2017
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.
More online www.icg.ie
CONTENTS
01
04-50
Strategic Report
04 The Group
06 Financial Highlights
07 Our Group at a Glance
08 Five Year Summary
10 Chairman’s Statement
14 Operating and Financial Review
48 Our Fleet
50 Executive Management Team
54-85
Corporate Governance
54 The Board
56 Report of the Directors
60 Corporate Governance Statement
69 Report of the Audit Committee
73 Report of the Nomination Committee
75 Report of the Remuneration Committee
85 Directors’ Responsibilities Statement
88-167
Financial Statements
88 Independent Auditor’s Report
97 Consolidated Income Statement
98 Consolidated Statement of Comprehensive
Income
99 Consolidated Statement of Financial Position
100 Consolidated Statement of Changes in Equity
102 Company Statement of Financial Position
103 Company Statement of Changes in Equity
105 Consolidated Statement of Cash Flows
106 Company Statement of Cash Flows
107 Notes to the Financial Statements
170-173
Other Information
170 Investor Information
173 Index to the Annual Report
02
Irish Continental Group
2017 Annual Report and Financial Statements
2017 has been a
successful year for the
Group, with a positive
operational and
financial performance
in both divisions
Read more from the Chairman’s Statement on page 10
Strategic Report
Corporate Governance
Financial Statements
Other Information
03
STRATEGIC
REPORT*
04 The Group
06 Financial Highlights
07 Our Group at a Glance
08 Five Year Summary
10 Chairman’s Statement
14 Operating and Financial Review
48 Our Fleet
50 Executive Management Team
*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
Irish Continental Group
2017 Annual Report and Financial Statements
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 Group division also
carries out ship chartering activities.
Revenue
Operating Profit
39%
61%
19%
81%
Capital Employed
EBITDA
23%
17%
77%
83%
Ferries Division
Container and Terminal Division
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 2017 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, together with container terminal
operations at Dublin and Belfast Ports.
M2
M50
M3
M50
M1
M50
Dublin Port
M4
M50
M50
M50
M7
Holyhead
Roterdam
Antwerp
C
h
e
r
b
o
u
r
g
M50
M50
M11
N
Irish Ferries Ropax and
Eucon Geographical
Cruise ferry Services
Coverage
Irish Ferries High Speed
Eucon Routes
Ferry
Ports Served By Ferries:
Dublin, Roslare, Holyhead,
Pembroke, Cherbourg,
Roscoff
Dublin Ferryport Terminals
Belfast Container Terminal
Ports Served By Container
Ships: Belfast, Dublin, Cork,
Antwerp, Rotterdam
Estonia
Latvia
Lithuania
Belfast
Dublin
Rosslare
Cork
Holyhead
Pembroke
U.K
Rotterdam
Poland
Netherlands
Antwerp
Belgium
Germany
Czech Rep.
Slovakia
Roscoff
Cherbourg
France
Switzerland
Italy
Austria
Hungary
Slovenia
Croatia
Romania
Serbia
Bulgaria
Strategic Report
Corporate Governance
Financial Statements
Other Information
05
M2
M50
M3
M50
M1
M50
Dublin Port
M4
M50
M50
M50
M7
M50
M11
Holyhead
Roterdam
Antwerp
C
h
e
r
b
o
u
r
g
M50
N
Irish Ferries Ropax and
Cruise ferry Services
Eucon Geographical
Coverage
Irish Ferries High Speed
Ferry
Eucon Routes
Ports Served By Ferries:
Dublin, Roslare, Holyhead,
Pembroke, Cherbourg,
Roscoff
Dublin Ferryport Terminals
Belfast Container Terminal
Ports Served By Container
Ships: Belfast, Dublin, Cork,
Antwerp, Rotterdam
Estonia
Latvia
Lithuania
Belfast
Dublin
Rosslare
Cork
Holyhead
U.K
Rotterdam
Poland
Pembroke
Netherlands
Antwerp
Belgium
Roscoff
Cherbourg
Germany
Czech Rep.
Slovakia
France
Switzerland
Italy
Austria
Hungary
Slovenia
Croatia
Romania
Serbia
Bulgaria
Revenue
Operating Profit
39%
61%
19%
81%
Capital Employed
EBITDA
23%
17%
77%
83%
Ferries Division
Container and Terminal Division
06
FINANCIAL HIGHLIGHTS
2017
2016
2017
2016
REVENUE
€335.1m
+3.0% (2016: €325.4m)
EBITDA*
€81.0m
-3.0% (2016: €83.5m)
NET CASH / (DEBT)*
€39.6m
+€77.5m (2016: (€37.9m))
2016
(€37.9m)
BASIC EPS
44.1 cent
+40.4% (2016: 31.4 cent)
ROACE*
39.7%
up 1.6 percentage points
(2016: 38.1%)
2017
2016
2017
2016
*Definitions of alternative performance measures are set out on page 21.
€335.1m
€325.4m
€81.0m
€83.5m
2017
€39.6m
44.1 cent
31.4 cent
39.7%
38.1%
Irish Continental Group2017 Annual Report and Financial Statements Strategic Report
Corporate Governance
Financial Statements
Other Information
07
OUR GROUP AT A GLANCE
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 287,500 RoRo
units carried in 2017.
Reliability underpinned by
investment in maintaining
quality assets ensuring
we meet our customer
expectations, achieving 92%
schedule integrity over all
our RoRo services in 2017,
with 99% schedule integrity
achieved on our conventional
RoRo cruise ferries.
Strategically located container
terminals which handled
296,800 container units
during 2017 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 321,400 teu
(twenty foot equivalent) in
2017 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 1.65 million passengers
and 424,000 cars during 2017
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.
08
FIVE YEAR SUMMARY
Non Statutory Income Statement Information
2017
€m
2016
€m
2015
€m
2014
€m
2013
€m
Revenue
Other operating expenses and employee benefits expense
Depreciation and amortisation
Non-trading items 1
Interest (net)
Profit before taxation
Taxation
Profit from continuing operations
Discontinued operations
Profit from discontinued operations
Non-trading items1:
Gain on disposal of discontinued operations
Total discontinued operations
335.1
(254.1)
(20.7)
60.3
28.7
(1.3)
87.7
(4.4)
83.3
-
-
-
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
Profit for the year
83.3
58.8
53.7
56.0
26.8
EBITDA (including trading from discontinued operations)
81.0
83.5
75.5
50.5
49.2
Per share information:
Earnings per share
-Basic
-Adjusted 2
€cent
€cent
€cent
€cent
€cent
44.1
29.0
31.4
31.4
28.9
29.1
30.4
15.5
14.6
13.8
Dividend per share
12.160
11.580
11.025
10.500
10.000
Shares in issue excluding treasury shares:
m
m
m
m
m
At year end
Average during the year
189.9
188.8
188.3
187.5
186.4
185.8
184.5
184.4
184.0
183.7
1.
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.
2. Adjusted earnings exclude pension interest and non-trading items.
Irish Continental Group2017 Annual Report and Financial Statements 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 inflow / (outflow) 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 cash / (debt)
Net debt / EBITDA
2017
€m
250.0
8.1
135.2
393.3
223.8
3.4
51.5
114.6
393.3
71.8
27.7
(51.3)
42.2
(0.1)
90.3
€m
39.6
Times
N/A
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
09
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
Gearing (Net debt as a percentage of shareholders’ funds)
N/A
26%
38%
100%
221%
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 10
Irish Continental Group
2017 Annual Report and Financial Statements
CHAIRMAN’S STATEMENT
Irish Continental Group (ICG) produced
another resilient performance in the face of
continued increasing fuel costs as a result
of a rise in global US Dollar oil prices. Group
fuel costs increased by 25.2% to €40.3
million (2016: €32.2 million). Notwithstanding
this, 2017 has been a successful year for
the Group, with a positive operational and
financial performance in both divisions
building upon the continued Irish economic
recovery. Revenue for the year grew by
3.0% to €335.1 million (2016: €325.4 million).
EBITDA for the year decreased by 3.0% to
€81.0 million (2016: €83.5 million) primarily
as a result of the aforementioned €8.1 million
year on year increase in fuel costs. During
this period we completed the sale of the MV
Kaitaki generating a profit on sale before tax
of €28.7 million. The subsequent reduced
charter earnings on the MV Kaitaki for the
remainder of the year were largely offset by
the increased earnings on the HSC Westpac
Express. Overall Group operating profit was
€89.0 million (2016: €62.6 million).
John B. McGuckian,
Chairman
12
CHAIRMAN’S STATEMENT
- CONTINUED
Basic EPS, was 40.4% higher at 44.1 cent (2016: 31.4 cent), while
adjusted EPS, which excludes the net interest cost on defined
benefit obligations and non-trading items, was 7.6% lower at
29.0 cent (2016: 31.4 cent).
On 19 January 2018, the cruise ferry MV W.B. Yeats was formally
named and the completed hull launched into the water. The
cruise ferry, is scheduled to commence sailing between Ireland
and France on the Dublin-Cherbourg route in summer 2018.
The Ferries division had a strong year which was attributable
to increased car volumes and the consolidation of the strong
RoRo growth over the last two years. Revenue was 1.1% higher
at €212.1 million (2016: €209.8 million). EBITDA in the division
decreased by 4.8% to €67.3 million (2016: €70.7 million) primarily
due to higher fuel costs which increased by €5.2 million. EBIT
rose by 48.8% to €77.8 million (2016: €52.3 million) principally
due to the sale of the MV Kaitaki for a profit before tax of €28.7
million.
In the Container and Terminal division revenue grew by 6.5% to
€131.9 million (2016: €123.9 million) following an increase in total
containers shipped and an increase in containers handled at the
Group’s terminals in Dublin Ferryport Terminal (DFT) and Belfast
Container Terminal (BCT). The division’s EBITDA increased by
7.0% to €13.7 million (2016: €12.8 million) while EBIT was €11.2
million (2016: €10.3 million).
ICG announced on 30 January 2018 that it has entered into
a Memorandum of Agreement (“MOA”) for the sale of the
HSC Jonathan Swift to Balearia Eurolineas Maritimas S.A for
an agreed consideration of €15.5 million. This vessel will be
delivered to the buyer in April 2018 and will be replaced in
our fleet by the 2001 built HSC Westpac Express, which was
recently redelivered following a period of twenty months
on external charter. This vessel will provide the Group with
increased capacity on its popular fast craft service. She is
currently undergoing a refurbishment programme to bring
her up to Irish Ferries passenger service standards and will be
renamed HSC Dublin Swift prior to entering service.
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.
We ended the year in a strong financial position with net cash
at €39.6 million, in contrast with a net debt position of €37.9
million in the previous year.
The charter-in of the Ropax vessel MV Epsilon will expire in
November 2018. The company has two further one year options
on the vessel.
Fleet
On 17 May 2017, the Group announced that it had entered
into a Memorandum of Agreement (“MOA”) for the sale of the
passenger ferry MV Kaitaki to the New Zealand ferry operator
KiwiRail. The vessel was delivered to KiwiRail on 25 May 2017.
The agreed consideration of €45.0 million, payable in cash, was
received on delivery and is being utilised for general corporate
purposes.
Belfast Harbour
2017 saw the second 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 in line with our expectations
and we will continue to develop both the volumes through
Belfast and the efficiencies of a single container terminal.
On 2 January 2018, 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 €165.2 million which
is scheduled for delivery during 2020. The cruise ferry is being
built specifically for Irish Ferries’ Dublin - Holyhead services.
The investment provides Irish Ferries with a significant increase
in both its freight and tourism carrying capacity on this fast
growing route. ICG intend to utilise credit facilities to finance
this investment. When completed, the vessel will be the largest
cruise ferry in the world in terms of vehicle capacity.
Dividend
During the year the Group paid the final dividend for 2016 of 7.76
cent per ICG Unit. The Group also paid an interim dividend for
2017 of 4.01 cent per ICG Unit, and the Board is proposing a final
dividend of 8.15 cent per ICG Unit, payable in June 2018, making
a total dividend for 2017 of 12.16 cent per ICG Unit, an increase of
5.0% on the prior year.
Irish Continental Group2017 Annual Report and Financial Statements 13
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 60 to 68.
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 63. 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.
Fuel
Group fuel costs in 2017 amounted to €40.3 million (2016: €32.2
million). The increase in fuel cost was due to the rise in global
US Dollar oil prices, partially offset by a weaker US Dollar versus
Euro.
In the period from 1 January 2018 to 3 March 2018, the Container
and Terminal division container carryings were 57,200, an
increase of 4.6% on the corresponding period last year. Port lifts
were 51,700, an increase of 5.7% compared to the same period
last year.
World fuel prices have strengthened over the last number of
months offset by the positive benefit from a weaker US Dollar.
Overall Euro fuel costs remain at manageable levels with our fuel
surcharge mechanisms remaining in place.
Despite the uncertainty around the implications of the UK
government triggering Article 50 of the EU Treaty in March 2017,
the economic outlook in our sphere of operations continues to
improve. We look forward to another year of volume growth
in our markets of operation. The Group is also set to benefit
this year from the introduction of the new cruise ferry MV W.B.
Yeats in the summer of 2018 which will bring additional earnings
potential for the Group.
The Group has in place a transparent fuel surcharge mechanism
for freight customers across the Group which mitigated
the increase in Euro fuel costs through increased surcharge
revenues. In the reporting period the Group had not engaged in
financial derivative trading to hedge its fuel costs.
John B. McGuckian,
Chairman
Outlook
Since our last update to the market, in the Interim Management
Statement of November 2017, trading conditions have remained
favourable. For the full year 2017 the Ferries Division recorded
strong volume growth of 1.7% for passengers, 2.4% for cars and
0.5% for RoRo freight. In the Container and Terminal Division
overall container volumes shipped were up 5.9%, while port lifts
were up 3.0%.
In the period from 1 January 2018 to 3 March 2018, car and
passenger volumes have benefited from additional high speed
ferry sailings. Irish Ferries carried 35,600 cars up 9.1% while the
number of passengers carried increased to 135,500, up 4.5%,
compared with the same period last year.
Due to prolonged bad weather in the period up to 3 March 2018
conventional sailings decreased 9% year on year. Irish Ferries
carried 43,800 RoRo units in that period which is down 3.3% on
the prior year.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 14
Irish Continental Group
2017 Annual Report and Financial Statements
OPERATING AND FINANCIAL REVIEW
This Operating and Financial Review
discusses the following:
16 Business Model
18 Our Strategy
20 Key Performance Indicators and
Summary of 2017 Results
24 Operating Review
34 Resources
36 Environmental and Safety Review
40 Financial Review
42 Principal Risks and Uncertainties
48 Our Fleet
50 Executive Management Team
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.
Eamonn Rothwell,
Chief Executive Officer
16
OPERATING AND FINANCIAL REVIEW
OPERATING AND FINANCIAL REVIEW
- CONTINUED
- CONTINUED
BUSINESS MODEL
Our key resources
For more information about our resources see page 34.
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.
A modern owned
Modern, flexible fleet
Access to
Recognised brand
ferry fleet
together with longterm
strategically located
names
Experienced,
qualified staff
lease hold interests in
ports and slot times
our container terminals
How we operate
Further details on these operations are set out in the
Operating Review on pages 24 to 31.
FERRIES
DIVISION
CONTAINER AND
TERMINAL DIVISION
Principal activities include passenger and RoRo
Principal activities include LoLo shipping activities
freight shipping services under the Irish Ferries
and the operation of two container terminals,
brand together with ship chartering activities.
within the ports of Dublin and Belfast.
The outcomes of what we do
For more information about our financial performance
see the financial review on pages 40 to 41.
1.6 million
passengers
Carried during
2017 on up to
321,400
teu
Best Ferry
Company
308
44.1c
employees
per share
Overall container
Voted by travel
At the end of 2017,
Basic EPS compared
volumes shipped (up
trade professionals
located in Ireland,
with 31.4 cent
17 daily sailings.
5.9% compared with
at the ‘Irish Travel
the UK and
in 2016.
the previous year).
Trade News Awards’.
The Netherlands.
Irish Continental Group2017 Annual Report and Financial Statements 17
Our key resources
For more information about our resources see page 34.
A modern owned
ferry fleet
Modern, flexible fleet
together with longterm
lease hold interests in
our container terminals
Access to
strategically located
ports and slot times
Recognised brand
names
Experienced,
qualified staff
How we operate
Further details on these operations are set out in the
Operating Review on pages 24 to 31.
FERRIES
DIVISION
CONTAINER AND
TERMINAL DIVISION
Principal activities include passenger and RoRo
freight shipping services under the Irish Ferries
brand together with ship chartering activities.
Principal activities include LoLo shipping activities
and the operation of two container terminals,
within the ports of Dublin and Belfast.
The outcomes of what we do
For more information about our financial performance
see the financial review on pages 40 to 41.
1.6 million
passengers
Carried during
2017 on up to
17 daily sailings.
321,400
teu
Best Ferry
Company
Overall container
volumes shipped (up
5.9% compared with
the previous year).
Voted by travel
trade professionals
at the ‘Irish Travel
Trade News Awards’.
308
employees
At the end of 2017,
located in Ireland,
the UK and
The Netherlands.
44.1c
per share
Basic EPS compared
with 31.4 cent
in 2016.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 18
OPERATING AND FINANCIAL REVIEW
OPERATING AND FINANCIAL REVIEW
- CONTINUED
- CONTINUED
OUR STRATEGY
There are two principal elements to the Group’s strategy for
delivering value to shareholders:
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.
Investment in quality assets in
order to achieve economies of
Benchmarking costs to industry
best practice to enable the Group
scale consistent with a superior
to compete vigorously in its
customer service.
chosen markets.
Strategy in action
Strategy in action
€309 million investment in
two new cruise ferries
over 6 million
visits to our website
ICG has committed to a €309 million investment in two
In 2017, we delivered a comprehensive programme of
new cruise ferries which are being constructed at the FSG
marketing and promotional activity across our key markets
shipyard in Flensburg, Germany. The first vessel was
of Britain, Ireland and France. We invested significantly in
named MV W.B. Yeats at a naming ceremony on 19
our brand, and delivered compelling and personalised
January 2018 when the hull was launched. The MV W.B.
offers to our customers at times relevant for the planning
Yeats has been designed to include the flexibility to service
and booking of their holidays and other travel. This
all of Irish Ferries routes and is scheduled to initially
approach helped to improve our brand awareness in these
operate on the Group’s Irish Ferries Dublin – Cherbourg
important markets, and to drive increased levels of
service in summer 2018. The second vessel as yet unnamed
enquiries to our website, www.irishferries.com, which
is scheduled to be delivered to the Group in April 2020
generated over 6 million visits, and delivered over 80% of
and to operate on Irish Ferries Dublin – Holyhead route.
the car and passenger bookings transacted in the year.
These vessel investments will support the longer term
objectives of the Group to meet the capacity demands of
our customers.
For more information about our fleet see page 48.
For more information about our markets see page 26.
Irish Continental Group2017 Annual Report and Financial Statements 19
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.
Strategy in action
Strategy in action
€309 million investment in
two new cruise ferries
over 6 million
visits to our website
ICG has committed to a €309 million investment in two
new cruise ferries which are being constructed at the FSG
shipyard in Flensburg, Germany. The first vessel was
named MV W.B. Yeats at a naming ceremony on 19
January 2018 when the hull was launched. The MV W.B.
Yeats has been designed to include the flexibility to service
all of Irish Ferries routes and is scheduled to initially
operate on the Group’s Irish Ferries Dublin – Cherbourg
service in summer 2018. The second vessel as yet unnamed
is scheduled to be delivered to the Group in April 2020
and to operate on Irish Ferries Dublin – Holyhead route.
These vessel investments will support the longer term
objectives of the Group to meet the capacity demands of
our customers.
In 2017, 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.
For more information about our fleet see page 48.
For more information about our markets see page 26.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 20
OPERATING AND FINANCIAL REVIEW
OPERATING AND FINANCIAL REVIEW
- CONTINUED
- CONTINUED
KEY PERFORMANCE INDICATORS
AND SUMMARY OF 2017 RESULTS
EBITDA
-3.0% (2016: €83.5 m)
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
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.
EBIT
€60.3m
- 3.7% (2016: €62.6m)
Free cash flow
€54.8m
+118.3% (2016: €25.1m)
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
Net cash/(debt)
€39.6m
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
Adjusted EPS
7
1
0
2
-7.6% (2016: 31.4c)
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
ROACE
39.7%
Non-Financial KPI
+1.6 percentage
points (2016: 38.1%)
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
-2.0% (2016: 94%)
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
€81.0 29.0c92%+€77.5m (2016: (€37.9m))Irish Continental Group2017 Annual Report and Financial Statements 21
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. 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.
EBITDA
-3.0% (2016: €83.5 m)
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
Description
EBITDA represents
earnings before interest,
tax, depreciation and
amortisation.
Benefit
Eliminates the effects of financing and
accounting decisions to allow assessment
of the profitability and performance of the
Group.
EBIT
€60.3m
- 3.7% (2016: €62.6m)
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
Free cash flow
€54.8m
+118.3% (2016: €25.1m)
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
Description
EBIT represents earnings
before interest, tax and
non-trading items.
Benefit
Measures the Group’s earnings from
ongoing operations.
Description
Free cash flow
comprises operating
cash flow less capital
expenditure.
Benefit
Assesses the availability to the Group of
funds for reinvestment or for return to
shareholders.
Net cash/(debt)
€39.6m
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
Adjusted EPS
7
1
0
2
-7.6% (2016: 31.4c)
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
Description
Net cash / (debt)
comprises total
borrowings less cash
and cash equivalents.
Benefit
Measures the Group’s ability to repay its
debts if they were to fall due immediately.
Description
EPS is adjusted to
exclude the non- trading
items and net interest
cost on defined benefit
obligations.
Benefit of APM
Directors consider Adjusted EPS to be
a key indicator of long-term financial
performance and value creation of a
Public Listed Company.
ROACE
39.7%
Non-Financial KPI
+1.6 percentage
points (2016: 38.1%)
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
-2.0% (2016: 94%)
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
Description
ROACE represents return on average
capital employed. Operating profit
(before non-trading items) expressed as a
percentage of average capital employed
(consolidated net assets, excluding
net debt / (cash), retirement benefit
(surplus) / obligation) and asset under
construction net of related liabilities.
Benefit
Measures the Group’s
profitability and the
efficiency with which its
capital is employed.
Description
Schedule integrity
(the number of sailings
completed versus
scheduled sailings).
Benefit
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.
€81.0 29.0c92%+€77.5m (2016: (€37.9m))Strategic ReportCorporate GovernanceFinancial StatementsOther Information 22
OPERATING AND FINANCIAL REVIEW
OPERATING AND FINANCIAL REVIEW
- CONTINUED
- CONTINUED
Key Performance Indicators and Summary of 2017 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 Cash / (Debt). See note 12 to the financial
statement for the calculation of Basic and Adjusted EPS.
