2003 Horse Racing Ireland - Annual Report

2003 Horse Racing Ireland - Annual Report Contents page 03 page 04 page 06 page 08 page 20 page 28 page 40 page 52 Mission Statement Board Members, CEO and Committees of HRI Chairman s Statement Chief Executive s Statement Irish Racing Review Industry Statistics Audited Reports & Group Financial Statements Notes to Financial Statement 02

Mission Statement To develop and promote Ireland as a world centre of excellence for horse racing and breeding. In identifying its mission for the next five years, Horse Racing Ireland (HRI) has placed emphasis on Ireland s position in both the international horse racing and breeding industries and the quality of the product being offered to the racegoing public. The continuity of funding necessary to develop strategies to achieve the mission is the key element of the Plan. The claim to be a world centre of excellence is a realistic one and the benefits of the strategies pursued to achieve the mission will be reflected in the economic, cultural and social environment of the country. This mission gives expression to the values and sense of purpose of the organisation. 03

2003 Board Members & CEO of HRI Brian Kavanagh William Flood Peter McCarthy Jerry Desmond John Kidd Cahir O Sullivan Dermot Cantillon Roy Craigie Members of Board and Committees 2003 HRI Board Denis Brosnan Pierce Molony Eddie Browne Dermot Cantillon Frank Clarke Roy Craigie Jerry Desmond William Flood Jessica Harrington John Kidd Dan Kirwan Peter McCarthy Seamus Mulvaney Cahir O Sullivan Michael Osborne Ray Rooney Chairman Vice-Chairman Racing Regulatory Body Representative Representative of Persons Employed in the Horse Racing Industry Racehorse Breeders Representative Racing Regulatory Body Representative Racing Regulatory Body Representative Racecourses Representative Racing Regulatory Body Representative Racehorse Trainers Representative Representative of Persons in the Horse Racing Industry in Northern Ireland Representative of Persons Employed Directly in the Horse Racing Industry Racehorse Owners Representative Authorised Bookmakers Representative Racing Regulatory Body Representative Racing Regulatory Body Representative Retired 18 December 2003 (not pictured) Racing Regulatory Body Representative Retired 18 December 2003 (not pictured) Subsidiary Boards & HRI Appointees to Other Boards Irish Thoroughbred Marketing Limited John Kidd Chairman Dermot Cantillon John Clarke Joe Foley Jim Gorman Brian Kavanagh Joe Osborne Navan Golf Club plc William Flood Chairman Raymond Horan Brian Kavanagh John Kidd Matt O Dwyer Tote Ireland Limited Dermot Cantillon Chairman Alan Byrne Brian Kavanagh Eamon McElroy Paul Tansey Paddy Waldron Cilcoone Limited Margaret Davin Fairyhouse Racecourse John Kidd Michael Lane Gowran Park Racecourse Jessica Harrington Peter McCarthy International Equine Institute, Limerick University Dan Kirwan Irish Equine Foundation Brian Kavanagh Peter McCarthy John Kidd Limerick Racecourse Jerry Desmond Bob Lanigan RACE Margaret Davin Dan Kirwan 04

Denis Brosnan Pierce Molony Seamus Mulvaney Eddie Browne Dan Kirwan Jessica Harrington Frank Clarke HRI Board Committees as at 31st December 2003 Appointments & Remuneration Committee Assists the Board in matters relating to composition of Boards and Committees and remuneration of senior executives ensuring compliance with Government policy, state sector guidelines and the provisions of the Horse and Greyhound Racing Act 2001. Denis Brosnan Chairman Pierce Molony Audit Committee Assists and advises the Board on governance and internal control matters. Pierce Molony Chairman Eddie Browne Roy Craigie Bookmakers Committee Carries out the functions of the Board in matters relating to the control of the operations of authorised Bookmakers and compliance with the Irish Horseracing Industry Act, 1994 and as amended by subsequent acts with regard to Bookmakers and Betting. Eddie Browne Chairman Roy Craigie Raymond Horan Brian Kavanagh Finance Committee Assists and advises the Board in relation to all financial and accounting matters on the advancement of the objectives as set out in the Strategic Plan. Denis Brosnan Chairman Roy Craigie Jerry Desmond Brian Kavanagh Pierce Molony Peter McCarthy Fixtures Committee The Race Fixtures Committee was established under section 19 of the Irish Horseracing Industry Act, 1994. It recommends, in accordance with the terms of reference decided by the Board, the fixing of the annual list of race fixtures. Roy Craigie Chairman Jerry Desmond Peter McCarthy Jessica Harrington John Moloney Seamus Mulvaney Foal Levy Committee Advises the Board on matters pertinent to the operation of the Thoroughbred Foal Levy Scheme. Peter McCarthy Chairman Dermot Cantillon William Flood Derek Iceton John Kidd Edmund Loder Tim O Regan Eimear Mulhern Media Rights Committee Negotiation of media rights matters in accordance with Section 10 of the Horse and Greyhound Racing Act, 2001. Jerry Desmond Chairman Peter McCarthy Pierce Molony Leopardstown Committee Assists and advises the Board on the management and development of Leopardstown Racecourse. Frank Clarke Chairman Dave McGrath Vice-Chairman Jimmy Farrelly Jessica Harrington Brian Kavanagh Liam Madden Philip Myerscough Breege O Donoghue Denis McCarthy Honorary Life President Navan Committee Assists and advises the Board on the management and development of Navan Racecourse. William Flood Chairman Donal Matthews Vice-Chairman Eddie Campbell Gina Galvin Liam Madden John McCabe Noel Meade Michael McEvoy Honorary Life President Joe O Sullivan Honorary Life President Programmes Committee Determines in accordance with section 20 of the Irish Horseracing Industry Act, 1994 the race programmes for all race fixtures. Roy Craigie Chairman Dermot Cantillon Jerry Desmond Jessica Harrington Peter McCarthy Seamus Mulvaney 05

2003 Chairman s Statement Success in 2003 2003 was a successful year for Irish racing with the new Board of Horse Racing Ireland and its executive team settling into its task and launching a Strategic Plan for the industry for the period 2003 to 2007. It was a record year for Irish racecourses with total attendances of just under 1.4 million. Additional fixtures and competitive racing ensured that the quality of Irish racing remained strong both at home and abroad. Nine out of the ten Group 1 races on the flat were kept at home in 2003, including a record breaking first Classic for 84 year old Paddy Mullins with Vintage Tipple in the Darley Irish Oaks at the Curragh. The key performance indicators of betting, attendance, prize money, sponsorship, sales and owner registrations all continued to be strong for the year showing growth across all measurements. Irish Successes Overseas Once again Irish trained, owned, bred and ridden horses had great international success, winning a total of seventeen Group / Graded races in the UK, including ten Group 1 races. In addition to our six Cheltenham Festival winners, Monty s Pass provided a third Irish success in five years in the Martell Grand National, Refuse to Bend won the 2000 Guineas at Newmarket and Hawk Wing had a spectacular Lockinge Stakes success. There was major success for Nobody Told Me and David Casey in the French Champion Hurdle, Alamshar and Johnny Murtagh in the King George, Brian Boru and Jamie Spencer in the Doncaster St. Leger and of course High Chaparral and Michael Kinane in the Breeders Cup Turf. Indeed the Breeders Cup provided a fantastic result for the breeding industry with three Irish bred winners. Such major international successes are very important as a shop window for Irish bloodstock. 06

Strategic Plan The launch of the HRI Strategic Plan in March was a major milestone and over the duration of this Plan we will continue to implement policies which will be of significant benefit to the industry. Our mission statement is to develop and promote Ireland as a world centre of excellence for horse racing and breeding and we have made the creation of a vibrant racecourse sector a centrepiece of the Plan. Corporate Governance Horse Racing Ireland is committed to maintaining the highest standards of Corporate Governance and has embraced the 2001 Code of Practice for the Governance of State Bodies. Key requirements under this code such as a Statement on the Systems of Internal Financial Control, the setting up of an internal audit function, the Code of Conduct for Employees and Code of Business Conduct for Directors are all now operating in Horse Racing Ireland and its subsidiaries. Acknowledgements I would like to sincerely acknowledge the work of the Minister for Arts, Sport and Tourism, John O Donoghue TD, and his colleague Charlie McCreevy TD, Minister for Finance and thank them for their support of the horse racing industry. I would also like to pay tribute to the officials of these Departments for their allegiance and assistance to the industry in the past. The Irish horse racing industry is the envy of many other countries worldwide and the positive approach of successive Governments to the industry is the most frequently referred to advantage. In addition I would like to thank all of my Board colleagues and those who served on the various Boards and Committees of the subsidiaries of Horse Racing Ireland during 2003 as well as the executive team and staff, led by Brian Kavanagh, for their dedication and professionalism. Irish horseracing is an important industry and a major contributor to Irish life both socially and economically. I am proud to be associated with it and will continue to promote its value to the social and economic fabric of the country. Denis Brosnan Chairman 07

2003 Chief Executive s Statement A Solemn Start Any review of the 2003 racing year must begin with solemn consideration of the fact that Irish racing lost three of its finest young jockeys that year. Kieran Kelly, Sean Cleary and Timmy Houlihan all graced the sport with their presence and will long be remembered wherever the racing community gathers in the future. In 2003 there were a total of 303 fixtures held in Ireland, an increase of 24 from 2002. The number of races run reached an all time high of 2,166 and total prize-money amounted to 50.4 million. National Hunt prize-money (including point to points) increased by 11% for the year, while flat prize-money increased by 7%. A healthy increase of almost 600,000 was experienced in race sponsorship. It is pleasing to note that this market remains strong and we look forward to further growth in 2004. On-course betting turnover amounted to 237 million, showing a 14% increase on the previous year. Of this total, betting with on-course bookmakers amounted to 183 million, Tote betting was 44.3 million, and on-course SP shops amounted for 9.7 million. One of the most encouraging factors of the year was an increase of 8.5% in total attendance at racemeetings to a figure of 1.396 million (excluding Northern Ireland fixtures). This works out at an average of 4,985 persons per fixture and compares very favourably with other major racing nations. The overall health of the industry is perhaps best reflected by three key indicators, namely that horses in training showed a 3.7% increase to 5,672, new owner registrations were up in the year 4% to 850, and the value of thoroughbred sales at public auction in Ireland increased by almost 2% to 114 million. It is further estimated that overseas and private sales of Irish bloodstock amounted to a further 121 million approximately. 08

