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 €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.
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 |
8 March 2023 |
31 December 2022 |
||
Number of Units |
% of Issued Units |
Number of Units |
% of Issued Units |
|
Eamonn Rothwell |
30,388,085 |
17.7% |
30,388,085 |
17.7% |
Wellington Management Company, LLP |
18,205,979 |
10.6% |
18,816,956 |
11.0% |
Kinney Asset Management, LLC |
11,606,002 |
6.7% |
11,606,002 |
6.7% |
Marathon Asset Management, LLP |
10,899,056 |
6.3% |
10,899,056 |
6.3% |
Ameriprise Financial Inc. |
6,517,249 |
3.8% |
7,633,033 |
4.4% |
FMR, LLC |
6,229,035 |
3.6% |
6,229,035 |
3.6% |
Brewin Dolphin Wealth Management |
5,895,833 |
3.4% |
5,895,833 |
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:
|
31/12/2022 |
01/01/2022 |
31/12/2021 |
01/01/2021 |
Director |
|
|
|
|
John B. McGuckian |
296,140 |
296,140 |
- |
- |
Eamonn Rothwell |
30,496,605 |
30,095,384 |
1,685,500 |
1,495,000 |
David Ledwidge |
261,757 |
149,968 |
562,000 |
459,500 |
John Sheehan (resigned: 11 November 2022) |
- |
90,000 |
- |
- |
Lesley Williams |
10,000 |
10,000 |
- |
- |
Dan Clague |
- |
- |
- |
- |
Éimear Moloney (appointed: 25 August 2022) |
10,000 |
- |
- |
- |
Company Secretary |
|
|
|
|
Thomas Corcoran |
388,623 |
272,780 |
350,500 |
506,000 |
ICG Units are explained on page 196 of this report.
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.
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 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.