Mr. Brian Kavanagh:

I am grateful for the invitation to meet the joint committee to discuss systems, governance and procedures in Horse Racing Ireland, HRI. The committee has always taken a very strong interest in our industry. With the Chairman's permission, we will also update members on some of the current issues facing the industry. I am the chief executive of and Accounting Officer for Horse Racing Ireland, the commercial semi-State body responsible for the development of the thoroughbred horse racing and breeding industries. I am accompanied by Ms Suzanne Eade, our chief financial officer, and Mr. Jason Morris, our director of racing.

Owing to the value of the horse racing industry to Ireland, the State has always taken a strong interest in and legislated for the sector which has been overseen by a State body since 1945. This task was initially performed by the Racing Board which subsequently became the Irish Horse Racing Authority under legislation introduced in 1994 and Horse Racing Ireland in 2001. This level of Government support for and understanding of our industry is central to the international position of the sector relative to other jurisdictions. HRI is a commercial semi-State body the mission of which is to develop and promote Ireland as a world centre of excellence for horse racing and breeding. The thoroughbred horse industry is a sector in which Ireland has genuine claims to world leadership. This has been consistently proved in the marketplaces and on the race tracks of the world. People come from many countries to see how we do things in Ireland.

In many fields, Ireland has led the way for the rest of the world in thoroughbred racing and breeding. It produces more thoroughbred foals than Britain and France combined and is the third largest producer in the world. We produce 45% of the total European Union output of thoroughbreds.

Ireland has legitimate claims to the No. 1 position with regard to quality. Over 65% of our annual production is exported. Last year, Irish horses were exported to 36 countries. I ask the committee to note that the Irish horse racing and breeding industry supports approximately 14,000 full-time jobs that are widely dispersed throughout rural communities. Some charts that are attached to my presentation show the locations of racecourses and training and breeding establishments across the country. They illustrate the nationwide distribution of the industry and its investment and employment. These are not jobs on the east coast or in Dublin; they are in the heart of rural Ireland.

This is the exact type of industry the country needs to protect and develop in the current circumstances. It is rurally-based and labour-intensive. It is probably the most environmentally-friendly agricultural activity we have. It leads to a significant level of international inward investment to Ireland. Horse racing and breeding is an all-island activity. It has always been run on a Thirty-two County basis. Foals born in Tyrone carry the (IRE) suffix after their name, just as foals born in Wexford do. The two Northern Ireland racecourses at Down Royal and Downpatrick operate under the Turf Club's rules of racing, with 90% of runners coming from the Republic.

This industry contributes over €1 billion in economic output to our economy every year and generates more than 80,000 tourist visits to Ireland annually. Our 26 racecourses contribute to sporting and social life and are at the heart of local economies. Festivals at tracks like Fairyhouse, Galway, Punchestown, Killarney and Listowel cumulatively contribute approximately €150 million in economic activity. Summer racecourses like Ballinrobe, Sligo, Bellewstown and Kilbeggan are key elements of the social fabric of their towns and regions. Point-to-point racing, which is the starting point for many great national hunt horses, is rooted in local communities. HRI has specifically increased its contribution to this sector in 2017.

I wish to emphasise the relationship between horse racing and breeding. The racecourse is the proving ground of the thoroughbred, where its true worth is established. If Ireland is to have a successful breeding industry, it needs a successful racing industry. One is the pipeline for the other. Successful racehorses become successful stallions that attract broodmares, many from outside Ireland. This, in turn, stimulates economic activity in a wide range of businesses. Racecourses and farms are more closely linked than many people might imagine. The majority of breeders in Ireland - 92% - have fewer than five horses.

I would like to give the committee a brief overview of the business and governance structure of Horse Racing Ireland. The headquarters of the company are at Ballymany on the Curragh, just outside Newbridge in County Kildare. We have 187 members of staff, 94 of whom are in HRI and 93 of whom are in our subsidiary companies. These staff are the backbone of the organisation. I am very proud of our team. Our board of 14 members acts as the national authority for horse racing by discharging its statutory functions as set out in the Irish Horseracing Industry Act 1994, the Horse and Greyhound Racing Act 2001 and the Horse Racing Ireland Act 2016. Its primary functions under legislation are the administration, development, promotion and governance of the industry.

HRI operates three principal commercial subsidiaries. HRI Racecourses Limited acts as the holding company for the racecourses at Leopardstown, Navan, Tipperary and Fairyhouse and owns the lands at Cork Racecourse in Mallow. Irish Thoroughbred Marketing Limited is an international marketing agency. Its task is to promote Ireland as the best country in the world in which to breed, train, buy and race thoroughbred horses. Tote Ireland Limited operates on-course and off-course totalisator betting services.

HRI and its subsidiaries are audited annually by the Comptroller and Auditor General. HRI also operates an outsourced internal audit function. The Comptroller and Auditor General's annual audit reports have never been qualified. A specific formal audit of corporate governance within HRI by our internal auditors was carried out most recently in 2015 and did not give rise to any significant concerns. That is not to say there is no room for improvement. HRI endeavours to address any issues raised by internal auditors in a timely and effective fashion. HRI's audit and risk committee meets four times a year. A number of the organisation’s functions are carried out through sub-committees of the board, some of which are established under statute and some of which have delegated board authority.

I am aware that the chairman of the board of HRI and some members of the board appeared before this committee in October 2016 to discuss governance processes pertaining to my appointment as chief executive. I regret the issues that arose at that time. Arising from this appointment, the board has taken a number of measures to strengthen governance. It has implemented a succession plan for the chief executive and senior management, introduced management development and training programmes, undertaken corporate governance training for board members and approved a new management structure for the organisation. I confirm that the importance of proper corporate governance is recognised within HRI at staff and board levels. HRI is fully committed to compliance with the new code of governance for State bodies, as published last autumn.

Last year was a positive one for the industry as Irish horses enjoyed unprecedented success on the track at home and internationally. For the first time, the five major races in Britain - the Champion Hurdle, the Gold Cup, the Grand National, the Derby and the Oaks - were all won by Irish-trained horses. In October, Aidan O’Brien completed the unprecedented feat of training the first three finishers in the world's most important flat race, the Prix de l’Arc de Triomphe. Irish-based stallions filled seven of the top ten places in the leading sires table in 2016. New emerging markets were developed for Irish horses last year. A copy of HRI's end-of-year press release for 2016, which contains all the key statistics, is attached to our submission.

Despite this strong position, the industry is facing a number of key challenges. The board and I are determined to address these challenges in a positive fashion with the support of this committee. We believe a long-term secure and sustainable funding base can be achieved for the industry while saving money for the Exchequer. Brexit is a significant issue for us because Britain is our biggest market for bloodstock exports. We also intend to focus on the recruitment and retention of skilled staff within the industry, to broaden the racehorse ownership base and to increase attendance at race meetings in the modern digital landscape.

Notwithstanding these challenges, international successes are very important in underlining the attractiveness of breeding, buying and keeping horses in training in Ireland. Race meetings are major sporting and social occasions in overseas countries. Irish winners deliver a very positive image of our country. I hope we will see further success for Irish horses, trainers, jockeys and breeders at Cheltenham next week. I again thank the committee for giving me this opportunity to discuss the industry. We will be happy to address any questions that members of the committee may have.