Sunrise at Greentree Stud

2003 was an extremely successful year on the track for Irish trained, ridden and bred animals and these achievements have been highlighted elsewhere in this report. Off the track, the highlight of 2003 for Horse Racing Ireland was the launch in March of its Strategic Plan for the industry. The mission statement which HRI has chosen to develop and promote Ireland as a world centre of excellence for horseracing and breeding is a realistic one. The benefits of the strategies which will be pursued by HRI to achieve this mission will be reflected in the economic, cultural and social environment of the country. In the Plan, a number of key goals were set in the following areas: 1 Funding 2 Racecourses 3 Integrity 4 Product development 5 Tote 6 Breeding 7 Training, education and employment 8 Information technology I am pleased to say that in the first year of the Plan all of the key economic indicators were in line with the targets set. Thoroughbred Foal Levy Scheme 2003 was the fourth year of the Foal Levy Scheme and income for the year was 1.33 million against 1.28 million for the previous year. Over 5,000 breeders paid this levy in respect of the 10,508 foals which were born. In accordance with the legislation, the proceeds of the levy were used for the benefit of the infrastructure of the breeding sector and the HRI Foal Levy Committee recommended allocations to the following bodies: Irish Equine Centre Irish Thoroughbred Breeders Association Irish Thoroughbred Marketing Irish Farriery Authority Irish Horse Welfare Trust In addition a Breeders Prize Scheme was introduced when the Foal Levy was launched and last year 152,000 was paid to breeders under the Scheme. 10

TOTE Tote Ireland had a most successful year in 2003, achieving solid growth in all areas. Total turnover for the 12 months came in at 44.3m, which was up 5.5m or 14.1% on the previous year. Turnover on Irish racing at 41.5m was up 3.9m or 10.5% on the previous year. The Irish racing turnover includes 0.6m bet into Irish Pools from the UK. Co-mingling into foreign pools showed exceptional growth, with 2.83m being bet as against 1.30m in 2002. Tote Ireland is now betting into all race meetings in the UK. The range of products available through co-mingling is the Win, Place and Exacta bets. Work is continuing apace to make further products such as the Jackpot and Placepot available for co-mingling in the not too distant future. There were some significant Tote records achieved in 2003, with Galway on 31st July achieving an all-time national Tote record of 1.74m. There were also course records at the Curragh on Derby Day of 1.02 million and at Punchestown on 30th April of 954k. The seven-day Galway Summer Festival produced a massive turnover of 7.5m for the week, which was up 0.8m on the previous year. 11

In April 2003, Tote Ireland reduced its retention on the Win Pool for races with 10 or less runners from 20% to 10%. This had a major impact on the dividends paid on these races when compared with bookmakers prices. Of the 457 races to which the lower retention applied, 274 or 60% paid better than the corresponding bookmakers price. The average Tote Dividend for these races was 5.74 as against 4.66 for the bookmakers. There was major testing carried out the on GPRS technology during the year. This technology will be used as the communication platform for the Teller Handheld Machines. The Tote introduced these handhelds on the racetracks in spring 2004. GPRS technology, besides being more cost effective than other communication platforms, will allow the Tote to bring its range of products via the handhelds direct to its racecourse patrons in bars and restaurants. The year also saw the introduction by Tote Ireland of an incentive payments system for racecourses. The total amount paid out to racecourses under this heading was 550,000 for the year. Payment was based on the amount of Tote turnover achieved by each track. The amount paid out represented 1.3% of track turnover. This initiative has been warmly welcomed by the racecourses. Profit for the year before provisions came in at 2.1 million, an increase of 0.5million on the previous year. All profits generated by Tote Ireland are used for reinvestment in the business or for the benefit of racing. Leopardstown 2003 ended on a very high note for Leopardstown with a recordbreaking attendance at the traditional Christmas Festival. Over 61,000 people attended the four day National Hunt Festival which will long be remembered for Best Mate s superb performance in the final running of the Ericsson Chase under that title sponsorship. The decision to run the reigning Gold Cup champion at Leopardstown was a great vote of confidence by connections in the quality of the race and the condition of the track. The full year attendance at Leopardstown exceeded 184,000 people. The Miller summer evening meetings on both Wednesdays and Saturdays continue to grow in strength with over 41,000 people attending. The highlight of the racing year at Leopardstown in many ways was the Ireland, the Food Island Champion Stakes which produced another tremendous contest. The 2003 race was the highest rating 12

race ever run in Ireland and the second best in the world last year (just behind the Prix de l Arc de Triomphe). The seven runners had amassed a remarkable seventeen Group 1 wins and over 13 million in win prize money alone. A highly competitive race ended up with victory for the home trained High Chaparral. It is worth noting that six of the seven runners in this race were bred in Ireland. Leopardstown received planning permission in 2003 for the proposed development of its car park, stable yard and golf centre. Work is expected to commence on this in 2004. The planning focus now is on the development of the stands, weighroom, parade ring, entrances, crèche and auxiliary areas with the objective of enhancing Leopardstown s status as a major international flagship course. Leopardstown eagerly anticipates the opening of the Sandyford and Carricksmines interchanges which will benefit the racecourse immensely due to designated access roads, and additionally the new LUAS light rail service to Sandyford industrial estate will be of great assistance. Navan The sixteen meetings which took place at Navan during 2003 attracted a total attendance of 48,384 with slightly increased betting turnover of 11.2 million. As indicated in recent years, the sponsorship performance at Navan racecourse continued to be strong with over 60% of all races sponsored. The Navan Race Committee has finalised its development plan in relation to the racecourse with particular emphasis on the stableyard, weighroom, and public facilities, and work will commence on this project in the near future. 13

Marketing Report 2003 was a record year for Irish Racecourses with total attendances of just under 1.4 million. HRI s Marketing Strategy is focused on growing attendances, with particular emphasis on the 20 29 age group. The major festival meetings were targeted as key points of entry for this age group and were supported with a significant TV Advertising campaign, which was recognised with a prestigious Silver Shark at the Kinsale International Advertising Awards. National and local radio campaigns were developed to support racecourses across the country together with Business to Business and consumer direct mail campaigns. HRI sponsored a new racing programme on TV3 with a 13 week summer series. Go Racing achieved a cumulative audience figure of over 1 million. Website and database development continued throughout the year with over 7,000 unique visitors per week visiting www.hri.ie, which included a facility to register on-line for weekly racing updates and text message alerts. In April 2003, the Racegoers Consultative Forum was launched and continued with a regular series of meetings to put forward the views of racegoers all across Ireland on the quality of the racing product on offer. In the latter half of the year, HRI recruited TV and racing personality Hector O heochagain to front advertising and promotional campaigns for HRI for a three year period. HRI was also proud to recognise the achievements of the heroes of the sport with the inauguration of the Irish Racing Awards and sponsorship of the inaugural Irish Stablestaff Association Awards. 14

Catherine Gannon 15

Irish Thoroughbred Marketing When discussing the 2003 season there are any number of horses which spring to mind - world class thoroughbreds with one thing in common, they are all Irish. One of the most memorable moments of the year would have to have been the Breeders Cup Turf in Santa Anita where High Chaparral (Ire) dead-heated with Johar while the world looked on. The adrenalin rush when watching that particular race was intense. Dermot Weld started the flat season off with a memorable success for Irish-bred and trained horses with Refuse to Bend winning the 2000 Guineas at Newmarket. On the home front, His Highness the Aga Khan dominated the Budweiser Irish Derby running both his colts, Alamshar (Ire) and Dalakhani (Ire), with Alamshar taking the trophy. These are but a few examples of some of the quality Irish Thoroughbreds which enthralled racing fans the world over. Others such as Vinnie Roe (Ire) and Vintage Tipple (Ire) all added to our already impressive portfolio of world class bloodstock, which is used by ITM to demonstrate the success obtained by buying quality Irish thoroughbreds. 2003 was yet another excellent season for Irish-bred National Hunt horses and saw a second Gold Cup win for Best Mate and victory for Monty s Pass in the Aintree Grand National with Irish-bred runners taking the Scottish, Welsh and Irish equivalents. The Cheltenham Festival highlighted the domination by Irish-bred horses of the UK National Hunt scene with seven Grade 1 victories for horses bred in Ireland, including the Irish trained trio of Moscow Flyer, Back in Front and Hardy Eustace. ITM continued to play a pivotal role in encouraging overseas buyers to choose Ireland as a premier location to purchase quality thoroughbreds. A total of 1060 overseas buyers from 21 different countries availed of the Inward Buyer Program in 2003 including buyers from Israel, Russia and Chile for the first time. Throughout the year ITM issued its regular weekly newsletter to over 2,500 contacts world wide and also provided information on Flat and National Hunt activity in Ireland on a regular basis. With the youthful ITM team working together for the past two years, strong relationships have now been cultivated with clients worldwide. This has been assisted by a constant communication process. 16

A total of 632 people availed of the ITM New Owners Promotion during the year showed an 8% increase on 2003, with 850 first time owners registering with HRI during the year. Finance The financial information for year-ended December 2003 is compared to a 54 week previous period. As a result of this, the comparative figures incorporate two Christmas festivals: December 2001 and December 2002, for both the Racecourse Division and Tote activity. 2003 was the first year of the new Strategic Plan for HRI. Turnover for the period was up 4.6% compared to the 54 week period in 2002. When you take out the effect of the extra two week period in 2002 however, the turnover at 53.1m is up 12% or 5.6m on a figure of 47.5m in 2002 (52 week period). The turnover increase is primarily due to the Tote increasing by 14% or 5.467m and the racecourse turnover increasing by 358k or 5% (52 week period). Betting income dropped by 220k due to the drop in the fixed fee payable to HRI by on-course bookmakers from 2,540 per annum to 500 per annum from August 2002. The Tote increase was due to an additional 22 fixtures as well as an additional 1.5m co-mingled from betting on a greater number of UK fixtures. Surplus The net profit for the Tote was 2.138m. Out of this profit, the Tote paid a dividend to HRI of 500,000, incurred rationalisation costs of 443,000 and also paid 550,000 to racecourses as part of an incentive programme to enable racecourses to invest this income towards further improvements on track. The remainder of the group surplus is primarily generated by HRI. This surplus is required to repay loans, invest in capital expenditure and to provide for the significant developments being planned by racecourses under the new Capital Development Programme. 17

