The Directors present their report and the audited financial statements of Bord na Móna plc for the period from 31 March 2011 to 28 March 2012.
The Group supplies electricity generated from peat, oil and biomass at its generating stations and supplies peat as a fuel to other
electricity generating stations. It also supplies waste management services, peat briquettes, coal and oil, horticultural products,
wastewater treatment and odour emmissions products, environmental consultancy and commercial laboratory services.
The Chairman’s Statement on pages 2 and 3, the Managing Director‘s Review on pages 4 to 13 contain a review of the development of the Group’s business during the year, the state of affairs of the businesses at 28 March 2012, recent events and likely future developments.
|Results for the period||€’000|
|Loss for the financial year||(15,975)|
|Loss retained for financial year||(20,307)|
Details of the financial results of Bord na Móna plc for the period 31 March 2011 to 28 March 2012 are given on pages 32 to 60.
Policy in Bord na Móna is determined by a twelve member Board appointed by the Government. The names of the persons who
were Directors during the period are set out below.
Fergus McArdle, Chairman
Gabriel D’Arcy, Managing Director
Gabriel Cribbin – term of office expired 21 October 2011
Denise Cronin – appointed with effect from 15 September 2011
Rose McHugh – resigned on 5 September 2011
Colm Ó Gógáin
Rory Scanlan – term of office expired 13 June 2012
Conor Skehan – resigned on 6 April 2011
Mr John Horgan was appointed as a Director with effect from 24 April 2012.
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” and has applied the principles of good corporate governance.
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). In December 2011, all of the shares were appropriated to the eligible participants through the Approved Profit Sharing Scheme in accordance with the rules of the scheme.
The Board met 12 times during the financial year.
There are three standing Committees of the Board which operate under formal terms of reference.
The members of the Risk and Audit Committee as at 28 March 2012 were Peter Wyer (Chairman), Rory Scanlan and Denise Cronin. Mr Robert Dix acts as an adviser to the Committee. The Committee met six times during the financial year. The Committee meets periodically with the internal auditor and the external auditors 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 and other related matters. The internal auditor and external auditors 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. The members as at 28 March 2012 were Fergus McArdle (Chairman), Paddy Fox and Pat McEvoy. The Managing Director, Gabriel D’Arcy, attends the Committee except when his own position is being discussed. The Committee met twice during the financial year.
The Finance Committee considers the financial aspects of matters submitted to the Board and the procurement, disposal and leasing of land, buildings and facilities. The members as at 28 March 2012 were Fergus McArdle (Chairman), Paudge Bennett, Gabriel D’Arcy, Colm Ó Gógáin and David Taylor. The Committee met three times during the financial year.
From time to time the Board also establishes temporary Committees to deal with specific matters under defined terms of reference. There were no such Committees established in the year ended 28 March 2012.
The table below summarises the attendance of Directors at Board and Committee meetings which they were eligible to attend during the year ended 28 March 2012.
|F McArdle, Chairman||12/12||4/4|
|G D’Arcy, Managing Director||12/12||3/3|
|C Ó Gógáin||12/12||3/3|
* No Board meeting took place in the period 31 March 2011 to 6 April 2011, the date of Dr Skehan’s resignation from the Board.
• The aggregate expenses paid to Directors in 2011/2012 were 247,974 (2010/2011: 261,832)
The Group’s operations expose it to a variety of financial risks that include the effects of changes in foreign exchange risk, credit
risk, liquidity and interest rate risk. The Group has in place a risk management programme that seeks to manage the financial
exposures of the Group by monitoring foreign exchange exposure together with debt finance and the related finance costs.
In order to ensure stability of cash outflows and hence manage interest rate risk, the Group has a policy of maintaining at least 50 per cent of its debt at fixed rate. At March 2012, the Group had fixed 100% (2011: 100%) of its private placement debt. Further to this the Group seeks to minimise the risk of uncertain funding in its operations by borrowing within a spread of maturity periods. Financial instruments are used to manage interest rate and financial risk. The Group does not engage in speculative activity and treasury operating policy is risk averse.
The Group’s treasury operations are managed in accordance with policies approved by the Board. These policies provide principles for overall financial risk management and cover specific areas such as interest rate, credit, liquidity and foreign exchange risk.
The Group is exposed to commodity price risk as a result of its operations. However, given the size of the Group’s operations, the costs of managing exposure to commodity price risk exceed any potential benefits. The Directors will revisit the appropriateness of this policy should the Group’s operations change in size or nature. The Group has no exposure to equity securities price risk as it holds no listed or other equity investments.