Cash Flow
Operating profit (EBIT)
Non-trading items
Net depreciation and amortisation (note 9)
EBITDA
Working capital movements (note 33)
2017
€m
2016
€m
89.0
62.6
(28.7)
-
20.7
81.0
20.9
83.5
(1.9)
4.7
Pension payments in excess of service costs
(note 33)
(1.1)
(1.8)
Share based payments expense (note 33)
1.1
0.2
(0.6)
(0.1)
78.5
86.5
(1.1)
(5.6)
(2.3)
(2.1)
The following table sets forth the reconciliation from the Group’s
ROACE calculation;
ROACE
Equity
Net (cash) / debt
Asset under construction (net)
Retirement benefit obligation
Retirement benefit surplus
Capital employed
Average Capital employed
2017
€m
2016
€m
223.8
144.4
(39.6)
37.9
(39.5)
(31.8)
3.4
15.9
148.1
166.4
(8.1)
(2.4)
140.0
164.0
152.0
164.5
Operating profit (before non-trading items)
60.3
62.6
ROACE
39.7%
38.1%
The following table sets forth the reconciliation from the Group’s
net cash / (debt) calculation;
Other
Cash generated from operations
Interest paid (note 33)
Tax paid (note 33)
Capex
Free cash flow
Proceeds on disposal of property, plant and
equipment
Dividends paid to equity holders of the
Company
Proceeds on issue of ordinary share capital
Interest received
Settlement of equity plans through market
purchase of shares
Net cash flows
Opening net debt
Translation/other
Closing net cash / (debt)
(17.0)
(57.0)
Net cash / (debt)
54.8
25.1
Cash and cash equivalents (note 18)
44.7
1.3
Non-current borrowings (note 21)
Current borrowings (note 21)
(22.2)
(21.0)
Net cash / (debt)
2017
€m
2016
€m
90.3
42.2
(50.0)
(1.7)
(0.7)
(78.4)
39.6
(37.9)
3.3
-
2.7
0.1
(3.0)
(0.4)
77.6
7.8
(37.9)
(44.3)
(0.1)
(1.4)
39.6
(37.9)
Irish Continental Group2017 Annual Report and Financial Statements 23
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 24.
Revenue
EBITDA
Operating profit (EBIT)
Non-trading item
Net pension interest expense (note 7)
Other finance charges (note 7)
Net interest
Profit before tax
ROACE
EPS: (note 12)
EPS Basic
EPS Adjusted
Free Cash Flow
Ferries
Container & Terminal
Inter-segment
Group
Comment
2017
€m
2016
€m
2017
€m
2016
€m
2017
€m
2016
€m
2017
€m
2016
€m
1
2
212.1
67.3
49.1
28.7
-
-
-
-
209.8
70.7
52.3
-
-
-
-
-
131.9
13.7
11.2
-
-
-
-
-
123.9
12.8
10.3
-
-
-
-
-
3
40.1%
38.3%
37.8%
37.1%
4
4
5
-
-
-
-
-
-
-
-
-
-
-
-
(8.9)
-
-
-
-
-
(8.3)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
335.1
81.0
60.3
28.7
(0.2)
(1.1)
(1.3)
87.7
325.4
83.5
62.6
-
-
(2.2)
(2.2)
60.4
39.7%
38.1%
44.1c
29.0c
31.4c
31.4c
54.8
25.1
Comment:
Financial KPIs
1. EBITDA: Group EBITDA for the year
decreased by 3.0%, to €81.0 million
(2016: €83.5 million). The decrease in
EBITDA was primarily due to increased
fuel costs which were up 25.2% to €40.3
million (2016: €32.2 million). EBITDA in
the Ferries division decreased by 4.8%,
to €67.3 million, while the Container and
Terminal division increased by 7.0%, to
€13.7 million.
3. ROACE: The Group achieved a return
on average capital employed of 39.7%
(2016: 38.1%). This increased return is
due to the decrease in EBIT from €62.6
million to €60.3 million, and a decrease
in average capital employed to €152.0
million from €164.5 million. The Ferries
Division achieved a return on average
capital employed of 40.1% while the
Container and Terminal division achieved
37.8%.
2. EBIT: Group EBIT (pre non-trading
items) for the year decreased by 3.7% to
€60.3 million (2016: €62.6 million). The
Ferries division decrease was 6.1%, while
the Container and Terminal division was
8.7% higher, as a result of volume growth.
On 17 May 2017, the Group completed the
sale of the vessel MV Kaitaki to KiwiRail
of New Zealand generating a profit
before tax of €28.7 million. Group EBIT
including non-trading items increased
by 42.2% to €89.0 million (2016: €62.6
million).
4. EPS: Adjusted EPS (before non-
trading items and the net interest cost
on defined benefit obligations) was 29.0
cent compared with 31.4 cent in 2016.
Basic EPS was 44.1 cent compared with
31.4 cent in 2016. The reason for the
increase in Basic EPS is due to an increase
of €24.5 million in profit attributable to
equity holders of the parent to €83.3
million (2016: €58.8 million). The increase
in profit relates to the sale of MV Kaitaki
which generated an after tax profit of
€24.9 million.
5. Free Cash Flow: The Group’s free
cash flow was €54.8 million (2016: €25.1
million) or 62% (2016: 40%) of Group
operating profit of €89.0 million (2016:
€62.6 million). The increase in free
cash flow is due to a decrease in capital
expenditure, down €40.0 million to €17.0
million primarily arising from payments
in relation to the new build and the
purchase of the HSC Westpac Express in
2016. This is partially offset by a decrease
in cash flows from operating activities,
down €10.3 million to €71.8 million.
Non-Financial KPIs
Schedule integrity: The Ferries division
successfully delivered 92% of scheduled
sailings compared with 94% in the
previous year across all services. Our
conventional ferry services (excluding the
fast ferry) delivered schedule integrity of
99% in comparison with 97% in 2016.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 24
Irish Continental Group
2017 Annual Report and Financial Statements
OPERATING AND FINANCIAL REVIEW
- CONTINUED
OPERATING REVIEW
FERRIES DIVISION
Revenue in the division was 1.1% higher than the previous year at €212.1 million
(2016: €209.8 million). Revenue in the first half of the year increased 2.4% to
€93.7 million (2016: €91.5 million), while in the second half revenue increased
0.1%, to €118.4 million (2016: €118.3 million). EBITDA decreased to €67.3
million (2016: €70.7 million) while EBIT was €49.1 million compared with €52.3
million in 2016. The decrease in profit was driven by increased fuel costs. Fuel
costs increased by €5.2 million in 2017. The division achieved a return on
capital employed of 40.1% (2016: 38.3%).
The Ferries division owns nine vessels in total and also charters in one vessel
as part of its operations. The Group has agreed ship building contracts for two
new cruise ferries for delivery in 2018 and 2020 which will be operated within
the division.
Irish Ferries operates four owned and one chartered-in multipurpose ferries
on routes to and from the Republic of Ireland. The chartered in vessel, Epsilon,
provides weekly sailings between Dublin and Holyhead as well as a weekend
round trip between Dublin and Cherbourg, France. Irish Ferries operated
5,140 sailings in 2017 (2016: 5,286), 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 currently operated by the Ferries division it
owns and charters out four container vessels. The 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
was redelivered to the Group at the end of November 2017 as per the terms of
the charter agreement with Sealift LLC. The Vessel is currently undergoing a
refurbishment programme to bring it up to Irish Ferries passenger service
standards. The W.B. Yeats which was formally named and the completed
hull launched into the water in January 2018 will commence sailing between
Ireland and France on the Dublin-Cherbourg route in summer 2018.
N
Irish Ferries Ropax and
Cruise ferry Services
Irish Ferries High Speed
Ferry
M2
M50
M3
M50
M1
M50
Dublin Port
M4
M50
M50
Holyhead
M50
M7
R
o
s
c
C
h
o
ff
e
r
b
o
u
r
g
M50
M50
M11
Dublin
Rosslare
Holyhead
U.K
Pembroke
Roscoff
Cherbourg
France
Strategic Report
Corporate Governance
Financial Statements
Other Information
25
N
M2
M50
M3
M50
M1
M50
Dublin Port
M4
M50
M50
Holyhead
M50
M7
R
o
s
c
C
h
o
e
r
b
ff
o
u
r
g
Irish Ferries Ropax and
Cruise ferry Services
Irish Ferries High Speed
Ferry
M50
M11
Fleet Summary:
Operated by Ferries Division
M50
In operation
MV Ulysses
Type
Employment
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
MV Epsilon
(chartered-in)
Under construction
Ropax*
HSC Westpac
High Speed Ferry
Rosslare – Cherbourg /
Roscoff
Dublin – Holyhead /
Cherbourg
Under refurbishment,
redelivery April 2018
MV W.B. Yeats
Hull 777
Cruise ferry
Cruise ferry
Delivery 2018
Delivery 2020
Chartered out by Ferries Division
Vessel
MV Ranger
MV Elbfeeder
MV Elbtrader
MV Elbcarrier
Type
Employment
LoLo container vessel Charter – 3rd Party
LoLo container vessel Charter – Inter-Group
LoLo container vessel Charter – Inter-Group
LoLo container vessel Charter – Inter-Group
*A Ropax ferry is a vessel with RoRo freight and passenger capacity.
Dublin
Rosslare
Holyhead
U.K
Pembroke
Roscoff
Cherbourg
France
26
OPERATING AND FINANCIAL REVIEW
OPERATING AND FINANCIAL REVIEW
- CONTINUED
- CONTINUED
Car and Passenger Markets
It is estimated that the overall car market, to and from the
Republic of Ireland, grew by approximately 1.7% in 2017 to
807,400 cars, while the all-island market, i.e. including routes
into Northern Ireland, is estimated to have grown by 1.8%. Irish
Ferries’ car carryings performed strongly during the year, at
424,000 cars, (2016: 414,100 cars), up 2.4% on the previous year.
In the first half of the year Irish Ferries grew its car volumes by
2.3% while in the second half of the year, which includes the
busy summer holiday season, volumes grew by 2.4%.
Our campaign strategy was to deliver awareness of our services,
using traditional and social 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.
The total sea passenger market (i.e. comprising car, coach and
foot passengers) to and from the Republic of Ireland increased
by 1.0% on 2016 to a total of 3.13 million passengers, while the
all-island market increased by 1.9%. Irish Ferries’ passenger
numbers carried increased by 1.7% at 1.650 million (2016: 1.623
million). In the first half of the year, Irish Ferries passenger
volumes grew by 1.7% and in the second half of the year, which is
seasonally more significant, the increase in passenger numbers
was 1.6%.
Irish Ferries services suffered greater weather disruption during
2017 compared to 2016 contributing to the overall reduction
in schedule integrity to 92% from 94%. 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 2017, Irish Ferries 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, irishferries.com,
which generated over 6.2 million visits, and delivered over 80%
of the car and passenger bookings transacted in the year.
We appreciate that our own performance is closely linked to
the performance of tourism source markets, and we continued
to work closely with state tourism agencies in Ireland (Tourism
Ireland & Fáilte Ireland), Wales (Visit Wales), and France (Atout
France & Normandy Tourism), to deliver co-operatively funded
advertising and publicity initiatives.
Given the commercial value of our e-commerce site,
considerable attention is paid to ensuring that the associated
systems are continuously available, robust and secure. We
continue to invest in developing our e-commerce 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 2017, we were delighted to be voted ‘Best Ferry Company’ by
travel trade professionals in both Britain and Ireland at the GB
‘Group Leisure & Travel Awards’ and at the ‘Irish Travel Industry
Awards’ (7th year in succession) and the ‘Irish Travel Trade News
Awards’ (11th year in succession).
Already in 2018, Irish Ferries has been voted ‘Best Cruise
or Ferry Experience’ by readers of the Irish Independent
Newspapers group through their Reader Travel Awards.
*(Market figures source: Passenger Shipping Association and Cruise & Ferry magazine)
Irish Continental Group2017 Annual Report and Financial Statements
28
OPERATING AND FINANCIAL REVIEW
OPERATING AND FINANCIAL REVIEW
- CONTINUED
- CONTINUED
RoRo Freight
The RoRo freight market between the Republic of Ireland, and
the U.K. and France, continued to grow in 2017 on the back of
the Irish economic recovery, with the total number of trucks
and trailers up 5.1%, to approximately 998,200 units. On an all-
island basis, the market increased by approximately 3.8% to 1.82
million units.
Irish Ferries’ carryings, at 287,500 freight units (2016: 286,100
freight units), increased by 0.5% in the year with volumes down
0.4% in the first half and up 1.3% in the second half. The strong
growth in the freight market in 2017 reflects the continued
strong performance of the Irish economy. The Irish Ferries
performance represents a consolidation of previously reported
average growth of 7.4% in 2015 and 2016.
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, 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.
Chartering
The MV Kaitaki remained on charter until the vessel was sold to
the existing charterer on 25 May 2017. In the last financial year
ended 31 December 2016 the charter of the vessel generated
operating profits of €2.1 million. Of our four owned LoLo
container vessels, the three Elb vessels are currently on year-
long charters to the Group’s container shipping subsidiary Eucon
on routes between Ireland and the continent whilst the Ranger is
on a short term charter to a third party.
The HSC Westpac Express, which was on charter since
acquisition in June 2016, was redelivered to the Group at the end
of November 2017. The Vessel will be renamed HSC Dublin Swift
on completion of a refurbishment programme and will replace
the HSC Jonathan Swift on the Dublin – Holyhead fast craft
service in April 2018. Overall external charter revenues were
€7.4 million in 2017 (2016: €8.7 million).
*(Market figures source: Passenger Shipping Association and Cruise & Ferry magazine)
Irish Continental Group2017 Annual Report and Financial Statements 30
Irish Continental Group
2017 Annual Report and Financial Statements
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 3,400 owned
and leased containers (equivalent to 6,700 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 €131.9 million (2016: €123.9 million). The
revenue is derived from container handling and related ancillary revenues
at our terminals and in Eucon from a mix of domestic door-to-door, quay-to-
quay and feeder services with 69% (2016: 70%) of shipping revenue generated
from imports into Ireland. With a flexible chartered fleet and slot charter
arrangements Eucon was able to adjust capacity and thereby continue to
meet the requirements of customers in a cost effective and efficient manner.
EBITDA in the division increased to €13.7 million (2016: €12.8 million) while
EBIT rose 8.7% to €11.2 million (2016: €10.3 million).
In Eucon overall container volumes shipped were up 5.9% compared with
the previous year at 321,400 teu (2016: 303,600 teu). The resulting revenue
increase was partially offset by a €2.9 million increase in fuel costs.
Containers handled at the Group’s terminals in Dublin Ferryport Terminal
(DFT) and Belfast Container Terminal (BCT) were up 3.0% at 296,800 lifts
(2016: 288,100 lifts). DFT’s volumes were up 4.7%, while BCT’s lifts were up
0.7%.
In November 2017, in recognition of the high quality of service Irish
Continental Group’s Container and Terminal Division were awarded the
‘Maritime Services Company of the Year’ at the 2017 Export Industry Awards
for the third year running.
M2
M50
M3
M50
M1
M50
Dublin Port
M4
M50
M50
Roterdam
Antwerp
M50
M11
M50
M50
M7
Belfast
Dublin
Cork
N
Eucon Geographical
Coverage
Eucon Routes
Dublin Ferryport Terminals
Belfast Container Terminal
Ports Served By Container
Ships: Belfast, Dublin, Cork,
Antwerp, Rotterdam
Estonia
Latvia
Lithuania
U.K
Rotterdam
Poland
Netherlands
Antwerp
Belgium
Germany
Czech Rep.
Slovakia
France
Switzerland
Italy
Austria
Hungary
Slovenia
Croatia
Romania
Serbia
Bulgaria
Strategic Report
Corporate Governance
Financial Statements
Other Information
31
M2
M50
M3
M50
M1
M50
Dublin Port
M4
M50
M50
Roterdam
Antwerp
M50
M11
M50
M50
M7
Belfast
Dublin
Cork
N
Eucon Geographical
Coverage
Eucon Routes
Dublin Ferryport Terminals
Belfast Container Terminal
Ports Served By Container
Ships: Belfast, Dublin, Cork,
Antwerp, Rotterdam
Estonia
Latvia
Lithuania
U.K
Rotterdam
Poland
Netherlands
Antwerp
Belgium
Germany
Czech Rep.
Slovakia
France
Switzerland
Italy
Austria
Hungary
Slovenia
Croatia
Romania
Serbia
Bulgaria
34
OPERATING AND FINANCIAL REVIEW
OPERATING AND FINANCIAL REVIEW
- CONTINUED
- CONTINUED
RESOURCES
The Group has the following key resources with which to pursue
its objectives:
• A modern owned ferry fleet and container terminals
• Access to strategically located ports and slot times
• Recognised brand names
• Experienced, qualified staff.
Fleet and terminals
The Group owns nine vessels at the reporting date comprising
five Ropax ferries and four LoLo vessels. Four Ropax ferries
were operated by the Group, the MV Oscar Wilde (31,914
Gross tonnage (GT)), delivered 1987, the MV Isle of Inishmore
(34,031 GT), delivered 1997, the HSC Jonathan Swift (5,989
GT), delivered 1999 and the MV Ulysses (50,938 GT), delivered
2001. In addition, the MV Epsilon (26,375 GT), delivered 2011,
was chartered in on bareboat charter basis. This charter will
now expire in November 2018, with options held by the Group
to extend the charter up to November 2020. The Ropax ferry
Kaitaki previously owned by the Group was sold in May 2017, this
vessel had been on charter outside of the Group.
Three of the LoLo container 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 on charter outside of
the Group since its acquisition during 2016 was redelivered to
the Group at the end of November 2017. The vessel is currently
undergoing a refurbishment programme to bring it up to Irish
Ferries passenger service standards.
In January 2018, ICG announced that it has entered into a
Memorandum of Agreement (“MOA”) for the sale of the High
Speed Craft “Jonathan Swift” to Balearia Eurolineas Maritimas
S.A. The agreed consideration of €15.5 million less broker’s
commission is payable in cash on delivery less a 10% deposit to
be held in escrow. The vessel is to be delivered by the end of
April 2018. This vessel will be replaced in Irish Ferries operations
by the HSC Westpac Express.
In addition to the currently owned fleet the Group will take
delivery of two new Ropax vessels being constructed for the
Group’s operations. The cruise ferry MV W.B. Yeats, which was
launched on 19 January 2018, will commence operations during
summer 2018 initially on the Dublin – Cherbourg route. A second
new cruise ferry, contracted in January 2018, will be delivered
during 2020 for operation on the Dublin – Holyhead route.
Additional details are contained under future developments on
page 58.
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
addition two electrically operated rubber tyred gantries
incorporating latest technologies to allow for remote operation
are currently undergoing commission. In Belfast Port the Group
operates the sole container terminal at VT3 under a services
concession agreement with Belfast Harbour Commissioners
(BHC). This facility comprises of 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 2017, the Group had 308 employees
compared with 302 at the start of the year, located in Ireland
(Dublin, Rosslare and Cork), the UK (Liverpool, Holyhead,
Pembroke and Belfast) and The Netherlands (Rotterdam).
Irish Continental Group2017 Annual Report and Financial Statements 36
OPERATING AND FINANCIAL REVIEW
OPERATING AND FINANCIAL REVIEW
- CONTINUED
- CONTINUED
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 (an International Convention for the
Prevention of Pollution from Ships (MARPOL) requirement which
involves setting targets for CO2 reduction).
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 the International Convention for the Prevention
of Pollution from Ships (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%. Ahead
of this change, the Vessel W.B. Yeats will utilise latest scrubber
technology and will enter service operating to an effective limit
of 0.1% both inside of the SECA and outside of it, thereby further
reducing our overall sulphur emissions 18 months ahead of this
regulation change.
Waste disposal / other
We continue to minimise the impact of waste disposal through
consistent compliance with the International Convention for
the Prevention of Pollution from ships (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.
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 role played by
charities and community organisations within our communities
and we are happy to help these organisations achieve their goals.
Irish Ferries has been a main sponsor of the National St. Patricks
Day festival. 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 Cycle
to Work Scheme an initiative to reduce commuting emissions
and promote health among staff. There is an on-site gym facility
at the Group head office, available to all staff.
We promote healthy eating among customers and staff through
a selection of healthy options on our food menus. We participate
in the Healthy Heart campaign with donations made to the Irish
Heart Foundation were customers opt for selected healthy meal
choices. Irish Ferries regularly updates its menus with 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 catering supplier specialist,
working with superior growers and producers throughout
Ireland. We source our fish and seafood products from a
large family-owned fishmonger that only use sustainable and
responsible fishing methods, located close to Dublin port. 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.
Irish Continental Group2017 Annual Report and Financial Statements 38
OPERATING AND FINANCIAL REVIEW
OPERATING AND FINANCIAL REVIEW
- CONTINUED
- CONTINUED
While the focus is on accident prevention where incidents do
occur, effective internal and external reporting and investigation
systems are employed to identify the cause of such incidents
and put in place actions to prevent recurrence. Due to the highly
regulated environment in which we operate, incidents may be
subject to external investigation by the appropriate regulatory
authority. The Group will always work with the authorities
toward a successful and constructive investigation outcome.
The bedrock of Irish Continental Group’s safety performance
is our people. We place strategic emphasis on ensuring all
those who work within the Group’s sphere of operations are
competent, provided with a high level of safety and quality
training and information, and are encouraged to engage with the
Group’s continuous improvement philosophy.
Compliance with policy and procedures, both ashore and
afloat, is monitored by regular and detailed audits. Audits are
conducted by trained and experienced auditors in an open
yet focused manner that drives compliance and improvement.
Senior management monitor safety and audit performance
across the Group, identifying and addressing safety trends and
opportunities for improvement where they may arise.
In addition to the Group’s own internal verification procedures,
our activities are subject to regular routine inspection by
national and international statutory bodies. They, like us, set high
standards to ensure the safety and well-being of all personnel,
passengers and cargoes; standards that we as a Group are ready
to meet and exceed.
Safety
The promotion and maintenance of a strong safety culture
across all activities is a principle strategy of Irish Continental
Group, to not only ensure the safety, security and well-being of
our people and passengers, but also so that all stakeholders reap
the competitive rewards that come from prioritising safety.
The Group’s operations span a wide range of activities, both
ashore and afloat. It is a matter of high priority that all our
activities are conducted in a manner that ensures the safety and
security of all our people, and all those who travel on board our
ships or visit our terminals.
As a minimum, all of the Group’s activities are conducted in
strict compliance with the various statutory health and safety
standards and international maritime regulations that apply.
In accordance with the Safety, Health and Welfare at Work
Act and its equivalents in other jurisdictions, the Group has
in place Safety Policies and Safety Statements that guide our
activities. We have in place a system of hazard identification
and risk assessment that ensures all necessary steps are taken
to minimise and mitigate safety risks. Laid down procedures
ensure that activities and operations are conducted in a
consistent and safe manner. By fostering a culture of employee
competence and participation we empower our employees to
continuously improve the efficiency and safety of our activities,
so contributing to a safe environment for all.
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). This
Convention is administered by the UN’s International Maritime
Organisation and is subject to continuous international review
and updating, ensuring ship safety standards keep pace with
societal expectations and technological advances.
The safety and security of ship’s crews, passengers and
cargoes is critical to our business, and is always the primary
consideration. Irish Continental Group ships are certified in
accordance with the International Safety Management (ISM)
Code, the international standard for the safe management and
operation of ships and for pollution prevention. Irish Continental
Group also operates in full compliance with the International
Ship and Port Facility Security (ISPS) Code on board all ships and
at all locations. The on-board management of the Irish Ferries
operated vessels is performed by Matrix Ship Management
Limited, Cyprus, on behalf of Irish Continental Group.
