Mr. Gerry Britchfield:

In the 2012 accounts, €6.7 million of the €35 million operating profit was from the sale of tangible fixed assets, mainly land. Coillte would like to acquire land for future planting, as we did through the 1990s when we acquired 60,000 hectares of which the majority was planted. However, we are in a weak competitive position in the market because from 1996 we were barred from being eligible for forest premia. As a result, it is difficult for us to compete for bare land in the marketplace. We have focused instead on reforesting the land we clear-felled.

In the recent past, we have entered into partnerships with farmers to plant their land and work with them to bring their crops through the clear-fell cycle. We have up to 10,000 hectares in farm partnerships. We are not planting bare land, however, but reforesting what we clear-fell as we are required to do under the Forestry Act 1946.

In accordance with our strategy, if we can grow our business, we can create and protect jobs in rural areas. The State, the shareholder, has said it wants a dividend from Coillte. We have no problem with that as a shareholder is entitled to a return on its investment. However, I believe we need to grow the business to put the company in a position where it can pay a substantial dividend. At the moment, it is only paying €2 million.

Deputy Ó Cuív asked if there was an overlap between Coillte and Bord na Móna. The two companies operate businesses which are significantly different. Coillte is in forestry, panel products, wind, telecoms and property sales, while Bord na Móna is in peat extraction, power generation from peat and biomass, peat briquettes, horticultural peat products, oil and coal distribution, waste recovery and wind. We have worked closely with it and NewERA to identify a small number of overlaps between the companies which could bring benefits for the shareholder. When one is looking for synergy, one has to have common customers, common routes to market or common products. We do not have that many of them, so there are a small number of overlaps such as wind energy. We completed our analysis of the benefits and risks of merging these overlaps by 1 November which we submitted to NewERA. It will prepare a report for the Government on the matter by 6 December.

The State has ownership of all mineral resources such as oil or gold. Several years ago, Coillte undertook an exercise to review sand and gravel deposits on its lands, particularly at the height of the building boom. To my knowledge, however, there has been no other extensive review of mineral deposits on our lands.

When we replant our lands, we manage them in line with Forest Stewardship Council Ireland principles. We regard forestry as one of our company’s key strengths. We have many talented and experienced and dedicated people working in the forestry part of our business.

Deputy Martin Ferris asked if the €450 million value uplift by 2018 is achievable. This figure was calculated by taking today’s cash flow and projected cash flow as we grow our business. We believe it is achievable and is a function of the strategy we want to deploy. We would not need to dip into the public purse to do this. It will be financed from our own resources, assets and some bank borrowings.

We are involved in the biomass sector and have a particular focus on renewable heat. Coillte entered into several contracts in this regard over the past several years with Astellas, a pharmaceutical company in Killorglin and the Radisson Hotel in Letterkenny.

We have also been very active in promoting the concept that we need a better incentive for renewable heat in Ireland. We do not believe the current refit supports for combined heat and power biomass are strong enough. The fact that there has been very little activity in combined heat and power in Ireland on the back of the State supports under refit is probably proof of that. When one factors in the cost of building these combined heat and power plants and the operating costs, the reality is that they cannot afford to buy the fibre based on the supports that are there. We have been working and will make our views known to the Department of Communications, Energy and Natural Resources about the need for a better incentive for renewable heat, which is where we see the big value for Ireland. Renewable heat can give one an efficiency of 80% or 90% in terms of bang for one's buck for the fibre as opposed to pure power generation where one might only get a 40% return efficiency. We think renewable heat is where it is at because that is where one can really add value to fibre.