Directors’ Report

The Directors present their Annual Report together with the audited financial statements of the Company for the financial year ended 31 December 2021.

Directors’ Responsibility for Financial Statements

The Directors are responsible for preparing the Directors’ report and the financial statements in accordance with the Companies Act 2014.

Irish company law requires the Directors to prepare financial statements for each financial year. Under the law, the Directors have elected to prepare the financial statements in accordance FRS 102 the Financial Reporting Standard applicable in the UK and Republic of Ireland issued by the Financial Reporting Council (“relevant financial reporting framework”). Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the assets, liabilities and financial position of the Company as at the financial year end date and of the profit or loss of the Company for the financial year and otherwise comply with the Companies Act 2014.

In preparing these financial statements, the Directors are required to:

select suitable accounting policies for the Company financial statements and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether the financial statements have been prepared in accordance with the applicable accounting standards, identify those standards, and note the effect and the reasons for any material departures from those standards; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for ensuring that the Company keeps or causes to be kept adequate accounting records which correctly explain and record the transactions of the Company, enable at any time the assets, liabilities, financial position and profit or loss of the Company to be determined with reasonable accuracy, enable them to ensure that the financial statements and Directors’ report comply with the Companies Act 2014 and enable the financial statements to be audited. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Legislation in Ireland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.

Legal Status

Dublin Port Company is a Designated Activity Company limited by shares established under statute pursuant to the Harbours Act, 1996 and incorporated in Ireland. On 3 March 1997 the Company became the successor entity to Dublin Port & Docks Board, the former statutory entity with responsibility for the Port of Dublin. On that date Dublin Port Company took over the functions and acquired the assets and liabilities of the predecessor organisation at valuations agreed with the then Minister for Communications, Marine and Natural Resources. In consideration for the assets and liabilities, the Company issued share capital in the amount of €7.648m to the then Minister for Communications, Marine and Natural Resources.

With effect from 26 July 1997 the Company became the pilotage authority for Dublin Bay.

Responsibility for the Commercial Port Sector was transferred from the Minister for Communications, Marine and Natural Resources to the Minister for Transport with effect from 1 January 2006.

On 12 July 2011 the Minister for Transport transferred the assets and liabilities of Dundalk Port Company to Dublin Port Company under SI No. 361 of 2011.

Principal Activities

The business purpose of Dublin Port Company is to facilitate the movement of goods and passengers, and attendant information flows through the Port.

The Company provides the infrastructure, facilities, services and hard standing to meet the needs of customers for the efficient transfer of goods and passengers between land and sea transport modes.

Revenue in connection with the provision of these facilities is generated from vessel dues, goods dues, rent and key services provided, such as towage and pilotage.

Accounting Records

The measures taken by the Directors to secure compliance with the Company’s obligation to keep adequate accounting records are the use of appropriate systems and procedures and employment of competent persons. The accounting records are kept at the Company’s registered office, Port Centre, Alexandra Road, Dublin 1.

Business Review

Details of the profit for the year, together with comparative figures for 2020, are set out in the Profit and Loss Account and the related notes. The Key Financial Performance Indicators of the business are set out below and in the Chief Executive’s Review.

Throughput was down on 2020 by 5.2% at 34.9 million tonnes (2020: 36.9 million tonnes). Exports fell by 9.4% in the year to 13.7 million tonnes (2020: 15.2 million tonnes) while imports fell by 2.3% to 21.2 million tonnes (2020: 21.7 million tonnes).

Turnover for the year amounted to €85.8m, a decrease of 1.0% on the previous year (2020: €86.6m).

Total Operating Costs at €50.4m in 2021 have increased by €7.2m (16.8%) on 2020 (2020: €43.1m). Payroll costs have increased by 5% to €13.6m (2020: €13.0m). Other non-pay costs have increased by €6.6m to €36.8m (2020: €30.2m) mainly due to higher depreciation charges of €2.9m and higher rates charges of €3.7m due to a rates waiver in 2020.

Operating Profit is 19.8% lower than 2020 at €35.4m resulting in an Operating Margin of 41% (2020: 51%).

Earnings before interest, tax, depreciation, and amortisation (EBITDA) was €48.8m (2020: €53.9m).

Net financing costs were €5.5m (2020: €4.5m).

Net Interest charges (excluding net interest on pension schemes) were €6.0m (2020: €5.1m) and the Company’s interest cover is 6 times (2020: 9 times) based on Profit before Interest and Taxation over net interest charges. Net Debt increased from €133.3m in 2020 to Net Debt of €164.2m in 2021 and the Company is fully compliant with all covenants in respect of its borrowing facilities.

Profit for the financial year was €26.0m (2020: €34.2m).

The Profit and Loss Reserve increased from €496.5m at 31 December 2020 to €520.5m and Shareholders’ Funds increased from €511.8m to €535.7m during the same period.

Throughput of 34.9 million tonnes was achieved in 2021, which was 4.1% behind the budgeted 36.7 million tonnes.

Principal Risks and Uncertainties

One of the principal uncertainties facing the Company is whether it will be able to deliver the port capacity required for the future.

In June 2018 the Company published “Dublin Port Masterplan 2040 - Reviewed 2018”, updating the original Masterplan which had been adopted in February 2012. The review included an extensive public consultation process and came to two important conclusions:

Firstly, where the Masterplan had originally envisaged a return to an eastern expansion of Dublin Port into Dublin Bay, Dublin Port Company is no longer pursuing this as an option.
Secondly, to meet anticipated capacity requirements Dublin Port needs to be developed on the basis of an average annual volume growth (AAGR) of 3.3% over the 30 years from 2010 to 2040 rather than the 2.5% originally assumed in 2012. As a result the capacity requirement for 2040 increases from 60 million gross tonnes to 77 million gross tonnes.

