Annual Report 2016

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18. Provisions

2016

Environmental restatementReorganisationand redundancyInsuranceOtherTotal
€’000€’000€’000€’000€’000
At beginning of the year47,9091,4667,1993,16759,741
Provisions made during the year2,2627,2591,7502,53413,805
Provisions used during the year(3,752)(1,296)(2,008)(731)(7,787)
Provisions reversed during the year(725)-(289)(823)(1,837)
Provisions released in respect of discontinued operation-(755)--(755)
Unwind of discount1,089---1,089
Capitalised during the year3,199---3,199
At end of the year49,9826,6746,6524,14767,455
Amounts due as follows:
Current8,6145,3526084,14718,721
Non-current41,3681,3226,044-48,734

2015

Environmental restatementReorganisationand redundancyInsuranceOtherTotal
€’000€’000€’000€’000€’000
At beginning of the year43,0544596,7472,49752,757
Provisions made during the year9221,8151,8501,1185,705
Provisions used during the year(2,384)(804)(864)(327)(4,379)
Provisions reversed during the year(235)(4)(534)(121)(894)
Unwind of discount1,203---1,203
Capitalised during the year5,349---5,349
At end of the year47,9091,4667,1993,16759,741
Amounts due as follows:
Current6,5351,4668003,16711,968
Non-current41,374-6,399-47,773

(a) Environmental reinstatement

Environmental reinstatement costs include:

(i) Costs that will be incurred at the end of the economic lives of the peatlands. Under IAS 37, provision is made for these costs when the circumstances occur giving rise to the obligation under the Group’s Integrated Pollution Prevention Control licence to decommission and reinstate the peatlands post peat production. The provision of €18.3 million as at 30 March 2016 (2015: €18.0 million) represents the present value of the expected future costs of decommissioning and reinstatement.

The majority of the obligation will unwind over a fifteen year timeframe but the exact timing of the liability is not certain. The group expects the majority of this provision will be utilised within fifteen years.

(ii) Environmental provisions of €7.3 million (2015: €9.2 million) recognised in accordance with IAS 37 in respect of the Group’s assessment of environmental liabilities in relation to (a) the AES site which was in existence prior to the Group’s acquisition of the business in May 2007; (b) a new facility taken under lease in a previous financial year and (c) environmental obligations under existing waste licences.

Item (a) & (b) will unwind in the medium term over the next three to five years. Item (c) will unwind over a twenty year timeframe.

(iii) The cost of maintaining the landfill facility post closure (2028) and the cost of capping existing engineered cells in use. The Group’s estimate of minimum unavoidable costs measured at present value amount to €16.9 million at 30 March 2016 (2015: €13.3 million). The Group continues to review the composition and quantum of these costs which may be impacted by a number of factors including changes in legislation and technology. The total post closure costs of landfill sites, including such items as monitoring, gas and leachate management and licensing, have been estimated by management based on current best practice and technology available. The dates of payments of these aftercare costs are uncertain but are anticipated to be over a period of approximately thirty years after the expiry of the operational license.

(iv) Certain other environmental restoration costs of €2.1 million (2015: €2.2 million) are recognised in accordance with IAS 37, being the Group’s estimate of waste removal and waste management costs associated with certain of its lands. These costs may be impacted by a number of factors including changes in legislation and technology. These estimates are reviewed annually based on advice from third party environmental experts.

The majority of the obligation will unwind over a three year timeframe but the exact timing of the provisions is not certain.

(v) A provision of €4.2 million (2015: €4.0 million) is made for power stations and wind-farm closure/decommissioning costs based on the present value of the current estimate of the costs of closure/decommissioning of generating stations at the end of their useful economic lives.

The majority of the obligation will unwind over a twenty year timeframe but the exact timing of the provisions is not certain.

(vi) A provision of €1.1 million (2015: €1.1 million) is made for plant closure costs based on the present value of the current estimate of the costs of closure of briquette and horticulture compost plants at the end of their useful economic lives.

The majority of the obligations will unwind over a twenty five year timeframe but the exact timing of the provisions is not certain.

Reorganisation and redundancy

The Fuels business experienced a difficult trading year and the announcement of a nationwide ban on the sale of bituminous coal from 2018 onwards has resulted in the business formulating a restructuring plan and thereby creating a provision for the required restructure. In addition the implementation of a finance shared service centre and the rollout of the Oracle e-business suite changes the finance delivery model and also resulted in a re-organisation of the finance team. A provision for reorganisation and redundancy costs is recognised when a constructive obligation exists. The directors have recognised a provision which represents their best estimate of the cost of these measures and it is expected to be utilised within the next year.

Insurance

The insurance provision relates to employer’s, public and product liability claims covered under the Group’s self-insurance policy. This provision is determined on completion of a case by case assessment. The provision includes a sum for incidents incurred but not reported at the balance sheet date.

Other

Other provisions include various anticipated warranty and other costs.