Harness Racing Annual Report 2016.Pdf

2016

2016ANNUAL REPORT Contents

Chairman’s Report 3 Chief Executive’s Report 4 Racing Highlights 9 Review of Operations –Finance 10 Summary of Financial Performance 14 Strategic Plan (Tax Parity Fund Strategy) 16 Review of Operations – Racing 27 Review of Operations – Breeding 36 Review of Operations - Integrity 42 Review of Operations - Marketing & Media 45 Review of Operations - External Operations 46 Corporate Structure 48 Harness Racing Industry Consultation Group 50 Harness Racing Clubs Committee 50 Harness Breeders NSW 51 NSW Standardbred Owners Association 53 United Harness racing Association 54 NSW Mini Trotting Association 54 Corporate Governance 55 Financial Statements 57 Chairman’s Report

It is with considerable pleasure that I report on the highlights of This brings me to Reid Sanders, our Chief Operating Officer, the year for Harness Racing New South Wales. who has recently announced his resignation. Reid was recruited in 2011 to head up the integrity operations of Harness Undoubtedly, the most important development through the year Racing New South Wales in a peculiarly distressed time for the was the announcement by the Deputy Premier and Minister for Sport. He was instrumental in cleaning up the so called ‘Green Racing, the Honourable Troy Grant MP, that the Government Light Affair’. He went on to put in place a highly organised would introduce so called Tax Parity over a 5 year period. system of swabbing that statically will pick up, over the course of a year, some 98% of breaches of the drug rules. And it was The idea is that the State would reduce its tax on TAB turnover Reid who led worldwide the attack on the use of Cobalt in from its historical rates to the same rate as applies in Victoria horse racing. More recently Reid has led the development of over that period. the Menangle Training Centre.

On current projections this will deliver the following additional It is not often that a Chairman gets to pay tribute to someone funding to the New South Wales Harness Racing Industry: who has contributed so much to an organisation, and more widely to a Sport. FY 2016 $3.2m FY 2017 $5.7m The Menangle Training Centre has already proved an FY 2018 $5.7m outstanding success with demand for barns outstripping our FY 2019 $7.0m supply. It has attracted trainers from out of the State and FY 2020 $8.3m provides a facility for young trainers to get into the Sport. It is FY 2021 $11.5m also the prototype for similar centres the Board would like to develop in due course in other locations, such as Bathurst and These amounts are not guaranteed and depend on TAB Wagga. turnover. The planning for the new track at Wagga is well underway. I wish to place formally on record our appreciation to the Tenders are in, and being assessed. Cost, as always, is an Baird Government, and Mr Grant in particular, for levelling issue but the Board is determined to build a facility that will the playing field for New South Wales Harness Racing. take the Sport in the Riverina into the future. The Development This is an important step in securing the future of a vibrant Application for the new Tamworth Track has now been lodged; and sustainable sport that is so much enjoyed by so many this development will provide exciting possibilities. participants. I mentioned that we had consulted widely with Industry HRNSW decided to consult widely with Industry participants Participants about how to apply the additional ‘Tax Parity’ before planning on how this additional funding should be funding. The Board of Harness Racing NSW is committed to applied. There were many legitimate claims on the additional engage with the Industry, both through the formal mechanisms funding but the Board’s starting point was planning for a secure mandated by the Act, and more widely. Our program of future for the Sport. The key items stood out: meetings with Clubs regionally has been especially valuable to us as a Board. Personally, I have enjoyed the opportunity • Prize Money; to hear from Club committees and to discuss issues directly • Club Administration; with the individuals who give so much to the Sport in their • Marketing; communities. • Breeding; • Equine Welfare; On giving much to the Industry, I should pay special tribute to • Youth development; my predecessor, Rex Horne, whose term expired in February • Infrastructure; after a total of 8 years on the Board of HRNSW, the last 2 as • Integrity. Chairman. Rex has thrown his all at Harness Racing both on the Board of HRNSW and of the NSW Harness Racing Club. Practically all the submissions we received called for the Rex uniquely contributed to the sale of Harold Park (and all the opportunity to be taken to market our Sport better to attract benefits it has brought the Industry); to the development of the new followers and participants. We have set aside an Menangle track and its top class facilities; to the development unprecedented amount for various aspects of marketing of the new Bathurst facilities; and to the progress towards the into the future. I emphasise that effective marketing, in the proposed new Wagga track. He will be remembered as one of Board’s view, encompasses all aspects of the Sport, including the great infrastructure builders Harness Racing in New South communication and presentation. Wales will ever see.

Our in principle decisions on the application of this additional So the year under report was a busy year of change. 2016 – funding were announced by the Chief Executive, John 17 will be at least as challenging but the Board is committed Dumesny, at the Industry Conference held in late June 2016. to looking to the future to secure an enduring Sport loved by so The Industry Conference, the first of its kind in recent memory, many. Our focus will be on sustainability across all areas. We marked one of the other highlights of the year, being supported want many, many more to enjoy it’s fun and spectacle. by some 150 attendees. The Panel of presenters covered a wide range of topics from challenging perspectives. Every session seemed to bring new ideas and challenges to the fore. Graham Kelly Chairman

