Mr. Gerry Britchfield:

I wish to begin by thanking the Vice Chairman and members of the joint committee for giving us the opportunity to make a presentation to them today. Over the next 15 minutes or so, we wish to provide the joint committee with an overview of our business as it is today, to review the highlights of our performance in 2012, to preview the outlook for 2013 and beyond and to provide an insight into our future strategy for the business. Coillte has been granted stewardship over two valuable resources, namely, 7% of the land area of Ireland and a wood fibre basket of 2.5 million cu. m per annum. Our aim is to add value to these two resources for the benefit of the State through the five businesses in which we already have a strong competitive position. Our forestry and panel products businesses are focused on adding value to Coillte's wood fibre resource and our wind, telecommunications and property businesses are focused on adding value to Coillte's land resource. As members can see from the map on the third slide in our presentation, Coillte has a countrywide presence. It has plantations in each of the Twenty-six Counties in Ireland and it directly employs approximately 1,000 people. In broader terms, the forestry and forest products sector in Ireland contributed €2.2 billion to the economy in 2012 and employs approximately 12,000 people, primarily in rural locations.

Coillte is the principal supplier of logs to a highly efficient export-orientated wood processing sector, comprising sawmills and panel mills. Our forests are certified as being sustainably managed by the Forest Stewardship Council and have been for more than ten years. In 2012, we sold 2.3 million cu. m of round wood, primarily to the wood processing sector. Since the collapse of the construction sector in Ireland, our sawmill customers have transformed their businesses and now export two thirds of their output, primarily into the United Kingdom market while in contrast, in 2007 two thirds of their output was sold in Ireland. In recent years, Coillte has been working actively with its sawmill customers and Enterprise Ireland to promote Irish timber at the Timber Expo event in the United Kingdom. Over the past five years, the Irish sawmills have been highly successful, in so far as they have increased their share of United Kingdom market and have almost doubled it to 6.5% of the sizeable market.

Coillte also is an exporter of innovative and sustainable wood-panel products. It owns two panel mills, namely, SmartPly in Belview Port, County Kilkenny, and Medite in Clonmel, County Tipperary. These businesses employ 300 people directly and approximately 400 to 500 indirectly, most of which jobs are located in the south east. Our panel products are used in construction, packaging, furniture, flooring and a range of other uses. We export more than 90% of output to more than 32 countries across the globe via our sales teams based in the United Kingdom and the Netherlands. We see significant opportunities for growth in demand for our panel products due to the increasing focus on both the energy efficiency of buildings and the sustainability credentials of building products. Our panel businesses have a deeply embedded innovation culture and we have developed a strong pipeline of new products. In 2012, we were the winners of the supreme innovation award at the Timber Expo for our new waterproof medium-density fibreboard, MDF, product, which is called Medite Tricoya.

We are supporting the achievement of national renewable energy targets. By 2020, the Government's objective is that 40% of electricity generation will be from renewable sources. Due to the nature of our land bank - we have elevated sites with strong wind regimes and good road access - Coillte is playing a leading role in supporting the delivery of Ireland's renewable energy targets. We have a successful track record in the delivery of wind energy projects. We have a pipeline of more than 300 MW with full planning consent across Ireland, which has been developed over the past five to ten years. Moreover, we have been successful by taking a considered and measured approach to wind projects, founded on our strong track record in community relations. Our strategy is to develop our pipeline of wind projects in partnership with key industry players.

Three of our leading projects are co-developments with the ESB and a further one is a co-development with SSE. We are also a provider of sites, rights of way and wayleaves to a range of third-party developers in the wind energy sector. Over 20% of installed capacity in Ireland is on lands formerly owned by Coillte.

We are also connecting rural communities. We have been leasing land to telecommunications companies to host mast sites in rural locations for over 15 years. Our leased rental model reflects the intensity of the usage of a site by a telecommunications company. Our telecommunications business manages over 400 mast locations on the Coillte estates. Most of the masts are owned and maintained by the four mobile telephone operators - Vodafone, O2, Meteor and 3. In recent years, in partnership with BT, we have built over 100 masts in our sites to enable roll-out of rural broadband via the national broadband scheme. We also recently received planning permission for a new mast on Three Rock in Dublin which will result in the removal of three of the existing masts, which will consolidate onto the new one. We have also begun delivering fibre-optic capability to key masts in rural locations, the first being in Castlerea, County Roscommon, to enable the roll-out of next generation networks.

Coillte is also actively supporting the provision of infrastructure to enable growth and economic recovery. For example, in recent times our property business has sold land to Irish Distillers to enable it to increase its whiskey storage facilities near Midleton and to Grant and Sons in Tullamore to enable it to build a new Tullamore Dew distillery there, and we have recently signed an agreement with film and television location specialists, O'Carroll Mulhern Services, to market Coillte properties for film, television and event business. We also regularly sell small parcels of land to facilitate sporting and local community projects.

We not only deliver economic returns, but are Ireland's leading supplier of outdoor recreation facilities. We have 80 million visits annually to our 150 recreation sites across the country. We have ten forest parks, including the successful development in Lough Key in partnership with Roscommon County Council. We have constructed four national mountain bike trail networks, including a international-class trail in the Ballyhoura Mountains in County Cork. We support over 1,600 km of dedicated trails on our lands, many of which are leading waymarked routes such as the Wicklow Way.

