annual report 2016 1 racing club 2 our results 3 chairman and chief executive’s report 3 the year in review 6 internal structure changes 6 racing highlights 10 2015 carnival economic impact 10 2016 flemington festival of racing 11 membership breakdown 11 racing rewards 11 masterplan 11 digital and technology 14 media partnerships 14 arts and heritage 14 awards 14 acknowledgements 15 partnerships 16 VRC in the community 18 board of directors 19 executive management 20 risk and corporate governance 21 financial statements victoria racing club vision Flemington is treasured by all as a world leader in racing and event entertainment, guaranteeing an unrivalled customer experience. values The day-to-day activities of VRC employees are underpinned by the following values: Integrity Acting with integrity in all that we do. Innovation Encouraging and embracing innovation to achieve continuous improvement. Excellence Setting the highest standards in service and value for our Members, customers and business partners. Collaboration Valuing and respecting the commitment and contribution of all of our people and expecting collaboration across our teams.

ANNUAL REPORT 2016 — 1 our results

2015/16 snapshot

racing 14 12 18 30 group 1 races group 2 races group 3 races listed races

2015 melbourne cup carnival 37 481 154 17 races were run horses participated trainers had runners internationally trained with an average during the melbourne runners during the of 13 runners per race cup carnival melbourne cup carnival

472,625 313,229 3.16m total attendances total melbourne cup home viewers tuned into the channel 7 coverage at VRC racedays carnival crowd of the emirates melbourne cup in australia 2015/16 result 2015 result 2015 result

$37.42m $1.4m $387.8m $1m prizemoney net profit in gross economic support for the 2015/16 result 2015/16 benefit to victoria community including $7 million 2015 result 2015/16 result in VRC top-ups melbourne cup carnival contributed to or raised economic impact by charitable causes (Source: IER economic impact report) through VRC fundraising partnerships and donations

2 — VICTORIA RACING CLUB chairman and chief executive’s report

Each year adds a new exciting chapter to the rich history of the VRC, and the 2015/16 season was no exception

Michael Burn, Chairman and Simon Love, Chief Executive the year in review Legends of the turf were honoured at Flemington in 2015/16, with a new trophy, statue, memorial and naming The Club and the industry had a successful year, with of a precinct all unveiled. A new award, the Harry White significant progress made towards a number of goals. Whip trophy is now awarded to the winning jockey of The Melbourne Cup Carnival proved once again why it the Emirates Melbourne Cup, along with the traditional is among the best racing carnivals in the world, with a miniature Emirates Melbourne Cup trophy. Named in history making win by Michelle Payne on Prince of Penzance. honour of four-time Melbourne Cup winner and Australian It was also wonderful to see Victorian trainer Darren Weir Racing Hall of Fame member Harry White, the gold trophy claim racing’s greatest prize, as well as the newly named is in the form of a jockey’s riding whip. J.B. Cummings Excellence Award for his outstanding Flemington also welcomed a new statue to its grounds achievements through the week. in 2015, with the unveiling of a bronze statue of Roy Engagement with the Melbourne Cup Carnival was strong ‘The Professor’ Higgins on Yellowglen Turnbull Stakes Day. once again. The Carnival also made broadcast history, with Taking pride of place at the Hill Gate entrance, the statue Channel 7’s online streaming service PLUS7 recording the by artist Judith Leman joins an elite group – only Phar Lap, largest ever live streamed event in Australia, with 342,000 and AM, had previously been viewers streaming the main race. Seven’s live coverage of honoured with statues at Flemington. This homage to the the Emirates Melbourne Cup was also impressive, reaching 11-time Melbourne jockey premiership winner was funded 3.16 million viewers. A world-first digital experience was by private donors, the VRC, Racing Victoria and the Victorian offered to racegoers at Flemington at the 2015 Melbourne Racing Industry Fund (VRIF), which itself is funded largely Cup Carnival. Using Cisco’s Stadium Vision Mobile technology through unclaimed dividends. and the Flemington Raceday Guide iPhone app connected Interred in the pre-parade ring below a bench seat and to Flemington’s free oncourse Wi-Fi, patrons were offered up plaque are the ashes of popular globe-trotting English stayer to four video streams direct to their iOS device. We once again and three-time runner up in the Emirates Melbourne Cup, achieved significant international visitation to the Carnival. Red Cadeaux. Racegoers are able to pay their respects to this During autumn racing, significant increases were made brave horse who endeared himself to so many. to prizemoney across nine Victorian Group 1 races as A new general admission precinct named in honour of Bart Racing Victoria committed additional industry funding. Cummings AM, has been opened and will house a collection The Australian Cup increased by $500,000 to $1.5 million, of his notable trophies generously bequeathed for public the Lexus Newmarket Handicap increased $250,000 display by Bart and supported by the Cummings family. to $1.25 million, and the Black Caviar Lightning and Formerly the Undercroft, it is now known as Place Australian Guineas both increased $250,000 to $750,000. and has undergone a $1 million renovation, with brilliant These boosts to Group 1 races were to ensure that they views of the Winning Post. remained a focal point for local, interstate and international owners and trainers.

ANNUAL REPORT 2016 — 3 4 — VICTORIA RACING CLUB the excitement of witnessing history in the making

ANNUAL REPORT 2016 — 5 chairman and chief executive’s report continued

The Club achieved a profit of $1.4 million in 2015/16. racing highlights This was a decrease of $9.3 million on the $10.7 million profit recorded in 2014/15. However, the 2014/15 result Flemington hosted 21 racedays during the 2015/16 season, included a profit of $9 million due to the sale of the Club’s of which there were 189 races containing 2,195 starters 50 per cent interest in the Australian Stud Book and providing an average of 11.6 runners per race. Craig Williams Australian Genetics Testing. was the most successful jockey at Flemington during 2015/16, with 21 winners, including his five winners on Flemington The ‘underlying’ result achieved by the Club of $1.4 million, Finals Day in July. Michael Dee was the most successful compared with $1.7 million in the previous year. The key apprentice with nine winners at Flemington during the factors influencing the decrease between years included season, while Darren Weir was the most successful trainer, an increase in media rights revenue due to the negotiation with 19 wins, 10 of those at Group or Listed level, including of a new agreement, and funding through the Victorian the Emirates Melbourne Cup with Prince of Penzance. Racing Industry Fund, which allowed capital works to be carried out on course. This was offset by an increase During 2015/16, the Club returned $37.42 million in in depreciation and amortisation expense. prizemoney, which included $7 million in voluntary top-ups.

Overall, the positive financial result ensured the Club’s 2015/16 Group 1 winners balance sheet remained healthy at year-end, positioning Makybe Diva Stakes Fawkner the Club well for significant planned investment in racecourse facilities. Yellowglen Turnbull Stakes Preferment (NZ) Japonisme internal structure changes Longines Mackinnon Stakes Gailo Chop (FR) AAMI Victoria Derby Tarzino (NZ) Starting in November 2015, the Club made some key changes Myer Classic Politeness to its internal structure. These changes were designed to ensure we deliver on the Club’s strategy and to continue Emirates Melbourne Cup Prince of Penzance (NZ) to be a strong, customer-focused organisation. Key changes Crown Oaks Jameka included the merging of the Membership, Marketing, Darley Classic Delectation Public Relations and International Development teams Emirates Stakes Turn Me Loose (NZ) to form a new Customer Engagement department. Black Caviar Lightning Stakes Chautauqua Caroline Ralphsmith was appointed to oversee this Australian Guineas Palentino department and brings extensive strategy, marketing, CRM, analytics and event experience both here and Lexus Newmarket Handicap The Quarterback internationally. The Sales and Commercial teams have Australian Cup Preferment (NZ) merged and been renamed the Commercial Operations department, which will allow one overarching commercial Carnival function to further focus on leveraging and growing The 2015 Melbourne Cup Carnival was one of the most the Club’s commercial value across all segments, including historic in many years, as Michelle Payne became the first sponsorship, corporate and media. A new People, Culture female jockey to win the race. Her victory thrilled fans and and Governance team was created, which saw the merging made headlines all over the world. Making it all the more of the People and Culture team with Legal, Risk, Safety and special was the horse – Prince of Penzance – who was an Procurement. A number of personnel changes were made injury-plagued gelding with odds of 100 – 1, and his trainer, internally, which we expect will further strengthen the Club. Ballarat-based Darren Weir. Weir enjoyed a stellar Carnival and has also created a new Commonwealth record for the most number of wins in a season. Before history was made in the Emirates Melbourne Cup, however, AAMI Victoria Derby Day saw some memorable moments of its own. Trainer Mick Price finally took the honours in the feature race with Craig Newitt on Tarzino, winning the AAMI Victoria Derby. With Price-trained horses previously finishing second, third, fourth, fifth and sixth in this race, it was an overdue victory. Politeness, trained by Robert Smerdon and ridden by Dwayne Dunn, made an impressive run to first place from the second half

