an mol digiteach - the digital hub · an mol digiteach tuarascÁil bhliantÚil 2012 ... corporate...

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THE DIGITAL HUB ANNUAL REPORT 2012

Published by the Digital Hub Development Agency Digital Exchange, Crane Street, The Digital Hub, Dublin 8.

Tel: +353 1 4806200 Email: [email protected] Web: www.thedigitalhub.com

Chairman’s Statement xx

CEO’s Review xx

The Work of the DHDA xx

The DHDA Board xx

The Executive Team xx

Corporate Governance xx

Financial Statements xx

Contents

2 THE DIGITAL HUB ANNUAL REPORT 2012

If 2012 was a year of change for The Digital Hub, 2013 looks to be even more significant. The coming year marks the 10th anniversary of The Digital Hub and as such, provides an important opportunity to reflect on the project’s successes to date and its continued relevance for the future.

In 2012, it was announced that The Digital Hub Development Agency (DHDA) would transition into Dublin City Council as part of the Government’s programme for public sector reform. The implications of this announcement have yet to be fully defined. One key point to emphasise upfront is that the day-to-day business of The Digital Hub remains – and will remain – unchanged. Throughout 2012, new companies continued to join our enterprise cluster; innovative strategic projects were developed and piloted by the DHDA, and digital enterprises located in the Hub continued to grow. In short, we remain very much open for business.

Irrespective of the transition to Dublin City Council, the key elements of The Digital Hub project will remain unchanged in the future. The Digital Hub will still be the axis of a vibrant cluster of growing digital enterprises, located in Dublin city centre. It will continue to be a hotbed for creativity and innovation, and a magnet for international companies looking to establish a European base. Finally, it will retain its remit to support government in the development and implementation of the National Digital Strategy.

So ‘Digital Ireland’, what’s up?

From the vantage point of the DHDA, the biggest single strategic gap Ireland has is a national digital curriculum for primary and secondary education. The formulation of such is definitely not rocket science and other developing and developed countries are racing ahead of Ireland in this respect

The first six months of 2013 sees Ireland hold the Presidency of the EU, during which time a specific emphasis will be placed on Europe’s digital economy and the concept of a ‘digital single market’. This provides Ireland with an important opportunity to market itself internationally as a digital leader, and to make real advances towards modernisation in areas such as national content aggregation, IT integration and education.

Getting Irish businesses online and transactional at scale is another huge ongoing challenge for Ireland and a source of competitive haemorrhaging from the domestic economy to overseas suppliers of goods and services, with a resulting loss of jobs and tax revenue. For example, by 2017, in excess of €10 billion in online trade will be lost from Ireland to the UK alone.

One of the most obvious ‘change management’ problems for the people in Ireland who run businesses (aged 30 years plus) is their lack of online experience, exacerbated by the relative absence within Ireland of exemplars from whom to learn. When it comes to government, somewhat ironically, it is the public services on the tax and levy collection side of the economy that have come a long way in digital. However, when one explores the various departments and agencies that deliver public services, the various websites provide a grim user experience. A much greater effort has to be made by the public sector to lead by example in creating a digital economy for goods and services.

Outside of the state sector, by far the biggest domestic institutions in Ireland are the banks. When you compare US banking services and their technology-led innovation road-maps with Irish banks’ standards for online digital products and services, you quickly see that we have a very long way to go. Given the role of the banks in the collapse of the economy, one could strongly argue that they have a clear obligation to lead the way in digital, a by-product of which would be to educate and partner with leaders in the SME sector in the strategic implications of online trading. Banks could for example, develop internet video portals, micro-banking apps for children, integrated biometrics payment systems and, more generally, deliver a greatly improved customer service experience.

Chairman’s Statement

Leonard Donnelly Chairman of the DHDA

THE DIGITAL HUB ANNUAL REPORT 2012 3

In the opinion of the Chair, the Government could obligate the State-funded banks to partner with SMEs and train them to get online effectively. If banks demand an effective online presence from SMEs when seeking working capital and/or other forms of credit for their businesses, then it is in the taxpayer’s interest as the risk associated with the debts would be reduced by virtue of the businesses being more profitable and sustainable.

In a different sense, over the years, one of the things we have noticed at The Digital Hub is that the opportunity for SMEs in the tech sector to innovate with the big-spending public service departments and banks is very limited, given that their IT spend in the main is channelled into the large tech multinationals located in Ireland. This experience puts a gifted indigenous tech sector at a material disadvantage. There are exceptions, but there are innumerable areas where public procurement can be used to stimulate innovation in SMEs, alongside the major international tech corporates currently supplying IT software and services.

Successful tech clusters like The Digital Hub typically shape the ideas for a broader digital economy. Some of the factors inherent in a successful tech cluster cannot be easily described. These are to do with the culture and ethos of the cluster; its location and atmosphere; its linkages across the city,

the country and the globe. In short, these are to do with the creation of an ‘ecosystem’ that attracts the brightest and best to locate within that cluster.

The DHDA is the foundation that Ireland can build on. It has amassed expertise in relation to digital enterprise that is unrivalled by any other entity in Ireland. It has excelled at spotting new and emerging trends in digital, and facilitating the growth of these trends. In the mid-2000s, for example, The Digital Hub became home to a number of companies from Ireland’s fledgling computer games industry. These companies – the likes of Gala Networks Europe, PopCap and Havok – have since gone on to achieve major global growth. As Ireland’s computer games sector has become more established, meanwhile, The Digital Hub has moved on to exploring and supporting new areas in digital, such as e-learning and e-health, where we expect groundbreaking levels of digital innovation and enterprise.

Ireland now competes directly with the new and burgeoning Tech City franchise in London. We are going to have our work cut out for us to sustainably compete with Tech City, given its level of sophistication, scale and plan for endurance.

Ireland is inherently a conservative culture, which seems amazing given the explosion of credit that led to the economic bust. Things are very much back to the old days, and austerity covers a multitude of sins in the process. A phrase often heard in the Irish public service is ‘festina lente’ (hasten slowly). At one level, this attitude promotes a sense of caution but, unfortunately, it does not work in digital and technology-based industries anywhere else in the world. You certainly won’t hear that in Mumbai! Therefore, the preparation of the National Digital Strategy announced by Minister Rabbitte is an exciting development, well overdue, and should at all costs not be impregnated with unproductive conservatism.

In conclusion, I want to acknowledge that Philip Flynn, who has diligently and very capably served as Chief Executive of the DHDA since 2002, will retire over the coming year. Philip has helped shape The Digital Hub into the successful project that it is today, and he has shown unwavering dedication and commitment to his work. I wish him the very best in his retirement.

Leonard Donnelly Chairman Digital Hub Development Agency


2012 was a strong year for digital in Ireland, with Irish enterprises performing well above their European counterparts in terms of e-commerce purchases and sales. This was reflected in activities at The Digital Hub: throughout 2012, enterprises in our cluster grew their business, hired new staff and attracted new clients.

Our experience is that companies, and particularly digital companies, are finding innovative ways to overcome difficulties within the Irish economy. In some cases, they are pursuing more aggressive marketing and sales strategies. In others, their growth can be attributed to moving into – or expanding their existing operations in – international markets.