Irish Continental Group2017 Annual Report and Financial Statements David Ledwidge,
Chief Financial Officer
40
OPERATING AND FINANCIAL REVIEW
OPERATING AND FINANCIAL REVIEW
- CONTINUED
- CONTINUED
FINANCIAL
REVIEW
Results
Revenue for the year amounted to €335.1 million (2016: €325.4
million) while operating profit before non-trading items
amounted to €60.3 million compared with €62.6 million in 2016.
Principal variations on the prior year include the increase in
revenue by €9.7 million (+3.0%) as set out above and an increase
in group wide fuel costs which were €8.1 million higher at
€40.3 million (2016: €32.2 million). On 17 May 2017, the Group
completed the sale of the vessel MV Kaitaki to KiwiRail of New
Zealand generating a non-trading item of €28.7 million. This
resulted in profit before tax from continuing operations of €87.7
million (2016: €60.4 million).
Taxation
The tax charge is €4.4 million compared with a charge of €1.6
million in 2016. The corporation tax charge of €6.5 million (2016:
€2.0 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 €2.1 million in 2017 (2016: €0.4
million). The increase year on year in the Group’s tax charge
mainly relates to the sale of the MV Kaitaki, which generated tax
on disposal of €3.8 million.
Earnings per share
Basic EPS was 44.1 cent compared with 31.4 cent in 2016. The
reason for the increase in Basic EPS is due to an increase in profit
attributable to equity holders of the parent to €83.3 million
(2016: €58.8 million). The increase in profit relates to the sale of
MV Kaitaki which generated an after tax profit of €24.9 million.
Adjusted EPS (before the net interest cost on defined benefit
obligations and non-trading items) was 29.0 cent compared with
31.4 cent in 2016.
Cash flow and investment
EBITDA for the year was €81.0 million (2016: €83.5 million).
There was a net outflow of working capital of €1.9 million, due
to an increase in receivables of €2.6 million from increased
revenue, an increase in inventories of €0.4 million, partially
offset by a decrease in payables of €1.1 million. The Group made
payments, in excess of service costs to the Group’s pension
funds of €1.1 million. Other net cash inflows amounted to €0.5
million resulting in cash generated from operations amounting to
€78.5 million (2016: €86.5 million).
Interest paid was €1.1 million (2016: €2.3 million) while taxation
paid was €5.6 million (2016: €2.1 million) including €5.1 million
relating to the sale of MV Kaitaki. Interest received amounted to
€nil (2016: €0.1 million).
Capital expenditure was €17.0 million (2016: €57.0 million) which
included annual refits of the vessels, new terminal handling
equipment and payments related to the new vessel MV W.B.
Yeats.
Arising from the cash flows set out above and dividend
payments of €22.2 million, settlement of equity plans through
market purchase of shares of €3.0 million, share issues of
€3.3 million, net proceeds on the sale of property, plant and
equipment of €44.7 million (€44.1 million net proceeds relating
to the sale of MV Kaitaki), net cash at year end was €39.6 million
(2016: €37.9 million net debt).
Dividend
During the financial year a final dividend of 7.76 cent per ICG
Unit was paid for the financial year ended 31 December 2016 and
an interim dividend of 4.01 cent per ICG Unit was paid for the
financial year ended 31 December 2017. The Board is proposing a
final dividend of 8.15 cent per ICG Unit in respect of the financial
year ended 31 December 2017.
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 €283.4 million
(2016: €274.8 million), while combined pension liabilities were
€278.7 million (2016: €288.3 million). The discount rate for
Euro liabilities has increased from 1.7% to 1.8% while the rate
for Sterling liabilities has decreased from 2.5% to 2.35%. Of the
Group’s four schemes, three were in surplus at the year end (€8.1
million) versus two schemes (€2.4 million) in 2016. One scheme
was in deficit (€3.4 million) versus two schemes (€15.9 million) in
2016. 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 2015, is €nil (2016: €nil).
The total net surplus of all defined benefit pension schemes at 31
December 2017 was €4.7 million in comparison to €13.5 million
deficit at 31 December 2016. The movement reflects an actuarial
gain of €17.5 million, arising from investment performance and
the positive effect of an increase in the discount rate used to
value scheme liabilities.
Irish Continental Group2017 Annual Report and Financial Statements 41
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 5 year
multicurrency revolving credit facility provided by Allied Irish
Banks plc (Co-ordinating Bank) and Bank of Ireland (Agent Bank)
extendable by up to 2 years, comprising a committed €75.0
million drawing limit together with an additional uncommitted
limit of €50.0 million, a 12 year amortising term loan provided
by the European Investment Bank comprising a committed
€75.0 million drawing limit, subject to certain conditions
precedent relating to the completion of the vessel W.B.
Yeats, multicurrency private loan note shelf agreements with
Metropolitan Life Insurance Company and Pricoa Capital Group
comprising total uncommitted drawing limits of USD275.0
million equivalent to €229.0 million and tenors of up to 15 years.
On 30 November 2017, the Group issued loan notes for a total
amount of €50.0 million. The Group also has an overdraft and
guarantee facility of €16.0 million provided by Allied Irish Banks
Plc.
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
2017.
The Group’s current committed bank facilities under the above
arrangements amount to €216.0 million (2016: €92.7 million).
Total amounts utilised at 31 December 2017 amounted to €50.6
million (2016: €78.4 million).
The Group had finance lease liabilities of €1.7 million at 31
December 2017 (2016: €2.4 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 interest rates on Group borrowings at 31 December 2017
comprising loan notes and finance lease obligations has been
fixed at a contracted rate at the date of drawdown with the
relevant lender eliminating exposure to interest rate risk on
borrowings. The average effective interest rate at 31 December
2017 was 1.53%. At 31 December 2016, 50% of Group borrowings
was at fixed rates at an average effective rate of 3.50%. Debt
interest cover, for the year was 68 times (2016: 28 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. Sterling revenues and expenses are netted, with
excess Sterling revenues applied 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 110,900 tonnes in 2017 (2016: 110,100
tonnes). The cost per tonne of heavy fuel oil (HFO) fuel in 2017
was 33% higher than in 2016 while marine gas oil (MGO) was 18%
higher than in 2016.
Credit risk
The Group’s credit risk arising on its financial assets is principally
attributable to its trade and other receivables. 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% (2016: 100%) of the Group’s cash
resources had a maturity of three months or less. Net cash at 31
December 2017 was €39.6 million (2016: net debt €37.9 million)
made up of borrowings of €50.7 million (2016: €80.1 million)
which is offset by cash and cash equivalents of €90.3 million
(2016: €42.2 million). Following the maturity of its previous debt
facilities ICG concluded a suite of financing agreements in late
2017 such that 1% (2016: 98%) of the Group’s bank borrowings are
due to mature within one year.
David Ledwidge,
Chief Financial Officer
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 42
OPERATING AND FINANCIAL REVIEW
OPERATING AND FINANCIAL REVIEW
- CONTINUED
- CONTINUED
RISK MANAGEMENT
Risk Appetite and Strategy
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
Board communicates its appetite for various risk areas through
the adoption of Risk Appetite Statements. These provide context
to which the Group’s strategy is pursued.
Risk Culture
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 with minimal
capacity for risk. This strong safety culture contributes to the
overall risk culture of the Group.
Risk Management Framework
The Group adopts a variant of the ‘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 function design and execute the application of
internal control measures on a daily basis. The second line
function undertakes an oversight and compliance role and
include the Group Risk Management function which report
directly on risk matters to the Board. 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 of internal control, compliance and
governance.
A key component of the Group’s framework is the Risk
Management Committee (the “RMC”), comprised of members
from all three lines of defence as well as having Board
representation. The RMC is tasked with developing the Group’s
ICG Board
Risk Management
Function Reporting
Audit Committee
Internal Audit
Reporting
Group Risk Register
Risk Management
Committee
External Audit
Other external Bodies
(Port State Authorities,
SOLAS, MARPOL, etc.)
2nd Line of Defence
(Risk Management
& Group Oversight
Functions)
1st Line of Defence
(Divisional
Management)
3rd Line of Defence
(Internal Audit
Function)
Irish Continental Group2017 Annual Report and Financial Statements 43
Bottom-up Risk Assessment process
Risk Area Personnel
Risk identification and assessment
Risk Area Owners
Review of risk assessments and grouping of
related risks into risk aspects
Risk Management Committee
Analysis of risk aspects
and risk reporting
ICG Board
Approval of risk
register and
reports
risk management policy and keeping it up to date, coordinating
risk management activities, and monitoring Key Risk Indicators.
Key Risk Indicators are metrics used to help monitor the level
of risk taking in an activity and can provide an early signal of
increasing risk exposure in various areas of the Group, enabling
corrective action to be taken before the risk materialises. The
Committee is also responsible for the maintenance of the Group
Risk Register and works with the Audit Committee to ensure
the register is robust, current and consistent across all Group
operating areas.
The Group Risk Register is the central repository for
documenting, assessing and prioritising risks and for measuring
the effectiveness of related controls. 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 likelihood and impact of each risk is scored on a 5 x 5 scale.
The Group Risk Register is reviewed on an ongoing basis by the
RMC. Any necessary changes to the Group Risk Register are
identified throughout the year from the occurrence of a risk
event, via regular RMC meetings or through alerts prompted
by a Key Risk Indicator. Reporting by management on key risks
is covered within the regular Board meeting agenda. These
activities form the basis for the continuous risk monitoring
process. The significant risks and uncertainties facing the Group
are set out on pages 44 to 47. The Board acting through the Audit
Committee conducts an annual assessment of the significant
risks and uncertainties and the adequacy of the monitoring
and reporting system maintained by management. No material
weaknesses were noted by the Board during the year.
During the reporting period, the RMC commenced a process
of updating its risk identification methodology by moving to
a bottom-up approach to risk identification and assessment,
utilising the knowledge and skills of staff at varying levels to
create a positive risk culture and environment. Coupled with the
input, control and monitoring from the Board fosters a collective
ability to identify, understand, openly discuss and act on the
Group’s current and future risks. Risk Assessment Forms, which
feed into the Group Risk Register will be completed by personnel
within each risk area and then reviewed by the relevant risk
area owner. The completed risk assessments will be used by
the risk area owners to identify Risk Aspects. Risk Aspects are
a grouping together of related risks, with reference back to the
source Risk Assessments. The risk area owners report on these
Risk Aspects directly to the RMC, providing the RMC with a tool
to maintain an overview of the broader Risk Aspects affecting
the Group. The RMC’s review of Risk Aspects feeds directly into
its risk reporting to the Board. This redesign was undertaken to
standardise the risk reporting across the Group and enhance
the culture of risk awareness and ownership at all levels of the
Group. This project is expected to be completed in 2018.
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 RMC and
Group Internal Audit, which includes the Group Risk Register.
Presentations were also made to the Audit Committee by the
RMC and Group Internal Auditor. Full details of the activities
performed by the Audit Committee can be found on pages 69 to
72. The risks and uncertainties set out on the following pages are
broadly unchanged from the previous year.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 44
OPERATING AND FINANCIAL REVIEW
OPERATING AND FINANCIAL REVIEW
- CONTINUED
- CONTINUED
Principal Risks and Uncertainties
Operational Risks
Description
Impact
Mitigation
Outlook
Serious
accident /
incident
A serious accident or
incident (e.g. collision, fire,
grounding explosion) could
occur to a vessel at sea or at
Group operations ashore.
Loss of life, personal
injury, significant vessel
damage or damage to plant
and machinery, cargoes,
environment, reputation
significant financial loss and
reduced growth prospects.
Mechanical
and other
failure
Disruption to schedules due
to mechanical or electrical
failure, or loss of critical
port installations, labour
disputes or failure of key
suppliers.
Financial loss, cancelled
sailings and late delivery
of cargos resulting in
diminished reputation.
Defined operating safety and
quality policies and procedures in
place, including, a system of hazard
identification and risk assessment
and performing regular accident and
emergency exercises and debriefs.
Group compliance with all external
regulatory health and safety standards
and requirements is subject to regular
audits both internally and externally.
Comprehensive insurance policies are
in place for the consequences of such
events.
There are policies and procedures in
place for maintaining and protecting
critical infrastructures and equipment.
Close relationships are maintained
with port infrastructure providers.
Contingency plans are in place in case
of loss of infrastructure.
There are comprehensive procedural
agreements in place for processing
disputes with all labour representation
bodies using appropriate third parties as
required.
Multiple supplier contracts for fuel are in
place at ports servicing our vessels.
Hazardous
accidents
Accidents in the
transportation of hazardous
materials, dangerous goods
and waste.
Personal injury, marine
pollution, reputational
damage, financial loss.
Compliance with the International
Maritime Dangerous Goods Code,
audited on a regular basis.
Ongoing monitoring of procedures and
training.
Fuel
contamination
Contamination to the
fuel consumed by Group
vessels.
Significant engine damage,
pollution, financial loss.
Random testing of fuel samples to
ensure supply is within specification.
Fuel quality is monitored through
combustion in main and auxiliary
engines and boilers.
Use of a surveyor at each bunkering to
monitor performance of supplier and
crew.
The Group is
committed to
monitoring, identifying
and addressing
safety trends and
opportunities for
improvement where
they may arise.
Continued investment
in quality assets
including the MV
W.B. Yeats (delivery
2018), a second new
vessel (delivery 2020),
upgrade of Westpac
Express and the
installation of new
terminal equipment will
reduce the likelihood of
technical failures.
The Group continually
ensures best practice
is followed and
appropriate personnel
are adequately trained.
Ongoing monitoring
and identifying any
opportunities for
improvement where
they may arise.
Irish Continental Group2017 Annual Report and Financial Statements 45
Commercial and Market Risks
Description
Impact
Mitigation
Outlook
Competitive
activity
Increases in competitor
activity through pricing or
capacity additions.
Decrease in customer base,
reduced profitability and
growth prospects.
A dynamic pricing approach is adopted,
utilising pricing initiatives in the
passenger market to mitigate against
these risks.
Continuous monitoring
of competitor activity
to make adjustments as
appropriate.
Fuel prices
Fluctuation in fuel prices
Increase in cost base,
reducing profitability.
Commercial arrangements are in place
with freight customers which mitigates
the immediate effects of additional
market capacity but there remains
medium term exposure to decreases in
customer base.
Group policy has been to purchase these
commodities in the spot markets and to
remain unhedged. The Group operates
surcharge mechanisms with the Group’s
freight customers which allows for
prearranged price adjustments in line
with Euro fuel costs. In the passenger
sector, changes in bunker costs are
included in the ticket price to the extent
that market conditions will allow.
Economic and
political
Economic and political
conditions, in particular
the effect of ‘Brexit’ could
adversely impact demand
for ferry travel, international
trade and the strength of
the Sterling relative to the
Euro.
Delays to scheduling and
vessel turnaround times,
reduced profitability and
growth prospects.
Liaison with various associations and
Government bodies to share Group
views on the manner of Brexit.
Close monitoring of currency exchange
movements and adoption of a matching
policy to reduce exposure.
Continued focus on
maintaining strong
relationships and
process integration
with freight customers.
Investment to maintain
reliability and expected
customer standards.
Group fuel costs
will remain largely
determined by global
factors beyond our
control.
The Group will continue
to seek efficiencies
to reduce fuel
consumption across
all ships including
adoption of the latest
proven designs and
technologies.
There remains
uncertainty over the
expected manner of
Brexit and its impact
on Group operations.
This uncertainty could
create both threats and
opportunities for the
Group. Developments
up to the current
effective date in April
2019 will continue to be
closely monitored.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 46
OPERATING AND FINANCIAL REVIEW
OPERATING AND FINANCIAL REVIEW
- CONTINUED
- CONTINUED
Principal Risks and Uncertainties - continued
IT Systems & Cyber Risks
Description
Impact
Mitigation
Outlook
IT systems
failure
IT systems may be
disrupted by internal
failures, outages at third-
party service providers or
by environmental events,
such as storms or flooding.
Business interruption,
including interruption to
booking systems, resulting
in financial loss, customer
ill will.
Data breach
Sensitive data and
information held by the
Group, as well as Group
networks and systems are
at risk of being targeted by
cyber criminals.
Business interruption
resulting in financial loss.
Depending on the form of
attack; financial loss to the
Group, customers, suppliers
or to third-party service
providers. Loss of personal
data of staff or customers.
Reputational damage.
IT standards and policies are 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.
A holistic approach to IT governance
and security is adopted. This includes;
dedicated IT security personnel with
direct reporting to the Board, regular
management meetings on information
security, external collaboration with
industry participants on matters
of information security, the use of
various applications to protect Group
systems and networks from breaches,
appropriate staff training in relation to
information security awareness and
incident response plans for the main
attack scenarios.
Continuous review of
IT systems and policies,
ensuring alignment
with best practice in
supporting current
operations and decision
making.
Following a number
of high-profile,
coordinated
ransomware attacks
globally in 2017,
cyberattacks are now
considered the new
normal in business
today. The introduction
of the EU’s General
Data Protection
Regulation in May 2018
reinforces the need to
have robust systems
in place for protecting
personal data. As such,
information security
remains an area of key
focus for the Group.
Irish Continental Group2017 Annual Report and Financial Statements 47
Financial Risks
Volatility
Description
Impact
Mitigation
Outlook
Financial risk arises in
the ordinary course of
business, specifically the
risk of default by debtors,
fluctuations in both foreign
exchange rates and interest
rates, and availability of
financing.
Potential financial loss to
the Group.
The Group has credit insurance in place,
where available, mitigating default of
debtors. The Group uses interest rate
swaps and forward foreign currency
contracts. Financing facilities are in
place to ensure secure access to finance
if required.
The Group has robust
policies and controls in
place to minimise the
financial risks detailed.
Fraud Risk
Material financial
misstatement may arise
due to fraud or error, in the
form of misappropriation
of assets or inaccurate
financial reporting.
Reputational damage may
arise from misstatement
in financial reports and
financial loss to the Group
may occur as a result of
misappropriation of assets.
We have
policies in place to
manage these risks
from a treasury and
financial reporting
perspective.
We adopt
recommendations
arising from internal
and external audits and
reviews as appropriate.
Key financial controls include clear
segregation of duties within the business
with regular monitoring of financial
performance against targets.
The risk of misappropriation of funds is
mitigated by the Group’s Treasury and
Finance functions who continuously
monitor bank accounts, cash floats and
cash takings and returns both on-board
and at port.
There is restricted access to bank
accounts and mandated dual
authorisation controls for payment
approvals as well as rigorous checks of
the settlement instructions received to
effect payment.
Retirement
Benefit
Scheme Risks
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.
The Group also has joint
and several liability risk
exposure to the obligations
of other participating
employers in the multi-
employer Merchant Navy
Officer Pension Fund.
Decreases in scheme
asset values, or increases
in scheme obligations
which may result in deficits
impacting on balance sheet
strength.
Use of balanced investment strategies
which are integrated to deficit recovery
plans and supported by appropriate
funding through ongoing and deficit
contributions.
Closure of the MNOPF to future accrual.
Operation of Group defined contribution
schemes for new employees.
The Scheme
investment strategy
continues to be
reviewed formally on
a regular basis by the
Trustee with regular
consultation with the
Group with recovery
plans on target.
Regular meetings with the investment
managers to monitor performance
relative to agreed benchmarks.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 48
OUR FLEET
MV Ulysses
Year Built
Acquired
Gross Tonnage
No. Engines
Speed
Lane Metres
Car Capacity
Passenger Capacity
Beds
MV Isle of Inishmore
2001
2001
50,938
4
22 knots
4,100
1,342
1,875
186
Year Built
Acquired
Gross Tonnage
No. Engines
Speed
Lane Metres
Car Capacity
Passenger Capacity
Beds
MV Oscar Wilde
Year Built
Acquired
Gross Tonnage
No. Engines
Speed
Lane Metres
Car Capacity
Passenger Capacity
Beds
1997
1997
34,031
4
21.5 knots
2,100
855
2,200
208
MV Epsilon (chartered in)
Year Built
Acquired
Gross Tonnage
No. Engines
Speed
Lane Metres
Car Capacity
Passenger Capacity
Beds
2011
chartered-in
26,375
2
23 knots
2,800
150
500
272
HSC Jonathan Swift
(disposal agreed in January 2018)
Year Built
Acquired
Gross Tonnage
No. Engines
Speed
Lane Metres
Car Capacity
Passenger Capacity
Beds
HSC Westpac Express
(to be renamed HSC Dublin Swift)
1999
1999
5,989
4
39 knots
-
200
800
-
Year Built
Acquired
Gross Tonnage
No. Engines
Speed
Lane Metres
Car Capacity
Passenger Capacity
Beds
1987
2007
31,914
4
21.5 knots
1,220
580
1,458
1,376
2001
2016
8,403
4
35 knots
-
251
900
-
W.B. Yeats (under construction)*
Hull 777 (under construction)*
Year Built
Acquired
Gross Tonnage
No. Engines
Speed
Lane Metres
Car Capacity
Passenger Capacity
Beds
2018
Mid 2018
50,000
4
22.5 knots
2,800
1,216
1,885
1,756
Year Built
Acquired
Gross Tonnage
No. Engines
Speed
Lane Metres
Car Capacity
Passenger Capacity
Beds
2020
Early 2020
67,000
4
23 knots
5,610
1,500
1,800
608
* Subject to final certificate
* Subject to final certificate
Irish Continental Group2017 Annual Report and Financial Statements 49
MV Ranger
Year Built
Acquired
Gross Tonnage
Deadweight
Capacity
MV Elbfeeder
Year Built
Acquired
Gross Tonnage
Deadweight
Capacity
2005
2015
7,852
9,300
803 TEU
2008
2015
8,246
11,157
974 TEU
MV Elbtrader
Year Built
Acquired
Gross Tonnage
Deadweight
Capacity
2008
2015
8,246
11,153
974 TEU
MV Elbcarrier
Year Built
Acquired
Gross Tonnage
Deadweight
Capacity
MV Endurance (chartered in)
MV Mirror (chartered in)
2007
2015
8,246
11,166
974 TEU
Year Built
Acquired
Gross Tonnage
Deadweight
Capacity
2005
chartered-in
7,642
9,146
750 TEU
Year Built
Acquired
Gross Tonnage
Deadweight
Capacity
2007
chartered-in
7,852
9,344
803 TEU
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 50
EXECUTIVE MANAGEMENT TEAM
Eamonn Rothwell BComm, MBS, FCCA, CFA UK
Chief Executive Officer
Eamonn Rothwell, aged 62, has been a Director for 31 years having been appointed as a non-executive
Director in 1987 and subsequently to the position of Chief Executive Officer in 1992. He is also 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 FCA, BSc (Mgmt)
Chief Financial Officer
David Ledwidge, aged 38, 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 vari-
ous 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 MSc. BEng(Hons). CEng. FIMarEST. FRINA.
Managing Director – Ferries Division
Andrew Sheen, aged 46, a chartered engineer, has been involved in shipping for over 27 years and has
worked with Irish Ferries in a variety of Operational Roles for over 12 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 President of
the Irish Chamber of Shipping and is a Director of the European Community Ship Owners Association and
the International Chamber of Shipping.
