Mr. Seamus McCarthy:

As members are aware, Horse Racing Ireland was established to provide a statutory basis for the control, regulation and development of the horse racing industry in Ireland. In addition to its regulatory, funding and development activities, HRI operates a number of racecourses and runs a totaliser betting system. Organisationally, HRI’s activities are delivered through a group structure involving the statutory body and eight subsidiary companies. In addition, HRI has around a one-third shareholding in an associate company called Curragh Racecourse Limited.

HRI received State funding of €67.2 million in 2020 from the Vote for agriculture, food and the marine. This accounted for 71% of HRI’s income in the year. Its other main sources of income were contributions from horse owners and sponsors towards racing prize money totalling €16.3 million, sales of media rights to the value of €5 million, registration fee income of €2.2 million and thoroughbred industry contributions of €202,000.

HRI incurred a net loss of €904,000 from racing activities in 2020, on turnover of just under €59 million. This outcome was a reversal from the small surplus of €294,000 in 2019, on turnover of just under €73 million. The decline in turnover and the loss incurred reflect the net impact of Covid-19 restrictions on racing and race attendance, and of Covid financial supports provided.

HRI had exceptional income of €9.3 million in 2020, mainly arising from the profit on a sale of land in Ballyogan, Dublin, to the Department of Education. The group accounts include a charge of €1 million in relation to a special dividend payment made by HRI to the Exchequer from the sales proceeds, on the instructions of the Department of Public Expenditure and Reform.

On the expenditure side in 2020, HRI incurred costs totalling €86.7 million, including €51.6 million paid out in prize money. Expenditure of €11.9 million was incurred on integrity and racecourse services, mainly comprising grants to the Irish Horse Racing Regulatory Board. Overall, the HRI group recorded a retained surplus of €13.8 million for 2020. The 2020 financial statements received a clear audit opinion. However, without qualifying that opinion, my report drew attention to two matters related to HRI’s activity in the year.

First, I drew attention to a loss of €1.8 million incurred in 2020 related to HRI’s investment in Curragh Racecourse Limited. This followed a loss on the same investment of just over €2 million in 2019. HRI’s cumulative loss to end 2020 arising from the investment was €6.4 million, representing almost 28% of the amount invested by HRI in the associate company. HRI recognised an impairment charge of €6.4 million on its investment in the HRI statement of financial position for 2020.

Curragh Racecourse Limited is a company established to provide for the redevelopment and management of the Curragh racecourse. The redevelopment involved the construction of a new stand and other racing facilities, which opened in mid-2019. Ownership of the company is split between HRI, the private-membership Turf Club and a consortium of private investors.

Notes 37 and 39 of the group financial statements explain that HRI had contributed funding to Curragh Racecourse Limited totalling over €36 million up to the end of 2019. This comprised an investment of €23 million in return for a 35.29% economic interest in the company, grant funding of €12.5 million towards the cost of the construction project, the upfront payment of €500,000 for the right to use a hospitality suite at the racecourse for 30 years and a loan of €500,000 given during 2019 to fund additional works on the racecourse’s parade ring.

Note 39 to the financial statements further discloses that Horse Racing Ireland entered into an agreement in 2020 to provide a convertible loan of up to €9 million to Curragh Racecourse Limited. By 31 December 2020, €6.9 million of the loan facility had been transferred to the company. Under the terms of the loan agreement, any outstanding liability to Horse Racing Ireland on 31 January 2024 will automatically convert to shares in the associate company.

The second matter to which I drew attention is the disclosure in Note 15 (i) to the financial statements that HRI booked a loss of €105,000 on the disposal of around seven acres of land through a land swap deal undertaken by its subsidiary, the Tipperary Race Company plc. HRI acquired around 12 acres of land adjoining Tipperary racecourse in 2019 at a cost of €25,000 per acre. Part of the land acquired was swapped with a neighbouring landholder, but was now valued at €10,000 an acre. The result was a write-down of around €15,000 an acre in the carrying value for the land disposed of.

Certification of HRI’s 2020 group financial statements was delayed as we awaited further information from HRI on the valuation of the investment in Curragh Racecourse Limited. HRI’s group financial statements were certified by me on 28 April 2022 and we are currently engaged with HRI in the process of final clearance of the financial statements for 2021.