Foreign exchange risk
Bord na Móna’s reporting currency is Euro. The Group is exposed to foreign exchange risks in the normal course of business, principally on the sale and purchase of both sterling and US dollar. Certain natural economic hedges exist within the Group. At the year end, the Group had $355,000,000 fixed rate debt which was hedged by swap arrangements.
The Group continually examines its credit policies in light of changing economic conditions that the Group operates in. Management, with the approval of the Board, has an ongoing programme of mitigating actions to reduce identified credit risks which include improved exception reporting and automated use of credit limits to manage risk. In addition, credit insurance is in place for the larger customers of the Group.
The Group’s operations are cash generative. The Group has historically utilised this cash to retire medium and long term debt and to fund capital expenditure. The Group is now primarily financed by medium term debt with maturities between 2013 and 2019. The Directors are satisfied that the Group has sufficient sources of short and medium-term debt to enable it to fund both existing operations and planned expansions.
Interest rate and cash flow risk
The Group has both interest bearing assets and interest bearing liabilities. Cash balances earn interest at a variable rate. The Group has a policy of maintaining at least 50% of debt at fixed rate to ensure certainty of future interest cash flows. The Directors will revisit the appropriateness of this policy should the Group’s operations change in size or nature. Through a series of interest rate swaps, the Group has fixed the interest rates on its medium-term debt.
The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable Irish law
and generally accepted accounting practice in Ireland including the accounting standards issued by the Accounting Standards Board
and published by the Institute of Chartered Accountants in Ireland.
Irish company law requires the Directors to prepare financial statements for each financial year that give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period. In preparing the financial statements, the Directors are required to:
The Directors confirm that they have complied with the above requirements in preparing the financial statements.
The Directors are responsible for keeping proper books of account, which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements are prepared in accordance with accounting standards generally accepted in Ireland and Irish Statutes comprising the Companies Acts, 1963 to 2012 and the European Communities (Companies: Group Accounts Regulations 1992). They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The measures taken by Directors to secure compliance with the Company’s obligation to keep proper books of account are the use of appropriate systems and procedures and the employment of competent persons. The books of account are kept at the registered office of the Company.
The Directors are also required to include in the Annual Report a statement on the system of internal control in accordance with the requirements of the Code of Practice for the Governance of State Bodies.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included in the Company’s website. Legislation in the Republic of Ireland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The Directors have overall responsibility for the Group’s systems of internal control and for reviewing their 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 identification and evaluation of significant risks together with the design and operation of suitable internal control systems. The systems of internal control are 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 report to the Board on major 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:
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 main Board. The process used to review the effectiveness of the system of internal controls includes:
The Directors have reviewed the Group’s businesses and other relevant information and confirm that Bord na Móna plc has adequate resources to continue operating for the foreseeable future. For this reason, the going concern basis continues to be adopted in preparing the financial statements.
Mr P Bennett, Mr P Fox, Mr P McEvoy and Mr C Ó Gógáin and the Secretary are participants in the Bord na Móna Employee Share Ownership Plan and 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 or the Bord na Móna Employee Share Ownership Trust. 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 28 March 2012.
The Code of Conduct for Employees continued in place during the 2011/2012 financial year. A Code of Conduct for Directors was adopted in April 2002 and remains in place.
Bord na Móna implements its Human Resources policies in a consultative and collaborative way that respects the importance of our
people and their performance. The Group aims for strong commercial results through a professional, performance driven approach.
As always, Bord na Móna maintained its partnership based relationship with employees and their union representatives with both sides recognising this as the most effective way of meeting our business challenges in a mutually beneficial way.
Bord na Móna continued its pursuit of improved health and safety at work through constant attention to best practice work processes. In addition, the Group continued its Health and Wellness programme that focuses on enhancing individual employee well-being.
The Board has adopted a policy that Bord na Móna will voluntarily obtain the relevant ISO accreditation and/or other relevant
accreditation for all its activities.
The Group has adopted the Code of Practice for the Delivery of Services to Customers of Commercial State Companies.
The measures taken by the Directors to secure compliance with the Group’s obligation to keep proper books of account are the use of appropriate systems and procedures and employment of competent persons. The books of account are kept at the Group’s registered office, Main Street, Newbridge, Co Kildare.
The Directors acknowledge their responsibility for ensuring compliance, in all material respects, with the provisions of the European Communities (Late Payment in Commercial Transactions) Regulations 2002 (“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 assurance against material non-compliance with the Regulations. The payment policy during the year under review was to comply with the requirements of the Regulations.
The Auditors, PricewaterhouseCoopers have indicated their willingness to continue in office as Auditors to the Group.
On behalf of the Board: