Chief Executive’s Review

2020 Performance

2020 was a challenging year for the Group which tested the resilience of our business model with the significant disruption caused by the Covid-19 pandemic measures.

Against the challenges presented by travel restrictions which essentially closed down all discretionary and leisure travel since March, the Group maintained essential shipping links on and off the island of Ireland through operating its conventional ferries. While the Group made a loss before tax of €18.0 million (2019: profit of €61.5 million), at an operating level pre non-trading items a modest profit of €0.8 million (2019: €50.0 million) is reported. Operations were cash generative at €46.1 million (2019: €84.8 million) and the Group maintained a strong balance sheet.

The Chairman in his review noted the progress we have made in the strategic development of the Group despite the difficult backdrop in our markets. These include significant environmental investments in both of our divisions.

The performance in the Ferries Division saw a decrease of 66.8% in EBITDA to €22.3 million (2019: €67.2 million). This was primarily due to Covid-19 travel restrictions on our passenger business. While the performance is disappointing, we take comfort and encouragement from the division’s ability to introduce material cost containment measures that ensured it remained profitable at an EBITDA level. This is testament to the division’s underlying cost base.

Performance in the Container and Terminal Division continued to grow at a steady rate. EBITDA in this division increased by 1.0% to €19.8 million (2019: €19.6 million). This was against the backdrop of reduced volumes in both containers shipped and terminal throughput.

Financial Position

The Group ended the year in a strong position financially, nothwithstanding that equity attributable to shareholders decreased by €22.0 million to €265.9 million. To protect the Group’s already strong liquidity position against the short-term uncertain trading environment, a decision was made not to pay any dividends during 2020 (2019: €24.7 million paid). Prior to the known extent of the effects of the travel restrictions, 570,000 or 0.3% of issued equity had been repurchased in the market at a cost of €1.7 million.

Net debt at year end was €88.5 million compared to net debt of €129.0 million in the prior year. This represents a net debt / EBITDA leverage of 2.1 times. The decrease in net debt is due to cash generation in the year, the repayment of the deposit on Hull 777 of €33.0 million offset by capital expenditure of €30.1 million. Year end net debt of €88.5 million comprised gross borrowings of €200.4 million (2019: €203.9 million), lease obligations of €38.5 million (2019: €36.0 million) less gross cash balances of €150.4 million (2019: €110.9 million). Right-of-use lease obligations are excluded for banking covenant purposes.

Strategic Performance

As Chief Executive my 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 2020 in preparing the Group for future long-term growth opportunities.

The Group’s principal defined benefit pension scheme entered into a buy-out transaction to transfer the liabilities relating to pensioners (at the transaction date) to a third-party insurer. This transaction materially reduces the size and risk of the scheme. This is a positive development for both the Group and the scheme’s pensioners and current members. This is an important and significant step in the long-term journey to safeguard members’ benefits and reduce any potential future cost or risk for the Group.

The Group was successful in the public tender to operate a container depot at the new Dublin Inland Port. This is an important contract 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. It is testament to the quality of our container operations in the port area that we have been selected as the first tenant in the new inland port facility.

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.

Key Financial highlights

2020 2019

EBITDA (pre non-trading items)


€86.8m | -51.5%

EBIT (pre non-trading items)


€50.0m | -98.4%

Return on average capital employed


19.6% | -19.4 pts

Adjusted earnings per share


23.8c | -118.1%

Free cash flow before strategic capex


€73.2m | -51.8%

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. Notwithstanding the challenges faced by the Group during 2020, the Group proceeded with the significant investments in installing exhaust gas cleaning systems (EGCS) and the ongoing program of electrification of heavy plant at our container terminals. 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. However, not all environmental initiatives require major capital investment and we continue our initiatives to replace single-use non-recyclable consumables with environmentally friendly alternatives across the Group. We have also commenced the roll-out of our Green Voyage initiative to our crews to promote optimal voyage efficiencies.

The Group gathers significant data in relation to its operations which can be harnessed to further drive awareness of the impact of individual actions. 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 has now commenced a program to collate and harness this data as a tool to promote environmental responsibility within the workforce. The object is to achieve measurable reductions in our environmental impact across the Group over time.

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 equipment suppliers adopting the latest technologies. As a small operator in a global market, the Group will only apply proven technologies which generate an economic return.

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.

