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IDA Annual Report 2009

financial statements_

The Industrial Development Agency Ireland (IDA) was established on 1 January 1994 as an agency of Forfás (the policy and advisory board for industrial development in Ireland) under the provisions of the Industrial Development Act, 1993.

Statement of Board Members' Responsibilities

Paragraph 7(2) of the First Schedule to the Industrial Development Act, 1993 requires the Agency to keep, in such form as may be approved of by the Minister for Enterprise, Trade and Employment with the consent of the Minister for Finance, all proper and usual accounts of money received and expended by it. In preparing those accounts, the Board is required to:

The Board is responsible for keeping proper books of account which disclose with reasonable accuracy at any time the financial position of the Agency and which enables it to ensure that the Financial Statements comply with Paragraph 7(2) of the First Schedule to the Industrial Development Act, 1993. The Board is also responsible for safeguarding all the assets of the Agency and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

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Statement on Internal Financial Control

On behalf of the Board of IDA I acknowledge our responsibility for ensuring that an effective system of internal financial control is maintained and operated by the Agency.

The system can only provide reasonable and not absolute assurance that assets are safeguarded, transactions authorised and properly recorded, and that material errors or irregularities are either prevented or would be detected in a timely period.

The Board has taken steps to ensure an appropriate control environment is in place by:

The Board has also established processes to identify and evaluate business risks. This is achieved in a number of ways including:

The system of internal financial control is based on a framework of regular management information, administrative procedures including segregation of duties, and a system of delegation and accountability. In particular it includes:

The IDA has an internal audit department, which reports directly to the Audit & Finance Committee of the Board. This committee meets on at least a quarterly basis to review reports prepared by Internal Audit and other departments. The Audit & Finance Committee in turn keeps the Board informed of the matters that it has considered.

The internal audit function operates in accordance with the Framework Code of Best Practice set out in the Code of Practice for the Governance of State Bodies. A rolling three-year Internal Audit work plan is determined by the Audit & Finance Committee and revised annually where required. The current work plan takes account of areas of potential risk identified in a risk assessment exercise carried out by management and reviewed by the Audit & Finance Committee and the Board. The Internal Auditor provides the Committee with quarterly reports on assignments carried out. These reports highlight deficiencies or weaknesses, if any, in the system of internal financial control and the recommended corrective measures to be taken where necessary.

The Board's monitoring and review of the effectiveness of the system of internal financial control is informed by the work of the Internal Auditor, the Audit & Finance Committee, which oversees the work of the Internal Auditor and the executive managers within IDA Ireland who have responsibility for the development and maintenance of the financial control framework.

I confirm that, in respect of the year ended 31 December 2008, the Board conducted a review of the system of internal financial control.

Signed on behalf of the Board

John Dunne
Chairman

10th June 2009

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Accounting Policies

01 Basis of Accounting

(a) The Financial Statements have been prepared in accordance with the historical cost convention in the form approved by the Minister for Enterprise, Trade and Employment with the consent of the Minister for Finance and are denominated in euro.
The Financial Statements are prepared on an accrual basis, except where stated in the Accounting Policies. The financial year is 1 January to 31 December.
Financial Reporting Standards recommended by the recognised accountancy bodies are adopted as they become applicable.

(b) Tangible Fixed Assets comprise:
(i) Land which is held for the purposes of industrial development.
(ii) Site development works.
(iii) Industrial buildings leased to tenants including buildings in the course of sale where title had not passed at the year end.
(iv) Vacant property available for industrial promotion or in the course of sale where title had not passed at the year end.
(v) Other Fixed Assets including motor vehicles, computer and office equipment and fixtures and fittings.

(c) Telecommunication Assets comprise:
Telecommunication Assets constitute an indefeasible right of use of a designated portion of a global telecommunications network for a period of 25 years from 2000.

(d) Investments consist entirely of equity investments.

(e) Accounts Receivable comprise amounts due in respect of:
(i) Properties sold on a deferred basis. Interest is charged on these amounts at the Exchequer Lending Rates advised by the Department of Finance or the EU Discount Reference Rate as applicable.
(ii) Rents due under the terms of lease agreements, for periods of up to 35 years, entered into between the Agency and tenants, charges for the use of undeveloped lands and estate maintenance charges billed to tenants.
(iii) Fees from purchase options given on IDA property, deposits paid by IDA for the purchase of property where title had not passed to the Agency at 31 December, and the provision of other services.
(iv) Amounts due in respect of the disposal or leasing of telecommunication assets.
(v) Amounts due in respect of joint arrangements.
(vi) Amounts due in respect of loans advanced and interest thereon.

