RACING VICTORIA LIMITED
2011 ANNUAL REPORT
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Chairman’s foreword RACING VICTORIA ANNUAL REPORT 2010/11
I am pleased to present the Annual Report of Racing Victoria featuring a snapshot of the 2010/11 racing season detailing the Victorian Group 1 winners, season premierships, award winners and other statistics.
The report also contains Racing Victoria’s Financial Report incorporating the Directors’ Report, Auditor’s Report and Financial Statements for the 2010/11 financial year.
MICHAEL DUFFY Chairman �ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Racing snapshot
THE 2010-11 racing season saw 9023 individual horses compete on Victorian tracks, but the headlines were stolen by one horse, Black Caviar. Unbeaten in six Victorian starts during the season, the champion sprinter was crowned Staging Connections Victorian Racehorse of the Year, whilst her jockey Luke Nolen and trainer Peter Moody dominated their respective fields. Following is a snapshot of the racing season – the award winners, the feature race heroes and the numbers that made the sport tick.
2010/11 GROUP 1 RESULTS
DATE VENUE RACE DIST PRIZE WINNER JOCKEY TRAINER (M) MONEY ($) 18/09/2010 Caulfield Patinack Farm Sir Rupert 1400 350,000 Response Craig Williams Mathew Ellerton Clarke Stakes & Simon Zahra 18/09/2010 Caulfield Rokk Ebony Underwood 1800 350,000 So You Think Steven Arnold Bart Cummings Stakes 24/09/2010 Moonee Valley Sportingbet Manikato Stakes 1200 500,000 Hay List Glyn Schofield John McNair
3/10/2010 Flemington Turnbull Stakes 2000 500,000 Zipping Nicholas Hall Robert Hickmott 9/10/2010 Caulfield The Age Caulfield Guineas 1600 1,000,000 Anacheeva Luke Nolen Peter Moody 9/10/2010 Caulfield Yalumba Stakes 2000 400,000 So You Think Steven Arnold Bart Cummings 9/10/2010 Caulfield David Jones Toorak Handicap 1600 350,000 More Joyous Nash Rawiller Gai Waterhouse 13/10/2010 Caulfield Schweppes Thousand Guineas 1600 500,000 Yosei Michelle Payne Stuart Webb 16/10/2010 Caulfield BMW Caulfield Cup 2400 2,500,000 Descarado Chris Munce Gai Waterhouse 23/10/2010 Moonee Valley Tatts Cox Plate 2040 3,000,000 So You Think Steven Arnold Bart Cummings 30/10/2010 Flemington AAMI Victoria Derby 2500 1,500,000 Lion Tamer Hugh Bowman Murray & Bjorn Baker 30/10/2010 Flemington Coolmore Stud Stakes 1200 500,000 Star Witness James Winks Danny O'Brien 30/10/2010 Flemington Longines Mackinnon Stakes 2000 1,000,000 So You Think Steven Arnold Bart Cummings 30/10/2010 Flemington Myer Classic 1600 500,000 Sacred Choice Corey Brown Joseph Pride 2/11/2010 Flemington Emirates Melbourne Cup 3200 6,000,000 Americain Gerald Mosse Alain de Royer Dupre 4/11/2010 Flemington Crown Oaks 2500 1,000,000 Brazilian Pulse Craig Williams Michael Moroney 6/11/2010 Flemington Emirates Stakes 1600 1,000,000 Wall Street Hugh Bowman Jeff Lynds 6/11/2010 Flemington Patinack Farm Classic 1200 750,000 Black Caviar Ben Melham Peter Moody 12/02/2011 Caulfield Sportingbet C. F. Orr Stakes 1400 400,000 Typhoon Tracy Luke Nolen Peter Moody 19/02/2011 Flemington Coolmore Lightning Stakes 1000 750,000 Black Caviar Luke Nolen Peter Moody 26/02/2011 Caulfield Patinack Farm Blue Diamond 1200 1,000,000 Sepoy Kerrin McEvoy Peter Snowden Stakes 26/02/2011 Caulfield Rokk Ebony Futurity Stakes 1400 500,000 More Joyous Nash Rawiller Gai Waterhouse 26/02/2011 Caulfield Sportingbet Oakleigh Plate 1100 400,000 Eagle Falls Damien Oliver David Hayes 5/03/2011 Flemington Australian Guineas 1600 750,000 Shamrocker Glen Boss Danny O'Brien 12/03/2011 Flemington Darley Australian Cup 2000 1,000,000 Shocking Corey Brown Mark Kavanagh 12/03/2011 Flemington Lexus Newmarket Handicap 1200 1,000,000 Black Caviar Luke Nolen Peter Moody 25/03/2011 Moonee Valley Pulse Pharmacy William 1200 500,000 Black Caviar Luke Nolen Peter Moody Reid Stakes �ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Racing snapshot
2010/11 PREMIERSHIPS (1 August 2010 to 31 July 2011)
METRO TRAINER WINS COUNTRY JOCKEY WINS
Peter Moody 103 1/2 Dean Yendall 126 1/2 Mark Kavanagh 38 Brad Rawiller 97
Mick Price 35 1/2 Andrew Mallyon 88 1/2
METRO JOCKEY WINS COUNTRY APPRENTICE WINS Luke Nolen 71 Jake Noonan 49
Craig Newitt 49 Jarrod Fry 42 1/2 Craig Williams 49 Katelyn Mallyon 42
METRO APPRENTICE WINS PICNIC TRAINER WINS Jake Noonan 37 Reg Manning 14
Jason Maskiell 27 Adam Bodey 9
Daniel Stackhouse 18 Tracey Josephs 8
STATE TRAINER WINS PICNIC JOCKEY WINS
Peter Moody 176 1/2 Adam Bodey 42
Darren Weir 114 1/2 Danielle Daniel 22
Mick Price 105 1/2 1/2 Matthew Corbisiero 16
STATE JOCKEY WINS JUMPS TRAINER WINS
Dean Yendall 150 1/2 Robbie Laing 8 Craig Newitt 132 Eric Musgrove 7
Brad Rawiller 116 Robert Smerdon 6
STATE APPRENTICE WINS JUMPS JOCKEY WINS Jake Noonan 86 Steven Pateman 14
Jason Maskiell 59 Adam Trinder 7
Ashley Thompson 54 Arron Lynch 6
COUNTRY TRAINER WINS
Darren Weir 104 1/2 Peter Moody 73
Mick Price 70 1/2 �ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Racing snapshot
2010/11 RACING STATISTICS (1 August 2010 to 31 July 2011 in Victoria)
NUMBER OF MEETINGS CONDUCTED FIELD SIZES Country 401 Average Starters
Metro 114* Country 10.15
Picnic 31 Metro 10.41
Grand Total 546 Picnic 6.74
* includes 2 Mornington metro meetings Total 10.06
NUMBER OF RACES NUMBER OF TRAINERS WITH A STARTER† Races Scheduled Races Conducted 1167
Country 3363 3189 NUMBER OF JOCKEYS WHO RODE† Metro 921 911 341 Picnic 215 186
Total 4499 4286 † Includes country, metro, picnic and trials
NUMBER OF INDIVIDUAL RACE STARTERS 9023
TOTAL NUMBER OF RACE STARTS Starters
Country 32373
Metro 9486
Picnic 1254
Total 43113
2010/11 VICTORIAN THOROUGHBRED RACEHORSE AWARD WINNERS
2010/11 VICTORIAN THOROUGHBRED RACEHORSE AWARD WINNERS
Staging Connections Victorian Racehorse of the Year Black Caviar Scobie Breasley Medal presented by Tabcorp Luke Nolen Fred Hoysted Medal presented by Radio Sport National Peter Moody Tommy Corrigan Medal presented by TRP Steve Pateman TVN Most Memorable Moment Award Brenton Primmer Mitchelton Wines Metropolitan Jockey Premiership Award Luke Nolen Eliza Park Metropolitan Trainer Premiership Award Peter Moody IER Metropolitan Apprentice Jockey Premiership Award Jake Noonan VRC Bert Wolfe Media Award Rod Nicholson �ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Contents
Racing Victoria Limited ACN 096 917 930 Financial report for the financial year ended 31 July 2011
Directors’ report 02-04
Auditor’s independence declaration 05
Independent auditor’s report 06-07
Directors’ declaration 08
Consolidated statement of comprehensive income 09
Consolidated statement of financial position 10
Consolidated statement of cash flows 11
Consolidated statement of changes in equity 12
Notes to the financial statements 13-36
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Directors’ report
The directors of Racing Victoria Limited submit herewith the annual financial report of the company for the financial year ended 31 July 2011. In order to comply with the provisions of the Corporations Act 2001, the directors’ report as follows:
The names of the directors of the company during or since the end of the financial year are as follows. Directors’ particulars and profiles can be viewed in the Annual Report.
