whole, were fair, balanced
and understandable and provide
the information necessary for
shareholders to assess the Group’s
performance, business model and
strategy;
• A comparison of these results with
management accounts; and
• The critical accounting judgements
and key sources of estimation applied
in the preparation of the financial
statements.
The critical accounting judgements and
key sources of estimation applied in the
preparation of the financial statements
for the financial year ended 31 December
2016 are set out below and also discussed
in detail on page 106.
Post-employment benefits
The Group operates a number of group
sponsored pension schemes and is
also a participating employer in the
Merchant Navy Officers Pension Fund,
a multi-employer scheme. Details of
these schemes are set out in note
30 to the financial statements. The
size of the pension obligations is
material to the Group and sensitive to
actuarial assumptions. The Committee
has reviewed actuarial advice on the
assumptions provided by the Group
actuary and discussed these with the
External Auditor. The Committee was
satisfied that the assumptions used
were reasonable and that the obligations
set out in the financial statements are
consistent with the assumptions.
Going concern
The Committee reviewed the
appropriateness of using a going
concern assumption for the preparation
of the Group Financial Statements. The
Committee considered future trading
projections and available bank facilities.
With the main existing loan facilities
due to mature in September 2017,
the Committee reviewed the ongoing
refinancing negotiations and were
confident that replacement facilities
would be available on normal commercial
terms and covenants. The Committee
were therefore satisfied that the Group
will have adequate financial resources to
continue in operational existence for the
foreseeable future. The Going Concern
Statement is set out on page 50.
Viability Statement
The Committee reviewed and challenged
the appropriateness of the assumptions
and scenarios together with the
calculations supporting the Viability
Statement set out on page 50.
Useful lives for property, plant and
equipment and intangible assets
Long-lived assets comprising primarily
of property, plant and equipment and
intangible assets represent a significant
portion of total assets. Changes in
the useful lives or residual values may
have a significant impact on the annual
depreciation and amortisation charge.
The Committee reviewed the useful lives
of significant assets, along with the
residual values used for vessels, and were
satisfied that the estimates used were
reasonable.
Impairment
The Group does not have assets which
are required to be tested annually
for impairment. In relation to other
significant assets the Committee made
inquiries of management to determine
whether there were any indications
of impairment. The Committee were
satisfied that no internal or external
indications of impairment were identified
and consequently no impairment review
was required.
Following discussion with management
and the External Auditor the Committee
is satisfied that the financial statements
have dealt appropriately with each area
of judgement. The External Auditor
has also reported to the Committee on
any misstatements noted during their
audit work in respect of the financial
statements for the financial year ended
31 December 2016 and confirmed that
there were no material unadjusted
misstatements noted by them.
Based on this work the Committee
reported to the Board that the Annual
Report and Financial Statements,
taken as a whole, is fair, balanced
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 64
Report of the Audit Committee
- continued
procedures for maintaining independence
and objectivity and their approach to
audit quality. Under the Deloitte policy of
lead partner rotation a new lead partner
was appointed to cover the 2016 audit.
The Committee assessed the quality
of the external audit plan as presented
by Deloitte and satisfied itself as to the
expertise and resources being made
available. The Committee also reviewed
the terms of the Letter of Engagement
and approved the level of remuneration.
audit reforms and audit tendering. As
the Group met the definition of a smaller
company under the Code, the Group has
availed of the exemption under the Code
on audit tendering. Under the Statutory
Audit Regulations, the Group will at the
latest be required to conduct a tender
process for the external audit in respect
of the financial year 2020. As Deloitte
will have served in excess of 20 years at
that time they will not be eligible for re-
appointment.
and understandable and provides the
information necessary for shareholders
to assess the Group’s performance and
recommended that the Annual Report and
Financial Statements be approved by the
Board.
Internal Control
The risk management framework is set
out on page 37. The Committee, on behalf
of the Board, reviewed the effectiveness
of the Company’s internal controls and
financial risk management systems
and ensured the Board receives regular
updates on this work.
The Committee met with the Internal
Auditor on a regular basis without the
presence of management. It reviewed and
approved the internal audit programme,
ensured that the internal audit function
is adequately resourced, and considered
the major findings of investigations and
management’s responsiveness to these
findings and recommendations.
Deloitte reported their key audit findings
to the Committee in March 2017 prior
to the finalisation of the financial
statements. This report, which included
a schedule of unadjusted errors and
misstatements, significant judgements
and estimations and key areas of risk, was
considered by the Committee in forming
their recommendation to the Board.
The Committee also considered the
representations sought by Deloitte from
the Directors.
Non-Audit Services
The Committee permits the External
Auditor to provide non-audit services
where they are permitted under the
Statutory Audit Regulations and are
satisfied that they do not conflict with
auditor independence. The Committee’s
policy on the provision of non-audit
services requires that each engagement
for the provision of non-audit services
requires approval of the Committee. The
Committee approved the engagement of
the External Auditor to provide certain
tax compliance services in respect of the
2016 financial year.
The Audit Committee has considered
all relationships between the Company
and the external audit firm, Deloitte,
including the provision of non-audit
services as disclosed in note 9 to the
financial statements which are within
the thresholds set out in the Statutory
Audit Regulations. The Committee does
not consider that those relationships
or the level of non-audit fees impair the
auditor’s judgement or independence.
Whistleblowing Procedures
The Group has a suite of policies covering
employee conduct which are available
on the internal staff intranet. Employees
are reminded to refresh their knowledge
of these policies at least annually.
These policies include a whistleblowing
policy formulated by the Committee
and procedures are in place to enable
employees to raise, in a confidential
manner, any genuine concerns about
possible financial impropriety or other
wrongdoing. The Committee last reviewed
this policy and procedure in November
2016.
The Committee reviewed the report
prepared by Internal Audit on business
and financial risk reporting to enable the
Board to make its annual assessment of
the significant risks facing the Group and
the adequacy of the on-going monitoring
and reporting system maintained by
management including the risks set out
on page 38 to 39.
Deloitte issued a letter on control
weakness noted during their audit, none
of which were considered of a serious
nature so as to cause Deloitte to amend
the scope of their original audit plan. The
Committee has considered these and
having discussed with management have
directed remedial action be taken where
considered appropriate.
External Audit
The Committee is responsible for
managing the relationship with the
Group’s External Auditor and monitoring
their performance, objectivity and
independence. Deloitte is the current
External Auditor to the Group.
Deloitte confirmed to the Company that
they comply with the Auditing Practices
Board Ethical Standards for Auditors and
that, in their professional judgement,
they and, where applicable, all Deloitte
network firms are independent and their
objectivity is not compromised.
The Committee met with Deloitte prior to
the commencement of the audit of the
financial statements for the financial year
ended 31 December 2016. The Committee
considered Deloitte’s internal policies and
The Committee evaluated Deloitte’s
performance and remains satisfied that
they remain effective, objective and
independent. The Committee therefore
recommended to the Board that Deloitte
be retained as auditors to the Group.
Deloitte were appointed External
Auditor to the Group in 1994 following
a tender process. The Committee notes
the provisions of the UK Corporate
Governance Code in respect of audit
tendering and the commencement of
the European Union (Statutory Audits)
(Directive 2006/43/EC, as amended by
Directive 2014/56/EU, and Regulation (EU)
No 537/2014) Regulations 2016 (SI 312 of
2016), the “Statutory Audit Regulations”.
The Statutory Audit Regulations, which
became effective in Ireland on 17 June
2016, include provisions dealing with
2016 Annual Report and Financial StatementsIrish Continental Group
Report of the Nomination Committee
65
Dear shareholder,
I am pleased to present the report of the Committee for the year
ended 31 December 2016.
This report sets out how the Committee fulfilled its duties under
its Terms of Reference and the UK Corporate Governance Code.
The Committee plays an important role in ensuring that the
Board has the appropriate balance of skills, knowledge and
experience to ensure the Board operates effectively for the long
term success of the Group.
During the period, the composition of the Committee was
changed to ensure that it comprised a majority of independent
Directors in line with our independence criteria.
Catherine Duffy
Chair of the Nomination Committee
Composition
The Nomination Committee membership
is set out in the table below which
also details attendance and tenure. All
Directors bring significant professional
expertise to their roles on this Committee
as set out in their professional
biographies on pages 48 to 49.
Member
A B
Tenure
C. Duffy (Chair)* 2 2
4 years
JB McGuckian
1 1
B. O’Kelly*
1 1
J. Sheehan*
1 1
Resigned
6 October 2016
Appointed
6 October 2016
Appointed
6 October 2016
E. Rothwell
2 2
17 years
*Independent director
Column A: the number of scheduled
meetings held during the year where the
Director was a member of the Committee.
Column B: the number of scheduled
meetings attended during the year
where the Director was a member of the
Committee.
Mr. McGuckian stepped down from the
Committee during the year as certain of
our shareholders, considered him not to
have been independent at the date of his
appointment as Chairman of the Board.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 66
Report of the Nomination Committee
- continued
Role and Responsibilities
The role, responsibilities and duties of
the Nomination Committee are set out
in written terms of reference which were
last reviewed and updated by the Board in
December 2016. The terms of reference
are available on the Group’s website www.
icg.ie.
Its duties are to regularly evaluate
the balance of skills, knowledge,
experience and diversity of the Board and
Committees and make recommendations
to the Board with regards to any changes.
It is also charged with searching out,
identifying and proposing to the Board
new appointments of executive or non-
executive Directors. The committee also
considers the re-appointment of any
non-executive Director on the expiry
of their term of office. In discharging
its duties the Committee is cognisant
of the requirement to allow for orderly
succession and refreshment of the Board.
Work Performed
The Committee met twice during the
year. The Chairman provides an update to
the Board on key matters discussed and
minutes are circulated to the Board.
The Committee made a recommendation
to the Board for the appointment of Mr.
David Ledwidge, Chief Financial Officer, as
a Director of the Company. Mr. Ledwidge’s
biographical details are set out on page
49.
The Committee considered the results
of the evaluation of the Board. The
Committee were satisfied that the Board
was of adequate size and composition
to suit the current scale of its operations
and had an appropriate balance of skills,
knowledge, experience and diversity
to enable it to effectively discharge its
duties. Notwithstanding, it was agreed
that future potential candidates be
researched to ensure orderly Board
refreshment on an ongoing basis.
The Committee, reviewed and
recommended to the Board the re-
appointment of Mr. McGuckian as non-
executive Director, subject to re-election
by shareholders at the AGM, noting that
he has served on the Board for in excess
of nine years. This recommendation was
proposed following a robust review of the
knowledge, skills and experience that he
contributes. The Committee assessed
him to be both independent in character
and judgement and to be of continued
significant benefit to the Board. The
Committee noted certain shareholders
consider Mr. McGuckian not to be
independent under the Code at his date of
appointment as Chairman of the Board in
2004 as he had served in excess of nine
years as a non-executive Director at that
date.
The Committee reviewed the performance
of John Sheehan as a Director of the
Company during his initial three year
term and recommended that John be re-
appointed as a Director of the Company
for a further three year term subject to
annual re-election by shareholders at the
AGM.
The Committee also reconfirmed their
previous assessment of the independence
of the two other non-executive Directors,
Catherine Duffy and Brian O’Kelly. In
relation to Catherine Duffy the Committee
assessed that her role with A&L Goodbody
did not compromise her independence as
a Director of the company.
No Committee member voted on a matter
concerning their position as a Director.
The Company values diversity of
backgrounds and the benefits this
can contribute to future success. In
considering any appointment to the Board
the Committee identifies the set of skills
and experience required. Individuals
are selected based on the required
competencies of the role with due regard
for the benefits of diversity, including
gender. External search agencies are
engaged to assist where appropriate.
2016 Annual Report and Financial StatementsIrish Continental Group Report of the Remuneration Committee
67
Dear Shareholder,
I am pleased to present the Report of the Remuneration
Committee for the year ended 31 December 2016.
The Committee ensures that the remuneration structures
and levels are set to attract and retain high calibre individuals
necessary at executive Directors and senior manager level
and to motivate their performance in the best interests of
shareholders. This report sets out how the Committee fulfilled
its responsibilities under its Terms of Reference and details the
remuneration outcomes for the Executive Directors.
Following from the voting result on the advisory resolution
presented at the 2016 AGM, the Committee engaged with major
shareholders and their advisers to listen to their concerns.
Arising from this process the Committee implemented a number
of changes to existing remuneration practices and are proposing
an updated remuneration framework for 2017. This will include
presenting a new Performance Share Plan for shareholder
approval at the 2017 AGM as a replacement for the existing share
option plan.
The Company will also be submitting this report to shareholders
as an advisory resolution at the 2017 AGM.
Brian O’Kelly
Chair of the Remuneration Committee
Composition
The Committee membership is set out
in the table below which also details
attendance and tenure. All Directors bring
significant professional expertise to their
roles on this Committee as set out in their
professional biographies on pages 48 to
49.
Member
B. O’ Kelly (Chair)
J. Sheehan
C. Duffy
A B
3 3
3 3
2 2
Tenure
4 years
3 years
Appointed
6 October 2016
Column A: the number of scheduled
meetings held during the year where the
Director was a member of the Committee.
Column B: the number of scheduled
meetings attended during the year
where the Director was a member of the
Committee.
Role and Responsibilities
The role, responsibilities and duties of the
Committee are set out in written terms of
reference which were last reviewed and
updated by the Board in December 2016.
The terms of reference are available on
the Group’s website www.icg.ie.
The Committee’s duties are to establish a
remuneration framework that;
• Will attract, motivate and retain high
calibre individuals
• Will reward individuals appropriately
according to their level of
responsibility and performance
• Motivate individuals to perform in the
best interest of the shareholders
• Will not encourage individuals to take
risks in excess of the Company’s risk
appetite
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 68
Report of the Remuneration Committee
- continued
Against this framework the Committee
approves remuneration levels and awards
based on an individual’s contribution to
the Company against the background
of underlying Company financial
performance having regard to comparable
companies in both size and complexity.
Meetings
The Committee met three times during
the year. The Chairman provided an
update to the Board on key matters
discussed.
The work performed included
consideration of levels of executive
Director and senior management
remuneration. The level of basic salaries
were reviewed by the Committee having
regard to job specification, level of
responsibility, individual performance
and market practice. The Committee
approved performance awards, to certain
employees, based on Group, business
unit and individual performance. The
Committee also undertook a review
of the existing and proposed a new
remuneration framework which is
discussed in more detail below.
The Committee considered the matter
of clawback of performance awards
and concluded that given the element
awarded by way of restricted shares,
as detailed below, that the value of
performance awards were significantly
aligned to future performance of
the Group. Notwithstanding this the
Committee recommended a new clawback
policy under the proposed remuneration
framework effective for any performance
awards granted from 1 January 2017.
Shareholders Views
The Committee noted that 31.3% of the
proxy votes held by the Board at the 2016
AGM held on 13 May 2016 on the advisory
resolution to receive and consider the
Report of the Remuneration Committee
for the year ended 31 December 2015
were cast against the resolution. The
Company has since engaged with our
major shareholders and their advisers
to understand their concerns. Having
considered these concerns, the
Committee has reviewed the existing
remuneration framework.
The changes adopted include;
• Setting of maximum opportunity
levels in respect of annual bonus
• More transparent reporting of out-
turns
• Requirement to allot a minimum of
50% of annual bonus by way of 5 year
restricted shares
•
Introduction of shareholding
requirements of 300% of base salary
for executive directors and members
of the executive committee
•
Introduction of clawback provisions
In revising the remuneration framework
we have sought the flexibility to choose
the most appropriate remuneration
structure for our business needs and
strategy, a view expressed by the
Investment Association Executive
Remuneration Working Group in their
report issued in July 2016.
We are of the view that any remuneration
framework should seek to create strong
linkages to longer term Company
performance and alignment with
shareholder interests through growth
in equity value. To achieve this the
Committee will seek to set base salaries
at median market levels and structure
performance awards in a manner that
encourages individuals to acquire and
retain significant shareholdings relative
to base salary that are above market
norms.
Following from this review the Committee
has implemented a number of changes to
the remuneration elements to more align
our framework with market norms.
In addition as part of the revised
remuneration framework going forward
the Committee is proposing to replace
the existing market priced option scheme
with a new long term incentive scheme,
the Performance Share Plan (PSP).
We are cognisant of the fact that there
is necessarily a time window for the
transitioning to the new framework
and that full implementation may be
constrained by pre-existing contractual
arrangements in certain instances.
In line with this review the Company
intends to operate its annual
remuneration arrangements in line with
the remuneration policy framework
set out below, subject to shareholder
approval of the new PSP. A cornerstone
of the PSP is the creation of a mandatory
alignment period of 8 years which is
significantly greater than the current
market norm of 5 years. A comprehensive
summary of the plan will be set out in the
Annual General Meeting materials which
will be circulated to shareholders.
2016 Annual Report and Financial StatementsIrish Continental Group 69
Proposed Remuneration Framework Effective from 1 January 2017
Element
Operation
Maximum Opportunity
Base Salary
To attract and
retain high calibre
individuals
Base salaries are reviewed by the Committee annually in the last quarter
of the year with any adjustments to take effect from 1 January of the
following year.
There is no prescribed
maximum salaries or
maximum increases.
Factors taken into account in the review include the individuals role and
level of responsibility, personal performance and general developments
in pay in the market generally and across the Group.
Increases will broadly reflect
increases across the Group
and in the market generally.
Increases may be higher
to reflect changes in
responsibility or market
changes and in the case of
newly appointed individuals to
progressively align salary with
market norms.
No maximum levels are
prescribed as benefits will
be related to each individual
circumstances.
The maximum award in any
period of 12 months may not
exceed 200% of base salary in
the case of the CEO and 150%
of base salary in the case of
any other individual.
An existing contractual
annual bonus arrangement
will continue to apply to the
existing CEO Mr. Eamonn
Rothwell in lieu of the
arrangements described here
and is explained in further
detail under the report on
2016 executive director
remuneration outcomes.
Benefits
To be competitive
with the market
Benefits include the use of a company car or an equivalent cash
amount, club subscriptions, life and health insurance.
Annual Bonus
To reward
achievement
of annual
performance
targets
Individuals will receive annual bonus awards based on the achievement
of financial targets and personal objectives agreed prior to the start
of each financial year. Threshold levels will be set for minimum and
maximum awards with pro-rata payments between the two points.
Due to commercial sensitivity the targets will not be disclosed in
advance but may be disclosed retrospectively.
For executive directors and members of the executive committee a
minimum of 50% of any bonus earned, after allowing for payroll taxes,
will be invested in ICG equity which must be held for a period of 5 years.
A formal clawback policy whereby all or a portion of the share award is
subject to clawback for a period of two years in certain circumstances.
Further details of the clawback policy are on page 76.
The Committee retains discretion to adjust any award to reflect the
underlying financial position of the Company and to agree awards
outside of the above framework in respect of recent joiners and leavers.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 70
Report of the Remuneration Committee
- continued
Proposed Remuneration Framework Effective from 1 January 2017 – continued
Element
Operation
Maximum Opportunity
Performance Share Plan (subject to the approval of Shareholders at the 2017 AGM)
To align the
interests of
individuals with the
long term interests
of the Company’s
shareholders
The Committee will grant nominal cost options to individuals to acquire
equity in the Company. The vesting period is normally 3 years with the
extent of vesting based on the performance conditions set out below.
Any vesting of awards is subject to the Committee discretion that it
is satisfied that the Company’s underlying performance has shown a
sustained improvement in the period since the date of grant.
The market value of any PSP
awards in any period of 12
months may not exceed 200%
of base salary in the case of
the CEO and 150% of base
salary in the case of any other
individual.
No re-testing of the vesting performance conditions will be permitted.
Options will normally be exercised upon vesting and any ICG equity
delivered to an individual will be held for a period of 5 years, except to the
extent that the Committee allow such number of the shares delivered to
be sold to facilitate the discharge of any tax liabilities.
In exceptional situations,
including recruitment, higher
awards may be granted but
not exceeding 300% of base
salary.
The plan incorporates market standard good leaver / bad leaver provisions.
Options may vest early in the event of a takeover, merger, scheme of
arrangement or other similar event involving a change of control of
the Company, subject to the pro-rating of the share awards, to reflect
the shortened performance period since the date of grant, though
the Committee can exercise its discretion not to apply pro-rating if it
considers it to be inappropriate given any particular circumstances.
The Committee in exercising its discretion under the rules of the PSP
may (i) Re-calibrate the performance conditions and change their
relative weightings (ii) introduce new and retire old performance
measures; provided that any changes are no less challenging, are aligned
with the interests of the Company’s shareholders and are disclosed in
the Committee’s report to shareholders.
A formal clawback policy whereby all or a portion of the share award
is subject to clawback for a period of two years post vesting in certain
circumstances. Further details of the clawback policy are on page 76.
The performance conditions, which are described in more detail in the
2017 AGM materials, currently are
• Diluted Earnings per Share (EPSd)
• Return on Average Capital Employed (ROACE)
• Free Cash Flow Ratio (FCFR)
• Total Shareholder Return (TSR)
Each condition is equally weighted and in all cases 30% vests at
threshold performance and 100% vests at maximum with pro-rata
vesting between these two levels.
The performance levels are currently calibrated as follows;
EPSd*
ROACE*
FCFR*
TSR**
Vesting Threshold
Minimum
5%
13%
100%
Median
Maximum
12%
20%
130%
Top Quartile
* average per annum over the 3 year vesting period
** Over the vesting period
2016 Annual Report and Financial StatementsIrish Continental Group 71
Proposed Remuneration Framework Effective from 1 January 2017 – continued
Element
Operation
Maximum Opportunity
Retirement Benefits
To attract and
retain high calibre
individuals
Certain individuals are members of a defined benefit pension scheme
where contributions are determined by the scheme actuary pursuant to
the benefits offered under the scheme rules.
There are no prescribed
maximum levels of pension
contribution.
Other individuals are members of a defined contribution pension scheme
where the Company has discretion to pay appropriate contributions as
a percentage of base salary as agreed by the Company and individual
under their contract of employment.
No element of remuneration
other than base salary is
pensionable.
In certain circumstances the Company may provide an equivalent cash
payment in lieu of pension contributions.
Shareholding Requirement
To align the
interests of
individuals with the
long term interests
of the Company’s
shareholders
All executive directors and members of the Executive Management
Committee are expected to maintain a minimum shareholding of 300%
of base salary. Individuals are allowed a five year period from date of first
appointment to achieve the required holding.
Not applicable.
The market value of vested options and any shares held under
the Company’s restricted share arrangements will count towards
determining an individual’s holdings.
Remuneration Outcomes for Executive Directors in 2016
Total Directors’ remuneration for the year was €2,860,000 compared with €2,643,000 in 2015 and details are set in the table below:
Executive Directors
E. Rothwell
D. Ledwidge*
Total for executives
Non-executive Directors
J. B. McGuckian
C. Duffy
B. O’Kelly
J. Sheehan
Total for non-executives
Total
Performance Pay
Base Salary
Restricted
shares
€’000
€’000
Cash
€’000
Benefits
Pension
€’000
€’000
Fees
€’000
526
133
659
1,765
77
1,842
-
-
-
-
-
-
-
-
-
-
-
69
69
-
-
-
-
-
35
18
53
-
-
-
-
-
-
27
27
-
-
-
-
-
659
1,842
69
53
27
-
-
-
90
40
40
40
210
210
Total
2016
€’000
2,326
324
2,650
90
40
40
40
210
2,860
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 72
Report of the Remuneration Committee
- continued
Details of Directors’ remuneration for the year ended 31 December 2015 are set out below:
Executive Directors
E. Rothwell
G. O’Dea*
T. Kelly*
Total for executives
Non-executive Directors
J. B. McGuckian
C. Duffy
B. O’Kelly
J. Sheehan
Total for non-executives
Total
Performance Pay
Base Salary
Restricted
shares
€’000
€’000
513
120
53
686
-
-
-
-
-
1,086
-
-
1,086
-
-
-
-
-
Cash
€’000
514
-
-
514
-
-
-
-
-
Benefits
Pension
€’000
€’000
Fees
€’000
36
6
6
48
-
-
-
-
-
63
36
-
99
-
-
-
-
-
-
-
-
-
90
40
40
40
210
210
Total
2015
€’000
2,212
162
59
2,433
90
40
40
40
210
2,643
686
1,086
514
48
99
*Mr Ledwidge was appointed to the Board on 3 March 2016. Mr Kelly and Mr O’Dea retired from the Board in March 2015 and May 2015 respectively.