Harness Racing NSW Annual Report 2016 3 Chief Executive’s Report

The key focus of the Board and Management of HRNSW The ‘twelve horse field’ initiative has also delivered increased during the 2015-16 Financial Year has been engagement average turnover although the real advantage with the initiative with the industry stakeholders. Such engagement involved is that, after the inevitable reduction in field size (through numerous actions to grow and sustain the harness racing attrition), ten horses actually start. industry. At Tabcorp Park Menangle - metropolitan meetings (the highest Stakeholders were invited and encouraged to become involved wagering track and primary meeting in NSW) $66,443 is the in the delivery of a cohesive industry through consultation, average turnover for 12 horse fields. The slide in average reviews and the inaugural Industry Conference. turnover is $64,438 (11 horses), $60,302 (10), $55,359 (9), $47,149 (8) and $40,107 (7). This clearly demonstrates the As expressed by Lyall Gorman, the keynote speaker at absolute necessity of maximum field sizes. the Harnessing Our Future Conference, the delivery of a ‘point of difference’ is essential and this resonated with all in Both measures - Divided Stakes and twelve horse fields - will attendance. Those delegates have carried this proposition continually be assessed for delivery of the overall needs of the forward throughout the year and the code’s future is clearly in Industry. their mindset. Whilst wagering revenue has decreased by 1% total prize Wagering money and bonuses distributed by HRNSW has increased by 2.5%. The major challenge the racing industry faces is and will In FY16 the total amount distributed by HRNSW in prize continue to be the ever evolving gambling environment. money and bonuses was $28,725,510 which was an increase of $555,574 over the previous financial year. This figure does Where an industry’s primary revenue revolves around the not include amounts distributed by Clubs and Associations competitive nature of securing adequate wagering income, the from their own resources. The Principal Club (NSWHRC) alone entire industry must be committed to the initiatives instigated. contributes $5.5 million above the funding emanating from HRNSW. This critical aspect was addressed by HRNSW on a number of platforms throughout the past year. A concerted effort to re-introduce Claiming races has proved successful. These races have become the staple filler for It is alarming that the total wagering income received from meetings at Tabcorp Park Menangle and Penrith. This is not all wagering operators in FY16 decreased by $489,721 or dissimilar to the contibution of trotters races over the past 1% from the amount received in FY15. This position is in fact decade. HRNSW is moving forward with the revitalisation of worse from a revenue perspective as the significant departure an Association for the enthusiasts of the trotting gait which will from the traditional pari-mutuel totalisator betting (TAB) to further improve opportunities for these horses through direct corporate bookmakers is clearly evident. involvement from stakeholders. By operation of the 1998 Intercode Deed, the three racing codes in NSW share by fixed percentage the total income Tax Parity generated. When wagering with the corporate operators attracts a lesser fee and the revenue is remitted only on the Crucial to the sustainability of the racing industry has been racing activities of the individual code, there is a need to act. the Baird/Grant Government’s wagering tax rebate legislation referred to as ‘Tax Parity’. HRNSW has taken steps to create competitive racing to attract punters to harness racing which in turn is aimed to generate The wagering tax parity with Victoria was confirmed with sustainable income. These steps include race programming the passing in the NSW Parliament of the Betting Tax such as the ‘Divided Pace’ races which have conclusively Legislation Amendment Bill 2015. The NSW Treasury based allowed for competitive racing. This same action has offered the percentage share to the three codes of racing on the more attractive betting options for both punters and wagering Government’s Size and Scope of the NSW Racing Industry operators. Report 2014 and in particular, the economic delivery analysis.

From the wagering perspective prohibitive odds-on favourites According to that analysis, the economic output generated by (>$1.60) have decreased and average turnover per race has each of the codes of racing in NSW was 77.3% thoroughbred, increased. The optimum range for favourites to attract punters 12.7% harness and 10% greyhound. The Government had to harness racing is $1.70 to $2.50. an additional requirement that the delivery of funding by the Controlling Bodies to the industry was to be in general A further key benefit from the ‘Divided Pace’ is participant- accordance with the Industry Strategic Plans. based whereby there is a more diverse group of winning horses. This in turn equates to more owners, trainers and With a staged reduction of these monies, revenue to the drivers receiving a return for their investment and involvement harness racing industry is estimated by Treasury to be FY16: in harness racing which naturally leads to increased prize $3.2 million (actual $3.04M; FY17: $5.7M; FY18: $5.7M; FY19: money and Breeders Challenge Bonuses being distributed $7.0M; FY20: $8.3M; FY21 and onwards estimated $11.5 across the industry. million).

4 Harness Racing NSW Annual Report 2016 However these amounts are not guaranteed and a reliance on An increased number of races had also been conducted with the wagering on the NSW TAB is paramount to the wellbeing six or, on occasion, with less than six starters. In particular and delivery of the HRNSW Tax Parity Strategy. A conservative 2015 had witnessed the record lowest number of starters in the approach was therefore adopted by HRNSW during the five Heats of all futurity race series. year Strategy. The review was twofold in that first stakeholders were Tax Parity Fund Strategy requested to comment on various issues including the length of the season (for two-year-old pacers), minimum starters in Over a five month period between January and May races, rotational programming of races at various tracks in 2016, HRNSW received and assessed submissions regions and the timing and number of futurity events. from industry stakeholders which included a Board and Management planning session over two days. The result Following the second round of submissions, stakeholders were was a comprehensive five year plan announced in June for then requested to respond to an electronic survey. The survey implementation in FY2016-17. focused on key issues identified in the written submissions received. The electronic survey in relation to the Review into The plan allows for prize money increases, administration relief Two-Year-Old Racing was completed by 577 respondents or to Clubs, industry marketing, breeding support, development in 31% of stakeholders. equine welfare and the youth of the industry, infrastructure and integrity measures. The Plan which is supported by drawing The Management of HRNSW analysed the individual down on the Industry Future Fund can be reviewed in this outcomes of each survey question and referred this data back Annual Report. to the Board for construction of a Policy.

GHRRA Loan Relief Essentially, the resultant key points of the Policy are: • Two-year-old racing will commence on January 1 from It is also with a significant degree of satisfaction to the industry 2018; that in November 2015 the Government released HRNSW • A full schedule of two-year-old races for the period from payment of the remainder of the unjust loan forced on the January 1 to August 31 will be released in October Industry when the GHRRA was dissolved. (preceding the Two-Year-Old Racing Season). The schedule will include exclusive races for two-year- Despite the unjust nature of the loan, repeated representations old fillies that are geographically placed on a regional to Governments since 2010 had been rejected. A basis to accommodate the pool of available horses; concerted effort over the previous year and many personal • Six horses will be the minimum number of original representations to a number of influential politicians and nominations/acceptors for a two-year-old race to be advisors resulted in NSW Treasury releasing HRNSW from the conducted; $1 million outstanding amount. • A Fund will be created to guarantee two-year-old races which attract a minimum six original The gratitude of the Industry must be extended to key nominations/acceptors with these race (where politicians Premier Mike Baird, Chris Patterson, Jai Rowell, applicable) additional to the standard eight race Bryan Doyle (former), Paul Toole, Stuart Ayres, Andrew program; Constance and the Treasurer Gladys Berejiklian. • The maximum field size for two-year-old races will be 10 on all track sizes with reserves being drawn in I especially acknowledge the Deputy Premier and Minister for Finals and Group races. Racing Troy Grant and his Chief of Staff Alex Bruce and Policy • Connections can choose to start two-year-old pacers Advisor Nick Santucci who were relentless in assisting with the against older horses but on a limited basis however relief. two-year-old pacers will not be permitted to contest races in NSW between September 1 and December Consultation with Industry 31 each year.

