annual report 2015 1 victoria racing club 2 board of directors 4 our results 5 chairman and chief executive’s report 5 the year in review 8 racing highlights 12 2014 melbourne cup carnival economic impact 12 2015 flemington festival of racing 12 membership breakdown 13 racing rewards 13 masterplan 13 digital and technology 13 media rights 16 carnival advertising campaign 16 awards 16 vale Bart Cummings AM 16 acknowledgements 17 partnerships 18 VRC in the community 20 executive management 21 risk and corporate governance 23 financial statements victoria racing club
vision Flemington is a world leader in thoroughbred racing, event management and entertainment
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. Safety and Sustainability Providing a safe and environmentally friendly workplace and venue for people, customers and industry participants.
ANNUAL REPORT 2015 — 1 board of directors
Michael Burn Date joined Committee/Board Racing interests and memberships Chairman, Remuneration Committee November 2003 Racehorse owner (Chair), member of the Audit Occupation and business interests Interests outside of racing and Risk Management Committee Executive Director Macquarie Family, golf and snow skiing and Masterplan Committee Capital, Director of various Bachelor of Commerce, Macquarie Group Subsidiaries, University of Melbourne Member of Council Loreto Mandeville Hall
Amanda Elliott Date joined Committee/Board Racing interests and memberships Vice Chairman, Chairman July 2002 Part-owner of seven racehorses, Design Committee for Club Occupation and business interests in Australia and UK Stand, Disciplinary Committee Director Chatswood Park Interests outside of racing (Chair), member of the Pty Ltd (pastoral and family Family and friends, tennis, Masterplan Committee and investment company) most sports, interior design Remuneration Committee and architecture, fashion, Bachelor of Arts (Hons), film and gardens University of Melbourne
John O’Rourke Date joined Committee/Board Racing interests and memberships Honorary Treasurer, December 2011 Racehorse owner, member Audit and Risk Management Occupation and business interests Melbourne Racing Club and Committee (Chair), Masterplan Director Plenary Group Pty Ltd, Moonee Valley Racing Club Committee (Chair) and member Plenary Research Holdings Pty Ltd, Interests outside of racing of the Remuneration Committee Plenary Health Holdings Golf, Richmond Football Club Bachelor of Commerce, University (Comprehensive Cancer Centre) of Melbourne; Graduate Diploma Pty Ltd, Plenary Conventions Pty Ltd, in Finance, RMIT Flagship Property Holdings Pty Ltd
Peter Fekete Date joined Committee/Board Racing interests and memberships Member of the Audit and July 2000 Racehorse owner, member Risk Management Committee, Occupation and business interests Melbourne Racing Club and Masterplan Committee and Director of a number of non-listed Moonee Valley Racing Club Chairman Thoroughbred Racing investment companies. Member Interests outside of racing Productions (VIC) Pty Ltd, Director of the Finance Investment and Skiing and football ThoroughVisioN Pty Ltd Risk Committee for the National Bachelor of Business (Accounting), Stroke Foundation Swinburne University; Fellow of the Institute of Chartered Accountants Australia (FCA)
Paul Leeds Date joined Committee/Board Racing interests and memberships Director Radio 3UZ Pty Ltd and April 2002 Racehorse owner and breeder, 3UZ Pty Ltd Occupation and business interests member Melbourne Racing Club Associate Fellow of Australian Vice President National Stroke Interests outside of racing Institute of Management Foundation, Director Collingwood Family, art, food, wine, travel, Football Club, Chairman Twenty3 collectables and football Sport+Entertainment, Chairman Australian Made Media, Advisory Board Menzies Art Brands
2 — VICTORIA RACING CLUB Katherine Bourke Date joined Committee/Board Racing interests and memberships Member of the July 2004 Racehorse owner and breeder, Disciplinary Committee Occupation and business interests member Melbourne Racing Club Bachelor of Laws, Master Judge of County Court of Victoria and Moonee Valley Racing Club of Laws and Bachelor of Arts, Interests outside of racing University of Melbourne Hawthorn Football Club, food, wine and travel
Elisa Sturzaker Robinson Date joined Committee/Board Racing interests and memberships Member of the May 2011 Racehorse owner and breeder Masterplan Committee Occupation and business interests Interests outside of racing Bachelor of Laws and Bachelor General Manager – Industry Geelong Football Club, Kooyong of Commerce, Monash University; Management at nbn (National Lawn Tennis Club, property admitted to the Supreme Court Broadband Network), speaking development, travel, food and wine, of Victoria; completing Masters engagements on diversity art, design, fashion, sports, including of Business Administration, and women in leadership, skiing, running and spending Melbourne Business School business and sport time with my husband and sons
Michael Ramsden Date joined Committee/Board Racing interests and memberships Member of the Audit and Risk December 2012 Part owner of approximately Management Committee Occupation and business interests 45 horses, including The Offer, Bachelor of Economics, Monash Managing Director Terrain Capital Chautauqua and Alaskan Rose, University, Bachelor of Laws, Ltd, Chairman Australian Mines Ltd, member Melbourne Racing Club, Monash University; Chairman Cremorne Capital Ltd, Moonee Valley Racing Club and France Galop Fellow of the Financial Services Chairman African Mahogany Institute of Australasia (Aust) Pty Ltd Interests outside of racing Golf, surfing, football, wine and food
Neil Wilson Date joined Committee/Board Racing interests and memberships Bachelor of Business (Accounting) December 2012 Racehorse owner and breeder (MIS); Certified Practicing Occupation and business interests Interests outside of racing Accountant (CPA) Chief Executive Officer and Managing Family, running and travel Director Oakton Limited
Simon Love Date joined Committee/Board Racing interests and memberships Chief Executive May 2015 Racehorse owner and breeder Bachelor of Business (Banking and Occupation and business interests Interests outside of racing Finance), Victoria University; Chief Executive Victoria Racing Club Travel, wine, hockey, golf Master of Business Administration, Swinburne University
ANNUAL REPORT 2015 — 3 our results
2014/15 snapshot
racing 14 11 19 31 group one races group two races group three races listed races
2014 melbourne cup carnival 37 536 13 3.24 m races were run horses participated, internationally home viewers tuned into with an average of trained runners the Channel 7 coverage 14.48 average during the Melbourne of the Emirates Melbourne runners per race Cup Carnival Cup in Australia
total attendances total melbourne cup at VRC racedays carnival crowd 2014/15 result 2014 result 509,197 325,519
prizemoney net profit $ 2014/15 result 2014/15 result $37.9 m $10.7 m including $7 million in VRC top-ups
2014 melbourne cup carnival economic impact support for the community $ 2014/15 result 2014/15 result $374.2 m $1 m in gross economic benefit to Victoria contributed to or raised by charitable causes through (Source: IER economic impact report) VRC fundraising partnerships and donations
4 — VICTORIA RACING CLUB chairman and chief executive’s report Michael Burn, Chairman and Simon Love, Chief Executive
the year in review The Club also made further significant progress in relation to the ongoing upgrade of our IT platforms. We are confident 2014/15 proved to be another significant year for the that the substantial investment made across several Club and for the Victorian thoroughbred racing industry. years to upgrade our IT capability will deliver significant Pleasingly, both the Club and the industry continued benefits to the Club and our Members. to make sound progress in relation to important strategic goals. 2014/15 saw the sale of the Club’s interests in the Australian Stud Book (‘ASB’) and Australian Genetics Testing (‘AGT’). On the racing front, the year was once again highlighted These investments had been held by the Club over many by a successful Melbourne Cup Carnival. Protectionist’s decades and the Club is proud of the achievements of the ASB dominant win in the Emirates Melbourne Cup was one and AGT under joint VRC/Australian Turf Club stewardship. of many highlights throughout a Carnival that drew However, the sale of the ASB and AGT interests should allow strong overall crowds, extensive interstate and international for the next phase of growth of those businesses, as they are visitor numbers and exceptional local, interstate and to be operated alongside other data rich businesses owned international racing talent. on behalf of the Australian racing industry by Racing Australia. International participation also continued to grow through The Club achieved a net profit of $10.7 million in 2014/15. the Flemington Festival of Racing in March as Flemington This was an increase of $7.3 million on the $3.4 million welcomed back UK trained globetrotter Red Cadeaux profit recorded in 2013/14. The increase is largely attributable and four notable Hong Kong-based jockeys: Brett Prebble, to the sale of the Club’s 50% interest in the Australian Stud Douglas Whyte, Nash Rawiller and crowd favourite Book and Australian Genetics Testing in September 2014, João Moreira. which generated a profit of approximately $9.0 million. On the commercial front, the Club worked closely with The underlying result achieved by the Club was a net profit Racing Victoria and other Victorian clubs to develop a of $1.7 million, compared to $3.4 million in the previous year. new set of broadcasting arrangements for Victorian racing. The key factors influencing the movement between years The Club is pleased that as a result of this work, Victorian were a reduction in media rights payments received through racing is now available to be viewed on the broadest ever the year, whilst new arrangements were being negotiated range of platforms, delivering on the goal that fans should and the cancellation of two significant outdoor music have the ability to watch Victorian thoroughbred racing festivals. Overall, the positive financial result ensured ‘anytime, anywhere’. the Club’s balance sheet remained healthy at year-end, positioning the Club well for significant planned investment in racecourse facilities.
leadership change After an extended period of illness, our former Chief Executive, David Courtney, resigned from the Club in August 2014. Tragically, David has since passed away. In his relatively short time with the Club, David demonstrated his outstanding executive capabilities. Our sincere condolences are extended to David’s wife, Meagan, and his family. Following a comprehensive recruitment and selection process, the VRC announced in June 2015 the appointment of Simon Love as Chief Executive. Simon had previously been our Executive General Manager Corporate Finance and Strategic Initiatives. Prior to Simon’s appointment, Julian Sullivan had been in the role of Acting Chief Executive. Julian has since advised of his intention to resign from the Club. Across a period of 37 years, Julian has been an outstanding executive for the VRC. On behalf of the Board, I would sincerely like to thank Julian for his contribution to the VRC. His enthusiasm, humour, commitment and capability will be missed.