Other Income The other Income at 81.8m against 81.4m reflects a drop in the Horse and Greyhound Fund as explained below, but an increase in Registry Office income and prize money contributions is due to the full year effect of this activity which was transferred across from the Turf Club in May 2002. 2002 reflects a partial year (from May 1st 2002) in the Registry Office income and prize-money deductions. The Horse and Greyhound Racing Fund was down by 4.8m in 2003 against 2002. When you take out the effect of the 2001 element in the previous year figure, the drop is 3.1m or 5.7%. This drop is due to the lower level which the Fund is linked to since the reduction in Off-Track Betting Duty to 2% in May 2002. Expenditure Group expenditure of 72.808m was down from the 2002 figure of 72.899m. The increase in prize-money is primarily due to the extra fixtures year-on-year of 24. The increase in prize-money contributions from owners and sponsors is as a result of comparing a twelve month period against an eight month period, since the transfer of the Registry Office in 2002 as well as the additional fixtures. A drop in expenditure of 7.3m arose under Capital Development Fund Amortisation since most of the grants were fully amortised by the end of 2002. The total paid at this point on development grants under the old scheme is 45.610m. The remainder of the expenditure includes an increase of 938k on Integrity Costs due primarily to the extra fixtures as well as additional legal costs, drug testing costs and an increased pension contribution. Racecourse improvement payments were up by 681k or 33% due to sponsorship and tote incentive schemes. Health and Safety grants were down since the new scheme had not significantly started in 2003. Grants paid to industry bodies were lower than 2002 since a once off grant was paid in 2002 to the Irish Equine Centre to enable a significant capital development to be carried out. General marketing and promotional costs were up by 346k due mainly to the Go Racing TV Programme. This is supported by the commitment of HRI to a strong marketing campaign for the racing and 18

breeding industry which will continue to fund programmes on TV as well as advertising contributions to local racecourses. The ITM contribution from the industry at 649k was utilised, together with an additional contribution from HRI of 1m, to fund initiatives ensuring the Irish Thoroughbred is branded strongly both at home and abroad. Through further investment in marketing the industry, ownership and sponsorship should continue to grow ensuring that Ireland enhances its reputation as a World Centre of Excellence. Acknowledgements In conclusion I would like to sincerely thank my management colleagues and the staff of Horse Racing Ireland (both full time and part time) for their significant contribution during a successful year for Irish racing. The staff of the subsidiaries (Tote Ireland, HRI Racecourses and ITM) also performed to a very high standard. I would also like to recognise the significant support of the Chairman, Denis Brosnan, the Board members and Committee members of Horse Racing Ireland, for their ongoing guidance on policy issues and to thank the officials of our sponsoring Department of Arts, Sport and Tourism for their consistent support and harmonious relations which undoubtedly are of great benefit to the industry in general. Brian Kavanagh Chief Executive Officer 19

2003 Irish Racing Review The Start of The Year In early January, the Tony Martin trained Xenophon (12/1) landed the Pierse Handicap Hurdle at Leopardstown under a well - judged ride from Mick Fitzgerald while two weeks later Christy Roche s Like-A- Butterfly just edged out Limestone Lad in a real thriller for the AIG Europe Champion Hurdle over the same course. Having landed the 2002 Ericsson Chase at Leopardstown in late December, all eyes were on the Michael Hourigan trained Beef Or Salmon in the Hennessy Cognac Gold Cup in early February and he certainly didn t disappoint his supporters with another impressive victory under Timmy Murphy while on the same day James Bowe s Solerina defeated Hardy Eustace in the Deloitte and Touche Novice Hurdle and Barrow Drive took the Dr. P.J. Moriarty Novice Chase after being left clear by the fall of Le Coudray at the final fence. Like A Butterfly Back In Front Moscow Flyer The Irish at Cheltenham and Aintree Cheltenham proved to be a resounding success for the Irish with six winners over the course of the three days. Edward O Grady s Back In Front won the opening Supreme Novices Hurdle in great style while Youlneverwalkalone took the William Hill Handicap Steeplechase in the hands of Barry Geraghty. On day two, the Jessica Harrington 20

trained Moscow Flyer lived up to his tag as the Irish banker with a brilliant display to win the Queen Mother Champion Chase while Dessie Hughes Hardy Eustace landed the Sun Alliance Hurdle for Kieran Kelly and Tony Martin s Xenophon hit the bookies hard as he scored in the Coral Cup. A fantastic week for jockey Barry Geraghty was rounded off by the victory of Jessica Harrington s Spirit Leader in the County Handicap Hurdle on the Thursday but it was not all plain sailing for the Irish as Beef Or Salmon was an early faller in the Gold Cup which was won in superb style by Best Mate. The Irish National Hunt Festivals The Grand National Meeting in early April saw another six winners for the Irish, with the victory of the Jimmy Mangan trained Monty s Pass in the Aintree Martell Grand National the Hardy Eustace highlight of the three days. Supported at fancy prices in the weeks before the race, Montys Pass (16/1) jumped superbly throughout as he strolled home twelve lengths clear under man-ofthe-moment Barry Geraghty and there were wild celebrations in the winners' enclosure as the Dee Racing Syndicate greeted their charge. At the same meeting Edward O Grady s Sacundai won a thrilling Martell Hurdle as he defeated Rooster Booster by a head while Irish jockey Charlie Swan announced his retirement from the saddle after he rode Patriot Games to victory on the Friday. At home the Powers Irish Grand National was won by the Dessie Hughes trained Timbera in front of a large crowd at Fairyhouse on Easter Monday while the following week the Punchestown Festival of National Hunt Racing proved to be a huge success with record crowds and levels of betting during the week. There was a big shock for punters when Moscow Flyer fell at the second last fence in the BMW Steeplechase on the opening day leaving Flagship Uberalles clear to record a notable victory while the following day the Francois Doumen trained First Gold became the first French trained horse to win at 21

Punchestown when he made all the running to win the Punchestown Heineken Gold Cup. Overseas raiders were to the fore once again on Thursday when Sporazene and Le Roi Miguel gave trainer Paul Nicholls and jockey Ruby Walsh a fine double in the IAWS Champion 4YO Hurdle and the Swordlestown Cup respectively. Trainer Jonjo O Neill rounded off an excellent week for the raiders when saddling Quazar to get the better of Back In Front in the Emo Oil Champion Hurdle on the Friday. First Gold On the Flat On the flat, trainer Dermot Weld sent out Refuse To Bend to win the English 2000 Guineas at Newmarket in early May while two weeks later the Aidan O Brien trained Hawk Wing put up a superb front running performance when winning the Lockinge Stakes at Newbury by a staggering eleven lengths. The Entenmann s Irish Guineas weekend at the Curragh in late May saw the Paul D Arcy trained Indian Haven land the 2000 Guineas under John Egan while the following day Aidan O Brien s Yesterday just held off Six Perfections by a short head to win the 1000 Guineas in a real thriller to complete a memorable day for connections after Black Sam Bellamy had taken the Tattersalls Gold Cup in good style. 22

The Epsom and Irish Derbys In early June there was a strong Irish challenge for the Epsom Derby but victory went to the Michael Stoute trained Kris Kin who defeated The Great Gatsby and Alamshar in a close finish and there was no luck for Aidan O Brien s Yesterday in the Epsom Oaks as she narrowly lost out to Andrew Balding s Casual Look after enduring a nightmare run in the straight. In late June, the John Oxx trained Alamshar got the better of Dalakhani to win the Budweiser Irish Derby in front of a huge attendance at the Curragh with Aidan O Brien s Roosevelt faring best of his six runners in finishing third. Alamshar had been a doubtful runner right up to the morning of the race after being plagued by a persistent back problem but after extensive physiotherapy everything worked out well in the end and this local victory went down brilliantly with the large attendance. Alamashar Yesterday Indian Haven 23

The Summer Months Two weeks later and veteran trainer Paddy Mullins is the man very much in the news as he saddled his first ever Classic victor when Vintage Tipple (12/1) arrived late and fast to win the Darley Irish Oaks under Frankie Dettori. Mullins then completed a tremendous big race double as Nearly A Moose landed the Hewlett Packard Galway Plate at the seven day Galway Festival in late July. Once again, the Galway Festival managed to break records on a daily basis with huge attendances and levels of betting being one of the features of the week. The racing world was stunned by the death of National Hunt jockey Kieran Kelly, following a fall at Kilbeggan in early August, as he became the first jockey to lose his life on an Irish racecourse since 1986. As the Irish racing community struggled to come to terms with this tragedy, things went from bad to worse when apprentice jockey Sean Cleary died after suffering severe head injuries in a fall at Galway in late October and fellow jockey Timmy Houlihan died in tragic circumstances in November. Vintage Tipple The Galway Festival Vinnie Roe Late Summer On the racetrack trainer Aidan O Brien saddled his sixth consecutive winner of the Waterford Wedgwood Phoenix Stakes at the Curragh when One Cool Cat defeated stable companion Old Deuteronomy and the same horse jumped to the head of the ante-post market for the 2004 English 2000 Guineas with another fine display when landing the Dunnes Stores National Stakes at the Curragh in mid-september. In early September, O Brien s High Chaparral just held off the flying late challenge of Falbrav to win the Ireland, the Food Island Champion Stakes at Leopardstown while seven days later the Dermot Weld trained Vinnie Roe became the first horse to win three consecutive Irish St Legers as Pat Smullen s mount defeated English raider Gamut by a length. 24

The Autumn Months In October, Dermot Weld s Grey Swallow confirmed himself as a very exciting prospect for next season with an impressive eight length victory in the Killavullan Stakes at Leopardstown while on the same weekend High Chaparral won the Breeders Cup Turf for the second consecutive year when dead-heating for first place with Johar after a truly memorable race. This proved to be Michael Kinane s last big race success as stable jockey for Aidan O Brien as two weeks later it was announced that the partnership was at an end after five excellent years which featured fifty eight Group One victories. Kinane is set to ride for the John Oxx stable in 2004 with Jamie Spencer filling Kinane s boots at Ballydoyle. Grey Swallow 25

In The End In late November, the James Bowe trained Solerina put up a fine frontrunning performance to win the Hatton s Grace Hurdle at Fairyhouse while on the same card Frances Crowley s Nil Desperandum easily took the Drinmore Steeplechase and Newmill won the Royal Bond Novice Hurdle for Thomas O Leary. Seven days later Michael Hourigan s Beef Or Salmon landed the John Durkan Memorial Steeplechase at Punchestown but he was firmly put in his place by the Henrietta Knight trained Best Mate in the Ericsson Chase at Leopardstown three weeks later. Best Mate s impressive victory was witnessed by a huge crowd at Leopardstown and the winner received a tremendous reception after his flawless display. Beef Or Salmon Best Mate Golden Cross At the same four day meeting, the Dessie Hughes trained Central House won the Denny Gold Medal Novice Steeplechase on St Stephen s Day while twenty four hours later the Paddy Power Handicap Chase went for export as Jonjo O Neill s World Wide Web took the honours. The concluding day of the meeting sees the Michael Halford trained Golden Cross spring a 66/1 shock in the Bewleys Hotels December Festival Hurdle under young Adrian Lane and this victory rounded off an excellent year for Irish Racing. 26

Nearly A Moose Wins

2003 Industry Statistics Fixtures Analysis - Per Year Year No. of Fixtures No. of Races 1999 264 1866 2000 270 1919 2001 268 1935 2002 279 1994 2003 303 2166 Fixtures Analysis - Per Month 28 No. of Fixtures 2003 2002 2001 2000 1999 January 12 17 14 17 12 February 15 9 11 12 12 March 19 21 -* 15 14 April 21 21 20 18 21 May 32 26 36 33 30 June 35 25 34 29 27 July 35 31 33 30 31 August 39 35 34 36 31 September 27 31 25 25 25 October 26 24 25 24 28 November 19 15 19 16 19 December 23 24 17 15 14 TOTAL 303 279 268 270 264 *cancellation of meetings due to foot and mouth restrictions

