Ms Imelda Hurley:

I thank Ms Gray and the Chairman and members of the committee for the opportunity to speak to them today. As I am new to the CEO role in Coillte and have not been before the committee previously, I would like to take a moment to tell members about my background. I have spent over 20 years in leadership and finance roles in sustainability across a variety of sectors, including food, agriculture, technology-related supply chain management and professional services. I am an experienced executive and non-executive director, having been a board member in public limited companies, State-owned, private equity and venture capital backed businesses. During my career, I have worked extensively in Ireland, the United Kingdom, eastern Europe, Hong Kong, China and Australia. In my most recent roles, as Ms Gray mentioned, I was chief financial officer in Origin Enterprises and CFO and head of sustainability in PCH International. The opportunity to join Coillte as chief executive officer was exciting for me, particularly because the sustainability agenda and getting the balance right between the social and economic elements of a company’s contribution have been important themes throughout my career. I was therefore delighted to take up this role last month. Coillte has been through a strong period of transformation and I greatly look forward to leading this progressive and dynamic company through the next phase of its evolution in the years ahead.

The 2018 annual report shows Coillte delivered strongly on its mandate from Government to ensure Ireland’s forests are managed on a profitable and sustainable basis. We are proud of the independent corroboration we receive with regard to the sustainable management of our forest estate, through the Forest Stewardship Council, FSC, and the Programme for the Endorsement of Forest Certification, PEFC, certification processes. These are internationally recognised sustainability standards that Coillte has been adhering to for the past 20 years, proving the strength of the company’s long-term credentials in managing the State’s forests in a responsible and sustainable way. Given the positive role forestry can play in climate action, we believe it is important for Coillte to be economically strong, not just for the sake of it, but so it can continue to support the success of its sawmill customers, grow forestry in Ireland and allow Coillte to enhance its contribution to funding non-commercial afforestation, biodiversity and recreation programmes.

Financial strength also allows us to contribute to the targets for increased afforestation in the Government’s climate action plan. The key for Coillte in the next phase is to ensure we continue to strike the right balance between the commercial, environmental and social and recreational agendas in the ever-evolving world we operate in. However, there are a number of challenges in the year ahead. Looking out to 2020, a number of elements will combine to make trading conditions more difficult. The UK is our biggest market and Brexit presents us with a clear challenge, the extent of which will not become known until the final shape of Britain’s exit is decided. Additionally, there is a general softening of market conditions predicted in Europe and beyond in 2020. My challenge is to protect and build on the progress we have made in the context of a business which is cyclical in nature. Our trading in this financial year to date reflects the uncertainty that exists in our key market, the UK, which is clearly seeing the effects of Brexit across the economy in general.

Despite these challenges, Coillte’s focus remains to drive a strong commercial performance and to provide a valuable environmental and social dividend to society at large. In July of this year, Coillte established a new not-for-profit entity, Coillte Nature, which will strengthen our focus on the environment and recreational forests and help tackle the climate and habitat challenges our country faces. Coillte Nature will target the delivery of new woodlands facilitating species diversity, biodiversity and carbon sequestration as part of the Government’s national forestry programme. It is a timely initiative and it further enhances our environmental and social contribution, but we fully recognise that we will need to be very ambitious as we push ourselves hard to deliver a strong contribution on climate action.

It is important to note too that in respect of biodiversity, there is a sense in the wider world that the diversity of Coillte’s forestry stock is limited. In reality, Sitka spruce accounts for 53% of our forestry. Other conifers and broadleaves account for the remainder of the planted areas. Sitka spruce flourishes particularly well in the Irish climate and plays a critical role in the economy by providing essential timber for building and other wood products. With the establishment of Coillte Nature, the company is seeking to advance its sustainability agenda by undertaking large discrete projects with a separate non-profit focus. Coillte Nature will collaborate with other organisations to maximise the impact. The first of our collaborations was announced jointly by Coillte and Bord na Móna in October, with 1,500 ha of bog suitable for forestry and carbon sequestration to be transformed into native woodland on the Bord na Móna estate in counties Offaly, Laois, Westmeath and Tipperary. Although our forest sector is small by European standards, it is young and dynamic and recognised by its peers internationally as being innovative, progressive and technologically very advanced. As the backbone of the Irish forestry sector, Coillte is well positioned to drive the development of forestry and forest products as a central pillar in the emerging bio-economy. We are working with the Department of Agriculture, Food and the Marine in examining ways for Coillte to make a significant contribution to the Government’s afforestation targets over the next decade, including advocating for changes in policy that might increase Coillte’s eligibility for incentives in that regard.

Before concluding I want to update the committee on the matter of farm partnerships. Coillte has established a portfolio of 695 farm partnerships, accounting for approximately 12,800 ha of highly productive forests. The farm partnerships are each based on a management agreement and property lease, with Coillte providing forest management expertise and the landowner acting in a caretaker role. We have fully recognised that there have been issues with a relatively small number of our farm partnerships and I am aware that the committee has discussed these issues with Coillte in the past. These partnerships are an important component of our business. Since 1993, Coillte has paid approximately €17 million in direct payments to its farm partners. This amount is in addition to grants and premiums received by our farm partners. Profits do not accrue to Coillte until the end of the partnership. By way of update, we gave a clear commitment to issue a commercial statement to all partners the year before they receive their first annuity payment from Coillte. This has been achieved and by the end of this year, we will have completed the commercial assessment process for all partners who will receive their first annuity payments in the next two years, 2020 and 2021, a total of 260 partners. We have significantly improved our communications, with each partner being assigned a designated forester whom they can contact to discuss their plantation. We believe we are now responding to any issues raised to the satisfaction of the vast majority of our farm partners.

Coillte employs more than 800 people and works with approximately 1,200 contractors throughout the country. At the core of the business is an estate of 7% of the land area of Ireland, comprising over 1 million acres, spread across almost 6,000 individual properties all over the State. Managing the State forestry is an important task and in my short time as chief executive, I am pleased to say that I have witnessed first hand the expertise, dedication and vision that my Coillte colleagues apply to their work on a daily basis. Over its 30-year history, I believe it is clear that Coillte has continually evolved and embraced change and brought new thinking to the management of Ireland’s forestry estate. We will continue to do this as we look ahead and recalibrate to take account of the increased importance of climate change mitigation and the role that our forests can play. In its climate action plan, the Government has set targets for afforestation over the coming period. Coillte will certainly play its part but reaching these targets will, we believe, require a new strategy in respect of Ireland's land use. Earlier this year, the Minister of State, Deputy Doyle, commissioned a report from independent expert, Jim Mackinnon, to review the approval processes for afforestation in Ireland and this report has just been published. Coillte will study its recommendations carefully over the coming weeks, with a view to doing what it can to support the implementation of key recommendations as quickly as possible. We are committed to ensuring Ireland’s forests are managed on a profitable and sustainable basis in collaboration with the communities in which we are rooted. We are building strong businesses from sustainable forests and delivering an economic return, mindful of our obligations to actively contribute in a meaningful way to the climate change agenda and to provide benefits for communities, habitats and nature. I look forward to discussing these matters further with members.