Michael Burn, Chairman
ANNUAL REPORT 2015 — 5 the beating heart of australian horse racing
6 — VICTORIA RACING CLUB ANNUAL REPORT 2015 — 7 chairman and chief executive’s report continued
racing highlights 2014 Melbourne Cup Carnival The 2014 Melbourne Cup Carnival was one of the most There were 25 racedays held at Flemington during competitive in recent years, with 29 individual trainers 2014/15. In total, 223 races were run, taking in 2,715 starters. from Melbourne, interstate and overseas enjoying success The season average was 12.2 per race, up from 11.9 during in the 37 races. 2013/14. There were 14 Group One, 11 Group Two, 19 Group Three and 31 Listed races for a total of 75 ‘Black Type’ races. Chris Waller won the opening race of the Carnival with Kermadec, ridden by Blake Shinn, and went on to dominate During 2014/15, the Club returned $37.9 million in AAMI Victoria Derby Day, winning the Group One Coolmore prizemoney, an increase of $1.2 million on 2013/14, Stud Stakes with Brazen Beau, ridden by Hong Kong-based which included $7 million in voluntary top-ups. jockey João Moreira, and the Group One AAMI Victoria Derby 2014/15 Group One winners with Preferment, ridden by Damien Oliver. Oliver went on to win the Group One Longines Mackinnon Stakes aboard Makybe Diva Stakes Dissident Happy Trails, for trainer Paul Beshara, while the Group One Turnbull Stakes Lucia Valentina (NZ) Myer Classic was won by Bonaria, for trainer Pat Hyland Coolmore Stud Stakes Brazen Beau and jockey Michael Rodd. Waller’s and Oliver’s performances Longines Mackinnon Stakes Happy Trails during the Melbourne Cup Carnival were recognised at the end of the week, with Waller taking out the Melbourne Cup AAMI Victoria Derby Preferment (NZ) Carnival Trainer Award for the second year in a row and Oliver Myer Classic Bonaria winning the Ron Hutchinson Award for riding excellence. Emirates Melbourne Cup Protectionist (GER) The internationalisation of Australia’s greatest horse Crown Oaks Set Square race was, as it has been in recent years, clearly evident, Darley Classic Terravista with a German-trained horse triumphant for the first time Emirates Stakes Hucklebuck in the Cup’s 154-year history. Purchased only months earlier Black Caviar Lightning Stakes Lankan Rupee by an Australian syndicate, Protectionist secured victory Australian Guineas Wandjina for German trainer Andreas Wöhler and English champion jockey Ryan Moore over nine-year-old Red Cadeaux, Lexus Newmarket Handicap Brazen Beau which was runner-up for an incredible third time from Australian Cup Spillway (GB) four Emirates Melbourne Cup starts.
8 — VICTORIA RACING CLUB The Group One Crown Oaks was taken out by young Melbourne Cup Carnival attendance trainer Ciaron Maher with the inexperienced Set Square, 2014 who justified the late entry paid by connections with Total Members % a convincing victory under Sydney jockey Hugh Bowman. Derby 90,244 52,807 58.5 The Melbourne Cup Carnival was rounded out with a Cup 100,794 43,648 43.3 spectacular Emirates Stakes Day, with the much anticipated Oaks 64,430 40,191 62.4 Group One Darley Classic bringing together some of Stakes 70,051 43,633 62.3 the world’s best sprinters in Chautauqua, Lankan Rupee Total 325,519 180,279 55.4 and the UK’s Slade Power. However, it was emerging star Terravista, ridden by Hugh Bowman for Joe Pride who emerged the victor in a strongly fought finish. The Group 2013 One Emirates Stakes capped off a highly successful week Total Members % for South Australia, with victory for trainer Phillip Stokes’s Derby 95,223 55,796 58.6 Hucklebuck under Adelaide-based jockey Dom Tourneur. Cup 104,169 44,586 42.8 The quality of the course proper is crucial to the success Oaks 66,757 43,043 64.5 of the Melbourne Cup Carnival, which during the week Stakes 65,047 43,513 66.9 sustained 37 races featuring 536 horses, representing Total 331,196 186,938 56.4 an average field size of 14.48. The track staff must be commended for their outstanding efforts in presenting 2012 a world-class surface across the four days of racing. Total Members % The Carnival continues to attract local, interstate and Derby 98,823 50,948 51.6 international visitors, and 2014 was no different, with 325,519 Cup 106,162 41,516 39.1 patrons attending Flemington Racecourse during the week. Oaks 71,825 37,605 52.4 Stakes 74,546 41,119 55.2 Total 351,356 171,188 48.7
ANNUAL REPORT 2015 — 9 glamour, refinement and prestige
10 — VICTORIA RACING CLUB ANNUAL REPORT 2015 — 11 chairman and chief executive’s report continued
2014 melbourne cup carnival The return of three-time Emirates Melbourne Cup runner-up economic impact Red Cadeaux was the highlight of the Flemington Festival of Racing, with the great champion showing his amazing Following the 2014 Melbourne Cup Carnival, the VRC courage and love of Flemington to finish fifth in the commissioned IER to conduct an independent analysis of Australian Cup. the economic impact of the Carnival on Victoria’s economy. For the second year running, the VRC joined with Melbourne The results of this research, highlighted by record figures, Food & Wine Festival, on Super Saturday, to present the demonstrate the significant contribution and positive Flemington Grazing Trail & Cellar Door. impact that the Carnival has on the state’s economy. The 2014 Melbourne Cup Carnival contributed $374.2 million of gross Through the association with Melbourne Food & Wine economic benefit to Victoria, up from $364.5 million in 2013. Festival, the Club was able to provide a unique experience for patrons by combining two of Melbourne’s great The Carnival was also responsible for a 9.8 per cent increase passions – high-quality food and wine complemented to a record value-added contribution to Victoria’s gross state by first-class racing. product of $194.9 million. This is a measure that quantifies the direct and flow-on impact of the Melbourne Cup Victoria’s finest wineries, breweries and food producers Carnival on the state’s economy from funds flowing through were on show, while leading chefs Nicki Riemer, Jake Kellie, Victoria by interstate and international visitors who were Andrew Logan, Stephen Burke and Mauro Callegari in Victoria specifically to attend the Melbourne Cup Carnival. participated in cooking demonstrations for the sizeable crowd. 2015 flemington festival of racing membership breakdown The Flemington Festival of Racing was a showcase of the globalised nature of racing, with internationally based Membership categories Number of Members jockeys taking out three of the feature Group One races, Full 24,195 along with a cameo from perennial globetrotter Red Restricted 1,976 Cadeaux in the Australian Cup. Life 125 Hong Kong-based jockeys Brett Prebble, Douglas Whyte Pre 1979 269 and Nash Rawiller made the trip from Hong Kong to fight Provisional 95 out the finish of the feature Group One Australian Guineas, on Australian Guineas Day, with Prebble emerging the victor Absentee 2,441 on Wandjina, ahead of Douglas Whyte, second on Alpine Junior 945 Eagle, and Nash Rawiller, an unlucky fourth on Kermadec. Phar Lap Club 1,124 On Super Saturday, the VRC welcomed back super star Total 31,170 jockey and crowd favourite João Moreira, who won two races, including the Group One Lexus Newmarket Handicap on Brazen Beau. Michael Walker scored a victory for the locally based jockeys, winning the feature Group One Australian Cup on Spillway for Flemington uncle and nephew training partnership David Hayes and Tom Dabernig.