Fixtures Analysis - Per Day No. of Fixtures 2003 2002 2001 2000 1999 Sunday 77 68 53 60 56 Monday 20 17 20 21 22 Tuesday 17 18 17 19 17 Wednesday 41 36 38 33 34 Thursday 41 40 38 34 38 Friday 30 28 34 33 27 Saturday 59 55 55 56 54 Bank Holiday 18 17 13 14 16 TOTAL 303 279 268 270 264 Horses in Training Years Average Average Average Average Average Old 2003 2002 2001 2000 1999 2 495 516 447 449 411 3 731 590 552 563 472 4 710 709 635 568 579 5 1,122 1,038 1,003 941 878 6+ 2,614 2,616 2,471 2,255 2,326 Total 5,672 5,469 5,108 4,776 4,666 29

Breeding & Sales Breeding 2003 2002 2001 2000 1999 Thoroughbred Stallions 390 356 349 347 344 Thoroughbred Mares 16,938 16,467 15,503 14,655 13,928 Thoroughbred Foals 10,574 10,214 9,452 8,793 8,119 Sales 2003 2002 2001 2000 1999 Catalogued 10,437 10,802 9,794 8,865 8,313 Offered 8,535 8,909 8,189 7,408 6,880 Sold 6,305 6,404 6,241 5,870 5,492 Aggregate '000 114,173 112,333 108,834 119,034 87,553 Average 18,108 17,541 17,439 20,278 15,942 Betting On - Course Home Away Betting Fixtures Annual Year Total Totaliser Bookmakers Bookmakers Shop (ex. NI) Attendances '000 '000 '000 '000 '000 1999 169,511 32,037 131,377 1,342 4,755 245 1,309,411 2000 205,626 35,535 162,147 1,971 5,973 252 1,354,073 2001 215,016 36,080 169,651 2,171 7,114 253 1,296,430 2002 208,393 38,811 159,768 2,323 7,491 258 1,286,914 2003 237,014 44,278 180,792 2,269 9,675 280 1,395,833 30

Off - Course Betting Exclusive of Betting Duty 2003 2002 2001 2000 1999 m m m m m 1,921 1,569 1,359 1,177 927 2003 On - Course Betting Analysis Home Away Betting Annual Total Totaliser Bookmakers Bookmakers Shop Fixtures Attendances (incl. NI) (excl.ni) Sunday 72,149,062 11,776,738 56,790,652 752,861 2,828,811 76 402,747 Monday 16,129,668 2,834,732 12,515,824 241,247 537,865 20 95,595 Tuesday 15,657,397 3,159,517 11,994,244 69,472 434,164 17 90,496 Wednesday 27,206,377 5,427,458 20,339,062 139,458 1,300,399 41 179,222 Thursday 28,194,724 5,167,528 21,910,387 147,952 968,857 41 179,337 Friday 18,707,643 3,975,780 13,893,581 206,983 631,299 30 147,843 Saturday 38,705,640 6,824,310 29,286,737 322,346 2,272,247 60 216,318 Bank Holiday 11,512,480 2,285,693 8,359,778 165,538 701,471 18 84,275 Point to Points 5,924,286-5,701,528 222,758-97 unavailable Comingling out 2,826,778 2,826,778 - - - - - Total 237,014,055 44,278,534 180,791,793 2,268,615 9,675,113 400 1,395,833 31

Betting by Racecourse Racecourse Fixtures Tote Betting Bookmaker Betting 2003 Total 2003 2002 2003 2002 Home Away SP Shop 2003 Ballinrobe 7 6 612,395 604,262 2,202,989 85,683-2,288,672 Bellewstown 3 3 385,373 325,907 1,777,059 40,903-1,817,962 Clonmel 13 12 582,963 517,884 4,605,834 48,981 315,710 4,970,525 Cork 19 19 1,275,214 1,397,721 5,806,227 204,535 669,741 6,680,503 Curragh 19 19 4,663,578 4,503,311 19,143,337 60,910 915,069 20,119,316 Dundalk - - - - - - - - Fairyhouse 17 18 2,448,576 2,618,163 13,035,512 19,384 722,115 13,777,011 Galway 12 11 8,312,711 7,308,630 19,045,333 155,433 1,143,296 20,344,062 Gowran Park 16 13 1,047,283 896,562 6,777,130 52,845 369,992 7,199,967 Kilbeggan 7 6 783,965 636,556 4,031,574 45,613-4,077,187 Killarney 7 7 596,159 658,477 2,806,535 115,552 67,968 2,990,055 Laytown 1-34,497-186,310 4,515-190,825 Leopardstown 22 21 6,133,788 5,414,022 23,090,937 58,642 1,736,139 24,885,718 Limerick 16 15 1,424,919 1,313,375 5,626,053 201,643 645,540 6,473,236 Listowel 9 9 2,345,791 2,144,309 7,821,647 161,570 431,098 8,414,315 Naas 13 12 1,063,523 1,025,122 6,839,048 10,884 419,204 7,269,136 Navan 16 16 1,297,419 1,157,684 9,339,910 78,233 563,116 9,981,259 Punchestown 17 16 4,483,498 3,771,441 17,105,783 49,372 1,193,444 18,348,599 Roscommon 9 5 690,049 361,912 4,670,130 147,104-4,817,234 Sligo 7 4 443,150 235,871 2,568,466 94,715-2,663,181 Thurles 11 12 370,208 403,676 4,261,809 11,961 146,048 4,419,818 Tipperary 12 9 532,872 419,297 4,439,829 59,431 173,771 4,673,031 Tralee 7 7 602,602 696,661 3,387,883 112,573-3,500,456 Tramore 11 9 791,880 629,456 3,773,294 90,042 162,862 4,026,198 Wexford 9 9 529,343 469,556 2,747,636 135,333-2,882,969 Down Royal 13 12 - - - - - - Downpatrick 10 9 - - - - - - Sub Total 303 279 41,451,756 37,509,855 175,090,265 2,045,857 9,675,113 186,811,235 Point to Point 97 97 - - 5,701,528 222,758-5,924,286 Comingling out - - 2,826,778 1,301,000 - - - - Total 400 376 44,278,534 38,810,855 180,791,793 2,268,615 9,675,113 192,735,521 32

Bookmaker Betting 2002 Total Ttl Betting Bookmakers/Tote Home Away SP Shop 2003 2003 2002 2,270,762 55,258-2,326,020 2,901,067 2,930,282 1,588,972 33,762-1,622,734 2,203,335 1,948,641 3,850,001 240,287-4,090,288 5,553,488 4,608,172 5,775,239 128,773 577,307 6,481,319 7,955,717 7,879,040 15,305,288 19,735 798,485 16,123,508 24,782,894 20,626,819 - - - - - - 11,993,628 29,711 680,859 12,704,198 16,225,587 15,322,361 16,562,060 90,768 830,649 17,483,477 28,656,773 24,792,107 6,741,450 28,982 289,762 7,060,194 8,247,250 7,956,756 3,655,445 35,793-3,691,238 4,861,152 4,327,794 2,619,503 178,171-2,797,674 3,586,214 3,456,151 - - - - 225,322-18,496,071 149,877 1,365,734 20,011,682 31,019,506 25,425,704 5,046,740 247,404 505,023 5,799,167 7,898,155 7,112,542 8,738,583 207,188 470,725 9,416,496 10,760,106 11,560,805 6,584,372 4,590 303,794 6,892,756 8,332,659 7,917,878 8,691,293 86,227 477,762 9,255,282 11,278,678 10,412,966 14,222,338 38,078 996,715 15,257,131 22,832,097 19,028,572 2,274,421 61,942-2,336,363 5,507,283 2,698,275 1,362,070 55,706-1,417,776 3,106,331 1,653,647 5,407,471 55,293 129,177 5,591,941 4,790,026 5,995,617 3,874,077 61,182 65,308 4,000,567 5,205,903 4,419,864 3,562,853 90,661-3,653,514 4,103,058 4,350,175 3,447,255 106,320-3,553,575 4,818,078 4,183,031 2,813,098 117,102-2,930,200 3,412,312 3,399,756 - - - - - - - - - - - - 154,882,990 2,122,810 7,491,300 164,497,100 228,262,991 202,006,955 4,884,519 199,986-5,084,505 5,924,286 5,084,505 - - - - 2,826,778 1,301,000 159,767,509 2,322,796 7,491,300 169,581,605 237,014,055 208,392,460 33

Prizemoney Contributions Total HRI Sponsors Owners Year,000,000 %,000 %,000 % 1998 21,048 8,858 42.1% 4,932 23.4% 7,258 34.5% 1999 26,088 11,661 44.7% 5,784 22.2% 8,643 33.1% 2000 30,879 14,785 48.0% 6,464 20.9% 9,630 31.2% 2001 42,319 23,509 55.6% 6,110 14.4% 12,700 30.0% 2002 46,230 25,523 55.2% 6,549 14.2% 14,158 30.6% 2003 50,369 28,356 56.3% 7,136 14.2% 14,877 29.5% 2003 Prizemoney Total HRI Sponsors Owners,000,000 %,000 %,000 % National Hunt 25,192 16,008 63.5% 3,586 14.2% 5,598 22.2% Flat 25,177 12,348 49.0% 3,550 14.1% 9,279 36.9% Total 50,369 28,356 56.3% 7,136 14.2% 14,877 29.5% 34

Sponsors 1999-2003 National Hunt Total EBF INHS Commercial NI Tracks,000,000 %,000 %,000 %,000 % 1999 3,121 204 6.6% 22 0.7% 2,416 77.4% 479 15.3% 2000 3,339 277 8.3% 19 0.6% 2,583 77.3% 460 13.8% 2001 2,977 267 9.0% 14 0.5% 2,335 78.5% 361 12.0% 2002 3,168 258 8.2% 17 0.5% 2,452 77.4% 441 13.9% 2003 3,586 412 11.5% 14 0.4% 2,694 75.1% 466 13.0% Sponsors 1999-2003 Flat Total EBF INHS Commercial NI Tracks,000,000 %,000 %,000 %,000 % 1999 2,662 627 23.6% - - 1,926 72.3% 109 4.1% 2000 3,126 1,015 32.5% - - 2,015 64.5% 96 3.1% 2001 3,133 816 26.1% - - 2,200 70.2% 117 3.7% 2002 3,382 1,013 30.0% - - 2,257 66.7% 112 3.3% 2003 3,550 1,296 36.5% - - 2,190 61.7% 64 1.8% Prizemoney Overview Prizemoney 2003 % 2002 % 2001 %,000,000,000 Flat 25,177 50.0% 23,519 50.9% 21,707 51.3% National Hunt 25,192 50.0% 22,711 49.1% 20,612 48.7% Total 50,369 46,230 42,319 Races 2003 2002 2001 Flat 848 789 782 National Hunt 1,318 1,205 1,153 Total 2,166 1,994 1,935 35

