Irish Continental Group Annual Report 2022

Plain-text annual report

2022 Annual Report & Financial Statements Irish Continental Group (ICG) is the leading Irish-based maritime transport group. We carry passengers and cars, Roll on Roll off freight (RoRo) and Container Lift on Lift off freight (LoLo), on routes between Ireland, Britain and Continental Europe. We also operate container terminals in the ports of Dublin and Belfast. We aim for continued success in our chosen markets and focus our efforts on the provision of a safe, reliable, timely, good value and high-quality experience for all our customers in a way that minimises our impact on the environment. We will achieve success by anticipating our customers’ needs and matching their requirements with superior services through constant innovation and the rapid application of technology. We measure our success through the quality of our service, as seen by our customers, which should result in delivering sustained and profitable growth for the benefit of all our stakeholders. view this report online icg.annualreport22.com STRATEGIC REPORT 1 Our Group at a Glance Financial Highlights Five Year Summary Chairman’s Statement Chief Executive’s Review How We Create Value Key Performance Indicators and Summary of 2022 Results The Ferries Division The Container and Terminal Division Financial Review Sustainability and ESG Risk Management Our Fleet Executive Management Team 04 06 07 08 12 16 18 22 28 32 36 60 70 72 76 The Board 78 Corporate Governance Report 91 Report of the Audit Committee Report of the Nomination Committee 95 Report of the Remuneration Committee 98 109 Report of the Directors 113 Directors’ Responsibility Statement CORPORATE GOVERNANCE FINANCIAL STATEMENTS Independent Auditor’s Report Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Financial Statements 116 124 125 126 127 129 130 Investor Information Other Information 196 198 INVESTOR AND OTHER INFORMATION Strategic Report2022 Annual Report and Financial Statements2 Our Group at a Glance Financial Highlights Five Year Summary Chairman’s Statement Chief Executive’s Review How We Create Value Key Performance Indicators and Summary of 2022 Results The Ferries Division The Container and Terminal Division Financial Review Sustainability and ESG Risk Management Our Fleet Executive Management Team 04 06 07 08 12 16 18 22 28 32 36 60 70 72 STRATEGIC REPORT Irish Continental Group3 The Strategic Report 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. The Strategic Report has been prepared for the Group as a whole and therefore gives greater emphasis to those matters which are significant to Irish Continental Group and its subsidiaries when viewed as a whole. Strategic Report2022 Annual Report and Financial Statements4 Our Group at a Glance Irish Continental Group is a customer focused business with a pivotal position in the logistics chain facilitating international trade between Ireland, Britain and Continental Europe. The Group operates through two divisions Ferries Division Principal activities include the chartering of vessels both internally and externally together with passenger and RoRo freight shipping services under the Irish Ferries brand. Container & Terminal Division Principal activities include LoLo shipping activities under the Eucon brand and the operation of two container terminals, Dublin Ferryport Terminals (DFT) and Belfast Container Terminal (BCT), within the two main ports on the island of Ireland, and following its opening in January 2022 the Dublin Ferryport Inland Depot. Strategic short sea RoRo routes operated by Irish Ferries providing seamless connections between Ireland, Britain and Continental Europe for the 696,600 RoRo units carried in 2022. Reliability underpinned by major investment in tonnage and maintenance of quality assets ensuring the high levels of schedule integrity demanded by our customers. Connected container transport services provided by Eucon, transporting 322,600 teu (twenty foot equivalent) in 2022 between Ireland and 20 countries throughout Europe by sea, road, rail and barge. Strategically located container terminals which handled 319,600 container units during 2022 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. EstoniaLatviaLithuaniaDenmarkSwedenNorwayRomaniaBulgariaSerbiaCroatiaItalySloveniaHungaryAustriaSlovakiaSwitzerlandBelgiumCzech Rep.PolandGermanyFranceUnited KingdomIrelandNetherlandsRosslareHolyheadAntwerpRotterdamPembrokeDoverCherbourgCalaisDublinBelfastCorkIrish Ferries Ropax and Cruise Ferry ServicesIrish Ferries High Speed FerryPorts Served By Ferries: Dublin, Rosslare, Holyhead, Pembroke, Cherbourg, Dover, CalaisGroup Geographical CoverageEucon RoutesDublin Ferryport TerminalsDublin Ferryport Inland DepotBelfast Container TerminalPorts Served By Container Ships: Belfast, Dublin, Cork, Antwerp, RotterdamIrish Continental Group5 Fastest crossing on the Irish sea on board the Irish Ferries Dublin Swift fastcraft service with a sailing time of two hours between Dublin and Holyhead at speeds of up to 65 kph. Key contributor to regional tourism in all countries we offer services, Irish Ferries carried 2,315,000 passengers and 573,400 cars during 2022 with research indicating that car tourists stay longer and travel outside the main urban centres. 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. High standard on-board experience enjoyed by our Irish Ferries customers encompasses quality food, beverage, entertainment and accommodation services. Duty free shopping for passengers travelling to and from Britain. Passengers are never out of touch with free satellite wi-fi services. EstoniaLatviaLithuaniaDenmarkSwedenNorwayRomaniaBulgariaSerbiaCroatiaItalySloveniaHungaryAustriaSlovakiaSwitzerlandBelgiumCzech Rep.PolandGermanyFranceUnited KingdomIrelandNetherlandsRosslareHolyheadAntwerpRotterdamPembrokeDoverCherbourgCalaisDublinBelfastCorkIrish Ferries Ropax and Cruise Ferry ServicesIrish Ferries High Speed FerryPorts Served By Ferries: Dublin, Rosslare, Holyhead, Pembroke, Cherbourg, Dover, CalaisGroup Geographical CoverageEucon RoutesDublin Ferryport TerminalsDublin Ferryport Inland DepotBelfast Container TerminalPorts Served By Container Ships: Belfast, Dublin, Cork, Antwerp, RotterdamStrategic Report2022 Annual Report and Financial Statements6 Financial Highlights Revenue €584.9m +74.9% 2021: €334.5m EBITDA* €127.2m +143.2% 2021: €52.3m Operating profit €66.7m 2021: €(0.2)m Basic earnings per share 33.6c 2021: (2.6)c Adjusted basic earnings per share* 33.6c 2021: (2.7)c Net debt* €(171.1)m (20.3%) 2021: €(142.2)m Return on average capital employed* 17.5% 2021: (0.1)% 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 €584.9m €334.5m €127.2m €52.3m €66.7m €(0.2)m 33.6c (2.6)c 33.6c (2.7)c €(171.1)m €(142.2)m 17.5% (0.1%) * The Group uses alternative performance measures “APMs” which are non-IFRS measures to monitor Group performance. Definitions and reconciliation to IFRS measures are set out on pages 18 to 20. Irish Continental Group2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 €584.9m €334.5m €127.2m €52.3m €66.7m €(0.2)m 33.6c (2.6)c 33.6c (2.7)c €(171.1)m €(142.2)m 17.5% (0.1%) Five Year Summary Summary extract of Income Statement Revenue Operating expenses and employee benefits expense Depreciation and amortisation Non-trading items 1 Interest (net) Profit / (loss) before taxation Taxation Profit / (loss) for the year EBITDA Per share information: Earnings per share -Basic -Adjusted basic 2 7 2022 €m 2021 €m 2020 €m 20193 €m 2018 €m 584.9 (457.7) (60.5) 66.7 - (4.2) 62.5 (2.7) 59.8 334.5 (282.2) (52.5) (0.2) - (3.9) (4.1) (0.8) (4.9) 277.1 (235.0) (41.3) 0.8 (11.2) (7.6) (18.0) (1.0) (19.0) 357.4 (270.6) (36.8) 50.0 14.9 (3.4) 61.5 (1.3) 60.2 330.2 (261.8) (22.1) 46.3 13.7 (0.8) 59.2 (1.4) 57.8 127.2 52.3 42.1 86.8 68.4 €cent €cent €cent €cent €cent 33.6 33.6 (2.6) (2.7) (10.2) (4.3) 31.7 23.8 30.4 23.1 Dividend per share (declared) 14.09 9.00 4.42 12.77 Shares in issue at year end: -At year end -Average during the year Summary extract of Statement of Financial Position Property, plant and equipment, right-of-use 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 Summary extract of Consolidated Statement of Cash Flows Net cash inflow from operating activities Net cash (outflow) / inflow from investing activities Net cash (outflow) / inflow from financing activities Cash and cash equivalents at the beginning of the year Effect of foreign exchange rate changes Closing cash and cash equivalents Net debt Net debt / EBITDA m 170.8 177.8 €m 405.6 33.6 134.7 573.9 260.8 0.4 195.8 116.9 573.9 126.3 (72.7) (52.8) 38.5 (0.3) 39.0 €m (171.1) Times 1.2x - m 187.0 187.0 €m 353.0 1.0 224.9 578.9 265.9 2.2 141.6 169.2 578.9 46.1 7.8 (14.4) 110.9 - 150.4 m 182.8 186.7 €m 387.3 6.7 117.9 511.9 249.7 1.4 154.8 106.0 511.9 57.8 (52.7) (117.4) 150.4 0.4 38.5 m 187.4 189.8 €m 353.5 12.5 225.8 591.8 287.9 3.7 229.3 70.9 591.8 84.8 (52.3) (46.5) 124.7 0.2 110.9 €m €m €m (142.2) (88.5) (129.0) Times 2.6x Times 2.1x Times 1.5x m 190.3 190.0 €m 308.1 2.5 203.7 514.3 252.9 4.2 205.7 51.5 514.3 61.5 (158.8) 131.4 90.3 0.3 124.7 €m (80.3) Times 1.2x Gearing (net debt as a percentage of shareholders’ funds) 66% 57% 33% 45% 32% 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. Adjusted basic earnings per share exclude pension interest and non-trading items. 2. 3 The figures for years prior to 2019 have not been restated for the effects of IFRS 16 which was adopted with effect 1 January 2019. The effect on the Consolidated Income Statement for financial year 2019 was to decrease operating expenses by €9.4 million, increase depreciation charges by €8.6 million, increase interest expenses by €1.0 million and a net reduction in profit after tax of €0.2 million. The effect on the Consolidated Statement of Financial Position was to increase assets by €35.3 million and liabilities by €35.5 million and reduce retained earnings by €0.2 million. Strategic Report2022 Annual Report and Financial Statements 8 Chairman’s Statement INVESTING FOR GROWTH AND A SUSTAINABLE FUTURE 2022 has been a year not just of recovery, but of building for long-term growth. With the Covid-19 pandemic now behind us, we have turned our full attention to maximising the opportunities that have arisen for the Group over the last two years. We come out of the pandemic operations larger than we had at its commencement, and with a balance sheet that is as strong as ever. 2022 saw the completion of our planned fleet investment for the Dover – Calais route. The entry to this route has been a long-term objective for the Group and the expansion to a three ship operation in the first half of this year allows us to compete effectively on this route. The ending of pandemic related travel restrictions alongside the continued support of our freight customers have driven revenues to a record level. We continued our investment in future growth and sustainability throughout 2022. We acquired a further ferry, the Isle of Inisheer, for the Dover – Calais route bringing the total number of vessels on the route to three. We also added a further container vessel, the CT Pachuca in March 2022. As summarised below and detailed later on in the Annual Report, we continued to invest in a sustainable future for the Group. Continued investment in Irish Continental GroupJohn B. McGuckian, Chairman 9 the electrification of Dublin Ferryport Terminal (DFT) took place, which will lead to an achievable and material reduction in emissions from the container terminal based in Dublin Port. Alongside the recovery in our passenger business during the year, both our RoRo freight operations and container and terminal operations enjoyed another strong year of growth. The Container and Terminal Division had another exceptionally strong year, with growth in both revenues and profitability. Ferries Division RoRo and Tourism revenues both grew to record levels driven primarily from the new operation on the English Channel. As in prior years, I would like to take this opportunity to thank all our colleagues who made these results possible. Our colleagues, particularly those on the front line, have ensured operations continued throughout the Covid-19 pandemic. Those same colleagues are essential to the strong recovery in our business during the year and our planned growth in the future. Financial Outcome The overall financial outcome for the Group was a profit before tax of €62.5 million (2021: loss of €4.1 million) while operating profit was €66.7 million (2021: loss of €0.2 million). EBITDA generated was €127.2 million (2021: €52.3 million) from total revenues of €584.9 million (2021: €334.5 million). EBITDA grew strongly versus the prior year in our Ferries Division where EBITDA was €95.7 million (2021: €23.2 million). The division saw increased revenues from the recovery in our tourism markets, continued growth in the freight market, increased charter revenue and the introduction of a third vessel on the Dover – Calais service which allowed us to compete effectively on the route. Performance in our Container and Terminal Division improved with an EBITDA of €31.5 million (2021: €29.1 million) through a continued focus on cost optimisation and increases in revenue. In the prior year, our diversified revenue streams and cost containment measures protected our strong balance sheet and allowed us to begin 2022 from a position of strength. The ending of travel restrictions and strong growth in our markets allowed us to build on that strength in the current year allowing us to both further invest in the business and make material returns to shareholders. Cash generated from operations of €132.0 million (2021: €67.0 million) together with net debt increase of €28.9 million was used to fund strategic capital expenditure of €57.4 million and returns to shareholders of €73.4 million via a combination of dividends and share buybacks. Net debt at year end was €171.1 million (2021 €142.2 million). Strategic Development The Group has continued to progress a number of key strategic developments during the year. In keeping with our progress over the last number of years, we have placed a significant focus on enhancing our approach to ESG and sustainability. We have rolled out a number of further initiatives across the Group and continued initiatives that commenced in prior years. These are discussed later in the Sustainability and ESG Report at pages 36 to 59, highlights of which include the significant progress we have made in reducing the emissions of our container terminal operations. Continuing our expansion and modernisation programme at Dublin Port, 2022 was a year of further material investment in this business. With the investment we have made and continue to make in more environmentally friendly terminal equipment, we are on course to achieve a reduction in the emissions from our container terminal operations of 70 per cent by 2025 over the course of the programme. With the progress made to date and the expected future investment, we expect to achieve our target of net zero emissions in our container terminal operations by 2030. We also continue to develop our environmental reporting processes in co-ordinating the collection of relevant data and considering how Strategic Report2022 Annual Report and Financial Statements10 Chairman’s Statement Continued best this can be harnessed to affect behaviours in order to drive further improvement. This also provides the basis for increasing transparency over our sustainability credentials as set out in the Sustainability and ESG Report. We continue to engage with our stakeholders to understand their key pressing and material issues which we will evaluate and implement in our day to day business when appropriate. We continued the expansion of our Dover – Calais service with the addition of a third vessel, the Isle of Inisheer, during April 2022. This service commenced by Irish Ferries in June 2021 has been well received by both passengers and freight customers. The introduction of the third vessel is the culmination of our planned investment for the route. With Irish Ferries now offering up to 30 sailings per day on the Dover – Calais service, we now offer a genuine alternative for all customers on the Channel route. During 2022, the Group continued its investment in the modernisation and expansion at DFT. It took delivery of and commissioned a further five remote control semi-automated electric rubber-tyred gantry cranes (RTGs) bringing the total of electrically powered units at DFT to nine. Six of these RTG’s have been commissioned and are in use, with a further three due to be commissioned in 2023. This will increase the total number of electric gantries in our Dublin Terminal from six to nine by the end of 2023, continuing our transition to this more environmentally efficient mode of operation. Following the successful deployment of these environmentally friendly electric rubber-tyred gantries the Group has also ordered one new electrically powered ship-to-shore crane (STS) for delivery in 2023. The deployment of these electric cranes puts us on track to meet our emissions reduction target of net zero emissions by 2030. Furthermore, the delivery of these cranes and the relocation of our empty depot facility to the Dublin Ferryport Inland Depot will increase the capacity of DFT to meet the need of the market. Belfast Container Terminal (BCT) operates the sole container terminal at Belfast under a services concession agreement with Belfast Harbour Commissioners (BHC) at a 27 acre site in Belfast Harbour. The £40 million re-investment project by BHC commenced in 2020 and continued into 2022. The project included extensive civil works and the delivery of two new ship-to-shore gantry cranes along with eight new electrically operated RTGs. As per the investment in DFT, this investment is essential to reducing emissions in our terminal operations. The project is now completed following the deployment of the final three RTGs in 2022. The Group commenced operations at the new Dublin Inland Port in January 2022, under a 20 year lease agreement awarded following a public tender process. Trading as Dublin Ferryport Inland Depot (DFID), this facility will be used for the remote storage, maintenance and upgrade of empty container boxes, releasing valuable capacity for the handling of containers in the port area. The Dublin Inland Port is located adjacent to Dublin Airport with direct access to the M50 Motorway (Dublin Ring Road) and Dublin Port via the Port Tunnel. 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 compliance with the provisions of the UK Corporate Governance Code (2018) and the Irish Corporate Governance Annex. I report on this framework in the Corporate Governance Report on pages 78 to 90. During the year, I led the annual evaluation of Board performance of which further details are set out in the Corporate Governance Report on page 86. 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. Dividend and share buyback Following the easing of travel restrictions and the subsequent increase in our tourism carryings, the Directors declared and paid during 2022 a final dividend of 9.00 cent per ordinary share for 2021 and an interim dividend of 4.64 cent per ordinary share for 2022. Dividends paid during the year totalled €24.2 million. Payment of dividends had been suspended during 2020 and 2021 due to the effects of the Covid-19 travel restrictions on the financial performance of the Group. During the year, the Company bought back a total of 12.0 million shares which were cancelled. The total consideration paid for these shares was €49.2 million (2021: €19.8 million). The Directors are proposing a final dividend in respect of 2022 of 9.45 cent per share subject to shareholder approval at the AGM on 11 May 2023, which will be paid on 9 June 2023 to shareholders on the register at close of business on 19 May 2023. Outlook We have experienced strong growth in car and RoRo freight volumes in 2022, due partly to the unwinding of Covid-19 restrictions and also due to the expansion of our services on the Dover – Calais route. Container volumes were down slightly as they are more impacted by the slowdown in world growth and international trade volumes. Irish Continental Group11 While the Group acknowledges that its operations have an inevitable impact on the environment it does so in the knowledge that it operates essential services from the island of Ireland, which was clearly evident during the worst of the Covid-19 lockdowns. Our operations remain the most environmentally sustainable form of transport for facilitating trade and movement of people on and off the island. Nevertheless, reducing our impact on the environment is embedded in the Group’s DNA through maximising the effectiveness and efficiency in our operations while continuing to invest in appropriate technologies to reduce our impact on the environment. We remain committed to our decarbonisation targets set out in the Sustainability and ESG Report. While there is some uncertainty around economic growth rates, we look forward to continued growth during 2023 through the leveraging of our recent investments and the continued support of all customers. John B. McGuckian, Chairman 8 March 2023 In the period from 1 January 2023 to 4 March 2023, Irish Ferries carried 50,000 cars, an increase of 42.0% over the same period in the prior year. While these increases are encouraging, it is over a seasonally less significant time of the year for passenger travel. We do see an opportunity for material growth in our passenger business with the expected return to pre-pandemic levels. RoRo volumes in the Ferries Division have also started strongly in 2023. Overall, Irish Ferries RoRo volumes are up 21.1% on the same period in the prior year to 111,900 RoRo units. We expect that 2023 sees a continuation of the trend of freight customers returning to the landbridge and we are hopeful that the Windsor Framework will remove the distortion from the non-implementation of the Northern Ireland Protocol. We welcome recent calls for the establishment of Green lanes on ferry routes between the UK and the Republic of Ireland, for traffic destined for Northern Ireland. This will ensure freight moves on and off the island of Ireland in the most efficient, timely and environmentally friendly manner. The Container and Terminal Division has seen a reduction in containers shipped in the period from 1 January 2023 to 4 March 2023 of 4.4%. The number of terminal lifts has seen a similar drop of 5.6% in the same period. This is indicative of a slowdown in the global economy and is not unexpected. However, the recent and ongoing investment in capacity expansion and plant modernisation at our container terminals will provide a platform for both growth and more efficient operations at our Dublin terminal. This will be further aided by the operations at our new Dublin Inland Port facility which commenced during 2022. We note the ever-increasing expectations and regulatory requirements to reduce the effects of our operations on the environment. Strategic Report2022 Annual Report and Financial Statements12 Chief Executive’s Review A YEAR OF PROGRESS AND RECORD GROWTH Key Financial Highlights EBITDA €127.2m +143.2% 2021: €52.3m Operating profit €66.7m 2021: €(0.2)m Return on average capital employed 17.5% +17.6pts 2021: (0.1)% Adjusted basic earnings per share 33.6c 2021: (2.7)c Free cash flow before strategic capital expenditure €108.0m +143.8% 2021: €44.3m Irish Continental GroupEamonn Rothwell, Chief Executive Officer 2022 Performance 2022 was a year of strong recovery in our business and record growth. As we exited the restrictions of the Covid-19 pandemic, we have benefited from the investment decisions made over the last two years. The investment in the new Dover – Calais route have allowed us to materially grow our ferries business. Our investment in container ships allowed us to benefit from the strong container ship market during 2022. We also continued the modernisation and expansion programme in our container terminals which has allowed us to offer our customers a more efficient and sustainable service. The Group made a profit before tax of €62.5 million (2021: loss of €4.1 million). Operations were cash generative at €126.3 million (2021: €57.8 million) and the Group maintained a strong balance sheet. The performance in the Ferries Division saw a significant increase in EBITDA to €95.7 million (2021: €23.2 million). Partially reflective of returning passenger volumes following removal of travel restrictions, the level of underlying growth is encouraging and justifies the decisions and investment we have made to grow both our ferry and chartering operations. Performance in the Container and Terminal Division again grew at an impressive rate during the year. EBITDA in this division increased by 8.2% to €31.5 million (2021: €29.1 million). This was achieved despite a reduction in volumes in both Eucon and the Terminals. Revenue grew by 27.2% to €221.5 million (2021: €174.0 million). 13 Financial Position The Group ended the year in a strong position with equity attributable to shareholders increasing by €11.1 million to €260.8 million, which was after total returns made to shareholders of €73.4 million. The strong recovery against the previous two financial years saw the resumption of dividend payments, with €24.2 million paid. In addition, the Group bought back 12.0 million shares which were cancelled, for a total consideration of €49.2 million. Net debt at year end was €171.1 million compared to net debt of €142.2 million in the prior year. This represents a net debt / EBITDA leverage of 1.2 times under banking covenant definitions. The increase in net debt together with cash generated from operations, was used to fund strategic capital expenditure of €57.4 million, dividends paid of €24.2 million and share buybacks of €49.2 million during the year. Year end net debt of €171.1 million comprised gross borrowings of €167.7 million (2021: €123.1 million), lease obligations of €42.4 million (2021: €57.6 million) less gross cash balances of €39.0 million (2021: €38.5 million). Right-of-use lease obligations are excluded for banking covenant purposes. Strategic Performance As Chief Executive, a key responsibility is to drive future profitable and sustainable growth of the Group. I’m happy to report that on a strategic level significant progress was made during 2022 in building on the progress made in 2021 and preparing the Group for future long term growth opportunities. The Group continued its investment in the Dover – Calais service, which had commenced in June 2021. The Isle of Inisheer was introduced as the third vessel on the route during April 2022. The addition of a third ship onto the route for Irish Ferries has strengthened our position on the route and ensures we are a viable alternative to the other operators on the route. Strategic Report2022 Annual Report and Financial Statements14 Chief Executive’s Review Continued Operations at our new inland container depot commenced in January 2022. This is an important development for the Group as we look to expand our container operations in Dublin in the knowledge of the scarcity of space to expand in the core Dublin Port area. This allows for increased utilisation at our terminal at Dublin Port facilitating efficient imports and exports. The Group’s management continually seeks investment opportunities which meet the Group’s stringent return hurdles both in terms of return and risk appetite, a policy which is promoted at all levels within the organisation. These investments are funded through a combination of debt and cash generation from existing activities. Strategy and the Environment The Group is conscious that its activities have an environmental impact but is happy to note that reducing that impact aligns with our overall strategy. The Group has continued with the significant investments in installing exhaust gas cleaning systems (EGCS). A further EGCS unit was installed on one of our container vessels while an EGCS was also installed on the Isle of Inishmore in early 2023. The programme for the electrification of heavy plant at our container terminals continued in 2022, including the commissioning of two additional electric cranes at Dublin Ferryport Terminal. Three further electric cranes were also delivered during 2022 and will be commissioned during 2023. Both of these investments, while reducing harmful emissions, also bring health and safety benefits to our operatives and align with the strategic objective of delivering sustained and profitable growth. Further details of our work in this space during the year are detailed in our Sustainability and ESG Report at pages 36 to 59. The Group currently collects various data related to its environmental impact of its operations for external reporting purposes. In recognition of the powerful effect that data can have on creating awareness of individual actions, the Group collates and harnesses this data as a tool to promote environmental responsibility within the workforce. While we recognise there is and always will be additional work to do in this space, we consider the ongoing improvement and progress together with the firm foundation established from prior years will enable the further development of our approach to sustainability, ESG and strong reporting in the years ahead. However, for certain aspects the Group will require the shipping sector as a whole to work together. This particularly relates to global regulation under the auspices of the International Maritime Organisation setting common standards and key DOVER – CALAIS SERVICE WILL GIVE US AN EXCELLENT PLATFORM TO CONTINUE TO GROW Irish Continental Group15 Outlook I look forward in 2023 to a continuation of the positive trends we saw throughout the Group in 2022 that saw both operational and financial progress across all the divisions in the Group. The work and the investment over the last number of years gives us an exciting platform for long- term sustainable growth in all of our divisions. As always, we will continue to seek out improvement and investment opportunities for our longer-term success. Eamonn Rothwell, Chief Executive Officer 8 March 2023 equipment suppliers adopting the latest technologies. As a small operator in a global market, the Group will only apply proven technologies and we will recover the costs of same, either by increased efficiencies or by passing associated costs through to customers. The International Maritime Organisation and the European Union decarbonisation goals for the Maritime industry are set out and discussed in our Sustainability and ESG Report on pages 36 to 59. The Group is aware that our stakeholders require us to be environmentally focused and the Group is committed to continuous improvement in both the big and small things that we do. Freight remains the backbone of the local Irish and European economies. Our efforts in greening the maritime industry is a vital part of moving the wider European economy to a sustainable footing in the face of the rising challenge from climate change. Stakeholders The Group’s performance is dependent on the support of our customers, suppliers and employees. I would like to thank all our customers for their support during the year. We will continue to work with our customers to meet their expectations into the future. Our suppliers are key to our ability to deliver quality services to our customers. We continually work with our suppliers whether they be port operators, contracted service providers or product suppliers to improve efficiencies and quality. We appreciate the co-operation and flexibility achieved in delivering our 24/7 services. As in prior years, I would like to take this opportunity to thank our employees for their continued dedication to the operation of our services that are essential to the island of Ireland. It is their knowledge and dedication to customer service that drives the future success of the Group. Strategic Report2022 Annual Report and Financial StatementsOUR PURPOSE 16 How We Create Value Revenue €399.9m 64% of Group * Capital Employed €317.7m 83% of Group EBITDA €95.7m 75% of Group *inclusive of inter-segment revenue Ferries Division Multipurpose ferry services carrying both passengers and RoRo freight on strategic short sea routes. Ireland Britain Ireland Britain France France Operating a fleet of eight ferries (including two chartered-in) Capacity to operate up to 47 sailings daily 8 LoLo chartered-out vessels Customer type Freight + Haulage Leisure Breaks Key strategic developments over the last 5 years W.B. Yeats The introduction of the WB Yeats in 2018 has met our expectations both operationally and financially. The flexibility, reliability and capacity of the vessel has been critical in allowing the Ferries Division to successfully navigate constantly changing trade flows due to the twin effects of the UK exit from the European Union and the Covid-19 pandemic. Irish Continental Group17 We will create value for our stakeholders by anticipating our customers’ needs and matching their requirements with superior services through constant innovation and the rapid application of technology. Revenue €221.5m 36% of Group * Capital Employed €66.9m 17% of Group EBITDA €31.5m 25% of Group *inclusive of inter-segment revenue Container & Terminal Division Direct container shipping services between Ireland and Continental Europe together with the operation of container terminals at both Dublin and Belfast. Container fleet capacity 8,900 TEU Strategically located container terminals Customer type Freight + Haulage Dover to Calais route Commencement of the Irish Ferries service on the Dover – Calais route in 2021. Introduction of a third ship onto the route in during 2022 allowing us to offer 30 sailings per day to our customers. Dublin Ferryport Inland Depot (DFID) Opening of our new terminal in the Dublin Ferryport Inland Depot in January 2022. The inland depot is strategically located to allow easy access to Ireland’s motorway system. This will allow ancillary services to be provided outside of the Dublin Port area, therefore increasing capacity in the Dublin Ferryport Terminal. Terminals Investment Continued investment in decarbonisation of Dublin and Belfast Terminals. During 2022, the Group took delivery of a further five electric RTGs, Of the total of nine electric RTG’s, six are fully commissioned and in use, with a further three to be commissioned in 2023. The Group has also ordered one new electrically powered ship-to-shore crane for delivery in 2023. Strategic Report2022 Annual Report and Financial Statements18 Key Performance Indicators and Summary of 2022 Results The Group uses a set of headline Key Performance Indicators (KPIs) to measure the performance of its operations and of the Group as a whole which are set out and defined below. 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. APM EBITDA EBIT Description Benefit of APM EBITDA represents earnings before interest, tax, depreciation, impairment, amortisation and non-trading items. Eliminates the effects of financing and accounting decisions to allow assessment of the profitability and performance of the Group. EBIT represents earnings before interest, tax and non-trading items. Measures the Group’s earnings from ongoing operations. Free cash flow before strategic capital expenditure Free cash flow comprises operating cash flow less capital expenditure before strategic capital expenditure which comprises expenditure on vessels excluding annual overhaul and repairs, and other assets with an expected economic life of over 10 years which increases capacity or efficiency of operations. Assesses the availability to the Group of funds for reinvestment or for return to shareholders. Net debt Leverage Net debt comprises total borrowings plus lease liabilities less cash and cash equivalents. Measures the Group’s ability to repay its debts if they were to fall due immediately. The debt leverage ratio is calculated per the terms of our lending agreement and is calculated as bank debt, excluding lease liabilities, expressed as times EBITDA. The calculation is set out at note 21 to the Financial Statements. Provides an indication of the Group’s borrowing capacity. Adjusted Basic Earnings Per Share (EPS) EPS is adjusted to exclude the non- trading items and net interest (income) / cost on defined benefit obligations. Directors consider Adjusted Basic EPS to be a key indicator of long-term financial performance and value creation of a public listed company. ROACE Pre-IFRS 16 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. Use of the term Pre-IFRS 16 denotes that the APM or IFRS measure has been adjusted to remove the effects of the application of IFRS 16: Leases. Measures the Group’s profitability and the efficiency with which its capital is employed. Measurement of covenants for bank facility purposes Non-Financial KPI Description Benefit of non-financial KPI Schedule integrity Schedule integrity (the number of sailings completed versus scheduled sailings). 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. Irish Continental Group19 The following table sets forth the reconciliation from the Group’s operating profit (EBIT) for the financial year to EBITDA, free cash flow and net debt. See note 11 to the Consolidated Financial Statements for the calculation of Basic and Adjusted Basic EPS. Cash Flow Operating profit / (loss) (EBIT) Depreciation and amortisation (note 9) EBITDA Working capital movements (note 33) Retirement benefit scheme movements (note 33) Share-based payments expense (note 30) Other Cash generated from operations Interest paid Tax paid Maintenance capital expenditure Free cash flow before strategic capital expenditure Strategic capital expenditure Free cash flow after strategic capital expenditure Proceeds on disposal of property, plant and equipment Share buybacks Dividends paid Settlement of employee equity plans through market purchases Proceeds on issue of ordinary share capital Net cash flows Opening net debt Recognition of right-of-use asset lease obligations Translation / other Closing net debt The following table sets forth the reconciliation from the Group’s ROACE calculation: ROACE Equity Net debt Asset under construction (including prepayment deposits) Retirement benefit obligations Retirement benefit surplus Capital employed Average capital employed Operating profit / (loss) ROACE 2022 €m 66.7 60.5 127.2 1.2 1.1 3.0 (0.5) 132.0 (4.0) (1.7) (18.3) 108.0 (57.4) 50.6 3.0 (49.2) (24.2) (2.9) 0.1 (22.6) (142.2) (6.2) (0.1) 2021 €m (0.2) 52.5 52.3 11.7 0.6 1.3 1.1 67.0 (8.4) (0.8) (13.5) 44.3 (41.7) 2.6 2.8 (19.8) - (1.0) 0.7 (14.7) (88.5) (38.5) (0.5) (171.1) (142.2) 2022 €m 260.8 171.1 (14.1) 0.4 418.2 (33.6) 384.6 381.0 66.7 17.5% 2021 €m 249.7 142.2 (9.2) 1.4 384.1 (6.7) 377.4 364.9 (0.2) (0.1%) Strategic Report2022 Annual Report and Financial Statements20 Key Performance Indicators and Summary of 2022 Results Continued The following table provides a reconciliation of the Group’s net debt position: Net debt Cash and cash equivalents (note 18) Non-current borrowings (note 21) Current borrowings (note 21) Non-current lease obligations (note 22) Current lease obligations (note 22) Net debt 2022 €m 39.0 (160.4) (7.3) (30.7) (11.7) (171.1) 2021 €m 38.5 (115.8) (7.3) (37.5) (20.1) (142.2) 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 Strategic Report on pages 22 to 30. Ferries Container & Terminal Inter- Segment Group Comment 2022 €m 2021 €m 2022 €m 2021 €m 2022 €m 2021 €m 2022 €m 2021 €m 399.9 175.5 221.5 174.0 (36.5) (15.0) 584.9 334.5 1 2 95.7 23.2 31.5 29.1 (49.3) (40.6) (11.2) (11.9) 46.4 (17.4) 20.3 (3.1) 0.1 (2.0) (1.2) - - 19.1 43.4 (19.4) 17.2 (2.0) 0.1 15.3 - - - - - - - - - - - - 127.2 52.3 (60.5) (52.5) 66.7 (4.3) 0.1 62.5 (0.2) (4.0) 0.1 (4.1) 3 14.9% (5.9)% 29.3% 25.5% 17.5% (0.1)% 4 4 5 33.6 33.6 (2.6)c (2.7)c 108.0 44.3 Revenue EBITDA Depreciation and amortisation Operating profit / (loss) (EBIT) Finance costs (note 7) Finance income (note 6) Profit / (loss) before tax ROACE EPS: (note 11) EPS Basic EPS Adjusted Basic Free cash flow Comment: Financial KPIs 1. EBITDA: Group EBITDA for the year increased by 143.2%, to €127.2 million (2021: €52.3 million). The increase in underlying EBITDA was primarily due to due to increased revenues and a continued focus on cost optimisation. EBITDA in the Ferries Division increased by 312.5%, to €95.7 million, while the Container and Terminal Division increased by 8.2%, to €31.5 million. 2. EBIT: Group EBIT for the year increased to €66.7 million (2021: €(0.2) million). The Ferries Division increase in underlying EBIT was €63.8 million, primarily due to a full year of trading without Covid-19 restrictions, while the Container and Terminal Division was €3.1 million higher, as a result of higher revenues. 3. ROACE: The Group achieved a return on average capital employed of 17.5% (2021: (0.1)%). The Ferries Division achieved a return on average capital employed of 14.9% (2021: (5.9)%) while the Container and Terminal Division achieved 29.3% (2021: 25.5%). 4. EPS: Basic EPS was 33.6 cent compared with (2.6) cent in 2021. Adjusted Basic EPS (before net interest (income) / cost on defined benefit obligations) was 33.6 cent compared with (2.7) cent in 2021. 5. Free cash flow before strategic capital expenditure: The Group’s free cash flow before strategic capital expenditure was €108.0 million (2021: €44.3 million). The increase in free cash flow is mainly due to the increase in EBITDA. Free cash flow before strategic capital expenditure is a meaningful measure of cash generated for investment or return to shareholders. Non-Financial KPIs Schedule integrity: The Ferries Division delivered 96% of scheduled sailings across all services during 2022 (2021: 96%). Irish Continental Group21 Strategic Report2022 Annual Report and Financial Statements22 The Ferries Division The Ferries Division operates multipurpose ferry services carrying both passengers and RoRo freight on strategic short sea routes between Ireland and Britain, Britain and France and direct ferry services between Ireland and France. The division also engages in chartering activities. The ferry services trade under the Irish Ferries brand. Irish Ferries operates on four routes utilising a fleet of eight vessels, six of which are owned and two of which are chartered-in. In addition to the modern fleet, Irish Ferries retains rights to access appropriate berthing times at key ports allowing Irish Ferries to facilitate its customers’ preferred sailing times. The division also owns eight container vessels, following the purchase of the CT Pachuca during 2022, which are time chartered at year end. Fleet Summary Operated by Ferries Division Vessel Ulysses Isle of Inishmore Isle of Innisfree Blue Star 1 (chartered-in) Type Cruise ferry Cruise ferry Cruise ferry Cruise ferry Employment Dublin – Holyhead Dover – Calais Dover – Calais Rosslare - Pembroke Epsilon (chartered-in) Ropax Dublin – Holyhead / Cherbourg Dublin Swift W.B. Yeats Isle of Inisheer High speed ferry Dublin – Holyhead Cruise ferry Ropax Dublin – Holyhead / Cherbourg Dover – Calais Chartered out by Ferries Division Vessel Ranger Elbfeeder Elbtrader Thetis D CT Daniel CT Rotterdam Elbcarrier CT Pachuca Type Employment LoLo container vessel Charter – 3rd Party LoLo container vessel Charter – Inter-Group LoLo container vessel Charter – Inter-Group LoLo container vessel Charter – 3rd Party LoLo container vessel Charter – 3rd Party LoLo container vessel Charter – Inter-Group LoLo container vessel Charter – Inter-Group LoLo container vessel Charter – Inter-Group FranceUnited KingdomIrelandIrish Ferries Ropax and Cruise Ferry ServicesIrish Ferries High Speed FerryRosslareHolyheadPembrokeDoverCherbourgCalaisDublinIrish Continental Group 23 Best Ferry or Fixed Link Operator in the Group Leisure & Travel awards in the UK. Dublin Port Holyhead C h e r b o Best Ferry Company awarded by the Irish Travel Trade News Awards and Irish Travel Agents Association. u r g FranceUnited KingdomIrelandIrish Ferries Ropax and Cruise Ferry ServicesIrish Ferries High Speed FerryRosslareHolyheadPembrokeDoverCherbourgCalaisDublinM50M1M2M3M4M7M50M50M50M50M50M50M50M11Strategic Report2022 Annual Report and Financial Statements24 The Ferries Division Continued 2022 Overall Ferries Division Performance Revenue €399.9m +127.9% 2021: €175.5m EBITDA €95.7m +312.5% 2021: €23.2m Operating profit €46.4m 2021: €(17.4)m ROACE 14.9% +20.8pts 2021: (5.9%) Revenue in the division was 127.9% higher than the previous year at €399.9 million (2021: €175.5 million). Revenue in the first half of the year increased by 167.0% to €167.9 million (2021: €62.9 million), while in the second half revenue increased by 106.0%, to €232.0 million (2021: €112.6 million). EBITDA increased to €95.7 million (2021: €23.2 million) while EBIT was €46.4 million compared with €(17.4) million in 2021. Fuel costs were €104.6 million, an increase of €61.5 million on the prior year. The division achieved a return on capital employed of 14.9% (2021: (5.9%)). In total, Irish Ferries operated 13,642 sailings in 2022 (2021: 6,331), the increase primarily due to increased sailings on the Dover – Calais route. Car and Passenger Markets It is estimated that the overall car market1, on the routes that we operate (Republic of Ireland to UK/ France and the Dover Straits), grew by approximately 147.2% in 2022 to 4,131,000 cars. While encouraging, this level of car carryings is still 23.9% behind 2019 levels. Irish Ferries’ car carryings during the year were increased over the previous year by 181.6% to 573,400 cars (2021: 203,600 cars). The increase in carryings versus 2021 levels is primarily due to the lifting of Covid-19 travel restrictions and the expansion to a three ship service on the Dover – Calais route. The total sea passenger market (i.e. comprising car, coach and foot passengers on the Republic of Ireland to UK/France and the Dover Straits) Irish Continental Group increased by 95.5% on 2021 to a total of 16.6 million passengers. Irish Ferries’ passenger numbers carried increased by 246.7% at 2,315,000 (2021: 667,800). The Ferries Division delivered 96% of scheduled sailings in 2022 compared with 96% in the previous year across all services. In 2022, with a return to more normal travel patterns, Irish Ferries focused its passenger messaging on its brand platform “Sea Travel Differently” which not only highlighted the service and hospitality Irish Ferries offers, but also the benefits of sea travel versus air travel, in a year in which many airports suffered significant security delays and airline operators had high levels of cancellations. The new Dover-Calais route continued to be a key focus for marketing and promotions activity in 2022, alongside support for our legacy routes. There was increased use of digital channels for our promotional communication including paid search, digital audio-visual and digital audio including podcasts, in line with consumer media consumption evolution. In October 2022, market research indicated that (in addition to our ongoing brand strength in the Irish market), for the British market 53% of people were aware of Irish Ferries services, and 14% would consider using our Dover – Calais service in the coming year2. There was strong growth in the number of visits to our website, as well as in the corresponding number of bookings transacted in the year. Our social following increased across all the main platforms including Twitter, Facebook, and Instagram, with fans and followers engaging with 25 our content and offers. AI enabled automated web chat was maximised to handle routine passenger enquiries more efficiently, and towards the end of the year was blended with live chat for optimum customer service. Irish Ferries continued to work throughout the year with state tourism agencies in Ireland (Tourism Ireland and Fáilte Ireland) as well as in our tourism source markets for Wales (Visit Wales) and France (Normandy Tourism and Cotentin Tourism). After a two-year absence, Irish Ferries returned as a headline sponsor of the four-day programme for the St. Patrick’s festival and the return of the parade to the streets of Dublin was important both in marking the kick-off of the tourism season and the return generally to routine tourism activities. We participated in a collaborative “press the green button” campaign with Tourism Ireland in the British and French markets as part of ongoing efforts to encourage tourists to return to Ireland, following the very restrictive Covid-19 conditions in 2021. 1. 2. (Market figures source: Passenger Shipping Association and Cruise & Ferry) (Inclusion in an online nationally representative omnibus survey carried out amongst all adults 16+ by a third-party market research company) Strategic Report2022 Annual Report and Financial Statements 26 The Ferries Division Continued Irish Ferries is proud to be selected to receive multiple awards from travel trade professionals in our key Irish and UK markets. Our numerous consecutive wins reflect our focus on delivering excellence in customer service and our warm welcome and wonderful hospitality on-board. We constantly build on this and actively seek feedback from our customers via social media and surveys to continuously improve our service offering and facilities on-board our vessels. This commitment to outstanding service was once again recognised in 2022 with the following awards which were a welcome acknowledgement of the quality experience we offer: • Ireland: - ‘Best Ferry Company’ awarded by the Irish Travel Trade News Awards for the 15th consecutive time. - 'Best Ferry Company' awarded by the Irish Travel Agents Association for the 11th consecutive time. • United Kingdom: Our duty-free prices were competitive at around 50% lower than high street prices, and duty-free stores and their ranges continue to be improved. - ‘Best Ferry or Fixed Link Operator’ in the Group Leisure & Travel awards for the 4th consecutive year. This accolade was particularly important as we extended our Dover-Calais service to groups for the first time in 2022. RoRo Freight The RoRo freight market* between the Republic of Ireland to the UK and France and the Dover Straits fell slightly in 2022. The total number of trucks and trailers decreased by 1.1%, to approximately 4,389,700 units. Duty Free Sales With the introduction of duty-free sales for services to/from the UK since 2021, expanding and promoting our duty-free offering has been a key focus on three routes (Dublin-Holyhead, Rosslare-Pembroke and Dover-Calais), as we returned to promoting travel. For all on-board sales, passengers were able to shop online and reserve items for “click and collect” once on-board. Irish Ferries’ freight carryings, at 696,600 freight units (2021: 290,000 freight units), increased by 140.2% versus the prior year. The increased carryings over market performance was enabled through the additional capacity of the three vessel service on the Dover – Calais route. * (Market figures source: Passenger Shipping Association and Cruise & Ferry) Irish Continental Group 27 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. years. We are confident that the trends seen in tourism markets in 2022 will continue in the current year and allow us to reach and eventually overtake pre-pandemic levels. With a full year well established three ship operation on our Dover – Calais route, we expect continued growth in our freight carryings on this route. We are planning for a continued return of traffic from the direct continental routes to the landbridge and are hopeful this will be helped with the implementation of the Windsor Framework. Chartering The Group continued to charter a number of vessels to third parties during 2022. Overall external charter revenues were €17.2 million in 2022 (2021: €8.1 million). Of our eight owned LoLo container vessels, five are currently on year-long charters to the Group’s container shipping subsidiary Eucon on routes between Ireland and the Continent whilst three are chartered to third parties. The Oscar Wilde continues on a bareboat hire purchase agreement with MSC Mediterranean Shipping Company SA. Outlook We look forward to further growth on all of our routes and taking advantage of the operational expansion undetaken over the last number of Strategic Report2022 Annual Report and Financial Statements 28 The Container and Terminal Division The Container and Terminal division provides direct container shipping services between Ireland and continental Europe together with the operation of container terminals at both Dublin and Belfast. DFT now operates six electrically operated rubber-tyred gantries incorporating latest technologies to allow for remote operation. Three more of these cranes have been delivered and will be commissioned in 2023. The delivery of these cranes and the relocation of our empty depot facility in January 2022 to our new Dublin Ferryport Inland Depot located at the new Dublin Inland Port will increase the capacity of DFT to meet the needs of the market. Belfast Container Terminal (BCT) operates the sole container terminal at Belfast under a services concession agreement with Belfast Harbour Commissioners (BHC) at a 27 acre site in Belfast Harbour. This services concession agreement currently extends to 2026. BHC are currently completing a £40 million re- investment project which includes extensive civil works and the delivery of two new Liebherr gantry cranes and eight new electrically operated RTGs incorporating the latest technologies to allow for remote operation similar to the RTGs operated at DFT. Civil works have continued on the building of two new RTG stacks and a further three RTGs are scheduled to be commissioned in the second half of 2023. The division’s intermodal shipping line Eucon is the market leader in the sector, operating a core fleet of six 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 is offering feeder services to the Deep Sea Lines and a full intermodal service where Eucon deploys 4,600 owned and leased containers (equivalent to 8,900 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 from all points on the island of Ireland to destinations across 20 European countries. Door to door services are contracted to third parties utilising a variety of transport modes including road, rail and barge. Dublin Ferryport Terminals (DFT) operates its Dublin Port container facility from a leasehold facility with remaining lease terms of between 73 and 99 years, covering over 34 acres. The facilities comprise 480 metres of berths for container ships, with a depth of nine to eleven metres and is equipped with three modern Liebherr gantry cranes (40 tonne capacity) and eleven 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. EstoniaLatviaLithuaniaDenmarkSwedenNorwayRomaniaBulgariaSerbiaCroatiaItalySloveniaHungaryAustriaSlovakiaSwitzerlandBelgiumCzech Rep.PolandGermanyFranceUnited KingdomIrelandNetherlandsAntwerpRotterdamDublinBelfastCorkEucon Geographical CoverageEucon RoutesDublin Ferryport TerminalsDublin Ferryport Inland DepotBelfast Container TerminalPorts Served by Container Ships: Belfast, Dublin, Cork, Antwerp, RotterdamIrish Continental Group29 Capex project €21m (2022/23) including the delivery of five new electric environmentally friendly semi- automated RTGs and the order of one new ship-to- shore (STS) crane to be delivered in 2023. Dublin Ferryport Inland Depot became operational in January 2022 It is located in North Dublin City with direct access to the M50 Motorway (Dublin Ring Road) and 15 minutes from Dublin Port via the Port Tunnel. Dublin Ferryport Inland Depot Dublin Port Rotterdam Antwerp EstoniaLatviaLithuaniaDenmarkSwedenNorwayRomaniaBulgariaSerbiaCroatiaItalySloveniaHungaryAustriaSlovakiaSwitzerlandBelgiumCzech Rep.PolandGermanyFranceUnited KingdomIrelandNetherlandsAntwerpRotterdamDublinBelfastCorkEucon Geographical CoverageEucon RoutesDublin Ferryport TerminalsDublin Ferryport Inland DepotBelfast Container TerminalPorts Served by Container Ships: Belfast, Dublin, Cork, Antwerp, RotterdamM50M1M2M3M4M7M50M50M50M50M50M50M50M11Strategic Report2022 Annual Report and Financial Statements30 The Container and Terminal Division Continued 2022 Overall Container and Terminal Performance Revenue €221.5m +27.3% 2021: €174.0m EBITDA €31.5m +8.2% 2021: €29.1m Operating profit €20.3m +18.0% 2021: €17.2m ROACE 29.3% +3.8pts 2021: 25.5% Revenue in the division increased to €221.5 million (2021: €174.0 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 74% (2021: 72%) 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. Outlook In Eucon, we have seen a reduction in containers shipped of 4.4% in the first 2 months of 2023 compared with the prior year. This is indicative of the slowdown in the global economy that is not unexpected. In our container business, we will continue with our approach of matching capacity to the demand requirements of our customers. Port lifts in our container terminals decreased by 5.6% in the first 2 months of 2023 compared with the prior year and again is indicative of the market situation. We will commission a further three electric rubber-tyred gantries capable of remote operation during 2023 along with the delivery of a new ship- to-shore crane. These investments will continue to deliver operational efficiency, increased capacity and with these progressive investments in the modernisation of our terminals we are well placed when growth returns to the market. EBITDA in the division increased by 8.2% to €31.5 million (2021: €29.1 million) while EBIT grew 18.0% to €20.3 million (2021: €17.2 million). In Eucon, overall container volumes shipped were down 6.9% compared with the previous year at 322,600 teu (2021: 346,600 teu). Despite the reduction in volumes in Eucon and strong increases in the cost base, revenue and profitability increased due to recovery from our customers by increasing rates and the continued application of the flexible bunker and fuel surcharges. Containers handled at the Group’s terminals in Dublin Ferryport Terminals (DFT) and Belfast Container Terminal (BCT) were down 4.7% at 319,600 lifts (2021: 335,500 lifts). DFT’s volumes were down 4.5%, while BCT’s volumes were down 5.1%. While the reduction in volumes is disappointing, we are encouraged by the continued revenue growth in the terminals offsetting the additional costs. Irish Continental Group32 Financial Review CONTINUATION OF STRONG PERFORMANCE Results Revenue for the year amounted to €584.9 million (2021: €334.5 million) while operating profit amounted to of €66.7 million compared with a loss of €(0.2) million in 2021. Principal variations on the prior year relate to the recovery in passenger volumes, continued growth in our freight volumes and revenue and an increase in container charter ship rates. Taxation The tax charge is €2.7 million in 2022 compared with a charge of €0.8 million in 2021. The corporation tax charge of €2.7 million (2021: €0.7 million) comprises Irish and UK corporation tax. Certain activities qualify to be taxed under tonnage tax (which is an EU approved special tax regime for qualifying shipping activities) in Ireland. A reconciliation of the tax charge showing the effect of the tonnage tax regime on the Group’s tax charge is shown at note 8 to the Financial Statements. The deferred tax charge was €nil in 2022 compared to a charge of €0.1 million in 2021. Irish Continental GroupDavid Ledwidge, Chief Financial Officer 33 Earnings per share Basic EPS was 33.6 cent compared with (2.6) cent in 2021. The primary reason for the increase in Group profitability versus the prior year. Adjusted basic EPS (before the net interest (income) / cost on defined benefit obligations and non-trading items) was 33.6 cent compared with (2.7) cent in 2021. Cash flow and investment EBITDA for the year was €127.2 million (2021: €52.3 million). There was a net inflow of €1.2 million due to positive working capital movements, pension funding movements of €1.1 million, yielding cash generated from operations amounting to €132.0 million (2021: €67.0 million). Interest paid was €4.0 million (2021: €8.4 million) while taxation paid was €1.7 million (2021: €0.8 million). Capital expenditure outflows amounted to €75.7 million (2021: €55.2 million) which included €57.4 million of strategic capital expenditure. Strategic capital expenditure included the purchase of an eighth container vessel the CT Pachuca, the purchase of the Isle of Inisheer and rubber-tyred gantry cranes for Dublin Ferryport Terminal. Total dividends of €24.2 million were paid during the year (2021: €nil) and €49.2 million (2021: €19.8 million) was expended in buying back the Group’s equity. The above cash flows resulted in a year-end net debt of €171.1 million (2021: €142.2 million) net debt, which comprised gross borrowings of €167.7 million (2021: €123.1 million), lease obligations of €42.4 million (2021: €57.6 million) offset by cash balances of €39.0 million (2021: €38.5 million). The key net debt / EBITDA (pre non-trading items) ratio was 1.2 times (2021: 2.6 times). Dividend and share buybacks Following the easing of travel restrictions and the consequent improvement in passenger revenues together with the continuation of strong performance in all other revenue streams, the Board considered it appropriate to recommence the payment of dividends. The Company paid a final dividend in respect of financial year 2021 of 9.00 cent per ordinary share on 7 July 2022 to shareholders on the register at the close of business on 10 June 2022. The Company paid an interim dividend in respect of financial year 2022 of 4.64c per share. The total amount paid was €24.2 million. During the year, the Group bought back 12.0 million shares which were cancelled. The total consideration paid for these shares was €49.2 million (2021: €19.8 million). 