Declan Freeman FCA
Managing Director - Container and Terminal Division
Declan Freeman, aged 42, 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.
Irish Continental Group2017 Annual Report and Financial Statements 52
Irish Continental Group
2017 Annual Report and Financial Statements
Corporate
Governance is
concerned with
how companies
are directed and
controlled.
Read more from the Corporate Governance Statement on page 60
Strategic Report
Corporate Governance
Financial Statements
Other Information
53
CORPORATE
GOVERNANCE
54 The Board
56 Report of the Directors
60 Corporate Governance Statement
69 Report of the Audit Committee
73 Report of the Nomination Committee
75 Report of the Remuneration Committee
85 Directors’ Responsibilities Statement
54
THE BOARD
The Group’s non-executive Directors are:
John B. McGuckian BSc (Econ)
Chairman
John B. McGuckian, aged 78, has been a Director for 30 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 also 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 56, has been a Director for 6 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 55, has been a Director for 5 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, Remuneration Committee (Chairperson), Nomination Committee
John Sheehan FCA
Independent Director
John Sheehan, aged 52, has been a Director for 4 years having been appointed to the Board in 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
Irish Continental Group2017 Annual Report and Financial Statements
55
The Group’s executive Directors are:
Eamonn Rothwell BComm, MBS, FCCA, CFA UK
Chief Executive Officer
Eamonn Rothwell, aged 62, has been a Director for 31 years having been appointed as a non-executive
Director in 1987 and subsequently to the position of Chief Executive Officer in 1992. He is also 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
David Ledwidge FCA, BSc (Mgmt)
Chief Financial Officer
David Ledwidge, aged 38, has been a Director for 2 years, having been appointed to the Board in 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.
The company secretary is:
Thomas Corcoran BComm, FCA
Company Secretary
Thomas Corcoran, aged 53, 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.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 56
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 2017.
Board of Directors
The Board members are listed on pages 54 to 55 of this report.
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 97 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 14 to 47. 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 2017 are set
out in the Consolidated Statement of Changes in Equity on page
100 for the Group and the Company Statement of Changes in
Equity on page 103 for the Company.
In June 2017, a final dividend of 7.76 cent per ICG Unit was paid
in respect of the financial year ended 31 December 2016. In
October 2017, an interim dividend of 4.01 cent per ICG Unit was
paid in respect of the financial year ended 31 December 2017.
The Board is proposing a final dividend of 8.15 cent per ICG Unit
to be paid in respect of the financial year ended 31 December
2017 in June 2018.
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.
In accordance with the Constitution, 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 2018
Annual General Meeting and offer themselves for re-election.
Biographical details of the Directors are set out on pages 54 to
55 of this report and the result of the annual board evaluation is
set out on page 63.
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 have been prepared on the going
concern basis and, 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 economic environment of 2018, the
principal risks and uncertainties facing the Group (pages 44 to
47), the Group’s 2018 budget plan and the medium term strategy
of the Group, including capital investment plans. The future cash
requirements have been compared to bank facilities which are
available to the Group and Company.
Viability Statement
The Directors have assessed ICG’s viability over an extended
timeframe of five years compared to three years previously used.
The extended period was selected as the Directors believe that
this reflects an appropriate timeframe for performing realistic
assessments of future performance given the dynamic nature
of our markets as regards the competitive landscape, economic
activity, long life assets and the significant capital investment
commitments related to new vessel construction contracts.
Irish Continental Group2017 Annual Report and Financial Statements 57
In making their assessment, the Directors took account of ICG’s
current financial and operational positions and contracted
capital expenditure. Much of this work was performed in
assessing the significant capital expenditure commitments made
during the period where management presented investment
proposals which were subject to examination and challenge
by the Directors. These positions were also assessed against
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 44 to 47. It was further
assumed that functioning financial markets exist throughout the
assessment period 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 five years.
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 he/she ought to
have taken as a Director to make himself/herself aware of any
relevant audit information (as defined) and to ensure that the
statutory Auditor is aware of such information.
Directors’ Compliance Statement
The Directors acknowledge that they are responsible for
securing compliance by the Company with its Relevant
Obligations as defined with 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
2017, the Directors have reviewed the effectiveness of these
arrangements and structures during the financial year to which
this Report relates.
International Financial Reporting Standards
Irish Continental Group presents its Financial Statements in
accordance 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 2017
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 44 to 47.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 58
REPORT OF THE DIRECTORS
CONTINUED
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 7
March 2018 and as at 31 December 2017 were as follows:
Beneficial Holder as Notified
7 March 2018
31 December 2017
Eamonn Rothwell
Wellington Management Company, LLP
Ameriprise Financial Inc.
Marathon Asset Management, LLP
BlackRock Inc.
FMR LLC
Number of Units
% of Issued Units
Number of Units
% of Issued Units
29,192,155
24,650,264
15,260,710
11,175,814
9,892,024
6,229,035
15.4%
13.0%
8.0%
5.9%
5.2%
3.3%
29,192,155
24,819,739
15,260,710
13,132,741
7,547,874
6,229,035
15.4%
13.1%
8.0%
6.9%
4.0%
3.3%
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 2017 and 1 January 2017 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
31/12/2017
ICG Units
296,140
01/01/2017
ICG Units
296,140
31/12/2017
Share Options
01/01/2017
Share Options
-
-
29,192,155
28,092,842
993,000
2,200,000
-
66,837
41,740
15,000
-
51,623
41,740
15,000
-
-
250,000
300,000
-
-
-
-
158,488
113,081
373,000
440,000
ICG Units are explained on page 170 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. Details of Deloitte’s appointment is set out on page 71.
Key Performance Indicators
The Group uses a set of headline Key Performance Indicators
(KPIs) to measure the performance of its operations. These
KPIs are set out on pages 21 to 22 and are incorporated into this
report by cross reference.
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 Conduct
Authority and of the Irish Corporate Governance Annex (“the
Irish Annex”) issued by the ISE. A corporate governance
statement is set out on pages 60 to 68 and are incorporated into
this report by cross reference.
Future Developments
The W.B. Yeats is scheduled to commence sailings between
Ireland and France on the Dublin-Cherbourg route in summer
2018. Following the completion of the summer season it will
operate on the Group’s Dublin – Holyhead route for the winter
months. The versatility of the ship will allow us far greater
flexibility going forward. This flexibility combined with the scale
of the ship will greatly enhance the Group’s revenue earning
capability. For the first time, the Group will have a ship that
can accommodate the peak summer traffic to France and also
Irish Continental Group2017 Annual Report and Financial Statements
59
provide our freight customers the capacity they need on the
direct route to France. The ship will have the capacity to carry
1,216 cars or 165 trucks, but importantly can also accommodate
300 cars when it is carrying 165 trucks. The ship was formally
named and the hull launched on the 19 January 2018.
of €165.2 million and is scheduled for delivery during 2020.
ICG announced on 30 January 2018 that it has entered into a
Memorandum of Agreement (“MOA”) for the sale of the High
Speed Craft “Jonathan Swift” to Balearia Eurolineas Maritimas
S.A for an agreed consideration of €15.5 million. This vessel will
be delivered to the buyer in April 2018.
There have been no other material events affecting the Group
since 31 December 2017.
Annual Report and Financial Statements
This Annual Report together with the Financial Statements for
the financial year ended 31 December 2017 was approved by
the Directors on 7 March 2018. 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
Thursday 10 May 2018, will be notified to shareholders in April
2018.
On behalf of the Board
Eamonn Rothwell
Director
David Ledwidge
Director
7 March 2018
Registered Office: Ferryport, Alexandra Road, Dublin 1, Ireland.
On 2 January 2018, ICG announced 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 €165.2 million and is
scheduled for delivery during 2020. The cruise ferry will replace
the MV Ulysses on the peak sailings between Dublin – Holyhead,
with the MV Ulysses becoming the second vessel on the route.
The ship will give ICG an increase in effective capacity from 200
freight units to 300 freight units on peak sailings. This will allow
ICG to continue growing on the key Dublin – Holyhead route
into the future. The vessel when completed, will be the largest
cruise ferry in the world in terms of vehicle capacity.
The HSC Westpac Express was redelivered to the Group
at the end of November 2017 as per the terms of the
charter agreement with Sealift LLC. The vessel is currently
undergoing a refurbishment programme to bring it up to Irish
Ferries passenger service standards. Upon completion of this
programme, the ship will be renamed HSC “Dublin Swift” and
will replace the HSC “Jonathan Swift” on the Dublin – Holyhead
fast craft service.
On 30 January 2018, ICG announced that it has entered into a
Memorandum of Agreement (“MOA”) for the sale of the HSC
“Jonathan Swift” to Balearia Eurolineas Maritimas S.A. The
agreed consideration of €15.5 million less broker’s commission
is payable in cash on delivery less a 10% deposit to be held in
escrow. The vessel is to be delivered by the end of April 2018.
Events after the Reporting Period
The Board is proposing a final dividend of 8.15 cent per ICG
Unit in respect of the results for the financial year ended 31
December 2017. On 2 January 2018, 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
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 60
CORPORATE GOVERNANCE STATEMENT
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 April 2016 edition of the Code.
The Corporate Governance Report explains how the Group has applied the
principles set out in the Code and the Irish Annex.
Your Board currently comprises two executive and four non-executive
Directors. Further details on Board composition is set out on pages 54 and
55. During the year I led the annual board evaluation and concluded that
the Board was as a whole operating effectively for the long term success of
the Group. While the Group met the criteria of a smaller company under the
equivalence thresholds contained in the Irish Annex as a strengthening of our
corporate governance practices the Board evaluation was externally facilitated
in line with commitments given in my 2016 Report.
The Remuneration Committee completed its review of the Group’s
remuneration framework for executive Directors and senior executives
and was presented as part of the Report of the Remuneration Committee
to shareholders at the 2017 AGM. I am happy to report that the advisory
resolution tabled at the 2017 AGM on the report of the Remuneration
Committee received 90.9% acceptance, a significant improvement on
previous acceptance rates.
The reports from the Committee chairmen are set out on pages 69 to 84.
The business conditions we face create opportunities and challenges going
forward and I look forward to continuing open and constructive debate and
ensuring that our corporate governance practices remain appropriate to assist
in the future growth of the Group.
John B. McGuckian
Irish Continental Group2017 Annual Report and Financial Statements 61
Corporate Governance Framework
The corporate governance structure at ICG is
set out below.
Chairman
Board of Directors
Company
Secretary
Audit
Committee
Chief
Executive
Remuneration
Committee
Nomination
Committee
Executive Management Team
Business Functions
Divisional Boards
The Company is committed to the principles of corporate
governance contained in the UK Corporate Governance Code
issued in April 2016 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 2017.
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 Irish Annex. The Report of the
Remuneration Committee at page 83 explains why in relation to
one Director a notice period in excess of one year may apply in
limited circumstances.
The Code can be viewed on the Financial Reporting Council’s
(FRC) website (www.frc.org.uk) and the Irish Annex on the ISE
website (www.ise.ie).
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 Constitution, 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 2017,
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 69, 73 and 75
respectively.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 62
CORPORATE GOVERNANCE STATEMENT
CONTINUED
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; and
• Ensuring effective communication with shareholders.
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.
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.
Director attendances at scheduled meetings are set out below.
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.
Attendance at scheduled Board meetings during the year ended
31 December 2017 was as follows:
Member
J. B. McGuckian (Chair)
E. Rothwell
C. Duffy
D. Ledwidge
B. O’Kelly
J. Sheehan
A
8
8
8
8
8
8
B
8
8
8
8
8
8
Tenure
30 years
31 years
6 years
2 years
5 years
4 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
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, 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
Irish Continental Group2017 Annual Report and Financial Statements 63
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 54 to 55. 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.
Catherine Duffy is 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 expenses
incurred, which were on an arm’s length basis at standard
commercial terms, are set out at note 32 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-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.
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 which is led by the Chairman, is forward
looking in nature. As part of a previous commitment, the 2017
evaluation process was externally facilitated as part of a triennial
cycle. Mr George Bartlett FCIS was appointed as external
facilitator.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 64
CORPORATE GOVERNANCE STATEMENT
CONTINUED
As part of the 2017 evaluation all Directors were provided with
a self-assessment questionnaire for completion on-line. The
inquiry areas included corporate strategy, business principles,
internal controls and risk management, performance and
measurement, stakeholder interaction, Board composition,
boardroom processes, Board effectiveness and Chairman
performance. The responses were collated and the external
facilitator presented a report of the questionnaire findings
together with observations thereon. The Chairman used
this report to lead a discussion with the Board on overall
effectiveness. Within this process, the non-executive
Directors, led by the Senior Independent Director, evaluated
the Chairman’s performance. The performance of individual
directors was also assessed by the Chairman following
discussions, held by the Chairman, with directors on an
individual basis.
Following conclusion of the process 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. While no areas of concern were highlighted a number
of Board process matters are to be followed up with a view to
improving overall reporting to the Board.
Separately, the Senior Independent Director reported that the
Chairman was providing effective leadership of the Board.
The Board is committed to providing a fair, balanced and
understandable assessment of the Group’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 Group’s position and prospects.
The Board has described its business model on page 16 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 69 and 72 and the risk
management framework and processes are set out on pages 42
and 47.
No material weaknesses in internal controls were reported to the
Board during the year.
Taking account of the Group’s current position and principal
risks the Directors have set out in the Viability Statement on
page 56 their assessment of the prospects for the Group.
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 75 to 84.
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 19% of the proxy votes held by
the Board at the 2017 AGM held on 17 May 2017 on the special
resolution to convene certain general meetings on 14 clear days’
notice were cast against the resolution. Following engagement
the Company understands that certain shareholders as a policy
do not support this type of resolution. The Directors consider
that it is in the best interests of the Company to retain the
flexibility of short notice but the Directors will only use the
authority where merited by the purpose of the meeting.
Irish Continental Group2017 Annual Report and Financial Statements 65
Regular formal updates are provided to shareholders and are
available on the Group’s website. During 2017 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 2017 Annual Report and 2018
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 66.
Further investor relations information is available on pages 170 to
172 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 2017.
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 58;
(ii) Share Option Plans page 84; (iii) Long Term Incentive Plan
page 81; (iv) Service Contracts page 83; and (v) Share-based
Payments page 150, (vi) Borrowings page 136 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 189,994,390 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 Constitution of the
Company.
The Directors may exercise their power to redeem Redeemable
Shares from time to time pursuant to the Company’s
Constitution 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 19 and 20 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 2017 and 31 December 2016.
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;
(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;
(v) unless the instrument of transfer is in respect of one class
only.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 66
CORPORATE GOVERNANCE STATEMENT
CONTINUED
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.
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 by the Company of its shares
Under the Constitution 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 Constitution of the Company and
to any directions given by members at a General Meeting. The
Constitution further provides 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 17 May 2017,
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
62,763,519 ICG Units.
In line with market practice, members will be asked to renew
these authorities at the 2018 Annual General Meeting.
General Meetings and Shareholders Voting and other Rights
Under the Constitution, 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.
Irish Continental Group2017 Annual Report and Financial Statements 67
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.
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% 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 Constitution, 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 Constitution
As provided in the Companies Act 2014, the Company may, by
special resolution, alter or add to its Constitution. 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
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 68
CORPORATE GOVERNANCE STATEMENT
CONTINUED
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.
(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
(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 Constitution 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 Directors have power to fill a casual vacancy or to appoint
an additional Director (within the maximum number of Directors
fixed by the Constitution 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.
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.
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
Irish Continental Group2017 Annual Report and Financial Statements REPORT OF THE AUDIT COMMITTEE
69
Composition
The Audit Committee membership is set out in the table below
which also details attendance and tenure.
Member
J. Sheehan (Chair)
C. Duffy
B. O’Kelly
A
3
3
3
B
3
3
3
Tenure
4 years
6 years
5 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 bring significant professional expertise to their
roles gained from a broad level of experience gained outside
of the Group. This together with their experience as directors
of the Company the Committee as a whole has competence
relevant to the sector in which the Group operates. The
member’s biographies are set out on pages 54 to 55. The Board
has determined that all appointees are independent, that Brian
O’Kelly and John Sheehan have recent and relevant financial
experience and that all members have experience of corporate
financial matters. Overall the Committee is independent and
possesses the skills and knowledge to effectively discharge its
duties under the Committee’s Terms of Reference. The Company
Secretary acts as secretary to the Committee.
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 2017. The terms of reference are
available on the Group’s website www.icg.ie.
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 Group’s internal controls and
financial risk management systems, including the internal
audit function;
Dear shareholder,
I am pleased to present the report of the
Committee for the year ended 31 December 2017.
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 and Company’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
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REPORT OF THE AUDIT COMMITTEE
CONTINUED
• 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; and
• 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;
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 31 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.
Financial Reporting
The Committee reviewed the Group’s Half Yearly Financial
Report for the six months ended 30 June 2017, the Statement
of Results and Annual Report & Financial Statements, for the
financial year ended 31 December 2017 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.
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 committed borrowing facilities agreed
during the year. 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 56.
Viability Statement
The Committee reviewed the appropriateness of the
assumptions and scenarios together with the calculations
supporting the Viability Statement set out on page 56.
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.
In assessing if the financial statements have dealt appropriately
with each area of judgement the Committee challenged the
key assumptions and methodologies used by management
in formulating estimates. The critical accounting judgements
and key sources of estimation applied in the preparation of the
financial statements for the financial year ended 31 December
2017 are set out below and also discussed in detail on page 118
to 119.
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.
The Committee also reviewed the calculation and presentation
of the non-trading item related to the disposal of the vessel MV
Kaitaki.
Irish Continental Group2017 Annual Report and Financial Statements 71
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
2017 and confirmed that there were no material unadjusted
misstatements noted by them.
process would enhance existing processes. Overall the
Committee continues to be satisfied that the Group control
environment remains 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.
Based on this work the Committee reported to the Board that
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’s performance
and recommended that the Annual Report and Financial
Statements be approved by the Board.
Deloitte confirmed to the Company that they comply with the
Ethical Standards for Auditors (Ireland) 2016 as issued by IAASA
and that, in their professional judgement, they and, where
applicable, all Deloitte network firms are independent and their
objectivity is not compromised.
Internal Control
The risk management framework is set out on page 42. The
Committee, on behalf of the Board, reviews the effectiveness of
the Group’s control environment including internal controls and
financial risk management systems.
During the year, at the request of the Committee executive
management formally constituted an executive risk management
group to coordinate a unified system of ongoing identification,
monitoring and reporting of risks throughout the Group. This
was an initiative to further enhance and standardise across the
Group the previous work of divisional teams. The activities of the
risk management group are undertaken alongside the activities
of internal audit.
In October 2017 the Committee met with members of the
Executive Risk Management Group where presentations
were made by the Group Marine and Safety Manager and
the Internal Auditor on operational and financial risks. The
presentations outlined work undertaken to date in standardising
risk monitoring systems and proposed schedules of work over
the coming year. The Committee also received regular reports
throughout the year including internal audit reviews, operational
and safety risk reviews including information technology and
cyber security. In addition the Chairman met separately with the
Internal Auditor on two occasions.
The Committee undertook a review of the Risk Management
Group’s and Internal Audit activities in order to assess how
effectively it had performed during the year and ensure that
the transition did not weaken the risk monitoring process.
Following the review, the Committee was satisfied that the Risk
Management Group and Internal Audit were achieving their
objectives. Furthermore, the deployment of its standardised
The Committee met with Deloitte prior to the commencement of
the audit of the financial statements for the financial year ended
31 December 2017. The Committee considered Deloitte’s internal
policies and procedures for maintaining independence and
objectivity and their approach to audit quality. 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.
Deloitte reported their key audit findings to the Committee in
March 2018 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.
Deloitte issued a letter on control weaknesses 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.
The Committee evaluated Deloitte’s performance which
included an assessment of Deloitte’s communication process
with the Committee and senior management, knowledge of
the Group and industry sector and resource commitment to
the external audit and the Committee is satisfied that Deloitte
remain effective, objective and independent. The Committee
therefore recommended to the Board that Deloitte be retained
as auditors to the Group for financial year 2018.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 72
REPORT OF THE AUDIT COMMITTEE
CONTINUED
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
procedures in November 2017.
Deloitte was first appointed by the Company to audit its financial
statements for the financial year ended 31 October 1988 and
subsequent financial periods. The lead partner is rotated every
five years to ensure continued objectivity and independence. Mr.
Ciarán O’Brien has acted as lead partner for the audit of the 2017
Financial Statements having been appointed to that role during
2016.
The Committee notes 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”. 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 2021. As Deloitte
will have served in excess of 20 years at that time they will not be
eligible for re-appointment. The Committee will initiate a tender
process in sufficient time to allow for an orderly transition to the
new external auditor.
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 2017 financial year. This approval was granted on
the basis of procedural efficiency and having considered that the
level of fees would be unlikely to affect the independence of the
external auditor.
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.
Irish Continental Group2017 Annual Report and Financial Statements REPORT OF THE NOMINATION COMMITTEE
73
Dear shareholder,
I am pleased to present the report of the
Committee for the year ended 31 December 2017.
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.
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
54 to 55.
Member
A
B
Tenure
C. Duffy (Chair)*
B. O’Kelly*
J. Sheehan*
E. Rothwell
*Independent director
1
1
1
1
1
1
1
1
5 years
1 year
1 year
18 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.
Role and Responsibilities
The role, responsibilities and duties of the Nomination
Committee are set out in written terms of reference which were
last reviewed by the Board in December 2017. 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.
The Chairman provides an update to the Board on key matters
discussed and minutes are circulated to the Board.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information
74
REPORT OF THE NOMINATION COMMITTEE
CONTINUED
The Committee also reconfirmed their previous assessment of
the independence of the two other non-executive Directors,
Brian O’Kelly and John Sheehan.
No Committee member voted on a matter concerning their
position as a Director.
Diversity
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.
Work Performed
The Committee met once during the year.
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 have been 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 Catherine Duffy
as a Director of the Company during her second three year
term and recommended her re-appointment as a Director of
the Company for a further three year term subject to annual
re-election by shareholders at the AGM. In considering her
re-appointment the Committee assessed that her role with A&L
Goodbody, who provide legal services to the Group, did not
compromise her independence as a Director of the company.
In assessing the impact of her position in A&L Goodbody, the
committee took into consideration the overall level of fees paid
by ICG to A&L Goodbody are unlikely to be material to the
overall partnership income.
Irish Continental Group2017 Annual Report and Financial Statements REPORT OF THE REMUNERATION COMMITTEE
75
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 54 to 55.
Member
B. O’ Kelly (Chair)
J. Sheehan
C. Duffy
A
4
4
4
B
4
4
4
Tenure
5 years
4 years
1 year
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 2017. 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.
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.
Dear shareholder,
I am pleased to present the Report of the
Remuneration Committee for the year ended 31
December 2017.
The Committee ensures that the remuneration
structures and levels are set to attract and retain
high calibre individuals necessary at executive
Director 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.