Consultation and reviews were undertaken in key Breeding components of the industry. The purpose of the consultation is to understand the needs of stakeholders and to take into The breeding sector of the Industry has been holding at a level account their respective requirements in decisions made. As of apparent sustainability through foaling numbers however the for reviews, these are to assess the delivery of established discontinuance of physically standing stallions at stud in NSW policies and practices. HRNSW met with the Harness Racing by leading nursery Pepper Tree Farm is a concern. Despite Industry Consultation Group in accordance with the Act with the fact that artificial insemination is the primary practice in several initiatives implemented. harness racing for mare impregnation, in NSW without quality stallions standing in the State a downturn can be envisaged. Review into Two-Year-Old Racing Whilst the decision of individual owners of stallions to stand A review of two year old racing was undertaken by HRNSW horses at stud is their commercial choice (which as the with two rounds of submissions from industry stakeholders regulator HRNSW cannot become involved in) through new being accepted over an extended period. initiatives HRNSW continues the tradition of fully supporting breeding in the State. This review was activated following concerns of participants and administrators as a consequence of the low number of juvenile pacers races being conducted during the season to date and thus the lack of confirmed opportunities.

Harness Racing NSW Annual Report 2016 5 As from this breeding season, the owners of foals born and Equine Welfare registered with HRNSW for the Breeders Challenge will have the registration fee of $185 subsidised by the Principal Club The observance of equine welfare has always been at the (NSWHRC), an initiative in respect of which Club Directors and forefront of the administration of HRNSW. Management must be acknowledged. The subsidization is for a period of three years (2016 to 2018) after which the registration The Policies and actions which are in place will be vigilantly fee will be covered from the Tax Parity Fund by HRNSW. monitored, reviewed and improved by the Integrity Department. There is zero tolerance of unacceptable practices and HRNSW Effective from the 2016 breeding season, the owners of has a proven record of prosecuting non compliant persons. stallions physically standing in NSW will not be required to pay the $750 Registration Fee. The $110 fee previously required In collaboration with Harness Racing Australia, HRNSW is to be paid to HRNSW for the resultant foals of these stallions undertaking an extensive and intensive investigation of the (born 2017) has also been removed. data held on the Harvey System to improve the tracing of horses whilst active in the industry. HRNSW continued to expand the Colonial Stallions Scheme by increasing the inclusion from three to six years and has Where feasible the retraining and rehoming of horses past the also introduced a $3,000 True Blue Bonus for winning horses requirements of the racing and breeding aspects of harness from the foal crop sired from this breeding season. The Stallion racing will require a concerted whole of industry approach. Incentive Scheme which assists with marketing of specifically HRNSW in consultation with HRICG will work diligently credentialed stallions standing in NSW continues to attract towards a plan which is both achievable and acceptable to the patronage to the State. majority of owners.

A review of all aspects of the NSW Breeders Challenge was Integrity commenced and will be considered by the Board in due course. This review will include both the Breeding Conditions Integrity measures remain paramount to the future of the and the Race Series. Industry. HRNSW has been an international equine industry leader in investigations and research into aspects which will if With the reliance on imported horses from New Zealand and not addressed retard the growth and future of any organisation. the migration of horses across State boundaries HRNSW will continue to be vigilant in assessing the foal population as these Challenges were mounted within and outside the HRNSW factors relate to the ‘tipping point’ for the supply of a robust judicial system. These challenges were defended on behalf of pool of racing stock. the Industry at large. The confirmation this past year that it is the absolute liability of a licensee to prepare horses under their In the breeding sector however NSW lost three iconic pioneers care clean of prohibited substances was a benefit for all fair through the passing of Mr Eric Hando of Rosewood Stud participants and a clear warning to those others. and Mr John Gibson of Success Stud. Whilst the passing of harness racing legend Mr Don Clough OAM occurred HRNSW is committed to address all aspects of integrity and after the end of this financial year, his loss to the industry is develop appropriate measures to protect compliant participants immeasurable. the industry in general. All three highly respected gentlemen were initiators, innovators Reid Sanders who was engaged to scour the sport of identified and instigators in the advancement of the breeding of corrupt practices emanating from the infamous ‘Green Light’ standardbreds to the betterment of trotting/harness racing in issues resigned from HRNSW after completing five years New South Wales then, now and into the future. of exemplary service. The harness racing industry in New South Wales as a result of his efforts is now recognised as the Three generations of the Hando Family - William (Ethel), Eric benchmark for integrity across all racing in Australia. (Dorothy) and Graeme (Lyn) were honoured with an Award for their outstanding service to the breeding industry by HRNSW.

Don Clough OAM Dorothy & Eric Hando John Gibson

6 Harness Racing NSW Annual Report 2016 Infrastructure Conviction, Charlaval, Rockmemama and Mouse In The House. It is worth noting that from those nine crowned The provision of new and adequate infrastructure at venues champions there were: where meeting are to be conducted and for the training of horses has been an aim of HRNSW since the sale of Harold • Nine different breeders Park (in 2010) and the release of the Industry Strategic Plan at • Nine different sets of owners that time. • Nine individual winning drivers • Eight different trainers (Steve Turnbull scoring with a In 2016 two projects were completed at Penrith Paceway double) and Menangle Park whilst attention was also directed to the • Eight different sires (Four Starzzz Shark siring two) Hawkesbury Training track. The Breeders Challenge Blue and Regional Finals rounded off New race night stalls appropriately named in honour of Club another outstanding year of state-bred futurity races and the stalwart Don Clough OAM were opened at Penrith where an trend continued with a cross section of winners. Only Bernie upgrade to the track lighting was also completed. Hewitt trained multiple winners in Ima Black Beauty and Hez All Courage. The Menangle Park Training Centre which had been the vision of the industry since 2006 was opened in 2016 by the retiring Alabar stallions Rock N Roll Heaven and Courage Under Fire HRNSW Chairman and former Chairman of the NSW Harness sired two winners each in Thunder Dance and My Mackenzie Racing Club Rex Horne. (Rock n Roll Heaven) and Hez All Courage and Si Nardore (Courage Under Fire). The training centre includes eight barns to accommodate 160 horses with walk-in walk-out stalls, walking machines, 16 large Fun Magic Trix (Blake Fitzpatrick) with a time of 1:55.9 and day yards, 1000 metre exercise track and is complemented Pixies Parlour (Steve and Amanda Turnbull) with a time of by a private water walker facility which is low cost to trainers. 1:54.4 both established new class records for two and three- Located next to Tabcorp Park Menangle trainers also have year-old fillies Regional Finals at Newcastle International access to the 1400 metre race track and the 800 metre sand Paceway. training track. Industry Conference The Development Application was approved by the South West Regional Planning Panel for the Wagga Wagga Racing Facility Whilst the Alabar Breeders Challenge Finals delivered the whilst the planning for the Tamworth Training and Racing champions of the season the inaugural Industry Conference – Facility was progressed. Harnessing Our Future - was the milestone event.

