Mr. Seamus McCarthy:

As members are aware, the NPHDB is responsible for the planning, design, construction and fit-out of the new national children's hospital's facilities. In addition to the main hospital at the St. James's campus in Dublin, where construction is ongoing, two satellite paediatric outpatient and urgent care centres located at Tallaght and Connolly hospitals have been completed and are now functioning under the management of Children's Health Ireland. A number of parallel subprojects, outside the remit of the development board, will be required to integrate and transfer staff, equipment and services into the new facilities at St. James's to bring them into operation. These subprojects are being progressed by Children's Health Ireland, which will manage and deliver care in the new hospital and the satellite centres into the future.

I turn to the NPHDB's financial statements for 2023. The development board is funded by Oireachtas grants, provided via the Health Service Executive. In 2023, the grant funding provided amounted to €156 million. This matched the expenditure incurred by the board in 2023, meaning the financial statements record a break-even outcome. As outlined in note 2, total accumulated capital development costs incurred by the board to the end of 2023 amounted to €1.396 billion, inclusive of the costs of developing the satellite centres. This includes payments to the main contractor, BAM, as well as the board's own costs in respect of administration, project design, and project monitoring and oversight.

Note 12 to the financial statements discloses that the board has been notified of a very large number of additional payment claims by the main contractor. The note outlines the structures in place for the resolution of such claims, including determination by the employer's representative or a project board through a conciliation process and, ultimately, if required, in the courts.

In my report, I drew attention to note 13, which discloses that in May 2024, the standing conciliator issued a recommendation that the board pay €107.6 million, excluding VAT, to BAM in respect of a claim for critical delay events on the construction project over the period from December 2019 to February 2023. When VAT of 13.5% is added, this brings the recommended payment value to around €122 million. This is not included in the capitalised development costs of €1.396 billion. The development board considers that very little of this claim is valid and has appealed the conciliation recommendation to the High Court. In order to do so, it was required to pay BAM the full amount recommended. The funding to make the payment was provided from the Health Vote, via the HSE. If, in due course, it is found by the court that BAM is not entitled to some or all of the payment, the company will be required to repay that amount plus interest to the development board. The potential repayment is underpinned by a bond purchased by BAM.

Note 8 indicates that the value of the development capital spending commitments outstanding at the end of 2023 stood at €235.2 million. Combined with the development costs incurred to the reporting date, this indicates a projected overall development cost of a minimum of €1.63 billion. This exceeded the budget of €1.443 billion approved for the board in December 2018. Note 13 explains that in February 2024, the approved budget available to the board was increased to €1.88 billion.

The 2023 financial statements were certified by me on 17 December 2024. My opinion was qualified on the basis that in complying with the standard direction of the Minister for Health, the board's financial statements account for pensions only as they become payable. Otherwise, in my view, the financial statements present a true and fair view in accordance with Financial Reporting Standard 102.

Children's Health Ireland was established as a legal entity on 1 January 2019 through an amalgamation of the existing children's hospitals located at Crumlin, Temple Street and Tallaght. It operates as one of the section 38 agencies supported by grant funding from the HSE. CHI's financial statements for 2023 recognise income totalling just under €589 million. Recurrent and capital grant funding received amounted to €541 million. Retained staff superannuation contributions amounted to a further €18.4 million. Income from patient charges amounted to just under €14.4 million, and other income, including donations and fundraising, was €14.4 million.

Expenditure for 2023 totalled €580 million. This comprised €406 million spent on pay and pensions and €174 million on non-pay. After transfers of a net €16 million to capital reserves, the financial statements indicate there was a deficit for the year of €7.8 million.

The 2023 financial statements were certified by me on 1 November 2024. As with the development board, the financial statements were qualified on the basis that in complying with the direction of the Minister for Health, Children's Health Ireland accounts for pensions only as they become payable.

Separately, the audit report draws attention to non-compliant procurement undertaken by CHI, losses incurred due to out-of-time claims for payment being rejected by health insurers and that CHI made a formal settlement with its former chief executive officer.