22. Financial Risk Management and Financial Assets/Liabilities

The carrying values of the financial assets and liabilities of the Company can be analysed as set out below. The Company has not disclosed the fair values for financial instruments where their carrying amounts are a reasonable approximation of fair value. The carrying values of the Company’s cash and cash equivalents, trade and other receivables (net), trade and other payables, and other current liabilities approximate their fair values because of the short-term nature of these instruments.

At amortised cost

Notes

31-Dec-24
€’000

31-Dec-23
€’000

Financial assets

Trade and other receivables

(i)

148,951

131,237

Cash and cash equivalents - available for company use

345,428

289,352

Cash and cash equivalents - third party balances

71,408

6,322

Financial assets - financial security held on term deposit

40,000

72,250

605,787

499,161

Financial liabilities

Borrowings and other debt

(ii)

(1,013,353)

(830,073)

Trade and other payables

(iii)

(193,613)

(165,373)

(1,206,966)

(995,446)

Net financial liabilities

(601,179)

(496,285)

(i) Prepayments have been excluded as these are not classified as a financial asset.

(ii) The fair value of borrowings and other debt as at 31 December 2024 was €962.5 million (2023: €739.2 million).

(iii) Accrued expenses and taxation liabilities have been excluded as these are not classified as financial liabilities.

Financial Risk Management

Financial risk management policies have been established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks. These financial risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, develops a disciplined and constructive control environment in which all employees understand their roles and obligations.

(i) Credit risk

Credit risk is defined as the total loss that the Company would sustain on its business and market transactions if a counterparty defaulted and failed to perform its contractual obligations. It includes credit exposures arising from trading relationships with customers. The objective of credit risk management is to manage and control credit risk exposures within acceptable parameters, while optimising the return.

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

31-Dec-24
€’000

31-Dec-23
€’000

Trade and other receivables (excluding prepayments)

148,951

131,237

Cash and cash equivalents - available for company use

345,428

289,352

Cash and cash equivalents - third party balances

71,408

6,322

Financial assets - financial security held on term deposit

40,000

72,250

Total

605,787

499,161

(i) (a) Treasury related credit risk

The Company’s Treasury function manages treasury related credit risk through the use of counterparty credit limits which take account of, among other relevant factors, published credit ratings. It is the Company’s policy that cash is mainly placed on deposit with institutions who maintain an investment grade credit rating. Treasury regularly evaluates and measures its treasury counterparty exposures.

(i) (b) Trade related credit risk

Refer to note 11 for an analysis of the Company’s exposure to trade related credit risk.

(ii) Funding and liquidity risk

The Company’s approach to managing funding and liquidity risk is to ensure, as far as possible, that it has adequate resources to meet its liabilities when due, under both normal and stressed conditions.

Treasury develops and maintains relationships with financial institutions in order to develop their understanding of the business and to build their long-term commitment to the Company. All banking and treasury services are sourced at competitive prices.

Treasury is responsible for ensuring the Company has access to sufficient liquidity to ensure that the Company is able to settle obligations arising through its day-to-day operations, maturing debt obligations and capital investment outlays. Cash pooling is carried out and account balances netted where possible to minimise idle cash and interest expense.

(ii) (a) Cash surpluses

Cash surpluses are used primarily to reduce the level of debt. Cash surpluses are held in Euro and largely invested in deposit accounts.

(ii) (b) Funding

€998.6 million of State loan facilities, provided by the Minister for Finance for capital expenditure attributed to the non-domestic sector for the period 2020 to 2024, has now been fully drawn. In the Government’s 2025 budget, €1 billion of funding was announced to be provided by the Minister of Finance to Uisce Éireann to support future capital investment. €300 million is to be provided in 2025 to fund domestic capital investment and €700 million to fund non-domestic capital investment over the period 2025 to 2027, €214 million of which will be provided in 2025.

Uisce Éireann has retained a €10 million banking overdraft facility for its daily banking requirements. The Company’s borrowings comprise solely of facilities drawn from Government, at fixed interest rates.

31-Dec-24

31-Dec-23

Weighted average interest rate on the Company’s portfolio of outstanding borrowings

1.83%

1.53%

Average maturity of debt

7.61 years

8.09 years

31-Dec-24
€’000

31-Dec-23
€’000

Total borrowings (excluding lease liabilities)

(998,559)

(814,499)

Undrawn committed Government working capital facility (NTMA)

(350,000)

(350,000)

Undrawn committed bank facilities (excluding overdraft facility)

-

-

Statutory borrowing limit

(2,000,000)

(2,000,000)

(ii) (c) Exposure to liquidity risk

The following are the contractual maturities of financial liabilities, including the undiscounted interest payment associated with borrowings and other debt.

Carrying amount
€’000

Contractual cash flows
€’000

< 1 year
€’000

1-2 years
€’000

2-5 years
€’000

> 5 years
€’000

At 31 December 2024

Borrowings and other debt

(1,013,354)

(1,174,584)

(24,136)

(20,034)

(59,254)

(1,071,160)

Trade and other payables

(193,613)

(193,613)

(104,508)

(45,953)

(43,152)

-

Total

(1,206,967)

(1,368,197)

(128,644)

(65,987)

(102,406)

(1,071,160)

At 31 December 2023

Borrowings and other debt

(830,074)

(946,393)

(9,900)

(15,948)

(40,372)

(880,173)

Trade and other payables

(165,373)

(165,373)

(109,340)

(27,953)

(28,080)

-

Total

(995,447)

(1,111,766)

(119,240)

(43,901)

(68,452)

(880,173)

(iii) Market risk

Market risk is the possibility that changes in market factors will adversely affect the value of the Company’s financial assets, liabilities or expected future cash flows. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Treasury is responsible for managing market risk with respect to currency exchange rates and interest rates for the Company.

(iii) (a) Exchange rate risk

The Company is exposed to certain trade-related foreign currency risk which is not significant and therefore the impact on the Company’s results is minimal.

(iii) (b) Interest rate risk

Interest rate risk derives from changes in interest rates which affect the market value of financial assets and liabilities of the Company and the level of finance charges. As described in the liquidity risk section of this note, as at 31 December 2024 all of the Company’s borrowings are long-term and at fixed interest rates, thus the Company is no longer exposed to cash flow interest rate risk on its borrowings.