The Hon Michael Duffy Chairman Appointed Director 17 December 2001 & Chairman 6 December 2007
Peter Sinn Deputy Chairman Appointed 4 December 2008 and Deputy Chairman 3 December 2009
Michael Caveny Appointed 9 December 2010
Ross Dobinson Appointed 3 December 2009
Bryan Gurry Appointed 4 December 2008
Graeme John AO Appointed 1 April 2010
Peter McMahon Appointed 6 December 2007 and retired 9 December 2010
David Moodie Appointed 3 December 2009
Robert Roulston Appointed 4 December 2008
Barbara Saunders Appointed 1 December 2005
Paul Schauble Appointed 4 December 2008
Robert Hines Appointed 11 August 2008
Mark Close Company Secretary Appointed 22 May 2008
PRINCIPAL ACTIVITIES The consolidated entity’s principal activities in the course of the financial year were the administration of thoroughbred racing in the State of Victoria.
DIVIDENDS Under the company’s constitution no dividends may be declared or paid.
REVIEW OF OPERATIONS The total revenue from operations (i) decreased by 4.8% to $272.5 million in the twelve months to 31 July 2011. The net profit of the consolidated entity for the twelve months to 31 July 2011 was $1.4 million compared to a profit of $0.6 million in the prior twelve months.
The profit from operations for the twelve months to 31 July 2011 consisted of a profit from Racing Victoria Limited general operations of $0.9 million, the share of profit from the equity accounting treatment of Racing Information Services Australia Pty Ltd (RISA) of $0.3 million, profit from Bookmakers Development Fund of $0.1 million and profit from the Accident Insurance Fund of $0.1 million.
(i) Refer to page 22 of the financial report for a full breakdown of joint venture and other operating revenue.
CHANGES IN STATE OF AFFAIRS During the financial year there was no significant change in the state of affairs of the consolidated entity other than that referred to in the financial statements or notes hereto.
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Directors’ report
SUBSEQUENT EVENTS The consolidated entity received approval for an additional debt facility of $8 million to fund working capital requirements during the final year of the regional racecourse infrastructure program.
FUTURE DEVELOPMENTS Disclosure of information regarding likely developments in the operations of the consolidated entity in future financial years and the expected results of those operations is likely to result in unreasonable prejudice to the consolidated entity. Accordingly, this information has not been included in this report.
DIRECTORS’ MEETINGS The following table sets out the number of directors’ meetings (including monthly and special meetings of the board and meetings of the audit committee) held during the financial year and the number of meetings attended by each director (while they were a director or committee member). During the financial year, 11 monthly board meetings, 5 special board meetings and 4 audit committee meetings were held.
�OARD OF �IRECTORS �UDIT �OMMITTEE No. of No. of No. of No. of Monthly Monthly Special Special No. of No. of Meetings Meetings Meetings Meetings Meetings Meetings Directors Held (*) Attended Held (*) Attended Held (*) Attended
The Hon Michael Duffy 11 11 5 4 Peter Sinn 11 11 5 5 4 4 Michael Caveny 6 6 3 3 Ross Dobinson 11 9 5 4 4 4 Bryan Gurry 11 11 5 4 Graeme John AO 11 10 5 4 2 2 Peter McMahon 5 5 2 1 2 2 David Moodie 11 11 5 5 Robert Roulston 11 11 5 5 Barbara Saunders 11 10 5 4 Paul Schauble 11 11 5 4 Robert Hines 11 11 5 5
(*) The number of meetings held during the time the directors held office during the 12 months to 31 July 2011.
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Directors’ report
INDEMNIFICATION OF OFFICERS AND AUDITORS During the financial year, the consolidated entity paid a premium in respect of a contract insuring the directors of the consolidated entity, the company secretary and all executive officers of the consolidated entity and of any related body corporate against a liability incurred as such a director, secretary or executive officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.
The consolidated entity has executed deeds of indemnity in favour of each of the directors. Each of these deeds provides for the consolidated entity to indemnify each director to the maximum extent permitted by law against:
• all liabilities incurred by the director as an officer of the consolidated entity and each subsidiary; and
• all legal costs and expenses arising from proceedings or an investigation incurred by the director as an officer of the consolidated entity or of a subsidiary.
The deeds also give the directors a right of access to board papers for a period of seven years after their retirement and require the consolidated entity to maintain insurance cover for the directors. A director’s right of access to board papers is subject to protection of the consolidated entity’s legal professional privilege rights and to the director keeping the board papers in confidence.
The consolidated entity has not otherwise, during or since the financial year, indemnified or agreed to indemnify an officer or auditor of the consolidated entity or of any related body corporate against a liability incurred as such an officer or auditor.
AUDITOR’S INDEPENDENCE DECLARATION The auditor’s independence declaration is included on page 5 of the financial report.
ROUNDING OFF OF AMOUNTS The consolidated entity is a consolidated entity of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order amounts in the directors’ report and the financial report have been rounded off to the nearest thousand dollars.
Signed in accordance with a resolution of the directors made pursuant to s.298(2) of the Corporations Act 2001.
On behalf of the directors
The Hon Michael Duffy Chairman
Melbourne, 10 November 2011
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Auditor’s independence declaration
Deloitte Touche Tohmatsu ABN 74 490 121 060
550 Bourke Street Melbourne VIC 3000 GPO Box 78 Melbourne VIC 3001 Australia
DX 111 Tel: +61 (0) 3 9671 7000 Fax: +61 (0) 3 9671 7001 The Board of Directors www.deloitte.com.au Racing Victoria Limited 400 Epsom Road Flemington Vic 3031
10 November 2011
Dear Board Members Racing Victoria Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Racing Victoria Limited.