12 — VICTORIA RACING CLUB racing rewards digital and technology In recent years, the VRC has been reviewing its Racing The Club is dedicated to improving its digital and Rewards program with the aim of designing a new program technological capabilities so as to provide an enhanced with increased benefits to more Members by enabling experience for all customers. Members to earn rewards through their spend, attendance In February, the VRC launched its new customer facing and tenure with the Club. website – flemington.com.au – which combined the existing This review included numerous initiatives implemented three customer facing websites into one fully responsive site. during the season. Members have been immensely The VRC website now sits under the banner of racing.com, supportive of these new initiatives, as well as changes an industry initiative of which VRC, Racing Victoria Ltd (RVL), to Racing Rewards as the Club transitions from the Melbourne Racing Club, Country Racing Victoria and Moonee old to the new program. The new-look Racing Rewards Valley Racing Club are all 20% shareholders. is set to launch in early 2016. One of the major components of new technology being implemented at the VRC will soon be realised, with a Members who achieved Racing Rewards Customer Relationship Management system, along with group status in 2014/15 updated financial, procurement and reporting systems Platinum 1,587 to be implemented at the end of 2015. Importantly for our Group One 1,178 Members, this upgrade will include a new e-commerce Group Two 2,140 store, which will be integrated into the VRC website and Group Three 4,958 is set to launch in December 2015. The new e-commerce store will further enhance the user experience for customers, Total 9,863 enabling for easier transactions and management of accounts. The e-commerce store will also provide a platform masterplan for Members to view their Racing Rewards information when the new loyalty program is launched in January 2016. The suite of improvements to the Flemington Racecourse Precinct, known as the Masterplan, is an ongoing project, which began several years ago. media rights Construction of the new Club Stand, which Members were In June, the VRC reached an agreement with RVL supporting advised of during 2013/14, is one of the major development a united Victorian thoroughbred industry decision to award projects of the Masterplan. its primary television rights to Seven West Media. The decision is a step forward for the industry to broaden the television While the Club had hoped to commence construction audience and allow people to watch Victorian racing of the Club Stand following the 2015 Melbourne Cup whenever, wherever and however they choose. Additionally, Carnival, the commencement of construction is dependent coverage has also been restored on Sky through Sky Racing 1. on a number of factors. One factor is the receipt of planning approvals from the state government necessary to allow Seven West Media launched the new channel called the proposed sale of two surplus parcels of land at racing.com on Saturday, 29 August. It is the first dedicated Flemington. The time frame in which the planning approvals channel on free-to-air television for any sport and were required to support the timeline for construction complements the industry-owned digital destination, originally communicated to Members has now passed. racing.com VRC management continues to work diligently towards the Importantly, the VRC continues to retain control over building of this exciting new facility and will advise Members its Melbourne Cup Carnival free-to-air television rights, of a revised construction timeline as soon as possible. which remain subject to a separate agreement with Seven West Media until 2018/19.
ANNUAL REPORT 2015 — 13 australia’s premier racecourse
14 — VICTORIA RACING CLUB ANNUAL REPORT 2015 — 15 chairman and chief executive’s report continued
carnival advertising campaign acknowledgements On 14 March 2015, VRC launched its ‘Racing Royalty’ advertising The VRC is fortunate to be supported by many of the world’s campaign for the 2015 Melbourne Cup Carnival. This campaign, leading organisations, enabling the Club to offer lucrative devised by VRC and newly appointed advertising agency prizemoney thus attracting world-class participants. Grey Melbourne, was the first significant change in We would like to thank all who have supported the advertising direction for more than a decade. The campaign VRC during 2014/15, in particular our Principal Partner, brought together some of racing’s most recognisable faces, Emirates Airline, who has been a Club sponsor for 18 years, along with people who work behind the scenes, who all and Major Partners, Myer (over 30 years), AAMI (23 years), contribute to making Flemington and the Melbourne Cup Crown (22 years) and James Boag (14 years). We would also Carnival so special. like to acknowledge our other long-standing sponsors, Treasury Wine Estates (38 years) and Schweppes (37 years), awards whose support is crucial to the success of the Club. On the eve of the 2014 Melbourne Cup Carnival, the 2013 We would like to acknowledge and thank the VRC Directors, Melbourne Cup Carnival was announced as the winner management and staff for their commitment to the success of the Major Festival and Events category at the RACV of the Club. Victorian Tourism Awards. The VRC won the same award It would not be possible for the Club to operate successfully in 2013 for the 2012 Melbourne Cup Carnival. This prestigious without the cooperation and assistance of a number award acknowledges the importance of the Melbourne of individuals and organisations. Accordingly, we record Cup Carnival to the state, with regards to the economic and our appreciation and thanks to: visitation impacts in addition to the positive promotion of Melbourne around the world. The VRC received bronze • The State Government and the Offi ce of the Premier, in the Major Festivals and Events category at the Australian The Hon Daniel Andrews MP Tourism Awards in February. • The Attorney General and Racing Minister, VRC was also announced the winner of Contribution to The Hon Martin Pakula MP Profile by a corporation at the Melbourne Awards, conducted • The Minister for Tourism and Major Events, by the City of Melbourne in November. The Club beat 10 other The Hon John Eren MP contenders for the award, which celebrates projects or • Racing Victoria Limited activities that have built Melbourne’s reputation as a centre for business, knowledge, sport, entertainment and culture. • The Melbourne Racing Club and Moonee Valley Racing Club The Club’s catering provider, Peter Rowland Catering (PRC), • Country Racing Victoria Ltd and all country racing clubs was acknowledged during the year with awards on two • The industry’s wagering joint venture partner, occasions. Peter Rowland Catering at Flemington – The Events Tabcorp Holdings Limited Centre was awarded best Speciality Meeting Venue at the • ThoroughVisioN Pty Ltd Meetings & Events Industry Awards in March. In addition, PRC was awarded ‘one glass’ from Gourmet Traveller Wine • Australian Racing Board for The Chairman’s Club wine list. • Victorian Major Events Corporation • City of Melbourne vale Finally, to all of our Members, thank you for your Bart Cummings AM continued support. The VRC was saddened by the loss of James Bartholomew Cummings AM, or ‘Bart’ as he was known, who passed away on 30 August 2015, aged 87. He will be remembered as Australia’s greatest horse trainer, with 268 Group One wins to his name, including an unrivalled 12 Melbourne Cups. He enjoyed great success at Flemington, winning an astonishing 83 of his Group One races at Australia’s most famous racecourse. He was respected by his peers, adored by the public and his contribution to the racing industry is undeniable. He will be greatly missed not only by those who knew him, but also by those who didn’t.
16 — VICTORIA RACING CLUB partnerships
Principal 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 2015 — 17 VRC in the community
Community engagement is important to the VRC, and this Since 2007, the Club has supported SecondBite through continued to be a key focus during 2014/15, with programs surplus food donations. After each major raceday, SecondBite, and initiatives delivering a range of benefits for charity assisted by the VRC caterers, collects fresh surplus food to partners and the broader community. distribute to local agencies for community food programs. Approximately $1 million was contributed to, or raised by, SecondBite collected 5,447 kilograms from Flemington charitable causes through VRC fundraising partnerships during the 2014/15 financial year, which equates to almost and donations during the year. 11,000 meals for those in need. Through an ongoing donations program, the VRC Emirates Melbourne Cup Parade assisted more than 160 charities and community groups with ticketing and hospitality donations. In addition, The Emirates Melbourne Cup Parade, proudly supported the VRC worked with a range of charities to utilise our by the City of Melbourne, saw more than 40,000 people world-class facility to deliver substantial fundraising line the streets of Melbourne to experience the traditional results to local causes. Emirates Melbourne Cup eve event.
Emirates Melbourne Cup Tour key highlights included: The VRC remains committed to taking the coveted SecondBite Emirates Melbourne Cup trophy to the people through In 2014, the VRC celebrated 20 years of Pin & Win, its major its annual tour: a pathway to engage with local communities annual fundraiser and the program passed the $4 million by profiling the heroes and champions intrinsically linked mark in total money raised for VRC partners. to the Cup. In its second and final year, food rescue charity SecondBite The 2014/15 season marked the 12th year of the tour, which raised more than $494,000, which will help provide more saw the ‘Peoples’ Cup’ travel a staggering 41,558 kilometres than 1.3 million meals for vulnerable Australians. to visit 34 metropolitan and regional destinations across Australia and New Zealand. A combined two-year total of just over $1 million exceeded all previous records and will enable SecondBite to provide The 2014 Emirates Melbourne Cup Tour successfully more than 2.5 million healthy meals for families and people increased out of state visitation by driving awareness of the in need across Australia. Melbourne Cup Carnival, both interstate and internationally. Most importantly, the tour enabled more than 24,847 people the unique opportunity to see the Cup first-hand and share in the heart-warming stories of the race’s 154-year history.