6 — VICTORIA RACING CLUB of the field in the Myer Classic, and a thrilling Lexus Stakes Melbourne Cup Carnival attendance saw Gai Waterhouse’s Excess Knowledge take out a photo 2015 finish against Zanteca. Chris Waller notched up his third Total Members % consecutive win in the Coolmore Stud Stakes, with Japonisme, Derby 85,943 49,895 58.1 and an international runner was the victor in the Longines Cup 101,015 42,087 41.7 Mackinnon Stakes for the second time in three years, Oaks 57,560 35,728 62.1 with French-trained Gailo Chop providing trainer Antoine Stakes 68,711 41,723 60.7 de Watrigant with his first Group 1 success. Total 313,229 169,433 54.1 Emirates Melbourne Cup Day was dominated by the incredible story of Michelle Payne, Prince of Penzance and 2014 Darren Weir. As well as her history-making efforts as the Total Members % first female rider to win the coveted Cup, praise was also Derby 90,244 52,807 58.5 given for a ride from Michelle Payne that was technically Cup 100,794 43,648 43.3 brilliant, her barrier one start setting her up for a dream ride, delighting her fans when The Prince ran into the Oaks 64,430 40,191 62.4 lead with 200 metres to go. Stakes 70,051 43,633 62.3 Total 325,519 180,279 55.4 Crown Oaks Day saw trainer Ciaron Maher take out back-to-back wins in the main race, with the filly Jameka 2013 taking out the Crown Oaks with champion jockey Damien Total Members % Oliver on board. The day saw the farewell of another Derby 95,223 55,796 58.6 legendary rider, Jim Cassidy, as he took his final ride in the last race on Crown Oaks Day. It was a fitting day to retire, Cup 104,169 44,586 42.8 as Cassidy had more wins at Flemington in the Crown Oaks Oaks 66,757 43,043 64.5 than any other race. Stakes 65,047 43,513 66.9 Emirates Stakes Day rounded out a memorable week, Total 331,196 186,938 56.4 with Turn Me Loose giving Kerrin McEvoy a win in the Emirates Stakes. Chris Waller also made his mark once again and became the only multiple Group 1 winning trainer at the Melbourne Cup Carnival with a surprise win by Delectation in the Darley Classic. Ridden by James McDonald, the sprinter took out the win in a thrilling finish over favourites Chautauqua and Terravista. With attendance figures of 313,229 across the week, the Carnival continues to attract a great blend of local, interstate and international visitors.

The 2015 Melbourne Cup Carnival was one of the most historic in many years

ANNUAL REPORT 2016 — 7 the fabulous fashion of flemington

8 — VICTORIA RACING CLUB ANNUAL REPORT 2016 — 9 chairman and chief executive’s report continued

2015 melbourne cup carnival 2016 flemington festival of racing economic impact The 2016 Flemington Festival of Racing was once again a Following the 2015 Melbourne Cup Carnival, the Club pleasing one for the Club. The scene was set on Black Caviar commissioned IER to conduct an independent analysis of Lightning Day for a stellar autumn carnival when super the economic impact of the Carnival on Victoria’s economy. sprinter Chautauqua won by a nose in a thrilling finish over rival Terravista, in the Group 1 Black Caviar Lightning. The results of this research highlighted record figures and Darren Weir proved once again why he is a champion trainer demonstrated the significant contribution and positive when Palentino crossed the line in first place in the Group 1 impact that the Carnival has on the state’s economy. The 2015 Australian Guineas, proving just a touch too strong for Melbourne Cup Carnival contributed $387.8 million of gross the AAMI Victoria Derby winner, Tarzino. Super Saturday economic benefit to Victoria, up from $374.2 million in 2014. provided the feel-good story of autumn, when The The Carnival was also responsible for a 4 per cent increase Quarterback, ridden by Craig Newitt was the winner to record a value-added contribution to Victoria’s gross state of the Group 1 Lexus Newmarket Handicap. This provided product of $202.7 million. This is a measure that quantifies trainer Robbie Griffiths with a fairytale ending – his first the direct and flow-on impact of the Melbourne Cup Group 1 win in 25 years. This joy was not so apparent in Carnival on the state’s economy from funds flowing through the Australian Cup, however, when a dramatic finish saw Victoria by interstate and international visitors who were the race decided in the steward’s room. Stephen Baster in Victoria specifically to attend the Melbourne Cup Carnival. on Awesome Rock was relegated to second place behind The number of visitors from interstate was up 7.7 per cent, on Preferment, denying father-son training with increased international visitation from the United team Leon and Troy Corstens their first Group 1 win together, States of America, Ireland, China, Japan and New Zealand. but giving Chris Waller his 12th for the season. David Hayes By almost every measure, the 2015 Melbourne Cup Carnival and Tom Dabernig had a good day, the trainers taking out was a resounding tourism success for the state. a double with Seaburge and He Or She both providing wins. The VRC joined with the Melbourne Food & Wine Festival on Super Saturday to present the Flemington Grazing Trail & Cellar Door for the third consecutive year, delivering a high percentage of repeat customers. The Club’s ongoing affiliation with the Melbourne Food & Wine Festival enabled us to showcase what Melbourne is most renowned for – world-class racing paired with quality food and wine in a unique cellar door atmosphere on the famous Flemington front lawn. Victoria’s finest wineries, breweries and food producers were on show, with Robin Wickens, Alejandro Saravia, Anthony Femia, Florent Gerardin, Matt Stone and dessert specialist Philippa Sibley showcasing their produce in live Victoria’s finest cooking demonstrations throughout the day. wineries, breweries and food producers

10 — VICTORIA RACING CLUB membership breakdown In May this year, Racing Victoria released a statement on its plans for a consultation process on the future Membership categories Number of members of metropolitan racing and training in Victoria. As a Club, Full 23,701 we remain supportive of industry initiatives that will ensure a sustainable future for racing and will be an active Restricted 1,848 and open participant in the consultation process. Life 125 Pre ’79 253 Provisional 92 digital and technology Absentee 2,556 The Club is committed to continuous improvement of digital and technological capabilities to provide an Junior 1,004 enhanced on and off course experience for all customers. Phar Lap Club 1,271 In October 2015, the Club launched the Flemington Raceday Total 30,850 Guide iOS app, and in February 2016, the Android version of the same app followed. In a world first for a racecourse, this mobile application utilised Cisco’s Stadium Vision Mobile racing rewards software to present our oncourse and Wi-Fi connected In January 2016, the Club launched a completely redesigned customers with the ability to stream up to four channels Racing Rewards loyalty program, putting customer intimacy of live vision. at the forefront. The program was an important step in Significantly, in December 2015, the Club launched its new creating a stronger connection between the Club and its enterprise resource planning (ERP) solution, including loyal Members, recognising raceday attendance, spend and a new Customer Relationship Management (CRM) system, years of Membership. The Club’s Racing Rewards program with integrated financial and purchasing systems. Other was first introduced in 2001, and was Australia’s first sports components of the ERP were the new online store, which industry loyalty program designed to increase visitation by is integrated into the website and new Racing Rewards recognising and rewarding frequently attending Members. program. The integration now allows Members the ability The Club thanks Members for their support during the to view Racing Rewards Tier Status, past transaction program transition as we continually work to further evolve history, points earned and easily use points to redeem Racing Rewards and deliver value back to our loyal Members. products online. Leveraging from the integration with CRM, for the first masterplan time, in 2016, Members were able to apply for Melbourne During the year, the Club continued to work actively on Cup Carnival dining online and improvements to the a suite of improvements known as the Masterplan. These Melbourne Cup Carnival Members’ Reserved Car Park improvements are designed to deliver greater benefits to application process were also made. Members, patrons, the racing industry and the community. As previously advised, the Club is making two parcels of surplus land available for development to help fund improvements to and ensure it continues to be a world-class entertainment venue. In line with the government approval process, the Minister for Planning has set up a Ministerial Advisory Committee to provide advice on the proposed planning controls for Flemington Life. Earlier this year, a public exhibition was held and the VRC shared its proposed plans with the wider community and detailed draft Planning Scheme Amendments. While the VRC is awaiting a decision from the Planning Minister, we look forward to working collaboratively with Members, local residents, government bodies and MPs, local councils and our neighbours at the Showgrounds in relation to our plans.

ANNUAL REPORT 2016 — 11 12 — VICTORIA RACING CLUB there’s something for everyone at flemington

ANNUAL REPORT 2016 — 13 chairman and chief executive’s report continued

media partnerships The Club’s catering provider, Peter Rowland Catering, was acknowledged during the year with The Chairman’s Club The VRC has once again enjoyed strong support from its wine list retaining its ‘one goblet’ rating in the Gourmet long-standing media partners. Seven continues to evolve Traveller Australia’s Wine List of the Year Awards for 2016. their coverage of the Melbourne Cup Carnival, including the introduction of live streaming on mobile in 2015. The Herald Sun has extended its valued partnership for acknowledgements an additional three years, continuing extensive editorial The VRC is fortunate to be supported by many of the world’s coverage year round on and off the track. leading organisations, enabling the Club to offer lucrative 3AW in the AM market and Southern Cross Austereo in the FM prizemoney thus attracting world-class participants. landscape have both expanded their support to include the We would like to thank all who have supported the VRC Emirates Melbourne Cup Tour, as well as extending coverage during 2015/16, in particular our Principal Partner, Emirates on their national platforms, with the Emirates Melbourne Cup Airline, who has been a Club sponsor for 19 years, and Major being simulcast live on 288 stations around Australia. Partners, Myer (over 31 years), AAMI (24 years), Crown (23 years) and James Boag (15 years). We would also like to acknowledge arts and heritage our other long-standing sponsors, Treasury Wine Estates (39 years) and Schweppes (38 years), whose support is crucial The art and heritage collection is used throughout the to the success of the Club. Club’s Flemington facility to recognise the rich history of the racecourse through the display of premier artworks We would like to acknowledge and thank the VRC Directors, and historical objects. Flemington’s permanent facilities, management and staff for their commitment to the success such as Saintly Place, The Committee Room, The Chairman’s of the Club. Club and The Terrace restaurant, were refreshed with new It would not be possible for the Club to operate successfully artworks in 2015/16. The collection was also a key feature without the cooperation and assistance of a number of of raceday and non-raceday events during the Melbourne individuals and organisations. Accordingly, we record our Cup Carnival. appreciation and thanks to: A total of 401 hanging artworks and 69 objects were on • The State Government and the Office of the Premier, display throughout the racecourse and office facilities during The Hon Daniel Andrews MP the 2015 Melbourne Cup Carnival. • The Minister for Racing, The Hon Martin Pakula MP Artworks and objects were also shared with wider audiences • The Minister for Tourism and Major Events, through partnerships with the Sofitel Melbourne on Collins, The Hon John Eren MP Government House and the National Gallery of Victoria. • Racing Victoria Limited Melbourne Cup Carnival events featuring the Club’s arts • The Melbourne Racing Club and Moonee Valley Racing Club and heritage collection included the Government House Cup Eve Welcome Reception, which incorporated historic • Country Racing Victoria Ltd and all country racing clubs Melbourne Cup trophies on display, including the 1865, • The industry’s wagering joint venture partner, 1915, 1965 and 2015 trophies, Jean Shrimpton’s 1965 replica Tabcorp Holdings Limited dress, as well as a Flemington and WWI interpretive panel display. Separately, an exhibition held at Sofitel Melbourne • Racing Australia on Collins throughout October and November displayed • Victorian Major Events Corporation iconic Melbourne Cup covers from the Australian Women’s • City of Melbourne Weekly Cover Art from the 1930s to 1960s. Finally, to all of our Members, thank you for your continued support. awards In early 2016, the 2014 Melbourne Cup Carnival was announced as winner of the Major Festivals and Events category at the Australian Tourism Awards, recognising the 2014 Melbourne Cup Carnival’s remarkable economic impacts and promotion of Victoria and Australia to audiences around the globe. This followed the announcement of our third consecutive win in this category at state level, in the RACV Victorian Tourism Awards, resulting in induction to the Hall of Fame.