The information above forms an integral part of the audited Consolidated Financial Statements as described in the Basis of
Preparation on page 95.
Base Salary
Base salary for Eamonn Rothwell, CEO, increased by 2.5% in 2016 versus 2015 which was in line with the increase awarded to all
employees generally. In terms of a wider comparator group the Committee noted that the CEO pay level was below median base
salaries of the bottom half of the FTSE 250 constituent companies.
Mr. David Ledwidge, CFO, was appointed to the Board on 3 March 2016. His salary is reported from that date and was set at a level
commensurate with his experience with the Group with the expectation that subject to individual and Group performance that this
level of salary will rise progressively over a number of years to comparable levels in the market for similar roles.
Director’s Pension benefits
The aggregate pension benefits attributable to the executive Directors at 31 December 2016 are set out below.
Increase in accumulated accrued annual benefits
(excluding inflation) in the period
Transfer value of the increase in accumulated accrued benefits
(excluding inflation) at year end*
Accumulated accrued annual benefits on leaving service at year end
* Note: Calculated in accordance with actuarial Guidance note GNII.
E. Rothwell
D. Ledwidge
€’000
€’000
-
-
-
1
1
12
Total
2016
€’000
1
1
12
Total
2015
€’000
-
-
-
There were no pension benefits attributable to Eamonn Rothwell as he has reached normal retirement age and pension benefits have
vested.
The Company also provides lump sum death in service benefits and the premiums paid during the year amounted to €4,000 and
€1,000 in relation to Eamonn Rothwell and David Ledwidge respectively.
2016 Annual Report and Financial StatementsIrish Continental Group 73
David Ledwidge
David Ledwidge was appointed Executive
Director during the year. The Committee
assessed Mr. Ledwidge’s performance
in his new role over the 10 months
since appointment and in particular his
development within the sphere of his
greater responsibility. The assessment
concluded that Mr. Ledwidge was
performing in line with expectations
and would continue to contribute to
the Group going forward. On this basis,
taking account of market norms and the
expectation that, subject to performance
at an individual and Company level, his
remuneration will rise progressively over
a number of years to comparable levels in
the market for similar roles the Committee
concluded that an annual bonus award
of €146,000 amount, being 91% of
annualised base salary was appropriate.
Clawback Arrangements in relation to
2016 Performance Related Pay
The final quantum of the 2016 annual
bonus will be assessed on completion of
the audit of the financial statements. In
relation to the performance award paid
through the restricted share plan, shares
are held in trust for the beneficiaries and
may not be sold for a period of 5 years
and one month from the date of grant,
aligning the value of the award with Group
performance over the restricted period.
Long Term Incentive
The long term incentive scheme
applicable for the 2016 financial year
was the Share Option Plan approved by
shareholder on 24 June 2009. During
2016 the Committee suspended any
awards under this plan pending a review
of the existing remuneration framework.
Therefore, no options were granted to
the executive directors or any other
individuals under this plan during 2016.
Performance Related Pay
Eamonn Rothwell
Eamonn Rothwell has been associated
with ICG since its inception as a public
company. He arranged the original
purchase of Irish Continental Line in
1987 (when he joined the Board) and
its flotation in 1988.He subsequently
negotiated the purchase of B+I line over
a two-year period ending in January 1992
and has led all the significant initiatives in
the Company since that date.
The CEO annual bonus performance
award is predominantly driven by a
formula based on basic EPS growth
which incorporates an adjustment for
share buybacks. The Committee also
retain discretion to make adjustments
for any non-cash non-trading items.
The Company believes that EPS is
consistent and transparent and the EPS
growth drives long term value creation
in the business, reflected in share price
appreciation. EPS is the key performance
indicator by which the Board assesses the
overall performance of the Company.
The CEO arrangement is a contractual
commitment agreed with him on joining
the Company as CEO in the very early
stage of the company’s development
and was in lieu of arrangements with his
previous employer. The bonus formula,
which only paid out when there was
an increase in EPS, was seen as an
appropriate motivational reward structure
to develop the Company over a longer-
term horizon. This contract is reviewed
by the Committee on a periodic basis and
it is still seen as a successful formula in
alignment with shareholders’ interest and
remains appropriate to the Company’s
strategy and needs.
As part of the Remuneration framework
review the Committee has reassessed
the CEO performance arrangements
and in its view the arrangements
remain appropriate. In carrying out
this assessment the Committee has
considered the arrangements over the
longer-term performance of the Company
rather than on a single year basis and
note the following;
• Since flotation in 1988 up to 31
December 2016 shareholders
have increased the value of their
investment 97 fold compared with an
11 fold increase for both the ISEQ and
the FTSE 100 and a 16 fold increase
for the S&P 500. The total shareholder
return over this period was 17.3% per
annum for ICG compared with 8.8%
per annum for the ISEQ, 8.9% per
annum for the FTSE 100 and 10.2% per
annum for the S&P 500.
• Over the last 10, 5 and 3 years to 31
December 2016 this outperformance
has continued
Total
Shareholder
Return (TSR)
Last 10
years
Last 5
years
Last 3
years
(Compound annual growth)
ICG
ISEQ
FTSE 100
FTSE 250
S&P 500
17.1%
29.2% 22.7%
-1.3%
20.0% 15.0%
5.3%
7.9%
6.9%
9.1%
15.4%
14.6%
5.9%
7.1%
8.9%
(Source: Bloomberg)
• Over the last 5 year and 10 year period
ended 2016 the level of cumulative
annual bonus awards as a ratio of
cumulative base salary were 1.8 and
2.3 times base salary respectively.
The Committee considers these
levels to be reflective of market
norms generally among FTSE 250
constituents taking into account
lower base salary.
• Over the 10 year period average 3
year total remuneration (salary plus
annual bonus) increased by 10.2 % per
annum, compared to Company TSR
of 17.1% per annum and FTSE 250 TSR
of 7.9%.
• Over the 5 year period average 3
year total remuneration (salary plus
annual bonus) increased by 14.8 % per
annum, compared to Company TSR of
29.2% per annum and FTSE 250 TSR
of 15.4%.
• Over the last 3 years 80% of the CEO’s
annual bonus has been remunerated
by way of shares, to be held for a
minimum of 5 years.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 74
Report of the Remuneration Committee
- continued
Share option schemes
There were no long term incentive plans
in place during the year other than the
Group’s 1998 (which expired as regards
new grants in 2008) and 2009 share
option plans.
The purpose of the share option plans
is to encourage identification of option
holders with shareholders’ longer term
interests. Under the plans, options
have been granted both to Directors
and to employees of the Group. The
options were granted by the Committee
on a discretionary basis, based on the
employees expected contribution to
the Group in the future. Non-executive
Directors are not eligible to participate
in the plan. Interests of the Executive
Directors in outstanding share options is
set out on page 75.
In the ten-year period ended 31 December
2016, the total number of options granted,
net of options lapsed amounted to 5.1% of
the issued share capital of the Company.
During 2016 the Committee deferred any
awards under the 2009 Share Option Plan
pending a shareholder vote at the 2017
AGM on the replacement Performance
Share Plan.
A charge is recognised in the
Consolidated Income Statement in
respect of share options issued to
executive Directors. The charge in respect
of executive Directors for the financial
year ended 31 December 2016 is €32,000
(2015: €4,000).
Director’s Service contracts
Non-executive Directors have been
appointed under letters of appointment
for periods of three years subject to
annual re-election at the AGM.
In respect of Eamonn Rothwell, CEO,
there is an agreement between the
Company and Eamonn Rothwell that,
for management retention reasons,
in the event of a change in control of
the Company (where over 50% of the
Company is acquired by a party or parties
acting in concert, excluding Eamonn
Rothwell) he will have the right to extend
his notice period to two years or to receive
remuneration in lieu thereof.
This amendment to Eamonn Rothwell’s
contract of employment was agreed by
the Remuneration Committee a number of
years ago to retain and motivate the CEO
during a series of attempted corporate
takeover actions.
The letters of appointment for other
Executive Directors do not provide for
any compensation for loss of office
other than for payments in lieu of notice
and, except as may be required under
Irish law, the maximum amount payable
upon termination is limited to 12 months
equivalent.
On termination any outstanding options
may at the absolute discretion of the
Committee be retained by the departing
individual in accordance with the good
leaver / bad leaver provisions of the
relevant plan. Any shares delivered to an
individual which are subject to a retention
period will remain unavailable to the
individual until the end of the retention
period and where applicable will be
subject to clawback under the provisions
of the Clawback Policy.
Other Matters
Minimum Shareholding Requirements
The Company encourages individuals
to acquire and retain significant
shareholdings to align interests of
management with those of shareholders.
During the year, the Company introduced
minimum shareholding requirement for
executive directors and members of the
executive management committee to
hold shares to a market value of 300% of
base salary. Persons are allowed a period
of 5 years to achieve this holding target.
The market value of vested options and
any shares held under the Company’s
restricted share arrangements will count
towards determining an individual’s
holdings.
The market value of holdings of executive
directors and Executive Committee at 31
December 2016 as a multiple of salary at
that date are shown in the table.
Eamonn Rothwell
David Ledwidge
Other Executive
Management
Salary
multiple held
247.0 times
1.4 times
6.8 times
Non –Executive Directors
Non-Executive Directors receive a fee
which is set by the Committee and
approved by the Board. They do not
participate in any of the Company’s
performance award plans or pension
schemes. There was no change in the
level of fees paid during 2016 over the
prior year which are detailed in the table
on page 71.
Non-Executive directors do not have
notice periods and the Company has no
obligation to pay compensation when
their appointment ceases. The letters of
appointment are available for inspection
at the Company’s registered office during
normal business hours and at the AGM.
2016 Annual Report and Financial StatementsIrish Continental Group 75
Directors’ share options
Exercise Price
Exercise Period
Exercise Conditions
Directors
Sep 2009 - Sep 2016
Sep 2011- Sep 2016
Dec 2010 - Dec 2017
Dec 2012 - Dec 2017
Mar 2015 – Mar 2022
Mar 2017 – Mar 2022
Mar 2018 – Mar 2025
Mar 2020 – Mar 2025
Note 1
Note 2
Note 1
Note 2
Note 3
Note 4
Note 3
Note 4
€1.067
€1.067
€2.132
€2.132
€1.570
€1.570
€3.580
€3.580
At 31 December 2015
Granted during the year
Exercised during the year
E. Rothwell
D. Ledwidge*
500,000
500,000
750,000
750,000
-
-
350,000
350,000
3,200,000
-
-
50,000
50,000
150,000
150,000
75,000
75,000
550,000
-
-
Exercise Price
Date of exercise
Market Price
€1.067
€2.132
€1.570
2 June 2016
31 May 2016
31 May 2016
€5.50
€5.40
€5.40
(1,000,000)
(100,000)
(150,000)
At 31 December 2016
* Mr Ledwidge was appointed to the Board on 3 March 2016.
2,200,000
300,000
Exercise Conditions
Note 1: These options may only be exercised if Earnings Per Share growth between the financial year immediately preceding the
financial year in which an option is granted and the financial year immediately preceding the financial year in which the
option is exercised is at least 2% above the increase in the Consumer Price Index compounded per annum over such period.
Note 2: These options may only be exercised if the Earnings Per Share growth over any period of five financial years since the
financial year immediately preceding the financial year in which the option was granted is such as to place the Company in
the top quartile of companies in the Irish Stock Exchange Index (“ISEQ Index”) by reference to Earnings Per Share growth
over the same period and during that period the annual Earnings Per Share growth is at least 10% above the increase in the
Consumer Price Index compounded per annum over such period.
Note 3: These options will vest and become exercisable three years after the date of grant once Earnings per Share growth over any
period of three consecutive financial years commencing at the financial year immediately preceding the date of grant is at
least 2% above the increase in the Consumer Price Index compounded per annum over such period.
Note 4: These options will vest and become exercisable from the fifth anniversary of grant once (i) Earnings Per Share growth over
any period of five consecutive financial years commencing at the financial year immediately preceding the date of grant
place the Company in the top quartile of companies either (a) listed on the Irish Stock Exchange or (b) included in the London
Stock Exchange FTSE 250, by reference to Earnings Per Share growth over the same period and (ii) over that period the
Earnings Per Share growth is at least 10% above the increase in the Consumer Price Index compounded per annum over such
period.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 76
Report of the Remuneration Committee
- continued
Say on Pay
ICG is an Irish incorporated company
and is not subject to the UK disclosure
requirements of the Large and Medium-
sized Companies and Groups (Accounts
and Reports) (Amendment) Regulations
2013. However, in accordance with
ICG’s commitment to best corporate
governance practices and shareholder
engagement, the Board, on the
recommendation of the Remuneration
Committee, will put this Report of the
Committee to an advisory vote at the
forthcoming 2017 AGM of the Company.
At the 2016 AGM where the 2015 Report
of the Remuneration Committee was
presented a vote of 31.3% against was
registered. The Company has since
engaged with its major shareholders
and their advisors and the Directors
believe that the proposed Remuneration
Framework and additional disclosures
outlined in this report addresses the
concerns raised during this engagement
process. Implementation of the proposed
Remuneration Framework is dependent
on shareholder support for the new
PSP outlined and of which additional
details will be provided in the 2017 AGM
documentation.
Market price of shares
The closing price of the shares on the
Irish Stock Exchange on 31 December
2016 was €4.500 and the range during the
year was €4.020 to €5.676.
Clawback Policy
The Committee recognises that there
could potentially be circumstances
in which performance related pay
(either annual bonuses, and/or longer
term incentive awards) is paid based
on misstated results or inappropriate
conduct resulting in material damage to
the Company. Whilst the Company has
robust management and internal controls
in place to minimise any such risk, the
Committee has put in place formal
clawback arrangements with effect from
1 January 2017 for the protection of the
Company and its investors. The clawback
of performance related pay (comprising
the Annual Bonus, and the proposed
PSP Awards) would apply in certain
circumstances including:
• a material misstatement of the
Company’s financial results;
• a material breach of an executive’s
contract of employment;
• any wilful misconduct, recklessness,
and/ or fraud resulting in serious
injury to the financial condition or
business reputation of the Company.
For Executive Directors and members
of the Executive Committee 50% of the
annual bonus will be invested in ICG
equity which must be held for a period
of 5 years and one month, which will be
subject to clawback for a period of two
years per the circumstances noted above.
Under the proposed PSP, any awards
granted will be subject to clawback
during the vesting period and any shares
delivered on vesting will be subject to
clawback for an initial two year period per
the circumstances noted above.
Payments to former directors
There were no pension payments or other
payments for loss of office paid to any
former directors during the year.
External Advisers
During the year the Committee obtained
independent advice from Mercer in
relation to market practices and design
of the PSP. Mercer are members of the
Remuneration Consultants Group and
signatories to its Code of Conduct.
2016 Annual Report and Financial StatementsIrish Continental Group Directors’ Responsibilities Statement
77
The directors are responsible for
preparing the Annual Report and
the Group and Company Financial
Statements, in accordance with
applicable laws and regulations. Company
law requires the directors to prepare
Group and Company Financial statements
each year. Under that law, the directors
are required to prepare the Group
Financial Statements in accordance with
IFRS as adopted by the European Union
and have elected to prepare the Company
Financial Statements in accordance with
IFRS as adopted by the European Union
and as applied in accordance with the
provisions of the Companies Act 2014.
Under company law, the directors must
not approve the Financial Statements
unless they are satisfied that they give a
true and fair view of the assets, liabilities
and financial position of the Group and
Company and of the Group profit or
loss for that period. In preparing each
of the Group and Company Financial
Statements, the directors are required to:
• select suitable accounting policies
and then apply them consistently;
• make judgements and estimates that
are reasonable and prudent;
• state that the Financial Statements
comply with IFRS as adopted by
the European Union as applied in
accordance with the Companies Act
2014; and
• prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Group and the Company will continue
in business.
The Directors are responsible for keeping
adequate accounting records which
disclose with reasonable accuracy
at any time the financial position
of the Company and the Group and
to enable them to ensure that the
financial statements are prepared in
accordance with IFRS as adopted by
the European Union and comply with
Irish statute comprising the Companies
Act 2014 and in regard to the Group
Financial Statements, Article 4 of IAS
Regulation. They are also responsible for
safeguarding the assets of the Company
and the Group and hence for taking
reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for the
maintenance and integrity of the
corporate and financial information
included in the Group’s and Company’s
website (www.icg.ie). Legislation in
Ireland governing the preparation and
dissemination of financial statements
may differ from legislation in other
jurisdictions.
The Directors of Irish Continental Group
plc acknowledge these responsibilities
and accordingly have prepared this
Consolidated Annual Report for the
financial year ended 31 December
2016 in compliance with the provisions
of Regulation (EC) No. 1606/2002,
regulations 4 and 5 of Statutory
Instrument No. 277 of 2007 of Ireland, the
Transparency Rules of the Central Bank
of Ireland, the applicable International
Financial Reporting Standards as adopted
by the European Union, the Companies
Act 2014 and the Listing Rules issued by
the Irish Stock Exchange.
Each of the Directors, whose names and
functions are listed on pages 48 and 49
of the annual report confirms that to the
best of each person’s knowledge and
belief:
•
•
•
the Consolidated Financial
Statements for the financial year
ended 31 December 2016 have
been prepared in accordance with
International Financial Reporting
Standards and give a true and fair
view of the assets, liabilities, financial
position and profit or loss of the
Company and the undertakings
included in the consolidation taken as
a whole;
the Operating and Financial
Review includes a fair review of the
development and performance of the
business for the financial year ended
31 December 2016 and the position of
the Company and the undertakings
included in the consolidation taken as
a whole, together with a description of
the principal risks and uncertainties
that they face; and
the Annual Report and Financial
Statements, taken as a whole, are fair,
balanced and understandable and
provides the information necessary
for shareholders to assess the Group’s
performance, business model and
strategy.
This responsibility statement was
approved by the Board of Director’s on 3
March 2017 and signed on its behalf by
Eamonn Rothwell
David Ledwidge
Director
Director
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 78
Irish Continental Group
2016 Annual Report and Financial Statements
79
Financial
Statements
Independent Auditor’s Report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Financial Position
Company Statement of Changes in Equity
Consolidated Statement of Cash Flows
Company Statement of Cash Flows
Notes to the Financial Statements
80
85
86
87
88
90
91
93
94
95
80
Independent Auditor’s Report to the Members of
Irish Continental Group plc
Opinion on financial statements of Irish Continental Group plc
In our opinion, the financial statements:
• give a true and fair view of the assets, liabilities and financial position of the Group and the company as at 31 December 2016 and
of the Group’s profit for the financial year then ended; and
• have been properly prepared in accordance with the relevant financial reporting framework and in particular, with the
requirements of the Companies Act 2014 and, as regards the Group financial statements, Article 4 of the IAS Regulation.
The financial statements comprise:
•
•
•
•
•
•
•
•
•
the Consolidated Income Statement;
the Consolidated Statement of Comprehensive Income;
the Consolidated Statement of Financial Position;
the Consolidated Statement of Changes in Equity;
the Company Statement of Financial Position;
the Company Statement of Changes in Equity;
the Consolidated Statement of Cash Flows;
the Company Statement Cash Flows; and
the related notes 1 to 35.
The financial reporting framework that has been applied in the preparation of the Group financial statements is Irish law and
International Financial Reporting Standards (IFRS) as adopted by the European Union (IFRSs as adopted by the EU), and in the case of
the parent company financial statements Irish law and IFRSs as applied in accordance with the Companies Act 2014.
Summary of our audit approach
Key risks
Materiality
Scoping
The key risks that we identified in the current year related to:
Appropriateness of Useful Lives of Vessels
Appropriateness of key assumptions used to determine retirement benefit obligations
Potential misstatement arising from incorrect revenue recognition
The materiality that we used in the current year was €3.5 million which was determined on the basis of profit
before tax.
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including
Group-wide controls, and assessing the risks of material misstatement at the Group level. Based on that
assessment, we focused our Group audit scope primarily on the audit work in ten legal entities all of which
were subject to a full audit, whilst the remaining legal entities were subject to specified audit procedures,
where the extent of our testing was based on our assessment of the risks of material misstatement and of the
materiality of the Group’s operations in those entities
2016 Annual Report and Financial StatementsIrish Continental Group 81
Going concern and the directors’ assessment of the principal risks that would threaten the solvency or liquidity of the Group
As required by the Listing Rules we have reviewed the directors’ statement on page 50 that the Group is a going concern.
We have nothing material to add or draw attention to in relation to:
•
•
•
•
the directors’ confirmation on page 50 that they have carried out a robust assessment of the principal risks facing the Group,
including those that would threaten its business model, future performance, solvency or liquidity;
the disclosures on page 38 to 39 that describe those risks and explain how they are being managed or mitigated;
the directors’ statement on page 50 about whether they considered it appropriate to adopt the going concern basis of accounting
in preparing them and their identification of any material uncertainties to the Group’s ability to continue to do so over a period of
at least twelve months from the date of approval of the financial statements; and
the directors’ explanation on page 50 as to how they have assessed the prospects of the Group, over what period they have done
so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation
that the Group will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment,
including any related disclosures drawing attention to any necessary qualifications or assumptions.
We agreed with the directors’ adoption of the going concern basis of accounting and we did not identify any such material
uncertainties. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the
Group’s ability to continue as a going concern.
Our assessment of risks of material misstatement
The assessed risks of material misstatement described below are those that had the greatest effect on our audit strategy, the
allocation of resources in the audit and directing the efforts of the engagement team:
Risk
Useful Lives of Vessels
Depreciation on vessels is charged so as to write off the cost
or deemed cost of the vessel less its residual value over its
estimated economic useful life.
A change in the estimate of useful economic lives or residual
value of vessels can have a significant impact on the amount of
depreciation charged to the Income Statement.
There is a risk that management’s estimate of useful lives or
residual values is inaccurate. The determination of appropriate
provisions requires significant judgement by management and
relies on inputs that are variable such as the value of scrap
metal.
Please also refer to page 62 (Audit Committee Report), page
101 (Accounting Policy – Property, Plant & Equipment), and note
3 – Critical accounting judgements and estimates and note 12
Property, Plant & Equipment.
How the scope of our audit responded to the risk
We obtained an understanding of management’s processes
and key controls over the assessment of useful lives
and residual values, which included evaluating design,
determining implementation and testing operational
effectiveness of those key controls.
We challenged and evaluate management’s key
assumptions including their assessment of useful lives and
their estimates of residual values.
We also benchmarked management’s assumptions against
information available from other external sources, such as
market data relating to the value of scrap metal, in assessing
the reasonableness of management’s estimates.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 82
Independent Auditor’s Report to the Members of
Irish Continental Group plc
- continued
Risk
How the scope of our audit responded to the risk
Retirement Benefit Obligations/Surplus
The Group operates a number of defined benefit schemes. The
net pension asset and deficit relating to these schemes was
€2.4m and €15.9m respectively at the balance sheet date.
There is a high degree of estimation and judgement by
management in the calculation of the pension liabilities,
particularly in the underlying actuarial assumptions, specifically
the discount and inflation rates, which are subject to high
volatility from small movements in assumptions.
There is a risk that the liabilities of pension schemes are
determined using inappropriate actuarial assumptions, leading
to potential misstatement of the net pension deficit.
