It is with great pleasure that I present my first Annual Report as Managing Director. When Bord na Móna was initially established, it was seen as an engine for economic development, particularly across the Midlands. Today, more than ever, the refrain of our company as a vehicle for economic growth in our communities rings true. It is my intention to ensure the future of this great company towards 2030 and beyond.

Financial overview

I am pleased to report another year of solid achievement by the Group in the year 2015. Turnover, at €417.4 million, is down 2.2% on the previous year, however the Suttons Oil business was disposed of in January 2014 and on an adjusted basis turnover increased by 3.5% in comparison to the prior year. EBITDA return for 2015 was €98.1 which was 7.9% up on 2014. Operating profit as a percentage of turnover increased from 11.7% in 2014 to 12.6% in 2015 an improvement of 7% reflecting the investments in the wind farms and the disposal of the low margin oil business.

Future Direction and strategic Intent

Bord na Móna has been undergoing seismic change in recent years as it transitions its traditional peat-based activities to a future that will ultimately see the company engaged in thriving sustainable businesses through to 2030 and beyond.

Since my appointment by the Board, I have undertaken a significant review of each of the businesses. In March, at our strategy review day, I presented a framework that will underpin our future growth to the Board and the Minister for Communications, Energy and Natural Resources, Mr. Alex White TD.

I have made changes to the operational structure of the Group since the start of the 2016 fiscal year, to streamline our business units so that they are best placed to deliver on our strategic objectives. Consumer and Professional became two separate business units, Fuels and Horticulture (Growing Media) respectively. The business unit formerly known as Powergen has also become two business units, Powergen Operations and Powergen Development. In light of the criticality of Biomass to our Group over the next number of years andthe exceptional volume demand I have appointed a new Head of Biomass to help reach our goals in this area.

Our intent is to optimise growth to become the leading player in every market that we operate. The plans that I outlined, and which were agreed in principle by the Board, will deliver a long term sustainable business up to 2030 and beyond. This plan is underpinned by five key areas of focus Growth, Human Capital, Sustainability, Market Leadership and our Joint Venture with Coillte.

Powergen operations will focus on maximising the value of the generating assets and Powergen Development will focus on identifying new generation assets potential obtaining consents and the construction of approved and consented projects.

The plan has at its core the key aim and ambition to become the leading player in every market that we operate. In terms of specifics this means that Bord na Móna will become:

  • number 1 supplier of renewable electricity on the island of Ireland;
  • number 1 supplier and user of biomass materials on the island of Ireland;
  • number 1 renewable home heating supplier in Ireland and the UK;
  • number 1 supplier of retail growing media in Ireland and the UK;
  • number 1 Resource Recovery landfill operator in Ireland; and
  • international market leader in professional growing media.

OUR plan has at its core the key aim and ambition to become the leading player in every market that we operate. In terms of specifics this means that Bord na Móna will become:

Number 1 supplier of renewable electricity on the island of Ireland.

Number 1 supplier and user of biomass materials on the island of Ireland.

Number 1 renewable home heating supplier in Ireland and the UK.

Number 1 supplier of retail growing media in Ireland and the UK.

Number 1 Resource Recovery landfill operator in Ireland.

International market leader in professional peat.


Building a long term sustainable future for the company will not be easy. Bord na Móna currently faces significant challenges, both in the immediate term, and over the next number of years. In the financial year 2015, the business experienced the significant adverse impact that items such as the Carbon Tax, Carbon Credit Pricing, the private sale of timber and turf and Cross Border Fuel Trading have had on our Fuels operating profit performance. The environment in which we operate is coming under increasing pressure because of the lack of a level playing field due to the lack of consistent enforcement and application of regulations.

In the medium term, we will face increased challenges in obtaining planning in consents for infrastructural developments, the cost effective supply of biomass to both our Powergen business and to the ESB peat stations post 2019, Pay by Weight in our Resource Recovery Business, the implementation of the Feedstock transformation programme and the expiry of the current long term Fuel Supply Agreements.