14 — VICTORIA RACING CLUB partnerships

Principle Partner Major Partners

Official Partners

LOGOTYPE COULEUR FOND BLANC Nº dossier : 20120475E M100 J80 N10 Date : 28/03/2013 Validation DA/DC : C40 M40 J40 N100 OFFICIAL OFFICIAL FRENCHValidation Client M30 J70 N25 OFFICIAL PRINT OFFICIAL COFFEE OFFICIAL MOTOR OFFICIAL TIMEKEEPER SPIRITS PARTNER CHAMPAGNE MEDIA PARTNER PARTNER VEHICLE PARTNER AND WATCH PARTNER PARTNER

OFFICIAL NON-ALCOHOLIC OFFICIAL TELECAST OFFICIAL WELLNESS OFFICIAL WAGERING OFFICIAL WINE BEVERAGE PARTNER PARTNER PARTNER PARTNER PARTNER

Race Sponsors

®

Event & Program Partners

Media Partners Sustainability Partners

ANNUAL REPORT 2016 — 15 VRC in the community

Engagement with the local Flemington community and Express Rooms, a medical free haven within hospitals, not-for-profits associated with the thoroughbred racing and enabled nearly 9,000 sick kids and their families industry are an integral part of the VRC’s approach to its to access these facilities. corporate social responsibility. Through the Club’s Community Program, the VRC partners with charities, schools, sporting SecondBite partnership clubs and other organisations to leave a positive impact Since 2007, the Club has supported SecondBite through on society and the environment. surplus food donations. After each major raceday, SecondBite, Approximately $1 million was contributed to, or raised by, assisted by the VRC caterers, collect fresh surplus food to charitable causes through VRC fundraising partnerships and distribute to local agencies for community food programs. donations during the year. Through an ongoing donations SecondBite collected 3,760 kilograms from Flemington program, the VRC assisted more than 160 charities and during 2015 Melbourne Cup Carnival, which equated community groups with ticketing and hospitality donations. to almost 7,000 meals for those in need. In addition, the VRC worked with a range of charities to utilise our world-class facility to deliver substantial fundraising Emirates Melbourne Cup Tour results to local causes. The VRC remains committed to taking the coveted Emirates Melbourne Cup trophy to the people through its annual tour. The tour represents a pathway to engage with local key highlights included: communities by profiling the heroes and champions Pin & Win fundraising initiative intrinsically linked to the Cup. In 2015, the VRC was proud to appoint Starlight Children’s The 2015/16 season marked the 13th year of the tour, which Foundation as the official Melbourne Cup Carnival Pin & saw the ‘People’s Cup’ travel a staggering 57,519 kilometres Win Charity Partner. Starlight brightens the lives of seriously to visit 37 metropolitan and regional destinations across ill children by replacing pain, fear and stress with fun, Australia and New Zealand. joy and laughter. Through the sale of Emirates Melbourne The 2015 Emirates Melbourne Cup Tour successfully Cup Pins, funds raised supported Starlight to continue increased out-of-state visitation by driving awareness of the this important work. Melbourne Cup Carnival both interstate and internationally. In the first year of its two-year partnership, Starlight raised More importantly, the tour enabled in excess of 26,000 people $350,000 through the support and generosity of Melbourne the unique opportunity to see the Cup first-hand and share Cup Carnival racegoers and more than 600 volunteers selling in the heart-warming stories of the race’s 155-year history. pins. Funds raised supported the organisation’s Starlight

2015 Emirates Melbourne Cup tour locations

Australia Victoria Queensland New South Wales Casterton Atherton Broken Hill Cranbourne Boulia Gilgandra Erica Brisbane Goulburn/Mulwaree Melbourne Cairns Shoalhaven Mildura Cloncurry Singleton Rawson Gold Coast Sydney Rosedale Mackay Young Walhalla Mount Isa Ravenshoe South Australia Tasmania Tolga Adelaide Launceston Angaston New Zealand Western Australia Port Pirie Auckland Karratha Cambridge Perth Taupo South Perth Wellington

Malaysia 37 Sandakan destinations across Australia, New Zealand and Malaysia

16 — VICTORIA RACING CLUB Emirates Melbourne Cup Parade Western Health Community Raceday The 2015 Emirates Melbourne Cup Parade, proudly supported The Western Health Community Raceday was held by the City of Melbourne, saw more than 50,000 people at Flemington in December 2015, with Western Health line the streets of Melbourne to experience the traditional celebrating its 10th anniversary as the VRC’s community Emirates Melbourne Cup eve event. raceday partner. The community raceday is Western Health’s flagship National Jockeys Trust fundraising event, and successfully raised over $90,000 The VRC is an ongoing supporter of the National Jockeys for the Critical Care Appeal, enabling rapid bedside Trust (NJT), which helps jockeys and their families overcome assessment for seriously ill heart patients and assistance financial hardship following serious injury, illness or the to provide the best possible care for the community in the passing of a jockey. Signed saddlecloths from the Melbourne west of Melbourne. Since 2006, more than $800,000 has Cup Carnival, feature races and other selected Group 1 races been raised through this raceday, which Western Health at Flemington are auctioned each year, with significant reports has supported more than 1 million patients. proceeds donated to the Trust. To recognise involvement in the Emirates Melbourne Cup Peter MacCallum Cancer Centre Parade, the VRC also makes a donation to the Trust for Floral arrangements displayed at Flemington were, every jockey who participates. Last year’s donation to the for the third year running, donated to the Peter MacCallum NJT from these activities totalled almost $15,000. Cancer Centre. These arrangements were given to patients, families and carers throughout the hospital. Doxa partnership The VRC has a long-standing relationship with Doxa, a youth Community ticketing foundation providing support for young people who face As per previous years, complimentary ticketing for the challenging life circumstances. This support has included 2015 Melbourne Cup Carnival was offered to over 350 local the VRC’s participation in the Doxa cadet program, providing residents of Flemington to show our appreciation for a number of cadets with a range of vocational experience their support. Flemington and Ascot Vale households were in areas of finance, technology, procurement, legal and risk and offered four general admission tickets to be redeemed facilities management. The VRC has been a strong advocate on one or more Carnival racedays. of the Doxa cadet program with four cadets working across the Club in 2015/16. The VRC also held the annual Doxa Racing Lunch at Flemington in 2015 and raised over $81,000 for Doxa to continue its important work, including its cadet program.

Starlight raised $350,000 through the support and generosity of Melbourne Cup Carnival racegoers

ANNUAL REPORT 2016 — 17 board of directors

Michael Burn Amanda Elliott Chairman Vice Chairman

John O’Rourke Peter Fekete Honorary Treasurer

Katherine Bourke Elisa Sturzaker Robinson

Michael Ramsden Neil Wilson

Sophie Cornell Simon Love Chief Executive

18 — VICTORIA RACING CLUB executive management

Nick Addison Mark Davies Executive General Manager Executive General Manager Commercial Operations Flemington

Caroline Ralphsmith Lucas Robertson Executive General Manager Executive General Manager Customer Engagement People, Culture and Governance