I’m delighted to be able to day that The Digital Hub continues to be a hotbed of innovation for new digital products and services. In the early days of the Hub, we played a key role in predicting the important contribution gaming companies would make to the Irish economy – and we were home to some of the first indigenous games companies, as well as the high-profile companies that came here from abroad. As computer gaming became more established in the mainstream economy, we continued to explore emerging trends in digital. We’re now concentrating on the next growth wave of digital enterprise, with a particular focus on health, education and mobility.

In recent years, Ireland has made considerable gains in terms of its international rankings for digital business, but we’re still really only scratching the surface. There is huge unexplored potential in terms of how digital can enhance our public services and our day-to-day lives. The Digital Hub is committed to keeping Ireland ahead of the curve by identifying, nurturing and accelerating the adoption and business development of digital trends and opportunities and providing an enterprise ecosystem to support them.

2012 highlights for The Digital Hub included the following:

n Considerable progress was made on implementing the Digital Hub Campus Development Strategy, including the opening – in November 2012 – of Townhouse Twenty2, the seventh office premises to be developed by the DHDA. In addition to this, 10-13 Thomas Street and 157 Thomas Street were refurbished and feasibility studies on other Digital Hub properties were completed in order to evaluate and progress development options. We have also done preparatory work for a planning application for an onsite ‘boutique’ data centre. During 2012, the DHDA’s campus development work was recognised by the Department of Arts, Heritage and the Gaeltacht as an exemplar for city regeneration projects.

n The establishment of Connected Health – a joint programme between the DHDA and St James’s Hospital – is aimed at supporting entrepreneurs to develop digital solutions to common health challenges. It will commence with the recruitment of companies in early 2013, with successful applicants offered a support package that includes collaboration with clinical professionals; free office infrastructure at The Digital Hub; and access to data from St James’s Hospital during the development process.

n The pilot phase of Future Creators, an after-school programme for teenagers, developed by the DHDA’s learning team and delivered in collaboration with the National College of Art and Design (NCAD) was successfully concluded. Participants – local teenagers from the Liberties area of Dublin, in which The Digital Hub and the NCAD are based – learned how to build and launch their own digital products and services. The second year of Future Creators is now underway

n The Schools Broadband Exemplar Project has harnessed the power of technology in the classrooms of Warrenmount Presentation Secondary School. Most notably during 2012, a video-conferencing system was established to connect a higher-level Maths class at Coláiste Bríde, Clondalkin, Dublin 22 with six students at Warrenmount. Without this facility, the six students would not have been able to study higher-level Maths.

CEO’s Review

Philip Flynn CEO of the DHDA


n Over the past year, The Digital Hub enjoyed visits by a number of high-profile individuals and delegations. Visitors during 2012 included An Taoiseach Enda Kenny; Pat Rabbitte TD, Minister for Communications, Energy and Natural Resources; the President of the European Parliament, Martin Schulz; a ‘Going Local’ delegation from the Cabinet of Neelie Kroes, Vice-President of the EU Commission with responsibility for the Digital Agenda; the Mexican ambassador to Ireland, H.E. Carlos Garcia De Alba; the Lord Mayor of Dublin, Naoise Ó Muirí; and members of both the Joint Oireachtas Committees on Transport and Communications, and the Joint Oireachtas Committee on Jobs, Enterprise and Innovation.

In October 2012, it was announced that the DHDA would transition into Dublin City Council over the coming year. This announcement was welcomed by the Agency, Dublin City Council and the Department of Communications, Energy and Natural Resources as providing certainty about the future direction of The Digital Hub. In making the announcement, the Minister for Communications, Energy and Natural Resources, Pat Rabbitte TD, said his Department would continue to actively engage with the Hub in the formulation and implementation of national digital strategy and with regard to the national imperative of accelerating the growth of Irish digital enterprises.

So, while 2012 was a strong year for companies at The Digital Hub and for Ireland’s internet industry overall, we anticipate even more exciting developments and further growth in this area in the coming year.

2013 is shaping up to be an important watershed year for digital in Ireland. The increasing importance of digital was acknowledged by the Government with the recent appointment of Lord David Puttnam as ‘Digital Champion’ for Ireland. The national digital strategy is due to be published by the Minister for Communications, Energy and Natural Resources, and the Lord Mayor of Dublin will also publish a Digital Masterplan for the city. The Digital Hub is centrally involved in both of these important initiatives.

On a personal note, after ten years in DHDA, 2012 marks my last full year as CEO of The Digital Hub, as I am due to retire in March 2013.

I would like to thank the Minister and his senior officials who have been especially supportive in helping to guide the project in the aftermath of the national property collapse and in working collaboratively with us to develop the Hub’s role and contribution to national digital strategy.

I would like to take the opportunity to thank all the members of the Board of the DHDA past and present for their energy, commitment and enthusiasm. Since the project was established, we have been fortunate to have had board members who brought the perfect balance of commercial and technological experience, business acumen and community involvement, which has enabled the Hub to play an important role in both the development of the digital economy and the socio-economic regeneration of the Liberties. I would like to make special mention of the Hub’s first chairman William Burgess R.I.P., who made a huge contribution to the early years of the project and to me personally in my role as CEO. Equally I would like to acknowledge the current Chairman, Leonard Donnelly,

who has brought his expertise and experience in the international digital/telecommunications marketplace to help drive and shape the Hub’s role in the National Digital Strategy and to offer my personal thanks for his continued support, which I have valued highly

I would also like to thank the many important stakeholders in the project for their continued support and input: Dublin City Council, IDA Ireland, Enterprise Ireland, the schools of Dublin 8 and the community development associations who have been consistently supportive from the outset. I would like to give special thanks to Peter Cassels who continued to serve, beyond his term on our board, as Chair of our award-winning community consultation and engagement process. His personal contribution was crucial to the success of that programme. Also, a note of thanks to three service providers: MCO Projects, who established a great foundation for the project, H2 Learning, and DHR Communications, whose work has been central to our success throughout the past ten years.

Finally, I’d like to offer a very special word of personal thanks to the Executive Team and to all the staff of the DHDA. We have had a relatively small staff throughout the ten years of my tenure but they have all shown an exceptional level of commitment and dedication to the mission and work of the Hub. Without them, we could not have achieved the results to date. With their continued efforts and the guidance of the Board, I am confident that The Digital Hub will continue to develop in importance as a strategic asset to both City and State.

Philip Flynn Chief Executive Officer Digital Hub Development Agency


Infrastructure Developments

During 2012, DHDA undertook a major refurbishment of 22-23 Thomas Street (renamed Townhouse Twenty2) which converted the former hostel into rentable enterprise office space for the Agency. Refurbishment works also took place on 10-13 Thomas Street and 157 Thomas Street, with resulting improvements to both buildings from both health and safety and aesthetic perspectives.

During the year, DHDA undertook three phases of essential maintenance works on its undeveloped properties. The first phase saw works carried out on 25, 26 and 27 Thomas Street to stabilise and waterproof the buildings. The second phase of essential works was carried out on VAThouse 7, Grainstore and 84 James Street to improve the integrity of these buildings from a health and safety perspective. The third phase saw works on the Crane Street warehouse, the Bonham St/Watling St Warehouse, and the Windmill building/yard, resulting in improvement works to these buildings.

DHDA carries out scheduled checks on all undeveloped buildings to ensure that any required maintenance works are identified and executed within a reasonable timeframe.

