Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697805753624.pdf (Ireland)
Annual Report & Financial Statements 2022 Supporting the delivery of new homes Contents 1.

Key Business Highlights 2.

Timeline of Key Events 3.

Chairperson's Statement 4.

Chief Executive Officer's Review 5. Business Review - Our Market - Our Performance - Our Customers - Our Products - Our Stakeholders - Our Policy Considerations - Our ESG Priority 6.

Case Studies 7.
Case Studies 7.

Governance and Corporate Information - Directors - Governance Statement and Board Members’ Report - Committee Reports - Risk Management - Management Team 8.

Financial Statements 2 5 6 8 10 10 10 10 11 13 13 14 16 18 18 20 25 27 29 30 1 About HBFI Home Building Finance Ireland (“HBFI”) was incorporated in December 2018 to provide funding at market rates for commercially viable residential developments in the State.
Its establishment was part of a wider response to Ireland’s housing supply shortage that, over recent years, has seen supply falling short of the estimated demand.

HBFI has a broad range of products and provides funding directly to housebuilders to support developments from five to over 300 units.

The funding provided supports the delivery of houses and apartments for owner occupiers, social and affordable homes and those seeking rental accommodation.
By engaging extensively with the market and monitoring the availability of finance for residential development, HBFI can identify gaps as they emerge and respond accordingly.

HBFI aims to ensure that funding is not an impediment in the drive to increase Ireland’s housing supply.

Our Mission HBFI’s mission is to help increase the supply of new homes in the State through the provision of finance to commercially viable residential property development.
Explore online Visit our website to find out more www.hbfi.ie HBFI | Annual Report 2022 2 Key Business Highlights Approvals 1,988 Number of homes 2022 €413m Total funding approved From inception: 5,717 2022 From inception: €1,248m 28 Number of facilities 2022 From inception: 99 21 Counties 6.8% Average lending rate €12.6m Average loan size Range: €1m to €94m 58 Average units per loan 25% Social housing 75% Private housing HBFI | Annual Report 2022 3 Active Sites €909m Total funding approved which relates to active or completed sites 60 Total number of active sites since inception 4,132 Number of new homes delivered or under construction Homes Completed 1,245 Number of units completed and sold 1,819 Number of units contracted for sale/sale agreed * From Inception figures reported are from 28 January 2019 to 31 December 2022.
Not all schemes approved will draw down funding from HBFI for various reasons including the project not progressing or alternative funding secured.

HBFI | Annual Report 2022 4 HBFI | Annual Report 2022 HBFI Facilities Approved to Date By County From inception to 31 December 2022, HBFI approved 99 loan facilities.

These facilities are located across 21 counties with an average of 58 new homes per facility.

Further details are available below.


2 Donegal 1 Monaghan 9 Louth 16 Dublin 4 Wicklow 9 Meath 7 Kildare 1 Carlow 1 Westmeath 3 Laois 1 Kilkenny 3 Wexford 2 Waterford 5 Offaly 1 Tipperary 5 Mayo 2 Clare 4 Galway 1 Limerick 18 Cork 4 Kerry 5 Timeline of Key Events 2022 2019 2020 2021 2022 HBFI opens for business on 28 January 2019 with an initial €750m to fund home building and site acquisition.

€114m in funding was approved in the 12 months to end January 2020.
Launch of Green Funding product to support the delivery of new homes in a sustainable way.

First funding provided to a cost rental development.

First HBFI facility approved on 4 April 2019.

New Apartment Product, Under 10 Units product and temporary Momentum Fund product launched.

Minister for Finance finalises first review of the performance of HBFI.

First facility drawdown in June 2019.

HBFI released its Mid- Year results to end July 2020 confirming approved funding of €340m.
First development completed in December 2019.

Social Housing product introduced and Under 10 Units product enhanced by the COSME guarantee to make it more accessible for smaller builders and developers.

Momentum Fund closed to new business in December 2021 at which point the fund had been over 90% committed in support of over 1,000 new homes.

Total funding approved by HBFI in 2021 reaches €440m.

HBFI’s first Green Loan is drawn down in November 2022.
Minister commences second Section 24 review of HBFI, including stakeholder consultation.

Total funding approved since inception reaches €1.25bn.

HBFI | Annual Report 2022 6 Chairperson’s Statement HBFI has worked to support home builders throughout the country...

I am pleased to present the fourth Annual Report of HBFI.

Strong signs of recovery for the construction industry at the start of 2022 were quickly replaced with uncertainty and challenges following the invasion of Ukraine.
This resulted in supply chain challenges, elevated cost inflation and as the year progressed, higher interest rates and economic uncertainty that led to a slowdown in housing activity.

HBFI has worked to support home builders throughout the country to access debt finance to enable the building of much needed homes, however as a result of the uncertainty fewer developers were seeking funding and this was evident with a slowdown in viable funding applications received as the year progressed.
We continued to ensure the sector knows HBFI has adequate funding to support all viable home building projects and have paid particular attention to providing support to home builders outside of the main urban centres with a series of localised campaigns, events and networks.

We have approved funding in 21 counties by the end of 2022.
We co-hosted an event with the Irish Green Building Council highlighting our Green Funding Product which supports developers in reaching sustainability certification for new homes.

strong pipeline, there continues to be a demand for funding that is not currently being met by other funders in the marketplace.

Despite all the uncertainties in the economy, 2022 was an important milestone for HBFI as we reached profitability for the first time following our establishment in 2019.
This sets us on course to start to replenish the equity subscribed by the Minister for Finance to fund the startup of HBFI.

We are constantly engaging with our stakeholders to ensure we play our part in the delivery of the Housing for All strategy.

We look forward to the finalisation of the Section 24 review of HBFI which is due to be published by the Minister for Finance in mid-2023.
On behalf of the Board, I would like to express our appreciation to Dara Deering, Chief Executive Officer whose drive and experience has a significant impact on the business.

I would also like to thank my fellow Board Members, Committee Members, the Management Team and staff for their ongoing professionalism, commitment, and agility in what has once again been a demanding year.

I look forward to their continued commitment and engagement during 2023 as we deliver on our objectives.
As we move into 2023, demand for housing remains high and we will continue to work with the construction sector to ensure that all viable projects can progress and with a Marie Collins Chairperson HBFI | Annual Report 2022 7 HBFI has worked to support home builders throughout the country to access debt finance.

Redwood is a development of 2, 3 and 4 bedroom terraced, semidetached and detached homes in Tullamore, Co Offaly.
HBFI | Annual Report 2022 8 Chief Executive Officer’s Review We have seen ongoing demand right across our product offering...

In 2022, HBFI continued to support the supply of residential development funding across Ireland, playing a key role in the delivery of new homes and offering a variety of funding products to residential developers.

The first six months of 2022 were our busiest yet with demand for funding from both large and smaller builders.
Throughout the year we approved 28 new facilities providing €413m in new funding supporting 1,988 new homes.

We have approved almost €1.25bn in funding since HBFI was established.

There have been continuing challenges in increasing new housing supply in 2022 and viability has become an issue in some areas.

As a result, HBFI received fewer viable funding applications from housebuilders in H2 2022.
HBFI has worked with our customers and various stakeholders to try to address the challenges in accelerating new housing supply and our interaction indicates that demand for housing is resilient despite the ongoing challenges of viability, construction price inflation and increasing interest rates.
While the sector was undoubtedly impacted by these issues, 2022 was still a really strong year for HBFI and by year end HBFI-funded schemes had completed and sold 1,245 new homes, with a further 1,819 at a sale agreed or contract stage.

We have seen ongoing demand right across our product offering from our small loan product for less than 10 units to larger developments in urban centres.
Most encouragingly, we have seen strong demand for our Social & Affordable Housing product with 25% of approvals to December 2022 in this segment.

As we look to 2023, the Irish housing market remains fragile and supply is still lagging demand.

The Government’s Housing for All strategy is designed to address the challenges to increasing supply over the coming years.
HBFI will continue to engage with our stakeholders across the public and private sector, and with our customers, to ensure the necessary funding is available to deliver new homes in the coming years.

We remain flexible in our approach and remain committed to developing new products and enhancing our existing products to meet the future funding needs of the construction industry.
Dara Deering Chief Executive Officer HBFI | Annual Report 2022 9 Throughout the year we approved 28 new facilities providing €413m in new funding supporting 1,988 new homes.

Barraduff is a development of 3 bedroom detached & semi-detached 2-storey contemporary homes in Barraduff, Co Kerry.

HBFI | Annual Report 2022 10 Business Review Our Market Our engagement with both new and existing customers and key stakeholders across the industry continues to inform our plans.
Feedback from stakeholders allows HBFI to identify gaps in the residential development funding market.

This has led to both the expansion of HBFI’s product offering and the enhancement of our existing products.

HBFI now offers five products that can provide funding for viable residential development projects ranging from five to over 300 units.
Through this varied product offering and our business development activities, HBFI targets segments of the market and locations that are not currently well served by existing funding providers.

This includes ensuring that HBFI has a consistent risk appetite to fund developments through economic cycles.
HBFI plays an important role in the provision of funding to borrowers who may find it challenging to secure funding from other lenders or where there are overly restrictive conditions attaching to the funding available.

The current product range includes a Green Funding product designed to encourage sustainable housing development by offering a discounted margin to developments that meet or exceed the Home Performance Index (“HPI”) standard.
HBFI was one of the first funders to bring such a product to the residential construction sector and continues to be one of the few offering this option.

The Social/Affordable Housing product has continued to see strong demand in 2022 as Approved Housing Bodies (“AHBs”) and Local Authorities continue to contract to purchase large numbers of new homes from builder/ developers under the turn-key model.
While not all schemes applying for finance are commercially viable, the level of applications received by HBFI highlights the ongoing demand for funding that is not currently being met by other lenders in the marketplace even when considering the challenges faced by the construction sector at present and the resulting slowdown in activity in the latter half of 2022.

Our Performance HBFI continued its growth in 2022, approving €413m of funding.
As of 31 December 2022, HBFI had approved funding since inception of €1.248bn, across 99 sites, which has the potential to support the delivery of up to 5,717 new homes.

Due to the time required to allow for legal due diligence and the completion of facility agreements following approval and prior to first drawdown, 60 of these facilities had reached drawdown (or had been completed) by 31 December 2022.
Total funding allocated to these 60 projects was €909m and these projects will support the delivery of 4,132 new homes.

By the end of December 2022, 1,245 homes had been completed and sold in the four years since HBFI’s launch, with 1,819 contracted for sale or sale agreed.

Some of the key metrics are detailed below.
n €1.248bn in funding approved across 99 schemes in 21 counties n 73% of funding approved is now under construction or has completed n 1,277 homes are completed with 1,245 sold and a further 1,819 contracted for sale or sale agreed n 68% of approvals relate to houses, with 32% to apartments n 50% of funding approved will provide homes for owner occupiers, 20% for private rental, 25% for social/affordable housing and 5% for Part V n 68% of homes have either 2 bedrooms or 3 bedrooms with the average expected price for a 3-bed home of €314k n 64% of HBFI funded schemes will deliver 50 or less homes.
HBFI has a national remit and works extensively with key stakeholders in each county to raise awareness of the debt finance available to support house building.

So far, HBFI has approved funding in 21 counties.

HBFI formally reviews its strategy and business plan on an annual basis taking into account any changes in the supply of and demand for housing, housing policy and the availability of finance for residential developments.
The HBFI Strategy and Business Plan was most recently updated and submitted to the Minister for Finance in February 2022.

Our Customers The key areas of focus for HBFI are to raise awareness of the funding products that we offer to the residential development sector and to make a positive impact in the Irish residential development funding market.
HBFI continues to engage with existing and potential customers in the residential development sector and seeks to inform the industry about our range of products and their suitability for different schemes.

HBFI | Annual Report 2022 11 HBFI’s Business Development and Lending teams work together to increase overall awareness of HBFI and its product range across the residential construction market.

They do this by targeting housebuilders who may have current or future financing needs.
In 2022, the team held over 420 meetings with potential customers to discuss HBFI’s offering.

HBFI also continued to engage with AHBs, Local Authorities and key stakeholders in the sector.

There is also engagement with key professionals in the sector such as engineers, planners, architects, and legal firms across the country to ensure there is broad awareness of HBFI’s product offering.
With the end of Covid-19 restrictions in early 2022, HBFI returned to a full programme of face-to-face activities and events, hosting seven regional events throughout the year to meet with potential and existing customers and participating in over 20 events hosted by industry bodies around the country.

Our Products In 2022, HBFI offered five products providing funding for the development of residential project.
These finance options facilitated the approval of €413m of funding across 28 developments for 1,988 new homes.

The Under 10 Units product continues to benefit from the Competitiveness of Enterprises and Small and Medium-sized Enterprises (“COSME”) guarantee scheme which is operated by the European Investment Fund.

This allows small developments, that might otherwise fall outside HBFI’s risk appetite and would most likely not be financed in the market, to access funding.
This product is of particular relevance to small developments outside of urban centres, that can have a positive and significant impact on the surrounding community relative to their size.

The products offered by HBFI in 2022 are detailed further in the table overleaf.

HBFI | Annual Report 2022 12 Business Review (continued) Under 10 Units (including COSME) The Small Development Funding Product (under 10 units) is designed to provide funding for projects of between five and nine residential units.
n Facility size from €1m (includes land purchase (up to 50%) and development funding) with a cap of €3m on COSME funding n Gearing of up to 80% (includes site purchase and development funding) n Margin of between 6% and 9% (over 3-month Euribor) n A 1% entry and exit fee will be applied subject to a minimum entry fee of €15K and minimum exit fee of €15K n Loan Guarantee Scheme provided by the European Investment Fund1 10 Units or Above HBFI’s original product offering, the Standard Development Funding Product, is designed to fund residential projects of 10 units or more.
Apartment Development The HBFI Apartment Funding Product is primarily geared towards apartment development as opposed to site purchase but may incorporate funding for site as part of the overall facility.