As lead audit partner for the audit of the financial statements of Racing Victoria Limited for the financial year ended 31 July 2011, I declare that to the best of my knowledge and belief, there have been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
David A Watson Partner Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited �ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Independent auditor’s report
Deloitte Touche Tohmatsu ABN 74 490 121 060
550 Bourke Street Melbourne VIC 3000 GPO Box 78 Melbourne VIC 3001 Australia
DX 111 Tel: +61 (0) 3 9671 7000 Fax: +61 (0) 3 9671 7001 www.deloitte.com.au
Independent Auditor’s Report to the members of Racing Victoria Limited
We have audited the accompanying financial report of Racing Victoria Limited, which comprises the statement of financial position as at 31 July 2011, the statement of comprehensive income, the statement of cash flows and the statement of changes in equity for the year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity, comprising the company and the entities it controlled at the year’s end or from time to time during the financial year as set out on pages 8 to 36.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards – Reduced Disclosure Requirements and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control, relevant to the entity’s preparation of the financial report that gives a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited 5 �ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Independent audit report
Auditor’s Independence Declaration
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Racing Victoria Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.
Opinion
In our opinion, the financial report of Racing Victoria Limited is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the consolidated entity’s financial position as at 31 July 2011 and of its performance for the year ended on that date; and
(b) complying with Australian Accounting Standards – Reduced Disclosure Requirements and the Corporations Regulations 2001.
DELOITTE TOUCHE TOHMATSU
David A Watson Partner Chartered Accountants Melbourne, 10 November 2011
6 �ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Directors’ declaration
The directors declare that:
(a) in the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and
(b) in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the consolidated entity.
Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act 2001.
On behalf of the directors
The Hon Michael Duffy Chairman
Melbourne, 10 November 2011
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Consolidated statement of comprehensive income for the financial year ended 31 July 2011
�OTE 2011 2010 ��000 ��000 Revenue 2(a) 272,497 286,221 Share of profit of associates accounted for using the equity method 9 309 124 Expenses from ordinary activities (excluding grants) 2(b) (121,807) (131,489)
Profit from operations before distributions 150,999 154,856 Grants to members 2(c) (149,642) (154,275)
Profit before income tax 1,357 581 Income tax expense 1(n) - -
Profit for the period 1,357 581 Other comprehensive income for the year (1,344) 51
Total comprehensive income for the year 13 632
Notes to the financial statements are included on pages 13 to 36.
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Consolidated statement of financial position as at 31 July 2011
�OTE 2011 2010 ��000 ��000 Current Assets Cash and cash equivalents 24(a) 500 1,956 Trade and other receivables 4 25,540 38,838 Other 5 3,049 2,130
Total Current Assets 29,089 42,924
Non-Current Assets Other financial assets 6 4,149 5,239 Property, plant & equipment 7 31,065 20,012 Other intangible assets 8 1,270 2,304 Investments accounted for using the equity method 9 3,794 3,485
Total Non-Current Assets 40,278 31,040
Total Assets 69,367 73,964
Current Liabilities Trade and other payables 10 36,090 35,444 Unearned revenue 6,038 7,263 Borrowings 11 10,795 12,573 Provisions 12 2,453 3,088
Total Current Liabilities 55,376 58,368
Non-Current Liabilities Borrowings 13 5,659 6,426 Provisions 14 2,871 3,722
Total Non-Current Liabilities 8,530 10,148
Total Liabilities 63,906 68,516
Net Assets 5,461 5,448
Equity Issued capital 15 - - Retained earnings 16 5,461 5,448
Total Equity 5,461 5,448
Notes to the financial statements are included on pages 13 to 36.
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Consolidated statement of cash flows for the financial year ended 31 July 2011
Inflows/(Outflows) Inflows/(Outflows) �OTE 2011 2010 ��000 ��000 Cash flows from operating activities Receipts on behalf of the thoroughbred racing industry 267,547 267,435 Grants to members (149,642) (154,358) Payments to suppliers and employees (137,880) (135,757) Interest received 322 302 Receipts from other activities 33,926 24,980
Net cash generated by operating activities 24(c) 14,273 2,602
Cash flows from investing activities Payments for plant & equipment (13,056) (12,913)
Net cash used in investing activities (13,056) (12,913)
Cash flows from financing activities Repayment of borrowings (9,380) (615) Advance – other related entities - (500) Proceeds from borrowings 6,707 10,793
Net cash provided by/(used in) financing activities (2,673) 9,678
Net decrease in cash held (1,456) (633)
Cash at beginning of financial year 1,956 2,589
Cash at the end of financial year 24(a) 500 1,956
Notes to the financial statements are included on pages 13 to 36.
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Consolidated statement of changes in equity for the financial year ended 31 July 2011
������ �������� �OTE ������� E������� ����� ��000 ��000 ��000
Balance at 1 August 2009 - 4,816 4,816 Profit for the year - 581 581 Actuarial gain on defined benefit plans 18 - 51 51
Balance at 31 July 2010 - 5,448 5,448
Balance at 1 August 2010 - 5,448 5,448 Profit for the year - 1,357 1,357 Actuarial loss on defined benefit plans 18 - (1,344) (1,344)
Balance at 31 July 2011 - 5,461 5,461
Notes to the financial statements are included on pages 13 to 36.
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Notes to the financial statements for the financial year ended 31 July 2011
1. Summary of Accounting Policies
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of Racing Victoria Limited and its subsidiaries.
Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards – Reduced Disclosure Requirements, other authoritative pronouncements of the Australian Accounting Standards Board and Interpretations and the Corporations Act 2001.
Compliance with Australian Accounting Standards – Reduced Disclosure Requirements The consolidated financial statements of the Racing Victoria Limited consolidated entity comply with Australian Accounting Standards – Reduced Disclosure Requirements as issued by the Australian Accounting Standards Board (AASB).
The financial statements were authorised for issue by the directors on 10 November 2011.
Historical cost convention These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss, certain classes of property, plant and equipment and investment property.
The consolidated entity is a consolidated entity of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order amounts in the Financial Report are rounded off to the nearest thousand dollars, unless otherwise indicated.
Comparatives have been reclassified where appropriate to ensure consistency and comparability with the current period.
The financial report has also been prepared in accordance with the terms of various agreements with the Victoria Racing Club, the members (as defined at (i) and (ii) below) and the racing industry in Victoria as follows:
(i) Establishment of Operations The consolidated entity was incorporated on 17 December 2001 for the purpose of administering the Victorian thoroughbred racing industry which was previously the responsibility of the Victoria Racing Club (VRC).
On 19 December 2001 the four thoroughbred racing bodies – Victoria Racing Club, Melbourne Racing Club, Moonee Valley Racing Club and Country Racing Victoria (collectively the members) entered into a Members Agreement with the consolidated entity. Under this agreement the members agreed to establish the consolidated entity as the new principal club and governing body for thoroughbred racing in Victoria, to be owned and funded by the members. The VRC agreed to relinquish its status as the principal club and its role as governing body to facilitate the granting to the consolidated entity of that status and role.
(ii) New Constitution On 21 June 2007 the consolidated entity announced that agreement had been reached with its four members (Country Racing Victoria, Melbourne Racing Club, Moonee Valley Racing Club and Victoria Racing Club) in relation to the outcomes of the Victorian Thoroughbred Racing Industry Review.
A number of the outcomes agreed with members related to changes to the consolidated entity’s governance and required amendment to the consolidated entity’s Constitution.