Sam Whatmore Executive General Manager Finance and Information Technology

ANNUAL REPORT 2016 — 19 risk and corporate governance

The VRC Board is ultimately responsible for the governance safety of the Club and remains committed to continuous improvement in this area. The Directors operate according Safety is, and must always be, paramount at Flemington. to a code of conduct and the rules set down by the Club’s Given our racing and events focus, including the need to constitution and by-laws. employ a range of permanent and temporary employees and contractors, this area requires constant focus, review and training. The safety team works with management, board composition and term of office our people, our contractors, our partners, the industry and The Board consists of nine non-executive independent WorkSafe to continually reinforce good safety practice Directors and the Chief Executive. Each non-executive Director and identify improvements in our systems of work. must seek re-election every three years, and Directors must retire at the next Annual General Meeting after they reach conflicts of interest the age of 72. The Chairman, Vice-Chairman and Honorary Treasurer are appointed each year. They may serve in these Directors and employees are expected to avoid any action, roles for a maximum of eight consecutive years. position or interest that conflicts with an interest of the Club or may give any appearance of such a conflict. A Director who has a conflict or a perceived conflict with an interest sub-committees of the Club must bring the matter to the notice of the other The Board establishes sub-committees, as required, to assist Directors. Directors will not vote on matters in which they have in carrying out its primary functions. These sub-committees an interest and may, at the Chairman’s discretion, be asked meet on a regular basis, populated by representatives of the to leave the meeting while the matter is being considered. Board and management, and act in an advisory capacity, making recommendations to the Board. remuneration A Remuneration Committee, comprising the Chairman, audit and risk management committee Vice-Chairman and Honorary Treasurer, reviews the The Audit and Risk Management Committee comprises the Club’s remuneration principles and proposed expenditure Honorary Treasurer (as Chair) and not less than two other on an annual basis. The Chief Executive and EGM People, Directors. This committee meets on at least three occasions Culture and Governance also attend these meetings. throughout the year and on further occasions as the need With the exception of the Chief Executive, VRC’s Directors arises. The committee meets with, and receives regular reports act in a voluntary capacity. However, they do receive certain from, the Club’s auditors and management, working with reimbursements and compensation for costs incurred them to review the Club’s risk profile, accounts and financial while fulfilling their role as a Director. Certain Directors position. The committee makes recommendations to the are nominated by the Club to act as representatives on Board in relation to key budget, financial and policy items. the Boards of Thoroughbred Racing Industry bodies and those Directors may be remunerated in accordance with the relevant entities’ remuneration practices. corporate reporting The Board receives reports from management on a monthly legal basis and otherwise as required. The VRC’s in-house counsel is involved in the negotiation of contracts and provide advice and support on a wide range risk management of matters affecting the Club. Processes and training are The Club utilises a web-based risk management system to implemented, as required, to ensure a consistent approach record, monitor and report on risks affecting the business. to contracts and compliance. External legal advice is also The Senior Risk Manager works with the management team sought where appropriate. to update the risk register and to review the effectiveness of controls. This process gives input and ownership to governance culture people at all levels and in all departments of the Club, while providing greater visibility and confidence to senior The Club remains committed to ensuring that all employees management and the Board. are appropriately inducted, trained and supported, as required, to ensure that good governance becomes second nature in all activities undertaken by the Club.

20 — VICTORIA RACING CLUB financial statements

22 Directors’ Report 25 Independence Declaration 26 Independent Auditor’s Report 27 Statement of Profit or Loss and Other Comprehensive Income 28 Statement of Financial Position 29 Statement of Changes in Equity 30 Statement of Cash Flows 31 Notes to and forming part of the Financial Statements 44 Directors’ Declaration

ANNUAL REPORT 2016 — 21 Directors’ Report

The Directors of the Victoria Racing Club Limited (‘the Club’) submit herewith the annual financial report of the Club for the financial year ended 31 July 2016. In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows: The Club became a registered company under the Corporations Act 2001 on 10 April 2006. The Club is a public company limited by guarantee, incorporated and operating in Australia. If the Club is wound up, the Constitution states that each current Member, and each person who ceased Membership within the preceding 12 months, is required to contribute a maximum of $10 towards meeting any outstanding obligations of the Club. At 31 July 2016, the number of Members was 30,850 (2015: 30,046), therefore the total contribution required by Members is equal to $300,850. The Directors of the Club during or since the end of the financial year are as follows:

Directors Appointed Qualifications Business Interests Katherine Bourke July 2004 • Bachelor of Laws, University of Melbourne Judge of the County Court of Victoria • Master of Laws, University of Melbourne since 2007. • Bachelor of Arts, University of Melbourne

Michael Burn November 2003 • Bachelor of Commerce, Executive Director Macquarie Capital, University of Melbourne Director of various Macquarie Group subsidiaries, Member of Council – Loreto Mandeville Hall.

Sophie Cornell December 2015 • Bachelor of Laws, Deakin University Head of Commercial and Development • Bachelor of Arts, Deakin University Australia and New Zealand, Juwai.

Amanda Elliott July 2002 • Bachelor of Arts (Hons), Director of Chatswood Park Pty Ltd. University of Melbourne

Peter Fekete July 2000 • Bachelor of Business (Accounting), Chairman of Thoroughbred Racing Swinburne University Productions (Vic) Pty Ltd, • Fellow of the Institute of Chartered Director of a number of non-listed Accountants Australia (FCA) investment companies, Member of the Finance Investment and Risk Committee of the National Stroke Foundation.

Paul Leeds April 2002 • Associate Fellow of Australian Institute Director of National Stroke Foundation, Resigned (December 2015) of Management Director of Collingwood Football Club, Director of Radio 3UZ Pty Ltd and 3UZ Pty Ltd, Director of Twenty3 Sport + Entertainment, Chairman of Australian Made Media, Advisory Board of Menzies Art Brands.

Simon Love May 2015 • Bachelor of Business (Banking and Finance), Chief Executive of the Victoria Racing Club, Victoria University Director of ECS (Aust) Pty Ltd. • MBA, Swinburne University

John O’Rourke December 2011 • Bachelor of Commerce, University of Melbourne Director of the Plenary Group Pty Ltd, • Graduate Diploma in Finance, RMIT Plenary Research Holdings Pty Ltd, Plenary Health Holdings (CCC) Pty Ltd, Plenary Conventions Holdings Pty Limited, and Flagship Property Holdings Pty Ltd, Director of Richmond Football Club.

Michael Ramsden December 2012 • Bachelor of Economics, Monash University Managing Director Terrain Capital Ltd, • Bachelor of Laws, Monash University Chairman Cremone Capital Ltd, • Fellow of the Financial Services Institute Chairman of Australian Mines Ltd, of Australasia Chairman of African Mahogany (Aust) Pty Ltd.

Elisa Sturzaker Robinson May 2011 • Bachelor of Laws and Bachelor of Commerce, Senior Counsel, Energy Management (ANZ) Monash University at General Electric, • Admitted to the Supreme Court of Victoria Director, Founder and Chief Executive • Master of Business Administration of One Grange Road Pty Ltd. and Master of Marketing Studies, Melbourne Business School

Neil Wilson December 2012 • Bachelor of Business (Accounting), (MIS) Chief Executive Officer and Managing Director • Certified Practicing Accountant (CPA) of Oakton Limited, Director of Pakenham Holdings Pty Ltd, Adina Tower Pty Ltd, King Wilson Pty Ltd and N & S Wilson Investments Pty Ltd.

22 — VICTORIA RACING CLUB Company Secretary • Revenue increased $5.5 million (3.5%) to $161.3 million for the Lucas Robertson, Executive General Manager People, year. The main sources of revenue for the Club continue to be Culture and Governance. raceday catering, dining, hospitality and events ($56.3 million), racing distributions ($31.1 million) and marketing, sponsorship Principal activities and broadcast rights ($25.3 million). Revenues from Members’ The principal activities of the Club during the year were the conduct subscriptions and their guests continue to play an integral part of thoroughbred race meetings and the provision of training facilities in the financial success of the Club, contributing $18.2 million for horses that are stabled and trained at Flemington Racecourse. in the 2016 financial year, excluding the revenue contribution from raceday catering and dining in Members’ areas. Objectives, strategies and key areas of focus The Club’s primary objective is for Flemington to be the world leader • Expenses excluding depreciation of $144.6 million was in line with in thoroughbred racing, event management and entertainment. the prior year. This included the Club’s continued commitment to owners, returning $37.7 million in prizemoney for the year, Key strategies to achieve this include: including $7 million in voluntary prizemoney ‘top ups’, with • Optimise the racing program and raceday experience $5.6 million allocated to the Melbourne Cup Carnival to attract the best domestic and international horses to Flemington. • Continuous improvement of racing, Member and patron facilities • Depreciation and amortisation costs of $15.3 million were • Active engagement with Members and patrons expensed for the year, compared with $9.5 million for the prior • Growth of the Melbourne Cup Carnival brand throughout year. The Directors determined that the carrying values of certain Australia and select international markets items of equipment did not reflect their current view regarding • Continued implementation of the ‘Masterplan’, including useful lives, and accordingly, an accelerated depreciation charge a review of non-core assets of $5 million was recognised during the year. • Improved staff engagement and the further development • The Club invested $12.3 million in capital projects during the of a performance based culture year, including $1.3 million towards the design of the Club Stand and $1.8 million in new technology and related systems to • Successful implementation of new systems to enhance the enhance the customer experience. The Club’s capital investment customer offering and drive internal process efficiencies. also included $5.8 million for improvements to public facilities, A key area of focus for the Club is to construct a new grandstand, including refurbishments of the Terrace Restaurant and The and ensure it is funded without undue pressure and risk on the Undercroft (now known as Saintly Place), an upgrade to the big Club’s financial position. screen and the implementation of StadiumVision mobile. • An actuarial loss of $0.9 million on the Club’s defined benefit The Club has a number of indicators to assess and monitor superannuation plan was recognised directly in equity during the performance. These include: year following an actuarial review of the plan’s financial position. Customer engagement: • Number of Members and Member retention rates Changes in state of affairs During the financial year, there was no significant change in the • Raceday attendance by customer segments state of affairs of the Club other than that referred to in the • Customer satisfaction research financial statements or notes thereto. • Number of events (racing and non-racing). Subsequent events On 12 October 2016, the Club entered into a building contract for Racing: the construction of a new Club Stand. Management estimates • Race fields, including average number of starters and that the total cost of the project and associated works will quality of fields be $128.9 million and construction is expected to commence • Pari-mutuel and bookmaker wagering turnover in November 2016. Financing has been arranged by the Club. on Flemington race meetings Future developments • Total prizemoney paid by the Club, including the amount Disclosure of information regarding likely developments in the contributed to prizemoney by the Club’s own activities operations of the Club in future financial years and the expected (often referred to as ‘top up’) results of those operations is likely to result in unreasonable • Stables’ tenancy and training gallops prejudice to the Club. Accordingly, this information has not been disclosed in this Report. • Racetrack condition. Indemnification of officers and auditors In addition to the above, the Club has a number of financial metrics to assess its performance. During the financial year, the Club paid a premium in respect of a policy insuring the Directors, officers and employees of the Club Review of operations against a liability incurred as such a Director, officer or employee The profit for the year ended 31 July 2016 was $1.4 million, compared to the extent of all losses which the Club becomes legally obligated with a profit of $10.7 million for the prior year. The 2015 profit included to pay on account of any claim. The Club has not during or since the a $9 million gain on the sale of the investments in Australian Stud financial year, except to the extent permitted by law, indemnified Book and Australian Genetics Testing Pty Ltd. The following factors or agreed to indemnify an auditor of the Club against a liability were key contributors to the financial performance: incurred as such an auditor.

