It is with great pleasure that I present my annual report as Chairman of Bord na Móna plc. I am pleased to report that Bord na Móna performed successfully in 2008/2009 and continued to make progress on its path of strategic growth and development. The Group took further important steps in its strategy in the energy and resource recovery sectors while continuing to maximise returns from its traditional businesses. The Group also continues to deliver good value to its shareholders.
In the year ended in March 2009, Bord na Móna achieved significant milestones towards delivering our vision for the Group, including:
|•||The implementation of the Bord na Móna Employee Share Ownership Plan which was completed in December 2008;|
|•||The restructuring of our horticulture business and the reorganisation of our manufacturing operations at Kilberry, Co Kildare;|
|•||The acquisition of the Goff Recycling business to increase the geographical reach and enhance the range of service offered to customers by our Resource Recovery business;|
|•||Obtaining planning and other permits to enable our Resource Recovery site at Drehid, Co Kildare to handle 360,000 tonnes of material annually;|
|•||Obtaining planning, grid connection and licensing for the construction of a 116 Megawatt Peaking Plant installation at Edenderry;|
|•||Innovation Centre formation and implementation of open innovation model;|
|•||Land and Property Division formation.|
The financial results showed turnover at a record level of €401.6 million for 2008/2009, up 8% on 2007/2008, reflecting in particular increased sales revenue generated by the Fuels and Energy businesses and from the first full year of operation of the Resource Recovery Centre at Drehid. Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) were €57.3 million, up €5.2 million on 2007/2008. However this figure is stated after once-off costs of €6.1 million for an ESOP charge and €5.6 million in relation to the restructuring of the horticultural business and other redundancy costs of €1.3 million which were incurred during the year. The operating profit for the year at €23.8 million was €1.3 million up on the previous year and prior to the once-off costs stated previously the operating profit was €10.4 million up on the previous year. Profit before tax in 2008/2009 at €19.5 million compares with €19.8 million for 2007/2008 and profit after tax in 2008/2009 at €15.5 million compares with €16.8 million in 2007/2008.
Notwithstanding our success in 2008/2009, Bord na Móna is subject to the same challenges faced by all businesses in the current challenging economic environment. Reflecting that, the Board decided that to effect pay increases in this environment would be inappropriate and undesirable. In the same context, the Managing Director voluntarily agreed to take a 7.5% cut in salary and members of the Group’s Executive Team also agreed a 5% salary reduction. Members of the Board also agreed to reduce their Board fees by 7.5%.
The position of pensions in the Group is a matter of concern to the Board. The defined benefit pension schemes operated on behalf of employees were affected by the severe conditions affecting investment markets and were in deficit at year end. The Group is in continuing discussion with staff representatives and regulatory authorities on the issues involved.
The Congress of the International Peat Society took place in Tullamore in June 2008. Over 500 delegates attended this major international event which takes place every four years. Bord na Móna was the main sponsor of the event and a number of personnel were heavily involved in the organisation of the Congress which was a significant success for Ireland and the midlands.
The Board continues to prioritise corporate governance based on best practice and emerging regulation and trends. The Group has an appropriate and responsive system of internal controls to mitigate significant risks which acts to keep exposures at an acceptable level. The Board is confident that Bord na Móna has a very effective system of corporate governance.
The Group also continues to deliver value to its shareholders and paid a dividend amounting to €12.9 million during the year, with €12.3 million paid to the State and €0.6 million paid to the Employee Share Ownership Plan.
I would like to thank my Board colleagues for their commitment and support during the year under review. I would like to especially acknowledge the contributions made by Ms Pam Kearney and Ms Anne Heraty whose terms as Directors came to an end during the year. I congratulate Dr Conor Skehan and Mr Peter Wyer who were both appointed to the Board with effect from May 2008 and Ms Rose McHugh appointed to the Board with effect from November 2008. Mr Gabriel Cribbin was reappointed to the Board also in May 2008 having served previously as a Director. I would also like to congratulate Mr David Taylor who was appointed to the Board in June 2009. I welcome their appointments and look forward to working with them on the Board. I would also like to take this opportunity to express my sincere thanks to Gabriel D’Arcy the Managing Director and to the management team he leads. I thank Gabriel and his colleagues and all our employees, for their dedication and hard work in delivering another year of progress for the Group, despite the challenges which emerged.
I would like to thank the Minister for Communications, Energy and Natural Resources, Mr Eamon Ryan T.D. for his ongoing support for Bord na Móna. I also express my appreciation to Mr Aidan Dunning, Secretary General of the Department, Ms Sara White, Deputy Secretary General and the other officers of the Department for their interest and advice.
The Board is pleased to report the ongoing progress in the implementation of the strategic plan for Bord na Móna. We are convinced that this will secure a successful and vibrant future for the Group and enhance the interests of the shareholders, management and employees. The Board is determined to provide the environment and support which will facilitate the achievement of the strategy. We are also ready to play our part in contributing to a sustainable future for Ireland by contributing to the advancement of environmentally friendly policies in energy, water and resource recovery.
23 June 2009