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 €124.8 million (2021: €145.8 million), while combined pension liabilities were €91.6 million (2021: €140.5 million). The total net surplus of all defined benefit pension schemes at 31 December 2022 was €33.2 million in comparison to a €5.3 million surplus at 31 December 2021. Financial risk management The principal objective of the Group’s treasury policy is the minimisation of financial risk at reasonable cost. To minimise risk the Group may use interest rate swaps and forward foreign currency contracts. The Group does not trade in financial instruments for speculative purposes. Strategic Report2022 Annual Report and Financial StatementsCredit 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 is limited due to the exposure being spread over a large number of counterparties and customers. The Group also has a significant long term receivable relating to a bareboat hire purchase arrangement which is secured by retention of title to the vessel. Liquidity It is Group policy to maintain available facilities which allow the Group to conduct its business in an orderly manner. The target level is reviewed from time to time in line with the Group’s future requirements over the medium term and will comprise cash deposits and committed banking facilities. Total available facilities at 31 December 2022 amounted to €67.4 million, comprising cash balances of €39.0 million together with undrawn committed facilities of €28.4 million with average maturity of 1.4 years (2021: 2.4 years). Total drawn facilities of €168.2 million had a weighted average maturity of 2.5 years (2021: 3.6 years) over remaining terms of up to 8 years (2021: 9 years). David Ledwidge, Chief Financial Officer 8 March 2023 34 Financial Review Continued Interest rate management The interest rates on Group borrowings at 31 December 2022, 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 2022 was 2.40% (2021: 1.60%). Debt interest cover as defined under our banking covenants to operating cash flows for the year was 36.0 times (2021: 12.6 times). Currency management The Group has determined that the euro is the presenting currency in which it reports its results. The Group also has significant sterling and US dollar cash flows. The Group’s principal policy is to minimise currency risk by matching foreign currency assets and liabilities and to match cash flows of like currencies as far as possible. Exposure to the US dollar relates mainly to fuel costs. The Group has in place fuel surcharge arrangements with its commercial customers which recovers a portion of movements in euro fuel costs above a base level which partially mitigates the exposure to US dollar currency movements. Commodity price management Bunker oil costs constitute a separate and significant operational risk, partly as a result of historically significant price fluctuations. In the Container and Terminal Division, bunker costs above a base level 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 161,900 tonnes in 2022 (2021: 129,400 tonnes). The increase in consumption was primarily due to increased activity levels on the Ferries Division’s new service on the English Channel following the introduction of a third vessel. The average cost per tonne of heavy fuel oil (HFO) fuel in 2022 was 47% higher than in 2021 while marine gas oil (MGO) was 107% higher than in 2021. Irish Continental Group35 Strategic Report2022 Annual Report and Financial Statements36 Sustainability and ESG CREATING VALUE IN A SUSTAINABLE MANNER €18.6m programme for the electrification of our terminals Single use plastic free on our ships €1.8m investment in Ballast Water systems Solar panels are now online in our DFT building Irish Continental GroupIntroduction As a business, we recognise the importance of providing transparency over our efforts to create value in a sustainable manner. Operating sustainably remains one of our strategic pillars as we execute on our business model and strategy in a manner that minimises our impact on the planet while achieving sustainable growth and returns over time. At ICG, stakeholder and environmental focus have been key elements within our longstanding mission statement. ICG activities positively impact society as a key transport provider of goods and essential supplies and as a significant contributor, under the Irish Ferries brand, to the tourism industries of Ireland, the UK and France. We have driven changes in our activities through alignment of our reporting with emerging frameworks as a means Our purpose is to achieve continued success in our chosen markets, delivering a safe, reliable, timely, good value and high-quality experience to our customers in a way that minimises our impact on the environment. 16% decrease in our LTIF statistics 37 of maximising our positive impact on society. We are embedding best in practice procedures and policies to drive our focus and commitment going forward. This puts ICG on the path to achieve our shared commitments to the IMO CO2 reduction targets of 40 percent carbon intensity by 2030 from a 2008 baseline and towards helping to achieve the UN SDGs for 2030. Our approach is informed by a review of best practice sustainability reporting standards and frameworks including guidelines and recommendations by the: • Global Reporting Initiative (GRI), • the Sustainability Accounting Standards Boards (SASB) Marine Transportation • the UN Sustainable Development Goals (SDGs) Gender balance on our board now 33% 1,000 new crew garments incorporating recycled plastics equating to 42250 plastic bottles Strategic Report2022 Annual Report and Financial Statements38 Sustainability and ESG Continued In December 2022, the Science based targets initiative issued its guidance for the maritime industry. We are carefully considering the recommendations and will look to see where we can align our targets in line with the guidance issued. We continue to integrate the requirements of the Task Force on Climate-related Financial Disclosures (TCFD) within our report. Transport of goods remains the backbone of the local Irish and European economies. Our efforts in greening the maritime industry are a vital part of moving the wider European economy to a sustainable footing in the face of the rising challenge from climate change. 2022 – A year of extremes The recent report from the EU’s Copernicus notes 2022 was a year of climate extremes, with record high temperatures and rising concentrations of greenhouse gases. The trends are stark. Climate.copernicus.eu Regulators are acting, whether it is European union led, globally at the IMO level or local governments, there continues to be a deluge of additional legislation in the pipelines with progressively stricter standards for emissions and reporting requirements for our industry. 2008 2011 2013 2017 2018 2020 2008 is our IMO set base year for shipping GHG emmission reductions targets. Marpol legislation Annex IV - Adoption of energy efficient legislation. Innovative Green Voyage Programme. IMO2020 Start of our Terminal electrification programme. EEDI energy efficient standards for new builds. Delivery of the Yeats- estimated 35% more capacity than its predecessor. Irish Continental Group39 Action and New Solutions At ICG we understand this need for action. We are actively working to achieve and surpass all standards for emissions where-ever possible while maintaining an economic return on investment. Our ambition is to have a 50 percent reduction of all GHG from shipping operations by 2050 versus 2008 in line with our IMO obligations. We set out below our industry’s challenges on decarbonisation of the of industry, primarily the reliance on marine diesel fuel to power our ships engines. Alternative fuel technologies are in the process of being deployed but these technologies are not sufficiently mature to currently replace diesel fuel engines as a power source at a commercially viable cost. When these technologies are optimised, we will deploy them across our network. In the meantime, we are making the changes to achieve optimisation of operations. We are looking at alternative sources of fuels, e.g. bio fuels trials for our Fast Craft Dublin Swift, and we will commit when sufficient reliable volumes become available from suppliers at a cost effective price. We are working with our partner ports to ensure that the necessary infrastructure, e.g. deployment of shore power, is available to support the maritime industry road to decarbonisation. 2021 2023 2024 2026 2030 2050 Our first integregated Sustainability report published. Voluntary inclusion of EU Taxonomy reporting. Expansion of the EU Emmissons Trading Systems (ETS) to include Maritime- will be phased in from 2024. CSRD regulations - We will formally report under the CSRD regulations. CII - New Legislation from the IMO, on a Carbon Intensity Inidcator to promote efficiencies. Vessels to have in place an ‘Enhanced’ Ship Energy Efficiency Management Plan (SEEMP), with the integration of a Carbon Intensity Indicator (CII) . EEXI (Energy Efficiency Existing Ship Index) is a measure introduced by the IMO to reduce the greenhouse gas emissions of ships. The EEXI is a measure related to the technical design of a ship. 2023/2024 Finalisation of Terminal Electrification programme. Alternatively fueled Vessels are becoming "ready for order" to the market. Expected uptake in the next years with maturation of the techniologies and the supporting infrastructure. Achieve - 2030 GHG Targets 40% reduction carbon intensity reduction from our 2008 baseline. FuelEU - From 1 January 2030 Passenger ships and Container ships at berth in a Member State shall connect to onshore power supply and use it for all energy needs while at berth. Alternatively, make use of zero-emission technology. UN SDG 2050 IMO Targets - 50% reduction from our 2008 baseline Strategic Report2022 Annual Report and Financial Statements40 Sustainability and ESG Continued Sustainable Development Goals Aligning operations with our contribution ICG support the Sustainable Development Goals by minimising our effect on the environment. This contributes to our customers efforts, to transport and deliver their products in a manner that is Sustainable into the future. The UN SDG’s and their respective targets form the backbone of the 2030 agenda for Sustainable development. The SDG’s define global priorities that will put the world on a more sustainable path, free of poverty, environmental degradation and inequalities. As highlighted within the pages of this report, the activities we believe best support the Group’s core SDGs are: Employee engagement practices Striving for greater diversity and inclusion, including through policies and initiatives Implementing effective waste management systems throughout our vessels Being a leader in health and safety, utilising a data driven approach Adoption of clean and environmentally sound technologies and processes Flexible working policies as well as a range of employment benefits Expanding reporting and engagement with external stakeholders Upgrade of infrastructure and retrofit projects with increased resource-use efficiency Enhancing pollution prevention systems Novel and market leading circular economy programmes preventing plastics from reaching the oceans Irish Continental Group41 Engagement with our stakeholders We regularly engage with our significant stakeholders, to understand their key pressing issues and material topics. We incorporate these topics into the planning and execution of our day-to-day business and output of the reporting of these issues. Our constant engagement process provides a self-feeding loop of improvement and helps us to adapt to emerging trends in real time. A summary of our engagement and key topics covered: How we engage? Material items Linkage to SDG’S Employees • One-to-one meetings • Employee health, safety and wellbeing • Team meetings • Diversity, Inclusion and Belonging • Performance review process • Rewards and recognition • Training and development • Career development and opportunities programmes • Succession planning • Business performance • Strategic developments Governments • Engagement with government • Policy updates/changes and state authorities • Industry associations • Audits • Economic growth • Supply chain sustainability • Environment and climate • Ongoing global challenges • Compliance and engagement Shareholders • AGM • Results/ Performance and forecasts. • Investor meetings • Our strategy • Update with our analysts • Sustainability strategy • Publications • Managing risks (including climate change) Customers • Ongoing engagement through • Co-creation and innovation commercial teams • Customer and industry conferences and events • Customer surveys • Health and safety • ESG platforms • Company website • Social media • Consumer trends and behaviour • Climate change and carbon footprint • Product environmental and social impact • Responsible sourcing including human rights and traceability Suppliers • Commercial engagement • Contingency supply arrangements • Trade organisations • Reliability • Industry conferences • Health and safety • ESG supplier engagement • Responsible sourcing platforms Community • Ongoing dialogue with • Impact of COVID-19 community organisations • Charity events • Volunteer groups • Local economic development • Diversity, Inclusion and Belonging • Human Rights • Climate change and environmental matters Strategic Report2022 Annual Report and Financial Statements42 Sustainability and ESG Continued Environment The Voyage Ahead As an organisation, we recognise our responsibility to reduce our emissions in line with stakeholder interests and relevant targets set for the industry. ICG operates in a heavily regulated industry and one that has been conscious of its environmental footprint for a long time. We focus on achieving these objectives in a two-fold manner, operationally doing what we can be immediately achieved in the short term and technically that which requires the development and deployment of new technologies to achieve the required reductions in GHG targets. Decarbonising our Vessel Operations The International Maritime Organization (IMO), a specialised agency of the United Nations responsible for regulating global shipping, and the European Union (EU) have each set decarbonisation goals for the maritime industry. Current IMO targets aim to reduce the industry’s total CO2 emissions per transport work by 40 percent by the year 2030 and overall GHG emissions by at least 50 percent by 2050 compared to 2008 levels. The EU has targeted an industry reduction in GHG intensity of 6 percent by 2030, accelerating in five-year stages to 75 percent by 2050, compared to 2020 levels. While regulatory developments at the IMO and EU are ongoing, we are aligning our decarbonisation strategy with the IMO goals and will adjust accordingly to achieve, at a minimum, all required targets. As the maritime industry has unique challenges arising from the current lack of proven, accessible alternative fuels, particularly for large vessels, our current decarbonisation strategy for our vessels is focused on achieving the above targets through a range of short-term operational measures and longer-term technical measures. Irish Continental Group43 Decarbonising Maritime transport- the Challenges. The primary power source of marine transportation is the burning of marine diesel in ship engines. The industry’s reliance on heavy fuel oil (“bunker fuel”) is of material concern given its impact on the environment and the volume of GHGs that it emits. It continues to be the only commercially viable source of fuel for the vast bulk of maritime transport for a number of reasons: • Cost • Technological feasibility • Safety concerns & Safety regulations of alternative fuel sources • Energy to volume density • Sustainability of supply, (given the volumes of fuel required) • Supporting Infrastructure These are challenging obstacles for the industry as a whole to overcome. Andrew Sheen, Managing Director of the Ferries Division gives us insight into our strategy and the work we are doing to further overcome these challenges. On Decarbonising our ships. Andrew Sheen, Managing Director, Ferries Division There are several alternative technologies/ strategies that are currently being trialled by the shipping industry. These technologies are yet to mature and become commercially viable for mass use. As an agile organisation, when the benefits outweigh the risks, we will execute on these new opportunities to refresh our fleet capacity with the latest environmentally friendly ships. In the meantime, we will: • continue to support R&D into specific activities where we see promise like sustainable fuel trials and innovative energy systems controls; • focus on operational measures to maximise our efficiencies and minimise our environmental impact while complying with the evermore stringent maritime regulations. For shipping, the big leap in carbon emissions reduction will come from the maturing technology advances in low carbon fuels but these are still likely a decade away to be commercially viable for mass take up. DNV (Maritime Classification Society) in their Maritime forecast – 2050 have estimated that it will be several years before alternative technologies are commercially available for mass market. It will then take a period of time for the existing fleet to accept and take up these new technologies. ICG will continue to monitor the latest shipping manufacturing developments and adopt into our fleet renewal and upgrade program when these technologies move to the sphere of being economically feasible. Operational Measures • Operation of green voyage programme to optimise voyage factors such as; port operations, navigational routing and speed management. • Environmental performance monitoring and advanced data analytics using fleet management software S-Insight. • Proactive monitoring of real-time vessel performance through a live feed from the vessels’ engine power management system, facilitating vessel responsiveness during different operation modes, including Eco-mode. Installation has progressed onboard the W.B. Yeats which, if successful, shall be expanded across the fleet. • Regular drydocking of vessels to reduce hull fouling and ensure high maintenance of machinery. • Use of experienced crews and port operations teams to increase efficiency. • Continuous improvement of vessel performance in line with relevant Ship Energy Efficiency Management Plans (SEEMPs). Strategic Report2022 Annual Report and Financial Statements44 Sustainability and ESG Continued • Ongoing research and trialling of accessible alternative fuels, including sustainable biofuels reduce emissions. Our recent trials onboard the Dublin Swift have been successful, we are exploring options to source reliable volumes of the biofuels at commercially viable costs. Technical Measures • Long-term replacement of existing fleet with efficient ships incorporating latest technologies, in line with vessel life cycles. Our most recent newbuild, the W.B. Yeats vessel, delivered in 2018, is approximately 35 percent more efficient than its predecessor, the Oscar Wilde. • Increased utilisation of onshore power within the EU enabled by FuelEU Maritime proposals. We have up graded the infrastructure of the Dublin Swift to connect to on shore electric power during winter layup. • Compliance with ongoing design efficiency requirements under IMO energy efficiency design index for new (EEDI) and existing (EEXI) ships. All our ships are EEXI compliant for 2022 and 2023. • Investment in exhaust gas cleaning systems on board certain vessels that minimise sulphur emissions to below levels mandated by existing regulation and significantly reducing particulate matter. • Investment in upgraded, more efficient turbochargers on board Ulysses. This has resulted in a significantly improved fuel efficiency, lowering of exhaust temperatures, reducing overall wear and tear whilst also improving reliability to customers and achieving a greater volume of green voyages status. • Use of innovative, non-toxic, anti-fouling hull paints to reduce resistance when moving through water. • Use of energy efficient propeller blades to decrease resistance and improve fuel efficiency. We continually research and assess the feasibility of retrofit projects to improve the emissions performance of our fleet, ensuring innovative technologies that are safe and proven effective can be introduced where appropriate. This includes; • Ongoing investment and assessment of suitable technologies to improve existing fleet including; air lubrication systems, we have recently extended our ongoing collaboration with a technology provider to test the suitability of this technology for our fleet. • Collaboration with suitable marine technology companies participating in clean energy projects and innovations. • Ongoing assessment of adjustments to vessel structure to improve efficiency, such as assessing modifications to a vessel’s hull shape. A core element of our decarbonisation strategy is to gather consistent data that aligns with regulatory requirements. This includes ongoing emissions data verification under both the EU Monitoring, Reporting and Verification (MRV) Regulation for which Group vessels have complied with since 2018, and the IMO Fuel Oil Data Collection System (DCS) reporting which came into effect in 2019. Strategy In Action: Green voyage program Rob Mathieson, Irish Ferries’ Operations Manager sets out the background of the Green Voyage initiative. Impact This program is making a real impact on the efficiency of our operations, in a manner that is simple to operate but is based on detailed analytics from our ships. Background As background, the green voyage program is set up to identify and encourage the most efficient running of our sailings. It is a simple mechanism that scores each sailing on several key criteria including timeliness, efficiency, minimised engine use etc. The goal is to provide a set of key criteria that can be benchmarked across time and specific conditions. These criteria are then reported and analysed with a feedback loop on the best in practice being fed back to our crews. Operationally This program is providing an extremely useful set of data points to ensure consistent improvement in our operations over time. The benefits being improved efficiencies and resource use and customer satisfaction through on-time scheduling. It is through our investment into our data analytics like individual engine output that allows us to get the data required to achieve this level of granularity into our performance on a sailing-by-sailing basis. Irish Continental Group45 Heavy Asset Recycling Cranes In our terminal operations, when our cranes are at the end of their life cycle they are decommissioned by specialist contractors who recycle over 98% of materials from cranes. Ship disposal All our ships are EU registered which ensures that at the end of life they will be scrapped in an environmentally sustainable way in an accredited shipyard. No ships were scrapped during the year. Decarbonising our Terminal Operations In our Terminal operations, we continue to progress on our targets to achieve our Net Zero goal for our terminal operations by 2030. We have continued our investment programme on our electric crane gantries at our DFT terminal. Our capital investments in previous years are beginning to show reductions in GHG emissions and will show further reductions as we align our operations to fully take advantage of the investment in electrification in 2023. Decarbonisation Investment programme An overview of key projects contributing to the decarbonisation of our terminal operations is set out below. • Solar Panels on DFT office buildings: commissioned in late September 2022, we have yet to see the full year benefit of this investment. We expect that in Summer 2023 our daily electric generation for our DFT building will exceed the buildings requirement and the excess electricity produced will be exported back to the grid. • Electric RTGs: starting in 2017, we have been electrifying our RTGs. Our current investment program will finalise in 2023 with the final commissioning of three further RTGs. In total we will have invested €26.5m as part of this investment, achieving electrification of 80% of our cranes with €6.8m to be spent in 2023 which has been included in our capital commitments note 27. • Each new electric RTG reduces our diesel fuel consumption on average by approx. 80,000 litres each year. These new cranes are powered by green electricity. • DFT Terminal Electric network: alongside our investment in electric cranes, we have been investing in the supporting infrastructure, with a €1.1m number invested over the last number of years. • Our Terminal in BCT uses eight completely electric RTGs following investment by Belfast port over the last number of years. • LED lighting is installed within our terminal buildings and flood and mast lighting systems around the terminals. Since mid-2020, the electricity supply for our DFT terminal and Dublin offices is certified green, while our Belfast Terminal has been powered by 100 percent green electricity for the last several years. • Company cars are being replaced with electric and hybrid models in line with replacement cycles. Six new electric and hybrid cars were ordered in 2022 to replace petrol and diesel cars used by sales and operations staff. • Investment in our yard Tugs and Tractors – over the last number of years we have continued to invest in upgrades to our yard Tug fleet. While diesel powered, they are some of the most efficient in class. These new engines will reduce NOx and Particulate matter by up to 93% from earlier engine types. Strategic Report2022 Annual Report and Financial Statements46 Sustainability and ESG Continued Responsible Resource consumption We are acutely aware that our environmental impact is much wider than just emissions, and we continue to focus on minimising waste and resource use, preventing pollution and protecting biodiversity. Due to the nature of our operations, the protection of marine life is of utmost importance. Every effort is made to prevent spills and releases overboard. Accidental releases can occur due to leaks, storms or human error. ICG has zero-tolerance for illegal dumping of waste at sea and uses high-quality port reception facilities and ISO certified waste management partners to responsibly discharge and treat various types of waste from our vessels and land-based activities. All vessels use oil recovery systems to recover spent oils which are then sent for recycling. We undertake periodic inspection of our partners’ waste management facilities to gain comfort over their waste treatment and reporting processes. We also use a specialised TBT free Marpol compliant non-toxic paints which avoid the release of harmful agents to the sea. All our vessels carry an Inventory of Hazardous Materials (IHM) certificate on board to demonstrate the control of hazardous materials on ships in compliance with both the EU Ship Recycling Regulation (SRR) and the Hong Kong Convention (HKC) for the Safe and Environmentally Sound Recycling of Ships. All vessels underwent a thorough survey and inspection during the year to ensure IHM certification was in place as required. At our Dublin offices, our waste management partner employs a combination of Solid Recovered Fuel (SRF) processing and Refuse Derived Fuel (RDF) processing to recover and recycle metals and transfer processed waste for alternative fuel and electricity production, thereby contributing to the circular economy and avoiding landfill. Food and garbage waste generated on vessels at sea that is bought ashore is incinerated ashore for biosecurity purposes. We have joined the UK Chamber of Shipping pledge to continuously minimise the generation of shipborne garbage and to the collective goal of zero pollution from ships to sea from plastics. To this effect, we have removed all single use plastics from our ships. Each crew and office department have designated waste management champions. Their responsibilities are to ensure vessels and office areas are compliant with agreed procedures, to perform checks at waste segregation areas and to improve awareness of consumption methods within their respective areas. Water We aim to conserve water and improve water efficiency as much as possible. The use of ballast water is important for the safety and stability of our vessels. Ballast water management involves the intake and discharge of ballast water at different locations due to changes to cargo and voyage conditions. We have invested and committed significantly to Ballast Water Treatment Systems (BWTS) across our fleet. The bulk of our fleet have now been fitted with BWTS with a further three to be fitted in 2023. The Dublin Swift does not use ballast water and therefore does not carry this risk. We on-board water for potable use from certified sources and retain these supplies on-board in certified sanitary conditions. Water stocks are regularly tested in line with on-board policies to ensure it remains of a high quality. Recognising that potable water is a scarce resource we have integrated water conservation measures including devices such as flow controllers. Where permitted, we use seawater for non- Circular economy The circular economy, while not new, is swiftly becoming a feature of European and Irish regulations. The Irish government has published its first every strategy on the circular economy in early 2022. The European circular economy presents opportunities for ICG, where we will be able to reposition ourselves in the value chain transporting recyclable materials to significant recycling facilities across Europe for their repurposing and reuse. Already, we transport significant volumes of approx. 7,000 teu of recyclable materials to cutting edge recycling facilities on the continent from Ireland for repurposing and reuse. We will continue to seek our opportunities and develop our role in the circular economy. potable use, which is treated prior to discharge back to sea. In previous years, an innovative container wash water recycling system was installed at our new Dublin Inland Port facility (our most intensive water use location within the terminals business), providing up to 90 percent savings in freshwater consumption. The system uses biological and separation technology to return used and dirty wash water back to clean and suitable re-use water. Irish Continental Group47 Supply Chain We seek to build lasting relationships with our key suppliers and contractors. Of utmost importance is that our suppliers are aligned with our own ethical principles. The ICG Supplier Code of Conduct sets out our expectations to suppliers regarding the environment, ethics, human rights and health and safety. Full details of this code can be found on our website. In 2022, we have engaged with our most significant suppliers in order to confirm that their values aligned with ICG. Operationally we are in constant communication with our principal contractors including our port operators and ship managers as we both work closely together to develop and execute on our business activities. This constant interaction allows us both to be flexible and adapt to evolving situations. Waste Increases in waste and consumption volumes in 2022 reflect the expansions made to our routes and operating fleet, as well as increased passenger travel following the removal of Covid 19 travel restriction in early 2022. We continue to have a focus on minimising waste, recycling materials wherever possible. We do this by constantly working with our ship managers and waste management partners across all our office locations and ports served to constantly implement best practice. Bamboo flooring is present on new and refurbished Eucon containers. On 31 December 2022, 1,240, or approximately 25 percent of the Group’s container fleet include bamboo flooring. Bamboo self-regenerates from its roots and is considered more sustainable than hardwood trees for its ability to regenerate quickly. We are promoting responsible consumption through our selection of crew uniforms, which now contain 95 percent recycled polyester recovered from plastic bottles. In 2022, ICG purchased approx. 1,000 garments, equating to 42,000 plastic bottles being recycled and prevented from reaching the oceans or landfill sites. We continually incorporate sustainability considerations into our procurement process. We minimise the number of deliveries to our vessels through containerised provisioning. Noise We are acutely conscious of our impact on the environment, including the noisescape of the ports that we visit as part of our transport network. To minimise our impact on our local communities, we ensure that latest alarm technologies are fitted to our operational vehicles, to ensure the safety of our staff while minimising disturbance of the wider community. As part of our ongoing activities, we periodically monitor our noise emissions to ensure they are in line with local environmental guidelines. There have been no noise complaints registered over the last 3 years concerning our activities. People Our people are high achieving, and customer centric focused. At ICG we enjoy a working environment built on trust and collaboration, where we encourage our people to collaborate up, down and across the organisation and to challenge positively the norm to deliver top class results. Our people are passionate about their work. Their strong commitment to delivering high standards is one of our strategic pillars that enables us to execute on our strategy successfully. Our culture We offer our people a holistic culture which incorporates safety, health, wellbeing, development reward and recognition. Development Through our Recruitment and Selection practices we hire for potential and ensure that our people reach their potential through challenging and meaningful work. Strategic Report2022 Annual Report and Financial Statements48 Sustainability and ESG Continued As a “Learning Organisation”, we actively support the growth mindset of our people through our Learning & Development Policy and also our Talent Review Process. We have fostered a culture of engagement which nurtures and supports our people to continually develop and upskill. Central to our success is leadership and we have a bespoke Leadership Programmes for those who we identify, through succession planning, to participate in these programmes as they progress within the business. Health & Wellbeing The health and wellbeing of our people is paramount to us and is supported by flexible work practices and family friendly policies. Events throughout the year focus not only on the physical health of our people but also their mental health, which is equally as important. Reward and Recognition Our people receive a competitive salary with a variety of incentives to ensure they are rewarded for their dedication and high achievements within the business. Reward and recognition is not only linked to our Talent Review Process but is actively acknowledged throughout the year. Psychological Safety We ensure that our people have a safe environment to work in and encourage a “speak up” culture, not only to positively challenge the norm but to speak up without fear of retribution. Central to all our business practices is dignity and respect. Our policies on Bullying & Harassment, Equality, Diversity & Inclusion, Dignity & Respect and Whistleblowing ensure that employees have a voice and a process to speak up against inappropriate behaviour or processes. We believe a diverse workforce is a key driver in supporting our competitive edge within the industry and we are fully committed to diversity, equality and inclusion across the business. While our gender ratio is imbalanced in comparison to wider society, it is characteristic of the maritime industry, which has been historically androcentric. According to the International Chamber of Shipping’s Seafarer Workforce Report 2021, the proportion of female seafarers is estimated to be 1.28 percent of the global seafarer workforce. We are committed to improving the representation of women at ICG through developments to our policies and recruitment process. In the current year, with the refreshing of our Board, and in line with our commitment to improve our gender balance, we are delighted to have improved our board level female gender balance to 33% of the Board. Safety First Safety remains one of our top priorities. Physical risks to safety We operate in a business where there are significant risks that require mitigation, whether it is managing containers, loading/ unloading ships or moving freight vehicles. Our management team are focused on ensuring all our staff and customers go home safely. The Group has focused on creating a strong safety culture and its performance for the year is a testament to our staff, crews and key third-party contractors who uphold the highest standards of safety in delivering a quality service for our customers. We do this by: • keeping our safety statements updated yearly, to ensure they cover all our policies and procedures. • trainings for all staff in high-risk areas. • specialised training deployed based on the risk levels. • Drills and exercises to test systems practices and resilience of our systems. In 2022, we are part of the founding members of Dublin Safe port, a Dublin port wide safety initiative which is designed to continually enhance safety culture and practice for all workers in Dublin Port. This initiative will include safety awareness campaigns, trainings and which will take place port-wide with the objective enhancing port safety culture and practice for the long-term. On our ships, we actively follow all aspects of the International Safety Management System (ISM) code which is the best practice in international shipping. One of the benefits of our RTG electrification program, is that our upgraded cranes are now driven remotely from a safe and comfortable office based control centre. This is inherently safer, as staff are not required to be in the yard. In addition, it opens the role to staff who may not have been considered previously due to physical disabilities and the requirement to climb the crane to reach the cabin. Our workforce has become more inclusive as a result. Irish Continental Group49 In 2022, we upgraded our digital booking system for our hauliers. Our app-based system allows for virtual orders and collections and importantly “Just in Time arrivals” of our hauliers to our terminals. It has reduced congestion and idling times in the port area considerably as all arrivals are prebooked into the system improving efficiency and safety for all parties. LTIF statistics Our LTIF statistics are set out on page 58 and we are delighted to report that our LTIF (Lost Time Injury Frequency) which measures the number of recordable workplace incidents resulting in lost days over a year per million hours worked saw a 16 percent decrease in LTIF, despite a 50 percent increase in the Group’s total exposure hours. These results are within our previously set targets for 2022 of LTIF on land <5 and LTIF at sea <3.5. Notwithstanding this statistic, we remain acutely aware that our workspaces are inherently high risk and continually ensure that safety awareness is always to the forefront of how we operate. All reported safety incidents are investigated internally to ensure all necessary steps are taken to improve and to prevent reoccurrences. Where required, we also report incidences to external authorities and co-operate fully with any inquiries. Health We comply with all health regulations issued by regulatory authorities to ensure minimum risk of illness to our customers, employees and contractors. We have implemented Hazard Analysis & Critical Control Point (HACCP) systems on board our vessels in all food handling areas and are subject to regular third-party inspections. Diversity & Inclusion We are committed to creating a positive working environment whereby all employees are respected, valued and can reach their full potential. We believe that a diverse workforce brings a range of skills and experience which will help to make us more creative and competitive. As well as treating people with dignity and respect, ICG strives to create a supportive environment in which all employees can flourish and reach their full potential. In order to attract, recruit, develop and retain the very best people, we have created an approach based on three key principles: 1. Equality - we promote equality of opportunity by seeking to remove barriers, eliminating bias, and ensuring equal opportunities and access for all. 2. Diversity - we accept each person as an individual. Our success is built on our ability to embrace diversity – and we believe that everyone should feel valued for their contributions. By working together, we will deliver the best possible service for our staff and stakeholders. 3. Inclusion - we create a working culture where differences are not merely accepted but valued; where everyone can develop in a way that is consistent with, and adheres to, ICG’s values of impartiality, honesty, integrity, and objectivity. Our aim is to be an organisation where people feel involved, respected, and connected to our success. At ICG, we strive to be a fully inclusive employer. This includes supporting our workforce by providing the flexibility for a positive work life balance, while continuing to ensure our needs as a business are met. To this effect, we facilitate hybrid working arrangements for our staff. Whistleblowing ICG is committed to having the highest standards of integrity and transparency. As part of this commitment, we have developed a Protected Disclosure Policy to encourage employees, board members, shareholder and job applicants or any person who has worked for ICG to make a disclosure where they may have a genuine concern and to provide protection for the person making the disclosure. We seek to always conduct our business honestly and with integrity. It is our policy as an employer to ensure that at every level of management our business complies with all legal requirements that govern our activities. However, we acknowledge that all businesses face the risk of their activities going wrong from time to time, or of unknowingly harbouring malpractice. We believe we have a duty to take appropriate measures to identify such situations and to attempt to remedy them. By encouraging a culture of openness and accountability, we believe we can help prevent such situations occurring. The full details of our Protected Disclosure policy can be found on our website. No disclosures under this policy were received by the Group during 2022. Anti-bribery ICG values its reputation and is committed to maintaining the highest level of ethical standards in the conduct of its business affairs. The actions and conduct of our staff as well as others acting on our behalf are key to maintaining these standards. We take a zero-tolerance approach to bribery and corruption and are committed to acting professionally, fairly and with integrity in all our business dealings and relationships wherever we operate and implement and enforce effective systems to counter bribery. As such, we have developed an Anti-Bribery Policy which applies to all employees, partners/directors, agents, consultants, and contractors. The policy can be read in full on our website. All forms of bribery or business courtesies that may create the appearance of a bribe are strictly forbidden. Limits and pre- approval requirements are imposed on the quantum and frequency of business courtesies received by staff. In 2022, there were no investigations from external parties into allegations of bribery or corruption. Human Rights We are committed to the highest standards of business and ethical behaviour and to the respect of internationally recognised human rights as established in the Universal Declaration on Human Rights and the International Labour Organisation’s Core Conventions. Our Human Rights Policy and Modern Slavery and Human Trafficking Policy which applies to all ICG employees, contractors, agents and business partners, can be accessed Strategic Report2022 Annual Report and Financial Statements 50 Sustainability and ESG Continued through our website. We have a zero- tolerance policy to modern slavery, human trafficking or the use of child labour in our supply chain. We take an open and transparent approach, taking steps to identify and tackle any instances of modern slavery or human trafficking in our supply chain which we outline in our Supplier Code of Conduct. ICG and its ship management service providers undertake regular training, including training provided by the United Nations Migration Agency in relation to human trafficking and labour exploitation. The Group requires a due diligence process to be conducted prior to the appointment of a contractor together with in- contract reviews. Within its day-to-day operations, the Group has in place a range of measures to help ensure modern slavery and human trafficking are not taking place in its business or its supply chains. Measures adopted include: • Provision of guidance to employees to support immigration and border agency initiatives to reduce human trafficking, which augments general observation for unusual behaviour in our ports and on board our vessels including signs of distress or other cues that may highlight any potential issue. Awareness of this issue is promulgated across all Group businesses. • Working with other companies and organisations to share knowledge, learning and best practice and co-operating with a series of law- enforcement projects that help to combat human trafficking and modern slavery. • Regular updates to management and committees on modern slavery so that Directors and key individuals understand their role and accountability for the prevention of modern slavery occurring in our businesses and supply chains. • Actively monitoring our initiatives in preventing modern slavery and human trafficking by reference to reports and alerts from staff, the public and communication with law enforcement agencies. Society Corporate Social Responsibility ICG remains committed to contributing to causes that can make a difference. ICG is proud to be a member of the local communities in which we operate. Over the past year, we have continued to support our charitable partners through our CSR programme. ICG are longstanding supporters of the Dublin Wicklow Mountain Rescue Team (DWMRT). The team share our commitment to the safety of our communities. Irish Ferries assist the DWMRT with transport services for rescue dogs, volunteers, and equipment to carry out critical search and training operations in Ireland. We would also like to thank our customers for making their own contributions to important causes. Onboard our Irish Ferries vessels we have collections to support the Royal National Lifeboat Association (RNLI) who are the largest charity saving lives across the seas of the United Kingdom, the Republic of Ireland, the Channel Islands and the Isle of Man. Our customers also contributed to the Irish Heart Foundation by choosing healthy meal options onboard. A percentage of proceeds from healthy meals marked with a heart on our menu is donated to the Irish Heart Foundation. Over the past year, we have continued to support the Irish Whale and Dolphin Association in their monitoring work. We facilitate the Irish Whale and Dolphin Association to come on board to conduct viewing exercises to monitor the behaviour and populations of whale and dolphin species around our coastline. ICG are a proud supporter of the St. Patrick’s festival in Ireland and provide transport for some of the participating bands and acts who travel from the UK for the event. We were delighted to have the festival back after two years of cancellations due to Covid restrictions, it remains a great event for the family and one of the highlights of our visitors trips to Ireland. Sunflower Lanyard Irish Ferries has adopted the hidden disability Sunflower Lanyard scheme Better together: Our own Nora Costello (Consumer Marketing and Sales Director) and a task force from Dublin, Wicklow Mountain Rescue Team, including Kai, Boomer and Maggie, the teams search and rescue dogs. Irish Continental Group51 across its entire fleet, being the first Irish travel operator to do so. Available to all passengers with hidden disabilities, and an addition to the full range of services already available to passengers with restricted mobility, the discreet Sunflower Lanyard enables crew who are specially trained, to readily identify those on-board who may require some extra help, time, or assistance. We continue to look for ways to ensure all customers can enjoy our services. Supporting Tourism and Local Economies Irish Ferries continued to work throughout the year with state tourism agencies in Ireland (Tourism Ireland and Fáilte Ireland) as well as in our tourism source markets for Wales (Visit Wales) and France (Normandy Tourism and Cotentin Tourism). This year we participated in Tourism Ireland’s ‘Press the Green Button’ campaign to encourage tourists back to Ireland after the downturn caused by the Covid-19 pandemic. The campaign aims to drive bookings for holidays in Ireland and to position the tourism industry well for years ahead. We love to showcase the best our local artisan producers have to offer and delight our customers in turn with exquisite tastes in our onboard restaurants whether it is our local seafood supplier from Howth, Irish beef and dairy or our breakfast meats that are sourced in counties Kilkenny and Cork. All are foods are Origin Green certified, meaning the farms and producers we source from are independently monitored and verified under Ireland’s pioneering food and drink sustainability program. We support our local producers where-ever possible. We are a strong promotor of Irish beverages, not only the larger brands but also smaller producers of craft beers and spirits. Our coffees are provided by a Dublin-based roaster using the world’s first purpose-built carbon neutral roastery in Dublin. All coffees and teas served on board are fair trade certified. We use local suppliers to service our new Dover- Calais route, including our UK-based coffee supplier that engages in various social projects to support farmers in Guatemala, Tanzania and Peru. We source our on-board wines from a distributor in Cherbourg that provides a vast selection of wines from large and small French wineries. We promote local French wines through special wine tasting events in conjunction with our partner in Cherbourg. Customers have the opportunity to meet with local wine producers and learn more about different wine regions and varietals. We also offer a wide variety of plant-based food and drink options in all our cafés and restaurants. Task Force on Climate-Related Financial Disclosures (TCFD) We set out our disclosures that are aligned to the Task Force on Climate-Related Financial Disclosures framework. Details of how ICG is making progress in implementing the recommendations of the TCFD are set out below. In addition to the four key areas of governance, strategy, risk management and metrics and targets, a complete Appendix cross referencing disclosure against the 11 recommendations is included on page 54 of the Annual Report. Governance Everything we do at ICG is underpinned by strong governance. Climate-related risks and opportunities are managed and being integrated as a core component of strategy and performance from the highest level of the business. As a leading maritime transport group, in what is an increasingly regulated industry, we recognise how important it is for us to play a leading role in driving more sustainable shipping. Our purpose and strategy are fully aligned to this goal. Oversight of climate-related issues is provided by the Board as a whole, with support from the Audit Committee, in particular in relation to climate risks and opportunities. In terms of management, we have dedicated significant resources to ensuring that climate risks and opportunities are at the forefront of day-to-day activities and operations. Management provides regular updates to the board on the wider sustainability agenda. We continue to review the governance of climate-related risks and opportunities to ensure our frameworks evolves with the demands of the outside world. Strategy Through our purpose, commitments to contribute to the UN SDG and from regulation, ensuring our strategy is aligned with reduced impact on the environment is a core component of our efforts. It is for this reason we have made significant strides in detailing our environmental impact over the past years while also committing to reducing that impact, with data and effective governance at the heart of those steps. To gain a better understanding of how climate change might impact our business, we have qualitatively reviewed different scenarios occurring over the coming years. These assessments looked at potential physical and transitionary risks of a changing climate such as flooding and water stress, as well as the risks associated with a transition to a low-carbon economy such as international climate policy and the impacts of carbon pricing. As an industry with stringent environmental- related regulations, the implications of regulatory steps have been a core part of our scenario analyses since before the introduction of the TCFD. Strategic Report2022 Annual Report and Financial Statements 52 Sustainability and ESG Continued The analysis evaluated the implications for ICG’s facilities, fleet and suppliers, as well as the impacts on our consumers. The analysis of both physical and transition risks showed that in both scenarios there is likely to be some financial risks which would need to be managed, but none that would materially impact our business model. While these analyses were conducted on a qualitative basis and form the foundation of the climate-related risks and opportunities provided below, we aim to conduct a quantitative scenario analysis against a range of warming scenarios in the periods ahead. Risk management Climate-related risk management is integrated into our enterprise risk management process, as detailed extensively on pages 60 to 69. The enterprise risk management process is designed to identify, assess, monitor and report on all risk related to the business. Through the TCFD lens, ICG prioritised the climate risk and opportunity assessment, and set out the following risks and opportunities related to climate change: A summary of the main climate related risks are set out: Type Description Potential financial impact Metrics and Targets Physical Risks Increase in extreme weather events A rise in extreme weather events may lead to decreased schedule integrity which may result in less sailings, impacting revenues and costs, it may damage assets, raise insurance rates, damage cargoes, impact the efficiency of the supply chain and impact the access to key locations including ports. Schedule integrity Gross margin Physical Risks Biodiversity loss within operating regions Increase cost of goods and natural resources due to shortages Gross margin Transition Risks Introduction of carbon emission allowances Transition Risks Negative impact of meeting EEXI/ EEDI requirements Transition Risks Failure of carbon reducing investments and projects to achieve desired efficiencies or meet standards from our regulators Greater costs to maintain current levels of service, for example the EU ETS scheme is to be extended to the maritime industry with a gradual phase in of verified emissions from 2024 to 100% in 2026. Gross margin Existing assets may lose value. As ever tightening technical requirements become mandatory, it may require additional capital investment to achieve the standards. EEXI Ratings Increase costs relating to higher-than- expected carbon intensity and larger quantities of alternative fuels required to meet operational demand Gross margins Transition Risks Poor ESG ratings from external agencies Increase financing costs due to limited debt options Achieved ESG Rating Transition Risks Unavailable debt financing for capital projects due to operational sustainability concerns Increase financing costs due to limited debt options Interest cover Opportunities Investment in new more fuel- efficient capital assets, will lead to a reduction in costs and harmful emissions. As our fleet is renewed, we will expect greater efficiencies and cost reduction as the most advanced technologies available are deployed as part of their build. GHG Emissions Gross margin Irish Continental Group 53 Type Description Potential financial impact Metrics and Targets Opportunities Being the leader in our market, will allow us to benefit from our market leading reputation, while operational excellence will improve profitability as we maximise efficiencies. Increased revenues and profits as capitalise on our premium product and operations excellence. Gross margin Metrics and targets Over the past number of years, we have commenced collection and disclosure of a range of measures used to assess and manage climate- related risks and opportunities. We have disclosed our scope 1 and scope 2 emissions and intend to develop our reporting to disclose our scope 3 emissions over time. ICG also adheres to limits on sulphur content of fuel oils, in relation to sulphur oxide (SOx) emissions from the shipping sector, investing approximately €25 million on the installation of exhaust gas cleaning systems (EGCS) in our owned and operated fleet. Targets Vessel operations We have reconsidered our targets disclosed from last year and simplified our comments to be focused on the IMO (International Maritime Organisation, a UN body) specific targets. Our guiding principle, when we are setting out our ambitions for our carbon reduction is to align ourselves with the targets set by the IMO and the actions they are requiring of the industry, these targets are: intensity target for 2030. We have set the operational and technical measures that we are employing to further achieve these goals in the report above. These will be challenging targets for us to achieve considering our expansion onto the Dover – Calais route which significantly expands our business footprint. We are confident as we optimise our operations and new technologies become available and come online, we will achieve our targets in due course. Terminal operations We have also set the following targets for our terminal operations: • 70 percent reduction in Scope 1 and 2 emissions by 2025. • Net zero Scope 1 and 2 operations by 2030. Baseline years data Given the length of time since our baseline years and the type of data required, there are challenges to estimate reliably our carbon metrics from those years due to the availability of data. We have made a best estimate of our footprint from our baseline years based on best available data. Our Progress to date For our vessel targets, we are measuring our performance against baseline targets using intensity metrics that are based on using “RoRo units” carried for the RoRo fleet (RoRo Fleet: gC02/ RoRo Units/ NM) and TEU's carried for the Container Fleet (Container Fleet: gC02/ TEU's/ NM). Our current progress is set out below. On our 2050 absolute reduction ambitions of 50% from our 2008 baseline, it will only be when our propulsion technology changes that we will achieve meaningful changes on this metric, given the growth of our business since 2008 and our expanded GHG footprint. • 40 percent reduction in carbon Progress towards achievement of our targets intensity from shipping operations by 2030 compared to 2008 levels; • 50 percent reduction of all GHG from shipping operations by 2050 compared to 2008 levels. The IMO’s strategy to achieve these goals is to require ever greater levels of efficiency standards from the global fleet. As our starting point we aim to be compliant with all these initiatives over the coming years and will work to achieve the ever-greater levels of technical efficiency requirements set in the years to come. We expect these initiatives on their own will have a significant impact on our carbon Shipping RoRo Fleet Cargo Fleet 38% 53% Terminals 26% 2030 Target 2025 Target 38% Achieved To achieve 62% 47% 100% 100% 74% 62% 100% 100% Strategic Report2022 Annual Report and Financial Statements54 Sustainability and ESG Continued Terminals Decarbonisation plan progress On our terminal 2025 reduction targets, we have achieved approx. 