Thefts of lead from the roofs of previously repaired buildings became a significant problem during 2012 and this required further remedial works to prevent damage to the fabric of

the buildings. DHDA has increased its CCTV coverage on the campus to tackle the ongoing risk from theft and vandalism to the buildings.

During 2012, DHDA was successful in achieving direct grant aid to assist in complying with the Government Policy on Architecture 2009-2015. Towards a Sustainable Future: Delivering Quality within the Built Environment. The grant aid will be used to develop a masterplan for Thomas Street South during 2013.

Learning & Community

2012 marked the successful conclusion of the pilot phase of Future Creators, an after-school programme for teenagers, developed by the DHDA’s learning team and delivered in collaboration with the National College of Art and Design (NCAD). Participants – local teenagers from the Liberties area of Dublin, in which The Digital Hub and the NCAD are based – learned how to build and launch their own digital products and services. The second year of Future Creators got underway in September 2012, and it is hoped that the resources developed by The Digital Hub and the NCAD for this project will feed into the new modules on digital media literacy, computer coding and programming currently being developed by the National Council for Curriculum and Assessment for the revamped Junior Certificate.

2012 also marked the continued collaboration with the Department of Communications, Energy and Natural Resources and Warrenmount Presentation Secondary School on the ‘Schools Broadband Exemplar Project’, which is aimed at harnessing the power of technology in the classroom and giving teachers the technical assistance, resources and support they need to become IT champions. Most notably during 2012, a video-conferencing system was established to connect an Honours Maths class at Coláiste Bríde, Clondalkin, Dublin 22 with six students at Warrenmount. Without this facility, these six students would not have had the opportunity to study higher-level Maths at Leaving Certificate level.

Energy Usage in 2012

The energy consumed by the Digital Hub Development Agency is used to maintain the Agency’s project office and the network operations centre. Energy consumed by the project office is used primarily for light, heat and office equipment, while most of the energy consumed by the network operations centre Is used for year-round air-conditioning.

One of the functions of the Agency is to facilitate the development of The Digital Hub as a location for digital enterprises, and this requires arranging energy supplies for many of our tenants. Although the DHDA has no direct influence over the amount of energy consumed (and paid for) by

The Work of the DHDA


these tenants, the energy consumption reported below includes consumption by these tenants. (Note: where tenants are billed directly by their energy provider, DHDA does not have information on their energy usage.)

In 2012, the DHDA and The Digital Hub consumed 2,362 MWh of energy, consisting of:

n 953 MWh of electricity.

n 39 MWh of fossil fuels (natural gas).

n 1,370 MWh of renewable fuels.

During 2012, the Digital Hub Development Agency agreed to participate in the programme for the submission of data to the Sustainable Energy Authority of Ireland in respect of the Public Sector Energy Monitoring and Reporting System.

Company Achievements

Key achievements of a selection of Hub companies over the past 12 months include the following:

Affinity Tech Group is an independent Irish games development company and digital animation studio based in The Digital Hub since 2012. In December 2012, the company launched their new, side-scrolling platform pursuit game called, ‘Santa Vs. Banker’. The recession themed, socially aware game attracted the attention of Seattle-based casual game giant BigFish games. Affinity Tech Group has signed a distribution agreement with Affinity that will see Santa Vs. Banker played in over 150 countries worldwide.

Igloo Animations, a fledging animation studio, signed Facebook as a client in April 2012 with their ‘Give me the short version’ animations, which allow companies and brands to explain their message using animation. In 2012, Igloo were given the thumbs up by Sir Stephen Fry, Sir Ken Robinson and Gillian Lynne after animating Sir Ken Robinson’s popular TED talk on education. Other major Igloo clients include ESB, the HSA and the EPA. The company is currently working to establish a London office as well as two new departments in Dublin, namely video/audio and web development. Igloo has been based in The Digital Hub since 2009.

Maithú is an IT Consultancy company specialising in software development for web and mobile devices. In 2012, the company developed The Irish Times app for a number of devices including iPhone, Android, WP7 and the new Windows 8 tablet. The free app brings users the latest news, sport and business from The Irish Times on the go. Maithú were also busy developing the Discover Ireland Festival & Events app, the 3football app and a number of their own iPhone and Android apps, including ‘The Man App’ and ‘Get the Focal’. Maithú has been located at The Digital Hub since 2008.

PixAlert is a market leader in the discovery and protection of unsecured, unstructured sensitive corporate information and illicit image detection across corporate networks. PixAlert’s advanced auditing solutions help businesses to detect, remove and

manage enterprise content, enabling organisations to continuously control risk, improve security and maintain compliance with standards such as PCI DSS, SOX, SAS70, FACTA, GLB and Data Protection legislation. In 2012, the company launched their new PCI DSS Scope Assessment product – an innovation which provides a fully automated mechanism for finding where CHD cardholder data is stored on the corporate network, helping businesses understand the scope of their CHD exposures for successful PCI DSS certification. PixAlert have been based in The Digital Hub since 2006.

xWerx helps companies to build the best possible user experience for their online products. They specialise in finding creative solutions to the ‘Big Data’ challenges that face complex multinational companies operating in the Financial Services, ERP and HR domains. A recent data visualisation project – www.propprice.com – saw the company work with an open data source, the Residential Property Price Register, which went live at the start of October 2012. xWerx built a beta application for research and education purposes to see what happens when you combine the source data from the Residential Property Price Register with Google Maps and Mapbox. Organic growth has seen the company expand from two owner-directors to an experienced team of 12 UX Specialists in 2012. The company has been located in The Digital Hub since 2005.


Companies operating in The Digital Hub as at 31 December 2012 were:

A-Z Children’s Charity

Affinity Tech

Atlas Products

Avego

Avvio

Bluebear

Bull or Bear

Calico Media

Capiche Design

Chuffey

Cluey

D8CEC

Davis Event Consulting

DIDWW

Digital Media Forum

Digital Skills Academy

DMD

EazySafe Ltd

EMCGPR

Emma Ledden Communications Ltd

Equinox

Etsy

Exploration Station

Ezora

Faxbox

Financial Sat Nav

Fluid Rock

Gaumina

Igloo

Incognito Interactive

Infobright

Innovative Interfaces

Irish Internet Association

Jaspersoft

Kavaleer Productions

Lime Green Technologies/2Saas

Lincor Solutions

Magpie 6 Media

Maithú

Mercury Boy

Minds and Machines

Mobile Travel Technology

MobileAware

National Digital Research Centre

Pay by Mobile

Phoenix Safety

Pillarprojects

PixAlert

Pixel Soup

Process

Retail Media Systems

TRI

Roamware

Schoolspace

Slevin Animation

Software Design

SWICLEC

Twelve Horses

Vuvie Media

Wifibre

xWerx

Zend Technologies

Total: 62 companies


Focus On:

Community Learning Advisory Group

The Digital Hub Community Learning Advisory Group (CLAG) was established in 2011 to advise on the implementation of the DHDA’s community learning activities. The Group advises on how existing learning projects – once successfully developed – can be sustained, advanced and replicated in other areas. The CLAG also advises on maximising the reach of the Digital Hub learning programme, and on promoting the outcomes of the programme at both local and national levels.

The group consists of eight members, including two local community leaders, two public sector representatives and two private sector representatives – one from a company based within The Digital Hub and one from an external company with a strong connection to Dublin 8. The remaining two members of the group are Philip Flynn, CEO of the Digital Hub Development Agency, and Alice Davis, a Board Member of the DHDA, who serves as Chair of the group.