This recent announcement between Bord na Móna and the ESB underpinning the operation of two peat power stations to 2030 is very significant news for the future of the company. This means that Feedstock can subject to supplying peat and biomass on a cost effective basis remain in business beyond the end of the current ESB agreements which expire in 2019.

Whilst the announcement is very welcome, considerable work still needs to be done, to make this agreement viable. The business has to reduce its costs considerably and sell peat at a competitive price. This confirmation is explicitly dependent on us significantly reducing in the absence of the support provided through the current public service obligation mechanism, the sale price of our peat in order to compete with oil, gas and coal, the prices of which have dropped substantially in recent times. The ESB have stated that the stations will only operate if they are commercially viable. I have made it clear that we will do everything in our power to meet this requirement.

This means that a major external obstacle to our plan for a long term sustainable Feedstock business has been removed. The power to back the plan to sustain jobs and the business now lies in the hands of Bord na Móna and our employees.

Change is neither popular nor easy in any organisation. For many in Bord na Móna the term Transformation is something that is only associated with our Feedstock business. Change is not however confined to just one area. I have already outlined many of the key challenges that face our businesses. For example, in Consumer and Professional we are facing big challenges from carbon tax and an unfairly structured fuels market. Powergen faces challenges around planning and regulation. Resource Recovery operate in an increasingly competitive and regulated industry. An essential element of continued success in the face of these challenges will be willingness by all employees to embrace the need for continuous change and improvement.

We can choose to back our own ability to change, to grow our business and to sustain our jobs. It has been said, the secret of change is to focus all of your energy, not on fighting the old, but on building the new. It is my primary focus to transform Bord na Móna and build a sustainable business out to 2030 and beyond.


Since I took up my position, it is clear to me that for Bord na Móna to succeed towards 2030, the critical success factor will be our people. Our employees are the most important resource that we have. For my part, I will endeavour to deliver and maintain positive work environments, with open communication channels that will encourage all of our staff to work together to build a long term sustainable future. Since taking up my position, I have endeavoured to meet and to listen to as many of our employees as possible, and I look forward to building these relationships even further over the coming years.

The future

Throughout the coming year, we will continue to maintain a strong focus on Health and Safety right across our Group. I am committed to improving communications across the organisation and to being open and transparent in all our dealings. Bord na Móna has strong links in our communities going back generations. We live here, we work here and we are deeply invested in creating the brightest possible future for the people of the regions in which we operate. I look forward to the coming years and building a long term sustainable future for Bord na Móna and the people we serve.

“Commencement of commercial operation of wind farms at Mount Lucas, Co. Offaly (84 MW) and at Bruckana (42 MW) on the borders of Laois, Tipperary and Kilkenny.”

Operational and Financial Review

A summary of the key Group financial results for the past three years is as follows:











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Profit/(loss) before tax




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Shareholders’ funds




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Turnover decreased by €9.4 million and €8.7 million in comparison to 2014 and 2013 respectively. The Suttons Oil business was disposed of in January 2014 and in comparison to the prior year reduced the turnover of the Group by €23.7 million. There was reduced sales activity in the home heating sector with briquette and coal sale tonnages down 14% and 23% respectively on 2014 due to the impact of increased carbon tax on solid fuels, increased competition from Northern Ireland suppliers and alternative products such as private turf and wood based products. Growing media sales into mainland Europe decreased on the prior year, with sales decreasing in the Dutch, Belgium and French markets but recovered in the Italian market in comparison to the prior year. Retail growing media sales in Ireland and the UK increased on the prior year reflecting favourable weather during the growing season.

Electricity sales in the power-generation business were up on the previous year due to the commencement of commercial operations at the Mountlucas and Bruckana wind farms. The Mountlucas farm with 28 turbines – an 84 megawatt wind farm was commissioned in September and the Bruckana farm with 14 turbines – a 42 megawatt wind farm was commissioned in November. Electricity sales for the co-fired peat/biomass power plant at Edenderry also increased on last year with increased plant availability of 13% with an extended summer outage in the prior year. Biomass supplies to the Edenderry power station increased to 284,000 tonnes, an 18% increase on the prior year. The peaking plant had 99.9% plant availability during the year.

