The Directors present their annual report and the audited financial statements of Bord na Móna plc for the financial year ended 30 March 2016.
The Group supplies electricity generated from peat, wind, oil and biomass at its generating stations and supplies peat as a fuel to other electricity generating stations. The Group develops and operates wind farms and renewable energy projects. It also manufactures peat briquettes and horticultural products, supplies waste management services and commercial laboratory services.
The Chairman’s Statement and the Managing Director‘s Review contain a review of the development of the Group’s business during the year, the state of affairs of the businesses at 30 March 2016, recent events and likely future developments.
|Profit for the financial year||17,282|
|Profit retained for financial year (Note 1)||7,141|
Note 1: This amount excludes the remeasurement of defined benefit liabilities.
Details of the financial results of Bord na Móna plc for the financial year ended 30 March 2016 are available here. The Board declared and paid a dividend of 0.1555 cent per share (€10.1 million). This was paid in July 2015.
Policy in Bord na Móna is determined by a twelve member Board appointed by the Minister for Communications, Energy and Natural Resources. Seven of the Directors are normally appointed for a term of five years. Four of the Directors are appointed for a term of four years, in accordance with the Worker Participation (State Enterprises) Acts 1977 and 1988. The Managing Director is appointed to the Board on appointment to that position. The Directors are:
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” updated in 2009 (“the Code”). The Code sets out the governance framework agreed by Government for the internal management and the internal and external reporting relationships of Commercial State Bodies.
The Board is responsible for overseeing and directing the Bord na Móna Group and ensuring its long-term success. Decisions are made after appropriate information has been made available to Board members and with due consideration of the risks identified through the risk management process.
The Board has reserved a schedule of matters for its decision, including:
The Board is provided with regular information on a timely basis which includes Key Performance Indicators for all areas of the business. Reports and papers are circulated to the Directors in preparation for Board and Committee meetings.
All members of the Board have access to the advice and services of the Company Secretary who is responsible to the Board for ensuring that Board procedures are complied with. The Group’s professional advisers are available for consultation by Directors as required. Individual directors may take independent professional advice in line with specified procedures.
Each Director received appropriate briefing on being appointed to the Board and access to training is provided by the Group during a Director’s term of office.
The Board implemented a process for evaluating its performance during the period.
The Board and Management maintain an ongoing dialogue with stakeholders on strategic issues.
The Board considers that all Directors are independent in character and judgement. However, the Board notes that the Managing Director and four Directors appointed in accordance with the Worker Participation (State Enterprises) Acts 1977 and 1988 have contracts of employment with Bord na Móna.
The Companies Act 2014 commenced on 1 June 2015. The Directors were fully briefed during the year on their responsibilities and obligations under the Act. The Board has put in place appropriate procedures to ensure compliance. All subsidiaries of Bord na Móna plc will be converted by 31 August 2016 to either Designated Activity Companies or Companies Limited by Shares. In addition, certain other provisions of the Act relating to Audit Committees, Directors’ Compliance Statements and Directors’ Audit Report Confirmations will come into effect for FY17 and specific processes have been approved in regard to these.
Fees for Directors are determined by the Government and set out in writing by the Minister for Communications, Climate Change and Natural Resources. Directors’ remuneration is outlined in note 5 to the financial statements.
The total expenses paid to the Directors in FY16 was €22,398 (FY15: €32,112).
The Board met 11 times during the financial year.
There are four standing Committees of the Board which operate under formal terms of reference.
The members of the Risk and Audit Committee as at 30 March 2016 were Denise Cronin (Chairman), John Farrelly and Barry Walsh. The Committee met seven times during the financial year. The Committee meets periodically with the internal auditor and the external auditor 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, risk management and other related matters. The internal auditor and external auditor 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, Human Capital Planning, Succession Management, Pensions and other HR matters. The members as at 30 March 2016 were John Horgan (Chairman), Elaine Treacy and Gerard O’Donoghue. The Managing Director, Mike Quinn, attends the Committee except when his own position is being discussed. The Committee met seven times during the financial year.