Emirates Melbourne Cup Tour
Australia Victoria Western Australia New South Wales Melbourne Perth Sydney Bendigo York Ballina Geelong Northern Territory Cootamundra Lorne Darwin Deniliquin Stawell Wodonga Tasmania Grenfell Hobart Lismore Queensland Sorell Murwillumbah/ Brisbane Tweed Birdsville New Zealand Wagga Wagga Charleville Auckland ACT Charters Towers Featherston Canberra Gold Coast New Plymouth Home Hill Wanganui Noosa Wellington South Australia Whakatane 34 Adelaide destinations across Australia and New Zealand
18 — VICTORIA RACING CLUB National Jockeys Trust ANZAC Day The VRC is an ongoing supporter of the National Jockeys Racing on ANZAC Day at Flemington has a long history, Trust (NJT), to help jockeys and their families overcome but 2015 was particularly significant as it commemorated financial hardship when jockeys are injured or killed in action. 100 years since the landing of troops in Gallipoli. Signed saddlecloths from the Melbourne Cup Carnival, Historical stories of the connection between horse, racing and feature races and other selected Group One races at war were drawn upon in a moving Mounting Yard ceremony. Flemington are auctioned each year, with 30% of profits In recognition of the occasion, active and returned donated to the Trust. service personnel were welcomed to Flemington with To recognise involvement in the Emirates Melbourne Cup free admission. Parade, the VRC also makes a donation to the Trust for every Watsonia RSL representatives raised over $7,500 through jockey who participates. the sale of ANZAC Day Appeal pins. Last year’s donation to the NJT from these activities totalled almost $19,000. Western Health Community Raceday The VRC also supports the NJT Pin & Win promotion each The annual Western Health Community Raceday was held autumn, with almost $6,000 in pins sold on Super Saturday, at Flemington in December 2014, with the Western Health as well as the annual 4Tracks4Kids walk, which benefits Foundation raising an impressive $106,000 for health a number of charities, including the NJT. services in Melbourne’s west. Since 2006, more than $800,000 has been raised through 4Tracks4Kids this annual raceday, which Western Health reports has The VRC is a proud supporter of 4Tracks4Kids, a racing impacted more than one million people. industry originated charity dedicated to helping the children of Australia by raising funds through selected partners. Peter MacCallum Cancer Centre In March, the fourth annual 4Tracks4Kids Melbourne Floral arrangements displayed at Flemington were, for walk raised $300,000 for its charity partners: Doxa Youth the second year running, donated to the Peter MacCallum Foundation, the National Jockeys Trust, Very Special Kids Cancer Centre. These arrangements were given to patients, and Pancare. families and carers throughout the hospital. The event continues to grow each year and congratulations go to Richard and Kaye Callander for their ongoing efforts with 4Tracks4Kids. The Pancare Foundation also raised $273,000 through a private event at Flemington in May.
ANNUAL REPORT 2015 — 19 executive management
Julian Sullivan Lucas Robertson Chief Operating Officer, Executive General Manager May 2015 – present Legal, Risk and Procurement Acting Chief Executive, April 2014 – May 2015
Nick Addison Susan Tonks Executive General Manager Executive General Manager Commercial Partnerships People and Culture and Customer Engagement
Mark Davies Penny Tripp Executive General Acting Executive General Manager Flemington Manager Club Services
Lisa Patroni Sam Whatmore Acting Executive Executive General Manager General Manager Brand, Finance and Information Technology Marketing and International Development
20 — VICTORIA RACING CLUB risk and corporate governance
The VRC Board is ultimately responsible for the governance corporate reporting of the Club and remains committed to continuous improvement in this area. The Directors operate according The Board receives reports from management on a monthly to a code of conduct and the rules set down by the Club’s basis and otherwise as required. constitution and by-laws. risk management board composition and term of office The Club utilises a web-based risk management system The Board consists of nine non-executive independent to record, monitor and report on risks affecting the business. Directors and the Chief Executive. It is the Board’s intention The Senior Risk Manager meets with executives individually to seek Directors with a broad range of skills and experience and as a group, on a regular basis, to update the risk register to assist it in carrying out its responsibilities and in meeting and to review the effectiveness of controls. This process the Club’s strategic objectives. Each non-executive Director gives input and ownership to people at all levels and in all must seek re-election every three years, and Directors must departments of the Club, while providing greater visibility retire at the next Annual General Meeting after they reach and confidence to senior management and the Board. the age of 72. The Chairman, Vice-Chairman and Honorary Treasurer are appointed each year. They may serve in these safety roles for a maximum of eight consecutive years. Given the nature of the VRC’s business, the Club remains keenly focused on its safety obligations. This is a high-priority sub-committees issue for all of our people, highlighted by the intensive work The Board establishes sub-committees, as required, to assist that goes into keeping Flemington Racecourse a safe place in carrying out its primary functions. These sub-committees to work throughout the year, but especially during and meet on a regular basis, populated by representatives of in the lead-up to Melbourne Cup Carnival. The safety team the Board and management, and act in an advisory capacity, works with management and our contractors to continually making recommendations to the Board. look at how we can improve on what we do in this area. audit and risk management committee conflicts of interest The Audit and Risk Management Committee comprises Directors and employees are expected to avoid any the Honorary Treasurer (as Chair) and not less than two action, position or interest that conflicts with an interest other Directors. This committee meets on at least three of the Club or may give any appearance of such a conflict. occasions throughout the year and on further occasions A Director who has a conflict or a perceived conflict with as the need arises. The committee meets with, and receives an interest of the Club must bring the matter to the notice regular reports from, the Club’s auditors and management, of the other Directors. Directors will not vote on matters working with them to review the Club’s risk profile, in which they have an interest and may, at the Chairman’s accounts and financial position. The committee makes discretion, be asked to leave the meeting while the matter recommendations to the Board in relation to key budget, is being considered. financial and policy items.
ANNUAL REPORT 2015 — 21 risk and corporate governance continued
remuneration legal A Remuneration Committee, comprising the Chairman, The VRC’s in-house legal counsel are involved in the Vice-Chairman and Honorary Treasurer, reviews the Club’s negotiation of contracts and provide advice and support remuneration of management and staff on an annual on a wide range of matters affecting the Club. Processes basis. The Chief Executive and EGM People and Culture and training are implemented, as required, to ensure also attend these meetings. With the exception of the a consistent approach to contracts and compliance. Chief Executive, VRC’s Directors act in a voluntary capacity. External legal advice is also sought where appropriate. However, they do receive certain reimbursements and compensation for costs incurred while fulfilling their role governance culture as a Director. Certain members of the Board participate in the Thoroughbred Racing Industry via means of ownership The Club remains committed to ensuring that all employees of racehorses. This involvement is on terms and conditions are appropriately inducted, trained and supported, no more favourable than other participants in the as required, to ensure that corporate governance becomes Thoroughbred Racing Industry. Certain Directors are second nature in all activities undertaken by the Club. nominated by the Club to act as representatives in the
Thoroughbred Racing Industry and those Directors are remunerated in accordance with the relevant entities’ remuneration practices.
22 — VICTORIA RACING CLUB financial statements
contents
24 Directors’ Report 27 Independence Declaration 28 Independent Auditor’s Report 29 Statement of Profit or Loss and Other Comprehensive Income 30 Statement of Financial Position 31 Statement of Changes in Equity 32 Statement of Cash Flows 33 Notes to and forming part of the Financial Statements 48 Directors’ Declaration
ANNUAL REPORT 2015 — 23 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 2015. 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 2015, the number of Members was 30,046 (2014: 30,154), therefore the total contribution required by Members is equal to $300,460. 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 since 2007. • Master of Laws, University of Melbourne • Bachelor of Arts, University of Melbourne
Michael Burn November 2003 • Bachelor of Commerce, University of Melbourne Executive Director Macquarie Capital, Director of Macquarie Investments, Macquarie Radar Holdings, Macquarie Technology Investments, Open Broadband Australia. Member of Council – Loreto Mandeville Hall.
David Courtney December 2012 • Bachelor of Business, RMIT Former Chief Executive of the Victoria Racing Club. Resigned (August 2014) • MBA, Monash University • Fellow of the Institute of Chartered Accountants Australia (FCA)
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 Productions Swinburne University (Vic) Pty Ltd, Director of ThoroughVisioN Pty Ltd • Fellow of the Institute of Chartered and a number of non-listed investment companies. Accountants Australia (FCA) Member of the Finance Investment and Risk Committee of the National Stroke Foundation.
Paul Leeds April 2002 • Associate Fellow of Australian Director of National Stroke Foundation, Institute 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 • MBA, Swinburne University
John O’Rourke December 2011 • Bachelor of Commerce, Director of the Plenary Group Pty Ltd, Plenary University of Melbourne Research Holdings Pty Ltd, Plenary Health Holdings • Graduate Diploma in Finance, RMIT (CCC) Pty Ltd, Plenary Conventions Holdings Pty Limited and Flagship Property Holdings Pty Ltd.
Michael Ramsden December 2012 • Bachelor of Economics, Monash University Managing Director Terrain Capital Ltd, Chairman • Bachelor of Laws, Monash University Cremone Capital Ltd, Chairman of Australian • Fellow of the Financial Services Institute Mines Ltd, Chairman of African Mahogany of Australasia (Aust) Pty Ltd.
Elisa Sturzaker Robinson May 2011 • Bachelor of Laws and Bachelor of Commerce, General Manager – Industry Management Monash University at NBN Co. • Admitted to the Supreme Court of Victoria • Postgraduate management studies, Melbourne Business School
Neil Wilson December 2012 • Bachelor of Business (Accounting), (MIS) Chief Executive Officer and Managing • Certified Practicing Accountant (CPA) Director of Oakton Limited.