Please also refer to page 62 (Audit Committee Report), page 100
(Accounting Policy – Retirement Benefit Schemes), and note 3 –
Critical accounting judgements and estimates.
Revenue Recognition
The Group recognises revenue in respect of its passenger and
freight services on the date of travel or transportation. Proceeds
from sales before the year end for a travel date after the year end
are deferred and included in creditors at the year end.
There is a risk that year end deferred revenues could be
manipulated to achieve performance targets, or misstated as a
result of error.
Please also refer to page 62 (Audit Committee Report), and page
97 (Accounting Policy – Revenue Recognition).
We utilised Deloitte actuaries as part of our team to assist
us in understanding, evaluating and challenging the
appropriateness of key actuarial assumptions with particular
focus on discount rates and inflation rates.
Our work included discussions with both Management
and the Group’s external pension advisors to understand
their processes and the assumptions used in calculating
retirement benefit liabilities. We benchmarked key
assumptions used against market and peer data where
available.
We tested the valuation of a sample of pension assets, by
obtaining independent valuations of investment held at year
end.
We assessed whether managements’ disclosures in the
financial statements in respect of retirement benefit
obligations were in accordance with the relevant accounting
standards.
We obtained an understanding of the significant revenue
arrangements in place across the Group, and of the internal
controls and IT systems in place over those revenue streams
to evaluate the reliability of the systems to ensure revenue
was appropriately recognised and reflect the terms of sale.
We evaluated the design, determined the implementation
and tested the operational effectiveness of key internal
controls over the Group’s significant revenue processes.
We tested year end deferred revenue on a sample basis
and assessed whether there was any evidence of bias in
management’s calculation of deferred revenue.
Our audit procedures relating to these matters were designed in the context of our audit of the financial statements as a whole, and
not to express an opinion on individual accounts or disclosures. Our opinion on the financial statements is not modified with respect
to any of the risks described above, and we do not express an opinion on these individual matters.
Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of
our audit work and in evaluating the results of our work.
We determined materiality for the Group to be €3.5 million, which is approximately 5.8% of profit before taxation, and approximately
2.4% of consolidated Shareholders’ equity.
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of €175,000, as well as
differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee
on disclosure matters that we identified when assessing the overall presentation of the financial statements.
2016 Annual Report and Financial StatementsIrish Continental Group
83
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including Group-wide controls, and
assessing the risks of material misstatement at the Group level. Based on that assessment, we focused our Group audit scope
primarily on the audit work in ten legal entities all of which were subject to a full audit, whilst the remaining legal entities were subject
to specified audit procedures, where the extent of our testing was based on our assessment of the risks of material misstatement
and of the materiality of the Group’s operations in those entities. These ten entities within full audit scope represent the principal
business units and account for 100% of the revenue and 100% of the Group’s total assets. Our audit work of the ten entities was
executed at levels of materiality applicable to each individual entity which were lower than Group materiality. In addition, audits are
performed for entity statutory purposes for all legal entities.
At the parent entity level we also tested the consolidation process and carried out analytical procedures to confirm our conclusion
that there were no significant risks of material misstatement of the aggregated financial information of the remaining components
not subject to audit or audit of specified account balances. As part of the Group audit, the Group engagement team issued
instructions to all component audit teams, and evaluated the outputs from each audit location.
Opinion on other matters prescribed by the Companies Act 2014
We have obtained all the information and explanations which we consider necessary for the purposes of our audit.
In our opinion the accounting records of the Parent Company were sufficient to permit the financial statements to be readily and
properly audited.
The parent Company balance sheet is in agreement with the accounting records.
In our opinion the information given in the Directors’ Report is consistent with the financial statements.
In addition we report, in relation to information given in the Strategic Report on page 4 to 45 and the Directors Report on pages 50 to
52, that:
• Based on knowledge and understanding of the Company and its environment obtained in the course of our audit, no material
misstatements in the information identified above have come to our attention;
• Based on the work undertaken in the course of our audit, in our opinion:
- The description of the main features of the internal control and risk management systems in relation to the process for
preparing the Group Financial Statements, and information relating to voting rights and other matters required by the European
Communities (Takeover Bids (Directive 2004/25/EC)) Regulations 2006 and specified by the Companies Act 2014 for our
consideration, are consistent with the Financial Statements and have been prepared in accordance with the Companies Act
2014; and
- The Corporate Governance Report contains the information required by the Companies Act 2014.
Matters on which we are required to report by exception
Our duty to read other information in the Annual Report
Under International Standards on Auditing (UK and Ireland), we are required to report to you if, in our opinion, information in the
annual report is:
• materially inconsistent with the information in the audited financial statements; or
• apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group acquired in the course of
performing our audit; or
• otherwise misleading.
In particular, we are required to consider whether we have identified any inconsistencies between our knowledge acquired during the
audit and the directors’ statement that they consider the annual report is fair, balanced and understandable and whether the annual
report appropriately discloses those matters that we communicated to the audit committee which we consider should have been
disclosed. We confirm that we have not identified any such inconsistencies or misleading statements.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 84
Independent Auditor’s Report to the Members of
Irish Continental Group plc
- continued
Directors’ remuneration
Under the Listing Rules of the Irish Stock Exchange we are required to review the six specified elements of disclosures in the report
to shareholders by the board, on directors’ remuneration. Under the Companies Act 2014 we are required to report to you if, in our
opinion, the disclosures of directors’ remuneration and transactions specified by law are not made. We have nothing to report arising
from our review of these matters.
Corporate Governance Statement
Under the Listing Rules of the Irish Stock Exchange we are also required to review the part of the Corporate Governance Statement
relating to the company’s compliance with the provisions of the UK Corporate Governance Code and the provisions of the Irish
Corporate Governance Annex specified for our review. We have nothing to report arising from our review.
Respective responsibilities of directors and auditor
As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view and otherwise comply with the Companies Act 2014.
Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards
for Auditors.
This report is made solely to the company’s members, as a body, in accordance with section 391 of the Companies Act 2014. Our audit
work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an
auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable
assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate to the Group’s and the parent company’s circumstances and have
been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors;
and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the
annual report to identify material inconsistencies with the audited financial statements and to identify any information that is
apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing
the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Ciarán O’Brien
For and on behalf of Deloitte
Chartered Accountants and Statutory Audit Firm
Dublin
Date: 3 March 2017
2016 Annual Report and Financial StatementsIrish Continental Group Consolidated Income Statement
for the financial year ended 31 December 2016
Revenue
Depreciation and amortisation
Employee benefits expense
Other operating expenses
Operating profit
Finance Income
Finance costs
Profit before tax
Income tax expense
Profit for the financial year: all attributable to equity holders of the parent
Earnings per share – expressed in euro cent per share
Basic
Diluted
85
2015
€m
320.6
(18.3)
(21.4)
(223.7)
57.2
0.1
(3.2)
54.1
(0.4)
53.7
2016
€m
325.4
(20.9)
(22.0)
(219.9)
62.6
0.1
(2.3)
60.4
(1.6)
58.8
31.4c
31.1c
28.9c
28.5c
Notes
4
9
5
6
7
8
9
11
11
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 86
Consolidated Statement of Comprehensive Income
for the financial year ended 31 December 2016
Profit for the financial year
Items that may be reclassified subsequently to profit or loss:
Cash flow hedges:
- Fair value movements arising during the financial year
-Transfer to Consolidated Income Statement – net
settlement of cash flow hedge
Exchange differences on translation of foreign operations
Items that will not be reclassified subsequently to profit or loss:
Actuarial (loss) / gain on defined benefit obligations
Deferred tax on defined benefit obligations
Other comprehensive (expense) / income for the financial year
Total comprehensive income for the financial year:
all attributable to equity holders of the parent
Notes
21 viii
21 viii
30a viii
22
2016
€m
58.8
(0.1)
0.4
(2.8)
(9.6)
0.7
(11.4)
47.4
2015
€m
53.7
(0.2)
0.4
0.5
16.5
(0.3)
16.9
70.6
2016 Annual Report and Financial StatementsIrish Continental Group Consolidated Statement of Financial Position
as at 31 December 2016
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Retirement benefit surplus
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Equity and liabilities
Equity
Share capital
Share premium
Other reserves
Retained earnings
Equity attributable to equity
holders of the parent
Non-current liabilities
Borrowings
Deferred tax liabilities
Provisions
Deferred grant
Retirement benefit obligation
Current liabilities
Borrowings
Trade and other payables
Derivative financial instruments
Current income tax liabilities
Provisions
Deferred grant
Total liabilities
Total equity and liabilities
87
2015
€m
170.0
0.9
5.6
176.5
1.9
41.0
25.0
67.9
244.4
12.1
13.1
(9.0)
99.3
2016
€m
204.3
0.8
2.4
207.5
2.3
39.6
42.2
84.1
291.6
12.2
15.7
(11.8)
128.3
144.4
115.5
1.7
2.7
0.6
0.3
15.9
21.2
78.4
46.7
0.2
-
0.6
0.1
126.0
147.2
291.6
55.3
3.8
0.5
0.4
10.7
70.7
14.0
43.0
0.5
0.1
0.5
0.1
58.2
128.9
244.4
Notes
12
13
30a iv
15
16
17
18
19
19
20
22
24
25
30a iv
20
23
21 viii
24
25
The financial statements were approved by the Board of Directors on 3 March 2017 and signed on its behalf by:
Eamonn Rothwell
David Ledwidge
Director
Director
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 88
Consolidated Statement of Changes in Equity
for the financial year ended 31 December 2016
Share
Share
Share
Capital
Options
Hedging
Translation
Retained
Capital
Premium
Reserve
Reserve
Reserve
Reserve
Earnings
€m
€m
€m
€m
€m
€m
€m
Total
€m
Balance at 1 January 2016
12.1
13.1
7.3
3.3
(0.5)
(19.1)
99.3
115.5
Profit for the financial year
Other comprehensive income /
(expense)
Total comprehensive income /
(expense) for the financial year
Employee share-based
payments expense
Share issue
Dividends
Settlement of equity plans through
market purchase of shares
Transferred to retained earnings on
exercise of share options
-
-
-
-
-
-
-
-
0.1
2.6
-
-
-
-
-
-
0.1
2.6
-
-
-
-
-
-
-
-
-
-
-
-
0.2
-
-
-
(1.1)
(0.9)
-
0.3
-
58.8
58.8
(2.2)
(9.5)
(11.4)
0.3
(2.2)
49.3
47.4
-
-
-
-
-
-
-
-
-
-
0.3
(2.2)
-
-
0.2
2.7
(21.0)
(21.0)
(0.4)
(0.4)
1.1
29.0
-
28.9
Balance at 31 December 2016
12.2
15.7
7.3
2.4
(0.2)
(21.3)
128.3
144.4
Analysed as follows:
Share capital
Share premium
Other reserves
Retained earnings
12.2
15.7
(11.8)
128.3
144.4
2016 Annual Report and Financial StatementsIrish Continental Group Consolidated Statement of Changes in Equity
for the financial year ended 31 December 2015
89
Share
Share
Share
Capital
Options
Hedging
Translation
Retained
Capital
Premium
Reserve
Reserve
Reserve
Reserve
Earnings
€m
€m
€m
€m
€m
€m
€m
Total
€m
Balance at 1 January 2015
12.0
9.7
7.3
4.8
(0.7)
(19.4)
47.6
61.3
Profit for the financial year
Other comprehensive income
Total comprehensive income for
the financial year
Employee share-based
payments expense
Share issue
Dividends
Settlement of equity plans through
market purchase of shares
Transferred to retained earnings on
exercise of share options
-
-
-
-
-
-
-
-
0.1
3.4
-
-
-
-
-
-
0.1
3.4
-
-
-
-
-
-
-
-
-
-
-
-
0.1
-
-
-
(1.6)
(1.5)
-
0.2
-
0.3
53.7
16.4
53.7
16.9
0.2
0.3
70.1
70.6
-
-
-
-
-
-
-
-
-
-
0.2
0.3
-
-
0.1
3.5
(19.9)
(19.9)
(0.1)
(0.1)
1.6
51.7
-
54.2
Balance at 31 December 2015
12.1
13.1
7.3
3.3
(0.5)
(19.1)
99.3
115.5
Analysed as follows:
Share capital
Share premium
Other reserves
Retained earnings
12.1
13.1
(9.0)
99.3
115.5
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 90
Company Statement of Financial Position
as at 31 December 2016
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Investments in subsidiaries
Retirement benefit surplus
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Equity and liabilities
Equity
Share capital
Share premium
Other reserves
Retained earnings
Equity attributable to equity holders
Non-current liabilities
Borrowings
Retirement benefit obligation
Provisions
Current liabilities
Borrowings
Trade and other payables
Provisions
Total liabilities
Total equity and liabilities
Notes
12
13
14
30b iv
15
16
17
18
19
19
20
30b iv
24
20
23
24
2016
€m
30.6
0.7
11.7
0.7
43.7
0.4
117.4
20.6
138.4
182.1
12.2
15.7
9.6
95.1
132.6
0.6
-
0.1
0.7
0.3
48.4
0.1
48.8
49.5
182.1
2015
€m
1.5
0.8
11.7
0.6
14.6
0.4
119.4
0.9
120.7
135.3
12.1
13.1
10.5
75.9
111.6
0.9
0.1
0.1
1.1
0.3
22.2
0.1
22.6
23.7
135.3
The financial statements were approved by the Board of Directors on 3 March 2017 and signed on its behalf by:
Eamonn Rothwell
David Ledwidge
Director
Director
2016 Annual Report and Financial StatementsIrish Continental Group Company Statement of Changes in Equity
for the financial year ended 31 December 2016
91
Share
Share
Share
Capital
Options
Retained
Capital
Premium
Reserve
Reserve
Earnings
€m
€m
€m
€m
€m
Total
€m
Balance at 1 January 2016
12.1
13.1
7.2
3.3
75.9
111.6
Profit for the financial year
Other comprehensive expense
Total comprehensive income for the financial year
Share issue
Dividends
Employee share-based payment expense
Transferred to retained earnings on exercise of share
options
Settlement of equity plans through market purchase of
shares
-
-
-
-
-
-
0.1
2.6
-
-
-
-
-
-
-
-
0.1
2.6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.1
39.6
-
39.6
-
39.6
39.6
-
(21.0)
-
2.7
(21.0)
0.1
(1.0)
1.0
-
-
(0.4)
(0.4)
(0.9)
19.2
21.0
Balance at 31 December 2016
12.2
15.7
7.2
2.4
95.1
132.6
Analysed as follows:
Share capital
Share premium
Other reserves
Retained earnings
12.2
15.7
9.6
95.1
132.6
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 92
Company Statement of Changes in Equity
for the financial year ended 31 December 2015
Share
Share
Share
Capital
Options
Retained
Capital
Premium
Reserve
Reserve
Earnings
€m
€m
€m
€m
€m
Total
€m
Balance at 1 January 2015
12.0
9.7
7.2
4.8
44.3
78.0
Profit for the financial year
Other comprehensive expense
Total comprehensive income for the financial year
Share issue
Dividends
Movement related to share options allocated to employees
in subsidiaries
Transferred to retained earnings on exercise of share
options
Settlement of equity plans through market purchase of
shares
-
-
-
-
-
-
0.1
3.4
-
-
-
-
-
-
-
-
0.1
3.4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(0.4)
(1.1)
50.6
(0.1)
50.6
(0.1)
50.5
50.5
-
(19.9)
-
1.1
3.5
(19.9)
(0.4)
-
-
(0.1)
(0.1)
(1.5)
31.6
33.6
Balance at 31 December 2015
12.1
13.1
7.2
3.3
75.9
111.6
Analysed as follows:
Share capital
Share premium
Other reserves
Retained earnings
12.1
13.1
10.5
75.9
111.6
2016 Annual Report and Financial StatementsIrish Continental Group Consolidated Statement of Cash Flows
for the financial year ended 31 December 2016
Net cash inflow from operating activities
Cash flow from investing activities
Interest received
Proceeds on disposal of property, plant and equipment
Purchases of property, plant and equipment
Purchases of intangible assets
Net cash outflow from investing activities
Cash flow from financing activities
Dividends paid to equity holders of the Company
Repayments of borrowings
Repayments of obligations under finance leases
Proceeds on issue of ordinary share capital
New bank loans raised
Settlement of equity plans through market purchase of shares
Net cash outflow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes
Cash and cash equivalents at end of year
93
2015
€m
68.2
0.1
0.1
(34.4)
(0.6)
(34.8)
(19.9)
(28.0)
(1.0)
3.5
17.5
(0.1)
(28.0)
5.4
19.4
0.2
25.0
Notes
32
17
2016
€m
82.1
0.1
1.3
(56.7)
(0.3)
(55.6)
(21.0)
(13.0)
(1.1)
2.7
25.0
(0.4)
(7.8)
18.7
25.0
(1.5)
42.2
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 94
Company Statement of Cash Flows
for the financial year ended 31 December 2016
Net cash inflow / (outflow) from operating activities
Cash flow from investing activities
Dividend received from subsidiary
Purchases of property, plant and equipment
Purchases of intangible assets
Notes
32
2016
€m
30.7
40.0
(31.8)
(0.2)
2015
€m
(35.5)
55.0
(1.9)
(0.6)
Net cash inflow from investing activities
8.0
52.5
Cash flow from financing activities
Dividends paid to equity holders of the Company
Repayments of obligations under finance leases
Proceeds on issue of ordinary share capital
Settlement of equity plans through market purchase of shares
(21.0)
(0.3)
2.7
(0.4)
(19.9)
(0.3)
3.5
(0.1)
Net cash outflow from financing activities
(19.0)
(16.8)
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
19.7
0.9
20.6
0.2
0.7
0.9
17
2016 Annual Report and Financial StatementsIrish Continental Group Notes to the Financial Statements
for the financial year ended 31 December 2016
95
1. General information
Irish Continental Group plc (ICG) is a public limited company incorporated in Ireland. The addresses of its registered office and
principal places of business are disclosed on the inside back cover of the Annual Report.
The Group carries passengers and cars, RoRo freight and container LoLo freight, on routes between Ireland, the United Kingdom and
Continental Europe. The Group also operates container terminals in the ports of Dublin and Belfast.
The Company operates a passenger and freight shipping service between Ireland and France. It is also the holding Company of a
number of subsidiary companies.
2. Summary of accounting policies
Statement of Compliance
The Group and Company financial statements have been prepared in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the EU and as applied in accordance with the Companies Act 2014.
The Company has availed of the exemption contained in Section 304 (2) of the Companies Act 2014 which permits a company which
publishes its Company and Group financial statements together to exclude the Company Income Statement and related notes that
form part of the approved Company financial statements from the financial statements presented to its members and filed with the
CRO.
Basis of preparation
The financial statements have been prepared under the historical cost convention except for the measurement of certain financial
assets and financial liabilities at fair value.
All figures presented in the financial statements are in Euro and are rounded to the nearest one hundred thousand except where
otherwise indicated.
The Consolidated Financial Statements include the information in the Remuneration Report that is described as being an integral
part of the Consolidated Financial Statements.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 December each year. Control is achieved where the Company:
• has the power over the investee;
•
is exposed, or has rights, to variable return from its involvement with the investee; and
• has the ability to use its power to affect its return.
In assessing control, potential voting rights that are currently exercisable or convertible are taken into account.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company
loses control of the subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the year are included in
the consolidated income statement from the date the Company gains control until the date the Company ceases to control the
subsidiary.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 96
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
2. Summary of accounting policies - continued
New standards and interpretations
The Group adopted certain new and revised International Financial Reporting Standards (IFRSs) and Interpretations in the year. The
impact of these is set out below.
The following standards and interpretations have been adopted since the last Annual Report but had no material impact on the
Financial Statements:
Title
IFRS 5 (Amendment) Non-current Assets Held for Sale and Discontinued Operations
IFRS 7 (Amendment) Financial Instruments: Disclosures
IFRS 10 (Amendments) Consolidated Financial Statements
IFRS 11 (Amendment) Joint Arrangements
IFRS 12 (Amendment) Disclosure of Interests in Other Entities
IFRS 14 Regulatory Deferral Accounts
IAS 1 (Amendment) Presentation of Financial Statements
IAS 16 (Amendments) Property, Plant and Equipment
IAS 19 (Amendment) Employee Benefits
IAS 27 (Amendment) Consolidated and Separate Financial Statements
IAS 28 (Amendments) Investments in Associates
IAS 34 (Amendment) Interim Financial Reporting
IAS 38 (Amendment) Intangible Assets
IAS 41 (Amendment) Agriculture
Effective date –
periods beginning on
or after
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2016
At the date of authorisation of these financial statements, the following standards and interpretations which have not been applied in
these financial statements were in issue but not yet effective:
Title
IFRS 9 Financial Instruments
IFRS 15 Revenue from Contracts with Customers
IFRS 16 Leases
IAS 7 (Amendments) Statement of Cash Flows
IAS 12 (Amendments) Income taxes
Effective date –
periods beginning on
or after
1 January 2018
1 January 2018
1 January 2019
1 January 2017
1 January 2017
The Company is currently assessing the impact in relation to the adoption of these standards and interpretations for future periods
of the Group. Excluding IFRS 15 and IFRS 16 which are currently under review the Directors assess that at this point they do not
believe the standards will have a significant impact on the financial statements of the Group in future periods.
2016 Annual Report and Financial StatementsIrish Continental Group 97
2. Summary of accounting policies - continued
IFRS 16 – Leases
IFRS 16 sets out the principle for the recognition, measurement, presentation and disclosure of leases for both lessee and lessor. It
eliminates the classification of leases as either operating leases or finance leases and introduces a single lessee accounting model
where the lessee is required to recognise assets and liabilities for all material leases that have a term of greater than a year. The
Group is currently evaluating the impact that IFRS 16 will have on its financial statements. On adoption of the standard the effects on
the Group’s financial statements will be dependent on the transition option chosen, the contractual terms at date of adoption and
the Group’s marginal borrowing costs. The principal known material long term leases that are expected to exist on the latest adoption
date relate to long term leases of property. The application of IFRS16 to these leases is not expected to have a material effect on
Group net assets, but may have a material effect individually on lease asset totals and lease liability totals. The effects on Group
profits are also expected to be immaterial on a net basis with higher depreciation and interest charges largely offset by a reduction in
operating expenses. IFRS 16 is expected to be endorsed by the EU during 2017.
IFRS 15 - Revenue from Contracts with Customers
IFRS 15 is a converged standard from the IASB and the Financial Accounting Standards Board (FASB) on revenue recognition. The
standard will improve the financial reporting of revenue and improve comparability of the top line in Financial Statements globally.
The Group is currently considering the implications of IFRS 15 and the implementation options available.
IFRS 9 – Financial Instruments
IFRS 9 replaces the guidance in IAS 39 ‘Financial Instruments: Recognition and Measurement’. It includes requirements on the
classification and measurement of financial assets and liabilities; it also includes an expected credit losses model that replaces the
current incurred loss impairment model. The Group is currently considering the implications of IFRS 9 and it does not intend to apply
IFRS 9 before the EU effective date.
Accounting policies applied in preparation of the financial statements for the financial year ended 31 December 2016
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable from passenger and freight services supplied to
third parties, net of discounts and value added tax in accordance with standard terms and conditions.
Passenger ticket revenue is recognised at the date of travel. Unused tickets which are non-refundable once the booked travel date
has passed are treated as revenue in accordance with the Group’s terms and conditions of sale. Freight revenue is recognised at the
date of transportation. Proceeds from passenger tickets sold before the year end for a travel date after the year end are included
in the Statement of Financial Position in current liabilities under the caption ‘Trade and other payables’. Sale of passenger tickets
which result in future discounts for customers are accounted for as multiple element revenue transactions and the fair value of the
consideration received is allocated between the original tickets supplied and the future travel discount granted. The consideration
allocated to the future travel discount is measured by reference to its fair value, the amount for which the reduction being the future
sales value could be sold separately. Such consideration is not recognised as revenue at the time of the initial sale transaction but is
deferred and recognised as revenue when the future travel discount is granted and the Group’s obligations have been fulfilled.
