The results for the year ending 29 March 2017 show a solid performance for the Company in the face of known challenges relating to the first full year of operation since the exit of the Edenderry Power station from Public Service Obligation support. Turnover was €406 million (down from €433 million in FY 16) and adjusted operating profit, before certain exceptional items detailed in the Chief Financial Officer’s Report, was €38.3 million down €12.9 million from last year. As outlined in the Chief Executive Officer’s report, we met all of our operational goals for the year.
The Company’s focus for the past year has been on making strategic additions that will support and enhance our existing businesses. We acquired the Liverpool based company “White Moss” and a 50% interest in the Irish based “Electricity Exchange”. We have also made progress on the establishment of a wood pellet plant in the USA. This is an integral part of our plan to ensure a continued high quality supply of biomass to our own Edenderry power station and the Lough Ree and West Offaly power stations, owned by ESB. Our plans to build a smokeless ovoid fuel plant in Foynes Co. Limerick have also progressed. This will enable us to protect our share of the home energy market in response to the Government’s decision to ban bituminous coal. A partnership has also been agreed with ESB to develop solar power on our land. We also secured a revolving credit facility that will enable us to pursue these and other future investment opportunities.
The Company’s focus for the past year has been on making strategic additions that will support and enhance our existing businesses.
One of the main preoccupations of the Board during the year was the struggle with the planning issues concerning the Edenderry power station. I am delighted to say that the Edenderry issue was brought to a successful conclusion during the year. With the appointment of Gerry McDonnell as Chief Operations Officer in March we have also completed a major restructure of the senior management of the Company.
But the past year was not without its challenges. Following a detailed assessment of peat briquette manufacturing operations, the Board reluctantly decided that it was in the long-term interest of the Company as a whole, to concentrate operations on one site, and that the Littleton factory should cease operation from April 2018. Detailed consultations and negotiations are taking place with the trade unions and employees to ameliorate the adverse consequences for employees at the location.
The Board has continued to focus on corporate governance, based on best practice, emerging regulation and trends. Significant progress was made towards the implementation of a comprehensive process for considering and reporting on the risks faced by the Group. The Board assesses all significant investments using rigorous methodologies to ensure we meet our responsibility to safeguard the Company’s assets. Details of the Group’s Risk Management process can be found on pages 63 to 65. I am satisfied that the Group has an appropriate and responsive system of internal controls to mitigate significant risks, keep exposures at an acceptable level and ensure that Bord na Móna continues its effective approach to corporate governance.
Early in my working life I was peripherally involved in the British coal mining industry and subsequently witnessed its catastrophic collapse in the 1980s. I have attempted to do whatever I could in Bord na Móna, to ensure that a similar wind down does not occur in the peat industry here. The impact this would have on the communities in the Midlands cannot be understated, and as such, the transition of the business to more sustainable alternatives needs to be carefully balanced with sustainable employment in these communities. To that end I have encouraged the Board and management to plan ahead, not just for the immediate and short term, but also for the medium and long term future of the Company in order to secure a prominent role for Bord na Móna in our growing economy. As part of this long term planning approach, we announced in 2015 that the harvesting of peat for energy would cease completely by 2030. In the meantime we have put in place, with the co-operation of our trade unions, a transformation project that faces up to the hard decisions that must be taken for peat to remain competitive in the power stations in the new regulatory environment post 2019. It will be essential that the difficult measures inherent in that programme are implemented in full.
Bord na Móna has always accepted its corporate responsibility to work with communities.
Bord na Móna has always accepted its corporate responsibility to work with communities, and as we move away from the traditional peat based businesses to the new businesses of Bord na Móna such as bioenergy, wind and solar, our responsibility towards these communities will remain unchanged. We will seek to replace the peat jobs with new sustainable jobs and will continue to support communities as technology opens new opportunities for Bord na Móna to make the most of our land and people resources.
My term as Chairman expires in September 2017 and I have indicated to the Minister that I do not wish to serve a second term. As this is therefore the last of my five Annual Reports I would like to take the opportunity to thank all my colleagues on the Board for their forbearance, support and, at times, indulgence of my vagaries. I have at all times striven to focus Board business on the bigger picture, and doing what’s best for the Company for the long-term. In this I have had the support of my colleagues in ensuring that all Board business was conducted in accordance with the Code of Practice. Over the last five years it has been a privilege for me to work with a number of truly outstanding senior managers and I have learned a great deal from them. The single most important duty I had while in the Chair was to recruit a replacement for Gabriel D’Arcy, the managing director whose term expired in 2014. With the assistance of Board members Denise Cronin and Barry Walsh we were successful in recruiting Mike Quinn who brought a new approach to the management of the Company. Mike has been extremely effective in his short time with us. He has introduced a new management structure and a rigorous accountability regime that has been welcomed by our management team. Unfortunately, Mike has decided to take another position in the state sector but I am sure that the changes he has introduced will be well embedded before he finishes in October 2017. I wish Mike the best in his future career.
I must especially thank Gerry Ryan, who for most of my time was Company Secretary and a trusted guide on the bureaucratic and governance landscape through which a new Chair must navigate. I am particularly pleased that Anna-Marie Curry has been appointed to ably succeed him and I thank Anna-Marie for her support.
I must also thank the Minister for Communications, Climate Action and Environment, Denis Naughten TD, and Mark Griffin, Secretary General and other officers of the Department, for their interest and advice. Over the year the Company interacted on a regular basis on governance matters with the NewERA division of the National Treasury Management Agency (NTMA) and the Department of Public Expenditure and Reform. I wish to thank Eileen Fitzpatrick and her colleagues in NewERA and the various officials in the Department for their support during the year.
I believe that with the continued support of all stakeholders we can say of Bord na Móna “the best is yet to be”.