2011/2012 delivered 95% (3.6 million tonnes) of our annual targeted peat harvest. This was despite the significant challenges resulting from higher than average summer rainfall in our western bogs. Peat sales were down 6% on Fiscal Year 2011 due to the planned five month outage at West Offaly power, Feedstock’s biggest customer, but strong customer sales in the energy generation and horticultural markets contributed to reasonable operating profits for the year. We face challenges, however, in our peat supply chain as the proximity of suitable peat to our customers becomes stretched. This is being addressed through a programme of transformational business change to ensure improved competitiveness and business sustainability into the future.
We increased our biomass supply to our Edenderry power station to 156,000 energy tonnes in the year ended 28 March 2012, representing 15.1% peat dilution. This underpins our commitment to develop a sustainable model for the plant over the longer term, and we are well on the way to reaching our 2016 objective of 30% co-firing of the plant with biomass.
We experienced bog fires on an unprecedented scale during April and May 2011, mainly as a result of fires spreading to our peatlands from adjoining lands. This resulted in significant peat stock damage. I would like to acknowledge the exceptional efforts of our workforce and the fire services in ensuring that members of the public and their property were protected.
Powergen delivered a strong performance for the year with turnover up 17.9% to €71.3 million. The Edenderry power station experienced a period of very good availability and stable generation following the major overhaul of a steam turbine. The Cushaling peaking plant had a successful full first year of operation at 99.2% availability. Our wind farm in Bellacorick, Co. Mayo enjoyed one of its best years since operations began 20 years ago, with a capacity factor of over 26%.
A new joint venture company was established with ESB Wind Development Limited, which will see the creation of a 172 MW wind farm at Oweninny, Co. Mayo. Commercial operation is targeted for late 2015. In addition, grid connection offers were signed for the Bord na Móna wind farms at Mount Lucas, Co. Offaly, and at Bruckana, Co. Tipperary. These projects, with a combined installed capacity of 120 MW, should commence commercial operation in 2014 and 2015 respectively. Substantial progress was made on the co-firing of Edenderry power station. Planning was obtained for the supporting infrastructure to ensure that future targets can be met in order to underpin the sustainability of the plant and its contribution to national RES-E (Renewable Electricity) targets.
A high level assessment was carried out on a number of our cutaway peatlands to ascertain their suitability for the construction of large-scale onshore wind farms as part of renewable energy export opportunities.
The resource recovery industry continues to experience significant challenges. The volume of waste generated nationally has fallen significantly since we acquired the AES collection business in 2007. This is a direct consequence of the economic downturn, particularly in the construction and commercial sectors. The resulting decline in customer numbers along with over capacity due to lack of consolidation has driven operating margins to an all time low.
The regulatory environment is also impacting on behaviour in the industry. The acceleration of landfill levies and the uncertainty regarding incineration has seen significant quantities of waste being stored and then exported by other industry participants. This is creating a significant issue for the industry and Ireland. As a consequence waste operators intent on moving to higher end treatment solutions are finding it difficult to execute their plans. This is further compounded by the credit crunch.
Despite this backdrop we have achieved market share growth in our collection business. We succeeded in acquiring the customer business of both the Kildare and Wexford County Councils through a competitive tender process. This has added 32,000 customers to our domestic operation and will produce additional operational efficiencies as we implement our integration plan. We are particularly delighted with the recognition from our local authority partners of the seamless transition of the service and billing operations. This demonstrates our capability to upscale as future opportunities unfold.
As part of our drive to create a best-in-class customer experience we launched a new internet self-service channel. This will not only benefit our customers but it will improve customer service efficiency and costs. The continued roll-out of our RFID (radio frequency identification) technology (bin chipping) is also leading to routing efficiencies as well as offering a wider range of payment options.
Our Resource Recovery business continues to contribute to Ireland’s waste recycling and recovery targets but the challenges in relation to waste generation and management of particular waste streams remain. In late 2011, we commenced the commissioning of our 25,000 tonne per annum brown bin composting plant at Drehid, Co. Kildare. Where possible the composted material from the plant will support the continued development of peat free growing media for the UK retail market.
