Directors’ Report

Principal Risks and Uncertainties

One of the principal uncertainties facing the Company is whether it will be able to deliver the required port capacity to meet market demands with the required level of confidence.

Masterplan 2040 sets out the planning framework for the three Strategic Infrastructure Development (SID) projects required to deliver the 2040 capacity objective:

• The first SID is the Alexandra Basin Redevelopment (ABR) Project and construction on this project continued during 2022.
• In July 2020, An Bord Pleanála granted a 15 year planning permission for the second of the three SIDs, the MP2 Project. The requisite foreshore permissions were received in 2022 and it is expected that works envisaged under the MP2 Project will commence later this year.
• We have termed the third and final SID the 3FM Project which is currently in the pre-planning stage.

There are three principal risks and uncertainties that could prevent the Company achieving the objective of Masterplan 2040 to provide the required annual throughput capacity by 2040:

1. It might not be possible to secure planning permission for the 3FM Project.
2. It might not be possible to ensure that the operators of unitised terminals (both RoRo and LoLo) operate at the high level of land utilisation required.
3. Constraints on port lands available following the loss of 14.6 hectares (6% of Dublin Port’s total land area) to State agencies to facilitate the reintroduction of border controls on trade with GB as a result of Brexit.

A combination of some or all of these risks could cause Dublin Port to reach its maximum throughput capacity as early as 2030.

The Company also faces uncertainties on the trading side due to downturns in the economy. Covid 19 and Brexit impacted on throughput over the years 2020 and 2021 while 2022 was impacted by the general economic environment as a result of reduced consumer spending related to inflationary pressures.

The war in Ukraine continues to have the potential to result in significant disruption to worldwide supply chains. As a consequence, there is uncertainty around the possible impact on input costs at an operational level and the potential impact for costs related to our construction projects. The Company will actively monitor the impact of these inflationary pressures.

The Company has ensured that it retains flexibility within the delivery of the capital investment programme envisaged under Masterplan 2040 to advance or delay implementation of projects in response to wider economic developments.

The Company is also exposed to the impact of an economic slowdown on its non-core Port activities. This has been evidenced by the diminution in value of the Company’s investment property located in the Eastpoint Business Park from €10.9m in 2001 to €4.2m at the end of 2012. The property was again valued by our property advisors at the end of 2022 resulting in a decrease of €0.85m from the prior year valuation of €9.2m to €8.3m. The cumulative diminution in value now stands at €2.6m.

The Company is committed to successfully managing its exposure to risk and to minimising its impact on the achievement of business objectives. The Board has an established Audit and Risk Committee with specific terms of reference reflecting the Committee’s role in supporting the Board in managing the Company’s exposure to risk.

The Company has put in place a Risk Management Framework comprising of the following components:

• Processes for identifying, prioritising and categorising risks,
• On-going assessment and measurement of risks, and
• Monitoring and reporting of risks to the Audit and Risk Committee as a sub-committee of the Board.

This comprehensive Risk Management Framework has been developed across all aspects of the business and includes the following elements:

1. Enterprise Risk Management
2. Emergency Management Plan
3. ICT Risk Management
4. Common Oil Pipeline Risk Management
5. Capital Projects Risk Management
6. Annual Board Strategy Review

Following a review of the Risk Management Framework completed by the Board in February 2020, the following additional measures were implemented in order to strengthen the overall management of risk within the Company:

• At each Board meeting, the Chief Risk Officer (the Chief Executive) will present a Strategic Risk Report focussing on specific risks of a strategic nature.
• Each year at the annual Board strategy review (in June / July), the risks reported and discussed at Board meetings during the year will be consolidated into the agenda for the Board strategy review to ensure that short-term business plans take account of these strategic risks.
• Responses to the strategic risks will subsequently be incorporated into the Work Programme presented to Board in September prior to commencement of budget preparation for the year ahead.
• The Board will periodically commission an external review of the effectiveness of the Company’s overall approach to risk management as required in the Code of Practice. The first such review was carried out from December 2020 to February 2021 and the final report submitted to the Audit & Risk Committee confirmed that Dublin Port Company’s approach to risk management is effective at identifying and assessing the key risks facing the Company.

