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, 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 | 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 | 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 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 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. |
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. See note 12 to the Consolidated Financial Statements for the calculation of Basic and Adjusted EPS.
Cash Flow | 2020 €m | 2019 €m |
Operating (loss) / profit (EBIT) | (10.4) | 64.9 |
Non-trading items (note 10) | 11.2 | (14.9) |
Net depreciation, impairment and amortisation (note 9) | 41.3 | 36.8 |
EBITDA | 42.1 | 86.8 |
Working capital movements (note 34) | 10.6 | 2.0 |
Pension payments in excess of service costs (note 34) | (1.1) | (1.3) |
Share-based payments expense (note 31) | 0.2 | 1.9 |
Other | (0.6) | 0.1 |
Cash generated from operations | 51.2 | 89.5 |
Interest paid (note 34) | (3.7) | (3.5) |
Tax paid (note 34) | (1.4) | (1.2) |
Maintenance capital expenditure | (10.8) | (11.6) |
Free cash flow before strategic capital expenditure | 35.3 | 73.2 |
Strategic capital expenditure | (19.3) | (42.5) |
Repayment of vessel contract deposit | 33.0 | - |
Free cash flow after strategic capital expenditure | 49.0 | 30.7 |
Proceeds on disposal of property, plant and equipment | 4.9 | 1.8 |
Dividends paid to equity holders of the Company | - | (24.7) |
Buyback of equity | (1.7) | (12.9) |
Proceeds on issue of ordinary share capital | 0.2 | 0.1 |
Net cash flows | 52.4 | (5.0) |
Opening net debt | (129.0) | (80.3) |
Recognition of right-of-use asset lease obligations | (12.5) | (43.5) |
Translation / other | 0.6 | (0.2) |
Closing net debt | (88.5) | (129.0) |
The following table sets forth the reconciliation from the Group’s ROACE calculation:
ROACE | 2020 €m | 2019 €m |
Equity | 265.9 | 287.9 |
Net debt | 88.5 | 129.0 |
Asset under construction (including prepayment deposits) | (3.3) | (43.9) |
Retirement benefit obligations | 2.2 | 3.7 |
353.3 | 376.7 | |
Retirement benefit surplus | (1.0) | (12.5) |
Capital employed | 352.3 | 364.2 |
Average capital employed | 358.3 | 254.6 |
Operating profit (before non-trading items) | 0.8 | 50.0 |
ROACE | 0.2% | 19.6% |
The following table sets forth the reconciliation from the Group’s net debt calculation:
Net debt | 2020 €m | 2019 €m |
Cash and cash equivalents (note 19) | 150.4 | 110.9 |
Non-current borrowings (note 22) | (113.1) | (200.3) |
Current borrowings (note 22) | (87.3) | (3.6) |
Non-current lease obligations (note 23) | (27.8) | (27.6) |
Current lease obligations (note 23) | (10.7) | (8.4) |
Net debt | (88.5) | (129.0) |
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 on pages 26 to 35.
Ferries | Container & Terminal | Inter-Segment | Group | ||||||
2020 €m | 2019 €m | 2020 €m | 2019 €m | 2020 €m | 2019 €m | 2020 €m | 2019 €m | ||
Comment | |||||||||
Revenue | 141.4 | 212.4 | 146.5 | 154.4 | (10.8) | (9.4) | 277.1 | 357.4 | |
EBITDA | 1 | 22.3 | 67.2 | 19.8 | 19.6 | - | - | 42.1 | 86.8 |
Depreciation, impairment and amortisation | (34.6) | (30.8) | (6.7) | (6.0) | - | - | (41.3) | (36.8) | |
Operating (loss) / profit (EBIT) | 2 | (12.3) | 36.4 | 13.1 | 13.6 | - | - | 0.8 | 50.0 |
Non-trading item (note 10) | (11.2) | 14.9 | - | - | - | - | (11.2) | 14.9 | |
Finance costs (note 7) | (6.4) | (2.0) | (1.4) | (1.5) | - | - | (7.8) | (3.5) | |
Finance income (note 6) | 0.2 | 0.1 | - | - | - | - | 0.2 | 0.1 | |
(Loss) / profit before tax | (29.7) | 49.4 | 11.7 | 12.1 | - | - | (18.0) | 61.5 | |
ROACE | 3 | (4.2)% | 17.6% | 21.0% | 28.6% | - | - | 0.2% | 19.6% |
EPS: (note 12) | |||||||||
EPS Basic | 4 | - | - | - | - | - | - | (10.2)c | 31.7c |
EPS Adjusted | 4 | - | - | - | - | - | - | (4.3)c | 23.8c |
Free cash flow | 5 | - | - | - | - | - | - | 35.3 | 73.2 |
Comment:
Financial KPIs
- EBITDA: Group EBITDA for the year decreased by 51.5%, to €42.1 million (2019: €86.8 million). The decrease in underlying EBITDA was primarily due to Covid-19 related travel restrictions, which materially reduced passenger traffic in the Ferries Division. EBITDA in the division decreased by 66.8%, to €22.3 million, while the Container and Terminal Division increased by 1.0%, to €19.8 million.
- EBIT: Group EBIT (pre non-trading items) for the year decreased by 98.4% to €0.8 million (2019: €50.0 million). The Ferries Division decrease in underlying EBIT was 133.8%, primarily due to the effect of Covid-19 travel restrictions, while the Container and Terminal Division was 3.7% lower, as a result of higher depreciation charges. Group EBIT including non-trading items decreased by 116.0% to €(10.4) million (2019: €64.9 million). The non-trading item relates to the transfer of pension liabilities to a third-party insurer.
- ROACE: The Group achieved a return on average capital employed of 0.2% (2019: 19.6%). The Ferries Division achieved a return on average capital employed of (4.2%) (2019: 17.6%) while the Container and Terminal Division achieved 21.0% (2019: 28.6%).
- EPS: Adjusted EPS (before non-trading items and the net interest cost on defined benefit obligations) was (4.3) cent compared with 23.8 cent in 2019. Basic EPS was (10.2) cent compared with 31.7 cent in 2019.
- Free cash flow before strategic capital expenditure: The Group’s free cash flow before strategic capital expenditure was €35.3 million (2019: €73.2 million). The decrease in free cash flow is mainly due to the decrease in EBITDA which was partially offset by positive working capital movements. 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 98% of scheduled sailings compared with 92% in the previous year across all services. Due to Covid-19 travel restrictions, the fastcraft Dublin Swift did not operate any sailings during 2020.