The Shannon Airport Group Annual Report and Accounts 2024

Annual Report and Accounts | 2024

RISK AND GOVERNANCE REPORT (CONTINUED)

Liquidity and treasury The Group is exposed to certain financial and treasury related risks, including fluctuating interest rates, credit risks and liquidity risks. Further information on financial and treasury related risks can be found in Note 25. Strategic Priority Driving Commercial Performance Investing in Property & Infrastructure for Growth Impact Significant fluctuations in interest rates or counterparties failing or defaulting in the performance of their obligations could have a negative financial impact on the Group. Mitigation ͳ 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. ͳ A prudent approach is adopted in managing liquidity including funding of significant investment requirements. ͳ A low risk of capital loss is a key objective of any treasury solutions adopted. Funding The Group has plans to make further significant capital investment that is of a strategic nature. The ability to continue to deliver this investment plan is contingent on funding from a number of sources, namely cash resources held by the Group, recurring operating profits, additional bank debt and disposal of non-core property. There can be no certainty that each of these funding sources will be available to meet planned investment needs. Strategic Priority Driving Commercial Performance Investing in Property & Infrastructure for Growth Excelling in Operations Impact Failure to deliver the planned sources of funding would have a significant negative financial impact on the delivery of the Group’s capital investment plans.

Impact There are risks associated with the delivery of significant capital projects including timing, cost (including construction price inflation), health and safety and failure to deliver desired objectives. Mitigation ͳ Defined procedures are in place for capital investment programme management, project management and contract and supplier management. ͳ All capital projects are tightly monitored to ensure these are delivered within budget, in line with market demands and in compliance with all relevant regulations e.g. health and safety regulations. Reliance on core customers The prospects of future air traffic movements at Shannon Airport are dependent, to a significant extent, on the future strategies and financial strengths of core airline customers and availability of aircraft. Strategic Priority Driving Commercial Performance Excelling in Operations Impact The loss of one or more of these customers, a significant deterioration in commercial terms, a reduction in airline growth plans or changes in the strategic direction of key customers such as restructuring of route networks, further consolidation of the airline industry or a change in ownership or control of significant airline customers could have a material impact on the Group’s financial performance. Mitigation ͳ The Group has developed strong relationships with major customers by focusing on customer service and cost competitiveness. ͳ The Group is focused on keeping abreast of developments in the airline industry and on the competitiveness of its offering and appropriateness of facilities for the needs of its current and prospective customers. ͳ Diversification of the Group’s product offering, targeting new customers and development of new revenue streams are key strategic objectives for the Group to limit the reliance on core customers.

PRINCIPAL RISKS AND UNCERTAINTIES (Continued) Business performance

ͳ The Group has processes in place to ensure it remains up to date with property market trends and is focused on maintaining and upgrading its properties through a programme of investment to meet customer expectations. ͳ The Group continuously reviews its customer product offerings to ensure they remain relevant, engaging and value for money. Investments and capacity The management and operation of an airport and property portfolio are by their nature capital intensive. Strategic Priority Driving Commercial Performance Investing in Property & Infrastructure for Growth Impact While recognising our obligation to stakeholders, there is a risk that investments made in respect of aeronautical and other regulated activities and upgrades and development of investment properties do not deliver the required rates of return or cash flows or may suffer impairment. The Group has determined its risk appetite for commercial investments and set financial tolerance levels accordingly. ͳ Decisions regarding investments in aeronautical activities and upgrades of investment properties are grounded on evidence-based inputs and are subject to appropriate approval processes. ͳ A planned maintenance and rehabilitation programme is in place for key assets, including airfield pavement structure, commercial properties and other operationally critical assets. Mitigation ͳ Capital projects The Group has plans to make further significant capital investment in line with its Strategic Plan. Strategic Priority Driving Commercial Performance Investing in Property & Infrastructure for Growth Excelling in Operations Winning hearts and minds

The Group’s revenue is sensitive to competitive, economic and geopolitical conditions in the markets and sectors in which it operates. A key factor affecting the Group’s financial performance is the number of passengers and the number of aircraft movements at Shannon Airport and the Group’s ability to maintain and grow its non-aeronautical income. The Group is also exposed to cost increases arising from the nature of its operating cost base, including increases in energy costs, and exposure to additional costs in responding to regulatory changes. Strategic Priority Driving Commercial Performance Investing in Property & Infrastructure for Growth Excelling in Operations Impact Increased competition, reduced consumer demand and the impact of global economic/geopolitical events (including potential tariffs) could negatively impact the overall level of revenue generated by the Group. In addition, cost inflation will lead to negative cash flow implications. Mitigation ͳ The Group operates strong business and financial control systems (including capital appraisal) with regular reporting on financial performance, early signalling of material deviation from plan and accountability of business unit management to the Chief Executive Officer. ͳ The Group is focused on continuous improvement of processes to drive efficiency, improve flexibility and proactively manage its cost base. ͳ The Group is focused on taking pro-active management action and implementing sound commercial strategies to continue the growth of its passenger footfall through Shannon Airport which will yield increased revenues, and to maintain and grow its non-passenger related revenues.