HORSE Sport Ireland’s financial statements have revealed a concerning state of affairs with the governing body deemed a going concern with a ‘fragile’ balance sheet after two years of operating at a deficit; €100,351 in 2022 and €318,909 in 2021.

The financial statements pertain to the financial year ending December 31st 2022, shortly after a giant shift in the make-up of the directors of the body.

In November 2022, eight directors resigned their posts after a turbulent two week-period with the Minister for Agriculture appointing four new ones in their place (Niamh Brennan, Michael Christopher Dowling (chair), Zoe Kavanagh and Kevin Smyth).

Deep divisions

At the time, chairman Joe Reynolds, the last of the eight to resign, told The Irish Field: “deep divisions have arisen at Board level, and it has not been possible to build a bridge between the differing parties”.

“These divisions related to a wide range of core issues, some of which were personality driven, while others were linked to historic issues within some affiliated groups,” he said.

“Matters came to a head recently when a number of Directors voted in favour of a motion at a Board meeting against specific legal advice. The course of events led directly to the ongoing Board issues becoming irreconcilable.”

In the 2022 Director’s Report signed by Niamh Brennan and Kevin Smyth, the body’s status as a going concern is clearly stated, along with concerns about liquidity and funding ongoing operations.

It states: “given their recent appointment, the directors were not actively engaged in the affairs of the company during the fiscal year 2022. Consequently, they had no direct influence or control over the company’s financial and operational activities during this period.”

Liquidity challenges

The report goes on to state: “The directors have noted that the current financial position is characterised by a delicate balance sheet between assets and liabilities, with limited working capital and liquidity challenges. These concerns stem from factors such as increased spending over successive years, declining cash reserves and uncertainties surrounding future revenue streams.

“The business is almost entirely dependent on funding streams from Sport Ireland and The Department of Food, Agriculture and the Marine. The timings of these revenue streams and the recovery nature of the grant disbursements create a significant challenge for the business to continue and it is imperative for stakeholders to recognise that the balance sheet may impact the company’s capacity to meet its financial commitments and fund its ongoing operations.

“Therefore, the directors emphasise the need for a comprehensive assessment of strategies to strengthen the financial position, including capital infusion, cost management and revenue diversification, to ensure the long-term sustainability and viability of the business as a going concern.”

Uncertainties

External auditors, CLA Evelyn Partners (Ireland) Limited agreed that the going concern basis of accounting was appropriate in that HSI will ‘continue in operational existence for the foreseeable future’ with the Board of management ‘actively managing uncertainties in relation to future funding’.

“As part of this process, the Board are monitoring the finances of the organisation against this procedure and taking appropriate action as and when necessary,” the auditor’s report states.

“On that basis, the Directors do not consider that a material uncertainty exists in relation to going concern.”

The statements show that current assets amounted to €2,214,195 with €2,196,810 falling due to creditors within one year.

A HSI spokesman said the body was ‘confident of its ability to continue to trade as normal’ and there was no risk to creditors. “Horse Sport Ireland is adequately resourced to meet its payment obligations as they fall due,” he said.

“As set out in the financial statements, the directors and management have already embarked on a comprehensive assessment of strategies to strengthen the financial position of Horse Sport Ireland. This plan is showing immediate impact and will further strengthen the organisation’s position in 2024.

“Horse Sport Ireland continues to provide much-needed services and supports to the equine industry. Although the organisation has faced challenges, it remains confident in its ability to deliver into the future.

The financial statements are available to download via the Companies Online Registration Environment, www.core.ie