Focus On:

Townhouse Twenty2

It provided refuge for a 1798 rebel, served as a public library for 99 years, and was home to a feather merchant and his family in the 18th Century, but in 2012 a new chapter in the life of 22-23 Thomas Street began when it reopened as a high-class office premises managed by The Digital Hub.

Townhouse Twenty2 is the latest premises to be developed by DHDA and is the seventh new building to be brought into use since The Digital Hub was established. It is one of a number of protected structures in a terrace of buildings fronting directly onto Thomas Street.

The redeveloped building has 372 square metres of office space over five stories, specifically designed to meet the digital business needs. The redevelopment required extensive alterations, as well as refurbishment and extension works. Although the building was completely modernised, an important emphasis was placed on retaining its historic features including the distinctive carriage arch and doorway, and the fine stucco detailing around all windows.

The offices in Townhouse Twenty2 have been designed to provide modern and flexible space to start-up and expanding companies. In November 2012, Townhouse Twenty2 was officially opened by the Lord Mayor of Dublin,

Naoise Ó Muirí. The Minister for Communications, Energy and Natural Resources, Pat Rabbitte TD, also spoke at the opening event.

The building was constructed during the mid-18th Century, and originally served as a townhouse in what was then one of the city’s most vibrant commercial locations. The redevelopment of this building will contribute in a very tangible way to the local economy and marks an important milestone in the development of The Digital Hub. All offices at the Hub have state-of-the-art broadband connectivity and IP-based voice and data services. Enterprise networking and support services are also available to all companies at the Hub.


The Board of the Digital Hub Development Agency is responsible for setting the broad strategy and policies for the Agency, and has oversight responsibility for the activities of the Agency. Board members are appointed by the Minister for Communications, Energy and Natural Resources with the consent of the Minister for Public Expenditure and Reform in accordance with the terms of the Digital Hub Development Agency Act, 2003. Board appointments are for a period of not more than three years, and members are eligible for re-appointment.

Within its own activities and its use of committees, the Board operates in accordance with the provisions set out in the Digital Hub Development Agency Act, 2003, and within the guidelines set out in the revised ‘Code of Practice for the Governance of State Bodies’, as issued by the Department of Finance in June 2009. The Board holds as many meetings each year as may be necessary for the performance of its functions and not less than one meeting in each quarter. The quorum for a meeting is six members. During 2012, the Board held four meetings.

Membership of the Board at 31st December 2012 was as follows:

n Leonard Donnelly (Chairman) (4/4), Executive Chairman, LocationBridge

n Philip Flynn (4/4), CEO, Digital Hub Development Agency

n Alice Davis (4/4), Community Representative

n Paul Holden (2/2), Managing Director, Rédacteurs Limited

n Katherine Licken (4/4), Assistant Secretary, Department of Communications, Energy and Natural Resources

n Denis Molumby (4/4), Executive Director, IDA

n Seamas Ratigan (2/2), Community Representative

n John Tierney (3/4), City Manager, Dublin City Council

Paul Holden and Seamas Ratigan were appointed to the Board on 29th May 2012.

Philip Flynn retired on 31st March 2013 and Edel Flynn has been appointed Interim CEO.

Numbers in brackets indicate the number of meetings attended/number of meetings held whilst a member of the Board.

Finance and Audit Committee

The Finance and Audit Committee is responsible for assisting the Board in overseeing the integrity of the financial statements and the financial reporting process, the performance and evaluation of the Internal Audit function, the risk management and assessment process, and the Agency’s compliance with internal policies.

During 2012, the Finance and Audit Committee met on seven occasions and comprised the following members:

n Denis Molumby (Chair)

n Alice Davis

n John Tierney

Matters relating to Remuneration and Management Development, Governance, and Property, previously delegated to Committees of the Board, have reverted to the main Board for the time being.

The DHDA Board

Leonard Donnelly

Executive Chairman, LocationBridge

Philip Flynn

CEO, Digital Hub Development Agency

Alice Davis

Community Representative

Paul Holden

Managing Director, Rédacteurs Limited

Katherine Licken

Assistant Secretary, Department of Communications, Energy and Natural Resources

Denis Molumby

Executive Director, IDA

Seamas Ratigan

Community Representative

John Tierney

City Manager, Dublin City Council


The Executive Team

During 2012, the Executive Team of the Digital Hub Development Agency comprised the following:

Philip Flynn

Prior to the DHDA, Philip worked in a senior executive capacity in the ICT sector, including on a number of international assignments. After joining Digital Equipment Corporation (DEC) in Clonmel in 1987, he worked as a Group Manager in the European headquarters in Geneva and, subsequently, in a worldwide director role at corporate headquarters in Massachusetts, USA. Upon returning to Ireland in 1997, Philip held the position of Vice-President and Managing Director of Visio International. Following the acquisition of Visio by Microsoft, he joined Orbiscom as Group COO in 2001, before taking up the position of CEO with the DHDA. Philip holds an MSc (Mgt) from Trinity College Dublin and is a member of the Institute of Directors and the Marketing Institute of Ireland.

Michael McDermott

Michael is a Fellow of the Chartered Institute of Management Accountants and holds an MBA degree from University College Dublin. He is also a member of the Institute of Directors in Ireland. Before joining the DHDA, Michael worked with a number of multinational organisations, initially with H.J. Heinz based in Ghana, West Africa, and subsequently with General Motors and Electronic Data Systems (EDS). Following completion of the MBA programme, Michael developed an interest in the area of corporate governance and was co-author of a research report on the independence of non-executive directors, published by the Centre for Corporate Governance.

Dr Stephen Brennan

Stephen has gained considerable commercial and academic experience throughout his career. Having completed his PhD in Physics (at Trinity College Dublin) in 1994, Stephen worked with a succession of leading Irish technology companies, such as Iona Technologies and Aldiscon. He is a member of IBEC’s Telecommunications and Internet Federation (TIF) and R&D

groups; chairs The Digital Hub CEO Forum; has contributed to national initiatives such as Next Generation Broadband; and established ‘Creative D’, a creative industries network in Dublin.

Edel Flynn

Prior to joining DHDA in 2006, Edel worked for over 10 years in the competitive commercial environments of Ryanair‘s commercial project team during their rapid expansion in the 1990s, as a senior manager in the British Tourist Authority and in a leading role as Operations Manager EMEA for Regus. She is a member of Mediators’ Institute of Ireland, the Urban Land Institute, the Institute of Directors in Ireland and the Women’s Executive Network. Edel has represented The Digital Hub on various committees, including the Digital Dublin Forum, Thomas Street Business Association and the Dublin Partnership Group.

Philip Flynn

Chief Executive Officer

Michael McDermott

Director of Finance and Secretary to the Board

Dr. Stephen Brennan

Chief Strategy Officer

Edel Flynn

Commercial Director


The DHDA was established by the Digital Hub Development Agency Act, 2003 and operates under the aegis of the Minister for Communications, Energy and Natural Resources. In addition to the Act, the Agency also complies with the following requirements:

Code of Practice for the Governance of State Bodies

The Agency’s Governance Manual adopted by the Board sets out all aspects of governance, accountability, procedures and operational structures, and seeks to apply all the provisions of the Code of Practice for the Governance of State Bodies issued by the Department of Finance. In accordance with these guidelines, Board members register their interests in other undertakings on their appointment and during their tenure in office. Following the revision of the Code of Practice in 2009, the DHDA has reviewed its processes to ensure that it is complying with the provisions of the revised code.