38% of the target required to date. We anticipate a significant drop in 2023 carbon emissions compared to 2022, especially in the latter half of the year, as our electrified cranes will come online and our existing diesel powered cranes are decommissioned. To achieve our 2025 goal, we are investigating the use of biofuels with the major barrier being security of supply and cost. It is only as a last resort that we will consider a carbon offsetting programme to achieve our target. Task Force on Climate-Related Financial Disclosures Appendix Governance Strategy Risk Management Metrics and Targets Disclose the organisation’s governance around climate related risks and opportunities. Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning where such information is material. Recommended Disclosures Disclose how the organisation identifies, assesses, and manages climate-related risks. (a) Describe the board’s oversight of climate- related risks and opportunities. Refer to pages 51, 63 and 81 (a) Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and long term. Refer to pages 51 to 53 and 63 and 64 (a) Describe the organisation’s processes for identifying and assessing climate-related risks Refer to pages 52 to 53 and pages 63 to 64 (b) Describe management’s role in assessing and managing climate- related risks and opportunities. Refer to pages 63 to 64 (b) Describe the impact of climate related risks and opportunities on the organisation’s businesses, strategy, and financial planning. Refer to pages 51 to 53 and pages 63 to 64 (b) Describe the organisation’s processes for managing climate- related risks. Refer to pages 63 to 64 Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material. (a) Disclose the metrics used by the organisation to assess climate related risks and opportunities in line with its strategy and risk management process Refer to pages 53, 56 to 57, 63 and 64 (b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks. Refer to page 52, 53 and pages 56 to 57 (c) Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario. Refer to pages 51 to 53 and pages 63 to 64 (c) Describe how processes for identifying, assessing, and managing climate- related risks are integrated into the organisation’s overall risk management. Refer to pages 60 to 69 (c) Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets. Refer to page 53 EU Taxonomy Background The EU Taxonomy goal is to create a “definition” of what is considered environmentally sustainable for a business. At its most basic form, the taxonomy creates a list of economic activities and then sets out a list of criteria/ standards that each activity must achieve to be taxonomy aligned and be deemed to be environmentally sustainable. Transport including maritime transport has been included in the list from the start, recognising its importance to wider economy and its potential impact on the environment. The Group has voluntary applied the requirements of the EU Taxonomy Regulation and provided the necessary disclosures. The legislation enacted has set out 6 environmental objectives and for our 2022 reporting season, we are required to report on two of them, climate change mitigation and climate change adaption. The process to calculate the disclosures requires us to: 1. identify what activities are eligible and non-eligible under the taxonomy meaning whether our businesses are included on the taxonomy list or not. 2. assess whether the technical criteria or standards set out in the legislation for each activity is met by the business for example one of the key criteria of activity 6.10 ‘Sea and coastal freight water transport, vessels for port operations and auxiliary activities’ is whether the ships in use have Zero tail pipe emissions. 3. assess the criteria for no significant harm done to any of the other objectives while also ensuring the minimum safeguards are met. Irish Continental Group55 CapEx KPI The capital expenditures amount to €74.4 million, comprising strategic and maintenance capital expenditures. The sum of the additions that reflect investments in Taxonomy-eligible activities forms the numerator. As with our turnover, 0% of eligible CapEx is aligned. Notwithstanding for example the work carried out on electrification of the terminals and the impact this has had on reducing our carbon footprint, our interpretation of the taxonomy legislation this expenditure is not eligible for inclusion. EU Taxonomy Accounting policies The taxonomy KPIs are calculated as followed: • Taxonomy revenue KPI = Eligible revenue / Total revenue • Taxonomy opex KPI = Eligible opex / Total opex • Taxonomy capex KPI = Eligible capex (additions) / Total capex (additions Turnover Turnover consists of total operating revenues. See Consolidated Income Statement on page 124 of our Annual Report alongside note 4 for details of the Group’s revenue generation. The associated critical accounting policies are set out in note 2 of our Annual Report. Capex Capex consists of additions to property, plant and equipment. See note 12 of the Consolidated financial statements. Opex Opex consists of total operating expenses. See Consolidated Income Statement on page 124 of our Annual Report. The associated critical accounting policies are set out on in note 2 of our Annual Report. As the reporting practice develops and expands, we will review and update the reporting of taxonomy-eligible KPIs and related accounting policies accordingly. Taxonomy Disclosures Activity 6.10 Sea and coastal freight including passenger activity Proportion Taxonomy eligible Proportion Taxonomy non eligible Proportion Taxonomy Aligned Proportion Taxonomy Non Aligned Total ‘M Turnover Capex Op ex 584.9 74.4 518.2 100% 100% 100% 0% 0% 0% 0% 0% 0% 100% 100% 100% Turnover KPI The total turnover of €584.9 million for the financial year ending 31 December 2022 is the basis for the denominator for the turnover KPI as presented in the Consolidated Income Statement on page 124. Assessment of Eligible activities The Group determines it has Taxonomy-eligible undertakings in accordance with activity 6.10 ‘Sea and coastal freight water transport, vessels for port operations and auxiliary activities’ (Annex I: climate change mitigation/ Annex II: climate change adaptation). All integrated services necessary to and dependent on the operation of vessels for the combined transport of freight and passengers on sea or coastal waters are also considered eligible and are therefore included within the reported metrics below. This includes service activities incidental to water transportation such as; on board passenger services, Group stevedoring services and quay-to-door container transport services that are component activities embedded within our sea transport offerings to customers. As a result, 100% of our operations are deemed eligible. Assessment of Aligned Activities We have assessed the substantial contribution criteria for both the climate change mitigation criteria and the adaptation criteria as set out in the delegated acts. We have found that none of the eligible activities are aligned given the various technical criteria tests. Given the age of our vessels, notwithstanding the significant investments made, for example the installation of scrubbers to improve their technical ability minimising the output of sulphur and other particulate matters, they do not meet the technical criteria set out in the delegated acts for mitigation or adaption. From an adaption perspective, we do not meet the technical criteria associated with the substantial contribution criteria, as a business, we operate with a number of key stakeholders and the development of robust physical adaptation solutions given the low-level nature of the ports is challenging. OpEx KPI The amounts reflecting direct non- capitalised costs relating to short- term leasing, maintenance and repair expenses and any other direct expenditures relating to the day- to-day servicing of Group assets or third parties to whom the activities are outsourced that are necessary to ensure the continued and effective functioning of such assets were considered for the denominator calculation. The numerator is derived from an analysis of the operating expenses associated with Taxonomy-eligible activities. As with our turnover, 0% of eligible OpEx is aligned. Strategic Report2022 Annual Report and Financial Statements56 Sustainability and ESG Continued Metrics and tables Environmental Data Shipping Operations Topic Relevant Metric 2022 2021 2020 Unit of measure SASB Reference Greenhouse gas emissions Gross global Scope 1 shipping emissions 519,082 399,796 336,535 CO2 emissions per GT mile TR-MT-110a.1 Metric tons (t) CO2-e Grams (g) CO2 / gross ton- nautical mile Conventional Ferries fleet Fast craft 18.97 66.51 16.58 72.72 15.34 N/a N/A CO2 emissions per transport work Container fleet 41.85 40.08 43.96 Total energy consumed 6,665,199 5,111,364 4,305,170 Percentage heavy fuel oil 62.99% 75.97% 74.91% Grams (g) CO2 / cargo ton- nautical mile Gigajoules (GJ) Percentage (%) N/A TR-MT-110a.3 TR-MT-110a.3 Average Energy Efficiency Design Index (EEDI) for new ships N/a N/a N/a TR-MT-110a.4 Air quality NOx (excluding N20) 10,614 7,882 7,393 Metric tons (t) TR-MT-120a.1 Ecological Impacts SOx Particulate Matter (PM10) Shipping duration in marine protected areas or areas of protected conservation status 830 448 Nil 623 396 Nil 525 341 Nil Percentage of fleet implementing ballast water exchange Percentage of fleet implementing ballast water treatment 94.12% 94.12% 92.31% 68.75% 29.41% 15.38% Metric tons (t) TR-MT-120a.1 Metric tons (t) TR-MT-120a.1 Number of travel days Percentage (%) Percentage (%) TR-MT-160a.1 TR-MT-160a.2 TR-MT-160a.2 Number of spills and releases to the environment Aggregate volume of spills and releases to the environment Nil Nil 1 2 Number TR-MT-160a.3 0.01 0.201 Cubic meters (m3) TR-MT-160a.3 Workforce health and safety Business ethics Lost time incident rate from seafaring operations Number of calls at ports in countries that have the 20 lowest rankings in Transparency International’s Corruption Perception Index Total amount of monetary losses as a result of legal proceedings associated with bribery or corruption 0.8 1.0 4.7 Rate TR-MT-320a.1 Nil Nil Nil Number TR-MT-510a.1 €Nil €Nil €Nil Euro TR-MT-510a.2 Irish Continental Group57 Topic Relevant Metric Accident and safety management Number of marine casualties Percentage classified as very serious 2022 1 0% Number of port state detentions 3 Activity Number of shipboard workers 725 2021 1 0% Nil 501 2020 1 100% Nil 412 Total distance travelled by vessels 996,292 824,132 642,945 Unit of measure SASB Reference Number TR-MT-540a.1 Percentage (%) Number Number Nautical miles (nm) TR-MT-540a.1 TR-MT-540a.3 TR-MT-000.A TR-MT-000.B Operating days 4,450 3,744 3,408 Days TR-MT.000.C Deadweight tonnage 121,039 100,485 95,819 Number of vessels in total shipping fleet Owned • Chartered in • Chartered out 15 12 3 3 16 12 4 3 13 10 3 2 Deadweight tons TR-MT-000.D Number TR-MT-000.E Number Number Number Number of vessel port calls 14,089 6,423 5,221 Number TR-MT-000.F Twenty-foot equivalent (TEU) capacity (Container fleet) 5,462 5,502 5,449 TEU TR.MT.000.G Land Based Operations Relevant Metric Scope 1 emissions from land based operations Scope 2 emissions from land based operations 2022 2,890 Nil Total Scope 1 and 2 emissions from land based operations 2,890 2021 3,117 Nil 3,117 2020 3,349 386 3,735 Unit of measure Metric tons (t) CO2-e Metric tons (t) CO2-e Metric tons (t) CO2-e Total energy consumed Percentage renewable Overall Group Relevant Metric 69,268 74,373 71,732 Gigajoules (GJ) 43.59% 43.21% 26.77% Percentage (%) 2022 2021 2020 Unit of measure Gross Global Scope 1 emissions 521,985 402,913 339,884 Metric tons (t) CO2-e Gross Global Scope 2 emissions 31 82 468 Metric tons (t) CO2-e Total Scope 1 and 2 emissions 522,016 402,995 340,270 Metric tons (t) CO2-e Total fuel consumed Total energy consumed Waste Total municipal Solid waste Total waste and oil sludge 163,410 126,519 106,688 Metric tons (t) 6,735,200 5,187,201 4,738,369 Gigajoules (GJ) 11,571 5,226 7,736 4,144 6,130 2,198 Cubic metres (Cm) Cubic metres (Cm) Total Freshwater consumption 107,374 64,680 61,686 Cubic metres (Cm) Strategic Report2022 Annual Report and Financial Statements58 Sustainability and ESG Continued Social: Employee Health and Safety and Diversity and Inclusion Safety Data 2022 2021 2020 Incidents Exposure hours Lost Time Injury Frequency Fatalities Incidents Exposure hours Lost Time Injury Frequency Fatalities Incidents Exposure hours Lost Time Injury Frequency Fatalities ICG employees and visitors Key contractors Total LTIF on land LTIF at sea 0 595,200 0 10 1.76 5,684,380 10 6.279,580 1.59 2022 4.6 0.8 0 0 0 1 595,200 1.7 0 0 595,200 0 0 1 1 7 3,627,720 1.9 8 4,222,920 1.9 2021 4.6 1.0 14 2,090,676 6.7 14 2,685,876 5.2 2020 6.3 4.7 1 1 Employee Statistics Total number of employees Male Female % Female Full time Part time % Part Time Female Board members Male Female % Female 31 Dec 2022 31 Dec 2021 31 Dec 2020 31 Dec 2022 31 Dec 2021 31 Dec 2020 290 177 113 39% 271 19 83% 6 4 2 284 173 111 39% 260 24 83% 6 5 1 288 175 113 39% 260 28 86% 6 5 1 Management staff Male Female % Female Total number of new employee hires Total number of departures Turnover rate Male Female 33% 17% 17% 51 40 11 52 41 11 54 42 12 22% 21% 22% 38 48 16% 8.5% 13% 42 47 16% 19% 13% 16 34 11% 13% 10% Key Terms, Definitions and Commentary Terms Definitions Commentary Scope 1 emissions Direct GHG emissions from sources that are controlled by the Group. Scope 2 emissions GHG emissions from the generation of purchased electricity consumed by the Group. The Group determines its Scope 1 emissions boundary in line with the Greenhouse Gas Protocol (GHG Protocol) using the principle of operational control. In establishing assets under operational control, consideration is given to the length of any charter arrangements, the responsibility for the purchase and consumption of the fuel and the responsibility for the operational activity of the asset being used. CO2 emissions from shipping are calculated using emission factors referenced in IMO Resolution MEPC 245 (66) 2014 “Guidelines on the method of calculation and the attained Energy Efficiency Index (EEDI) for new ships”. Scope 1 emissions from land-based activities are calculated in line with GHG Protocol calculation tools. There are some locations which are leased and have bundling arrangement on some costs, which means that activity-based data are not always available. We expect data availability to improve in the future. Scope 2 emissions are calculated in line with the GHG Protocol. Where possible, the Group applies supplier specific emission factors to its electricity consumed. Where this information is not available, regional grid emission factors are obtained and applied for the relevant electricity source used by the provider. Irish Continental Group 59 Terms CO2-e CO2 emissions per GT mile CO2 emissions per transport work Definitions Commentary Carbon dioxide equivalent units. CO2-e includes direct CO2 emissions plus emissions of other gases converted to CO2 based on their equivalent global warming potential. Grams of CO2 per gross ton- nautical mile The Group considers this metric useful to viewing the carbon intensity of its ferries fleet. Grams of CO2 per cargo ton- nautical mile This is a widely adopted industry metric for container vessels to assess environmental performance. An average intensity for the overall operated container fleet is disclosed. NOx Nitrogen Oxides SOx Sulphur Oxides PM10 Particulate matter NOx emissions from shipping are calculated using guidance from the NOx Technical Code and MARPOL Annex VI Regulation 13, Nitrogen Oxides (NOx). Emissions from land-based activities are calculated in line with GHG Protocol calculation tools. SOx emissions are calculated by fuel-based emission factors. For vessels with exhaust gas cleaning systems (EGCS), a reported SO2/ CO2 emission ratio is used to determine the level to which the sulphur content has been scrubbed down. Group SOx emissions have significantly reduced since the installation of exhaust gas cleaning systems. The mass of PM10 is calculated by means of an energy-based emission factor depending on engine type, engine tier and type of fuel consumed. Default emission factors proposed by the Fourth IMO GHG Study July 2020 were applied. Lost Time Incident Rate Lost time incidents per 1 million hours worked A lost time incident is an incident that results in absence from work beyond the date or shift when it occurred. Marine Casualties Shipboard workers Operating days The reported marine casualty in 2022, related to damage to ship doors from a driving accident on board. The incident was not considered serious. An event, or sequence of events, that occurs directly in connection with the operations of a ship and results in death, serious injury or loss of a person from a ship or material damage to a ship, collision of a ship or material damage to marine infrastructure external to a ship or to the environment. Those who work on aboard operated vessels (including direct employees and contractors) The Group discloses an average number of shipboard workers per vessel across operating vessels per year. Shipboard workers increased by approximately 44% percent in 2022 due to increases to the operating fleet and return to service of the Dublin Swift. The number of available days in a reporting period minus the aggregate number of days vessels are off-hire due to unforeseen circumstances Operating days increased in 2022 due to the strategic expansion of our ferries routing and return to service of the Dublin Swift following the easing of Covid-19 restrictions on non-essential passenger travel. Strategic Report2022 Annual Report and Financial Statements60 Risk Management Overview Exposure to risk is an inherent element to carrying out the business activities of the Group; the operation of vessels and provision of related services. Effective risk management and internal control systems are essential to protect the Group from exposure to unnecessary risks and to ensure the sustainability of the Group’s business. The Board has overall responsibility for establishing procedures to manage risk, oversight of the internal control framework and determining the nature and extent of the principal risks the Group is willing to accept in order to achieve its long-term objectives. The Board has created a culture of risk awareness throughout the organisation whereby risk consideration is embedded in the decision making processes. The Board has delegated the appraisal of the Group’s risk management and internal control systems to the Audit Committee. This assessment is carried out through the review of reports and presentations made by the Risk Management Committee (RMC) and Group Internal Audit. Further information on the Audit Committee activities is set out in its report on pages 91 to 94. Risk Architecture, Strategy and Protocols The Group follows international standard ISO 31000 (2018) ‘Risk Management – Guidelines’ in designing its risk architecture, strategy and protocols (RASP). s l o c o t o r P k s i R nterpris e R i s k Managem E e n t P Risk Strategy C l i m a t e Risk Mana g e m e r o c e s s s s e n t P roc R i s k A r c h i t e c t u r e The Group’s risk architecture includes the roles and responsibilities of the Board and Group personnel in managing risk, along with internal reporting requirements. This is illustrated by the ’three lines of defence’ model. External Audit Regulator Audit Committee / Board Senior Management 1st Line of Defence 2nd Line of Defence 3rd Line of Defence Management Controls Financial Control Internal Audit Internal Control Measures Risk Management Monitoring Compliance The ﬁrst line of defence rests with management acting through their staffs who are responsible for the design, implementation and monitoring of internal control measures within their respective business areas. The second line of defence comprises of oversight functions such as Group Finance and Group Marine and Safety. These functions are involved in policy setting and provide assurance over ﬁrst line activities. The third line of defence consists of the Group Internal Audit function, which performs independent oversight of the ﬁrst two lines and reports directly to the Audit Committee on matters of internal control, compliance and governance. Irish Continental Group 61 Roles, responsibilities, risk management policy, objectives and process overviews are documented within the Group’s Risk Code. The Group adopts an Enterprise Risk Management (ERM) system that takes a unifying, broad and integrated approach to managing risks and aligns risk management to the achievement of strategic objectives. Role of the Risk Management Committee The Risk Management Committee (RMC) established by the Group comprises members from across the three lines of defence, including Board representation. With its mandate from the Board, the RMC is tasked with; • Making appropriate recommendations to the Board on all significant matters relating to the development of risk strategy and processes of the Group. • Keeping under review the effectiveness of the Group’s risk management systems. • Reviewing the Group’s risk exposures in relation to the Board’s risk appetite. • Maintaining a robust Group Risk Register and ensuring risks are identified comprehensively and assessed consistently across classified risk areas. The Board sets the Group’s risk appetite for classified risk areas. Risk appetite is communicated through the adoption of Risk Appetite Statements. These statements, along with internal capabilities, resources and industry factors provide context to how the Group’s strategy is pursued and to which risks are assessed. Stakeholder views with respect to climate and ESG issues, are considered by the Board in setting appropriate appetite levels. Refer to pages 63 to 64 for an overview of the Group’s climate risk framework. The Board has a low acceptance for risks that may impact safety of vessels, workers and customers and compliance with relevant laws and regulations. The Group wide nature of the risk assessment and monitoring process, requires collaboration across departments and divisions within the Group. Each business owner is responsible for ensuring comprehensive risk identification and assessment is carried out covering their sphere of responsibility. Risks are identified through various means, including the use of an identification tool guiding risk assessors through several internal and external factors in identifying potential barriers to respective objectives. Risks are assigned to risk owners with responsibility for the activity generating the risk. Where a risk contains multiple causes and consequences, risk owners are required to collaborate in performing a cause and consequence analysis. Risk owners are ultimately responsible for the completion and maintenance of risk assessments across their respective risk areas. Risks are measured in terms of the likelihood of occurrence and estimated impact using a standardised scoring model. All evaluations are made from a Group perspective and are relative to Group risk appetite. Guidance tools are in place to ensure Group-wide consistency is achieved across risk assessments. Existing control measures are documented and assessed within the risk assessment forms in determining residual risk scores. All risk assessments are reviewed by members of the RMC before they are released to the Group Risk Register. The RMC and risk owners can prescribe the implementation of further control measures at the review stage. The Group Risk Register is the central online repository for documenting, assessing and prioritising risks, and for documenting and prescribing control measures. The Register forms a significant portion of the Group’s risk management process. The Group Risk Register is reviewed on a regular basis by the RMC. Risk Management Process - Assessments and Monitoring The Group’s Risk Management Process is underpinned by its RASP methodology and is led by the RMC. The Group’s process is based on the revised international standard ISO 31000 (2018), ‘Risk Management – Guidelines’, and provides an iterative and systematic approach to managing risks throughout the Group. n o i t a t l u s n o C d n a n o i t a c i n u m m o C Scope, Context, Criteria Risk Assessments Risk Identiﬁcation Risk Analysis Risk Evaluation Risk Treatment Recording and Reporting M o n i t o r i n g a n d R e v i e w Strategic Report2022 Annual Report and Financial Statements 62 Risk Management Continued Any necessary changes to the Group Risk Register are made throughout the year and can be prompted by; • The occurrence of a risk event. • The identification of new emerging risks or as circumstances of existing emerging risks change. • Quarterly RMC meetings. • Internal Audit or regulatory reviews. • Annual risk owner reassessment. • Changes in Key Risk Indicator measurements. • New risk assessments completed within business area teams. Risk information within the Group Risk Register is analysed and used for reporting principal risks to the Board and for Internal Audit planning. A presentation of the Group’s principal and emerging risks is made to the Board at least annually or more frequently if warranted by developments. At these presentations, the Board challenges the RMC in their processes and evaluations of the principal and emerging risks identified in the context of the Group’s own risk policy, risk appetite and general market developments both within and outside the industry sector. Key Risk Indicators are in place for highly ranked individual risks at the residual level, to ensure exposure levels are monitored, flagged to the Board and corrective actions taken before impacts are fully realised. Emerging Risks Risk monitoring is an ongoing process to reflect the dynamic nature of the environment in which the Group operates. The Group acknowledges three types of emerging risks that can arise. The first type are new risks that emerge in the Group’s external environment. These are identified through the ongoing Group risk identification process. The second type are previously identified risks recorded in the Group Risk Register whose impact on Group activities has changed, prompting a reassessment. The third type are new risks emerging from the internal environment when changes to core processes are made. These are identified when undertaking new projects or engaging with new business partners. Emerging risks are closely monitored and assessed as their uncertain nature can result in the risks becoming significant within a short timeframe. Emerging risks currently under review at the date of this report relate to local governments imposing additional regulations over seafarer working conditions and the illegal invasion of Ukraine by Russia. We continue to monitor the war in Eastern Europe and its impact on supply chains and fuel prices. Ongoing trends that are a constant in our industry and remain front of mind are the greater environmental and climate awareness driving increased corporate responsibility and regulatory requirements and long-term risks and opportunities associated with technological advancements. Managing Cyber Security As our business becomes increasingly digitalised, we are faced with an ever- increasing Cyber threat landscape. At ICG, we are keenly aware of our responsibility to protect our systems and our customers information from outside interference. Cyber Security continues to be a top priority for the board as it carries out its risk management duties. The Board of ICG manages Cyber Security risk in the context of an overall Risk Management Framework. Given its strategic importance, the board is informed on Cyber Security topics through regular reporting from our Information Technology team. In 2022, reports were received on cyber security and related topics, covering areas such as managed security and breach detection, vulnerability management, NISD Compliance, Incident response planning and business continuity. Our Information Security Management System (ISMS) is aligned with recognised frameworks such as ISO 27001 and NIST. Cyber Security controls are designed and implemented based on thorough risk assessments and to meet increasing compliance requirements such as PCI-DSS, GDPR and NISD. Cyber Security architecture and controls are constantly reviewed and improved to mitigate emerging security risks as they develop across the wider industry. Operationally, we manage Cyber Security through a blended model of inhouse expertise and the use of best-in-class Managed Security Services Providers (MSSPs) which allows our organisation to benefit from the scale and expertise required to address the evolving threat landscape. We develop a culture of Cyber Security awareness at ICG through continuous training on relevant security topics. All employees that use our systems are required to complete regular security awareness training which highlights and reinforces their role in protecting the organisation from phishing and other cyber threats. Simulated phishing campaigns are used to gauge the effectiveness of our security training program. Irish Continental Group63 RMC members. The Group’s recent Board appointments helps ensure there is adequate Non-Executive Director representation with ESG expertise to challenge the RMC and Executive Management on relevant issues. The RMC is comprised of management across all areas of the business, including; risk and sustainability, sales, operations, health and safety, planning and finance. Collectively, the RMC has the skills, knowledge and experience to best manage the Group’s climate change risks and their wide-ranging impacts. ESG issues are incorporated in the incentive plans of Executive Management and dedicated management roles within the RMC. 3. Stakeholder Insights and Research The interests and expectations of stakeholders are important considerations in the Group’s climate risk management approach. In 2022, the Group undertook a stakeholder research program to gain insights on ESG issues facing the Group. This is helping facilitate an evaluation of our core strategic, operational and compliance processes concerning the environment and climate change expectations. Mapping of these insights is helping align stakeholder values to the Group’s strategic objectives and core processes. 4. Risk Appetite Setting Following the outcome of our stakeholder engagement program, the RMC is in the process of developing more specific risk appetite areas across a range of ESG issues. Areas of highest stakeholder importance will be considered in setting the appetite levels for Board approval. All ESG and climate change risks going forward will then be assessed, and mitigation plans updated to ensure they remain proportionate to the relevant appetite levels. Managing Climate Change Risks The Group has adopted a framework, based on guidance from the Institute of Risk Management, which identifies the key areas that require attention to enable the development and execution of its climate change risk management strategy. This framework is integrated within the Group’s RASP and related risks assessments are released to the Group Risk Register. 2. Effective Governance Systems 8. Operationalise Metrics and Targets 3. Stakeholder Insights and Research 7. Implementing Mitigation and Resilience Plans 1. Climate Change Risk Landscape 4. Risk Appetite Setting 6. Strategic Positioning and Roadmap 5. Materiality Assessment over Alternative Horizons 1. Climate Change Risk Landscape The Group identifies climate risks using the same processes as other emerging risks, with additional emphasis on expert climate risk publications and regulatory updates. Climate change risks are unique in how they; affect every individual and organisation, are long term in nature and are highly uncertain in their ultimate progressions and impacts. Due to these considerations, the Group’s climate risk register contains the following additional details; • Risks are assessed over three different time horizons; 0-3 years, 3-10 years and >10 years, with the 0-3-year horizon assessments transferring to the Group Risk Register. • Impacted stakeholder groups are identified for engagement on associated risks. • Opportunities are identified for each risk to support strategic positioning and resilience planning. • Impacts are linked to financial statement areas. A summary of the Group’s climate risks, impacts and opportunities is disclosed on pages 52 to 53. 2. Effective Governance Systems The Group applies the same risk governance structure to climate change risks as all enterprise risks. The RMC advises the Board on risk appetite, risk management approach and important risk management issues and considerations, which are ultimately approved by the Board or used to facilitate decision making. The RMC presents to the Board during the year on all important risk management issues, including climate change and ESG risks. Executive Management are also equipped to update the Board on such matters throughout the year, as 75 percent of the Executive Management Team are Strategic Report2022 Annual Report and Financial Statements64 Risk Management Continued 5. Materiality Assessment over Alternative Horizons Climate change risks are assessed over three separate horizons; 0-3 years, 3-10 years and >10 years. Current known transition risks are most significant in the short and medium term and are expected to curtail from the third time horizon as the Group shifts towards a low carbon economy. While physical risks require attention today, significant physical impacts for the Group may only be experienced over the long-term horizon. Assessments over the long-term horizon are most challenging to calculate but are key to future resilience planning. The Group is exploring further methods to help quantitively analyse the impact of certain future scenarios. High Impact Medium Impact Low Impact Transition Risk Physical Risk Short Term (1 -3 years) Medium Term (3 -10 years) Long Term (>10 years) Significant and Emerging Risk Events War in Eastern Europe The Group is continuing to monitor developments in Eastern Europe following the illegal invasion of Ukraine by Russia. A full organisational-wide risk assessment was conducted as geopolitical tensions escalated in early 2022. The potential impacts highlighted by this review included: • The impact of economic sanctions on Russia on Group operations and fuel prices; • Impact on passenger demand due to ticket price inflation; • Increased cyber security risk to assets and operations; • Business continuity risks associated with supply of fuel and key third- party contractors; • We are continuing to closely monitor all developments as they evolve and how they may impact the Group. Increasing Regulations Over Seafarer Working Conditions The UK government declared an intention to increase the obligations of employers in the maritime sector, including the imposition of a minimum wage, over the current international requirements by way of a bilateral agreements. Authorities in France have also made a similar statement of intent. This could lead to a potentially significant increase in operating costs for the Ferries Division. We are engaging with regional trade bodies to ensure that our position is heard and understood at Governmental and European Union level. Viability assessment The principal risks identified through the Group’s risk processes have been considered by the Directors when preparing the Viability Statement on page 110, as part of their assessment of the prospects for the Group. 6. Strategic Positioning and Roadmap Following a full assessment of risks and opportunities over separate time horizons, the Group can assess strategically its current position against long-term goals. This stage allows the Group to identify any changes to its business model necessary for long-term success, with a focus on opportunity management. Further climate change related controls and projects are then agreed. 7. Implementing Mitigation and Resilience Plans Further controls and projects to help address climate change risks are implemented and managed. Current resilience plans, including the Group’s Major Incident Response Plans and Disaster Recovery Plans are also reviewed and updated periodically for additional information gathered throughout the process. 8. Operationalise Metrics and Targets Metrics and targets, including carbon intensity and absolute GHG emissions are monitored and reviewed. Relevant Key Risk Indicators are also introduced to monitor high residual risks, in line with the Group’s risk management process. Irish Continental Group65 Principal Risks and Uncertainties Linkage to strategic pillars: Quality Service People and Culture Financial Management Safety Sustainability Description and Impact Risk Treatment 2022 Developments Strategic Risk - Commercial & Market The Group operates in a highly competitive industry with market risks and opportunities arising from uncertain political and economic landscapes. The Group is at risk of markets not performing in line with expected growth and at risk of loss in market share to competitors, impacting profitability. The Group undertakes regular assessments of its cost base and performs competitor benchmarking. Direct and indirect competitor activity and market performance is closely monitored which allows the Group to respond swiftly. The Group focuses on ensuring a safe, reliable and high-quality service is provided to customers in order to maintain and strengthen alliances. Strategic Risk - Economic and Political Exposure to commercial and market risks continues to increase as the Group continues to invest and expand in the Dover – Calais route with 2 ships newly operational during the year. The route remains increasingly competitive with competitors introducing additional capacity on existing markets served. Economic and political factors including instability and changes to laws on travel and trade could adversely impact the Group’s activities and demand for its services. Geopolitical risks, including war risks could have devastating Global impacts, including impacts to Group operations. The Group liaises with various associations and governmental bodies to share views on proposed legislative changes. Micro and macroeconomic activity is closely monitored to ensure Group decision making is informed and timely. The illegal invasion of Ukraine by Russia has had a significant impact on the wider European economy especially in the areas of fuel and other supply chain inflation. The freight market continues to work through the effect of Brexit and the continuing implementation of the Northern Ireland protocol. Operational Risk - Business Continuity The Group’s operations are exposed to the risk of fire, flood, storms, vessel incidents and loss of critical supplies caused by accident or by natural disaster. The Group places strategic importance on investment in quality assets and safety, including vessels suitable for challenging sailing conditions and experienced crews and operations teams. Minor disruptions can impact revenues while major disruptive events can result in the loss of critical infrastructure causing significant financial loss and reputational damage. The Group has detailed, coordinated and rehearsed business continuity plans containing crisis management and disaster recovery components to respond to major incidents at land or at sea and ensure affected operations can be resumed promptly and safely. The Group continuously monitor government guidance, the prevalence of contagious illness in the wider population and will continue to exercise caution in how business activities are conducted. In 2022, the Group operated a full service through most of the year and importantly throughout the entire 2022 tourism season. Strategic Report2022 Annual Report and Financial Statements66 Risk Management Continued Description and Impact Risk Treatment 2022 Developments Operational Risk - Health and Safety The Group is inherently exposed to the risk of incidents, including; workplace accidents, vessel collisions and damages, hazardous cargo and incidents involving passengers. There is also a risk of outbreak of contagious illness among staff, crews and customers. These events could result in loss of life, serious personal injury or illness, asset damage and reputational impact concerning safety. The Group and its service providers adhere to defined operating safety and quality policies and procedures. All sites are regularly inspected by internal second line functions and external regulatory bodies. Emergency procedures and safety training are conducted regularly. Hazardous cargoes are managed in accordance with international maritime regulations. Group vessels, offices and facilities are thoroughly and frequently sanitised. World Health Organisation (WHO) and governmental guidance and instructions are followed. Operational Risk - Operational Compliance The Group’s activities are governed by a range of IMO, flag state, port state, EU and national governmental regulations. There is a risk that instances of non- compliance may occur that causes disruption, reputational damage or financial penalties. Ongoing training is provided to operations staff and contractors in line with regulatory requirements. New regulations are discussed and assessed at management meetings, together with measures to ensure compliance. The Group’s vessels and port operations are subject to regular inspections and audits from internal second line functions and external bodies. Health and safety metrics for the year are disclosed on page 58. The Group continuously monitor government guidance, the prevalence of contagious illness in the wider population including new waves of Covid-19 and will continue to exercise caution in how business activities are conducted. The rollout of vaccination programmes throughout Europe helped to protect staff, crew and customers from Covid-19 impacts and contributed to the safe resumption of non-essential travel for passengers. This has helped normalise our trading patterns in 2022. The Group will continue to monitor new regulatory developments at the IMO and the EU and liaise with regional chambers of shipping, shipowners’ associations and other industry representatives as further information is announced. Compliance risks related to reducing emissions are managed within the Group’s climate change risk framework. Irish Continental Group67 Description and Impact Risk Treatment 2022 Developments Operational Risk - Environmental Protection The Group is exposed to long- term physical effects of climate change and to near and long- term transition risks associated with the movement towards a low carbon economy. These risks and impacts are detailed further on pages 52 to 53. There is also a risk of spillages or incidents causing pollution and discharge to the sea. Operational Risk - Human Capital There is a risk of failure to attract qualified and talented individuals and additionally a risk of losing key personnel. Staff could become unmotivated or dissatisfied with the working environment. These risks can ultimately lead to a poor standard of customer service and decision making, affecting the Group’s market position, reputation and stakeholder relationships. The Group continues to place significant focus on enhancing its approach to ESG and sustainability. Refer to the Sustainability section on pages 36 to 59 for further information on activities and developments during the year. Physical and transition climate change risks are managed within the Group’s climate change risk framework. The Group is employing a range of technical and operational measures to achieve its GHG reduction targets. Refer to pages 36 to 59 for further details. The Group and its service providers adhere to defined operating safety and quality policies and procedures. All sites are regularly inspected by internal second line functions and external regulatory bodies. Emergency procedures and safety training are conducted regularly. Hazardous cargoes are managed in accordance with international maritime regulations. Pay and conditions are reviewed and benchmarked to ensure the Group remains competitive. ICG is an equal opportunities employer and seeks a diverse workforce to promote a strong and accepting culture and to help make informed decisions. Work from home arrangements can be attractive opportunities for many individuals. The Group introduced hybrid working arrangements in response to changes in the work environment brought upon by the Covid-19 pandemic. Staff are encouraged and supported in their pursuits of further education and career advancement. Long-term incentive plans are in place to retain and motivate key management personnel. IT Systems and Cyber Risk - Information Security and Cyber Threats The Group is heavily reliant on its IT systems to support business activities. These systems are susceptible to data breaches and cyber attacks that can result in disruption, heavy fines and reputational damage. The Group employs a suite of physical access controls and technical controls to prevent, detect, mitigate and remediate malicious threats and unusual activity. Such controls include rehearsals for major cyber incidents, vulnerability management processes and security awareness training for staff and key contractors. Cyber-attacks continue to grow in volume and sophistication and have particularly intensified since the beginning of the Covid-19 pandemic. The Group to remain vigilant and ensure all efforts to protect its systems are made. For an overview of the Group’s cyber security risk management process, see page 62. Strategic Report2022 Annual Report and Financial Statements68 Risk Management Continued Description and Impact Risk Treatment 2022 Developments Financial Risk - Financial Loss The Group is at risk of losses caused by ineffective or inefficient financial policies or practices, such as; inadequate budgeting and planning, insurance provisioning, project management or credit control techniques. Financial Risk - Volatility The Group is exposed to adverse fluctuations in fuel prices and exchange rates which can reduce revenues, increase cost base and reduce overall profitability. We continue to invest and improve our analytics offerings to our executive management to monitor key operational statistics timely. This allows us to act swiftly and decisively to address any building trends against established benchmarks. Fuel prices were highly volatile in 2022, but overall have increased substantially over previous years, leading to an increase in Group fuel costs. The Group’s magnitude for exposure to unfavourable Sterling movements increased during the year, following increased trade on the Dover-Calais route. The Group’s financial management activities are performed by experienced and knowledgeable personnel. Regular internal management reporting ensures negative variances and trends are identified timely and acted upon. Close relations with insurance brokers are maintained and emerging risks are considered when assessing coverage. Major projects require pre-approval of the Board. Due diligence procedures are carried out for project contractors and new commercial customers while ongoing performance management of projects and debtors are in place. Group policy has been to purchase commodities in the spot markets and remain unhedged. The Group operates a dynamic surcharge mechanism with its freight customers which allows prearranged price adjustments in line with Euro fuel costs to help mitigate US Dollar exposure arising from fuel purchases. In the passenger sector, in addition to fixed environmental surcharges, changes in bunker costs are included in the ticket price to the extent that market conditions will allow. The Group employs a matching policy to mitigate exposure to Sterling. Decreases in translation of Sterling revenues to Euro are largely offset against corresponding decreases in translation of Sterling costs. Financial Risk - Retirement Benefit Scheme The Group’s pension liabilities are exposed to risks arising from changes in interest rates, inflation, demographics and market values of the underlying investments, resulting in increased scheme obligations or decreased scheme assets. A portion of the Group’s defined benefit risks are transferred to a third-party insurance company. In 2022, the Group continued its de- risking initiatives and active investment management. All actuarial assumptions are substantiated and challenged where necessary. Regular communication is maintained with the scheme investment managers to monitor performance relative to agreed benchmarks. Irish Continental Group69 Description and Impact Risk Treatment 2022 Developments Financial Risk - Fraud A significant volume of transactions is processed throughout the course of the year. These include a large amount of payment exchanges in the booking process, on board passenger vessels and at port ticket desks. This level of activity inherently carries a risk of fraud through the processing of improper payments or misappropriation of cash or assets. Any instance of fraud affecting ICG could result in financial loss, reputational and cultural damage. Improper payments are prevented by a segregation of duties within the payment set-up, payment approval and accounts posting processes. Further training and procedures are in place to ensure any requested changes to vendor payments are validated. Daily reconciliations are performed at cash processing locations. All cash counts require supervisor oversight and CCTV cameras are installed to deter and capture any inappropriate behaviour. Internal audit procedures are designed with consideration for the scope of fraud, where relevant. The Group is not aware of any confirmed or suspected instances of fraud during the year. The Group reviewed its Protected Disclosure (Whistleblowing) Policy to encourage employees or any person who works or has worked for the Group to make a disclosure in respect of significant matters including instances of fraud. This policy is available on our website. Financial Risk - Financial Compliance As a public listed company with operations in different jurisdictions, the Group must comply with multiple financial and administrative regulations. Any policy changes or instances of non-compliance could result in financial loss, penalties or reputational damage. The Group relies on its professional staff to ensure necessary filings are timely, complete and accurate. Third party experts are engaged when required to advise on complex matters. The Group engages productively with Irish tax authorities through the Co-Operative Compliance Framework. Additional assurance is also gained from the work of the Group’s external auditors. The Group is monitoring developments in regulations particularly around whether BEP’s Pillar 2 may affect the group in future periods, through increased tax obligations. The Group is also monitoring and assessing the financial and administrative impact of the EU emission trading scheme and a similar scheme proposed by the United Kingdom. Strategic Report2022 Annual Report and Financial Statements70 Our Fleet W.B. Yeats Year Built Acquired Gross Tonnage No. Engines Speed Lane Metres Car Capacity Passenger Capacity Beds 2018 2018 54,975 4 Ulysses Year Built Acquired Gross Tonnage No. Engines 2001 2001 50,938 4 Isle of Inishmore Year Built Acquired Gross Tonnage No. Engines 22.5 knots Speed 22 knots Speed 2,800 1,216 1,885 1,706 Lane Metres Car Capacity Passenger Capacity Beds 4,100 1,342 1,875 186 Lane Metres Car Capacity Passenger Capacity Beds 1997 1997 34,031 4 21.5 knots 2,100 855 2,200 208 Isle of Innisfree Isle of Inisheer Year Built Acquired Gross Tonnage No. Engines Speed Lane Metres Car Capacity Passenger Capacity Beds 1992 2021 28,833 4 Year Built Acquired Gross Tonnage No. Engines 2000 2022 25,152 4 21.0 knots Speed 22.5 knots 2,300 600 1,140 78 Lane Metres Car Capacity Passenger Capacity Beds 1,950 500 589 218 Dublin Swift Year Built Acquired Gross Tonnage No. Engines Speed Lane Metres Car Capacity Passenger Capacity Beds 2001 2016 8,403 4 35 knots - 251 817 - Epsilon (chartered in) Blue Star 1 (chartered in) Year Built Acquired Gross Tonnage No. Engines Speed Lane Metres Car Capacity Passenger Capacity Beds 2011 chartered-in Year Built Acquired 26,375 2 23 knots 2,800 150 500 272 Gross Tonnage No. Engines Speed Lane Metres Car Capacity Passenger Capacity Beds 2000 chartered-in 29,858 4 27 knots 1,718 700 1,500 192 Irish Continental Group71 Ranger Year Built Acquired Gross Tonnage Deadweight Capacity 2005 2015 7,852 9,300 Elbfeeder Year Built Acquired Gross Tonnage Deadweight 2008 2015 8,246 11,157 Elbtrader Year Built Acquired Gross Tonnage Deadweight 803 TEU Capacity 974 TEU Capacity 2008 2015 8,246 11,153 974 TEU Elbcarrier Year Built Acquired Gross Tonnage Deadweight Capacity 2007 2015 8,246 11,166 974 TEU Thetis D Year Built Acquired Gross Tonnage Deadweight Capacity 2009 2019 17,488 17,861 1,421 TEU CT Rotterdam Year Built Acquired Gross Tonnage Deadweight Capacity 2009 2019 8,273 11,157 974 TEU CT Daniel Year Built Acquired Gross Tonnage Deadweight Capacity 2006 2021 9,990 11,190 868 TEU CT Pachuca Year Built Acquired Gross Tonnage Deadweight Capacity Mirror (chartered in) 2005 2022 6,901 9,235 750 TEU Year Built Acquired Gross Tonnage Deadweight Capacity 2007 chartered-in 7,852 9,344 803 TEU Strategic Report2022 Annual Report and Financial Statements72 Executive Management Team Eamonn Rothwell BComm, MBS, FCCA, CFA UK Chief Executive Officer David Ledwidge FCA, BSc (Mgmt) Chief Financial Officer Eamonn Rothwell, aged 67, has been a Director for 36 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 former stockbrokers NCB Group, now part of Tilman Brewin Dolphin. Prior to that, he worked with Allied Irish Banks plc, Fáilte Ireland (The Irish Tourist Board) and as a financial journalist. David Ledwidge, aged 43, was appointed to the Board in March 2016. David joined the Group in 2006 from professional services firm Deloitte where he qualified as a Chartered Accountant. He has held various financial positions within the Group, including Group Risk Accountant and 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 Declan Freeman FCA Managing Director - Container and Terminal Division Andrew Sheen, aged 51, a Chartered Engineer, has been involved in shipping for over 30 years and has worked with Irish Ferries in a variety of operational roles for over 15 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 a Director of the International Chamber of Shipping. Declan Freeman, aged 47, 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 Group73 Strategic Report2022 Annual Report and Financial Statements74 The Board Corporate Governance Statement Report of the Audit Committee Report of the Nomination Committee Report of the Remuneration Committee Report of the Directors Directors’ Responsibility Statement 76 78 91 95 98 109 113 CORPORATE GOVERNANCE Irish Continental Group75 Corporate Governance2022 Annual Report and Financial Statements76 The Board The Group’s non-executive Directors are: John B. McGuckian BSc (Econ) Chairman Daniel Clague Independent Director John B. McGuckian, aged 83, has been a Director for 35 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 and as Senior Pro-Chancellor and Chairman of the Senate of the Queen’s University of Belfast. Committee Membership: Remuneration Committee, Nomination Committee (Chair) Dan Clague, aged 63, was appointed to the Board in August 2021. Dan is a Senior Adviser with the Transport Services and Infrastructure group of Stephens Europe, an independent investment bank for middle market companies. Dan has over 25 years' experience in investment banking and has previously held senior positions with Hawkpoint Partners, SG Hambros, ABN Amro and Baring Brothers. Prior to entering investment banking, Dan spent a number of years working in the maritime sector as a shipping and ports manager. He has global experience of both public and private company mergers and acquisitions across the transport industry including the RoRo, LoLo and port sectors. Dan is based in London. Committee Membership: Audit Committee, Remuneration Committee (Chair), Nomination Committee Éimear Moloney FCA Independent Director Lesley Williams FCISI Senior Independent Director Éimear Moloney, aged 52, was appointed to the Board in August 2022. Éimear has over 20 years’ experience in capital markets and most recently held a senior executive position with Zurich Life Assurance (Ireland) plc, with responsibility for managing asset allocation across various geographic portfolios. Éimear holds non-executive directorships at listed companies Kingspan Group plc where she is a member of the Audit Committee and Hostelworld Group plc where she chairs the Audit Committee. She also holds a non- executive directorship at privately owned Chanelle Pharmaceuticals Group and was previously a non-executive Director at Yew Grove Reit plc. Éimear holds a B.A. Accounting and Finance and MSc. Investment and Treasury from Dublin City University and is a fellow of the Institute of Chartered Accountants in Ireland. She is also a member of the Institute of Directors in Ireland. Lesley Williams, aged 57, was appointed to the Board in January 2021. Lesley has over 25 years’ experience in capital markets having held senior positions with Investec Bank plc as Head of Irish Equities, Euronext Dublin (formerly the Irish Stock Exchange) as Head of Irish Market and Goodbody Stockbrokers as Head of Institutional Equity Sales. Lesley is a non-executive director of Origin Enterprises plc where she is chair of the ESG Committee. Lesley also holds a number of independent non-executive directorships in the asset management and International fund sectors. She is also a past director of Dublin Port Company where she held the position of Chair of the Audit and Risk Committee. Lesley is an Associate member of the Chartered Financial Analyst Institute (CFA) from which she also holds a certificate in ESG investing and is a Fellow of the Chartered Institute for Securities and Investment. Committee Membership: Audit Committee (Chair), Remuneration Committee, Nomination Committee Committee Membership: Audit Committee, Remuneration Committee, Nomination Committee Irish Continental Group77 The Group’s executive Directors are: The Company Secretary is: Eamonn Rothwell BComm, MBS, FCCA, CFA UK Chief Executive Officer Thomas Corcoran BComm, FCA Company Secretary Thomas Corcoran, aged 58, 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 and Company Secretary. He was appointed Company Secretary in 2001. Eamonn Rothwell, aged 67, has been a Director for 36 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 former stockbrokers NCB Group, now part of Brewin Dolphin. Prior to that, he worked with Allied Irish Banks plc, Fáilte Ireland (The Irish Tourist Board) and as a financial journalist. Committee Membership: Nomination Committee David Ledwidge FCA, BSc (Mgmt) Chief Financial Officer David Ledwidge, aged 43, was 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. Corporate Governance2022 Annual Report and Financial Statements78 Corporate Governance Report regarding composition of the Board and the Report of the Remuneration Committee details the concern around remuneration practices. Corporate Governance Code The Group has adopted the UK Corporate Governance Code (2018) (The Code) issued by the Financial Reporting Council and the Irish Corporate Governance Annex issued by Euronext Dublin. Copies of these are available at the respective websites, www.frc.org.uk and www.euronext.com. The Group used the Code and Annex as a framework for developing its corporate governance processes. The Corporate Governance Report details how the Group has applied the principles and complied with the provisions set out in the Code. In certain instances where compliance with the provisions of the Code has not been achieved in the specific circumstances of the Group, explanation has been provided. The Corporate Governance Report details on the following pages our compliance with the Code, the composition of the Board, its corporate governance processes and activities during the year, together with the reports from each of the Board committees. Finally, I would like to thank all our stakeholders for their continued support and look forward to continued constructive engagement through 2023. John McGuckian Chairman 8 March 2023 economics and strategy to drive shareholder returns. Éimear also serves on the Board of a number of other listed companies. John Sheehan resigned as a Director having served terms in aggregate totalling nine years. I express my gratitude to John for his service and contributions to the Group over his tenure. Subsequent to John’s resignation, Éimear, in recognition of her relevant qualifications and experience, was appointed as Chair of the Audit Committee. Other changes in roles during 2022 was the nomination of Lesley Williams as Senior Independent Director and Dan Clague as Chair of the Remuneration Committee. As detailed in the Corporate Governance Report, in relation to my own tenure as Chairman of the Board exceeding nine years, the Nomination Committee has assessed my performance and have reaffirmed my continuing position as Chairman. Engagement We have progressed our engagement with stakeholders on corporate governance concerns, including sustainability interests, to help us understand which aspects of our services and practices need to be prioritised to ensure we continue to align with their interests. We also continue to improve our processes and reporting in the area of sustainability as set out in the Sustainability and ESG Report on pages 36 to 59. On employee engagement, we have implemented a new talent review programme as a means of further engaging with employees and allowing them to maximise their potential within the organisation. We have also commenced engagement with our principal customers and suppliers on ESG matters and have continual engagement with our shareholders. These engagement processes are described in the Corporate Governance Report. At our AGM held on 11 May 2022, all resolutions put to the meeting were passed. Two resolutions received less than 80% support and in accordance with the requirements of the Code, the Report of the Nominations Committee details the concern raised Dear Shareholder, I have pleasure in introducing my 2022 Report on Corporate Governance. 