Analysis by Race Type Prizemoney Races 2003 % 2002 % 2001 % 2003 2002 2001,000,000,000 2yo 5,796 11.5 5,704 12.3 5,109 12.1 170 171 162 Classic 2,800 5.6 2,800 6.1 2,286 5.4 5 5 5 Other Flat 16,581 32.9 15,015 32.5 14,312 33.8 673 613 615 Chase 9,983 19.8 8,559 18.5 7,914 18.7 404 349 327 Hurdle 12,104 24.0 11,336 24.5 10,388 24.5 700 657 614 Bumper 2,387 4.8 2,137 4.6 2,198 5.2 214 199 212 Point to Point 718 1.4 679 1.5 112 0.3 Total 50,369 100 46,230 100 42,319 100 2,166 1,994 1,935 2003 Runners Analysis by Race Type No. Horses Average Average of Races Entered * Entries Starters Starters 2yo 170 5,561 33 1,981 12 Classic 5 830 166 50 10 Other Flat 673 20,666 31 9,163 14 Chase 404 9,719 24 4,551 11 Hurdle 700 21,643 31 9,861 14 Bumper 214 7,683 36 3,296 15 Total 2,166 66,102 31 28,902 13 * after balloting 36

Cumulative Attendances to 31st December 2003 RACECOURSE Total Attendances No. Of Fixtures Average Attendances 2003 2002 2003 2002 2003 2002 Ballinrobe 16,317 17,488 7 6 2,331 2,915 Bellestown 12,200 13,823 3 3 4,067 4,608 Clonmel 25,136 19,402 13 12 1,934 1,617 Cork 61,432 61,028 19 19 3,233 3,212 Curragh 145,772 140,017 19 19 7,672 7,369 Dundalk - - - - - - Fairyhouse 69,933 70,033 17 18 4,114 3,891 Galway 208,360 200,471 12 11 17,363 18,225 Gowran Park 47,020 37,947 16 13 2,939 2,919 Kilbeggan 44,317 40,085 7 6 6,331 6,681 Killarney 23,939 24,288 7 7 3,420 3,470 Laytown 2,901-1 - 2,901 - Leopardstown 184,217 158,417 22 21 8,374 7,544 Limerick 71,238 72,000 16 15 4,452 4,800 Listowel 97,293 95,876 9 9 10,810 10,653 Naas 34,100 30,600 13 12 2,623 2,550 Navan 48,384 46,900 16 16 3,024 2,931 Punchestown 100,840 86,895 17 16 5,932 5,431 Roscommon 32,117 16,120 9 5 3,569 3,224 Sligo 19,461 10,982 7 4 2,780 2,746 Thurles 24,175 27,018 11 12 2,198 2,252 Tipperary 31,851 26,309 12 9 2,654 2,923 Tralee 32,059 33,517 7 7 4,580 4,788 Tramore 35,871 33,393 11 9 3,261 3,710 Wexford 26,900 24,305 9 9 2,989 2,701 TOTAL 1,395,833 1,286,914 280 258 4,985 4,988 37

Top Six Festival Meetings No. of Days Total Betting '000 Tote Betting '000 2003 2002 2003 2002 2003 2002 Galway 7 7 24,587 21,428 7,516 6,702 Listowel 7 7 10,147 10,684 2,202 1,948 Punchestown 5 5 13,269 12,054 3,350 2,982 Leopardstown (Christmas) 4 3 9,849 7,106 2,052 1,516 The Curragh (Derby Weekend) 3 3 5,937 4,669 1,485 1,270 Fairyhouse (Easter) 3 3 5,987 5,346 1,175 1,184 Total 29 28 69,776 61,287 17,780 15,602 Total fixtures (excl. NI) 280 258 237,014 208,393 44,278 38,811 Top 6 as % of all meetings 10.36% 10.85% 29.44% 29.41% 40.16% 40.20% 38

Bookmakers Betting '000 Prizemoney '000 Attendance 2003 2002 2003 2002 2003 2002 17,071 14,726 1,573 1,496 191,973 186,669 7,945 8,736 1,214 1,077 93,243 89,803 9,919 9,072 1,709 1,539 69,629 65,250 7,797 5,590 1,099 998 61,314 44,246 4,452 3,399 2,546 2,516 46,995 42,809 4,812 4,162 899 869 32,281 29,089 51,996 45,685 9,040 8,495 495,435 457,866 192,736 169,582 50,369 46,230 1,395,833 1,286,914 26.98% 26.94% 17.95% 18.38% 35.49% 35.58% 39

2003 Audited Reports & Group Financial Statements Members of the Board Mr Denis Brosnan Chairman Mr Pierce Molony Vice Chairman Appointed 18 12 03 Mr Raymond J. Rooney Vice Chairman Retired 18 12 03 Mr Eddie Browne Mr Dermot Cantillon Mr Roy Craigie Mr Jerry Desmond Mr William Flood Mrs Jessica Harrington Mr John Kidd Mr Dan Kirwan Mr Peter McCarthy Mr Seamus Mulvaney Mr Michael Osborne Retired 18 12 03 Mr Cahir O Sullivan Appointed 18 12 03 Mr Frank Clarke Appointed 18 12 03 Other Information Registered Office Secretary Thoroughbred County House, Kill, Co Kildare. Mr Raymond Horan Auditors Comptroller and Auditor General, Dublin Castle, Dublin 2. Solicitors Arthur Cox & Co, Arthur Cox Building, Earlsfort Terrace, Dublin 2. Bankers Bank of Ireland AIB Bank Ulster Bank Bank of Scotland Anglo Irish Bank 40

Moscow Flyer Wins 041

Statement on the System of Internal Financial Control for Horse Racing Ireland For the year ended 31st December 2003 1 I acknowledge that the Board of Horse Racing Ireland is responsible for the body s system of internal financial controls. 2 The internal financial controls are such that they provide reasonable, but not absolute, assurance against material error in the financial statements. 3 The undertaking of a formal review process to identify and evaluate organisational risks will be carried out during 2004. body of text here... 4 As well as complying with Generally Accepted Accounting Principles, the following are further key procedures in place designed to provide effective financial controls: A clearly defined Management Structure within Horse Racing Ireland and its subsidiaries with clarity on responsibilities. A division of duties for responsibilities within the finance function is split where appropriate and possible. A Financial Control function operates in principal subsidiaries additional to one operating in Horse Racing Ireland. Budgets are built from zero base each year and there are detailed review processes with management and CEO before Board approval. Subsequently, qualified accounting staff prepare monthly management accounts and report on variances from Budget. These reports go before Senior Management and then Boards. HRI has an outsourced internal audit function, which operates in accordance with the Framework Code of Best Practice set out in the Code of Practice on the Governance of State Bodies and which reports directly to the Audit Committee and in turn to the Board of HRI. In 2003, 4 Audit Committee meetings were held and 13 reports reviewed and recommendations implemented. All cheques payable must have 2 signatories under the agreed mandate. Banking On Line system is used for internal transfers, foreign payments and other selected payments. All payments through this system are done through an approved cheque-signing mandate. All Bank Accounts are reconciled once a month. All other financial transactions (such as money deposits and transfers) are signed off under 2 authorised signatories also. A formalised purchasing procedure for expenditure of a revenue and capital nature operates and tendering is complied with under EU and Irish public procurement procedures. Pension valuations are completed within the specified period and minimum funding standards are reviewed ongoing. 5 During the course of 2003 the effectiveness of the system of internal financial control was kept under review by the Audit Committee on behalf of the Board. A formal review was not conducted during 2003 but the Board will conduct one in 2004. Denis Brosnan Chairman 42

Statement Of Members Responsibilities The members of Horse Racing Ireland are required to prepare financial statements in respect of the financial year ended 31st December 2003, which give a true and fair view of the state of affairs of Horse Racing Ireland and the group at the end of that year and of the result of the group for the year then ended. In preparing those financial statements, the members of Horse Racing Ireland are required to: Select suitable accounting policies and then apply them consistently; Make judgements and estimates that are reasonable and prudent; Prepare the financial statements on the going concern basis unless it is inappropriate to presume that Horse Racing Ireland and the group will continue in business; State whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements. The members of Horse Racing Ireland are responsible for keeping proper books of account, which disclose with reasonable accuracy at any time the financial position of the group and to enable them to ensure that the financial statements are prepared in accordance with accounting standards generally accepted in Ireland. They are also responsible for safeguarding the assets of Horse Racing Ireland and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Denis Brosnan Chairman Pierce Molony Vice Chairman 43

Report of Comptroller and Auditor General for Presentation to the Houses of the Oireachtas body of text here... I have audited the financial statements on pages 46 to 67 under Section 13 of the Horse and Greyhound Racing Act, 2001. Respective Responsibilities of the Members of Horse Racing Ireland and the Comptroller and Auditor General The accounting responsibilities of the Members of the Horse Racing Ireland are set out in the Statement of Members Responsibilities on Page 43. It is my responsibility, based on my audit, to form an independent opinion on the financial statements presented to me and to report on them. I review whether the statement on page 42 reflects Horse Racing Ireland s compliance with applicable guidance on corporate governance and report any material instance where it does not do so, or if the statement is misleading or inconsistent with other information of which I am aware from my audit of the financial statements. Basis of Audit Opinion In the exercise of my function as Comptroller and Auditor General, I conducted my audit of the financial statements in accordance with auditing standards issued by the Auditing Practices Board and by reference to the special considerations which attach to State bodies in relation to their management and operation. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made in the preparation of the financial statements, and of whether the accounting policies are appropriate to Horse Racing Ireland s circumstances, consistently applied and adequately disclosed. 44

I planned and performed my audit so as to obtain all the information and explanations that I considered necessary to provide me with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement whether caused by fraud or other irregularity or error. In forming my opinion I also evaluated the overall adequacy of the presentation of information in the financial statements. Opinion In my opinion, proper books of account have been kept by Horse Racing Ireland and the financial statements, which are in agreement with them, give a true and fair view of the state of the affairs of Horse Racing Ireland and the Group at 31 December 2003 and of the Group s income and expenditure and cash flow for the year then ended. John Purcell Comptroller and Auditor General 26th July 2004 45