Ethics in Public Office Act, 1995, and Standards in Public Office Act, 2001

In accordance with the Ethics in Public Office Act, 1995, and the Standards in Public Office Act, 2001, Board members are obliged to submit to the Standards Commission a Statement of Interests which could be a material influence on their performance as board members. In addition, DHDA staff members holding designated positions also comply with the Acts.

Freedom of Information Acts, 1997 and 2003

The Digital Hub Development Agency complies with the provisions of the Freedom of Information Acts, 1997 and 2003. These Acts provide a legal right to individuals to access information to the greatest extent possible, consistent with the public interest and the right to privacy. Requests for information under these Acts can be addressed to the Freedom of Information Executive, Digital Hub Development Agency, Digital Exchange, Crane Street, Dublin 8.

Employment Equality Acts, 1998 and 2004

The Digital Hub Development Agency is an equal opportunities employer and is committed to a policy of equal opportunities in the organisation. The Agency is committed to ensuring that no staff member or applicant for employment receives less favourable treatment than any other on any grounds not relevant to good employment practice.

Safety, Health and Welfare at Work Act, 2005

The wellbeing of the Agency’s employees is safeguarded through strict adherence to health and safety standards. The Agency has taken the necessary actions to ensure compliance with the Safety, Health and Welfare at Work Act, 2005, including the adoption of a safety statement. This extends to the Public Health (Tobacco) Acts, 2002 and 2004.

Clients’ Charter

The Digital Hub Development Agency issued its Clients’ Charter in 2004, setting out its commitment to a high quality of service to clients and to the general public. This Charter includes a procedure for dealing with complaints.

Corporate Governance


Official Languages Act, 2003

The Digital Hub Development Agency comes under the remit of the Official Languages Act, 2003, which provides a statutory framework for the delivery of services through the Irish language. In accordance with Section 10 of the Act, this Annual Report is published simultaneously in Irish and English.

Details Number Value

Payments made:

within 15 days 773 €4,392,211

within 16 to 30 days 18 €12,794

in excess of 30 days 1 €67

Total payments made 792 €4,405,072

Disputed Invoices at end of the year

– –

Prompt Payment of Accounts Act, 1997

The Agency’s system of internal control includes procedures to identify invoices and contracts for payment within the prescribed payment dates. These procedures are designed to provide reasonable, although not absolute, assurance of compliance with the Prompt Payment of Accounts Act, 1997, amended by the Late Payment in Commercial Transactions Regulations, 2002. The table below provides a breakdown of payments made to suppliers in 2012:


Financial Statements and Accountsfor the year ended 31st December 2012

Statement of Board Members’ Responsibilities xx

Statement on Internal Financial Control xx

Comptroller and Auditor General Report xx

Statement of Accounting Policies xx

Income and Expenditure Account xx

Balance Sheet xx

Cash Flow Statement xx

Notes to the Financial Statements xx

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Statement of Board Members’ Responsibilities

The Digital Hub Development Agency was established under the Digital Hub Development Agency Act 2003. Section 31(4) of the Act requires the accounts of the Agency to be kept in such form and manner as may be specified by the Minister for Communications, Energy & Natural Resources, be prepared by the Chief Executive Officer for each financial year and approved by the Agency as soon as practicable but not later than three months after the end of the financial year for submission to the Comptroller & Auditor General for audit.

In preparing the financial statements, the Board Members’ are required to:

n select suitable accounting policies and apply them consistently

n make judgements and estimates that are reasonable and prudent

n comply with applicable accounting standards, subject to any material departures disclosed and explained in the financial statements

n prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Agency will continue in operation.

The Board is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Agency and which enables it to ensure that the financial statements are prepared in accordance with Section 31 of the Digital Hub Development Agency Act 2003. The Board is also responsible for safeguarding the assets of the Agency and hence for taking reasonable steps to prevent and detect fraud and other irregularities.

Signed on behalf of the Board:

Leonard Donnelly Chairman

Edel Flynn Chief Executive Officer

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Statement on Internal Financial Controlfor the year ended 31st December 2012

Responsibility for Internal Financial Control

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

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

Key Control Procedures

The Board has taken steps to provide an appropriate control environment by:

n clearly defining management responsibilities;

n establishing formal procedures for reporting significant control failures and ensuring appropriate corrective action.

The Board has established processes to identify and evaluate business risks by:

n identifying the nature, extent and financial implication of risks facing the Agency including the extent and categories which it regards as acceptable;

n assessing the likelihood of identified risks occurring;

n assessing the Agency’s ability to manage and mitigate the risks that do occur;

n assessing the costs of operating particular controls relative to the benefit obtained.

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:

n comprehensive budgeting system with an annual budget which is reviewed and agreed by the Board;

n regular reviews by the Board of periodic and annual financial reports which indicate financial performance against forecasts;

n setting targets to measure financial and other performance.

The Agency has an internal audit function, which operates in accordance with the Framework Code of Best Practice set out in the Code of Best Practice for the Governance of State Bodies. The work of internal audit is informed by analysis of the risk to which the body is exposed; the annual internal audit plans are based on this analysis. The analysis of risk and the internal audit plans are endorsed by the Audit Committee and approved by the Board. At least annually, Internal Audit provides the Board with a report of internal audit activity. The report includes Internal Audit’s opinion on the adequacy and effectiveness of the system of internal financial control.

The Board’s monitoring and review of the effectiveness of the system of internal financial control is informed by the work of internal audit, the Audit Committee which oversees the work of internal audit, the executive management of the Digital Hub Development Agency who have responsibility for the development and maintenance of the financial control framework, and comments made by the Comptroller and Auditor General in his management letter or other reports.

Annual Review of Controls

I confirm that, in respect of the year ended 31st December 2012 the Board conducted a review of the effectiveness of the system of internal financial control.

Signed on behalf of the Board

Leonard Donnelly Chairman

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Comptroller and Auditor General Reportfor presentation to the Houses of the Oireachtas

I have audited the financial statements of the Digital Hub Development Agency for the year ended 31 December 2012 under the Digital Hub Development Agency Act 2003. The financial statements, which have been prepared under the accounting policies set out therein, comprise the statement of accounting policies, the income and expenditure account, the balance sheet, the cash flow statement and the related notes. The financial statements have been prepared in the form prescribed under Section 31 of the Act and in accordance with generally accepted accounting practice in Ireland.

Responsibilities of the Members of the Agency

The Members of the Agency are responsible for the preparation of the financial statements, for ensuring that they give a true and fair view of the state of the Agency’s affairs and of its income and expenditure, and for ensuring the regularity of transactions.

Responsibilities of the Comptroller and Auditor General

My responsibility is to audit the financial statements and report on them in accordance with applicable law.

My audit is conducted by reference to the special considerations which attach to State bodies in relation to their management and operation.

My audit is carried out in accordance with the International Standards on Auditing (UK and Ireland) and in compliance with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of Audit of the Financial Statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements, sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of

n whether the accounting policies are appropriate to the Agency’s circumstances, and have been consistently applied and adequately disclosed

n the reasonableness of significant accounting estimates made in the preparation of the financial statements, and

n the overall presentation of the financial statements.

I also seek to obtain evidence about the regularity of financial transactions in the course of audit.

In addition, I read the Agency’s annual report to identify material inconsistencies with the audited financial statements. If I become aware of any apparent material misstatements or inconsistencies, I consider the implications for my report.

Going Concern

Without qualifying my opinion, I draw attention to note 12 to the financial statements which discloses the challenges faced by the Agency in developing its own funding source and that it anticipates that Exchequer funding will continue to be available to it in 2013.

Opinion on the Financial Statements

In my opinion, the financial statements, which have been properly prepared in accordance with generally accepted accounting practice in Ireland, give a true and fair view of the state of the Agency’s affairs at 31 December 2012 and of its income and expenditure for 2012.

In my opinion, proper books of account have been kept by the Agency. The financial statements are in agreement with the books of account.

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Matters on which I report by exception

I report by exception if

n I have not received all the information and explanations I required for my audit, or

n there was any material instance where money has not been applied for the purposes intended or where the transactions did not conform to the authorities governing them, or

n the information given in the Agency’s annual report is not consistent with the related financial statements, or

n the Statement on Internal Financial Control does not reflect the Agency’s compliance with the Code of Practice for the Governance of State Bodies, or

n I find there are other material matters relating to the manner in which public business has been conducted.

I have nothing to report in regard to those matters upon which reporting is by exception.

Patricia Sheehan For and on behalf of the Comptroller and Auditor General

26 November 2013

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Statement of Accounting Policies

The following accounting policies have been applied in dealing with items which are considered material in relation to the Agency’s financial statements.

1. Basis of Accounting

The financial statements have been prepared under the accruals method of accounting and in accordance with generally accepted accounting principles under the historical cost convention, as modified by the revaluation of investment properties. Financial Reporting Standards recommended by the Accounting Standards Board are adopted as they become operative.

2. Grants

Exchequer Grants from the Department of Communications, Energy & Natural Resources for current expenditure are recognised when received. Capital grants received are treated as deferred income and recognised in the Income & Expenditure Account by instalments over the expected useful life of the related assets on a basis consistent with the depreciation policy, except for grants received in respect of investment properties which are not depreciated.

3. Deferred Income

Unearned revenue which has been billed to customers is excluded from Income and is recorded as Deferred Income.

4. Development Assets

Development assets consist of land and buildings transferred to the Agency to be used for the purpose of developing an international digital enterprise area. Development assets will be developed under conditional contract arrangements with third party developers.

Development assets are treated as fixed assets and recorded at the lower of open market value (at date of transfer) or recoverable amount. Recoverable amount is determined by reference to the estimated value of the development assets given the Agency’s intention for the ultimate use of the assets. Upon development, the assets will be accounted for as investment properties.

Costs incurred by the Agency on such assets are included in the costs of the assets.

5. Investment Properties

Investment properties are properties on which development has been completed and which are retained by the Agency for the purpose of their investment potential and rental generation.

In accordance with Statement of Standard Accounting Practice No.19, investment properties are stated at open market value. As investment properties, they are subject to annual revaluation in line with the Appraisal and Valuation Manual of the Society of Chartered Surveyors in Ireland and professional opinion, and every five years by an external valuer.

Surpluses and deficits arising in the value of investment properties are disclosed as a movement on the revaluation reserve through the Statement of Total Recognised Gains and Losses. In the event of the revaluation reserve being insufficient to cover a diminution in value, the amount by which the diminution exceeds the reserve is charged to Income & Expenditure Account.

No depreciation or amortisation is provided in respect of investment properties.

6. Fixed Assets

Fixed assets are stated at cost less accumulated depreciation, which is calculated on a straight-line basis over the expected useful life of the asset. Digital Hub Development Agency operates to a threshold of €1,000 for the capitalisation of fixed assets, and assets below the threshold are expended in the Income & Expenditure Account.

Depreciation is provided at the following rates:

Fixtures & Fittings 20%

Computer Equipment & Software 331/3%

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7. Deferred Tax

In accordance with Financial Reporting Standard No.19, the Digital Hub Development Agency provides for deferred tax on a ‘full provision’ basis arising from timing differences arising between the recognition of gains or losses in the financial statements and their recognition in a tax computation. Deferred tax balances are not discounted as it is considered that the effect of discounting would not be material.

8. Debtors

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

9. Pensions

Digital Hub Development Agency operates a defined benefit pension scheme.

The Agency has an arrangement with the Department of Communications, Energy and Natural Resources (DCENR) under which the Agency will be reimbursed all monies required to settle the pension obligations when they fall due. In return, the Agency is required to pay DCENR an amount equal to employee contributions for the year plus an employer contribution at rates set by the Department of Public Expenditure and Reform.

Pension costs reflect pension benefits earned by DHDA staff in the period and are shown net of employee pension contributions, which are retained by DCENR. An amount equal to the benefits earned by staff is recognised as deferred funding in line with the reimbursement arrangement set out above.

Pension scheme liabilities represented by the present value of future pension payments earned by DHDA staff to date are measured on an actuarial basis using the projected unit method (if appropriate). The amount to be included in the financial statements for the Deferred Pension Funding amount is estimated at an equal amount to the estimate of the obligation for the pension scheme liabilities

10. Capital Reserve

Capital Reserve represents the value of assets transferred to the Agency on its establishment and thereafter plus other funding and grants received. Capital Reserve is amortised in line with depreciation on relevant assets.

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Income and Expenditure Accountfor the year ended 31st December 2012

Note

2012

€

2011

€

Income

Exchequer Grants 1 2,066,720 2,473,633

Commercial Income 1,541,916 1,847,132

Sponsorship 18,571 61,817

Amortisation of Capitalised Grants – 3,188

3,627,207 4,385,770

Expenditure

Payroll Related 2 1,268,274 1,255,036

Operations, General and Administration 3 2,236,065 3,041,757

Learning & Community 4 270,540 317,562

3,774,879 4,614,355

Surplus/(Deficit) from Operating Activities (147,672) (228,585)

Funding provided for Development Work 8 67,702 –

Transfer to Capital Reserve 9 (67,702) –

Corporation Tax 10 (22,514) 21,339

Surplus/Deficit for the period (125,158) (249,924)

Balance at 1 January (42,202,710) (41,952,786)

Balance at 31 December (42,327,868) (42,202,710)

Certain comparative figures have been regrouped and re-presented on the same basis as those for the current year.

Amounts shown under Income & Expenditure are in respect of continuing activities.

There are no recognised gains or losses in the financial or the preceding year other than those dealt with in the Income and Expenditure Account.

The Accounting Policies and Notes 1 to 14 form part of the financial statements.