2022 was an exciting year for the Group, as we emerged from the pandemic restrictions and welcomed returning passengers onboard our services. We continued our strategic expansion programmes, increasing capacity on our Dover – Calais service, commenced during 2021, to three vessels and made further progress on our terminal expansion and renewal project commissioning additional environmentally friendly plant during the year. Philosophy The Board is committed to maintaining high standards of corporate governance practices which support the delivery of our strategy. The Board believes that corporate governance is not solely concerned with Boardroom practices but must be intertwined with all activity which the Group undertakes affecting our employees, customers, suppliers and all other stakeholders including the wider society in which the Group exists. The Board sets the tone for corporate governance practices across the Group through engagement, communication and policy formulation. This Corporate Governance Report, together with the Annual Report as a whole, is presented with the objective of providing an insight into the corporate governance process at the Group. Board Changes We continued our program of board refreshment during 2022, with the appointment of Éimear Moloney on 25 August. Éimear has extensive experience of capital markets, macro- Irish Continental Group79 Application of the UK Corporate Governance Code During 2022 This Corporate Governance Report presented in the context of the full Annual Report and Financial Statements for the year ended 31 December 2022 sets out how the Board has applied the Principles of the Code. This is supported through reporting on compliance with the Provisions of the Code. The Board considers that, other than for the deviations noted below which have been explained in this Corporate Governance Report, 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. Provision 5 of the Code requires the Board to describe in its Annual Report how the interests of key stakeholders and the matters set out in Section 172 of the United Kingdom Companies Act of 2006 are addressed. While that Act does not apply to Irish companies, the Board is satisfied that these matters have been addressed in discussions and disclosures throughout this Annual Report including discussion on strategy and business model, business review, risk processes, environmental matters and stakeholder engagement. Provision 5 also requires that employee engagement be facilitated by one of three prescribed methods. As the Board has not chosen one or more of these methods, it explains at page 84 the alternative arrangements which are in place and why it considers that they are effective. Under Provision 19 of the Code, the Chair should not remain in post beyond nine years from the date of their first appointment. This report at page 84 provides details to the continuing tenure of Mr. John B. McGuckian as Chairman beyond nine years. Provision 36 requires that the Remuneration Committee should develop a formal policy for post- employment shareholding requirements encompassing both unvested and vested shares. The Report of the Remuneration Committee at pages 107 and 108 sets out the reasoning for not establishing set levels for post-employment shareholdings given that the existing arrangements under the Remuneration Policy already provide for contractual restrictions on share disposals of up to five years post- employment. Provision 39 requires that notice or contract periods should be one year or less. The Report of the Remuneration Committee at page 106 sets out why in relation to one Director a notice period of two years will apply in certain circumstances. Corporate Governance Framework y r a t e r c e S y n a p m o C The Board The Board is collectively responsible for the long-term sustainable success of the Company through provision of leadership and setting the company’s purpose, values and strategy within a framework of prudent and effective controls which enables risk to be assessed and managed. Committees The Board has established various committees to assist it in meeting its responsibilities. The Group has three standing committees with formal terms of reference. The Committees report to the board on all work undertaken. Audit Committee Nomination Committee Remuneration Committee Monitors the Group’s ﬁnancial integrity through oversight of the ﬁnancial reporting process, including the risk and control systems which underlie that process. Establishes the framework for the development of an inclusive and high performing leadership team. Sets the remuneration policy and structures for executive directors and senior management. Chief Executive Ofﬁcer Chief Financial Ofﬁcer Responsible for implementing Board strategy and policy. Responsible for managing the ﬁnancial affairs of the Group and optimising capital management. *The Company secretary provides a support role to the Board and its Committees in managing information ﬂows and in supporting corporate government processes. Corporate Governance2022 Annual Report and Financial Statements 80 Corporate Governance Report Continued Board Leadership and Company Purpose The Board is collectively responsible for the long-term sustainable 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. In discharging this responsibility, the Board has adopted 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 of significant assets, dividends and share redemptions, board appointments and setting the risk appetite. Certain additional matters are delegated to Board Committees. In discharging their duties, the Board has arrangements in place for Directors to disclose any direct or indirect interests which may possibly conflict with the interests of the Company. Directors must abstain on any vote regarding matters where a conflict exists. Group Strategy and Corporate Governance On page 16 we describe the Group’s strategy. This strategy is supported by our five strategic pillars, consideration of which is interwoven throughout the Board agenda for each meeting and throughout this report. Strategic pillar Key activities during the period Quality service Investment in quality assets is essential to ensure a reliable, timely and high- quality service to our customers which is essential to retaining the Group’s pivotal position in international logistics chain and to driving growth in the Group’s business. • The oversight and monitoring of performance of the fleet • Evaluation and approval of ongoing expansion including: - expansion of new ferry services between Dover and Calais. - Increase in the operational ferry fleet from 7 to 8 vessels, through the acquisition of the Isle of Inisheer - Increase in the container vessel fleet from 7 to 8 vessels. - Approval of the acquisition of a new ship to shore electrically powered crane at Dublin Ferryport Terminals as part of the ongoing replacement and expansion program. - Vessel upgrade works involving customer facing and background technical improvements. - Commencement of operations at the Dublin Inland Port. Irish Continental Group81 Strategic pillar Key activities during the period People and culture Our customers’ experience is directly affected through their interaction with our employees and third-party contractors. • Overview of service quality reports. • Monitoring of feedback from staff briefing sessions. • Sponsoring of talent management programme. • Review of whistleblowing procedures. Financial management Pursuit of investment opportunities within stringent risk and reward hurdles, avoidance of speculative financial positions and Capital management. Safety The operational safety of our vessels and terminal facilities is paramount to maintaining the reputation of our brands which is vital to future success and a strong safety culture is promoted across all activities. Sustainability The Group seeks to minimise the impact of its activities on the environment through constant innovation, efficiency and awareness. • Reviewed the regular reports from the CEO and CFO regarding the Group’s operations. • Monitored the financial liquidity and adequacy of borrowing facilities. • Challenge of investment proposals presented by the executive team in terms of resilience and risk appetite. • Consideration of commodity and currency exposures. • Assessed the Group’s capital allocation, dividend and buyback transactions, approving the resumption of dividend payments. • Oversight of Group operational safety reviews. • Attended briefings from the Risk Management Committee. • Review of risk appetite statements. • Reviewed effectiveness of the Group’s internal control and risk management systems. • Oversight of Group compliance with existing regulations and potential effects of new regulations. • Approval of additional resources to formalise the development of integrated Group sustainability policy and framework. • Review of sustainability targets and roadmap • Approval of projects to improve the Group’s environmental footprint. Corporate Governance2022 Annual Report and Financial Statements82 Corporate Governance Report Continued Stakeholder Engagement At ICG, we believe success in our business will deliver sustained and profitable growth for the benefit of all our stakeholders. To nurture this success, regular dialogue takes place at relevant levels within the Group and feedback is delivered to the Board through the CEO and presentations from the senior executive team. S ociety W o rkforce Shareholders C u s t o m e rs s r e pli S up Environm e n t Shareholders The Board acknowledges its responsibility to engage with shareholders to ensure that their interests are being met and to listen to any areas of concern which they may raise. The Board encourages communications with shareholders and welcomes their participation at all general meetings of the Company. The 2022 AGM provided an opportunity to meet once again with shareholders in-person following the virtual AGMs in 2020 and 2021. We also engaged with our shareholders and their advisers prior to the 2022 AGM. Shareholders were afforded an opportunity at the 2022 AGM to vote on advisory resolutions concerning the 2021 Annual Report which received 100% support and on the Report of the Remuneration Committee which received 74% support. Further details on the matters raised concerning remuneration are detailed in this year’s report of the Remuneration Committee at page 99. The re-election of Mr. McGuckian as Director received 77% support and further details on the matters raised on Mr. McGuckian’s re-election are discussed in the Report of the Nomination Committee on page 96. In addition to the AGM engagement, 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 and analysts 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. While supporting the Group’s strategy, an increasing area of interest to shareholders is our sustainability credentials. Our Sustainability and ESG Report at pages 36 to 59 explains our sustainability policy and framework and how we are increasingly embedding sustainability practices into our everyday operations. and are available on the Group’s website. During 2022, these include, the 2021 Annual Report and Financial Statements, the 2022 Half-Yearly Financial Report, Trading Updates together with investor presentations. ICG’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. The 2023 Annual General Meeting is scheduled for 11 May 2023. Arrangements will be made for the 2022 Annual Report and 2023 Annual General Meeting Notice to be available to shareholders at least 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 pages 88 to 90. Apart from the direct engagement described above, regular formal updates are provided to shareholders Further investor relations information is available on pages 196 and 197 of this Annual Report. Customers Our strategy centres around meeting our customers maritime transport requirements whether that is being a key partner in their organisation’s international logistics chain or personal travel arrangements. We engage with our customers on a daily basis through the provision of our services but also proactively work in partnership with our customers so that they can achieve their objectives. Through listening to our customer feedback and requirements we adapt our offering in the provision of safe, reliable, timely, good value and high quality maritime transport, while continuing initiatives to minimise the impact of our operations on the environment. The Board receives regular updates from the CEO and senior managers on customer performance and market developments. Suppliers The Group’s partnerships with its suppliers are essential to the Group’s success in delivering its services. We work closely with our suppliers to ensure the quality of supplies and services meet our exacting requirements. We support our suppliers with their innovation projects which benefit the way we can deliver our services. Increasingly this involves initiatives with an environmental benefit whether it be a new or improved product or a new way of doing things. We have in place a Supplier Code of Conduct the purpose of which is to ensure our procurement processes are aligned with our values and policies across the areas of environment, ethics, human rights and health and safety. The Board receives regular updates from the CEO and senior managers on the performance of key suppliers and innovations. Irish Continental Group83 Workforce We rely on our workforce to promote our values and deliver on our strategic objectives. Our customers’ experience and consequentially our success is directly affected through their interaction with our workforce comprising our own employees and third-party contractors. In return, we recognise our obligation to promote employee development in an environment which promotes diversity, inclusion and realisation of potential in a safe working environment. The Board notes the Code provision 5 relating to workforce engagement and the methods which might be used to effect same. The Board has considered these against the nature of the manner in which the Group’s activities are performed. As is common practice in the maritime sector, our vessels are crewed through third-party managers. The Group has no legal rights to engage with the individual crew members who are directed and controlled by the third-party manager. The contracts between the Group and the crewing managers include detailed service level arrangements and requirements that the third- party adhere to international IMO regulations regarding employment terms for seafarers. The Group monitors the crewing manager certification on an ongoing basis. The Group has also entered into third- party labour contracts with respect to its terminal operations. At peak season, the Group engages in excess of 1,200 persons, of which approximately 300 are direct employees. The Board has considered that the most appropriate manner in which it can ensure that the interests of persons employed directly or indirectly can be considered is through challenging the CEO and divisional managing directors on their regular reports to the Board. Both formal and informal processes underlie engagement with the direct workforce. Formal processes include general briefing sessions to all employees through the management chain. During 2022, the Group introduced a new talent review programme which promotes the exchange of views and encourages individuals to realise their potential through agreed development goals. The Group has also formulated grievance and whistleblowing procedures whereby employees can report any concern in confidence. The Group also has arrangements in place for the provision of confidential counselling services. Informally, given the small direct workforce, there is an open access policy whereby any employee has access to any manager up to the CEO. Senior management also regularly visit all Group locations. Our workforce is a rich source of information on how the Group performs in both a customer facing roles and operationally. Within the processes described, executive management report on workforce matters to the Board which are taken into consideration in further developing the Group’s businesses. The Company also facilitated Board visits to Group vessels and port operations during 2022, where the Directors had an opportunity to meet with members of the workforce. These visits had been curtailed during 2020 and 2021 in line with Group safety protocols around Covid-19. Environment and Society The Group acknowledges its societal responsibility to conduct business in a manner that protects our shared environment. We operate in a highly regulated industry which requires adherence to high standards of waste and resource management, pollution prevention and increasingly rigorous compliance measures to reduce greenhouse gas emissions across the maritime sector. This involves continuous engagement with port and flag state authorities, industry representative bodies, and local and international regulatory agencies. A key step in the Group’s climate change risk framework outlined on page 63 is to engage in a research program to incorporate stakeholder views on the environment and climate change expectations into the Group’s risk appetite setting and strategic planning processes. We have to date engaged with key customers and our employees to identify those aspects of the Group’s services which they value most, including sustainability initiatives. ICG is recognised as a critical infrastructure operator in providing essential transport services under the Irish Ferries and Eucon brands. This requires collaboration with the Irish Government on areas of business continuity and network and information security. Irish Ferries is also a significant contributor to the tourism industries of Ireland, the UK and France and engages in co- operative campaign programs with regional tourism bodies to promote local tourism. We also support various community initiatives and charities that align with our strategic pillars of safety and sustainability, which are outlined on pages 50 and 51. Corporate Governance2022 Annual Report and Financial Statements84 Corporate Governance Report Continued Division of Responsibilities The Board is comprised of two executive and four non-executive Directors. The roles of Chairman and Chief Executive are separate, set out in writing and approved by the Board. The Board has adopted the corporate governance structure set out below which it believes provides for segregation of the oversight functions from those of executive management. Chairman: The Board is led by the Chairman who is responsible for its overall effectiveness in directing the Group. John B. McGuckian has served as Chairman of the Board since 2004 and is responsible for leading the Board, ensuring its effectiveness through; • Setting the Board’s agenda and ensuring that adequate time is available for discussion. • Promoting a culture of openness and debate by facilitating the effective contribution of non-executive Directors in particular and ensuring constructive relations between executive and non-executive Directors. • Ensuring that the Directors receive accurate, timely and clear information. • Ensuring effective communication with shareholders. Chief Executive: The Board has delegated the management of the Group to the Executive Management Team, through the direction of Eamonn Rothwell who has served as Chief Executive since 1992. The Chief Executive is responsible for implementing Board strategy and policies and closely liaises with the Chairman and manages the Group’s relationship with its shareholders. Senior Independent Director: The Board, having considered her experience, appointed Lesley Wiliams as the Senior Independent Director effective from 14 November 2022. The Senior Independent Director acts as a sounding board for the Chairman and serves as an intermediary for the other Directors if necessary. The Senior Independent Director 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. John Sheehan served as the Senior Independent Director up to his retirement as Director on 11 November 2022. Non-executive Directors: Non- executive Directors through their knowledge and experience gained outside the Group constructively challenge and contribute to the development of Group strategy. Non-executive Directors scrutinise the performance of management in meeting agreed goals and objectives and monitor the reporting of performance. They satisfy themselves on the integrity of financial information and that financial controls and systems of risk management are robust and defensible. Through their membership of Committees, they are responsible for determining appropriate levels of remuneration of executive Directors and have a prime role in appointing and, where necessary, removing executive Directors, and in succession planning. Company Secretary: The Company Secretary provides a support role to the Chairman and the Board ensuring good information flows within the Board and its committees and between senior management and non-executive Directors, as well as facilitating induction and assisting with professional development as required and advising the Board through the Chairman on governance matters. Thomas Corcoran has served as Company Secretary since 2001. Committees: During the year ended 31 December 2022, 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 are available on the Group’s website. The reports of the committees are set out at pages 91 to 108. 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. The Nominations Committee reviews on an annual basis the continuing independence of the existing Directors before recommending their going forward for re-election at the AGM. Mr. McGuckian, as Chairman of the Board, is not considered independent under the Code. Mr McGuckian was assessed to have been independent at the date of appointment as Chairman in 2004. The Board has also noted the Code’s requirements around tenure, with Mr. McGuckian having served on the Board for more than nine years since his first appointment. The Board, as advised by the Nomination Committee, considered Mr. McGuckian’s suitability to continue as Chairman of the Board and Director of the Company. The Board assessed Mr. McGuckian to possess an independent mindset with which he carries out his role. The Board also considered the knowledge, skills and experience that he contributes and considered him to be both independent in character and judgement and to be of continued significant benefit to the Board. While conscious of the recommendations of the UK Code, the Board – through the Nomination Committee – considered it in the best interests of the Company and its stakeholders for the Chair to continue for 2023. Mr. McGuckian’s extensive knowledge of the business ensures appropriate challenge and leadership of the Board during this time of strategic expansion of activities. Meetings: The Board agrees a schedule of regular meetings each calendar year and also meets on other occasions Irish Continental Group85 if necessary 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 Team who regularly brief the Board in relation to operational, financial and strategic matters concerning the Group. Director attendances at scheduled meetings are set out below. In addition, there was regular contact and updates between these scheduled meetings. The Chairman also held 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 2022 was as follows: Composition, Succession and Evaluation Composition: The Board comprises two executive and four non-executive Directors. Excluding the Chairman, a majority of the Board comprises independent non-executive Directors in line with the recommendation of the Code. 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 pages 76 to 77. 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. The Board changes that occurred during 2022 further underpinned that diversity of background and refreshment of experience. Member J. B. McGuckian (Chair) E. Rothwell D. Ledwidge J. Sheehan (resigned 11 November 2022) Lesley Williams Dan Clague Éimear Moloney (appointed: 25 August 2022) A 7 7 7 6 7 7 2 B 7 7 7 6 7 7 2 Tenure 35 years 36 years 7 years 9 years 2 years 1.5 years 0.5 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. 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. The Board has established a Nomination Committee to lead the appointments process and plan for orderly succession at Board and senior management level. The Nomination Committee reviews the size, composition and board skillset at least annually taking into consideration the results of the Chairman led evaluation process. The Nomination Committee report is set out on pages 95 to 97. 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. Prior to their nomination as a non-executive Director, an assessment is carried out to determine that they are independent. Non-executive Directors’ independence is thereafter reviewed annually, prior to recommending the resolution for re-election at the AGM. Under the Constitution 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 AGM. 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 AGM of the Company. Éimear Moloney was appointed to the Board on 25 August 2022, Éimear was deemed independent on appointment. John Sheehan resigned as a Director on 11 November 2022 having served nine years as a Director of the Company. These Board changes further underpinned the diversity of background and the opportunity to introduce fresh thinking to the Board processes. 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 Corporate Governance2022 Annual Report and Financial Statements86 Corporate Governance Report Continued brings independent judgement to bear on issues of strategy, risk and performance. The Directors also have access to the Executive Management Team 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. 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 includes identification of improvements in Board procedures and to assess each Director’s suitability for re-election. The process, which is led by the Chairman, is forward looking in nature. On a triennial cycle, an independent external facilitator is engaged to further assist the process, the most recent such engagement relating to the 2021 evaluation. The 2022 evaluation was led by the Chairman. The Company Secretary provided a briefing to the Board outlining key focus areas for consideration by the Directors against key events addressed by the Board during the year together with a review of the matters for action emanating from the previous evaluation. The focus areas included Board composition, Board agenda, Director interaction, quality of information, time allocation and decision making processes. Following the briefing, the Directors were invited to submit any observations on Board processes and performance to the Chairman. The Chairman subsequently reviewed with each Director their observations on the items raised in the presentation. Following the conclusion of the Director engagement process, the Chairman reported to the Board his conclusion from the evaluation process where he 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. The ongoing progress on the matters noted in the prior year was acknowledged, in particular the resumption of site visits and in-person presentations by senior managers. No further matters for action were added as a result of the latest evaluation. Separately, as part of the evaluation process, the non-executive Directors, led by the Senior Independent Director, met initially with the Chairman and then without his presence to evaluate the Chairman’s performance. The Senior Independent Director subsequently reported to the Board that the non-executive Directors had concluded that the Chairman was providing effective leadership of the Board. The results of the evaluation were also considered by the Nominations Committee in their review of Board composition. Diversity The Board has adopted a Board Diversity Policy in compliance with the European Union (Disclosure of non- financial and diversity information by certain large undertakings and Groups) Regulation 2017. The promotion of a diverse Board makes prudent business sense, promotes effective decision-making and ensures stronger corporate governance. The Group seeks to maintain a Board comprised of talented and dedicated Directors with a diverse mix of expertise, experience, skills and backgrounds reflecting the diverse nature of the business environment in which the Group operates. For purposes of Board composition, diversity includes, but is not limited to, age, gender or educational and professional backgrounds. When assessing Board composition or identifying suitable candidates for appointment or re-election to the Board, the Group, through the Nomination Committee, considers candidates on merit against objective criteria having due regard to the benefits of diversity and the needs of the Board. The Nomination Committee will give due regard to diversity when reviewing Board composition and considering Board candidates. The Committee will report annually, in the corporate governance section of the Annual Report, on the process it has used in relation to any Board appointments. Beyond the Board, of 51 individuals holding a managerial position, 11 are female and in relation to the total workforce 39% are female. While the Board acknowledges that these ratios have been relatively static over recent years and the imbalance of this ratio compared to society at large, it is reflective in part of the sector in which the Group operates. While the Board has not set any gender ratio target, it is committed to improving this ratio over time. In that regard the Nomination Committee and Executive Management Team, as appropriate, actively seek out female candidates when undertaking recruitment. To ensure that this is being implemented we have commenced the monitoring of diversity and inclusion metrices across the recruitment process. Audit Risk and Internal Control The Board has described its business model on pages 16 and 17 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 implementation and monitoring 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. Irish Continental Group87 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 movements during the year are set out in notes 19 and 20 to the Financial Statements. Restrictions on the Transfer of Shares 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. For so long and to the extent that any redeemable shares are in issue, transfers of ordinary shares and redeemable shares can, in those circumstances, only be effected where the transfer of one class of share (e.g. ordinary share) involves a simultaneous transfer of the other linked class of shares (e.g. redeemable share) as an ICG Unit. As noted, there are currently no redeemable shares in issue. An ICG Unit comprised one ordinary share and nil redeemable shares at 31 December 2022 and 31 December 2021. 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 91 to 94. The risk management framework and processes including the principal risks and uncertainties identified are set out on pages 60 to 69. 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 their assessment of the prospects for the Group in the Viability Statement on page 110. Reporting 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 Group. 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. 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 98 to 108. 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 2022. 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 111; (ii) Share Option Plans page 107; (iii) Long Term Incentive Plan pages 104 to 105; (iv) Service Contracts pages 106 to 107; and (v) Share-based Payments pages 169 to 171; (vi) Borrowings pages 157 to 160; 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 170,823,142 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 Constitution 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). Corporate Governance2022 Annual Report and Financial Statements88 Corporate Governance Report Continued ICG Units are, in general, freely transferable but, in accordance with the Companies Act 2014 (as amended) and the Constitution, 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: 1. if redeemable shares are in issue, 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 (as described immediately above); 2. a lien is held by the Company; or 3. 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; 4. unless the instrument of transfer is accompanied by the certificate of the shares to which it relates (if any) and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer; or 5. unless the instrument of transfer is in respect of one class only (unless redeemable shares are in issue and the proposed transfer is in respect of ICG Units). 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 (as amended). In line with market practice, members will be asked to renew these authorities at the 2023 AGM. 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 an AGM each year in addition to any other meetings in that year and no more than 15 months may elapse between the date of one AGM and that of the next. The AGM will be held at such time and place as the Directors determine. All General Meetings, other than AGMs, 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. Two or more 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. 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 (as amended), 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 AGM held on 11 May 2022, resolutions were passed whereby 1. 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; and 2. the Directors were authorised until the conclusion of the next AGM, to allot shares up to an aggregate nominal value of 66.66% of the then present issued ordinary share capital and the present authorised but unissued redeemable share capital of the Company subject to the provision that any shares allotted in excess of 33.33% of the then present issued ordinary share capital must be allotted pursuant to a rights issue. Irish Continental Group89 The Company publishes the date of its AGM 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 per cent 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. In the case of an AGM 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 AGM), needs to be given in writing in the manner provided for in the Constitution to all the members, Directors, Secretary, the Auditor for the time being of the Company and to any other person entitled to receive notice under the Companies Act. Voting at any General Meeting is by a show of hands unless a poll is properly demanded. On a show of hands, every member who is present in person or by proxy has one vote regardless of the number of shares held by a shareholder. On a poll, every member who is present in person or by proxy has one vote for each share of which he/she is the holder. A poll may be demanded by the Chairman of the meeting or by at least three members having the right to vote at the meeting or by a member or members representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting or by a member or members holding shares in the Company conferring a right to vote at the meeting, being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right. 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. EU (Shareholders' Rights) Regulations 2020 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, 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 three per cent of the issued share capital of the Company, representing at least three 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. Corporate Governance2022 Annual Report and Financial Statements7. if s/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. 90 Corporate Governance Report Continued 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 AGM. No person, other than a Director retiring at a General Meeting is eligible for appointment as a Director without a recommendation by the Directors for that person’s appointment unless, not less than six or more than 40 clear days before the date of the General Meeting, written notice by a member, duly qualified to be present and vote at the meeting, of the intention to propose the person for appointment and notice in writing signed by the person to be proposed of willingness to act, if so appointed, shall have been given to the Company. The Directors have power to fill a casual vacancy or to appoint an additional Director (within the maximum number of Directors fixed by the 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 AGM following their appointment, when the Director concerned shall retire, but shall be eligible for reappointment at that meeting. Each Director must retire from office no later than the third AGM 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 AGM 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 AGM and following review are being recommended for re-election. A person is disqualified from being a Director, and their office as Director ipso facto vacated, in any of the following circumstances: 1. if s/he is adjudicated bankrupt or being bankrupt has not obtained a certificate of discharge in the relevant jurisdiction; or 2. if in the opinion of a majority of his/ her 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 s/he may discharge his/her duties; or 3. if s/he ceases to be, or is removed as a Director by virtue of any provision of the Acts or the Articles, or s/he becomes prohibited by law from being a Director or is restricted by law in acting as a Director; or 4. if s/he (not being a Director holding for a fixed term an executive office in his/her capacity as a Director) resigns his/her office by notice in writing to the Company; or 5. if s/he is absent for six successive months without permission of the Directors from meetings of the Directors held during that period and the Directors pass a resolution that by reason of such absence s/he has vacated office; or 6. if s/he is removed from office by notice in writing served upon him/ her signed by all his/her co-Directors; if s/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/her and the Company; or Irish Continental GroupReport of the Audit Committee At 31 December 2022, the Committee comprised of three non-executive Directors, all of whom have been determined by the Board to be independent. 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, assures that the Committee as a whole has competence relevant to the sector in which the Group operates. The members’ biographies are set out on pages 76 to 77. The Board has determined that Éimear Moloney has recent and relevant financial experience. Éimear is a qualified chartered accountant and has experience of audit committee membership at other listed companies. The other members of the Committee have wide experience of corporate financial and risk 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. There were three scheduled meetings during the year at which all the then current members attended. In addition, where requested, the Chief Executive Officer, the Chief Financial Officer, Board Chair and other members of the Risk Management Committee also attended. The scheduled meetings normally 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. Dear shareholder, I am pleased to present the Report of the Audit Committee (the Committee) for the year ended 31 December 2022. I have served on the Committee since August 2022 and was appointed as Chair in November 2022. On behalf of the Committee and the Board, I would like to thank my predecessor, John Sheehan, for his service as Chair of the Audit Committee. The Committee plays an important role in ensuring the Group’s financial integrity for shareholders through oversight of the financial reporting process, including the risk and control systems which underlie 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 relevant legislation. Composition The Audit Committee membership during the year is set out in the table below which also details attendance and tenure. Member E. Moloney (appointed Chair: 14 November 2022) (appointed to Committee: 25 August 2022) J. Sheehan (resigned, 11 November 2022) L Williams D. Clague A 1 3 3 3 B 1 3 3 3 Tenure 0.5 years 9 years 1.7 years 1.5 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. 91 Role and Responsibilities The role, responsibilities and duties of the Audit Committee are set out in written terms of reference which are reviewed annually. 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 the financial reporting process including assessment of key estimates, critical accounting judgements, going concern and viability statements. • Advise whether 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 and Company’s position and performance, business model and strategy. • Overseeing the functioning of the internal audit function. • Monitor the effectiveness of the Group’s internal controls and risk management systems, including structures and arrangements supporting the Directors’ Compliance Statement. • 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. Work Performed The principal work undertaken by the Committee during the period under review was focused on the following areas; Financial Reporting The Committee reviewed the Group’s Half Yearly Financial Report for the six months ended 30 June 2022, the Preliminary Statement of Results and Annual Report and Financial Statements, for the financial year ended 31 December 2022 and the two Trading Statements issued during the year. These reviews considered; Corporate Governance2022 Annual Report and Financial Statements92 Report of the Audit Committee Continued • Assessment of the effects of new standards effective for reporting in financial year 2022; • Other than for any new standards, the consistency, appropriateness and application of the Group’s accounting policies; • 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 position and 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. 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 key sources of estimation uncertainty and critical accounting judgements applied in the preparation of the Financial Statements for the financial year ended 31 December 2022 are set out below and also discussed on pages 140 to 142. Key Estimates • 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 at €91.6 million (2021: €140.5 million) are material to the Group and sensitive to actuarial assumptions. The Committee has reviewed actuarial advice received from the Group’s external actuary on the assumptions used by the scheme actuary in estimating the outstanding pension obligations at the year end. 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 and fairly presented. The Committee also noted that for certain schemes, assets exceeded liabilities resulting in a pension surplus at 31 December 2022 of €33.6 million (2021: €6.7 million). The Committee made inquiries of management to ensure that this amount represented a fair estimate of the unconditional right of a refund the Group may expect in the future either by way of a contribution holiday or refund. • 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 may have a significant impact on the annual depreciation and amortisation charge. The Committee reviewed the useful life estimates of significant assets including technological developments, regulatory developments, operating performance and industry scrapping cycles and were satisfied that the estimates used were reasonable. The Committee noted that in respect of one vessel which had reached 25 years from date of construction, that management had reviewed the remaining estimated useful life from 5 years (from an original estimate of 30 years original useful life) to 10 years. While provision for this revision to useful life is set out in the accounting policy for property, plant and equipment, the Committee queried management on the robustness of the reasoning for this extension. Following explanation, the Committee were satisfied with the change in useful life. Critical Accounting Judgements • 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 noted that the profitability of the Irish Ferries branded operations had been materially affected in financial years 2021 and 2020, due to the imposition of government travel restrictions. This decline in profitability had been subsequently assessed as an indication of impairment. Following the lifting of all travel restrictions in early 2022, passenger carryings recovered but remained behind pre- pandemic 2019 levels, which was in line with management expectations as previously modelled in the prior year recoverability assessments. The Committee discussed with management their assessment that the declining trends in market charter rates in the second half of 2022 amounted to an indication of impairment of the Group’s fleet. While the Committee noted that these charter rates remained higher than average 2021 rates, they agreed with management’s decision to perform a recoverability assessment. The Committee reviewed management’s calculations of the recoverable value estimates which were prepared based on the conditions and information available at 31 December 2022. The Committee examined the methodology, key assumptions and key judgements used including the limitations of the independent vessel valuations, the rationale for treating the ferry fleet as a single cash generating unit, growth rates and the discount rate used in the value in use calculations. The Committee also considered management’s views on the likely effect of environmental regulations on premature obsolescence and operating costs. The Committee was satisfied that the recoverability assessment performed at the reporting date was robust, comprehensive and supported the carrying value of the Irish Continental Group 93 ferry fleet as at 31 December 2022. The Committee agreed that no provision for impairment against the carrying value of the Group’s fleet was required at 31 December 2022. • Going concern The Committee reviewed the appropriateness of using a going concern assumption for the preparation of the Group Financial Statements. The Committee noted that with the removal of travel restrictions in early 2022, that the profitability of ferry operations had recovered and that the overall Group was reporting a profit attributable to equity holders of €59.8 million, a level which had exceeded budget expectations and which compared to a loss of €4.9 million in 2021. The Committee reviewed and challenged management on their going concern modelling including assumptions and sensitivities in a number of trading scenarios including the possible effects of reduced volumes over budget levels and higher fuel prices. The Committee also considered existing and future financial resources which could reasonably be expected to be available to the Group on normal market terms. The going concern modelling covered a period of 12 months from the date of approval of the Financial Statements. Following completion of the above, the Committee were satisfied that the Group will have adequate financial resources to continue in operational existence for the foreseeable future and the use of the going concern basis remained appropriate in the preparation of the financial statements. The Going Concern Statement is set out on page 142. Viability Statement The Committee reviewed and challenged management’s assumptions and scenarios together with the calculations supporting the Viability Statement set out on page 110. The Committee also considered the appropriateness of the five year assessment time frame and that the Group’s principal and emerging risks had been appropriately considered. The Committee was satisfied that a robust assessment had been completed and reported this to the Board. Fair, balanced and understandable The Committee reviewed the 2022 Annual Report and Financial Statements to ensure that in its opinion taken as a whole, it is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s position and performance, business model and strategy. Recommendations to the Board Based on the work undertaken, the Committee reported to the Board that the Annual Report and Financial Statements for the year ended 31 December 2022 taken as a whole, is fair, balanced and understandable, and provides the information necessary for shareholders to assess the Group and Company’s position and performance, business model and strategy and recommended that the Annual Report and Financial Statements be approved by the Board. The Committee had also recommended the approval of the Half Yearly Financial Report for the six months ended 30 June 2022 and the Trading Statements issued during 2022. Engagement with Regulators The Committee oversaw management’s engagement with the Irish Auditing and Accounting Supervisory Authority (IAASA) regarding their inquiries into certain aspects of the Annual Report and Financial Statements for the year ended 31 December 2021. While no adverse findings were assessed, the Company provided undertakings regarding additional clarification on certain sustainability metrics and reconciliation of certain APM measures in future financial statements. The Committee believes that it has addressed these undertakings in this 2022 Annual Report. Risk Management and Internal Control The Board is responsible for the Group’s risk management and system of internal control. The Board’s approach to risk management is set out in the Risk Management Report at page 60. The Committee, on behalf of the Board, reviews the effectiveness of the Group’s control environment including internal controls and risk identification and management systems. The Risk management report describes the principal risks and uncertainties faced by the Group. Risks are grouped under strategic, operational, IT system and cyber and financial risks. The risk management system is dynamic and monitors for signals of new emerging risks. During 2022, two areas were being actively monitored; the effect of the war in eastern Europe and Increasing Regulations Over Seafarer Working Conditions. Further details on these are set out in the Risk Management Report at page 60. The Committee oversees the work of the Risk Management Committee (RMC) which coordinates a unified system of ongoing identification, monitoring and reporting of risks throughout the Group. The activities of the RMC are undertaken alongside the activities of Internal Audit. During the year, the Committee met with members of the RMC and presentations were made outlining the work undertaken in managing risk monitoring systems, procedures for ensuring the Group Risk Register is being updated for new and emerging risks and the management of exposure to principal risks. The work of the RMC is also central in putting consideration of risk to the fore in business decision making throughout the Group. The Committee reviewed the updated Risk Appetite Statements prepared by the RMC which were then presented to the Board for approval. 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 meets regularly with Group Internal Audit and the Committee approved the 2022 Internal Audit Plan. Corporate Governance2022 Annual Report and Financial Statements 94 Report of the Audit Committee Continued The Committee undertook a review of the RMC and Internal Audit activities. The Committee noted that the internal audit function had not been resourced in the latter part of the year due to management changes. However, the Committee was satisfied that management had rectified the resourcing issue in early 2023. In the intervening period, existing finance personnel had been used to a limited extent to address any ad-hoc matters which arose. Notwithstanding the internal audit matter, the Committee was satisfied that all other risk management and internal control systems had been in place throughout the financial year. In conducting the review, the Committee acknowledges that the risk management and internal control system is designed to manage and mitigate rather than eliminate risk. The Committee was satisfied that the RMC and Internal Audit (for part of the year) were achieving their objectives and that the Group control environment remains appropriate and effective. This assessment has been reported to the Board. The Committee also reviewed the effectiveness of the arrangements and structures which the Company has designed and put in place to secure material compliance with its Relevant Obligations as defined under Companies Act 2014. Relevant obligations comprise compliance with certain company law and tax obligations. The Committee reported to the Board that the arrangements and structures were sufficient to secure material compliance with its Relevant Obligations. External Audit The Committee is responsible for managing the relationship with the Group’s external auditor and monitoring their performance, objectivity and independence. The Committee evaluates on an annual basis, at the conclusion of the audit, the effectiveness of the external audit process. 