Social/Affordable Housing The Social/Affordable Housing Product is designed to provide funding for social and affordable housing projects that are contracted for sale pre- construction to a Local Authority, an AHB (Approved Housing Body) or the LDA (Land Development Agency).
Green Funding The Green Funding Product is designed to encourage the development of sustainable housing across all HBFI products n Gearing of up to 80% (includes site purchase and development funding) n Margin of between 5% and 8% (over 3-month Euribor), with an entry fee and exit fee of up to 1% n The maximum funding provided under this product type is €35m n Gearing of up to 80% (includes site purchase and development funding) n This product can be used to fund developments with pre-sales/ private sales or a mix n The maximum funding provided under this product type is €75m n Margin and fees will be reflective of risk pertaining to each development n The project must be contracted to a Local Authority, an AHB or the LDA prior to the first drawdown from the facility provided by HBFI n Gearing of up to 80% (includes site purchase and development funding) n The minimum amount that can be borrowed under this product is €3 million n Margin of between 5% and 7% (over 3-month Euribor), with an entry fee of 1% and no exit fee n Ideally, the site should have planning permission or be in the process of achieving planning permission n In order to qualify for the product, the project must be certified to the Home Performance Index or equivalent standard n Those projects that qualify can avail of a discount of up to 0.5% on the margin that they could normally expect to be charged n The product/discount is available across all HBFI products (some products are subject to certain minimum margins) n Early engagement with HBFI is essential to ensure that the criteria for HPI certification are planned from the outset n Further information regarding the qualification criteria can be found on the Home Performance Index Website at homeperformanceindex.ie 1 benefits from the support of the European Union under the Loan Guarantee Facility established under Regulation (EU) No 1287/2013 of the European Parliament and the Council establishing a Programme for the Competitiveness of Enterprises and small and medium enterprises (COSME) (2014-2020).
HBFI | Annual Report 2022 13 Our Stakeholders Engagement with our stakeholders in both the public sector and the residential development sector was ongoing throughout 2022.

Builders and residential property developers seeking finance continue to be our primary stakeholders.
However, the residential development sector includes many stakeholders involved in the delivery of new homes, including: n Affordable Housing Bodies n Architects n Engineers n Estate Agents n Legal Firms n Local Authorities n Planners n Quantity Surveyors A network of Business Introducers was established in 2022.

This network includes business advisors to the construction industry around the country.
These introducers are not appointed by HBFI directly (any contract is between the introducer and the borrower).

However, they are updated on HBFI’s product offering and provide local market feedback to support business development activities in each county.

There are currently over 100 introducers in the network.
HBFI also continued to engage with key professional bodies across the industry, participating in events and meetings with various bodies including: n Construction Industry Federation n Institute of Professional Auctioneers and Valuers n Irish Home Builders Association n Quantity Surveyor Firms and Legal Firms n Society of Chartered Surveyors of Ireland n The Irish Green Building Council As well as participating in 20 national and regional conferences, roadshows, and events over the last year, HBFI also held seven standalone regional events to promote its products, meet with stakeholders and potential customers, and listen to local market feedback.
This ongoing stakeholder engagement aimed: n To continue to raise awareness of HBFI as a direct funding provider to the Residential Construction Sector; n To re-engage and follow up with those who have previously completed an Expression of Interest to see if further assistance is required; and n To gather feedback on what HBFI can do to address any emerging funding gaps and learn how HBFI’s strategy may be improved.
Feedback was sought from a range of stakeholders on HBFI’s performance on a regular basis during 2022.

This feedback is sought both formally, via a biennial survey (the most recent being in June 2022), and informally, via individual stakeholder meetings.

Feedback was sought on issues such as the impact of HBFI on the market, market perception of HBFI’s products, HBFI’s approval process and its level of engagement with the market.
Responses and interactions were considered as part of HBFI’s strategic planning process and are a key factor in ongoing plans to streamline HBFI’s processes and ensure HBFI impacts the sector where it is most needed.

As HBFI is an agency of the state, we also continued to work with relevant government departments, the Housing Agency, Approved Housing Bodies, Local Authorities and the Land Development Agency.
We value the importance of continued engagement and a comprehensive stakeholder engagement plan is in place for 2023 as HBFI continues to build awareness of our product offering and support the delivery of supply targets in the Government’s Housing for All strategy.

Our Policy Considerations Under Section 24 of the HBFI Act, the Minister for Finance must regularly review HBFI to ensure that we are delivering on our mandate and making an impact in the market.
The Minister for Finance has commenced the second such Section 24 review which is due to be finalised in mid-2023.

Any recommendations from this review will be progressed appropriately to ensure HBFI continues to deliver on its mandate to support an increase in the supply of new homes throughout Ireland.

HBFI is cognisant of Government policy relating to housing, in particular the Housing for All strategy published in September 2021.
HBFI meets with the Department of Finance on a regular basis and also, given the synergies in mandate, with the Department of Housing.

In addition, HBFI maintains a specific email address for members of the Oireachtas to submit any queries that may arise.
HBFI | Annual Report 2022 14 Business Review (continued) Throughout 2022, HBFI continued to focus on aligning its activities with Government policy while also addressing its policy considerations through: n Increasing the availability of development finance for the delivery of new homes; n Holding information events around the country and ensuring HBFI staff actively engaged with new and existing customers; and n Regular engagement and collaboration with government agencies, departments and construction industry representatives.
Our ESG Priority HBFI is committed to embedding Environmental, Social and Governance (“ESG”) principles in its business practices in acknowledgement of the importance of ESG to the Irish economy and society.

Environmental Lending Activities The construction sector has seen meaningful improvements in regulation in recent years.

This will ultimately result in a considerable decrease in energy consumption over the lifecycle of new homes.
For example, the Nearly Zero Energy Buildings2 (NZEB) regulations introduced a very high energy performance in building standards requiring that all new homes are NZEB compliant.
HBFI endeavours to ensure that all funded projects are compliant with the latest building standards, with compliance being confirmed by Monitoring Surveyors appointed to each project, helping to ensure that highest standards in building regulation are met on all HBFI funded developments and that the impact on the environment is minimised.
In addition, HBFI launched a Green Funding product in January 2021 to encourage sustainable development and incentivise builders/developers to complete new homes to a standard which is higher than that set by regulation.

The first Green Funding transaction closed in 2022.

As an incentive, HBFI offers a discount of up to 0.5% on the margin charged.

To qualify for this margin reduction, the scheme must be certified to Home Performance Index (“HPI”) or an equivalent standard.
The HPI standard is monitored and certified by the Irish Green Building Council.

Public Sector Climate Action Mandate HBFI is committed to deliver its Climate Action Roadmap in conjunction with the NTMA as part of the Public Sector Climate Action Mandate (2022) in line with targets set out in the CAP23.

Energy Efficiency Report HBFI is located with the National Treasury Management Agency (“NTMA”) in offices at Treasury Dock, North Wall Quay.
Treasury Dock is certified as LEED Platinum and BER A3 energy rating standards and is NZEB compliant.

Treasury Dock has many sustainable features including rainwater harvesting for grey water use, LED lighting and daylight and presence detection sensors to manage lighting requirements and a building management system to control the internal environment in an energy efficient manner.
HBFI is represented on the NTMA’s Green Team which actively encourages environmentally sustainable behaviours among all employees.

The NTMA’s Energy Efficiency Report details energy usage by the Treasury Dock building and is published with the NTMA’s Annual Report on the NTMA website.

2 ‘Nearly Zero Energy Buildings’ means a building that has a very high energy performance.
The nearly zero or very low amount of energy required should be covered to a very significant extent by energy from renewable sources, including energy from renewable sources produced on-site or nearby.

HBFI | Annual Report 2022 15 Social Lending Activities HBFI has a social/affordable housing product, which was introduced in 2020, to promote the delivery of social and affordable housing.
HBFI’s stakeholder engagement programme includes engagement with a range of bodies supporting the delivery of social housing across Ireland, including the Housing Agency, Approved Housing Bodies, the Land Development Agency and Local Authorities.

25% of HBFI’s approvals to date relate to Social & Affordable housing.

General HBFI has a strong focus on employee wellbeing.
HBFI staff, as employees of the NTMA, benefit from a wide range of progressive corporate initiatives aimed at fostering an inclusive and diverse workforce, including gender, disability, multicultural and LGBT+ focused initiatives.

The focus on inclusion and diversity initiatives reflect the Public Sector Duty requirement set out in Section 42 of the Irish Human Rights and Equality Commission Act 2014.

Gender Matters HBFI’s employee gender profile at 31 December 2022 is 25% female/75% male.
HBFI’s board of director gender profile at 31 December 2022 is 57% female/43% male.

The NTMA 2022 Gender Pay Gap Report published on 22 December 2022 includes figures for staff assigned to HBFI and is available on the NTMA website.

Governance HBFI complies with the Code of Practice for the Governance of State Bodies, subject to certain exceptions agreed with the Department of Finance.
HBFI has a strong governance structure around decision making with certain approvals Reserved for Decision by the Board and robust Terms of Reference for the Committees established to support the Board.

In respect of the Board of Directors, these are chosen through an open and transparent Public Appointments Service Process (PAS System).
HBFI | Annual Report 2022 16 HBFI | Annual Report 2022 Case Studies Under 10 Units (including COSME) COMPANY NAME: Heather Homes Ireland SITE NAME: Bell Lane SITE LOCATION: Daingean, Co. Offaly NUMBER OF UNITS: 8 PROJECT STATUS: Under Construction 10 Units or Above COMPANY NAME: Lagan Homes Ireland SITE NAME: Lumann SITE LOCATION: Straffan, Co. Kildare NUMBER OF UNITS: 65 PROJECT STATUS: Under Construction Apartment Development COMPANY NAME: Kimpton Vale SITE NAME: Windmill SITE LOCATION: Clonsilla, Dublin 15 NUMBER OF UNITS: 219 PROJECT STATUS: Nearing Completion HBFI | Annual Report 2022 17 Social/ Affordable Housing COMPANY NAME: Blacon Development CONTRACTED TO: Wexford County Council SITE NAME: Blackwater SITE LOCATION: Co. Wexford NUMBER OF UNITS: 30 PROJECT STATUS: Phase 2 under construction Green Funding Product COMPANY NAME: D/RES Group SITE LOCATION: Newtownmountkennedy, Co. Wicklow NUMBER OF UNITS: 349 PROJECT STATUS: Under Construction 18 Governance and Corporate Information Directors Marie Collins Chairperson Dara Deering Board member (Appointed 1 June 2019 for a five-year term) (Appointed 2 September 2019 for a five-year term) (Member of the Remuneration Committee, Member of the Credit Committee) Marie Collins is an experienced non-executive director in both the private and public sectors.
She currently serves on the boards of Irish Property Unit Trust Plc.

(IPUT) and Dunnes Stores Pension Trustee ULC.

She chairs Bank of Ireland’s General Investment Trust DAC and is a Trustee of Trinity College Dublin Foundation.

She previously chaired the Irish Association of Pensions Funds (IAPF), as well as currently chairing the Audit & Risk Committees of several organisations.

Marie is a Chartered Director, holds an MBA from TCD and Post Graduate Dip in Corporate Governance from UCD.
(Chief Executive Officer and ex officio member) Dara Deering is CEO of HBFI having joined the organisation on 2 September 2019.

Dara has extensive experience in Financial Services having previously served as Executive Director and Head of Retail Banking at KBC Bank Ireland plc since February 2012.

During that time Dara led the launch and implementation of a new Retail Bank, broadening the range of products and services available, and offering a new banking alternative for Irish consumers.
Prior to her time in KBC Dara held a number of leadership positions in the retail financial services industry.

She holds an MBA from Smurfit Business School and a Bachelor of Science Management from Trinity College Dublin.
Des Carville Board member Grainne Hennessy Board member (Appointed 7 December 2018 for a five-year term) (Appointed 1 June 2019 for a five-year term) (Member of the Audit and Risk Committee, Member of the Credit Committee) (Chair of the Remuneration Committee, Member of the Audit and Risk Committee) Des Carville is head of the Shareholding and Financial Advisory Division (SFAD) of the Department of Finance, manages the State’s shareholdings and investments in the banking sector, the National Asset Management Agency (NAMA) and IBRC (in Special Liquidation).
It has policy oversight for the Credit Union sector.

The Division also provides financial advisory services to the Department.

He previously worked with Davy Corporate Finance for 15 years.

He is a member of Chartered Accountants Ireland (FCA), having trained with KPMG, and is a Certified Bank Director with the Institute of Banking.

He is a director of the European Investment Bank.


Grainne Hennessy is a senior partner at Arthur Cox with over 30 years’ experience in advising lenders and borrowers on the funding of real estate investments, including some of the largest construction finance projects in the country.

She was Head of the Finance Department and a member of the management committee of Arthur Cox for six years.
HBFI | Annual Report 2022 19 Andrew O’Flanagan Board member Ken Slattery Board member (Appointed 7 December 2018 for a five-year term) (Appointed 1 June 2019 for a four-year term) (Member of the Remuneration Committee, Member of the Credit Committee) Andrew O’Flanagan is Director of the National Development Finance Agency and NewERA at the National Treasury Management Agency (NTMA).
Prior to joining the NTMA in 2011, he was Group Head of Legal at ESB and Chief Legal Officer of Ervia and worked in New York and London for seven years as a corporate lawyer with the Wall Street law firm Davis Polk & Wardwell, which included a secondment to the international investment bank Morgan Stanley.

Andrew is a graduate of NUI Galway and Yale Law School (where he was a John F. Kennedy Scholar).
(Chair of the Audit and Risk Committee)* Ken Slattery has extensive board room experience in the financial services sector, currently on the board of Permanent TSB where he chairs the Remuneration Committee and sits on the Nomination, Culture and Ethics Committee.

He is also on the board of the National Shared Services Office where he chairs the Audit and Risk Committee.
Previously he held a number of senior leadership positions with Bank of Ireland including Corporate Banking Director (15 years) and Credit & Operations Director with Social Finance Foundation (nine years).

He is a Fellow of the Institute of Bankers and a Certified Bank Director.

Claire Solon Board member (Appointed 1 June 2019 for a four-year term) (Member of the Credit Committee)* Claire Solon is Managing Director at Greystar Ireland managing multi-family investment and development in Ireland.
Previous roles include Head of Property at Aviva, managing in excess of €600m of property funds in Ireland and UK and Head of Estates Management at ESB, responsible for the management of the ESB property portfolio in Ireland.

She is a Fellow of the SCSI and RICS and has lectured extensively in valuations and feasibility analyses.

She served as President of the Society of Chartered Surveyors in 2016 and also served on the Board of the Irish Green Building Council.
* Reappointed for a second term which will take effect from 1 June 2023.

HBFI | Annual Report 2022 20 Governance Statement and Board Members’ Report n Prepare the financial statements on a going concern basis unless it is inappropriate to do so; and n Disclose and explain any material departure from applicable accounting standards.
The Board is responsible for ensuring that HBFI keeps, or causes to be kept, adequate accounting records which correctly explain and record the transactions of the Company, enable at any time the assets, liabilities, financial position and profit or loss of the Company to be determined with reasonable accuracy, enable them to ensure that the Financial Statements and Directors’ Report comply with the Companies Act 2014 and enable the financial statements to be audited.
The Board is responsible for approving the HBFI income and expenditure budget and corporate strategy.

Forecasts against budget and goals are reviewed by the Board during the year and variations are reviewed at year end.

The Board is also responsible for safeguarding its assets and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Board considers that the financial statements of HBFI give a true and fair view of the financial performance during the period under review and the financial position of HBFI at 31 December 2022.

Board Structure HBFI’s Constitution provides that there shall be a minimum of three and a maximum of seven directors, one of whom will be the Chief Executive Officer as an ex-officio member of the Board.
The first three directors were appointed by the Minister on the formation and registration of HBFI with the additional four directors appointed on 1 June 2019 following a Public Appointments Service process.

The CEO was appointed to the Board in September 2019 replacing one of the original Board members.

The Chairperson is appointed by the Minister.

A director’s term of office shall not exceed five years.

Directors may be reappointed for a subsequent term subject to a maximum of ten years in total.
Details of the current directors and their appointment periods are set out on pages 18 to 19.

Governance HBFI was incorporated as a designated activity company pursuant to the Home Building Finance Ireland Act 2018 (the “HBFI Act 2018”) on 7 December 2018.

A group entity, Home Building Finance Ireland (Lending) DAC (“HBFIL”) was subsequently incorporated on 4 January 2019.

The Board is accountable to the Minister for Finance.
The Board is responsible for ensuring good governance and performs this task by setting strategic objectives and targets and making strategic decisions on all key business issues.

The regular day-to-day management, control and direction of HBFI, within defined authority levels, are the responsibility of the Chief Executive Officer (CEO) and the senior management team.
The CEO and the senior management team must follow the broad strategic direction set by the Board and must ensure that all Board members have a clear understanding of the key activities and decisions related to the entity, and of any significant risks likely to arise.

The CEO acts as a direct liaison between the Board and management of HBFI.

Board Responsibilities The functions of HBFI are prescribed in Section 7 of the HBFI Act 2018.
There is a formal schedule of matters reserved for decision by the Board.

This includes: n Annual Reports and Financial Statements; n Risk Management Policy; n Risk Appetite Statement, including eligibility criteria; n Strategic Plan; n Annual Budgets and Corporate Plans; n Financing facilities; n Appointment and terms and conditions of the Chief Executive Officer (after consultation with the Minister); and n Overall remuneration policy and staffing plan.
HBFI is required by the HBFI Act 2018 to prepare financial statements in respect of its operations for each financial year.

The financial statements are prepared in accordance with FRS 102, the Financial Reporting Standard applicable in the UK and Ireland, and in accordance with the Companies Act 2014.
In preparing these financial statements, the HBFI Board is required to: n Select suitable accounting policies and apply them consistently; n Make judgements and estimates that are reasonable and prudent; HBFI | Annual Report 2022 21 The Board has established three committees to assist it in discharging its responsibilities, each with formal terms of reference: n Audit and Risk Committee n Credit Committee n Remuneration Committee For further information on the Board’s committees, see Committee Reports on pages 25 to 26.
In addition, the Board has delegated certain credit decisions to an Executive Management Team Credit Committee through the Delegated Authority Policy, which is subject to regular review by the Board.

The Board plan includes a requirement for the Board to conduct an annual evaluation of its own performance and that of its Committees.

In each of the years since establishment, this performance evaluation was conducted by way of self-assessment.
In 2022, the Board’s performance evaluation was conducted externally in accordance with the requirement set out in paragraph 4.6 of the Code of Practice for the Governance of State Bodies (2016).

The Board is supported in its functions by the Board Secretary who also coordinates the activities for the various Board committees.
Schedule of Attendance, Fees and Expenses A schedule of attendance at the Board and Committee meetings for 2022 is set out below including the fees and expenses received by each member in their capacity as a Board or Committee member: Board Scheduled Unscheduled Audit and Risk Committee Credit Committee Remuneration Committee Fees 2022 € Expenses 2022 € Number of Meetings 8 8 8 8 6 8 8 5 Board Members Dara Deering Marie Collins Des Carville Grainne Hennessy Andrew O’Flanagan Ken Slattery Claire Solon Staff Members Sean Alger Michael Broderick 2 2 2 2 1 1 1 2 6 6 4 6 7 7 7 7 4 6 7 0/1(p) 2 2 2 2 €31,500 €15,750 €15,750 €15,750 (p) refers to the number of meetings it was possible to attend based on dates of membership The Chief Executive Officer (ex officio member), Andrew O’Flanagan (NTMA) and Des Carville (Department of Finance) do not receive any remuneration in respect of their membership of the Board.
Members of staff do not receive any additional remuneration in respect of membership of committees.

HBFI | Annual Report 2022 22 Governance Statement and Board Members’ Report (continued) Employee Short-Term Benefits Breakdown Employee short-term benefits in excess of €50,000 in 2022 are categorised into the following bands: Range No.
of Employees €50,001 to €75,000 €75,001 to €100,000 €100,001 to €125,000 €125,001 to €150,000 €150,001 to €175,000 €175,001 to €200,000 €200,001 to €225,000 €225,001 to €250,000 €250,001 to €275,000 €275,001 to €300,000 Total 3 8 7 5 1 2 0 0 1 0 27 Note: For the purposes of this disclosure, short-term employee benefits rendered during 2022 include salary, other taxable benefits paid to employees (including performance-related payments), and other payments made on behalf of employees, but exclude employer’s PRSI and employer pension contributions.
Disclosures Required by Code of Practice for the Governance of State Bodies (2016) The Board is responsible for ensuring that HBFI has complied with the requirements of the Code of Practice for the Governance of State Bodies (“the Code”), as published by the Department of Public Expenditure and Reform in August 2016.

The following disclosures are required by the Code: Consultancy Costs Consultancy costs include the cost of external advice to management and exclude outsourced ‘business-as- usual’ functions.
Gender Balance in the Board membership As at 31 December 2022, the Board had four female (57%) and three male (43%) members, with no positions vacant.

The Board therefore meets the Government target of a minimum of 40% representation of each gender in the membership of State Boards.
The following measures are in place to maintain and support gender balance on this Board: n The term of office of appointed members does not exceed five years; and n Board vacancies are filled through the Public Appointments Service process which considers the requirements set out in Section 4.4 of the Code of Practice for the Governance of State Bodies regarding diversity.

Key Personnel Changes There were no changes to the members of the Board during 2022.
With effect from 1 February 2022, Michael Broderick was assigned from his role as Chief Commercial Officer to another role outside of HBFI.

Remuneration The HBFI Act 2018 provides that the NTMA shall assign staff to HBFI as HBFI determines to be necessary for the performance of its functions.

Thus, all HBFI staff are employees of the NTMA.

The NTMA’s remuneration model is based on confidential, individually negotiated employment contracts, with competitive, market-aligned remuneration.
The typical remuneration package comprises a fixed-base salary, pension entitlement and provision for discretionary performance-related pay.

Discretionary performance-related payments are intended to reward exceptional performance having regard to the employee’s own performance, the performance of the employee’s area of responsibility, and the overall performance of HBFI.
Performance related payments are made in accordance with parameters approved by the Board on the recommendation of the Remuneration Committee.

The overall amount of performance-related payments made in respect of any year is also subject to the approval of the Board.

HBFI made performance-related payments to 8 staff in 2023 in respect of 2022.

These payments totalled €88,000 in aggregate.
HBFI | Annual Report 2022 23 Legal advice Financial advice Marketing/Design/Public Relations Human Resources Other 2022 €’000 2021 €’000 38 100 12 1 21 50 49 30 15 30 Total consultancy costs 172 174 Consultancy costs capitalised 0 0 Consultancy costs charged to the Statement of Comprehensive Income Total consultancy costs 172 172 174 174 Legal Costs and Settlements For the purposes of the Code disclosure requirement, there was no relevant expenditure incurred in 2022.
Travel and Subsistence Expenditure Travel and subsistence expenditure is categorised as follows: Domestic – Board – Employees International – Board – Employees Total 2022 €’000 2021 €’000 0 39 0 0 39 0 19 0 0 19 Hospitality Expenditure The Statement of Comprehensive Income includes €5.7k in respect of staff hospitality expenditure in 2022 (2021: €2.9k).

This includes the NTMA’s corporate health and wellbeing programme.
Statement of Compliance HBFI has complied in all material respects with the Code of Practice for the Governance of State Bodies, as published by the Department of Public Expenditure and Reform (“the Code”) with a limited number of adaptions/variations which have been agreed with the Department of Finance as summarised below: Matters Reserved for Decision by the Board The Code sets out a formal schedule of matters specifically reserved for decision by the Board.
Other than “significant amendments to the pension benefits of the Chief Executive and staff” which is a matter for the NTMA Board as all HBFI staff are employees of the NTMA and are members of the NTMA superannuation scheme, the Schedule of Reserved Matters includes the items set out in the Code.

Customer Service The Code sets out a requirement to have a four-step cycle in respect of a customer charter.
In relation to the fourth step which deals with the reporting of results, as the Code does not specify whether this reporting should be external or internal, HBFI reports the results internally to the Board.
Non-Compliance with Statutory Obligations In view of the wide range of relevant statutory obligations to which HBFI is subject, it is agreed to address this requirement with regard to the most significant obligations to which HBFI is subject and to apply a materiality filter to the notification of any incidence of non-compliance to the Minister.

Audit and Risk Committee The Code recommends that the Audit and Risk Committee has members drawn from outside the Board.
Although the Committee consists wholly of non- executive Board members, the Board is satisfied that the members have the requisite skills and experience to perform the role required.

Public Spending Code The Public Spending Code is likely to be limited in its application to HBFI as its principal activity is the provision of finance to commercially viable residential developments.

Should HBFI engage in capital projects, a further review of the applicability of the Public Spending Code will be undertaken.
HBFI | Annual Report 2022 24 Governance Statement and Board Members’ Report (continued) Remuneration and Superannuation The HBFI Act 2018 provides that the NTMA shall assign such staff to HBFI as HBFI determines to be necessary for the performance of its functions.

Thus, all HBFI staff are employees of the NTMA.


Remuneration matters in respect of NTMA employees assigned to HBFI are approved by the NTMA Chief Executive Officer, representing the NTMA as employer, in accordance with criteria and oversight arrangements agreed from time to time with HBFI.

With regard to these criteria and oversight arrangements, the HBFI Board has established a Remuneration Committee and has put in place a formal remuneration policy.
In complying with the Code’s provisions in respect of remuneration, HBFI has adopted the provisions applying to commercial State bodies, adapted in light of its particular governance and reporting structures and remuneration model.

Travel Circulars The NTMA’s travel policy which applies to all HBFI staff is based on the Framework for a Travel Policy for State Bodies contained in the Code.

Revenue approved civil service mileage rates (reflecting Circular 07/2017) are applied.
In accordance with the NTMA travel policy, HBFI does not pay subsistence rates in respect of travel but operates a vouched expense process for the reimbursement of travel expenses and Department of Public Expenditure and Reform circulars and office notices regarding subsistence are, therefore, not applied.
HBFI | Annual Report 2022 Committee Reports Audit and Risk Committee Report The Audit and Risk Committee’s role is to assist the Board in the oversight of: n the quality and integrity of the financial statements; the review and monitoring of the effectiveness of the systems of internal control; the internal audit process and compliance matters; and the review of the outputs from the external auditor, the Comptroller and Auditor General (C&AG); and n HBFI’s risk management framework including risk appetite; the monitoring of adherence to risk governance and ensuring risks are properly identified, assessed, managed and reported.
The Committee comprises of three non-executive members appointed by the Board.

The members of the Committee during 2022 were: n Ken Slattery, Chairperson n Des Carville n Grainne Hennessy The Committee met on six occasions in 2022.

Financial Reporting The Committee reviewed the draft financial statements and recommended them to the Board.
The review focused on the accounting methods, the Companies Act 2014 and the clarity and completeness of disclosures in line with applicable accounting standards, and relevant provisions of the Code of Practice for the Governance of State Bodies.

The Committee also reviewed the Governance Statement and Board Members’ Report, and statements on risk management for inclusion in the HBFI Annual Report.

Internal Controls The Committee reviewed the effectiveness of the system of internal control.
It also reviewed the Statement on Internal Control to be included in the 2022 financial statements and recommended it to the Board.

The review was informed by a report from management in relation to the assertions contained in the Statement and by the Committee’s detailed work programme, including regular internal audit and risk reports.

25 Internal Audit HBFI’s internal audit process is managed by the NTMA Internal Audit function.

The Committee received regular reports from internal audit.
It reviewed the key findings from the outcome of individual audit reviews completed under the 2022 risk-based internal audit plan and monitored the implementation of audit recommendations.

The Committee approved the 2023 internal audit plan.

The Committee reviewed the effectiveness of the internal auditor.

The Committee meets privately with the NTMA Head of Internal Audit without management present at least annually.

External Audit HBFI’s external auditor is the Comptroller and Auditor General.
The Committee reviewed the external audit plan, the key areas of focus and the audit terms of engagement.

The Committee meets with the external auditor without management present at least annually.

Risk The Committee approved updates to certain risk policies and recommended updates to the Board, in accordance with the Risk Management Policy and Framework.
The Committee reviewed HBFI’s Risk Management Policy and Framework and Risk Appetite Statement and received regular reports on HBFI’s risks and the controls in place to mitigate risks.

The Committee also approved the Risk Management Plan for 2023 and monitored progress against the 2022 plan.

The Committee meets privately with the Head of Risk without management present at least annually.

Compliance The Committee reviewed the annual compliance report and the services provided by NTMA Compliance.
The Committee approved updates to the Protected Disclosures Policy.

The Committee also reviewed and recommended to the Board the Business Risk Assessment and the Anti-Money Laundering Policy.

The Committee meets with the NTMA Head of Compliance without management present at least annually.

Other The Committee’s priorities in respect of 2023 were approved as part of its Work Programme 2023.

The terms of reference for the Audit and Risk Committee were reviewed by the Board during 2022.
HBFI | Annual Report 2022 26 Committee Reports (continued) Credit Committee Report The Committee operates under delegated authority from the Board of HBFI which has ultimate responsibility for the credit risk of HBFI.

Commensurate with the risk appetite approved by the Board, and subject to agreed credit policies, the Credit Committee is responsible for the approval of credit applications in line with the credit approval authority as set out in the Delegated Authority Policy approved by the Board.
Remuneration Committee Report The Remuneration Committee assists the Board on remuneration matters in respect of the NTMA employees assigned to HBFI in accordance with the criteria and oversight arrangements agreed with the NTMA.

The Board is responsible for HBFI’s overall Remuneration Policy and is guided in its responsibilities by the advice and recommendations of the Remuneration Committee.

The Committee comprises of three non-executive members appointed by the Board.
Its current members are: n Grainne Hennessy, Chairperson n Andrew O’Flanagan n Marie Collins The Remuneration Committee met twice during 2022.

The terms of reference for the Remuneration Committee were reviewed by the Board during 2022.

The Committee comprises of four non-executive members of the Board, the Chief Executive Officer and the Head of Credit and Risk1.
The members of the Committee during 2022 were: n Marie Collins Chairperson (Board Chairperson) n Des Carville n Andrew O’Flanagan n Claire Solon n Dara Deering n Sean Alger (HBFI Head of Credit & Risk) n Michael Broderick (HBFI Chief Commercial Officer) (to 31 January 2022) The Credit Committee met on seven occasions during the year.

Its main activity involved the review of detailed credit proposals from management.

The terms of reference for the Credit Committee were reviewed by the Board during 2022.
1 Previously also included the Chief Commercial Officer HBFI | Annual Report 2022 Risk Management HBFI aims to manage risk in an informed and proactive manner, in accordance with its Risk Management Policy and Framework and its Risk Appetite Statement, such that the level of accepted risk is consistent with its underlying business activity, and that HBFI understands and is able to manage or absorb the impact of any risks that may materialise.
HBFI complies with the risk management provisions of the Code of Practice for the Governance of State Bodies (2016).

Throughout 2022, the Audit and Risk Committee and the Board reviewed the Risk Register on a regular basis, and the Board received regular updates in respect of risk management and high and emerging risks.

Roles and Responsibilities Board The Board is responsible for setting the risk appetite and overseeing and guiding risk management activity across HBFI.
The Board has mandated that risk management be integrated and embedded into the tone and culture of HBFI and this has been adopted across HBFI with all members of the HBFI team responsible for identification and management of risk.

Management is responsible for regularly reviewing the risk register and individually confirming that the stated controls are in place.
Audit and Risk Committee The Audit and Risk Committee is responsible for overseeing the implementation of the HBFI Risk Management Policy and Framework and ensuring that HBFI’s risk management governance model provides appropriate levels of independence and challenge.

The Audit and Risk Committee reports to the Board.

27 Three Lines of Defence First Line of Defence HBFI’s Risk Management Policy and Framework is predicated on the three lines of defence model.
Within this model, the HBFI team and senior management (first line of defence) incur and own the risks.

Second Line of Defence The HBFI Risk function (the second line of defence) provide independent oversight and objective challenge to the first line of defence.

They also provide risk monitoring and reporting.


Third Line of Defence The Internal Audit function acts as part of a third line of defence by providing independent, reasonable, risk- based assurance to key stakeholders on the robustness of the HBFI risk management system, its governance and the design and operating effectiveness of the internal control environment.

Audit In accordance with statutory requirements, HBFI is audited by the Comptroller and Auditor General.
HBFI’s internal audit process is managed by the NTMA Internal Audit function and includes an external firm, currently KPMG, appointed to carry out internal audit work reporting to the NTMA Head of Internal Audit.

Principal Risks HBFI is exposed to a wide variety of risks which have the potential to affect its financial and operational performance.

The Risk Management Policy and Framework establishes the processes to identify, assess, report and mitigate risk.
HBFI has identified the following principal risks which may adversely affect the achievement of its objectives.

In addition, HBFI maintains a comprehensive Risk Register which identifies all of the risks facing HBFI, including credit risk, business & strategic risk, operational risk, liquidity, market & equity risk, regulatory risk and ESG risk among others.

Reputational risk may also occur as a consequence of these risks.
HBFI | Annual Report 2022 28 Risk Management (continued) Risk Description of the Risk Risk Mitigation Measure Credit Risk Business and Strategic Risk Operational Risk Liquidity, Market and Equity Risk Regulatory Risk Credit Risk is defined as the risk of financial loss resulting from a counterparty being unable to meet its contractual obligations to HBFI in respect of loans or other financial transactions.
This risk comprises default risk, recovery risk, exposure risk, concentration risk and settlement risk.

The risk that HBFI will not perform as anticipated against its mandate which could be affected by strategy formation/execution and/or macroeconomic and geopolitical factors.

HBFI is exposed to operational risk arising from its internal processes, people and systems or from external events, including weather events or pandemics.
Key operational risks include system failures, reporting errors, data protection breaches and failure to follow procedures which could potentially result in HBFI failing to meet its objective and/or reputational damage.

Liquidity, market and equity funding risk is the possibility that, over a specific time horizon, HBFI will be unable to fund its assets or have insufficient funds to meet its obligations as they fall due.
Risk mitigants include HBFI’s credit review and sanctioning process, adherence to relevant lending and credit policies and procedures, ongoing monitoring and review of facilities.

This risk is mitigated by ongoing product and strategic reviews to ensure that strategy is aligned to market needs.
HBFI is flexible and, if necessary, can adjust its strategy and business offering to fill gaps in the market This risk is mitigated by an appropriate management and monitoring structure and the ability to leverage the existing systems, processes and controls of the NTMA and external service providers.
The availability of funds to meet specific obligations as they fall due is managed through careful forward planning and day-to-day cashflow management and reporting and adherence to liquidity targets set out in relevant policies.

The risk that HBFI could be subject to a legal challenge under State Aid rules or the failure by HBFI to meet new or existing regulatory and/or legislative requirements and deadlines or to embed requirements into processes.
HBFI must comply with a number of regulatory requirements including data protection law, anti-money laundering legislation and State Aid rules.

This risk is mitigated by the procurement of a Market Economy Operator Principle report annually and adherence to relevant policies and procedures together with operational support and services provided by the NTMA under a Service Level Agreement, including appointment of a Data Protection Officer and a Money Laundering Reporting Officer.
Environmental, Social and Governance Risk The risk that HBFI does not take necessary actions to integrate and implement ESG into its business operations and work practices.

The HBFI product suite includes a Social & Affordable Housing and a Green Funding product.

HBFI funded developments must comply with standards set out in applicable planning permissions and building regulations.

HBFI has a robust risk management framework in place with oversight and reporting to the HBFI Board.
HBFI | Annual Report 2022 Management Team 29 Dara Deering Chief Executive Officer Denise Donovan Head of Operations and Finance Paula Flinter Head of Legal Sean Alger Head of Credit and Risk Fergus Mangan Head of Lending Note: With effect from 1 February 2022, the Chief Commercial Officer was assigned to another role outside of HBFI.
HBFI | Annual Report 2022 30 HBFI | Annual Report 2022 Financial Statements Contents Company and Other Information Directors’ Report Statement of Directors’ Responsibilities Statement on Internal Control Report of the Comptroller and Auditor General Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Company Statement of Comprehensive Income Company Statement of Financial Position Company Statement of Changes in Equity Company Statement of Cash Flows Notes to the Financial Statements 31 32 34 35 37 39 40 41 42 43 44 45 46 47 Company and Other Information 31 Directors Marie Collins (Chairperson) Desmond Carville Dara Deering Grainne Hennessey Andrew O’Flanagan Timothy Ken Slattery Claire Solon Company Secretary Cecilia Fourie Registered Office Treasury Dock North Wall Quay Dublin 1 D01 A9T8 Bankers Allied Irish Banks Plc Molesworth Street Dublin 2 D02 W260 Central Bank of Ireland New Wapping Street North Wall Quay Dublin 1 D01 F7X3 Auditor Comptroller and Auditor General 3A Mayor Street Upper Dublin 1 D01 PF72 HBFI | Annual Report 2022 32 Directors’ Report The Directors of Home Building Finance Ireland DAC present their report and audited Group and Company financial statements for the year ended 31 December 2022 (“the financial year”).
Principal risks and uncertainties The principal risks and uncertainties facing the Group are detailed below.

In addition, reputational risk may occur as a consequence of these risks.

Home Building Finance Ireland DAC (“HBFI” or the “Company”), the holding company, was incorporated on 7 December 2018 (company reg.

639272) pursuant to the Home Building Finance Ireland Act 2018 (“HBFI Act 2018”) which was enacted on 3 December 2018.
On incorporation, HBFI allotted and issued, to the Minister for Finance, shares with a total nominal value of €20 million.

HBFI established and is a 100% shareholder of Home Building Finance Ireland (Lending) DAC (“HBFIL” or the “Subsidiary”) which was incorporated on 4 January 2019 (company reg.

640801).

Principal activities The principal activity of the Group is to provide debt funding for residential development in the State.
HBFIL provides financing to builders and developers seeking to build viable residential development projects in Ireland on commercial, market equivalent terms and conditions.

Business review The 2022 Annual Report (“the Report”) forms part of the Directors’ Report.

The Chairperson’s Statement and Chief Executive Officer’s Review in the Report outline the development and performance of HBFI during the financial year and significant events that occurred during that period.
Further information on HBFI’s strategy, business model and operations is provided in the Business Review section of the Annual Report.

During the financial year, HBFI focused on achieving its key objectives by continuing to assess loan applications and advance loan amounts to existing and new developments.
During the financial year, the following represent the key outcomes: n €413m of loans approved for borrowers1; n €331m2 of funds advanced to borrowers under approved loans; n €135m of capital loans repaid by borrowers; n €4.1m Operating Profit for the year.

Credit Risk n The Group is exposed to the risk that a borrowing counterparty defaults on its obligations and fails to repay its debt in full, resulting in losses to the Group.
Business and Strategic Risk n There is a risk that HBFI may not perform as expected against its mandate due to factors such as strategy formulation and execution or the impact of macroeconomic and geopolitcal events.

Operational Risk n The Group is exposed to a broad range of operational risks arising from the people, systems and processes involved in meeting its objectives and from external events such as weather events or pandemics.
Key operational risks include and are not limited to systems failures, reporting errors, data protection breaches and process errors, over reliance on key individuals, failure to follow procedures which could ultimately result in the Group failing to meet its objectives and significant reputational damage.

Liquidity, Market and Equity Risk n The risk that HBFI will be unable to fund its assets or have insufficient funds to meet its obligations as they fall due.
Regulatory Risk n The Group may be subject to a legal challenge under State aid rules.

Such a challenge could inhibit the Group’s activities pending a resolution.

The Group is also exposed to the risk that it fails to meet other regulatory and legislative requirements.

Environmental, Social and Governance Risk n The risk that HBFI does not take necessary actions to integrate ESG into its business operations and work practices.
1 Not all loans approved will proceed to draw down funding from HBFI for various reasons including the project not progressing or alternative funding secured 2 Including interest and commitment fees capitalised HBFI | Annual Report 2022 33 Financial risk management The Group is exposed to financial risks including market risk, liquidity risk, capital risk and concentration risk in addition to credit risk in the normal course of its business.
Further details on how the Group manages these financial risks are given in Note 12 to the financial statements.
Directors The following are the names of the persons who, at any time during the financial year, were Directors of the Company: Marie Collins (Chairperson) Desmond Carville Dara Deering Grainne Hennessey Andrew O’Flanagan Timothy Ken Slattery Claire Solon Company Secretary Cecilia Fourie Directors’ interests The Directors had no beneficial interest in the Group during the financial year or at the year end.

The issued share capital of the Group is owned solely by the Minister for Finance.
Adequate accounting records The Directors ensure compliance with the Group’s obligations with regards to keeping accounting records required under sections 281 to 285 of the Companies Act 2014, through the use of qualified accounting personnel and appropriate systems and procedures, as set out in the Statement on Internal Control on page 35.