Statement Of Accounting Policies The significant accounting policies adopted by the group are as follows: Basis of Accounting The financial statements have been prepared on an accruals basis, under the historical cost convention, and in accordance with generally accepted accounting practice. Financial reporting standards recommended by the recognised accounting bodies have been adopted as they become applicable. The unit of currency in which the financial statements are denominated is the Euro. The financial statements comprise the financial statements of Horse Racing Ireland and its subsidiaries. The accounting dates of the subsidiaries are coterminous with that of Horse Racing Ireland. Basis of Consolidation The consolidated financial statements comprise the financial statements of Horse Racing Ireland and all of its subsidiaries made up to coterminous period ends. Turnover Turnover, which excludes inter group transactions with group subsidiaries, represents tote turnover, revenue from bookmakers betting and revenue from race meetings and ancillary activities. Fixed Assets and Deprecation Fixed Assets are stated at cost less accumulated depreciation except for land which is stated at cost. Depreciation is provided so as to writeoff the cost of the assets over their expected useful lives on the straight-line basis at the following annual rates: Land Nil Buildings 2% to 4% Plant, equipment & vehicles 7.5% -33.33% Financial Assets Financial assets are stated at cost less provision for any permanent diminution in value. Contribution To Prize Money Contributions to prize money are made by Horse Racing Ireland, Owners and Sponsors. Contributions to prize money by Horse Racing Ireland are expensed in the period in which they are incurred. The entrance fees, forfeits and sponsorship money for guaranteed value races are applied in funding prize money for such races. Where there is a surplus in any guaranteed value race this is used to fund any deficits in other such races at the same venue at a subsequent time as directed by the Chief Executive of Horse Racing Ireland. 46

Pensions Contributions to defined benefit pension schemes are based on the advice of independent qualified actuaries and are charged to the income and expenditure account on a systematic basis over the period of service of employees. Payments to defined contribution pension schemes are charged to the income and expenditure account in the period to which they relate. Additional payments arising from actuarial reviews are charged in full to the income and expenditure account. On establishment of the Irish Horseracing Authority (now Horse Racing Ireland), a pension reserve was transferred from The Racing Board, which had been made in order to make provision for formalisation of aspects of its pension arrangements. This was transferred to Horse Racing Ireland on its establishment. Leased Assets Payments made under operating leases are charged to the income and expenditure account. Grants and Racecourse Improvement Schemes (i) Grants paid Capital development grants paid to racecourses under the new capital development programme are included as intangible assets in the balance sheet and are fully amortised in the period in which they are granted. These grants are treated as a deferred credit in the balance sheets of the subsidiary companies and are credited to revenue on the same basis as the related fixed assets are depreciated. However for consolidation, these balances are adjusted in order to reflect the correct group position. (ii) Grants received Government revenue grants are credited to revenue on a cash receipts basis. Government capital grants received and receivable are treated as future development reserves in the balance sheet and released to the income and expenditure account based on the estimated useful lives of the assets to which the grants relate. (iii) Racecourse Improvement Schemes Racecourse improvement grants, primarily to meet health and safety requirements, are charged to the income and expenditure account in the period to which they relate. Racecourse incentive schemes based upon racecourses achieving specific criteria are charged to the income and expenditure account in the period to which they relate. Comparative Period The comparative figures shown for 2002 are for the period 18th December 2001 to 31st December 2002. 47

Group Income and Expenditure Account For the year ended 31st December 2003 Notes Year Ended Period Ended 31 12 2003 31 12 2002 000 000 TURNOVER Tote Ireland turnover 44,278 41,504 Income from bookmakers betting 886 1,153 Racecourse income 7,912 8,064 TOTAL TURNOVER 53,076 50,721 Winnings paid on bets (35,368) (32,438) Operating costs (15,068) (15,352) DIRECT COSTS 4 (50,436) (47,790) OTHER INCOME Allocation from the Horse & Greyhound Racing Fund 5 51,349 56,146 Prize money contributions from Owners & Sponsors 8 22,013 16,917 Foal Levy 6 1,338 1,279 Registry Office income 2,424 1,588 Industry contributions to Irish Thoroughbred Marketing 649 632 Interest income (net) 12 1,416 1,627 Profit on disposal of fixed assets 7 20 304 NET INCOME 81,849 81,424 EXPENDITURE Contributions to prize money 8 28,357 26,528 Payment of prize money collected from Owners & Sponsors 8 22,013 16,917 Integrity services 9 6,270 5,332 Racecourse Improvement Schemes 13 2,764 2,083 Capital Development Fund amortisation 15 1,305 8,576 Capital Development Fund interest & expenses 12 571 968 Grants paid to industry bodies 10 1,144 2,596 Foal Levy distribution 6 1,338 1,279 Horse Racing Ireland administration costs 12 4,017 4,016 Irish Thoroughbred Marketing expenditure 1,715 1,800 General marketing and promotions 1,896 1,550 Rationalisation costs 11 1,418 1,254 72,808 72,899 Taxation 29 8 - SURPLUS FOR THE PERIOD 12 9,033 8,525 Transfers to reserves 24 (7,779) (1,041) 1,254 7,484 SURPLUS AT BEGINNING OF PERIOD 7,484 - SURPLUS AT END OF PERIOD 8,738 7,484 The statement of Accounting Policies and Notes 1 to 31 form part of these financial statements. All gains and losses are accounted for in the Group Income and Expenditure Account. Denis Brosnan Chairman Pierce Molony Vice Chairman 48

Group Balance Sheet As at 31st December 2003 Notes 31 12 2003 31 12 2002 000 000 FIXED ASSETS Tangible assets 14 52,989 54,692 Intangible assets 15 492 330 Financial assets 16 4,840 5,010 58,321 60,032 CURRENT ASSETS Debtors 17 5,691 2,734 Cash at bank 18 56,383 53,290 62,074 56,024 CREDITORS Amounts falling due within one year 19 27,589 26,045 Bank overdraft - 195 27,589 26,240 NET CURRENT ASSETS 34,485 29,784 TOTAL ASSETS LESS CURRENT LIABILITIES 92,806 89,816 CREDITORS Amounts falling due after more than one year 20 17,358 23,191 NET ASSETS 75,448 66,625 Deferred Capital Grant 22 1,719 2,037 FINANCED BY Establishment reserve 23 17,109 17,109 Income and expenditure account 8,738 7,484 Other reserves 24 46,539 38,760 74,105 65,390 Minority interest 26 1,343 1,235 75,448 66,625 The statement of Accounting Policies and Notes 1 to 31 form part of these financial statements. All gains and losses are accounted for in the Group Income and Expenditure Account. Denis Brosnan Chairman Pierce Molony Vice Chairman 49

Horse Racing Ireland Balance Sheet As at 31st December 2003 Notes 31 12 2003 31 12 2002 000 000 FIXED ASSETS Tangible assets 14 24,578 24,622 Intangible assets 15 - - Financial assets 16 18,295 18,614 42,873 43,236 CURRENT ASSETS Debtors 17 3,123 285 Cash at bank 18 51,042 47,121 54,165 47,406 CREDITORS Amounts falling due within one year 19 38,377 36,921 Bank overdraft - 195 38,377 37,116 NET CURRENT ASSETS 15,788 10,290 TOTAL ASSETS LESS CURRENT LIABILITIES 58,661 53,526 CREDITORS Amounts falling due after more than one year 20 14,710 18,234 NET ASSETS 43,951 35,292 FINANCED BY Establishment reserve 23 9,592 9,592 Income and expenditure account 6,346 5,466 Other reserves 24 28,013 20,234 43,951 35,292 The statement of Accounting Policies and Notes 1 to 31 form part of these financial statements. All gains and losses are accounted for in the Group Income and Expenditure Account. Denis Brosnan Chairman Pierce Molony Vice Chairman 50

Group Cashflow Statement For the year ended 31st December 2003 Notes Year Ended Period Ended 31 12 2003 31 12 2002 000 000 Net Cash Inflow from Operations 27(i) 10,331 78,565 RETURN ON INVESTMENTS & SERVICING OF FINANCE Interest received 1,844 1,917 Interest paid (999) (1,258) NET CASH INFLOW FROM RETURNS ON INVESTMENTS & SERVICING OF FINANCE 845 659 CAPITAL EXPENDITURE & FINANCIAL INVESTMENT Receipts from sale of tangible fixed assets 50 364 Payments to acquire tangible fixed assets (861) (17,066) Additions to intangible assets (1,467) (2,322) Loans to racecourses 170 (17) Preference Shares 108 226 NET CASH OUTFLOW FROM CAPITAL EXPENDITURE & FINANCIAL INVESTMENT (2,000) (18,815) NET CASH INFLOW BEFORE FINANCING 27(ii) 9,176 60,409 FINANCING Bank loan repayment (5,888) (20,230) NET CASH OUTFLOW FROM FINANCING (5,888) (20,230) INCREASE IN CASH 27(iii) 3,288 40,179 The statement of Accounting Policies and Notes 1 to 31 form part of these financial statements. All gains and losses are accounted for in the Group Income and Expenditure Account. Denis Brosnan Chairman Pierce Molony Vice Chairman 51

Notes to the Financial Statements For the year ended 31st December 2003 1 Establishment of Horse Racing Ireland Horse Racing Ireland was established under the Horse and Greyhound Racing Act 2001, and came into existence on the 18th December 2001. Under Section 22 of the Act, the assets and liabilities of the Irish Horseracing Authority were transferred to Horse Racing Ireland on that date. Under Section 8 (2) of the Act, the functions of the Registry Office were transferred to Horse Racing Ireland on 1st May 2002, being the date set by the Minister. On that day, funds held by the Racing Regulatory Body in individual client accounts, including all supporting assets and liabilities, were transferred to Horse Racing Ireland. 2 Employee Numbers The number of persons employed by the group at 31st December 2003 is as set out below: Year Ended Period Ended 31 12 2003 31 12 2002 Number Number Permanent staff 137 115 Racegoing staff part time 535 523 672 638 During the period several departments were transferred from the Turf Club, these include the Patrol Camera Unit and Starting Stalls staff. 3 Employee Remuneration The aggregate payroll cost of the employees detailed at Note 2 was as follows: Year Ended Period Ended 31 12 2003 31 12 2002 000 000 Wages and salaries 7,041 6,596 Employer s social welfare costs 587 533 Employer s pension costs 605 492 8,233 7,621 4 Direct Costs Winnings paid on bets Operating costs Total Total Year Period Year Period Year Period Ended Ended Ended Ended Ended Ended 31 12 2003 31 12 2002 31 12 2003 31 12 2002 31 12 2003 31 12 2002 000 000 000 000 000 000 Betting collection costs - - 342 332 342 332 Tote Ireland 35,368 32,438 6,778 7,138 42,146 39,576 HRI Racecourses Group - - 7,948 7,882 7,948 7,882 35,368 32,438 15,068 15,352 50,436 47,790 52

