Corporate Governance

Board Meetings

The Group complies with the provisions of the Department of Finance’s “Code of Practice for the Governance of State Bodies” and has applied the principles of good corporate governance.

The Board met 14 times during the financial year.

Committees of the Board

There are three standing Committees of the Board which operate under formal terms of reference.

The members of the Risk and Audit Committee as at 30 March 2011 were Peter Wyer (Chairman), Rory Scanlan and Gabriel Cribbin.  Mr Robert Dix acts as an adviser to the Committee.

The Committee met five times during the financial year. The Committee meets periodically with the internal auditor and the external auditors 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 and other related matters.

The internal auditor and external auditors 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 considers the remuneration and expenses of the Managing Director and senior management in accordance with Government guidelines. The members as at 30 March 2011 were Fergus McArdle (Chairman), Paddy Fox, Pat McEvoy and Rose McHugh. The Managing Director, Gabriel D’Arcy, attends the Committee except when his own remuneration is being considered. The Committee met four times during the financial year.

The Finance Committee considers the financial aspects of matters submitted to the Board and the procurement, disposal and leasing of land, buildings and facilities. The members as at 30 March 2011 were Fergus McArdle (Chairman), Paudge Bennett, Gabriel D’Arcy, Colm O’Gogain and David Taylor. The Committee met three 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. There were no such Committees established in the year ended 30 March 2011.

Attendance at Board and Committee Meetings

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 2010.

Committee Meetings Attended/Eligible

Director	Board Meetings	Attended/Eligible
F McArdle, Chairman	14/14	7/7
G D’Arcy, Managing Director	14/14	7/7
P Bennett	14/14	3/3
G Cribbin	12/14	3/5
P Fox	13/14	4/4
P Kane	12/12	4/4
P McEvoy	2/2	N/A
R McHugh	11/14	3/4
C O’Gogain	2/2	3/3
P Rowland	12/12	N/A
R Scanlan	14/14	5/5
C Skehan	8/14	3/3
D Taylor	13/14	3/3
P Wyer	14/14	5/5

Employee Share Ownership Plan

The Bord na Mona Employee Share Ownership Plan (ESOP) continues to hold 5% of the total ordinary shares in Bord na Mona 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). The shares are appropriated to the participants via the APSS in accordance with the rules of the Plan.

Financial Risk Management

The Group’s operations expose it to a variety of financial risks that include the effects of changes in foreign exchange risk, credit risk, liquidity and interest rate risk.  The Group has in place a risk management programme that seeks to manage the financial exposures of the Group by monitoring foreign exchange exposure together with debt finance and the related finance costs.

In order to ensure stability of cash outflows and hence manage interest rate risk, the Group has a policy of maintaining at least 50 per cent of its debt at fixed rate. At March 2011, the Group had fixed 100% (2010: 100%) of its private placement debt.  Further to this the Group seeks to minimise the risk of uncertain funding in its operations by borrowing within a spread of maturity periods. Financial instruments are used to manage interest rate and financial risk. The Group does not engage in speculative activity and treasury operating policy is risk averse.

The Group’s treasury operations are managed in accordance with policies approved by the Board. These policies provide principles for overall financial risk management and cover specific areas such as interest rate, liquidity and foreign exchange risk.

Price risk The Group is exposed to commodity price risk as a result of its operations.  However, given the size of the Group’s operations, the costs of managing exposure to commodity price risk exceed any potential benefits. The Directors will revisit the appropriateness of this policy should the Group’s operations change in size or nature. The Group has no exposure to equity securities price risk as it holds no listed or other equity investments.

Foreign exchange risk

Credit risk

Liquidity risk The Group’s operations are cash generative. The Group has historically utilised this cash to retire medium and long term debt and to fund capital expenditure. The Group is now primarily financed by long term debt with maturities between 2013 and 2019. The Directors are satisfied that the Group has sufficient sources of short, medium and long-term debt to enable it to fund both existing operations and planned expansions.  

Interest rate and cash flow risk The Group has both interest bearing assets and interest bearing liabilities.  Cash balances earn interest at a variable rate.  The Group has a policy of maintaining at least 50% of debt at fixed rate to ensure certainty of future interest cash flows.  The Directors will revisit the appropriateness of this policy should the Group’s operations change in size or nature. Through a series of interest rate swaps, the Group has fixed the interest rates on its long-term debt.