The accounting records are kept at the Company’s registered office at Treasury Dock, North Wall Quay, Dublin 1, D01 A9T8.
Results and dividends The results for the financial year and assets, liabilities and financial position of the Group are set out in the Consolidated Statement of Comprehensive Income and the Consolidated Statement of Financial Position on pages 39 and 40 respectively.

The Company results and financial position are set out on pages 43 and 44.
The Group did not pay any dividends during the financial year to its sole shareholder, the Minister for Finance, and does not propose to pay any dividends for this financial year.

Events after the reporting period Refer to Note 25 of the financial statements.

Auditor The Comptroller and Auditor General (“C&AG”) is the Group’s statutory auditor by virtue of section 15 (2) of the HBFI Act 2018 which permits the C&AG to be HBFI’s statutory auditor notwithstanding HBFI is a for profit entity.
So far as each of the Directors in office at the date of approval of the financial statements is aware: n There is no relevant audit information of which the Group’s auditor is unaware; and n The Directors have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Group’s auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of Section 330 of the Companies Act 2014.
Approved and authorised for issue by the Board of Directors and signed on its behalf: Dara Deering Chief Executive Officer Home Building Finance Ireland DAC Marie Collins Chairperson Home Building Finance Ireland DAC 19 April 2023 HBFI | Annual Report 2022 34 Statement of Directors’ Responsibilities They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Legislation in Ireland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.
Approved and authorised for issue by the Board of Directors and signed on its behalf: Dara Deering Chief Executive Officer Home Building Finance Ireland DAC Marie Collins Chairperson Home Building Finance Ireland DAC 19 April 2023 Directors’ responsibilities statement The directors are responsible for preparing the Directors’ Report and the Group and Company financial statements (“the financial statements”) in accordance with the Companies Act 2014.
Irish company law requires the directors to prepare financial statements for each financial year.

Under that law the directors have elected to prepare the financial statements in accordance with FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland, issued by the Financial Reporting Council (“relevant financial reporting framework”).
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the assets, liabilities and financial position of the Group and Company as at the financial year end date and of the profit or loss of the Group for the financial year and otherwise comply with the Companies Act 2014.
In preparing these financial statements, the directors are required to: n select suitable accounting policies for the financial statements and then apply them consistently; n make judgments and estimates that are reasonable and prudent; n state whether the financial statements have been prepared in accordance with the applicable accounting standards, identify those standards, and note the effect and the reasons for any material departure from those standards; and n prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for ensuring that the Company keeps or causes to be kept adequate accounting records which correctly explain and record the transactions of the Company, enable at any time the assets, liabilities, financial position and profit or loss of the Company to be determined with reasonable accuracy, enable them to ensure that the financial statements and the director’s report comply with the Companies Act 2014 and enable the financial statements to be audited.
HBFI | Annual Report 2022 35 Statement on Internal Control The consolidated and Company financial statements for HBFI are prepared within an internal control framework established by HBFI.

The HBFI Board and the committees established by the Board are responsible for the monitoring and oversight of HBFI and its subsidiary, HBFIL.

Scope of Responsibility On behalf of HBFI, we acknowledge the Board’s responsibility for ensuring that an effective system of internal control is maintained and operated.
This responsibility takes account of the requirements of the Code of Practice for the Governance of State Bodies (2016).

Purpose of the System of Internal Control The system of internal control is designed to manage risk to a tolerable level rather than to eliminate it.
The system can therefore 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 detected in a timely way.

The system of internal control, which accords with guidance issued by the Department of Public Expenditure and Reform, has been in place in HBFI for the year ended 31 December 2022 and up to the date of approval of the financial statements.
Capacity to Handle Risk HBFI has a formal risk management and governance framework in place, designed to support the proactive management of risk.

HBFI’s Risk Management Policy and Framework and Risk Appetite Framework together set out its risk appetite and risk management processes.

HBFI has an Audit and Risk Committee (“ARC”) comprising of three non-executive members of the Board with financial and audit experience, one of whom acts as the Chairperson.

The ARC met on six occasions during 2022.


The ARC oversees the internal audit activities of HBFI, which are based on a programme of work agreed with the ARC and performed by the National Treasury Management Agency’s (“NTMA”) internal audit function.
The NTMA provides certain finance, human resources, information technology, internal audit, compliance and procurement services to HBFI, as provided for under section 9 of the HBFI Act 2018, and as agreed in the Service Level Agreement between the NTMA and HBFI.

HBFI therefore depends to a significant degree on the controls operated by the NTMA.
The NTMA has developed a thorough system of internal control and any services provided to HBFI under the Service Level Agreement are provided in accordance with the NTMA’s system of internal control.

HBFI has received an assurance from the NTMA that it has reviewed its system of internal control in relation to services provided to HBFI.

HBFI has also relied on controls operated by its third- party Loan Services provider.
These loan services are provided in accordance with a Service Level Agreement and HBFI has established procedures with the Loan Services provider for the reporting of incidents, including control failures.

HBFI has received an assurance from its Loan Services provider, Fexco Asset Finance Limited, that it has reviewed its system of internal control in relation to services provided to HBFI.
Risk and Control Framework HBFI has implemented a risk management system which identifies and reports key risks and the management actions being taken to address and, to the extent possible, to mitigate those risks.

A Risk Register is in place, which identifies the key risks facing HBFI and these have been identified, evaluated and graded according to their significance.

On the basis of risks identified, controls are implemented to manage and mitigate these risks.
The Risk Register is reviewed by the ARC on a quarterly basis and by the Board of Directors annually at a minimum.

The outcome of these assessments is used to plan and allocate resources to ensure risks are managed to an acceptable level.

The management team is required to attest on a quarterly basis that the controls noted in the Risk Register are in place and effective, to the best of their knowledge.
The Risk Register (i) details the controls and actions needed to mitigate risks and (ii) assigns responsibility for operation of controls to specific staff.
We confirm that the control environment contains the following elements: n Documented procedures for key business processes; n Systems ensuring the security of the information and communication technology systems; n Regular review and assessment of financial assets; n A comprehensive budgeting system including an annual budget which is reviewed and approved by the Board of Directors; n Regular reviews of periodic financial reports which detail financial performance against forecasts; and n Adherence to a Protected Disclosures Policy and Anti-Fraud Policy.
HBFI | Annual Report 2022 36 Statement on Internal Control (continued) Review of Effectiveness We confirm that HBFI has procedures to monitor the effectiveness of its risk management and control procedures.

HBFI’s monitoring and review of the effectiveness of the system of internal control is informed by the work of the internal and external auditors, the ARC which oversees their work, and the senior management within HBFI responsible for the development and maintenance of the internal control framework.
We confirm that the Board conducted a review of the system of internal control for the year ended 31 December 2022.

Internal Control Issues No weaknesses in the system of internal control were identified in relation to the year ended 31 December 2022 that require disclosure in the financial statements.
Dara Deering Chief Executive Officer Home Building Finance Ireland DAC Marie Collins Chairperson Home Building Finance Ireland DAC 19 April 2023 Ongoing Monitoring and Review Formal procedures have been established for monitoring control processes.

Any control deficiencies are communicated to those responsible for taking corrective action and to management and the Board, where relevant, in a timely way.
We confirm that the following ongoing monitoring systems are in place: n Key risks and related controls have been identified and processes have been put in place to monitor the operation of those controls and report any identified deficiencies; n Reporting arrangements have been established at all levels where responsibility for financial management has been assigned; and n There are regular reviews by senior management of periodic/annual performance and financial reports which indicate performance against budgets/ forecasts.
Procurement HBFI’s procurement support is provided by the NTMA and HBFI adheres to the NTMA Procurement Policy (published on its website) and associated procedures, which are consistent with the current Office of Government Procurement guidelines.

In certain circumstances, it is deemed appropriate to obtain duly authorised exceptions from the Policy and Procedure (i.e.

not run a competitive tender process) in respect of services, supplies or works valued above €5,000 (ex VAT) and below the EU thresholds.
Such exceptions are approved by the Executive Management team and do not amount to non-compliant procurement.

During 2022, the following procurement exceptions were approved: n Pending the completion of a competitive process, HBFI engaged a valuation firm without a competitive tender process with a total cost of €0.07m to ensure business requirements continued to be met.

A competitive process was undertaken in 2022 with a new valuation firm appointed in June 2022 pursuant to that process.
n Pending the finalisation of the appointment of a new insurance advisory firm following a competitive process undertaken in late 2021, HBFI engaged a single firm on a temporary basis to ensure continuity of services with a total cost of €0.05m.

The competitive process was finalised and a new advisor appointed in April 2022.
HBFI | Annual Report 2022 37 Ard Reachtaire Cuntas agus Ciste Comptroller and Auditor General Report for presentation to the Houses of the Oireachtas Home Building Finance Ireland Opinion on the financial statements I have audited the group and company financial statements of Home Building Finance Ireland for the year ended 31 December 2022 as required under the provisions of the Home Building Finance Ireland Act 2018.
The financial statements comprise the consolidated and company statements of comprehensive income, the consolidated and company statements of financial position, the consolidated and company statements of changes in equity, the consolidated and company statements of cash flows and the related notes, including a summary of significant accounting policies.
In my opinion, the financial statements n give a true and fair view of the assets, liabilities and financial position of the group and of the company at 31 December 2022 and of the group’s profit for the year n have been properly prepared in accordance with Financial Reporting Standard (FRS) 102— The Financial Reporting Standard applicable in the UK and the Republic of Ireland, and n have been properly prepared in accordance with the Companies Act 2014.
Basis of opinion I conducted my audit of the financial statements in accordance with the International Standards on Auditing (ISAs) as promulgated by the International Organisation of Supreme Audit Institutions.

My responsibilities under those standards are described in the appendix to this report.

I am independent of the company and have fulfilled my other ethical responsibilities in accordance with the standards.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

n whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern.

I have nothing to report in that regard.


Opinion on matters prescribed by the Companies Act 2014 Based solely on the work undertaken in the course of the audit, I report that in my opinion n the information given in the directors’ report is consistent with the financial statements, and n the directors’ report has been prepared in accordance with the Companies Act 2014.

I have obtained all the information and explanations that I consider necessary for the purposes of my audit.
In my opinion, the accounting records of the group were sufficient to permit the financial statements to be readily and properly audited, and the financial statements are in agreement with the accounting records.

The Companies Act 2014 also requires me to report if, in my opinion, the disclosures of directors’ remuneration and transactions required by sections 305 to 312 of the Act are not made.

I have nothing to report in that regard.


Report on information other than the financial statements, and on other matters The directors have presented certain other information with the financial statements.

This comprises the annual report, including the governance statement and board members’ report, the directors’ report, the statement of directors’ responsibilities, and the statement on internal control.
My responsibilities to report in relation to such information, and on certain other matters upon which I report by exception, are described in the appendix to this report.

I have nothing to report in that regard.

Conclusions related to going concern The directors have prepared the financial statements on a going concern basis.
As described in the appendix to this report, I conclude on Seamus McCarthy Comptroller and Auditor General 27 April 2023 n the appropriateness of the use of the going concern basis of accounting by the directors, and HBFI | Annual Report 2022 38 Report of the Comptroller and Auditor General (continued) Appendix to the report Responsibilities of the directors As detailed in the governance statement and board members’ report, the directors are responsible for n the preparation of annual financial statements in the form prescribed under the Companies Act 2014 n ensuring that the financial statements give a true and fair view in accordance with FRS102 n ensuring the regularity of transactions n assessing whether the use of the going concern basis of accounting is appropriate, and n such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Responsibilities of the Comptroller and Auditor General I am required under section 15 of the Home Building Finance Ireland Act 2018 to audit the financial statements of the group and company and to report thereon to the Houses of the Oireachtas.

My objective in carrying out the audit is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement due to fraud or error.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the ISAs will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with the ISAs, I exercise professional judgment and maintain professional scepticism throughout the audit.

In doing so, n I identify and assess the risks of material misstatement of the financial statements whether due to fraud or error; design and perform audit procedures responsive to those risks; and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

n I obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal controls.
n I evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures.

n I conclude on the appropriateness of the use of the going concern basis of accounting and, based on the audit evidence obtained, on whether a material uncertainty exists related to events or conditions that may cast significant doubt on Home Building Finance Ireland’s ability to continue as a going concern.
If I conclude that a material uncertainty exists, I am required to draw attention in my report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion.

My conclusions are based on the audit evidence obtained up to the date of my report.

However, future events or conditions may cause Home Building Finance Ireland to cease being a going concern.
n I evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.
Information other than the financial statements My opinion on the financial statements does not cover the other information presented with those statements, and I do not express any form of assurance conclusion thereon.
In connection with my audit of the financial statements, I am required under the ISAs to read the other information presented and, in doing so, consider whether the other information is materially inconsistent with the financial statements or with knowledge obtained during the audit, or if it otherwise appears to be materially misstated.

If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact.
Reporting on other matters My audit is conducted by reference to the special considerations which attach to State bodies in relation to their management and operation.

I report if I identify material matters relating to the manner in which public business has been conducted.