(f) Accounts Payable comprise amounts payable in respect of:
(i) Creditors.
(ii) Grants that have matured for payment.
(iii) Deposits for uncompleted sales.

(g) Provisions for liabilities and charges comprise:
(i) Amounts provided in respect of potential costs associated with the dilapidations provision of operating leases.
(ii) Amounts provided where the future costs arising under operating leases are estimated to exceed the amounts recoverable from
sub lessees.

(h) By way of memorandum Income and Expenditure in respect of Industrial Property transactions are set out in note 23 to the Financial Statements.

02 Income recognition

Income from Oireachtas grants, grant refunds, the National Training Fund, investments, the European Social Fund and the European Regional Development Fund save as referred to in 05 below, represent actual cash received.

03 Industrial Property

Industrial Property included in tangible fixed assets has been acquired, developed or constructed for the purposes of assisting in the promotion and development of industry and is not considered to be investment property but normal fixed assets.

04 Carrying Amounts, Depreciation and Provisions for Impairment

(a) The carrying amounts for tangible fixed assets, other than land, and for telecommunication assets comprise:
Historic cost less accumulated depreciation and less a provision for impairment of the assets, where applicable, to endeavour to ensure that the value of the assets carried in the Financial Statements do not exceed their estimated recoverable amounts.

(b) The carrying amounts for Land and Investments comprise:
Historic cost less a provision for impairment of the assets, where applicable, to endeavour to ensure that the value of the assets carried in the Financial Statements do not exceed their estimated recoverable amounts.

(c) Depreciation is calculated in order to write off the cost of assets less, where applicable, any impairment provision over their estimated remaining useful lives. No provision for depreciation is made in respect of land or investments.

(d) Provisions for impairment may be made following reviews of fixed assets, telecommunication assets and investments carried out by officers of IDA or independent valuers, as appropriate, if events or changes in circumstances or economic conditions indicate that the carrying amount of the assets or investments may not be fully recoverable. Any such provisions will be recognised in the Operating Account in the year in which they are made.
Where a subsequent review indicates that the circumstances which gave rise to a provision for impairment no longer exist or have changed materially the accumulated provision for impairment will be reduced accordingly.

(e) The cost of land, site development and industrial property includes an apportionment of administration costs associated with the acquisition or development of the assets.

05 Deferred Income

European Regional Development Fund grants received in respect of the purchase or development of fixed assets are treated as a deferred credit and are amortised to the operating account annually over the useful economic life of the assets to which they relate.

06 Accounting for Bad and Doubtful Debts

Known bad debts are written off and specific provision is made for any amount the collection of which is considered doubtful.

07 Accounting for Investments

The IDA Financial Statements do not reflect a consolidation of the results of the investee companies because IDA activities are so different from those of the investee companies that such consolidation would be incompatible with the obligation to give a true and fair view.

08 Grants Payable

Grants are accrued in the Financial Statements when the grantee complies with stipulated conditions.

09 Foreign Currencies

Assets and liabilities denominated in foreign currencies are translated at the exchange rates ruling at the Balance Sheet date. Revenues and costs are translated at the exchange rates ruling at the dates of the underlying transactions.
Profits and losses arising from foreign currency translations and on settlement of amounts receivable and payable in foreign currency are dealt with in the Operating Account.

10 Operating Leases

The rentals under operating leases are dealt with in the Financial Statements as they fall due. In the case of industrial property available for promotion a provision is made, where applicable, for future rental payments by the Agency.

11 Capital

Capital represents funds utilised for the acquisition and development of industrial property, the acquisition of other fixed assets, telecommunication assets and investments taking account of disposals, depreciation charges and, where applicable, provisions for impairment in the carrying amounts.

12 Superannuation

All IDA staff are employees of Forfás and are seconded to the Agency by Forfás. Legislation requires Forfás to prepare and administer pension schemes for the granting of pension entitlements to its staff including staff seconded to IDA. Forfás is also responsible for pension reporting requirements, including those set out under FRS 17. Voluntary early retirement costs paid directly by IDA and all pension contributions deducted from staff are accounted for in the Operating Account in the period in which they arise.