The Conditions placed on the development of the Wagga From the opening welcome by Chairman Graham Kelly Project are onerous whilst the Tamworth Project is not able to through to the close the Conference delivered emphatically be progressed past development approval until the proceeds across all sessions on the theme of Harnessing Our Future. of the sale of the Tamworth Showground are received by HRNSW. The key note speaker was Cronulla Sharks Chief Executive Lyall Gorman who captured the imagination of the delegates Carnival of Cups with his delivery on the need to establish a point of difference for any sport or form of entertainment to be an attractive option The TAB.COM.AU Carnival of Cups was yet again the main for patrons and followers. event at the majority of tracks across the State. As is always the case year-by-year the competition for the ‘best’ was evident Chief Executives Edward Rennell (Harness Racing New amongst the Clubs. This year, the awards went to: Zealand) and Andrew Kelly (Harness Racing Australia) demonstrated that the Australian challenges are in fact • Best Club with a feature race to a maximum of international. $50,000 (but no less than $25,001) – Eugowra HRC. • Best Club with a feature race to a maximum of Marketing experts Sean Callanan and Paul Dunn opened $25,000 (but no less than $14,001) – Parkes HRC. the minds to the rapidly changing media and marketing world • Best Club with a feature race to a maximum of which must be addressed for an operation to grow. $14,000 (but no less than $10,001) - West Wyalong HRC. Denise Martin of Star Thoroughbreds revealed that to be in • Best Club with a feature race to a maximum of not the game you must respect and service those people already more than $10,000 – Griffith HRC. involved and those people whom you wish to attract. • Best Community Engagement Club – Goulburn HRC. • Best Fraternity Engagement Club – Leeton HRC. Bulli Club representative John Crittenden again awakened • Best New Innovation Club – Temora HRC. the delegates to the awareness and responsibility aspect of conducting a harness racing club or business. Breeders Challenge Doug Freeman and his Tabcorp Team highlighted where harness racing needs to aim to capture wagering revenue in an The Alabar NSW Breeders Challenge Finals were again a extremely competitive market. resounding success for the NSW industry with the widest spread of winners (let alone distribution of $840,000 in stakes) Detective Paul King and Reid Sanders (Chief Operating ever experienced. Officer) demonstrated how the past will shape the future. Corrupt practices will impact on the required resources and Naturally there were nine different winners – Empire Bay, Red wellbeing of any industry. Hot Tooth, Iona Grinner, Sapphire Stride, Shezallapples,

Harness Racing NSW Annual Report 2016 7 Heather Neil (RSPCA) gave a fair warning on community The open consultative nature of the Members, evidenced by expectations whilst Dr Eliot Forbes (Tas Racing Chief the Regional Meetings with individual Clubs and the regular Executive and veterinarian) articulated how harness racing attendances at race meetings and functions by the Board can meet community expectations. In particular both clearly Members, demonstrates the strong leadership of an involved explained that a poor record in the area of animal welfare will and committed Board. derail an industry. I thank all these dedicated Board Members for the vision they Brett Coffey facilitated the diverse range of views of leading have for the advancement of our industry and the support industry participants Jackie Gibson, Donna Egan, Melanie given to the HRNSW Management and Staff to drive the code Settree and Harvey Kaplan on breeding and other industry forward. aspects. I acknowledge the dedication of stakeholders in particular the Governance countless volunteers to the welfare of the industry and the dedicated staff of HRNSW. Government and in particular the Deputy Premier Troy Grant and his office have been champions for the racing industry for In Conclusion which harness racing will be continually indebted. Tax Parity and relinquishing the GHRRA Loan from Government were The year ahead is encouraging and can be rewarding but it will principally driven by the Deputy Premier. have challenges.

There were changes in the composition of the Board during The growth and protection of the industry’s revenue sources the financial year with Chris Edwards re-joining as a member will be paramount. in December following the short tenure of Grant Mayer. Rex Horne retired in February after fulfilling the maximum eight All stakeholders must work diligently towards ensuring the year term permissible under the Harness Racing Act. optimum is attainable.

The inaugural female member to the Board of HRNSW was One specific task however is again before HRNSW namely welcomed in February when Robyn Stubbs was appointed for the formulation of the Industry Strategic Plan (2018 to 2020). a four year term. Post the end of the financial year (July) Alex This function which is required on a three year cycle is in Smith resigned his position on the Board which he had held for accordance with the legislative requirements of the Harness the previous four years. Racing Act. As is the policy of the Board of HRNSW a consultative process with Industry stakeholders and HRICG Under the stewardship of Graham Kelly assisted by the will be commenced during 2017. aforementioned and Rod Smith, who were re-appointed to the Board in February, HRNSW has further grown in Industry acceptance. John Dumesny Chief Executive

HRNSW Board Members and Executive Management 8 Harness Racing NSW Annual Report 2016 Racing Highlights

OUR WAIKIKI BEACH

• Won G1 NSW Derby • NSW 3YO Colt & Gelding of the Year • NSW 3YO of the Year • NSW Horse of the Year

HAVE FAITH IN ME

• Won G1 SEW Eurodrive Miracle Mile in Australasian Mile Record of 1:47.5 • Won G1 Form 700 Chariots of Fire • NSW Aged Horse & Gelding of the Year • NSW Aged Horse of the Year

ON THUNDER ROAD

• Won G1 SEW Eurodrive Trotters Cup • NSW Aged Trotter of the Year

OUR DREAM ABOUT ME

• Won G1 NSW Oaks in a World Record for fillies & mares of 1:54.2 for distance between 2400m and 2999m.

SMOLDA

• Won G1 Bohemia Crystal FFA in a World Record of 1:52.7 for distances between 2400m and 2999m.

BLING IT ON

• Won G1 Gold Coast Cup in a World Record of 1:52.4 for distances between 2000m and 2399m

Harness Racing NSW Annual Report 2016 9 Review of Operations Finance HRNSW Result pari-mutuel to fixed odds wagering, with the pari-mutuel component decreasing by $1.281m and the Wagering Incentive Harness Racing NSW produced a statutory surplus of $6.881m Fee (WIF, which includes fixed odds wagering) increasing from for the year to 30 June 2016. $15.266m to $16.698m. The Wagering Incentive Fee now makes up 46.64% of total TAB revenues, up from 33.64% in The FY2016 surplus includes the items below which are in FY2013. addition to normal product fee revenue streams derived from the TAB and corporate wagering operators: Race Fields Income (a) $3,044,587 of Tax Parity revenues. Tax parity legislation was introduced by the New South Race fields revenue for the year was $10.128m, a slight Wales government on 24 November 2015. The effect decrease of $0.641m on the $10.769m received in FY2015. of the Legislation is to provide a rebate on the tax The FY2015 figure includes $1.857m of revenues bought paid on wagers to bring the NSW tax in line with that forward following the change of accounting policy relating to charged in Victoria. The reduction in the overall the recognition of this revenue stream. tax rate will be reduced over a five year period. If the fifth quarter revenues from FY2015 are excluded race (b) $918,572 of revenue bought to account following the fields revenue increased by $1.367m during the year. forgiveness by the NSW Government of the reminder Race Fields revenue grew during the year mainly from existing of the $2.0m loan taken out in June 2009. wagering operators. Revenue was also boosted from PGI, an offshore arm of the TAB which commenced business in (c) $1,228,414 earned on investments held in the FY2014. Future Fund. Race fields contributed 22.05% of the total revenue received in Excluding the above items the entity derived a surplus of FY2016, up from 19.86% last year. $1,689,728 which was mainly due to higher than expected Wagering Incentive Fees from the TAB during the year. Race Fields revenue is allocated to the industry in accordance with the principles of a formula set within the 2010-2013 This carried forward surplus will be required in its entirety to Strategic Plan. However changes have been made to those fund prize money payments, club administration funding and principles by the Board to accommodate industry needs and breeding schemes in FY2017. race funding requirements.

