Mr. Seamus McCarthy:

Go raibh maith agat a Chathaoirligh.

Horse Racing Ireland was established as a statutory agency for the control, regulation and development of the horse racing industry in Ireland. It operates racing and tote activities through eight active subsidiary companies and licenses horse racing at other privately owned tracks. HRI also has a minority shareholding in Curragh Racecourse Limited.

HRI received State funding of €70.4 million in 2022, sourced from the horse and greyhound racing fund. Its other main sources of income in the year were: race entry fees and sponsorships earmarked for racing prize money, totalling €25.6 million; media payments of €7 million; registration fees totalling €2.6 million; and net income from racing arising from tote and HRI-owned racecourses of €1.6 million.

On the expenditure side in 2022, HRI paid out €68.2 million in prize money. Expenditure of €16.7 million was incurred on "integrity and racecourse services", mainly representing grants to the Irish Horseracing Regulatory Board. Overall, the HRI group incurred a deficit for 2022 of €5.7 million. Its net assets amounted to €111 million as at the end of that year.

The 2022 financial statements received an unqualified opinion, but I drew attention to the disclosure in the group statement of income and expenditure of a loss of €1.4 million in 2022, relating to Horse Racing Ireland’s investment in Curragh Racecourse Limited. CRL was established to provide for the redevelopment and management of the Curragh racecourse, in a joint venture involving HRI, the Turf Club and a number of private investors. As at 31 December 2022, HRI held a 35.29% economic share in the racecourse. As explained in notes 36 and 38 of the group financial statements, HRI has provided equity investment and grant funding totalling almost €36 million to CRL up to the end of 2022. A further €0.5 million was paid for the right to use a hospitality suite at the Curragh for 30 years and there were two small loans from HRI outstanding at the year end.

In 2020, HRI entered into a new €9 million convertible loan agreement with CRL. As at 31 December 2022, €8.24 million had been transferred to CRL. The maturity date on the loan was 31 January 2024 and under the terms of the loan agreement, the loan was convertible into shares on that date, at CRL's discretion. That option was exercised by CRL and HRI's economic interest in the company increased to 37.4%, from that conversion.

The Irish Horseracing Regulatory Board is a company limited by guarantee. The board was established by the Turf Club and the Irish National Hunt Steeplechase Committee, with effect from 1 January 2018, for the purpose of carrying out the regulatory and licensing functions for Irish horse racing, as provided for in the Horse Racing Ireland Act 2016. The members of the board are appointed by the Turf Club and the Irish National Hunt Steeplechase Committee. The board has a number of statutory functions, including: responsibility for making and enforcing of the rules of racing, provision of integrity services for horse racing; licensing of all participants in horse racing in Ireland; and doping control, forensic testing and handicapping in respect of horse racing.

The board received funding of €12.3 million from HRI in 2022. This accounted for 88% of its income in the year. The board also received €1.3 million in licensing income, collected on its behalf by HRI from trainers and jockeys. Overall, IHRB operates on a financial break-even basis. In 2022, it expended €8.5 million on integrity services and €3.8 million on administrative expenses.

The 2022 financial statements received a clear audit opinion. Without qualifying that opinion, I drew attention in my report to a financial governance issue disclosed in note 18 to the financial statements, which deals with related party transactions. The note discloses that €350,000 was transferred from the jockeys' emergency fund, a charity bank account under the control of the Irish Horseracing Regulatory Board, to the board’s own bank account in January 2022. The funds were subsequently repaid by the board to the same charity account in April 2022.

Note 24 and the statement on internal control report that concerns arose in June 2023 about the financial governance of those transactions and that an independent external review of those concerns and certain other matters was ongoing in March 2024 when the board's audited financial statements for 2022 were being finalised. The board's chief executive officer will be able to update the committee on progress with that review.