Leonard Donnelly Edel Flynn Chairman Chief Executive Officer


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Balance Sheetas at 31st December 2012

Note

31 Dec 2012

€

31 Dec 2011

€

Fixed AssetsDevelopment Assets 7,563,732 7,600,000

Investment Properties 7,020,170 5,708,800

Fixtures & Fittings 923,705 1,080,535

Computer Equipment 74,029 130,048

5 15,581,636 14,519,383

Current AssetsDebtors 6 429,223 658,729

Bank and Cash 775,516 718,310

1,204,739 1,377,039

Current LiabilitiesCreditors (amounts falling due within one year) 7 964,202 1,097,386

964,202 1,097,386

Net Current Assets 240,537 279,653

Creditors (amounts falling due more than one year) 8 – 67,702

Total Assets less Liabilities before pensions 15,822,173 14,731,334

Deferred Pension Funding 11 1,400,000 1,200,000

Pension Liabilities 11 (1,400,000) (1,200,000)

Net Assets 15,822,173 14,731,334

Represented by:

Capital Reserve 9 58,150,041 56,934,044

Income & Expenditure Account (42,327,868) (42,202,710)

15,822,173 14,731,334




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Cash Flow Statementyear ended 31st December 2012

Note

2012

€

2011

€

Reconciliation of Net Movement for the year to Net Cash Inflow from Operating Activities

Surplus/(Deficit) from Operating Activities (147,672) (228,585)

Depreciation 400,343 412,254

Disposal of Fixed Asset – 84,656

Amortisation of Capitalised Grants – (3,188)

Bank Interest (9,824) (9,481)

Decrease in Debtors 248,930 359,350

Decrease in Creditors (133,184) (215,767)

Net Cash Inflow from Operating Activities 358,593 399,239

Cash Flow Statement

Net Cash Inflow from Operating Activities 358,593 399,239

Returns on Investment and Servicing of Finance:

– Bank Interest Received 9,824 9,481

Taxation 3,090 49,785

Capital Expenditure 5 (1,462,596) (96,765)

Financing:

– Capital Funding 1,148,295 –

Net Cash Inflow for the period 57,206 361,740

Reconciliation of Net Cash Flow to Movement in Net Funds

Net Funds as at 1 January 718,310 356,570

Net Funds as at 31 December 775,516 718,310

Movement in Net Funds in the Year 57,206 361,740





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Notes to the Financial Statementsfor the year ended 31st December 2012

1. Exchequer Grants

Grants made to the Agency under Section 29 of the Digital Hub Development Agency Act 2003 for the purposes of expenditure by the Agency in the performance of its functions were as follows:

2012

€

2011

€

Current Expenditure

– Operations 1,500,000 1,560,000

– Learning and Community programmes 133,560 192,000

– Schools Broadband Exemplar project 91,500 145,000

– Maintenance of undeveloped properties 341,660 576,633

2,066,720 2,473,633

Capital Expenditure

– Development Works 1,148,295 –

Capital Expenditure includes renovation of 22-23 Thomas Street (renamed Townhouse Twenty2) into enterprise offices.

2. Staff Numbers and Costs

The average number of persons employed by the Agency during the year was 14 (2011: 15). The aggregate payroll costs were as follows:

2012

€

2011

€

Payroll costs 1,000,584 975,642

Board Member fees 28,780 32,490

Social Welfare (Employer’s contribution) 86,017 91,246

Pension Costs 152,893 155,658

1,268,274 1,255,036

DHDA adheres to Government pay policy. In 2012, an amount of €65,771 (2011: €68,987) was deducted from salaries in respect of the Pension Levy and paid over to the Department of Communications, Energy and Natural Resources.

In 2012, the Chief Executive Officer received a base salary of €175,383 and a pension contribution equal to 25% of the base salary. The CEO also received a motor allowance of €11,263 which was subject to PAYE and PRSI deduction. No performance-related payments were made during the year. The CEO contract concluded on 8th December 2012. The contract was extended on revised terms from 8th December 2012 to 31st March 2013.

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2. Staff Numbers and Costs continued

DHDA complies with Government guidelines in respect of payment of fees to Board members. Fees and Board-related expenses paid to Board members in 2012 were as follows:

Fees

€

Expenses

€

– Leonard Donnelly 11,970 4,096

– Alice Davis 7,695 –

– Philip Flynn – –

– Paul Holden 4,558 –

– Katherine Licken – –

– Denis Molumby – –

– Seamus Rattigan 4,558 –

– John Tierney – –

Board-related expenses in 2012 were as follows: mileage €3,305 and subsistence €791.

3. Operations, General and Administration Costs

2012

€

2011

€

Travel & Subsistence 9,287 9,774

Office Lease Costs¹ 68,175 186,610

Office Services and Rates 1,216,003 1,408,345

Office Overhead 139,564 116,711

Insurance 62,635 73,470

Marketing 48,336 49,776

Networking Events (Agency’s contribution) 2,334 2,373

Property-Related Expenditure² 135,687 557,207

Professional Services 107,805 100,164

Audit Fee 13,865 12,980

Depreciation (see Note 5) 400,343 412,254

Profit/Loss on Disposal of Fixed Assets – 84,656

Bad Debts 26,985 22,049

Bank Charges 2,088 1,736

Sundry 2,958 3,652

2,236,065 3,041,757

Notes to the Financial Statements


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3. Operations, General and Administration Costs continued


¹ 2012 represents OPW’s share of income from the redeveloped Digital Court building which is owned by OPW and leased to DHDA under a 99-year income-sharing agreement.

² Includes property-related expenditure associated with the maintenance of the undeveloped properties.

During 2012, the administrative offices of the Digital Hub Development Agency, located in the OPW-owned Digital Exchange building were free of rent.

4. Learning & Community

Relates to the cost of activities under the Learning Initiative, which provides a test-bed for use of digital media in education and employment and learning programmes arranged through community organisations and schools in the local area. Professional services relate to the project management of the activities of the Learning and Community programmes and the Schools Broadband Exemplar project.

2012

€

2011

€

Professional Services 91,233 71,540

Schools Broadband Exemplar Project 91,500 139,000

Future Creators Project 55,375 55,000

Other Project Costs 32,432 52,022

270,540 317,562


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5. Fixed Assets

Total

€

Development Assets

€

Investment Properties

€

Fixtures & Fittings

€

Computer Equipment

€

Cost/Valuation

at 1 Jan 2012 16,802,226 7,600,000 5,708,800 2,405,795 1,087,631

Reclassification¹ – (330,000) 330,000 – –

Additions 1,462,596 293,732 981,370 178,005 9,489

at 31 Dec 2012 18,264,822 7,563,732 7,020,170 2,583,800 1,097,120

Depreciation

at 1 Jan 2012 2,282,843 – – 1,325,260 957,583

Charge for Year 400,343 – – 334,835 65,508

at 31 Dec 2012 2,683,186 – – 1,660,095 1,023,091

Net Book Value

at 1 Jan 2012 14,519,383 7,600,000 5,708,800 1,080,535 130,048

at 31 Dec 2012 15,581,636 7,563,732 7,020,170 923,705 74,029

¹ Relates to 22-23 Thomas Street (renamed Townhouse Twenty2) was reclassified under Investment Properties following its renovation to enterprise offices for rental to tenant companies.

The Digital Court is an OPW-owned building granted to DHDA under a 99-year income-sharing agreement and redeveloped by DHDA for use as enterprise offices.

The Digital Exchange is an OPW-owned building granted to DHDA under an arrangement whereby DHDA manages the building and its tenants.

The Digital Depot building is jointly owned by DHDA and Dublin City Council. The Digital Depot is operated by DHDA as enterprise offices, with DCC’s interest protected by a Deed of Trust. In the event of a future sale of the building, DCC would be entitled to 50% of the proceeds; apart from this, all risks and rewards of ownership reside with DHDA. As there is no present intention to dispose of the building, the full value of the property has been recognised in the financial statements, with DCC’s entitlement considered to be a contingent liability.

