Dear shareholder,

I am pleased to present the Report of the Audit and Risk Committee (the Committee) for the year ended 31 December 2023. I have served on the Committee since August 2022 and was appointed as Chair in November 2022.

The Committee plays an important role in ensuring the Group’s financial integrity for shareholders through oversight of the financial reporting process, including the risk and control systems which underlie that process. This report sets out how the Committee fulfilled its duties under its Terms of Reference, the UK Corporate Governance Code, the Irish Annex and relevant legislation.

Composition

The Audit Committee membership during the year is set out in the table below which also details attendance and tenure.

At 31 December 2023, the Committee comprised of three non-executive Directors, all of whom have been determined by the Board to be independent. The members bring significant professional expertise to their roles gained from a broad level of experience gained outside of the Group. This, together with their experience as Directors of the Company, assures that the Committee as a whole has competence relevant to the sector in which the Group operates. The members’ biographies are set out under Director Biographies. The Board has determined that Éimear Moloney has recent and relevant financial experience. Éimear is a qualified chartered accountant and has experience of audit committee membership at other listed companies. The other members of the Committee have wide experience of corporate financial and risk matters. Overall, the Committee is independent and possesses the skills and knowledge to effectively discharge its duties under the Committee’s Terms of Reference. The Company Secretary acts as secretary to the Committee.

There were four scheduled meetings during the year at which all members attended. In addition, where requested, the Chief Executive Officer, the Chief Financial Officer, Board Chair and other members of the Risk Management Committee also attended. The scheduled meetings normally take place on the same day as Board meetings. The Chairman provides updates to the Board on key matters discussed and minutes are circulated to the Board.

Role and Responsibilities

The role, responsibilities and duties of the Committee are set out in written terms of reference which are reviewed annually. The Terms of Reference are available on the Group’s website www.icg.ie. During 2023, the terms of reference were updated by the Board to recognise the changing environment around risk and climate developments and their effect on the business together with recent and expected increased reporting requirements. The Committee name was also amended to the Audit and Risk Committee to reflect the greater sphere of responsibility.

The principal responsibilities of the Committee cover the following areas;

• Supporting the Board in fulfilling its responsibilities in relation to the integrity of the financial reporting process including assessment of key estimates, critical accounting judgements, going concern and viability statements.
• Advise whether the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provide the information necessary for shareholders to assess the Group and Company’s position and performance, business model and strategy.
• Overseeing the functioning of the internal audit function.
• Monitor the effectiveness of the Group’s internal controls and risk management systems, including the functioning of the Executive Risk Management Committee and the structures and arrangements supporting the Directors’ Compliance Statement.
• Managing the relationship with the external auditor, including consideration of the appointment of the external auditor, the level of audit fees, any questions of independence, the provision of non-audit services and resignation or dismissal.
• Managing the relationships with external financial regulatory authorities

Work Performed

The principal work undertaken by the Committee during the period under review was focused on the following areas;

Financial Reporting

The Committee reviewed the Group’s Half Yearly Financial Report for the six months ended 30 June 2023 the Preliminary Statement of Results and Annual Report and Financial Statements, for the financial year ended 31 December 2023 and the two Trading Statements issued during the year. These reviews considered;

• Assessment of the effects of new standards effective for reporting in financial year 2023;
• Other than for any new standards, the consistency, appropriateness and application of the Group’s accounting policies;
• The clarity and completeness of disclosures and compliance with financial reporting standards, legislative and regulatory requirements;
• Whether these reports, taken as a whole, were fair, balanced and understandable and provide the information necessary for shareholders to assess the Group’s position and performance, business model and strategy;
• A comparison of these results with management accounts; and
• The critical accounting judgements and key sources of estimation applied in the preparation of the Financial Statements.

In assessing if the Financial Statements have dealt appropriately with each area of judgement, the Committee challenged the key assumptions and methodologies used by management in formulating estimates. The key sources of estimation uncertainty and critical accounting judgements applied in the preparation of the Financial Statements for the financial year ended 31 December 2023 are set out below with further details at Note 3 to the Financial Statements.

