Annual Report and Accounts | 2024
Annual Report and Accounts | 2024
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Finance lease receivable The credit risk in respect of the finance lease receivable arises with one counterparty. The balance is not past due or impaired. The Group has procedures in place for monitoring and managing this credit risk based on experience and the customer’s track record of payment. Cash and cash equivalents Cash and cash equivalents (“cash deposits”) are invested with institutions, for which management has considered their credit rating. Regarding the Group and Company’s cash deposits, the credit rating of the institution in which cash is deposited was Baa3 or above at year end based on Moodys’ ratings (2023: Baa3 or above). The Group considers that its cash and cash equivalents have low credit risk based on the external credit ratings of the counterparties. The expected credit loss is less than €1,000. Financial assets Government bonds held by the Group have a credit rating of AA or above at year end, based on Fitch ratings. The Group’s investment in a money market fund is held in a fund with a rating of AA, based on Fitch ratings.
25. FINANCIAL RISK MANAGEMENT (Continued)
(a) Credit risk (Continued)
The following table provides an aged analysis of the Group’s trade receivables:
2024 €’000
2023 €’000
1,021
Within credit terms 0-30 days past due 31-60 days past due 61-90 days past due
731
593 458 204 720
1,376
278
48
1,189 3,622
Greater than 90 days past due
2,996
Total
The Group considers that its financial assets have a low credit risk based on the external credit ratings of the counterparties.
Expected credit loss assessment for individual customers as at 31 December 2024 At each reporting date the Group evaluates the recoverability of trade receivables and records allowances for doubtful receivables based on experience. The Group uses an allowance matrix to measure the expected credit loss of trade receivables from individual customers. Loss rates are calculated using a ‘roll rate’ method based on the probability of a receivable progressing through successive stages of non-recoverability to write-off.
(b) Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting its obligations with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to manage liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. Cash generated by the business is the primary source of funding available to the Group. The Group’s subsidiary companies, Shannon Airport and Shannon Commercial Enterprises have obtained long-term bank loans to partially fund their capital expenditure programmes (Note 23). A prudent approach is adopted in managing liquidity including funding of significant investment requirements. The Group has determined its risk appetite for commercial investments and set financial tolerance levels accordingly. The Group’s cash and other financial assets are the key to the achievement of the Group’s Strategic Plan. A treasury strategy is in place to maximise the short-term return on the Group’s cash reserves. The Group has invested in a money market fund and purchased a number of government bonds with laddered maturities (Note 18). The Group operates strong business and financial control systems with regular operational cash flow and cash balance position reporting, early signalling of material deviation from plan and carries out reviews to ensure liquidity is maintained in the short to longer term. The Group has adequate funding resources available to meet forecast short term funding requirements of its operations and capital investment programme. An overdraft facility of €5 million is available to meet short term working capital requirements. Arising from this, the bank holds security over certain Group assets (Note 11). The overdraft facility was used during 2024. The overdraft was not used in 2023. The Group has prepared a five-year rolling plan. Implementation of the Group’s capital programme will require additional external borrowings.
Weighted-average loss rate
Gross carrying amount
Loss allowance
Credit- impaired
€’000 1,021
€’000
€’000
2.4% 5.6%
(25) (33) (86) (40)
996 560 372 164 253
Within credit terms 0-30 days past due 31-60 days past due 61-90 days past due
593 458 204 720
18.8% 19.6% 64.9%
(467) (651)
Greater than 90 days past due
2,996
2,345
Total
Loss rates are based on historic data of credit loss experience. It also takes into consideration the Group’s view of economic conditions over the expected lives of the receivables.
Expected credit loss assessment for individual customers as at 31 December 2023
Weighted-average loss rate
Gross carrying amount
Loss allowance
Credit- impaired
€’000
€’000
€’000
731
(29) (89) (55)
702
Within credit terms 0-30 days past due 31-60 days past due 61-90 days past due
4.0% 6.5%
1,376
1,287
278
223
19.8% 14.6% 64.4%
48
(7)
41
1,189 3,622
(766) (946)
423
Greater than 90 days past due
2,676
Total
108
109
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