As a consequence a Special General Meeting was held on 24 September 2007 at which a special resolution was passed to adopt a new Constitution.
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Notes to the financial statements for the financial year ended 31 July 2011
1. Summary of Accounting Policies (continued)
The principal changes to the Constitution provided that:
• the membership of the consolidated entity be expanded to include Racing Victoria Limited’s ten stakeholder bodies subject to those new members satisfying minimum qualification criteria before being eligible to vote;
• a vote of 66.66% be required to pass all resolutions other than a special resolution (which will continue to require a vote of 75%);
• a new independent board be appointed with effect from the close of the 2007 Annual General Meeting; and
• with effect from the 2008 Annual General Meeting directors will be required to retire by rotation and be subject to appointment by direct election of the members in the event of any member nominating candidates in addition to candidates proposed by the consolidated entity’s Board.
The new Constitution came into operation on 29 November 2007 being the day upon which the Victorian Government Gazette published a certification by the Minister for Racing that the special resolution had not been disallowed by either House of the Victorian Parliament.
The new Constitution provides that consolidated entity’s membership and the associated voting rights are as follows:
• Country Racing Victoria - ten votes;
• Melbourne Racing Club - five votes;
• Moonee Valley Racing Club - five votes;
• Victoria Racing Club - five votes;
• Thoroughbred Racehorse Owners Association - three votes;
• Thoroughbred Breeders Victoria - two votes;
• Australian Trainers Association - two votes;
• Victorian Jockeys’ Association - one vote;
• Australian Jumping Racing Association and Victorian Bookmakers’ Association - one vote exercisable jointly; and
• Australian Services Union, Australian Workers Union, Liquor, Hospitality & Miscellaneous Workers Union and Media and Entertainment Arts Alliance - one vote exercisable jointly.
(iii) Thoroughbred Racing Industry Revenue and Distributions The racing industry in Victoria has entered into joint venture and information supply agreements with the Tabcorp group of companies. Under a Racing Industry Deed of Operations executed on 25 May 1994, the thoroughbred, harness and greyhound racing codes have determined arrangements between themselves including the allocation of joint venture profits and information supply fees. This income is received by the thoroughbred racing industry in the form of a racing program fee, a product supply fee, a marketing fee and the joint venture profit share (refer Note 2(a)).
Following the adoption of the new constitution the consolidated entity and the clubs agreed to terminate the Members’ Agreement as it operated between them and a new club Members’ Deed was entered into for the purpose of providing for certain arrangements in relation to the governance of the TABCORP Joint Venture, the making of grants to the clubs and the re-licensing process.
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Notes to the financial statements for the financial year ended 31 July 2011
1. Summary of Accounting Policies (continued)
In relation to the consolidated entity making grants to the clubs the following principles apply:
• The consolidated entity will from time to time make grants to participants in the Victorian thoroughbred racing industry for the purpose of encouraging thoroughbred horseracing.
• In making grants, the consolidated entity will seek to:
(i) adequately support the objectives of the Victorian thoroughbred racing industry;
(ii) provide incentives for club performance and achievements of industry objectives; and
(iii) encourage and optimise participation in the ownership of thoroughbred race horses throughout Victoria by maximising returns to owners through statewide prize money strategies and other incentives.
• The clubs further acknowledge that, consistent with the constitution of the consolidated entity, no portion or amount of the income or assets of the consolidated entity may be distributed, paid or transferred directly or indirectly by way of dividend, bonus, or otherwise by way of profit to or amongst the clubs in their capacity as members.
(iv) Retained Profits Under the terms of the Members Agreement net profit and the ongoing retained profits of the consolidated entity cannot be distributed as dividends to the members.
Significant Accounting Policies The following significant accounting policies have been adopted in the preparation and presentation of the financial report:
(a) Borrowings and Borrowing Costs Borrowings are recorded initially at fair value, net of transaction costs. Subsequent to initial recognition, borrowings are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit and loss over the period of the borrowing using the effective interest rate method.
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset form part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.
(b) Cash and Cash Equivalents Cash comprises cash on hand and demand deposits. Cash equivalents are short tem, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.
Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.
(c) Employee Benefits A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave, and sick leave when it is probable that settlement will be required and they are capable of being measured reliably.
Liabilities recognised in respect of employee benefits expected to be settled within 12 months, are measured at their nominal values, using the remuneration rate expected to apply at the time of settlement.
Liabilities recognised in respect of employee benefits which are not expected to be settled within 12 months, are measured as the present value of the estimated future cash outflows to be made by the consolidated entity in respect of services provided by employees up to the reporting date.
Defined Contribution Plans Contributions to defined contribution superannuation plans are expensed when incurred.
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Notes to the financial statements for the financial year ended 31 July 2011
1. Summary of Accounting Policies (continued)
Defined Benefit Plans For defined benefit superannuation plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at each reporting date. Actuarial gains and losses are recognised in full, directly in retained earnings, in the period in which they occur.
Past service is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight line basis over the average period until the benefits become vested.
The defined benefit obligation recognised in the statement of financial position represents the present value of the defined benefit, net of the fair value of the plan assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the plan.
(d) Financial Assets Investments are recognised and derecognised on trade date where purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs except for those financial assets classified as at fair value through profit or loss which are initially measured at fair value.
Subsequent to initial recognition, investments in associates are accounted for under the equity method.
Under the equity method, investments in associates are carried in the consolidated statement of financial position at cost as adjusted for post acquisition changes in the consolidated entity’s share of the net assets of the associate, less any impairment in the value of individual investments.
Loans and Receivables Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method less impairment interest is recognised by applying effective interest rates.
(e) Financial Instruments issued by the consolidated entity Debt and Equity Instruments Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the contractual arrangement.
Interest Interest is classified as an expense consistent with the balance sheet classification of the related debt.
(f) Goods and Services Tax Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:
i. where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense or
ii. for receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.
Cash flows are included in the statement of cash flows on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from or payable to, the taxation authority is classified as operating cash flows.
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Notes to the financial statements for the financial year ended 31 July 2011
1. Summary of Accounting Policies (continued)
(g) Impairment of Other Tangible and Intangible Assets At each reporting date, the consolidated entity reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the consolidated entity estimates the recoverable amount of the cash generating unit to which the asset belongs. Where a reasonable and consistent basis can be identified, corporate assets are also allocated to individual cash generating units, or otherwise they are allocated the smallest group of cash generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. Notwithstanding this, value in use is depreciated replacement cost of an asset when the future economic benefits of the asset are not primarily dependent on the asset’s ability to generate net cash inflows and where RV would, if deprived of the asset, replace its remaining future economic benefits. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the reversal of the impairment loss is treated as a revaluation increase.
(h) Intangible Assets Capitalised Software Capitalised software is recorded at cost less accumulated amortisation and impairment. Amortisation is charged on a straight line basis over the estimated useful life of the software being five years.
(i) Leased Assets Leased assets are classified as finance leases when terms of the lease transfer subsequentially at the risks and rewards incidental to ownership of the leased asset to the leasee. All other leases are classified as operating leases.
Finance leased assets are amortised on a straight-line basis over the estimated useful life of the asset. Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the lease asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
(j) Payables Trade payables and other accounts payable are recognised when the consolidated entity becomes obliged to make future payments resulting from the purchase of goods and services. Trade and other payables are stated at amortised cost.