Cash & credit card revenue from on-board sales is recognised immediately.
Revenue received under vessel charter agreements is recognised on a daily basis at the applicable daily rate under the terms of the
charter agreement.
Finance Income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable,
which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s
net carrying amount on initial recognition.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 98
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
2. Summary of accounting policies - continued
Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership
to the lessee. All other leases are classified as operating leases.
The Group as lessee
Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present value of the
minimum lease payments, each determined at the inception of the lease.
Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of
interest on the remaining balance of the liability. The capital element of future lease rentals is treated as a liability and is included in
the Consolidated Statement of Financial Position as a finance lease obligation.
The interest element of lease payments is charged to the Consolidated Income Statement over the period of the lease in proportion
to the balance outstanding.
Rentals payable under operating leases are charged to the Consolidated Income Statement on a straight-line basis over the term of
the lease.
Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the
lease term as a reduction of the rental expense.
The Group as lessor
Under IAS 17 Leases, the Group treats long term bareboat hire purchase sale agreements in relation to disposal of vessels as
finance leases. The sales proceeds recognised at the commencement of the lease term by the Group is the fair value of the asset.
The carrying amount of the asset is offset against the sales proceeds and the net amount is recognised as the profit or loss on
disposal, which is recognised in the Consolidated Income Statement. Costs incurred by the Group in connection with negotiating and
arranging a finance lease are recognised as an expense at the commencement of the lease term.
Amounts due from lessees under the finance lease are recognised as receivables at the amount of the Group’s net investment in the
leases. Finance lease income is included in Revenue and is allocated to accounting periods so as to reflect a constant periodic rate of
return on the Group’s net investment outstanding in respect of the lease.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs
incurred in negotiating and arranging an operating lease are added to the carrying value of the lease asset and recognised on a
straight-line basis over the lease term.
Concession and Licence agreements
Revenue received in relation to a concession agreement is recognised in the income statement as earned under the terms of the
agreement.
Payments made under concession agreements where the Group is the operator are charged to the income statement as incurred
under the terms of the arrangement.
Benefits received and receivable as an incentive to enter into a concession agreement are also spread on a straight-line basis over
the agreement term as a reduction of the expense.
2016 Annual Report and Financial StatementsIrish Continental Group 99
2. Summary of accounting policies - continued
Foreign currencies
The individual financial statements of each Group entity are prepared in the currency of the primary economic environment in which
the entity operates (its functional currency). For the purpose of the Consolidated Financial Statements, the results and financial
position of each entity are expressed in Euro, which is the functional currency of the Company, and the presentation currency for the
Consolidated Financial Statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional
currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each statement of
financial position date, monetary assets and liabilities denominated in foreign currencies are retranslated at the rates prevailing on
the statement of financial position date. Non-monetary items that are measured in terms of historical cost in a foreign currency are
not retranslated. Exchange differences arising on the settlements of monetary items and on the retranslation of monetary items, are
included in the Consolidated Income Statement for the financial year.
For the purpose of presenting Consolidated Financial Statements, the assets and liabilities of the Group’s foreign operations are
expressed in Euro using exchange rates prevailing on the statement of financial position date. Income and expense items are
translated at the average exchange rates for the year, unless exchange rates fluctuate significantly during the period, in which case
the exchange rates at the date of transactions are used.
Exchange differences arising on the translation of foreign currency subsidiaries, if any, are recognised in the Consolidated Statement
of Comprehensive Income and accumulated in equity in the translation reserve. On disposal of a foreign subsidiary the cumulative
translation difference for that foreign subsidiary is transferred to the Consolidated Income Statement as part of the gain or loss on
disposal.
In order to hedge its exposure to certain foreign exchange risks, the Group enters into forward contracts and options (see below for
details of the Group’s accounting policies in respect of such derivative financial instruments).
On consolidation, exchange differences arising from the translation of the net investment in foreign operations and on borrowings
and other currency instruments of such investments, are recognised in other comprehensive income and accumulated in equity.
Finance costs
Finance costs comprise interest payable on borrowings calculated using the effective interest rate method, gains and losses on
hedging instruments that are recognised in the Consolidated Income Statement and the unwinding of discounts on provisions.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that
necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary
investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for
capitalisation. All other borrowing costs are recognised in the Consolidated Income Statement in the financial year in which they are
incurred.
The interest expense component of finance lease payments is recognised in the Consolidated Income Statement using the effective
interest rate method.
The net interest cost on defined benefit obligations is recognised in the Consolidated Income Statement under finance costs in
accordance with IAS 19 Employee Benefits.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 100
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
2. Summary of accounting policies - continued
Retirement benefit schemes
Defined benefit obligations
For defined benefit obligations, the cost of providing benefits and the liabilities of the schemes are determined using the projected
unit credit method with assets valued at bid price and actuarial valuations being carried out by independent and professionally
qualified actuaries at each statement of financial position date. Current service costs, past service cost, or credit, and net interest
expense or income are recognised in the Consolidated Income Statement. Adjustments in respect of a settlement, a curtailment
and past service cost, or credit, are recognised in the Consolidated Income Statement in the period of a plan amendment.
Remeasurement comprising, actuarial gains and losses is reflected in the Statement of Financial Position with a charge or credit
recognised in the Consolidated Statement of Comprehensive Income in the period in which they occur.
The net interest cost on defined benefit obligations has been recorded in the Consolidated Income Statement under finance costs.
Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.
In addition to the pension schemes operated by the Group, certain employees are included in the Merchant Navy Officers Pension
Fund (MNOPF). As the Group has no control over the calls for contributions made from the MNOPF, it has determined that the fund
should be accounted for as a defined benefit obligation and its liability recognised accordingly. The Group’s share of the MNOPF
deficit as advised by the trustees is included with the other Group schemes.
The retirement benefit obligation recognised in the Consolidated Statement of Financial Position represents the deficit or surplus in
the Group’s defined benefit obligations. Any surplus resulting from this calculation is limited to past service cost, plus the present
value of available refunds and reductions in future contributions to the scheme.
Defined contribution pension schemes
Payments to defined contribution pension schemes are recognised as an expense as they fall due. Any contributions outstanding at
the period end are included as an accrual in the Consolidated Statement of Financial Position.
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable
profit for the year. Taxable profit differs from profit as reported in the Consolidated Income Statement because it excludes items of
income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.
The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the statement of
financial position date.
A proportion of the Group’s profits fall within the charge to tonnage tax, under which regime taxable profits are relieved to an amount
based on the tonnage of vessels employed during the year. In accordance with the IFRIC guidance on IAS 12 Income Taxes, the
tonnage tax charge is included within other operating expenses in the Consolidated Income Statement.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in
the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the
statement of financial position liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the
initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a
transaction that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the
Group is able to control the reversal of the temporary differences and it is probable that the temporary difference will not reverse in
the foreseeable future.
2016 Annual Report and Financial StatementsIrish Continental Group 101
2. Summary of accounting policies - continued
The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to the extent that it
is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised
based on tax laws and rates that have been enacted at the statement of financial position date. Deferred tax is charged or credited
to the Consolidated Income Statement, except when it relates to items charged or credited directly to the Consolidated Statement of
Comprehensive Income or is dealt with in equity.
Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Property, plant and equipment
Vessels
Vessels are stated at cost, with the exception of the fast ferry Jonathan Swift which is stated at deemed cost upon transition to IFRS,
less accumulated depreciation and any accumulated impairment losses.
Depreciation on vessels is charged so as to write off the cost or deemed cost less residual value over the estimated economic useful
life on a straight line basis. The amount initially recognised in respect of Ropax ships less estimated residual value, is allocated
between hull and machinery and hotel and catering elements for depreciation purposes. In respect of LoLo vessels, all value is
attributed to hull and machinery.
In considering residual values of ships, the Directors have taken into account the valuation of the scrap value of the ships per light
displacement tonne. Residual values are reviewed annually and updated if required. Estimations of economic life and residual
values of ships are a key accounting judgement and estimate in the financial statements. Any change in estimates are accounted for
prospectively.
The estimated economic useful lives of vessels is as follows;
Hull
• Conventional Ropax Ships
• Fast ferries
• LoLo
30 - 35 years
15 - 25 years
25 years
Hotel and Catering
10 years
For conventional ferries, hull and machinery components are depreciated over an initial estimated useful life of 30 years but this is
reviewed on a periodic basis for vessels remaining in service 25 years after original construction.
The carrying values of passenger ships are reviewed for impairment when there is any indication that the carrying values may not be
recoverable in which case the assets are written down to their recoverable amount.
Drydocking
Costs incurred in renewing the vessel certificate are capitalised as a separate component under vessels in the tangible fixed assets
and depreciated over the period to expiry of certificate of between 1 to 5 years. Costs and accumulated depreciation relating to
expired certificates are treated as disposals.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 102
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
2. Summary of accounting policies - continued
Other assets
Property, plant and equipment, other than passenger ships and freehold land, are stated at cost less accumulated depreciation and
any accumulated impairment losses. Freehold land is stated at cost and is not depreciated. The carrying values of other assets are
reviewed for impairment when there is any indication that the carrying values may not be recoverable in which case the assets are
written down to their recoverable amount. Cost comprises purchase price and directly attributable costs.
The amount initially recognised in respect of an item of other assets is allocated to its significant parts and each such part is
depreciated separately. In respect of stevedoring equipment cost is allocated between structural frame and machinery.
Depreciation on property, plant and equipment other than vessels but including leased assets is charged so as to write off the cost,
other than freehold land and assets under construction, over the estimated economic useful lives, using the straight-line method, on
the following bases:
Buildings
Plant and Equipment
Vehicles
0.7% - 10%
4% - 25%
20%
Assets held under finance leases are depreciated over the shorter of their expected useful lives or the lease term, taking into account
the time period over which benefits from the leased assets are expected to accrue to the Group.
Assets under construction, the construction of which takes a substantial period of time are recorded at the cost incurred to date less
any impairment loss and no depreciation is charged on these amounts. Depreciation commences when the assets are ready for their
intended use. Cost includes borrowing costs capitalised in accordance with the Group’s accounting policies. Borrowing costs directly
attributable to the construction of property, plant and equipment are capitalised as part of the cost of the assets up to the date of
substantial completion.
Gains or losses on the disposal of property, plant and equipment represent the difference between the net proceeds and the carrying
value at the date of sale. Income is accounted for when there is an unconditional exchange of contracts, or when all necessary terms
and conditions have been fulfilled.
Intangible assets
Computer Software
Costs incurred on the acquisition of computer software are capitalised, as are costs directly associated with developing computer
software programmes, if it is probable that the expected future economic benefits that are attributable to these assets will flow to
the Group and the cost of these assets can be measured reliably. Computer software costs recognised as assets are written off on a
straight line basis over their estimated useful lives, which is normally 5 years.
Investments in subsidiaries
Investments in subsidiaries held by the Company are carried at cost less any accumulated impairment losses. Equity settled share
based payments granted by the Company to employees of subsidiary companies are accounted for as an increase or decrease in the
carrying value of the investment in subsidiary companies and the share options reserve.
Government grants
Grants of a capital nature are treated as deferred income and are released to the Consolidated Income Statement at the same rates
as the related assets are depreciated. Grants of a revenue nature are credited to the Consolidated Income Statement in the same
periods as the related expenditure is charged. Government grants are not recognised until there is a reasonable assurance that the
Group will comply with the conditions attaching to them and the grants will be received.
2016 Annual Report and Financial StatementsIrish Continental Group 103
2. Summary of accounting policies - continued
Impairment of property, plant and equipment and intangible assets
At each statement of financial position date, the Group reviews the carrying amounts of its property, plant and equipment and
intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount
of the cash generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of the time
value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, the carrying
amount of the asset (cash generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense
immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash generating unit) is increased to the revised
estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would
have been determined had no impairment loss been recognised for the assets (cash generating units) in prior years. A reversal of an
impairment loss is recognised as income immediately.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost represents suppliers’ invoiced cost net of any related
discounts etc. determined on a first in, first out basis. Net realisable value represents the estimated selling price less all costs to be
incurred in marketing, selling and distribution.
Treasury shares
Consideration paid to purchase the Company’s equity share capital is deducted from the total shareholders’ equity and classified
as treasury shares until such shares are cancelled. No gain or loss is recognised on the purchase, sale, issue or cancellation of the
treasury shares. Where such shares are subsequently sold or reissued, any consideration received is included in total shareholders’
equity.
The Capital Redemption reserve represents the nominal value of share capital repurchased.
Financial instruments
Financial assets and financial liabilities are recognised on the Group’s Statement of Financial Position when the Group becomes a
party to the contractual provisions of the instrument.
Trade receivables
Trade receivables are measured at initial recognition at invoice value, which approximates to fair value. Appropriate allowances for
estimated irrecoverable amounts are recognised in the Consolidated Income Statement when there is objective evidence that the
carrying value of the asset exceeds the recoverable amount.
Trade receivables are classified as loans and receivables which are subsequently measured at amortised cost, using the effective
interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposits and other short-term highly liquid investments that are readily
convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 104
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
2. Summary of accounting policies - continued
Financial liabilities and equity
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual
arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after
deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out
below.
Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at fair value, net of transaction costs incurred. Finance charges, including
premiums payable on settlement or redemption and direct issue costs, are accounted for in the profit or loss using the effective
interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in
which they arise. Bank borrowings are classified as financial liabilities and are measured subsequently at amortised cost using the
effective interest rate method.
Trade payables
Trade payables are classified as other financial liabilities, are initially measured at fair value, and are subsequently measured at
amortised cost, using the effective interest rate method.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Derivative financial instruments and hedge accounting
The Group’s activities expose it primarily to the financial risks of changes in foreign exchange rates and interest rates. The Group
uses foreign exchange forward contracts and interest rate swaps to hedge these exposures.
The use of financial derivatives is governed by the Group’s policies approved by the Board of Directors, which provide written
principles on the use of financial derivatives consistent with the Group’s risk management strategy. The Group does not use
derivative financial instruments for speculative purposes.
Derivative financial instruments are held in the Consolidated Statement of Financial Position at their fair value. Changes in the
fair value of derivative financial instruments that are designated, and are effective, as hedges of changes in future cash flows are
recognised directly in other comprehensive income. Any ineffective portion of the hedge is recognised in the Consolidated Income
Statement. When the cash flow hedge of a firm commitment or forecasted transaction subsequently results in the recognition of
an asset or a liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that was
previously recognised in other comprehensive income and accumulated in equity are included in the initial measurement of the asset
or liability. For hedges that do not result in the recognition of an asset or liability, amounts accumulated in equity are recognised in
the Consolidated Income Statement in the same period in which the hedged item affects profit or loss.
Changes in fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the Consolidated
Income Statement as they arise.
Hedge accounting is discontinued when the hedge instrument expires or is sold, terminated, or exercised, or no longer qualifies for
hedge accounting. At that time, any cumulative gain or loss on the hedging instrument accumulated in equity is retained in equity
until the forecasted transactions occur. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss
accumulated in equity is transferred to the Consolidated Income Statement in the period.
2016 Annual Report and Financial StatementsIrish Continental Group 105
2. Summary of accounting policies - continued
Contingent liability
A contingent liability is disclosed unless the possibility of an outflow of resources embodying economic benefits is remote.
Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will
be required to settle that obligation. Provisions are measured at the Directors’ best estimate of the expenditure required to settle the
obligation at the statement of financial position date, and are discounted to present value where the effect is material.
Financial guarantee contracts
Where the Group enters into financial guarantee contracts to guarantee the indebtedness of other parties, the Group considers these
to be insurance arrangements and accounts for them as such. The Group treats the guarantee contract as a contingent liability until
such time it becomes probable that the Group will be required to make a payment under the guarantee.
Share-based payments
The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured
at fair value (excluding the effect of non-market based vesting conditions) at the date of grant. The fair value determined at the grant
date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s
estimate of the shares expected to vest as a result of the effect of non-market based vesting conditions.
Fair value is measured using the Binomial pricing model. The Binomial pricing model has been used as in the opinion of the Directors
this is more appropriate given the nature of the schemes.
The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations.
Employee benefits expense
Wages, salaries, bonuses, social security contributions, paid annual leave and sick leave are accrued in the period in which the
associated services are rendered by the employees of the Group. A liability for a termination benefit is recognised at the earlier of
when an entity can no longer withdraw the offer of the termination benefit and the entity recognises any related restructuring costs.
Distributions
Distributions are accounted for when they are approved, through retained earnings. Dividend income from investments is recognised
when the shareholders’ rights to receive payment have been established (provided that it is probable that the economic benefits will
flow to the Group and the amount of revenue can be measured reliably). Dividends received from fellow subsidiaries are eliminated
on consolidation.
Operating profit
Operating profit is stated after non-trading items arising from continuing operations. Non-trading items are material non-recurring
items that derive from an event or transaction that falls outside the ordinary activities of the Group and which individually or, if of
a similar type, in aggregate are separately disclosed by virtue of their size or incidence but before investment income and finance
costs.
Adjusted earnings per share
Adjusted earnings per share, is earnings per share adjusted to exclude the net interest cost on defined benefit obligations and non-
trading items.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 106
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
3. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group’s and Company’s accounting policies, the Directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual results may differ from these amounts. The estimates and
underlying assumptions are reviewed on an on-going basis.
Key sources of estimation uncertainty and critical accounting judgements are as follows:
Estimates
Post-employment benefits
The Group’s and Company’s total obligation in respect of defined benefit obligations is calculated by independent, qualified
actuaries, updated at least annually. The size of the obligation is sensitive to actuarial assumptions. These include demographic
assumptions covering mortality and longevity, and economic assumptions covering price inflation, benefit and salary increases
together with the discount rate used. The size of the scheme assets is also sensitive to asset return levels and the level of
contributions from the Group and Company. Further details are set out in note 30.
The Group and Company is a participating employer in the Merchant Navy Officer Pension Fund (MNOPF), a multi-employer defined
benefit obligation. The MNOPF is in deficit. Under the rules of the fund all employers are jointly and severally liable for the deficit. The
deficit included in the Financial Statements for the Group and Company represents an apportionment of the overall scheme deficit
based on notification received from the trustees which is currently 1.53% for the Group and 0.51% for the Company, less any deficit
payments made. Should other participating employers default on their obligations, the Group and Company will be required to absorb
a larger share of the scheme deficit calculated in the same manner as the current apportionment.
Going concern
The Directors have satisfied themselves that the Group and Company are going concerns and will have adequate financial resources
to continue in operational existence for the foreseeable future. In forming their view the Directors have taken into consideration the
net current liabilities position of €41.9 million shown in the financial statements and the future financial requirements of the Group
and Company. The Directors have also considered the likely availability of replacement loan facilities on normal terms and covenants
to replace the existing bank facilities which have a maturity in September 2017. In forming this view the Directors have considered the
future cash requirements of the Group’s business in the context of the current economic environment outlook, the principal risks and
uncertainties facing the Group (pages 38 to 39), the Group’s 2017 budget plan and the medium term strategy of the Group, including
capital investment plans.
Useful lives for property, plant and equipment and Intangible assets
Long-lived assets comprising primarily of property, plant and equipment and intangible assets represent a significant portion of
total assets. The annual depreciation and amortisation charge depends primarily on the estimated lives of each type of asset and,
in certain circumstances, estimates of residual values. Management regularly reviews these lives and change them if necessary to
reflect current conditions. In determining these useful lives management considers technological change, patterns of consumption,
physical condition and expected economic utilisation of the asset. Changes in the useful lives or residual values may have a
significant impact on the annual depreciation and amortisation charge. Details of the useful lives are included in the accounting
policy headed property, plant and equipment. Further details are set out in note 12.
Uncertainity
Impairment
The Group assessed its property, plant & equipment and intangible assets to determine if there were any indications of impairment.
Factors considered in identifying whether there were any indications of impairment included the economic performance of assets,
technological developments, new rules and regulations, shipbuilding costs and carrying value versus market capitalisation of the
Group. At 31 December 2016, no internal or external indications of impairment were identified for assets and consequently no
impairment review was performed. In the prior year, following a change of operations in Belfast, certain terminal equipment became
surplus to operational requirements. At 31 December 2015 no decision had been taken as to the future use of the equipment within
the Company. On the basis there was no future revenue streams attributable to the assets, the Directors imputed an impairment
charge of €0.6 million.
2016 Annual Report and Financial StatementsIrish Continental Group 107
2016
€m
209.8
123.9
(8.3)
325.4
2015
€m
203.9
118.2
(1.5)
320.6
4. Segmental information
Revenue
The following is an analysis of the Group’s revenue for the financial year:
Ferries
Container & Terminal
Inter-segment
Total
Business segments
The Board is deemed the chief operating decision maker within the Group. For management purposes, the Group is currently
organised into two operating segments; Ferries and Container & Terminal. These segments are the basis on which the Group reports
internally and are the only two revenue generating segments of the Group.
The Ferries segment derives its revenue from the operation of combined RoRo passenger ferries and the chartering of vessels. The
Container & Terminal segment derives its revenue from the provision of door-to-door and feeder LoLo freight services, stevedoring
and other related terminal services.
Segment information about the Group’s operations is presented below.
Revenue
2016
External revenue
Inter-segment revenue
Total
2015
External revenue
Inter-segment revenue
Total
Ferries Container & Terminal
Inter- segment
€m
€m
€m
202.7
7.1
209.8
203.6
0.3
203.9
122.7
1.2
123.9
117.0
1.2
118.2
-
(8.3)
(8.3)
-
(1.5)
(1.5)
Total
€m
325.4
-
325.4
320.6
-
320.6
Inter-segment revenue is at prevailing market prices. The inter-segment revenue in the Ferries Division in 2016 of €7.1 million (2015:
€0.3 million) primarily relates to the container vessels MV Elbtrader, MV Elbcarrier and MV Elbfeeder which are on time charter to the
Group’s container shipping subsidiary Eucon.
An analysis of the Group’s revenue is as follows:
Passenger
Freight
Chartering and other
Total
2016
€m
117.3
199.4
8.7
325.4
2015
€m
122.7
193.9
4.0
320.6
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 108
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
4. Segmental information - continued
No single external customer in the current or prior financial year amounted to 10 per cent or more of the Group’s revenues.
Ferries
Container & Terminal
Total
Result
Operating profit
Finance Income
Finance costs
Profit before tax
Income tax expense
Profit for the financial year
Statement of Financial Position
Assets
Segment assets
Cash and cash equivalents
Consolidated total assets
Liabilities
Segment liabilities
Borrowings
Consolidated total liabilities
Other segment information
Capital additions
Depreciation and amortisation
2016
€m
52.3
0.1
(2.2)
50.2
(0.9)
49.3
202.1
37.2
239.3
44.1
78.9
123.0
2015
€m
48.1
0.1
(3.0)
45.2
(0.5)
44.7
174.8
23.1
197.9
40.6
67.3
107.9
51.4
18.4
32.1
15.6
2016
€m
10.3
-
(0.1)
10.2
(0.7)
9.5
47.3
5.0
52.3
23.0
1.2
24.2
5.6
2.5
Geographic analysis of revenue by origin of booking
Revenue
Ireland
United Kingdom
Netherlands
Belgium
France
Other
Total
2015
€m
9.1
-
(0.2)
8.9
0.1
9.0
44.6
1.9
46.5
19.0
2.0
21.0
2016
€m
62.6
0.1
(2.3)
60.4
(1.6)
58.8
249.4
42.2
291.6
67.1
80.1
147.2
2015
€m
57.2
0.1
(3.2)
54.1
(0.4)
53.7
219.4
25.0
244.4
59.6
69.3
128.9
2.9
2.7
57.0
20.9
35.0
18.3
2016
€m
163.2
66.7
53.4
26.5
7.6
8.0
325.4
2015
€m
153.6
69.5
52.0
26.9
7.1
11.5
320.6
2016 Annual Report and Financial StatementsIrish Continental Group 4. Segmental information - continued
Geographic analysis of location of property, plant and equipment
Property, plant and equipment
Vessels at sea / assets in transit / under construction
Vessels
Containers
On Shore
Ireland
Other
109
2015
€m
135.7
4.4
140.1
27.4
2.5
29.9
2016
€m
170.9
5.0
175.9
27.3
1.1
28.4
Carrying amount at 31 December
204.3
170.0
Due to the mobile nature of some of the assets in property, plant and equipment, their location is not always fixed.