ANNUAL REPORT 2016 — 23 Directors’ Report continued

Dividends Under the Club’s constitution, no dividends may be declared or paid. Directors’ meetings The following table sets out the number of Directors’ Board meetings and meetings of the Audit and Risk Management Committee held during the financial year and the number of meetings attended by each Director (during their tenure). During the financial year, 11 Board meetings, and three Audit and Risk Management Committee meetings were held. Audit and risk Board of directors management committee Directors Held Att’d Held Att’d Katherine Bourke 11 10 – – Michael Burn 11 11 3 3 Sophie Cornell (a) 6 6 – – Amanda Elliott (b) 11 11 – – Peter Fekete 11 11 3 3 Paul Leeds (c) 5 5 – – Simon Love (b) 11 11 – – John O’Rourke 11 11 3 3 Michael Ramsden 11 11 3 3 Elisa Sturzaker Robinson 11 10 – – Neil Wilson 11 11 – –

(a) Mrs Cornell was appointed to the Board on 18 December 2015. (b) Mrs Elliott and Mr Love attended the Audit and Risk Management Committee meetings as invitees. (c) Mr Leeds resigned from the Board on 18 December 2015. (d) Masterplan Committee – The Club went through a public process as required by the Victorian Minister for Planning to allow the Club to seek a Planning Scheme Amendment in relation to the sale of surplus land. An Advisory Committee was appointed which has made recommendations to the Minister. No decision had been received by the end of the financial year. No other strategic level issues arose which required a meeting of this committee to be convened. (e) Disciplinary Committee – The Committee met on 24 December 2015. Disciplinary Committee members received and considered papers with recommendations from management in relation to Member misconduct as appropriate. (f) Remuneration Committee – The Committee met on 3 September 2015.

Auditor Deloitte Touche Tohmatsu continues in office as the Club’s auditor. The auditor’s Independence Declaration is included in the financial statements on page 25. Signed in accordance with a resolution of Directors made pursuant to Section 298(2) of the Corporations Act 2001. On behalf of the Directors,

Michael S Burn John B O’Rourke Director Director Melbourne, 21 October 2016

24 — VICTORIA RACING CLUB 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 The Board of Directors Tel: +61 (0) 3 9671 7000 Victoria Racing Club Limited Fax: +61 (0) 3 9671 7001 448 Epsom Road www.deloitte.com.au FLEMINGTON VIC 3031

21 October 2016

Dear Board Members

Victoria Racing Club 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 Victoria Racing Club Limited. As lead audit partner for the audit of the financial statements of Victoria Racing Club Limited for the financial year ended 31 July 2016, 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.

DELOITTE TOUCHE TOHMATSU Peter A. Caldwell Partner Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited

ANNUAL REPORT 2016 — 25 Independent Auditor’s Report to the Members of Victoria Racing Club Limited

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

We have audited the accompanying financial report of Victoria Racing Club Limited, which comprises the statement of financial position as at 31 July 2016, the statement of profit or loss and other 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 company as set out on pages 27 to 44. 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 gives a true and fair view and 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. 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 Victoria Racing Club 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 Victoria Racing Club Limited is in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the company’s financial position as at 31 July 2016 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 Peter A. Caldwell Partner Chartered Accountant

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited

26 — VICTORIA RACING CLUB Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 July 2016

2016 2015 Notes $000 $000 Revenue Thoroughbred Racing Industry Distributions 31,093 30,887 Catering, Dining, Hospitality and Events 56,264 58,799 Marketing, Sponsorship and Broadcast Rights 25,330 22,418 Members’ Tickets and Subscriptions 18,244 18,055 Public Ticketing 6,694 7,201 Wagering and Other Racing Revenue 8,556 7,311 Racecourse, Training Facilities and Grants 8,609 5,223 Gaming 4,605 4,815 Share of Net Profits of Associates and Jointly Controlled Entities Accounted for Using the Equity Method 11 702 657 Interest 243 180 Other Revenue 923 193 Total Revenue 161,263 155,739

Expenditure Prizemoney and Other Returns to Owners 37,695 38,275 Catering, Dining, Hospitality and Events 42,444 42,702 Marketing, Sponsorship and Broadcast Rights 10,874 11,579 Members’ Services and Administration 28,554 26,523 Racecourse and Training Facilities 18,940 19,932 Gaming 4,076 4,443 Financing Costs 8 28 101 Depreciation and Amortisation 15,310 9,544 Net Loss on Disposal of Fixed Assets 10 47 Other Expenditure 1,951 883 Total Expenditure 159,882 154,029 Profit for the Year before Net Gains on Sale of Investments 1,381 1,710 Gain on Sale of Investments – 8,973 Profit for the Year 5 1,381 10,683

Other Comprehensive Income Gain on Revaluation of Properties 17,709 – Actuarial Gain/(Loss) on Defined Benefit Plan 19 (928) 2,428 Other Comprehensive Income for the Year 16,781 2,428 Total Comprehensive Income for the Year 18,162 13,111

The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.

ANNUAL REPORT 2016 — 27 Statement of Financial Position at 31 July 2016

2016 2015 Notes $000 $000 Assets Current Assets Cash and Cash Equivalents 20 10,600 8,533 Trade and Other Receivables 9 9,115 9,755 Inventories 1,153 1,081 Prepayments 4,241 3,315 Assets Classified as Held For Sale 10 – 37,581 Total Current Assets 25,109 60,265

Non-current Assets Trade and Other Receivables 9 – 9 Investments Accounted for using the Equity Method 11 238 162 Intangibles 12 1,100 1,009 Other Financial Assets 13 1,809 2,641 Property, Plant and Equipment 14 212,474 159,774 Total Non-current Assets 215,621 163,595 Total Assets 240,730 223,860

Liabilities Current Liabilities Trade and Other Payables 15 9,022 6,701 Fees in Advance 23,089 25,779 Borrowings 16 1,038 1,909 Provisions 17 1,701 1,609 Total Current Liabilities 34,850 35,998

Non-current Liabilities Trade and Other Payables 15 – 200 Provisions 17 2,617 2,561 Total Non-current Liabilities 2,617 2,761 Total Liabilities 37,467 38,759 Net Assets 203,263 185,101

Equity Retained Earnings 5 131,587 131,134 Reserves 6 71,676 53,967 Total Equity 203,263 185,101

The above Statement of Financial Position should be read in conjunction with the accompanying notes.

28 — VICTORIA RACING CLUB Statement of Changes in Equity for the year ended 31 July 2016

Properties Investments revaluation revaluation Retained reserve reserve earnings Total $000 $000 $000 $000 Balance as at 31 July 2014 53,795 172 118,023 171,990 Profit for the year – – 10,683 10,683 Other comprehensive income for the year – – 2,428 2,428 Balance as at 31 July 2015 53,795 172 131,134 185,101 Profit for the year – – 1,381 1,381 Other comprehensive income for the year 17,709 – (928) 16,781 Balance as at 31 July 2016 71,504 172 131,587 203,263

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

ANNUAL REPORT 2016 — 29 Statement of Cash Flows for the year ended 31 July 2016

2016 2015 Notes $000 $000 Cash Flows from Operating Activities: Receipts from Thoroughbred Racing Industry Distributions 34,133 34,156 Receipts from Catering, Dining, Hospitality and Events 58,505 64,857 Receipts from Marketing, Sponsorship and Broadcast Rights 27,863 27,045 Receipts from Members’ Tickets and Subscriptions 20,106 19,610 Receipts from Public Ticketing 7,364 7,921 Receipts from Gaming 5,072 5,296 Receipts from Wagering and Other Racing Revenue 10,698 7,690 Receipts from Racecourse, Training Facilities and Other 11,043 5,946 Payments for Prizemoney and Other Returns to Owners (41,858) (42,377) Payments for Catering, Dining, Hospitality and Events (47,128) (44,468) Payments for Marketing, Sponsorship and Broadcast Rights (12,075) (15,900) Payments for Members’ Services and Administration (31,115) (30,958) Payments for Gaming (4,596) (4,887) Payments for Racecourse, Training Facilities and Other (23,008) (23,403) Interest Received 243 180 Interest and Other Costs of Finance Paid (83) (141) Net Cash Provided by Operating Activities 20(c) 15,164 10,567

Cash Flows from Investing Activities: Payments for Buildings and Infrastructure (586) (132) Payments for Plant and Equipment (7,946) (4,080) Payments for Construction Work in Progress (3,217) (7,850) Payments for Intangibles (493) (266) Proceeds from the Sale of Investments – 8,973 Proceeds from the Sale of Property, Plant and Equipment 7 41 Distribution from Equity Accounted Investments 9 723 Net Cash Used in Investing Activities (12,226) (2,591)

Cash Flows from Financing Activities: Proceeds from Borrowings 87 1,225 Repayment of Borrowings (958) (1,841) Net Cash Used in Financing Activities (871) (616) Net Increase in Cash and Cash Equivalents 2,067 7,360 Cash and Cash Equivalents at Beginning of the Financial Year 8,533 1,173 Cash and Cash Equivalents at End of the Financial Year 20(a) 10,600 8,533

The above Statement of Cash Flows should be read in conjunction with the accompanying notes.

