The Directors present their Report together with the audited Financial Statements of the Group for the financial year ended 31 December 2020.
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 122 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 Business Review on pages 4 to 65. 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.
Dividend and Share Buyback
The Group did not pay any dividends during financial year 2020 and is not proposing a final dividend in respect of financial year 2020.
The Group announced on 1 July that it would withdraw its proposal to pay the final dividend in respect of financial year 2019, that had been previously announced on 5 March 2020. This was due to the Board decision to conserve cash following the uncertainty arising from the introduction of government Covid-19 measures.
The Company has adopted a progressive dividend policy since 2010 the aim of which is to gradually increase or at least maintain the annual total dividend per share over the medium term. Any dividend is declarable at the discretion of the Directors following assessment of the Company’s performance, its cash resources and distributable reserves. At 31 December 2020 the Company’s retained earnings amounted to €153.7 million all of which were considered to be distributable.
The Company during financial year 2020 bought back 570,000 (2019: 2,900,000) of its shares, representing 0.3% (2019: 1.5%) of its issued share capital at 1 January 2020 for a total consideration of €1.7 million (2019: €12.9 million). Further details are contained at note 20 to the Financial Statements.
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 2021 AGM and offer themselves for re-election. Biographical details of the Directors are set out on pages 68 to 70 of this report and the result of the annual board evaluation is set out on pages 77 to 78.
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.
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 review contained at pages 40 to 53.
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 2021, the principal risks and uncertainties facing the Group (pages 57 to 61), the Group’s 2021 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 at various times during the financial year 2020 had a material effect on the Group’s financial results. This was particularly concentrated on our passenger business where international travel was restricted to essential purposes resulting in a fall in passenger revenues of 66.3% compared to 2019 levels. The Group has, despite the imposition of restrictions, continued to operate its passenger services on all routes in conjunction with its RoRo services.
Notwithstanding the downturn in profitability due to reduced passenger revenues, the Group’s RoRo, LoLo and port stevedoring services operated largely in line with expectations and the Group generated cash from operations of €51.2 million (2019: €89.5 million) in financial year 2020, with free cash flow after maintenance capital expenditures of €35.3 million (2019: €73.2 million). The Group retained cash balances and committed undrawn facilities at 31 December 2020 of €240.8 million and had agreed an increase in leverage covenants with its lenders from 3 times to 4 times EBITDA. The leverage covenant level at 31 December 2020 calculated in accordance with the lending agreements, was 1.7 times.
Government imposed travel restrictions have continued into 2021 and there is uncertainty as to the duration and continuing severity of these restrictions. In addition, there has been some disruption to RoRo revenues on our Ireland – UK routes in early 2021 following the ending of the Brexit transition period on 31 December 2020 and the imposition of custom controls. Following a material drop in RoRo carryings in the early weeks of 2021, carryings have been trending upwards and the revenue losses on the UK routes have been significantly replaced with revenues on our direct services to France.
In making their going concern assessment, the Directors have considered a number of trading scenarios including a continuation of current level of travel restrictions to March 2022. This modelling assumed full schedule of services of the conventional ferry fleet 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 2022.
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 relating to our fleet and terminal 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 57 to 61. 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 Directors.
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 years’ 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 2020, 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 2020 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 57 to 61.
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 10 March 2021 and as at 31 December 2020 were as follows:
Beneficial Holder as Notified
10 March 2021
31 December 2020
Number of Units
% of Issued Units
Number of Units
% of Issued Units
Wellington Management Company, LLP
Ameriprise Financial Inc.
Marathon Asset Management, LLP
Kinney Asset Management, LLC
Brewin Dolphin Wealth Management
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 2020 and 1 January 2020 all of which were beneficial, were as follows:
John B. McGuckian
Note: Lesley Williams was appointed to the Board on 4 January 2021, and therefore is not included in the above table.
ICG Units are explained on page 198 of this report.
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 auditors.
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 bere-appointed.
As outlined in the Audit Committee Report on page 87, the Company is engaged in a competitive tender process and the Board expect to replace Deloitte Ireland LLP as the Company’s auditor with effect from the 2021 financial year. An ordinary resolution confirming the appointing of a replacement auditor will be proposed at the 2021 AGM.
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 71 to 83 and is incorporated into this Report by cross reference.
The Group has established an Audit Committee whose Report is included at pages 84 to 87.
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 22 to 25 and are incorporated into this report by cross reference.
The duration of the travel restrictions and other measures introduced by various governments in the jurisdictions in which we offer services will continue to create uncertainty in relation to our passenger revenues in 2021. The Group expects that as vaccine programs are rolled out to the population at large, passenger volumes will return. However, the other revenue streams are largely unaffected and the Group is expected to remain in a cash generative position. Current disruptions to RoRo freight activity in early 2021 are expected to dissipate as trade to our nearest neighbour acclimatises to the new post-Brexit regulatory environment.
Despite the current uncertainties, given the Group’s strong financial position it is well placed to take advantage of opportunities in its area of competence. While the cancellation of our second new vessel with the contracted shipyard was a disappointment, it does not affect the near-term trading capacity of the Group. The Group continues to evaluate the optimisation of its fleet to meet future requirements. Having concluded an agreement with Dublin Port, the Group is looking forward to taking charge of Ireland’s new inland port during 2021. It is also continuing the capacity expansion of its container terminal at Dublin Port with the continuation of the program of replacing existing diesel powered equipment with environmentally friendly, remotely controlled electric units. The Group notes the ever increasing expectations and regulatory requirements to reduce the effects of its operational footprint 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.
Events after the Reporting Period
No events have occurred between 31 December 2020 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 2020 was approved by the Directors on 10 March 2021. 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 12 May 2021, will be notified to shareholders in April 2021.
On behalf of the Board
Eamonn Rothwell, Director
David Ledwidge, Director
10 March 2021
Registered Office: Ferryport, Alexandra Road, Dublin 1, Ireland.