Directors’ Responsibilities for Financial Statments

The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable Irish law and generally accepted accounting practice in Ireland including the accounting standards issued by the Accounting Standards Board and published by the Institute of Chartered Accountants in Ireland.

Irish company law requires the Directors to prepare financial statements for each financial year that give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.  In preparing the financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors confirm that they have complied with the above requirements in preparing the financial statements.   The Directors are responsible for keeping proper books of account, which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements are prepared in accordance with accounting standards generally accepted in Ireland and Irish Statutes comprising the Companies Acts, 1963 to 2009 and the European Communities (Companies: Group Accounts) Regulations 1992).  They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.  The measures taken by Directors to secure compliance with the Company’s obligation to keep proper books of account are the use of appropriate systems and procedures and the employment of competent persons.  The books of account are kept at the registered office of the Company.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included in the Company’s website.  Legislation in the Republic of Ireland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Internal Controls

The Directors have overall responsibility for the Group’s systems of internal control and for reviewing their 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 identification and evaluation of significant risks together with the design and operation of suitable internal control systems. The systems of internal control are 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 report to the Board on major 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:

• an organisation structure with clear operating and reporting procedures, authorisation limits, segregation of duties and delegated authorities;
• clearly defined management responsibilities have been established throughout the Group and the services of qualified personnel have been secured and duties properly allocated among them;
• a statement of decisions reserved to the Board;
• a risk management process which enables the identification and assessment of risks, that could impact business performance and objectives and ensures that appropriate mitigation plans are formulated to minimise the residual risk;
• a comprehensive budgeting process for each business and the Group centre culminating in an annual Group budget approved by the Board;
• a comprehensive planning process for each business and the Group centre culminating in an annual Group long term plan, approved by the Board;
• a comprehensive financial reporting system with actual performance against budget, forecasts, performance indicators and significant variances reported monthly to the Board;
• a set of policies and procedures relating to operational and financial controls including capital expenditure;
• procedures for addressing the financial implications of major business risks, including financial instructions, delegation practices, and segregation of duties and these are supported by monitoring procedures;
• Management at all levels are responsible for internal control over its respective business functions, and
• procedures for monitoring the effectiveness of the internal control systems include the work of the Risk and Audit Committee, Management reviews, the use of external consultants and internal audit.

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 objectives. 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 main Board. The process used to review the effectiveness of the system of internal controls include:

• review and consideration of the internal audit work programme and consideration of its reports and findings:
• review of the regular reporting from internal audit on the status of the internal control environment and the status of recommendations raised previously from their own reports and reports from the external auditors;
• review of reports from the external auditors which contain details of any material internal financial control issues identified by them in their work as auditors, and
• review of the risk register reports, the counter measures in place to mitigate the risk, the remaining residual risk and actions required or being taken to further mitigate the risks.

Going Concern

The Directors have reviewed the Group’s businesses and other relevant information and confirm that Bord na Móna plc has adequate resources to continue operating for the foreseeable future. For this reason, the going concern basis continues to be adopted in preparing the financial statements.

Directors’ and Secretary’s Shareholdings

Mr. P Bennett, Mr. P Fox, Mr. P McEvoy and Mr. C O’Gogain and the Secretary are participants in the Bord na Móna Employee Share Ownership Plan and 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 or the Bord na Móna Employee Share Ownership Trust. 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 2010.

Codes of Conduct

The Code of Conduct for Employees continued in place during the 2010/2011 financial year. The Group’s Code of Conduct for Directors remains in place and was adhered to during the year.

Accounting Records

The measures taken by the Directors to secure compliance with the Group’s obligation to keep proper books of account are the use of appropriate systems and procedures and employment of competent persons.  The books of account are kept at the Group’s registered office, Main Street, Newbridge, Co. Kildare.   

Payment of Accounts

The Directors acknowledge their responsibility for ensuring compliance, in all material respects, with the provisions of the European Communities (Late Payment in Commercial Transactions) Regulations 2002 (“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 assurance against material non-compliance with the Regulations. The payment policy during the year under review was to comply with the requirements of the Regulations.