Key Estimates

• Post-employment benefits
  The Group operates a number of Group sponsored pension schemes and is also a participating employer in the Merchant Navy Officers Pension Fund, a multi-employer scheme. Details of these schemes are set out in note 31 to the Financial Statements. The size of the pension obligations at €96.9 million (2022: €91.6 million) are material to the Group and sensitive to actuarial assumptions. The Committee has reviewed the advice received from an actuary independent of the schemes on the setting of actuarial assumptions used by the scheme actuaries in estimating the outstanding pension obligations at the year end. The Committee was satisfied that the assumptions used were reasonable and that the obligations set out in the Financial Statements are consistent with the assumptions and fairly presented.
  
  The Committee also noted that for certain schemes, assets exceeded liabilities resulting in a pension surplus at 31 December 2023 of €39.4 million (2022: €33.6 million). The Committee made inquiries of management to ensure that this amount represented a fair estimate of the unconditional right of a refund the Group may expect in the future.
• Useful lives for property, plant and equipment and intangible assets
  Long-lived assets comprising primarily of property, plant and equipment and intangible assets represent a significant portion of total assets. Changes in the useful lives may have a significant impact on the annual depreciation and amortisation charge. The Committee reviewed the useful life estimates of significant assets including technological developments, regulatory developments, operating performance and industry scrapping cycles and were satisfied that the estimates used were reasonable.
  
  

Critical Accounting Judgements

• Impairment
  The Group does not have assets which are required to be tested annually for impairment. In relation to other significant assets, the Committee made inquiries of management to determine whether there were any indications of impairment. The Committee discussed with management their approach to the identification of indictors of impairment including management’s assessment of the economic performance of assets, technological developments, new rules and regulations including environmental regulation, shipbuilding costs, valuation models and the carrying value versus market capitalisation of the Group.
  
  The Committee noted that the profitability of the Irish Ferries branded operations had been materially affected in financial years 2021 and 2020, due to the imposition of government travel restrictions as a result of the Covid 19 pandemic. This decline in profitability had been subsequently assessed as an indication of impairment in those years. Following the lifting of all travel restrictions in early 2022, passenger carryings recovered and this recovery was sustained throughout 2023 broadly in line with management expectations. The related strong recovery in profitability was considered such that this factor was no longer considered to be an indicator of impairment at 31 December 2023 consistent with the prior year assessment.
  
  The Committee discussed with management their assessment that the declining trends in market charter rates for container vessels during 2023 and persisting at the period end amounted to an indication of impairment of the Group’s container vessel fleet. The Committee noted that for 2023, management were confining this assessment to the container vessel fleet only whereas in the prior year the assessment had been applied to the Groups full fleet including ferries. The Committee were satisfied with the management explanation of the differing characteristics of both fleets and that the assessment was correctly applied to the container vessel fleet only.
  
  The Committee reviewed management’s calculations of the recoverable value estimates prepared on the container vessel fleet which were prepared based on the conditions and information available at 31 December 2023. The Committee examined the methodology, key assumptions and key judgements used including the limitations of the independent vessel valuations, derivation of estimated future charter rates and the discount rate used in the value in use calculations. The Committee also considered management’s views on the likely effect of environmental regulations on premature obsolescence and future operating costs.
  
  The Committee was satisfied that the recoverability assessment performed at the reporting date was robust, comprehensive and supported the carrying value of the container vessel fleet as at 31 December 2023. The Committee agreed with the management conclusion that no provision for impairment against the carrying value of the Group’s fleet was required at 31 December 2023.
• Going concern
  The Committee reviewed the appropriateness of using a going concern assumption for the preparation of the Group Financial Statements.
  
  The Committee noted that the recovery in profitability in the ferry operations seen in 2022 following the Covid pandemic, had sustained during 2023 and was materially in line with expectations.
  