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Notes to the financial statements for the financial year ended 31 July 2011
1. Summary of Accounting Policies (continued)
(k) Property, Plant and Equipment Plant and equipment, buildings and infrastructure capital are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item. In the event that settlement of all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present value as at the date of acquisition.
Depreciation is provided on property, plant and equipment, including freehold buildings but excluding land. Depreciation is calculated on a straight-line basis so as to write off the net cost or other revalued amount of each asset over its expected useful life to its residual value. Leasehold improvements are depreciated over the period of the lease or estimated useful life; whichever is the shorter, using the straight-line method. The estimated useful lives, residual values and depreciation method is reviewed at the end of each annual reporting period, with effect of any changes recognised on a prospective basis.
The following estimated useful lives are used in the calculation of depreciation:
Buildings and Improvements 40 years Plant and Equipment 3 to 10 years Infrastructure Capital 10 to 15 years
During the year the consolidated entity acquired assets through the completion of projects which are part of the Regional Racing Infrastructure Program. These projects are individually assessed for appropriateness of recognition as assets within the consolidated statement of financial position of the consolidated entity. The key elements for recognition of the capital expenditure as an asset are control and ensuring that future economic benefits will flow to the consolidated entity.
(l) Provisions Provisions are recognised when the consolidated entity has a present obligation (legal or constructive) as a result of a past event, it is probable that the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation, the future sacrifice for economic benefits is probable, and the amount of the provision can be measured reliably.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cashflows estimated to settle the present obligation, its carrying amount is the present value of those cashflows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Accident Insurance Fund Prior to 1 September 1985 the Fund was an authorised insurer for the purposes of the Workers Compensation Act 1958. The provision for outstanding claims is disclosed at Note 14. The provision is based on the last actuarial assessment of the outstanding claims of the Fund conducted as at 31 July 2011 by Frank Funder, a fellow of the Institute of Actuaries of Australia and reviewed annually by management having regard for material events impacting the calculation of the provision.
(m) Revenue Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.
Thoroughbred Racing Industry Revenue Revenue is recognised when receivable under the joint venture and information supply agreements with the Tabcorp group of companies.
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Notes to the financial statements for the financial year ended 31 July 2011
1. Summary of Accounting Policies (continued)
Sale of Goods and Disposal of Assets Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
• the consolidated entity has transferred to the buyer the significant risks and rewards of ownership of the goods;
• the consolidated entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
• the amount of revenue can be measured reliably;
• it is probable that the economic benefits associated with the transaction will flow to the consolidated entity; and
• the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Rendering of Services Revenue from a contract to provide services is recognised by reference to the stage of completion of the contract. The stage of the contract is determined as follows:
• installation fees are recognised by reference to the stage of completion of the installation, determined as the proportion of the total time expected to install that has elapsed at reporting date;
• servicing fees included in the price of products sold are recognised by reference to the proportion of the total cost of providing the servicing for the product sold, taking into account historical trends in the number of services actually provided on past goods sold;
• revenue from time and material contracts is recognised at the contractual rates as labour hours are delivered and direct expenses incurred.
Contributions of Assets Revenue arising from the contribution of assets is recognised when the consolidated entity gains control of the contribution or the right to receive the contribution.
Interest Revenue Interest revenue is accrued on a time basis, by reference to the principal outstanding and effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the assets carrying amount.
Government Grants Revenue from government grants relating to the roll out of the Regional Racing Infrastructure Fund (RRIF) is recognised in accordance with AASB 1004 “contributions”.
(n) Income Tax The consolidated entity is exempt from Income Tax under section 50-45 of the Income Tax Assessment Act.
(o) Critical Accounting Judgements and Key Sources of Estimation Uncertainty In the application of the consolidated entity’s accounting policies, which are described above, management is required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods.
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Notes to the financial statements for the financial year ended 31 July 2011
1. Summary of Accounting Policies (continued)
Critical judgements in applying the consolidated entity’s accounting policies Judgements made by management in the application of IFRS that have significant effects on the financial statements and estimates with a significant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to the financial statements.
Accounting policies are selected and applied in a manner that ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at balance date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
Useful lives of Property, Plant & Equipment and Computer Software & Databases As described in note 1(k), the consolidated entity reviews the estimated useful lives of property, plant and equipment and equipment at the end of each annual reporting period.
(p) Subsidiaries The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Racing Victoria Limited (‘’consolidated entity’’ or ‘’parent entity’’) as at 31 July 2011 and the results of all subsidiaries for the year then ended. Racing Victoria Limited and its subsidiaries together are referred to in this financial report as the group or the consolidated entity.
Subsidiaries are all entities (including special purpose entities) over which the consolidated entity has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the consolidated entity controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases.
Racing Victoria Limited established Racing Victoria Media Pty Ltd (a wholly owned subsidiary with a shareholding of one share) on 20 May 2009.
Intercompany entity transactions, balances and unrealised gains on transactions between consolidated entity companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income statement, statement of comprehensive income, statement of changes in equity and statement of financial position respectively.
(q) Parent Entity Financial Information The financial information for the parent entity, Racing Victoria Limited, disclosed in note 21 has been prepared on the same basis as the consolidated financial statements.
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Notes to the financial statements for the financial year ended 31 July 2011
1. Summary of Accounting Policies (continued)
(r) New Accounting Standards and Interpretations In the current year, the consolidated entity has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current annual reporting period. The adoption of these new and revised Standards and Interpretations did not have any material financial impact on the amounts recognised in the financial statements of the consolidated entity, however they have impacted the disclosures presented in the financial statements.
At the date of authorisation of the financial report, the following relevant Standards and Interpretations were issued but not yet effective:
(i) Revised AASB 124 Related Party Disclosures and AASB 2009-12 Amendments to Australian Accounting Standards (effective for annual reporting periods beginning on or after 1 January 2011)
(ii) AASB 9 Financial Instruments and AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 (effective for annual reporting periods beginning on or after 1 January 2013)
(iii) AASB 2009-14 Amendments to Australian Interpretation - Prepayments of a Minimum Funding Requirement (effective for annual reporting periods beginning on or after 1 January 2011)
(iv) AASB 2010-5 Amendments to Australian Accounting Standards (effective for annual reporting periods beginning on or after 1 January 2011)
(v) AASB 2010-6 Amendments to Australian Accounting Standards - Disclosures on Transfers of Financial Assets (effective for annual reporting periods beginning on or after 1 July 2011)
(vi) AASB 2010-8 Amendments to Australian Accounting Standards - Deferred Tax: Recovery of Underlying Assets (effective for annual reporting periods beginning on or after 1 January 2012)
(vii) IFRS 10 Consolidated Financial Statements (effective for annual reporting periods beginning on or after 1 January 2013)
(viii) IFRS 11 Joint Arrangements (effective for annual reporting periods beginning on or after 1 January 2013)
(ix) IFRS 12 Disclosure of Interests in Other Entities (effective for annual reporting periods beginning on or after 1 January 2013)
(x) IFRS 13 Fair Value Measurement (effective for annual reporting periods beginning on or after 1 January 2013)
The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material financial impact on the financial statements of the consolidated entity.