5. Employee benefits expense
The average number of employees during the financial year was as follows:
Ferries
Container & Terminal
The number of employees at the financial year end was
Aggregate costs of employee benefits were as follows:
Wages and salaries
Social insurance costs
Defined benefit obligations - current service cost (note 30a vii)
Defined contribution pension scheme – pension cost (note 30a)
Past service credit (note 30a vii)
Share-based payment expense (note 29)
Total employee benefit expense
2016
€m
214
96
310
302
2016
€m
18.0
1.8
1.9
0.1
-
0.2
22.0
2015
€m
217
100
317
316
2015
€m
17.8
1.8
1.9
0.1
(0.3)
0.1
21.4
There were no employees in the Company during the financial year ended 31 December 2016 (2015: nil). Costs of €3.2 million (2015:
€3.0 million) were recharged to the Company from subsidiary companies in relation to management services.
No staff costs were capitalised during the financial year (2015: nil) for the Group or the Company.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report
110
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
6. Finance Income
Interest on bank deposits
Total Finance Income
7. Finance costs
Interest on bank overdrafts and loans
Interest on obligations under finance leases
Net interest cost on defined benefit obligations (note 30a vii)
Total finance costs
8. Income tax expense
Current tax
Deferred tax (note 22)
Total income tax expense for the financial year
2016
€m
0.1
0.1
2016
€m
2.1
0.2
-
2.3
2016
€m
2.0
(0.4)
1.6
2015
€m
0.1
0.1
2015
€m
2.5
0.3
0.4
3.2
2015
€m
0.7
(0.3)
0.4
The Company and its Irish tax resident subsidiaries have elected to be taxed under the Irish tonnage tax scheme. Under the tonnage
tax scheme, taxable profit on eligible activities is calculated on a specified notional profit per day related to the tonnage of the ships
utilised. In accordance with the IFRIC guidance on IAS 12 Income Taxes, the tonnage tax charge is not considered an income tax
expense and has been included in other operating expenses in the Consolidated Income Statement.
Domestic income tax is calculated at 12.5% of the estimated assessable profit for the year for all activities which do not fall to be
taxed under the tonnage tax scheme. Taxation for other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.
2016 Annual Report and Financial StatementsIrish Continental Group 111
2015
€m
54.1
6.8
(5.5)
(0.3)
-
(0.6)
0.4
2015
€m
(0.1)
(1.3)
39.0
0.4
18.0
18.4
(0.1)
18.3
2016
€m
60.4
7.6
(5.8)
(0.1)
0.2
(0.3)
1.6
2016
€m
(0.3)
2.5
32.2
0.4
20.6
21.0
(0.1)
20.9
8. Income tax expense - continued
The total expense for the financial year is reconciled to the accounting profit as follows:
Profit before tax
Tax at the domestic income tax rate of 12.5% (2015: 12.5%)
Effect of tonnage relief
Net utilisation of tax losses
Difference in effective tax rates
Other items
Income tax expense recognised in the Consolidated Income Statement
9. Profit for the year
Profit for the financial year has been arrived at after charging/(crediting):
Gain on disposal of property, plant and equipment
Foreign exchange losses / (gains)
Fuel cost
Amortisation of intangible assets (note 13)
Depreciation of property, plant and equipment (note 12)
Amortisation of deferred grant (note 25)
Net depreciation and amortisation expense
Auditors’ remuneration:
€’000
€’000
- Audit of Group financial statements
- Audit of the Subsidiary financial statements
- Other assurance services
- Tax advisory services
- Other non-audit services
193
25
-
43
6
267
186
25
-
44
3
258
Disclosure of Directors’ emoluments as required by Section 305 Companies Act 2014, is given in the Report of the Remuneration
Committee and is included within the financial statements by way of a cross reference.
The Company’s profit for the financial year determined in accordance with IFRS as adopted by the EU was €39.6 million (2015: €50.6
million).
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 112
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
10. Dividends
Final dividend of 7.387c per ICG Unit for financial year ended 31 December 2015 (2014: 7.035c)
Interim dividend of 3.820c per ICG Unit for the financial year ended 31 December 2016 (2015:
3.638c)
2016
€m
13.8
7.2
21.0
2015
€m
13.1
6.8
19.9
The Board is proposing a final dividend of 7.760 cent per ICG Unit amounting to €14.6 million in respect of the results for the financial
year ended 31 December 2016.
11. Earnings per share
Weighted average number of ordinary shares for the purposes of basic earnings per share
Effect of dilutive potential ordinary shares: Share options
Weighted average number of ordinary shares for the purpose of diluted earnings per share
2016
’000
187,536
1,692
189,228
2015
’000
185,776
2,806
188,582
The denominator for the purposes of calculating both basic and diluted earnings per share has been adjusted to reflect shares issued
during the year and excludes treasury shares (note 18).
The earnings used in both the adjusted basic and adjusted diluted earnings per share are adjusted to take into account the net
interest on defined benefit obligations (note 30a).
The calculation of the basic and diluted earnings per share attributable to the ordinary equity holders of the parent is based on the
following data:
Earnings
Earnings for the purposes of basic and diluted earnings per share -
Profit for the financial year attributable to equity holders of the parent
Net interest cost on defined benefit obligations
Earnings for the purposes of adjusted basic and diluted earnings per share
Basic earnings per share
Diluted earnings per share
Adjusted basic earnings per share
Adjusted diluted earnings per share
2016
€m
58.8
-
58.8
2016
Cent
31.4
31.1
31.4
31.1
2015
€m
53.7
0.4
54.1
2015
Cent
28.9
28.5
29.1
28.7
2016 Annual Report and Financial StatementsIrish Continental Group 113
11. Earnings per share - continued
Diluted earnings per ordinary share
Diluted earnings per Ordinary Share is calculated by adjusting the weighted average number of Ordinary Shares outstanding to
assume the exercise of all vested share option awards at 31 December. Share option awards which have not yet satisfied the required
performance conditions for vesting are excluded from the calculation. The dilutive effect of vested share options is calculated as the
difference in the average market value during the period and the option price expressed as a percentage of the average market value.
Share options outstanding at 31 December are set out in note 29. Of the 2,866,500 (2015: 4,815,000) vested options at 31 December
2016, the dilutive effect is 1,692,000 ordinary shares (2015: 2,806,000 ordinary shares).
12. Property, plant and equipment
Group
Assets under
Plant
and
Land
and
Construction
Vessels
Equipment
Vehicles
Buildings
€m
€m
€m
Cost
At 1 January 2015
Additions
Exchange differences
Disposals
Impairment
At 1 January 2016
Additions
Exchange differences
Disposals
At 31 December 2016
Accumulated depreciation
At 1 January 2015
Depreciation charge for the financial year
Eliminated on disposals
Exchange difference
At 1 January 2016
Depreciation charge for the financial year
Eliminated on disposals
Exchange difference
At 31 December 2016
Carrying amount
At 31 December 2015
54.9
3.2
0.3
(0.3)
(0.6)
57.5
2.3
(0.6)
(2.7)
56.5
37.2
3.2
(0.3)
0.1
40.2
3.0
(1.8)
(0.3)
41.1
-
-
-
-
-
-
31.8
-
-
302.3
31.1
-
(5.7)
-
327.7
21.0
(0.5)
(6.0)
31.8
342.2
183.5
14.2
(5.7)
-
192.0
17.1
(6.0)
-
203.1
-
-
-
-
-
-
-
-
-
-
€m
1.4
-
-
(0.3)
-
1.1
0.3
-
(0.4)
1.0
0.9
0.2
(0.3)
-
0.8
0.2
(0.3)
-
0.7
0.3
0.3
€m
25.1
0.1
-
-
-
25.2
1.3
-
-
Total
€m
383.7
34.4
0.3
(6.3)
(0.6)
411.5
56.7
(1.1)
(9.1)
26.5
458.0
8.1
0.4
-
-
8.5
0.3
-
-
8.8
229.7
18.0
(6.3)
0.1
241.5
20.6
(8.1)
(0.3)
253.7
16.7
170.0
17.7
204.3
At 31 December 2016
31.8
139.1
15.4
135.7
17.3
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 114
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
12. Property, plant and equipment - continued
Under the terms of the amortising term loan facility, statutory mortgages securing amounts outstanding under that facility have been
registered on certain of the Group’s vessels. At 31 December 2016, the amount outstanding under that facility was €37.7 million (2015:
€50.7 million) and the vessels that are subject to the mortgages had a net book value of €53.1 million (2015: €57.1 million).
Assets held under finance leases are secured by the lessors’ title to the leased assets.
The carrying amount of the Group’s plant and equipment includes an amount of €2.3 million (2015: €3.9 million) in respect of assets
held under finance leases.
Company
Cost
At 1 January 2015
Additions
Disposals
At 1 January 2016
Additions
Disposals
At 31 December 2016
Accumulated depreciation
At 1 January 2015
Depreciation charge for the financial year
Eliminated on disposals
At 1 January 2016
Depreciation charge for the financial year
Eliminated on disposals
At 31 December 2016
Carrying amount
At 31 December 2015
At 31 December 2016
Assets under
Plant
And
Land
and
Construction
Equipment
Vehicles
Buildings
€m
€m
-
-
-
-
29.6
-
29.6
-
-
-
-
-
-
-
-
29.6
6.8
1.9
(1.9)
6.8
2.2
(1.7)
7.3
4.8
2.4
(1.9)
5.3
2.7
(1.7)
6.3
1.5
1.0
€m
0.1
-
-
0.1
-
-
0.1
0.1
-
-
0.1
-
-
0.1
-
-
€m
0.1
-
-
0.1
-
-
0.1
0.1
-
-
0.1
-
-
0.1
-
-
Total
€m
7.0
1.9
(1.9)
7.0
31.8
(1.7)
37.1
5.0
2.4
(1.9)
5.5
2.7
(1.7)
6.5
1.5
30.6
The carrying amount of the Company’s plant and equipment includes an amount of €0.8 million (2015: €1.1 million) in respect of
assets held under finance leases.
In accordance with IAS 16, the property, plant and equipment of the Group and Company has been reviewed in relation to the residual
values used for the purpose of depreciation calculations. In considering residual values of passenger ships, the Directors have taken
into consideration the valuation of the scrap value of the ships per light displacement tonne. Residual values are reviewed annually
and updated if required.
2016 Annual Report and Financial StatementsIrish Continental Group 115
12. Property, plant and equipment - continued
Estimations of economic life and residual values of ships are a key judgemental estimate in the financial statements. A 10% increase
/ decrease in residual values of ships would have a €0.2 million (2015: €0.1 million) decrease / increase on depreciation in the
Consolidated Income Statement and a €0.2 million (2015: €0.1 million) increase / decrease on the carrying value of property, plant
and equipment in the Statement of Financial Position. In relation to the remaining estimated economic life of the ships, a one year
increase / decrease would have a €1.4 million (2015: €1.1 million) decrease / €1.8 million (2015: €1.4 million) increase in depreciation in
the Consolidated Income Statement, and a €1.4 million (2015: €1.1 million) increase / €1.8 million (2015: €1.4 million) decrease on the
carrying value of property, plant and equipment in the Statement of Financial Position.
In the Company the asset under construction amount relates to initial payments in relation to the new build announced on 31 May
2016. ICG have entered into an agreement with the German company Flensburger Schiffbau-Gesselschaft & Co.KG (“FSG”) whereby
FSG has agreed to build a cruise ferry for ICG at a contract price of €144 million to be delivered during 2018. Capitalised interest costs
of €0.2m and €nil staff costs are included within the aggregated amount. Group assets under construction also include payments
under other contracts to deliver certain items of property, plant and equipment in 2017. At the balance sheet date, the Group and
Company had paid €31.8 million and €29.6 million respectively under contractual agreements, of which €22.2 million and €20.0 million
represents work completed at the balance sheet date.
13. Intangible assets
Cost
At 1 January
Additions
At 31 December
Amortisation
At 1 January
Charge for the financial year
At 31 December
Carrying amount
At 1 January
At 31 December
Group
2016
€m
10.2
0.3
10.5
9.3
0.4
9.7
0.9
0.8
Group
2015
€m
9.6
0.6
10.2
8.9
0.4
9.3
0.7
0.9
Company
Company
2016
€m
9.6
0.2
9.8
8.8
0.3
9.1
0.8
0.7
2015
€m
9.0
0.6
9.6
8.5
0.3
8.8
0.5
0.8
The intangible assets included above, all computer software, have finite useful lives of 5 years, over which the assets are amortised.
Amortisation is on a straight-line basis.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 116
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
14. Investment in subsidiaries
Company
Investment in subsidiaries at beginning of the financial year
Movement related to share options allocated to employees in subsidiaries
Investment in subsidiaries at end of the financial year
2016
€m
11.7
-
11.7
2015
€m
12.1
(0.4)
11.7
The movement related to share options represents share options attributable to employees of subsidiary companies.
The composition of the Group and the Company’s principal subsidiaries at 31 December 2016 is as follows:
Name of subsidiary
Country of incorporation
and operation
Proportion of ownership
in ordinary share capital
Proportion of voting
power held
Principal activity
Irish Ferries Limited
Eucon Shipping & Transport Limited
Irish Continental Line Limited
Irish Ferries Services Limited
Ireland
Ireland
Ireland
Ireland
Belfast Container Terminal (BCT) Limited
Northern Ireland
Irish Ferries (U.K.) Limited
United Kingdom
100%
100%
100%
100%
100%
100%
Eurofeeders Limited
United Kingdom
100%
Irish Ferries (U.K.) Services Limited
United Kingdom
100%
Zatarga Limited
Contarga Limited
Isle of Man
Ireland
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Ferry operator
Container shipping
services
Ship leasing
Administration
services
Container handling
Shipping &
forwarding agents
Shipping &
forwarding agents
Administration
services
Ship leasing
Ship leasing
The registered office for Irish Ferries Limited, Eucon Shipping & Transport Limited, Irish Continental Line Limited, Contarga Limited
and Irish Ferries Services Limited is Ferryport, Alexandra Road, Dublin 1.
The registered office for Belfast Container Terminal Limited is 1 Lanyon Place, The Soloist Building, Belfast BT1 3LP, Northern Ireland.
The registered office for Irish Ferries (U.K.) Limited and Irish Ferries (U.K.) Services Limited is Corn Exchange Building, Fenwick Street,
Liverpool L2 7TP, England.
The registered office for Eurofeeders Limited is Collins House, Rutland Square, Edinburgh, Midlothian EH1 2AA, Scotland.
The registered office for Zatarga Limited is Merchants House, 24 North Quay, Douglas IM1 4LE, Isle of Man.
2016 Annual Report and Financial StatementsIrish Continental Group 117
15. Inventories
Fuel and lubricating oil
Catering and other stocks
Group
2016
€m
2.1
0.2
2.3
Group
2015
€m
1.6
0.3
1.9
Company
Company
2016
€m
0.1
0.3
0.4
2015
€m
0.1
0.3
0.4
The Directors consider that the carrying amount of inventories approximates their replacement value.
Cost of inventories recognised as an expense in the Consolidated Income Statement amounted to €39.0 million during the financial
year (2015: €45.5 million).
16. Trade and other receivables
Trade receivables
Allowance for doubtful debts
Prepayments
Amounts due from subsidiary companies
Other receivables
Group
2016
€m
35.1
(1.4)
33.7
4.8
-
1.1
39.6
Group
2015
€m
33.0
(1.4)
31.6
5.7
-
3.7
41.0
Company
Company
2016
€m
1.1
-
1.1
0.2
115.7
0.4
117.4
2015
€m
1.2
-
1.2
0.2
115.1
2.9
119.4
Credit risk
The Group and Company review all receivables that are past their agreed credit terms and assesses whether any amounts are
irrecoverable, determined by reference to past default experience, together with any particular risk factor applicable to an individual
customer.
The Group and Company extend credit to certain trade customers after conducting a credit risk assessment. Year-end trade
receivables represent 39 days sales at 31 December 2016 (2015: 38 days).
The Group’s trade receivables are analysed as follows:
Not past due
-Within terms
Past due
-Within 3 months
-After 3 months
Gross value
Impairment
Net value
Gross value
Impairment
Net value
2016
€m
32.7
1.9
0.5
35.1
2016
€m
2016
€m
2015
€m
2015
€m
2015
€m
(1.1)
31.6
30.5
(0.9)
29.6
(0.2)
(0.1)
(1.4)
1.7
0.4
33.7
2.3
0.2
33.0
(0.4)
(0.1)
(1.4)
1.9
0.1
31.6
Other InformationFinancial StatementsCorporate GovernanceStrategic Report
118
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
16. Trade and other receivables - continued
The amounts presented in the Statement of Financial Position are net of allowances for doubtful debts. An allowance for doubtful
debts is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the
recoverability of the cash flows.
Movement in the allowance for doubtful debts
Balance at beginning of the financial year
Increase in allowance during the financial year
Balance at end of the financial year
Group
2016
€m
1.4
-
1.4
Group
2015
€m
1.3
0.1
1.4
In determining the recoverability of a trade receivable the Group and Company consider any change in the credit quality of the trade
receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the
exposure being spread over a large number of counterparties and customers. Accordingly, the Directors believe that there is no
further allowance required in excess of the allowance for doubtful debts.
This allowance has been determined by reference to past default experience.
The amounts for prepayments, amounts due from subsidiary companies and other receivables are neither past due nor impaired at 31
December 2016.
17. Cash and cash equivalents
For the purposes of the statement of cash flows, cash and cash equivalents include cash on hand and in banks net of outstanding
bank overdrafts. Cash and cash equivalents at the end of the reporting period as shown in the statement of cash flows can be
reconciled as follows:
Cash and cash equivalents
Cash and cash equivalents
Group
2016
€m
42.2
42.2
Group
2015
€m
25.0
25.0
Company
Company
2016
€m
20.6
20.6
2015
€m
0.9
0.9
Cash and cash equivalents comprise cash held by the Group and Company and short-term bank deposits with an original maturity
of three months or less. The carrying amount of these assets approximates their fair value. The Directors consider the credit risk of
these counterparties to be compatible with the Group’s credit policy and operational requirements.
2016 Annual Report and Financial StatementsIrish Continental Group
119
17. Cash and cash equivalents - continued
The geographic spread by deposit institution for the Group was as follows:
Ireland
United Kingdom
Europe
Total
Group
2016
€m
40.5
0.2
1.5
42.2
Group
2015
€m
22.9
0.8
1.3
25.0
Company
Company
2016
€m
20.6
-
-
20.6
2015
€m
0.9
-
-
0.9
The cash and cash equivalents figure of €42.2 million at 31 December 2016 includes a deposit of €1.4 million (2015: €0.9 million) which
the Group has granted a charge in favour of the Irish Ferries Pension Trustee DAC as continuing security for amounts due under a
deficit funding agreement concluded with the Trustee on behalf of the Irish Ferries Limited Pension Scheme.
18. Share capital
Group and Company
Authorised
2016
Number
2016
€m
2015
Number
Ordinary shares of par value €0.065 each
450,000,000
29.3
450,000,000
Redeemable shares of par value
€0.00001 each
Allotted, called up and fully paid
Ordinary shares
At beginning of the financial year
Share issue
At end of the financial year
4,500,000,000
2016
Number
186,471,890
1,837,500
188,309,390
0.0
29.3
2016
€m
12.1
0.1
12.2
4,500,000,000
2015
Number
184,526,890
1,945,000
186,471,890
2015
€m
29.3
0.0
29.3
2015
€m
12.0
0.1
12.1
The Company has one class of share unit, an ICG Unit, which at 31 December 2016 comprised one ordinary share and nil redeemable
shares. The share unit, nor any share therein, carries no right to fixed income
The number of ICG Units issued during the year was 1,837,500 (2015: 1,945,000) and total consideration received amounted to €2.7
million (2015: €3.5 million). These ICG Units were issued under the Group’s and Company’s share option plans.
Holders of ordinary shares are entitled to such dividend that may be declared from time to time on such shares and are entitled to
attend, speak and vote at the Annual General Meeting of the Company. On return of capital on a winding up, the holder of ordinary
shares is entitled to participate in a distribution of surplus assets of the Company.
Redeemable shares do not entitle holders to any dividend or any right to participate in the profit or assets of the Company other than
to the repayment of a sum equal to the nominal value of 0.001 cent per share on a winding up of the Company. Redeemable shares
do not entitle the holder to attend, speak or vote at the Annual General Meeting. At a General Meeting of the Company on 22 May
2014, shareholders approved redemption at par and the cancellation of all of the Company’s issued Redeemable Shares which was
implemented on 6 June 2014.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 120
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
19. Analysis of Equity
Group and Company
Share premium
The share premium account comprises the excess of monies received in respect of share capital over the nominal value of shares
issued.
Capital reserves
This consists of reserves arising on consolidation and the capital redemption reserve.
Reserves arising on consolidation relate to the acquisition of a subsidiary. At 31 December 2016 the reserve balance stands at €0.1
million. The balance is unchanged from 1 January 2015 and 1 January 2016.
The capital redemption reserve represents the nominal value of share capital repurchased. At 31 December 2016 the reserve balance
stands at €7.2 million (2015: €7.2 million).
Share options reserve
The share options reserve represents the cumulative charge to the Consolidated Income Statement of share options issued which are
not yet exercised and issued as shares.
Hedging reserve
The hedging reserve represents the cumulative amount of gains and losses on hedging instruments arising from effective cash
flow hedges. The cumulative deferred gain or loss on the hedging instrument is recognised in the Income Statement only when the
hedged transaction impacts the profit or loss, or is included as a basis adjustment to the non-financial hedged item, consistent with
the applicable accounting policy.
Translation reserve
Exchange differences relating to the translation of the net assets of the Group’s foreign currency denominated subsidiaries, from
their functional currency into the parent’s functional currency, being Euro, are recognised directly in the translation reserve.
20. Borrowings
Bank loans
Finance lease liabilities
The borrowings are repayable as follows:
On demand or within one year
In the second year
In the third year
In the fourth year
Fifth year and after
Less: Amount due for settlement within 12 months
Amount due for settlement after 12 months
Group
2016
€m
77.7
2.4
80.1
78.4
0.7
0.6
0.3
0.1
80.1
(78.4)
1.7
Group
2015
€m
65.7
3.6
69.3
14.0
53.5
0.7
0.6
0.5
69.3
(14.0)
55.3
Company
Company
2016
€m
-
0.9
0.9
0.3
0.3
0.3
-
-
0.9
(0.3)
0.6
2015
€m
-
1.2
1.2
0.3
0.3
0.3
0.3
-
1.2
(0.3)
0.9
2016 Annual Report and Financial StatementsIrish Continental Group 121
20. Borrowings - continued
Under the terms of the amortising term loan facility, the Group has (i) granted statutory mortgages securing amounts outstanding
under that facility of €37.7 million at 31 December 2016 (2015: €50.7 million), registered on certain of the Group’s vessels (ii) granted a
floating charge over the remaining assets of Zatarga Limited.
The Group’s and Company’s obligations under finance leases are secured by the lessors’ title to the leased assets.
The currency profile of the Group’s borrowings are set out in note 21 (iii).
Company lease obligations at 31 December 2016 of €0.9 million (2015: €1.2 million) are denominated in Euro.