  The Committee reviewed and challenged management on their going concern modelling including assumptions and sensitivities in a number of trading scenarios including the possible effects of reduced volumes over budget levels and higher fuel prices. The Committee also considered existing and future financial resources which could reasonably be expected to be available to the Group on normal market terms. The going concern modelling covered a period of 12 months from the date of approval of the Financial Statements.
  
  Following completion of the above, the Committee were satisfied that the Group will have adequate financial resources to continue in operational existence for the foreseeable future and the use of the going concern basis remained appropriate in the preparation of the financial statements. The Going Concern Statement is set out at Note 3 to the Consolidated Financial Statements.
• Leases – determination of lease term
  There is judgement required in determining the term of a leased vessel where there are any periods covered by options to extend the lease and/or purchase the vessel if these are reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and right-of-use assets recognised. The Committee challenged management on the factors considered in determining the lease terms for those significant leases which contained unexercised renewal options at the reporting period end. The Committee were satisfied that a robust consideration taking into account likely developments in the market and the Group had been made in determining the lease terms.

Viability Statement

The Committee reviewed and challenged management’s assumptions and scenarios together with the calculations supporting the Viability Statement set out the Report of the Directors. The Committee also considered the appropriateness of the five year assessment time frame and that the Group’s principal and emerging risks had been appropriately considered. The Committee was satisfied that a robust assessment had been completed and reported this to the Board.

Fair, balanced and understandable

The Committee reviewed the 2023 Annual Report and Financial Statements to ensure that in its opinion taken as a whole, it is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s position and performance, business model and strategy.

Recommendations to the Board

Based on the work undertaken, the Committee reported to the Board that the Annual Report and Financial Statements for the year ended 31 December 2023 taken as a whole, is fair, balanced and understandable, and provides the information necessary for shareholders to assess the Group and Company’s position and performance, business model and strategy and recommended that the Annual Report and Financial Statements be approved by the Board.

The Committee had also recommended the approval of the Half Yearly Financial Report for the six months ended 30 June 2023 and the Trading Statements issued during 2023.

Engagement with Regulators

The Committee oversaw management’s engagement with the Irish Auditing and Accounting Supervisory Authority (IAASA) regarding their inquiries into certain aspects of the Annual Report and Financial Statements for the year ended 31 December 2022. The Committee noted that no adverse findings were assessed.

Risk Management and Internal Control

The Board is responsible for the Group’s risk management and system of internal control. The Board’s approach to risk management is set out in the Risk Management Report. The Committee, on behalf of the Board, reviews the effectiveness of the Group’s control environment including internal controls and risk identification and management systems.

The Risk Management report describes the principal risks and uncertainties faced by the Group. Risks are grouped under strategic, operational, IT system and cyber and financial risks. The risk management system is dynamic and monitors for signals of new emerging risks which during 2023 included political tensions in eastern Europe and Middle East, the effect of proposed regulations over seafarer working conditions. Further details on these are set out in the Risk Management Report.

The Committee oversees the work of the Risk Management Committee (RMC) which coordinates a unified system of ongoing identification, monitoring and reporting of risks throughout the Group. The activities of the RMC are undertaken alongside the activities of Internal Audit.

During the year, the Committee met with members of the RMC and presentations were made outlining the work undertaken in managing risk monitoring systems, procedures for ensuring the Group Risk Register is being updated for new and emerging risks and the management of exposure to principal risks. The work of the RMC is also central in putting consideration of risk to the fore in business decision making throughout the Group. The Committee reviewed with the RMC those activities giving risk to the highest risk exposures and formulated a recommendation to the Board to continue those activities as being necessary to the Group’s operations. The Committee also received regular reports throughout the year including internal audit reviews, operational and safety risk reviews including information technology and cyber security. In addition, the Chairman meets regularly with Group Internal Audit and the Committee approved the 2023 Internal Audit Plan.

