1. GOVERNMENT CONSTRUCTION PROJECTS & CAPITAL SPEND Update on the HSE Capital Investment Programme 2016-2021 Con Quigley Corporate Finance Partner, BDO 11 th May 2016

2. INTRODUCTION Building on Recovery: Infrastructure & Capital Investment 2016-2021 -The Department of Health’s capital allocation -for the years 2016-2021 -Published: Department of Public Expenditure & Reform -29 th September 2015 Now over 6 years, (not 5 ! - HSE’s Capital Plan 2015-2019) €3,061 million in total -Building to annual €600 million in 2021 -But earlier years actually reduced From 2021, "€600 million will be spent annually by the HSE on upgrading hospitals and healthcare residential homes." -Of which, c. €500 million will be construction capital. Update on the HSE Capital Investment Programme 2016-2021 Page 2

3. €3.1bn HSE CAPITAL PROGRAMME 2016-21 Update on the HSE Capital Investment Programme 2016-2021 Page 3

4. DEPARTMENT OF HEALTH CAPITAL ALLOCATION 2016 - 2021 2016 €m 2017 €m 2018 €m 2019 €m 2020 €m 2021 €m Totals €m Exchequer Allocation (excluding lottery) 3743864095225706002,861 Lottery Funding for NCH 40686428--200 Total Exchequer Allocation 4144544735505706003,061 DoH Direct Funding (15) (90) HSE ICT (55) (60)(70)(85)(87)(412) Construction Capital Available 3443843984654704982,559 Update on the HSE Capital Investment Programme 2016-2021 Page 4

5. Update on the HSE Capital Investment Programme 2016-2021 Page 5

6. DEPARTMENT OF HEALTH CAPITAL COMMITMENTS 2016 - 2020 2016 €m 2017 €m 2018 €m 2019 €m 2020 €m Totals €m HSE’s Construction Allocation 3443843984654702,061 Contractual Commitments (304)(306)(319)(362)(360)(1,651) Maintenance (Minor Capital & Project Management) (32)(47) (220) Estimated Available for New Projects 831325663190 Update on the HSE Capital Investment Programme 2016-2021 Page 6

7. HSE INVESTMENT COMMITTMENTS Update on the HSE Capital Investment Programme 2016-2021 Page 7 Each year between €30m and €40m of the HSE’s capital allocation provides funding for a Minor Works programme The National Ambulance Service currently require on average €13.2m per annum to maintain its fleet and equipment increase the allocation to the Ambulance Replacement Programme to €18m in 2016 The Equipment Replacement Programme developed over the last number of years based on a risk analysis of the existing medical devices A three year rolling programme - reviewed each year Annual allocation increased to €25m in 2016

8. HIQA COMPLIANCE PROGRAMME The proposed capital allocation for Social Care for the period 2016-2021 is €448m. Additional €300m divided between Older People (€200m) and Disability (€100m) There will remain a number of CNUs that will have to be delivered by means of PPP and / or alternative funding mechanisms. Update on the HSE Capital Investment Programme 2016-2021 Page 8

9. MATERNITY CARE Proposed re-location of the National Maternity Hospital, Holles St. to the St. Vincent’s University Hospital Site at Elm Park, Dublin. Structure/governance to be resolved before a planning application will be submitted. Towards the end of the capital programme it is intended that the Rotunda, the Coombe and Limerick Maternity hospitals will move to Connolly Hospital, St. James’s Hospital and University Hospital Limerick, respectively. Update on the HSE Capital Investment Programme 2016-2021 Page 9

10. NATIONAL CHILDRENS HOSPITAL Planning permission granted by An Bord Pleanála on 28 April 2016 for the €710m National Children’s Hospital to be built at the St. James’s Hospital site in Dublin. It is expected that construction can commence by the end of 2016. The new Children’s Hospital is expected to open in 2020. Two boards are currently in place – one focused on the development project and a second to look after operations and the transition period. Update on the HSE Capital Investment Programme 2016-2021 Page 10

11. OTHER INVESTMENTS Update on the HSE Capital Investment Programme 2016-2021 Page 11 Re-location of the Central Mental Hospital to Portrane, Co. Dublin. Planning granted in June 2015 Tender documents are due back at the end of May 2016 It is expected that construction will commence before the end of 2016 Due to become operational in 2018 National Rehabilitation Hospital – new 120 bed unit to be built in Dún Laoghaire Planning permission granted in April 2015 Additional exchequer funding of €15m allocated in August 2015 to bridge funding gap Construction is expected to commence in Q3 2016 Expected to become operational in late 2017

12. OTHER INVESTMENTS Update on the HSE Capital Investment Programme 2016-2021 Page 12 National Plan for Radiation Oncology to cover locations in Dublin, Cork and Galway. Construction taking place in 2016/2017. Other projects (ambitions) include; Cavan General Hospital – next phase of general upgrade University Hospital Waterford – Ward Block / Palliative Care Unit Cork City Ambulance Base Connolly Hospital Radiology Unit University Hospital Galway – Blood Science Project Roscommon General Hospital Rehabilitation Unit Ballyjamesduff PCC Rowlagh North Clondalkin PCC Tuam Community Mental Health Unit

13. PRIMARY CARE Update on the HSE Capital Investment Programme 2016-2021 Page 13 Public Private Partnership Development of 14 Primary Care Centres by way of PPP, Total investment value of €140m Operational Lease Model To date 48 PCCs have been completed Many more "in development" by way of operational lease. Standard Lease – the HSE lease a significant amount of space, mainly for office / administrative accommodation.

14. NURSING HOME INVESTMENT ECOSYSTEM Update on the HSE Capital Investment Programme 2016-2021 Page 14 A review of the Fair Deal Scheme Currently being undertaken by the NTPF, on the instruction of former Minister of State Kathleen Lynch. NTPF are to report to the Department of Health by the end of 2016. Current metrics FDR rate range - €675 to €1,325 prpw Labour % - c. 55% - 65% of turnover Bank gearing – 70% of capex / asset value Equity / M&A

15. MOBILISING PRIVATE SECTOR INVESTMENT? Update on the HSE Capital Investment Programme 2016-2021 Page 15 Public Private Partnerships Public Finance Initiative Competitive dialogue Negotiated contracts Supply, service and accommodation contracts “Simple leases”

16. THE FUTURE? Update on the HSE Capital Investment Programme 2016-2021 Page 16 Minister for Health Simon Harris: 10 year plan for health. Review of current NTPF expenditure to make the sector more attractive to private capital investment BDO's view The biggest challenge in “Irish Healthcare” is Healthcare – our challenges are not unique – all models have their issues Strengths in our system, people, infrastructure and outcomes Our model is – & is likely to remain – largely public-sector-driven Limited funding available for a limited no. of capital projects. Must stimulate private sector investment without “selling out” We’re seeing more and we need more PPPs, PFIs and contractual arrangements allowing private sector to invest behind HSE Revenue spending

17. QUESTIONS Con Quigley Corporate Finance Partner, BDO cquigley@bdo.ie www.bdo.ie 4 Michael Street, Limerick (+353 61 464821) Beaux Lane House, Mercer St Lower, Dublin 2 (+353 1 4700504) Page 17 Update on the HSE Capital Investment Programme 2016-2021