Annual Report 2013

Notes to the Financial Statements

6. Taxation

 

2013

2012

 

’000

’000

Taxation based on the profit/(loss) for the year:

 

Irish corporation tax

 

Current tax for the year

2,818

2,733

Adjustments in respect of prior years

14

113

 

2,832

2,846

Foreign taxation

 

Current tax for the year

12

9

Adjustments in respect of prior years

0

0

 

12

9

Total current tax (see note below)

2,844

2,855

Deferred tax - origination and reversal of timing differences (Note 17)

465

664

Tax on profits on ordinary activities

3,309

3,519

 

 

Factors affecting corporation tax charge for the year

 

Profit/(loss) before taxation

12,532

(12,742)

Standard rate of corporation tax for the year

12.50%

12.50%

Profit/(loss) before taxation multiplied by standard rate

1,567

(1,593)

 

 

Effects of:

 

Expenses not deductible for tax purposes

254

722

Depreciation and amortisation in excess of capital allowances

16

168

Ineligible depreciation

984

623

Impairment of tangible assets and investment property

114

860

Amortisation of intangible assets

312

411

Impairment of intangible assets

0

2,107

Utilisation of tax losses

0

(60)

Taxation rate differences

5

29

Pension contribution relief in excess of pension cost charge

(422)

(525)

Adjustments in respect of prior years

14

113

 

2,844

2,855

 

 

7. Intangible assets

 

Goodwill

Other intangibles

Total

Goodwill

Patents

Total

 

2013

2013

2013

2012

2012

2012

THE GROUP

’000

’000

’000

’000

’000

’000

Cost

 

 

 

 

 

 

At beginning of the financial year

66,878

503

67,381

64,188

503

64,691

Reclassification (Note 8)

0

7,355

7,355

0

0

0

Additions

0

1,269

1,269

0

0

0

Arising on acquisition (Note 21)

0

0

0

2,675

0

2,675

Exchange adjustment

11

0

11

15

0

15

At end of the financial year

66,889

9,127

76,016

66,878

503

67,381

 

 

 

 

Amortisation and Impairments

 

 

 

At beginning of the financial year

50,476

503

50,979

30,326

503

30,829

Reclassification (Note 8)

0

3,187

3,187

0

0

0

Charge for year

2,098

403

2,501

3,291

0

3,291

Impairment

0

0

0

16,857

0

16,857

Exchange adjustment

11

0

11

2

0

2

At end of the financial year

52,585

4,093

56,678

50,476

503

50,979

 

 

 

Net Book Amounts

 

 

 

At beginning of the financial year

16,402

0

16,402

33,862

0

33,862

 

 

 

 

At end of the financial year

14,304

5,034

19,338

16,402

0

16,402

 

 

 

 

At the beginning of the year the Group reclassified its capitalised grid connection costs from tangible assets to intangible assets. The gross value of capitalised grid connection costs was 7,355,000 and the accumulated amortisation at the date of transfer was 3,187,000 (Note 8).

Other intangibles include 1,269,000 in respect of grid connection costs that are in the course of construction.

The carrying value of goodwill of 14,304,000 (2012: 16,402,000) is represented by goodwill in the Powergen business of 6,357,000 (2012: 6,962,000), goodwill in the Resource Recovery business of 7,705,000 (2012: 9,154,000) and goodwill in the Anua-Environmental business of 242,000 (2012: 286,000).

In accordance with the provisions of FRS 11 - ‘Impairment of Fixed Assets’, the Group has reviewed the carrying value of goodwill. The recoverable amounts of each of the identified income generating units (IGU) were estimated based on a value in use calculation using cash flow projections based on the financial five year plans as approved by the Board. Cash flows beyond five years are extrapolated based on a perpetuity growth rate of 2.3% (2012: 2.3%) and a pre tax weighted average cost of capital of 9.0% (2012: 9.7%) which are consistent with the Group’s expectation for market development and growth in market share where applicable. Based on these reviews there was no impairment of the carrying value of goodwill (2012: impairment charge of 16,857,000 on goodwill in the Resource Recovery sector).

The estimated value in use of the Resource Recovery generation unit is dependent on two key assumptions, the discount rate and the growth rate assumed in future EBITDA for which there could be a reasonably possible change that could result in the carrying amount exceeding the recoverable amount. The following table shows the amount by which these two assumptions would need to change individually in order for the estimated value in use of the Resource Recovery generation unit to be equal to the carrying amount.

