The Directors present their Annual Report together with the audited financial statements of the Company for the financial year ended 31 December 2016.

The Directors are responsible for preparing the Directors’ report and the financial statements in accordance with Irish law.

Irish law requires the Directors to prepare financial statements for each financial year that give a true and fair view of the Company’s assets, liabilities and financial position as at the end of the financial year and of the profit or loss of the Company for the financial year. Under that law the Directors have prepared the financial statements in accordance with Generally Accepted Accounting Practice in Ireland (accounting standards issued by the Financial Reporting Council of the UK, including Financial Reporting Standard (FRS) 102, the financial reporting standard applicable in the UK and the Republic of Ireland and promulgated by the Institute of Chartered Accountants in Ireland and Irish law).

Under Irish law, the Directors shall not approve the financial statements unless they are satisfied that they give a true and fair view of the Company’s assets, liabilities and financial position as at the end of the financial year and the profit or loss of the Company for the financial year.

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

• select suitable accounting policies 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 applicable accounting standards and identify the standards in question, subject to any material departures from those standards being disclosed and explained in the notes to the financial statements; 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 keeping adequate accounting records that are sufficient to:

• correctly record and explain 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; and
• enable the Directors to ensure that the financial statements comply with the Companies Act 2014 and enable those financial statements to be audited.

The Directors 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.

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

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.

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.

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.

Details of the profit for the year, together with comparative figures for 2015, 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 ahead of 2015 by 6.3% at 34.9 million tonnes (2015: 32.8 million tonnes). Exports grew by 6.7% in the year to 14.2 million tonnes (2015: 13.3 million tonnes) while imports grew by 6.1% to 20.7 million tonnes (2015: 19.5 million tonnes).

Turnover for the year amounted to €81.6m, an increase of 5.1% on the previous year (2015: €77.7m).

Total Operating Costs at €36.6m in 2016 are level with 2015 (€36.6m). Increased depreciation charge arises following the higher capital expenditure programme in 2016. In addition redundancy payment arose in 2016 with no comparable cost in 2015. These additional costs are offset by lower pension costs as a result of the past service benefit arising from the pension levy.

Operating Profit increased to €45.6m in 2016 from €42.9 in 2015 resulting in an Operating Margin of 56% (2015: 55%).

Net financing costs were €0.5m (2015: €1.0m). Net Finance income amounts to €414k (2015: €207k). A credit of €375k arises in respect of the pension funds due to an overall increased surplus (2015: €184k cost).

Net Interest charges (excluding net interest on pension schemes) were €0.8m (2015: €0.8m) and the Company’s interest cover is 54 times (2015: 51 times) based on Profit before Interest and Taxation over net interest charges. Net Cash decreased from €35.1m in 2015 to €3.0m in 2016 and the Company is fully compliant with all covenants in respect of its borrowing facilities.

Profit for the financial year was €39.0m (2015: €36.4m).

The Profit and Loss Reserve increased from €313.2m at 31 December 2015 to €334.3m and Shareholders’ Funds increased from €328.5m to €349.6m during the same period.

The Company has a target throughput of 36.2 million tonnes for 2017. Throughput of 34.9 million tonnes was achieved in 2016, which was 1.5% ahead of its target of 34.4 million tonnes.

One of the principal uncertainties identified in previous reports relates to the Company’s ability to deliver capacity to the market. In January 2012 the Company adopted the Masterplan 2012 to 2040 following an extensive public consultation, stakeholder engagement and environmental assessment process. The Masterplan provides a vision as to how Dublin Port could be developed to cater for an anticipated doubling in Port volumes over the 30 years from 2010 to 2040. It provides strategic guidance and direction on land use within Dublin Port recognising that the optimal use of a scarce land and quayside resource remains an important factor against which future development of Dublin Port must be carefully planned.

Construction work on the Alexandra Basin Redevelopment Project commenced in 2016 following receipt of the requisite planning permission from An Bord Pleanála in July 2015 and the additional consents received in 2016 in respect of Foreshore Licence, Dumping at Sea Licence and Industrial Emissions Directive Licence. This project will deliver approximately one-third of the infrastructure development options originally identified in the Masterplan. Delivery of further development options will be dependent on receiving the requisite planning and environmental consents.

In January 2017 the Company launched a review of the Masterplan and commenced a public consultation process in this regard. The review is intended to update and refine the infrastructure development options for Dublin Port and, in doing this, to ensure that the Masterplan continues to provide the best solution for the future sustainable development of Dublin Port through to 2040.

As evidenced by the fall in trade in the latter half of 2008 and continuing into 2009 the Company is exposed, through the normal course of its operations, to the impact of an economic slowdown on Port activities. Throughput growth through Dublin Port over the past four years has been 24.7% ensuring that trade levels are now 12.9% higher than at the previous peak in 2007. It is clear that the prospects for the Irish economy in general will continue to impact on the Company’s growth prospects into the future.