Exit of the United Kingdom from the European Union

The UK exited the EU on 31 January 2020 and ended its transition period on 31 December 2020. The Group welcomes the EU-UK Trade and Cooperation Agreement between the UK and the EU. It is the Group’s position that Ireland as an island will continue to trade outside of its borders. Given the strong linkages between Ireland and the UK both culturally and commercially, it is the Group’s view that trade between these two economies will remain robust over the longer term.

However, the Group’s investment in vessels is designed to provide route planning flexibility to enable the Group to adapt its schedules to customer demand both over the short and long term. Should demand for the Group’s existing services fall over the longer term, the vessels are capable of being deployed to most geographic areas given their design specification.

Following the end of the transition period, the Group has, as previously outlined, adjusted capacity on the direct continental services.

Of some concern is the lack of implementation of appropriate checks on goods arriving into Northern Ireland from Britain, which are required under the Northern Ireland Protocol. To the extent that these goods are heading for the Republic of Ireland this is causing a distortion in the level playing field as goods from Britain are being checked on arrival in Republic of Ireland ports. If the exemptions are continued or enforcement continues to be haphazard, jobs will be lost in the Republic of Ireland as companies migrate to Northern Ireland because of easier logistical connections for exports and imports.

As the UK is no longer a member of the EU, the Group can introduce duty-free retail facilities on board its ferries operating to the UK. This had been an important ancillary revenue stream prior to the abolition of duty-free retail under EU rules in 1999.

Legal Challenge to the National Transport Authority (NTA) interpretation of the EU Regulation No 1177/2010

As previously reported, Irish Ferries has commenced legal proceedings by way of judicial review against the NTA’s interpretation of the EU Regulation No 1177/2010 in respect of the cancellations that arose during 2018 resulting from the delayed delivery by the shipyard of our cruise ferry W.B. Yeats, delivered in December 2018. The review has been admitted to the High Court of Ireland who have referred certain questions for interpretation to the European Court of Justice.

We believe this challenge is necessary, particularly in the context of whether landbridge is an alternative route to direct services. Greater clarity on the regulation has an important role to play in our island connectivity and the viability of direct links to the Continent. We further believe this challenge is in the best interests of our customers, to protect the viability of direct links to the Continent which is now all the more critical against the backdrop of the UK’s exit from the EU. These direct links are threatened by what we strongly believe to be the NTA’s incorrect interpretation of the Regulation.

Government support for essential shipping services during Covid-19

As noted, the Group’s passenger carryings were severely affected by the travel restrictions imposed as part of governments’ response to the Covid-19 pandemic. Notwithstanding the Group committed, without any government support, to continue operating our loss-making routes which provide a vital lifeline service to our island. However, we were disappointed to note that the Irish Government introduced a Public Services Obligation (PSO) model for part of 2020 covering the shortfall between variable revenue and certain variable costs of certain competitors. This was not an approach that we supported as we believe this model was liable to create distortions in the marketplace and could be open to legal challenge. For these reasons we decided not to participate in this PSO model.

The Group, where appropriate, has availed of governments’ staff retention support schemes across Europe.


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 this difficult 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. This dedication has never before been so severely tested. It is testament to their dedication and skill that the Group’s services on and off the island were maintained.


The continued circulation of the Covid-19 virus in our communities has resulted in Covid-19 measures remaining in place, restricting travel to essential purposes and closing the hospitality sector. There is uncertainty as to when these restrictions will be eased and travel patterns return to previous levels. I note the various vaccine programs being rolled out in our immediate jurisdictions of Ireland and the UK and government commitments to ensuring the majority of the populations will have received some level of vaccination during the first half of 2021. Achievement of these commitments will assist with the return of travel between the closely integrated communities of Ireland and the UK in the second half of 2021. We are offering early booking flexibility and operate a travel safe program on all our Irish Ferries passenger services to protect our returning customers. Against that background Irish Ferries is well placed to benefit from a resumption in international tourism travel.

While the freight market between Ireland and the UK continues to adapt to the end of the transition period, I believe with a level playing field and protection of the landbridge, freight will move on the most efficient and quickest routes on and off the island of Ireland.

Our resilient business model has ensured that we have retained a strong financial position with significant liquidity resources. This will support the Group into the future where we will continue to seek out improvement and investment opportunities for our longer term success.

Eamonn Rothwell,

Chief Executive Officer

10 March 2021