2022 Audit Process The Committee met with KPMG prior to the commencement of the audit of the Financial Statements for the financial year ended 31 December 2022. The Committee considered KPMG’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 KPMG 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. KPMG reported their key audit findings to the Committee in March 2023 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 KPMG from the Directors. KPMG’s key audit findings report included control weaknesses noted during their audit, none of which were considered significant deficiencies so as to cause KPMG 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 has also considered feedback from management involved in the audit process regarding interaction with and level of preparedness of the audit team. The Committee also meet with the audit team without the presence of management. The Committee evaluated KPMG’s performance which included an assessment of KPMG’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 in conducting the audit of the 2022 Financial Statements, KPMG were effective, objective and independent. Ethical Standards for Auditors (Ireland) 2020 as issued by IAASA and that, in their professional judgement, they and, where applicable, all KPMG network firms are independent and their objectivity is not compromised. KPMG confirmed to the Company that the lead partner will be rotated every five years to ensure continued objectivity and independence. Mr. Colm O’Sé (who was appointed in 2021) has acted as lead partner for the audit of the 2022 Financial Statements. Auditor Independence The Committee permits the external auditor to provide non-audit services where they are permitted under Part 27 of the Statutory Audits of Companies Act 2014 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 and reporting accountant services in respect of certain pension scheme in respect of the 2022 financial year. This approval was granted on the basis of procedural efficiency. The Committee must also give approval for the employment of any person who was previously employed by the external auditor within the previous two years of proposed employment by the Group. The Audit Committee has considered all relationships between the Company and the external audit firm, KPMG, including the provision of non-audit services as disclosed in note 9 to the financial statements which are within the thresholds set out in Part 27 of the Statutory Audits of Companies Act 2014. The Committee does not consider that those relationships or the level of non- audit fees impair the auditor’s judgement or independence. Based on consideration of the above the Committee concluded that it was satisfied with the performance, objectivity and independence of the external auditor. As auditor, KPMG confirmed to the Company that they comply with the Éimear Moloney Chair of the Audit Committee Irish Continental Group8 March 2023 95 a member of the Committee and Board on 11 November 2022. John had served nine years as a non-executive Director of the Company and I extend our gratitude to him for his service. Committee Membership 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 76 to 77. Member J.B. McGuckian (Chair) J. Sheehan* (resigned 11 November 2022) L. Williams* D. Clague* E. Moloney* (appointed 25 August 2022) E. Rothwell A 2 1 2 2 1 2 B 2 1 2 2 1 2 Tenure 1.5 years 5 years 1.7 years 1.5 years 0.5 years 13 years * Independent Director Column A: the number of scheduled meetings held during the year where the Director was a member of the Committee. Column B: the number of scheduled meetings attended during the year where the Director was a member of the Committee. In addition to the scheduled meeting, there was significant engagement between Committee members throughout the period to progress the Committee’s business. Role and Responsibilities The role, responsibilities and duties of the Committee are set out in written terms of reference and are reviewed annually. 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 lead the process for appointments, ensure plans are in place for orderly succession to both the Board and senior management positions and overseeing the development of a diverse pipeline for succession. The Committee’s effectiveness is evaluated within the overall Board evaluation process outlined on page 86. No matters of concern were noted in relation to the Committee’s effectiveness. Board Composition and Renewal The Committee considered the results of the Board evaluation and the changes to Board composition made during 2022. The Committee was satisfied that the Board continues to be of adequate size and composition to suit the current scale of its operations and has an appropriate balance of skills, knowledge, experience and diversity to enable it to effectively discharge its duties. As outlined in a number of areas of this report, the Committee is placing a particular focus on ensuring greater diversity at Board and senior management level. We are confident the changes we make to succession planning will address this imbalance versus best practice in the periods Report of the Nomination Committee Dear shareholder, I am pleased to present the Report of the Nomination Committee (the Committee) for the year ended 31 December 2022. This Report sets out how the Committee fulfilled its duties under its terms of reference and the UK Corporate Governance Code, the Irish Annex and relevant legislation. At the heart of every organisation are its people, culture and values, which underpins the important role of the Nomination Committee. The Committee sets the framework for the development of an inclusive and high-performing leadership team and workforce. At Board level during 2022, the Committee continued its focus on Board refreshment, with one appointment made. This was a formal and rigorous process, which was designed to ensure the Board’s depth of experience continued to expand. As part of orderly succession and refreshment of the Board, one Director also stepped down during 2022. At the time of writing, the Board is comprised of four non-executive Directors and two executive Directors. With the Board changes which took place during the year there were consequent changes made to the Committees. Newly appointed non- executive Director Éimear Moloney joined the Committee on 25 August 2022. John Sheehan stepped down as Corporate Governance2022 Annual Report and Financial Statements96 Report of the Nomination Committee Continued ahead. Outside of gender and ethnic diversity, as a Committee, we are confident the current Board’s skillset ensures the ability to oversee management and contribute to the development of strategy. the induction process be provided with comprehensive information on the Group’s strategy, structure and performance reporting. They will also be afforded opportunity to meet senior management and visit Group sites. regard for the benefits of diversity. The Committee appointed Éimear Moloney as Director in August 2022 and Mr. John Sheehan resigned as Director in November 2022. The Board gender diversity is currenting 33% female. The Committee notes the Code’s comments on non-executive Director tenure and the tenure profile of the existing non-executive Directors. The average tenure of the non-executive Directors, including the Chairman, is 9.7 years and 1.3 years excluding the Chairman. Appointments The Committee continued a comprehensive search process for future potential candidates to ensure orderly Board refreshment. A number of potential candidates were identified and screened based on an assessment of their skill set and experience, against the future requirements of the Board with due regard to the Board’s diversity policy. Following this process, the Committee made a recommendation to the Board for the appointment of Éimear Moloney as a Director of the Company. Éimear was appointed as a non-executive Director effective from 25 August 2022. No external search agency was engaged for this appointment. All non-executive Directors receive a letter of appointment setting out the terms of the appointment, responsibilities and expected time commitments. Copies of these letters are available for inspection at the Annual General Meeting (AGM) and at the Company’s registered office. In compliance with the provisions of the Code, any person co-opted to the Board during the year will seek re-election at the next AGM together with all the Directors. All newly appointed Directors will as part of Engagement The Committee noted the results on the individual Director re-election resolutions tabled at the 2022 Annual General Meeting. The Committee welcomed the strong voting result in supporting the re-election of all Directors. However, the Committee noted that while the re-election of John B. McGuckian was affirmed, the resolution received 77% support which is below the threshold set in the Code. The Company had engaged extensively with its major shareholders in advance of the 2022 Annual General Meeting. The general consensus was that, notwithstanding Mr. McGuckian’s tenure, that shareholders were supportive of Mr. McGuckian continuing as a Director and Chairman of the Board in the circumstances where the Group faced significant challenges relating to Covid-19 and was undertaking major strategic initiatives. In addition, certain shareholders noted the benefits of retaining Mr. McGuckian as Chair during the period of Board refreshment. The Committee was aware that a minority of shareholders had expressed a dissatisfaction with the Board’s progress on achieving greater gender diversity on the Board, and voted against the re-election of Mr. McGuckian in his role as Chair of the Nominations Committee. The Committee notes that the Board was undergoing a period of renewal and refreshment which was ongoing at the time of the 2022 Annual General Meeting. While the Board has not set diversity targets, its policy is to select candidates based on the required competencies of the role with due Director Independence Outside of the newly appointed Director, the Committee reviewed and recommended to the Board the re-appointment of the remaining Directors at the Company’s AGM. In considering the proposals for the re-election, the Committee had particular regard to the tenure of John B. McGuckian. John has served as Chairman of the Board since 2004 and as a non-executive Director since 1988. This recommendation was proposed following a robust review of the knowledge, skills and experience that he contributes, in the interests of the Company and stakeholders. The Committee assessed him to be both independent in character and judgement and to be of continued significant benefit to the Board. Recognising the provisions of the UK Code, the Committee was also cognisant of the appointment of John well in advance of the revisions to market expectations on Chair tenure. The Committee expects to align with the provisions of the UK Code on this issue in the future; however, at this time, and particularly in light of the strategic expansion of the Group, the Committee determined it appropriate for John to continue as Chair and leader of the Board. The Committee was also satisfied that the role of the Senior Independent Director further ensures clear division between management and oversight. Irish Continental Group97 The Committee did not identify any issues that were likely to impair, or could appear to impair the independence of the non-executive Directors, Lesley Williams, Dan Clague and Éimear Moloney. No Committee member voted on a matter concerning their position as a Director. Inclusion and Diversity The Committee reviewed the processes agreed in respect of workforce engagement described at page 83 and was satisfied that these arrangements remain appropriate to the Group’s circumstances. The Group values diversity and the benefits it can provide in promoting the success of the business. The Board’s Diversity Policy is discussed on page 86. 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. The Group’s gender diversity is set out at page 86. Currently, the female composition of the Board is 33% (2021: 14%), 22% (2021: 21%) among senior managers and 39% (2021: 39%) across the organisation as a whole. While this indicates marginal progress year on year, the Committee continues to focus on improving these ratios. In relation to future Board and senior manager appointments the Committee will actively seek out a greater pool of female candidates for consideration. The Committee has also requested executive management to ensure this requirement is followed for recruitment across all levels of the organisation. External search agencies independent of the Group are engaged to assist where appropriate and their mandates include considerations of diversity. Other No recruitment for senior management positions requiring the input of the Committee took place during the period. John B. McGuckian Chair of the Nomination Committee 8 March 2023 Corporate Governance2022 Annual Report and Financial Statements98 Report of the Remuneration Committee 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; • Will motivate individuals to perform in the best interest of the shareholders; and • Will not encourage individuals to take risks in excess of the Company’s risk appetite. Within this framework the Committee has formulated a Remuneration Policy which was submitted to shareholders at the 2021 AGM by way of an advisory resolution which received 87% approval. This Remuneration Report sets out how we have applied the Remuneration Policy during FY 2022 and will be put to a shareholder vote as an advisory resolution at the 2023 AGM. 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 them to deliver strategy in the interests of our shareholders and wider stakeholders. The committee believes that an approach to remuneration grounded in pay for performance with a bias to long term remuneration delivered in equity is the most effective way of aligning management’s interests to those of our stakeholders. Remuneration levels and awards are based on an individual’s Dear Shareholder, I am pleased present the Directors’ Remuneration Report for year ended 31 December 2022. I have served on the Committee since August 2021 and was appointed as Chair in November 2022. On behalf of the Committee and the Board, I would like to thank my predecessor, John Sheehan, for his service as Chair of the Remuneration Committee. The Remuneration Committee The Remuneration Policy and Framework is overseen by the Remuneration Committee. Committee membership during 2022 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 76 to 77. Role and Responsibilities The role, responsibilities and duties of the Committee are set out in written terms of reference which are reviewed annually. The Terms of Reference are available on the Group’s website www. icg.ie. Member D. Clague (Chair – appointed: 14 November 2022) J. Sheehan (resigned: 11 November 2022) L. Williams E. Moloney (appointed: 25 August 2022) A 3 2 3 1 B 3 2 3 1 Tenure 1.5 years 9 years 1.7 years 0.5 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 Committee met three times during the period with follow up contacts between meetings. The Chairman provided an update to the Board on key matters discussed. contribution to the Company against the background of underlying Company financial performance having regard to comparable companies in both size and complexity. Overview of Performance 2022 was a year where we welcomed a return to growth having faced the twin challenges of the Covid-19 pandemic and Brexit over the prior years. The Group is reporting an operating profit of €66.7 million for 2022 compared to the outturn (before non-trading items) of a €0.2 million loss and €0.8 million profit in 2021 and 2020 respectively. This improvement in performance is principally attributable to returning passenger traffic post pandemic while the Group has also leveraged its recent investments on expanding its operations in both divisions. The performance improvement has also increased cash generated from operations from €67.0 million in 2021 to €132.0 million in 2022. This has been utilised in facilitating the continued investment in our business during 2022 with strategic capital expenditure amount to €57.4 million (2021: €41.7 million) and returns to shareholders of € 73.4 million (2021: €19.8 million) by way of dividends and share buybacks. The Committee acknowledges the strong contribution of the Executive Directors and senior managers during financial year 2022 in delivering the above result, including the actions taken in response to returning passenger flows post pandemic, delivering on the Group’s expansion initiatives and embracing our ESG goals. The level of performance achieved, which exceeded budget expectations, maintained the Group’s strong financial position and provides a platform for future growth. Our approach to remuneration and variable pay seeks to consistently link variable remuneration to performance: when performance is strong, executives will be awarded higher levels of variable pay and when performance is behind where we would want it to be, variable remuneration will be low Irish Continental Group99 or nil. The Committee considers the most important aspect of variable remuneration to be the alignment between it and the interests of shareholders, stakeholders and management. Noting the strong recovery in performance in FY2022 against FY2021, FY2020 and FY2022 budget expectations, the Committee concluded that bonus payouts approaching maximum opportunity were appropriate for 2022 for certain Directors and senior managers. However, other than for the CEO who has a contractual legacy arrangement, the Committee considered it appropriate to make downward adjustments where it considered the financial performance by which a manger was assessed was affected by external factors outside of the manger’s direct control. We are satisfied the Committee’s actions are aligned with the philosophy of our shareholder approved remuneration policy, which favours long-term equity ownership over short- term remuneration. Remuneration Policy and Shareholder Engagement At the 2021 AGM, 87% of voting shareholders supported our proposed remuneration policy, a level at which the Committee is satisfied endorses our arrangements to incentivising Executive Directors. The full Remuneration Policy is available at https://icg.ie/investors/general- meetings/. The Committee having reviewed the Policy during 2022, taking into account feedback on the 2021 Report of the Remuneration Committee, remain satisfied that it continues to be appropriate to the business needs and strategy of the Group. The Policy is next scheduled to be put to an advisory vote of shareholders at the 2025 AGM. The 2021 Report of the Remuneration Committee was put to an advisory vote at the 2022 AGM and was supported by 74% of voting shareholders. We had engaged with major shareholders and their voting advisors and we are aware that some shareholders had raised some or all of the following concerns; Concern Raised Committee Response Terms and disclosure of metrics around CEO Bonus arrangements and potential for uncapped payouts Level of salary increases to executive Directors While the terms of the CEO’s bonus are governed by a contractual agreement from the early days of his appointment, we have since continued to design a remuneration structure which responds to the specific needs of our business, our strategy and the life cycle of our assets. Accepting that the CEO’s incentive scheme is distinct compared to certain market peers, with disclosure of the specific targets potentially impacting us commercially, it has been an effective structure for motivational reward in alignment with the Group’s performance, long-term strategy and shareholder interests. Despite its specificities, the link between pay for performance for the CEO has been demonstrated by the absence of pay-outs for 2020 and 2021 performance, while the EPS performance during the past fiscal year merited a pay-out. We believe focusing on this one aspect of the remuneration policy – a policy which applies to all senior management and not just the CEO – does not recognise the efforts we have made to strengthen our incentive arrangements over the past number of years and the broader impact of the incentive framework on the business. It is a one-off, legacy arrangement that will not apply to the next CEO. Following the in-depth review, the Committee determined that, effective from 1 January 2022, it would increase the salaries of the CEO and CFO by 20% and 26%, respectively to ensure the remuneration arrangements of our executives remain competitive, particularly as the business entered a crucial juncture, in terms of the exiting of the pandemic and executing on the evolution of our expansion strategy. While these were the primary considerations of the Committee, it was also cognisant of using benchmarking data as a reference point in determining the appropriate salary levels for high performing executives. In relation to the CEO, other than for inflationary increases, salary levels were last adjusted in 2008. Corporate Governance2022 Annual Report and Financial Statements100 Report of the Remuneration Committee Continued Concern Raised Committee Response Post-employment holding requirements The Company, while acknowledging that it has not set absolute holding requirements for senior executives who depart the Company, notes its remuneration structures by design since 2013 ensure that any senior executive who leaves employment contractually retains an interest in equity proportional to their variable remuneration awarded in the last five years of employment. The effect of this policy as reported in the 2021 Report was that the CEO and CFO at 31 December 2021 held 19.4 times and 2.4 times their base salary in equity which was subject to a disposal restriction for a weight average profile of 1.5 and 3.1 years respectively, over a period of one to five years. The 31 December 2022 metrics are reported later in this Report. Also, any unvested LTIPS retained by an executive on good leaver terms remain subject to the normal rules of the Performance Share Plan which may create an additional alignment of up to 7 years post-employment. The Committee notes that these post-employment requirements exceed market norms and are part of an enforceable contractual rather than voluntary arrangement. The Committee believes that while not strictly complying with Provision 36 of the UK Corporate Governance Code, that these arrangements meet the objective of the Code and exceed market norms. While acknowledging the above concerns, the Committee also refers below to other aspects of the Company’s Remuneration Policy which create some of the most stringent deferral and holding mechanisms in the Irish and UK markets, including; • A minimum of 50% of annual bonus (after tax liabilities) to be invested in equity, with the Committee exercising discretion to apply a higher percentage in recent years. • Up to a five-year deferral, continuing to apply post-vesting, for the entire portion of the awards reinvested in equity under the annual bonus. • A five-year holding period, continuing to be applied post- employment, following a three-year performance period for awards vesting under the Performance Share Plan, for a total of an eight-year time horizon from grant to release; and • Shareholding guidelines for all executive Directors and members of the Executive Committee of a minimum three times base salary to be achieved within five years of appointment. Workforce Remuneration As a Remuneration Committee, we are always mindful of the extent to which the remuneration of the executives aligns with the experience of our stakeholder groups. The Committee has received regular updates on relevant matters affecting the workforce and have overseen the implementation of a range of measures to help and support its direct employees. The team has performed extremely well managing the return of business post pandemic and the expansion of the Group’s activities. The Committee hopes to oversee further staff development, including reward frameworks that are increasingly aligned with sustainable practices and the development of succession planning. Salary Increases The Committee conducted a review of salary and fixed pay arrangements at the end of 2021, which focused on the importance of remuneration arrangements remaining competitive as the business entered a crucial juncture, in terms of the exiting of the pandemic and executing on the evolution of our strategy. While these were the primary considerations of the Committee, it was also cognisant of using benchmarking data as a reference point in determining the appropriate salary levels for high performing executives. Following the in-depth review, the Committee determined that it would increase the salaries of the CEO and CFO by 20% and 26%, respectively, effective from 1 January 2022. The Committee reviewed these salary levels at the end of 2022 in light of financial performance of the Group’s businesses and the market generally. Acknowledging that the salary rates of the CEO and CFO has been reset earlier in 2022, the Committee considered it appropriate that any salary increase awarded in 2023 should be in line with the increases awarded to the workforce generally. In that respect, increases of 2.5% were awarded to the CEO and CFO effective from 1 January 2023. Consideration of Discretion The Committee reviewed the outcomes of both the annual bonus and long-term incentive plan and considered the results both against the relevant performance targets and the wider internal and external context. As set out earlier in this report, it was Irish Continental Group101 noted that as travel restrictions were lifted in early 2022, the return of pre- pandemic passenger travel patterns contributed to a strong financial performance in the year. In relation to the CEO, the formulaic calculations based on Group performance indicated that a bonus would be payable under his legacy arrangement. Noting that no bonus had been payable in 2020 or 2021 under this arrangement which aligned with overall financial performance of those years, the Committee considered that it would not be appropriate to adjust the formulaic outcome of the 2022 calculations. However, the Committee did require that the full award, rather than the minimum 50%, be invested in equity through the Group’s restricted share scheme which creates a five year disposal restriction. In relation to the CFO, whilst the formulaic outcomes indicated a full bonus opportunity had been achieved, the Committee considered it appropriate to exercise discretion and reduced the formulaic outcome by 26% to account for external factors affecting financial performance not within the control of the Group. Similar downward discretion was exercised in the case of other members of the senior management team. With regard to the vesting outcomes under the long-term incentive plan, the Committee agreed that the formulaic vesting outcomes were appropriate given performance against the three-year targets and concluded that a reduction in vesting outcome was not required. One of the strengths of our approach to remuneration is the market leading deferral requirements which, unlike the vast majority of our listed peers, allows us the flexibility to restrict the disposal of vested awards for up to five years. Integrating ESG Measures Over recent years, there has been significant growth in the focus on ESG and sustainability, with investors and wider stakeholders raising expectations as to how companies are embedding environmental, social and governance criteria into strategies and everyday operations. As outlined elsewhere is this Annual Report, during the last year, the business has significantly advanced its integration of a range of ESG factors into the risk management and strategy frameworks. At this point in our ESG maturity, we are focused on developing frameworks, policies and formally integrating ESG into decision making in all aspects of our business. Where ESG matters are part of a reward structure they are currently assessed in relation to progress in these programmes. As the Group moves through the ESG maturity cycle, the Committee will seek to incorporate measurable targets and outcomes into performance remuneration. Outlook 2022 has been one of recovery following the disruption to our passenger business during 2020 and 2021 due to the effects of travel restrictions imposed to control the spread of the Covid-19 pandemic. 2022 was also a year where the scale of our operations was expanded with the further development of our Dover Calais service commenced in 2021, an increase in the fleet and continued expansion at our terminals commissioning the latest environmentally friendly equipment. 2023 will be a year where we further build upon and leverage these developments. Remuneration Outcomes for executive Directors in 2022 Total Directors’ single figure remuneration for the year was €4,476,000 compared with €1,722,000 in 2021 and details are set in the table below: Performance pay Base salary Restricted shares Cash Benefits Pension Options / PSP1 Fees Total 2022 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 Executive Directors E. Rothwell D. Ledwidge Total for executives Non-executive Directors J. B. McGuckian J. Sheehan L. Williams D. Clague E. Moloney Total for non-executives Total 700 400 1,100 1,380 444 1,824 - - - - - - - - - - - 1,100 1,824 - - - - - - - - - - - 35 22 57 - - - - - - - 60 60 814 335 1,149 - - - 2,929 1,261 4,190 - - - - - - - - - - - - 125 43 50 50 18 286 286 125 43 50 50 18 286 4,476 57 60 1,149 1. 67.5% of the options granted on 6 March 2020 under the PSP are expected to vest during 2023 based on performance to 31 December 2022, subject to continued employment up to the vesting date. The value of any options vesting will be based on the actual share price at date of vesting. For the purposes of the above disclosure, the value of an option has been based on the difference between the option subscription price and the average closing price of an ICG Unit between 1 October and 31 December 2022. Corporate Governance2022 Annual Report and Financial Statements102 Report of the Remuneration Committee Continued Details of Directors’ remuneration for the year ended 31 December 2021 are set out below: Executive Directors E. Rothwell D. Ledwidge Total for executives Non-executive Directors J. B. McGuckian C. Duffy B. O’Kelly J. Sheehan L. Williams D. Clague Total for non-executives Total Performance pay Base salary Restricted shares Cash Benefits Pension Options / PSP1 Fees Total 2021 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 580 318 898 - - - - - - - - 75 75 - - - - - - - - 32 32 - - - - - - - 35 22 57 - - - - - - - - 43 43 - - - - - - - 230 77 307 - - - - - - - 898 75 32 57 43 307 - - - 125 18 50 50 50 17 310 310 845 567 1,412 125 18 50 50 50 17 310 1,722 1. The value of options which vested during 2022 based on financial performance to 31 December 2021 reported in the prior year based on the average closing price of an ICG Unit between 1 October 2020 and 31 December 2020 has been restated based on the actual closing price on the vesting date. The restatement amounted to a decrease to the previously reported benefit in respect of Eamonn Rothwell of €74,000 and in respect of David Ledwidge €25,000. Base Salary The Committee reviewed the salaries of the CEO and CFO against market competitive levels for similar sized ISEQ and FTSE companies during 2021, taking into account the performance of the executive Directors; in particular their leadership of the company through the challenges of Brexit, the Covid-19 pandemic and significant expansion of operations. The Committee noted that these challenges were successfully managed without accessing cash from shareholders, while at the same time paying down debt and returning cash to shareholders. It was also noted that through this period, the Group had positioned itself for further growth underpinning further shareholder value creation over the longer-term. In light of the strong contribution in protecting the resiliency of the business, and to ensure that both executive Directors are retained to execute on the recent significant strategic initiatives, the Committee determined that it would address the gap in salary between the executive Directors and rates in the market. The Committee concluded that it was appropriate in this context to award a 20% increase in annualised base salary to Eamonn Rothwell, CEO. The Committee determined that the proposed salary level was appropriate in the context of the CEO’s experience and performance, and market norms, being at the median level for other ISEQ companies of comparable scale and the FTSE250 more broadly. The previous reassessment of the CEO salary levels, other than inflationary increases was in 2008. The Committee also awarded a 26% increase in annualised base salary to David Ledwidge, CFO, for 2022. The adjustment set the CFO salary level in line with the median level of base pay for ISEQ20 companies of similar market capitalisation, and the lower quartile for other FTSE 250 companies. The Committee concluded that this salary level reflects the CFO’s continued strong contribution and individual performance in his role. Director’s Pension Benefits The aggregate pension benefits attributable to the executive Directors at 31 December 2022 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. D. Ledwidge Total 2022 €’000 1 4 19 Total 2021 €’000 1 4 18 Irish Continental Group103 There were no pension benefits attributable to Eamonn Rothwell as he has reached normal retirement age under the pension scheme rules and pension benefits have vested. With regard to David Ledwidge, costs incurred in relation to defined benefit pension arrangements were €29,000 (2021: €20,000) with a further €31,000 (2021: €23,000) related to the defined contribution pension arrangements. The Company also provides lump sum death in service benefits and the premiums paid during the year amounted to €6,000 and €1,000 in relation to Eamonn Rothwell and David Ledwidge respectively. Executive Directors participation in Group sponsored pension schemes is on similar terms as apply to Group employees in Ireland. Performance Related Pay Eamonn Rothwell Eamonn Rothwell has been with ICG since its inception as a public company and flotation in 1988. As detailed in the Remuneration Policy passed at the 2021 AGM, a legacy contractual arrangement continues to govern 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 and rights issues. The Committee also retains discretion to make adjustments for any non-cash non-trading items. The Company believes that EPS is consistent and transparent. EPS growth drives long- term value creation for all stakeholders and has increased in line with the company’s scaling over the past two decades. EPS is one of the key performance indicators by which the Board assesses the overall performance of the Company and, as such, the Committee deems it an appropriate incentive for the Company’s most senior employee. The Committee reassessed the CEO performance incentive arrangements and in its view the arrangements remain an effective means of driving performance and aligning the interests of the CEO, shareholders and wider stakeholders. The Committee considered the performance of Mr. Rothwell and the significant effort expended in managing the Group’s businesses throughout another year of external challenges. While the lifting of Covid-19 travel restrictions saw a return of passenger volumes, significant increased energy costs and other inflationary pressures created cost challenges to be passed through to customers. The Committee also noted the efforts in further developing and expanding the Group’s strategically significant Dover Calais service, first launched during 2021. Against these developments, the Company also returned €73.4 million to shareholders through a combination of dividends and share buybacks. The Committee assessed the formulaic outcome from the long- standing legacy arrangement and did not consider it appropriate to exercise discretion to adjust the formulaic outcome. The Committee considered that in each of 2020 and 2021, when performance of the Group was negatively affected by external factors outside of the control of the CEO resulting in a nil payout, that they had not exercised discretion to overrule the formulaic outcome. This consistent application of the performance-related pay formula was considered appropriate based on the two key factors, simplicity and performance alignment. When financial performance is strong and shareholder experience is healthy, payouts will accrue. When the converse is the case, performance related pay will be correspondingly reduced to a minor or nil amount, which runs in contrast to more complex schemes commonplace at listed companies. Based on the above considerations, the Committee approved a performance bonus of €1,380,000 be paid to the CEO in line with the formulaic outcome, of which the full amount, rather than the required minimum of 50%, was required to be invested in equity through the Group’s restricted share scheme, which is subject to a disposal restriction of greater than 5 years. David Ledwidge The Committee assessed Mr. Ledwidge’s performance in his role over the period and concluded that Mr. Ledwidge was performing in line with expectations and contributing positively to the longer term development of the Group. The Committee considered it appropriate to retain for Mr. Ledwidge the maximum annual bonus opportunity of 150% current year salary, as per the Remuneration Policy, against the following parameters; • 75% based on Group financial outturn with the targets based off 2023 budget; • 15% based on personal objectives including completion of certain operational projects and input into strategic development; • 10% on the continuing development of an ESG framework into the overall risk framework and enhancement of ESG reporting. Based on the 2022 financial outturns, which exceeded budgeted levels the Committee determined that a full bonus amount of €450,000 was eligible to be paid under the financial outturn element. However, following a holistic evaluation of Company performance and in recognition that certain external factors beyond the direct control of the Group contributed to the strong performance, the Committee reduced the financial portion of the bonus to €330,000. The Committee also assessed the personal objectives set and noted Mr. Ledwidge’s significant effort during the year in managing the Group’s capital facilitating a return of €73.4 million to shareholders and his contribution to strategic initiatives to position the Group for future growth. The Committee further noted the work achieved to date on ESG frameworks and reporting. Taking into account the positive aspects of personal performance, the Committee considered that a full bonus pay-out of €150,000 accrued under these criteria. However, the Committee again, in consideration of the matters discussed above determined it appropriate that this be reduced by 24% to €114,000. Corporate Governance2022 Annual Report and Financial Statements104 Report of the Remuneration Committee Continued The Committee in approving the aggregate bonus of €444,000 required that the full amount, rather the required minimum of 50%, be invested in equity through the Group’s restricted share scheme, which is subject to a disposal restriction of greater than 5 years. Restricted Shares In relation to Mr. Rothwell and Mr. Ledwidge, their full annual bonus award was applied towards the acquisition of 330,935 and 106,474 ICG units respectively which will be held in the employee trust for a period of five years. Long Term Incentive (i) Options expected to vest during 2023 based on performance to 31 December 2022 The Committee has considered the performance conditions attaching to the options granted under the PSP on 6 March 2020 which are tested against Group performance up to 31 December 2022. The 2022 outcomes have been adjusted for the effects of the application of IFRS 16 Leases so that the diluted earnings per share, return on average capital employed and free cash flow ratio metrics align with the definitions per the Plan rules. The overall vesting rate is expected to be 67.5% (2021: 31.1%) and the table below details the expected vesting on each metric. Performance Condition Weighting Threshold Maximum Actual Outcome Adjusted diluted earnings per share Return on average capital employed Free cash flow ratio Total shareholder return • Versus peer group • Versus FTSE 250 30% vesting occurs at threshold performance increasing pro-rata up to the maximum vesting threshold. Vesting will be conditional on the continued employment of the option holders at the vesting date in 2023. At 31 December 2022, there were 1,054,536 outstanding options granted on 6 March 2020, including 297,000 and 122,000 options in favour of Mr. Rothwell and Mr. Ledwidge respectively of which 200,475 and 82,350 are expected to vest during 2023 under the above performance outturns. The gross value of those options expected to vest in favour of the executive Directors based on performance to 31 December 2022 has been included in the total Director remuneration table for year ended 31 December 2022, based on an estimated share price of €4.13, being the average closing price of an ICG Unit between 1 October 2022 and 31 December 2022. (ii) Options Vested during 2022 As reported in last year’s report, the Committee determined, based on performance up to 31 December 2021, the vesting of the options granted under the PSP on 8 March 2019 at an 25% 25% 25% 27.5c 13% 100% 33.4c 20% 130% 33.5c 6.7% 274% 25% out of 25% 0% out of 25% 25% out of 25% 12.5% (30.0%) (8.3%) (5.1%) 12.5% out of 12.5% 12.5% (9.2%) 21.3% (5.1%) 5.0% out of 12.5% exercise price of €0.065 at a vesting rate of 31.1 per cent, vesting 230,859 options in total. Mr. Rothwell held 70,286 of the PSP vested options. Share option remuneration of €230,000 based on the market price at the vesting date has been disclosed in the 2021 remuneration table (adjusting the €304,000 previously disclosed last year which was estimated based on average prices in the last quarter of 2021). Under the rules of the PSP, the 70,286 PSP options which vested were exercised and are subject to retention in trust for a period of five years. Mr. Ledwidge held 23,636 of the PSP vested options. Share option remuneration of €77,000 based on the market price at the vesting date has been disclosed in the 2021 remuneration table (adjusting the €102,000 previously disclosed last year which was estimated based on average prices in the last quarter of 2021). Under the rules of the PSP, the 23,636 PSP options which vested were exercised and 15,364 are subject to retention in trust for a period of five years. The share price at date of vesting was €3.34. (iii) Grants during 2022 The long term incentive scheme applicable for the 2022 financial year was the PSP approved by shareholders on 17 May 2017. The Committee had suspended future awards under the legacy 2009 Share Option Plan which remains in place to facilitate the administration of previously granted options. On 11 March 2022, the Committee granted options over 1,552,500 ICG Units to employees of the Group. These included an annual award of options granted 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. The total number of options granted to Mr. Rothwell and Mr. Ledwidge based on a share price of €3.36 were 416,500 and 178,500 respectively. Vesting of these awards are based on the achievement of the following performance conditions over a three-year vesting period; • Adjusted Diluted Earnings per Share (EPSd) • Return on Average Capital Employed (ROACE) • Free Cash Flow Ratio (FCFR) • Total Shareholder Return (TSR) Irish Continental Group105 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 were calibrated as follows; Vesting Threshold Minimum Maximum 5% 12% 13% 20% 100% 130% Median Top Quartile Adjusted diluted earnings per share Return on average capital employed Free cash flow ratio Total shareholder return The Committee noted in setting the above targets that EPSd for financial year 2021 was negative, largely due to the continuing effect of government imposed travel restrictions. In recognition of the continuing uncertainty around the pattern of returning passengers following the removal of these restrictions and the challenges in setting a base EPSd level, the Committee agreed in relation to the 2022 grants to set base EPSd at 0.1 cent per share. This was consistent with the approach followed in the prior year. The targets relating to the other measures were retained at previous year levels. TSR is measured against a combination of the performance of the FTSE 250 index and a grouping of peer companies comprising DFDS, Tallink Grupp, Viking Line, Air-France KLM Group., Ryanair Group, EasyJet, Getlink, Origin Enterprises, Dalata Hotel Group and C&C Group. The Committee considered the timing of grant of awards in the first quarter of 2022 and whether there were circumstances which may create a perception that participants benefitted from ‘windfall gains’. The Committee noted that in the period leading up to the award date that there was political uncertainty affecting financial markets generally which was not specific to the Company. The Committee further noted that the price used was calculated as per the rules of the scheme and that the timing of the grants was consistent with that of previous grant dates. The Committee did not deem it appropriate to adjust the award amounts having considered these circumstances. As with each award, the Committee will review any outcome at the time of vesting to ensure that there has not been any disproportionate windfall to any participant based on external factors. The 2022 PSP awards granted were calculated based on a share price of €3.36, the closing share price on the day preceding the award date. In 2021, the PSP awards granted were calculated based on a share price of €4.26. Options Held 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: E. Rothwell Option Type Unvested Date of Grant 31-Dec-21 Granted Exercised Lapsed 31-Dec-22 Option Price (€) Earliest Vesting Date Latest Expiry Date Performance Share Plan 1 5-Mar-19 226,000 Performance Share Plan 2 6-Mar-20 297,000 Performance Share Plan 2 12-Mar-21 272,000 - - - Performance Share Plan 2 11-Mar-22 - 416,500 Vested but not yet exercised 5-Mar-15 700,000 - (70,286) (155,714) - 0.065 - - - - - - - - - 297,000 272,000 0.065 6-Mar-23 0.065 12-Mar-24 416,500 0.065 11-Mar-25 700,000 3.58 - 4-Mar-25 D. Ledwidge Option Type Unvested 1,495,000 416,500 (70,286) (155,714) 1,685,500 Date of Grant 31-Dec-21 Granted Exercised Lapsed 31-Dec-22 Option Price (€) Earliest Vesting Date Latest Expiry Date Performance Share Plan 1 05-Mar- 19 76,000 Performance Share Plan 2 6-Mar-20 122,000 - - Performance Share Plan 2 12-Mar-21 111,500 Performance Share Plan 2 11-Mar-22 - 178,500 Vested but not yet exercised 5-Mar-15 150,000 - (23,636) (52,364) - 0.065 - - - - - - - - - 122,000 0.065 6-Mar-23 111,500 0.065 12-Mar-24 178,500 150,000 0.065 11-Mar-25 3.58 - 4-Mar-25 459,500 178,500 (23,636) (52,364) 562,000 1. These are expected to vest during 2023 at a vesting rate of 67% based on performance to 31 December 2022 and the gross value has been included in the Director remuneration schedule. The delivered shares less any permitted sales to discharge tax liabilities, will be held in trust for a period of five years from the exercise date. 2. These will vest and become exercisable three years from the third anniversary of grant in accordance with achievement of the performance conditions set at date of grant. These options will normally have to be exercised on or shortly after the vesting date and the delivered shares, less any permitted sales to discharge tax liabilities, held in trust for a period of five years from the exercise date. - - - - - - Corporate Governance2022 Annual Report and Financial Statements106 Report of the Remuneration Committee Continued Remuneration for executive Directors in 2023 The Committee will continue to apply the existing Remuneration Policy, approved by shareholders in May 2021, during financial year 2023. Base Salary The Committee conducted a review of the salaries of the CEO and CFO against market competitive levels for similar sized ISEQ and FTSE companies during 2021. Taking into account the results of this review and the performance of the executive Directors, salary levels were reset effective from 1 January 2022. The Committee noted the continuing leadership in managing the Group’s businesses post pandemic and the continued expansion of operations. Nevertheless, the Committee noted that these factors had been considered in last year’s review and that a further in-depth review of salaries was not warranted at this time. In recognition of the general level of salary increases awarded to the Group’s employees based in Ireland, the Committee awarded an increase in salaries of 2.5% over existing levels to each of the CEO and CFO. These increases are effective from 1 January 2023. Pension arrangements and other benefits Pension arrangements and other benefits will be unchanged from 2022. Annual Bonus The Committee following review has retained the long-standing legacy CEO bonus arrangements for FY2023. The Committee remains satisfied that the outcomes reflect Group performance under this arrangement, in line with its straightforward alignment structure between Group performance and payouts, with a particular focus on EPS. levels, 10% on ESG related measures and 15% on personal objectives. The Committee retains discretion to adjust the formulaic outcome. Long-term incentive The Committee will make an annual award of options under the PSP in line with the plan limits of 200% of base salary for the CEO and 150% for the CFO. The performance metrics, EPS growth, return on capital employed, cash flow generation and relative TSR will be set at the same levels as for the 2022 awards. 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 of three times base salary. The holding levels are expected to be met within five years from the date of appointment. The Committee considers these minimum holding requirements to exceed market norms. The market value inherent in 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 management at 31 December 2022 as a multiple of base salary at that date are shown in the following table: Salary multiple held Eamonn Rothwell 186.5 times David Ledwidge 3.1 times Other executive management 7.2 times In relation to the CFO, he will be eligible for an annual bonus award with maximum opportunity of 150% of base salary. In line with 2022, any award of bonus is weighted 75% on the Group achieving stretching financial targets, benchmarked against budget 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. During 2022, the Committee reviewed the level of fees payable to non-executive Directors which were last adjusted in January 2017. The Committee considered the increase in scale of the Group’s operation since then, the increased responsibilities of non- executive Directors and the fee level paid by equivalent sized quoted companies. Following this review, the Committee submitted a recommendation to increase the fee payable to the Board Chairman from €125,000 to €150,000 per annum and other non-executive Directors from €50,000 to €65,000. These fee levels were approved by the Board, effective from 1 January 2023. 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 2023 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 Mr. Rothwell, CEO, there is an agreement between the Company and Mr. 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 Mr. Rothwell) he will have the right to extend his notice period to two years or to receive remuneration in lieu thereof. This amendment to Mr. 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. No future executive contracts will include similar change of control provisions. 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 Irish Continental Group107 law, the maximum amount payable upon termination is limited to 12 months equivalent. 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 2009 share option plans (suspended as regards new grants) and the PSP. 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 2022, the total number of options granted, net of options lapsed amounted to 3.9% of the issued share capital of the Company at 31 December 2022. 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 2022 is €1,149,000 (2021: €478,000). Clawback Policy The Committee recognises that there could potentially be circumstances in which performance related pay (either annual bonuses, and / or longer term incentive awards) is paid based on misstated results or inappropriate conduct resulting in material damage to the Company. Whilst the Company has robust management and internal controls in place to minimise any such risk, the Committee has in place formal clawback arrangements for the protection of the Company and its investors. The clawback of performance related pay comprising the annual bonus and PSP awards would apply in certain circumstances including; • a material misstatement of the Company’s financial results; • a material breach of an executive’s contract of employment; • any wilful misconduct, recklessness, and / or fraud resulting in serious injury to the financial condition or business reputation of the Company. For executive Directors and members of the Executive Management Team, a minimum of 50 per cent of the annual bonus will be invested in ICG equity which must be held for a period of five years, which will be subject to clawback for a period of two years per the circumstances noted above. Any awards granted under the PSP 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. Post-employment holdings The Committee, in designing its performance pay initiatives, as explained below, has ensured that executive Directors and senior managers contractually retain an appropriate level of shareholding post- employment. For the past ten years, the Company has had a structure in place under which all equity awarded to executives (either under the annual bonus plan or PSP) is placed in a trust for a period of five years. Executives are restricted from disposing of those shares during this five-year period even in circumstances where they are no longer in the employment of the Company. This ensures strong alignment with investors and other stakeholders’ post-employment and ensures that departing executives retain an interest in the business for a significant period after leaving the Company. Consequently, under the annual bonus scheme a minimum of 50% of an annual award must be invested in shares and held in trust for a holding period of five years. Similarly, any shares delivered pursuant to the vesting of options under the PSP must normally be held in trust for a holding period of five years (for a total time horizon of eight years from date of grant). Therefore, at termination executive Directors and senior management participating in these schemes will contractually retain an interest in shares for up to a period of five years post-employment, proportional to the amount of variable pay awarded over the final five years of employment. At 31 December 2022, the following vested share awards were held in employee trusts relating to executive Directors and members of the executive management team with release dates between January 2023 and January 2028. Corporate Governance2022 Annual Report and Financial Statements108 Report of the Remuneration Committee Continued Eamonn Rothwell David Ledwidge Other executive management No. shares Held in Trust Value €m Salary multiple held Weighted release profile Release timeframe 1,682,753 255,259 1,136,247 7.2 1.1 4.9 10.3 times 2.1 years Jan 2023 to Jan 2028 2.7 times 3.5 years Jan 2023 to Jan 2028 4.6 times 3.5 years Jan 2023 to Jan 2028 The Committee believes that while not setting an absolute post-employment equity retention requirement, that the above arrangements achieve the objective of Provision 36 of the UK Corporate Governance Code and is unique in that it is an enforceable contractual commitment compared to general market practice. External Appointments No executive Director retained any remuneration receivable in relation to external board appointments. Payments to former Directors There were no pension payments or other payments for loss of office paid to any former Directors during the year. Employee Average Remuneration The annual percentage change in payments to Directors and an average full time equivalent employee across the Group over the past five years, together with the annual change in the ISEQ index and Company annual total shareholder return were as follows; Eamonn Rothwell David Ledwidge John B. McGuckian 2022 2021 2020 2019 2018 168.6% (27.7%) (44.0%) 0.0% (74.3%) 76.9% 0.5% 18.0% 7.2% (57.0%) 0.0% 0.0% 0.0% 0.0% 0.0% External Advisers The Committee’s independent advisor during the year was Ellason LLP, who provide advice and external market perspectives on remuneration for the Executive Directors. During the year, this included advice on general remuneration developments and provision of market data on base salaries. Ellason LLP is a member of the UK’s Remuneration Consultants Group and a signatory to its Code of Conduct. Other than the services above, Ellason LLP did not provide any other services to the Group in the period from 1 January 2022 to the date of this report. Market price of shares The closing price of an ICG Unit on Euronext Dublin on 31 December 2022 was €4.28 and the range during the year was €3.20 to €4.75, with an average daily closing price of €4.03. Non-Executive Directors 0.0% 0.0% 0.0% 0.0% 0.0% FTE Employee ISEQ ICG TSR 4.2% 24.2% (4.2%) 2.0% (10.4%) (15.8%) 14.5% 2.7% 31.1% (22.1%) (2.1%) 0.6% (7.0%) 17.2% (24.6%) Dan Clague Chair of the Remuneration Committee 8 March 2023 The payments to Directors and employees include base salaries, overtime, allowances, bonuses, pension costs, other benefits and Directors’ fees paid to or on behalf of employees and Directors together with profits earned on the exercise of share options but exclude employer costs expensed to the Income Statement relating to social welfare contributions. Irish Continental GroupReport of the Directors 109 The Directors present their Report together with the audited Financial Statements of the Group for the financial year ended 31 December 2022. 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 124 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 Strategic Report on pages 4 to 73. 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 vessel design and vessel availability with an emphasis on product improvement, environmental efficiency and achievement of economies of scale. During the reporting period, the Group has worked with external suppliers to adopt new technologies into its operations, both on its vessels and onshore. Dividend and Share Buyback The Company recommenced the payment of dividends during financial year 2022, returning €24.2 million to shareholders. The Company is proposing to pay a final dividend in respect of the financial year ended 31 December 2022 of 9.45 cent per ICG Unit on 9 June 2023 to shareholders on the register at the close of business on 14 May 2023. The cumulative payment to all shareholders in respect of this dividend is estimated at €16.1 million. Irish dividend withholding tax will be deducted where applicable. Payment of this dividend is subject to the approval of shareholders at the AGM scheduled for 11 May 2023. The Company has adopted a progressive approach to returning cash to shareholders, through a combination of dividends and share buybacks. No dividends were paid during the years ended 31 December 2021 and 2020 due to the effects of the Covid-19 pandemic on the financial outturn. The Company during financial year 2022 bought back 12,006,403 (2021: 4,565,000) of its shares, representing 6.5% (2021: 2.4%) of its issued share capital at the beginning of the financial year for a total consideration of €49.2 million (2021: €19.8 million). Further details are contained at note 19 to the financial statements. Dividends are declarable at the discretion of the Directors, and as with buybacks, following assessment of the Company’s performance, its cash resources and distributable reserves. At 31 December 2022, the Company’s retained earnings amounted to €111.0 million, substantially all of which were considered to be distributable. Board of Directors The Company’s Constitution requires that one third of the Directors are required to retire from office at each AGM 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 2023 AGM and offer themselves for re-election. Biographical details of the Directors are set out on pages 76 to 77 of this report and the result of the annual board evaluation is set out on page 86. Éimear Moloney joined the Board on 25 August 2022 and John Sheehan retired from the Board on 11 November 2022. 