Annual Report 2017

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Directors’ Report

The Directors present their annual report and the audited financial statements of Bord na Móna plc for the financial year ended 29 March 2017.

Principal activities, Business Review and Future Developments

The Group supplies electricity generated from peat, wind, oil and biomass at its generating stations and supplies peat as a fuel to other electricity generating stations. The Group develops and operates wind farms and renewable energy projects. It also manufactures peat briquettes and horticultural products, supplies waste management services and commercial laboratory services.

The Chairman’s Statement on pages 10–13 and the Managing Director’s Review on pages 14–17 contain the business review and a review of the development of the Group’s business during the year, the state of affairs of the businesses at 29 March 2017, recent events and likely future developments.

Results for the year and dividends

 €'000
Profit for the financial year5,094
Dividend paid4,495

Details of the financial results of Bord na Móna plc for the financial year ended 29 March 2017 are given on pages 75 to 124. The Board declared and paid a dividend of 0.0689 cent per share (€4.5 million). This was paid in July 2016.

Directors

Policy in Bord na Móna is determined by a twelve member Board appointed by the Minister for Communications, Climate Action and Environment. Seven of the Directors are normally appointed for a term of five years. Four of the Directors are appointed for a term of four years, in accordance with the Worker Participation (State Enterprises) Acts 1977 and 1988. The Managing Director is appointed to the Board on appointment to that position. The Directors are:

  • John Horgan, Chairman
  • Mike Quinn, Managing Director
  • Philip Casey
  • Denise Cronin
  • John Farrelly
  • Kevin Healy
  • Denis Leonard
  • Seamus Maguire
  • Paschal Maher
  • Gerard O’Donoghue
  • Elaine Treacy
  • Barry Walsh

Corporate Governance

As part of its commitment to quality the Group has continued to implement best practice in relation to the conduct of its business and in relation to financial and general reporting. The Group complies with the provisions of the Department of Finance’s “Code of Practice for the Governance of State Bodies”. The Code sets out the governance framework agreed by Government for the internal management and the internal and external reporting relationships of Commercial State Bodies.

The Board

The Board is responsible for overseeing and directing the Bord na Móna Group and ensuring its long-term success. Decisions are made after appropriate information has been made available to Board members and with due consideration of the risks identified through the risk management process. The Board has reserved a schedule of matters for its decision, including:

  • Approval of Group Strategy, Five Year Plan, Annual Budgets and interim and annual financial statements;
  • Review of operational and financial performance;
  • Approval of major capital expenditure;
  • Review of the Group’s system of financial control and risk management;
  • Appointment of the Managing Director; and,
  • Appointment of the Company Secretary.

The Board is provided with regular information on a timely basis which includes Key Performance Indicators for all areas of the business. Reports and papers are circulated to the Directors in preparation for Board and Committee meetings.

All members of the Board have access to the advice and services of the Company Secretary who is responsible to the Board for ensuring compliance with Board procedures. The Group’s professional advisers are available for consultation by Directors as required. Individual directors may take independent professional advice in line with specified procedures. Each Director received an appropriate briefing on being appointed to the Board and access to training is provided by the Group during a Director’s term of office.

The Board carried out an internal evaluation of its performance during the period.

The Board and Management maintain an ongoing dialogue with stakeholders on strategic issues. The Board considers that all Directors are independent in character and judgment. However, the Board notes that the Managing Director and four Directors appointed in accordance with the Worker Participation (State Enterprises) Acts 1977 and 1988 have contracts of employment with Bord na Móna.

Companies Act 2014 (the “Act”)

Audit Committee

In accordance with the provisions of section 167 of the Act, the Directors confirm that they have in place a Risk and Audit Committee which meets the requirements of section 167 of the Act.

Directors’ Compliance statement

It is the policy of Bord na Móna plc to comply with the Company’s relevant obligations, as defined in section 225 of the Act. Each of the Directors acknowledge that they are responsible for the Company’s compliance with its “relevant obligations” and confirm as follows:

  • a compliance policy statement has been drawn up setting out the Company’s policies regarding compliance by the Company with its “relevant obligations”;
  • appropriate arrangements and structures designed to secure material compliance with the Company’s “relevant obligations” have been put in place; and
  • a review of the aforementioned arrangements and structures has been conducted during the financial year.

Relevant Audit information

In accordance with the provisions of section 330 of the Act each of the Directors confirms that,

  • so far as the directors are aware, there is no relevant audit information of which the statutory auditors are unaware; and
  • the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and they have established that the statutory auditors are aware of that information.