Risk Appetite

The Company’s risk appetite profile varies across different areas and activities of its business:

• The Board is willing to tolerate a moderate level of risk in pursuit of strategic objectives.
• Recognising that there is a trade-off between risk and reward, the Board achieves a balanced risk appetite by taking a prudent approach to ensuring the business is adequately financed, particularly as regards funding infrastructure projects. The Board is not prepared to take risks that would jeopardise key covenants in the Company’s debt facility agreements.
• The Board prioritises the safety of passengers, visitors, staff and port workers and its risk appetite in the areas of safety and security is very low.
• The Company takes measures to identify and manage operational risks. There is a low risk appetite in relation to maintaining critical systems and protecting data.
• The Company seeks to ensure that compliance activities meet the requirements of relevant regulations and maintains a low risk appetite for compliance and regulatory issues.

In addition, overall business performance risk is managed through the following measures:

• The preparation of an Annual Budget and Five Year Financial Plans,
• Monthly Reporting and Variance Analysis,
• Financial Controls,
• Key Performance Indicators, and
• Detailed Policies, Standards and Guidelines to support the control and mitigation of risks.

Financial Risk Management

The Company’s operations expose it to a variety of financial risks that include interest rate risk, credit risk, and liquidity and cash flow risk. Policies to protect the Company from financial risks are kept under regular review. The Directors have not delegated the responsibility of monitoring financial risk management to a sub-committee of the Board. The Policies are set out by the Board of Directors and are implemented by the Company’s Finance Department.

Liquidity and Cash Flow Risk:

The Company maintains a mix of short, medium and long term debt finance to ensure sufficient funds are available for planned capital investment. The Company put in place a €50m borrowing facility with Ulster Bank in March 2017 to replace and extend the Company’s debt. At the end of 2022 the Company had in place un-drawn committed facilities of €50 million on this facility.

In December 2015 the Company entered into a Finance Contract with the European Investment Bank in respect of a €100m project finance facility. This facility is for a 20 year term was fully drawn at year end 2019.

In December 2019 the Company issued €300m unsecured senior bonds to a range of institutional investors. These bonds are listed on the Global Exchange Market of Euronext Dublin. At 31 December 2021 €200m of bonds had been purchased. During the course of 2022 the final tranche of €100m was drawn.

The Company’s policy is to maximise investment return by placing surplus cash balances on low risk cash deposit on a short term basis. The Company has treasury mandates in place with a number of financial institutions for this purpose.

Credit Risk:

The Company is exposed to credit risk in the course of trading and to manage this risk it carries out appropriate credit checks on potential customers and trades only with recognised creditworthy third parties.

Interest Rate Risk:

In order to manage the Company’s exposure to significant adverse interest rate movements, the Company has a policy of maintaining a minimum of 60 per cent of its debt at fixed interest rates. In order to achieve this objective, the Company has entered into a fixed interest rate agreement with the European Investment Bank on the €100m project finance facility. In 2019 the Company issued €300m unsecured senior bonds at a fixed coupon rate which has been fully drawn down at 31 December 2022.

Events since the end of the financial year

There have been no events between the Balance Sheet date and the date on which the financial statements were approved by the Board.

Future Developments

The Company has a budgeted Capital Investment Programme of €87.0m for 2023. The planned Capital Investment Programme for 2023 includes €24.6m in respect of Masterplan 2040 projects, €18.9m in respect of Masterplan Phase 2 and €11.4m in respect of the Alexandra Basin Redevelopment project (“ABR”).

Results and Dividends

The Company’s profit for the financial year amounted to €41.3m. The Directors’ allocations and recommendations in respect of this amount were as follows:

The Directors do not propose to declare a final dividend.

	2022	2021
	€’000	€’000
Interim Dividend of €0.00 (2021: €0.00) per ordinary share paid	-	-
Profit for the Financial Year	41,337	25,995
Increase in Profit Retained	41,337	25,995

Directors’ and Secretary’s Interests

The Directors and Secretary had no interest in the share capital of the Company at 31 December 2022 and 2021.

Prompt Payments Act

It is Company policy to pay suppliers in accordance with the terms of the European Communities (Late Payments in Commercial Transactions) Regulations, 2002 and the Prompt Payments of Accounts Act, 1997.

To this end, the Company’s payment routines are designed to provide reasonable assurance against material non-compliance with the terms of the Regulations. The standard credit period is 30 days unless otherwise specified in contractual arrangements. Substantially all payments by number and value were made within the appropriate credit period as required. Consequently, the Directors are satisfied that the Company has complied with the requirements of the Act.

Directors

The names of the persons who were Directors at any time during the year ended 31 December 2022 are set out below.