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. Non-Financial information The Group is not subject to the reporting requirements of the European Union (Disclosure of Non- Financial and Diversity Information by certain large undertakings and groups) Regulations 2017 (as amended). Notwithstanding the Group provides certain non-financial information in its Sustainability and ESG Report contained at pages 36 to 59. Going Concern The Financial Statements have been prepared on the going concern basis. The Directors report that, after making inquiries, they have a reasonable expectation 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 and Company in the context of the economic environment of 2023, the principal risks and uncertainties facing the Group (pages 65 to 69), the Group’s 2023 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. The introduction of measures in response to Covid-19 by governments in the jurisdictions in which we operate services in March 2020 and which continued in various forms throughout the period to January 2022 had a material effect on the Group’s financial results in that period. This was particularly concentrated on our passenger business where international travel was affected resulting in a material reduction in passenger revenues compared to pre-pandemic levels. Following the removal of the last of these restrictions in January 2022, passenger volumes have returned, though at levels less than 2019, the last comparative full year pre-pandemic. The Group’s RoRo, LoLo, chartering and port stevedoring services which were not materially affected by the pandemic effects have continued to operate largely in line with expectations. The Group generated cash from operations of €132.0 million (2021: €67.0 million) in financial year 2022, with free cash flow after maintenance capital expenditures of Corporate Governance2022 Annual Report and Financial Statements110 Report of the Directors Continued €108.0 million (2021: €44.3 million). The Group retained cash balances and committed undrawn facilities at 31 December 2022 of €67.4 million. The leverage covenant level at 31 December 2022 calculated in accordance with the lending agreements, was 1.2 times EBITDA, within maximum permitted levels of 3 times. In the period from 1 January 2023 up to the date of the approval of the financial statements, trading has been performing satisfactorily and largely within expectation. In making their going concern assessment, the Directors have considered a number of trading scenarios including lower trading activity in light of the current economic uncertainty. This modelling assumed maintenance of a full schedule of services and cash management within the terms of the Group’s existing financing arrangements. Based on this modelling, the Directors believe the Group retains sufficient liquidity to operate for at least the period up to March 2024. Viability Statement The Directors have assessed ICG’s viability over a timeframe of five years which the Directors believe 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 continued capital investment commitments related to our operations. In making their assessment, the Directors took account of ICG’s current financial and operational positions and contracted capital expenditure. These positions were then rolled forward based on a set of assumptions on expected outcomes to arrive at a base projection. Sensitivity analysis was then performed on the base projection 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 65 to 69. 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. The process, which was performed by management, was subject to examination and challenge by the Audit Committee and the Board. 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 five year assessment period. Directors’ Compliance Statement The Directors acknowledge that they are responsible for securing compliance by the Company with its Relevant Obligations as defined by 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 with respect to compliance 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 2022, the Directors have reviewed the effectiveness of these arrangements and structures during the financial year to which this Report relates. In discharging its obligations under the Companies Act 2014, as set out above, the Directors have relied on the advice of persons employed by the Company or retained by it under a contract for services, who the Directors believe to have the requisite knowledge and experience to advise the Company on compliance with its Relevant Obligations. Disclosure of Information to Statutory Auditors In accordance with the provisions of Section 330 of the Companies Act 2014, each Director of the Company at the date of approval of this report individually confirms that; • So far as they are aware, there is no relevant audit information, as defined in the Companies Act 2014, of which the Statutory Auditor is unaware; and • They have taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant audit information (as defined) and to ensure that the Statutory Auditor is aware of such information. International Financial Reporting Standards ICG 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 2022 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 strategic, operational, financial and information technology and cyber risks arising in the ordinary course of business. Further details of risks and uncertainties are set out on pages 65 to 69. Irish Continental Group 111 Substantial Shareholdings The latest notifications of interests of 3 per cent or more in the share capital of the Company received by the Company on or before 8 March 2023 and as at 31 December 2022 were as follows: Beneficial Holder as Notified Eamonn Rothwell 8 March 2023 31 December 2022 Number of Units % of Issued Units Number of Units % of Issued Units 30,388,085 17.7% 30,388,085 Wellington Management Company, LLP 18,205,979 10.6% 18,816,956 Kinney Asset Management, LLC 11,606,002 6.7% 11,606,002 Marathon Asset Management, LLP 10,899,056 6.3% 10,899,056 Ameriprise Financial Inc. FMR, LLC Brewin Dolphin Wealth Management 6,517,249 6,229,035 5,895,833 3.8% 3.6% 3.4% 7,633,033 6,229,035 5,895,833 17.7% 11.0% 6.7% 6.3% 4.4% 3.6% 3.4% 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 2022 and 1 January 2022 all of which were beneficial, were as follows: Director John B. McGuckian Eamonn Rothwell David Ledwidge John Sheehan (resigned: 11 November 2022) Lesley Williams Dan Clague Éimear Moloney (appointed: 25 August 2022) Company Secretary Thomas Corcoran ICG Units are explained on page 196 of this report. 31/12/2022 ICG Units 01/01/2022 ICG Units 31/12/2021 Share Options 01/01/2021 Share Options 296,140 296,140 - - 30,496,605 30,095,384 1,685,500 1,495,000 261,757 149,968 562,000 459,500 - 90,000 10,000 10,000 - 10,000 - - - - - - - - - - 388,623 272,780 350,500 506,000 Auditors KPMG were appointed auditor by the shareholders voting on an ordinary resolution tabled at the AGM held on 12 May 2021 and have expressed their willingness to remain in office. Section 383 of the Companies Act 2014 provides for the automatic re- appointment of the auditor of an Irish company at a company’s AGM, unless the auditor has given notice in writing of his unwillingness to be re-appointed or a resolution has been passed at that meeting appointing someone else or providing expressly that the incumbent auditor shall not be re-appointed. As required under Section 381(1) (b) of the Companies Act 2014, the AGM agenda will include a resolution authorising the Directors to fix the remuneration of the auditor. Corporate Governance The Group applies the principles and provisions of The UK Corporate Governance Code (2018) as adopted by Euronext Dublin and the UK Financial Conduct Authority and of the Irish Corporate Governance Annex (the Irish Annex) issued by Euronext Dublin. A Corporate Governance Report is set out on pages 78 to 90 and is incorporated into this Report by cross reference. The Group has established an Audit Committee whose Report is included at pages 91 to 94. 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 18 to 20 and are incorporated into this report by cross reference. Corporate Governance2022 Annual Report and Financial Statements112 Report of the Directors Continued during 2023 through the leveraging of our recent investments and the continued support of all customers. Events after the Reporting Period No events have occurred between 31 December 2022 and the date of approval of these Financial Statements which require to be separately reported. Annual Report and Financial Statements This Annual Report together with the Financial Statements for the financial year ended 31 December 2022 was approved by the Directors on 8 March 2023. The Directors consider 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 Company’s position and performance, business model and strategy. Annual General Meeting Notice of the AGM, which will be held on 11 May 2023, will be notified to shareholders during April 2023. On behalf of the Board Eamonn Rothwell, Director David Ledwidge, Director 8 March 2023 Registered Office: Ferryport, Alexandra Road, Dublin 1, Ireland. Future Developments 2022 was a year of progress with a return to profitability following the challenges presented in the two previous years due to the effects of the Covid-19 pandemic on our passenger business. The improvement of passenger markets through 2022 following the lifting of travel restrictions earlier in the year has provided momentum to an expected recovery to pre-pandemic levels. We look forward to the Ferries Division benefiting from this passenger growth together with the benefit of our increased scale following the recent expansion of services on the Dover – Calais route. In our Container and Terminal business, the recent and ongoing investment in capacity expansion and plant modernisation at our container terminals will provide a platform for both growth and more efficient operations at our Dublin terminal. This will be further aided by the operations at our new Dublin Inland Port facility which commenced during 2022. We note the ever increasing expectations and regulatory requirements to reduce the effects of our operations on the environment. While the Group acknowledges that its operations have an inevitable effect on the environment, reducing this effect is embedded within the Group’s strategy through achievement of efficiencies and reflected in our capital investment program. We remain committed to our decarbonization targets set out in the Sustainability and ESG Report. While geopolitical events have given rise to inflationary pressures and increased volatility in fuel prices, our policy is to pass these through the logistics chain in the form of increased rates. While there is some uncertainty around economic growth rates, we look forward to continued growth Irish Continental GroupDirectors’ Responsibility Statement 113 The Directors are responsible for preparing the Annual Report and the Group and Company financial statements, in accordance with applicable law and regulations. Company law requires the Directors to prepare Group and Company financial statements for each financial 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 applicable law including Article 4 of the IAS Regulation. The Directors have elected to prepare the Company financial statements in accordance with FRS 101 Reduced Disclosure Framework and in accordance with the provisions of the Companies Act 2014. Under company law the Directors must not approve the Group and Company 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’s profit or loss for that year. In preparing each of the Group and Company financial statements, the Directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and estimates that are reasonable and prudent; • state whether applicable Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; • assess the Group and Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and • use the going concern basis of accounting unless they either intend to liquidate the Group or Company or to cease operations, or have no realistic alternative but to do so. The Directors are also required by the Transparency (Directive 2004/109/ EC) Regulations 2007 and the Transparency Rules of the Central Bank of Ireland to include a management report containing a fair review of the business and a description of the principal risks and uncertainties facing the Group. Responsibility statement as required by the Transparency Directive and UK Corporate Governance Code Each of the Directors, whose names and functions are listed on pages 76 and 77 of this Annual Report, confirm that, to the best of each person’s knowledge and belief: • The Group financial statements, The Directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any time the assets, liabilities, financial position and profit or loss of the Company and which enable them to ensure that the financial statements comply with the provision of the Companies Act 2014. The Directors are also responsible for taking all reasonable steps to ensure such records are kept by its subsidiaries which enable them to ensure that the financial statements of the Group comply with the provisions of the Companies Act 2014 including Article 4 of the IAS Regulation. They are responsible for such internal controls as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsible for safeguarding the assets of the Group, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are also responsible for preparing a Directors’ Report that complies with the requirements of the Companies Act 2014. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s and Company’s website www.icg.ie. Legislation in the Republic of Ireland concerning the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. prepared in accordance with IFRS as adopted by the European Union and the Company financial statements prepared in accordance with FRS 101 Reduced Disclosure Framework, give a true and fair view of the assets, liabilities, and financial position of the Group and Company at 31 December 2022 and of the profit or loss of the Group for the year then ended; • The Directors’ Report contained in the Annual Report includes a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risk and uncertainties that they face; and • The Annual Report and financial statements, taken as a whole, provides the information necessary to assess the Group’s performance, business model and strategy and is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy. On behalf of the Board Eamonn Rothwell, Director David Ledwidge, Director Corporate Governance2022 Annual Report and Financial Statements114 Independent Auditor’s Report Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Financial Statements 116 124 125 126 127 129 130 FINANCIAL STATEMENTS Irish Continental Group115 Financial Statements2022 Annual Report and Financial Statements116 Independent Auditor’s Report to the Members of Irish Continental Group plc Report on the audit of the financial statements Opinion We have audited the financial statements of Irish Continental Group plc (‘the Company’) and its consolidated undertakings (‘the Group’) for the year ended 31 December 2022 set out on pages 124 to 193, contained within the reporting package 635400FQKB6QXERQOC74- 2022-12-31-en.zip, which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows; Company Statement of Financial Position, Company Statement of Changes in Equity and related notes, including the summary of significant accounting policies set out in note 2. The financial reporting framework that has been applied in their preparation is Irish Law, including the Commission Delegated Regulation 2019/815 regarding the single electronic reporting format (ESEF) and International Financial Reporting Standards (IFRS) as adopted by the European Union and, as regards the Company financial statements, as applied in accordance with the provisions of the Companies Act 2014. In our opinion: • the financial statements give a true and fair view of the assets, liabilities and financial position of the Group and Company as at 31 December 2022 and of the Group’s profit for the year then ended; • the Group financial statements have been properly prepared in accordance with IFRS as adopted by the European Union; • the Company financial statements have been properly prepared in accordance with IFRS as adopted by the European Union, as applied in accordance with the provisions of the Companies Act 2014; and • the Group and Company financial statements have been properly prepared in accordance with the requirements of the Companies Act 2014 and, as regards the Group financial statements, Article 4 of the IAS Regulation. 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 further described in the Auditor’s Responsibilities section of our report. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is consistent with our report to the Audit Committee. We were appointed as auditor by the shareholders on 12 May 2021. The period of total uninterrupted engagement is the year ended 31 December 2022. We have fulfilled our ethical responsibilities under, and we remained independent of the Group in accordance with, ethical requirements applicable in Ireland, including the Ethical Standard issued by the Irish Auditing and Accounting Supervisory Authority (IAASA) as applied to public interest entities. No non-audit services prohibited by that standard were provided. Conclusions relating to going concern In auditing the financial statements, we have concluded that the director’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the director’s assessment of the Group’s and Company’s ability to continue to adopt the going concern basis of accounting included: • Understanding the Group’s process around the going concern assessment performed by management; • Agreeing the underlying cash flow projections to Board approved forecasts, understanding how these forecasts are compiled; • Testing of the clerical accuracy of management’s going concern model; • Evaluating the key assumptions within management’s forecasts; • Assessing whether the plausible downside scenario prepared by management appropriately considered the principal risks facing the business; • Evaluating the feasibility of management’s mitigating actions in the plausible downside scenario; • Evaluating management’s assessment of the Group’s ability to comply with debt covenants; and • Assessing the appropriateness of the going concern disclosures by evaluating the consistency with management’s assessment and for compliance with the relevant reporting requirements. Irish Continental Group117 Secondly, the Group is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as those most likely to have such an effect: health and safety, anti-bribery, employment law, environmental regulation, maritime law, liquidity and certain aspects of company legislation. Auditing standards limit the required audit procedures to identify non- compliance with these non-direct laws and regulations to inquiry of the directors and inspection of regulatory and legal correspondence, if any. These limited procedures did not identify actual or suspected non-compliance. We assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. As required by auditing standards, we performed procedures to address the risk of management override of controls and the risk of fraudulent revenue recognition. We did not identify any additional fraud risks. • Inquiring of directors, the Audit Committee and internal audit as to the Group’s policies and procedures to prevent and detect fraud, including the internal audit function, and the Group’s channel for “whistleblowing”, as well as whether they have knowledge of any actual, suspected or alleged fraud; • Inquiring of directors and the Audit Committee regarding their assessment of the risk that the financial statements may be materially misstated due to irregularities, including fraud; • Inspecting selected regulatory and legal correspondence; • Reading Board and Audit Committee minutes; • Considering remuneration incentive schemes and performance targets for management; and • Performing planning analytical procedures to identify any usual or unexpected relationships. We discussed identified laws and regulations, fraud risk factors and the need to remain alert among the audit team. Firstly, the Group is subject to laws and regulations that directly affect the financial statements including companies and financial reporting legislation, taxation legislation etc. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items, including assessing the financial statement disclosures and agreeing them to supporting documentation when necessary. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group or the Company’s ability to continue as a going concern for a period of at least twelve months from the date when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. In relation to the Group and the Company’s reporting on how they have applied the UK Corporate Governance Code and the Irish Corporate Governance Annex, we have nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting. Detecting irregularities including fraud We identified the areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements and risks of material misstatement due to fraud, using our understanding of the entity’s industry, regulatory environment and other external factors and inquiry with the directors. In addition, our risk assessment procedures included: • Inquiring with the directors and other management as to the Group’s policies and procedures regarding compliance with laws and regulations, identifying, evaluating and accounting for litigation and claims, as well as whether they have knowledge of non-compliance or instances of litigation or claims; Financial Statements2022 Annual Report and Financial Statements118 Independent Auditor’s Report to the Members of Irish Continental Group plc Continued In response to the fraud risks, we also performed procedures including: • Identifying journal entries to test based on risk criteria and comparing the identified entries to supporting documentation; • Evaluating the business purpose of significant unusual transactions; • Assessing significant accounting estimates for bias; and • Assessing the disclosures in the financial statements. As the Group is regulated, our assessment of risks involved obtaining an understanding of the legal and regulatory framework that the Group operates and gaining an understanding of the control environment including the entity’s procedures for complying with regulatory requirements. Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remains a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non- compliance and cannot be expected to detect non-compliance with all laws and regulations. Key audit matters: our assessment of risks of material misstatement Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, 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. In arriving at our audit opinion above, the key audit matters, in decreasing order of audit significance, were as follows (unchanged from 2021): Group key audit matters Valuation of vessels – Group €320.3m (2021: €294.1m) and Company €138.8m (2021: €144.4m) Refer to note 2 (accounting policy), note 3 (Critical accounting judgements and key sources of estimation uncertainty) and notes 12 and 39 (Group and Company financial disclosures respectively) Irish Continental Group119 The key audit matter How the matter was addressed in our audit Property, plant and equipment amounted to €362.3 million (Company: €139.1 million) as of 31 December 2022, of which €320.3 million (Company: €138.8 million) related to owned vessels. The vessel-related depreciation charge for the year ended 31 December 2022 was €34.7 million (Company: €5.7 million). We identified the valuation of vessels as a key audit matter. This matter consists of: 1. the evaluation of the key assumptions used in estimating the periodic depreciation of vessels, including the key assumptions relating to useful economic life and expected residual values; and 2. the identification of the Group’s ferry fleet as a single Cash Generating Unit and the assessment of the recoverable value of the Group’s vessels as part of the impairment review, including the selection of key assumptions regarding future revenue and future costs. We obtained and documented an understanding of the Group’s process and tested the design and implementation of the relevant control in place over the Group’s process to value vessels including the control relating to the development of the assumptions in relation to the useful economic life and expected residual values together with the calculation of the recoverable values of vessels. In respect of part 1) of the key audit matter, we assessed the estimated useful lives and estimated residual values assumptions by comparing; • the estimated useful lives to the Group’s own experience of disposals of vessels and to industry benchmarks relating to the lives of ships that were scrapped during the financial year, and • the estimated residual values of vessels to industry benchmarks relating to the value of scrap metal. In respect of part 2) of the key audit matter, we assessed the accuracy of the Group’s calculations used in assessing those assets subject to impairment testing and considered whether the assumptions and methodology applied to the assets tested were reasonable and appropriate. We evaluated the key assumptions used in the Group’s value in use calculations with regard to those assets subject to impairment assessment by: • Challenging the Group’s identification of its ferry fleet as a single Cash Generating Unit by assessing its basis and conclusions for same including the nature of the assets, the interdependence of the vessels and the routes they are used for, and the transferability of the vessels between routes; • Assessing the reasonability of the key assumptions made by the Group regarding future revenue and future costs, including in particular container vessel charter rates and fuel costs; • Comparing the future cash flow projections used in the value in use calculation to the projections used in the Group’s going concern and Viability Statement analyses; • Assessing other non key inputs used in the value in use calculation in respect of future revenues, costs and other cash flows by comparing them to past performance and known contracted future cash flows, and performing reasonability assessments on uncontracted future cash flows; • Challenging the completeness of future cash outflows given known future industry developments, including those relating to climate change mitigation measures and other related regulations; • Assessing the reasonability of the discount rate used in calculating the present value of the future cash flows with reference to the Group’s cost of capital. Financial Statements2022 Annual Report and Financial Statements120 Independent Auditor’s Report to the Members of Irish Continental Group plc Continued The key audit matter How the matter was addressed in our audit We performed sensitivity analysis over the Group’s key assumptions with regard to cash flows and discount rate, to assess the impact of changes to those key assumptions on the Group’s determination of the recoverability of vessels. We inspected asset valuations obtained from experts engaged by the Group and considered whether they supported the Group’s assessment of impairment at 31 December 2022. We evaluated the completeness, accuracy and relevance of disclosures required by IAS 36, including disclosures about sensitivities and major sources of estimation uncertainty. As a result of our work performed, we found that the judgements made by the Group in relation to: • the key assumptions used in estimating the periodic depreciation of vessels relating to the expected useful life, the expected residual values; and • the identification of the Group’s ferry fleet as a single Cash Generating Unit and assessment of the recoverable value of vessels including key assumptions regarding future revenue and future costs were reasonable. We found the related disclosures to be appropriate. Valuation of net defined benefit pension asset – Group only Refer to note 2 (accounting policy), note 3 (Critical accounting judgements and key sources of estimation uncertainty) and note 31 (financial disclosures) Valuation of the net defined benefit pension asset of €33.2m consisting of pension assets of €124.8m and liabilities of €91.6m (2021 – net pension asset of €5.3m consisting of pension assets of €145.8m and liabilities of €140.5m) The key audit matter How the matter was addressed in our audit The Group operates a number of defined benefit pension schemes. We obtained and documented our understanding of the process in place to value the defined benefit pension schemes, including the selection of actuarial assumptions used, in particular the discount rate used. The valuation of such schemes requires judgement and is subject to volatility arising from movements in actuarial assumptions and the selection of same. We consider that the valuation of the net defined benefit pension assets includes estimation uncertainty in relation to the key assumptions used, in particular the discount rate. In addition, the valuation of the net defined benefit pension asset is sensitive to changes in those key assumptions applied. We engaged internal KPMG actuarial specialists to inspect the valuation assessments and key assumptions applied throughout the Group. We made inquiries of management to understand the key assumptions made in calculating the net defined benefit pension asset and we tested the design and implementation of the relevant control in place. We challenged, with the support of our actuarial specialist, the key actuarial assumptions applied in the calculation of the valuation of the defined benefit pension asset. The most significant judgements related to the evaluation of the appropriateness of the discount rates assumptions. We also assessed the inflation rates and mortality/life expectancies used. This included a comparison of these assumptions against externally available benchmarks. We also considered the adequacy of the Group’s disclosures in respect of the sensitivity of the net defined benefit pension asset to these assumptions. We found the assumptions used in, and the resulting valuation of the net defined benefit pension asset to be reasonable and the related disclosures to be adequate. Irish Continental Group121 Company key audit matter In addition to the two matters noted above which applied to the Group and Company, the following additional key audit matter applied to the Company only: Valuation of investment in subsidiaries €16.5m (2021: €14.4m) Refer to note 37 (accounting policy) and note 41 (financial disclosures) The key audit matter How the matter was addressed in our audit Investments in subsidiary undertakings are carried on the Company balance sheet at cost less impairment. There is a risk of impairment in respect of the carrying value of these investments if the future performance and cashflows of such subsidiaries is not sufficient to support the carrying value of the Company’s investments. We focused on this matter due to the materiality of the balance in the context of the Company balance sheet and the uncertainty associated with assumptions used in forecasting future performance and cashflows. We obtained and documented our understanding of management’s process in place for monitoring the carrying values of investments in subsidiaries. We considered management’s assessment of impairment indicators by comparing the carrying value of investments in the Company’s Balance Sheet to the net assets of the subsidiary financial statements and to the market capitalisation of the Company. We compared the carrying value of investments in the Company’s subsidiary undertakings to the net assets of each subsidiary and to the market capitalisation of the Company. We considered the audit procedures performed in relation to the impairment testing performed by management over the carrying value of vessels as outlined in the key audit matter above, in particular the assumptions relating to the forecasting of future performance and cashflows. As a result of our audit work performed, we found that management’s assessment of the valuation of investments in subsidiary undertakings to be appropriate. Our application of materiality and an overview of the scope of our audit Materiality for the Group financial statements and Company financial statements as a whole was set at €2.85m (2021: €2.5m) and €1.5m (2021: €1.5m) respectively, determined with reference to benchmarks of profit before tax (2021: total revenue) for the Group and total assets for the Company (of which it represents 5% of profit before tax (2021: 0.75% of total revenue) and 0.9% (2021: 0.5%) respectively. In applying our judgement to determine the most appropriate benchmark, the factor, which had the most significant impact was our understanding that the principal item on which the attention of the users of the Group’s financial statements tends to be focused on is, profit before tax. Profit before tax is the principal item used by Management in assessing performance. In applying our judgement in determining the percentage to be applied to the benchmark, we considered that the Group has a high public profile and operates in a regulated environment and has debt arrangements which include covenants linked to operating results. We consider profit before tax to be the most appropriate benchmark for 2022 and the most representative benchmark for the financial performance of the Group. This represents a change from the prior year. We used total revenue as the benchmark in 2021 due to the impact of Covid-19 on the Group’s performance. However, as performance fluctuations and associated uncertainties eased in 2022, we reverted to profit before tax as the most appropriate benchmark for investors. In applying our judgement in determining the most appropriate benchmark for Company materiality, we considered the elements of the financial statements and the nature of the Company and the fact that the Company is an investment holding company for the Group. In applying our judgement in determining the percentage to be applied to the benchmark, we considered that the Company is listed and has a high public profile. Performance materiality for the Group financial statements and Company financial statements was set at 75% (2021: 75%) of materiality for the financial statements as a whole, which equates to €2.1m (2021: €1.9m) and €1.25m (2021: €1.25m) respectively. We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall Financial Statements2022 Annual Report and Financial Statements122 Independent Auditor’s Report to the Members of Irish Continental Group plc Continued materiality. In applying our judgement in determining performance materiality, we considered a number of factors including; the low number and value of misstatements detected and the low number and severity of deficiencies in control activities identified in the prior year financial statement audit. We reported to the Audit Committee any corrected or uncorrected identified misstatements exceeding €150,000 (2021: €150,000), in addition to other identified misstatements that warranted reporting on qualitative grounds. Of the Group’s 12 reporting components, we subjected all to full scope audits for group purposes. The structure of the Group’s finance function is such that certain transactions and balances are accounted for by the central Group finance team, with the remainder accounted for in the Group’s components. We performed comprehensive audit procedures, including those in relation to the key audit matters as set out above, on those transactions accounted for at Group and component level. Our audits covered 100% of total Group revenue and 100% of Group total assets, including 100% of the Company’s revenue and total assets. The work on all components was performed by the Group team. The audits undertaken for Group reporting purposes at the key reporting components were all performed to component materiality levels. These component materiality levels were set individually for each component and ranged from €27,000 to €2.2 million. The Group audit team were also auditors to all of the Group’s significant components. Our audit was undertaken to the materiality and performance materiality level specified above and was all performed by a single engagement team in Dublin. Other information The directors are responsible for the other information presented in the Annual Report together with the financial statements. The other information comprises the information included in the directors’ Report, the Strategic Report, the Corporate Governance Report and the Investor and Other Information. The financial statements and our auditor’s report thereon do not comprise part of the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work we have not identified material misstatements in the other information. Based solely on our work on the other information undertaken during the course of the audit, we report that: • we have not identified material misstatements in the directors’ report; • in our opinion, the information given in the directors’ report is consistent with the financial statements; • in our opinion, the directors’ report has been prepared in accordance with the Companies Act 2014. Corporate Governance Report We have reviewed the directors’ statement in relation to going concern, longer-term viability, that part of the Corporate Governance Report relating to the Company’s compliance with the provisions of the UK Corporate Governance Code and the Irish Corporate Governance Annex specified for our review by the Listing Rules of Euronext Dublin and the UK Listing Authority. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Report is materially consistent with the financial statements and our knowledge obtained during the audit: • Directors' statement with regards the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified set out on page 93; • Directors’ explanation as to their assessment of the Group's prospects, the period this assessment covers and why the period is appropriate set out on page 93; • Director’s statement on whether it has a reasonable expectation that the Group will be able to continue in operation and meets its liabilities set out on page 93; • Directors' statement on fair, balanced and understandable and the information necessary for shareholders to assess the Group's position and performance, business model and strategy set out on page 93; • Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks and the disclosures in the annual report that describe the principal risks and the procedures in place to identify emerging risks and explain how they are being managed or mitigated set out on page 62; • Section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on page 86; and; • Section describing the work of the Audit Committee set out on page 91. The Listing Rules of Euronext Dublin also requires us to review certain elements of disclosures in the report to shareholders by the Board of Directors’ remuneration committee. We have nothing to report in this regard. Irish Continental Group123 In addition as required by the Companies Act 2014, we report, in relation to information given in the Corporate Governance Report on pages 78 to 90, that: We have nothing to report on other matters on which we are required to report by exception The Companies Act 2014 requires us to report to you if, in our opinion: 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. A fuller description of our responsibilities is provided on IAASA’s website at https://iaasa.ie/publications/ description-of-the-auditors- responsibilities-for-the-audit-of-the- financial-statements/. The purpose of our audit work and to whom we owe our responsibilities Our 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. Colm O’Sé for and on behalf of KPMG Chartered Accountants, Statutory Audit Firm 1 Stokes Place St. Stephen’s Green Dublin 2 D02 DE03 9 March 2023 • based on the work undertaken for our audit, in our opinion, the description of the main features of internal control and risk management systems in relation to the financial reporting process and information relating to voting rights and other matters required by the European Communities (Takeover Bids (Directive 2004/EC) Regulations 2006 and specified for our consideration, is consistent with the financial statements and has been prepared in accordance with the Act; • based on our knowledge and understanding of the Company and its environment obtained in the course of our audit, we have not identified any material misstatements in that information; and • the Corporate Governance Report contains the information required by the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017. We also report that, based on work undertaken for our audit, the information required by the Act is contained in the Corporate Governance Report. We also report that, based on work undertaken for our audit, the information required by the Act is contained in the Corporate Governance Report. Our opinions on other matters prescribed by the Companies Act 2014 are unmodified 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 and the financial statements are in agreement with the accounting records. • the disclosures of directors’ remuneration and transactions required by Sections 305 to 312 of the Act are not made; • the Company has not provided the information required by Section 1110N in relation to its remuneration report for the financial year 31 December 2021. We have nothing to report in this regard. Respective responsibilities and restrictions on use Responsibilities of directors for the financial statements As explained more fully in the directors’ responsibilities statement set out on page 113, the directors are responsible for: the preparation of the financial statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group and 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 they either intend to liquidate the Group or 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 Financial Statements2022 Annual Report and Financial Statements 124 Irish Continental Group Consolidated Income Statement for the year ended 31 December 2022 Revenue Depreciation and amortisation Employee beneﬁts expense Other operating expenses Operating proﬁt / (loss) Finance income Finance costs Proﬁt / (loss) before tax Income tax expense Proﬁt / (loss) for the ﬁnancial year: all attributable to equity holders of the parent Earnings per share – expressed in euro cent per share Basic Diluted Notes 4 9 5 9 6 7 8 9 11 11 2022 €m 584.9 (60.5) (26.8) (430.9) 66.7 0.1 (4.3) 62.5 (2.7) 2021 €m 334.5 (52.5) (20.8) (261.4) (0.2) 0.1 (4.0) (4.1) (0.8) 59.8 (4.9) 33.6 33.2 (2.6) (2.6) 2022 Annual Report and Financial Statements Financial Statements 125 Consolidated Statement of Comprehensive Income for the year ended 31 December 2022 Proﬁt / (loss) for the ﬁnancial year Items that may be reclassiﬁed subsequently to proﬁt or loss: Currency translation adjustment Items that will not be reclassiﬁed subsequently to proﬁt or loss: Actuarial gain on deﬁned beneﬁt obligations Deferred tax on deﬁned beneﬁt obligations Other comprehensive income for the ﬁnancial year Total comprehensive income for the ﬁnancial year: all attributable to equity holders of the parent Notes 31 viii 24 2022 €m 59.8 2021 €m (4.9) (2.5) 1.3 29.4 (2.4) 24.5 84.3 7.1 (0.9) 7.5 2.6 126 Irish Continental Group Consolidated Statement of Financial Position as at 31 December 2022 Assets Non-current assets Property, plant and equipment Intangible assets Right-of-use assets Retirement beneﬁt surplus Finance lease receivable Deferred tax asset 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 Lease liabilities Deferred tax liabilities Provisions Retirement beneﬁt obligation Current liabilities Borrowings Lease liabilities Trade and other payables Provisions Total liabilities Total equity and liabilities Notes 12 13 14 31 iv 15 24 16 17 18 19 20 20 21 22 24 26 31 iv 21 22 25 26 2022 €m 2021 €m 362.3 328.2 1.9 41.4 33.6 10.5 0.1 1.9 57.2 6.7 13.6 0.1 449.8 407.7 5.2 79.9 39.0 124.1 573.9 11.1 20.5 (8.2) 237.4 260.8 160.4 30.7 3.6 1.1 0.4 196.2 7.3 11.7 96.2 1.7 116.9 313.1 573.9 3.8 61.9 38.5 104.2 511.9 11.9 20.4 (8.1) 225.5 249.7 115.8 37.5 1.3 0.2 1.4 156.2 7.3 20.1 75.5 3.1 106.0 262.2 511.9 The Financial Statements were approved by the Board of Directors on 8 March 2023 and signed on its behalf by: Eamonn Rothwell Director David Ledwidge Director 2022 Annual Report and Financial Statements Financial Statements 127 Consolidated Statement of Changes in Equity For the year ended 31 December 2022 Share Capital €m Undenominated Share Share Capital Options Translation Premium Reserves Reserve Reserve Retained Earnings €m €m €m Total €m Balance at 1 January 2022 11.9 20.4 Proﬁt for the ﬁnancial year Other comprehensive income Total comprehensive income for the ﬁnancial year Employee share-based payments expense Share issue Dividends Share buyback Settlement of employee equity plans through market purchase Transferred to retained earnings on exercise of share options Reserve movements in the year Balance at 31 December 2022 - - - - - - (0.8) - - (0.8) 11.1 - - - - 0.1 - - - - 0.1 20.5 €m 7.8 - - - - - - 0.8 - - 0.8 8.6 €m 4.7 - - - 3.0 - - - - (1.4) 1.6 6.3 (20.6) 225.5 249.7 - (2.5) 59.8 27.0 59.8 24.5 (2.5) 86.8 84.3 - - - - - - (2.5) - - (24.2) (49.2) 3.0 0.1 (24.2) (49.2) (2.9) (2.9) 1.4 11.9 - 11.1 (23.1) 237.4 260.8 128 Irish Continental Group Consolidated Statement of Changes in Equity For the year ended 31 December 2021 Balance at 1 January 2021 Loss for the ﬁnancial year Other comprehensive income Total comprehensive income for the ﬁnancial year Employee share-based payments expense Share issue Share buyback Settlement of employee equity plans through market purchase Transferred to retained earnings on exercise of share options Reserve movements in the year Balance at 31 December 2021 Share Capital €m 12.2 - - - - - (0.3) - - (0.3) 11.9 Undenominated Share Share Capital Options Translation Premium Reserves Reserve Reserve Retained Earnings €m 19.7 - - - - 0.7 - - - 0.7 20.4 €m 7.5 - - - - - 0.3 - - 0.3 7.8 €m 5.1 - - - 1.3 - - - (1.7) (0.4) €m €m Total €m (21.9) 243.3 265.9 - 1.3 1.3 - - - - - (4.9) 6.2 1.3 - - (4.9) 7.5 2.6 1.3 0.7 (19.8) (19.8) (1.0) 1.7 (1.0) - 1.3 (17.8) (16.2) 4.7 (20.6) 225.5 249.7 2022 Annual Report and Financial Statements Financial Statements 129 Consolidated Statement of Cash Flows for the financial year ended 31 December 2022 Proﬁt / (loss) for the ﬁnancial year Adjustments for: Finance costs (net) Income tax expense Retirement beneﬁt scheme movements Depreciation of property, plant and equipment Amortisation of intangible assets Depreciation of right-of-use assets Share-based payment expense (Decrease) / increase in provisions Working capital movements Cash generated from operations Income taxes paid Interest paid Net cash inﬂow from operating activities Cash ﬂow from investing activities Proceeds on disposal of property, plant and equipment Lease inception costs Purchases of property, plant and equipment and intangible assets Net cash outﬂow from investing activities Cash ﬂow from ﬁnancing activities Share buyback Dividends Repayments of leases liabilities Repayments of bank loans Drawdown of bank loans Settlement of employee equity plans through market purchases Proceeds on issue of ordinary share capital Net cash outﬂow from ﬁnancing activities Net increase / (decrease) 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 Notes 33 33 33 33 18 2022 €m 59.8 4.2 2.7 1.1 38.5 0.4 21.6 3.0 (0.5) 1.2 132.0 (1.7) (4.0) 126.3 3.0 - (75.7) (72.7) (49.2) (24.2) (21.0) (7.6) 52.0 (2.9) 0.1 2021 €m (4.9) 3.9 0.8 0.6 31.9 0.3 20.3 1.3 1.1 11.7 67.0 (0.8) (8.4) 57.8 2.8 (0.3) (55.2) (52.7) (19.8) - (19.8) (87.5) 10.0 (1.0) 0.7 (52.8) (117.4) 0.8 38.5 (0.3) 39.0 (112.3) 150.4 0.4 38.5 130 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements for the financial year ended 31 December 2022 1. General information Irish Continental Group plc (ICG) is a public limited company incorporated in Ireland (Company registration number: 41043) and listed on Euronext Dublin and the London Stock Exchange. 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, Britain and Continental Europe. The Group also operates container terminals in the ports of Dublin and Belfast. The Company charters vessels and is the holding Company of a number of subsidiary companies. 2. Summary of accounting policies Statement of Compliance The consolidated and the Company ﬁnancial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB) and interpretations issued by the IFR Interpretations Committee (IFRIC) as adopted by the EU and those parts of the Companies Act 2014 applicable to companies reporting under IFRS and Article 4 of the IAS Regulation. The Company has availed of the exemption in Section 304 of the Companies Act 2014 and has not presented the Company Income Statement, which forms part of the Company’s ﬁnancial statements, to its members and the Registrar of Companies. Basis of preparation The Financial Statements have been prepared on the going concern basis and the historical cost convention, as modiﬁed by: • measurement at fair value of share based payments at initial date of award; • recognition of the deﬁned beneﬁt surplus as plan assets less the present value of the deﬁned beneﬁt obligation All ﬁgures presented in the Financial Statements are in euro and are rounded to the nearest one hundred thousand except where otherwise indicated. 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; • • has the ability to use its power to affect its return. is exposed, or has rights, to variable return from its involvement with the investee; and 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. New standards and interpretations New and revised accounting standards and interpretations have been issued which are set out below. These will be adopted by the Group from the effective dates. 2022 Annual Report and Financial Statements Financial Statements 131 2. Summary of accounting policies (continued) Standards effective for the Group from 1 January 2022 Standard Description Effective date for periods commencing IFRS 16 (amendment) IAS 37 (amendments) Annual Improvements to IFRS Standards 2018–2020 IAS 16 (amendments) Covid-19 related rent concessions beyond 30 June 2021 1 April 2021 Onerous Contracts - Cost of Fulﬁlling a Contract 1 January 2022 Property, Plant and Equipment - Proceeds before Intended Use 1 January 2022 1 January 2022 IFRS 3 (amendments) Reference to the Conceptual Framework 1 January 2022 The above amended standards have been applied in the preparation of the ﬁnancial statements for the year ended 31 December 2022 but did not have any material impact on the results or ﬁnancial position of the Group. Standards effective for the Group from 1 January 2023 or later Standard Description Effective date for periods commencing IAS 1 (amendments) IAS 1 (amendments) IAS 1 (amendments) IFRS 17 Classiﬁcation of liabilities as current or non-current 1 January 2023 * Disclosure of Accounting Policies 1 January 2023 Non-current Liabilities with Covenants 1 January 2023 * Insurance Contracts 1 January 2023 IAS 8 (amendments) Deﬁnition of Accounting Estimates 1 January 2023 IAS 12 (amendments) Deferred Tax related to assets and liabilities arising from a single transaction 1 January 2023 IFRS 16 (amendments) Lease Liability in a Sale and Leaseback 1 January 2023 * IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures (amendments) * Not yet endorsed by the EU Sale or Contribution of Assets between an Investor and its Associate or Joint Venture TBD * The above standards and amendments to standards have not been applied in the preparation of the ﬁnancial statements for the year ended 31 December 2022. They are not expected to have a material impact on the results or ﬁnancial position of the Group when applied in future periods. Accounting policies applied in the preparation of the Financial Statements for the ﬁnancial year ended 31 December 2022: Revenue recognition Revenue is measured based on the consideration speciﬁed in a contract concluded with a customer and excludes any amounts collected on behalf of third parties including taxes. 132 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 2. Summary of accounting policies (continued) The principal activities from which the Group generates its revenue are set out below. Ferries Division Product or Nature and satisfaction of performance obligation Service Passenger Transport Passenger revenue is recognised over time as services are provided. Contracts are concluded during the booking process with a high degree of probability of collection of the sales proceeds. Sales proceeds are recognised as deferred revenue where the single performance obligation from the departure point to destination point are subsequently released to revenue over the elapsed time taken to complete the single performance obligation being the provision of transport between the departure point and destination point. The price is ﬁxed at the time of booking. Where a customer is eligible to participate in loyalty programmes, the price is allocated based on the relative stand-alone selling price or expected selling price based on company data. Deferred revenue is reduced for any refund paid to a customer where the Company is unable to complete the performance obligation. Ticket breakage, i.e. deferred untravelled revenue for no shows, is recognised in full once the original booked travel date has expired based on a no refund policy. RoRo Freight RoRo freight revenue is recognised over time as services are provided. Contracts are concluded during the booking process with a high degree of probability of collection of the sales proceeds. Sales proceeds are recognised as deferred revenue which are subsequently released to revenue over the elapsed time taken to complete the single performance obligation being the provision of transport between the departure point and destination point. The price is ﬁxed at the time of booking or is otherwise variable if the customer has an active rebate arrangement. The contract price less the estimates of the most probable rebate amount is allocated to the performance obligation with the rebate amount retained in deferred revenue until paid. Onboard Sales Revenue from sales in bars and restaurants is recognised at the time of sale. The Group recognises a single contract for all goods and services in a transaction basket at the time of transaction with payment received at the same time. There is a single identiﬁable obligation to transfer title with the price ﬁxed at the time of transaction. Retail Concessions Revenues earned from retail concessions is recognised over time based on declarations received up to the reporting date. For each concession the Group recognises a single contract involving the grant of a licence or creation of a right to provide services onboard vessels creating a single identiﬁable obligation. The price is variable being based on a proﬁt share model. Container and Terminal Division Product or Nature and satisfaction of performance obligation Service Container Shipping LoLo container shipping revenue is recognised over time as services are provided. Contracts are concluded during the booking process with a high degree of probability of collection of the sales proceeds. Sales proceeds are recognised as deferred revenue which are subsequently released to revenue over the time based on effort expended on each activity (collection, shipping and delivery) undertaken in fulﬁlment of the single performance obligation being the provision of transport between the departure point and destination point. The price is ﬁxed at the time of booking. Stevedoring Stevedoring revenue is recognised over time in line with the number of containers loaded or discharged onto vessels in fulﬁlment of obligations. Contracts are concluded with customers covering services to be provided over time with a high degree of probability of collection of the sales proceeds. Sales proceeds are recognised once the performance obligations are satisﬁed i.e. the loading or discharge of a vessel. The price is ﬁxed at the time of contract or is otherwise variable if the customer has an active rebate arrangement. The contract price less the best estimate of the most probable rebate amount is allocated to the performance obligation with the rebate amount retained in deferred revenue. As rebates are paid to customers, amounts included in deferred revenue are released with experience adjustments included as revenue. 