I seek to obtain evidence about the regularity of financial transactions in the course of audit.
I report if I identify any material instance where public money has not been applied for the purposes intended or where transactions did not conform to the authorities governing them.
HBFI | Annual Report 2022 Consolidated Statement of Comprehensive Income For the financial year ended 31 December 2022 39 Interest income Interest expense Net interest income Other income Operating expenses Operating profit/(loss) before tax Tax expense Profit/(loss) for the year after tax Other comprehensive income Note 5 6 7 8 10 2022 €000 13,428 (6,875) 6,553 4,761 (7,226) 4,088 - 4,088 - 2021 €000 3,349 (2,020) 1,329 2,538 (6,890) (3,023) - (3,023) - Total comprehensive income for the year 4,088 (3,023) The accompanying notes form an integral part of the financial statements.
Approved and authorised for issue by the Board of Directors and signed on its behalf: Dara Deering Chief Executive Officer Home Building Finance Ireland DAC Marie Collins Chairperson Home Building Finance Ireland DAC 19 April 2023 HBFI | Annual Report 2022 40 Consolidated Statement of Financial Position as at 31 December 2022 Non-current assets Financial assets – loans and receivables Other receivables Current assets Financial assets – loans and receivables Other receivables Cash and cash equivalents Creditors; amounts falling due within 1 year Other liabilities Net current assets Total assets less current liabilities Creditors; amounts falling due after 1 year Funding Other liabilities Net assets Capital and reserves Called up share capital presented as equity Retained losses Total equity 31 December 2022 €000 31 December 2021 €000 Note 11 14 11 14 171,088 102,017 683 307 171,771 102,324 158,849 567 15,638 175,054 18,501 669 16,066 35,236 15 (3,049) (4,034) 172,005 31,202 343,776 133,526 (329,713) (125,504) (3,660) 10,403 (1,707) 6,315 20,000 (9,597) 10,403 20,000 (13,685) 6,315 16 15 19 The accompanying notes form an integral part of the financial statements.
Approved and authorised for issue by the Board of Directors and signed on its behalf: Dara Deering Chief Executive Officer Home Building Finance Ireland DAC Marie Collins Chairperson Home Building Finance Ireland DAC 19 April 2023 HBFI | Annual Report 2022 41 Consolidated Statement of Changes in Equity For the year ended 31 December 2022 Balance at 1 January 2021 Total comprehensive income for the year Balance at 31 December 2021 Total comprehensive income for the year Share capital €000 20,000 - 20,000 - Retained losses €000 (10,662) (3,023) (13,685) 4,088 Total equity €000 9,338 (3,023) 6,315 4,088 Balance at 31 December 2022 20,000 (9,597) 10,403 Approved and authorised for issue by the Board of Directors and signed on its behalf: Dara Deering Chief Executive Officer Home Building Finance Ireland DAC Marie Collins Chairperson Home Building Finance Ireland DAC 19 April 2023 HBFI | Annual Report 2022 42 Consolidated Statement of Cash Flows For the year ended 31 December 2022 Cash flows from operating activities Profit/(loss) for year Advances to borrowers Repayments from borrowers Interest receivable Increase in other receivables Interest payable Increase in other liabilities Note 2022 €000 2021 €000 4,088 (3,023) (330,687) (127,430) 134,695 (13,428) (274) 6,747 968 46,891 (3,296) (294) 1,947 818 Net cash from operating activities (197,891) (84,387) Cash flows from financing activities Funding loans received Funding loans repaid 16 16 215,163 (17,700) 97,220 (10,925) Net cash inflow from financing activities 197,463 86,295 Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at 1 January (428) 1,908 16,066 14,158 Cash and cash equivalents at 31 December 15,638 16,066 HBFI | Annual Report 2022 Company Statement of Comprehensive Income For the year ended 31 December 2022 Note 2022 €000 2021 €000 43 - - - - (100) (100) - (100) - (100) - - - - (114) (114) - (114) - (114) Interest income Interest expense Net interest income Other income Operating expenses Operating loss before tax Tax
 expense Loss for the year after tax Other comprehensive income 8 10 Total comprehensive income for the year The accompanying notes form an integral part of the financial statements.
Approved and authorised for issue by the Board of Directors and signed on its behalf: Dara Deering Chief Executive Officer Home Building Finance Ireland DAC Marie Collins Chairperson Home Building Finance Ireland DAC 19 April 2023 HBFI | Annual Report 2022 44 Company Statement of Financial Position as at 31 December 2022 Note 22 31 December 2022 €000 31 December 2021 €000 19,000 19,000 842 842 15,000 15,000 4,863 4,863 15 (282) (203) 560 4,660 19,560 19,560 19,660 19,660 20,000 (440) 20,000 (340) 19,560 19,660 Non-current assets Investment in subsidiary Current assets Cash and cash equivalents Creditors; amounts falling due within 1 year Other liabilities Net current assets Total assets less current liabilities Net assets Capital and reserves Called up share capital presented as equity 19 Retained losses Total equity The accompanying notes form an integral part of the financial statements.
Approved and authorised for issue by the Board of Directors and signed on its behalf: Dara Deering Chief Executive Officer Home Building Finance Ireland DAC Marie Collins Chairperson Home Building Finance Ireland DAC 19 April 2023 HBFI | Annual Report 2022 45 Company Statement of Changes in Equity For the year ended 31 December 2022 Balance at 1 January 2021 Total comprehensive income for the year Balance at 31 December 2021 Total comprehensive income for the year Balance at 31 December 2022 Share capital €000 20,000 - 20,000 - 20,000 Retained losses €000 (226) (114) (340) (100) (440) Total equity €000 19,774 (114) 19,660 (100) 19,560 Approved and authorised for issue by the Board of Directors and signed on its behalf: Dara Deering Chief Executive Officer Home Building Finance Ireland DAC Marie Collins Chairperson Home Building Finance Ireland DAC 19 April 2023 HBFI | Annual Report 2022 46 Company Statement of Cash Flows For the year ended 31 December 2022 Cash flows from operating activities Loss for year Increase in other liabilities Net cash outflow from operating activities Cash flows from investing activities Investment in subsidiary Net cash from investing activities 2022 €000 (100) 79 (21) (4,000) (4,000) 2021 €000 (114) 78 (36) - - Net decrease in cash and cash equivalents (4,021) (36) Cash and cash equivalents at 1 January 4,863 4,899 Cash and cash equivalents at 31 December 842 4,863 HBFI | Annual Report 2022 47 Notes to the financial statements 1.
Reporting entity The HBFI Group comprises of HBFI, as holding company, and its subsidiary HBFIL.

HBFI is a Designated Activity Company limited by shares incorporated under the Companies Act 2014 (Registered Number 639272).

HBFIL is a Designated Activity Company limited by shares incorporated under the Companies Act 2014 (Registration Number 640801).

The principal activities of the Group are to provide debt funding for residential development in the State.
The registered office of both companies is at Treasury Dock, North Wall Quay, Dublin 1, D01 A9T8.

The financial statements consolidate the financial statements of HBFI and HBFIL for the financial year ended 31 December 2022.

The financial statements of the holding company, HBFI, are shown separately within this report.

2.

3.
Statement of Compliance These financial statements for the financial year ended 31 December 2022 have been prepared in accordance with the Companies Act 2014 and FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland, issued by the Financial Reporting Council in the UK (“FRS 102”) having elected, as permitted by FRS 102, to account for all of the Group’s and Company’s financial instruments by applying the recognition and measurement rules of IAS 39 Financial Instruments: Recognition and Measurement.
Critical accounting estimates and judgements The preparation of financial statements in conformity with FRS 102 requires the use of estimates and judgements that affect the reported amounts of assets and liabilities.

Estimates and judgements are continually evaluated and are based on a number of factors, including expectations of future events that are believed to be reasonable under the circumstances.
Management believes that the underlying assumptions used are appropriate and that the financial statements, therefore, present the financial position and results fairly.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are described as below: 3.1.
Key sources of estimates and judgements The following are the key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

3.1.1.
3.1.1.

Loan impairment assessment In line with the requirements of IAS 39 as permitted by FRS 102, the Group reviews its portfolio of loans for objective evidence of impairment at the statement of financial position date.
In determining whether an impairment loss should be recorded in the Consolidated Statement of Comprehensive Income at the reporting date, the Group uses internal and external sources of information to assess whether there is any evidence that an asset may be impaired (in line with IAS 39.59).
Evidence of impairment may include the following: n significant financial difficulty of the borrower; n a breach of contract, such as a default in interest or principal payments; n the granting of a concession to the developer for economic or legal reasons relating to the borrower’s financial difficulty that wouldn’t otherwise be considered; or n where it is probable that the borrowers will enter bankruptcy or other financial reorganisation.
If any objective evidence of impairment exists, the Group performs a detailed impairment calculation on each loan individually to determine the impairment loss that should be recognised.

An asset is impaired, and an impairment loss is recognised, if the loss is incurred at the reporting date as a result of one or more events that occurred after initial recognition of the asset.

3.1.2.
3.1.2.

Income recognition on loans and receivables The accounting policy for the recognition of interest income on loans and receivables is set out in Note 4.5.

HBFI | Annual Report 2022 48 Notes to the financial statements (continued) 4.

Significant accounting policies 4.1.


Basis of preparation The financial statements are prepared on a going concern basis and the Board of Directors of the Company (“the Board”) is satisfied that the Group and Company will continue as a going concern for the foreseeable future.
In its consideration of whether accounting on a going concern basis is appropriate, the Board has had regard to the functions of the Group and Company as set out in the HBFI Act 2018 and believes it is reasonable to assume that, given the purpose of the legislation, the State will take appropriate steps to ensure that the Group and Company are put in a position to discharge their mandate.
The function of the Group and Company is to provide debt funding in a prudent manner to borrowers for the development of residential units in the State.

The Group’s and Company’s activities are subject to risk factors including credit, business and strategic, operational, liquidity, market and equity, regulatory and environmental, social and governance risk.

The Board has reviewed these risk factors and all relevant information to assess the Group’s and Company’s ability to continue as a going concern.
The Board and Audit and Risk Committee review key aspects of the Group’s and Company’s activities on an on-going basis and review, whenever appropriate, the critical assumptions underpinning its long-term strategies.

As permitted by the Companies Act 2014, the Directors have adapted the arrangements and headings and subheadings otherwise required by Profit and Loss Account Format 1 and Balance Sheet Statement Format 1 as the special nature of the Group’s and Company’s business requires such adaptation.
The financial statements are presented in euro (€), which is the Group’s and Company’s functional and presentational currency.

The figures shown in the financial statements are stated in € thousands.

4.2.

Basis of consolidation The Group financial statements consolidate the financial statements of the Company and its subsidiary undertaking drawn up to 31 December each year.
The results of subsidiaries acquired or disposed of during the financial period are included in the Consolidated Statement of Comprehensive Income from the effective date of acquisition and up to the effective date of disposal, as appropriate using accounting policies consistent with those of HBFI.

Business combinations are accounted for under the purchase method.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

4.3.

Investment in subsidiaries In the Company financial statements, the investment in the subsidiary, HBFIL, is accounted for at cost less impairment.

4.4.
4.4.

Basis of measurement The financial statements have been prepared under the historic cost convention.

4.5.

Interest income and expense Interest income and expense for all financial instruments are recognised in the Consolidated Statement of Comprehensive Income using the Effective Interest Rate (“EIR”) method.
The EIR method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant financial period.

The EIR is the rate that exactly discounts estimated future cash payments or receipts over the expected life of the financial instrument to the net carrying amount of the financial asset or liability.
When calculating the EIR, the Group estimates cash flows considering all contractual terms of the financial instrument.

HBFI | Annual Report 2022 49 4.

Significant accounting policies (continued) 4.5.

Interest income and expense (continued) Once a financial asset has been written down as a result of an impairment loss, interest income is recognised using the original rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.
Interest income receivable on loans to borrowers and interest expense payable on loans from funders are presented within operating activities in the Consolidated Statement of Cash Flows.

4.6.

Other income Fee income relates mainly to arrangement fees and commitment fees charged to the borrower.

Fee expenditure relates to due diligence and legal fees incurred on facilities.
Fee income and fee expenditure are deferred initially and then released to the Statement of Comprehensive Income over the term of the relevant facility in line with FRS 102 Section 23 Revenue.

4.7 Costs reimbursable to the NTMA In accordance with section 9 (2) of the HBFI Act 2018, the NTMA provides business and support services and systems in addition to assigning staff to the Group.

Costs reimbursable to the NTMA are recognised on an accruals basis.
These expenses are recovered from the Group by the NTMA at cost.

Further information on costs reimbursable to the NTMA is included in Note 8.1.

4.8 Financial assets The Group classes its financial assets in accordance with IAS 39 classifications.

The Group determines the classification of its financial instruments at initial recognition.

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
On initial recognition, the loans are measured at fair value plus incremental direct transaction costs that are directly attributable to the issue of the loan.

They are then subsequently measured at amortised cost using the EIR method as described in Note 4.5.

4.9 Financial liabilities Funding are those readily accessible loans drawn down by the Group from the ISIF in order to support its lending activities.
The Group recognises these loans in its Consolidated Statement of Financial Position on the date the loan is drawn down.

These loans are measured initially at fair value plus incremental direct transaction costs that are directly attributable to the issue of the financial liability.

They are subsequently measured at amortised cost using the EIR method as described in Note 4.5.
4.10 De-recognition of financial assets and liabilities Financial assets are derecognised when the contractual rights to receive the cash flows from these assets have ceased to exist or the assets have been transferred and substantially all the risks and rewards of ownership of the assets have also been transferred.

Financial liabilities are derecognised when they have been redeemed or otherwise extinguished.
4.11 Impairment of financial assets The Group assesses at the end of each financial period whether there is objective evidence that a financial asset or group of financial assets, measured at amortised cost, is impaired.

For loans and receivables, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original EIR.
The amount of the impairment loss is recognised in the Consolidated Statement of Comprehensive Income.

HBFI | Annual Report 2022 50 Notes to the financial statements (continued) 4.

Significant accounting policies (continued) 4.11 Impairment of financial assets (continued) The loans to each borrower deemed to be individually significant are objectively assessed for evidence of impairment at the end of the financial period.
A collective assessment approach, grouped on the basis of similar credit risk characteristics is adopted for all other loans without individual specific impairments.
Objective evidence that a financial asset is impaired includes: n significant financial difficulty of the borrower; n granting a concession to the borrower for economic or legal reasons relating to the borrower’s financial difficulty which would not otherwise have been considered; n breaches of contract, such as default or delinquency in interest or principal payments; n signs that the borrower will enter bankruptcy or other financial reorganisation.
The Group recognises interest income following impairment using the rate of interest used to discount the future cash flows in measuring that impairment.

If, in a subsequent financial period, the amount of the impairment loss decreases due to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed.