The Committee completed a review of the Group’s
remuneration framework for executive Directors
and senior executives during the year. A number
of changes to existing practices together with
the adoption of a new Performance Share Plan
following approval by shareholders at the 2017
AGM form a revised framework. In revising
the remuneration framework we have sought
the flexibility to choose the most appropriate
remuneration structure for our business needs and
strategy.
The Company will also be submitting this report to
shareholders as an advisory resolution at the 2018
AGM.
Brian O’Kelly
Chair of the Remuneration Committee
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 76
REPORT OF THE REMUNERATION COMMITTEE
CONTINUED
Meetings
The Committee met four 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
determined the vesting of options under the 2009 Share Option
Plan previously granted during 2012 and 2014. The Committee
also undertook a review of the existing and proposed a new
remuneration framework which is discussed in more detail
below.
Remuneration framework
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 this review the Committee has implemented a
number of changes to the remuneration elements to more align
our framework with market norms. The changes implemented
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.
Following the approval of a new Performance Share Plan (PSP)
at the 2017 AGM, the Committee suspended future grants under
the existing Share Option Plan. A cornerstone of the PSP is the
creation of a mandatory alignment period of 8 years.
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 in certain instances be constrained by pre-
existing contractual arrangements.
Irish Continental Group2017 Annual Report and Financial Statements 77
Maximum Opportunity
There is no prescribed maximum
salaries or maximum increases.
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.
Remuneration Framework Effective from 1 January 2017
Element
Operation
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.
Factors taken into account in the review include the individual’s
role and level of responsibility, personal performance and
general developments in pay in the market generally and across
the Group.
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.
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 2017 executive
director remuneration outcomes.
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 84.
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.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information Maximum Opportunity
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.
In exceptional
situations, including
recruitment, higher
awards may be
granted but not
exceeding 300% of
base salary.
78
REPORT OF THE REMUNERATION COMMITTEE
CONTINUED
Remuneration Framework Effective from 1 January 2017 – continued
Element
Operation
Performance Share
Plan
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.
No re-testing of the vesting performance conditions is 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.
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 84.
The performance conditions, which are measured over a three year vesting
period are currently based on;
• Adjusted 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
Vesting Threshold
Maximum
12%
20%
130%
Top Quartile
Irish Continental Group2017 Annual Report and Financial Statements 79
Remuneration Framework Effective from 1 January 2017 – continued
Element
Operation
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.
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.
In certain circumstances the Company may provide an
equivalent cash payment in lieu of pension contributions.
Maximum Opportunity
There are no prescribed maximum
levels of pension contribution.
No element of remuneration other
than base salary is pensionable.
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
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 2017
Total Directors’ remuneration for the year was €3,447,000 compared with €2,860,000 in 2016 and details are set in the table below:
Performance
pay:
Restricted shares
Performance
pay:
Cash
Base Salary
€’000
€’000
€’000
Benefits
€’000
Pension
€’000
Fees
€’000
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
538
184
722
2,195
88
2,283
-
-
-
-
-
-
-
-
-
-
-
80
80
-
-
-
-
-
35
22
57
-
-
-
-
-
-
30
30
-
-
-
-
-
Total
722
2,283
80
57
30
-
-
-
125
50
50
50
275
275
Total
2017
€’000
2,768
404
3,172
125
50
50
50
275
3,447
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 80
REPORT OF THE REMUNERATION COMMITTEE
CONTINUED
Details of Directors’ remuneration for the year ended 31 December 2016 are set out below:
Performance
pay:
Restricted shares
Performance
pay:
Cash
Base Salary
€’000
€’000
€’000
Benefits
€’000
Pension
€’000
Fees
€’000
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
526
133
659
1,765
77
1,842
-
-
-
-
-
-
-
-
-
-
-
69
69
-
-
-
-
-
35
18
53
-
-
-
-
-
-
27
27
-
-
-
-
-
Total
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
In relation to Mr. David Ledwidge costs in relation to defined
benefit pension arrangements were €20,000 (2016: €20,000)
with a further €10,000 (2016: €7,000) related to the defined
contribution pension arrangements. Mr. Ledwidge was
appointed to the Board on 3 March 2016.
In relation to Mr. Rothwell €0.6 million (2016: €nil) of
performance pay has been included as a non-trading item (note
10) in relation to the disposal of MV Kaitaki.
The information above forms an integral part of the audited
Consolidated Financial Statements as described in the Basis of
Preparation on page 107.
Base Salary
Base salary for Eamonn Rothwell, CEO, increased by 2.5% in
2017 versus 2016 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. Against these considerations, in 2017, the Committee
awarded Mr. Ledwidge a 15% increase in annualised base salary.
Irish Continental Group2017 Annual Report and Financial Statements 81
Director’s Pension benefits
The aggregate defined benefit pension benefits attributable to the executive Directors at 31 December 2017 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
2
14
Total
2017
€’000
1
2
14
Total
2016
€’000
1
1
12
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.
Performance Related Pay
Eamonn Rothwell
Eamonn Rothwell has been associated with ICG since its
inception as a public company and floatation in 1988. A legacy
contractual arrangement governs Mr. Rothwell’s performance
related pay.
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 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.
As part of the remuneration framework review the Committee
reassessed the CEO performance arrangements and in its view
the existing performance pay 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.
100% of the 2017 annual bonus award was allocated towards the
acquisition of restricted shares.
David Ledwidge
David Ledwidge was appointed Executive Director on 6 March
2016. The Committee assessed Mr. Ledwidge’s performance in
his new role over the period 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 which included his contribution to
investment appraisal and the conclusion of a financing package
to support the longer term development of the Group. 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 €168,000, being 91%
of annualised base salary was appropriate. Of this annual bonus
award, 52% was allocated towards the acquisition of restricted
shares with the balance received in cash.
Restricted Shares
In relation to any element of the annual 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
Grants during 2017
The long term incentive scheme applicable for the 2017 financial
year was the Performance Share Plan approved by shareholders
on 17 May 2017. The Committee had previously suspended
awards under the 2009 Share Option Plan pending completion
of the review of the remuneration framework. Therefore, no long
term incentive awards were made to executive directors or any
other individuals since 2015.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 82
REPORT OF THE REMUNERATION COMMITTEE
CONTINUED
On 23 May 2017 the Committee, granted an annual award of
options in respect of 2017 to Mr. Rothwell and Mr. Ledwidge in
line with the annual limits set out in the PSP rules being 200%
and 150% of salary respectively. In addition the Committee
considered that the suspension of awards since 2015 amounted
to exceptional circumstances such that an additional catch-up
award in relation to 2016 was merited such that an additional
award of 100% and 150% of base salary was awarded to Mr.
Rothwell and Mr. Ledwidge respectively. The total number of
options granted to Mr. Rothwell and Mr. Ledwidge based on a
share price of €5.505 were 293,000 and 100,000 respectively.
Options Vested during 2017
During the period the Committee considered the performance
conditions attaching to the second tier options granted on 26
March 2012 and basic tier options granted on 1 September 2014
under the legacy Share Option Plan. Under the rules of the
Share Option Plan, the Committee determined that both grants
vested based on reported Group EPS for the year ended 31
December 2016, and accordingly 1,352,500 outstanding options
were deemed vested in favour of participants during the year,
including 150,000 second tier options in favour of Mr. David
Ledwidge.
Details of movements in share options granted to Directors
under the Performance Share Plan and the legacy share option
plan are set out in the table below;
Option Type
E. Rothwell
Unvested
Date of Grant
31-Dec-16
Granted
Vested
Exercised
31-Dec-17
Option
Price€
Earliest
Vesting Date
Latest Expiry
Date
Basic Tier Share Option
05-Mar-15
350,000
Second Tier Share Option
05-Mar-15
350,000
-
-
Performance Share Plan
23-May-17
- 293,000
-
-
-
- 350,000
3.58
05-Mar-18
04-Mar-25
- 350,000
3.58
05-Mar-20
04-Mar-25
- 293,000
0.065 23-May-20
-
Vested
19-Dec-07 1,500,000
-
- (1,500,000)
-
2.132
to 5-Oct-17
2,200,000 293,000
- (1,500,000) 993,000
12-Jun-17
Average
of €5.88
Exercise Date Market Price
Option Type
D. Ledwidge
Unvested
Date of Grant
31-Dec-16
Granted
Vested
Exercised
31-Dec-17
Option
Price€
Earliest
Vesting Date
Latest Expiry
Date
Second Tier Share Option
26-Mar-12
150,000
- (150,000)
Basic Tier Share Option
05-Mar-15
75,000
Second Tier Share Option
05-Mar-15
75,000
-
-
Performance Share Plan
23-May-17
- 100,000
-
-
-
-
-
-
-
1.57
26-Mar-17
25-Mar-22
75,000
3.58
05-Mar-18
04-Mar-25
75,000
3.58
05-Mar-20
04-Mar-25
- 100,000
0.065 23-May-20
-
Vested
26-Mar-12
-
- 150,000
(150,000)
-
1.57
13-Dec-17
€5.80
300,000 100,000
-
(150,000) 250,000
Exercise Date Market Price
Irish Continental Group2017 Annual Report and Financial Statements 83
Unvested options are subject to vesting conditions as follows;
Basic Tier Options: 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.
Second Tier Options: 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.
Performance Share Plan: These options will vest and become
exercisable three years from the third anniversary of grant in
accordance with achievement of the performance conditions
set out in the remuneration framework table. These options will
normally have to be exercised on or shortly after the vesting date
and the delivered shares held in trust for a period of 5 years from
exercise date.
Other matters
Minimum Shareholding Requirements
The Company encourages individuals to acquire and retain
significant shareholdings to align interests of management
with those of shareholders. The Company has a minimum
shareholding requirement for executive directors and members
of the executive management committee to hold shares to
a market value 300% of base salary within 5 years of date of
appointment. 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 the holdings of executive directors and
executive Committee at 31 December 2017 as a multiple of salary
at that date are shown in the following table:
Eamonn Rothwell
311.4 times
Salary multiple held
David Ledwidge
Other Executive
Management
2.1 times
8.9 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. As part of the overall review of remuneration
structures the Committee recommended an increase in the
fee payable to the Board Chairman from €90,000 per annum
to €125,000 per annum and an increase in the fee payable to
other non-executive Directors from €40,000 to €50,000. The
revised fee levels are considered more in line with market norm
generally and reflective of the increased levels of commitment
now expected from persons holding non-executive directorship
positions.
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.
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.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 84
REPORT OF THE REMUNERATION COMMITTEE
CONTINUED
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.
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 2018 AGM of
the Company.
Market price of shares
The closing price of the shares on the Irish Stock Exchange on
31 December 2017 was €5.76 and the range during the year was
€4.45 to €5.98.
On termination, 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.
Share option schemes
There were no long term incentive plans in place during the year
other than the Group’s 1998 (now expired) and 2009 share option
plans (suspended as regards new grants) and Performance Share
Plan.
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.
In the ten-year period ended 31 December 2017, the total number
of options granted, net of options lapsed amounted to 3.1% of
the issued share capital of the Company at 31 December 2017.
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 2017 is €359,000 (2016: €32,000).
Clawback Policy
The Committee recognises that there could potentially be
circumstances in which performance related pay (either annual
bonuses, and 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.
Irish Continental Group2017 Annual Report and Financial Statements DIRECTORS’ RESPONSIBILITIES STATEMENT
85
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;
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 54 and 55 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 2017 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 2017 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
• state that the Financial Statements comply with IFRS as
• 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
Directors on 7 March 2018 and signed on its behalf by
Eamonn Rothwell
Director
David Ledwidge
Director
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 2017
in compliance with the provisions of Regulation (EC) No.
1606/2002, regulations 4 and 5 of Statutory Instrument No.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 86
Irish Continental Group
2017 Annual Report and Financial Statements
Strategic Report
Corporate Governance
Financial Statements
Other Information
87
FINANCIAL
STATEMENTS
88 Independent Auditor’s Report
97 Consolidated Income Statement
98 Consolidated Statement of Comprehensive Income
99 Consolidated Statement of Financial Position
100 Consolidated Statement of Changes in Equity
102 Company Statement of Financial Position
103 Company Statement of Changes in Equity
105 Consolidated Statement of Cash Flows
106 Company Statement of Cash Flows
107 Notes to the Financial Statements
88
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
IRISH CONTINENTAL GROUP PLC
Opinion on financial statements of Irish Continental Group plc
In our opinion, the Group and Company 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 2017 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 we have audited comprise the:
Group financial statements:
• the Consolidated Income Statement;
• the Consolidated Statement of Comprehensive Income;
• the Consolidated Statement of Financial Position;
• the Consolidated Statement of Changes in Equity;
• the Consolidated Cash Flow Statement;
Company financial statements:
• the Company Statement of Financial Position;
• the Company Statement of Changes in Equity;
• the Company Cash Flow Statements;
and; the related notes 1 to 36, including a summary of significant accounting policies as set out in note 2 to the financial statements.
The relevant financial reporting framework that has been applied in the preparation of the financial statements is the Companies
Act 2014 and International Financial Reporting Standards (IFRS) as adopted by the European Union (IFRSs as adopted by the EU), and
as regards the Company financial statements, as applied in accordance with the provisions of the Companies Act 2014 (“relevant
financial reporting framework”).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and applicable law. Our
responsibilities under those standards are described below in the “Auditor’s responsibilities for the audit of the financial statements”
section of our report.
We are independent of the Group and the Company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in Ireland, including the Ethical Standard issued by the Irish Auditing and Accounting Supervisory Authority, as
applied to public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Irish Continental Group2017 Annual Report and Financial Statements 89
Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current financial year related to:
• The appropriateness of useful lives and residual values of vessels used to determine the depreciation
charge;
• The appropriateness of key assumptions used to determine retirement benefit liabilities; and
• Revenue recognition as a result of manipulation of deferred revenue.
There have been no significant changes to the key audit matters since the prior financial year report.
Materiality
The materiality that we used in the current financial year was €3.5m which was determined on the
basis of adjusted profit before tax.
We use adjusted profit before tax to exclude the effect of volatility (for example, separately disclosed
non-trading items) from our determination.
Scoping
We determined the scope of our Group audit 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 components. Five of these were subject to a full scope audit, whilst the remaining five
components were subject to audits of specified account balances, 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 components.
Significant changes in
our approach
There were no significant changes in our audit approach in the current financial year, the activities of
the Group remained consistent year on year.
Conclusions relating to principle risks, going concern and viability statement
We have nothing to report in respect of the following information in the annual report, in relation to which ISAs (Ireland) require us to
report to you whether we have anything material to add or draw attention to:
• the disclosures on pages 44 to 47 to the annual report that describe the principal risks and explain how they are being managed or
mitigated;
• the Directors’ confirmation in the annual report on page 57 that they have carried out a robust assessment of the principal risks
facing the Group and the Company, including those that would threaten its business model, future performance, solvency or
liquidity;
• the Directors’ statement on page 56 in the financial statements about whether the Directors consider it appropriate to adopt
the going concern basis of accounting in preparing the financial statements and the Directors’ identification of any material
uncertainties to the Group’s and the Company’s ability to continue to do so over a period of at least twelve months from the date of
approval of the financial statements;
• whether the Directors’ statement relating to going concern required under the Listing Rules in accordance with Listing Rule
6.8.3(3) is materially inconsistent with our knowledge obtained in the audit; or
• the Directors’ explanation on page 56 in the annual report as to how they have assessed the prospects of the Group and Company,
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 and Company 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.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information
90
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
IRISH CONTINENTAL GROUP PLC
- CONTINUED
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current financial year and include the most significant assessed risks of material misstatement (whether or not due
to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the
audit, and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Appropriateness of the useful lives and residual values of vessels used in the determination of the depreciation charge.
Key audit matter
description
There is a risk that management’s estimate of useful lives and residual values of vessels is inaccurate
leading to an impact on the depreciation charge.
The Group holds €114.9m of vessels at 31 December 2017.
The annual depreciation charge depends primarily on the estimated lives of each type of vessel
and the estimated residual value, as determined by management. The determination of appropriate
estimates requires significant judgement by management and relies on inputs that are variable such
as the value of scrap metal and the estimated residual value of vessels.
A change in the estimate of useful lives or residual value of vessels can have a significant impact on
the amount of depreciation charged to the Income Statement.
Please also refer to page 69 (Audit Committee Report), page 113 (Accounting Policy – Property, Plant &
Equipment), and note 3 – Critical accounting judgements and key sources of estimation uncertainty and
note 13 Property, Plant & Equipment.
How the scope of our
audit responded to the
key audit matter
We examined management’s assessment of useful lives and estimated residual values of these
vessels.
We obtained an understanding of management’s processes and performed testing of relevant
controls, which included reviews by senior members of management and the Board to ensure the
current assumptions used are appropriate.
We challenged and evaluated management’s key assumptions including their assessment of useful
lives and their estimates of residual values.
We benchmarked management’s assumptions against information available from external
independent market sources, such as:
(i) market data relating to the value of scrap metal;
(ii) market data relating to the sale of similar ships;
(iii) market data relating to the lives of ships that were scrapped during the financial year.
We determined that management’s assessment of the useful lives of the vessels and residual values to
be reasonable based on the work that we carried out.
Irish Continental Group2017 Annual Report and Financial Statements 91
Appropriateness of key assumptions used to determine retirement benefit liabilities
There is a risk that the liabilities of pension schemes are determined using inappropriate actuarial assumptions, leading to potential
misstatement of the net pension asset/deficit.
The Group operates a number of defined benefit schemes. The net pension asset and deficit relating to these schemes was €8.1m
and €3.4m respectively at the date of the Statement of Financial Position.
There is a high degree of estimation and judgement in the calculation of the pension liabilities, particularly in the underlying
actuarial assumptions, specifically the discount, mortality and inflation rates, which are subject to high volatility from small
movements in assumptions.
Please also refer to page 69 (Audit Committee Report), page 112 (Accounting Policy – Retirement Benefit Schemes), and note 3 –
Critical accounting judgements and estimates
The following audit procedures were performed in order to assess the Group’s valuation of its retirement benefit liabilities, we;
(i) utilised Deloitte Actuarial Specialists as part of our team to assist us in understanding, evaluating and challenging the
appropriateness of key actuarial assumptions with particular focus on discount, mortality and inflation rates;
(ii) made inquiries with both management and the Group’s external pension advisors to understand their processes in determining
the assumptions used in calculating retirement benefit liabilities.
(iii) benchmarked key assumptions used against comparable market and peer data, where available to ensure that they were
within appropriate ranges and reasonable given our knowledge of the schemes;
(iv) assessed whether management’s disclosures in the financial statements in respect of retirement benefit schemes were in
accordance with the relevant accounting standards.
Based on the evidence obtained, we found that the data and assumptions used by management in the actuarial valuations for
pension liabilities are within a range we consider reasonable.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 92
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
IRISH CONTINENTAL GROUP PLC
- CONTINUED
Revenue recognition as a result of manipulation of deferred revenue
Key audit matter
description
There is a risk that financial year end deferred revenues could be manipulated to achieve performance
targets, or misstated as a result of error.
The deferred revenue balance amounted to €4.8m at the financial year ended 31 December 2017.
The Group recognises revenue in respect of its passenger and freight services on the date of travel or
transportation. Proceeds from sales before the financial year end for a travel date after the financial
year end are deferred and included in trade and other payables at the financial year end.
Please also refer to page 69 (Audit Committee Report), and page 109 (Accounting Policy – Revenue
Recognition).
How the scope of our
audit responded to the
key audit matter
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 in order to evaluate
the reliability of the systems to ensure revenue was appropriately recognised and reflects the terms of
sale.
We performed testing of relevant internal controls over the Group’s significant revenue processes
including the process over the revenue recognition journals that are recorded at year end.
We tested on a sample basis, revenue recognised around year end to ensure that the date of travel or
transportation had occurred for the associated revenue recognised to ensure that it was recognised
appropriately.
We recalculated management’s deferred revenue calculation. We tested on a sample basis the
elements of the calculation to ensure the revenue has been recognised or deferred in line with group
accounting policies and that the deferred balance appropriately reflects the terms of sale in order to
test for bias in management’s calculations.
No significant matters arose from our work.
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 that makes it probable that the economic decisions of a reasonably
knowledgeable person, relying on the financial statements, 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 €3.5m, which is approximately 6% of profit before tax and non-trading items, and
1.6% of Consolidated Shareholders’ equity. We have considered the profit before tax and non trading items to be the appropriate
benchmark for determining materiality because it is the most important measure for users of the Group’s financial statements. We
have considered quantitative and qualitative factors, such as understanding the entity and its environment, history of misstatements,
complexity of the Group and reliability of the control environment.
We agreed with the Audit Committee that we would report to them all audit differences in excess of €175,000 as well as differences
Irish Continental Group2017 Annual Report and Financial Statements 93
€59m
below this 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.
€3.5m
€0.101m
to €2.5m
An overview of the scope of our audit
We determined the scope of our Group audit 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 components. Five of these were subject
to a full scope audit, whilst the remaining five
components were subject to audits of specified
account balances, 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
components.
Audit Committee reporting threshold
Component materiality range
PBT and non-trading items
Group materiality
€0.175m
These components were selected based on coverage achieved and to provide an appropriate basis for undertaking audit work
to address the risks of material misstatement identified above. Our audit work at the ten components was executed at levels of
materiality applicable to each individual unit which were lower than Group materiality and ranged from €0.101m to €2.5m.
At the Group 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.
The levels of coverage of key financial aspects of the Group by type of audit procedures are as set out below:
*For scoping purposes net assets exclude intercompany balances and other consolidation adjustments.
Revenue
2%
98%
Profit before tax
Net assets*
10%
33%
57%
6%
17%
77%
Full audit scope
Specified account balances
No procedures performed
The Audit of the Group and all components were completed by one team based in Ireland.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 94
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
IRISH CONTINENTAL GROUP PLC
- CONTINUED
Other information
The Directors are responsible for the other information. The other information comprises the information included in the annual
report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are
required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
In this context, we also have nothing to report with regard to our responsibility to specifically address the following items in the other
information and to report as uncorrected material misstatements of the other information where we conclude that those items meet
the following conditions:
• Fair, balanced and understandable – the statement given by the Directors that they consider 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’s and the Company’s performance, business model and strategy, is materially inconsistent with our knowledge
obtained in the audit; or
• Audit committee reporting – the section describing the work of the audit committee does not appropriately address matters
communicated by us to the audit committee; or
• Directors’ statement of compliance with the UK Corporate Governance Code and the Irish Corporate Governance Annex -
the parts of the Directors’ statement required under the Listing Rules relating to the Company’s compliance with the UK Corporate
Governance Code and the Irish Corporate Governance Annex containing provisions specified for review by the auditor in
accordance with Listing Rule 6.8.3(7) and Listing Rule 6.8.3(9) do not properly disclose a departure from a relevant provision of the
UK Corporate Governance Code or the Irish Corporate Governance Annex.
Responsibilities of directors
As explained more fully in the Directors’ Responsibilities Statement, 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, and for
such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group and the Company’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
the Directors either intend to liquidate the Group and the Company or to cease operations, or have no realistic alternative but to do
so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
Irish Continental Group2017 Annual Report and Financial Statements 95
As part of an audit in accordance with ISAs (Ireland), we exercise professional judgment and maintain professional scepticism
throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group and the Company’s internal
control;
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by the Directors;
• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group and
the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of the auditor’s report. However,
future events or conditions may cause the entity (or where relevant, the Group) to cease to continue as a going concern;
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the
financial statements represent the underlying transactions and events in a manner that achieves fair presentation;
• Obtain sufficient appropriate audit evidence regarding the financial information of the business activities within the Group
to express an opinion on the Group financial statements. The group auditor is responsible for the direction, supervision and
performance of the group audit. The group auditor remains solely responsible for the audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that the auditor identifies during the audit.