24 — VICTORIA RACING CLUB Company Secretary • Revenue increased $4.8 million (3.2%) to $155.7 million for the Lucas Robertson, Executive General Manager Legal, year. The main sources of revenue for the Club continue to be Risk and Procurement. raceday catering, dining, hospitality and events $56.6 million, racing distributions $30.9 million and marketing, sponsorship Principal activities and broadcast rights $24.6 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 of thoroughbred racemeetings and the provision of training facilities part in the financial success of the Club, contributing $18.1 million for horses that are stabled and trained at Flemington Racecourse. in the 2015 financial year, excluding the revenue contribution Objectives, strategies and key areas of focus to raceday catering and dining. The Club’s primary objective is for Flemington to be the world leader • Expenses increased $6.5 million (4.4%) for the year. This included in thoroughbred racing, event management and entertainment. the Club’s continued commitment to owners, returning $38.3 million in prizemoney for the year, up $1.2 million (3.4%), Key strategies to achieve this include: including $7.0 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 Expenses also included costs of $0.4 million relating to the • Active engagement with Members and patrons potential sale of surplus land to Greenland (Australia). • Growth of the Melbourne Cup Carnival brand throughout • Depreciation and amortisation costs of $9.5 million were expensed Australia and select international markets for the year, the same amount as for the prior year. • Continued implementation of the ‘Masterplan’, including • The Club invested $12.3 million in capital projects during the a review of non-core assets year, including $2.9 million towards the design of the Club Stand, • Improved staff engagement and the further development $2.0 million for the construction of a new commercial kitchen of a performance based culture to service on course catering, $2.1 million in new technology and related systems to enhance the customer experience and • Successful implementation of new systems to enhance the $1.5 million in improvements to public facilities, including the customer offering and drive internal process efficiencies. completion of the James Boag’s Premium Celebration Deck Bar. A key area of focus for the Club is to construct a new grandstand, • An actuarial gain of $2.4 million on the Club’s defined benefit and ensure it is funded without undue pressure and risk on the superannuation plan was recognised directly in equity during the Club’s financial position. year following an actuarial review of the plan’s financial position. The Club has a number of indicators to assess and monitor The Club continues to maintain a term overdraft facility to fund performance. These include: the working capital requirements of the Club during the year, with an expiry of October 2017. Customer engagement: • Number of Members and Member retention rates Changes in state of affairs • Raceday attendance by customer segments During the financial year, there was no significant change in the state of affairs of the Club other than that referred to in the financial • Customer satisfaction research statements or notes thereto. • Number of events (racing and non-racing). Subsequent events Racing: There have been no matters or circumstances occurring subsequent • Race fields, including average number of starters and quality to the end of the financial year that have significantly affected, or may of fields significantly affect, the operations of the Club, the results of those operations or the state of affairs of the Club in future financial years. • Pari-mutuel and bookmaker wagering turnover on Flemington racemeetings 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 prejudice to the Club. Accordingly, this information has not been • Stables’ tenancy and training gallops disclosed in this Report. • Racetrack Condition. Indemnification of officers and auditors In addition to the above, the Club has a number of financial metrics During the financial year, the Club paid a premium in respect of to assess its performance, including banking covenants linked to the a policy insuring the Directors, officers and employees of the Club Club’s financing facilities. against a liability incurred as such a Director, officer or employee to the extent of all losses which the Club becomes legally obligated Review of operations to pay on account of any claim. The Club has not during or since the The profit for the year ended 31 July 2015 was $10.7 million, compared financial year, except to the extent permitted by law, indemnified with a profit of $3.4 million for the prior year. The 2015 profit included or agreed to indemnify an auditor of the Club against a liability a $9.0 million gain on the sale of the investments in Australian Stud incurred as such an auditor. Book and Australian Genetics Testing Pty Ltd. The following other factors were key contributors to the financial performance:
ANNUAL REPORT 2015 — 25 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, 16 Board meetings (11 scheduled monthly meetings and five extraordinary 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 16 13 – – Michael Burn 16 16 3 2 David Courtney (a) – – – – Amanda Elliott (b) 16 15 – – Peter Fekete 16 15 3 1 Paul Leeds 16 14 – – Simon Love (b) (c) 2 2 – – John O’Rourke 16 16 3 3 Michael Ramsden 16 16 3 3 Elisa Sturzaker Robinson 16 13 – – Neil Wilson 16 15 – –
(a) Mr Courtney resigned from the Board on 20 August 2014. (b) The Chief Executive and Mrs Elliot attended the Audit and Risk Management Committee as invitees. (c) Mr Love was appointed to the Board on 28 May 2015. (d) Masterplan Committee – The Club made an application to the Victorian Planning Minister requesting a planning process and terms of reference to allow the Club to seek a Planning Scheme Amendment in relation to the sale of surplus land. This application was made prior to the beginning of the financial year and a formal response in respect of this was not received until after 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 – No meetings were required during the financial year. 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 20 August 2014.
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 27. 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, 23 October 2015
26 — VICTORIA RACING CLUB Independence Declaration
Deloitte Touche Tohmatsu A.B.N. 74 490 121 060 550 Bourke Street Melbourne VIC 3000 GPO Box 78B 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
23 October 2015
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 2015, I declare that to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU Peter Caldwell Partner Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited
ANNUAL REPORT 2015 — 27 Independent Auditor’s Report to the Members of Victoria Racing Club Limited
Deloitte Touche Tohmatsu A.B.N. 74 490 121 060 550 Bourke Street Melbourne VIC 3000 GPO Box 78B 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 2015, the statement of comprehensive income, the statement of cash flows and the statement of changes in equity for the year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the company as set out on pages 29 to 48. 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. 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 2015 and of its performance for the year ended on that date; and (b) c omplying with Australian Accounting Standards – Reduced Disclosure Requirements and the Corporations Regulations 2001.
DELOITTE TOUCHE TOHMATSU Peter Caldwell Partner Chartered Accountants Melbourne, 23 October 2015
Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited
28 — VICTORIA RACING CLUB Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 July 2015
2015 2014 Notes $000 $000 Revenue Thoroughbred Racing Industry Distributions 30,887 29,545 Catering, Dining, Hospitality and Events 56,631 53,951 Marketing, Sponsorship and Broadcast Rights 24,586 23,128 Members’ Tickets and Subscriptions 18,055 17,769 Public Ticketing 7,201 7,505 Wagering and Other Racing Revenue 7,311 7,433 Racecourse, Training Facilities and Grants 5,223 5,559 Gaming 4,815 4,558 Share of Net Profits of Associates and Jointly Controlled Entities Accounted for Using the Equity Method 11 657 1,186 Interest 180 97 Net Gain on Disposal of Fixed Assets – 10 Other Revenue 193 185 Total Revenue 155,739 150,926
Expenditure Prizemoney and Other Returns to Owners 38,275 37,030 Catering, Dining, Hospitality and Events 39,921 39,361 Marketing, Sponsorship and Broadcast Rights 14,360 12,250 Members’ Services and Administration 26,523 25,449 Racecourse and Training Facilities 19,932 18,481 Gaming 4,443 4,390 Financing Costs 8 101 286 Depreciation and Amortisation 9,544 9,545 Net Loss on Disposal of Fixed Assets 47 – Other Expenditure 883 697 Total Expenditure 154,029 147,489 Profit for the Year before net gains on Sale of Investments 1,710 3,437 Gain on Sale of Investments 8,973 – Profit for the Year 5 10,683 3,437
Other Comprehensive Income Actuarial Gain on Defined Benefit Plan 19 2,428 281 Other Comprehensive Income for the Year 2,428 281 Total Comprehensive Income for the Year 13,111 3,718
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2015 — 29 Statement of Financial Position at 31 July 2015
2015 2014 Notes $000 $000 Assets Current Assets Cash and Cash Equivalents 20 8,533 1,173 Trade and Other Receivables 9 9,755 9,065 Inventories 1,081 865 Prepayments 3,315 3,031 Assets Classified as Held For Sale 10 37,581 37,581 Total Current Assets 60,265 51,715
Non-current Assets Trade and Other Receivables 9 9 12 Investments Accounted for using the Equity Method 11 162 922 Intangibles 12 1,009 1,197 Other Financial Assets 13 2,641 1,129 Property, Plant and Equipment 14 159,774 157,665 Total Non-current Assets 163,595 160,925 Total Assets 223,860 212,640
Liabilities Current Liabilities Trade and Other Payables 15 6,701 9,069 Fees in Advance 25,779 23,678 Borrowings 16 1,909 1,640 Provisions 17 1,609 1,135 Total Current Liabilities 35,998 35,522
Non-current Liabilities Trade and Other Payables 15 200 466 Borrowings 16 – 886 Provisions 17 2,561 3,776 Total Non-current Liabilities 2,761 5,128 Total Liabilities 38,759 40,650 Net Assets 185,101 171,990
Equity Retained Earnings 5 131,134 118,023 Reserves 6 53,967 53,967 Total Equity 185,101 171,990
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
30 — VICTORIA RACING CLUB Statement of Changes in Equity for the year ended 31 July 2015
Properties Investments revaluation revaluation Retained reserve reserve earnings Total $000 $000 $000 $000 Balance as at 1 August 2013 53,795 172 114,305 168,272 Profit for the year – – 3,437 3,437 Other comprehensive income for the year – – 281 281 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
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2015 — 31 Statement of Cash Flows for the year ended 31 July 2015
2015 2014 Notes $000 $000 Cash Flows from Operating Activities: Receipts from Thoroughbred Racing Industry Distributions 34,156 31,954 Receipts from Catering, Dining, Hospitality and Events 64,857 59,168 Receipts from Marketing, Sponsorship and Broadcast Rights 27,045 25,876 Receipts from Members’ Tickets and Subscriptions 19,610 20,051 Receipts from Public Ticketing 7,921 8,255 Receipts from Gaming 5,296 4,993 Receipts from Wagering and Other Racing Revenue 7,690 7,049 Receipts from Racecourse, Training Facilities and Other 5,946 8,002 Payments for Prizemoney and Other Returns to Owners (42,377) (41,080) Payments for Catering, Dining, Hospitality and Events (44,468) (45,000) Payments for Marketing, Sponsorship and Broadcast Rights (15,900) (13,277) Payments for Members’ Services and Administration (30,958) (27,769) Payments for Gaming (4,887) (4,845) Payments for Racecourse, Training Facilities and Other (23,403) (20,507) Interest Received 180 97 Interest and Other Costs of Finance Paid (141) (264) Net Cash Provided by Operating Activities 20(c) 10,567 12,703
Cash Flows from Investing Activities: Payments for Buildings and Infrastructure (132) (1,886) Payments for Plant and Equipment (4,080) (4,283) Payments for Construction Work in Progress (7,850) (5,959) Payments for Intangibles (266) (266) Proceeds from the Sale of Investments 8,973 – Proceeds from the Sale of Property, Plant and Equipment 41 10 Distribution from Equity Accounted Investments 723 1,167 Net Cash Used in Investing Activities (2,591) (11,217)