The Committee reviewed the effectiveness and resourcing of the RMC and Internal Audit activities. The Committee was satisfied that management had rectified an internal audit resourcing deficit in early 2023 and that the internal audit program had not been adversely affected. The Committee was satisfied that all other risk management and internal control systems had been in place throughout the financial year. In conducting the review, the Committee acknowledges that the risk management and internal control system is designed to manage and mitigate rather than eliminate risk. The Committee was satisfied that the RMC and Internal Audit were achieving their objectives and that the Group control environment remains appropriate and effective. This assessment has been reported to the Board.

The Committee also reviewed the effectiveness of the arrangements and structures which the Company has designed and put in place to secure material compliance with its Relevant Obligations as defined under Companies Act 2014. Relevant obligations comprise compliance with certain company law and tax obligations. The Committee reported to the Board that the arrangements and structures were sufficient to secure material compliance with its Relevant Obligations.

External Audit

The Committee is responsible for managing the relationship with the Group’s external auditor and monitoring their performance, objectivity and independence. The Committee evaluates on an annual basis, at the conclusion of the audit, the effectiveness of the external audit process.

2023 External Audit Process

The Committee met with KPMG prior to the commencement of the audit of the Financial Statements for the financial year ended 31 December 2023. The Committee considered KPMG’s internal policies and procedures for maintaining independence and objectivity and their approach to audit quality. The Committee assessed the quality of the external audit plan as presented by KPMG and satisfied itself as to the expertise and resources being made available. The Committee also reviewed the terms of the Letter of Engagement and approved the level of remuneration.

KPMG reported their key audit findings to the Committee in March 2024 prior to the finalisation of the Financial Statements. This report, which included a schedule of non-material unadjusted errors and misstatements, significant judgements and estimations and key areas of risk, was considered by the Committee in forming their recommendation to the Board. The Committee also considered the representations sought by KPMG from the Directors.

KPMG’s key audit findings report included control weaknesses noted during their audit, none of which were considered significant deficiencies so as to cause KPMG to amend the scope of their original audit plan. The Committee has considered these and, having discussed with management, have directed remedial action be taken where considered appropriate. The Committee has also considered feedback from management involved in the audit process regarding interaction with and level of preparedness of the audit team. The Committee also meet with the audit team without the presence of management.

The Committee evaluated KPMG’s performance which included an assessment of KPMG’s communication process with the Committee and senior management, knowledge of the Group and industry sector and resource commitment to the external audit and the Committee is satisfied that in conducting the audit of the 2023 Financial Statements, KPMG were effective, objective and independent.

As auditor, KPMG confirmed to the Company that they comply with the Ethical Standards for Auditors (Ireland) 2020 as issued by IAASA and that, in their professional judgement, they and, where applicable, all KPMG network firms are independent and their objectivity is not compromised.

KPMG confirmed to the Company that the lead partner will be rotated every five years to ensure continued objectivity and independence. Mr. Colm O’Sé (who was appointed in 2021) has acted as lead partner for the audit of the 2023 Financial Statements.

Auditor Independence

The Committee permits the external auditor to provide non-audit services where they are permitted under Part 27 of the Statutory Audits of Companies Act 2014 and are satisfied that they do not conflict with auditor independence. The Committee’s policy on the provision of non-audit services requires that each engagement for the provision of non-audit services requires approval of the Committee. The Committee approved the engagement of the external auditor to provide certain tax compliance services and reporting accountant services in respect of certain pension scheme in respect of the 2023 financial year. This approval was granted on the basis of procedural efficiency. The Committee must also give approval for the employment of any person who was previously employed by the external auditor within the previous two years of proposed employment by the Group.

The Audit Committee has considered all relationships between the Company and the external audit firm, KPMG, including the provision of non-audit services as disclosed in note 9 to the financial statements which are within the thresholds set out in Part 27 of the Statutory Audits of Companies Act 2014. The Committee does not consider that those relationships or the level of non-audit fees impair the auditor’s judgement or independence.

Based on consideration of the above the Committee concluded that it was satisfied with the performance, objectivity and independence of the external auditor.