The market value of the properties is appraised by a professional firm of valuers every five years, and by reference to property indices and/or professional opinion on an annual basis. The properties were last valued by an independent property consultancy firm as at 31st December 2010.

Notwithstanding the property indices for 2012 and the difficulty in estimating market value in the current climate, it was decided to maintain property valuations unchanged at 31st December 2012 on the premise of a marked improvement in demand for commercial office space and a firm indication of improving conditions in that sector.



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6. Debtors

31 Dec 2012

€

31 Dec 2011

€

VAT 42,963 36,241

Rental Debtors 277,834 297,721

Prepayments 69,484 53,168

OPW Accrued Receivable – 244,737

Other Debtors 938 8,282

Taxation 38,004 18,580

429,223 658,729

7. Creditors (amounts falling due within one year)

31 Dec 2012

€

31 Dec 2011

€

Creditors and Accruals 492,077 654,404

PSWT and Relevant Contracts Tax 35,875 43,015

Payroll Taxes and Deductions 43,641 38,037

Deferred Income 161,501 132,525

Security Deposits 231,108 229,405

964,202 1,097,386

8. Creditors (amounts falling due more than one year)

2012

€

2011

€

1 Jan Deferred Income – Developers’ Deposits* 67,702 67,702

Capital Expenditure – Development Work (67,702) –

31 Dec Deferred Income – Developers’ Deposits – 67,702

* Non-refundable deposits received under the terms of the developer contracts.

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9. Capital Reserve

2012

€

2011

€

1 Jan Opening Balance 56,934,044 56,937,232

Capital Funds – Undeveloped Properties 293,732 –

Capital Funds – Development Work 854,563 –

Capital Reserve – Development Work (see Note 8) 67,702 –

Amortisation of Capital Grants – (3,188)

31 Dec Closing Balance 58,150,041 56,934,044

10. Taxation

DHDA is liable to corporation tax in respect of interest income (Case III/IV) and rental income (Case V). DHDA also provides for deferred tax on a ‘full provision’ basis arising from timing differences between the recognition of gains or losses in the financial statements and their recognition in a tax computation.

Taxation charged to the Income & Expenditure Account is as follows:

2012

€

2011

€

Tax on ordinary activities – –

Deferred Tax* (22,514) 21,339

Charge for the year (22,514) 21,339

Section 610 of the Taxes Consolidation Act 1997 (Schedule 15) provides an exemption to DHDA from Capital Gains Tax on disposals made on or after 1st January 2008. For all other tax liabilities, the Digital Hub Development Agency strives to be exemplary in its compliance with taxation laws and in accordance with its tax obligations.

11. Pension Costs

a. Pension Scheme

Under Section 21 of the Digital Hub Development Agency Act 2003, the Agency provides a scheme for the granting of superannuation benefits to and in respect of its staff members subject to Ministerial approval. DHDA’s Superannuation Scheme and Spouses & Children’s Pension Scheme are being operated on an approved ‘administrative basis’ until formally sanctioned by the Minister for Communications, Energy & Natural Resources with the consent of the Minister for Public Expenditure and Reform. The former scheme provides retirement benefits (lump sum and pension) and death gratuity benefits in respect of death in service. The latter scheme provides pension benefits for surviving spouses and dependant children of deceased members. Both schemes are unfunded defined benefit superannuation schemes.



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11. Pension Costs continued

Pension levies are deducted from salaries and paid over to DCENR annually together with the employer contribution. Under the arrangement in place, DCENR will reimburse in full the pension liability of the Agency as and when those liabilities fall due. The Agency recognises its right to the reimbursement as a separate asset.

The board has adapted the treatment and disclosures required by the accounting standard, Financial Reporting Standard 17 (Retirement Benefits) to reflect the arrangements in operation. The FRS17 pension liability at 31st December 2012 is €1,400,000.

The results set out below are based on an actuarial valuation of the pension liabilities in respect of Agency staff as at 31st December 2012. This valuation was carried out by a qualified independent actuary for the purposes of FRS 17. The Chief Executive Officer is excluded from the scheme and the Agency provides 25% of basic salary as a pension contribution, which is paid directly into a personal pension scheme approved by the Revenue Commissioners.

b. Financial Assumptions

The financial assumptions used to calculate scheme liabilities under FRS17 are:

2012 2011

Discount rate 5.5% 5.5%

Salary rate increase 4.0% 4.0%

Pension rate increase 4.0% 4.0%

Inflation rate increase 2.0% 2.0%

Life expectancy at age 65: Male 22 years 22 years

Life expectancy at age 65: Female 25 years 25 years

c. Pension Costs

i) Analysis of total pension costs charged to expenditure

Pensions Cost of €152,893 charged to the Income & Expenditure Account are in accordance with funding arrangements agreed with DCENR. In the absence of the reimbursement arrangement, the impact on costs would have been:

2012

€

2011

€

Total Employer Contributions 152,893 155,658

Current service cost* 190,000 190,000

Interest Costs 66,000 60,000

Adjustment to Deferred Exchequer Pension Funding (256,000) (250,000)

152,893 155,658

* Employee contribution of €36,140 (2011: €38,215) have been included in the calculation of the current service cost.

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11. Pension Costs continued

c. Pension Costs

ii) Movement in net Pension Liability

2012

€

2011

€

Net Pension Liability at 1 January 1,200,000 1,100,000

Current Service Cost 190,000 190,000

Interest Cost 66,000 60,000

Experience (gains)/losses on scheme liabilities (56,000) (150,000)

Pensions paid in year – –

Net Pension Liability at 31 December 1,400,000 1,200,000

12. Going Concern and Future Development

Properties owned by the Agency consist of a mix of investment properties and development assets. Investment properties are used for enterprise incubation and offices, with the remaining properties having been the subject of two, now defunct development contracts. As certain milestones in the developer contracts had not been met, the Agency terminated both contracts. Based on legal advice, legal proceedings against the developers, both in receivership, was deferred as it would not be commercially prudent and would expose the Agency to legal costs.

Notwithstanding the termination of the contracts, the Agency remains focused on the delivery of enterprise offices and is engaged with the Department in progressing its campus development strategy consistent with its objectives. During the year, 22-23 Thomas Street was renovated into enterprise offices for rental to tenant companies, and other near-term development projects are underway.

The Agency currently meets its operational costs from a mix of Exchequer grants and commercial income. As a statutory body, it is anticipated that Exchequer funding will continue to be available to the Agency in 2013 to meet ongoing financial obligations. For this reason the financial statements continue to be prepared on a going concern basis.

Following on from the publication of the Public Sector Reform programme in November 2011, it was announced in October 2012 that the Digital Hub Development Agency will transition to Dublin City Council. The Agency is preparing a strategy document to facilitate the transition ahead of the legislative changes required to give effect to the transition.



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13. Board Members – Disclosure of Transactions

The Digital Hub Development Agency adheres to the guidelines issued by the Department of Finance in relation to the disclosure of interests by Board Members.

There were no transactions during the period in relation to the Agency’s activities in which Board Members had any beneficial interest.

14. Approval of Financial Statements

The financial statements were approved by the Board on 18th September 2013.

Digital Hub Development Agency, Digital Exchange, Crane Street, The Digital Hub, Dublin 8. Tel: +353 1 4806200 Email: [email protected] Web: www.thedigitalhub.com

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