The Finance Committee considers the financial aspects of matters submitted to the Board, including the Annual Budget and Five Year Plan, and the procurement, disposal and leasing of land, buildings and facilities. The members as at 30 March 2016 were John Horgan (Chairman), Kevin Healy, Denis Leonard, Seamus Maguire and Mike Quinn. The Committee met twice during the financial year.
The Health & Safety Committee advises the Board on Health & Safety matters within the Bord na Móna Group. The members as at 30 March 2016 were Colm Ó’Gógáin (Chairman), Philip Casey, Gerard O’Donoghue and Mike Quinn. The Committee met four 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.
A Committee to review the outcome of the Board Evaluation process and to make recommendations to the Board also operated during the year. The members of the Committee as at 25 March 2015 are Barry Walsh (Chairman) Elaine Treacy and Colm O’Gogain. The Committee met three times during the financial year.
The table below summarises the attendance of Directors at Board and Committee meetings which they were eligible to attend during the year ended 30 March 2016.
|Director||Board Meetings||Committee Meetings|
|Directors as at 30 March 2016|
|J Horgan (Chairman)||11/11||8/9|
|M Quinn (Managing Director)||11/11||5/6|
|C Ó Gógáin*||10/11||7/7|
* Term of Office expired 13 May 2016
The Directors have overall responsibility for the Group’s systems of internal control and for reviewing its 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 design and operation of suitable internal control systems. The system of internal control is 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 reports to the Board on material 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 Board. The process used to review the effectiveness of the system of internal controls includes:
The Board has overall responsibility for risk management including determining the nature and extent of significant risks that it is willing to accept in pursuit of its strategic and operational objectives. To address this, the Board has established a Risk Management System that provides for the continuous identification, assessment, implementation of mitigating actions and controls, and the monitoring and reporting of significant risks within Bord na Móna.
Details of the principal risks facing the Group and the operation of the Risk Management System of Bord na Móna plc for FY16 are given here.
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).
Philip Casey, Kevin Healy, Seamus Maguire, Paschal Maher and the Secretary are participants in the Bord na Móna Employee Share Ownership Plan and at the start and end of the financial year 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. Colm Ó Gógáin, who served as a Director in the year ended 30 March 2016, is a participant in the Bord na Móna Employee Share Ownership Plan and also 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. 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 30 March 2016 or in the prior year.
The Directors, having made enquiries, believe that Bord na Móna has adequate resources to continue in operation for the foreseeable future and that it is appropriate to continue to adopt the going concern basis in preparing the financial statements.
There have been no events between the balance sheet date and the date on which the financial statements were approved by the Board which would require disclosure and/or adjustment to the FY16 financial statements.
The Directors believe that they have complied with the requirements of Sections 281 to 285 of the Companies Act, 2014, with regard to the obligation to keep adequate accounting records, by employing accounting personnel with appropriate expertise and by providing adequate resources to the finance function. The accounting records 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 Prompt Payments of Accounts Act, 1997, the European Communities (Late Payment in Commercial Transactions) Regulations, 2002 and the European Communities (Late Payment in Commercial Transactions) Regulations, 2012 - 2014, (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 but not absolute assurance against material non−compliance with the Regulations. The Directors are satisfied that Bord na Móna Plc has complied with the requirements of the Regulations in all material respects in relation to external supplier payments within the EU.
In 2015 the Government launched the Prompt Payment Code of Conduct and Bord na Móna is a signatory to this code and undertakes to pay suppliers within agreed terms.
Details of the Group’s principal operating subsidiaries (including overseas branches) and joint ventures are set out in note 25 of the financial statements.
The Group’s strategy on research and development and the costs incurred during the year are set out in the Operational and Financial reviews of this annual report.
The Board made no political donations during the year (FY15: €nil).
In accordance with Section 383(2) of the Companies Act, 2014, the auditor KPMG, Chartered Accountants will continue in office.
On behalf of the Board:
30 June 2016