Movement required in key assumptions for carrying amount to equal value in use:

 

2013

Discount rate

2%

EBITDA growth

(7%)

8. Tangible assets

 

Bogland, drainage & production buildings

Landfill

Railways, plant & machinery

Generating assets

Freehold land, administration & research buildings

Assets in course of construction

Total

THE GROUP

’000

’000

’000

’000

’000

’000

’000

Cost

 

 

 

 

 

 

 

At 28 March 2012

123,600

27,407

236,415

162,523

18,005

11,561

579,511

Reclassification (Note 7)1

0

0

0

(6,925)

(430)

0

(7,355)

Additions at cost2

2,094

937

6,516

367

46

29,415

39,375

Disposals/retirements3

(223)

0

(7,998)

0

0

0

(8,221)

Transfers out of assets under construction

2,800

2,019

4,659

0

0

(9,478)

0

Exchange adjustment

0

0

24

0

(13)

0

11

At 27 March 2013

128,271

30,363

239,616

155,965

17,608

31,498

603,321

 

 

 

 

 

 

 

 

Accumulated Depreciation

 

 

 

 

 

 

 

At 28 March 2012

86,428

15,671

175,396

47,200

9,881

0

334,576

Reclassification (Note 7)1

0

0

0

(3,187)

0

0

(3,187)

Charge for year

4,276

3,388

17,333

10,080

609

0

35,686

Disposals/retirements3

(207)

0

(7,898)

0

0

0

(8,105)

Exchange adjustment

0

0

20

0

(2)

0

18

At 27 March 2013

90,497

19,059

184,851

54,093

10,488

0

358,988

 

 

 

 

 

 

 

 

Net Book Value

 

 

 

 

 

 

 

At 28 March 2012

37,172

11,736

61,019

115,323

8,124

11,561

244,935

 

 

 

 

 

 

 

 

At 27 March 2013

37,774

11,304

54,765

101,872

7,120

31,498

244,333

 

 

 

 

 

 

 

 

1 At the beginning of the year the year the Group reclassified its capitalised grid connection costs from tangible assets to intangible assets. The gross value of capitalised grid connection costs was 7,355,000 and the accumulated amortisation at the date of transfer was 3,187,000 (Note 7).

2 Additions includes:

(i) a sum of 1,016,000 in respect of decommissioning and restoration assets (2012: 3,712,000) (Note 17).

(ii) the Group capitalised borrowing costs of 458,000 (2012: 132,000) in respect of assets in the course of construction during the year (Note 5). The rate of interest applied was 7.3% (2012: 7.3%).

3 Retirements/disposals during the year primarily relate to fully depreciated assets.

In accordance with the provisions of FRS 15 - ‘Tangible Fixed Assets’ the Group conducted impairment reviews of the Group’s tangible assets. This process has resulted in an impairment charge of Nil (2012: 6,876,000 in the Resource Recovery and Anua-Environmental businesses).

 

Bogland, drainage & production buildings

Railways, plant & machinery

Freehold land, administration & research buildings

Total

THE COMPANY

’000

’000

’000

’000

Cost

 

 

 

 

At 28 March 2012

559

10,509

6,175

17,243

Additions at cost

0

513

12

525

At 27 March 2013

559

11,022

6,187

17,768

 

 

 

 

 

Accumulated Depreciation

 

 

 

 

At 28 March 2012

0

9,175

3,473

12,648

Charge for year

0

1,048

260

1,308

At 27 March 2013

0

10,223

3,733

13,956

 

 

 

 

 

Net Book Value

 

 

 

 

At 28 March 2012

559

1,334

2,702

4,595

 

 

 

 

 

At 27 March 2013

559

799

2,454

3,812

 

 

 

 

 

9. Investment properties

 

2013

2012

 

’000

’000

 

At beginning of the financial year

8,660

11,900

Impairment during the year charged to the statement of total recognised gains and losses

0

(2,463)

Impairment during the year charged to the profit and loss account

(910)

(777)

At end of the financial year

7,750

8,660

 

 

 

The investment property is stated at market value as at 27 March 2013. Market value means ‘the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherin the parties had each acted knowledgeably, prudently and without compulsion’.

The valuation of the Group’s freehold interest in the property was carried out by DTZ Sherry Fitzgerald, qualified professional valuers acting in the capacity as external valuer. The valuation was carried out in accordance with the Royal Institution of Chartered Surveyors’ Valuation Standards Global, 8th Edition (the ‘Red Book’). The valuation was carried out as at 27 March 2013 and resulted in an impairment charge of 910,000 (2012: 3,240,000).

The market value of the investment property has been primarily derived using comparable market transactions on arm’s length terms and an assessment of market sentiment. The valuation reflects, where appropriate, the type of tenant actually in occupation or likely to be in occupation after letting of vacant accommodation and the market’s perception of their creditworthiness and the remaining useful life of the property.