We are actively supporting the provision of new tourism offerings for Ireland, for example, the Nephin Wilderness Project, which is a joint development with Mayo County Council and the National Parks and Wildlife Service, which was launched by the Taoiseach and the Minister for Arts, Heritage and the Gaeltacht, Deputy Deenihan, in May of this year, and the development of an interpretative centre and trail facilities at the Cavan Bureen Geopark, which is a joint development with Cavan County Council that we launched in August 2013. Some 20% of our estate is managed primarily for biodiversity and nature conservation. In total, we are providing public goods for the Irish people with a value estimated at €500 million per annum.

We were proud in June of this year to receive external validation for our performance when we overcame tough competition from other exemplars of best business practice across Europe. In all, there were 15,000 participants across ten different categories and we won the European Business Award for Environmental and Corporate Sustainability. According to the judges, Coillte shone across the board in its dedication to sustainability, the environment and its local community. It was seen as an innovator in new products and also demonstrated strong leadership in delivering positive results across its social, economic and environmental objectives. The judges went on to state that this year's winner has shown an impressive commitment to ensuring that the environment it owns is not only protected and preserved, but open to everyone in the community to enjoy. We were particularly honoured to be recognised in this category as environmental and corporate sustainability is at the heart of who Coillte is and what we do. I have worked in Coillte for 21 years. The people of Coillte, through their behaviour day in, day out, sustain and build on these high standards of environmental and corporate sustainability. They believe in it and have built it in to the fabric of what we do.

I will turn briefly to the 2012 highlights. In terms of our financial performance, we delivered an operating profit before exceptional items of €35 million in 2012 on turnover of €262 million. We believe that it was a good result in the context of the five or six years of recessionary market environment that we have been through. We paid a dividend of €2 million to the shareholder in 2012.

We exported, as I stated, our wood panel products to over 30 countries. We launched a number of new products, not only Medite Tricoya but also an OSB product called ToughPly which is a substitute for non-sustainable tropical plywood. We also celebrated ten years of FSC certification in 2012 and we planted 15 million trees on approximately 6,000 hectares of reforestation in 2012. In terms of conservation, we won not only the European Business Award but, closer to home, the RDS forestry award for our leadership in nature conservation.

In terms of the outlook for 2013, we are confident that we will deliver an operating profit similar or slightly better than that in 2012. Markets for our panel products and our customer sawn wood, particularly in the United Kingdom, have shown a marked improvement in the second half of 2013. The United Kingdom housing sector is showing signs of recovery and this is positive for our business as we look forward into 2014.

During the economic downturn, we have significantly reduced our cost base. We had to do that in the face of a difficult economic environment. Our head count has fallen by 25% over the past five years. Our operating costs have been reduced by €40 million per annum and we have exited a number of businesses that were non-performing and that we could not make profitable. We have also significantly enhanced our innovation capability over those years and that is now reaping dividends for us. These achievements combined with our strong Medite and SmartPly brands, and excellent routes to market, means, we believe, that we are well positioned to turn to a strong-growth path as our key markets recover.

We firmly believe that Coillte is an organisation that has never been more relevant. In a world that is placing ever more value on environmental and corporate sustainability, we believe that Coillte displays good credentials in this space, as evidenced by our recent win in the European Business Awards and our ongoing FSC certification.

We have stewardship of two valuable resources - 7% of the land area of Ireland and a wood-fibre basket of 2.5 million cu. m per annum. We play an important role in Irish society. We provide extensive recreation facilities for people to enjoy and deliver a wide range of biodiversity benefits for Ireland, and we are supporting economic recovery via our export driver - exporting to over 30 countries last year.

Turning to the future, the priority for Government is for Coillte to deliver a material financial dividend to the State on an annual basis and our core objective is to implement a restructuring and growth strategy within Coillte over the next five years that will enable us to deliver an annual financial dividend of circa €20 million to the State by 2018. It is focused on these two overriding objectives of adding value to the wood fibre that we own and adding value to the land bank.

Our strategy is to be building on our key strengths - our impeccable environmental and sustainability credentials, the scale of our land assets and our strong market share in key markets, such as the United Kingdom - but will also demand that we enhance our existing capabilities, particularly in the innovation space, and build new ones such as strategic marketing which we will need for the future. We will deliver our strategy through five businesses where we already have a strong competitive position: forestry and panel products, in terms of adding value to fibre; and telecommunications, wind and property development sales, in terms of adding value to our land.

The strategy is focused primarily on improving operational performance and adopting new market positions in businesses and in geographies we already know well. We believe our strategy is credible and we are confident that we can deliver it because we have spent many months on rigorous and comprehensive analysis of the markets, customers and supply chains. We believe that most of the key drivers of successful implementation are within our control and we have taken a conservative approach to assumptions that are not, and we believe our assumptions are grounded. We think we have a good track record of having, I suppose, faced adversity for the past five years and taken our cost base down. We think that we have a good platform for delivering growth in the future.

Following on from the Government decision in June 2013, Coillte and Bord na Móna, together with NewERA and the relevant stakeholder Departments, have been working in recent weeks to evaluate the prospects for a beneficial merger of the two companies. This work is focused on assessing the financial benefits, costs, risks and issues associated with a full merger of the two companies. The financial benefits on which we are focusing on identifying derive from overlaps between our businesses, and are over and above those flowing from implementation of the respective companies' business strategies. Whether a full merger is initiated by Government or not, we believe the delivery of our strategy will remain a key imperative for us in order to optimise the value to the shareholder of the wood fibre and the land in Coillte's stewardship.

That brings me to the end of our presentation. I hope the members have found it interesting and informative and now have a better understanding of why we believe trees are just the start of what Coillte has to offer the State. We will be delighted to take any questions that the committee might have.