In this regard the impact of Brexit on the Irish economy at a macro level and its impact in particular on GDP growth will have a knock-on impact on Dublin Port’s volumes. In addition at a more practical level the possibility of a hard Brexit and the consequent introduction of customs controls could result in the Company having to allocate scarce land resources to facilitate customs clearance in the Port which would negatively impact on the Company’s ability to deliver additional capacity to cater for increased throughput volumes.

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 €4.4m at the end of 2013. The property was again valued by our property advisors at the end of 2016 resulting in an increased valuation of €0.4m to €6.3m. The cumulative diminution in value now stands at €4.6m.

The Company is committed to successfully managing its exposure to risk and to minimising its impact on the achievement of business objectives. During 2012 the Audit Committee was reconstituted as the Audit and Risk Committee. The Committee’s terms of reference were amended by the Board to reflect 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.

The role of the Environmental Health and Safety Manager has been expanded to include Risk and it is intended that during 2017 the Company will revise and update the Risk Register, continue to systematically assess the risks identified and develop safe operating procedures.

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.

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 and medium term debt finance to ensure sufficient funds are available for planned capital investment. At the end of 2016 the Company had in place un-drawn committed facilities of €15 million. The Company put in place a borrowing facility during 2012 to replace and extend the Company’s debt. This facility was due for repayment in March 2017. Subsequent to the year-end, the Company put in place a new finance facility in the amount of €50m with Ulster Bank to fully replace this debt and extend the Company’s debt maturity.

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 and is undrawn at year end 2016 and 2015.

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 (2015: 60 per cent) of its debt at fixed interest rates. In order to achieve this objective, the Company has put in place interest rate swap agreements.

On 24 March 2017 the land sale transaction completed in respect of cash held in escrow. This cash was held in relation to the purchase of lands at Dublin Airport Logistics Park which was subject to appropriate zoning.

As noted above, on 29 March 2017, the Company put in place a new €50m borrowing facility to replace its existing debt which expired in March 2017.

The Company has a budgeted Capital Investment Programme of €93.3m for 2017. The planned Capital Investment Programme for 2017 includes €54.6m in respect of the Alexandra Basin Redevelopment project (“ABR”).

The Company’s profit for the financial year amounted to €39.0m. The Directors’ allocations and recommendations in respect of this amount were as follows:

The Directors do not propose to declare a final dividend.

The Directors and Secretary had no interest in the share capital of the Company at 31 December 2016 and 2015.

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.

The names of the persons who were Directors at any time during the year ended 31 December 2016 are set out below.

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.

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 will be 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 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. As a result of the completion of current terms of office of Ms Emer Finnan and Ms Helen Collins resulting in two vacancies on the Audit and Risk Committee, the role of the Committee was taken on by the Board with effect from 21 July 2016. Ms Emer Finnan was reappointed to the Board on 22 November 2016 and was subsequently reappointed as Chairperson of the Audit and Risk Committee. The full Board continues to perform the role of the Audit and Risk Committee pending the filling of two Board vacancies.

The Audit and Risk Committee met four times during the year. The members of the Committee over the course of the year were Ms Emer Finnan (Chairperson), Ms Helen Collins, Mr Pat Magner, Mr Paul Bates, Mr Geoffrey Darling, Ms Lucy McCaffrey, Mr John Moore and Mr Eamonn O’Reilly.

The Board also established a Remuneration Committee in 1999. The members of the committee during the year were Ms Lucy McCaffrey (Chairperson), Mr Pat Magner and Mr Geoffrey Darling. The Committee operates under formal terms of reference.

With regard to the previously established Policy Environment Committee the Board agreed that the strategic nature of the issues that are of relevance for consideration would be best addressed by the full Board. These matters include EU and domestic legislation, transport policy at EU and national levels and competition policy. The members this committee had been Mr Paul Bates (Chairperson), Ms Lucy McCaffrey, Mr John Moore and Mr Eamonn O’Reilly.

There were 11 General Board Meetings during the year ended 31 December 2016.

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

There were no Remuneration Committee meetings during the year. All matters were dealt with at full Board during 2016.

Expenses in the amount of €3,258 have been paid to the Board during the year in respect of other expenses.

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 2017 to 2021 was formally adopted by the Board in December 2016;
• 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 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 requires immediate attention at Board level, were revealed.

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.

The Board made no political donations during the year.

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 auditors are 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.

The statutory auditors, PricewaterhouseCoopers, have indicated their willingness to continue in office, and a resolution that they be re-appointed will be proposed at the Annual General Meeting.