Group finance leases
Minimum lease payments
Present value of
minimum lease payments
Amounts payable under finance leases:
Within one year
In the second to fifth years inclusive
After five years
Less: future finance charges
Present value of lease obligations
Less: amount due for settlement within 12 months
Amount due for settlement after 12 months
2016
€m
0.8
1.9
-
2.7
(0.3)
2.4
(0.7)
1.7
Company finance leases
Minimum lease payments
Amounts payable under finance leases:
Within one year
In the second to fifth years inclusive
Less: future finance charges
Present value of lease obligations
Less: amount due for settlement within 12 months
Amount due for settlement after 12 months
2016
€m
0.3
0.7
1.0
(0.1)
0.9
(0.3)
0.6
2015
€m
1.2
2.6
0.2
4.0
(0.4)
3.6
(1.0)
2.6
2015
€m
0.3
1.1
1.4
(0.2)
1.2
(0.3)
0.9
2016
€m
0.6
1.8
-
2.4
-
2.4
(0.7)
1.7
Present value of
minimum lease payments
2016
€m
0.3
0.6
0.9
-
0.9
(0.3)
0.6
2015
€m
1.0
2.4
0.2
3.6
-
3.6
(1.0)
2.6
2015
€m
0.3
0.9
1.2
-
1.2
(0.3)
0.9
It is the Group’s policy to lease certain of its plant and equipment under finance leases. Lease terms vary from 3 to 7 years. For the
financial year ended 31 December 2016, the average effective lease borrowing rate was 5.5% (2015: 5.5%) in the Group and 5.6% (2015:
5.6%) in the Company. Interest rates are fixed at the contract date, and thus expose the Group and Company to fair value interest rate
risk. All leases are on a fixed repayment basis.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 122
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
20. Borrowings - continued
Bank loan facilities
Unsecured bank overdraft and trade guarantee facility:
Amount utilised – bank overdraft
Amount utilised – trade guarantee
Amount undrawn
Unsecured bank loan facility:
Amount drawn
Amount undrawn
Group
2016
€m
-
0.7
14.3
15.0
40.0
-
40.0
Group
2015
€m
-
0.7
14.3
15.0
15.0
25.0
40.0
Secured bank amortising term loan facility:
Amount outstanding
37.7
50.7
Company
Company
2016
€m
-
-
14.3
14.3
-
-
-
-
2015
€m
-
-
14.3
14.3
-
25.0
25.0
-
At 31 December the Group had total committed facilities of €92.7 million (2015: €105.7 million) which comprised of amounts utilised of
€78.4 million (2015: €66.4 million) and amounts undrawn of €14.3 million (2015: €39.3 million).
The weighted average interest rates paid during the financial year were as follows:
Bank overdrafts
Bank loans
Group
2016
0.7%
2.9%
Group
2015
0.9%
3.2%
Company
Company
2016
2015
0.7%
-
0.9%
-
2016 Annual Report and Financial StatementsIrish Continental Group 123
20. Borrowings - continued
The Group has the following borrowing facilities available with its lenders;
(i) A bank overdraft and trade guarantee facility with permitted drawing amounts of €15.0 million. At 31 December 2016, €0.7 million
(2015: €0.7 million) was utilised on this facility by way of trade guarantees and €nil was utilised as an overdraft. The maturity date
of the bank overdraft and trade guarantee facility is June 2017. Interest rates are calculated by reference to the lenders prime
rate plus a fixed margin. This facility, available for drawing by the Company and certain subsidiaries, is reviewed annually and is
repayable on demand. This facility is unsecured but is cross guaranteed between certain subsidiaries within the Group.
(ii) A multicurrency revolving credit facility with permitted drawing amounts of €40.0 million. At 31 December 2016, €40.0 million
(2015: €15.0 million) was drawn under this facility. Interest rates are arranged at floating rates, calculated by reference to EURIBOR
or LIBOR settings depending on currency drawn plus an agreed margin which varies with the Group’s net debt to EBITDA ratio,
which creates a cash flow interest rate risk. This facility is available for drawing by the Company and certain subsidiaries and
matures on 30 September 2017. This facility is unsecured but is cross guaranteed between certain subsidiaries within the Group.
(iii) An amortising term loan facility with an outstanding balance at 31 December 2016 of €37.7 million (2015: €50.7 million). This is
repayable in quarterly instalments together with a final payment of €31.2 million on maturity on 30 September 2017. The interest
rate is calculated by reference to EURIBOR plus a fixed margin. Under the facility terms the floating interest rate has been
swapped for fixed rates to match exactly the quarterly principal repayments. The derivative financial instrument underlying this
swap has been fair valued at 31 December 2016 as set out in note 21(i). This facility is secured by vessel mortgages on certain of
the Group’s vessels and by a floating charge over the assets of Zatarga Limited.
The Group’s financing facilities contain provisions that where there is a change in control of the company, lenders may cancel the
facilities and declare all utilisations immediately due and payable. A change of control is where any person or group of persons acting
in concert becomes the owner of more than fifty per cent of the voting share capital of the Company.
In the opinion of the Directors, the Group and Company are in compliance with the covenants contained in its banking agreements as
of 31 December 2016.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 124
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
21. Financial instruments and risk management
The Group’s activities expose it to a variety of financial risks including interest rate risk, foreign currency risk, liquidity risk, credit
risk, market risk and commodity price risk. The Group’s funding, liquidity and exposure to interest and foreign exchange rate risks
are managed by the Group’s treasury and accounting departments. A combination of derivative financial instruments and treasury
management techniques are used to manage these underlying risks. In addition to the disclosures below please refer to the Financial
Review on pages 40 to 41 for further disclosures.
(i) Categories of financial instruments
Financial assets and liabilities
2016
Trade and other receivables
Cash and cash equivalents
Borrowings
Derivative financial instruments
Trade and other payables
2015
Trade and other receivables
Cash and cash equivalents
Borrowings
Derivative financial instruments
Trade and other payables
Loans
and
receivables
at amortised
cost
Cash flow
hedges at fair
value
Financial
liabilities at
amortised
cost Carrying value
Fair value
€m
€m
€m
€m
€m
39.6
42.2
-
-
-
-
-
-
0.2
-
-
-
80.1
-
46.7
39.6
42.2
80.1
0.2
46.7
39.6
42.2
80.5
0.2
46.7
Loans
and receivables
at amortised
cost
Cash flow
hedges at fair
value
Financial
liabilities at
amortised cost
Carrying value
Fair value
€m
€m
€m
€m
€m
41.0
25.0
-
-
-
-
-
-
0.5
-
-
-
69.3
-
43.0
41.0
25.0
69.3
0.5
43.0
41.0
25.0
66.3
0.5
43.0
Fair value hierarchy
The fair value of financial assets and financial liabilities that are carried in the Statement of Financial Position at fair value, are
classified within Level 2 (2015: Level 2) of the fair value hierarchy as market observable inputs (forward rates and yield curves) which
are used in arriving at fair values.
The Group has adopted the following fair value measurement hierarchy for financial instruments:
• Level 1: quoted (unadjusted) prices in active markets for identical assets and liabilities;
• Level 2: other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either
directly (i.e. as prices) or indirectly (i.e. derived from prices); and
• Level 3: techniques that use inputs which have a significant effect on the recorded fair value that are not based on observable
market data.
The following are the significant methods and assumptions used to estimate fair values of financial assets and financial liabilities:
2016 Annual Report and Financial StatementsIrish Continental Group 125
21. Financial instruments and risk management - continued
Trade and other receivables / payables
For trade receivables and trade payables, with average settlement periods of 39 days (2015: 38 days) and 72 days (2015: 64 days)
respectively the carrying value less allowance for doubtful debts, where appropriate, is estimated to reflect fair value.
Cash and cash equivalents
For cash and cash equivalents, all with a maturity of three months or less, the nominal amount is estimated to reflect fair value.
Borrowings
The fair value of bank loans has been determined based on a discounted cash flow analysis with the most significant input being
the discount rate reflecting the Group’s own credit risk. For finance leases the Group considers that the implicit interest rate used to
calculate the carrying value includes a fair estimate of counterparty risk and the carrying value approximates fair value.
Derivative financial instruments
Derivative financial instruments are measured in the Statement of Financial Position at fair value. The fair values of derivative
financial instruments which comprised interest rate swaps is based on the movement in the market cost of credit derivatives
between the commencement and the balance sheet date. The fair value of derivative financial instruments was a liability of €0.2
million as at 31 December 2016 (2015: €0.5 million) and consisted entirely of interest rate swaps.
(ii) Interest rate risk
The Group has an exposure to interest rate risk arising on changes in Euro and Sterling interest rates.
Interest rates on finance leases payable are fixed at the contract date for the lease term. Under the terms of its bank loan facilities
the Group has swapped the floating interest rate on the amortising term loan for fixed rates to match the loan amortisation schedule
for the loan term. At 31 December 2016, 50% (2015: 78%) of Group borrowings were at fixed rates at an average effective rate of 3.5%
(2015: 3.5%) with an average repricing period of 0.9 years (2015: 1.9 years). The agreement to fix interest rates has exposed the Group
to fair value interest rate risk and the derivative instrument to effect this was fair valued at 31 December 2016 as a liability of €0.2
million (2015: €0.5 million).
At 31 December 2016, interest rates on short term bank deposits and short term borrowings were contracted for terms of less than
three months at average effective rates of 0.1% (2015: 0.4%) and 1.7% (2015: 1.7%) respectively.
Sensitivity
The Group has prepared calculations to measure the estimated change to the Consolidated Income Statement and Equity of either
an instantaneous increase or decrease of 100 basis points (1%) in market interest rates or a 10% strengthening or weakening in
Euro against all other currencies, from the rates applicable at 31 December 2016, for each class of financial instruments with all
other variables remaining constant. The sensitivity analysis excludes the impact of market risks on net post-employment benefit
obligations and taxation. This analysis is for illustrative purposes only, as in practice market rates rarely change in isolation. The
interest rate sensitivity analysis is based on the assumption that changes in market interest rates affect the interest income or
expense of variable financial instruments. No account has been taken of the effect of interest rate changes on derivative financial
instruments as the exposure to these at 31 December 2016 and 31 December 2015 was immaterial. The amounts generated from the
sensitivity analysis are estimates of the impact of market risks assuming that specified changes occur. Actual results in the future
may differ materially from these results due to developments in the global financial markets which may cause fluctuations in interest
and exchange rates to vary from the hypothetical amounts disclosed below, which therefore should not be considered a projection of
likely future events and losses.
Under these assumptions, a one percentage point increase or decrease in market interest rates for all currencies in which the Group
had borrowings and derivative financial instruments at 31 December 2016 would have decreased or increased profit before tax and
equity by approximately €0.4 million (2015: €0.2 million).
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 126
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
21. Financial instruments and risk management - continued
(iii) Foreign currency risk management
The Group publishes its consolidated financial statements in Euro and conducts business in different foreign currencies. As a
result, it is subject to foreign exchange risk due to exchange rate movements which will affect the Group’s transaction costs and the
translation of the results and underlying net assets of its foreign operations.
The Group undertakes certain transactions denominated in foreign currencies. Hence, exposure to exchange rate fluctuations arises.
Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts.
Sensitivity
The currency risk sensitivity analysis is based on the assumption that all cash flow hedges are highly effective.
Under the assumptions; (i) a 10% strengthening in Euro exchange rates against all currencies, profit before tax would have increased
by €1.1 million (2015: €0.6 million) and equity (before tax effects) would have decreased by €0.3 million (2015: €0.2 million); (ii) a 10%
weakening in Euro exchange rates against all currencies, profit before tax would have decreased by €1.4 million (2015: €0.7 million)
and equity (before tax effects) would have increased by €0.4 million (2015: €0.2 million).
The currency profile of the carrying amounts of the Group’s monetary assets and monetary liabilities at the statement of financial
position date are as follows:
2016
Trade and other receivables1
Cash and cash equivalents
Total assets
Trade and other payables
Bank loans
Derivative financial instruments
Finance leases
Total liabilities
Net current (liabilities) / assets
2015
Trade and other receivables1
Cash and cash equivalents
Total assets
Trade and other payables
Bank loans
Derivative financial instruments
Finance leases
Total liabilities
Net current (liabilities) / assets
1. Excludes allowance for doubtful debts
Euro
€m
34.0
33.1
67.1
32.8
77.7
0.2
2.4
113.1
(46.0)
Euro
€m
32.3
9.2
41.5
31.3
65.7
0.5
3.0
100.5
(59.0)
Sterling
€m
6.8
8.9
15.7
10.6
-
-
-
10.6
5.1
Sterling
€m
7.7
15.6
23.3
9.8
-
-
0.6
10.4
12.9
US Dollar
€m
0.2
0.2
0.4
3.3
-
-
-
3.3
(2.9)
US Dollar
€m
2.4
0.2
2.6
1.9
-
-
-
1.9
0.7
Total
€m
41.0
42.2
83.2
46.7
77.7
0.2
2.4
127.0
(43.8)
Total
€m
42.4
25.0
67.4
43.0
65.7
0.5
3.6
112.8
(45.4)
2016 Annual Report and Financial StatementsIrish Continental Group 127
21. Financial instruments and risk management - continued
(iv) Commodity price risk
In terms of commodity price risk the Group’s vessels consume heavy fuel oil (HFO), marine diesel / gas oil (MDO/MGO) and lubricating
oils, all of which continue to be subject to price volatility. The Group must also manage the risks inherent in changes to the
specification of fuel oil which are introduced under international and EU law from time to time.
The Group’s policy has been to purchase these commodities in the spot markets and to remain unhedged. Bunker costs of the
Container and Terminal division are offset to a large extent by the application of prearranged price-adjustments with our customers.
Similar arrangements are in place with freight customers in the Ferries division. In the passenger sector, changes in bunker costs are
included in the ticket price to the extent that market conditions will allow.
(v) Liquidity risk
The Group and Company is exposed to liquidity risk which arises primarily from the maturing of short-term and long-term debt
obligations and derivative transactions. The Group and Company’s policy is to ensure that sufficient resources are available either
from cash balances, cash flows or undrawn committed bank facilities, to ensure all obligations can be met as they fall due. To achieve
this objective, the Group and Company:
• monitors credit ratings of institutions with which the Group and Company maintains cash balances;
•
limits maturity of cash balances; and
• borrows the bulk of its debt needs under committed bank lines or other term financing and by policy maintains a minimum level
of undrawn committed facilities.
At each year end, the Group and Company’s rolling liquidity reserve (which comprises cash and undrawn committed facilities and
which represents the amount of available cash headroom in the Group and Company’s funding structure) was as follows:
Cash and cash equivalents
Committed undrawn facilities
Liquidity reserve
Group
2016
€m
42.2
14.3
56.5
Group
2015
€m
25.0
39.3
64.3
Company
Company
2016
€m
20.6
14.3
34.9
2015
€m
0.9
39.3
40.2
Management monitors rolling cash flow forecasts on an on-going basis to determine the adequacy of the liquidity position of the
Group and Company. This process also incorporates a longer term liquidity review to ensure refinancing risks are adequately catered
for as part of the Group and Company’s strategic planning.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report
128
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
21. Financial instruments and risk management - continued
Liquidity analysis
The following table sets out the maturity and liquidity analysis of the Group’s financial liabilities and net settled derivative financial
liabilities into the relevant maturity groupings based on the remaining period at the statement of financial position date to the
contractual maturity date:
Liquidity Table 2016
Liabilities
Trade and other payables
Bank loans
Finance leases
Derivative financial instruments
Total liabilities
Weighted
average period
until maturity
Carrying
amount
Contractual
amount
Less than 1
year
Between
1 – 2 years
Between
2 – 5 years
More than 5
years
Years
€m
€m
€m
0.7
1.9
0.7
46.7
77.7
2.4
0.2
46.7
78.1
2.7
0.2
46.7
78.1
0.8
0.2
127.0
127.7
125.8
€m
-
-
0.7
-
0.7
€m
-
-
1.2
-
1.2
€m
-
-
-
-
-
Liquidity Table 2015
Liabilities
Trade and other payables
Bank loans
Finance leases
Derivative financial instruments
Total liabilities
Weighted
average period
until maturity
Carrying
amount
Contractual
amount
Less than 1
year
Between
1 – 2 years
Between
2 – 5 years
More than 5
years
Years
€m
€m
€m
€m
1.3
2.1
1.1
43.0
65.7
3.6
0.5
43.0
68.2
4.0
0.5
112.8
115.7
43.0
14.6
1.2
0.3
59.1
-
53.6
0.9
0.2
54.7
€m
-
-
1.7
-
1.7
€m
-
-
0.2
-
0.2
(vi) Credit risk
The Group and Company monitors its credit exposure to its counterparties via their credit ratings (where applicable) and limits its
exposure to any one party to ensure that there are no significant concentrations of credit risk. The notional amounts of financial
instruments used in interest rate and foreign exchange management do not represent the credit risk arising through the use of these
instruments. The immediate credit risk of these instruments is generally estimated by the fair value of contracts with a positive
value. Credit risk in relation to trade and other receivables and cash and cash equivalents has been discussed in notes 16 and 17
respectively. The maximum exposure to credit risk is represented by the carrying amounts in the Statement of Financial Position.
2016 Annual Report and Financial StatementsIrish Continental Group 129
21. Financial instruments and risk management - continued
(vii) Capital management
The Group’s objective when managing capital is to safeguard the Group’s ability to continue as a going concern in order to provide
returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the overall cost of
capital.
No changes were made in the objectives, policies or processes for managing capital during the financial years ended 31 December
2016 and 31 December 2015.
The capital structure of the Group consists of net debt (borrowings as detailed in note 20 offset by cash and cash equivalents) and
equity of the Group (comprising issued capital, reserves and retained earnings as detailed in notes 18 and 19).
The Group is not subject to any externally imposed capital requirements.
In managing its capital structure, the primary focus of the Group is the ratio of consolidated net debt as a multiple of EBITDA.
Maximum levels for this ratio are set under Board approved policy so as to ensure compliance with banking covenants under the
Group’s loan agreements. These policy requirements were achieved at 31 December 2016 and 31 December 2015. At 31 December
2016, the ratio of consolidated net debt as a multiple of EBITDA (reported basis) improved to 0.5 times (2015: 0.6 times).
(viii) Derivative financial instruments
The fair value of derivative financial instruments at 31 December 2016 was a liability of €0.2 million (2015: €0.5 million). All cash flow
hedges were effective and fair value losses of €0.1 million (2015: losses of €0.2 million) were recorded in other comprehensive income
and net settlements amounted to €0.4 million (2015: €0.4 million).
The Group utilised interest rate swaps during the years ended 31 December 2016 and 31 December 2015. The Group entered into
an agreement whereby it swapped its EURIBOR floating interest rate exposure from 1 January 2013 under the amortising term loan
facility for fixed interest rates. The notional amount of this contract at 31 December 2016 was €37.7 million (2015: €50.7 million) and
the notional amounts for all future periods match the amortising schedule of the loan agreement. This interest rate swap agreement
is designated and is effective as a cash flow hedge. The estimated fair value of this agreement based on quoted market prices for
equivalent instruments at 31 December 2016 was a liability of €0.2 million (2015: €0.5 million). The estimated fair value has been
accumulated in equity and will be subsequently recognised in the Consolidated Income Statement in the same period as the hedged
expense.
The Company did not utilise any other interest rate swaps during the years ended 31 December 2016 and 31 December 2015.
The Group and Company utilises currency derivatives to hedge short term future cash flows in the management of its exchange rate
exposures. At 31 December 2016 and 31 December 2015, there were no outstanding forward foreign exchange contracts.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 130
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
22. Deferred tax liabilities
The Company and its subsidiaries, where appropriate, have elected to be taxed under the tonnage tax scheme in respect of all eligible
activities. Certain activities will not fall within the tonnage tax scheme and will continue therefore to be subject to standard rates of
corporation tax. These activities give rise to deferred tax assets and liabilities and the impact of these is shown below.
In both the Group and the Company taxable losses in excess of expected future reversing taxable temporary differences, have been
incurred that are available for offset against future taxable profits. Deferred tax assets are recognised to the extent that it is probable
that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilised. A deferred
tax asset has not been recognised in respect of these losses where suitable taxable profits are not expected to arise. The Group
estimates the probable amount of future taxable profits, using assumptions consistent with those employed in the Group’s financial
planning process, and taking into consideration applicable tax legislation in the relevant jurisdiction. These calculations require the
use of estimates.
The Group has not provided deferred tax in relation to temporary differences applicable to investments in subsidiaries on the basis
that the Group can control the timing and realisation of these temporary differences and it is probable that the temporary difference
would be immaterial and will not reverse in the foreseeable future.
The following are the deferred tax liabilities and assets recognised by the Group, and the movements thereon, during the current and
prior reporting periods.
Group 2016
At beginning of the financial year
Credit to the Consolidated Income Statement
Credit to the Consolidated Statement of Comprehensive Income
At end of the financial year
Group 2015
At beginning of the financial year
Credit to the Consolidated Income Statement
Charge to the Consolidated Statement of Comprehensive Income
At end of the financial year
Accelerated tax
depreciation
Retirement benefit
obligation
€m
3.0
(0.4)
-
2.6
€m
0.8
-
(0.7)
0.1
Accelerated tax
depreciation
Retirement benefit
obligation
€m
3.1
(0.1)
-
3.0
€m
0.7
(0.2)
0.3
0.8
Total
€m
3.8
(0.4)
(0.7)
2.7
Total
€m
3.8
(0.3)
0.3
3.8
Deferred tax is recognised in the Consolidated Statement of Comprehensive Income to the extent it arises on income or expenses
recognised in that statement.
Company
There are no deferred tax liabilities and assets recognised by the Company during the current and prior reporting periods.
2016 Annual Report and Financial StatementsIrish Continental Group 131
22. Deferred tax liabilities - continued
Unrecognised deferred tax assets – Group and Company
The estimated value of the deferred tax asset not recognised is €0.1 million (2015: €0.1 million) in the Group and €0.1 million (2015:
€0.1 million) in the Company. Deferred tax assets are not recognised as it is not probable that taxable profits will be available against
which deductible temporary differences can be utilised. These amounts are analysed as follows:
Tax losses carried forward
Other temporary differences
23. Trade and other payables
Within 1 year
Trade payables and accruals
Payroll taxes
Social insurance cost
Value added tax
Amounts due to subsidiary companies
Group
2016
€m
0.1
-
0.1
Group
2016
€m
43.2
1.3
0.4
1.8
-
46.7
Group
2015
€m
0.1
-
0.1
Group
2015
€m
39.2
1.3
0.4
2.1
-
43.0
Company
Company
2016
€m
0.1
-
0.1
2015
€m
0.1
-
0.1
Company
Company
2016
€m
3.8
0.1
-
0.1
44.4
48.4
2015
€m
3.9
0.1
-
0.2
18.0
22.2
Trade payables and accruals comprise amounts outstanding for trade purchases and on-going costs, and, are non-interest bearing.
The average trade credit period outstanding was 72 days at 31 December 2016 (2015: 64 days). Certain suppliers reserve the right to
charge interest on balances past their due date.
The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 132
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
24. Provisions
Claims provision
At beginning of the financial year
Utilisation of provision
Increase in provision
At end of the financial year
Analysed as follows:
Current liabilities
Non-current liabilities
Group
2016
€m
1.0
-
0.2
1.2
0.6
0.6
1.2
Group
2015
€m
1.0
(0.1)
0.1
1.0
0.5
0.5
1.0
Company
Company
2016
€m
0.2
-
-
0.2
0.1
0.1
0.2
2015
€m
-
-
0.2
0.2
0.1
0.1
0.2
The claims provision comprises the insurance excess payable by the Group and Company in a number of potential compensation
claims, arising in the normal course of business. No provision has been recognised for instances that may have been incurred prior to
the financial year end, but for which no claim has been received.
