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Bord na Móna Reports Robust Performance, Significant progress on Decarbonisation

Bord na Móna launched its Annual Report for year ended 28 March 2018 in Dublin today. The results show a company in the midst of a radical decarbonisation process that is maintaining robust fiscal strength. The company is also progressing an ambitious diversification strategy that will see 70% of profits derived from non-peat based business by 2021.

Commenting on the results, Chairman, Geoff Meagher said “These results point to the fundamental change underway in Bord na Móna as it implements its Decarbonisation Agenda, prepares for the imminent end of the Public Service Obligation, relating to peat for power generation, in 2019 and the exit from peat extraction for energy production by 2030.  As we make this transition we are acutely conscious that Bord na Móna contributes significantly to regional economic development and provides sustainable, quality employment in the Midlands of Ireland. The transition is extremely important as it will involve Bord na Móna further developing Ireland’s renewable energy infrastructure whilst remaining a profitable company.  It will also involve our traditional businesses underpinning the development of our renewable power generation and resource recovery businesses. The success of this positive transition will be shared not just by Bord na Móna and its employees but by communities across the Midlands and the people of Ireland generally”

Also speaking at the launch of the annual report, Tom Donnellan, Chief Executive of Bord na Móna said “As someone who recently joined the company I am pleased to say that the underlying performance of the company is sound and that the transition to a more diverse, sustainable business model is proceeding apace. This is reflected in the fact that the operating profit, before exceptional items, remains strong at €33.2m. The financial strength of the business is also reflected in the fact that the company is reporting a much reduced net debt of €76.1m, an impressive decrease from €170.5m in the previous year.The company’s journey to a new, more sustainable business model saw it achieve some significant transition landmarks that also support our decarbonisation agenda. One significant landmark involved financial close being reached on the €180m Oweninny windfarm (joint venture with ESB). This project demonstrates how we in Bord na Móna can best use our land bank of over 200,000 acres in order to support national policy to decarbonise,  by investing in new forms of renewable energy that are secure and sustainable.

We are also reporting that the Carbon intensity of the electricity we generate has fallen for the eleventh year in a row, representing a 40% decline since 2007. This already steep decline is set to continue as the company expands its renewable generation capacity with solar coming on line and increasing wind and biomass. This will see the carbon intensity of Bord na Móna electricity fall by 65% in 2020 and by 85% in 2025. The company’s move away from peat was also evidenced in the fact that during the year we reduced the operational area of our bogs to a point where we now harvest peat on just one percent of Irish peat lands.

During FY18, as part of our decarbonisation agenda, the group also restructured the Fuels business, closed the Littleton Briquette Factory and outlined plans to exit the coal business. The results also reflect the resolution of compliance issues in the UK based business, which was purchased in 2016. The costs associated with progressing all of these changes are reported today in the exceptional items and are driven by the need to decarbonise along with the required transition to a more sustainable business model.

Progress on the sustainability agenda included the investment of €31.3m in a variety of projects. This expenditure involved a number of different business areas including;

  • Resource Recovery where this expenditure was focused on transfer centres, waste to energy infrastructure, the purchase of new refuse collection vehicles and construction of engineered landfill cells for the company’s waste treatment facility.
  • Also in Powergen, for an investment of €5.2 million in Oweninny wind farm.

Other future facing investment included a spend of €9.3million on research and development including business development (exclusive of grants). This spend involves the development of new opportunities in areas such as Renewable Gas,  Waste to Energy, Wind and Solar Farms, new products and markets in the horticultural sector and process improvements in all areas.”

The Annual Report Shows:

  • Turnover decreased by 3% from €406.2 million to €395.3 million, a decrease of €10.9 million in challenging market conditions.
  • Decarbonisation costs including the closure of Littleton Briquette factory, exit of the coal business together with the resolution of compliance issues on UK acquisition classified in exceptional items totalling €39.3million.
  • Operating profit adjusted for exceptional costs reduced €5.1m on FY17 to €33.2m, with adjusted EBITDA decreasing by €7.9m to €74.3m.
  • Operating loss as reported (after exceptional items) €6.1million
  • Net debt reduced by €94.4m to €76.1m, with disposal of property assets realising €40m along with strong operating cash flow.