Key Performance Indicators and Summary of 2019 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 Description Benefit of APM
EBITDA EBITDA represents earnings before interest, tax, depreciation, 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 EBIT represents earnings before interest, tax and non-trading items. Measures the Group’s earnings from ongoing operations.
Free cash flow before strategic capex Free cash flow comprises operating cash flow less capital expenditure before strategic capex 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 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.
Adjusted Earnings Per Share (EPS) EPS is adjusted to exclude the non-trading items and net interest cost on defined benefit obligations. Directors consider Adjusted EPS to be a key indicator of long-term financial performance and value creation of a public listed company.
ROACE 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. Measures the Group’s profitability and the efficiency with which its capital is employed.
Pre-IFRS 16 Use of the term Pre-IFRS 16 denotes that the APM or IFRS measure presented for 2019 has been adjusted to remove the effects of the application of IFRS 16: Leases. Assists the year on year comparison of underlying performance
Non-Financial KPIs 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.

The following table sets forth the reconciliation from the Group’s operating profit for the financial year to EBIT, EBITDA, Free Cash Flow and Net (debt)/ cash. See note 12 to the Financial Statements for the calculation of Basic and Adjusted EPS. The Group implemented IFRS 16: leases on a modified retrospective basis and has not restated the prior year results for the change in accounting policy.

Cash Flow 2019
Operating profit (EBIT) 64.9 60.0
Non-trading items (note 10) (14.9) (13.7)
Net depreciation and amortisation (note 9) 36.8 22.1
EBITDA 86.8 68.4
Working capital movements (note 35) 2.0 (3.8)
Pension payments in excess of service costs (note 35) (1.3) (1.6)
Share based payments expense (note 32) 1.9 2.4
Other 0.1 (0.7)
Cash generated from operations 89.5 64.7
Interest paid (note 35) (3.5) (1.0)
Tax paid (note 35) (1.2) (2.2)
Maintenance capex (11.6) (15.6)
Free cash flow before strategic capex 73.2 45.9
Strategic capex (42.5) (160.5)
Free cash flow after strategic capex 30.7 (114.6)
Proceeds on disposal of property, plant and equipment 1.8 17.4
Dividends paid to equity holders of the Company (24.7) (23.5)
Buyback of equity (12.9) -
Proceeds on issue of ordinary share capital 0.1 0.6
Net cash flows (5.0) (120.1)
Opening net (debt)/ cash (80.3) 39.6
Recognition of right of use asset lease obligations (43.5) -
Translation/ other (0.2) 0.2
Closing net debt (129.0) (80.3)

The following table sets forth the reconciliation from the Group’s ROACE calculation;

ROACE 2019
Equity 287.9 252.9
Net debt 129.0 80.3
Asset under construction (including prepayment deposits) (43.9) (189.9)
Retirement benefit obligations 3.7 4.2
376.7 147.5
Retirement benefit surplus (12.5) (2.5)
Capital employed 364.2 145.0
Average capital employed 254.6 142.5
Operating profit (before non-trading items) 50.0 46.3
ROACE 19.6% 32.5%

The following table sets forth the reconciliation from the Group’s net debt calculation;

Net debt 2019
Cash and cash equivalents (note 19) 110.9 124.7
Non-current borrowings (note 22) (200.3) (204.0)
Current borrowings (note 22) (3.6) -
Non-current lease obligations (27.6) (0.7)
Current lease obligations (8.4) (0.3)
Net debt (129.0) (80.3)

The calculation and performance of KPIs and a summary of the key financial results for the year is set out in the table below. A detailed review of the divisional operations is set out in the Operating Review and Financial Review on pages 26 to 39.