10. Financial assets

2013

2012

THE GROUP

’000

’000

 

 

 

Joint Venture

 

At beginning of the financial year

1,193

0

Investment during the year

500

1,525

Group share of loss

(717)

(332)

At end of the financial year

976

1,193

 

 

Share of gross assets

2,025

1,525

Share of gross liabilities

(1,049)

(332)

Share of net assets

976

1,193

 

 

 

2013

2012

The following transactions were carried out with the joint venture:

’000

’000

 

(a) Purchase of services

185

253

(b) Provision of finance

535

1,525

(c) Amounts receivable from joint venture

111

246

(d) Amounts payable to joint venture

0

1,525

 

 

Oweninny Power Limited was incorporated in September 2011 as a joint venture between Bord na Móna Energy Limited and ESB Wind Development Limited to develop a 172MW wind farm in Oweninny, Co. Mayo. The joint venture is developing the wind farm project and has not yet commenced trading.

At the balance sheet date the Group had a commitment to provide additional funding of 1,700,000 to fund the development of the Oweninny wind farm.

 

Subsidiary undertakings

 

Unlisted shares

Convertible loan stock

Loans

Total

THE COMPANY

’000

’000

’000

’000

At beginning of the financial year

6,853

782

87,766

95,401

Repayment during the year

0

(302)

0

(302)

Impairment during the year

(6,853)

0

0

(6,853)

At end of the financial year

0

480

87,766

88,246

 

 

 

 

 

The Company has reviewed the carrying value of investments in subsidiary companies as at 27 March 2013 which resulted in an impairment of the value of unlisted shares of 6,853,000 (2012: 18,547,000). The Company also reviewed the carrying value of the loans of 87,766,000 and there was no impairment on the loans.

The convertible loan stock was issued by the Company’s 55% owned subsidiary, Derryarkin Sand and Gravel Limited, with the balance of the stock held by the minority shareholders (Note 19). It is convertible at par value into ordinary shares by agreement between the stockholders and Derryarkin Sand and Gravel Limited. All convertible stock not previously redeemed or converted will be redeemable at par upon the expiration of ten years from the date of issue which is March 2013. Derryarkin Sand and Gravel Limited repaid 302,000 of loan stock to the Company during the year (2012: Nil). The Company has reviewed the carrying value of investments in convertible loan stock at the balance sheet date and impaired the investment by Nil (2012: 730,000).

The principal subsidiary and joint venture companies in the Group at 27 March 2013 are as follows:

Subsidiary company

Business

Registered office

Shareholding

 

 

 

 

Bord na Móna Energy Limited1

Production and sale of milled peat

Newbridge, Co Kildare

100

Bord na Móna Allen Peat Limited

Production and sale of milled peat

Newbridge, Co Kildare

100

Edenderry Power Limited

Power Generation

Newbridge, Co Kildare

100

Edenderry Power Operations Limited

Maintenance of power plants

Newbridge, Co Kildare

100

Cushaling Power Limited

Power Generation

Newbridge, Co Kildare

100

Renewable Energy Ireland Limited

Power Generation

Newbridge, Co Kildare

89

Mount Lucas Wind Farm Limited

Power Generation

Newbridge, Co Kildare

100

Bruckana Wind Farm Limited

Power Generation

Newbridge, Co Kildare

100

Bord na Móna Fuels Limited1

Production, sale and distribution of solid fuels

Newbridge, Co Kildare

100

BnM Fuels Limited

Production, sale and distribution of solid fuels

Newbridge, Co Kildare

100

Suttons Oil Limited

Distribution of oil

Newbridge, Co Kildare

100

Suttons Limited

Distribution of oil

Newbridge, Co Kildare

100

Bord na Móna Horticulture Limited1

Production and sale of horticultural products

Newbridge, Co Kildare

100

Bord na Móna Environmental Limited1

Production, sale and installation of environmental products.

Newbridge, Co Kildare

100

Bord na Móna Environmental Products (UK) Limited

Sale and installation of environmental products

Bridgewater, Somerset, England

100

Bord na Móna Environmental Products US Inc.

Sale and installation of environmental products

Delaware, U.S.A.

100

Advanced Environmental Solutions (Ireland) Limited1

Resource recovery and recycling company

Newbridge, Co Kildare

100

Bord na Móna Property Limited1

Property holding company

Newbridge, Co Kildare

100

Derryarkin Sand and Gravel Limited1

Extraction and sale of sand and gravel

Newbridge, Co Kildare

55

Joint venture company

 

 

 

Oweninny Power Limited

Power generation

St. Stephen’s Green, Dublin 2

50

Pursuant to the provisions of Section 17, Companies (Amendment) Act, 1986, the Company has guaranteed the liabilities of its Irish subsidiaries with the exception of Suttons Oil Limited. As a result, these companies will be exempted from the filing provisions of Section 7, Companies (Amendment) Act, 1986.

1Shareholding held directly by Bord na Móna plc.