Total Revenue In addition to race and administration funding, $1.450m was directed to breeding schemes from race fields monies. Total revenue increased by $2.929m to $53.095m. The increase was driven mainly by the receipt of $3.045m of tax Tax Parity Income parity monies. Tax parity legislation was introduced by the New South Wales Total revenue from the TAB and Wagering Operators amounted government on 24 November 2015. to $45.931m, a decrease of $0.490m on the $46.421m derived in FY2015. When the fifth quarter race fields fees from FY2015 The NSW Government will provide a rebate on the tax paid on are excluded the increase was a healthy $1.367m. wagers to gradually bring the NSW tax in line with that charged in Victoria. TAB Income The tax will be introduced over a five year period. Gross revenues from the TAB were $35.803m up slightly by $0.152m on the $35.651m derived in FY2015. The reduction in the effective tax rate will ensure that additional funds are made available to support the NSW racing industry. Income from the TAB reflected the continuing shift from Harness Racing NSW will receive 12.7% of the tax benefit.

In its first year HRNSW received $3,044m.

Revenue Channel Contribution FY2008-FY2016 2008 2009 2010 2011 2012 2013 2014 2015 2016 Category TAB 100.00% 91.42% 84.82% 85.54% 80.62% 83.00% 77.93% 80.14% 77.95% Race Fields 0.00% 8.58% 15.18% 14.46% 19.38%** 17.00% 22.07% 19.86% 22.05% Total Revenue 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% ** Race Fields revenue spiked in FY2014/2015 as a consequence of the receipt of $1.5million from Sportsbet relating to prior years.

10 Harness Racing NSW Annual Report 2016 All Other income The Industry Fund receives a set allocation from the TAB Distribution that is used by Harness Racing NSW to finance The majority of all other operational income items were in line general activities such as the Breeders Challenge Series, with those received in the prior financial year. Breeders Challenge Owners Bonus Scheme, the Carnival of Cups series, Trotters Foundation Series, promotion of the industry’s youth and younger drivers including Mini Trots and Expenditure assistance to Industry Associations.

Total Harness Racing NSW expenses decreased slightly from In FY2016 $2.479m was received by the Industry Fund from $47.939m to $47.132m. the TAB Distribution.

TAB distributions and prize money payments for the majority of The Fund also received $1.450m from race fields monies race meetings increased however prize money and marketing derived during FY2016 for breeding initiatives and a further payments for the Inter Dominion were not required in FY2016. $0.100m as a contribution towards marketing expenses.

Salaries and related expenses increased slightly during the Expenditure for the year was $5.554m. The majority of Industry year mainly as the result of three additional staff at the new Fund expenditure was dedicated to the Breeders Challenge training centre at Menangle Park. Series as well as the State Bred Bonus Scheme and Breeders Challenge Owners Bonus Scheme all of which are essential to Gazette expenses have again decreased following the the development of the breeding industry and hence long-term decision to phase out the printed publication and move it to an sustainability of racing. The total amount devoted to breeding electronic format. activities amounted to $3.647m.

The increased occupancy expenses can be attributed to the In FY2016 a total of 430 NSW Breeders Challenge Owners establishment costs of setting up the Menangle Park Training Bonus Certificates were issued with a total value of Centre. $1,292,000.

IT costs have increased due to a few ‘one off’ project related There were 308 Foal Nominators bonuses won during FY2016. expenses which will have long term beneficial impacts on the This amounted to $924,000 in cash being distributed. business. Projects funded include upgrades required for the implementation of drivers’ superannuation and upgrades to the A further $48,774 was distributed in Group 1 Winning Bonuses general ledger and stakes systems. which were paid at 10% of the advertised first prizemoney to any 2YO, 3YO and 4YO Foal Nominator. Depreciation expenses increased due to the decision in early FY2016 to purchase photo finish equipment rather than lease Therefore in total $2,264,774 in NSW Breeding Scheme the equipment through a third party. The resultant savings were Bonuses were paid in FY2016, this was an increase of passed on to the clubs. $188,014 (9.1%) on FY2015.

Although Integrity expenses are showing a decrease in Financial support to the Mini-Trotting Association and Rising FY2016 it is mainly due to a substantial payment received in Stars and Young Drivers series was in line with previous settlement of a matter that has been before the courts for a initiatives designed to develop younger drivers and participants number of years. The payment relates to legal fees incurred in into the industry. prior years. Racecourse Development Fund The settlement involved the recovery of certain legal expenses involving cases where the Board and Management pursued The Racecourse Development Fund (RDF) is used to provide a number of matters through the court system to ensure the financing for industry capital works programs including track integrity of the Act, the Rules of Racing and Local Rules. development, enhancement of facilities and the acquisition of plant and equipment to support racing operations. However HRNSW has ensured that all other integrity expenses have remained high and in line with the substantial amounts In FY2016 $0.708m was provided to the RDF from the TAB spent over the past few years. Distribution.

Loan Forgiven The Fund earned a significant amount of investment income during the year as a consequence of moving the investment HRNSW received a ‘one off’ benefit following the forgiveness portfolio from bank term deposits to an array of investments by the NSW Government of the outstanding loan provided to under the management of JBWere. HRNSW in 2009 to fund amalgamation expenses and unfunded superannuation liabilities. Monies remaining from the sale of Harold Park were invested in portfolios under the management of JBWere. As with The net benefit of the loan and outstanding interest payments the Future Fund a number of objectives were set including was $918,572. investment returns. Given that a substantial portion of the funds will be required Industry Fund to fund new tracks and other infrastructure over the next few years the composition of the portfolio differs from that of the Future Fund.

The Menangle Park Training Centre facility was completed and officially opened in January 2016. The facility is already fully leased and planning work is underway to expend the facility.