J Grant

E O’Reilly (term of office ended 31st August 2022)

B O’Connell (appointed 14th November 2022)

M Brophy (term of office ended 28th January 2022, re-appointed 28th April 2022)

D Cronin (appointed 25th January 2022)

G Darling (term of office ended 16th July 2022)

B Grist (appointed 25th January 2022)

M Hand

K Nolan (term of office ended 28th September 2022

B Power (appointed 14th October 2022)

Relations with Shareholders

The Chairperson, Chief Executive and management maintain an on-going dialogue with the Company’s shareholders on trading performance, future plans and strategic issues. Certain specified matters require the approval of the Minister for Transport and/or the Minister for Finance and on-going communication with the relevant Minister is maintained through their respective departments. The Chairperson reports to the Minister for Transport as required under Section 28 of the Harbours Act, 1996 and as required under the Code of Practice for the Governance of State Bodies.

Ultimate Controlling Party

The beneficial ownership of the issued share capital of the Company is the Minister for Transport.

Corporate Governance

Dublin Port Company is committed to maintaining high standards of corporate governance and has adopted the principles of corporate governance and the Code of Practice for the Governance of State Bodies issued by the Department of Finance in May 2009. The Code of Practice was updated on 1 September 2016 and the provisions of the updated Code have been applied to the financial reporting period commencing 1 January 2017. The Company also complies with its obligations under the Ethics in Public Office Act, 1995 and the Standards in Public Office Act, 2001.

The majority of Directors are non-executive and are appointed by the Minister. The Board meets formally on a monthly basis (with 10 meetings per year) and has a formal schedule of matters specifically reserved to it for decision. The Board is responsible for exercising all the powers of the Company, other than those reserved to Shareholders, and has collective responsibility for all the operations of the Company. The Board may delegate such of its powers as it sees fit, to either a Board Committee or the Chief Executive, subject to whatever restrictions or regulation it imposes with such delegation. Subject to ministerial consent in certain cases, the Board has formally approved the reservation of decisions in relation to certain functions in the areas of Governance, Finance, Procurement, Operations, and Appointments in Human Resources. The Board has access to the advice and services of the Company Secretary and can take independent professional advice as and when deemed necessary.

The Code of Practice for the Governance of State Bodies requires that an annual self-assessment exercise is undertaken by the Board to assess its effectiveness. A self-assessment review was completed by the Board in February 2022 based on the questionnaire contained in the Code of Practice. The Code of Practice requires that an external formal evaluation is undertaken at least on a three yearly basis. The most recent independent review was carried out during October to November 2022 and reported to the Board in January 2023. The results of the 2022 formal evaluation confirmed that the Board is operating effectively and recommended a number of areas for consideration by the Board.

The Board established an Audit Committee in 1997 under formal terms of reference. This Committee was reconstituted in 2012 as the Audit and Risk Committee. The terms of reference set out the purpose, authority and membership of the Committee and its responsibilities in the areas of external financial reporting, external audit, corporate governance and internal audit.

At its meeting on 28th January 2022 the Board confirmed the appointment of Ms. Denise Cronin as Chairperson of the Audit and Risk Committee with effect from April 2022.

The Audit and Risk Committee met four times during the year. The members of the Committee over the course of the year were Ms Denise Cronin (chairperson), Mr. Michael Brophy, Mr. Jerry Grant and Mr. John Kelly (term ended during the year).

The Board also established a Remuneration Committee in 1999. The members of the committee during the year were Mr Michael Brophy, Ms Denise Cronin, Mr. Geoffrey Darling (term ended during the year), Mr Jerry Grant, Ms Berna Grist and Mr. Michael Hand. The Committee operates under formal terms of reference.

In March 2021 the Board established an Infrastructure Committee in order to assist the Board in determining the general policy and strategy in relation to the development of port Infrastructure. Mr. Michael Hand was appointed as Chairperson of the Committee. Ms. Berna Grist was appointed to the Committee at the Board meeting on 28th January 2022. The members of the Committee over the course of the year were Mr. Jerry Grant, Ms. Berna Grist and Mr. Michael Hand.

There were 10 General Board Meetings during the year ended 31 December 2022.

