Urenco Annual Report 2022

54 Urenco Annual report and accounts 2022 Strategic report 01 Funding position Liquidity continues to remain strong as a result of cash flow generation.As at 31 December 2022, the Group had€500million (2021: €500million) of undrawn committed bank facilities, as well as cash, cash equivalents and short-termdeposits of €1,310.4 million (2021: €1,075.8million). The Group's funding position remains robust and continues to be underpinned by our established order book, which gives high levels of revenue visibility and robust EBITDAmargins, resulting in strong cash flowgeneration. The Group’s debt is rated byMoody’s (Baa1/Stable) and Standard &Poor’s (BBB+/Stable); these external ratings were unchanged during 2022. Interest bearing loans and borrowings Property, plant & equipment vs net cash Funding programme The Group’s funding strategy is to: • Maintain a core of longer-dated debt and committed borrowing facilities, consistent with the long term nature of the Group’s investments and the need to maintain an optimised long term capital structure; • Use a range of financial instruments and financial markets in order to execute attractive funding opportunities as they emerge; • Manage debt maturities by raising funds in advance of ultimate repayment dates of debt instruments. The average time tomaturity of the Group’s debt at 31 December 2022was 6.9 years (at 31 December 2021: 4.0 years). Managing foreign currency risk Our foreign currency hedging policy has the objectives of reducing volatilities in net cash flow and income, and protecting the income statement frombalance sheet remeasurements of debt. However, a long termreduction in income exposure ismuchmore difficult to achieve due to the strict requirements with respect to hedge accounting under IFRS.The functional currency of Urenco Limited is sterling, although the company reports its results in euros. The Group receivesmost of its customer revenues in US dollars and euros.The net cash flows of Urenco’s European business have been hedged by selling US dollar customer revenue and buying forward the sterling required tomeet the costs of the UK operations, and selling the remaining US dollars to buy euros.The net cash flows of the US business of Urenco have been used to pay US dollar denominated costs. The Group hedges the impact of changes in foreign exchange rates by using a progressive rolling programme of buying and selling currency over a period of up to three years ahead of the current year.Thismedium termhedging period strikes a balance between the objective of maximising cash flow certainty (which suggests a long hedging period) and the objective of maintaining a hedge portfolio that largely qualifies for hedge accounting under IFRS. Urenco has a stable future revenue stream that ismanaged using a portfolio of hedges.There is always an element of uncertainty due to changes in quantities and timing of deliveries based onmarket movements and customers’requirements, whichmakes it difficult to achieve effective hedge accounting over the longer term. The Group has a total of €442.5million (2021: €402.8million) cross currency swaps,mainly to convert the economic exposure of part of the Group’s debt fromeuros to US dollars that are then net investment hedged for Group accounting purposes.This better aligns the currency of the debt with the asset base and cash flows of the Group. 2020 4,082.6 2019 4,388.8 €m 5000 6000 4000 3000 2000 1000 0 2,963 3,556 4,285 4,662 4,821 2013 2012 2011 2010 2009 €m 5000 4000 3000 2000 1000 0 0 1000 2000 3000 4000 5000 6000 7000 8000 2018 4,796.3 2021 4,209.5 2022 4,885.7 (1000) Property, plant & equipment Property, plant & equipment 2022 Net debt/net cash Funding facilities at 31 Dece 2014 (€million) Bank loans (€896m) EIB (€526m) European Private Placements ( US Private Placements (€470m Eurobonds (€1,000m) Eurobonds €995.5m Other loans €142.5m