Environmental - Anua
It was a mixed year in our environmental business where some encouraging trends in the UK were offset by continued pressure in the US and Ireland. We will continue to closely monitor the performance of this business while we continue in our commitment to be a leading provider of cost effective, sustainable and environmentally friendly clean air and water technologies, but will redesign our route-to-market to reflect the challenges faced.
We rebranded our Bord na Móna Environmental business to Anua (from athnuaigh – meaning ‘to renew’) during the year, to more accurately reflect the product proposition we offer in this sector. We also introduced a customer service management model to strengthen our commitment to excellence in this area.
At the start of the year we consolidated our UK operations into a single site in Bridgwater, Somerset. The benefits of our leaner manufacturing operation and customer focused sales operation are beginning to show positive results in a challenging market, with annual revenue up 15%.
To respond to the challenges in our US business we have launched a new residential water treatment solution - Platinum - to complement our Puraflo technology. This will address the requirement to offer a lower-end, value solution to tackle current market conditions in certain States. Our investment in innovation, combined with the continued development of our distribution partners, will position us well as the economy recovers.
The retail markets in Ireland and the UK remain under pressure and, combined with an unseasonably mild Winter, impacted negatively on our fuel category sales. This resulted in a decrease of 9.7% in revenue. There was better news for our horticulture products which grew by 3.4%, to €54.2 million, driven by a strong performance in our mainland Europe business. This was not sufficient to fully offset our lost fuel sales and consolidated retail sales finished 5.9% behind last year at €171.6 million. Margins were also down as a result of increased retail price competition, as consumers continue to seek out value solutions. Throughout 2011/2012 we experienced significant increases in freight costs resulting from a reduction in UK inbound freight volume into Ireland, reducing our ability to benefit from attractive back-load pricing on products which we export.
We completed a strategic review of our retail operations and merged our Fuels and Horticulture business units into a new single Retail business unit in advance of our year-end. This underlines our commitment to longer term growth, particularly in the UK market, despite the challenges of the current economic and legislative environment.
A number of new products were launched during the year, including the Verve range of growing media for B&Q. Our retail innovation and product development focus demonstrates the commitment to add a sustainable range of fuel and growing media products to our traditional range. We expanded our UK sales resource through the acquisition of the Vital Earth sales team, which gives us the opportunity to expand our full portfolio of products to the UK garden centre and convenience retail sectors. Further afield, the international footprint of our professional growing media has extended into Eurasia and we have recently appointed a distributor in Turkey.
The newly formed Retail business is uniquely positioned as a cohesive trading unit with a product innovation capability. Combined with a dedicated marketing focus this will ensure the business delivers profitable growth as an increasingly international entity.
Land and Property
The objective of the Land and Property business unit is to generate commercial, environmental and social value from these key assets.
The Bord na Móna Strategic Framework for the Future Use of Peatlands guides our decision making in relation to potential future uses and developments on cutaway bogs. During the year we commenced a programme of consultation with interested parties on the Strategic Framework, including the Midland Regional Authority and the Peatlands Council.
Lough Boora Parklands was honoured with the Most Innovative Corporate Social Responsibility (CSR) Project Award at the annual Chambers Ireland CSR awards. The Award was partnered by Business in the Community Ireland to recognise companies that are committed to socially responsible business practices. The Lough Boora project was specifically identified as contributing positively to the community.
Bord na Móna completed the signing of a fifty year lease agreement on a 400 acre peatland, which is to be used as an amenity for the people of Abbeyleix and the surrounding area.
A number of other community and wildlife projects were progressed during the year, including a conservation project promoting red grouse, a bird species that has undergone serious decline in population in past decades, and other works to rehabilitate peatlands at various locations.
The first annual review of the Group’s Biodiversity Action Plan was carried out in consultation with environmental groups and other stakeholders and good progress was noted.
A pilot project to increase the level of security of our bogs to prevent unauthorised access and trespass was initiated successfully.