Mr. Seamus McCarthy:

The Land Development agency was incorporated as a designated activity company, DAC, in December 2021, as provided for in the Land Development Agency Act 2021. It commenced trading at the end of March 2022.

The agency succeeded the previous Land Development Agency, which had commenced operations under a 2018 statutory instrument. All the assets, liabilities, staff and functions of the predecessor entity were transferred to the agency in accordance with the provisions of the 2021 Act. The Act also brought the agency within my remit for audit. The key functions of the Land Development Agency are to acquire, develop and manage land within public control with a view to facilitate and maximise the provision of affordable and social housing.

The Minister for Public Expenditure, National Development Plan Delivery and Reform is the primary shareholder in the company on behalf of the State. The Minister for Housing, Local Government and Heritage holds a minority shareholding. Both Ministers’ equity in the company was paid for from the Ireland Strategic Investment Fund on foot of a statutory direction by the Minister for Finance. In 2022, €100 million from the investment fund was invested in ordinary shares in the company. A further €825 million from the fund was invested in 2023.

The Land Development Agency recorded €24 million in turnover and an equivalent amount in cost of sales in respect of amounts recharged to Dún Laoghaire-Rathdown County Council for the social housing portion of the Shanganagh Castle development. The agency received just over €1 million in rental income from cost-rental units. The related operating costs totalled €275,000, resulting in a gross trading profit of €766,000 in 2023. Other income comprised interest income on deposits of €1.3 million; EU Urban Regeneration and Development Fund grants of €907,000; and grants of €855,000 from the Department of Housing, Local Government and Heritage.

The Land Development Agency incurred operating expenses of €21.4 million in 2023. The most significant items of expenditure related to staff costs of €9 million and professional fees totalling €8 million. In making comparisons of costs, it should be recalled that the 2022 figures relate to a nine-month period of operation only. The company recorded a loss of €17.6 million for 2023. This followed a loss of €11.8 million in 2022.

At the end of 2023, the agency held just under €428.5 million in non-current assets. These comprised mainly cost-rental housing assets valued at €305 million and assets under construction at the year end of €124 million. Just over €400 million of the assets were acquired in 2023, representing a very substantial increase in operations. In addition, the agency held a stock of housing, at various stages of development, intended for sale as affordable housing. At year end, this was valued at €41.7 million. The agency records holdings of cash and cash equivalents of €427 million at the end of 2023.

I certified the financial statements on 14 June 2024, and issued a clear audit opinion on the financial statements. In my audit report, I referred to the fact that a significant number of amendments were required to the draft financial statements presented for audit. This mainly occurred because the agency was reliant on a spreadsheet-based accounting system that required significant manual intervention. The board stated it was satisfied that compensatory controls were in place to mitigate the risks arising from the use of the spreadsheet-based system. Given the very significant ramping-up of the agency’s activities since its incorporation in March 2022, implementing an integrated accounting software package is necessary, and I note the agency’s stated intention to complete this in 2024.