25. Deferred grant
Group
At beginning of the financial year
Amortisation
At end of the financial year
Analysed as follows:
Current liabilities
Non-current liabilities
2016
€m
0.5
(0.1)
0.4
0.1
0.3
0.4
2015
€m
0.6
(0.1)
0.5
0.1
0.4
0.5
The deferred grant is in respect of capital assets and is amortised to the Consolidated Income Statement over the life of the assets.
26. Commitments
Group
2016
€m
Group
2015
€m
Commitments for the acquisition of property, plant and equipment – approved and contracted
for
122.2
10.1
2016 Annual Report and Financial StatementsIrish Continental Group 27. Operating lease agreements
133
Group
2016
€m
Group
2015
€m
Minimum lease payments under operating leases recognised as an expense during the
financial year
12.8
14.8
At the statement of financial position date outstanding commitments under non-cancellable operating leases fall due as follows:
Within one year
In the second to fifth years inclusive
After five years
Group
2016
€m
11.0
15.6
64.2
90.8
Group
2015
€m
7.8
10.8
62.6
81.2
Group
Operating lease payments represent rentals payable by the Group for certain of its properties, for the charter of vessels and for
the hire of containers and other equipment. Excluding the lease with Dublin Port, which has an outstanding term of 106 years, the
outstanding terms of the operating leases within the Group at 31 December 2016 range from less than 1 month to 5 years. Property
rentals are fixed for periods ranging from 1 to 7 years.
28. Operating lease income
The aggregate future minimum lease payments receivable under non-cancellable operating leases for the Group and Company are as
follows:
Within one year
In the second to fifth years inclusive
Group
2016
€m
4.1
8.2
12.3
Group
2015
€m
4.1
1.9
6.0
Company
Company
2016
€m
0.3
0.7
1.0
2015
€m
0.3
1.1
1.4
The Group charters vessels under operating leases to third parties.
The Company leases certain assets under an operating lease to a subsidiary company.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 134
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
29. Share-based payments
The Group and Company operate equity settled share option schemes, the 1998 and 2009 share option plans. Certain employees of
the Group and Company have been issued with share options under the Group’s and Company’s plans.
Options granted under the 1998 share option plan are subject to the following performance criteria:
1. Basic options may only be exercised if Earnings Per Share growth between the financial year immediately preceding the financial
year in which an option is granted and the financial year immediately preceding the financial year in which the option is exercised
is at least 2% above the increase in the Consumer Price Index compounded per annum over such period.
2. Super options may only be exercised if the Earnings Per Share growth over any period of five financial years since the financial
year immediately preceding the financial year in which the option was granted is such as to place the Company in the top quartile
of companies in the Irish Stock Exchange Index (“ISEQ Index”) by reference to Earnings Per Share growth over the same period
and during that period the annual Earnings Per Share growth is at least 10% above the increase in the Consumer Price Index
compounded per annum over such period.
Options granted under the 2009 share option plan are subject to the following performance criteria:
1. Basic Tier Options will vest and become exercisable three years after the date of grant once Earnings Per Share growth over any
period of three consecutive financial years commencing at the financial year immediately preceding the date of grant is at least
2% above the increase in the Consumer Price Index compounded per annum over such period.
2. Second Tier Options will vest and become exercisable from the fifth anniversary of grant once (i) Earnings Per Share growth over
any period of five consecutive financial years commencing at the financial year immediately preceding the date of grant place
the Company in the top quartile of companies either (a) listed on the Irish Stock Exchange or (b) included in the London Stock
Exchange FTSE 250, by reference to Earnings Per Share growth over the same period and (ii) over that period the Earnings Per
Share growth is at least 10% above the increase in the Consumer Price Index compounded per annum over such period.
The number of shares over which options may be granted may not exceed 10% of the shares of the Company in issue.
Options are forfeited where the grantee ceases employment with the Group or Company unless retention, for a maximum period of 12
months, is permitted by the Remuneration Committee. The Scheme Rules allow for the early exercise of outstanding options upon a
change in control of the Company.
The number and weighted average exercise price of share options granted under the above plans is as follows:
2016
2015
Number
of share
options
8,385,000
-
(1,948,500)
(155,000)
6,281,500
Weighted
average
exercise
price
€
2.22
-
1.48
3.36
2.42
Number
of share
options
8,365,000
2,030,000
(1,980,000)
(30,000)
8,385,000
Outstanding at 1 January
Granted during the year
Exercised during the year
Forfeited during the year
Outstanding at 31 December
Exercisable at 31 December
2,866,500
1.95
4,815,000
Weighted average share price
at date of exercise of options
Weighted average remaining contractual
life of options outstanding at year end
5.38
4.9 years
4.2 years
Weighted
average
exercise
price
€
1.80
3.58
1.83
3.38
2.22
1.76
4.14
2016 Annual Report and Financial StatementsIrish Continental Group
135
Price
€
1.067
1.067
2.132
2.132
1.570
1.570
2.970
2.970
3.580
3.580
2016
Options
2015
Options
-
-
890,000
1,050,000
500,000
540,000
1,100,000
1,475,000
926,500
2,866,500
1,200,000
4,815,000
1,200,000
152,500
152,500
955,000
955,000
3,415,000
6,281,500
1,200,000
180,000
180,000
1,005,000
1,005,000
3,570,000
8,385,000
29. Share-based payments - continued
The exercise prices of options outstanding at 31 December are as follows:
Exercisable:
1998 Share Option Plan
Basic Options
Super Options
Basic Options
Super Options
2009 Share Option Plan
Basic Tier Options
Exercisable at 31 December
Not Yet Exercisable:
2009 Share Option Plan
Second Tier Options
Basic Tier Options
Second Tier Options
Basic Tier Options
Second Tier Options
Not Yet Exercisable at 31 December
Outstanding at 31 December
Under Group equity settled share based payment schemes the maximum life of a share option is ten years, these are measured at fair
value (excluding the effect of non-market based vesting conditions) at the date of grant. Fair value is measured using the Binomial
option pricing model. The expected life used in the model has been adjusted, based on management’s best estimates, for the effects
of non-transferability, exercise restrictions and behavioural considerations.
On 1 January 2015 (start of comparative period) outstanding options had been granted on 13 April 2005, 18 September 2006, 19
December 2007, 26 March 2012, 1 September 2014 and 5 March 2015. The estimated fair values of the options are as follows:
Year of Grant
2015
Basic
Tier
2015
Second
Tier
2014
Basic
Tier
2014
Second
Tier
2012
Basic
Tier
2012
Second
Tier
Fair value of option
€0.4528
€0.5581
€0.2992
€0.4449
€0.324
€0.368
Year of Grant
Fair value of option
2007
€0.922
2006
€0.443
2005
€0.401
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 136
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
29. Share-based payments - continued
The inputs into the model in the respective years of grant were as follows:
Year of Grant
At date of grant:
Weighted average share price
Weighted average exercise price
Expected volatility
Expected life
Risk free rate
Expected dividend yield
Year of Grant
Weighted average share price
Weighted average exercise price
Expected volatility
Expected life
Risk free rate
Expected dividend yield
2015
Basic
Tier
€3.580
€3.580
29%
7 years
0.090%
5.16%
2015
Second
Tier
€3.580
€3.580
31%
9 years
0.299%
4.72%
2014
Basic
Tier
€2.970
€2.970
27%
7 years
0.439%
5.83%
2014
Second
Tier
€2.970
€2.970
30%
9 years
0.765%
4.89%
2012
Basic
Tier
€1.570
€1.570
34%
7 years
1.323%
4.97%
2012
Second
Tier
€1.570
€1.570
33%
9 years
1.799%
4.41%
2007
2006
2005
€2.132
€2.132
35%
€1.067
€1.067
35%
€1.000
€1.000
36%
10 years
10 years
10 years
4.260%
1.64%
3.765%
1.87%
3.293%
1.69%
Expected volatility was determined by calculating the historical volatility of the Company’s share price over the previous 7 years in
the case of 2012, 2014 and 2015 basic tier options, and 9 years in the case of 2012, 2014 and 2015 second tier options and 10 years
in respect of previous option grants. The fair value determined at the grant date of the equity settled share-based payments is
expensed on a straight-line basis over the vesting period, based on the Group’s estimate of the shares that will eventually vest, and
adjusted for the effect of non-market based vesting conditions.
In 2016, the share-based payment expense recognised in the Consolidated Income Statement was €0.2 million (2015: €0.1 million) and
in the Income Statement of the Company was €0.1 million (2015: €nil).
The share-based payment expense has been classified in the Consolidated Income Statement as follows:
Employee benefits expense
Total share-based payment expense
Group
2016
€m
0.2
0.2
Group
2015
€m
0.1
0.1
Company
Company
2016
€m
0.1
0.1
2015
€m
-
-
Share-based payment expense of €32,000 (2015: €4,000) relates to the Directors of the Group. The balance on the share option
reserve in the Consolidated Statement of Financial Position at 31 December 2016 is €2.4 million (2015: €3.3 million). The balance on
the share option reserve in the Company Statement of Financial Position at 31 December 2016 is €2.4 million (2015: €3.3 million).
2016 Annual Report and Financial StatementsIrish Continental Group 137
30. Retirement benefit schemes
(a) Group retirement benefit schemes
The Group operates defined contribution pension schemes in all of its main operating locations. The Group also has defined benefit
obligations as set out below. Scheme assets are held in separate trustee administered funds.
Defined Contribution Scheme
The Group operates a defined contribution pension scheme, which provides retirement and death benefits for all recently hired
employees. The total cost charged in the Consolidated Income Statement of €0.1 million (2015: €0.1 million) represents employer
contributions payable to the externally administered defined contribution pension scheme at rates specified in the rules of the
scheme. There was €nil in outstanding contributions included in trade and other payables at 31 December 2016 (2015: €nil).
Defined Benefit Obligations
(i) Group sponsored schemes
The Group operates contributory defined benefit obligations, which provide retirement and death benefits for other employees who
are not members of the defined contribution pension scheme. The defined benefit obligations provide benefits to members in the
form of a guaranteed level of pension payable for life, the level of the benefits depend on the member’s length of service and salary.
The assets of these schemes are held separately from those of the Group in schemes under the control of trustees. The trustees
are responsible for ensuring the schemes are run in accordance with the applicable trust deed and the pension laws of the relevant
jurisdiction. The trustees invest the funds in a range of assets with the objective of maximising the fund return whilst minimising
the cost of funding the scheme at an acceptable risk profile. In assessing the risk profile the trustees take account of the nature and
duration of the liabilities and review investment strategy regularly.
The pension contributions paid in the year ended 31 December 2016 amounted to €3.7 million (2015: €4.3 million) while the current
service cost charged to the Consolidated Income Statement amounted to €1.9 million (2015: €1.9 million). A past service credit of €nil
(2015: €0.3 million) is recognised as a credit in the employee benefits expense note. The past service credit relates to reduction of
benefits applied by the trustee to recoup the cost of pension levies imposed on schemes resident in Ireland. At 31 December 2016,
there were 783 pensioners in receipt of pension payments from the Group’s schemes (2015: 768).
In 2015, one of the Group’s defined benefit obligations which had no employed members was wound up. The scheme assets at
the date of wind up, amounting to €4.4 million, were utilised in full to secure the accrued benefits of the deferred members and
pensioners. The actuary determined, as at date of wind-up, that the scheme assets equated to the actuarial value of the accrued
benefits and that no augmentation cost or curtailment gain arose.
In 2014 the Group concluded a deficit funding agreement with the trustee of the Group’s main defined benefit obligations, the Irish
Ferries Limited Pension Scheme. Under the terms of the agreement the Company makes deficit payments to the scheme of €1.5
million per annum, adjusted for inflation, for a projected period up to 2023, or until the deficit is eliminated if earlier, with additional
payments of €0.5 million per annum to an escrow account, the balance of which will also be payable to the scheme in certain
circumstances.
The pension charges and payments in respect of the schemes are in accordance with the advice of professionally qualified actuaries.
The latest actuarial valuation reports for these schemes, which are not available for public inspection, are dated between 29 June
2012 and 1 April 2015. The valuations employed for disclosure purposes have been based on the most recent funding valuations for
each scheme adjusted by the independent actuaries to allow for the accrual of liabilities up to 31 December 2016 and to take account
of financial conditions at this date. The present value of the defined benefit obligation, and the related current service cost and past
service credit, were measured using the projected unit credit method and assets have been valued at bid value.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 138
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
30. Retirement benefit schemes - continued
(ii) Merchant Navy Officers Pension Fund (MNOPF)
In addition to the pension schemes operated by the Group, certain employees are members of the MNOPF, an industry wide multi-
employer scheme. The latest actuarial valuation of the scheme, which is available for public inspection, is dated 31 March 2012,
which disclosed a funding shortfall of £152 million. The MNOPF trustee subsequently issued contribution demands on participating
employers. The share of the Group in the MNOPF as advised by the trustees is 1.53% (2015: 1.53%). Disclosures relating to this scheme
are based on these allocations.
The valuation at 31 December 2016 is based on the actuarial deficit contributions notified to the Group in May 2013 by the Trustee
based on the deficit as at 31 March 2012 less any payments made thereof by the Group.
The share of the overall deficit in the MNOPF apportioned to the Group at 31 December 2016 is €nil (2015: €0.5 million). During the
year the Group made payments of €0.5 million (2015: €1.1 million) to the trustees.
(iii) Principal risks and assumptions
The Group is exposed to a number of actuarial risks as set out below:
Investment risk
The pension schemes hold investments in asset classes such as equities which are expected to provide higher returns than other
asset classes over the long-term, but may create volatility and risk in the short-term. The present value of the defined benefit
obligations liability is calculated using a discount rate by reference to high quality corporate bond yields; if the future achieved return
on scheme assets is below this rate, it will create a deficit.
Salary risk
The present value of the defined benefit liability is calculated by reference to the projected salaries of scheme participants at
retirement based on salary inflation assumptions. As such, any variation in salary versus assumption will vary the schemes liabilities.
Life expectancy risk
The present value of the defined benefit obligations liability is calculated by reference to the best estimate of the mortality of scheme
participant’s both during and after their employment. An increase in the life expectancy of the scheme participants will change the
scheme liabilities.
2016 Annual Report and Financial StatementsIrish Continental Group 139
30. Retirement benefit schemes - continued
Inflation risk
A significant proportion of the benefits under the plans are linked to inflation with higher inflation leading to higher liabilities.
The Directors have taken independent actuarial advice on the key judgements used in the estimate of retirement benefit scheme
assets and liabilities.
The principal assumptions used for the purpose of the actuarial valuations were as follows:
Sterling Liabilities
Euro Liabilities
2016
2015
2016
2015
Discount rate
Inflation rate
Rate of annual increase of pensions in payment
Rate of increase of pensionable salaries
2.50%
3.45%
3.15%
1.00%
3.75%
3.10%
2.90%
1.44%
1.70%
1.60%
2.20%
1.50%
0.70% - 0.80%
0.60% - 0.70%
0.00% - 1.00%
0.00% - 1.00%
IAS 19 Employee Benefits provides that the discount rate used to value retirement benefits should be determined by reference to
market yields on high quality corporate bonds consistent with the duration of the liabilities. Due to a narrow bond universe the Group
defines high quality bonds in the Eurozone as those rated AA or higher by at least one rating agency. In respect of Sterling schemes,
corporate bonds must be rated AA, or higher, by at least two rating agencies.
The average life expectancy used in all schemes at age 60 is as follows:
2016
Male
Female
2015
Male
Female
Current retirees
Future retirees
26.1 years
28.5 years
28.9 years
30.8 years
26.0 years
27.6 years
28.9 years
30.2 years
Assumptions regarding life expectancies are set based on actuarial advice in accordance with published statistics and experience in
each jurisdiction.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 140
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
30. Retirement benefit schemes - continued
Sensitivity of pension liability judgemental assumptions
The Group’s total obligation in respect of defined benefit obligations is calculated by independent, qualified actuaries, updated at
least annually and totals €288.3 million at 31 December 2016 (2015: €268.8 million). At 31 December 2016, the Group also has scheme
assets totalling €274.8 million (2015: €263.7 million), giving a net pension deficit of €13.5 million (2015: deficit of €5.1 million). The size
of the obligation is sensitive to actuarial assumptions. The sensitivity analyses below are based on a change in an assumption while
holding all other assumptions constant with the exception of the rate of inflation assumption which impacts other inflation linked
assumptions. The sensitivity analyses intends to provide assistance in understanding the sensitivity of the valuation of pension
liabilities to market movements on discount rates, inflation rates and mortality assumptions for scheme beneficiaries. The analyses
are for illustrative purposes only as in practice assumptions rarely change in isolation. There has been no change from the prior year
in the methods and assumptions used in preparing the sensitivity analyses below.
Assumption
Change in assumption
Impact on Euro schemes
liabilities
Impact on Sterling scheme
liabilities
Combined impact on
liabilities
Discount rate
Rate of inflation*
Rate of mortality
0.5% increase in
discount rate
0.5% increase in price
inflation
Members assumed to
live 1 year longer
7.1% decrease in
liabilities
5.6% increase in
liabilities
3.7% increase in
liabilities
8.3% decrease in
liabilities
5.1% increase in
liabilities
3.8% increase in
liabilities
7.2% decrease in
liabilities
5.6% increase in
liabilities
3.7% increase in
liabilities
*The rate of inflation sensitivity includes its impact on the rate of annual increase of pensions in payment assumption and the rate of increase of pensionable salaries
assumption as they are both inflation linked assumptions.
The size of the scheme assets which are also sensitive to asset return levels and the level of contributions from the Group are
analysed by asset class in part (iv) of this note.
(iv) Retirement benefit assets and liabilities
The amount recognised in the Consolidated Statement of Financial Position in respect of the Group’s defined benefit obligations,
including an apportionment in respect of the MNOPF is as follows:
Equities
Bonds
Property
Other
Fair value of scheme assets
Present value of scheme liabilities
Surplus / (deficit) in schemes
Schemes with liabilities in
Sterling
Schemes with liabilities in
Euro
2016
€m
9.4
14.9
0.3
1.0
25.6
(23.9)
1.7
2015
€m
9.9
16.2
0.4
0.6
27.1
(22.8)
4.3
2016
€m
124.7
93.7
18.0
12.8
249.2
(264.4)
(15.2)
2015
€m
119.4
88.4
16.5
12.3
236.6
(246.0)
(9.4)
Two of the defined benefit obligations accounted for by the Group are in a net surplus position and are shown in non-current assets
in the Consolidated Statement of Financial Position. Three of the defined benefit obligations accounted for by the Group are in a net
deficit position and are shown in non-current liabilities.
The overall weighted average duration of the Group’s defined benefit obligations is 16.1 years (Euro schemes 16 years, Sterling
schemes 17years).
2016 Annual Report and Financial StatementsIrish Continental Group
30. Retirement benefit schemes - continued
The split between the amounts shown in each category is as follows:
Non-current assets – retirement benefit surplus
Non-current liabilities – retirement benefit obligation
Net deficit in pension schemes
(v) Movements in retirement benefit assets
Movements in the fair value of scheme assets in the current year were as follows:
2016
€m
2.4
(15.9)
(13.5)
2016
Schemes in Sterling
Schemes in Euro
At beginning of the financial year
Interest income
Actuarial gains
Exchange difference
Employer contributions
Contributions from scheme members
Benefits paid
At end of the financial year
€m
27.1
1.0
1.8
(4.0)
0.4
0.1
(0.8)
25.6
€m
236.6
5.2
13.6
-
2.8
0.3
(9.3)
249.2
2015
Schemes in Sterling
Schemes in Euro
At beginning of the financial year
Interest income
Actuarial gains
Exchange difference
Employer contributions
Contributions from scheme members
Benefits paid
At end of the financial year
€m
25.8
0.9
(0.8)
1.5
0.4
0.1
(0.8)
27.1
€m
230.7
4.5
13.1
-
2.8
0.3
(14.8)
236.6
141
2015
€m
5.6
(10.7)
(5.1)
Total
€m
263.7
6.2
15.4
(4.0)
3.2
0.4
(10.1)
274.8
Total
€m
256.5
5.4
12.3
1.5
3.2
0.4
(15.6)
263.7
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 142
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
30. Retirement benefit schemes - continued
(vi) Movement in retirement benefit liabilities
Movements in the present value of defined benefit obligations in the year were as follows:
2016
Schemes in Sterling
Schemes in Euro
At beginning of the financial year
Service cost
Interest cost
MNOPF deficit payments
Contributions from scheme members
Actuarial loss
Exchange difference
Benefits paid
At end of the financial year
€m
22.8
0.2
0.8
(0.5)
0.1
4.7
(3.4)
(0.8)
23.9
€m
246.0
1.7
5.4
-
0.3
20.3
-
(9.3)
264.4
2015
Schemes in Sterling
Schemes in Euro
Total
€m
268.8
1.9
6.2
(0.5)
0.4
25.0
(3.4)
(10.1)
288.3
Total
€m
At beginning of the financial year
Service cost
Interest cost
Past service credit
MNOPF deficit payments
Contributions from scheme members
Actuarial gains
Exchange difference
Benefits paid
At end of the financial year
€m
22.6
0.4
0.8
-
(1.1)
0.1
(0.5)
1.3
(0.8)
22.8
€m
258.0
280.6
1.5
5.0
(0.3)
-
0.3
(3.7)
-
(14.8)
246.0
1.9
5.8
(0.3)
(1.1)
0.4
(4.2)
1.3
(15.6)
268.8
2016 Annual Report and Financial StatementsIrish Continental Group 30. Retirement benefit schemes - continued
(vii) Amounts recognised in the Consolidated Income Statement
Amounts recognised in the Consolidated Income Statement in respect of the defined benefit obligations are as follows:
Charges / (credits) to Employee benefits expense
Current service cost
Past service credit
2016
€m
1.9
-
1.9
The past service credit relates to reduction of benefits applied by the trustee to recoup the cost of pension levies imposed on
schemes resident in Ireland.
Charged to Finance costs
Interest income on scheme assets
Interest on scheme liabilities
Net interest cost on defined benefit obligations (note 7)
2016
€m
(6.2)
6.2
-
143
2015
€m
1.9
(0.3)
1.6
2015
€m
(5.4)
5.8
0.4
The estimated amounts of contributions expected to be paid to the schemes during 2017 is €2.8 million based on current funding
agreements.
(viii) Amounts recognised in the Consolidated Statement of Comprehensive Income
Amounts recognised in the Consolidated Statement of Comprehensive Income in respect of the defined benefit obligations are as
follows:
Actuarial gains and losses
Actual return on scheme assets
Interest income on scheme assets
Return on scheme assets (excluding amounts included in net interest cost)
Remeasurement adjustments on scheme liabilities:
- Gains and losses arising from changes in demographic assumptions
- Gains and losses arising from changes in financial assumptions
- Gains and losses arising from experience adjustments
Actuarial (loss) / gains recognised in the Consolidated Statement of Comprehensive Income
Exchange movement:
Exchange (loss) / gain on scheme assets
Exchange gain / (loss) on scheme liabilities
Net exchange gain recognised in the Consolidated Statement of Comprehensive Income
2016
€m
21.6
(6.2)
15.4
0.3
(27.3)
2.0
(9.6)
2016
€m
(4.0)
3.4
(0.6)
2015
€m
17.7
(5.4)
12.3
-
8.4
(4.2)
16.5
2015
€m
1.5
(1.3)
0.2
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 144
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
30. Retirement benefit schemes - continued
(b) Company retirement benefit schemes
(i) Company sponsored / Group affiliated schemes
Certain employees of the Company are members of a defined benefit obligations which is sponsored by another Group Company,
Irish Ferries Limited. The stated policy between the sponsoring entity and the Company does not require the Company to recognise
the net defined benefit in its individual financial statements. Consequently the Company recognises a retirement benefit cost in
its Income Statement in respect of this scheme equal to its contribution payable for the year. Detailed information in respect of
this scheme is given within part (a) of this note. Other employees are members of the Ex Merchant Navy Officers Pension Fund (Ex
MNOPF), which is sponsored by the Company.
