Chairman's Statement

Tom Roche

Dear Shareholder,
As I reported to you at the half-year results, I am satisfied with the Group’s performance in the year ended 31 March 2012. The Group has delivered on the first phase of the strategic and operational plan announced last year, improving results and making good progress towards creating value in all of our businesses.


On a like-for-like basis, revenue of €327.0 million is up €9.7 million (3%) year on year. EBITDA (see Financial Statements, Note 1 for definition) doubled to €17.4 million. Losses for the year have been reduced significantly to €88.8 million, and assets have slightly increased. We now have a much higher proportion of tangible fixed assets, which have increased by €221.2 million to 65% of the total. The Group invested €107 million into assets across the portfolio and finished the year with a cash position of €43.7 million. The Finance Review describes the results in more detail.

We have made progress on driving operating performance and efficiencies, reducing costs, rebalancing the business investments and growing the underlying value of the portfolio. As a result, the risk profile of the Group has been improved and our core businesses are more equipped to meet the challenging economic environment, which continues to prevail. While we have more to do, and preservation of cash is still a priority, we are confident that the Group has taken vital steps forward this year on its path to delivering future value.

Business Context

Global financial markets, including financing for major projects like wind farms, have been very volatile and become more risk averse. Our operations are largely based in the US and in Ireland, two countries that have yet to emerge from recession in any sustained way. In Ireland, the deep recession since 2008 has led to a decline in real Gross National Product of 11.9% up to 2011, and economic forecasters (such as the Economic and Social Research Institute) are not projecting any meaningful recovery in 2012-13, particularly in the context of Eurozone uncertainty. In the US, according to the latest Federal Reserve outlook, economic activity has decreased in the first half of 2012, unemployment is still high and the outlook for growth is flat.

Although the sectors in which we operate, renewable energy and sustainable waste management, are attractive and expected to grow in the longer term, they are not immune from the wider economic context and the resulting challenges. Management have had to negotiate these challenges carefully to progress our plans this year.

Renewable Energy: Wind

I am pleased to report that Wind Capital Group, our US wind energy developer and operator, has made significant progress this year in evolving from being primarily focused on developing a project pipeline towards building out its operating assets. It was a notable achievement to secure project financing for the 201 MW Post Rock Wind Facility in the final calendar quarter of 2011. Construction of Post Rock is progressing well and the facility is on target to achieve commercial operation before the end of 2012. This will be in addition to the 150 MW Lost Creek plant, which is being operated very effectively and exceeding revenue targets.

Turning to project development, development of future wind projects in the US has slowed considerably this year because of legislative inaction surrounding the expiry of the Production Tax Credit (PTC), which provided essential support for developing wind resources. As a result, the planned build of wind projects for 2013 is much reduced and the value of pipeline projects under development is linked to the extension of the PTC. Clarity about the future of the PTC is not expected before the end of 2012, but is important for the industry and for progressing the development of Wind Capital’s pipeline of projects. However, with Wind Capital’s emphasis now more on operating assets, developing new projects in the short term is not a requirement for success.

Reflecting our confidence in the company and the strength of the operating platform, NTR made further investments in Wind Capital during the year, bringing our ownership of the company from 62% to 97%. We expect to see continued revenue growth from Wind Capital as Post Rock comes on stream.

Sustainable Waste Management

After performing strongly in the first half of the year, a sharp fall in commodity prices reduced Greenstar Recycling’s (US) overall performance. The business is currently focused on measures to help offset the impact of price swings. Despite the cyclical nature of the commodity markets and the current price challenges, Greenstar Recycling was able to grow revenue 8% year on year. It also built a new single-stream recycling facility in Akron, Ohio, expanding its presence in the Ohio market. We are positive about the potential for growth in the US market, where recycling rates still lag well behind Europe.

Greenstar Ireland saw revenues decline overall this year, largely due to the continuing economic crisis in the Irish market. As we indicated at the half-year, revenue was impacted by continued pressure on landfill pricing caused by below-cost selling in the market. Despite these challenges, the Greenstar management team met revenue and EBITDA targets.

At time of writing, Greenstar Ireland is in discussions with its banks about refinancing Greenstar’s debt.

Board Review

Your Directors pay close attention to the role of the Board in providing effective governance and supporting executive decision-making. This year, as we do every two-three years, we conducted a review of Board functioning, which involved a detailed examination of Board goals, roles and processes as well as an assessment of each Director’s contribution. While the review found the Board to be effective and diligent, we are using its findings to refine and further enhance our processes.

Board Changes

I am delighted to welcome Alan Walsh, Chief Executive of One51 plc, to the NTR Board. Alan joined in June 2012 and has a keen interest in the Group’s future due to One51’s significant shareholding in NTR. His experience will be of great benefit to the Board and we look forward to working with Alan.

Dividend Policy

The Board is not recommending a dividend at this time. We will continue to keep the dividend policy under review.

Conclusion

As Michael McNicholas outlines in his Chief Executive’s Review, we have completed the first year of a threeyear plan. We have made progress in rebalancing the portfolio towards revenue-generating operational assets, revamped our internal processes to instil more disciplined risk management and implemented a new investment decision framework. This disciplined approach has underpinned the significant investments we have made this year and will also be the foundation for developing new options for growth in the next couple of years.

In my review for 2011, I emphasised that I believed the fundamentals for value creation were in place at NTR plc. Your Board and Group management are determined to steer the company through these choppy economic waters to protect and grow value for shareholders. This year, our underlying results demonstrate that we are making progress.

Management and staff have set ambitious targets for themselves and for the Group – we are fortunate that we have talented people who are committed, capable and focused on execution. On behalf of the Board, I would like to thank the people of NTR and its businesses for their efforts and achievements in 2011-12.



Tom Roche
Chairman

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