5 Allocation from Horse and Greyhound Racing Fund Horse Racing Ireland was established on 18th December 2001, under the Horse & Greyhound Racing Act 2001. A fund was established by the government for the purpose of giving support to the horse and greyhound racing industry under Section 12 of this Act. Under the Act, the total amount paid into the Fund from monies provided by the Oireachtas should not exceed 254m or such other increased amounts as may stand specified in regulations made by the Minister for Arts, Sport and Tourism with the consent of the Minister for Finance. It is anticipated that the limit of 254m will be reached in 2004. The Board of HRI understands that the Minister for Arts, Sport and Tourism proposes, with the consent of the Minister for Finance, to increase the amount available to the Fund so as to provide for the financing of HRI in the medium term. 6 Foal Levy Under the Irish Horseracing Authority Act 1994, as amended by the Horse and Greyhound Racing (Betting Charges and Levies) Act 1999, Horse Racing Ireland may, with the consent of the Minister for Arts, Sports and Tourism, charge a levy on all thoroughbred foals registered in a stud book. This levy is collected by Weatherby s on behalf of Horse Racing Ireland, at variable rates. Year Ended Period Ended 31 12 2003 31 12 2002 000 000 Received in 2003 for foals born in 2003 (10,508 foals paid) 1,338 1,279 Allocation to industry and running costs of scheme (1,338) (1,279) - - 7 Profit on Disposal of Fixed Assets The profit on the disposal of fixed assets relates to the trade in of Motor Vehicles and Machinery. Year Ended Period Ended 31 12 2003 31 12 2002 000 000 Group Horse Racing Ireland - - Leopardstown Racecourse 20 304 Tipperary Race Company plc - - 20 304 8 Contributions to Prizemoney Year Ended Period Ended 31 12 2003 31 12 2002 000 000 Group (a) From Owners and Sponsors 22,013 16,917 (b) From Horse Racing Ireland 28,357 26,528 50,370 43,445 (a) The contributions from Owners and Sponsors and the related payment of prize money disclosed in the Income and Expenditure account for 2003 are in respect of the year to 31st December 2003.The contributions in the previous period are in respect of the period 1st May to 31st December 2002. (b) The contribution to prize money from Horse Racing Ireland relates to the full period for both comparatives. 53

Notes to the Financial Statements Continued 9 Integrity Services Under the Irish Horseracing Industry Act 1994, Part III, as amended by the Horse and Greyhound Racing Act 2001, Schedule 6, the Racing Regulatory Body (which comprises the Turf Club and the Irish National Hunt Steeplechase Committee) has responsibility for making and enforcing the Rules of Racing and for providing on-course integrity services. Horse Racing Ireland provides funding to the Racing Regulatory Body to meet the costs of providing such services as laid out in Part III, paragraph 42 of the 1994 Act. 10 Grants to Industry Bodies Grants paid to industry bodies are split as follows: Year Ended Period Ended 31 12 2003 31 12 2002 000 000 Irish Equine Centre 588 1,993 RACE 301 444 Other Industry Bodies (including Blue Cross, Order of Malta, etc.) 255 159 1,144 2,596 11 Rationalisation Costs These costs represent the associated move costs incurred in the year in relation to the relocation of Horse Racing Ireland to Kill, Co. Kildare. Included within these costs is a voluntary redundancy programme in place for staff of The Turf Club on the transfer of functions from the Registry Office to Horse Racing Ireland on 1st May 2002 and a voluntary redundancy programme for Tote Ireland staff who were based in Leopardstown. Horse Racing Ireland and Tote Ireland operate from Kill, Co. Kildare since June 2003. 12 Surplus for the Period Year Ended Period Ended 31 12 2003 31 12 2002 000 000 Surplus for the period has been arrived at after charging : Depreciation 2,534 2,275 Amortisation of intangible assets 1,305 8,576 Auditors remuneration 60 71 Interest payable on loans from banks a) 999 1,258 Horse Racing Ireland Board Members fees 132 132 and after crediting: Interest receivable on deposits with banks 1,470 1,491 Interest receivable on loans to racecourses 374 426 a) Included in interest payable is bank interest on Horse Racing Ireland s Capital Development Fund loan of 571,590 54

The remuneration package of the Chief Executive of Horse Racing Ireland for the year ended 31st December 2003 is as follows: Year Ended Period Ended 31 12 2003 31 12 2002 000 000 Basic salary 137 137 Pension contributions and other taxable benefits 44 40 Performance related remuneration 23 23 204 200 Employers PRSI on the above 17 17 Horse Racing Ireland Administration costs comprise the following: Year Ended Period Ended 31 12 2003 31 12 2002 000 000 Running costs of departments - pay and non - pay 3,385 2,483 Additional pension contributions and other related costs 0 1,130 Building running costs 632 403 4,017 4,016 For the comparative period, departmental running costs for the employees who transferred on 1st May 2002 are not included up to that date. 13 Racecourse Improvement Schemes Year Ended Period Ended 31 12 2003 31 12 2002 000 000 Health and Safety Grants 1,497 2,083 Track Widening Grants 185 0 Sponsorship Incentive Scheme 531 0 Tote Percentage Betting Payments 551 0 2,764 2,083 Amounts paid to racecourses within the Group included within the above schemes amounted to 334k (2002: 200k). 55

Notes to the Financial Statements Continued 14 Tangible Assets Group Land & Plant Equipment 31 12 2003 Buildings & Vehicles Total 000 000 000 Cost At 1st January 2003 51,797 16,202 67,999 Additions 119 742 861 Disposals - (663) (663) At 31st December 2003 51,916 16,281 68,197 Aggregate depreciation At 1st January 2003 4,680 8,627 13,307 Charge for period 1,003 1,531 2,534 Disposals - (633) (633) At 31st December 2003 5,683 9,525 15,208 Net book value At 31st December 2003 46,233 6,756 52,989 At 31st December 2002 47,117 7,575 54,692 Horse Racing Ireland Land & Plant Equipment 31 12 2003 Buildings & Vehicles Total 000 000 000 Cost At 1st January 2003 24,611 1,065 25,676 Additions - 174 174 Disposals - (505) (505) At 31st December 2003 24,611 734 25,345 Aggregate depreciation At 1st January 2003 414 640 1,054 Charge for period 32 176 208 Disposals - (495) (495) At 31st December 2003 446 321 767 Net book value At 31st December 2003 24,165 413 24,578 At 31st December 2002 24,197 425 24,622 56

15 Intangible Assets 31 12 2003 31 12 2002 000 000 Group (a) Capital development grants paid Paid to 31st December 2002 44,143 41,821 Payments during the year 1,467 2,322 Paid to 31st December 2003 45,610 44,143 Amortisation of grants paid Balance at 31st December 2002 43,813 35,198 Charge for the year 1,305 8,615 Balance at 31st December 2003 45,118 43,813 Net book value 492 330 (a) The Irish Horseracing Authority (now Horse Racing Ireland) established a capital development fund to enable a substantial upgrading of racecourse facilities to take place. It provided up to a maximum of 50% funding with the balance being funded by the racecourses. This scheme has now been completed and the Irish Horseracing Authority s (now Horse Racing Ireland s) contribution has been funded by way of a 15 year loan. The balance remaining (i.e. 492,000 2003; 330,000 2002) relates to grants paid by Tote Ireland to racecourses not owned by Horse Racing Ireland in order to fund capital developments of Tote buildings at those tracks. These grants are amortised over a five year period. (b) The Board of Horse Racing Ireland established a new Capital Development Scheme in 2003. Under the new programme Horse Racing Ireland provides up to a maximum of 55% funding with the balance being funded by the racecourses. 16 Financial Assets 31 12 2003 31 12 2002 000 000 Group Loans to racecourses 4,840 5,010 Horse Racing Ireland Loans to subsidiaries 13,403 13,552 Investment in subsidiaries 52 52 Loans to racecourses 4,840 5,010 Details of the principal subsidiaries of Horse Racing Ireland and their activities are set out in note 31. 18,295 18,614 57

Notes to the Financial Statements Continued 17 Debtors Amounts falling due within one year 31 12 2003 31 12 2002 000 000 Group Trade debtors 4,099 1,543 Prepayments and accrued income 1,592 1,191 5,691 2,734 Horse Racing Ireland Trade debtors 2,370 146 Prepayments and accrued income 753 139 3,123 285 18 Cash at Bank 31 12 2003 31 12 2002 000 000 Horse Racing Ireland 51,042 47,121 HRI Racecourses 888 1,385 Tote Ireland 4,148 4,112 Irish Thoroughbred Marketing 305 672 56,383 53,290 Horse Racing Ireland 51,042 47,121 The cash balance in Horse Racing Ireland relates primarily to the funds on deposit arising from the sale of land at Leopardstown to Dun Laoghaire-Rathdown County Council for development of the Motorway as well as stakes won but not drawn down by clients of the Registry Office at 31st December 2003. 19 Creditors Amounts falling due within one year 31 12 2003 31 12 2002 000 000 Group Accruals 5,198 5,732 Deferred payment on asset acquisition 795 671 Bank loan (Note 21) 2,396 2,863 Trade creditors 4,873 2,727 Prize money due to racing clients 13,578 12,975 Guaranteed value races prizefund 375 747 Taxation creditors 374 330 27,589 26,045 58

Amounts falling due within one year 31 12 2003 31 12 2002 000 000 Horse Racing Ireland Accruals 2,560 3,484 Amounts owed to group companies 18,155 18,024 Bank loan (Note 21) 1,143 1,143 Trade creditors 2,330 317 Prize money due to racing clients 13,578 12,975 Guaranteed value races prizefund 375 747 Taxation creditors 236 231 The movement in the Guaranteed Value Races Fund for the relevant period was as follows: 38,377 36,921 000 000 Balance at 1st January 2003 747 1,054 Surpluses on Guaranteed Value Races 361 465 Released to Income and Expenditure Account (733) (772) Balance at 31st December 2003 375 747 Analysis of Taxation Creditors 31 12 2003 31 12 2002 000 000 Group PAYE 171 163 PRSI 85 80 Other taxes 118 87 374 330 Horse Racing Ireland PAYE 112 114 PRSI 46 46 Other taxes 78 71 20 Creditors 236 231 Amounts falling due after more than one year 31 12 2003 31 12 2002 000 000 Group Bank loan (Note 21) 17,358 22,779 Deferred payment of asset acquisition - 412 17,358 23,191 Horse Racing Ireland Bank loan (Note 21) 14,710 18,234 59

Notes to the Financial Statements Continued 21 Bank Loans 31 12 2003 31 12 2002 000 000 Group Repayable within 1 year 2,396 2,863 Repayable within 2 to 5 years 13,344 8,149 Repayable after 5 years 4,014 14,630 19,754 25,642 Horse Racing Ireland Repayable within 1 year 1,143 1,143 Repayable within 2 to 5 years 10,697 3,808 Repayable after 5 years 4,013 14,426 15,853 19,377 There is a negative covenant for 3.7 million (2002: 4.8m) in favour of our bankers pledged against the assets of The Leopardstown Club Limited of a similar value. 22 Deferred Capital Grant 31 12 2003 31 12 2002 000 000 Group Balance at 31 December 2002 2,037 2,365 Amortised during the year (318) (328) Balance at 31 December 2003 1,719 2,037 The government allocated by way of grant 3.2 million in 1999 towards the acquisition of a new Tote System. This amount is being transferred to the Income and Expenditure account over a 10 year period in line with the matching depreciation. 23 Establishment Reserve The establishment reserve arose on the transfer of net assets from the Racing Board to the Irish Horseracing Authority on 1st December 1994, and the transfer of net assets of the Irish Horseracing Authority to Horse Racing Ireland on 18th December 2001. 60