Cash Flows from Financing Activities: Proceeds from Borrowings 1,225 – Repayment of Borrowings (1,841) (1,170) Net Cash Used in Financing Activities (616) (1,170) Net Increase in Cash and Cash Equivalents 7,360 316 Cash and Cash Equivalents at Beginning of the Financial Year 1,173 857 Cash and Cash Equivalents at End of the Financial Year 20(a) 8,533 1,173
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
32 — VICTORIA RACING CLUB Notes to and forming part of the Financial Statements of the Victoria Racing Club Limited for the year ended 31 July 2015
1. General information The following significant accounting policies have been adopted The Victoria Racing Club Limited’s principal place of business in the preparation and presentation of the financial report. and registered office is 448 Epsom Road, Flemington 3031, (a) Cash and cash equivalents tel (03) 8378 0888. Cash comprises cash on hand and term deposits. Cash equivalents Victoria Racing Club Limited (‘the Club’) is a public company are short-term highly liquid investments that are readily convertible limited by guarantee, incorporated and operating in Australia. to known amounts of cash and which are subject to an insignificant risk of changes in value and have a maturity of three months or less at the date of acquisition, where applicable. Bank overdrafts will 2. Adoption of new and revised accounting standards be shown within borrowings in current liabilities in the Statement Standards affecting reported results and financial position of Financial Position. There are no new and revised standards and interpretations (b) Inventories adopted in these financial statements affecting the reporting Inventories are stated at the lower of cost and net realisable value. results or financial position. Costs are assigned to inventory on hand by the method most Standards affecting presentation and disclosure appropriate to each particular class of inventory, with the majority There are no new and revised standards and interpretations being valued on a first in first out basis. Net realisable value represents adopted in these financial statements affecting presentation the estimated selling price for inventories less all estimated costs and disclosure. of completion and costs necessary to make the sale. Standards and interpretations adopted with no effect (c) Financial assets on financial statements Other financial assets The Club has adopted all new and revised standards and The investments in ThoroughVisioN Pty Ltd and 3UZ Sport 927 held interpretations issued by the Australian Accounting Standards by the Club are classified as being available for sale financial assets Board (AASB) that are relevant to its operations and effective and are stated at fair value per the Directors’ valuation. Gains and for the current annual reporting period. losses arising from changes in fair value are recognised directly in the investment revaluation reserve with the exception of impairment There was no material impact on the financial statements losses, which are recognised directly in the Statement of Profit or Loss on the application of new and revised accounting standards. and Other Comprehensive Income to the extent that it exceeds the balance, if any, held in the revaluation reserve relating to a previous revaluation of that asset. Where the investment is disposed of or is 3. Significant accounting policies determined to be impaired, the cumulative gain or loss previously Statement of compliance recognised in the investment revaluation reserve would be included These financial statements are general purpose financial statements in the Statement of Profit or Loss and Other Comprehensive Income which have been prepared in accordance with the Corporations for the period. Act 2001 and Australian Accounting Standards – Reduced Disclosure Requirements as issued by the Australian Accounting Standards Available for sale financial assets are carried at Directors’ valuation Board (AASB). with independent valuations for available for sale assets prepared as and when the Directors see fit. The independent valuations are For the purposes of preparing the financial statements, the Club used to assist Directors in assessing the fair value of available for is a not-for-profit entity. sale assets. The financial statements were authorised for issue by the Directors Loans and receivables on 23 October 2015. Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market Basis of preparation are classified as loans and receivables. The financial report has been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial Loans and receivables are initially measured at fair value, net instruments. Cost is based on the fair values of the consideration of transaction costs. Loans and receivables are subsequently given in exchange for assets. All amounts are presented in Australian measured at amortised cost using the effective interest method dollars, unless otherwise noted. less impairment. The Club is a company of the kind referred to in ASIC Class Order Investments in associates 98/0100, dated 10 July 1998, and in accordance with that Class Subsequent to initial recognition, investments in associates are Order, amounts in the financial report are rounded off to the accounted for under the equity method in the financial statements. nearest thousand dollars, unless otherwise indicated. Jointly controlled entities The Club has retained the presentation and classification of items Interests in jointly controlled entities in which the Club is a venturer in the financial statements from one period to the next unless: (and so has joint control) are accounted for under the equity method. (i) it is apparent, following a significant change in the nature of the entity’s operations or a review of its financial statements, that another presentation or classification would be more appropriate having regard to the criteria or the selection and application of accounting policies in AASB 108; or (ii) an Australian Accounting Standard requires a change in presentation.
ANNUAL REPORT 2015 — 33 Notes to and forming part of the Financial Statements of the Victoria Racing Club Limited for the year ended 31 July 2015 continued
(d) Other financial liabilities (g) Impairment of tangible and intangible assets excluding goodwill Other financial liabilities, including trade and other payables and At the end of each reporting period, the Club reviews the carrying borrowings, are initially measured at fair value, net of transaction amounts of its tangible and intangible assets to determine whether costs. Trade and other payables are recognised when the Club there is any indication that those assets have suffered an impairment becomes obliged to make payments resulting from the purchase loss. If any such indication exists, the recoverable amount of the asset of goods and services. is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable (e) Property, plant and equipment amount of an individual asset the Club estimates the recoverable Freehold land is measured at fair value. Fair value is determined on amount of the cash-generating unit to which the asset belongs. the basis of an annual independent valuation prepared by external valuation experts based on an analysis of the size and position Intangible assets with indefinite useful lives and intangible assets of the land, and of sales of land within close proximity over the not yet available for use are tested for impairment at least annually, last number of years. Fair values are recognised in the financial and whenever there is an indication that the asset may be impaired. statements and are reviewed regularly by the Directors to ensure Recoverable amount is the higher of fair value less costs to sell and that the carrying values of freehold land are not materially value in use. In assessing value in use, the estimated future cash different from their fair values. flows are discounted to their present value using the pre-tax discount Any revaluation increase arising from the revaluation of land is rate that reflects current market assessments of the time value credited to the properties revaluation reserve. A decrease in carrying of money and the risks specific to the asset. amount arising on the revaluation of land is charged as an expense If the recoverable amount of an asset is estimated to be less than its in the Statement of Profit or Loss and Other Comprehensive Income carrying amount, the carrying amount of the asset is reduced to its to the extent that it exceeds the balance, if any, held in the recoverable amount. An impairment loss is recognised immediately revaluation reserve relating to a previous revaluation of that asset. in the Statement of Profit or Loss and Other Comprehensive Income, Plant and equipment and buildings are stated at cost less unless the relevant asset is carried at a revalued amount, in which accumulated depreciation and impairment. Cost includes expenditure case the impairment loss is treated as a revaluation decrease. that is directly attributable to the acquisition of the item. In the Where an impairment loss subsequently reverses, the carrying event that settlement of all or part of the purchase consideration amount of the asset is increased to the revised estimate of its is deferred, cost is determined by discounting the amounts payable recoverable amount, but so that the increased carrying amount does in the future to their present value as at the date of acquisition. not exceed the carrying amount that would have been determined Depreciation is provided on plant and equipment, including buildings had no impairment loss been recognised for the asset in prior and infrastructure, but excluding construction work in progress, and years. A reversal of an impairment loss is recognised in Statement is calculated on a straight line basis so as to write off the net cost of of Profit or Loss and Other Comprehensive Income immediately, each asset over its expected useful life to its estimated residual value. unless the relevant asset is carried at a revalued amount, in which The estimated useful lives, residual values and depreciation method case the impairment loss is treated as a revaluation increase. are reviewed at the end of each annual reporting period, with the (h) Borrowing costs effect of any changes recognised on a prospective basis. All borrowing costs are recognised in the Statement of Profit The following estimated useful lives are used in the calculation or Loss and Other Comprehensive Income in the period in which of depreciation: they are incurred. • Buildings and infrastructure – 25 to 40 years (i) Provisions • Plant and equipment – 3 to 10 years. Provisions are recognised when the Club has a present obligation (legal or constructive) as a result of a past event, it is probable (f) Leased assets that the Club will be required to settle the obligation and a reliable Leases are classified as finance leases when the terms of the lease estimate can be made of the amount of the obligation. transfer substantially all the risks and rewards incidental to ownership of the leased asset to the lessee. All other leases are classified as The amount recognised as a provision is the best estimate of the operating leases. consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties Assets held under finance leases are initially recognised at their surrounding the obligation. Where a provision is measured using fair value or, if lower, at amounts equal to the present value of the cash flows estimated to settle the present obligation, its carrying the minimum lease payments, each determined at the inception amount is the present value of those cash flows. of the lease. The corresponding liability to the lessor is included in the Statement of Financial Position as a finance lease obligation. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, Lease payments are apportioned between finance charges and a receivable is recognised as an asset if it is virtually certain reduction of the lease obligation so as to achieve a constant rate that reimbursement will be received and the amount of the of interest on the remaining balance of the liability. Finance charges receivable can be measured reliably. are charged directly against income. Finance leased assets are amortised on a straight line basis over the estimated useful life (j) Employee benefits of the asset. A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave Operating lease payments are recognised as an expense on a straight when it is probable that settlement will be required and they are line basis over the lease term, except where another systematic basis capable of being measured reliably. is more representative of the time pattern in which economic benefits from the leased asset are consumed.