2022 Annual Report and Financial Statements Financial Statements 133 2. Summary of accounting policies (continued) Leasing Identifying a lease Where a contract conveys the right to control the use of an identiﬁed asset for a period of time in exchange for consideration it is treated as a lease. a) As Lessee Where the Group acts as a lessee, the Group recognises a right-of-use asset and lease liability at the lease commencement date, which is the date the underlying asset is available for our use. Right-of-use assets are initially measured at cost plus initial direct costs incurred in arranging a lease, and subsequently measured at cost less any accumulated depreciation and impairment losses (if any) and adjusted for certain remeasurement of lease liabilities. The recognised right-of-use assets are depreciated on a straight-line basis over the shorter of their estimated useful lives and the lease term. Right-of-use assets are subject to impairment under IAS 36 Impairment of assets. Right-of-use assets are presented as a separate line item in the Statement of Financial Position. Lease liabilities are initially measured at the present value of lease payments that are not paid at the commencement date, discounted using the incremental borrowing rate if the interest rate implicit in the lease is not readily determinable. The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments made. In the Consolidated Statement of Cash Flows the payments made are separated into the principal portion (presented within ﬁnancing activities), and interest (presented in operating activities). Lease liabilities are remeasured and a corresponding adjustment is made to right of use assets if there is a change in future lease payments, a change in the lease term, or as appropriate, a change in the assessment of whether an extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised. The Group applies the short-term lease recognition exemption to leases that have a lease term of 12 months or less from the commencement date. The Group also applies the lease of low-value assets recognition exemption to leases that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the term of the lease. The Group also avails of practical expedients permitted under IFRS 16 Leases. The portfolio approach is applied to leases of containers where a master leasing agreement exists and in relation to the time charter of vessels does not separate non-lease components from lease components treating each time charter as a single component. b) As Lessor The Group treats bareboat hire purchase sale agreements in relation to the disposal of vessels as ﬁnance leases where it transfers substantially all the risks and rewards incidental to ownership of the underlying vessel to the charterer. The sales proceeds recognised at the commencement of the lease term by the Group are that implied by the fair value of the asset, which together with any initial direct costs equal to the net investment in the lease and are presented as a ﬁnance lease receivable in the Statement of Financial Position. Loss allowances on the ﬁnance lease receivables are estimated at an amount equal to lifetime expected credit losses. Following initial measurement ﬁnance lease income is recognised in revenue and is allocated to accounting periods so as to reﬂect a constant periodic rate of return on the outstanding net investment. Lease payments receivable arising from the grant of a right-of-use vessel which do not meet the requirement of a ﬁnance lease are recognised as revenue on a straight-line basis over the term of the relevant charter. The provision of operation and maintenance services is recognised on a daily basis at the applicable daily rate under the terms of the charter. Concession and Licence agreements Payments made under concession arrangements, where the Group beneﬁts from the use of an asset or right and the obligation to make the payments has not been recognised in the Statement of Financial Position as a lease obligation, are charged to the Consolidated Income Statement as the rights conferred under the terms of the arrangement are consumed. 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. The Group does not recognise that element of a contract as a lease in the Statement of Financial Position where the right to control the use of an identiﬁed asset for a period of time is based on variable consideration based on activity levels. In these circumstances any variable consideration is expensed to the Income Statement as the right is consumed. 134 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 2. Summary of accounting policies (continued) Non-trading items The Group treats material items either individually or, if of a similar type, in aggregate, that derive from events or transactions that fall outside the ordinary activities of the Group as non-trading items. Non-trading items are presented separately on the face on the Consolidated Income Statement, separately disclosing any tax effects. 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 reporting date, monetary assets and liabilities denominated in foreign currencies are retranslated at the rates prevailing on the reporting 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 and presented in euro. 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 reporting 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 may, from time to time, enter into forward contracts and options. On consolidation, exchange differences arising from the translation of the net investment in foreign operations are recognised in the Statement of Other Comprehensive Income and accumulated in equity. Finance costs Finance costs comprises interest expense on borrowings, negative interest on bank deposits, interest on lease obligations and interest on net deﬁned beneﬁt pension scheme liabilities. All borrowing costs are recognised in the Consolidated Income Statement under ﬁnance costs using the effective interest method. 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. Finance Income Finance income comprises interest income on bank deposits, interest earned on ﬁnance lease receivables, interest on the net deﬁned beneﬁt pension scheme assets and interest on any other interest bearing ﬁnancial assets. Interest income is recognised in the Consolidated Income Statement under ﬁnance income using the effective interest method. 2022 Annual Report and Financial Statements Financial Statements 135 2. Summary of accounting policies (continued) Retirement beneﬁt schemes Deﬁned beneﬁt obligations For deﬁned beneﬁt obligations, the cost of providing the 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 reporting 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 income on deﬁned beneﬁt obligations has been recorded in the Consolidated Income Statement under ﬁnance income. 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 former employees are members of 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. 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. 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. For awards where vesting will be determined by market based vesting conditions, those granted prior to 1 January 2019 were fair value measured using a binomial pricing model. Monte-Carlo modelling was used for awards granted after 1 January 2019. 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. 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 reporting date. A provision is recognised for those matters for which the tax determination is uncertain, but it is considered probable that there will be a future outﬂow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable. 136 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 2. Summary of accounting policies (continued) A proportion of the Group’s proﬁts fall within the charge to tonnage tax, under which regime taxable proﬁts are relieved to an amount based on the tonnage of vessels employed during the year. In accordance with the IFRIC guidance on IAS 12 Income Taxes, the tonnage tax charge is included within other operating expenses in the Consolidated Income Statement. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the ﬁnancial statements and the corresponding tax bases used in the computation of taxable proﬁt and is accounted for using the statement of ﬁnancial position liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable proﬁts will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax proﬁt nor the accounting proﬁt. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary differences and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each reporting 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 or substantively 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 less accumulated depreciation and any accumulated impairment losses. Depreciation on vessels is charged so as to write off the cost less residual value over the estimated economic useful life on a straight-line basis. The amount initially recognised in respect of Ropax vessels 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 vessels, 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 of vessels 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 are as follows: Hull and Machinery • Conventional Ropax vessels • 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. 2022 Annual Report and Financial Statements Financial Statements 137 2. Summary of accounting policies (continued) Drydocking Costs incurred in renewing the vessel certiﬁcate are capitalised as a separate component under vessels in property, plant and equipment and depreciated over the period to the next expected drydocking required for certiﬁcate renewal. Costs and accumulated depreciation relating to expired certiﬁcates are treated as disposals. The estimated useful lives for drydock assets are as follows: Passenger vessels Container vessels 1 – 2 years 1 – 5 years Estimations of economic life and residual values are reassessed at each reporting date. Any change in estimates are accounted for prospectively. Other assets Property, plant and equipment, other than freehold land, are stated at cost less accumulated depreciation and any accumulated impairment losses. Freehold land is stated at cost and is not depreciated. 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 superstructure and plant. With the exception of freehold land and assets under construction, depreciation on property, plant and equipment is charged so as to write off the cost over the estimated economic useful lives, using the straight-line method, on the following bases: Buildings Plant, equipment and vehicles Plant superstructure 10 – 100 years 4 – 25 years 12 – 20 years 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 Costs incurred on the acquisition and commissioning 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 ﬁve years. Impairment of property, plant and equipment and intangible assets At each reporting date, the Group performs a review to ascertain whether there are any indications of impairment which may affect carrying amounts of its property, plant and equipment and intangible assets. If any such indications exist, the recoverable amount of the asset is estimated in order to determine whether the affected assets have actually suffered an impairment loss. Where an 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. 138 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 2. Summary of accounting policies (continued) 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 or 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. Where shares are cancelled an amount equivalent to the nominal value of the cancelled shares is transferred from retained earnings to the undenominated capital reserve. Financial instruments Financial assets and ﬁnancial liabilities are recognised on the Group and Company’s Statement of Financial Position when the Group and Company becomes a party to the contractual provisions of the instrument. Trade receivables Trade and other receivables are initially recognised at transaction price and subsequently carried at amortised cost, net of allowance for expected credit losses. Any trade and other receivables included in non-current assets are carried at amortised cost in accordance with the effective interest rate method. The Group applies the simpliﬁed approach to providing for expected credit losses (ECL) under IFRS 9 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the trade receivables. The Group uses an allowance matrix to measure the ECL of trade receivables based on its credit loss rates. Expected loss rates are based on historical payment proﬁles of sales and the corresponding historical credit loss experience. The historical loss rates are adjusted to reﬂect current and forward economic factors if there is evidence to suggest these factors will affect the ability of the customer to settle receivables. The Group has determined the ECL default rate using market default risk probabilities with regards to its key customers. Balances are written off when the probability of recovery is assessed as being remote. Trade receivables are derecognised when the Group no longer controls the contractual rights that comprise the receivables, which is normally the case when the asset is sold or the rights to receive cash ﬂows from the asset have expired, and the Group has not retained substantially all the credit risks and control of the receivable has transferred. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and on demand deposits. 2022 Annual Report and Financial Statements Financial Statements 139 2. Summary of accounting policies (continued) Financial liabilities and equity Financial liabilities and equity instruments issued by the Group are classiﬁed according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The accounting policies adopted for speciﬁc ﬁnancial liabilities and equity instruments are set out below. Bank borrowings Interest-bearing bank loans and overdrafts are initially recorded at fair value, net of transaction costs incurred. Overdrafts are set off against cash balances in accordance with the contractual terms of any set off agreement. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are expensed in the Consolidated Income Statement using the effective interest rate method and any unamortised costs at the reporting date are deducted from the carrying amount of the instrument. 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 in share capital with any premium over nominal value recorded in the share premium account. Any associated issue costs are deducted from retained earnings. 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. Distributions Distributions are accounted for when they are paid, 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. 140 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 3. Critical accounting judgements and key sources of estimation uncertainty In the application of the Group’s and Company’s accounting policies, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these amounts. The estimates and underlying assumptions are reviewed on an ongoing 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 pension 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. Many of the actuarial assumptions are dependent on market developments and are outside the control of the Company and Group and movements may give rise to material adjustments in future estimates of post-employment obligations. The Group and Company is a participating employer in the Merchant Navy Ofﬁcer Pension Fund (MNOPF), a multi- employer deﬁned beneﬁt pension scheme. The MNOPF was in surplus at the most recent valuation date of 31 March 2021. 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 the most recent notiﬁcation received from the trustees dated May 2013 and which was 1.04% for the Group and 0.33% 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 Long lived assets comprising primarily of property, plant and equipment represent a signiﬁcant portion of total assets. The annual depreciation and amortisation charge depends primarily on the estimated useful lives of each type of asset. Management regularly reviews these useful 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 may have a signiﬁcant impact on the annual depreciation and amortisation charge. Details of the useful lives are included in the accounting policy headed property, plant and equipment. Further details are set out in note 12. In relation to one vessel which had reached 25 years from date of construction, the remaining useful life was increased from ﬁve years to ten years. This decision was taken following a rigorous review which considered the record and condition of the vessel, expected future regulation including environmental regulations, recent capital expenditure and the result of the ﬂeet impairment review. The effect of the increase in useful life was to reduce the depreciation charge in the reporting period by €1.5 million. Critical accounting judgements Impairment The Group does not hold any assets, including goodwill, which requires an annual assessment of recoverable amount. In line with the requirements of IAS36: Impairment of assets, 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 including environmental regulation, shipbuilding costs and carrying value versus market capitalisation of the Group. During 2020 and 2021, the Group experienced a reduced level of passenger carryings due to the imposition of government restrictions placed on travel in the jurisdictions that we offer services. These restrictions, ﬁrst introduced in March 2020 were fully removed in January 2022. The proﬁtability of the Irish Ferries branded operations was materially affected in ﬁnancial years 2021 and 2020, which was subsequently assessed as an indication of impairment. Having completed a recoverability assessment at 31 December 2021 and 2020, no impairment charges were recognised. 2022 Annual Report and Financial Statements Financial Statements 141 3. Critical accounting judgements and key sources of estimation uncertainty (continued) Following the lifting of all travel restrictions in early 2022, passenger carryings recovered but remained behind pre- pandemic 2019 levels, which was in line with management expectations as previously modelled in the prior year recoverability assessments. The Group revenues are generated from passenger trafﬁc, including tourism, and freight movements between Ireland and Britain, Ireland and continental Europe and Britain and Continental Europe. The performance of these markets are in turn dependent to a signiﬁcant degree on macro-economic factors including economic growth both local and global, inﬂation, interest rates and exchange rates. These same factors feed into our input costs. Current geo-political issues including the war in Ukraine and post-pandemic recovery have resulted in a signiﬁcant increase in energy costs, leading to higher general inﬂation, with policy makers increasing interest rates in response. The Group also notes the progress of negotiations concerning the Northern Ireland Protocol and trade negotiations between the United Kingdom and the European Union. These have created uncertainty around the short-term economic growth rates in the markets in which the Group operates and hence the likely growth rates to be achieved in our businesses. While the Group acknowledges that it cannot control macro-economic factors, it has demonstrated as part of its business model its capacity to pass increased costs through the logistics chain. Unlike the circumstances of the Covid-19 pandemic, the Group views the current uncertainty as a more normal part of conducting business. The Directors also considered known and expected environmental regulation expected over the remaining life of its existing ﬂeet. While the Group has mapped known requirements against the current status of its ﬂeet, it is not in a position to cost compliance as in many cases technological solutions are currently not commercially available or developed. Given the current low rate of renewal of global ﬂeets, partially related to the absence of proven pathways to compliance with new regulation, the Directors consider that the additional regulation will not lead to accelerated obsolescence of its ﬂeet but may result in increased costs. The most signiﬁcant item in the short term is the introduction by the EU of an Emissions Trading System applicable to vessel operators, with a similar scheme expected to be endorsed by the United Kingdom. The EU system will be effective for CO2 emissions from 1 January 2024, which will require the payment of a levy based on the volume of emissions. Similar to the actions taken in relation to the IMO2020 regulations which required the consumption of more expensive fuel oils, the maritime sector has been signalling to the market that the costs of the Emission Trading Systems will be passed through to customers. Given the experience of the Group with the previous IMO2020 levies, the Group will be passing through the increased cost of these regulations to our customers. In the ﬁrst half of 2022, the container vessel charter market performed strongly with charter rates continuing the rise experienced throughout 2021. However, in the second half of the year, rates plateaued before declining in the last quarter, a trend which has continued into early 2023. This has created uncertainty around future renewal rates and consequently likely future market value of vessels. The Group has undertaken an impairment test to assess the recoverable value of its ﬂeet assets based on the conditions and information available at the reporting date. The Group engaged independent shipbroker Simsonship AB and Ernst Russ Shipbrokers GMBH & Co KG to provide valuations on its ﬂeet. These valuations are prepared on standard market terms on the assumption of assets being encumbrance free with a willing buyer and seller. The Group adjusted these valuations for an estimate of disposal costs to arrive at a fair value less cost of disposal (FVLCOD) valuation of the ﬂeet. The Group was satisﬁed that the carrying value of the ﬂeet was strongly supported by the FVLCOD estimate at 31 December 2022. Notwithstanding the headroom over carrying value indicated by the FVLCOD estimate, the Group acknowledges the potential shortcoming limitations of such valuation estimates where there are limited transactions and certain vessels in the Group’s ﬂeet are bespoke to its requirements and true value can only be assessed if offered for sale to one or more willing purchasers. Against that background, the Group sought to derive its own valuations through performance of a value in use exercise. Due to the inter-dependence of ferries across routes and transferability of vessels between routes, the Group considers its ferries to comprise a single cash generation unit. Such inter-dependence is not as evident in respect of the container vessels due to contractual arrangements and these vessels were individually assessed. 142 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 3. Critical accounting judgements and key sources of estimation uncertainty (continued) The value in use exercise involved projecting cash ﬂows over a ten year period and discounting these to a present value using an estimate of the weighted average cost of capital. Vessels were assigned a terminal value at the end of the projection period based on the unexpired portion of the year end broker valuations based on a straight line write down of those valuations over the remaining useful life of the vessel. The starting position for projecting cashﬂows was to use the 2023 budget, as approved by the Board. For 2024 and subsequent years, the passenger revenues and freight revenues were projected to increase based on market growth assumptions and expected strategic positioning of the Group. Energy costs were based of crude oil prices of $88 per barrel over the projection period. Fuel price movements are mitigated through surcharge mechanisms which are included in certain contracts. Charter revenues at next renewal were estimated at rates below indicative charter rates at 31 December 2022. The cash ﬂows included an allowance for maintenance capital principally comprising estimated drydock costs based on each vessel’s maintenance plan. The cashﬂow projections for years 1 to 5 were consistent with the base scenario used in the viability assessment. Sensitivity on this base scenario was performed for a number of downside scenarios ﬂexing the revenue growth rates, fuel costs, the discount rate and terminal values. The Directors have concluded that any reasonably possible movement in the assumptions used in the impairment test at 31 December 2022 would not result in the identiﬁcation of an impairment. The Directors are satisﬁed that the value in use projections robustly supported the broker valuations and consequently the carrying value of the ﬂeet at 31 December 2022. The Directors have reviewed the methodology, key assumptions and the results of the impairment testing as described above. Consequently, the Directors concluded that the recoverability assessment described above, supported the carrying value of the Group’s ﬂeet assets and that no provision for impairment was required at 31 December 2022. Going Concern The Financial Statements have been prepared on the going concern basis. The Directors report that, after making inquiries, they have a reasonable expectation 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 and Company in the context of the economic environment at the reporting date, the principal risks and uncertainties facing the Group (pages 65 to 69), the Group’s 2023 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. The introduction of measures in response to Covid-19 by governments in the jurisdictions in which we operate services in March 2020 materially affected the Group’s ﬁnancial results for both years ended 31 December 2021 and 2022. This was particularly concentrated on our passenger business where international travel was affected resulting in a material reduction in passenger revenues compared to pre pandemic levels. In early 2022, these restrictions were removed and passenger carrying increased signiﬁcantly over the prior year, broadly in line with the Directors post-recovery expectations. Other revenue streams from the Group’s RoRo, LoLo, chartering and port stevedoring services had been largely unaffected by the Covid-19 measures. The Group generated cash from operations of €132.0 million (2021: €67.0 million) in ﬁnancial year 2022, with free cash ﬂow of €108.0 million (2021: €44.3 million) after maintenance capital expenditure. The Group retained cash balances and committed undrawn facilities at 31 December 2022 of €67.4 million. The leverage covenant level at 31 December 2022 calculated in accordance with the lending agreements, was 1.2 times EBITDA, within maximum permitted levels of 3.0 times. In making their going concern assessment, the Directors have considered a number of trading scenarios. including a re- imposition of travel restrictions. The base scenario assumptions assume no re-emergence of community borne infections resulting in imposition of travel restrictions. Taking into consideration current macro-economic uncertainty around growth rates in the economies in which we provide services and continuing inﬂationary pressures, the downside has considered lower activity levels across our businesses. Notwithstanding this lower activity, the downside modelling assumed a full schedule of services being maintained by the Group. The modelling further assumed that there were no changes to the Group’s existing contractual ﬁnancing arrangements, with earliest maturities occurring in late 2024. Based on this modelling, the Directors believe the Group retains sufﬁcient liquidity to operate for at least the period up to March 2024. 2022 Annual Report and Financial Statements Financial Statements 143 4. Segmental information Business segments The Executive 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 and 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 and Terminal segment derives its revenue from the provision of door-to-door and feeder LoLo freight services, stevedoring and other related terminal services. Segment information about the Group’s operations is presented below. Revenue 2022 External revenue Inter-segment revenue Total 2021 External revenue Inter-segment revenue Total Ferries €m Container & Terminal Inter- segment €m €m 364.6 35.3 399.9 161.7 13.8 175.5 220.3 1.2 221.5 172.8 1.2 174.0 - (36.5) (36.5) - (15.0) (15.0) Total €m 584.9 - 584.9 334.5 - 334.5 Inter-segment revenue is at best estimates of prevailing market prices. The inter-segment revenue in the Ferries Division in 2022 of €35.3 million (2021: €13.8 million) primarily relates to container vessels which are on time charter to the Group’s container shipping subsidiary, Eucon. Revenue has been disaggregated into categories which reﬂect how the nature, amount, timing and uncertainty of revenue and cash ﬂows are affected by economic factors. As revenues are recognised over short time periods of no more than days, a key determinant to categorising revenues is whether they principally arise from a business to customer (passenger contracts) or a business to business relationship (freight and charter contracts) as this impacts directly on the uncertainty of cash ﬂows. Revenue Passenger Freight Chartering Total Ferries 2022 €m 162.7 184.7 17.2 364.6 2021 €m 59.0 94.6 8.1 161.7 Container & Terminal 2022 €m - 220.3 - 220.3 2021 €m - 172.8 - 172.8 Total 2022 €m 162.7 405.0 17.2 584.9 2021 €m 59.0 267.4 8.1 334.5 For the year ended 31 December 2022, €553.3 million was recognised over time (2021: €323.6 million) and €31.6 million was recognised at a point in time (2021: €10.9 million). No single external customer in the current or prior ﬁnancial year amounted to 10 per cent or more of the Group’s revenues. Of total Group revenues of €584.9 million (2021: €334.5 million), €16.6 million (2021: €7.4 million), all of which relates to the Ferries Division, is recognised under IFRS 16 with the remainder being recognised as revenue under IFRS 15. 144 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 4. Segmental information (continued) Ferries Container & Terminal Result Operating proﬁt / (loss) Finance income Finance costs Proﬁt / (loss) before tax Income tax expense Proﬁt / (loss) for the ﬁnancial year Statement of Financial Position Assets Segment assets Cash and cash equivalents Consolidated total assets Liabilities Segment liabilities Borrowings and lease liabilities Consolidated total liabilities Consolidated net assets Other segment information Capital additions Right-of-use asset additions Depreciation and amortisation Other operating expenses Fuel Labour Port costs Haulage Other Inter-segment 2022 €m 46.4 0.1 (3.1) 43.4 (1.3) 42.1 422.5 34.5 457.0 66.7 174.6 241.3 215.7 68.1 3.0 49.3 2021 €m (17.4) - (2.0) (19.4) (0.1) (19.5) 367.0 29.9 396.9 49.8 140.0 189.8 207.1 44.0 22.0 40.6 2022 €m 20.3 - (1.2) 19.1 (1.4) 17.7 112.4 4.5 116.9 36.3 35.5 71.8 45.1 6.7 3.2 11.2 2021 €m 17.2 0.1 (2.0) 15.3 (0.7) 14.6 106.4 8.6 115.0 31.7 40.7 72.4 42.6 2.6 16.8 11.9 Ferries Container & Terminal 2022 €m 104.6 48.3 69.0 - 61.3 (1.2) 2021 €m 43.1 28.7 44.0 - 20.7 (1.2) 2022 €m 19.4 12.6 35.2 56.6 60.4 (35.3) 148.9 2021 €m 12.0 9.7 33.7 50.0 34.5 (13.8) 126.1 Total 2022 €m 66.7 0.1 (4.3) 62.5 (2.7) 59.8 534.9 39.0 573.9 103.0 210.1 313.1 260.8 74.8 6.2 60.5 Total 2022 €m 124.0 60.9 104.2 56.6 121.7 (36.5) 430.9 2021 €m (0.2) 0.1 (4.0) (4.1) (0.8) (4.9) 473.4 38.5 511.9 81.5 180.7 262.2 249.7 46.6 38.8 52.5 2021 €m 55.1 38.4 77.7 50.0 55.2 (15.0) 261.4 Total other operating expenses 282.0 135.3 2022 Annual Report and Financial Statements Financial Statements 145 4. Segmental information (continued) Geographic analysis of revenue by origin of booking Revenue Ireland United Kingdom Netherlands Belgium France Poland Austria Other Total 2022 €m 202.4 142.2 99.7 47.7 20.2 18.8 10.8 43.1 2021 €m 135.6 64.1 73.7 36.7 4.5 4.5 0.8 14.6 584.9 334.5 For the year ended 31 December 2022, the ‘other’ revenue balance of €43.1 million did not contain revenue attributable to any single country in excess of €10.8 million. Geographic location of non-current assets At Sea and in transit Vessels Containers On Shore Ireland Other 2022 €m 327.9 9.9 337.8 60.2 7.6 67.8 2021 €m 315.8 9.9 325.7 51.6 10.0 61.6 Carrying amount at 31 December 405.6 387.3 Non-current assets exclude ﬁnancial assets, retirement beneﬁt assets and deferred tax assets. Due to the mobile nature of certain assets in property, plant and equipment, their geographic location is not always ﬁxed. 5. Employee beneﬁts expense The average number of employees during the ﬁnancial year was as follows: Ferries Container and Terminal The number of employees at ﬁnancial year-end was 2022 202 86 288 288 2021 197 86 283 284 146 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 5. Employee beneﬁts expense (continued) Aggregate costs of employee beneﬁts were as follows: Wages and salaries Covid-19 government subsidies Social insurance costs Deﬁned beneﬁt obligations – current service cost (note 31 vii) Deﬁned contribution pension scheme – pension cost (note 31) Share-based payment expense (note 30) 2022 €m 19.7 - 2.0 1.7 0.4 3.0 2021 €m 17.2 (1.4) 1.7 1.7 0.3 1.3 Total employee beneﬁt costs incurred 26.8 20.8 There were no staff costs capitalised during the ﬁnancial year (2021: €nil) in relation to management and supervision of the contracts for the construction of new vessels. 6. Finance income Net interest income on deﬁned beneﬁt assets (note 31 vii) Total ﬁnance income 7. Finance costs Interest on bank overdrafts and loans Interest on lease obligations Total ﬁnance costs 2022 €m 0.1 0.1 2022 €m 3.0 1.3 4.3 2021 €m 0.1 0.1 2021 €m 2.7 1.3 4.0 2022 Annual Report and Financial Statements Financial Statements 147 8. Income tax expense Current tax Deferred tax (note 24) Total income tax expense for the ﬁnancial year 2022 €m 2.7 - 2.7 2021 €m 0.7 0.1 0.8 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 vessels utilised. In accordance with the IFRIC clariﬁcation of tonnage taxes issued May 2009, the tonnage tax charge is not considered an income tax expense under IAS 12 Income Taxes, 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 €2.7 million (2021: €0.7 million) and a deferred tax charge of €nil (2021: €0.1 million). The total tax expense for the ﬁnancial year is reconciled to the accounting proﬁt as follows: Proﬁt / (loss) before tax Tax at the domestic income tax rate of 12.5% (2021: 12.5%) Losses not eligible for surrender under loss provisions Effect of tonnage relief Difference in effective tax rates Other items Income tax expense recognised in the Consolidated Income Statement 2022 €m 62.5 7.8 - (6.6) 0.3 1.2 2.7 2021 €m (4.1) - 2.4 (2.2) 0.8 (0.2) 0.8 148 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 9. Proﬁt / (loss) for the year Proﬁt / (loss) for the year arrived at after charging: Depreciation of property, plant and equipment (note 12) Amortisation of intangible assets (note 13) Depreciation of right-of-use assets (note 14) Net depreciation and amortisation costs Fuel Labour Port costs Haulage Other Other operating expenses Foreign exchange losses / (gains) Expenses relating to lease payments not included in the measurement of the lease liability Short-term leases Variable lease payments Group Auditor’s remuneration: The audit of the Group ﬁnancial statements Other assurance services Tax advisory and compliance 2022 €m 38.5 0.4 21.6 60.5 124.0 60.9 104.2 56.6 85.2 430.9 1.9 0.9 2.4 €’000 275.0 40.0 105.0 420.0 2021 €m 31.9 0.3 20.3 52.5 55.1 37.2 77.7 50.0 41.4 261.4 (0.5) 2.2 2.1 €’000 260.0 40.0 45.0 345.0 The portion of the above audit fees attributable to the Company ﬁnancial statements payable to KPMG was €79,000 (2021: €75,000). 10. Dividends Final dividend of 9c per ICG Unit RE: ﬁnancial year ended 31 December 2021 (2020: nil) Interim dividend of 4.64c per ICG Unit RE: the ﬁnancial year ended 31 December 2022 (2021: nil) 2022 €m 16.1 8.1 24.2 2021 €m - - - The Board is proposing a ﬁnal dividend of 9.45 cent per ordinary share amounting to €16.1 million out of the distributable reserves of the Company. 2022 Annual Report and Financial Statements Financial Statements 149 11. Earnings per share Shares in issue at the beginning of the year Effect of shares issued during the year Effect of share buybacks and cancellation in the year Weighted average number of ordinary shares for the purpose of basic earnings per share Dilutive effect of employee equity plans where vesting conditions not met Weighted average number of ordinary shares for the purposes of diluted earnings per share Denominator for earnings and diluted earnings per share calculations 2022 ’000 2021 ’000 182,795 186,980 23 (5,044) 177,774 2,363 180,137 134 (398) 186,716 - 186,716 Equity awards under the ICG Performance Share Plan are treated initially as contingently issued shares because any shares which may in future be issued are contingent on the satisfaction of performance conditions set at the date of grant, in addition to the passage of time. Where the performance conditions have been met at the end of the performance period and the awards remain unexercised, they are no longer treated as contingently issuable and are treated as issued shares from the end of the performance period and included in the weighted average number of ordinary shares for the purpose of basic earnings per share. Those contingently issuable shares for which the performance period has not yet expired, are included in the weighted average number of ordinary shares for the purposes of diluted earnings per share unless the performance conditions governing their exercisability have not been met at the reporting date. A total of 664,484 (2021: 3,646,828) unvested share options outstanding at the reporting date have been excluded from the weighted average number of ordinary shares for the purposes of diluted earnings per share as they were either antidilutive or had not met the performance conditions governing their exercisability. 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 and the effect of non-trading items after tax. The calculation of the basic and diluted earnings per share attributable to 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 / (loss) for the ﬁnancial year attributable to equity holders of the parent Net interest income on deﬁned beneﬁt assets (note 31 vii) Earnings for the purposes of adjusted basic and adjusted diluted earnings per share Basic earnings per share Diluted earnings per share Adjusted basic earnings per share Adjusted diluted earnings per share 2022 €m 59.8 (0.1) 59.7 2022 Cent 33.6 33.2 33.6 33.1 2021 €m (4.9) (0.1) (5.0) 2021 Cent (2.6) (2.6) (2.7) (2.7) 150 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 12. Property, plant and equipment Assets under Construction Cost At 1 January 2021 Additions Reclassiﬁcation Disposals Currency adjustment At 31 December 2021 Additions Reclassiﬁcation Disposals Currency adjustment At 31 December 2022 Accumulated depreciation At 1 January 2021 Depreciation charge for the ﬁnancial year Eliminated on disposals Currency adjustment At 31 December 2021 Depreciation charge for the ﬁnancial year Eliminated on disposals Currency adjustment At 31 December 2022 Carrying amount At 31 December 2022 At 31 December 2021 €m 0.7 0.5 (0.6) - - 0.6 4.5 (0.5) - - 4.6 - - - - - - - - - 4.6 0.6 Vessels €m 444.2 42.7 0.6 (7.6) 1.4 481.3 62.6 - (7.4) (2.4) 534.1 166.5 27.8 (7.6) 0.5 187.2 34.7 (7.4) (0.7) 213.8 320.3 294.1 Plant, Equipment and Vehicles €m 64.8 2.2 - (5.6) 0.2 61.6 5.2 0.5 (1.6) (0.2) 65.5 46.0 3.4 (5.6) 0.1 43.9 3.3 (1.6) (0.1) 45.5 20.0 17.7 Land and Buildings €m 26.0 0.2 - - - 26.2 2.1 - - - Total €m 535.7 45.6 - (13.2) 1.6 569.7 74.4 - (9.0) (2.6) 28.3 632.5 9.7 0.7 - - 10.4 0.5 - - 222.2 31.9 (13.2) 0.6 241.5 38.5 (9.0) (0.8) 10.9 270.2 17.4 15.8 362.3 328.2 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 vessels, the Directors have taken into consideration the valuation of the scrap value of the vessels per light displacement tonne. Residual values are reviewed annually and updated where the Directors consider the latest estimates of residual value estimates would lead to a signiﬁcant change in depreciation charges. 2022 Annual Report and Financial Statements Financial Statements 151 12. Property, plant and equipment (continued) Estimations of economic life of vessels are a key judgemental estimate in the ﬁnancial statements and further details are set out in note 3. In relation to the remaining estimated economic life of the vessels, a one year increase/ decrease would have a €2.1 million (2021: €1.6 million) decrease/ €2.7 million (2021: €2.0 million) increase in depreciation in the Consolidated Income Statement, and a €2.1 million (2021: €1.6 million) increase/ €2.7 million (2021: €2.0 million) decrease on the carrying value of property, plant and equipment in the Statement of Financial Position. In relation to one vessel which had reached 25 years from date of construction, the remaining useful life was increased from ﬁve years to ten years. The effect of the increase in useful life was to reduce the depreciation charge in the reporting period by €1.5 million. During the years ended 31 December 2022 and 2021, no staff costs or interest costs were included in additions. Assets under construction at 31 December 2022 of €4.6 million (2021: €0.6 million) relate to construction completed on assets not in operation at the year end. 13. Intangible assets Cost At 1 January Additions At 31 December Amortisation At 1 January Charge for the ﬁnancial year At 31 December Carrying amount At 31 December At 1 January 2022 €m 12.5 0.4 12.9 10.6 0.4 11.0 1.9 1.9 2021 €m 11.5 1.0 12.5 10.3 0.3 10.6 1.9 1.2 The intangible assets included above, all computer software, have ﬁnite useful lives of ﬁve years over which the assets are amortised. Amortisation is on a straight-line basis. 152 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 14. Right-of-use assets Cost At 1 January 2021 Additions Lease remeasurement Derecognition on lease expiry Currency adjustment At 31 December 2021 Additions Lease remeasurement Derecognition on lease expiry Currency adjustment At 31 December 2022 Accumulated depreciation At 1 January 2021 Charge for the period Derecognition on lease expiry Currency adjustment At 31 December 2021 Charge for period Derecognition on lease expiry Currency adjustment At 31 December 2022 Carrying amount At 31 December 2022 At 31 December 2021 Vessels €m Plant and Equipment Land and Buildings €m €m 21.0 28.5 (0.3) - - 49.2 2.8 - (2.8) - 49.2 11.3 16.2 - - 27.5 17.0 (2.8) - 41.7 7.5 21.7 8.0 5.0 - (0.9) - 12.1 3.2 - (0.1) - 15.2 4.0 1.9 (0.9) - 5.0 2.2 (0.1) - 7.1 8.1 7.1 28.8 5.3 - - 1.0 35.1 0.2 - (0.4) (0.8) 34.1 4.2 2.2 - 0.3 6.7 2.4 (0.4) (0.4) 8.3 25.8 28.4 Total €m 57.8 38.8 (0.3) (0.9) 1.0 96.4 6.2 - (3.3) (0.8) 98.5 19.5 20.3 (0.9) 0.3 39.2 21.6 (3.3) (0.4) 57.1 41.4 57.2 Right-of-use assets are depreciated on a straight-line basis over the lease term. Where a lease contract contains extension options, the Group includes such option periods in its valuation of right-of-use assets where it is reasonably certain to exercise the option. Initial direct costs incurred in the period relating to the acquisition of leases and included in additions amounted to €nil (2021: €0.3 million). Plant and equipment mainly relates to containers used in the Group’s container ﬂeet leased under various master agreements with an average remaining term of 2.8 years (2021: 3.9 years). Land and buildings comprised (i) leased land at Dublin Port from which the Group operates a container terminal where the average remaining lease term was 92 years (2021: 93 years); (ii) a concession agreement at Belfast Harbour from which the Group operates a container terminal where the average remaining lease term was 3.7 years (2021: 4.7 years) and (iii) land leased during 2021 at Dublin Inland Port from which the Group operates a container depot where the average remaining lease term was 19.0 years (2021: 20.0 years). Related lease liabilities of €42.4 million (2021: €57.6 million) are disclosed in note 22 to the Consolidated Financial Statements. 2022 Annual Report and Financial Statements Financial Statements 153 15. Finance lease receivable At 1 January Amounts received Net beneﬁt recognised in revenue At 31 December 2022 €m 16.6 (3.6) 0.6 13.6 2021 €m 19.4 (3.6) 0.8 16.6 In 2019, the Group entered into a bareboat hire purchase sale agreement for the disposal of a vessel. Legal title to the vessel transfers to the lessor only on payment of the ﬁnal instalment. The deferred consideration has been treated as a ﬁnance lease receivable at an amount equivalent to the net investment in the lease. Amounts received less the net beneﬁt recognised in revenue, a total of €3.0 million (2021: €2.8 million) has been recognised in the Consolidated Statement of Cash Flows as proceeds on disposal of property, plant and equipment. The amounts receivable under the agreement at 31 December were as follows: Within one year Between one and two years Between two and three years Between three and four years Between four and ﬁve years Greater than ﬁve years Undiscounted payments receivable Unearned income Present value of payments receivable / Net investment in the lease Analysed as: Current ﬁnance lease receivable Non-current ﬁnance lease receivable 2022 €m 3.6 3.6 7.3 - - - 14.5 (0.9) 13.6 3.1 10.5 13.6 2021 €m 3.6 3.6 3.6 7.3 - - 18.1 (1.5) 16.6 3.0 13.6 16.6 The Group is not exposed to foreign currency risk as a result of the lease arrangement, as it is denominated in euro. Residual value risk on the vessel under lease is not signiﬁcant, because of the existence of a secondary market in vessels. The Directors of the Company estimate the loss allowance on the ﬁnance lease receivable at 31 December at an amount equal to lifetime expected credit losses. None of the ﬁnance lease receivable at 31 December 2022 was past due. Taking into account the historical payment experience up to the date of approval of these ﬁnancial statements has been in line with the agreed contractual arrangement together with the retention of legal title, the Directors of the Group consider that the allowance for expected credit losses is immaterial. 154 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 16. Inventories Fuel and lubricating oil Catering and other stocks 2022 €m 4.7 0.5 5.2 2021 €m 3.5 0.3 3.8 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 €135.1 million during the ﬁnancial year (2021: €60.4 million). 17. Trade and other receivables Trade receivables Allowance for expected credit losses Prepayments Deposit on vessel Deposits relating to other property, plant and equipment Other prepayments Finance lease receivable (note 15) Other receivables 2022 €m 65.0 (2.6) 62.4 - 9.5 3.1 3.1 1.8 79.9 2021 €m 47.3 (1.8) 45.5 3.2 5.4 2.5 3.0 2.3 61.9 The Group and Company extend credit to certain trade customers after conducting a credit risk assessment. Year-end trade receivables represent 41 days sales at 31 December 2022 (2021: 52 days). Deposits paid relating to other property, plant and equipment include advance payments for services or goods where title has not transferred at the period end. The Group’s trade receivables are analysed as follows: Not past due Within terms Past due Within 3 months After 3 months Gross value Expected credit losses Net value Gross value Expected credit losses 2022 €m 57.9 6.2 0.9 65.0 2022 €m (1.4) (0.6) (0.6) (2.6) 2022 €m 56.5 5.6 0.3 62.4 2021 €m 42.6 4.4 0.3 47.3 2021 €m (1.0) (0.5) (0.3) (1.8) Net value 2021 €m 41.6 3.9 - 45.5 2022 Annual Report and Financial Statements Financial Statements 155 17. Trade and other receivables (continued) Expected credit losses The Group has applied the IFRS 9 simpliﬁed model of recognising lifetime expected credit losses for all trade receivables as these items do not have a signiﬁcant ﬁnancing component. The concentration of credit risk is limited due to the exposure being spread over a large number of counterparties and customers. In measuring the expected credit losses, the trade receivables have been grouped by shared credit risk characteristics and by days past due. The expected loss rates are heavily inﬂuenced by the past rate of actual credit losses. Trade receivables are written off when there is no reasonable expectation of recovery. The Group also considers expected credit losses in relation to prepaid capital purchases such as vessel building deposits as there is a risk of non-delivery. The Group has a limited history of credit losses. Movement in the allowance for expected credit losses Balance at beginning of the ﬁnancial year Increase in allowance during the ﬁnancial year Balance at end of the ﬁnancial year 2022 €m 1.8 0.8 2.6 2021 €m 1.7 0.1 1.8 In relation to the amounts paid as deposits on capital works, signiﬁcant progress on these works had been completed by the ﬁnancial statement approval date. No allowance has been made for expected credit losses on refundable deposits. 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. There were no bank overdrafts outstanding at 31 December which met the offsetting conditions under IAS 32 Financial Instruments. Cash and cash equivalents at the end of the reporting period as shown in the Statement of Cash Flows were: Cash and cash equivalents 2022 €m 39.0 2021 €m 38.5 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. 95 per cent of the cash and cash equivalents were on deposit in institutions rated A2 or above by Moodys. 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 2022 €m 36.8 1.4 0.8 39.0 2021 €m 32.5 3.3 2.7 38.5 The cash and cash equivalents ﬁgure of €39.0 million (2021: €38.5 million) at 31 December 2022 includes a deposit of €3.5 million (2021: €3.5 million) over 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. 156 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 19. Share capital Group and Company Authorised 2022 Number 2022 €m 2021 Number Ordinary shares of par value €0.065 each 450,000,000 29.3 450,000,000 Redeemable shares of par value €0.00001 each Allotted, called up and fully paid Ordinary shares At beginning of the ﬁnancial year Share issue Share buyback At end of the ﬁnancial year 4,500,000,000 - 4,500,000,000 2022 Number 182,794,567 34,978 (12,006,403) 170,823,142 29.3 2022 €m 2021 Number 11.9 186,980,390 379,177 (0.8) (4,565,000) 11.1 182,794,567 2021 €m 29.3 - 29.3 2021 €m 12.2 (0.3) 11.9 There were no redeemable shares in issue at 31 December 2022 or 31 December 2021. The Company has one class of share unit, an ICG Unit, which at 31 December 2022 comprised one ordinary share and nil redeemable shares. The share unit, nor any share therein, does not carry any right to ﬁxed income. The number of ICG Units issued during the year was 34,978 (2021: 379,177) and total consideration received amounted to €0.1 million (2021: €0.7 million). These ICG Units were issued under the Group’s and Company’s share option plans. During the year, the Company bought back 12,006,403 (2021: 4,565,000) ICG Units on the market at prices ranging between €3.50 and €4.27 and at a weighted average price of €4.05 per ICG Unit. Total consideration paid of €49.2 million (2021: €19.8 million) was charged against retained earnings. The nominal value of the shares cancelled of €780,000 (2021: €297,000) was retained in a undenominated capital redemption reserve. The buybacks were conducted in line with the Group’s capital management policy at prices which the Directors considered were in the best interests of the remaining shareholders. Holders of ordinary shares are entitled to such dividends 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. 2022 Annual Report and Financial Statements Financial Statements 157 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 undenominated capital redemption reserve. Reserves arising on consolidation relate to the acquisition of a subsidiary. At 31 December 2022, the reserve balance was €0.1 million. The balance is unchanged from 31 December 2021, 1 January 2022 and 1 January 2021. The undenominated capital redemption reserve represents the nominal value of share capital repurchased. During the year, €0.8 million was transferred from retained earnings representing the nominal value of shares cancelled. At 31 December 2022, the reserve balance stands at €8.5 million (2021: €7.7 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. Translation reserve Exchange differences relating to the translation of the net assets and results of the Group’s foreign currency denominated subsidiaries, from their functional currency into the Group’s presentational currency, being euro, are recognised directly in the translation reserve. 21. Borrowings Bank loans Private placement loan notes Origination fees On demand or within one year In the second year In the third year In the fourth year Fifth year and after Less: Amount due for settlement within 12 months Amount due for settlement after 12 months 2022 €m 118.2 50.0 (0.5) 167.7 7.3 119.4 7.4 7.5 26.1 167.7 (7.3) 160.4 2021 €m 73.8 50.0 (0.7) 123.1 7.3 7.3 67.4 7.5 33.6 123.1 (7.3) 115.8 158 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 21. Borrowings (continued) Obligations under the Group borrowing facilities have been cross guaranteed by Irish Continental Group plc, Irish Ferries Limited, Eucon Shipping & Transport Limited, Zatarga Limited, Irish Ferries Finance DAC and ICG Shipping (W.B. Yeats) Limited but are otherwise unsecured. The currency proﬁle of the Group’s borrowings is set out in note 23 (iii). Borrowing facilities Overdraft and trade guarantee facilities Amounts utilised – trade guarantee (note 35) Amounts undrawn Total committed overdraft facilities Committed loan facilities Amounts drawn Amounts undrawn Total committed loan facilities Uncommitted facilities 2022 €m 0.6 15.4 16.0 168.2 13.0 181.2 258.0 2021 €m 0.6 15.4 16.0 123.8 65.0 188.8 242.8 At 31 December 2022, the Group had total committed loan and overdraft facilities of €197.2 million (2021: €204.8 million) which comprised of amounts utilised (including trade guarantees of €0.6 million (2021: €0.6 million)) of €168.8 million (2021: €124.4 million) and amounts undrawn of €28.4 million (2021: €80.4 million). 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 2022 were unsecured and cross guaranteed by certain subsidiaries within the Group and are denominated in euro. The Group’s borrowing facilities comprise of the following; i) A bank overdraft and trade guarantee facility with permitted drawing amounts of €16.0 million. At 31 December 2022, €0.6 million (2021: €0.6 million) was utilised on this facility by way of trade guarantees and €nil (2021: €nil) was utilised as an overdraft. Interest rates are calculated by reference to the lender’s 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. ii) 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 2022, €62.0 million (2021: €10.0 million) was drawn under this facility. Interest rates are arranged at ﬂoating rates for an interest period of up to six months, calculated by reference to EURIBOR or other reference rate 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 2024. iii) Amortising term loan facility totalling €56.2 million (2021: €63.8 million) made available by the European Investment Bank to fund the construction of a new cruise ferries one of which was delivered in December 2018. This facility had been drawn in full and is repayable in equal instalments over a ten year period commencing December 2020 and ending during 2030. Interest rates were ﬁxed for the duration of the term at a rate of 1.724%. 2022 Annual Report and Financial Statements Financial Statements 159 21. Borrowings (continued) iv) Multicurrency private placement loan note shelf agreements agreed with a number of investors with a potential drawing amount of €258.0 million. Loan notes for a total amount of €50.0 million with a maturity of 30 November 2024 at an interest rate of 1.40% have been issued under this facility. The remaining balance of €208.0 million total is available for drawing at the discretion of investors up to 6 October 2023. Interest rates are set at each drawing date and maturity may extend for up to 15 years. The weighted average interest rates paid during the ﬁnancial year were as follows: Bank overdrafts Bank loans 2022 1.05% 1.80% 2021 0.41% 1.61% The average interest rates reﬂect the terms of the reﬁnancing arrangements concluded in prior periods. There was €52.0 million (2021: €10.0 million) worth of bank loans drawn during 2022 from an existing loan facility. Interest rates on all bank loans drawn in prior periods were ﬁxed at date of drawdown with resetting occurring every three to six months. 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 50 per cent of the voting share capital of the Company. The borrowing agreements contain a range of undertakings and negative pledges including conduct of business in compliance with laws and regulations, maintenance of assets, insurance and take-on of additional borrowing facilities. In certain circumstances, proceeds from the disposal of key assets must be applied towards repayment of borrowings. 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 2022. The two key ﬁnancial covenants cover leverage which is borrowings expressed as times EBITDA and interest cover which is EBITDA expressed as times interest on borrowings. The calculation of these ratios and reconciliation to IFRS measures is set out below. EBITDA for covenant purposes Operating proﬁt / (loss) Depreciation and amortisation EBITDA Movement in lease receivable (note 15) Lease payments (note 22) EBITDA for covenant purposes Net debt for covenant purposes Cash (note 18) Bank deposits subject to lien (note 18) Borrowings (note 21) Origination fees (note 21) Trade guarantees (note 35) Net debt for covenant purposes 2022 €m 66.7 60.5 127.2 3.0 (22.3) 107.9 2022 €m (39.0) 3.5 167.7 0.5 0.6 133.3 2021 €m (0.2) 52.5 52.3 2.8 (21.1) 34.0 2021 €m (38.5) 3.5 123.1 0.6 0.6 89.4 160 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 21. Borrowings (continued) Bank loan interest expense Finance income Finance costs Net ﬁnance costs Interest income on deﬁned beneﬁt assets (note 6) Interest expense on lease liabilities (note 7) Bank loan interest expense Covenant Leverage ratio Interest service ratio Covenant Level Max 3.0x (2021: 4.0x) Min 4.0x 2022 €m (0.1) 4.3 4.2 0.1 (1.3) 3.0 2021 €m (0.1) 4.0 3.9 0.1 (1.3) 2.7 Times Times 1.2x 36.0x 2.6x 12.6x For ﬁnancial covenant testing dates falling during calendar year 2021, a temporary increase in covenant leverage levels from 3.0x to 4.0x had been agreed with the Company’s lenders. 22. Lease liabilities At 1 January Additions Payments Lease remeasurement Lease interest expense recognised in period Currency adjustment At 31 December Analysed as: Current liabilities Non-current liabilities 2022 €m 57.6 6.2 (22.3) - 1.3 (0.4) 42.4 11.7 30.7 42.4 2021 €m 38.5 38.5 (21.1) (0.3) 1.3 0.7 57.6 20.1 37.5 57.6 2022 Annual Report and Financial Statements Financial Statements 161 22. Lease liabilities (continued) The maturity proﬁle of lease liabilities is set out below: Committed lease obligations Within one year Between one and two years Between two and three years Between three and four years Between four and ﬁve years Between ﬁve and 10 years Greater than 10 years 2022 €m 11.7 4.1 3.7 2.5 1.0 2.5 16.9 42.4 2021 €m 20.1 9.1 3.7 3.3 2.1 2.1 17.2 57.6 Outstanding lease terms vary from one month to eight years except in the case of leasehold land where the terms vary between 19 and 99 years. At 31 December 2022, the average incremental borrowing rate applying to lease liabilities was 3.2% (2021: 2.5%) for periods of between 3 months and 99 years. These rates were based on the incremental borrowing rate which in the case of lease liabilities recognised on application of IFRS 16 was estimated at 1 January 2019 and in all other cases at the date of commencement of the lease. The incremental borrowing rate is estimated as that rate of interest available to the Group for borrowings over a similar term as the obligation to acquire a similar asset. The Group’s obligations are secured by lessors’ title to the leased assets. All lease contracts relating to land and property contain market review clauses. The leases for land and property in Dublin contain seven yearly upward only rent reviews based on market rates. The next review is due on 1 January 2024. The lease contract relating to land and property in Belfast includes an annual review based on UK Retail Price Inﬂation. The above lease liabilities do not include any variable payments based on throughput of leased facilities, short term leases of less than one year or leases relating to low value assets. These are expensed as incurred and disclosed at note 9. Related right-of-use assets of €41.4 million (2021: €57.2 million) are disclosed in note 14 to the Consolidated Financial Statements. Expenses of €3.3 million (2021: €4.3 million) relating to short-term leases, variable lease payments and leases of low-value assets were recognised in the income statement and are disclosed in note 9 to the Consolidated Financial Statements. 162 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 23. 