30 — VICTORIA RACING CLUB Notes to and forming part of the Financial Statements of the Victoria Racing Club Limited for the year ended 31 July 2016

1. General information Going concern The Victoria Racing Club Limited’s principal place of business The Club’s current liabilities exceed current assets at 31 July 2016 and registered office is 448 Epsom Road, Flemington 3031, largely due to the significant amount of membership subscriptions tel (03) 8378 0888. and Melbourne Cup Carnival product sales paid in advance prior to year end. The Club has generated positive operating cash flows Victoria Racing Club Limited (‘the Club’) is a public company in excess of $15.8 million subsequent to year-end. Accordingly, the limited by guarantee, incorporated and operating in Australia. Directors continue to adopt the going concern basis in preparing these financial statements. 2. Application of new and revised accounting standards (a) Cash and cash equivalents Amendments to AASBs and the new Interpretation that are Cash comprises cash on hand and term deposits. Cash equivalents mandatorily effective for the current year are short-term highly liquid investments that are readily convertible In the current year, the Club has applied two amendments to AASBs to known amounts of cash and which are subject to an insignificant issued by the Australian Accounting Standards Board (AASB) that risk of changes in value and have a maturity of three months or less are mandatorily effective for an accounting period that begins on at the date of acquisition. Where applicable, bank overdrafts will or after 1 July 2015, and therefore relevant for the current year end. be shown within borrowings in current liabilities in the Statement of Financial Position. AASB 2015-3 ‘Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality’. (b) Inventories Inventories are stated at the lower of cost and net realisable value. This amendment completes the withdrawal of references to AASB Costs are assigned to inventory on hand by the method most 1031 in all Australian Accounting Standards and Interpretations, appropriate to each particular class of inventory, with the majority allowing that Standard to effectively be withdrawn. being valued on a first in first out basis. Net realisable value The application of these amendments does not have any material represents the estimated selling price for inventories less all impact on the disclosures or amounts recognised in the Club’s estimated costs of completion and costs necessary to make the sale. financial statements. (c) Financial assets Other financial assets The investment in 3UZ Pty Ltd held by the Club is classified as being 3. Significant accounting policies an available for sale financial asset and is stated at fair value per the Statement of compliance Directors’ valuation. Gains and losses arising from changes in fair These financial statements are general purpose financial statements value are recognised directly in the investment revaluation reserve which have been prepared in accordance with the Corporations Act with the exception of impairment losses, which are recognised 2001 and Australian Accounting Standards – Reduced Disclosure directly in the Statement of Profit or Loss and Other Comprehensive Requirements as issued by the AASB. Income to the extent that it exceeds the balance, if any, held in the For the purposes of preparing the financial statements, the Club revaluation reserve relating to a previous revaluation of that asset. is a not-for-profit entity. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in the investment The financial statements were authorised for issue by the Directors revaluation reserve would be included in the Statement of Profit on 21 October 2016. or Loss and Other Comprehensive Income for the period. Basis of preparation Available for sale financial assets are carried at Directors’ valuation The financial report has been prepared on the basis of historical with independent valuations for available for sale assets prepared cost, except for the revaluation of certain non-current assets and as and when the Directors see fit. The independent valuations are financial instruments. Cost is based on the fair values of the used to assist Directors in assessing the fair value of available for consideration given in exchange for assets. All amounts are sale assets. presented in Australian dollars, unless otherwise noted. Loans and receivables The Club is a company of the kind referred to in ASIC Corporations Trade receivables, loans and other receivables that have fixed or (Rounding in Financial/Directors’ Reports) Instrument 2016/191, determinable payments that are not quoted in an active market dated 24 March 2016, and in accordance with that Class Order, are classified as loans and receivables. amounts in the financial report are rounded off to the nearest thousand dollars, unless otherwise indicated. Loans and receivables are initially measured at fair value, net of transaction costs. Loans and receivables are subsequently The Club has retained the presentation and classification of items measured at amortised cost using the effective interest method in the financial statements from one period to the next unless: less impairment. (i) It is apparent, following a significant change in the nature of the Investments in associates entity’s operations or a review of its financial statements, that Subsequent to initial recognition, investments in associates are another presentation or classification would be more appropriate accounted for under the equity method in the financial statements. having regard to the criteria or the selection and application of accounting policies in AASB 108; or (d) Other financial liabilities (ii) An Australian Accounting Standard requires a change Other financial liabilities, including trade and other payables and in presentation. borrowings, are initially measured at fair value, net of transaction costs. Trade and other payables are recognised when the Club The following significant accounting policies have been adopted becomes obliged to make payments resulting from the purchase in the preparation and presentation of the financial report. of goods and services.

ANNUAL REPORT 2016 — 31 Notes to and forming part of the Financial Statements of the Victoria Racing Club Limited for the year ended 31 July 2016 continued

(e) Property, plant and equipment (g) Impairment of tangible and intangible assets excluding goodwill Freehold land is measured at fair value. Fair value is determined At the end of each reporting period, the Club reviews the carrying on the basis of an independent valuation prepared by external amounts of its tangible and intangible assets to determine whether valuation experts based on an analysis of the size and position there is any indication that those assets have suffered an impairment of the land, and of sales of land within close proximity over the loss. If any such indication exists, the recoverable amount of the asset past number of years. Fair values are recognised in the financial is estimated in order to determine the extent of the impairment loss, statements and are reviewed regularly by the Directors to ensure if any. Where it is not possible to estimate the recoverable amount of that the carrying values of freehold land are not materially an individual asset the Club estimates the recoverable amount of the different from their fair values. cash-generating unit to which the asset belongs. Any revaluation increase arising from the revaluation of land is Intangible assets with indefinite useful lives and intangible assets credited to the properties revaluation reserve. A decrease in carrying not yet available for use are tested for impairment at least annually, amount arising on the revaluation of land is charged as an expense and whenever there is an indication that the asset may be impaired. in the Statement of Profit or Loss and Other Comprehensive Recoverable amount is the higher of fair value less costs to sell and Income to the extent that it exceeds the balance, if any, held in the value in use. In assessing value in use, the estimated future cash flows revaluation reserve relating to a previous revaluation of that asset. are discounted to their present value using the pre-tax discount rate Plant and equipment and buildings are stated at cost less that reflects current market assessments of the time value of money accumulated depreciation and impairment. Cost includes and the risks specific to the asset. expenditure that is directly attributable to the acquisition If the recoverable amount of an asset is estimated to be less than its of the item. In the event that settlement of all or part of the carrying amount, the carrying amount of the asset is reduced to its purchase consideration is deferred, cost is determined recoverable amount. An impairment loss is recognised immediately by discounting the amounts payable in the future to their in the Statement of Profit or Loss and Other Comprehensive Income, present value as at the date of acquisition. unless the relevant asset is carried at a revalued amount, in which Depreciation is provided on plant and equipment, including case the impairment loss is treated as a revaluation decrease. buildings and infrastructure, but excluding construction work Where an impairment loss subsequently reverses, the carrying in progress, and is calculated on a straight line basis so as to write amount of the asset is increased to the revised estimate of its off the net cost of each asset over its expected useful life to its recoverable amount, but so that the increased carrying amount does estimated residual value. The estimated useful lives, residual not exceed the carrying amount that would have been determined values and depreciation method are reviewed at the end of each had no impairment loss been recognised for the asset in prior years. annual reporting period, with the effect of any changes recognised A reversal of an impairment loss is recognised in the Statement on a prospective basis. of Profit or Loss and Other Comprehensive Income immediately, The following estimated useful lives are used in the calculation unless the relevant asset is carried at a revalued amount, in which of depreciation: case the impairment loss is treated as a revaluation increase. • Buildings and Infrastructure – 10 to 40 years (h) Borrowing costs • Plant and Equipment – 1 to 20 years. All borrowing costs are recognised in the Statement of Profit or Loss and Other Comprehensive Income in the period in which (f) Leased assets they are incurred. Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards incidental (i) Provisions to ownership of the leased asset to the lessee. All other leases Provisions are recognised when the Club has a present obligation are classified as operating leases. (legal or constructive) as a result of a past event, it is probable that the Club will be required to settle the obligation and a reliable Assets held under finance leases are initially recognised at their estimate can be made of the amount of the obligation. fair value or, if lower, at amounts equal to the present value of the minimum lease payments, each determined at the inception The amount recognised as a provision is the best estimate of the of the lease. The corresponding liability to the lessor is included in consideration required to settle the present obligation at the end of the Statement of Financial Position as a finance lease obligation. the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using Lease payments are apportioned between finance charges and the cash flows estimated to settle the present obligation, its carrying reduction of the lease obligation so as to achieve a constant rate amount is the present value of those cash flows. of interest on the remaining balance of the liability. Finance charges are charged directly against income. Finance leased assets are When some or all of the economic benefits required to settle amortised on a straight line basis over the estimated useful life a provision are expected to be recovered from a third party, of the asset. a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the Operating lease payments are recognised as an expense on receivable can be measured reliably. a straight line basis over the lease term, except where another systematic basis is more representative of the time pattern in (j) Employee benefits which economic benefits from the leased asset are consumed. A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave when it is probable that settlement will be required and they are capable of being measured reliably. Liabilities recognised in respect of short-term employee benefits, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement.

