Urenco Annual Report 2022

51 Urenco Annual report and accounts 2022 Strategic report 01 The net costs for other nuclear provisions in 2022 increased by €83.4million as a result of changes to the forecasts for future re-enrichment of low assay feed, fromnet gains of €19.7 million in 2021 to net costs of €63.7 million in 2022. Overall, therefore, the net costs of nuclear provisions were €249.5 million in 2022, compared to €144.4million in 2021, an increase of €105.1 million. EBITDA performance 2022 €m 2021 €m increase/ (decrease) Income from operating activities - (pre-exceptional) 443.8 635.8 (192.0) Adjustment for depreciation in inventories, SWU assets and nuclear provisions 15.9 6.9 9.0 Add: depreciation and amortisation 370.1 331.0 39.1 Adjustment for results of joint venture and other investments (5.2) (2.6) (2.6) EBITDA 824.6 971.1 (146.5) Exceptional items During the year, an exceptional itemof €921.4millionwas recognised (2021: €nil) on a pre-tax basis and€888.1million (2021: €nil) on a post-tax basis in the Income Statement.This related to a reversal of impairment charges previously recognised in 2016 and 2019 on the USAoperations cash generating unit. The pre-tax reversal of the impairment is considered exceptional due to both the incidental nature and size of the financial impact. The associated deferred tax charge together with any resulting valuation allowance release are similarly considered exceptional in nature, as they arise as a result of the exceptional pre-tax impairment reversal. EBITDA 1 EBITDA for 2022was €824.6million, a decrease of €146.5million (15.1%) from€971.1million in 2021.The decrease in EBITDA is due to increased costs offsetting the higher revenue.The EBITDA margin for 2022was 48.0%, compared to 58.2% in 2021. The costs associatedwith changes to inventories of finished goods and SWU assets for 2022were €126.9million, an increase of €37.9 million from€89.0million in 2021.These costs have increased due to underlying increases in both direct costs of production and in inventory purchase costs. In calculating the EBITDA impact of these stockmovements and of movements in nuclear provisions, an adjustment for the net increase in depreciation of €15.9million was applied in 2022 (2021: net increase in depreciation of €6.9 million), giving an increase in EBITDAof €9.0million. Other operating and administrative expenses 2 were higher than the prior year at €531.4million in 2022, compared to €471.7 million in 2021, an increase of €59.7million. Other operating costs were higher reflecting increases in employee costs, transport, maintenance, and other third party services. Employee costs were higher than the prior year at €206.9million in 2022, compared to €180.3million in 2021, an increase of €26.6million, whichwas due to increases in both inflation and headcount. Nuclear provisions Tails provisions The net costs for tails provisions in 2022were €25.2million higher than those for 2021. Higher net costs in 2022 are due to an increase in the unit tails rate, offset in part by an increase in the adopted discount rate.The lower release from tails provisions primarily relates to a lower volume of re-enrichment activities during 2022. 2022 €m 2021 €m increase/ (decrease) Additional tails provisions in the year 270.7 195.4 75.3 Change in real discount rates (54.4) - (54.4) Release from tails provisions in the year (40.3) (44.6) 4.3 Net costs for tails provisions in the year (pre-exceptional) 176.0 150.8 25.2 Decommissioning provisions The net costs for decommissioning provisions recognised in the Income Statement decreased by €3.5million in 2022, due to 2021 bearing increased net cost estimates associatedwith the triennial review of decommissioning strategy, and 2022 benefitting from the impact of increased discount rates. 2022 €m 2021 €m increase/ (decrease) Additional decommissioning provisions in the year 17.9 46.1 (28.2) Change in real discount rates (2.3) - (2.3) Release fromdecommissioning provisions in the year (5.8) (32.8) 27.0 Net costs for decommissioning provisions in the year 9.8 13.3 (3.5) 1 EBITDA isdefinedasearningsbeforeexceptional items, interest(includingotherfinancecosts),taxation,depreciationandamortisationandresultsof jointventureandother investments.Areconciliationto incomefrom operatingactivities(pre-exceptional items) issetoutonpage122. 2 Otheroperatingandadministrativeexpensesaredefinedasexpensescomprisingcostsofrawmaterialsandconsumablesused,employeecostsandotherexpenses. € 3.0 2.5 2.0 1.5 1.0 0.5 0 €million 2500 2000 1500 1000 500 0 € €million EBITDA / Net Interest (LH scale) EBITDA / Net Interest 2013 (LH scale) Ratio of funds from operations to total adjusted debt (FFO/TAD), as at the end of the year (RH scale) 3.0 2.5 2.0 1.5 1.0 0.5 0 2013 2012 2011 2010 2009 1600 1400 1200 1000 800 600 4 0 200 0 2018 3.5 2019 2020 2021 2022 Revenue EBITDA Income from operating activities Net income Basic earnings per share (RH scale) Financial performance - pre-exceptional items