Bord na Mona increased its profits by almost 50 per cent to more than £7 million in the year to the end of March, its highest earnings in a decade.

However, it cautions that this year is proving difficult and bad weather has meant that so far this year the company has achieved only half of its production target. This will inevitably affect profitability, it warned. The State-owned company said lower debt repayments, increased efficiency and a slight rise in sales, had contributed to the improvement in profits last year.

The company's chairman, Mr Pat Dineen, said the most notable financial feature of the financial year was an equity injection by the Government of a first tranche of £49 million equity last December.

"This, and a commitment to a further £61 million, will strengthen Bord na Mona's balance sheet and enable [the company] to operate on a more commercial basis in its milled peat business," he added.

The company made a net profit of £7.1 million for the 12 months to March 28th, a 46 per cent increase on the previous year. Operating profits before exceptional items were £26.5 million, a rise of 11 per cent.

Turnover was £144.51 million, up just 2.1 per cent on the previous year, while borrowings were reduced by £56.4 million to £111.1 million from £167.5 million.

During the year, there had been considerable progress on the development of the proposed £100 million "Europeat" power station, likely to be built in Offaly or Kildare, the company said. Bord na Mona expects to supply more than 90 per cent of the turf burnt at the new plant.

Mr Paddy Hughes, the company's managing director, said there were five different consortiums bidding to build, own and operate the plant, and he expected the contract to be awarded by October or November.

"Our primary desire is to sell a million tonnes of peat - we're not involved in any of the bids to run it," he added.

The company's chief executive, Mr Patrick Hughes, said the ideal spot to locate the plant, so far as Bord na Mona was concerned, was at the centre of the bog it intends using to supply the peat, on the Kildare-Offaly border.

The bog stretches from Portarlington to Prosperous and Clane, he added, and the cost of turf - £13 per tonne at 1993 prices - was conditional on there being minimal transport expenses. If the plant were to be built elsewhere, Bord na Mona would have to charge considerably more per tonne, to cover the heavy cost of transport, he added.

Mr Dineen said the company had moved to restructure its horticultural division following an "unsatisfactory" return on investments in Britain. This involved contracting out the sale, marketing and distribution of its Shamrock products to Levington Horticultural.

Mr Hughes warned that the latest results were achieved due in part to two good production summers in 1995 and 1996.

"Unfortunately, the 1997 summer is the very opposite, being an exceptionally poor one. We have just over 50 per cent of our target-to-date with little prospect at this stage of improving on that," he added.