Harness Racing NSW Annual Report 2016 11 Planning continued for the proposed new track at Wagga, The investment return objective for the Fund is to achieve although the project has encountered some difficulties which a long term total returns (income and capital growth) of have delayed its originally planned starting date. Work on the Consumer Price Index (CPI) All Groups + 2.5%, over a rolling 5 proposed new track at Tamworth will continue. year period after fees.

In addition to expenditure on infrastructure outlined above, the The strategy adopted by the Investment Committee set a risk Board also committed to a program of grants to assist with the objective of limiting the probability of a negative return on the maintenance of existing facilities. total portfolio to 1 year in every 5 years. This equates to a 68% probability that the range of returns will be between -2.2% and The program commenced in FY2015 and will run for three 17%. years with $0.750m being allocated to clubs and training centres each year. The fund derived a satisfactory return in FY2016.

Benevolent Fund Industry Funding and Turnover

The Benevolent Fund is a trust established by the harness NSW harness racing turnover with the NSW TAB for FY2016 racing industry to provide financial assistance to current and was $158.829 million, down $8.293 million (5.0%) from the past participants who may find themselves in difficult financial $167.122 million recorded in FY2015. circumstances. When comparing turnover by region, country/provincial racing The Benevolent Fund is administered by Harness Racing decreased by 5.0%, while metropolitan meetings (NSW NSW which, in the past, has approved requests for assistance Harness Racing Club) decreased by 5.1% year on year. to contribute towards funerary costs and provide levels of financial respite especially in cases where there has been a lag When interstate and international turnover is included, total in the release of insurance benefits by providers. turnover on harness racing increased by $10.081 million (1.5%) year on year to $662.722 million. As in past years, portions of fines levied on participants for transgressions of the Rules of Racing were directed to the Of significance 40.9% of all wagering on harness racing with Benevolent Fund to grow and maintain its reserves. the NSW TAB was through Fixed Odds betting compared to 34.7% in FY2015, an increase of 17.9%. These reserves will supplement funds secured through the establishment of the Benevolent Fund as a Charitable Land Fundraising organisation which allows the Fund to conduct fundraising activities under licence as a means of growing its There are no major developments to report this year on the resources and providing assistance to participants. project to realise a commercial benefit from the parcel of land at Beresfield. This project remains on Harness Racing NSW’s In keeping with confidentiality provisions, Harness Racing NSW agenda to be pursued when circumstances allow. does not report on applications received by the Benevolent Fund and amounts disbursed. The operation of the Fund is There are also no developments to report on the two parcels governed by the Harness Racing Act 2009. of land owned by HRNSW adjacent to the Goulburn Harness Racing Club track. Future Fund The parcel of Land purchased at Tamworth will be assessed The Board of HRNSW established a Future Fund from race for commercial activities during FY2017 and the development fields monies remaining after the various loans had been of a racing track and related infrastructure will occur following repaid which maintained race and club administration funding the completion of the track at Wagga. A total of $5.000m from FY2009 to FY2012. inclusive of the $1.400m to be received following the sale of the Tamworth Showgrounds has been allocated to this project. The objectives of the Fund, which is overseen by an Investment Committee, are to produce capital growth and Land was also purchased at Wagga in 2014 which will be used income to increase the real value of the Fund over the longer for the new track and related infrastructure. term, plus provide financial sustainability, so that HRNSW is better resourced to achieve its mission. Specifically the Future Club and Administrative Funding Fund provides financial sustainability for now and into the future. Part of Harness Racing NSW’s mandate is the disbursement of funds received under the Totalizator Act 1997 to the industry After repaying loans and other disbursements over the period including payments to clubs for prizemoney and administration, to 30 June 2014 the Board determined that Future Fund be set funding of general industry activities (Industry Fund) and at $10.0m less any required working capital. These funds are capital works (Racecourse Development Fund), and funding of not governed by the Intra Code Agreement and therefore the the controlling body’s (Harness Racing NSW) operating costs. Board can determine how the funds are prudently invested and utilised. Commonly referred to as the TAB Distribution, funds received from the TAB are allocated annually by Harness Racing NSW The objective of the Future Fund income is to provide a buffer according to the provisions of the Intracode Agreement 2004 for the industry against future shocks or to contribute to future negotiated between Harness Racing NSW and clubs, and growth initiatives. The Fund enables HRNSW to even out the operating budgets prepared by HRNSW. revenue cycle and to contribute to recurrent income for the industry. The TAB Distribution for FY2016 amounted to $35.803m, an increase of $0.152m on funding received in FY2015. The increase was mainly due to the higher WIF received.

12 Harness Racing NSW Annual Report 2016 In accordance with the Harness Racing Act 2009 and the A Public and Products Liability policy was also taken out to Intracode Agreement, a series of provisions were made ‘off- cover participants and clubs for potential claims made against the-top’ of the Distribution before determination of allocations them. Allocation of the premium was made on the basis of past to clubs. claims and other criteria. All trainers and drivers now pay a small fee each time they A total of $3.187m was allocated from the TAB Distribution to participate in a race which represents a contribution to their the Industry Fund ($2.479m) and Racecourse Development insurance coverage. As a result of this change a large lump Fund ($0.708m) at the prescribed rates of 7% (including sum insurance charge is no longer levied on annual licences the 1% Carnival of Cups allocation) and 2% respectively. fees. Administration Funding of $4.503m was provided to Harness Racing NSW as endorsed by the Harness Racing Clubs Other policies are purchased by Harness Racing NSW to Committee. cover the building at Meredith Street, the motor vehicle fleet, directors and insurance for equipment such as trailers and The balance of $28.113m remaining after the ‘off-the-top’ photo finish equipment which are used throughout the state for funding provisions was allocated to clubs to fund racing prize race meetings. money and club operating costs. Stakes Payment System Additional funding of $4.825m was distributed to the industry to fund racing prize money and club operating costs from Race There were no major enhancements made to the system Fields revenues. during the year.

Insurance In keeping with Harness Racing NSW’s commitment to the environment and process improvement, stakes system All trainers and registered harness racing clubs are covered statements are no longer printed and posted to participants. by either a Public Liability, Personal Accident or Workers Compensation policy whilst undertaking harness related Statements are available online. activities. Racing Integrity All trainers, drivers, stablehands, attendants, voluntary workers and mini trot participants are covered by a Personal Accident In accordance with Section 24 of the Harness Racing Bill 2009, policy when not covered by a NSW Workers Compensation Harness Racing NSW appointed “a person who, in the opinion policy. of Harness Racing NSW, has suitable legal qualifications to hold the office of Harness Racing Integrity Auditor” During the year Mr Graham Gorrie fulfilled this role.

