Bord Gáis doubles state dividend to €50m

Bord Gáis Eireann has reported an overall after-tax loss of €169m for 2013, driven by nearly €300m inexceptional charges.

In its last year as a retail energy-dominated player, the group generated a post-tax, but pre-exceptional item, profit of €130m, generated €458m in cash from operating activities and more than doubled its annual dividend to the State to €50m , bringing its total combined historic dividend payment to the exchequer to almost €1bn.

The Bord Gáis Energy retail business — recently sold to a consortium led by UK utility, Centrica — saw its earnings increase last year by 15% to €91m and revenue rise by 2% to €1.35bn.

However, as well as other charges, the former energy business incurred a post-tax impairment of €224m, mainly due to the impact of a number of enduring market factors — including lowering demand — on future cash-flows from the Whitegate gas turbine plant in Cork.

“Although exceptional charges meant that we recorded an overall accounting loss in 2013, our businesses improved their performance across all key financial metrics,” CEO Michael McNicholas remarked at yesterday’s publication of the company’s latest annual report.

He duly noted the sale of the Bord Gáis Energy business, the establishment of Irish Water and the rebirth of the group into Ervia — the country’s first multi-utility company (combining Irish Water and Gas Networks Ireland) — as being representative of a transformational year.

On the sale of the retail business, Mr McNicholas said that management was broadly happy with the €1.1bn combined price, despite some individual assets — such as Whitegate — eventually going for less than original book value.

The Government stands to receive €630m of the total sale proceeds immediately; with the remaining €370m, or so, coming from Bord Gáis’ refinanced legacy debt, at a later date, rather than cash flow.

Meanwhile, while understanding of the initial opposition to water charging, Mr McNicholas said that the utility model marks the only realistic way by which to fund and improve the country’s vastly under-invested water services network over the long-term.

He added that running and investment costs for both Irish Water and Gas Networks Ireland (the former is spending €1.7bn on nearly 300 infrastructure projects over the coming two years) will initially largely be met by Government subventions, with longer-term funding likely to be sourced from things like bond issuances, private placements, commercial bank financing and use of European Investment Bank funds.