25. Contingencies and commitments


A. Government grants

A contingent liability of €63,355,000 (2008: €74,994,000) exists in respect of government grants which become repayable if certain conditions, as set out in the agreements, are not adhered to. The most significant of these conditions relates to afforestation grants. Plantations must be adequately maintained and protected for a period of at least ten years after the date of payment of the grant, failing which all grant monies or part thereof may be refundable.


B. The Irish Forestry Unit Trust

The trust deed of the Irish Forestry Unit Trust commits the Group to providing liquidity to the fund if it is needed. This commitment would require the purchase of forests by the Group from the Irish Forestry Unit Trust representing up to 15% of the value of the fund. This is subject to an annual limit of the lesser of 5% of the value of the fund or €4,400,000. The maximum amount that the Group can be required to purchase is €38,000,000.


C. Operating lease commitments

Commitments under operating leases expire as follows:

Land &
Machinery & Equipment Total
  €'000 €'000 €'000 €'000
Within one year 22 10 32 81
Between two and five years 26 295 321 387
Over five years* 102 - 102 102
  150 305 455 570

* SmartPly Europe Limited leases the 60 acres on which its facility is constructed from Waterford Harbour Commissioners and Kilkenny County Council. The lease agreement expires in 2034, it is renewable at five year intervals thereafter and it provides for rent reviews every five years. The Company has a commitment, under the terms of the lease, to ship a certain agreed tonnage of finished product through the Port of Waterford each year. At 31 December 2009 the Company was committed to making an annual payment of €112,000 (2008: €102,000) in respect of these lease obligations.

On cessation of the lease and vacating the site SmartPly Europe Limited is required to remove all plant, equipment, rolling stock and inventory and shall give the lessor clear and vacant possession of the premises, foundations and fixtures.