Remuneration of Directors

Fees for Directors are determined by the Government and set out in writing by the Minister for Communications, Climate Action and Environment. Directors’ remuneration is outlined in note 5 to the financial statements on page 90.

The total expenses paid to the Directors in FY17 was €21,368 (FY16: €22,398).

Board Meetings

The Board met 14 times during the financial year.

Committees of the Board

There are four standing Committees of the Board which operate under formal terms of reference.

The members of the Risk and Audit Committee as at 29 March 2017 were Denise Cronin (Chairman), John Farrelly and Barry Walsh. The Committee met seven times during the financial year. The Committee meets periodically with the internal auditor and the external auditor to discuss the Group’s internal accounting controls, the internal audit function, the choice of accounting policies and estimation techniques, the external audit plan, the statutory audit report, financial reporting, risk management and other related matters. The internal auditor and external auditor have unrestricted access to the Risk and Audit Committee. The Chairman of the Committee reports to the Board on all significant issues considered by the Committee and the minutes of its meetings are circulated to all Directors.

The Remuneration Committee deals with the remuneration and expenses of the Managing Director and senior management within Government guidelines, Human Capital Planning, Succession Management, Pensions and other HR matters. The members as at 29 March 2017 were John Horgan (Chairman), Elaine Treacy and Gerard O’Donoghue. The Managing Director, Mike Quinn, attends the Committee except when his own position is being discussed. The Committee met eight times during the financial year.

The Finance Committee considers the financial aspects of matters submitted to the Board, including the Annual Budget and Five Year Plan, and the procurement, disposal and leasing of land, buildings and facilities. The members as at 29 March 2017 were John Horgan (Chairman), Kevin Healy, Denis Leonard, Paschal Maher and Mike Quinn. The Committee met twice during the financial year.

The Health and Safety Committee advises the Board on Health and Safety matters within the Bord na Móna Group. The members as at 29 March 2017 were Gerard O’Donoghue (Chairman), Philip Casey, Seamus Maguire and Mike Quinn. The Committee met three times during the financial year.

DirectorBoard MeetingsCommittee Meetings
 Attended/EligibleAttended/Eligible
Directors as at 30 March 2016  
J Horgan (Chairman) 14/14 10/10
M Quinn (Managing Director) 13/14 5/5
P Casey 11/14 3/3
D Cronin 14/147/7
J Farrelly 13/14 7/7
K Healy 14/142/2
D Leonard 13/141/2
S Maguire 14/142/2
G O’Donoghue 13/14 11/11
E Treacy 12/14 8/8
B Walsh 14/14 6/7
P Maher 12/14 2/2

* Term of Office expired 13 May 2016

Internal Controls

The Directors have overall responsibility for the Group’s systems of internal control and for reviewing its effectiveness. These systems are designed to manage risk and can give reasonable, but not absolute, assurance against material misstatement or loss. The Board confirms that it has reviewed the effectiveness of the system of internal control.

Management is responsible for the design and operation of suitable internal control systems. The system of internal control is designed to ensure that transactions are executed in accordance with Management’s authorisation, that reasonable steps are taken to safeguard assets and to prevent fraud and that proper financial records are maintained. Management reports to the Board on material changes in the business and external environment which affect risk.

The principal procedures which have been put in place by the Board to provide effective internal control include:

  • an organisation structure with clear operating and reporting procedures, authorisation limits, segregation of duties and delegated authorities;
  • clearly defined management responsibilities have been established throughout the Group and the services of qualified personnel have been secured and duties properly allocated among them;
  • a statement of decisions reserved to the Board;
  • a risk management process which enables the identification and assessment of risks, that could impact business performance and objectives and ensures that appropriate mitigation plans are formulated to minimise the residual risk;
  • a comprehensive budgeting process for each business and the central support services culminating in an annual consolidated Group budget approved by the Board;
  • a comprehensive planning process for each business and the central support services culminating in an annual consolidated Group long-term plan approved by the Board;
  • a comprehensive financial reporting system with actual performance against budget, prior year, forecasts, performance indicators and significant variances reported monthly to the Board;
  • a set of policies and procedures relating to operational and financial controls including capital expenditure;
  • procedures for addressing the financial implications of major business risks, including financial instructions, delegation practices, and segregation of duties and these are supported by monitoring procedures;
  • management at all levels are responsible for internal control over its respective business function; and
  • procedures for monitoring the effectiveness of the internal control systems include the work of the Risk and Audit Committee, management reviews, the use of external consultants and internal audit.