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 auditor’s 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.
Report on other legal and regulatory requirements
Opinion on other matters prescribed by the Companies Act 2014
Based solely on the work undertaken in the course of the audit, we report that:
• 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 Company were sufficient to permit the financial statements to be readily and properly
audited;
• The Company statement of financial position is in agreement with the accounting records;
• In our opinion the information given in the Directors’ Report is consistent with the financial statements and the Directors’ Report
has been prepared in accordance with the Companies Act 2014.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 96
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
IRISH CONTINENTAL GROUP PLC
- CONTINUED
Corporate Governance Statement
We report, in relation to information given in the Corporate Governance Statement on pages 60 that, in our opinion the information
given in the Corporate Governance Statement pursuant to subsections 2(c) and (d) of section 1373 Companies Act 2014 is consistent
with the Company’s statutory financial statements in respect of the financial year concerned and such information has been
prepared in accordance with section 1373 of the Companies Act 2014.
Based on our knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not
identified any material misstatements in this information.
In our opinion, based on the work undertaken during the course of the audit, the information required pursuant to section 1373(2)
(a),(b),(e) and (f) of the Companies Act 2014 is contained in the Corporate Governance Statement.
Matters on which we are required to report by exception
Based on the knowledge and understanding of the Group and Company and its environment obtained in the course of the audit, we
have not identified material misstatements in the Directors’ Report.
We have nothing to report in respect of the provisions in the Companies Act 2014 which require us to report to you if, in our opinion,
the disclosures of directors’ remuneration and transactions specified by law are not made.
The Listing Rules of the Irish Stock Exchange require us to review six specified elements of disclosures in the report to shareholders
by the Board of Directors’ remuneration committee. We have nothing to report in this regard.
Other matters which we are required to address
We were first appointed by Irish Continental Group plc to audit the financial statements for the financial year ended 31 December
1988 and subsequent financial periods. The period of total uninterrupted engagement including previous renewals and
reappointments of the firm is 30 years, covering the years ending 31 December 1988 and 31 December 2017.
The non-audit services prohibited by IAASA’s Ethical Standard were not provided and we remained independent of the Company in
conducting the audit.
Our audit opinion is consistent with the additional report to the audit committee we are required to provide in accordance with ISA
(Ireland) 260.
Ciarán O’Brien
For and on behalf of Deloitte
Chartered Accountants and Statutory Audit Firm
Dublin
7 March 2018
Irish Continental Group2017 Annual Report and Financial Statements CONSOLIDATED INCOME STATEMENT
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017
Revenue
Depreciation and amortisation
Employee benefits expense
Other operating expenses
Non-trading items
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
97
Notes
4
9
5
10
6
7
8
9
12
12
2017
€m
335.1
(20.7)
(22.5)
2016
€m
325.4
(20.9)
(22.0)
(231.6)
(219.9)
60.3
28.7
89.0
-
(1.3)
87.7
62.6
-
62.6
0.1
(2.3)
60.4
(4.4)
(1.6)
83.3
58.8
44.1c
43.8c
31.4c
31.1c
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 98
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017
Notes
2017
€m
2016
€m
Profit for the financial year
83.3
58.8
Items that may be reclassified subsequently to profit or loss:
Cash flow hedges:
- Fair value movements arising during the financial year
22 viii
-
(0.1)
-Transfer to Consolidated Income Statement – net
settlement of cash flow hedge
Currency translation adjustment
Items that will not be reclassified subsequently to profit or loss:
Actuarial gain / (loss) on defined benefit obligations
Deferred tax on defined benefit obligations
22 viii
31a viii
23
0.2
(0.6)
17.5
(0.2)
0.4
(2.8)
(9.6)
0.7
Other comprehensive income / (expense) for the financial year
16.9
(11.4)
Total comprehensive income for the financial year:
all attributable to equity holders of the parent
100.2
47.4
Irish Continental Group2017 Annual Report and Financial Statements CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2017
99
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
Notes
13
14
31a iv
16
17
18
19
20
20
21
23
25
26
31a iv
21
24
22 viii
25
26
2017
€m
2016
€m
249.5
204.3
0.5
8.1
0.8
2.4
258.1
207.5
2.7
42.2
90.3
135.2
393.3
12.3
18.9
(13.1)
205.7
223.8
50.0
0.8
0.5
0.2
3.4
54.9
0.7
112.4
-
0.9
0.5
0.1
114.6
169.5
393.3
2.3
39.6
42.2
84.1
291.6
12.2
15.7
(11.8)
128.3
144.4
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
The financial statements were approved by the Board of Directors on 7 March 2018 and signed on its behalf by:
Eamonn Rothwell
Director
David Ledwidge
Director
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 100
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017
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 2017
12.2
15.7
7.3
2.4
(0.2)
(21.3)
128.3
144.4
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
3.2
-
-
-
-
-
-
0.1
3.2
-
-
-
-
-
-
-
-
-
-
-
-
1.1
-
-
-
(2.0)
(0.9)
-
0.2
-
(0.6)
83.3
17.3
83.3
16.9
0.2
(0.6)
100.6
100.2
-
-
-
-
-
-
-
-
-
-
0.2
(0.6)
-
-
1.1
3.3
(22.2)
(22.2)
(3.0)
(3.0)
2.0
77.4
-
79.4
Balance at 31 December 2017
12.3
18.9
7.3
1.5
-
(21.9)
205.7
223.8
Analysed as follows:
Share capital
Share premium
Other reserves
Retained earnings
12.3
18.9
(13.1)
205.7
223.8
Irish Continental Group2017 Annual Report and Financial Statements CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016
101
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
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 102
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2017
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
Provisions
Current liabilities
Borrowings
Trade and other payables
Provisions
Total liabilities
Total equity and liabilities
Notes
13
14
15
31b iv
16
17
18
19
20
20
21
25
21
24
25
2017
€m
99.9
0.4
12.0
0.8
113.1
0.5
140.6
27.3
168.4
281.5
12.3
18.9
8.7
146.0
185.9
0.3
-
0.3
0.3
95.0
-
95.3
95.6
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
281.5
182.1
The Company reported a profit for the financial year ended 31 December 2017 of €74.4 million (2016: €39.6 million).
The financial statements were approved by the Board of Directors on 7 March 2018 and signed on its behalf by:
Eamonn Rothwell
Director
David Ledwidge
Director
Irish Continental Group2017 Annual Report and Financial Statements COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017
103
Share
Capital
€m
Share
Premium
€m
Capital
Reserve
€m
Share
Options
Reserve
€m
Retained
Earnings
€m
Total
€m
Balance at 1 January 2017
12.2
15.7
7.2
2.4
95.1
132.6
Profit for the financial year
Other comprehensive income
Total comprehensive income for the
financial year
Share issue
Dividends
Employee share-based payments expense
Transferred to retained earnings on exercise
of share options
Movement related to share options granted
to employees in subsidiaries
Settlement of equity plans through market
purchase of shares
-
-
-
-
-
-
0.1
3.2
-
-
-
-
-
-
-
-
-
-
0.1
3.2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.4
(1.6)
0.3
-
74.4
0.1
74.4
0.1
74.5
74.5
-
(22.2)
-
1.6
-
3.3
(22.2)
0.4
-
0.3
(3.0)
(3.0)
(0.9)
50.9
53.3
Balance at 31 December 2017
12.3
18.9
7.2
1.5
146.0
185.9
Analysed as follows:
Share capital
Share premium
Other reserves
Retained earnings
12.3
18.9
8.7
146.0
185.9
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 104
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016
Share
Capital
€m
Share
Premium
€m
Capital
Reserve
€m
Share
Options
Reserve
€m
Retained
Earnings
€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 payments 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
Irish Continental Group2017 Annual Report and Financial Statements CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017
105
Net cash inflow from operating activities
33
71.8
82.1
Notes
2017
€m
2016
€m
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 inflow / (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 (net of origination fees)
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
-
44.7
(17.0)
-
27.7
(22.2)
(77.7)
(0.7)
3.3
49.0
(3.0)
(51.3)
48.2
42.2
(0.1)
90.3
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
18
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 106
COMPANY STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017
Net cash (outflow) / inflow from operating activities
33
(39.0)
30.7
Notes
2017
€m
2016
€m
Cash flow from investing activities
Dividend received from subsidiaries
Purchases of property, plant and equipment
Purchases of intangible assets
Net cash inflow from investing activities
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
75.0
(7.1)
-
40.0
(31.8)
(0.2)
67.9
8.0
(22.2)
(21.0)
(0.3)
3.3
(3.0)
(0.3)
2.7
(0.4)
Net cash outflow from financing activities
(22.2)
(19.0)
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
6.7
20.6
27.3
19.7
0.9
20.6
18
Irish Continental Group2017 Annual Report and Financial Statements NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017
107
1. General information
Irish Continental Group plc (ICG) is a public limited company incorporated in Ireland (Company registration number: 41043). 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 on the going concern and 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.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 108
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - 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
Effective date – periods beginning on or after
IAS 7 (Amendments) Statement of Cash Flows
IAS 12 (Amendments) Income taxes
1 January 2017
1 January 2017
The following standards have been endorsed by the EU and are effective from 1 January 2018. The Group has not adopted these
standards early and instead have applied them from 1 January 2018.
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 has not adopted this standard early and instead intends to apply it from the effective date 1 January 2018. The full impact
of this standard is currently under review.
IFRS 9 – Financial Instruments
This standard 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 has not adopted this standard early and instead intends to apply it from the
effective date 1 January 2018. The full impact of this standard is currently under review.
The following standards and interpretations are not yet endorsed by the EU. The potential impact of these standards on the Group is
under review.
Title
Issued date
IFRS 17 Insurance Contracts
IASB effective date 1 January 2021
IFRIC 22 — Foreign Currency Transactions and Advance Consideration
Issued on 8 December 2016
IFRIC 23 — Uncertainty over Income Tax Treatments
Issued on 7 June 2017
Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions
Issued on 20 June 2016
Amendments to IAS 40 Transfers of Investment Property
Issued on 8 December 2016
Amendments to IFRS 9 Prepayments features with Negative Compensation
Issued on 12 October 2017
Amendments to IAS 28 Long-term Interests in Associates and Joint Ventures
Issued on 12 October 2017
Annual improvements to IFRS Standards 2015-2017 Cycle
Issued on 12 December 2017
Amendments to IAS 19 Plan Amendment, Curtailment of Settlement
Issued on 7 February 2018
Irish Continental Group2017 Annual Report and Financial Statements 109
2. Summary of accounting policies - continued
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
Effective date – periods beginning on or after
IFRS 16 Leases
1 January 2019
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 IFRS 16 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 expected to be immaterial on a net basis with higher depreciation and interest charges largely offset by a reduction
in operating expenses. IFRS 16 was endorsed by the EU in October 2017. The Group has not adopted this standard early and instead
intends to apply it from the effective date. The full impact of this standard on the Group is under review.
Accounting policies applied in preparation of the financial statements for the financial year ended 31 December 2017;
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 and 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.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information
110
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - 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 / 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 Consolidated 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 Consolidated 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.
Irish Continental Group2017 Annual Report and Financial Statements 111
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.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 112
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - 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.
Irish Continental Group2017 Annual Report and Financial Statements 113
2. Summary of accounting policies - continued
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.
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
Hotel and Catering
30 - 35 years
15 - 25 years
25 years
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.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 114
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
2. Summary of accounting policies - continued
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 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 related costs are 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.
Irish Continental Group2017 Annual Report and Financial Statements 115
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.
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 Company held no treasury shares in the current or prior financial year.
The Capital Redemption reserve represents the nominal value of share capital repurchased.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 116
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
2. Summary of accounting policies - continued
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.
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.
Irish Continental Group2017 Annual Report and Financial Statements 117
2. Summary of accounting policies - continued
Derivative financial instruments and hedge accounting – continued
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.
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.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 118
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
2. Summary of accounting policies - continued
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 non-trading items and the net interest cost on defined benefit
obligations and non-trading items.
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 31.
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 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.
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 13.
Irish Continental Group2017 Annual Report and Financial Statements 119
3. Critical accounting judgements and key sources of estimation uncertainty - continued
Critical accounting judgements
Impairment
The Group assessed its property, plant and 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. No internal or external indications of impairment were identified for other assets and consequently no impairment
review was performed.
Going concern
The Directors have satisfied themselves that the Group and Company are going concerns having adequate financial resources to
continue in operational existence for the foreseeable future. In forming their view the Directors have taken into consideration the
future financial requirements of the Group and Company and the existing suite of financing agreements which were concluded
during 2017.
4. Segmental information
Revenue
The following is an analysis of the Group’s revenue for the financial year:
Ferries
Container & Terminal
Inter-segment
Total
2017
€m
2016
€m
212.1
131.9
(8.9)
335.1
209.8
123.9
(8.3)
325.4
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.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 120
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
4. Segmental information – continued
Segment information about the Group’s operations is presented below.
Revenue
2017
External revenue
Inter-segment revenue
Total
2016
External revenue
Inter-segment revenue
Total
Ferries
€m
Container &
Terminal
Inter- segment
€m
€m
Total
€m
204.4
7.7
212.1
202.7
7.1
209.8
130.7
1.2
131.9
122.7
1.2
123.9
-
(8.9)
(8.9)
-
(8.3)
(8.3)
335.1
-
335.1
325.4
-
325.4
Inter-segment revenue is at prevailing market prices. The inter-segment revenue in the Ferries Division in 2017 of €7.7 million (2016:
€7.1 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
2017
€m
117.9
209.8
7.4
335.1
2016
€m
117.3
199.4
8.7
325.4
No single external customer in the current or prior financial year amounted to 10 per cent or more of the Group’s revenues.
Irish Continental Group2017 Annual Report and Financial Statements 121
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
4. Segmental information – continued
Ferries
2017
€m
Container & Terminal
2016
€m
2017
€m
2016
€m
Total
2017
€m
Profit for the financial year
Operating profit
Finance income
Finance costs
Non-trading items
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
49.1
-
(1.2)
28.7
76.6
(3.5)
73.1
52.3
0.1
(2.2)
-
50.2
(0.9)
49.3
251.3
81.2
332.5
202.1
37.2
239.3
95.3
49.8
44.1
78.9
Consolidated total liabilities
145.1
123.0
Other segment information
Capital additions
Depreciation and amortisation
78.7
18.2
51.4
18.4
11.2
-
(0.1)
-
11.1
(0.9)
10.2
51.7
9.1
60.8
23.5
0.9
24.4
2.9
2.5
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
60.3
-
(1.3)
28.7
87.7
(4.4)
83.3
303.0
90.3
393.3
118.8
50.7
169.5
81.6
20.7
57.0
20.9
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 122
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
4. Segmental information – continued
Geographic analysis of revenue by origin of booking
Revenue
Ireland
United Kingdom
Netherlands
Belgium
France
Other
Total
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
2017
€m
2016
€m
162.8
163.2
65.5
57.9
27.6
7.4
13.9
66.7
53.4
26.5
7.6
8.0
335.1
325.4
2017
€m
2016
€m
218.3
3.8
222.1
26.6
0.8
27.4
170.9
5.0
175.9
27.3
1.1
28.4
Carrying amount at 31 December
249.5
204.3
Due to the mobile nature of some of the assets in property, plant and equipment, their location is not always fixed.
Irish Continental Group2017 Annual Report and Financial Statements 123
2017
Number
2016
Number
215
93
308
308
2017
€m
17.8
1.7
1.8
0.1
1.1
22.5
214
96
310
302
2016
€m
18.0
1.8
1.9
0.1
0.2
22.0
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 31a vii)
Defined contribution pension scheme – pension cost (note 31a)
Share-based payment expense (note 30)
Total employee benefit expense
There were no employees in the Company during the financial year ended 31 December 2017 (2016: nil). Costs of €3.6 million (2016:
€3.2 million) were recharged to the Company from subsidiary companies in relation to management services.
Staff costs of €0.1 million were capitalised during the financial year (2016: €nil) for the Group. Staff costs of €nil were capitalised in
the Company (2016: €nil).
6. Finance income
Interest on bank deposits
Total finance income
2017
€m
-
-
2016
€m
0.1
0.1
Strategic ReportCorporate GovernanceFinancial StatementsOther Information
124
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
7. Finance costs
Interest on bank overdrafts and loans
Interest on obligations under finance leases
Net interest cost on defined benefit obligations (note 31a vii)
Total finance costs
8. Income tax expense
Current tax
Deferred tax (note 23)
Total income tax expense for the financial year
2017
€m
1.0
0.1
0.2
1.3
2017
€m
6.5
(2.1)
4.4
2016
€m
2.1
0.2
-
2.3
2016
€m
2.0
(0.4)
1.6
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.
The income tax expense for the year includes a current tax charge of €5.6 million and a deferred tax credit of €1.8 million relating to
non-trading items (note 10).
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% (2016: 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
2017
€m
2016
€m
87.7
60.4
11.0
7.6
(5.6)
(0.3)
0.3
(1.0)
4.4
(5.8)
(0.1)
0.2
(0.3)
1.6
Irish Continental Group2017 Annual Report and Financial Statements 9. Profit for the financial year
Gain on disposal of property, plant and equipment
Foreign exchange (gains) / losses
Fuel cost
Amortisation of intangible assets (note 14)
Depreciation of property, plant and equipment (note 13)
Amortisation of deferred grant (note 26)
Net depreciation and amortisation expense
Group Auditors’ remuneration:
- Total Group audit fee
- Audit of the subsidiary financial statements
- Other assurance services
- Tax advisory services
- Other non-audit services
Company Auditors’ remuneration:
- Total Company audit fee
- Other assurance services
- Tax advisory services
- Other non-audit services
125
2016
€m
(0.3)
2.5
32.2
0.4
20.6
21.0
(0.1)
20.9
€’000
193
25
-
43
6
267
2017
€m
(29.1)
(0.1)
40.3
0.3
20.5
20.8
(0.1)
20.7
€’000
201
25
-
47
-
273
€’000
€’000
16
-
16
-
32
15
-
14
2
31
Disclosure of Directors’ emoluments as required by Section 305 of the 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 €74.4 million (2016: €39.6
million).
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 126
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
10. Non-trading items
On 17 May 2017, the Group completed the sale of the vessel MV Kaitaki to KiwiRail of New Zealand. The MV Kaitaki which was
commissioned by and delivered to ICG in 1995 became surplus to ICG’s operational requirements following delivery of our cruise
ferry Ulysses in 2001. MV Kaitaki has been on charter outside the Group since 2002, most recently to the buyers KiwiRail who
operate the vessel in New Zealand.
Gain on disposal of vessel
Consideration
Disposal costs
Performance pay associated with disposal
Net proceeds
NBV of vessel disposed
Gain on disposal
Tax on disposal
Tax payable at 12.5%
Deferred tax credit on disposal of vessel
Tax on disposal
The gain on disposal of the vessel is included in the profit for the period and is disclosed on a separate line in the Consolidated
Income Statement.
11. Dividends
Final dividend of 7.760c per ICG Unit for financial year ended 31 December 2016 (2015: 7.387c)
Interim dividend of 4.01c per ICG Unit for the financial year ended 31 December 2017 (2016: 3.820c)
2017
€m
14.6
7.6
22.2
2017
€m
45.0
(0.3)
(0.6)
44.1
(15.4)
28.7
5.6
(1.8)
3.8
2016
€m
13.8
7.2
21.0
The Board is proposing a final dividend of 8.15 cent per ICG Unit amounting to €15.5 million in respect of the results for the financial
year ended 31 December 2017.
Irish Continental Group2017 Annual Report and Financial Statements 12. Earnings per share
127
2017
’000
2016
’000
Weighted average number of ordinary shares for the purposes of basic earnings per share
188,801
187,536
Effect of dilutive potential ordinary shares: Share options
1,208
1,692
Weighted average number of ordinary shares for the purpose of diluted earnings per share
190,009
189,228
The denominator for the purposes of calculating both basic and diluted earnings per share has been adjusted to reflect shares issued
during the year (note 19).
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 31a).
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
Non-trading item (note 10)
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
2017
€m
83.3
(28.7)
0.2
54.8
2017
Cent
44.1
43.8
29.0
28.8
2016
€m
58.8
-
-
58.8
2016
Cent
31.4
31.1
31.4
31.1
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 30. Of the 1,714,000 (2016: 2,866,500) vested options at 31 December
2017, the dilutive effect is 1,208,000 ordinary shares (2016: 1,692,000 ordinary shares).
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 128
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
13. Property, plant and equipment
Group
Assets under
Construction
Plant
and
Land
and
Vessels
Equipment
Vehicles
Buildings
Cost
At 1 January 2016
Additions
Exchange differences
Disposals
At 1 January 2017
Additions
Exchange differences
Disposals
At 31 December 2017
Accumulated depreciation
At 1 January 2016
Depreciation charge for the financial year
Eliminated on disposals
Exchange difference
At 1 January 2017
Depreciation charge for the financial year
Eliminated on disposals
Exchange difference
At 31 December 2017
Carrying amount
At 31 December 2016
€m
€m
€m
-
31.8
-
-
31.8
71.7
-
-
103.5
-
-
-
-
-
-
-
-
-
327.7
21.0
(0.5)
(6.0)
342.2
8.7
(0.3)
(63.9)
286.7
192.0
17.1
(6.0)
-
203.1
17.0
(48.3)
-
171.8
57.5
2.3
(0.6)
(2.7)
56.5
0.6
(0.1)
(1.8)
55.2
40.2
3.0
(1.8)
(0.3)
41.1
2.9
(1.8)
(0.1)
42.1
31.8
139.1
15.4
At 31 December 2017
103.5
114.9
13.1
€m
1.1
0.3
-
(0.4)
1.0
0.2
-
(0.3)
0.9
0.8
0.2
(0.3)
-
0.7
0.2
(0.3)
-
0.6
0.3
0.3
€m
25.2
1.3
-
-
26.5
0.4
-
-
Total
€m
411.5
56.7
(1.1)
(9.1)
458.0
81.6
(0.4)
(66.0)
26.9
473.2
8.5
0.3
-
-
8.8
0.4
-
-
241.5
20.6
(8.1)
(0.3)
253.7
20.5
(50.4)
(0.1)
9.2
223.7
17.7
204.3
17.7
249.5
Security comprising statutory mortgages securing amounts outstanding under an amortising term loan facility was released during
the year following repayment of that loan facility. At 31 December 2017 no mortgages had been granted over any of the Group’s
assets.
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 €1.8 million (2016: €2.3 million) in respect of assets
held under finance leases.