32 — VICTORIA RACING CLUB Liabilities recognised in respect of long-term employee benefits The net amount of GST recoverable from or payable to the are measured as the present value of the estimated future cash taxation authority is included as part of receivables or payables. outflows to be made by the Club in respect of services provided Cash flows are included in the Statement of Cash Flows on by employees up to reporting date. a gross basis. The GST component of cash flows arising from Defined benefit plans investing and financing activities, which is recoverable from, For defined benefit retirement benefit plans, the cost of providing or payable to, the taxation authority, is classified within cash benefits is determined using the projected unit credit method, with flows from operating activities. actuarial valuations being carried out at the end of each annual (m) Intangible assets reporting period. Remeasurement, comprising actuarial gains and Intangible assets acquired separately are carried at cost less losses, the effect of the changes to the asset ceiling (if applicable) accumulated amortisation and impairment. Amortisation is and the return on plan assets (excluding interest) is reflected charged on a straight-line basis over their estimated useful lives. immediately in the Statement of Financial Position with a charge The estimated useful life and amortisation method is reviewed at or credit recognised in other comprehensive income in the the end of each annual reporting period, with any changes in these period in which they occur. Remeasurement recognised in other accounting estimates being accounted for on a prospective basis. comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. Past service (n) Government grants cost is recognised in profit or loss in the period of a plan Government grants are not recognised until there is a reasonable amendment. Net interest is calculated by applying the discount assurance that the Club will comply with the conditions attaching rate at the beginning of the period to the net defined benefit to them and that the grants will be received. liability or asset. Defined benefit costs are categorised as follows: (o) Assets held for sale • service cost (including current service cost, past service cost, Non-current assets are classified as held for sale if their carrying as well as gains and losses on curtailments and settlements); amount will be recovered principally through a sale transaction • net interest expense or income; and rather than through continuing use. This condition is regarded as met only when the asset is available for immediate sale in • remeasurement. its present condition subject only to terms that are usual and The Club presents the first two components of defined benefit customary for sales for such an asset and its sale is highly probable. costs in profit or loss in the line item administration and members’ Management must be committed to the sale, which should services expenses. Curtailment gains and losses are accounted for be expected to qualify for recognition as a completed sale within as past service costs. The retirement benefit obligation recognised one year from the date of classification. in the Statement of Financial Position represents the actual deficit or surplus in the Club’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic 4. Critical accounting judgements and key sources benefits available in the form of refunds from the plans or reductions of estimation uncertainty in future contributions to the plans. In the application of the Club’s accounting policies, which are (k) Revenue described in Note 3, management is required to make judgements, estimates and assumptions about carrying amounts of assets Revenue is measured at the fair value of the consideration received and liabilities that are not readily apparent from other sources. or receivable for sale of goods and services. The estimates and associated assumptions are based on historical Sale of goods and services experience and other factors that are considered to be relevant. Revenue from the sale of goods and services is recognised when Actual results may differ from these estimates. all of the following conditions are satisfied: The estimates and underlying assumptions are reviewed on an • The Club has transferred to the buyer the significant risks and ongoing basis. Revisions to accounting estimates are recognised rewards of ownership of the goods or service in the period in which the estimate is revised if the revision affects • The Club retains neither continuing managerial involvement only that period or in the period of the revision and future periods to the degree usually associated with ownership nor effective if the revision affects both current and future periods. control over the goods sold or service provided Management uses their judgement in selecting the most appropriate • The amount of revenue can be measured reliably valuation technique in deriving fair value. For available for sale financial assets, as noted in Note 13, a combination of commonly used • It is probable that the economic benefits associated with the valuation techniques are applied. transaction will flow to the Club As described in Note 3(e), the Club reviews the estimated useful lives • The costs incurred or to be incurred in respect of the transaction of property, plant and equipment at the end of each reporting period. can be measured reliably. During the year, the Directors determined that the carrying values Interest revenue of certain items of equipment did not reflect their current view Interest revenue is recognised when it is earned. regarding useful lives, and accordingly, an accelerated depreciation charge of $5 million was recognised in the Statement of Profit or (l) Goods and Services Tax Loss and Other Comprehensive Income in the current financial year. 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 that are recognised inclusive of GST.

ANNUAL REPORT 2016 — 33 Notes to and forming part of the Financial Statements of the Victoria Racing Club Limited for the year ended 31 July 2016 continued

5. Retained earnings 2016 2015 $000 $000 Balance at 1 August 131,134 118,023 Actuarial gain/(loss) on defined benefit plan (928) 2,428 Net profit 1,381 10,683 Balance at 31 July 131,587 131,134

6. Reserves 2016 2015 $000 $000 Investment revaluation 172 172 Properties revaluation 71,504 53,795 Balance at 31 July 71,676 53,967

Investment revaluation reserve Balance at 1 August 172 172 Movement – – Balance at 31 July 172 172

The investment revaluation reserve arises on the revaluation of available for sale financial assets. Where a revalued financial asset is sold, that portion of the reserve which relates to that financial asset is effectively realised and is recognised in the Statement of Profit or Loss or Other Comprehensive Income. Where a revalued financial asset is impaired, that portion of the reserve which relates to that financial asset is recognised in the Statement of Profit or Loss or Other Comprehensive Income. 2016 2015 $000 $000 Properties revaluation reserve Balance at 1 August 53,795 53,795 Revaluation increments/(decrements) 17,709 – Balance at 31 July 71,504 53,795

The properties revaluation reserve arises from the revaluation of land. Where revalued land is sold, that portion of the properties revaluation reserve which relates to that asset, and is effectively realised, is transferred directly to retained earnings.

7. Income tax The Club is exempt from income tax under section 50–45SS9.1(a) of the Income Tax Assessment Act 1997 (as amended).

34 — VICTORIA RACING CLUB 8. Finance cost 2016 2015 $000 $000 Interest on term overdraft 28 46 Interest on obligations under finance lease – 55 Total 28 101

9. Trade and other receivables 2016 2015 $000 $000 Current Trade receivables (i) 5,221 7,032 Other receivables 385 574 Industry funding 1,314 581 Thoroughbred Racing Production (Vic) Pty Ltd 2,195 1,568 9,115 9,755

Non-current 3UZ Sport 927 – 9 Total 9,115 9,764

(i) The average credit period on sales of goods and services is 30 days. Penalty interest is charged on outstanding receivables where applicable.

10. Assets held for sale 2016 2015 $000 $000 Freehold land held for sale (i) – 37,581 Total – 37,581

(i) During the 2016 financial year, a conditional agreement with Greenland (Australia) to sell parcels of freehold land surplus to the Club’s needs was terminated. The value of this land has now been reclassified as Freehold land under note 14.

ANNUAL REPORT 2016 — 35 Notes to and forming part of the Financial Statements of the Victoria Racing Club Limited for the year ended 31 July 2016 continued

11. Investments accounted for using the equity method 2016 2015 $000 $000 Investments in associates 238 162 238 162

Country of 2016 2015 Name of entity Principal activity incorporation % % Investments in associates Australian Prices Network Distribution of betting price fluctuations Australia 16.7 16.7 Thoroughbred Racing Production (Vic) Pty Ltd Production of on course racing vision Australia 25.0 25.0

$000 $000 Summarised financial information of associates Share of associates’ profit 702 657 702 657

12. Other intangible assets 2016 2015 $000 $000 Cost 1,705 1,412 Accumulated amortisation (605) (403) 1,100 1,009

Gaming Digital entitlements (i) assets Total Cost $000 $000 $000 Balance at 1 August 2014 1,333 281 1,614 Additions – 79 79 Disposals – (281) (281) Balance at 31 July 2015 1,333 79 1,412 Additions – 293 293 Balance at 31 July 2016 1,333 372 1,705

Accumulated amortisation Balance at 1 August 2014 261 156 417 Amortisation expense 133 50 183 Disposals – (197) (197) Balance at 31 July 2015 394 9 403 Amortisation expense 133 69 202 Balance at 31 July 2016 527 78 605

(i) In August 2012, the Club’s gaming venue commenced operation under a new gaming machine entitlement arrangement. The Club is entitled to operate 80 gaming machines over a 10-year period.

36 — VICTORIA RACING CLUB 13. Other financial assets 2016 2015 $000 $000 Available for sale investments at fair value: Non-current 3UZ Sport 927 (i) 1,074 1,074

Investments carried at amortised cost: Non-current Bank term deposits 55 55

Superannuation assets: Non-current Defined benefit plan 680 1,512 Total 1,809 2,641

(i) At 31 July 2016, the Club held a 14.23% (2015: 14.23%) shareholding in 3UZ Pty Ltd. Based on a combination of factors, which included market values of assets, licences held and analysis of direct and indirect benefits accruing to the Racing Industry as a result of ownership of the radio station, the Club has valued its 14.23% shareholding at $1.074 million (2015: $1.074 million).