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Operating Account For Year Ended 31 December 2008

  Notes 2007
€'000
2006
€'000
Income      
Oireachtas Grants 1 122,619 124,623
National Training Fund 2 2,500 1,034
EU - INTERREG 111A Programme 3 383 670
EU & Exchequer Co-Funded Research Technology and Innovation (RTI) for Industry Programme 4 1,690 3,430
ESF Receipts   - -
Grant Refunds   4,189 14,572
Rental Income   2,396 2,374
Less Rental Income received from Enterprise Ireland Clients 5 (a) (76) (95)
Other Income 6 4,392 2,762
Profit on Disposal of Assets 7 48,679 33,818
    186,772 183,188
       
Expenditure      
Grants Payable 8 79,691 78,518
Promotion, Administration and General Expenses 9 (a) 48,060 45,808
Industrial Building Charges 10 45,856 15,552
Depreciation & Impairment Charges 11 43,309 18,431
    216,916 158,309
       
Net Operating (Deficit)/Surplus for Year   (30,144) 24,879
Contribution to the Exchequer 12 (8,566) (12,486)
Balance at 1 January   3,361 26,524
Transfer from/(to) Capital 13 25,686 (35,556)
Balance at end of Year   (9,663) 3,361

Amounts shown under Income and Expenditure are in respect of continuing activities. There are no recognised gains or losses, other than those dealt with in the Operating Account.

The Basis of Accounting, Accounting Policies, Cash Flow Statement and Notes 1 to 26 form part of these
Financial Statements.

John Dunne Barry O'Leary Loretta Brennan Glucksman
Chairman Chief Executive Chairman , Audit and Finance Committee

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Balance Sheet As at 31 December 2008

  Notes 2007
€'000
2006
€'000
Tangible Fixed Assets      
Industrial Property 14 317,490 343,783
Other Fixed Assets 15 2,034 1,427
    319,524 345,210
       
Intangible Assets and Investments      
Telecommunication Assets 16 - -
Investments 17 - -
Total Tangible and Intangible Assets and Investments   319,524 345,210
       
Current Assets      
Accounts Receivable 18 18,757 14,798
Cash at Bank and on hand   71,924 69,078
    90,681 83,876
       
Current Liabilities      
Accounts Payable 19 (13,389) (12,560)
Net Current Assets   77,292 71,316
       
Long Term Receivables      
Accounts Receivable: amounts falling due after more than one year 18 13,219 772
       
Long Term Payables      
Accounts Payable: amount falling due after more than one year 19 (61,650) (61,650)
       
Provisions      
Provisions for Liabilities and Charges 20 (36,973) (5,143)
       
Deferred Income      
EU INTERREG 111A Programme 3 (1,551) (1,934)
Net Assets   309,861 348,571
       
Representing:      
Capital 13 319,524 345,210
Operating Account   (9,663) 3,361
    309,861 348,571

The Basis of Accounting, Accounting Policies, Cash Flow Statement and Notes 1 to 26 form part of these Financial Statements.

John Dunne Barry O'Leary Loretta Brennan Glucksman
Chairman Chief Executive Chairman , Audit and Finance Committee

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Cash Flow Statement For Year Ended 31 December 2008

  Notes 2007
€'000
2006
€'000
Reconciliation of Net Operating (Deficit)/Surplus to
net cash inflow from operating activities
     
Net Operating (Deficit) /Surplus for Year   (30,144) 24,879
Depreciation and Impairment Charges:      
- Industrial Property 11 42,438 17,050
- Other Fixed Assets & Telecommunication Assets 11 871 1,381
EU - INTERREG 111A Programme Grant Amortised 3 (383) (670)
Expenditure Capitalised 9 (a) (417) (589)
Profit on Disposal of Assets 7 (48,679) (33,818)
Bank Interes 6 (2,892) (2,215)
(Increase) in Accounts Receivable amounts falling due within one year   (3,959) (5,361)
Increase/ (Decrease) in Accounts Payable amounts falling due within one year   829 (1,853)
Increase in Provisions and Charges   31,830 5,463
(Increase) / Decrease in Accounts Receivable amounts falling due after more than one year   (12,447) 904
Increase / (Decrease) in Accounts Payable amounts falling due after more than one year   - -
Net Cash (Outflow)/Inflow from Operating Activities   (22,953) 5,171
       
CASH FLOW STATEMENT      
Net Cash (Outflow)/Inflow from Operating Activities   (22,953) 5,171
Contribution to the Exchequer 12 (8,566) (12,486)
Returns on Investment and Servicing of Finance 24 (a) 2,892 2,215
Capital expenditure and financial investment      
- Acquisitions 24 (b) (37,901) (59,649)
- Disposals 24 (c) 69,374 40,069
Management of Liquid Resources      
(Increase) in short term deposits 24 (d) (11,000) (26,526)
(Decrease) in cash for the period   (8,154) (51,206)
Reconciliation of net cash flow to movement in net funds      
(Decrease) in cash for the period   (8,154) (51,206)
Increase in liquid resources   11,000 26,526
Movement in net funds in the period   2,846 (24,680)
Net funds at 1 January 24 (d) 69,078 93,758
Net funds at 31 December   71,924 69,078
John Dunne Barry O'Leary Loretta Brennan Glucksman
Chairman Chief Executive Chairman , Audit and Finance Committee

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