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 assessed within the Group’s risk management systems and included on the Group’s risk register. Risk mitigation measures may include use of ﬁnancial derivatives, foreign currency forward contracts, interest rate swaps and cash ﬂow matching. i) Categories of ﬁnancial instruments Financial assets and liabilities 2022 Finance lease receivable Trade and other receivables Cash and cash equivalents Borrowings Trade and other payables 2021 Finance lease receivable Trade and other receivables Cash and cash equivalents Borrowings Trade and other payables Loans and receivables at amortised cost Financial liabilities at amortised cost Carrying value Fair value €m 13.6 76.8 39.0 - - €m - - - 167.7 79.7 €m 13.6 76.8 39.0 167.7 79.7 €m 13.6 76.8 39.0 169.0 79.7 Loans and receivables at amortised cost Financial liabilities at amortised cost Carrying value Fair value €m 16.6 58.9 38.5 - €m - - - 123.1 57.9 €m 16.6 58.9 38.5 123.1 57.9 €m 16.6 58.9 38.5 124.8 57.9 Fair value hierarchy The Group does not have any ﬁnancial assets or ﬁnancial liabilities that are carried at fair value in the Consolidated Statement of Financial Position at 31 December 2022 and 31 December 2021. In relation to those ﬁnancial assets and ﬁnancial liabilities where fair value is required to be disclosed in the Notes to the Consolidated Financial Position, these ﬁnancial assets and ﬁnancial liabilities are classiﬁed within Level 3 (2021: Level 3) 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. 2022 Annual Report and Financial Statements Financial Statements 163 23. 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: Finance lease receivable Finance lease recognised based on the estimated net investment in the lease being the present value of the contractual future cash ﬂows discounted at the rate implicit in the lease. Trade and other receivables / payables For trade receivables and trade payables, with average settlement periods of 41 days (2021: 50 days) and 67 days (2021: 81 days) respectively, the carrying value less allowance for expected credit losses, where appropriate, is estimated to reﬂect fair value due to their short-term nature. 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 incremental borrowing cost used to calculate the carrying value includes a fair estimate of counterparty risk and the carrying value approximates fair value. Derivative ﬁnancial instruments There are no derivative ﬁnancial instruments outstanding at 31 December 2022 and 31 December 2021 and none were entered into in either 2021 or 2022. ii) Interest rate risk At 31 December 2022, interest rates on short-term bank deposits were contracted for terms of less than three months at average effective rates of 0.3% (2021: (0.3%)). The interest rates on all Group borrowings at 31 December 2022 comprising loan notes and term loans has been ﬁxed at contracted rates at the date of drawdown with the relevant lender eliminating exposure to interest rate risk on borrowings. The average interest rate at 31 December 2022 was 2.40% (2021: 1.60%) for remaining terms of between 1.8 and 7.5 years. The interest rates on all lease liabilities at 31 December 2022 were ﬁxed at the incremental borrowing rate at the later of the IFRS 16 effective application date of 1 January 2019 or lease commencement date. Sensitivity to interest rates As all of the Group’s borrowings are ﬁxed for the full remaining borrowing terms, the Group has not prepared calculations to measure the estimated effect of changes in market interest rates on the Consolidated Income Statement and Equity Review. 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. Sterling denominated proﬁts are translated to euro at the average rate of exchange for the ﬁnancial year. The average rate at which sterling proﬁts were translated during the year was €1:£0.8528 (2021: €1:£0.8596). Exchange rate exposures are managed within approved policy parameters. The Group did not utilise forward foreign exchange contracts during the year ended 31 December 2022 or 31 December 2021. 164 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 23. Financial instruments and risk management (continued) Sensitivity The currency risk sensitivity analysis is set out below: Under the assumptions; (i) a 10% strengthening in euro exchange rates against all currencies, proﬁt before tax would have increased by €5.2 million (2021: increase of €4.8 million) and equity (before tax effects) would have increased by €1.0 million (2021: increase of €3.2 million); (ii) a 10% weakening in euro exchange rates against all currencies, proﬁt before tax would have decreased by €6.3 million (2021: decrease of €6.2 million) and equity (before tax effects) would have decreased by €1.2 million (2021: decrease of €4.3 million). The currency proﬁle of the carrying amounts of the Group’s monetary assets and monetary liabilities at the reporting date are as follows: 2022 Trade receivables (net) Cash and cash equivalents Total assets Trade and other payables Lease liabilities Total liabilities Net assets / (liabilities) 2021 Trade receivables (net) Cash and cash equivalents Total assets Trade and other payables Lease liabilities Total liabilities Net assets / (liabilities) Euro €m - 1.1 1.1 - - - 1.1 Euro €m - 0.2 0.2 - - - 0.2 Sterling US Dollar €m 3.7 12.3 16.0 14.0 - 14.0 2.0 €m 0.1 1.0 1.1 8.1 1.1 9.2 (8.1) Sterling US Dollar €m 3.4 6.0 9.4 11.3 - 11.3 (1.9) €m 0.3 1.5 1.8 6.2 0.7 6.9 (5.1) Total €m 3.8 14.4 18.2 22.1 1.1 23.2 (5.0) Total €m 3.7 7.7 11.4 17.5 0.7 18.2 (6.8) 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. In the Container and Terminal Division, movements in fuel costs are offset to a large extent by the application of pre-arranged price adjustments with our customers. Similar arrangements are in place with freight customers in the Ferries Division. In the passenger sector, changes in fuel costs are included in the ticket price to the extent that market conditions will allow. 2022 Annual Report and Financial Statements Financial Statements 165 23. Financial instruments and risk management (continued) v) Liquidity risk The Group and Company are exposed to liquidity risk which arises primarily from the maturing of short-term and long-term debt obligations. There were no open derivative contracts at 31 December 2022 or 31 December 2021. 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: • monitor credit ratings of institutions with which the Group and Company maintain cash balances; • • borrow the bulk of its debt needs under committed bank lines or other term ﬁnancing and by policy maintains a limit maturity of cash balances; and minimum level of undrawn committed facilities. At each year-end, the Group’s rolling liquidity reserve (which comprises cash and undrawn committed facilities and which represents the amount of available cash headroom in the Group funding structure) was as follows: Cash and cash equivalents Committed undrawn facilities Liquidity reserve 2022 €m 39.0 28.4 67.4 2021 €m 38.5 80.4 118.9 Management monitors rolling cash ﬂow forecasts on an ongoing basis to determine the adequacy of the liquidity position of the Group. This process also incorporates a longer term liquidity review to ensure reﬁnancing risks are adequately catered for as part of the Group’s strategic planning. Liquidity analysis The following table sets out the maturity and liquidity analysis of the Group’s ﬁnancial liabilities into the relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date: Liquidity Table 2022 Liabilities Trade and other payables Bank loans Lease liabilities Total liabilities Liquidity Table 2021 Liabilities Trade and other payables Bank loans Lease liabilities Total liabilities Weighted average period until maturity Carrying amount Contractual amount Less than 1 year Between 1 – 2 years Between 2 – 5 years Between 5 – 10 years More than 10 years Years €m €m €m €m €m €m €m - 2.5 35.6 84.2 167.7 42.4 84.2 178.4 86.8 84.2 11.9 12.8 294.3 349.4 108.9 - 123.3 5.1 128.4 - 24.0 9.5 33.5 - 19.2 - - 5.9 53.5 25.1 53.5 Weighted average period until maturity Carrying amount Contractual amount Less than 1 year Between 1 – 2 years Between 2 – 5 years Between 5-10 years More than 10 years Years €m €m €m €m €m €m €m - 3.6 27.1 60.2 123.1 57.6 60.2 130.3 101.5 240.9 292.0 60.2 9.1 22.0 91.3 - 9.1 9.4 18.5 - 85.1 11.4 96.5 - 27.0 - - 5.5 53.2 32.5 53.2 166 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 23. Financial instruments and risk management (continued) vi) Credit risk The Group and Company monitors its credit exposure to its counterparties via their credit ratings (where applicable) and where possible limits its exposure to any one party to ensure that there are no signiﬁcant concentrations of credit risk. Notwithstanding the foregoing, due to the nature of the underlying transaction there is a material exposure to a single counterparty in relation to the lease receivable. Mitigation of this exposure to ﬁnance lease receivables is explained at note 15. 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. vii) Capital management The objective when managing capital is to safeguard the Group’s ability to continue in business and provide returns for shareholders together with maintaining the conﬁdence of all stakeholders. No changes were made in the objectives, policies or processes for managing capital during the ﬁnancial years ended 31 December 2022 and 31 December 2021. The capital structure of the Group consists of net debt (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 seeks to maintain an optimal capital structure to reduce the overall cost of capital while balancing the beneﬁts of different capital sources. Within this framework the Group considers the amount and tenor of borrowings and distributions to shareholders either through dividends or buybacks. During the year the Company bought back 12.0 million ICG units at a cost of €49.2 million. The Group increased bank borrowings (net of repayments) by €44.4 million), lease liabilities decreased by €15.2 million and cash and cash equivalents increased by €0.5 million. The Group actively monitors the externally imposed capital requirements contained in our debt facilities which set a maximum leverage ratio of net debt to earnings before interest tax depreciation and amortisation. Having agreed a temporary increase in this leverage ratio against the background of the Covid-19 pandemic to 4 times which applied during the ﬁnancial year ended 2021, this reverted to 3 times for testing dates after 1 January 2022. At 31 December 2022, the leverage ratio under covenant deﬁnitions was 1.2 times (2021: 2.6 times). At 31 December 2022, the net debt position of the Group was €171.1 million (2021: net debt of €142.2 million) and total equity balances amounted to €260.8 million (2021: €249.7 million). 24. Deferred tax liabilities Companies within the Group where appropriate, have elected to be taxed under the Irish tonnage tax scheme in respect of all eligible shipping 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. Deferred tax assets arise where 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 of €0.1 million (2021: €0.1 million) has not been recognised in respect of tax losses as 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. 2022 Annual Report and Financial Statements Financial Statements 167 24. Deferred tax liabilities (continued) The following are the deferred tax liabilities and assets recognised by the Group, and the movements thereon, during the current and prior reporting periods: 2022 At beginning of the ﬁnancial year Charge to the Statement of Consolidated Income Charge to Statement of Other Comprehensive Income Currency translation adjustment At end of the ﬁnancial year Analysed as: Non-current asset Non-current liability 2021 At beginning of the ﬁnancial year Charge to the Statement of Consolidated Income Charge to Statement of Other Comprehensive Income At end of the ﬁnancial year Accelerated tax depreciation Retirement beneﬁt obligation €m 0.5 - - - 0.5 €m 0.7 - 2.4 (0.1) 3.0 Accelerated tax depreciation Retirement beneﬁt obligation €m 0.4 0.1 - 0.5 €m (0.2) - 0.9 0.7 Deferred tax is recognised in the Consolidated Statement of Comprehensive Income to the extent it arises on proﬁts or losses recognised in that statement. 25. Trade and other payables Within one year Trade and other payables Accruals Deferred revenue Payroll taxes Social insurance cost Corporation tax Value-added tax 2022 €m 37.1 42.6 79.7 11.8 1.3 0.3 1.0 2.1 96.2 Total €m 1.2 - 2.4 (0.1) 3.5 (0.1) 3.6 3.5 Total €m 0.2 0.1 0.9 1.2 2021 €m 30.7 27.2 57.9 15.3 0.7 0.2 - 1.4 75.5 168 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 25. Trade and other payables (continued) Trade payables and accruals comprise amounts outstanding for trade purchases and ongoing costs and are non-interest bearing. They also include deferred revenue amounts of €11.8 million (2021: €15.3 million) relating to cash received in respect of performance obligations outstanding not yet complete by the Group. Movements in deferred revenue balances during the period were as follows: At 1 January Passenger revenue Cash received At 31 December 2022 €m 15.3 (162.7) 159.2 11.8 2021 €m 13.0 (59.0) 61.3 15.3 The average trade credit period outstanding was 67 days at 31 December 2022 (2021: 81 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. 26. Provisions Claims provision At beginning of the ﬁnancial year Utilisation of provision (Decrease) / increase in provision At end of the ﬁnancial year Analysed as follows: Current liabilities Non-current liabilities The claims provision comprises; 2022 €m 3.3 (0.3) (0.2) 2.8 1.7 1.1 2.8 2021 €m 2.2 - 1.1 3.3 3.1 0.2 3.3 (i) the insurance excess payable by the Group and Company in a number of potential compensation claims, arising in the normal course of business. Provision is made for incidents reported prior to the reporting date but for which no claim has been received. No provision has been recognised for incidents that may have occurred prior to the reporting date, but which had not been reported to the Group, as based on past experience these are not expected to be material; (ii) provisions relate to claims lodged and expected to be lodged with the Group based on events which have occurred prior to the reporting date, where a future cash ﬂow is expected to occur. 2022 Annual Report and Financial Statements Financial Statements 169 27. Commitments Commitments for the acquisition of property, plant and equipment – approved and contracted for, but not accrued Approved and contracted Less accrued at 31 December Approved and contracted for not accrued 28. Short-term vessel charter and container hire obligations Within one year 2022 €m 30.8 (18.4) 12.4 2022 €m - 2021 €m 42.0 (10.6) 31.4 2021 €m - There were €nil outstanding commitments at 31 December 2022 (2021: €nil million) relating to short-term vessel charter and container hire obligations. An expense of €3.3 million (2021: €4.3 million) was recognised in the period where the related rights were not recognised as a right-of-use asset. The 2022 expense is analysed in note 9. 29. Operating lease income The aggregate future minimum lease payments receivable under non-cancellable operating leases are as follows: Within one year Between one and two years Between two and three years 2022 €m 13.2 3.7 - 16.9 2021 €m 17.2 13.2 3.7 34.1 The lease payments receivable relate to the charter of container vessels. 30. Share-based payments The Group operates two equity-settled share option schemes under which certain employees have been issued with share options as described below. The Performance Share Plan (PSP) is 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, 1,552,500 (2021: 1,042,500) options were granted under the PSP with a vesting period of three years. The 2009 Share Option Plan remains in place with respect to outstanding grants made prior to 2016 but no new grants will be made following the adoption of the PSP. The number of shares over which options may be granted may not exceed 10 per cent of the shares of the Company in issue. 170 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 30. Share-based payments (continued) Options are forfeited where the grantee ceases employment with the Group unless retention, 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 Exercisable at 31 December Weighted average share price at date of exercise of options Weighted average remaining contractual life of options outstanding at year-end 2022 2021 Number of share options Weighted average exercise price Number of share options Weighted average exercise price 5,646,854 1,552,500 (1,060,856) (608,962) 5,529,536 1,910,000 5,756,140 1,042,500 (637,530) (514,256) 5,646,854 2,790,000 € 1.47 0.065 1.25 0.35 1.25 3.52 3.51 1.6 years € 1.59 0.065 1.25 0.065 1.47 2.94 4.35 1.8 years In settlement of the options exercised during the year, the Company issued 34,978 (2021: 379,177) new ICG units with the balance of 1,025,878 (2021: 258,353) settled through market purchase. The exercise prices of options outstanding at 31 December are as follows: Exercisable: 2009 Share Option Plan Vested Options Vested Options Vested Options Exercisable at 31 December Not Exercisable: Performance Share Plan Outstanding at 31 December 2022 Options 2021 Options - 200,000 1,710,000 1,910,000 825,000 205,000 1,760,000 2,790,000 3,619,536 5,529,536 2,856,854 5,646,854 Price € 1.57 2.97 3.58 0.065 Options issued under the 2009 Share Option Plan were market priced options with a maximum life of 10 years. These had been measured at fair value using a binomial option pricing model. All options issued under the 2009 Option Plan have vested to participants and the fair value of these has been expensed to the Income Statement over the period from date of grant to date of vesting determination. 2022 Annual Report and Financial Statements Financial Statements 171 30. Share-based payments (continued) Options granted under the PSP are priced at the nominal price of the shares comprised in an ICG unit. Vesting of options under the PSP are contingent on the achievement of certain market and non-market performance hurdles. The fair value of options subject to market conditions is estimated using Monte-Carlo simulation. The fair value of options subject to non- market conditions is estimated based on the market value at date of grant adjusted for the effects of non-transferability, exercise restrictions and behavioural considerations. The fair value is expensed to the Income Statement evenly over a vesting period of three years with an adjustment made at each reporting period for the estimated vesting rate for those options subject to non-market vesting conditions. Outstanding options had been granted on 1 September 2014, 5 March 2015, 6 March 2020, 12 March 2021 and 11 March 2022. The estimated fair values of the options are as follows: Year of Grant Share Plan Fair value of option: Options subject to market performance conditions Options subject to non-market performance conditions 2022 PSP - 2021 PSP - 2020 2015 2015 2014 2014 PSP 2009 Plan 2009 Plan 2009 Plan 2009 Plan - Basic Tier Second Tier Basic Tier Second Tier €1.29 €2.15 €0.96 €0.4528 €0.5581 €0.2992 €0.4449 €2.30 €3.63 €3.07 - - - - The inputs into the valuation model in the respective years of grant were as follows: Year of Grant At date of grant: 2022 2021 2020 2015 2015 2014 2014 Basic Tier Second Tier Basic Tier Second Tier Weighted average share price €3.36 €4.26 €3.77 Weighted average exercise price €0.065 €0.065 €0.065 Expected volatility 45% 43% 29% €3.580 €3.580 29% Expected life Risk free rate 3 years 3 years 3 years 7 years (0.141%) (0.562%) (0.462%) 0.090% Expected dividend yield 4.41% 2.15% 3.70% 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% Expected volatility was determined by calculating the historical volatility of the Company’s share price. In 2022, the share-based payment expense recognised in the Consolidated Income Statement was €3.0 million (2021: €1.3 million). The share-based payment expense has been classiﬁed in the Consolidated Income Statement as follows: Employee beneﬁts expense 2022 €m 3.0 2021 €m 1.3 Share-based payment expense of €1.1 million (2021: €0.5 million) relates to the Directors of the Company. The balance on the share option reserve in the Consolidated Statement of Financial Position at 31 December 2022 is €6.3 million (2021: €4.7 million). 172 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 31. 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 €0.4 million (2021: €0.3 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 2022 (2021: €nil). Deﬁned Beneﬁt Obligations i) Group sponsored schemes The Group operates contributory deﬁned beneﬁt obligations, which provide retirement and death beneﬁts for other employees who are not members of the deﬁned contribution pension scheme. The deﬁned beneﬁt obligations provide beneﬁts to members in the form of a guaranteed level of pension payable for life, the level of the beneﬁts depend on the member’s length of service and salary. The assets of these schemes are held separately from those of the Group in schemes under the control of trustees. The trustees are responsible for ensuring the schemes are run in accordance with the applicable trust deed and the pension laws of the relevant jurisdiction. The trustees invest the funds in a range of assets with the objective of maximising the fund return whilst minimising the cost of funding the scheme at an acceptable risk proﬁle. In assessing the risk proﬁle, the trustees take account of the nature and duration of the liabilities and review investment strategy regularly. The pension 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 31 March 2021 and 31 October 2021. 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 2022 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. The pension contributions paid in the year ended 31 December 2022 amounted to €0.6 million (2021: €1.1 million) while the current service cost charged to the Consolidated Income Statement amounted to €1.7 million (2021: €1.7 million). The proﬁle of membership across all schemes at 31 December was as follows; Current employees Members with deferred beneﬁts Pensioners Total 2022 130 476 163 769 2021 145 500 134 779 Buyout transaction On 9 December 2020, the Trustee of the Group’s principal deﬁned beneﬁt pension scheme entered into an irrevocable agreement whereby the liabilities relating to pensions in payment at the transaction date were transferred to a third-party insurer on payment of an initial premium of €160.6 million. This gave rise to a non-cash settlement loss of €9.3 million being the difference between the present value of the transferred liabilities discounted at the AA corporate bond rate used for IAS 19 valuation purposes at the transaction date and the premium paid. A further premium of €8.5 million was paid to the insurer during 2021 on completion of a data veriﬁcation exercise. The obligations associated with this payment had been included in the pension scheme obligations as at 31 December 2020 and no additional settlement gain or loss arose on payment of this further premium. 2022 Annual Report and Financial Statements Financial Statements 173 31. Retirement beneﬁt schemes (continued) The Trustee, in agreement with the Company, also augmented pension beneﬁts of certain members resulting in an augmentation cost of €1.1 million being the present value of the future beneﬁt changes, which was recognised in the Income Statement for the year ended 31 December 2020. In conjunction with the 9 December 2020 transaction, the Group concluded a new deﬁcit funding agreement with the trustee replacing the previous deﬁcit funding agreement agreed in 2014. Under the new agreement, the Group retained the obligation to make 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. During 2021, the Trustee conﬁrmed that the Scheme met the minimum funding standard including risk reserves as set out in Irish pensions legislation leading to a cessation of the requirement to continue making the deﬁcit funding payments. The Trustee continues to retain a charge over the escrow deposit created and funded under the former funding agreement until 31 December 2023, with the balance payable to the scheme in certain circumstances. The balance held in the escrow account at 31 December 2022 was €3.5 million (note 18). Netherlands Scheme The Group operates a deﬁned beneﬁt pension scheme for certain employees based in The Netherlands. All the liabilities of this scheme are matched by insurance contracts other than for inﬂation adjustment to accrued beneﬁts for current employees. 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 former 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 2021 and disclosed a net past service surplus of £55.0 million, equivalent to a gross funding level of 102%. The Group’s share of the MNOPF obligations, as most recently advised by the trustees, is 1.04% (2021: 1.53%). The obligation valuation in these ﬁnancial statements at 31 December 2022 is based on the actuarial deﬁcit contribution demands notiﬁed to the Group and which remain outstanding at the reporting date. The last deﬁcit demand received by the Group was dated May 2013 and has been fully paid. On this basis, the share of the overall deﬁcit in the MNOPF estimated to be attributable to the Group at 31 December 2022 is €nil (2021: €nil). During the year, the Group made payments of €nil (2021: €nil) 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 in the Eurozone as those rated AA or higher by at least one rating agency. In respect of sterling schemes, corporate bonds must be rated AA, or higher, by at least two rating agencies. Salary risk The present value of the deﬁned beneﬁt liability is calculated by reference to the projected salaries of scheme participants at retirement based on salary inﬂation assumptions. As such, any variation in salary versus assumption will vary the schemes’ liabilities. Life expectancy risk The present value of the deﬁned beneﬁt obligations liability is calculated by reference to the best estimate of the mortality of scheme participants both during and after their employment. An increase in the life expectancy of the scheme participants will change the scheme liabilities. 174 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 31. Retirement beneﬁt schemes (continued) Inﬂation risk A signiﬁcant proportion of the beneﬁts under the plans are linked to inﬂation with higher inﬂation leading to higher liabilities. The Directors have taken independent actuarial advice on the key judgements used in the estimate of retirement beneﬁt scheme assets and liabilities. The principal assumptions used for the purpose of the actuarial valuations were as follows: Discount rate Inﬂation rate Rate of annual increase of pensions in payment Rate of increase of pensionable salaries Sterling liabilities Euro liabilities 2022 4.75% 2.90% 2021 1.85% 3.60% 2.20% - 3.30% 2.20% - 3.40% 2022 3.65% 2.50% 1.50% 2021 1.20% 2.00% 1.00% 1.15% 1.10% 0.00% - 1.40% 0.00% - 1.20% The euro and sterling discount rates have been determined in consultation with the Group’s independent actuary, who has 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 2022, the high quality corporate bond population include those rated AA or higher by at least two rating agencies. Sterling obligations include the effects of the UK GMP equalisation court decisions. The estimated effect was to increase the obligations of the UK scheme by 0.1%. The average life expectancy used in the principal Group schemes at age 60 is as follows: Irish Schemes: Current retirees Future retirees UK Schemes: Current retirees Future retirees 2022 Male 26.7 years 29.1 years 27.7 years 29.2 years Female 29.6 years 31.6 years 29.5 years 30.9 years 2021 Male 26.6 years 29.0 years 27.8 years 29.3 years Female 29.5 years 31.5 years 29.4 years 30.9 years Assumptions regarding life expectancies are set based on actuarial advice in accordance with published statistics and experience in each jurisdiction. 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 €91.6 million at 31 December 2022 (2021: €140.5 million). At 31 December 2022, the Group also has scheme assets totalling €124.8 million (2021: €145.8 million), giving a net pension surplus of €33.2 million (2021: surplus of €5.3 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 analysis 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. Rate of inﬂation* Rate of mortality 2021 Rate of inﬂation* Rate of mortality 2022 Annual Report and Financial Statements Financial Statements 175 31. Retirement beneﬁt schemes (continued) There has been no change from the prior year in the methods and assumptions used in preparing the sensitivity analyses below. 2022 Assumption Change in assumption Impact on euro schemes Impact on sterling scheme Combined impact on Discount rate 0.5% increase in discount rate 0.5% increase in price inﬂation liabilities liabilities liabilities 9.5% decrease in liabilities 8.5% increase in liabilities 7.2% decrease in liabilities 4.7% increase in liabilities 9.1% decrease in liabilities 7.8% increase in liabilities Members assumed to live one year longer 3.0% increase in liabilities 3.1% increase in liabilities 3.0% increase in liabilities Assumption Change in assumption Impact on euro schemes Impact on sterling scheme Combined impact on liabilities liabilities liabilities Discount rate 0.5% increase in discount rate 0.5% increase in price inﬂation 9.5% decrease in liabilities 10.3% increase in liabilities 8.4% decrease in liabilities 6.0% increase in liabilities 4.3% increase in liabilities 9.3% decrease in liabilities 9.4% increase in liabilities 4.1% increase in liabilities Members assumed to live one year longer 4.0% 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 is as follows: Equities Bonds Property Insurance contracts Other Fair value of scheme assets Present value of scheme liabilities Surplus in schemes Scheme with liabilities in sterling Schemes with liabilities in euro Total 2022 €m 10.8 14.6 - - 2.9 28.3 (16.5) 11.8 2021 €m 13.5 15.1 - - 3.4 32.0 (28.3) 3.7 2022 €m 63.2 22.3 0.1 7.4 3.5 96.5 (75.1) 21.4 2021 €m 68.9 27.4 1.0 10.9 5.6 113.8 (112.2) 1.6 2022 €m 74.0 36.9 0.1 7.4 6.4 124.8 (91.6) 33.2 2021 €m 82.4 42.5 1.0 10.9 9.0 145.8 (140.5) 5.3 176 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 31. Retirement beneﬁt schemes (continued) Three of the deﬁned beneﬁt obligation schemes 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 obligation schemes 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 16.5 years (2021: 19.7 years). The weighted average duration of euro scheme obligations was 17.0 years (2021: 20.1 years) and of sterling scheme obligations was 14.5 years (2021: 17.9 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 in pension schemes v) Movements in retirement beneﬁt assets Movements in the fair value of scheme assets in the current year were as follows: 2022 At beginning of the ﬁnancial year Interest income Actuarial loss Exchange difference Employer contributions Contributions from scheme members Beneﬁts paid At end of the ﬁnancial year 2021 At beginning of the ﬁnancial year Interest income Actuarial gains Exchange difference Employer contributions Contributions from scheme members Transfer of assets * Beneﬁts paid At end of the ﬁnancial year 2022 €m 33.6 (0.4) 33.2 Schemes in sterling Schemes in euro €m 32.0 0.5 (2.2) (1.6) 0.3 0.1 (0.8) 28.3 €m 113.8 1.4 (16.5) - 0.3 0.2 (2.7) 96.5 Schemes in sterling Schemes in euro €m 27.3 0.3 3.1 1.9 0.3 0.1 - (1.0) 32.0 €m 112.3 0.8 12.4 - 0.8 0.2 (8.5) (4.2) 113.8 2021 €m 6.7 (1.4) 5.3 Total €m 145.8 1.9 (18.7) (1.6) 0.6 0.3 (3.5) 124.8 Total €m 139.6 1.1 15.5 1.9 1.1 0.3 (8.5) (5.2) 145.8 * The transfer of assets during 2021 relates to the premium paid relating to the buyout transaction concluded on 9 December 2020. Further details are provided at note 31(i) above. 2022 Annual Report and Financial Statements Financial Statements 177 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: 2022 At beginning of the ﬁnancial year Service cost Interest cost Contributions from scheme members Actuarial gain Exchange difference Beneﬁts paid At end of the ﬁnancial year 2021 At beginning of the ﬁnancial year Service cost Interest cost Contributions from scheme members Actuarial (gain) / loss Exchange difference Transfer of liabilities * Beneﬁts paid At end of the ﬁnancial year Schemes in sterling Schemes in euro €m 28.3 0.4 0.5 0.1 (10.9) (1.1) (0.8) 16.5 €m 112.2 1.3 1.3 0.2 (37.2) - (2.7) 75.1 Schemes in sterling Schemes in euro €m 28.0 0.4 0.4 0.1 (1.6) 2.0 - (1.0) 28.3 €m 112.8 1.3 0.6 0.2 10.0 - (8.5) (4.2) 112.2 Total €m 140.5 1.7 1.8 0.3 (48.1) (1.1) (3.5) 91.6 Total €m 140.8 1.7 1.0 0.3 8.4 2.0 (8.5) (5.2) 140.5 * The transfer of liabilities during 2021 relate to the buyout transaction concluded on 9 December 2020, which also gave rise to the settlement and augmentation losses reported in the year ended 31 December 2020. Further details are provided at note 31(i) above. 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 2022 €m 1.7 1.7 2021 €m 1.7 1.7 178 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 31. Retirement beneﬁt schemes (continued) Recognised in ﬁnance income Interest income on scheme assets Interest on scheme liabilities Net interest income on deﬁned beneﬁt obligations (notes 6 and 7) 2022 €m (1.9) 1.8 (0.1) 2021 €m (1.1) 1.0 (0.1) The estimated amounts of employer contributions expected to be paid to the schemes during 2023 is €0.6 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 total 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: Losses arising from changes in demographic assumptions Gains arising from changes in ﬁnancial assumptions Gains arising from experience adjustments Actuarial gain recognised in the Consolidated Statement of Comprehensive Income Exchange movement Exchange (loss) / gain on scheme assets Exchange gain / (loss) on scheme liabilities Net exchange loss recognised in the Consolidated Statement of Comprehensive Income 2022 €m (16.8) (1.9) (18.7) - 46.9 1.2 29.4 2022 €m (1.6) 1.1 (0.5) 2021 €m 16.6 (1.1) 15.5 (8.6) 0.1 0.1 7.1 2021 €m 1.9 (2.0) (0.1) 2022 Annual Report and Financial Statements Financial Statements 179 32. Related party transactions During the ﬁnancial year, Group entities incurred costs of €0.2 million (2021: €0.2 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. 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 2022 €m 6.1 0.3 2.2 8.6 2021 €m 3.2 0.3 0.9 4.4 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. 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. Dividends The Company paid a ﬁnal dividend in respect of 2021 on 7 July 2022 and an interim dividend in respect of 2022 on 7 October 2022. The total amounts received by key management including Directors in respect of these dividend payments was €4.3 million. No dividends were paid in 2021. Share options Share options exercised by the Company’s Directors are set out in the Report of the Remuneration Committee on page 105. 180 Irish Continental Group Notes Forming Part of the Consolidated Financial Statements Continued 33. Cash ﬂow components Retirement beneﬁt scheme movements Retirement beneﬁt obligations – current service cost Retirement beneﬁt obligations – payments Total retirement beneﬁt scheme movements Repayments of lease liabilities Lease payments (note 22) Interest element of lease payments (note 7 & 22) Capital element of lease payments Purchases of property, plant and equipment and intangible assets Purchases of property, plant and equipment (note 12) Purchases of intangible assets (note 13) Increase in capital asset prepayments (note 17) Total purchases of property, plant and equipment and intangible assets Changes in working capital Increase in inventories (Increase) / decrease in receivables Increase in payables Total working capital movements 34. Change in ﬁnancing liabilities 2022 €m 1.7 (0.6) 1.1 (22.3) 1.3 (21.0) (74.4) (0.4) (0.9) (75.7) (1.4) (17.0) 19.6 1.2 The changes in liabilities arising from ﬁnancing activities during the year ended 31 December 2022 were as follows: At 1 January 2022 Changes from cash ﬂows Repayment of borrowings Lease payments Loan drawdown Non-cash ﬂow changes Amortisation Lease liabilities recognised Currency adjustment At 31 December 2022 Bank loans Loan notes Origination fees Lease liabilities €m 73.8 (7.6) - 52.0 - - - €m 50.0 - - - - - - 118.2 50.0 €m (0.7) - - - 0.2 - - (0.5) €m 57.6 - (21.0) - - 6.2 (0.4) 42.4 2021 €m 1.7 (1.1) 0.6 (21.1) 1.3 (19.8) (45.6) (1.0) (8.6) (55.2) (1.9) 2.5 11.1 11.7 Total €m 180.7 (7.6) (21.0) 52.0 0.2 6.2 (0.4) 210.1 Capital repayments on the bank loans drawn during 2018 commenced in 2020. The loan notes have bullet payment terms with repayment due in 2024. 2022 Annual Report and Financial Statements Financial Statements 181 35. 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 (2021: €0.6 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 is a participating employer in the Merchant Navy Ofﬁcer Pension Fund (MNOPF), a multi-employer deﬁned beneﬁt pension scheme. 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’s share of any deﬁcit would be 1.46%. Should other participating employers’ default on their obligations, the Group will be required to absorb a larger share of the scheme deﬁcit. If the Group 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 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. 36. Events after the reporting period The Board is proposing a ﬁnal dividend of 9.45 cent per ordinary share amounting to €16.1 million out of the distributable reserves of the Company. There have been no other material events affecting the Group since 31 December 2022. 182 Company Statement of Financial Position as at 31 December 2022 Assets Non-current assets Property, plant and equipment Intangible assets Investments in subsidiaries Retirement benefit surplus Current assets 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 Current liabilities Trade and other payables Total liabilities Total equity and liabilities Notes 39 40 41 46 iv 42 43 45 2022 €m 139.1 0.3 16.5 1.0 2021 €m 144.6 0.4 14.4 1.1 156.9 160.5 1.4 4.7 6.1 163.0 11.1 20.5 14.8 111.0 157.4 5.6 5.6 5.6 163.0 57.8 1.6 59.4 219.9 11.9 20.4 12.4 140.3 185.0 34.9 34.9 34.9 219.9 The Company reported a profit for the financial year ended 31 December 2022 of €45.7 million (2021: €5.3 million). The financial statements were approved by the Board of Directors on 8 March 2023 and signed on its behalf by: Eamonn Rothwell Director David Ledwidge Director Irish Continental Group183 Total €m 185.0 45.7 (0.1) Company Statement of Changes in Equity For the financial year ended 31 December 2022 Share Share Share Capital Options Retained Capital Premium Reserve Reserve Earnings €m 11.9 €m 20.4 €m 7.7 €m 4.7 €m 140.3 Balance at 1 January 2022 Profit for the financial year Other comprehensive income Total comprehensive income for the financial year Share issue Share buyback Dividends Employee share-based payments expense Movement related to share options granted to employees in subsidiaries (note 41) Settlement of employee equity plans through market purchase Transferred to retained earnings on exercise of share options - - - - (0.8) - - - - - - - - 0.1 - - - - - - Movements in the year (0.8) 0.1 Balance at 31 December 2022 11.1 20.5 - - - - 0.8 - - - - - 0.8 8.5 - - - - - - 0.1 2.9 - 45.7 (0.1) 45.6 45.6 - (49.2) (24.2) - - 0.1 (49.2) (24.2) 0.1 2.9 (2.9) (2.9) (1.4) 1.4 - 1.6 (29.3) (27.6) 6.3 111.0 157.4 Financial Statements2022 Annual Report and Financial Statements184 Company Statement of Changes in Equity For the financial year ended 31 December 2021 Share Share Capital Options Retained Capital Premium Reserve Reserve Earnings Share Balance at 1 January 2021 Profit for the financial year Other comprehensive income Total comprehensive income for the financial year Share issue Share buyback Employee share-based payments expense Movement related to share options granted to employees in subsidiaries (note 41) Settlement of employee equity plans through market purchase Transferred to retained earnings on exercise of share options €m 12.2 - - - (0.3) - - - - €m 19.7 - - 0.7 - - - - - €m 7.4 - - - 0.3 - - - - €m 5.1 - - - - 0.6 0.7 - €m 153.7 5.3 0.4 Total €m 198.1 5.3 0.4 5.7 5.7 - (19.8) - - 0.7 (19.8) 0.6 0.7 (1.0) (1.0) (1.7) 1.7 - Movements in the year (0.3) 0.7 0.3 (0.4) (13.4) (13.1) Balance at 31 December 2021 11.9 20.4 7.7 4.7 140.3 185.0 Irish Continental GroupNotes Forming Part of the Company Financial Statements Continued 185 37. Company Statement of Accounting Policies Basis of preparation The Company Financial Statements of Irish Continental Group plc (the Company) were prepared under the historical cost convention, in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101). In preparing these Financial Statements, the Company applies the recognition, measurement and presentation requirements of International Financial Reporting Standards as adopted by the EU (Adopted IFRSs), but makes amendments where necessary in order to comply with the Companies Act 2014 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken. In these Financial Statements, the Company has applied the exemptions available under FRS 101 in respect of the following disclosures: • Presentation of Company Statement of Cash Flows; • Disclosures in respect of capital management; • The effects of new but not yet effective IFRSs; and • Disclosures in respect of the compensation of key management personnel. As the Consolidated Financial Statements of the Group are prepared in accordance with IFRS as adopted by the EU and include the equivalent disclosures, the Company has also taken the exemptions under FRS 101 available in respect of the following disclosures: • Certain disclosures required by IFRS 2 Share-based Payments; • Certain disclosures required by IFRS 13 Fair Value Measurement and the disclosures required by IFRS 7 Financial Instruments: disclosures. The accounting policies used in the preparation of the Company Financial Statements are consistent with the accounting policies used in the preparation of the Consolidated Financial Statements set out in the Summary of Accounting Policies at note 2 on pages 130 to 139. Unless otherwise stated, these have been applied consistently to all periods presented in these Company Financial Statements. The Financial Statements have been prepared in euro and are rounded to the nearest hundred thousand. Accounting policies applying only to the Company Financial Statements 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. 38. Company profit for the period The profit attributable to equity shareholders dealt with in the Financial Statements of the Company was €45.7 million (2021: €5.3 million). In accordance with Section 304 of the Companies Act 2014, the Company is availing of the exemption from presenting its individual Income Statement to the Annual General Meeting and from filing it with the Registrar of Companies. Disclosure of Directors’ remuneration paid in the reporting period ended 31 December 2022 and 2021 as required by Section 305 of the Companies Act 2014, is set out below. Directors remuneration: Emoluments Pension contributions – Defined benefit Pension contributions – Defined contribution Gains from the exercise of options 2022 €’000 2021 €’000 3,307 1,379 29 31 307 3,674 19 24 335 1,757 There were no employees in the Company during the financial year ended 31 December 2022 (2021: nil). Costs of €4.6 million (2021: €2.3 million) were recharged to the Company from subsidiary companies in relation to management services. Financial Statements2022 Annual Report and Financial Statements186 Notes Forming Part of the Company Financial Statements Continued 39. Property, plant and equipment Company Cost At 1 January 2021 Additions At 31 December 2021 Additions At 31 December 2022 Accumulated depreciation At 1 January 2021 Depreciation charge for the financial year At 31 December 2021 Depreciation charge for the financial year At 31 December 2022 Carrying amount At 31 December 2022 At 31 December 2021 40. Intangible assets Cost At 1 January Additions At 31 December Amortisation At 1 January Charge for the financial year At 31 December Carrying amount At 31 December At 1 January Assets under Plant, Equipment Land and Construction Vessels and Vehicles Buildings €m €m €m €m - - - - - - - - - - - - 161.2 - 161.2 0.1 161.3 11.1 5.7 16.8 5.7 22.5 138.8 144.4 3.3 0.3 3.6 0.4 4.0 3.2 0.2 3.4 0.3 3.7 0.3 0.2 0.1 - 0.1 - 0.1 0.1 - 0.1 - 0.1 - - 2022 €m 10.4 - 10.4 10.0 0.1 10.1 0.3 0.4 Total €m 164.6 0.3 164.9 0.5 165.4 14.4 5.9 20.3 6.0 26.3 139.1 144.6 2021 €m 10.2 0.2 10.4 9.9 0.1 10.0 0.4 0.3 The intangible assets included above, all computer software, have finite useful lives of five years, over which the assets are amortised. Amortisation is on a straight-line basis. Irish Continental Group41. Investment in subsidiaries Investment in subsidiaries at beginning of the financial year Movement related to share options allocated to employees in subsidiaries Payments received on exercise of options Investment in subsidiaries at end of the financial year The Company’s principal subsidiaries at 31 December 2022 are as follows: 187 2021 €m 14.7 0.7 (1.0) 14.4 2022 €m 14.4 2.9 (0.8) 16.5 Name of subsidiary Country of incorporation and operation Principal activity Irish Ferries Limited* Ireland Ferry operator Eucon Shipping & Transport Limited* Ireland Container shipping services Irish Continental Line Limited* Irish Ferries Services Limited* Ireland Ireland Ship leasing Administration services Belfast Container Terminal (BCT) Limited Northern Ireland Container handling Irish Ferries (U.K.) Limited United Kingdom Shipping & forwarding agents Eurofeeders Limited United Kingdom Non-trading Irish Ferries (U.K.) Services Limited United Kingdom Administration services Zatarga Limited Isle of Man Contarga Limited* Irish Ferries Finance DAC* Ireland Ireland ICG Shipping (W. B. Yeats) Limited Ireland Irish Ferries International Limited* Ireland *Companies availing of Companies Act 2014 exemption under S357 Ship leasing Ship leasing Administration services Non-trading Ferry operator The Company in all instances owns 100 per cent of the issued ordinary share capital and voting rights attaching thereto in respect of all subsidiary companies. The registered office for Irish Ferries Limited, Eucon Shipping & Transport Limited, Irish Continental Line Limited, Contarga Limited, Irish Ferries Services Limited, Irish Ferries Finance DAC, ICG Shipping (W.B. Yeats) Limited, and Irish Ferries International Limited 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, 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 2nd Floor, St Mary’s Court, 20 Hill Street, Douglas, Isle of Man, IM1 1EU. Financial Statements2022 Annual Report and Financial Statements188 Notes Forming Part of the Company Financial Statements Continued 42. Trade and other receivables Amounts due from subsidiary companies (note 47) Prepayments – deposit on vessel Other receivables 2022 €m 1.1 - 0.3 1.4 2021 €m 54.3 3.2 0.3 57.8 Amounts due from subsidiary companies are repayable on demand. The Company has assessed credit losses as if the receivable had been demanded at the statement of financial position date. As all amounts are due from subsidiaries which were in a net asset position at the reporting date, the Company concluded that no allowance for credit losses was required as it would be immaterial. 43. Share capital Details of the Company’s equity share capital are set out at note 19 to the Consolidated Financial Statements. 44. Deferred tax liabilities There are no deferred tax liabilities and assets recognised by the Company during the current and prior reporting periods. The Company’s taxable income was fully taxable within the Irish tonnage tax system. The estimated value of deferred tax assets not recognised is €0.1 million (2021: €0.1 million). 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. 45. Trade and other payables Within 1 year Amounts due to subsidiary companies (note 47) Other payables Other payables include provisions of €1.2 million at 31 December 2022 (€2.2 million at 31 December 2021). The amounts owed by the Company to its subsidiaries is represented as follows: Trading balances Financing balances 2022 €m 3.4 2.2 5.6 2022 €m 3.4 - 3.4 2021 €m 31.2 3.7 34.9 2021 €m 7.2 24.0 31.2 Trading balances owed to subsidiary companies are subject to normal credit terms. The reduction in financing balances was due to repayment of loans to a subsidiary which were financed through repayment of amounts owed to the Company by other subsidiaries (Note 42). Irish Continental Group189 45. Trade and other payables – continued Interest is payable on financing balances at agreed fixed rates comprising funding cost and a margin. The average interest rate paid on borrowings advanced during the year was 1.83% (2021: 1.80%). There were no financing balances outstanding at 31 December 2022 (2021: €24.0 million at an interest rate of 1.52%). 46. Retirement benefit schemes i) Company sponsored / Group affiliated schemes Certain former employees of the Company were 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. Detailed information in respect of this scheme is given in note 31 to the Consolidated Financial Statements. Other former employees were 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 companies provide retirement and death benefits for former 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 2021. 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 2022 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 former 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 2021 and disclosed a net past service surplus of £55.0 million, equivalent to a gross funding level of 102%. The Company’s share of the MNOPF obligations, as most recently advised by the trustees, is 0.33% (2021: 0.51%). The obligation valuation in these financial statements at 31 December 2022 is based on the actuarial deficit contribution demands notified to the Company and which remain outstanding at the reporting date. The last deficit demand received by the Company was dated May 2013 which has been fully paid. The share of the overall deficit in the MNOPF apportioned to the Company is €nil at 31 December 2022 (2021: €nil). During the year the Company made payments of €nil (2021: €nil) to the trustees. iii) Principal risks and assumptions The principal risks and assumptions used for the purpose of the actuarial valuations are set out in note 31 (iii) of the Consolidated Financial Statements. The Company’s total obligation in respect of the defined benefit schemes is calculated by independent, qualified actuaries, updated at least annually and totals €0.7 million at 31 December 2022 (2021: €0.9 million). At 31 December 2022, the Company also has scheme assets totalling €1.7 million (2021: €2.0 million) giving a net pension surplus of €1.0 million (2021: €1.1 million). The size of the obligation is sensitive to actuarial assumptions. Financial Statements2022 Annual Report and Financial Statements190 Notes Forming Part of the Company Financial Statements Continued 46. Retirement benefit schemes – continued iv) Retirement benefit assets and liabilities The amount recognised in the Statement of Financial Position in respect of the Company’s defined benefit schemes, is as follows: Equities Bonds Property Other Fair value of scheme assets Present value of scheme liabilities Surplus in schemes 2022 €m 1.2 0.3 0.1 0.1 1.7 (0.7) 1.0 2021 €m 1.5 0.3 0.1 0.1 2.0 (0.9) 1.1 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 2021 is €nil (2021: €nil). The total surplus of €1.0 million (2021: €1.1 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. v) Movement in retirement benefit assets Movements in the fair value of scheme assets in the financial year were as follows: 2022 At beginning of the financial year Actuarial losses At end of the financial year 2021 At beginning of the financial year Actuarial gains At end of the financial year €m 2.0 (0.3) 1.7 1.7 0.3 2.0 Irish Continental Group46. Retirement benefit schemes – continued vi) Movement in retirement benefit liabilities Movements in the present value of defined benefit obligations in the financial year were as follows: 2022 At beginning of the financial year Actuarial gains At end of the financial year 2021 At beginning of the financial year Actuarial losses At end of the financial year 191 €m 0.9 (0.2) 0.7 1.0 (0.1) 0.9 The present value of scheme liabilities at the financial year ended 31 December 2022 and 31 December 2021 relate to wholly funded plans. vii) Amounts recognised in the Company Income Statement There were no amounts recognised in the Company Income Statement in respect of defined benefit obligations in the period (2021: €nil). The estimated amounts of contributions expected to be paid by the Company to the schemes during 2022 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 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: Losses arising from experience adjustments Gains arising from changes in financial assumptions Actuarial (loss) / gain recognised in Statement of Comprehensive Income 2022 €m - - - (0.3) 0.2 (0.1) 2021 €m - - - - 0.4 0.4 Financial Statements2022 Annual Report and Financial Statements192 Notes Forming Part of the Company Financial Statements Continued 47. Related party transactions The Company’s profit for the year includes transactions with subsidiary companies comprising principally comprising of charter income of €18.6 million (2021: €18.6 million), dividends received of €38.0 million (2021: €nil million) and interest payable of €0.1 million (2021: €3.8 million). Details of loan balances to / from subsidiaries are provided in the Company Statement of Financial Position on page 182, in note 45 ‘Trade and other payables’, in note 42 ‘trade and other receivables’ and in the table below. The Company has provided Letters of Financial Support for certain of its other subsidiaries. At 31 December the following amounts were due to or from the Company by its subsidiaries: Amounts due from subsidiary companies (note 42) Amounts due to subsidiary companies (note 45) 2022 €m 1.1 (3.4) (2.3) 2021 €m 54.3 (31.2) 23.1 The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. Certain of the balances are trading balances and will be settled on normal credit terms. Other balances are repayable on demand. 48. Contingent liabilities The Company is a participating employer in the Merchant Navy Officer Pension Fund (MNOPF), a multi-employer defined benefit pension scheme. 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 Company’s share of any deficit would be 0.47%. Should other participating employers default on their obligations, the Company will be required to absorb a larger share of the scheme deficit. If the Company were to terminate their obligations to the fund, voluntarily or otherwise, the Company 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 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. The Company acts as guarantor to lending arrangements concluded by certain of its subsidiaries. The Company has also guaranteed the liabilities and commitments of certain of its Irish subsidiaries for the financial year ended 31 December 2022 pursuant to the provision of Section 357 of the Companies Act 2014. The Company has treated these guarantees as insurance arrangements and each contract is treated as a contingent liability until as such time it becomes probable that the Company will be required to make a payment under the guarantee. The Company has carried out a review based on the latest financial information available regarding these subsidiaries, all of which are in a net asset position, and assessed that as at 31 December 2022 it was not probable that the Company would be required to make a payment under any of these guarantees. Details of the Group’s principal subsidiaries have been included in note 41. Irish Continental Group193 49. Events after the reporting period The Board is proposing a final dividend of 9.45 cent per ordinary share amounting to €16.1 million out of the distributable reserves of the Company. There have been no other material events affecting the Group since 31 December 2022. 50. Approval of financial statements The Financial Statements were approved by the Board of Directors and authorised for issue on 8 March 2023. Financial Statements2022 Annual Report and Financial Statements194 Investor Information Other Information 196 198 INVESTOR AND OTHER INFORMATION Irish Continental Group195 Financial Statements2022 Annual Report and Financial Statements196 Investor Information ICG Units An ICG Unit consists of one ordinary share and nil redeemable shares at 31 December 2022 and 31 December 2021. 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 8 March 2023, 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 a rate of 25% 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 2022 Year ended 31 December 2021 Share listings High 4.75 4.82 Low 3.20 3.84 Year end 4.28 4.53 ICG Units are quoted on the official lists of both Euronext Dublin 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 Email: investorrelations@icg.ie Irish Continental Group197 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 Company’s Registrar is: Computershare Investor Services (Ireland) Limited 3100 Lake Drive Citywest Business Campus Dublin 24 D24 AK82 Telephone: +353 1 447 5483 Fax: +353 1 447 5571 Email: webqueries@computershare.ie Financial calendar 2023 Announcement of Preliminary Statement of Results to 31 December 2022 9 March 2023 Annual General Meeting Half year results announcement Travel discounts for shareholders 11 May 2023 24 August 2023 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 8 March 2023 are: • 20% discount on passenger and car ferry services between Ireland and Britain, and Britain and France; • 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. Full details and terms and conditions are available at www.icg.ie. For further information please contact Irish Ferries Customer Support in Dublin on + 353 1 607 5700 or email shareholders@irishferries.com. Financial Statements2022 Annual Report and Financial Statements198 Investor Information Continued Other information Registered office Solicitors Auditors Ferryport Alexandra Road Dublin 1, Ireland. A&L Goodbody, Dublin KPMG Chartered Accountants, Statutory Audit Firm 1 Stokes Place, St. Stephen’s Green, Dublin 2 Principal bankers AIB Group plc, Dublin Bank of Ireland Group plc, Dublin Stockbrokers Goodbody Stockbrokers, Dublin Registrars Website Email Reuters Bloomberg ISE Xetra Computershare Investor Services (Ireland) Limited 3100 Lake Drive Citywest Business Campus Dublin 24 D24 AK82 www.icg.ie info@icg.ie Euronext Dublin London Stock Exchange IR5B_u.I IR5B IR5B ICG_u.L ICGC Irish Continental Group Irish Continental Group plc, Ferryport, Alexandra Road, Dublin 1, Ireland. Tel: +353 1 607 5628 email: info@icg.ie Website: www.icg.ie Irish Ferries, Ferryport, Alexandra Road, Dublin 1, Ireland. Tel: +353 1 607 5700 email: info@irishferries.com Website: www.irishferries.com Eucon Shipping & Transport Ltd, Irish Ferries head office, Breakwater Road South, Ferryport, Alexandra Road, Dublin 1, Ireland. Tel: +353 1 607 5555 email: info@eucon.ie Website: www.eucon.ie Dublin Ferryport Terminals, Container Terminal, Breakwater Road, Dublin 1, Ireland. Tel: +353 1 607 5700 email: info@dft.ie Belfast Container Terminal, Victoria Terminal 3, West Bank Road, Belfast BT3 9JL, Northern Ireland. Tel: +44 7901 825387 email: info@bcterminal.com Dublin Ferryport Inland Depot Cedar Drive, Dublin Airport Logistics Park, Saint Margarets, Co Dublin, K67 Y6Y8. 200 Irish Continental Groupe i . n g i s e d e c r u o s w w w . Irish Continental Group plc , Ferryport Alexandra Road, Dublin 1, Ireland, D01W2F5.

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