Éimear Moloney

Chair of the Audit Committee

6 March 2024

Dear shareholder,

I am pleased to present the Report of the Nomination Committee (the Committee) for the year ended 31 December 2023

This Report sets out how the Committee fulfilled its duties under its terms of reference and the UK Corporate Governance Code, the Irish Annex and relevant legislation.

The Board is comprised of four non-executive Directors and two executive Directors. With the significant refreshment of the Board which had taken place in recent years, the focus of the Committee during the period was to ensure that the Board continued to possess the necessary skills to address the dynamic business and regulatory environment facing the Company.

The Committee recognises that at the heart of every organisation are its people, culture and values and against that backdrop the Committee sets the framework for the development of an inclusive and high-performing leadership team and workforce.

Committee Membership

The Committee membership is set out in the table below which also details attendance and tenure. All Directors bring significant professional expertise to their roles on this Committee as set out in their professional biographies.

* Independent Director

In addition to the scheduled meeting, there was significant engagement between Committee members throughout the period to progress the Committee’s business.

Role and Responsibilities

The role, responsibilities and duties of the Committee are set out in written terms of reference and are reviewed annually. The Terms of Reference are available on the Group’s website www.icg.ie.

Its duties are to regularly evaluate the balance of skills, knowledge, experience and diversity of the Board and Committees and lead the process for appointments, ensure plans are in place for orderly succession to both the Board and senior management positions and overseeing the development of a diverse pipeline for succession.

The Committee’s effectiveness is evaluated within the overall Board evaluation process outlined in the Corporate Governance Report. No matters of concern were noted in relation to the Committee’s effectiveness.

Board Composition and Renewal

The Committee considered the results of the Board evaluation and the changes to Board composition made during the prior year. The Committee was satisfied that the Board continues to be of adequate size and composition to suit the current scale of its operations and has an appropriate balance of skills, knowledge, experience and diversity to enable it to effectively discharge its duties.

The Committee continues to place a particular focus on ensuring greater diversity at Board and senior management level. We are confident the changes we make to succession planning will address this imbalance in the organisation versus best practice in the periods ahead. Outside of gender and ethnic diversity, as a Committee, we are confident the current Board’s skillset ensures the ability to oversee management and contribute to the development of strategy.

The Committee notes the Code’s comments on non-executive Director tenure and the tenure profile of the existing non-executive Directors. The average tenure of the non-executive Directors, including the Chairman, is 10.7 years and 2.3 years excluding the Chairman.

Appointments

There were no new appointments to the Board or senior leadership team during the period.

All non-executive Directors receive a letter of appointment setting out the terms of the appointment, responsibilities and expected time commitments. Copies of these letters are available for inspection at the Annual General Meeting (AGM) and at the Company’s registered office.

In compliance with the provisions of the Code, any person co-opted to the Board during the year will seek re-election at the next AGM together with all the Directors. All newly appointed Directors will as part of the induction process be provided with comprehensive information on the Group’s strategy, structure and performance reporting. They will also be afforded opportunity to meet senior management and visit Group sites.

Engagement

The Committee welcomed the results on the individual Director re-election resolutions tabled at the 2023 Annual General Meeting where support for the re-election of all Directors was above the threshold set in the Code. Notwithstanding the Committee noted the 19% of votes against the re-election of the John. B. McGuckian, Chairman of the Board. The Company maintains an ongoing dialogue with major shareholders and had engaged extensively with them in advance of the 2023 Annual General Meeting. The general consensus was that, notwithstanding Mr. McGuckian’s tenure, our shareholders were supportive of Mr. McGuckian continuing as a Director and Chairman of the Board in the circumstances where the Group had recently undertaken major strategic initiatives together with a number of recent non-executive Director appointments to the Board. A minority of shareholders had expressed a reservation around succession planning and voted against the re-election of Mr. McGuckian in his role as Chair of the Nominations Committee. The Committee is cognisant of the importance of succession planning for senior roles and while it reviews this on an ongoing basis considers it inappropriate to provide details in advance of any succession event.