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Notes to the financial statements for the financial year ended 31 July 2011
2011 2010 ��000 ��000
2. Profit from Operations (a) Revenue: Revenue from operations consisted of the following items: Racing program fee 59,429 61,862 Product supply fee (i) 67,608 70,572 Marketing fee 2,795 2,885 Joint venture profit share 72,589 71,179
Total joint venture revenue 202,421 206,498
Regional racecourse infrastructure program 10,607 8,945 Racing 1,895 1,821 Publishing - 610 Education and training 443 312 Race fields (Note 3) 42,264 47,583 SuperVOBIS 1,694 1,714 Interest 322 302 Media rights 3,239 4,649 Regional services 1,007 999 Industry service recoveries 3,150 3,581 Scratching fee income 1,406 1,506 Sponsorship 1,776 1,774 Rent received 928 821 Super screen 229 267 Bookmakers levy (ii) 27 3,271 Other 1,029 539
Non-operating revenue: Profit for the year has been arrived at after crediting: Shareholder grant - 1,026 Other 59 3
272,497 286,221
(i) Product supply fees are received from Racing Products Victoria Pty Ltd net of third party charges (race fields and international fees) incurred in accordance with the Product Supply Agreement. (ii) Bookmaker levy income is inclusive of $2.1 million repaid for levy collected in excess of amounts due. The directors are of the opinion that the calculation methodology applied in ascertaining the amount repaid is correct.
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Notes to the financial statements for the financial year ended 31 July 2011
2011 2010 ��000 ��000
2. Profit from Operations (continued)
(b) Expenses: Profit has been arrived at after charging the following expenses: Racing Victoria Limited operating expenditure Integrity services 5,165 7,325 Racing 2,529 2,485 Veterinary and swabbing 2,622 3,348 Racing development 3,031 3,153 Information services 3,267 2,769 Legal 1,100 1,044 Occupancy 1,954 1,679 Services and administration 4,231 7,138 Depreciation and amortisation 3,037 1,961 Bookmakers development fund 317 373 Fleet costs 1,441 1,547 Other 3,481 1,995
32,175 34,817
Industry expenditure Marketing and promotion 2,623 1,152 Race day services 11,723 10,189 Special projects allocations 1,417 864 Grants – Australian Racing Museum 1,000 2,475 Stewards video and race telecasting 6,376 5,991 Formguide 1,382 1,343 Regional racecourse infrastructure program 5,285 12,553 Training facilities maintenance funding 11,284 10,443 Infrastructure operations 418 567 Jockey’s workcover expenses 4,526 4,716 Media rights 3,239 4,649 Contributions Sport 927 1,564 1,651 SuperVOBIS 5,584 6,037 Provision for doubtful debts 15 (110) Riding fees 9,061 8,949 Jockey welfare 1,401 1,474 Legal and consulting 1,034 561 Super screen 195 251 Race fields 16,985 18,893 Bookmaker levy 3,100 3,171 Interest expense 1,386 853 Other 34 -
89,632 96,672
Total operating and industry expenditure 121,807 131,489
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Notes to the financial statements for the financial year ended 31 July 2011
2011 2010 ��000 ��000
2. Profit from Operations (continued) Expenses from ordinary activities include: Employee benefits expense 12,659 12,754 Defined benefit superannuation plan expense/(income) (1,174) 284 Depreciation of non-current assets: Property, plant and equipment 1,479 813 Amortisation of non-current assets: Computer software and databases 1,558 1,148 Operating lease rental expenses 801 920 Operating expenses – other related party: Australian Racing Museum 1,000 2,475
(c) Grants to members: Prize money grants Country Racing Victoria (i) 45,970 48,762 Melbourne Racing Club (i) 33,093 30,480 Moonee Valley Racing Club (ii) 15,883 18,130 Victoria Racing Club 22,000 22,218 Prize money subsidies 522 383
117,468 119,973
General grants Country Racing Victoria 14,191 15,233 Melbourne Racing Club 6,320 6,698 Moonee Valley Racing Club 3,428 4,384 Victoria Racing Club 8,235 7,987
32,174 34,302
Total grants to members: 149,642 154,275
(i) Following the merger between Melbourne and Mornington Racing Club, the Mornington prize money grants are now combined with the Melbourne Racing Club, having been previously included in Country Racing Victoria. (ii) Prize money grants to Moonee Valley Racing Club reduced year on year primarily due to a reduction in meetings conducted. 3. Race Fields
The constitutional validity of NSW race fields legislation has been challenged in the High Court by Sportsbet Pty Ltd and Betfair Pty Ltd. The Court has reserved its decision. The judgment, when delivered, may have implications for race fields legislation in Australian States, including Victoria.
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Notes to the financial statements for the financial year ended 31 July 2011
2011 2010 ��000 ��000
4. Current Trade and Other Receivables Trade receivables (i) 11,456 14,477 Allowance for doubtful debts (ii) (22) (7)
11,434 14,470
Joint Venture fees and indexation receivable 2,088 6,639 Joint Venture profit share receivable 4,408 5,509 Training tracks capital receivable (Note 11) 895 780 Loan - ThoroughVisioN 1,000 1,000 Receivable from Racing Information Services Australia - other related party 250 250 Media rights receivables 3,057 3,057 Sundry receivables 2,408 7,133
25,540 38,838
(i) The majority of trade receivables arise as a result of transactions with trainers and racing clubs. The credit period provided to trainers and clubs are 60 days and 30 days respectively. A provision has been made for estimated irrecoverable amounts from these receivables, determined by reference to past default experience. (ii) Reconciliation of doubtful debts Allowance for doubtful debts 31 July 2010 7 117 - Bad debts written off - - - Movement in allowance account taken to profit and loss 15 (110)
Allowance for doubtful debts 31 July 2011 22 7
5. Other Current Assets Prepayments – other 1,021 339 Financial assets – other 2,028 1,791
3,049 2,130
6. Other Non-current Financial Assets At amortised cost: Receivable from Racing Information Services Australia – other related party 329 524 Training tracks capital receivable (Note 13) 3,820 4,715 Receivable from Australian Racing Museum - other related party 1,875 1,875 - Less allowance for doubtful debts (i) (1,875) (1,875)
4,149 5,239
(i) Reconciliation of doubtful debts Allowance for doubtful debts 31 July 2010 ` 1,875 1,875 - Bad debts written off - - - Movement in allowance account taken to profit and loss - -
Allowance for doubtful debts 31 July 2011 1,875 1,875
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Notes to the financial statements for the financial year ended 31 July 2011
7. Property, Plant and Equipment Work in Progress Free-hold Infra- Infra- Land structure structure Plant & Buildings at cost Capital Capital Equipment Total ��000 ��000 ��000 ��000 ��000 ��000
Gross carrying amount (at cost) Balance at 31 July 2010 10,304 3,199 5,153 799 11,794 31,249 Additions 1,345 - 2,502 7,214 1,486 12,547 Assets written off - - - - (26) (26) Balance at 31 July 2011 11,649 3,199 7,655 8,013 13,254 43,770
Accumulated Depreciation Balance at 31 July 2010 (1,532) - (75) - (9,630) (11,237) Assets written off - - - - 11 11 Depreciation expense (340) - (592) - (547) (1,479) Balance at 31 July 2011 (1,872) - (667) - (10,166) (12,705)
Net Book Value As at 31 July 2010 8,772 3,199 5,078 799 2,164 20,012 As at 31 July 2011 9,777 3,199 6,888 8,013 3,088 31,065
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Notes to the financial statements for the financial year ended 31 July 2011
2011 2010 ��000 ��000
7. Property, Plant and Equipment (continued) Aggregate depreciation allocated whether recognised as an expense or capitalised as part of the carrying amount of other assets during the year. Buildings 340 290 Infrastructure capital 592 75 Plant and equipment 547 448
1,479 813
8. Other Intangible Assets
Computer Software and databases Gross carrying amount (at cost) Balance at 31 July 2010 17,418 16,598 Additions 524 820 Assets written off - -
Balance at 31 July 2011 17,942 17,418
Accumulated Amortisation Balance at 31 July 2010 (15,114) (13,966) Assets written off - - Amortisation expense (1,558) (1,148)
Balance at 31 July 2011 (16,672) (15,114)
Net Book Value 1,270 2,304
9. Investments accounted for using the Equity Method Name of entity Principal activity Balance date Ownership interest Carrying amount Interest in associated entity: 2011 2010 2011 2010 $’000 $’000 Racing Information Services Australia Pty Ltd Racing Information 31/07/2011 35% 35% 3,794 3,485 Significant influence is derived over Racing Information Services Australia Pty Ltd through the Board’s appointment of a nominee director. Pursuant to a shareholder agreement the consolidated entity has the right to cast 33% of the votes at a shareholder meeting.