The amount of the reversal is recognised in the Consolidated Statement of Comprehensive Income.
Where there is no further prospect of recovering the carrying value of a loan, or a portion of a loan, the Group writes the amount that is not recoverable off against the related impairment loss (i.e.

in this circumstance, there is no additional charge to the Consolidated Statement of Comprehensive Income).

Subsequent recoveries of amounts previously written off decrease the amount of the charge for loan impairment in the Consolidated Statement of Comprehensive Income.
4.12 Cash and cash equivalents Cash comprises cash on hand and on demand deposits.

Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Cash and cash equivalents are carried at amortised cost in the Statement of Financial Position.
The Statement of Cash Flows shows the changes in cash and cash equivalents arising during the financial year from operating activities, investing activities and financing activities.

The cash flows from operating activities are reported using the indirect method, whereby major classes of gross cash receipts and gross payments are disclosed.
4.13 Provisions A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.

When the effect is material, provisions are determined by discounting expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
4.14 Contingent liabilities Contingent liabilities are possible obligations whose existence will be confirmed only by the occurrence of uncertain future events or present obligations where the transfer of economic benefit is uncertain or cannot be reliably estimated.

Contingent liabilities are not recognised but disclosed in the notes to the financial statements unless the probability of the transfer of economic benefit is remote.

HBFI | Annual Report 2022 51 4.


Significant accounting policies (continued) 4.15 Taxation Current tax is recognised for the amount of income tax payable in respect of the taxable profit for the current or past reporting periods using the tax rates and laws that have been enacted or substantively enacted by the reporting date.

Deferred tax is recognised in respect of all timing differences at the reporting date, except as otherwise indicated.
4.16 Leasing Rentals under operating leases are charged on a straight line basis over the term of the lease to the Consolidated Statement of Comprehensive Income in line with FRS 102 Section 20 Leases.

4.17 Key management personnel Key management personnel in the Group consist of the members of the Board, the Chief Executive Officer and the senior management team reporting directly to the Chief Executive Officer.

See Note 8.

5.
See Note 8.

5.

Interest income Interest on loans and receivables 2022 €000 13,428 2021 €000 3,349 Interest on loans and receivables relates to interest income from loans provided to borrowers.

The EIR method is applied as per note 4.5.

6.

Interest expense Interest on funding 2022 €000 6,875 2021 €000 2,020 Interest on funding relates to the interest charge on the ISIF funding facility.

The EIR method is applied as per note 4.5.

7.


Other income Fee income Fee expenditure 2022 €000 6,253 (1,492) 4,761 2021 €000 3,196 (658) 2,538 Fee income relates mainly to arrangement fees and commitment fees charged to the borrower and recognised over the term of the relevant facility.

Commitment fees are fees charged to the borrower on certain facilities based on the committed but undrawn balance of the approved facility.

Fee expenditure relates to due diligence and legal fees incurred on facilities.
The amounts are recognised in line with note 4.6.

24 HBFI | Annual Report 2022 52 Notes to the financial statements (continued) 8.

Operating expenses Costs reimbursable to the NTMA Loan administration services Board fees Other expenses Note 8.1 9 Group 2022 €000 6,172 500 79 475 Group 2021 €000 6,038 384 79 389 7,226 6,890 Other expenses consist mainly of professional fees, including legal and financial advisory, and bank interest and charges.
Board fees Other expenses Note 9 Other expenses consists of bank interest and charges.
8.1 Costs reimbursable to the NTMA (see note 23) NTMA staff costs Occupancy costs Business services Professional fees Technology Other operating costs Company 2022 €000 Company 2021 €000 79 21 100 2022 €000 4,051 222 47 124 216 1,512 6,172 79 35 114 2021 €000 4,151 213 29 122 289 1,234 6,038 Other operating costs consists mainly of the corporate function recharges for services provided by the NTMA to HBFI including compliance, procurement, finance and information technology, and an allocation for depreciation costs in relation to NTMA capital assets used by HBFI.
HBFI | Annual Report 2022 53 8.

Operating expenses (continued) 8.1 Costs reimbursable to the NTMA (see note 23) (continued) 8.1.1 NTMA staff costs The Group has no employees.

All personnel are employed by the NTMA and the remuneration cost of staff who are engaged full time in the Group business is recharged to the Group by the NTMA.

The number of NTMA employees directly engaged in the Group at the reporting date was 31 (2021: 31).
Aggregate Employee Benefits Staff short term benefits Pay related social insurance Staff Short-term Benefits Basic Pay Performance related pay Allowances 2022 €000 3,167 355 3,522 2021 €000 3,187 333 3,520 3,022 3,077 88 57 55 55 3,167 3,187 The NTMA contributed €529,000 (2021: €447,262) in pension contributions for the year ended 31 December 2022 to those engaged full time in the Group business.

NTMA staff costs include the CEO’s salary which is as detailed below.
8.1.2 Key management personnel Salary Allowances Performance related pay Health insurance 2022 €000 847 19 24 2 892 2021 €000 892 24 14 1 931 Key management personnel in HBFI consists of the members of the Board, the Chief Executive Officer and the senior management team reporting directly to the Chief Executive Officer.

The total value of employee benefits for key management personnel is set out above (excluding employer’s contribution to social insurance costs).
This does not include the value of retirement benefits earned in the period.

The key management personnel (excluding the Chief Executive Officer and the Board) are members of the NTMA pension scheme and their entitlements in that regard do not extend beyond the terms of the model public service pension scheme.

HBFI | Annual Report 2022 54 Notes to the financial statements (continued) 8.
Operating expenses (continued) 8.1 Costs reimbursable to the NTMA (see note 23) (continued) 8.1.3 Chief Executive Officer salary and benefits – Dara Deering Salary Taxable benefits Contributions to retirement schemes 2022 €000 250 19 45 314 2021 €000 250 19 45 314 No performance related payment was paid or is payable to the CEO during the period.

The amounts paid to the CEO are included in the costs reimbursable to the NTMA.

9.
9.

Board fees and expenses An annual fee is paid to the chairperson of €31,500 and to certain Directors at a rate of €15,750 as specified by the Minister for Finance.

The fee paid to each Director is as below.


Board member Marie Collins Claire Solon Grainne Hennessy Timothy Ken Slattery 2022 € 31,500 15,750 15,750 15,750 2021 € 31,500 15,750 15,750 15,750 78,750 78,750 The Chief Executive Officer (ex officio member), Andrew O’Flanagan (NTMA) and Des Carville (Department of Finance) did not receive any remuneration in respect of their membership of the Board.
Directors can be reimbursed approved expenses on a vouched basis to travel to attend meetings in HBFI’s offices in Dublin.

No expenses were incurred during the financial year.

10.

Taxation Profit/(loss) before tax Corporation tax Loss before tax Corporation tax Group 2022 €000 4,088 - Group 2021 €000 (3,023) - Company 2022 €000 Company 2021 €000 (100) - (114) - The tax on profits is charged at the standard rate of corporation tax in Ireland (12.5%).

HBFI | Annual Report 2022 10.


Taxation (continued) Profit/(loss) before tax Non-deductible expenses Adjusted profit/(loss) Corporation tax charge @ 12.5% Unrecognised tax loss Utilisation of tax losses carried forward Tax Charge 55 Group 2022 €000 4,088 99 4,187 523 - (523) - Group 2021 €000 (3,023) 93 (2,930) 366 (366) - - HBFI has accumulated tax losses during its first years of trading.

The amount of tax losses at prior year end was €1.6m.
The Group has elected to utilise this against the profit earned in 2022.

The Group will carry forward losses worth €1.1m following the utilisation.

Loss before tax Non-deductible expenses Adjusted loss Corporation tax charge @ 12.5% Unrecognised tax loss Tax Charge 11.
Loans and receivables Non-current Loans to borrowers Current Loans to borrowers Company 2022 €000 Company 2021 €000 (100) - (100) 13 (13) - (114) - (114) 14 (14) - 2022 €000 2021 €000 171,088 102,017 158,849 18,501 329,937 120,518 The Group had loans in issue to 37 borrowers (2021: 25) at the end of the year.

The remaining term of the loans being due range from less than one year to four years.

See Statement of Cash Flows for reconciliation of loans and receivables movements during the year.
The Group assesses at the end of each financial period, whether there is objective evidence that the loans are impaired (See Note 4.11).

Following the impairment assessment of the loans as at 31 December 2022, the Group concluded that no evidence of impairment existed at the reporting date.

HBFI | Annual Report 2022 56 Notes to the financial statements (continued) 12.

Risk management The Group aims to be risk aware and to actively manage its risks.
The critical activities carried out by the organisation and the reliance on its good reputation mean that there is a strong emphasis on an appropriate range of controls.

The Group aims to manage risks in an informed and proactive manner, in accordance with its risk appetite, such that the level of risk is consistent with the underlying business activity and the Group understands and is able to manage or absorb the impact of the risk in the event that it materialises.
The principal risk categories identified and managed by the Group in its day-to-day business and which potentially have the greatest impact on the financial statements of the Group are credit risk, liquidity risk and market risk.

Risk management framework The Board is responsible for setting the risk appetite and overseeing and guiding risk management activity across the Group.

The Board has mandated that risk management be integrated and embedded into the tone and culture of the Group.
The Audit and Risk Committee is responsible for overseeing the implementation of the Group’s Risk Management Framework.

The Audit and Risk Committee will seek to ensure that the Group’s risk management governance model provides appropriate levels of independence and challenge.

The Audit and Risk Committee reports to the Board independently.

The Group’s Risk Management Framework is in accordance with the principles of the Code of Practice for the Governance of State Bodies.
The Group relies on the services provided by the NTMA for certain elements of risk management, namely: n business continuity services; n compliance services; n counterparty credit risk services for cash management purposes; and n internal audit services.

First line of defence: The Group’s management is responsible for the day-to-day management of risk and for ensuring that adequate controls are in place and operating effectively.

Management report on risk management to the Audit and Risk Committee.
The following are the key steps used in the risk management process: n Identify all risks that may affect/prevent the Group from achieving the objectives established by the Group’s Board and management (taking into consideration any historical events/near misses which may have threatened the achievement of such objectives); n For each risk, determine its initial impact and its probability of occurrence; n For each risk, determine whether the risk can be accepted or will need to be transferred, reduced or avoided; n For each risk, regardless of its impact or probability of occurrence, consider actions to reduce risk; n Review residual impact/probability of occurrence and criticality status of the risk in light of the implemented actions/controls/mitigants; n Review and monitor mitigating actions on an on-going basis.
Second line of defence: The Group Risk function (and the NTMA Compliance function with regard to Compliance Risk) provide independent challenge and oversight to ensure implementation of the Group’s Risk Management Policy and Framework.

HBFI | Annual Report 2022 57 12.


Risk management (continued) Third line of defence: Internal Audit is the third line of defence and provides independent, reasonable, risk-based assurance on the robustness of the Group’s risk management system, governance and the design and operating effectiveness of the internal control environment.

12.1 Credit risk Credit risk is the risk of incurring financial loss as a result of default of a counterparty to a particular transaction.
In order to achieve its key objectives and fulfil its mandate, the Group must assume a certain level of credit risk.

As a fundamental principle, the Group will seek to do so in a prudent manner that assumes the minimum level of credit risk required to achieve its objectives, which is in line with the Group’s Risk Appetite Statement.

The Group’s main credit risk arises from the potential failure of a borrower to fulfil its contractual obligations to the Group.
Credit risk is the most important risk for the Group’s business.

The Group, therefore, carefully manages its exposure to credit risk.

Credit risk is measured, assessed and controlled for all transactions entered into by the Group.

The Group endeavours to minimise its credit risk exposure by undertaking an extensive due diligence process in advance of any lending decisions.
The Group’s credit risk management process includes the following: Underwriting approval n thorough assessment of each prospective borrower and development, its management, operational capability, development experience, financial performance and repayment capacity.
This assessment includes factors such as construction cost inflation and supply chain disruptions; n on-site visits and face to face meetings with management; n assessment of the financial performance of the prospective borrower by reference to available information, including financial accounts, management accounts and financial projections; n analysis of the borrower’s repayment capacity, including clear and reasonable demonstration of the borrower’s ability to meet its obligations and discharge the Group’s debt in full; n independent risk review and sign off by the Group’s Head of Credit and Risk (or appointed delegate) of each potential transaction; n obtaining adequate security for each transaction; n credit decisions reserved to the HBFIL Board, HBFIL Credit Committee or Executive Management Team Credit Committee depending on size of facility or risk characteristics of transaction; n on-going review of credit facilities, including monitoring surveyor reviews of each development on an ongoing basis to monitor construction progress and cost against budget; n regular review of compliance with the respective covenants and undertakings and any terms and conditions imposed by the Group.
The maximum exposure to credit risk for financial assets with credit risk at 31 December 2022 is €346m.

This maximum exposure to credit risk is presented by class of financial instrument below.

The credit quality of HBFI’s loans and receivables are non-rated.

Cash and cash equivalents are held with the Central Bank of Ireland (Standard & Poor’s rating: AA-) (2021: AA-) and Allied Irish Bank Plc (Standard & Poor’s rating: A-) (2021: A-).
HBFI | Annual Report 2022 58 Notes to the financial statements (continued) 12.

Risk management (continued) Cash and cash equivalents Loans and receivables 2022 €000 15,638 2021 €000 16,066 329,937 120,518 345,575 136,584 Undrawn commitments to borrowers at 31 December 357,000 255,000 HBFI has entered into a COSME Loan Guarantee Facility with the European Investment Fund which provides a loan guarantee of up to 50% of certain eligible HBFI loan facilities.
The guarantee is subject to certain terms and conditions including a maximum guarantee amount of €25m and that eligible HBFI loans must relate to developments of no more than 10 units.

There is no fee payable for this guarantee.

As at 31 December 2022, the balance on HBFI eligible loan facilities subject to the COSME Loan Guarantee was €1.1m.