Irish Continental Group2017 Annual Report and Financial Statements 129
Total
€m
7.0
31.8
(1.7)
37.1
71.7
(2.1)
€m
0.1
-
-
0.1
-
-
0.1
106.7
0.1
-
-
0.1
-
-
0.1
-
-
5.5
2.7
(1.7)
6.5
2.4
(2.1)
6.8
30.6
99.9
13. Property, plant and equipment - continued
Company
Assets under
Plant
And
Land
and
Construction
Equipment
Vehicles
Buildings
Cost
At 1 January 2016
Additions
Disposals
At 1 January 2017
Additions
Disposals
At 31 December 2017
Accumulated depreciation
At 1 January 2016
Depreciation charge for the financial year
Eliminated on disposals
At 1 January 2017
Depreciation charge for the financial year
Eliminated on disposals
At 31 December 2017
Carrying amount
At 31 December 2016
At 31 December 2017
€m
€m
-
29.6
-
29.6
69.9
-
99.5
-
-
-
-
-
-
-
29.6
99.5
6.8
2.2
(1.7)
7.3
1.8
(2.1)
7.0
5.3
2.7
(1.7)
6.3
2.4
(2.1)
6.6
1.0
0.4
€m
0.1
-
-
0.1
-
-
0.1
0.1
-
-
0.1
-
-
0.1
-
-
The carrying amount of the Company’s plant and equipment includes an amount of €0.5 million (2016: €0.8 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.
Estimates 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 (2016: €0.2 million) decrease / increase on depreciation in the
Consolidated Income Statement and a €0.2 million (2016: €0.2 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 €1.5 million (2016: €1.4 million) decrease / €1.9 million (2016: €1.8 million) increase in depreciation
in the Consolidated Income Statement, and a €1.5 million (2016: €1.4 million) increase / €1.9 million (2016: €1.8 million) decrease on
the carrying value of property, plant and equipment in the Statement of Financial Position.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 130
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
13. Property, plant and equipment - continued
At the balance sheet date, the Company’s asset under construction relates to the new build MV W.B. Yeats and comprises payments
of €34.2 million, an accrual reflecting value of work completed not yet payable of €64.6 million, capitalised interest of €0.6 million
and staff costs of €0.1 million. During the year ended 31 December 2017, interest costs of €0.4 million and staff costs of €0.1 million
were capitalised.
Group assets under construction also include payments under other contracts to deliver certain items of property, plant and
equipment.
14. Intangible assets
Cost
At 1 January
Disposals
Additions
At 31 December
Amortisation
At 1 January
Eliminated on disposals
Charge for the financial year
At 31 December
Carrying amount
At 1 January
At 31 December
Group
2017
€m
10.5
(0.3)
-
10.2
9.7
(0.3)
0.3
9.7
Group
2016
€m
10.2
-
0.3
10.5
9.3
-
0.4
9.7
0.8
0.5
0.9
0.8
Company
Company
2017
€m
9.8
-
-
9.8
9.1
-
0.3
9.4
0.7
0.4
2016
€m
9.6
-
0.2
9.8
8.8
-
0.3
9.1
0.8
0.7
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.
Irish Continental Group2017 Annual Report and Financial Statements 131
2017
€m
11.7
0.3
12.0
2016
€m
11.7
-
11.7
15. 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
The composition of the Group and the Company’s principal subsidiaries at 31 December 2017 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
100%
100%
100%
100%
Belfast Container Terminal (BCT) Limited
Northern Ireland
100%
Irish Ferries (U.K.) Limited
United Kingdom 100%
Eurofeeders Limited
United Kingdom 100%
Irish Ferries (U.K.) Services Limited
United Kingdom 100%
Zatarga Limited
Contarga Limited
Irish Ferries Finance DAC
Isle of Man
Ireland
Ireland
100%
100%
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
Administration services
The registered office for Irish Ferries Limited, Eucon Shipping & Transport Limited, Irish Continental Line Limited, Contarga Limited,
Irish Ferries Services Limited and Irish Ferries Finance DAC is Ferryport, Alexandra Road, Dublin 1.
The registered office for Belfast Container Terminal (BCT) 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 The Plaza, Suite 4D – 4th Floor, 100 Old
Hall Street, Liverpool L3 9QJ, 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.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 132
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
16. Inventories
Fuel and lubricating oil
Catering and other stocks
Group
2017
€m
2.5
0.2
2.7
Group
Company
Company
2016
€m
2.1
0.2
2.3
2017
€m
0.1
0.4
0.5
2016
€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 €47.1 million during the financial
year (2016: €39.0 million).
17. Trade and other receivables
Trade receivables
Allowance for doubtful debts
Prepayments
Amounts due from subsidiary companies
Other receivables
Group
2017
€m
38.2
(1.5)
36.7
4.7
-
0.8
42.2
Group
Company
Company
2016
€m
35.1
(1.4)
33.7
4.8
-
1.1
39.6
2017
€m
1.3
-
1.3
0.2
138.9
0.2
140.6
2016
€m
1.1
-
1.1
0.2
115.7
0.4
117.4
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 42 days sales at 31 December 2017 (2016: 39 days).
Irish Continental Group2017 Annual Report and Financial Statements 133
17. Trade and other receivables - continued
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
2017
€m
2017
€m
2017
€m
2016
€m
2016
€m
2016
€m
35.5
(1.2)
34.3
32.7
(1.1)
31.6
1.9
0.8
38.2
(0.2)
(0.1)
(1.5)
1.7
0.7
36.7
1.9
0.5
35.1
(0.2)
(0.1)
(1.4)
1.7
0.4
33.7
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
2017
€m
1.4
0.1
1.5
Group
2016
€m
1.4
-
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 2017.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 134
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
18. 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:
Group
2017
€m
Group
Company
Company
2016
€m
2017
€m
2016
€m
Cash and cash equivalents
90.3
42.2
27.3
20.6
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.
The geographic spread by deposit institution for the Group was as follows:
Ireland
United Kingdom
Europe
Total
Group
Group
Company
Company
2017
€m
88.1
0.1
2.1
90.3
2016
€m
40.5
0.2
1.5
42.2
2017
€m
2016
€m
27.3
20.6
-
-
-
-
27.3
20.6
The cash and cash equivalents figure of €90.3 million at 31 December 2017 includes a deposit of €1.9 million (2016: €1.4 million)
which the Group has granted a charge in favour of the Irish Ferries Pension Trustee Limited as continuing security for amounts due
under a deficit funding agreement concluded with the Trustee on behalf of the Irish Ferries Limited Pension Scheme.
19. Share capital
Group and Company
Authorised
2017
Number
2017
€m
2016
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
4,500,000,000
0.0
4,500,000,000
29.3
2016
€m
29.3
0.0
29.3
Irish Continental Group2017 Annual Report and Financial Statements
19. Share capital- continued
Allotted, called up and fully paid
Ordinary shares
At beginning of the financial year
Share issue
At end of the financial year
2017
Number
188,309,390
1,685,000
189,994,390
2017
€m
12.2
0.1
12.3
2016
Number
186,471,890
1,837,500
188,309,390
135
2016
€m
12.1
0.1
12.2
The Company has one class of share unit, an ICG Unit, which at 31 December 2017 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 1,685,000 (2016: 1,837,500) and total consideration received amounted to €3.3
million (2016: €2.7 million). These ICG Units were issued under the 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 nor 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 the 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.
20. 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 2017 the reserve balance stands at €0.1
million. The balance is unchanged from 1 January 2016 and 1 January 2017.
The capital redemption reserve represents the nominal value of share capital repurchased. At 31 December 2017 the reserve balance
stands at €7.2 million (2016: €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.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 136
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
20. Analysis of Equity - continued
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.
21. Borrowings
Bank loans
Private placement loan notes
Origination fees
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
Group
2017
€m
-
50.0
(1.0)
1.7
50.7
0.7
0.5
0.2
-
49.3
50.7
Group
2016
€m
77.7
-
-
2.4
80.1
78.4
0.7
0.6
0.3
0.1
80.1
Less: Amount due for settlement within 12 months
(0.7)
(78.4)
Amount due for settlement after 12 months
50.0
1.7
Company
Company
2017
€m
-
-
-
0.6
0.6
0.3
0.3
-
-
-
0.6
(0.3)
0.3
2016
€m
-
-
-
0.9
0.9
0.3
0.3
0.3
-
-
0.9
(0.3)
0.6
Obligations under the Group borrowing facilities have been cross guaranteed by certain subsidiaries but are otherwise unsecured,
except for finance lease obligations which are secured by the lessors’ title to the leased assets.
The currency profile of the Group’s borrowings are set out in note 22 (iii).
Company lease obligations at 31 December 2017 of €0.6 million (2016: €0.9 million) are denominated in Euro.
Irish Continental Group2017 Annual Report and Financial Statements 137
Minimum lease payments
Present value of
minimum lease payments
2017
€m
0.8
1.1
1.9
(0.2)
1.7
(0.7)
1.0
2016
€m
0.8
1.9
2.7
(0.3)
2.4
(0.7)
1.7
2016
€m
0.3
0.7
1.0
(0.1)
0.9
(0.3)
0.6
2017
€m
0.7
1.0
1.7
-
1.7
(0.7)
1.0
Present value of
minimum lease payments
2017
€m
0.3
0.3
0.6
-
0.6
(0.3)
0.3
2016
€m
0.6
1.8
2.4
-
2.4
(0.7)
1.7
2016
€m
0.3
0.6
0.9
-
0.9
(0.3)
0.6
21. Borrowings – continued
Group finance leases
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
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
2017
€m
0.3
0.4
0.7
(0.1)
0.6
(0.3)
0.3
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 2017, the average effective lease borrowing rate was 5.5% (2016: 5.5%) in the Group and 5.6%
(2016: 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.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 138
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
21. Borrowings – continued
Borrowing facilities
Overdraft and trade guarantee facility:
Amounts utilised – bank overdraft
Amounts utilised – trade guarantee
Amounts undrawn
Committed Loan facilities:
Amounts drawn
Amounts undrawn
Uncommitted Loan facilities:
Amounts undrawn
Group
Company
Company
Group
2017
€m
-
0.6
15.4
16.0
50.0
150.0
200.0
2016
€m
-
0.7
14.3
15.0
77.7
-
77.7
2017
€m
-
-
15.4
15.4
-
75.0
75.0
229.3
-
-
2016
€m
-
-
14.3
14.3
-
-
-
-
At 31 December the Group had total committed facilities of €216.0 million (2016: €92.7 million) which comprised of amounts utilised
of €50.6 million (2016: €78.4 million) and amounts undrawn of €165.4 million (2016: €14.3 million), of which €75.0 million is available
for drawing on 11 June 2018 subject to satisfaction of certain conditions precedent related to the project for the construction of the
MV W.B Yeats. Uncommitted facilities relate to bank and private placement shelf agreements which are available for drawing at the
discretion of the relevant lender. All borrowings at 31 December 2017 were unsecured and cross guaranteed by certain subsidiaries
within the Group.
The weighted average interest rates paid during the financial year were as follows:
Bank overdrafts
Bank loans
Group
2017
0.6%
2.3%
Group
2016
0.7%
2.9%
Company
Company
2017
2016
0.6%
-
0.7%
-
Irish Continental Group2017 Annual Report and Financial Statements 139
21. Borrowings – continued
The Group has the following borrowing facilities available;
1. A bank overdraft and trade guarantee facility with permitted drawing amounts of €16.0 million. At 31 December 2017, €0.6 million
(2016: €0.7 million) was utilised on this facility by way of trade guarantees and €nil was utilised as an overdraft. 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.
2. A multicurrency revolving credit facility with permitted drawing amounts of €75.0 million, which may be increased to €125.0
million in total at the discretion of the lenders on application. At 31 December 2017, €nil (2016: €40.0 million under an expired
facility) 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 2022, but is extendable for further periods of up to two years at the discretion of the lenders on application.
3. An amortising term loan agreement with the European Investment Bank available for drawing after 11 June 2018 subject to certain
conditions precedent relating to the completion of the vessel W.B Yeats. The facility consists of a drawing amount of up to €75.0
million and is repayable in equal instalments over a ten year period commencing 11 December 2020. A contractual fixed interest
rate was agreed with the lender post year-end.
4. Multicurrency loan note agreements agreed with a number of investors with a total uncommitted investment amount of €229.3
million. These amounts are available for drawing at the discretion of investors for an initial period up to 6 October 2020. Interest
rates are set at each drawing date and maturity may extend for up to 15 years. On 30 November 2017, Irish Ferries Finance DAC
issued loan notes for a total amount of €50.0 million with a seven year bullet maturity of 30 November 2024.
5. An amortising term loan facility with an outstanding balance at 31 December 2016 of €37.7 million was repaid during the year and
all security released. An associated derivative financial instrument whereby floating rate EURIBOR had been swapped for a fixed
interest rate was also settled.
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 borrowing agreements
as of 31 December 2017.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 140
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
22. Financial instruments and risk management
The Group’s activities expose it to a variety of financial risks including market risk (such as interest rate risk, foreign currency risk,
commodity price risk), liquidity risk and credit 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.
(i) Categories of financial instruments
Financial assets and liabilities
2017
Trade and other receivables
Cash and cash equivalents
Borrowings
Trade and other payables
2016
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
42.2
90.3
-
-
-
-
-
-
-
-
50.7
112.4
42.2
90.3
50.7
42.2
90.3
50.4
112.4
112.4
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
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 (2016: 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.
Irish Continental Group2017 Annual Report and Financial Statements 141
22. Financial instruments and risk management – continued
The following are the significant methods and assumptions used to estimate fair values of financial assets and financial liabilities:
Trade and other receivables / payables
For trade receivables and trade payables, with average settlement periods of 42 days (2016: 39 days) and 69 days (2016: 72 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 €nil as at 31
December 2017 (2016: a liability of €0.2 million) and consisted entirely of interest rate swaps.
(ii) Interest rate risk
At 31 December 2017, interest rates on short term bank deposits were contracted for terms of less than three months at average
effective rates of 0.0% (2016: 0.1%).
The interest rates on Group borrowings at 31 December 2017 comprising loan notes and finance lease obligations have been fixed
at a contracted rate at the date of drawdown with the relevant lender eliminating exposure to interest rate risk on borrowings. The
average effective interest rate at 31 December 2017 was 1.53%. At 31 December 2016, 50% of Group borrowings were at fixed rates at
an average effective rate of 3.5%.
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 2017, 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 2017 and 31 December 2016 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, as all interest rates on borrowings at 31 December 2017 were at contracted fixed rates until maturity, a one
percentage point increase or decrease in market interest rates on Group borrowings and derivative financial instruments would have
decreased or increased profit before tax and equity by approximately €nil (2016: €0.4 million).
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 142
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
22. 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 €1.3 million (2016: €1.1 million) and equity (before tax effects) would have decreased by €0.5 million (2016: €0.3 million); (ii) a 10%
weakening in Euro exchange rates against all currencies, profit before tax would have decreased by €1.5 million (2016: €1.4 million)
and equity (before tax effects) would have increased by €0.5 million (2016: €0.4 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:
2017
Trade and other receivables1
Cash and cash equivalents
Total assets
Trade and other payables
Bank loans
Finance leases
Total liabilities
Net (liabilities) / assets
1. Excludes allowance for doubtful debts
Euro
€m
35.3
78.4
113.7
98.0
49.0
1.7
148.7
(35.0)
Sterling
US Dollar
€m
8.2
11.8
20.0
11.0
-
-
11.0
9.0
€m
0.2
0.1
0.3
3.4
-
-
3.4
(3.1)
Total
€m
43.7
90.3
134.0
112.4
49.0
1.7
163.1
(29.1)
Irish Continental Group2017 Annual Report and Financial Statements 143
Total
€m
41.0
42.2
83.2
46.7
77.7
0.2
2.4
Sterling
US Dollar
€m
0.2
0.2
0.4
3.3
-
-
-
€m
6.8
8.9
15.7
10.6
-
-
-
10.6
5.1
3.3
(2.9)
127.0
(43.8)
22. Financial instruments and risk management - continued
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
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)
(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 & 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
2017
€m
90.3
165.4
255.7
2016
€m
42.2
14.3
56.5
Company
2017
€m
27.3
90.4
117.7
2016
€m
20.6
14.3
34.9
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 144
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
22. Financial instruments and risk management - continued
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.
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
2017
Liabilities
Trade and other payables
Bank loans
Finance leases
Total liabilities
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
Years
€m
€m
€m
Between
1 – 2 years
€m
6.9
1.5
112.4
49.0
1.7
163.1
112.4
55.0
1.9
169.3
112.4
0.7
0.7
113.8
-
0.7
0.6
1.3
Between
2 – 5 years
More than 5
years
€m
-
2.1
0.6
2.7
€m
-
51.5
-
51.5
Weighted
average period
until maturity Carrying amount
Contractual
amount
Less than 1 year
Years
€m
€m
€m
Between
1 – 2 years
€m
Between
2 – 5 years
More than 5
years
€m
€m
0.7
1.9
0.7
46.7
77.7
2.4
0.2
127.0
46.7
78.1
2.7
0.2
127.7
46.7
78.1
0.8
0.2
125.8
-
-
0.7
-
0.7
-
-
1.2
-
1.2
-
-
-
-
-
(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 17 and 18
respectively. The maximum exposure to credit risk is represented by the carrying amounts in the Statement of Financial Position.
Irish Continental Group2017 Annual Report and Financial Statements 145
22. 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
2017 and 31 December 2016.
The capital structure of the Group consists of net cash (borrowings as detailed in note 21 offset by cash and cash equivalents) and
equity of the Group (comprising issued capital, reserves and retained earnings as detailed in notes 19 and 20).
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 borrowing agreements. These policy requirements were achieved at 31 December 2017 and 31 December 2016. At 31
December 2017, the Group was in a net cash position. The ratio of consolidated net debt as a multiple of EBITDA (reported basis) in
2016 was 0.5 times.
(viii) Derivative financial instruments
The fair value of derivative financial instruments at 31 December 2017 was €nil (2016: €0.2 million). All cash flow hedges were
effective and fair value losses of €nil (2016: losses of €0.1 million) were recorded in other comprehensive income and net settlements
amounted to €0.2 million (2016: €0.4 million).
The Group utilised interest rate swaps during the year 31 December 2017. The Group entered into an agreement whereby it swapped
its EURIBOR floating interest rate exposure from 1 January 2013 under the expired amortising term loan facility for fixed interest
rates. The derivative financial instrument was settled on repayment of the term loan facility. The estimated fair value of this derivative
based on quoted market prices for equivalent instruments at 31 December 2017 was €nil (2016: €0.2 million).
The interest rates on Group borrowings at 31 December 2017 has been fixed at a contracted rate.
The Company did not utilise any other interest rate swaps during the years ended 31 December 2017 and 31 December 2016.
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 2017 and 31 December 2016, there were no outstanding forward foreign exchange contracts.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 146
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
23. 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 2017
At beginning of the financial year
Credit to the Consolidated Income Statement
Debit to the Consolidated Statement of Comprehensive Income
At end of the financial year
Group 2016
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
2.6
(2.1)
-
0.5
€m
0.1
-
0.2
0.3
Accelerated tax
depreciation
Retirement
benefit
obligation
€m
€m
3.0
(0.4)
-
2.6
0.8
-
(0.7)
0.1
Total
€m
2.7
(2.1)
0.2
0.8
Total
€m
3.8
(0.4)
(0.7)
2.7
Deferred tax is recognised in the Consolidated Statement of Comprehensive Income to the extent it arises on income or expenses
recognised in that statement.
Irish Continental Group2017 Annual Report and Financial Statements 147
23. Deferred tax liabilities - continued
Company
There are no deferred tax liabilities and assets recognised by the Company during the current and prior reporting periods.
Unrecognised deferred tax assets – Group and Company
The estimated value of the deferred tax asset not recognised is €0.1 million (2016: €0.1 million) in the Group and €0.1 million (2016:
€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
24. Trade and other payables
Within 1 year
Trade payables and accruals
Asset under construction (note 13)
Payroll taxes
Social insurance cost
Value added tax
Amounts due to subsidiary companies
Group
2017
€m
0.1
-
0.1
Group
2017
€m
43.5
64.6
1.4
0.5
2.4
-
Group
Company
Company
2016
€m
0.1
-
0.1
2017
€m
0.1
-
0.1
2016
€m
0.1
-
0.1
Group
Company
Company
2016
€m
43.2
–
1.3
0.4
1.8
-
2017
€m
4.9
64.6
0.1
-
0.2
25.2
95.0
2016
€m
3.8
–
0.1
-
0.1
44.4
48.4
112.4
46.7
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 69 days at 31 December 2017 (2016: 72 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.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 148
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
25. 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
Group
Company
Company
2017
€m
1.2
(0.2)
-
1.0
0.5
0.5
1.0
2016
€m
1.0
-
0.2
1.2
0.6
0.6
1.2
2017
€m
0.2
(0.2)
-
-
-
-
-
2016
€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.
26. Deferred grant
Group
At beginning of the financial year
Amortisation
At end of the financial year
Analysed as follows:
Current liabilities
Non-current liabilities
2017
€m
0.4
(0.1)
0.3
0.1
0.2
0.3
2016
€m
0.5
(0.1)
0.4
0.1
0.3
0.4
The deferred grant is in respect of capital assets and is amortised to the Consolidated Income Statement over the life of the assets.
27. Commitments
Commitments for the acquisition of property, plant and equipment
Approved and contracted
Less accrued at 31 December (note 13)
Approved and contracted for not accrued
Group
2017
€m
281.0
(64.6)
216.4
Group
2016
€m
122.2
–
122.2
Irish Continental Group2017 Annual Report and Financial Statements 28. Operating lease agreements
149
Group
2017
€m
Group
2016
€m
Minimum lease payments under operating leases recognised as an expense during the financial year
14.3
12.8
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
2017
€m
10.8
7.7
63.5
82.0
Group
2016
€m
11.0
15.6
64.2
90.8
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 105 years, the
outstanding terms of the operating leases within the Group at 31 December 2017 range from less than 1 month to 5 years. Property
rentals are fixed for periods ranging from 1 to 7 years.
29. 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
2017
€m
0.3
-
0.3
Group
2016
€m
4.1
8.2
12.3
Company
Company
2017
€m
0.3
0.7
1.0
2016
€m
0.3
0.7
1.0
The Group charters vessels under operating leases to third parties and the Company leases certain assets under an operating lease
to a subsidiary company.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information
150
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
30. Share-based payments
The Group and Company operates a number of equity settled share option schemes under which certain employees of the Group
and Company have been issued with share options.
On 17 May 2017 the Company in general meeting approved the adoption of the Performance Share Plan (“PSP”), which is now the
active plan under which option awards may be granted. Details of the award and vesting conditions are set out in the Report of the
Remuneration Committee. Vesting is contingent on market conditions such as total shareholder return and non-market conditions
such as Earnings per Share, free cash flow and return on average capital employed. During the year 1,076,000 options were granted
under the PSP with a vesting period of 3 years.
In addition to the PSP there are two legacy option schemes. The 1998 Share Option Plan expired during the year following the
exercise of the remaining previously vested options by participants.
The 2009 Share Option Plan remains in place with respect to any outstanding grants made prior to 2016 but no new grants will
be made following the adoption of the PSP. During the year grants of second tier options granted on 26 March 2012 and basic tier
options granted on 1 September 2014 were determined to have vested.