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Notes to the financial statements for the financial year ended 31 July 2011
2011 2010 ��000 ��000
9. Investments accounted for using the Equity Method (continued) Movements in investments in associates At the beginning of the financial year 3,485 3,361 Share of profit 309 124
At the end of the financial year 3,794 3,485
Summarised financial position of associates: Current assets: Cash and cash equivalents 3,528 2,804 Trade and other receivables 1,069 1,489 Non-current assets: Property, plant and equipment 266 112 Trade and other receivables 622 876 Intangibles 6,837 6,811 Current liabilities: Trade and other payables (505) (983) Provisions (183) (157) Non-current liabilities: Borrowings (569) (758) Provisions (224) (238)
Net assets 10,841 9,956
Net profit 309 142
Dividends received from associates During the year, the consolidated entity received no dividends (2010: nil) from its associates. Capital commitments The consolidated entity’s share of capital commitments and other expenditure commitments of associates is nil.
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Notes to the financial statements for the financial year ended 31 July 2011
2011 2010 ��000 ��000
10. Current Trade and Other Payables Unsecured: Trade payables 14,109 11,062 Stakes accruals 6,448 6,693 Sundry payables 10,614 11,712 Media rights payable 1,500 2,083 Financial liabilities - other 2,028 1,791 GST payable 1,391 2,103
36,090 35,444
Accruals and payables represent liabilities for goods and services provided to the consolidated entity, prior to the end of the financial year, which are unpaid. Amounts are normally settled within 30 days and are carried at nominal value. Racing Victoria Limited has financial risk management policies in place to ensure that all payables are paid within the credit timeframe. 11. Current Borrowings Secured at amortised cost: Commercial bills (i) & (ii) 6,000 2,000 Shareholder loans (iii) - 6,000 Training tracks facility (i) & (ii) (Note 4) 895 780 Land facility (i) & (ii) 2,700 3,000 Quarantine centre facility (i) & (ii) 1,200 793
10,795 12,573
(i) Secured by a fixed and floating charge over the assets of Racing Victoria Limited. (ii) During the period there were no defaults or breaches on any of the loans. (iii) Shareholder loans are on 90 day call and are not subject to any fixed repayment terms. 12. Current Provisions Employee benefits 2,453 3,088
2,453 3,088
13. Non-Current Borrowings Secured at amortised cost: Training tracks facility (i) & (ii) (Note 6) 3,820 4,715 Unsecured at amortised cost: Loan – other 1,839 1,711
5,659 6,426
(i) Secured by a fixed and floating charge over the assets of Racing Victoria Limited. (ii) During the period there were no defaults or breaches on any of the loans.
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Notes to the financial statements for the financial year ended 31 July 2011
2011 2010 ��000 ��000
14. Non-Current Provisions Accident claims (i) (Note 1(l)) 1,964 2,043 Employee benefits 223 268 Superannuation – defined benefit fund (Note 18) 684 1,411
2,871 3,722
(i) Accident claims Balance at beginning of the year 2,043 2,043 Additional provisions written back (79) -
Balance at end of the year 1,964 2,043
15. Issued Capital The consolidated entity is a consolidated entity limited by guarantee. Every member undertakes to and must contribute an amount not exceeding $10 in the event of the winding up of the consolidated entity. 16. Retained Earnings Balance at beginning of financial period 5,448 4,816 Actuarial gains/(losses) (1,344) 51 Net profit 1,357 581
Balance at end of financial period 5,461 5,448
17. Commitments for Expenditure (a) Non-cancellable operating leases: Not later than 1 year 806 842 Later than 1 year but not later than 5 years 253 1,113
1,059 1,955
Operating leases relate to the leasing of motor vehicles. The term of each individual lease is between one and three years. These lease agreements are not subject to rental adjustments. (b) Other (broadcast contract): Not later than 1 year 6,637 6,224 Later than 1 year but not later than 5 years 6,850 13,487
13,487 19,711
Other relates to the supply of outside broadcasting services to the Victorian Thoroughbred Racing Industry by ThoroughVisioN Pty Ltd. The initial term of this contract is five years, ceasing on 31 July 2013. (c) The consolidated entity has undertaken to provide financial support to the Australian Racing Museum to a maximum of $1.000 million during 2011/12.
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Notes to the financial statements for the financial year ended 31 July 2011
18. Superannuation Commitments
The employees of the consolidated entity are members of Victorian Racing Industry Superannuation Fund, which also includes employees of the Victoria Racing Club and Country Racing Victoria. The fund has a composition of defined benefit and accumulation membership.
The financial information of the fund disclosed in this report relates to the employees of the consolidated entity.
Under the defined benefit plan, employees are entitled to retirement benefits based on a multiple of their deemed final salary upon attainment of their retirement age of 60. No other post-retirement benefits are provided to these employees.
The defined benefit plans are funded plans. The superannuation plans compute their obligations in accordance with Accounting Standard AAS 25 “Financial Reporting by Superannuation Plans” which prescribes a different measurement basis to that applied in this financial report. The net deficit determined in the plans most recent financial report, being the annual reports for the financial year ended 31 July 2011, was $0.684 million (2010: $1.411 million). The plan actuaries have not recommended that additional contributions beyond the current contribution level be made. Funding recommendations are made by the actuaries based on their forecast of various matters, including future plan assets performance, interest rates and salary increases.