34 — VICTORIA RACING CLUB Liabilities recognised in respect of short-term employee benefits (l) Goods and Services Tax are measured at their nominal values using the remuneration rate Revenues, expenses and assets are recognised net of the amount expected to apply at the time of settlement. of Goods and Services Tax (GST), except: Liabilities recognised in respect of long-term employee benefits are (i) where the amount of GST incurred is not recoverable from measured as the present value of the estimated future cash outflows the taxation authority, it is recognised as part of the cost to be made by the Club in respect of services provided by employees of acquisition of an asset or as part of an item of expense; or up to reporting date. (ii) for receivables and payables that are recognised inclusive of GST. Defined benefit plans The net amount of GST recoverable from or payable to the taxation For defined benefit retirement benefit plans, the cost of providing authority is included as part of receivables or payables. benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual Cash flows are included in the Statement of Cash flows on a gross reporting period. Remeasurement, comprising actuarial gains and basis. The GST component of cash flows arising from investing losses, the effect of the changes to the asset ceiling (if applicable) and and financing activities, which is recoverable from, or payable to, the return on plan assets (excluding interest) is reflected immediately the taxation authority, is classified within cash flows from in the Statement of Financial Position with a charge or credit operating activities. recognised in other comprehensive income in the period in which (m) Intangible assets they occur. Remeasurement recognised in other comprehensive Intangible assets acquired separately are carried at cost less income is reflected immediately in retained earnings and will accumulated amortisation and impairment. Amortisation is charged not be reclassified to profit or loss. Past service cost is recognised on a straight line basis over their estimated useful lives. The estimated in profit or loss in the period of a plan amendment. Net interest useful life and amortisation method is reviewed at the end of each is calculated by applying the discount rate at the beginning of the annual reporting period, with any changes in these accounting period to the net defined benefit liability or asset. Defined benefit estimates being accounted for on a prospective basis. costs are categorised as follows: • service cost (including current service cost, past service cost, (n) Government grants as well as gains and losses on curtailments and settlements); Government grants are not recognised until there is a reasonable assurance that the Club will comply with the conditions attaching • net interest expense or income; and to them and that the grants will be received. • remeasurement. (o) Assets held for sale The Club presents the first two components of defined benefit costs Non-current assets and disposal groups are classified as held for sale in profit or loss in the line item Members’ services and administration if their carrying amount will be recovered principally through a sale expenses. Curtailment gains and losses are accounted for as past transaction rather than through continuing use. This condition is service costs. The retirement benefit obligation recognised in the regarded as met only when the asset is available for immediate sale Statement of Financial Position represents the actual deficit or in its present condition, subject only to terms that are usual and surplus in the Club’s defined benefit plans. Any surplus resulting customary for sales for such an asset and its sale is highly probable. from this calculation is limited to the present value of any economic Management must be committed to the sale, which should benefits available in the form of refunds from the plans or reductions be expected to qualify for recognition as a completed sale within in future contributions to the plans. one year from the date of classification. (k) Revenue Revenue is measured at the fair value of the consideration received 4. Critical accounting judgements and key sources or receivable for sale of goods and services. of estimation uncertainty Sale of goods and services In the application of the Club’s accounting policies, which are Revenue from the sale of goods and services is recognised when described in Note 3, management is required to make judgements, all of the following conditions are satisfied: estimates and assumptions about carrying amounts of assets and liabilities that are not readily apparent from other sources. • The Club has transferred to the buyer the significant risks and The estimates and associated assumptions are based on historical rewards of ownership of the goods or service experience and other factors that are considered to be relevant. • The Club retains neither continuing managerial involvement Actual results may differ from these estimates. to the degree usually associated with ownership nor effective The estimates and underlying assumptions are reviewed on an control over the goods sold or service provided ongoing basis. Revisions to accounting estimates are recognised • The amount of revenue can be measured reliably in the period in which the estimate is revised if the revision affects • It is probable that the economic benefits associated with the only that period or in the period of the revision and future periods transaction will flow to the Club if the revision affects both current and future periods. • The costs incurred or to be incurred in respect of the transaction Management uses their judgement in selecting the most appropriate 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 Interest revenue used valuation techniques are applied. Interest revenue is recognised when it is earned.
ANNUAL REPORT 2015 — 35 Notes to and forming part of the Financial Statements of the Victoria Racing Club Limited for the year ended 31 July 2015 continued
5. Retained earnings 2015 2014 $000 $000 Balance at 1 August 118,023 114,305 Actuarial gain on defined benefit plan 2,428 281 Net profit 10,683 3,437 Balance at 31 July 131,134 118,023
6. Reserves 2015 2014 $000 $000 Investment revaluation 172 172 Properties revaluation 53,795 53,795 Balance at 31 July 53,967 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 and 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 and Other Comprehensive Income.
Properties revaluation reserve Balance at 1 August 53,795 53,795 Revaluation increments – – Balance at 31 July 53,795 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).
36 — VICTORIA RACING CLUB 8. Finance cost 2015 2014 $000 $000 Interest on term overdraft 46 191 Interest on obligations under finance lease 55 95 Total 101 286
9. Trade and other receivables 2015 2014 $000 $000 Current Trade receivables (i) 7,032 6,712 Other receivables 574 698 Industry Funding 581 624 Thoroughbred Racing Production (Vic) Pty Ltd 1,568 1,031 9,755 9,065
Non-current 3UZ Sport 927 9 12 Total 9,764 9,077
(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 2015 2014 $000 $000 Freehold land held for sale (i) 37,581 37,581 Total 37,581 37,581
(i) During the 2014 financial year, the Club entered a conditional agreement with Greenland (Australia) to sell parcels of freehold land surplus to the Club’s needs. The settlement of this contract is contingent upon the outcome of a planning process that is currently ongoing.
ANNUAL REPORT 2015 — 37 Notes to and forming part of the Financial Statements of the Victoria Racing Club Limited for the year ended 31 July 2015 continued
11. Investments accounted for using the equity method 2015 2014 $000 $000 Investments in associates 162 185 Investments in jointly controlled entities (i) – 737 162 922
Country of 2015 2014 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
Jointly controlled entity Australian Stud Book Maintenance of breeding register Australia – 50.0 Australian Genetics Testing Pty Ltd DNA screening of research animals Australia – 50.0
2015 2014 $000 $000 Summarised financial information of associates Share of associates’ profit 657 501
Summarised financial information of jointly controlled entities Share of jointly controlled entities profit (i) – 685 657 1,186
(i) In September 2014, the Club sold its asset holding in Australian Stud Book and its shares in Australian Genetics Testing Pty Ltd and had no further entitlement to sharing in the profits of those entities.