24 Movement on Reserves Reserve for Future Revaluation Pension Total Other Development Reserve Obligations Reserves 000 000 000 000 Group Opening balance at 1st January 2003 30,834 6,984 942 38,760 Transfer from Income and Expenditure 7,779 - - 7,779 Transfer to Income and Expenditure - - - - Closing balance at 31st December 2003 38,613 6,984 942 46,539 Horse Racing Ireland Opening balance at 1st January 2003 12,308 6,984 942 20,234 Transfer from Income and Expenditure 7,779 - - 7,779 Transfer to Income and Expenditure - - - - Closing balance at 31st December 2003 20,087 6,984 942 28,013 The transfer to the Reserve for Future Development in the Group relates to income allocated for future significant development under the Capital Development Programme 2003-2008 and the redevelopment of Leopardstown Racecourse. 25 Pensions Commitments Defined Benefit Scheme (Racing Board Scheme) a) On 1st December 1994, the Irish Horseracing Authority took over the operation of the Racing Board s Defined Benefit Pension Scheme for permanent staff. This scheme continues to operate under Horse Racing Ireland since 18th December 2001. b) A full actuarial valuation was carried out on 1st April 2003 and at 31st December 2003, this valuation was updated for the purposes of FRS 17 by a qualified independent actuary. The actuarial valuation carried out 1st April 2003 is available to members of this scheme. c) This is now a closed scheme and there were 12 active participants and 54 inactive participants at 31st December 2003. d) Contributions made for the year ended 31st December 2003 were 98,000. Future contributions will be made in accordance with advice from Horse Racing Ireland s actuaries. 61

Notes to the Financial Statements Continued The main financial assumptions used to calculate the retirement liabilities under FRS 17 as at 31st December 2003 were as follows: Valuation Method Projected Unit Discount Rate 5.50% Inflation Rate 2.25% Salary increases 4.00% Pension increases 2.25% The market value of assets in the pension scheme and the expected rate of return and the scheme liabilities as at 31st December 2003 were: Expected Expected Market Value Market Value Return 2003 Return 2002 31 12 2003 31 12 2002 Equities 7.75% 8.00% 7,396 5,664 Bonds 4.75% 5.00% 3,093 3,654 Property / Other 5.75% 7.00% 712 1,078 Cash 3.00% - 85-11,286 10,396 Present value of pension scheme liabilities 11,830 11,266 Net deficit in pension scheme 544 870 Net pension liability 544 870 62

Analysis of the amount which would be charged to operating profit is as follows: 31 12 2003 31 12 2002 000 000 Current Service Cost 70 117 Past Service Cost - 77 Analysis of the amount which would be credited to other finance income is as follows: 000 000 Interest on scheme liabilities 608 620 Expected return on scheme assets (698) (728) Analysis of the amount which would be recognised in the statement of total recognised gains and losses (STRGL) is as follows: 000 000 Actual return less expected return on scheme assets 603 (3,402) Experience gains and losses (395) 2,104 Changes in assumptions - (87) Actuarial gain which would be recognised in the STRGL 208 (1,385) Analysis of the movement in deficit during the year is as follows: 000 000 Deficit at the beginning of the year (870) (508) Current service cost (70) (163) Contributions 98 1,268 Past service costs - (77) Other finance income 90 1,100 Actuarial gain / (loss) 208 (2,490) Deficit at end of year (544) (870) The above calculations are included for information only. Compulsory full adoption of FRS 17 has been deferred to reporting dates after 1st January 2005 (formerly after 22nd June 2003). Defined Benefit Scheme (The Turf Club of Ireland Pension Scheme) a) On 1st May 2002, at the point of transfer of employees from the Turf Club to Horse Racing Ireland, a Deed of Adherence between Horse Racing Ireland, Stewards of the Turf Club and Coyle Hamilton Trustees Limited was put in place allowing Horse Racing Ireland to be an Adhering Body to participate in the Turf Club of Ireland Pension Scheme (the Principal Employer) from that point. b) The Adhering Body covenants with the Principal Employer (The Turf Club) and the Trustees to be bound by the provisions of the scheme set out by the declaration and the rules. c) There are 28 employees of Horse Racing Ireland in this scheme which is now a closed scheme. During 2003, 5 employees who operate Patrol Camera and Photofinish transferred into Horse Racing Ireland from the Turf Club. d) The most recent actuarial valuation on the scheme was dated 31st July 2003. e) Contributions made for the year ended 31st December 2003 for the 28 employees included in this scheme were 137,350. f ) This scheme also covers the employees of Integrity Services who are directly funded by HRI under the Irish Horseracing Authority Act 1994, Section 42. Employees of the Turf Club and the Curragh Racecourse are also included in the liabilities of the scheme but not in the net pension liability defined underneath. 63

Notes to the Financial Statements Continued The main financial assumptions used to calculate the retirement liabilities under FRS 17 for the full scheme were as follows: Valuation Method Discount Rate 5.50% Inflation Rate 2.00% Salary increases 3.50% Pension increases 2.50% Projected Unit The mid market value of assets in the scheme and the expected rate of return were: Expected Expected Market Value Market Value Return Return at 31 12 2003 at 31 12 2002 2003 2002 000 s 000 s Equities 7.50% 7.50% 6,767 5,654 Fixed Interest 4.50% 4.50% 1,524 1,745 Property/ Other 6.50% 6.50% 630 678 Cash 3.00% - 565-9,486 8,077 Present Value of pensions scheme liabilities 12,749 11,960 Net Pension Liability Total Scheme 3,263 3,883 Net deficit in pension scheme in relation to HRI direct employees and HRI directly funded Integrity Services Employees 2,355 2,910 Net Pension Liability for HRI 2,355 2,910 Defined Contribution Scheme/PRSA a) Horse Racing Ireland operates a Defined Contribution Scheme for all employees not in the Defined Benefit Scheme, i.e. 69 employees. b) The pension costs for the period ended 31st December 2003 was 168,662. There were no prepaid costs at the end of the period. c) During 2003, Horse Racing Ireland appointed Eagle Star as the preferred supplier for PRSA s for employees not within the other schemes. To date, there has been little interest in this facility. 64

26 Minority Interest Year Ended Pwriod Ended 31 12 2003 31 12 2002 000 000 Opening balance 1,235 1,009 Preference Shares and Related Share Premium 108 226 Closing balance 1,343 1,235 Navan Golf Club Plc has a nominal share capital of 1,000 Preference Shares at 6 cent each. There were 492 shares issued and fully paid at the 31st December 2003. The balance of 1,342,719 represents the share premium on these issued shares of 1,305,719 and 37,000 minority interest in Tipperary Race Company Plc. 27 (i) Reconciliation of Surplus for the Year to Net Cash Inflow/Outflow from Operations Year Ended Period Ended 31 12 2003 31 12 2002 000 000 Surplus for the year 9,033 8,525 Interest receivable (1,844) (1,917) Interest payable 999 1,258 Depreciation charges 2,534 2,275 Profit on sale of tangible assets (20) (304) Amortisation of Capital Development Fund grants 1,305 8,576 (Increase) / Decrease in Debtors (2,957) 47,771 Increase / (Decrease) in Creditors 1,599 12,709 Amortisation of deferred capital grants (318) (328) Net Cash Inflow From Operations 10,331 78,565 27 (ii) Reconciliation of Movement in Net Funds Year Ended Period Ended 31 12 2003 31 12 2002 000 000 Increase in Cash in the Period 3,288 40,179 Repayment of Bank loans 5,888 20,230 Change in Net Funds 9,176 60,409 Net Funds/ (Debt) at 1st January 2003 27,453 (32,956) Net Funds at 31st December 2003 36,629 27,453 65

Notes to the Financial Statements Continued 27 (iii) Analysis of Changes in Net Funds At Cash At 31 12 2002 Flows 31 12 2003 000 000 000 Cash at Bank 53,095 3,288 56,383 Debt due within one year (2,863) 467 (2,396) Debt due after one year (22,779) 5,421 (17,358) 27,453 9,176 36,629 28 Capital and Other Commitments Future capital and other expenditure committed by the group but not provided for in these financial statements are as follows: 31 12 2003 31 12 2002 000 000 Committed 4,335 3,813 Contracted - - Within the above figure of 4.335m is an amount of 2.5m, which represents a commitment made by Horse Racing Ireland to Punchestown Racecourse once all outstanding legal requirements have been complied with to the satisfaction of both parties. On the 18th December 2003, a Management Services Agreement was entered into between HRI and Kildare Hunt Club (and certain companies controlled by Kildare Hunt Club) whereby Punchestown Holdings Limited provides management services in relation to the operation of Punchestown Racecourse and Event Centre. The Board of Punchestown Holdings Limited is made up of 10 members with 5 representatives nominated by both HRI and Kildare Hunt Club. The Agreement is an interim measure pending finalisation of a joint venture agreement. Punchestown Holdings Limited did not trade in 2003. HRI has a commitment in respect of the leasing of premises in the next year amounting to 280k. This comprises rent payable on a leasehold interest on premises at Thoroughbred County House. The term of this lease is for 3 years ending during 2006. 29 Taxation The activities of Horse Racing Ireland, Irish Thoroughbred Marketing Limited and Tote Ireland Limited are exempt from corporation tax. The taxable charge in the income and expenditure account arose in The Leopardstown Club Limited. 30 Contingent Liabilities A number of legal cases are pending involving Horse Racing Ireland and its subsidiaries. These are being fully defended by Horse Racing Ireland. The financial effect, if any, arising from the cases cannot reasonably be ascertained. 66

31 Principal Subsidiaries Direct Subsidiaries % Held Tote Ireland Limited 100 Operation of Totalisator at racemeetings and operation of a credit betting service Irish Thoroughbred Marketing Limited 100 Promotion of the Irish Thoroughbred Horse HRI Racecourses Limited 100 Racecourse Holding Company Indirect Subsidiaries The Leopardstown Club Limited 100 Holding of racemeetings and ancillary activities Navan Races Limited 99 Holding of racemeetings and ancillary activities Cork Racecourse Limited 100 Letting of land The Tipperary Race Company PLC 78 Letting of a racecourse Navan Golf Club PLC 100 Operation of a golf course All the subsidiary companies are incorporated in the Republic of Ireland with their registered offices at Thoroughbred County House, Kill, Co. Kildare. 67

68