The consolidated entity has a legal liability to make up a deficit in the plans but no legal right to use any surplus in the plans to further its own interests. 2011 2010 % % Key Assumptions used (expressed as weighted averages) Discount rate gross of tax 4.8 5.2 Discount rate net of tax 4.1 4.4 Expected return on plan assets 7.0 7.0 Expected rate of salary increase 4.5 4.4
2011 2010 ��000 ��000
Amounts recognised in income in respect of the defined benefit plan is as follows:
Current service cost 439 417 Interest cost 465 472 Expected return on plan assets (496) (605) Curtailment or settlement (gains) (1,582) -
Total including employee benefit expense (1,174) 284
Actuarial gains / (losses) incurred during the year and recognised in the statement of changes in equity (1,344) 51
Cumulative actuarial gains recognised in the statement of changes in equity 1,552 2,896
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Notes to the financial statements for the financial year ended 31 July 2011
2011 2010 ��000 ��000
18. Superannuation Commitments (continued) The amount included in the statement of financial position arising from the consolidated entity’s obligations in respect of its defined benefit plan is as follows: Present value of funded defined benefit obligations (5,424) (11,119) Fair value of plan assets 4,740 9,708
Net liability arising from defined benefit obligations (684) (1,411)
Included in the balance sheet: Non-current provision for employee benefits (Note 14): Superannuation - defined benefit fund 684 1,411
Net liability arising from defined benefit obligations 684 1,411
Movement in the present value of defined benefit obligations in the current period were as follows: Opening defined benefit obligation (11,119) (10,641) Current service cost (439) (417) Interest cost (465) (472) Contribution from plan participants (104) (155) Notional asset transfer (90) - Actuarial losses 65 - Benefits and tax paid 6,334 654 Curtailments and settlements 394 -
Closing defined benefit obligation (5,424) (11,119)
Movement in the present value of plan assets in the current period were as follows: Opening fair value of plan assets 9,708 8,326 Expected return on assets 496 605 Actuarial gains / (losses) (220) 139 Contributions from the employer 896 1,137 Contributions from plan participants 104 155 Notional asset transfer 90 - Benefits and tax paid (6,334) (654)
Closing fair value of plan assets 4,740 9,708
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Notes to the financial statements for the financial year ended 31 July 2011
2011 2010 ��000 ��000
18. Superannuation Commitments (continued) Fair value of plan assets: Equity instruments 2,820 5,776 Debt instruments 1,209 2,476 Property 261 534 Other 450 922
4,740 9,708
2011 2010 � �
19. Key Management Personnel Remuneration The aggregate compensation of the key management personnel, including directors of the consolidated entity, is set out below: Other key management Short-term employee benefits 1,857,705 1,599,214 Post-employment benefits 71,219 64,307
1,928,924 1,663,521
Directors Short-term employee benefits 604,437 611,738
604,437 611,738
20. Remuneration of Auditors – Deloitte Touche Tohmatsu Audit of the financial report 100,000 97,000
100,000 97,000
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Notes to the financial statements for the financial year ended 31 July 2011
2011 2010 ��000 ��000
21. Parent Entity financial information Assets Current assets 26,005 39,841 Non-current assets 41,835 32,039
Total assets 67,840 71,880
Current liabilities 53,851 50,613 Non-current liabilities 8,530 15,820
Total liabilities 62,381 66,433
Shareholders’ equity Retained earnings 5,459 5,447
Net Assets 5,459 5,447
Profit for the year 1,356 580
Total comprehensive income 12 631
22. Segment Reporting The consolidated entity operates in the thoroughbred racing industry in the State of Victoria. 23. Related Party Disclosures (a) Equity interests in associates and joint ventures Details of interests in associates are disclosed in note 9 to the financial statements.
(b) Key management personnel compensation Details of key management personnel compensation including directors are disclosed in Note 19 to the financial statements
(c) Transactions with key management personnel Certain directors participate in the thoroughbred racing industry via means of ownership of race horses either individually or through related entities. This involvement is on terms and conditions no more favourable than other participants in the thoroughbred racing industry.
(d) Other related party disclosures Transactions with key management personnel and their related entities The net profit reported in the statement of comprehensive income in 2011 includes expenses in relation to activities paid by Racing Victoria Limited on behalf of the Australian Racing Museum Ltd (director related entity) totalling $1.000 million (2010: $2.475 million). These expenses were incurred only after approval by the Racing Victoria Limited board. During the financial year the consolidated entity also provided administrative services to the entity on normal commercial terms and conditions as agreed by the parties. Aggregate amounts receivable from director related entities are disclosed in Notes 4 and 6 to the financial statements.
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Notes to the financial statements for the financial year ended 31 July 2011
2011 2010 ��000 ��000
24. Notes to the Statement of Cash Flows (a) Reconciliation of cash For the purpose of the statement of cash flows, cash and cash equivalents includes cash on hand and in banks and investments, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the balance sheet as follows:
Cash at bank 500 1,956
(b) Financing facilities Secured bank overdraft facility, maturing 30 September 2011: - amount used - - - amount unused 4,000 2,000
4,000 2,000
Secured commercial bill facility, reviewed annually: - amount used 6,000 - - amount unused 5,438 -
11,438 -
Secured bank loan facilities, reviewed annually: - amount used 8,615 11,288 - amount unused 3,000 1,707
11,615 12,995
(c) Reconciliation of net profit to net cash flows from operating activities Profit from ordinary activities 1,357 581 Share of associates (profit) (309) (124) Depreciation & amortisation of non-current assets 3,037 1,961 Defined benefit plan gain (2,071) (853) Receivable reduction – training tracks 780 3,615 Interest income 70 116 Changes in net assets & liabilities: (Increase)/decrease in: Receivables 13,666 (13,860) Prepayments (682) (161) Increase/(decrease) in: Payables 329 7,700 Provisions (680) 41 Unearned revenue (1,224) 3,586
Net cash provided by operating activities 14,273 2,602
�ACING VICTO R I A � I M I T E D – 2011 ANNUAL REPORT
Notes to the financial statements for the financial year ended 31 July 2011
25. Contingent Liability Under the Deed of Contribution and Indemnity with the Victoria Racing Club, the consolidated entity has indemnified the Victoria Racing Club against any claims against the Victoria Racing club arising from its previous operation of the thoroughbred racing industry in Victoria.
Racing Victoria Limited has guaranteed a loan facility of Australian Racing Museum of $1.500 million. (2010: $1.700 million).
Racing Victoria Limited has guaranteed a loan facility of Thoroughbred Racing Productions (VIC) Pty Ltd of $4.787 million. (2010: Nil). This facility has been guaranteed following the acquisition management rights by Racing Victoria Limited in relation to Thoroughbred Racing Productions (VIC) Pty Ltd.
Bookmakers levy repayments for overcharged levy has been calculated and any further bookmaker claims or disputes in relation to this overcharge will be vigorously defended by Racing Victoria Limited. In respect to this matter, on 2 November 2011, Racing Victoria Limited was served with a Writ and Statement of Claim by WinBet (Aust) Pty Ltd, a Victorian licensed bookmaker. The claim has been filed in the Supreme Court of Victoria, Commercial Court. WinBet seeks a declaration in relation to the proper construction of the Racing Victoria Bookmaker Levy Rules and reimbursement of the amount of $0.415 million, plus interest. Racing Victoria is confident that its interpretation of the Levy Rules is correct and denies any obligation to pay any additional amount to WinBet.
26. Subsequent Events The consolidated entity received approval for an additional debt facility of $8.000 million to fund working capital requirements during the final year of the regional racecourse infrastructure program.
27. Additional Consolidated Entity Information Racing Victoria Limited is a consolidated entity incorporated and operating in Australia.
Principal Registered Office and Principal Place of Business Racing Victoria Limited 400 Epsom Road Flemington Victoria 3031 Telephone: (03) 9258 4258 www.racingvictoria.net.au
Racing Victoria Limited 400 Epsom Road Flemington Victoria 3031 Telephone: (03) 9258 4258 www.racingvictoria.net.au