Director Independence

The Committee reviewed ongoing Director independence and did not identify any issues that were likely to impair, or could appear to impair the independence of the non-executive Directors, Lesley Williams, Dan Clague and Éimear Moloney.

The Committee recommended to the Board the re-appointment of all the Directors at the Company’s AGM. In considering the proposals for the re-election, the Committee had particular regard to the tenure of John B. McGuckian. Mr. McGuckian has served as Chairman of the Board since 2004 and as a non-executive Director since 1988. This recommendation was proposed following a robust review of the knowledge, skills and experience that he contributes, in the interests of the Company and stakeholders. The Committee assessed him to be both independent in character and judgement and to be of continued significant benefit to the Board. Recognising the provisions of the UK Code, the Committee was also cognisant of the appointment of Mr. McGuckian well in advance of the revisions to market expectations on Chair tenure. The Committee expects to align with the provisions of the UK Code on this issue in the future. However, at this time, and particularly in light of the recent strategic expansion of the Group, the Committee determined it appropriate for Mr. McGuckian to continue as Chair and leader of the Board. The Committee was also satisfied that the role of the Senior Independent Director further ensures clear division between management and oversight.

No Committee member voted on a matter concerning their position as a Director.

Inclusion and Diversity

The Committee reviewed the processes agreed in respect of workforce engagement described earlier in the Corporate Governance Report and was satisfied that these arrangements remain appropriate to the Group’s circumstances.

The Group values diversity and the benefits it can provide in promoting the success of the business. The Board’s Diversity Policy is discussed in the Corporate Governance Report. In considering any appointment to the Board the Committee identifies the set of skills and experience required. Individuals are selected based on the required competencies of the role with due regard for the benefits of diversity.

The Group’s gender diversity is set out in the Corporate Governance Report. Currently, the female composition of the Board is 33% (2022: 33%), 22% (2022: 22%) among senior managers and 41% (2022: 39%) across the organisation as a whole. While this indicates marginal progress year on year, the Committee continues to focus on improving these ratios. In relation to future Board and senior manager appointments the Committee continues to actively seek out a greater pool of female candidates for consideration. The Committee has also requested executive management to ensure this requirement is followed for recruitment across all levels of the organisation.

External search agencies independent of the Group are engaged to assist where appropriate and their mandates include considerations of diversity.

The Committee notes the requirements of UK Listing Rule 9.8.6 concerning certain Board diversity disclosures on an aggregated basis. The Board has considered this requirement and concluded that due to the small the size of the Board that compliance with this requirement would not be consistent with the Company’s data processing obligations under Irish and EU data protection legislation.

The Committee reports the following Board balance statistics at 31 December 2023

John B. McGuckian

Chair of the Nomination Committee

6 March 2024

Dear Shareholder,

I am pleased present the Directors’ Remuneration Report for year ended 31 December 2023. I have served on the Committee since August 2021 and was appointed as Chair in November 2022. This report sets out the Company’s remuneration policy and framework and how it was applied during 2023.

The Remuneration Committee

The Remuneration Policy and Framework is overseen by the Remuneration Committee. Committee membership during 2023 is set out in the table below which also details attendance and tenure. All Directors bring significant professional expertise to their roles on this Committee as described in the Director Biographies.

The Committee met twice during the period with follow up contacts between meetings. The Chairman provided an update to the Board on key matters discussed.

Role and Responsibilities

The role, responsibilities and duties of the Committee are set out in written terms of reference which are reviewed annually. The Terms of Reference are available on the Group’s website www.icg.ie.

The Committee’s duties are to establish a remuneration framework that;

• Will attract, motivate and retain high calibre individuals;
• Will reward individuals appropriately according to their level of responsibility and performance;
• Will motivate individuals to perform in the best interest of the shareholders; and
• Will not encourage individuals to take risks in excess of the Company’s risk appetite.