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 2021.
In July 2020, An Bord Pleanála granted a 15 year planning permission for the second of the three SIDs, the MP2 Project. We are currently awaiting confirmation of our foreshore application 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. First stage stakeholder and local consultations have taken place and we have also commenced pre-application consultation with An Bord Pleanála. It is envisaged that the formal planning application will be lodged with An Board Pleanála in quarter one 2023.

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 of 77 million gross tonnes by 2040:

It might not be possible to secure planning permission for the 3FM Project.
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.
There might not be sufficient 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 creates.

A combination of some or all of these risks could cause Dublin Port to reach its maximum throughput capacity as early as 2030. Were this to happen, additional port capacity would be needed at other locations to prevent the emergence of a national port capacity deficit.

The Company also faces uncertainties on the trading side due to downturns in the economy. Covid 19 and Brexit are the latest factors to affect the Company’s throughput and financial performance following the economic collapse in 2008.

In the case of Brexit, there are significant changes evident in trading patterns in the immediate period following the end of the UK’s transition period:

Within the unitised trade there has been some movement of goods from RoRo to LoLo. Over the course of 2021 RoRo volumes declined by 11.8% in tonnage terms while LoLo volumes increased by 11% in tonnage terms.
The GB share of unitised trade fell from 64% pre-Brexit to 52% post-Brexit while the EU share of unitised trade increased from 36% to 48%.
There has been some dislocation of volume from Dublin Port to ports in Northern Ireland as a result of the differential in border controls.

Since year end, developments relating to the war in Ukraine have the potential to result in significant disruption to worldwide supply chains. As a consequence there is growing 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 2021 resulting in no increase to the prior year valuation of €9.2m. The cumulative diminution in value now stands at €1.7m.

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:

Enterprise Risk Management
Emergency Management Plan
ICT Risk Management
Common Oil Pipeline Risk Management
Capital Projects Risk Management
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 2020 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. At 31 December 2021 €200m of bonds had been purchased. During the course of 2021 it was agreed to defer the purchase of the remaining €100m of bonds, referred as forward purchase bonds, from September 2021 to September 2022. The Company retains the option to cancel the commitment to purchase some or all of the forward purchase bonds at no cost.

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.

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 €83.3m for 2022. The planned Capital Investment Programme for 2022 includes €25.9m in respect of Masterplan 2040 projects, €16.5m in respect of Estates and €13.8m in respect of the Alexandra Basin Redevelopment project (“ABR”).

Results and Dividends

The Company’s profit for the financial year amounted to €26.0m. The Directors’ allocations and recommendations in respect of this amount were as follows:

	2021	2020
	€’000	€’000
Interim Dividend of €0.00 (2020: €0.00) per ordinary share paid	-	-
Profit for the Financial Year	25,995	34,251
Increase in Profit Retained	25,995	34,251

The Directors do not propose to declare a final dividend.

Directors’ and Secretary’s Interests

The Directors and Secretary had no interest in the share capital of the Company at 31 December 2021 and 2020.

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 2021 are set out below.

J Grant

E O’Reilly

M Brophy

H Collins (term of office expired 15th January 2021)

G Darling

M Hand

K Nolan

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.

Corporate Governance

Dublin Port Company is committed to maintaining the highest 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 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 the summer of 2019 and reported to Board in September. The results of the 2019 formal evaluation confirmed that the Board is operating effectively and recommended a number of areas for consideration by the Board. The Board has agreed to initiate a further evaluation in 2022.

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 29th January 2021 the Board confirmed the appointment of Mr. John Kelly as Chairperson of the Audit and Risk Committee and Mr. Michael Brophy and Mr Jerry Grant as committee members.

The Audit and Risk Committee met five times during the year. The members of the Committee over the course of the year were Mr. John Kelly, Mr. Michael Brophy and Mr. Jerry Grant.

The Board also established a Remuneration Committee in 1999. The members of the committee during the year were Mr. Geoffrey Darling, Mr. Michael Hand and Mr. Jerry Grant. 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. The members of the Committee over the course of the year were Mr. Jerry Grant, Mr. Michael Hand, Mr. Keith Nolan and Mr. Eamonn O’Reilly.

Attendance at Meetings

There were 10 General Board Meetings during the year ended 31 December 2020.

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

	Attended	Eligible to Attend
J Grant	10	10
E O’Reilly	10	10
M Brophy	10	10
G Darling	10	10
M Hand	9	10
K Nolan	10	10

Audit and Risk Committee

M Brophy	5	5
H Collins	5	5
L Williams	5	5

Infrastructure Committee

J Grant	1	1
M Hand	1	1
K Nolan	1	1
E O’Reilly	1	1

Diversity and Inclusion

Dublin Port Company is committed to placing equality, dignity, diversity and non-discrimination at the heart of the Company. As part of its ongoing commitment to Diversity and Inclusion, Dublin Port Company continues to review and develop policies and strategies to reflect that resolve and is currently conducting a review of all family friendly policies. All Management and staff training, and awareness raising, has diversity and inclusion as a core element. Our overall aim is that the deep roots that Dublin Port Company has in its neighbourhood will be reflected in the diversity of the DPC community at work.

Directors’ Expenses

Expenses in the amount of €2,109 (2020: €1,229 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 financial control 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 auditor, Deloitte Ireland LLP, Chartered Accountants and Statutory Audit firm, continue in office in accordance with section 383(2) of the Companies Act, 2014.

On Behalf of the Board

Jerry Grant Chairperson
Eamonn O’Reilly Chief Executive

25th March 2022