Internal audit considers the Group’s control systems by examining financial reports, by testing the accuracy of transactions and by otherwise obtaining assurances that the systems are operating in accordance with the Group’s policies and control requirements. Internal audit report directly to the Risk and Audit Committee on the operation of internal controls and make recommendations on improvements to the control environment if appropriate.

The Group has a robust framework in place to review the adequacy and monitor the effectiveness of internal controls covering financial, operational, risk management and compliance controls. The Board is satisfied that the system of internal control in place is appropriate for the business.

The Board has reviewed the effectiveness of the system of internal control up to the date of approval of the financial statements. The Risk and Audit Committee performed a detailed review and reported its findings back to the Board. The process used to review the effectiveness of the system of internal controls includes:

  • review and consideration of the internal audit work programme and consideration of its reports and findings;
  • review of the regular reporting from internal audit on the status of the internal control environment and the status of recommendations raised previously from their own reports and reports from the external auditor;
  • review of reports from the external auditor which contain details of any material internal financial control issues identified by them in their work as auditors; and,
  • review of the risk register reports, the counter measures in place to mitigate the risk, the remaining residual risk and actions required or being taken to further mitigate the risks.

Principal Risks and Uncertainties

The Board has overall responsibility for risk management including determining the nature and extent of significant risks that it is willing to accept in pursuit of its strategic and operational objectives. To address this, the Board has established a Risk Management System that provides for continuous identification, assessment, implementation of mitigating actions and controls, and the monitoring and reporting of significant risks within Bord na Móna. Details of the principal risks facing the Group and the operation of the Risk Management System of Bord na Móna plc for FY17 are given on pages 64–65.

Directors’ and Secretary’s Shareholdings

The Bord na Móna Employee Share Ownership Plan (ESOP) continues to hold 5% of the total ordinary shares in Bord na Móna plc on behalf of 2,102 eligible participants (serving and retired employees) in the Bord na Móna Employee Share Ownership Trust or the Bord na Móna Approved Profit Sharing Scheme (APSS).

Philip Casey, Kevin Healy, Seamus Maguire, Paschal Maher and the Secretary are participants in the Bord na Móna Employee Share Ownership Plan and at the start and end of the financial year each has a notional allocation of 1,771 ordinary shares in Bord na Móna plc, which are held in the Bord na Móna Approved Profit Sharing Scheme. The other Directors and their families had no interests in the shares of Bord na Móna plc or any other Group company during the year ended 29 March 2017 or in the prior year.

Going Concern

The Directors, having made enquiries, believe that Bord na Móna has adequate resources to continue in operation for the foreseeable future and that it is appropriate to continue to adopt the going concern basis in preparing the financial statements.

Subsequent Events

There have been no events between the balance sheet date and the date on which the financial statements were approved.

Accounting Records

The Directors believe that they have complied with the requirements of Sections 281 to 285 of the Companies Act, 2014, with regard to the obligation to keep adequate accounting records, by employing accounting personnel with appropriate expertise and by providing adequate resources to the finance function. The accounting records are kept at the Group’s registered office, Main Street, Newbridge, Co Kildare.

Prompt Payment of Accounts

The Directors acknowledge their responsibility for ensuring compliance, in all material respects, with the provisions of the Prompt Payments of Accounts Act, 1997, the European Communities (Late Payment in Commercial Transactions) Regulations, 2002 and the European Communities (Late Payment in Commercial Transactions) Regulations,2012 - 2016, (the “Regulations”). Procedures have been implemented to identify the dates upon which invoices fall due for payment and to ensure that payments are made by such dates. Such procedures provide reasonable but not absolute assurance against material non−compliance with the Regulations. The Directors are satisfied that Bord na Móna Plc has complied in all material respects with the relevant requirements of the Regulations in relation to external supplier payments within the EU. In 2015 the Government launched the Prompt Payment Code of Conduct and Bord na Móna is a signatory to this code and undertakes to pay suppliers within agreed terms.

Principal Subsidiaries and Partnerships

Details of the Group’s principal operating subsidiaries (including overseas branches) and partnerships are set out in note 25 of the financial statements.

Research and Development

The Group’s strategy on research and development and the costs incurred during the year are set out in the Chief Financial Officers’ review of this annual report.

Political Donations

The Board made no political donations during the year (FY16: €nil).

Independent Auditors

In accordance with Section 383(2) of the Companies Act, 2014, the auditor KPMG, Chartered Accountants, will continue in office.

On behalf of the Board:

Signed:

John Horgan
Chairman and Director

Mike Quinn
Managing Director

22 June 2017