38 — VICTORIA RACING CLUB 12. Other intangible assets 2015 2014 $000 $000 Cost 1,412 1,614 Accumulated amortisation (403) (417) 1,009 1,197
Gaming Water entitlements (i) Website rights (ii) Total $000 $000 $000 $000 Balance at 1 August 2013 1,333 281 180 1,794 Additions – – – – Impairment – – – – Disposals – – (180) (180) Balance at 31 July 2014 1,333 281 – 1,614 Additions – 79 – 79 Impairment – – – – Disposals – (281) – (281) Balance at 31 July 2015 1,333 79 – 1,412
Accumulated amortisation Balance at 1 August 2013 128 86 163 377 Amortisation expense 133 70 17 220 Impairment – – – – Disposals – – (180) (180) Balance at 31 July 2014 261 156 – 417 Amortisation expense 133 50 – 183 Impairment – – – – Disposals – (197) – (197) Balance at 31 July 2015 394 9 – 403
(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. (ii) In 2009, the Club acquired the right for a period of five years to utilise additional annual quantities of potable water, this expired during 2014 financial year.
ANNUAL REPORT 2015 — 39 Notes to and forming part of the Financial Statements of the Victoria Racing Club Limited for the year ended 31 July 2015 continued
13. Other financial assets 2015 2014 $000 $000 Available for sale investments at fair value: Non-current ThoroughVisioN Pty Ltd (i) – – 3UZ Sport 927 (ii) 1,074 1,074 1,074 1,074
Investments carried at amortised cost: Non-current Bank term deposits 55 55
Superannuation assets: Non-current Defined benefit plan 1,512 – Total 2,641 1,129
(i) At 31 July 2014, the Club assessed the fair value of its shareholding in ThoroughVisioN Pty Ltd (TVN) as $nil. TVN ceased broadcasting during the 2015 financial year, but the Club continues to hold a 12.5% (2014: 12.5%) shareholding in the company until such time that TVN becomes deregistered. (ii) At 31 July 2015, the Club held a 14.23% (2014: 14.23%) shareholding in 3UZ Sport 927. 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 (2014: $1.074 million).
40 — VICTORIA RACING CLUB 14. Property, plant and equipment Freehold Work in Plant and Assets under land at progress Buildings and equipment finance fair value at cost infrastructure at cost lease Total $000 $000 $000 $000 $000 $000 Gross carrying amount Balance at 1 August 2013 60,489 7,577 126,545 135,281 2,982 332,874 Additions – 5,959 795 4,689 – 11,443 Transfers – (3,985) 665 1,783 1,537 – Transfer to held for sale (36,491) – – – – (36,491) Net revaluation increments – – – – – – Impairment – – – – – – Disposals – – – (132) – (132) Balance at 31 July 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 – – Transfer to held for sale – – – – – – Net revaluation increments – – – – – – Impairment – – – – – – Disposals – (838) – (258) – (1,096) Balance at 31 July 2015 23,998 13,790 128,772 147,794 4,556 318,910
Accumulated depreciation and impairment Balance at 1 August 2013 – – 67,578 73,228 30 140,836 Depreciation expense – – 3,043 5,815 467 9,325 Disposals – – – (132) – (132) Balance at 31 July 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
Net book value As at 31 July 2014 23,998 9,551 57,384 62,710 4,022 157,665 As at 31 July 2015 23,998 13,790 55,118 63,320 3,548 159,774
ANNUAL REPORT 2015 — 41 Notes to and forming part of the Financial Statements of the Victoria Racing Club Limited for the year ended 31 July 2015 continued
15. Trade and other payables 2015 2014 $000 $000 Current Trade payables (i) 1,779 2,666 Other payables 4,210 4,935 Payables for assets 445 1,201 Gaming Licence Payable 267 267 6,701 9,069
(i) The average credit period on purchases is 30 days. No interest is charged on trade payables.
Non-current Gaming Licence Payable 200 466 Total 6,901 9,535
16. Borrowings 2015 2014 $000 $000 Unsecured – at amortised cost Current Finance lease liabilities (i) 958 1,640 Insurance premium funding 951 – 1,909 1,640
Non-current Finance lease liabilities (i) – 886 Total 1,909 2,526
(i) Secured by assets leased.
42 — VICTORIA RACING CLUB 17. Provisions 2015 2014 $000 $000 Current Employee benefits 1,609 1,135
Non-current Employee benefits 2,561 2,903 Defined benefit plan – 873 2,561 3,776 Total 4,170 4,911
The employee benefits expense for the year was $0.5 million (2014: $0.5 million). The expense has been included in the Statement of Profit or Loss and Other Comprehensive Income in expenditure for members’ services and administration.
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 2015 2014 2015 2014 Finance lease liabilities $000 $000 $000 $000 – not later than 1 year 958 1,640 958 1,640 – later than 1 year and not later than 5 years – 952 – 886 Included in the financial statements as: (Note 16) – Current borrowings 958 1,640 – Non-current borrowings – 886 958 2,526
Operating leases Leasing arrangements relate to the rental of computer equipment and motor vehicles with lease terms of between 3 to 5 years. On conclusion of the term, there are options to extend the lease or return the goods. 2015 2014 $000 $000 Non-cancellable operating lease commitments No longer than 1 year 189 219 Longer than 1 year and not longer than 5 years 194 359 383 578
ANNUAL REPORT 2015 — 43 Notes to and forming part of the Financial Statements of the Victoria Racing Club Limited for the year ended 31 July 2015 continued
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 2015, was $1.5 million (2014: deficit of $0.9 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. 2015 2014 % % Key assumptions used for the purpose of the actuarial valuation were as follows (expressed as weighted averages): Discount rate gross of tax 4.0 3.5 Expected return on plan assets 7.0 7.0 Expected rate of salary increase 3.5 4.5
Amounts recognised in profit or loss in respect of the defined benefit plan are as follows: 2015 2014 Notes $000 $000 Expense recognised in the Statement of Profit or Loss and Other Comprehensive Income 403 405 Actuarial gains incurred during the year (2,428) (281) Cumulative actuarial (gains)/losses (1,792) 636 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 9,159 11,191 Fair value of plan assets at end of year (10,671) (10,318) Net liability/(asset) arising from defined benefit 13, 17 (1,512) 873
Movements in the present value of the plan assets in the current period were as follows: Opening fair value of plan assets 10,318 9,594 Employer contributions 361 529 Member contributions 91 31 Benefits paid (1,198) (604) Other 1,099 768 Closing fair value of plan assets 10,671 10,318
The analysis of the plan assets and the expected rate of return at the Statement of Financial Position date are as follows: Fair value of plan assets 2015 2014 $000 $000 Equity instruments 4,407 3,830 Debt instruments 4,386 4,514 Property 598 849 Other 1,280 1,125 Total 10,671 10,318
44 — VICTORIA RACING CLUB 20. Notes to the statement of cash flows 2015 2014 $000 $000 (a) Reconciliation of cash and cash equivalents Cash at Bank 8,533 1,173 8,533 1,173
(b) Financing facilities Unsecured facility (i) Amount used – – Amount unused 8,000 22,000 8,000 22,000
(i) The unsecured facility limit reduces to $2.0 million on 1 August to 31 December.
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 10,683 3,437 Depreciation and amortisation expense 9,544 9,545 Share of profits in associated entities not received as dividends or distributions (657) (19) Gain on disposal of investments (8,973) – (Gain)/loss on disposal of fixed assets 47 (10) Non-cash movements in defined benefit superannuation expense 2,384 405
Changes in operating assets and liabilities Increase in trade and other receivables (971) (409) Increase in inventories (216) (160) Decrease in trade and other payables (2,634) (5) Increase in fees in advance 2,101 269 Decrease in employee benefit provisions (741) (350) Net operating cash flow 10,567 12,703
ANNUAL REPORT 2015 — 45 Notes to and forming part of the Financial Statements of the Victoria Racing Club Limited for the year ended 31 July 2015 continued
21. Auditor’s remuneration 2015 2014 $ $ Auditors of Victoria Racing Club Limited – Audit of the financial report 119,000 117,200 – Other services 42,218 40,275 161,218 157,475
22. Key management personnel compensation The key management personnel of the Club include the Chief Executive Officer, Chief Operating Officer, seven Executive General Managers (2014: 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. 2015 2014 $ $ Compensation to Directors and other members of key management personnel of the Club 2,316,106 2,431,360
46 — VICTORIA RACING CLUB 23. Capital commitments 25. Subsequent events The Club has capital commitments for capital expenditure on There have been no further matters or circumstances occurring qualifying assets at 31 July 2015 of $0.8 million (2014: $1.8 million). subsequent to the end of the financial year that have significantly affected, or may significantly affect, the operations of the Club, the results of those operations or the state of affairs of the Club 24. Related parties in future financial years. 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 2015 (as detailed on page 24 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.
ANNUAL REPORT 2015 — 47 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 S Burn John B O’Rourke Director Director Melbourne, 23 October 2015
Photographs are courtesy of Getty Images, Michael Dodge (Getty Images), Robert Cianflone (Getty Images), Mark Metcalfe (Getty Images), Cameron Spencer (Getty Images), Karon Photography, Andrew Craig Photography, and Bryce Dunkley. 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. 48 — VICTORIA RACING CLUB Photographs are courtesy of Getty Images, Michael Dodge (Getty Images), Robert Cianflone (Getty Images), Mark Metcalfe (Getty Images), Cameron Spencer (Getty Images), Karon Photography, Andrew Craig Photography, and Bryce Dunkley. 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)