Bord na Móna to borrow €300m

BORD NA MÓNA plans to borrow up to €300 million over the next five years to fund its expansion into hydrogen-based fuels, waste management and environmental protection.

Government statute prevents the company from borrowing over €127m, but chief executive John Hourican says going public to raise funds is not a realistic option. It is "too small" to merit consideration for a stock market flotation, he said. "We have a long way to go before we have an issue with privatisation," he said.

On the other hand if the Government thought differently, "we would be happy to react to that situation if it ever arises," he said.

Mr Hourican was speaking at the launch of the group's annual results for 2003/2004, which showed continuing solid profit growth and the elimination of its borrowings.

Sales rose modestly to €250 million, an increase of 2.7%. Operating profits were up a substantial, 25.6% to €29m. An €11m provision of the Oweninny Works in Mayo at the end of the year took some of the gloss from the figures.

As a result, net profit after tax fell from €18.4m to €15.7m.

Bord na Móna still generates over 50% of sales from turf harvesting, but its policy of continuing to diversify has lessened its dependency on peat harvesting, the bulk of which is sold to the ESB for its peat driven power plants.

For the first time the group has also eliminated borrowings from its books. During the year, the group put a new structure in place to highlight its changing strategy.

It has now three core directorates covering: peat and allied businesses covering horticulture, energy and the fuel businesses; environmental global directorate covering the various environmental businesses including renewable energy and waste.

Finally, the group has set up its third directorate to give greater focus to its ongoing financial needs. On the hydrogen and environmental side, the latter is the more immediate in terms of delivering long-term growth.

After Coillte the group is the biggest landholder in the country.

Many of its sites are suitable for landfill and this area of development is being pursued.

The group will not be getting involved in the controversial incinerator end of the business.

However, it will look at all other aspects of the business where it has been developing expertise. Plans for a major waste site in Kildare are already in the pipeline. On the hydrogen plan, that has a 15-year timeframe.

But buses driven on hydrogen are already in use in the US and Europe.

Some hydrogen filling stations already exist in the US, but Mr Hourican believes the alternative renewable energy source will not become popular until governments lace more taxes on carbon fuels.

It is involved in a joint venture with the ESB in Mayo to produce 300 mega watts of power over time. Initial units have been installed, and the plan is for a gradual build up.