Urenco Annual Report 2022

53 Urenco Annual report and accounts 2022 Strategic report 01 3 Capitalexpenditure includesnetcashflowsonthepurchasesofproperty,plantandequipmentand intangibleassetsof€166.6millionandonthedecreaseofcapitalaccrualsof€17.4million(included inworkingcapital payables).Capitalexpenditurefortheyearended31December2021hasbeenrepresentedfrom€129.8millionto€142.3millionandcomprisednetcashflowsonthepurchasesofproperty,plantandequipmentand intangibleassetsof€143.5millionandonthe increaseofcapitalaccrualsof€1.2million(included inworkingcapitalpayables). 4 Netcash/debt isdefined intheGlossaryonpage180andthecalculation issetoutonpage151. Tax paid in the periodwas €79.5million (2021: €146.4million) due to the timing and phasing of cash payments which can often span multiple years. Accordingly, net cash flows fromoperating activities were higher at €1,054.2million (2021: €881.2million). Capital expenditure 3 In 2022 the Group invested a total of €184.0million (2021: €142.3 million), representing expenditure on core enrichment assets. Investment inTMF in 2022was €18.9million (2021: €25.9million, 2020: €35.5million), reflecting completion of construction in late 2018.The final stage of active commissioning has been substantially completed in the second half of 2022, with uranium oxide production having commenced in 2021. Capital structure The Group’s equity increased to €2,973.3million during the year (2021: €2,097.8million) due to an increase in retained earnings of €880.7million (reflecting the net income of €1,173.2million (including impairment reversal of €888.1million) and gains of €7.5 million in other comprehensive income for the year, less €300.0 million of dividends paid during the year), an increase in the foreign currency translation reserve of €12.6million, primarily due to foreign exchange gains on property, plant and equipment held in US dollars and as a result of the strengthening of the US dollar against the euro, and a decrease in hedging reserve (including cost of hedging reserve) of €17.6million and a decrease in the investments revaluation reserve of €0.2million.Themovement in the hedging reserve is primarily associatedwithmark tomarket losses on cash flowhedges, which protect the Group’s future revenues in foreign currencies. Net cash 4 , including lease liabilities of €27.3million (2021: €31.3 million), was €627.2million (2021: net debt €11.5million). Net debt and total assets The Groupmonitors its capital structure through the use of financial ratios, principally those of net debt to total assets and funds fromoperations to total adjusted debt (FFO/TAD).The Group targets an FFO/TAD ratio that results in a strong investment grade credit rating. The FFO/TAD ratio at the end of 2022 decreased to 31.4 % , compared to 36.2 % at the end of 2021. FFOwas lower by €172.9million due to lower EBITDAwhichwas partially offset by lower net interest on bank borrowings.TADwas lower by €221.6million, primarily reflecting an increase in cash and short-termdeposits and investments in the nuclear decommissioning trust fund of €716.7million, partially offset by an increase in tails and decommissioning provisions of €277.6million. The increase in nuclear provisions reflects the increase in provisions arising during the year as well as inflationary pressure offset by an increase in the net discount rates in 2022. Details of the FFO/TAD calculation are set out in note 28 of the Group’s Consolidated Financial Statements. The Group’s interest cover also remains strong at 7.2x (2021: 8.4x). Five-year summary funding ratios European Enrichment Sites €127.4m US Enrichment Site €37.7m TMF €18.9m €527m European Enrichment Sites €77.9m USA Enrichment Site €345.1m TMF €163.8m Capital expenditure Five EBITDA INTERE 2 10 8 6 4 2 0 25.0% 20.0% 5.0% 10.0% 15.0% 20 25 NET DEBT NET DEBT/ TOTAL ASSETS 20.8% 2018 1,370.9 14.2 201 928 500 0 1500 1000 (500) (1000) 10.0% 5.0% 0.0% 2018 1,370.9 2019 928.1 455.7 2020 11.5 2021 (627.2) 2022 Net debt Net cash 2022 Net debt/total assets (RH scale) Five EBITD INTER 10 8 6 4 2 0 FFO/TAD % EBITDA/ INTEREST 10 8 6 4 2 0 25 20 0 5 10 15 0 2 4 6 8 10 20 25 35 30 8.6 2018 7.8 2019 7.7 2020 40 8.4 2021 7.2 2022 EBITDA/Net interest EBITDA/Net interest 2022 FFO/TAD (RH scale)