ESB finance, a wholly owned subsidiary of the ESB, has reported a significant jump in pretax profit from €4,000 in 2015 to €3 million last year. The jump is attributed mainly to gains in foreign currency.
An ESB spokesman told The Irish Times that the weakening of sterling during 2016 was the main cause of the foreign exchange gain.
The company which sells bonds to provide funding for the undertakings of the ESB group as a whole had income of €89.6 million in the period, down by 7.8 per cent on the previous year. This income, the spokesman added, dropped “due to a reduction in the interest expense on payable loans and borrowings.”
In accounts dated to the end of 2016, total borrowings for the company stood at over €2.2 billion, up by 13 per cent following the sale in 2016 of a €600 million bond due to mature in June 2031.
The company had one post-balance sheet event, namely the issuance of a €500 million bond due to expire in January 2029. The group declined to comment on whether the purpose of this sale was to pay for bonds maturing later this year.
The borrowings of ESB Finance DAC are ultimately guaranteed by its parent company, ESB Group. This support, the directors believe, means the likelihood of uncertainties arising that would preclude them from paying their debts are remote.
At December 31st last year Standard & Poor's, Fitch and Moody's all held a stable outlook on the company. Ratings from those agencies ranged from A- to BBB+. The Standard & Poor's ratings means that it believes the company has a strong capacity to meet its financial commitments while the other two ratings suggest that its ability is merely adequate.
Asked whether the BBB+ rating was a cause for concern, the ESB spokesman wouldn’t comment. The company also declined to comment on the general health of the company.