Ferries Container & Terminal Inter- Segment Group
Revenue 212.4 196.2 154.4 143.3 (9.4) (9.3) 357.4 330.2
EBITDA 1 67.2 53.6 19.6 14.8 - - 86.8 68.4
Operating profit (EBIT) 2 36.4 34.2 13.6 12.1 - - 50.0 46.3
Non-trading item (note 10) 14.9 13.7 - - - - 14.9 13.7
Net pension interest income/ (expense) (note 6 and 7) - - - - - - - 0.1
Other finance charges (note 7) - - - - - - (3.5) (1.0)
Finance income (note 6) - - - - - - 0.1 0.1
Net interest - - - - - - (3.4) (0.8)
Profit before tax - - - - - - 61.5 59.2
ROACE 3 17.6% 31.1% 28.6% 37.1% - - 19.6% 32.5%
ROACE (Excl. IFRS 16 Effects) 17.4% 31.1% 40.0% 37.1% - - 20.6% 32.5%
EPS: (note 12)
EPS Basic 4 - - - - - - 31.7c 30.4c
EPS Adjusted 4 - - - - - - 23.8c 23.1c
Free Cash Flow 5 - - - - - - 73.2 45.9


Financial KPIs

1. EBITDA: Group EBITDA for the year increased by 26.9%, to €86.8 million (2018: €68.4 million). Adjusting for the effects of IFRS 16 (Note 30 (iii)) the underlying comparable EBITDA was €77.4 million, an increase of 13.1%. The increase in underlying EBITDA was primarily due to better schedule integrity following the disruption in the Ferries division in 2018, and the introduction of the W.B. Yeats. Underlying EBITDA in the Ferries division increased by 14.3%, to €61.3 million, while the Container and Terminal division increased by 8.1%, to €16.1 million.

2. EBIT: Group EBIT (pre non-trading items) for the year increased by 7.9% to €50.0 million (2018: €46.3 million). Adjusting for the effects of IFRS 16 (Note 30 (iii)) the underlying comparable EBIT was €49.2 million, an increase of 6.2%. The Ferries division increase in underlying EBIT was 5.8%, while the Container and Terminal division was 7.4% higher, as a result of volume growth. In April 2019, the Group entered into a bareboat hire purchase agreement for the sale of the cruise ferry Oscar Wilde to MSC Mediterranean Shipping Company SA. The total gross consideration for the sale was €28.9 million payable in instalments over 6 years, up to 2025. The sale generated a profit before tax of €14.9 million (2018: sale of the vessel Jonathan Swift generating a profit before tax of €13.7 million). Group EBIT including non-trading items increased by 8.1% to €64.9 million (2018: €60.0 million).

3. ROACE: The Group achieved a return on average capital employed of 19.6% (2018: 32.5%). This decreased return is due to the increase in average capital employed to €364.2 million from €145.0 million. This increase was primarily due to the introduction of the W.B. Yeats. The Ferries division achieved a return on average capital employed of 17.6% (2018: 31.1%) while the Container and Terminal division achieved 28.6% (2018: 37.1%). The comparable underlying returns after adjusting net assets and operating profit for the effects of IFRS 16 was a total Group return of 20.6%, Ferries division 17.4% and Container and Terminal division 40.0%.

4. EPS: Adjusted EPS (before non-trading items and the net interest cost on defined benefit obligations) was 23.8 cent compared with 23.1 cent in 2018. Basic EPS was 31.7 cent compared with 30.4 cent in 2018. The comparable EPS for 2019 increases by 0.1 cent after adjusting for the effect of IFRS 16.

5. Free Cash Flow before strategic capital expenditure: The Group’s Free Cash Flow before strategic capital expenditure was €73.2 million (2018: €45.9 million). The increase in free cash flow is mainly due to the increase in EBITDA, positive working capital movements and reduced maintenance capital expenditure. Free Cash Flow before strategic capital expenditure is a meaningful measure of cash generated for investment or return to shareholders. Adjusting for the effects of IFRS 16 the comparable free cash flow amount was €64.8 million.

Non-Financial KPIs

Schedule integrity: The Ferries division delivered 92% of scheduled sailings compared with 86% in the previous year across all services. Our conventional ferry services (excluding the fast ferry) delivered schedule integrity of 97% in comparison with 90% in 2018. These figures largely reflect the lost sailings arising from the technical issues affecting the Ulysses in 2018 and non-operation of scheduled W.B. Yeats sailings due to the late delivery of that vessel by the shipbuilder in the prior year.