In the prior year, one of the Group’s defined benefit obligations which had no employed members was wound up. The scheme assets
at the date of wind up, amounting to €4.4 million, were utilised in full to secure the accrued benefits of the deferred members and
pensioners. The actuary determined, as at date of wind-up, that the scheme assets equated to the actuarial value of the accrued
benefits and that no augmentation cost or curtailment gain arose.
The contributory defined benefit obligations sponsored by the Company and the Group companies provide retirement and death
benefits for employees. The defined benefit obligations provide benefits to members in the form of a guaranteed level of pension
payable for life, the level of the benefits depend on the member’s length of service and salary. The assets of these schemes are held
separately from those of the Company and Group in schemes under the control of trustees. The trustees are responsible for ensuring
the schemes are run in accordance with the applicable trust deeds and the pension laws of the relevant jurisdiction. The pensions
charge and payments in respect of the schemes are in accordance with the advice of professionally qualified actuaries.
The latest actuarial valuation report for the Ex MNOPF Scheme, which is not available for public inspection, is dated 29 June 2012. The
valuation employed for disclosure purposes has been based on the most recent funding valuations for the schemes adjusted by the
independent actuaries to allow for the accrual of liabilities up to 31 December 2016 and to take account of financial conditions at this
date.
The present value of the defined benefit obligation, and the related current service cost and past service credit, were measured using
the projected unit credit method and assets have been valued at bid value.
(ii) Merchant Navy Officers Pension Fund (MNOPF)
In addition to the pension schemes operated by the Company, certain employees are members of the MNOPF, an industry wide multi-
employer scheme. The latest actuarial valuation of the scheme, which is available for public inspection, is dated 31 March 2012. The
share of the Company in the MNOPF as advised by the Trustees is 0.51% (2015: 0.51%). Disclosures relating to this scheme are based
on these allocations.
The valuation at 31 December 2016 is based on the actuarial deficit contributions notified to the Group in May 2013 by the Trustee
based on the deficit as at 31 March 2012 less any payments made by the Company.
The share of the overall deficit in the MNOPF apportioned to the Company is €nil at 31 December 2016 (2015: €0.1 million). During the
year the Company made payments of €0.2 million (2015: €0.3 million) to the Trustees.
(iii) Principal risks and assumptions
The principal risks and assumptions used for the purpose of the actuarial valuations are set out in part (a) (iii) of this note.
The Company’s total obligation in respect of the defined benefit obligations is calculated by independent, qualified actuaries,
updated at least annually and totals €0.9 million at 31 December 2016 (2015: €1.0 million). At 31 December 2016, the Company also has
scheme assets totalling €1.6 million (2015: €1.5 million) giving a net pension surplus of €0.7 million (2015: €0.5 million). The size of the
obligation is sensitive to actuarial assumptions.
2016 Annual Report and Financial StatementsIrish Continental Group 145
30. Retirement benefit schemes - continued
(iv) Retirement benefit assets and liabilities
The amount recognised in the Statement of Financial Position in respect of the Company’s defined benefit obligations, including an
apportionment in respect of the MNOPF are as follows:
Equities
Bonds
Property
Other
Fair value of scheme assets
Present value of scheme liabilities
(Deficit) / surplus in schemes
Schemes with liabilities in
Sterling
Schemes with
liabilities in Euro
2016
€m
-
-
-
-
-
-
-
2015
€m
-
-
-
-
-
(0.1)
(0.1)
2016
€m
1.2
0.2
0.1
0.1
1.6
(0.9)
0.7
2015
€m
1.1
0.2
0.1
0.1
1.5
(0.9)
0.6
One of the retirement benefit schemes accounted for by the Company is in a net surplus position, while the other scheme is in a net
deficit position. The split between the amounts shown in each category is as follows:
Non-current assets – retirement benefit surplus
Non-current liabilities – retirement benefit obligation
Net surplus in pension schemes
2016
€m
0.7
-
0.7
2015
€m
0.6
(0.1)
0.5
These include demographic assumptions covering mortality and longevity, and economic assumptions covering price inflation,
benefit and salary increases together with the discount rate used. The size of the scheme assets is also sensitive to asset return
levels and the level of contributions from the Company.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 146
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
30. Retirement benefit schemes - continued
(v) Movement in retirement benefit assets
Movements in the fair value of scheme assets in the current financial year were as follows:
2016
At beginning of the financial year
Actuarial gains
At end of the financial year
2015
At beginning of the financial year
Interest income
Actuarial gains
Benefits paid
At end of the financial year
Schemes in
Schemes in
Sterling
€m
-
-
-
Euro
€m
1.5
0.1
1.6
Schemes in
Schemes in
Sterling
€m
-
-
-
-
-
Euro
€m
5.4
0.1
0.3
(4.3)
1.5
(vi) Movement in retirement benefit liabilities
Movements in the present value of defined benefit obligations in the financial year were as follows:
2016
At beginning of the financial year
MNOPF deficit payments
Actuarial losses
At end of the financial year
Schemes in
Schemes in
Sterling
€m
0.1
(0.2)
0.1
-
Euro
€m
0.9
-
-
0.9
2015
Schemes in
Schemes in
At beginning of the financial year
Interest cost
MNOPF deficit payments
Actuarial losses
Benefits paid
At end of the financial year
Sterling
€m
0.4
-
(0.3)
-
-
0.1
Euro
€m
4.7
0.1
-
0.4
(4.3)
0.9
Total
€m
1.5
0.1
1.6
Total
€m
5.4
0.1
0.3
(4.3)
1.5
Total
€m
1.0
(0.2)
0.1
0.9
Total
€m
5.1
0.1
(0.3)
0.4
(4.3)
1.0
The present value of scheme liabilities at the financial year ended 31 December 2016 and 31 December 2015 relate to wholly funded
plans.
2016 Annual Report and Financial StatementsIrish Continental Group 30. Retirement benefit schemes - continued
(vii) Amounts recognised in the Company Income Statement
Amounts recognised in the Company Income Statement in respect of the defined benefit obligations are as follows:
Charged to Finance costs
Interest income on scheme assets
Interest cost on scheme liabilities
Net interest cost on defined benefit obligations
2016
€m
-
-
-
147
2015
€m
(0.1)
0.1
-
The estimated amounts of contributions expected to be paid by the Company to the schemes during 2017 is €nil based on current
funding agreements.
(viii) Amounts recognised in the Company Statement of Comprehensive Income
Amounts recognised in the Company Statement of Comprehensive Income in respect of the defined benefit obligations are as
follows:
Actuarial gains and losses:
Actual return on scheme assets
Interest income on scheme assets
Return on scheme assets (excluding amounts included in net interest cost)
Remeasurement adjustments on scheme liabilities:
- Gains and losses arising from changes in demographic assumptions
- Gains and losses arising from changes in financial assumptions
- Gains and losses arising from experience adjustments
Actuarial loss recognised in Statement of Comprehensive Income
2016
€m
0.1
-
0.1
-
-
(0.1)
-
2015
€m
0.4
(0.1)
0.3
-
-
(0.4)
(0.1)
31. Related party transactions
During the financial year, Group entities incurred costs of €0.3 million (2015: €0.3 million) through provision of administration and
accounting services to Irish Ferries Limited Pension Scheme and Irish Ferries (UK) Limited Pension Scheme, related parties that are
not members of the Group. These related parties provide pension benefits to employees of the Group.
As at the statement of financial position date, Catherine Duffy, non-executive Director of the Company, is Chairman at law firm
A&L Goodbody (“ALG’’). During the year ended 31 December 2016, expenses of €0.2 million of which €40,000 relates to Catherine’s
remuneration for her role as Non - Executive Director (2015: €0.1 million of which €40,000 relates to Catherine’s remuneration for
her role as Non - Executive Director) were incurred for services received from ALG in their capacity as legal advisors to the Group. All
services have been provided on an arm’s length basis at the standard commercial terms of ALG.
The Company chartered a vessel from a subsidiary Company during the year. It also advanced and received funds to and from certain
subsidiaries. Net funds received from subsidiaries during the financial year amounted to €25.8 million (2015: €32.3 million advanced
to subsidiaries). The Company has provided Letters of Financial Support for certain of its other subsidiaries as disclosed in note 33.
During the financial year the Company received dividends of €40.0 million (2015: €55.0 million) from subsidiary companies.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 148
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
31. Related party transactions - continued
At 31 December the following amounts were due to or from the Company by its subsidiaries:
Amounts due from subsidiary companies (note 16)
Amounts due to subsidiary companies (note 23)
2016
€m
115.7
(44.4)
71.3
2015
€m
115.1
(18.0)
97.1
The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. There are no set
terms and conditions attached to the amounts outstanding.
Compensation of key management personnel
The Group’s key management comprise the Board of Directors and senior management having authority and responsibility for
planning, directing and controlling the activities of the Group.
The remuneration of key management, including Directors, during the financial year was as follows:
Short-term benefits
Post-employment benefits
Share-based payment expense
Group
2016
€m
4.1
0.3
0.1
4.5
Group
2015
€m
3.9
0.3
0.1
4.3
Short-term benefits comprise salary, performance pay and other short term employee benefits.
Post-employment benefits comprise the past and current service cost calculated in accordance with IAS 19 Employee Benefits.
Share-based payment expense represents the cost charged in respect of equity settled share-based payments.
The remuneration of Directors and key management is determined by the Remuneration Committee having regard to the
performance of individuals, market trends and the performance of the Group and Company.
There were no key management directly employed by the Company during the financial year ended 31 December 2016 (2015:
nil). Costs of €3.3 million (2015: €3.0 million) which includes amounts recharged from subsidiary companies were included in the
Company Income Statement in respect of key management.
Details of the Remuneration of the Groups Individual Directors, together with the number of ICG shares owned by them and their
outstanding share options are set out in the Report of the Remuneration Committee and the Report of the Directors.
2016 Annual Report and Financial StatementsIrish Continental Group 149
Company
Company
2016
€m
3.1
2016
€m
58.8
2.2
1.6
1.9
(3.7)
-
20.6
0.4
(0.1)
0.2
(0.3)
-
0.2
81.8
(0.4)
1.4
3.7
2015
€m
3.0
2015
€m
53.7
3.1
0.4
1.9
(4.3)
(0.3)
18.0
0.4
(0.1)
0.1
(0.1)
0.6
-
73.4
0.1
(6.3)
4.6
86.5
71.8
(2.1)
(2.3)
(0.8)
(2.8)
82.1
68.2
31. Related party transactions - continued
Dividends
Amounts received by key management, including Directors, arising from dividends are as follows:
Dividends
Group
2016
€m
3.2
Group
2015
€m
3.0
Share options
Share options exercised by the Company’s Directors are set out in the Report of the Remuneration Committee on page 75.
32. Net cash from operating activities
Group
Operating activities
Profit for the financial year
Adjustments for:
Finance costs (net)
Income tax expense
Retirement benefit obligations – current service cost
Retirement benefit obligations – payments
Retirement benefit obligations – past service credit
Depreciation of property, plant and equipment
Amortisation of intangible assets
Amortisation of deferred income
Share-based payment expense
Gain on disposal of property, plant and equipment
Impairment
Increase in provisions
Operating cash flows before movements in working capital
(Increase) / Decrease in inventories
Decrease / (Increase) in receivables
Increase in payables
Cash generated from operations
Income taxes paid
Interest paid
Net cash inflow from operating activities
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 150
Notes to the Financial Statements
for the financial year ended 31 December 2016 - continued
32. Net cash from operating activities - continued
Company
Operating activities
Profit for the financial year
Adjustments for:
Finance costs (net)
Retirement benefit obligations – payments
Dividend income
Depreciation of property, plant and equipment
Amortisation of intangible assets
Share-based payment expense
Increase in provisions
Operating cash flows before movements in working capital
Decrease in inventories
Decrease in receivables
Increase / (decrease) in payables
Cash utilised by operations
Interest paid
Net cash inflow / (outflow) from operating activities
2016
€m
39.6
0.2
(0.2)
(40.0)
2.7
0.3
0.1
-
2.7
-
2.0
26.2
30.9
2015
€m
50.6
0.4
(0.3)
(55.0)
2.4
0.3
-
0.2
(1.4)
0.1
6.8
(40.6)
(35.1)
(0.2)
(0.4)
30.7
(35.5)
2016 Annual Report and Financial StatementsIrish Continental Group 151
33. Contingent liabilities
The Group has issued counter indemnities to Allied Irish Banks plc in relation to bonds required by regulatory authorities and
suppliers, amounting to €0.7 million (2015: €0.7 million). The Group regards these financial guarantee contracts as insurance
contracts and accordingly the accounting treatment applied is that applicable to insurance contracts. No claims have been notified
to the Group in respect of these contracts, therefore no provision is warranted.
The Group and Company is a participating employer in the Merchant Navy Officer Pension Fund (MNOPF), a multi-employer defined
benefit obligations. The MNOPF is closed to future accrual. Under the rules of the fund all employers are jointly and severally liable for
any past service deficit of the fund. The last notification from the trustees showed that the Group and Company’s share of any deficit
would be 1.53% and 0.51% respectively. Should other participating employers default on their obligations, the Group and Company
will be required to absorb a larger share of the scheme deficit. If the Group (and or Company) were to terminate their obligations to
the fund, voluntarily or otherwise, the Group may incur a statutory debt under Section 75 of the United Kingdom Pensions Act 1995
amended by the Pensions Act 2004. The calculation of such statutory debt is prescribed in legislation and is on a different basis from
the current deficit calculations. This would likely be a greater amount than the net position included in these financial statements
and the Directors consider that this amount is not quantifiable unless and until such an event occurs.
In the ordinary course of business the Group and Company is exposed to legal proceedings from various sources including
employees, customers, suppliers and regulatory authorities. It is the opinion of the Directors that losses, if any, arising in connection
with these matters will not be materially in excess of provisions made in the financial statements.
Pursuant to the provision of Section 357 of the Companies Act 2014, the Company has guaranteed the liabilities of its Irish
subsidiaries for the financial year ended 31 December 2016. Details of the Group‘s principal subsidiaries have been included in note
14 which includes the Irish subsidiaries of the Group covered by the Section 357 exemption. The Company has fair valued these
guarantees at €nil at 31 December 2016 (2015: €nil) based on projected cash flows.
The Company has entered into a Put and Call agreement with a subsidiary company, Zatarga Limited, which grants the Company the
option to purchase one or more vessels from Zatarga Limited.
The Company has provided a guarantee and indemnity in favour of lenders in respect of obligations of certain subsidiaries who are
borrowers under the Group’s overdraft and revolving credit facilities.
34. Events after the Reporting Period
The Board is proposing a final dividend of 7.760 cent per ICG Unit in respect of the results for the financial year ended 31 December
2016.
There have been no other material events affecting the Group since 31 December 2016.
35. Approval of financial statements
The financial statements were approved by the Board of Directors and authorised for issue on 3 March 2017.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 152
Irish Continental Group
2016 Annual Report and Financial Statements
153
Shareholder
and other
information
Investor Information
Index to the Annual Report
154
157
154
Investor Information
ICG Units
An ICG Unit consists of one Ordinary Share and nil Redeemable Shares at 31 December 2016 and 31 December 2015. The shares
comprising a unit are not separable for sale or transfer purposes.
The number of Redeemable Shares comprised in an ICG Unit at any particular time will be displayed on the Irish Continental Group
plc. website www.icg.ie. The redemption of redeemable shares is solely at the discretion of the Directors.
At 3 March 2017, an ICG Unit consisted of one Ordinary share and nil Redeemable shares.
Payments to Shareholders
Shareholders are offered the option of having any distributions paid in Euro or Sterling and made by way of cheque payment or
electronic transfer. Shareholders should contact the Company’s Registrar for further information.
The Company is obliged to deduct Dividend Withholding Tax (DWT) at the standard rate of income tax in Ireland (currently 20%) from
dividends paid to its shareholders, unless a shareholder is entitled to an exemption from DWT and has returned a declaration form to
the Company’s Registrar claiming such entitlement.
ICG Unit price data (€)
Year ended 31 December 2016
Year ended 31 December 2015
High
Low
Year end
5.676
5.474
4.020
3.170
4.500
5.414
Share listings
ICG Units are quoted on the official lists of both the Irish Stock Exchange and the UK Listing Authority.
ICG’s ISIN code is IE00BLP58571.
ICG is a member of the CREST share settlement system. Shareholders may choose to hold paper share certificates or hold their
shares in electronic form.
Investor Relations
Please address investor enquiries to:
Irish Continental Group plc
Ferryport
Alexandra Road
Dublin 1
Telephone: +353 1 607 5628
+353 1 855 2268
Fax:
investorrelations@icg.ie
Email:
2016 Annual Report and Financial StatementsIrish Continental Group 155
Registrar
The Company’s Registrar deals with all administrative queries about the holding of ICG Units.
Shareholders should contact the Registrar in order to:
• Register to receive shareholder information electronically;
• Elect to receive any distributions from the Company by bank transfer; and
• Amalgamate accounts where shareholders have multiple accounts in their name, to avoid duplicate sets of Company mailings
being sent to one shareholder.
The registrar also offers a share dealing service to shareholders.
The Company’s registrar is:
Computershare Investor Services (Ireland) Limited
Heron House
Corrig Road
Sandyford Industrial Estate
Dublin 18
Telephone: +353 1 447 5483
+353 1 447 5571
Fax:
webqueries@computershare.ie
Email:
Financial calendar 2017
Announcement of Preliminary Statement of Results to 31 December 2016
Annual General Meeting
Proposed final dividend payment date
Half year results announcement
6 March 2017
17 May 2017
9 June 2017
31 August 2017
Travel discounts for Shareholders
Registered shareholders of 1,000 or more ICG shares can avail of a discount when travelling with Irish Ferries. The availability of the
discount, the conditions applicable and the level of discount are subject to review and are varied from time to time. The principal
features of the scheme at 3 March 2017 are:
• 20% discount on passenger and car ferry services between Ireland and Britain;
•
10% discount on passenger and car ferry services between Ireland and France (direct sailings only); and
• 5% discount on Irish Ferries inclusive package holidays (incorporating travel with Irish Ferries).
To qualify for the discount the person travelling must be the registered holder of the shares, book online at www.irishferries.com, and
apply for the discount at the time of booking. The discount is not available in conjunction with any other discount scheme.
For further information please contact Irish Ferries Customer Support in Dublin on + 353 1 607 5700 or email shareholders@
irishferries.com.
Other InformationFinancial StatementsCorporate GovernanceStrategic Report
156
Investor Information
- continued
Other information
Registered office
Solicitors
Auditors
Ferryport
Alexandra Road
Dublin 1, Ireland.
A&L Goodbody, Dublin
Deloitte
Chartered Accountants and Statutory Audit Firm
Earlsfort Terrace, Dublin 2
Principal bankers
Allied Irish Bank plc, Dublin
The Governor and Company of the Bank of Ireland, Dublin
Ulster Bank Ireland Ltd, Dublin
Stockbrokers
Investec Stockbrokers, Dublin
Goodbody Stockbrokers, Dublin
Registrars
Computershare Investor Services (Ireland) Limited
Heron House, Corrig Road
Sandyford Industrial Estate
Website
Email
Reuters
Bloomberg
ISE Xetra
Dublin 18
www.icg.ie
info@icg.ie
ISE
IR5B_u.I
IR5B
IR5B
LSE
ICG_u.L
ICGC
2016 Annual Report and Financial StatementsIrish Continental Group Index to the Annual Report
- continued
A
Accounting Policies
Annual General Meeting
Audit Committee, Report
Auditor’s Report
Auditor’s Remuneration
B
Board Approval of Financial Statements
Board Committees
Board of Directors
Borrowings
C
Cash and Bank Balances
Chairman’s Statement
Commitments
Contingent Liabilities
Corporate Governance Statement
Credit Risk
CREST
Critical Accounting Judgements
D
Deferred Grant
Deferred Tax
Depreciation
Derivative Financial Instruments
Directors’ and Company Secretary’s
Shareholdings
Directors’ and Company Secretary’s Share
Options
Directors, Report
Dividend
Drydocking
E
Earnings per ICG Share Unit
Employee Numbers and Benefits
Environment and Safety
Events After The Statement of Financial Position
Date
95
52
62
80
111
151
55
48
120
118
10
132
151
53
128
154
106
132
130
111
129
52
52
50
40
101
112
109
32
151
F
Financial Calendar 2017
Financial Highlights
Financial Review
Finance Costs
Finance Income
Financial Instruments
Financial Risk Management
Five Year Summary
Fleet
G
General Information
Group Operations
Going Concern
Guarantees
I
International Financial Reporting Standards
Income Statement, Consolidated
Income Tax
Inventories
Intangible Assets
Interest Rate Risk
Internal Control
Investment in Subsidiaries
Investor Information
K
Key Performance Indicators
L
Leases, Finance
Leases, Operating
Long Term Strategy
M
Merchant Navy Officers Pension Fund (MNOPF)
N
Nomination Committee, Report
Notes to the Financial Statements
157
155
6
40
110
110
124
40, 124
8
42
95
4, 7
50
151
96
85
110
117
115
125
64
116
154
15
120
133
14
138
65
95
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 131
117
110
158
Index to the Annual Report
- continued
O
Operating Lease Income
Operating Profit, Group
(details of certain charges / credits)
Operating Review
P
Pensions, Directors
Provisions
Property, Plant and Equipment
R
Registrar
Related Party Transactions
Remuneration Committee, Report
Reserves, Other
Resources
Retained Earnings
Retirement Benefit Schemes
Revenue
Risk and Uncertainties
S
Segmental Information
Share-Based Payments
Share Capital
Share Premium
Share Price Data
Shareholder Discount
Shareholder Voting Rights
Statement of Cash Flow - Company
Statement of Cash Flow - Consolidated
Statement of Changes in Equity - Company
Statement of Changes in Equity - Consolidated
Statement of Comprehensive Income -
Consolidated
Statement of Directors’ Responsibilities
Statement of Financial Position - Company
Statement of Financial Position - Consolidated
Stock Exchange Listings (Share Listings)
Substantial Shareholdings as at 3 March 2017
T
133
Trade and Other Payables
Trade and Other Receivables
Tonnage Tax (Relief)
111
18
71
132
113
155
147
67
88
29
88
137
107
38
107
134
119
120
154
155
59
94
93
91
88
86
77
90
87
154
51
2016 Annual Report and Financial StatementsIrish Continental Group 159
Other InformationFinancial StatementsCorporate GovernanceStrategic Report 160
2016 Annual Report and Financial StatementsIrish Continental Group Irish Continental Group plc,
Ferryport, Alexandra Road, Dublin 1, Ireland.
+353 1 607 5628
Tel:
Fax: +353 1 855 2268
email: info@icg.ie
www.icg.ie
Irish Ferries,
Ferryport, Alexandra Road, Dublin 1, Ireland.
+353 1 607 5700
Tel:
Fax: +353 1 607 5679
email: info@irishferries.com
www.irishferries.com
Eucon Shipping & Transport Ltd,
Irish Ferries Freight Centre, Terminal Road West,
Ferryport, Dublin 1, Ireland.
Tel:
Fax: Sales +353 1 855 2280, Ops +353 1 855 2311
email: info@eucon.ie
www.eucon.ie
+353 1 607 5555
Dublin Ferryport Terminals,
Container Terminal, Breakwater Road, Dublin 1, Ireland.
+353 1 607 5700
Tel:
Fax: +353 1 607 5623
email: info@dft.ie
Belfast Container Terminal,
Victoria Terminal 3, West Bank Road,
Belfast BT3 9JL, Northern Ireland.
+44 7901 825387
Tel:
email: info@bcterminal.com
Irish Continental Group plc , Ferryport
Alexandra Road, Dublin 1, Ireland, D01W2F5.