ANNUAL REPORT 2016 — 37 Notes to and forming part of the Financial Statements of the Victoria Racing Club Limited for the year ended 31 July 2016 continued

14. Property, plant and equipment Freehold Plant and land at Construction Buildings and equipment Assets under fair value W.I.P. at cost infrastructure at cost finance lease Total $000 $000 $000 $000 $000 $000 Gross carrying amount Balance at 1 August 2014 23,998 9,551 128,005 141,621 4,519 307,694 Additions – 7,849 132 4,294 37 12,312 Transfers – (2,772) 635 2,137 – – Disposals – (838) – (258) – (1,096) Balance at 31 July 2015 23,998 13,790 128,772 147,794 4,556 318,910 Additions 586 3,740 – 8,211 – 12,537 Transfers – (7,961) – 12,517 (4,556) – Transfer from held for sale 37,581 – – – – 37,581 Net revaluation increments 17,709 – – – – 17,709 Disposals – – – (3,287) – (3,287) Balance at 31 July 2016 79,874 9,569 128,772 165,235 – 383,450

Accumulated depreciation and impairment Balance at 1 August 2014 – – 70,621 78,911 497 150,029 Depreciation expense – – 3,033 5,817 511 9,361 Disposals – – – (254) – (254) Balance at 31 July 2015 – – 73,654 84,474 1,008 159,136 Depreciation expense – – 2,619 12,489 – 15,107 Transfers – – – 1,008 (1,008) – Disposals – – – (3,268) – (3,268) Balance at 31 July 2016 – – 76,273 94,703 – 170,976

Net book value As at 31 July 2015 23,998 13,790 55,118 63,320 3,548 159,774 As at 31 July 2016 79,874 9,569 52,499 70,532 – 212,474

38 — VICTORIA RACING CLUB 15. Trade and other payables 2016 2015 $000 $000 Current Trade payables (i) 1,286 1,779 Other payables 6,825 4,210 Payables for assets 711 445 Gaming licence payable 200 267 9,022 6,701

(i) The average credit period on purchases is 30 days. No interest is charged on trade payables.

Non-current Gaming licence payable – 200 Total 9,022 6,901

16. Borrowings 2016 2015 $000 $000 Unsecured – at amortised cost Current Finance lease liabilities (i) – 958 Insurance premium funding 1,038 951 Total 1,038 1,909

(i) Secured by assets leased.

17. Provisions 2016 2015 $000 $000 Current Employee benefits 1,701 1,609

Non-current Employee benefits 2,617 2,561 Total 4,318 4,170

The employee benefits expense for the year was $0.7 million (2015: $0.5 million). The expense has been included in the Statement of Profit or Loss and Other Comprehensive Income in expenditure for administration and members’ services.

ANNUAL REPORT 2016 — 39 Notes to and forming part of the Financial Statements of the Victoria Racing Club Limited for the year ended 31 July 2016 continued

18. Leases Finance leases Leasing arrangements relate to the purchase of technology equipment with lease terms of up to four years remaining. At the conclusion of the term and final payment, full ownership is transferred to the Club.

Minimum future Present value of minimum lease payments future lease payments 2016 2015 2016 2015 Finance lease liabilities $000 $000 $000 $000 – not later than 1 year – 958 – 958 – later than 1 year and not later than 5 years – – – – Included in the financial statements as: (Note 16) – Current borrowings – 958 – Non-current borrowings – – – –

Operating leases Leasing arrangements relate to the rental of computer equipment and motor vehicles with lease terms of between three to five years. On conclusion of the term, there are options to extend the lease or return the goods. 2016 2015 $000 $000 Non-cancellable operating lease commitments No longer than 1 year 216 189 Longer than 1 year and not longer than 5 years 65 194 281 383

40 — VICTORIA RACING CLUB 19. Defined benefit superannuation plan A significant number of employees of the Club are members of the Victorian Racing Industry Superannuation Fund (the sub-plan) of AMP Signature Super. The sub-plan has a combination of defined benefit and accumulation membership. The following information relates to the defined benefit membership. The defined benefit segment of the sub-plan is closed to new members. The defined benefit members are entitled to retirement benefits based on a multiple of their deemed final salary upon attainment of a retirement age of 60. No other post-retirement benefits are provided to these employees. The defined benefit superannuation segment is a funded segment of the sub-plan. The net surplus determined in the sub-plan’s most recent financial report, for the year ended 31 July 2016, was $0.7 million (2015: $1.5 million). The Club has a legal liability to make up a deficit in the defined benefit segment of the sub-plan, but no direct legal right to withdraw any surplus from the sub-plan. 2016 2015 % % Key assumptions used for the purpose of the actuarial valuation were as follows (expressed as weighted averages): Discount rate gross of tax 3.1 4 Expected return on plan assets 7 7

Expected rate of salary increase 3.5 3.5

Amounts recognised in profit or loss in respect of the defined benefit plan are as follows: 2016 2015 Notes $000 $000 Expense recognised in the Statement of Profit or Loss and Other Comprehensive Income 216 403 Actuarial losses/(gains) incurred during the year 928 (2,428) Cumulative actuarial gains (864) (1,792) The amount included in the Statement of Financial Position arising from the Club’s obligations in respect of its defined benefit sub-plan is as follows: Present value of defined benefit obligation at end of year 8,232 9,159 Fair value of plan assets at end of year (8,912) (10,671) Net asset arising from defined benefit 13 (680) (1,512) Movements in the present value of the plan assets in the current period were as follows: Opening fair value of plan assets 10,671 10,318 Employer contributions 311 361 Member contributions 80 91 Benefits paid (2,206) (1,198) Other 56 1,099 Closing fair value of plan assets 8,912 10,671

The analysis of the plan assets at the Statement of Financial Position date are as follows: Fair value of plan assets 2016 2015 $000 $000 Equity instruments 3,796 4,407 Debt instruments 3,823 4,386 Property 437 598 Other 856 1,280 Total 8,912 10,671

ANNUAL REPORT 2016 — 41 Notes to and forming part of the Financial Statements of the Victoria Racing Club Limited for the year ended 31 July 2016 continued

20. Notes to the Statement of Cash Flows 2016 2015 $000 $000 (a) Reconciliation of cash and cash equivalents Cash at Bank 10,600 8,533 10,600 8,533

(b) Financing facilities Unsecured facility (i) Amount used – – Amount unused – 8,000 – 8,000

(i) The unsecured facility expired on 31 October 2015.

Unsecured leasing facility Amount used – – Amount unused 1,300 1,300 1,300 1,300

(c) Reconciliation of profit for the year to net cash flows from operating activities Profit for the year 1,381 10,683 Depreciation and amortisation expense 15,310 9,544 Share of profits in associated entities not received as dividends or distributions (76) (657) Gain on disposal of investments – (8,973) Loss on disposal of fixed assets 10 47 Non-cash movements in defined benefit superannuation expense (833) 2,384

Changes in operating assets and liabilities Decrease/(Increase) in trade and other receivables 649 (687) Increase in inventories (72) (216) Increase in prepayments (926) (284) Increase/(Decrease) in trade and other payables 2,121 (2,634) (Decrease)/Increase in fees in advance (2,690) 2,101 Increase/(Decrease) in employee benefit provisions 290 (741) Net operating cash flow 15,164 10,567

42 — VICTORIA RACING CLUB 21. Auditor’s remuneration 2016 2015 $ $ Auditors of Victoria Racing Club Limited – Audit of the financial report 122,000 119,000 – Other services 23,400 42,518 145,400 161,518

22. Key management personnel compensation The key management personnel of the Club include the Chief Executive Officer, five Executive General Managers (2015: seven) and members of the Board. During the year, the compensation of the key management personnel is set out below and includes remuneration and allowances, payments for accrued annual and long service leave and post employment benefits in the form of superannuation. Directors of the Board are not remunerated by the Club; however, they do receive certain reimbursements and travel allowances for costs incurred while fulfilling their role as a Director. 2016 2015 $ $ Compensation to Directors and other members of key management personnel of the Club 2,305,206 2,316,106

23. Capital commitments The Club has capital commitments for capital expenditure on qualifying assets at 31 July 2016 of $3.6 million (2015: $0.8 million).

24. Related parties The following parties are considered to be related parties to the Club: Members of the Board who held office in the year ended 31 July 2016 (as detailed on page 22 of this Report). All members of the Board act in an honorary capacity and receive no remuneration for their services; however, they do receive certain reimbursements and compensation for costs incurred while fulfilling their role as a Director. Certain members of the Board participate in the Thoroughbred Racing Industry via means of ownership of racehorses. This involvement is on terms and conditions no more favourable than other participants in the Thoroughbred Racing Industry. Certain Directors are nominated by the Club to act as representatives in the thoroughbred industry; those Directors are remunerated in accordance with the relevant entities remuneration practices. The Club paid Directors’ and Officers’ Liability Insurance on behalf of the Board and officers of the Club. The Club indemnifies each officer of the Club against any liability that may be instituted against them or any of them in the exercise of their office or performance of their duties. The Club has not otherwise, during or since the financial year, indemnified or agreed to indemnify an officer or auditor of the Club or any related organisation against liability incurred as such an officer or auditor. All other material transactions and balances with related parties have been disclosed in this Report.

25. Subsequent events On 12 October 2016, the Club entered into a building contract for the construction of a new Club Stand. Management estimates that the total cost of the project and associated works will be $128.9 million and construction is expected to commence in November 2016. Financing has been arranged by the Club.

ANNUAL REPORT 2016 — 43 Directors’ Declaration

The Directors declare that: (a) In the Directors’ opinion, there are reasonable grounds to believe that the Club will be able to pay its debts as and when they become due and payable. (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 Club. Signed in accordance with a resolution of the Directors made pursuant to Section 295 (5) of the Corporations Act 2001. On behalf of the Directors

Michael Burn John O’Rourke Director Director Melbourne, 21 October 2016

44 — VICTORIA RACING CLUB Photographs are courtesy of Getty Images, Andrew Craig Photography, GAZi Photography, Ed Sloane Photography and Karon Photography. Paper: this annual report is printed entirely on paper certified by the Forest Stewardship Council® (FSC) to be sourced from responsibly managed plantation forests. The cover, printed on Knight Smooth, is made without the use of harmful elemental chlorine, while the text, printed on HannoArt, is produced as a totally chlorine free paper and is manufactured under the world’s best practice ISO14001 Environmental Management System. Victoria Racing Club Limited (acn 119 214 078) 448 Epsom Road, Flemington Victoria 3031 Telephone: 613 8378 0888, Facsimile: 613 8378 0661 vrc.net.au

The VRC and Flemington logos are ™, Victoria Racing Club Limited (acn 119 214 078)