Have Faith In Me (Natalie Rasmussen) became the fastest horse in the Southern Hemisphere when it won the 2016 SEW Eurodrive Miracle Mile at Tabcorp Park Menangle in 1:47.5

Harness Racing NSW Annual Report 2016 13 Summary Of Financial Performance

Harness Racing NSW FY2016 FY2015 FY2014 FY2013 FY2012 FY2011 FY2010 Racing Metrics Clubs 34 34 34 33 32 32 32 Meetings 469 487 505 501 509 515 518 TAB Races 3,688 3,692 3,851 3,832 3,818 3,594 3,713 Non TAB Races 103 153 161 185 155 323 365 Total Races 3,791 3,845 4,012 4,017 3,973 3,917 4,078 Individual Starters 3,777 3,687 3,980 4,085 4,093 4,100 4,099 Total Starters 35,533 34,181 34,640 35,492 35,094 35,145 36,273 Starters per race 9.4 8.9 8.6 8.8 8.8 9.0 8.9 Prizemoney 32,904,560 32,204,734 31,336,496 31,345,821 27,205,098 24,269,000 25,384,100 Starts per starter 9.4 9.3 8.7 8.7 8.6 8.6 8.8 Prizemoney on offer per 8,712 8,735 7,873 7,673 6,647 5,919 6,193 starter Average Prizemoney per 8,680 8,376 7,811 7,803 6,847 6,196 6,225 race NSW TAB Turnover 158,829,000 167,122,000 185,891,000 192,759,000 188,931,000 192,651,000 208,710,000 Average Turnover per 43,066 45,266 48,271 50,302 49,484 53,604 56,211 NSW TAB race Total Turnover 662,722,000 652,641,000 660,641,000 Average Turnover per 179,697 176,772 171,551 Race Income Wagering-TAB 35,802,926 35,651,682 33,458,278 34,145,540 33,566,158 32,907,952 33,654,924 Wagering-Race Fields 10,128,235 10,769,201 9,472,759 6,995,743 22,748,365 (i) - - Tax Parity Revenue 3,044,587 ------Stewarding and Other 1,067,757 1,074,008 1,050,018 1,048,720 849,623 850,000 827,182 Fees Charged To Clubs Registration & Licensing 712,259 613,611 668,775 759,141 959,381 901,251 739,271 Income Grants Received 643,179 802,082 1,603,001 393,342 2,386,731 (iii) 184,010 155,000 (ii) Investment Income 1,359,913 938,462 533,249 935,128 2,218,996 (iv) 58,828 42,521 Other 336,363 317,566 260,830 202,947 246,420 333,581 991,851 (v) Total Income 53,095,220 50,166,612 47,046,910 44,480,561 62,975,674 35,235,622 36,410,749 Expenditure Club Distributions 17,055,186 (vi) 16,968,308 16,159,965 16,404,109 34,661,585 26,181,714 29,013,674 Prizemoney and Other 15,883,176 (vi) 17,727,569 17,322,790 16,413,891 - - - IF/ RDF Distributions 4,737,658 4,106,528 3,652,729 3,049,789 3,010,589 2,961,716 3,002,284 Integrity 1,528,982 1,820,738 1,387,801 1,311,445 1,230,839 661,427 631,476 Video Production and 1,817,332 1,632,194 1,578,214 1,542,606 486,514 - - Photo Finish Costs Administration/Other 6,110,157 5,683,928 4,918,033 5,553,594 8,117,984 (vii) 5,091,359 4,423,632 Total Expenditure 47,132,491 47,939,265 45,019,532 44,275,434 47,507,511 34,896,216 37,071,066 Surplus/ (Loss) 5,962,728 2,227,347 2,027,378 205,127 15,468,163 339,406 (660,317) Non Recurring Items - - RDF Grant- Land - - (1,351,492) - - - - Purchase Other Non Cash - - 19,465 - - - - Adjustments Amalgamation Expenses/ 918,572 - - - - - (1,080,329) Loan forgiveness (viii) 5th Quarter Race Fields - (1,857,583) - - - - - Income Surplus/ (Loss) Carried 6,881,300 369,764 695,351 205,127 15,468,163 339,406 (1,740,646) Forward

14 Harness Racing NSW Annual Report 2016 Summary Of Financial Performance

FY2016 FY2015 FY2014 FY2013 FY2011 FY2011 FY2010 Industry Fund TAB Distribution 2,479,290 2,448,676 2,324,567 2,372,058 2,344,452 2,303,563 2,335,485 Race Fields Distribution 1,550,000 950,000 664,000 785,178 - - - to Fund Foal and Other 706,984 683,916 1,130,465 764,146 645,297 366,126 296,353 Registration Fees

Carnival Of Cups 594,072 673,006 613,561 604,566 462,359 455,695 580,139 Prizemoney Subsidies 1,107,812 1,103,000 1,441,120 920,905 961,182 1,050,889 773,289 Breeders Incentives 2,386,274 1,792,282 886,878 652,726 604,000 528,615 464,401 Racecourse Development Fund TAB Distribution 708,368 707,852 664,162 677,731 666,141 658,159 666,799 Investment Income 920,940 791,846 1,115,966 1,364,443 1,597,309 20,801 46,880 Other - 820 436,019 549,506 3,265,425 (ix) 420,000 283,287 Repayment of IFIL - - - - 25,499,783 (x) - -

Election Promise Grants - 129,320 328,018 1,062,211 446,319 - - Training Centre Grants 618,976 548,702 694,929 293,296 - - - New Infrastructure 7,074,205 6,396,260 5,321,145 850,856 100,734 109,825 - Land Purchases - - 1,351,492 - 1,694,708 15,965 - Video Production Subsidy - - - - (x) 1,130,165 1,147,627 Other Grants 528,387 709,897 (xii) 94,648 268,620 789,477 (xi) 348,254 359,966

(i) Prior year revenue held in Trust but recognised in FY2012 following favourable decision in race fields high court litigation. (ii) Grants Received in FY2014 includes $1.351m for Tamworth land acquisition. (iii) Grants Received are higher in FY2012 and FY2014 as result of funds received from RDF for land purchases. (iv) Prior year interest income on race fields funds recognised in FY2012, as a result of the favourable race fields high court decision. (v) The profit of $512,016 arising from acquistion of GHRRA assets for nil consideration has been recognised in Other Income. Commencing FY2013 HRNSW paid prizemoney direct to participants on behalf of clubs and other participants with administration funding only being paid to all (vi) clubs except the Principal Club. Prior to this both prizemoney and administration funding were paid to all clubs. (vii) FY2012 Administration Fee is high due to reimbursement of $3.1m to RDF for video fees paid by RDF during race fields dispute. (viii) Amalgamation expenses relating to the integration of GHRRA and HRNSW. $652,544 was paid in FY2009. The RDF subsidised HRNSW for Sky video production costs until the decision on the race fields case was handed down.This subsidy was repaid in FY2012 (ix) (refer (vii) above). (x) Repayment of IFIL by the Principal Club - from proceeds from the sale of the Harold Park Site (xi) Other Grants are high in FY2012 due to a contribution of $412,490 being made to HRNSW's special investigation program. (xii) Other Grants are high in FY2015 due to a contribution of $450,000 being made to HRNSW's integrity expenses.