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 under good leaver rules. 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:
Outstanding at 1 January
Granted during the year
Exercised during the year
Forfeited during the year
Outstanding at 31 December
2017
2016
Number
of share
options
Weighted
average
exercise
price
€
Number
of share
options
6,281,500
2.42
8,385,000
1,076,000
0.065
-
(2,505,000)
2.01
(1,948,500)
-
-
(155,000)
4,852,500
2.11
6,281,500
Weighted
average
exercise
price
€
2.22
-
1.48
3.36
2.42
Exercisable at 31 December
1,714,000
1.68
2,866,500
1.95
Weighted average share price
at date of exercise of options
Weighted average remaining contractual
life of options outstanding at year-end
5.75
5.38
5.1 years
4.9 years
In settlement of the 2,505,000 options exercised during the year the Company issued 1,685,000 new ICG units with the balance of
820,000 sourced through market purchase.
Irish Continental Group2017 Annual Report and Financial Statements 151
2017
Options
2016
Options
Price
€
-
-
890,000
1,050,000
726,500
926,500
850,000
137,500
-
-
1,714,000
2,866,500
-
-
1,200,000
152,500
152,500
152,500
955,000
955,000
955,000
955,000
1,076,000
-
4,852,500
6,281,500
2.132
2.132
1.570
1.570
2.970
1.570
2.970
2.970
3.580
3.580
0.065
30. Share-based payments - continued
The exercise prices of options outstanding at 31 December are as follows:
Exercisable:
1998 Share Option Plan
Basic Options (1)
Super Options (2)
2009 Share Option Plan
Basic Tier Options (3)
Second Tier Options (4)
Basic Tier Options (3)
Exercisable at 31 December
Not Yet Exercisable:
2009 Share Option Plan
Second Tier Options (4)
Basic Tier Options (3)
Second Tier Options (4)
Basic Tier Options (3)
Second Tier Options (4)
Performance Share Plan (5)
Total outstanding at 31 December
1.
2.
3.
4.
5.
Basic options under the 1998 Share Option Plan were only exercisable 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.
Super options under the 1998 Share Option Plan were only exercisable 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.
Basic Tier Options under the 2009 Share Option Plan 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.
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.
Vesting of options under the Performance Share Plan are contingent on the achievement of certain market and non-market performance hurdles set out in the Report
of the Remuneration Committee.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 152
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
30. Share-based payments – continued
Under Group equity-settled share based payment schemes the maximum life of a share option is up to 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 2016 (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, 5 March 2015 and 23 May 2017. The estimated fair values of the options are as
follows:
Year of Grant
2017
2015
2015
2014
2014
Basic Tier
Second Tier
Basic Tier
Second Tier
Fair value of option
€3.67
€0.4528
€0.5581
€0.2992
€0.4449
Year of Grant
2012
2012
2007
2006
2005
BasicTier
Second Tier
Fair value of option
€0.324
€0.368
€0.922
€0.443
€0.401
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
2017
2015
2015
2014
2014
Basic Tier
Second Tier
Basic Tier
Second Tier
€5.400
€5.400
22%
8 years
0.023%
4.61%
€3.580
€3.580
29%
7 years
0.090%
5.16%
€3.580
€3.580
31%
9 years
0.299%
4.72%
€2.970
€2.970
27%
7 years
0.439%
5.83%
€2.970
€2.970
30%
9 years
0.765%
4.89%
Year of Grant
2012
2012
2007
2006
2005
Basic Tier
Second Tier
Weighted average share price
Weighted average exercise price
Expected volatility
Expected life
Risk free rate
Expected dividend yield
€1.570
€1.570
34%
7 years
1.323%
4.97%
€1.570
€1.570
33%
€2.132
€2.132
35%
€1.067
€1.067
35%
€1.000
€1.000
36%
9 years
10 years
10 years
10 years
1.799%
4.41%
4.260%
1.64%
3.765%
1.87%
3.293%
1.69%
Irish Continental Group2017 Annual Report and Financial Statements 153
30. Share-based payments – continued
Expected volatility was determined by calculating the historical volatility of the Company’s share price. 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 2017, the share-based payment expense recognised in the Consolidated Income Statement was €1.1 million (2016: €0.2 million) and
in the Income Statement of the Company was €0.4 million (2016: €0.1 million).
The share-based payment expense has been classified in the Consolidated Income Statement as follows:
Employee benefits expense
1.1
0.2
Group
Company
Company
Group
2017
€m
2016
€m
2017
€m
0.4
2016
€m
0.1
A share-based payment expense of €359,000 (2016: €32,000) relates to the Directors of the Group. The balance on the share option
reserve in the Consolidated Statement of Financial Position at 31 December 2017 is €1.5 million (2016: €2.4 million). The balance on
the share option reserve in the Company Statement of Financial Position at 31 December 2017 is €1.5 million (2016: €2.4 million).
31. 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 (2016: €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 2017 (2016: €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.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 154
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
31. Retirement benefit schemes – continued
The pension contributions paid in the year ended 31 December 2017 amounted to €2.9 million (2016: €3.7 million) while the current
service cost charged to the Consolidated Income Statement amounted to €1.8 million (2016: €1.9 million). At 31 December 2017, there
were 763 pensioners in receipt of pension payments from the Group’s schemes (2016: 783).
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 1 April 2015
and 1 October 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 2017 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 Group, the Group has obligations in respect of past service of certain employees
who are members of the MNOPF, an industry wide multi-employer scheme and which is closed to future accrual. The latest actuarial
valuation of the scheme, which is available for public inspection, is dated 31 March 2015 and disclosed a funding shortfall of GBP 5.0
million. The Group’s share of the MNOPF obligations, as most recently advised by the trustees, is 1.53% (2016: 1.53%). The valuation
at 31 December 2017 is based on the actuarial deficit contribution demands notified to the Group and which remains outstanding at
the reporting date.
On this basis the share of the overall deficit in the MNOPF estimated by the Company attributable to the Group at 31 December 2017
is €nil (2016: €nil). During the year the Group made payments of €nil (2016: €0.5 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. 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 as those rated AA or higher by at least two
rating agencies.
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.
Irish Continental Group2017 Annual Report and Financial Statements 155
31. Retirement benefit schemes – continued
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.
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:
Discount rate
Inflation rate
Rate of annual increase of pensions in payment
Rate of increase of pensionable salaries
Sterling Liabilities
Euro Liabilities
2017
2016
2017
2016
2.35%
3.40%
3.10%
0.95%
2.50%
3.45%
1.80%
1.60%
1.70%
1.60%
3.15%
0.70% - 0.80%
0.70% - 0.80%
1.00%
0.00% - 1.00%
0.00% - 1.00%
The Euro and Sterling discount rates have been determined in consultation with the Group’s independent actuary, who have devised
proprietary models referencing market yields at the balance sheet date on high quality corporate bonds consistent with the duration
of the liabilities. For 31 December 2017 the high quality corporate bond population include those rated AA or higher by at least two
rating agencies. In 2016 the Euro corporate bond population included corporate bonds rated AA or higher by at least one rating
agency. This change in Euro bond population selection is consistent with the independent actuary’s in-house approach and would
not have affected the determination of the 2016 Euro discount rate.
The average life expectancy used in all schemes at age 60 is as follows:
Current retirees
Future retirees
2017
2016
Male
Female
Male
Female
26.3 years
29.0 years
26.1 years
28.9 years
28.6 years
31.2 years
28.5 years
30.8 years
Assumptions regarding life expectancies are set based on actuarial advice in accordance with published statistics and experience in
each jurisdiction.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 156
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
31. 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 €278.7 million at 31 December 2017 (2016: €288.3 million). At 31 December 2017, the Group also has scheme
assets totalling €283.4 million (2016: €274.8 million), giving a net pension surplus of €4.7 million (2016: deficit of €13.5 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
0.5% increase in
discount rate
7.3% decrease in
liabilities
8.4% decrease in
liabilities
7.3% decrease in
liabilities
Rate of inflation*
0.5% increase in price
inflation
6.8% increase in
liabilities
Rate of mortality
Members assumed to
live 1 year longer
3.3% increase in
liabilities
5.4% increase in
liabilities
3.9% increase in
liabilities
6.8% increase in
liabilities
3.3% 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
Diversified funds
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
2017
€m
10.5
13.8
-
0.3
1.3
25.9
(23.8)
2.1
2016
€m
9.4
14.9
-
0.3
1.0
25.6
(23.9)
1.7
2017
€m
2016
€m
117.6
124.7
95.2
24.9
18.7
1.1
257.5
(254.9)
2.6
93.7
11.6
18.0
1.2
249.2
(264.4)
(15.2)
Irish Continental Group2017 Annual Report and Financial Statements 157
31. Retirement benefit schemes – continued
Three 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. One of the defined benefit obligations accounted for by the Group is in a net
deficit position and is 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 17 years).
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 / (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:
2017
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
2016
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
2017
€m
8.1
(3.4)
4.7
Schemes in
Sterling
Schemes in
Euro
€m
€m
25.6
0.6
1.1
(0.9)
0.4
0.1
(1.0)
25.9
249.2
4.2
10.8
-
2.5
0.3
(9.5)
257.5
Schemes in
Sterling
Schemes in
Euro
€m
€m
27.1
1.0
1.8
(4.0)
0.4
0.1
(0.8)
25.6
236.6
5.2
13.6
-
2.8
0.3
(9.3)
249.2
2016
€m
2.4
(15.9)
(13.5)
Total
€m
274.8
4.8
11.9
(0.9)
2.9
0.4
(10.5)
283.4
Total
€m
263.7
6.2
15.4
(4.0)
3.2
0.4
(10.1)
274.8
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 158
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
31. 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:
2017
Schemes in
Sterling
Schemes in
Euro
€m
€m
Total
€m
At beginning of the financial year
23.9
264.4
288.3
Service cost
Interest cost
Contributions from scheme members
Actuarial loss / (gain)
Exchange difference
Benefits paid
At end of the financial year
2016
0.3
0.6
0.1
0.6
(0.7)
(1.0)
23.8
1.5
4.4
0.3
(6.2)
-
(9.5)
254.9
1.8
5.0
0.4
(5.6)
(0.7)
(10.5)
278.7
Schemes in
Sterling
Schemes in
Euro
€m
€m
Total
€m
At beginning of the financial year
22.8
246.0
268.8
Service cost
Interest cost
MNOPF deficit payments
Contributions from scheme members
Actuarial loss
Exchange difference
Benefits paid
At end of the financial year
0.2
0.8
(0.5)
0.1
4.7
(3.4)
(0.8)
23.9
1.7
5.4
-
0.3
20.3
-
(9.3)
1.9
6.2
(0.5)
0.4
25.0
(3.4)
(10.1)
264.4
288.3
(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 to employee benefits expense
Current service cost
2017
€m
1.8
1.8
2016
€m
1.9
1.9
Irish Continental Group2017 Annual Report and Financial Statements 31. Retirement benefit schemes – continued
Charges to finance costs
Interest income on scheme assets
Interest on scheme liabilities
Net interest cost on defined benefit obligations (note 7)
159
2016
€m
(6.2)
6.2
-
2017
€m
(4.8)
5.0
0.2
The estimated amounts of contributions expected to be paid to the schemes during 2018 is €2.9 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 gain / (loss) recognised in the Consolidated Statement of Comprehensive Income
Exchange movement:
Exchange (loss) on scheme assets
Exchange gain on scheme liabilities
Net exchange loss recognised in the Consolidated Statement of Comprehensive Income
2017
€m
16.7
(4.8)
11.9
0.6
3.7
1.3
17.5
2017
€m
(0.9)
0.7
(0.2)
2016
€m
21.6
(6.2)
15.4
0.3
(27.3)
2.0
(9.6)
2016
€m
(4.0)
3.4
(0.6)
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 160
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
31. 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 scheme 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), of which the Company is the sponsoring employer.
The contributory defined benefit schemes sponsored by the Company and the Group provide retirement and death benefits for
employees. The defined benefit schemes 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 2015.
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 2017 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 2015.
The Group’s share of the MNOPF obligations, as most recently advised by the trustees, is 0.51% (2016: 0.51%).
The valuation at 31 December 2017 is based on the actuarial deficit contribution demands notified to the Group and which remains
outstanding at the reporting date.
The share of the overall deficit in the MNOPF apportioned to the Company is €nil at 31 December 2017 (2016: €nil). During the year
the Company made payments of €nil (2016: €0.2 million) to the Trustees.
Irish Continental Group2017 Annual Report and Financial Statements 161
31. Retirement benefit schemes - continued
(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 schemes is calculated by independent, qualified actuaries, updated
at least annually and totals €0.9 million at 31 December 2017 (2016: €0.9 million). At 31 December 2017, the Company also has
scheme assets totalling €1.7 million (2016: €1.6 million) giving a net pension surplus of €0.8 million (2016: €0.7 million). The size of the
obligation is sensitive to actuarial assumptions.
(iv) Retirement benefit assets and liabilities
The amount recognised in the Statement of Financial Position in respect of the Company’s defined benefit schemes, including an
apportionment in respect of the Sterling based MNOPF are as follows:
Equities
Bonds
Property
Other
Fair value of scheme assets
Present value of scheme liabilities
Surplus in schemes
Schemes with liabilities in Sterling
Schemes with Liabilities in Euro
2017
€m
2016
€m
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2017
€m
1.3
0.2
0.1
0.1
1.7
(0.9)
0.8
2016
€m
1.2
0.2
0.1
0.1
1.6
(0.9)
0.7
The retirement benefit scheme sponsored by the Company is in a net surplus position. In addition, the Company’s share of the deficit
in the industry wide scheme, the MNOPF, based on the last actuarial valuation as at 31 March 2015, is €nil (2016: €nil). The total
surplus of €0.8 million (2016: €0.7 million) is shown under non-current assets in the Statement of Financial Position.
The Company is exposed to a number of actuarial risks, 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.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 162
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
31. 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:
2017
At beginning of the financial year
Actuarial gains
At end of the financial year
2016
At beginning of the financial year
Actuarial gains
At end of the financial year
Schemes in
Schemes in
Sterling
€m
-
-
-
Euro
€m
1.6
0.1
1.7
Schemes in
Schemes in
Sterling
€m
-
-
-
Euro
€m
1.5
0.1
1.6
(vi) Movement in retirement benefit liabilities
Movements in the present value of defined benefit obligations in the financial year were as follows:
2017
At beginning of the financial year
Actuarial losses
At end of the financial year
2016
At beginning of the financial year
MNOPF deficit payments
Actuarial losses
At end of the financial year
Schemes in
Schemes in
Sterling
€m
-
-
-
Euro
€m
0.9
-
0.9
Schemes in
Schemes in
Sterling
€m
0.1
(0.2)
0.1
-
Euro
€m
0.9
-
-
0.9
Total
€m
1.6
0.1
1.7
Total
€m
1.5
0.1
1.6
Total
€m
0.9
-
0.9
Total
€m
1.0
(0.2)
0.1
0.9
The present value of scheme liabilities at the financial year ended 31 December 2017 and 31 December 2016 relate to wholly funded
plans.
Irish Continental Group2017 Annual Report and Financial Statements 163
31. 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
2017
€m
-
-
-
2016
€m
-
-
-
The estimated amounts of contributions expected to be paid by the Company to the schemes during 2018 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 gain recognised in Statement of Comprehensive Income
2017
€m
0.1
-
0.1
-
-
-
0.1
2016
€m
0.1
-
0.1
-
-
(0.1)
-
32. Related party transactions
During the financial year, Group entities incurred costs of €0.2 million (2016: €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 2017, expenses of €0.3 million of which €50,000 relates to Catherine’s
remuneration for her role as non - executive Director (2016: €0.2 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 advanced to subsidiaries during the financial year amounted to €42.4 million (2016: €25.8 million
received from subsidiaries). The Company has provided Letters of Financial Support for certain of its other subsidiaries as disclosed
in note 34.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 164
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
32. Related party transactions - continued
During the financial year the Company received dividends of €75.0 million (2016: €40.0 million) from subsidiary companies.
At 31 December the following amounts were due to or from the Company by its subsidiaries:
Amounts due from subsidiary companies (note 17)
Amounts due to subsidiary companies (note 24)
2017
€m
138.9
(25.2)
113.7
2016
€m
115.7
(44.4)
71.3
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
2017
€m
4.9
0.2
0.7
5.8
Group
2016
€m
4.1
0.3
0.1
4.5
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 employed by the Company during the financial year ended 31 December 2017 (2016: nil). Costs of
€0.3 million (2016: €0.2 million) were recharged to the Company from subsidiary companies in relation to management services.
Details of the Remuneration of the Group’s 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.
Irish Continental Group2017 Annual Report and Financial Statements 165
32. Related party transactions - continued
Dividends
Amounts received by key management, including Directors, arising from dividends are as follows:
Group
2017
€m
Group
Company
Company
2016
€m
2017
€m
2016
€m
Dividends
3.4
3.2
3.3
3.1
Share options
Share options exercised by the Company’s Directors are set out in the Report of the Remuneration Committee on page 82.
33. Net cash from operating activities
Operating activities
Profit for the year
Adjustments for:
Finance costs (net)
Income tax expense
Retirement benefit obligations – current service cost
Retirement benefit obligations – payments
Pension payments in excess of service costs
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
(Decrease) / increase in provisions
Operating cash flows before movements in working capital
Increase in inventories
(Increase) / decrease in receivables
Increase in payables
Working capital movements
Cash generated from operations
Income taxes paid
Interest paid
2017
€m
83.3
1.3
4.4
(1.1)
20.5
0.3
(0.1)
1.1
(29.1)
(0.2)
80.4
(1.9)
78.5
(5.6)
(1.1)
2016
€m
58.8
2.2
1.6
(1.8)
20.6
0.4
(0.1)
0.2
(0.3)
0.2
81.8
4.7
86.5
(2.1)
(2.3)
1.9
(3.7)
(0.4)
1.4
3.7
1.8
(2.9)
(0.4)
(2.6)
1.1
Net cash inflow from operating activities
71.8
82.1
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 166
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 - CONTINUED
33. 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
Decrease in provisions
2017
€m
2016
€m
74.4
39.6
0.1
-
0.2
(0.2)
(75.0)
(40.0)
2.4
0.3
0.4
(0.2)
2.7
0.3
0.1
-
Operating cash flows before movements in working capital
2.4
2.7
Increase in inventories
(Increase) / decrease in receivables
(Decrease) / increase in payables
Cash generated by operations
Interest paid
(0.1)
(23.2)
(18.0)
-
2.0
26.2
(38.9)
30.9
(0.1)
(0.2)
Net cash (outflow) / inflow from operating activities
(39.0)
30.7
Irish Continental Group2017 Annual Report and Financial Statements 167
34. 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 €0.6 million (2016: €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 2017. Details of the Group’s principal subsidiaries have been included in note
15 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 2017 (2016: €nil) based on projected cash flows.
35. Events after the Reporting Period
The Board is proposing a final dividend of 8.15 cent per ICG Unit in respect of the results for the financial year ended 31 December
2017. On 2 January 2018, 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 €165.2 million and is
scheduled for delivery during 2020. ICG announced on 30 January 2018 that it has entered into a Memorandum of Agreement
(“MOA”) for the sale of the High Speed Craft Jonathan Swift to Balearia Eurolineas Maritimas S.A for an agreed consideration of
€15.5 million. This vessel will be delivered to the buyer in April 2018.
There have been no other material events affecting the Group since 31 December 2017.
36. Approval of financial statements
The financial statements were approved by the Board of Directors and authorised for issue on 7 March 2018.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 168
Irish Continental Group
2017 Annual Report and Financial Statements
Strategic Report
Corporate Governance
Financial Statements
Other Information
169
OTHER
INFORMATION
170 Investor Information
173 Index to the Annual Report
170
INVESTOR INFORMATION
ICG Units
An ICG Unit consists of one Ordinary Share and nil Redeemable Shares at 31 December 2017 and 31 December 2016. 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 7 March 2018, 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 2017
Year ended 31 December 2016
High
Low
Year end
5.980
5.676
4.450
4.020
5.760
4.500
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
Fax: +353 1 855 2268
Email: investorrelations@icg.ie
Irish Continental Group2017 Annual Report and Financial Statements 171
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
Fax: +353 1 447 5571
Email: webqueries@computershare.ie
Financial calendar 2018
Announcement of Preliminary Statement of Results to 31 December 2017
8 March 2018
Annual General Meeting
Proposed final dividend payment date
Half year results announcement
Travel discounts for Shareholders
10 May 2018
8 June 2018
30 August 2018
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 7 March 2018 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.
Strategic ReportCorporate GovernanceFinancial StatementsOther Information
172
INVESTOR INFORMATION
- CONTINUED
Other information
Registered office
Solicitors
Auditors
Principal bankers
Stockbrokers
Registrars
Website
Email
Reuters
Bloomberg
ISE Xetra
Ferryport
Alexandra Road
Dublin 1, Ireland.
A&L Goodbody, Dublin
Deloitte
Chartered Accountants and Statutory Audit Firm
Earlsfort Terrace, Dublin 2
AIB Group plc, Dublin
Bank of Ireland Group plc, Dublin
Investec Stockbrokers, Dublin
Goodbody Stockbrokers, Dublin
Computershare Investor Services (Ireland) Limited
Heron House, Corrig Road
Sandyford Industrial Estate
Dublin 18
www.icg.ie
info@icg.ie
ISE
IR5B_u.I
IR5B
IR5B
LSE
ICG_u.L
ICGC
Irish Continental Group2017 Annual Report and Financial Statements INDEX TO THE ANNUAL REPORT
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
107
59
69
88
125
167
61
54
136
134
10
148
167
60
144
170
118
148
146
125
145
58
58
56
40
114
127
123
36
167
F
Financial Calendar 2018
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
173
171
6
40
124
123
140
41, 140
8
48
107
4, 7
56
167
108
97
124
132
130
141
71
131
170
21
136
149
18
154
73
107
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 174
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 7 March 2018
T
Trade and Other Payables
Trade and Other Receivables
Tonnage Tax (Relief)
149
125
24
79
148
128
172
163
75
100
34
100
153
119
44
119
150
135
135
170
171
66
106
105
103
100
98
85
102
99
170
58
147
132
124
Irish Continental Group2017 Annual Report and Financial Statements 175
Strategic ReportCorporate GovernanceFinancial StatementsOther Information 176
NOTES
Irish Continental Group2017 Annual Report and Financial Statements Irish Continental Group plc,
Ferryport, Alexandra Road, Dublin 1, Ireland.
Tel:
+353 1 607 5628
Fax: +353 1 855 2268
email: info@icg.ie
www.icg.ie
Irish Ferries,
Ferryport, Alexandra Road, Dublin 1, Ireland.
Tel:
+353 1 607 5700
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 1 607 5551
email: info@eucon.ie
www.eucon.ie
+353 1 607 5555
Dublin Ferryport Terminals,
Container Terminal, Breakwater Road, Dublin 1, Ireland.
Tel:
email: info@dft.ie
+353 1 607 5700
Belfast Container Terminal,
Victoria Terminal 3, West Bank Road,
Belfast BT3 9JL, Northern Ireland.
Tel:
email: info@bcterminal.com
+44 7901 825387
Irish Continental Group plc , Ferryport
Alexandra Road, Dublin 1, Ireland, D01W2F5.