Within this framework the Committee has formulated a Remuneration Policy which was submitted to shareholders at the 2021 AGM by way of an advisory resolution which received 87% approval. This Remuneration Report sets out how we have applied the Remuneration Policy during FY 2023 and will be put to a shareholder vote as an advisory resolution at the 2024 AGM.

The Committee ensures that the remuneration structures and levels are set to attract and retain high calibre individuals necessary at executive Director and senior manager level and to motivate them to deliver strategy in the interests of our shareholders and wider stakeholders. The committee believes that an approach to remuneration grounded in pay for performance with a bias to long term remuneration delivered in equity is the most effective way of aligning management’s interests to those of our stakeholders. Remuneration levels and awards are based on an individual’s contribution to the Company against the background of underlying Company financial performance having regard to comparable companies in both size and complexity.

Overview of Performance

The Group is reporting an operating profit of €68.4 million for 2023 (2022: €66.7 million). Operating profit in the Ferries Division was €52.1 million, a 12% increase on 2022. This improvement in ferries performance is principally attributable to returning passenger traffic post pandemic while also leveraging its expanded footprint. The container and terminal operations encountered more challenging trading conditions, where operating profit fell to €16.3 million, a 20% reduction on 2022. The 2023 performance generated cash from operations from €136.7 million compared to €132.0 million in 2022. This has been utilised in facilitating the continued investment in our business during 2023 with strategic capital expenditure amounting to €21.8 million (2022: €57.4 million) and returns to shareholders of €45.8 million (2022: €73.4 million) by way of dividends and share buybacks.

The Committee acknowledges the strong contribution of the Executive Directors and senior managers during financial year 2023 in delivering the above result, including the actions taken in managing recent Group expansion and developing its sustainability program. The level of performance achieved maintained the Group’s strong financial position and provides a platform for continued future growth.

Our approach to remuneration and variable pay seeks to consistently link variable remuneration to performance: when performance is strong, executives will be awarded higher levels of variable pay and when performance is behind where we would want it to be, variable remuneration will be low or nil. The Committee considers the most important aspect of variable remuneration to be the alignment between it and the interests of shareholders, stakeholders and management.

While noting the Group financial performance in 2023 continued the recovery seen in 2022, it was behind expectation. On that basis the Committee concluded that bonus payouts below maximum opportunity were appropriate for 2023 for certain Directors and senior managers. However, other than for the CEO who has a contractual legacy arrangement, the Committee did not consider it appropriate to exercise discretion to make adjustments to any formulaic outcome in respect of performance pay.

We are satisfied the Committee’s actions are aligned with the philosophy of our shareholder approved remuneration policy, which favours long-term equity ownership over short-term remuneration.

Remuneration Policy and Shareholder Engagement

At the 2021 AGM, 87% of voting shareholders supported our proposed remuneration policy, a level at which the Committee is satisfied endorses our arrangements to incentivising Executive Directors. The full Remuneration Policy is available at https://icg.ie/investors/general-meetings/.

The Committee having reviewed the Policy during 2023, taking into account shareholder feedback on the 2022 Report of the Remuneration Committee, remain satisfied that it continues to be appropriate to the business needs and strategy of the Group. The Policy is next scheduled to be put to an advisory vote of shareholders at the 2025 AGM.

The 2022 Report of the Remuneration Committee was put to an advisory vote at the 2023 AGM and was supported by 88% of voting shareholders. While we welcome this strong level of support, we have noted feedback from our major shareholders with whom we had engaged with prior to the AGM.

Some shareholders had noted that the terms and disclosure of metrics around the CEO bonus arrangements and potential for uncapped payments are distinct compared to certain market peers. The Committee acknowledges this view but notes that the CEO bonus arrangements has been an effective structure for motivational reward in alignment with the Group’s performance, long-term strategy and shareholder interests. The Committee further notes that the CEO bonus had been remunerated in equity with a holding period in excess of five years. This is a legacy contractual arrangement and will not apply to the next CEO.