The Feedstock business increased the sale of milled peat for power generation in the year with supplies increased by 6% and 13% to the West Offaly and Edenderry Power stations respectively. However at Lough Ree Power, supplies were 7% lower in the current year as an extended scheduled outage occurred in the summer of 2014. Sales to the briquette factories were significantly down on the prior year, a reduction of 20% as briquette manufacturing was curtailed by an additional ten weeks to address the high briquette stocks at each factory. Sales of peat for growing media declined by 11% due to reduced demand for professional peat in the Dutch and French markets.

Resource Recovery increased their inbound tonnage intake from commercial customers by 22% and end treatment sales to the Drehid facility increased by 13% on the prior year. The landfill gas electricity generation units fired by gas recovered from the engineered landfill will power 8,500 residential homes and had increased sales of 140% with a full year’s operation.

EBITDA at €98.1 million was €7.2 million up on 2014 reflecting:

  • commencement of commercial operations at the Mountlucas wind farm in September and the Bruckana wind farm in November;
  • increased plant availability and higher electrical output at the co-fired Edenderry Power station;
  • increased sales of milled peat for power generation to the West Offaly and Edenderry power stations;
  • increased inbound tonnage for the waste collection business and the opening of the Lusk recycling facility in north Dublin;
  • increased inbound tonnage to the Drehid Landfill facility, the Composting facility and full year impact of the generation of electricity on recovered gases from the engineered landfill;
  • currency gains on sales of growing media into the U.K. market and on the adverse side to the prior year;
  • lower sales of briquette and coal products impacted by the increased carbon tax and increased competition from alternative products such as private turf and wood based products;
  • reduced sales activity and reduced gross margins for the Anua business.

Profit before tax of €37.2 million was €2.7 million down on 2014 reflecting the enhanced earnings in the Powergen and Resource Recovery businesses and the additional sales of good quality peat for power generation. However, the profit before tax figure included an exceptional cost of €4.6 million (pre-tax) in relation to termination of operations in the Anua businesses. The business has incurred losses in previous years and following a strategic review by the Board in the early part of the year and an examination of potential investments, the Board decided to arrange for the orderly wind-up of the operations. The exceptional charge includes costs for redundancy of €1.6 million, a write down of the inventory and receivable to recoverable amounts of €2.2 million, a provision for onerous contracts of €0.6m and impairment of €0.2 million to tangible assets. The profit before tax for 2014 of €39.9 million was €27.3 million up on 2013, but the financial year 2013 included exceptional costs of €23.3 million on a record low annual harvest yield of only 1.4 million tonnes of peat, 37% of the annual target and a shortfall of 2.4 million tonnes of peat.

Shareholders’ funds have increased by €9.3 million in the period, mainly as a result of retained earnings of €30.4 million for the year and a revaluation gain on the Baggot Street investment property of €14.1 million. However, shareholders’ funds were reduced by a charge of €24. 6 million (net of tax) for a deficit on the defined benefit pension schemes and a dividend payment of €11.2 million. The key contributing factor to the pension deficit is a change in the discount rate from 3% down to 1.25% which increased the plan liabilities by €83.9 million; this was offset by an increased return on the scheme assets and experience gains on the pension assumptions.

Funds from Operating Activities

The Group had an operational cash flow of €89.1 million compared to €47.5 million in the prior year – an improvement of €41.6 million. In the prior year there was significant investment in stocks of €36.7 million with a rebuild of milled peat stocks of 2.9 million tonnes to 5.2 million tonnes but in the current year the Group has increased stock investment in milled peat and coal by €9.8 million, a decrease of €26.9 million upon the prior year. The Group will seek to reduce investment in stocks for the year to March 2016. The improved operating profit of €2.2 million in 2015, together with increased depreciation and amortisation charges of €10.6 million in comparison to 2014 are the other key contributors to the cash flow variance.

The Group had a cash outflow of €190.1 million, capital expenditure and investment of €113.7 million of which €86.5 million is attributable to the two wind farms. The Group repaid €40.7 million to Private Placement debt holders, interest repayments of €14.0 million, dividend payment of €11.2 million and corporation tax payments of €10.8 million.