The attendance of Directors at meetings of the Board was as follows:

Attendance at Meetings

	Attended	Eligible to Attend
J Grant	10	10
E O’Reilly	7	7
B O’Connell	1	1
M Brophy	6	8
D Cronin	10	10
G Darling	6	6
B Grist	10	10
M Hand	9	10
K Nolan	7	7
B Power	2	2

Audit and Risk Committee

M Brophy	2	2
D Cronin	4	4
J Grant	4	4
J Kelly	2	2

Infrastructure Committee

J Grant	1	1
B Grist	1	1
M Hand	1	1

Remuneration Committee

M Brophy	3	3
D Cronin	3	3
G Darling	1	1
J Grant	3	3
B Grist	3	3
M Hand	3	3

Diversity and Inclusion

Dublin Port Company is committed to placing equality, dignity, diversity and non-discrimination at the heart of the Company with Diversity and Inclusion being a core strand of our People Strategy. During 2022 the Company launched a number of key policies following extensive consultation with stakeholders including an updated Dignity at Work Policy and a new retirement policy with a support process for retirees. A management development programme was launched for our entire management cohort called Managing Resourceful People. At the heart of this programme was a focus on managing your own and your team’s mind-set and mental health including managing a diverse team. Year two of this programme in 2023 will continue to keep Diversity and Inclusion at its heart particularly issues of Dignity at Work. Other enablers of our Diversity & Inclusion strategy that are planned for 2023 are in person Dignity at Work Training for all staff and for our managers, a full Diversity and Inclusion review of our recruitment process with appropriate training for recruiting managers, preparing for Gender Pay Gap reporting in 2024 and a relaunch of the Dublin Port Company apprenticeship scheme with the aim of attracting a diverse range of applicants. Our overall aim is that the deep roots that the Company has in its neighbourhood will be reflected in the diversity of the Dublin Port Company community at work.

Directors’ Expenses

Expenses in the amount of €4,223 (2021: €2,109) have been paid to Board members during the year in respect of travel expenses.

Internal Controls

The Board has overall responsibility for the Company’s systems of internal control. These systems which are maintained by the Company can only provide reasonable but not absolute assurance that transactions are executed in accordance with management’s authorisation that assets are safeguarded, that fraud is prevented and that proper financial records are maintained. The Board confirms that it has reviewed the effectiveness of the system of internal control.

To ensure the effective application of the Company’s internal controls, the services of qualified personnel have been secured and duties properly allocated among them.

The systems of internal control include the following:

• The process of identifying business risks and the evaluation of their financial implications is carried out through regular reviews of the Company’s Strategic Plan. The Company’s Risk Management Framework process has been outlined above under the heading of “Principal Risks and Uncertainties”. The latest Strategic Plan for the period 2022 to 2026 was submitted to the Department in December 2021;
• An annual budget approved by the Board and monthly consideration of actual results compared with budget forecasts;
• An Audit and Risk Committee which has been established to review and discuss, with the internal and external auditors, the Company’s internal accounting controls, Internal Audit function, choice of accounting policies, internal and external audit plans, statutory auditors’ report, financial reporting and other related matters;
• An Internal Audit function which reviews key business processes and controls;
• Formal codes of conduct for Directors and employees; and
• Procurement policies and procedures. These ensure, firstly, that procurement activities are carried out so as to provide value for money in terms of overall lifecycle costs and, secondly, that all relevant State Guidelines and EU Directives applicable to Public Utilities are complied with. The appropriate requirements of the Department of Public Expenditure and Reform Public Spending Code are being complied with.

The Board, through the Audit and Risk Committee, has reviewed the effectiveness of the system of internal control up to the date of approval of the financial statements.

A review of the effectiveness of the system of internal controls was undertaken by the Internal Auditor and no significant control weaknesses which pose a significant risk of financial loss or operational disruption, that require immediate attention at Board level, were revealed.

Compliance statement

The Directors of the Company acknowledge that they are responsible for securing the Company’s compliance with its relevant obligations (as defined in the Companies Act 2014 (the “2014 Act”)) and, as required by section 225 of the 2014 Act, the Directors confirm that:

(i) a compliance policy statement setting out the Company’s policies with regard to complying with the relevant obligations under the 2014 Act has been prepared;

(ii) arrangements and structures have been put in place that they consider sufficient to secure material compliance with the Company’s relevant obligations; and

(iii) a review of the arrangements and structures has been conducted during the financial year to which this Directors’ report relates.

Political Donations

The Board made no political donations during the year.

Disclosure of Information to Auditors

The Directors in office at the date of this report have each confirmed that:

• As far as he/she is aware, there is no relevant audit information of which the Company’s statutory auditor is unaware; and
• He/she has taken all the steps that he/she ought to have taken as a Director in order to make himself/herself aware of any relevant audit information and to establish that the Company’s statutory auditors are aware of that information.

Statutory Auditors

The statutory auditors, PricewaterhouseCoopers, who were appointed during the financial year, continue in office in accordance with section 383(2) of the Companies Act, 2014.