The Committee refers below to other aspects of the Company’s Remuneration Policy which create some of the most stringent deferral and holding mechanisms in the Irish and UK markets, including;

• A minimum of 50% of annual bonus (after tax liabilities) to be invested in equity, with the Committee exercising discretion to apply a higher percentage in recent years.
• A five-year contractual holding requirement applies to the entire portion of the annual bonus reinvested in equity.
• A five-year contractual holding requirement applies to any awards vesting under the Performance Share Plan following the three-year performance period creating a total eight-year time horizon from grant to release; and
• The five-year contractual holding requirement extends post employment creating post employment holding commitments of up to five years.
• Shareholding guidelines for all executive Directors and members of the Executive Committee of a minimum three times base salary to be achieved within five years of appointment.

Workforce Remuneration

As a Remuneration Committee, we are always mindful of the extent to which the remuneration of the executives aligns with the experience of our stakeholder groups. The Committee has received regular updates on relevant matters affecting the workforce and have overseen the implementation of a range of measures to help and support its direct employees. The team continued to perform extremely well managing the return of business post pandemic and the expansion of the Group’s activities. The Committee hopes to oversee further staff development, including reward frameworks that are increasingly aligned with sustainable practices and the development of succession planning.

Salary Increases

The Committee acknowledges the importance of remuneration arrangements remaining competitive and noted that it had realigned the salary and fixed pay arrangements applying to the CEO and CFO for 2022 to take into account the increased scale of the Group operations. These salary levels were increased by 2.5% for 2023.

The Committee again reviewed salary levels at the end of 2023 in light of financial performance of the Group’s businesses and the market generally. The Committee considered it appropriate that any salary increase should be in line with the increases awarded to the workforce generally. In that respect, increases of 2.5% were awarded to the CEO and CFO effective from 1 January 2024.

Consideration of Discretion

The Committee reviewed the outcomes of both the annual bonus and long-term incentive plan and considered the results both against the relevant performance targets and the wider internal and external context.

In relation to the CEO, the formulaic calculations based on Group performance indicated that a bonus would be payable under his legacy arrangement. The Committee considered that the formulaic outcome was consistent with performance achieved and that an adjustment was not warranted, noting that the full award, rather than the minimum 50%, was invested in equity through the Group’s restricted share scheme which creates a five year disposal restriction.

In relation to the CFO, the Committee considered that the formulaic outcomes fairly reflected Group and personal performance and that it was appropriate not to exercise discretion to adjust these formulaic outcomes. This decision was also applied in the case of other members of the senior management team.

With regard to the vesting outcomes under the long-term incentive plan, the Committee agreed that the formulaic vesting outcomes were appropriate given performance against the three-year targets and concluded that a reduction in vesting outcome was not required. One of the strengths of our approach to remuneration is the market leading deferral requirements which, unlike the vast majority of our listed peers, allows us the flexibility to restrict the disposal of vested awards for up to five years.

Integrating ESG Measures

Over recent years, there has been significant growth in the focus on ESG and sustainability, with investors and wider stakeholders raising expectations as to how companies are embedding environmental, social and governance criteria into strategies and everyday operations. As outlined elsewhere is this Annual Report, during the last year, the business has continued to advance its integration of a range of ESG factors into the risk management and strategy frameworks. At this point in our ESG maturity, we are continuing to focus on developing frameworks, policies and formally integrating ESG into decision making in all aspects of our business. Where ESG matters are part of a reward structure they are currently assessed in relation to overall progress in these programmes, particularly on our CO₂ reduction targets. As the Group moves through the ESG maturity cycle, the Committee will seek to incorporate additional measurable targets and outcomes into performance remuneration.

Outlook

2023 has been one of continuing recovery following the disruption to our passenger business during the Covid pandemic, with certain challenges arising in our container and terminal operations. In addition, our recent strategic initiatives including the development of our Dover – Calais service commenced in 2021, the modernisation and increased capacity at our container terminals and strong financial position will provide a platform for growth going forward.