The Group had a net cash outflow of €101.0 million funded by a reduction in cash of €76.9 million and bank overdraft facilities of €24.1 million. Net debt increased from €72.2 million at the start of the year to a closing net debt of €132.6 million an increase of €60.4 million. The Group had a closing cash balance of €96.3 million which will partially fund the implementation of the strategy for the Group.

The Group generated €47.5 million from operating activities in 2014 compared to €89.1 million in the current year. Milled peat stock levels being rebuilt in the prior year and lower cash operating profits were the key contributors.





Net cash flow from operating activities



Capital expenditure and investments



Financing costs paid



Disposal of a subsidiary



Corporation tax paid



Dividend paid



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Increase/(decrease) in net debt



At year end, the Group had net debt of €132.6 million, an increase of €60.3 million in the year – attributable to the level of capital expenditure on the two wind farms which became operational in September and November 2014. The detailed cash flow statement is shown on page 51 supported by Note 20 to the Financial Statements.

Investment for the future

Capital Expenditure and Financial Investment for 2015 amounted to €113.8 million (€86.3 million in 2014). The capital investment programme undertaken during the year included the completion of the substation for the Bruckana wind farm, erection of wind turbines on wind farms at Mountlucas, Co. Offaly and Bruckana on the borders of counties Kilkenny, Laois and Tipperary. The Mountlucas and Bruckana wind farms began commercial operations in September and November respectively. Other key items of expenditure were the production plant for peat harvesting, transport equipment for the transport of milled peat, the construction of engineered landfill cells for waste treatment and gas recovery, upgrades at the two briquette factories, refurbishment of the Baggot Street property and the design and build of new financial processes and systems for the new finance delivery model based on Financial Shared Services and Finance Business Partnering.

Research and Development: During 2015 Bord na Móna spent €5.5 million on research and development including business development, exclusive of grants (compared with €4.0 million in 2014). Nine people are directly employed in the Innovation Centre with a further seventeen people in business development and innovation embedded in the operational businesses of the Group.

Capital Structure and Treasury Policy

The Treasury Policy for the Group is reviewed by the Board on an annual basis. This policy is implemented and monitored by the Group Treasury function. The Treasury policy aims to minimise overall Group funding costs, maintain flexibility in volatile markets, subject to acceptable levels of treasury and counterparty risk.

The overall objective of the Treasury function in managing foreign exchange risk is to contribute to the achievement of the Group financial objective of stable Euro operating profit growth in a risk averse and cost effective manner and to use natural hedges across the Group wherever possible. Exposures in relation to foreign investments are hedged as far as possible by borrowings in the same currency as the underlying net assets.

The Treasury policy permits derivative instruments to be used to mitigate financial risks and derivatives are executed in compliance with the specification of the Minister for Finance issued pursuant to the ‘Financial Transactions of Certain Companies and Other Bodies Act 1992’.

The Group’s overall debt position is primarily fixed through swaps. Net borrowings in the current financial year reached a peak of €166 million in December 2014, compared with a peak in the previous year of €78 million. The peak borrowing related to the completion of the two wind farms. Bank interest payable and similar charges at €10.6 million was €2.5 million lower than in the previous year with, increased capitalised interest and lower gross private placement debt with a €40.7 million repayment during the year. Interest receivable at €0.3m was €2.4 million lower than in 2014 due to lower cash levels and reduced deposit interest rates.

At year end, the Group had $273 million (€203.6 million) fixed rate debt raised on the US private placement debt market. In order to hedge the associated US dollar exchange rate exposures and convert the underlying interest rates to fixed, the Group entered into a number of cross currency swaps to match the maturity profile of this debt.

The maturity profile of debt at the financial year end was as follows, 31% repayable in 2017, 16% repayable in 2018, 24% repayable in 2019 and 29% repayable in 2020.

Gearing was 60% at year end compared to 34% at the start of the year reflecting the investment in capital expenditure during the year. The gearing ratio was forecast to increase in 2015 and is expected to remain at a similar level for March 2016.

Mike Quinn

Managing Director

25 June 2015