12.2 Liquidity risk Liquidity risk is the risk that the Group is unable to meet all of its financial obligations as and when they fall due.
It is the risk of loss arising from a situation where there will not be enough cash to fund day-to-day operations.

The Group’s liquidity risk management process includes: n Management of day-to-day funding including the monitoring of future expected cash flows, e.g.

future lending commitments, to ensure that requirements can be met as they fall due.
n Asset and liability management by monitoring the maturity profile within the Group’s Statement of Financial Position to ensure that sufficient cash resources are available or funding established where mismatches are likely to occur, thereby minimising the impact of liquidity outflows.

n Managing its liquidity risk by aligning, to the greatest extent possible, the maturity profile of its assets and liabilities so eliminating refinancing risk where possible.
The Group has sourced long-term funding from its funder, and where possible it structures the tenor and repayment schedule of its loans to reflect that funding maturity profile.

n Maintaining a cash liquidity buffer to address any short-term liquidity needs that may arise.

The dates of the contractual amounts that commit the Group to make repayments on loans it has borrowed are summarised in the below table.

The amounts presented are undiscounted.


2022 Repayments due 2021 Repayments due No later than 1 year €000 1-5 years €000 Over 5 years €000 Total €000 - - - - 329,713 329,713 125,504 125,504 HBFI | Annual Report 2022 59 12.

Risk management (continued) 12.3.

Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices.

HBFI’s market risk comprises interest rate risk.


Market risks arise from open positions in interest rate products which are exposed to general and specific market movements, and changes in the level of volatility of interest rates.

Interest rate risk The Group’s Net Interest Income is exposed to interest rate fluctuations with its loan receivables subject to variable rates (3-month Euribor base rate) and its funding facilities currently on a fixed rate basis.
Interest rate risk is identified, monitored and managed by the Group.

The carrying amounts exposed to interest rate risk at 31 December are detailed below: Financial Assets – variable rate Cash and cash equivalents Loans and receivables Financial liabilities – fixed rate Funding 2022 €000 15,638 329,937 345,575 2021 €000 16,066 120,518 136,584 329,713 125,504 It should be noted the three tranches within the funding facility are carried at a fixed rate of interest at 31 December 2022.
Currency risk The Group is not directly exposed to currency risk, as all of its funding and lending activities are denominated in euro.

Interest rate risk sensitivity Information provided by the sensitivity analysis below does not necessarily represent the actual change in fair value that the Group would incur under normal market conditions because, due to practical limitations, all variables other than the specific market risk factor are held constant.
The table below shows the sensitivity of the Group to an immediate +/- 100 basis point movement in interest rates, in terms of the impact on net interest income, on a forward-looking twelve-month basis, assuming no change in balance sheet.
Interest Rate Sensitivity Analysis - a 100bp move Net Interest Income +100bp €000 3,299 -100bp €000 (3,299) The net interest income sensitivity reflects the fact that all loan receivables are floating rate over 3-month Euribor and interest income is subject to movements in the underlying base rate while the interest rate on loans payable is fixed as at 31 December 2022 and any movement in market rates has no impact on interest expense.
HBFI | Annual Report 2022 60 Notes to the financial statements (continued) 12.

Risk management (continued) 12.4 Capital management The Group is not subject to externally imposed capital requirements.

The Group is committed to ensuring it is adequately capitalised as there is a risk that inappropriate management of the Group’s capital will result in it being unable to absorb any potential credit losses.
The holding company’s current paid-up share capital is €20m, which was provided by its sole shareholder, the Minister for Finance.

The Board reviews the capital structure frequently to determine the appropriate level of capital to safeguard against these risks.
12.5 Concentration risk Concentration risk is the risk that the Group is exposed to any single exposure or group of exposures that has the potential to produce losses large enough to threaten the ability of the Group to continue operating as a going concern.

The Group manages this risk by adhering to the limits set out in the Risk Appetite Statement which has been approved by the HBFI Board and which is subject to regular review by the Board.
The Risk Appetite Statement defines the maximum amounts of credit facilities to be committed to borrowers.

The measures are intended to ensure that the risk profile of the overall portfolio is appropriately diversified, and not unduly exposed to excessive concentration of risk.
The Group’s geographic concentration of risk assets is solely in Ireland, and the sole sectoral concentration of risk is to residential development, arising from its statutory mandate to make funding available for residential development in the State, as set out in the HBFI Act 2018.

13.

Fair value of financial assets and liabilities 13.1.
Comparison of carrying value to fair value The table below summarises the carrying amounts and fair values of the financial assets and liabilities not presented on the Group’s Statement of Financial Position at their fair value.

None of the assets and liabilities in the Statement of Financial Position of the Group are measured at fair value.
The fair values of these financial instruments are measured according to the following fair value hierarchy: Level 1 - financial assets and liabilities measured using quoted market prices (unadjusted).

Level 2 - financial assets and liabilities measured using valuation techniques which use observable market data.

Level 3 - financial assets and liabilities measured using valuation techniques which use unobservable market data.
Group 2022 Financial Assets Carrying Value €000 Level 1 €000 Level 2 €000 Level 3 €000 Fair value €000 Cash and cash equivalents 15,638 15,638 Loan and receivables 329,937 Financial liabilities Funding Other liabilities 329,713 1,020 - - - - - - - - 15,638 329,937 329,937 329,713 329,713 1,020 1,020 HBFI | Annual Report 2022 61 13.

Fair value of financial assets and liabilities (continued) 13.1.
Comparison of carrying value to fair value (continued) Group 2021 Financial Assets Carrying Value €000 Level 1 €000 Level 2 €000 Level 3 €000 Fair value €000 Cash and cash equivalents 16,066 16,066 Loan and receivables 120,518 Financial liabilities Funding Other liabilities Company 2022 Financial Assets 125,504 950 Carrying Value €000 Cash and cash equivalents 842 842 - - - - - - - - 16,066 120,518 120,518 125,504 125,504 950 950 Level 1 €000 Level 2 €000 Level 3 €000 Fair value €000 - - - 842 282 282 282 - Carrying Value €000 Level 1 €000 Level 2 €000 Level 3 €000 Fair value €000 Financial liabilities Other liabilities Company 2021 Financial Assets Cash and cash equivalents 4,863 4,863 Financial liabilities Other liabilities 203 - - - - 4,863 203 203 13.2 Fair value measurement principles Cash and cash equivalents The fair value of these financial instruments is equal to their carrying value due to these instruments being repayable on demand and short-term in nature.
Loans and receivables and Funding The fair value of these financial instruments is equal to their carrying value due to the defined nature/purpose of these facilities.

HBFI | Annual Report 2022 62 Notes to the financial statements (continued) 14.
Other receivables Non-current Deferred expenditure Other receivables Current Deferred expenditure Other receivables 2022 €000 2021 €000 675 8 683 473 94 567 235 72 307 535 134 669 Deferred expenditure relates to external expenses incurred and paid in carrying out due diligence reviews and finalising legal agreements on facilities which are recognised over the term of the relevant facility.

Other receivables consist of commitment fees receivable from borrowers.

15.
15.

Other liabilities Current Amounts due to the NTMA (see note 23) Revenue – Payroll Taxes Deferred income Accrued expenses Trade payables Non-current Deferred income Group 2022 €000 998 8 1,758 263 22 3,049 Group 2021 €000 950 8 2,902 174 - 4,034 3,660 1,707 Deferred income relates to the facility arrangement fees received from the borrower.

Each arrangement fee is recognised in the Consolidated Statement of Comprehensive Income over the term of the relevant facility.
Current Other liabilities Other liabilities relate to board fees payable to HBFIL.

Company 2022 €000 Company 2021 €000 282 203 HBFI | Annual Report 2022 16.

Funding Funding loans 63 2022 €000 2021 €000 329,713 125,504 The Group had loans of €330m outstanding from the ISIF as at 31 December 2022 under a 10 year revolving credit facility with a maturity date of 28 May 2029.

There are no scheduled repayments under the facility prior to the maturity date.
See Statement of Cash Flows for reconciliation of funding movements during the year.

At the end of the period the Group had €400m in undrawn funding facilities.

17.

Maturity analysis of assets and liabilities The below table presents the breakdown of those assets and liabilities which contain a non-current element.

The asset analysis is based on when management expects to receive cash for the asset.
Liabilities are analysed between current and non-current depending on whether or not the Group has an unconditional right at the balance sheet date to defer settlement for at least 12 months from that date.

2022 Financial assets Loans and receivables Financial liabilities Funding 2021 Financial assets Loans and receivables Financial liabilities Funding 18.

Auditor’s remuneration Audit of financial statements There are no non-audit services included above.

19.
19.

Equity Current €000 Non-current €000 Total €000 158,849 171,088 329,937 - (329,713) (329,713) Current €000 Non-current €000 Total €000 18,501 102,017 120,518 - (125,504) (125,504) 2022 €000 34 2021 €000 33 The ultimate beneficial ownership of the Group is held by the Minister for Finance by means of 20,000,000 nominal shares of €1.00 each in the holding company, HBFI.
In accordance with section 10 (4) of the HBFI Act 2018, HBFI’s authorised share capital may be increased to such other amount as may be determined by the Minister for Finance from time to time.

HBFI | Annual Report 2022 64 Notes to the financial statements (continued) 20.

Commitments In January 2019 HBFI entered into an agreement for office accommodation at 1 Treasury Dock, North Wall Quay, Dublin 1.

The lease term runs from 1 January 2019 to 24 May 2033.
HBFI may break the lease term only on foot of a Ministerial Direction that HBFI cease operations and subject to providing a minimum twelve- month notice period to the lessor to exercise this break.

Lease expenditure of €0.16m was incurred in 2022 (2021: €0.16m).

The nominal future minimum rentals payable to 24 May 2033 are as follows: Within one year In two to five years Over five years 2022 €000 159 636 857 1,652 2021 €000 159 636 1,016 1,811 21.
Contingent liabilities The Group had no contingent liabilities at the reporting date which would require disclosure in the financial statements.

22.

Investment in subsidiary undertakings The subsidiary of the Company as at 31 December 2022, HBFIL, is incorporated and operating in Ireland, with registered office at Treasury Dock, North Wall Quay, Dublin 1, D01 A9T8.
Home Building Finance Ireland (Lending) DAC 100% 1 Ordinary Share of €1 Lending Proportion Held Issued Share Capital Activity HBFIL is a 100% subsidiary of HBFI by means of 1 ordinary share (€1 nominal value) issued.

The authorised share capital consists of 200,000,000 ordinary shares of €1.00.

HBFI made a capital contribution to HBFIL in 2019.

The capital contribution of €15m is non-refundable and gives no rights to HBFI to shares in the capital or assets of HBFIL.
An additional capital contribution of €4m was made in 2022 on the same terms.

Opening capital contribution to HBFIL Investment in subsidiary Company 2022 €000 15,000 4,000 Company 2021 €000 15,000 - Closing capital contribution to HBFIL 19,000 15,000 HBFI | Annual Report 2022 65 23.

Related parties disclosures 23.1.

Related parties Home Building Finance Ireland (Lending) DAC Home Building Finance Ireland (Lending) DAC is a 100% subsidiary of Home Building Finance Ireland DAC.
Minister for Finance The issued share capital of HBFI is owned solely by the Minister for Finance.

The authorised share capital may be determined by the Minister for Finance from time to time by virtue of section 10 (4) of the HBFI Act 2018.

NTMA The NTMA provides staff and business support services to the Group.

The costs incurred by the NTMA are charged to the Group, in accordance with the terms of the Service Level Agreement between HBFI and the NTMA.
Other Government controlled entities The Ireland Strategic Investment Fund and Allied Irish Banks Plc.

are related parties of the Group in accordance with FRS 102 Section 33 as each are under the control of the Minister for Finance.

Key management personnel Key management personnel in HBFI consists of the members of the Board, the Chief Executive Officer and the senior management team reporting directly to the Chief Executive Officer.

23.2.
23.2.

Transactions and balances with related parties The following are the transactions that took place during the financial period with related parties: NTMA recharge The NTMA incurs costs for the running of the Group, which it recharges to the Group.

The total of these costs for the financial period was €6.2m (2021: €6m).

Further details in respect of these costs are disclosed in Note 8.

There is an amount of €1m (2021: €0.95m) payable to the NTMA at the end of the financial period.
In addition, the NTMA is the landlord for the lease payments set out in Note 20.

ISIF Loan Facility The ISIF provided a loan facility of €730 million to the Group, under direction from the Minister for Finance.

The ISIF loan operates as a revolving loan facility with a facility maturity date of 28 May 2029.

Drawdowns, repayments, and interest transactions in relation to the facility are set out in the Statement of Cash Flows and disclosures above.
Allied Irish Banks Plc At the end of the financial year, the Group held €14.8m of cash at Allied Irish Banks Plc (2021: €11.1m).

Key management personnel Transactions with key management personnel are disclosed in Note 8.

24.

Disclosures of interest There are disclosure of interest requirements on Directors under the Companies Act 2014, the Company’s Articles of Association and the Code of Practice for the Governance of State Bodies.
HBFI has put in place procedures to assist Directors in meeting their disclosure of interest obligations during the period under review.

HBFI | Annual Report 2022 66 Notes to the financial statements (continued) 25.

Events after the end of the reporting period No events requiring adjusting or disclosure in the financial statements occurred after the end of the reporting period.

26.
26.

Comparative Information Certain comparative information has been reclassified for consistency with the current year disclosures.

27.

Approval of the financial statements The financial statements were approved by the Directors on 19 April 2023.

HBFI | Annual Report 2022 67 HBFI | Annual Report 2022 68 HBFI | Annual Report 2022 Home Building Finance Ireland Treasury Dock, North Wall Quay, Dublin 1, D01 A9T8, Ireland T 353 1 238 4000 E info@hbfi.ie W www.hbfi.ie