Harness Racing NSW Annual Report 2016 15 Review of Operations Strategic Plan

In accordance with Section 12 of the Harness Racing Act 2009, Harness Racing New South Wales is required to include in the Annual Report a progress report on the implementation of the Industry Strategic Plan 2015 to 2016 – A Pathway for the Future.

The Strategic Future encompassed a number of areas which are shown below and on the following pages.

OVERVIEW PRIZEMONEY CLUB ADMINISTRATION MARKETING BREEDING INDUSTRY DEVELOPMENT INFRASTRUCTURE INTEGRITY

PRIZEMONEY TWO-YEAR-OLD RACES FUND UNPLACED/UNFUNDED PRIZEMONEY DRIVERS SUPERANNUATION GUARANTEE FUND NON TAB INCREMENTAL INCREASES $3,000 MEETINGS PRIZEMONEY INCREASES REALLOCATION OF 10 $3,000 MEETINGS TO $5,000 MEETINGS NSWHRC MIDWEEK & $6,000 MEETING INCREASES

16 Harness Racing NSW Annual Report 2016 TWO-YEAR-OLD RACES FUND • FUNDS ADDITIONAL RACE PRIZEMONEY & FORECAST BONUSES AS A RESULT OF THE GUARANTEED TWO- YEAR-OLD RACING POLICY

• FY2017 $200,000 • FY2018 $224,000 • FY2019 $248,000 • FY2020 $272,000 CONVICTION • FY2021 $296,000 NSWBC 2YO SEMI FINAL WINNER

UNPLACED/UNFUNDED PRIZEMONEY

• PAYS THE PRIZEMONEY FOR HORSES THAT PLACE 10TH TO LAST IN PACERS RACES AND 11TH TO LAST IN TROTTERS RACES

• FY2017 $275,000 • FY2018 $325,000 • FY2019 $400,000 • FY2020 $475,000 • FY2021 $550,000

DRIVERS SUPERANNUATION GUARANTEE FUND

• PAYS DRIVERS 9.5% OF GROSS EARNINGS (DRIVERS FEE ONLY) (PROVIDED THAT THEY EARN IN EXCESS OF $450 FOR THE MONTH)

• FY2017 $363,000 • FY2018 $363,000 • FY2019 $400,000 • FY2020 $425,000 • FY2021 $450,000

Harness Racing NSW Annual Report 2016 17 NON TAB INCREMENTAL INCREASES

• INCREASES ARE INTRODUCED INCREMENTALLY IN LINE WITH THE PROJECTED REVENUE FROM $1,500 TO $2,000 • FY2017 $55,500 • FY2018 $55,500 • FY2019 $55,500 FROM $2,000 TO $3,500 • FY2020 $222,000 • FY2021 $222,000

$3,000 MEETINGS PRIZEMONEY INCREASES

• INCREASES ARE INTRODUCED INCREMENTALLY IN LINE WITH THE PROJECTED REVENUE FROM $3,000 TO $3,500 • FY2017 $187,500 • FY2018 $187,500 FROM $3,500 TO $5,000 • FY2019 $750,000 • FY2020 $750,000 • FY2021 $750,000

RECLASSIFICATION OF MEETINGS

• 10 X $3,000 RACE MEETINGS ARE RECLASSIFIED TO $5,000 RACE MEETINGS FROM $3,000 TO $5,000 • FY2017 $120,000 • FY2018 $120,000 • FROM FY2019 ONLY NON TAB CLUBS WILL CONDUCT RACES FOR $3,500 • ASPIRATIONAL FUTURE PROVIDES FOR NO NON TAB MEETINGS

18 Harness Racing NSW Annual Report 2016 INCREASED STAKES – NSWHRC MIDWEEK & $6,000 RACES • INCREASES ARE INTRODUCED INCREMENTALLY IN LINE WITH THE PROJECTED REVENUE • FY2017 NSWHRC MIDWEEK RACES = $6,500 (BASE PRIZEMONEY)

• NSWHRC MIDWEEK & $6,000 RACES - $500 INCREASE • FY2020 $1.029M

• NSWHRC MIDWEEK & $6,500 RACES - $500 INCREASE • FY2021 $2.059M

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26 Harness Racing NSW Annual Report 2016 Review of Operations Racing Tiers and Funding Race Date Allocation

Base prizemoney per race for FY2015/16 from was the same HRNSW continued to aim at stemming the flow of decreasing for each race at each meeting. The thresholds were as per the field sizes from the preceding financial years. Race dates and table below: race programming continued to be streamlined based on the following principles. Races per Base Prizemoney per Type of Meeting meeting Meeting Race Dates Motivation NSWHRC – Metropolitan 8 $187,443 NSWHRC – Career Penalty 8 $48,000 a) To program race meetings based on the horse population within a region at any given time of the A Category 8 $48,000 year. B Category 8 $40,000 b) To increase the probability of full and competitive race B Category 6 $30,000 fields. C Category 8 $24,000 c) To ensure trainers are given options to compete weekly within a region at a level where their horse(s) C Category 6 $18,000 will have some chance of earning money. Non-TAB 6 $9,000 Race Meetings were allocated within regions with the All Carnival of Cups meetings were funded at the A Category Classification of each meeting suiting the status of the meeting Meeting level. and ensuring that there were options for trainers to compete at a competitive level. Prizemoney Contingency Fund For example: To ensure that the horse population was catered for at any If there are two meetings programmed in the Western Districts given time of the year funds are set aside in the prizemoney during a week and there is a Primary Meeting at Bathurst budget into what was termed the Prizemoney Contingency (A Category Meeting), there will be a Secondary meeting Fund. programmed at Parkes or Dubbo (B or C Category Meeting).

The Fund allowed Clubs that received nominations over Race Programming and above their allocated races per meeting at TAB covered meetings to conduct additional races upon application. The programming system which commenced from 1 For example: September 2014 remained in place during 2015/16. If Parkes was to conduct a Secondary (6 race) meeting in a Saturday Twilight timeslot and received enough nominations to The model aims to: conduct eight races, two additional races could be funded from the Prizemoney Contingency Fund. a) Make a higher percentage of horses viable, which will keep them racing and maintain their connections in Additional monies were also required to fund races with 10 or the sport. more starters as Newcastle maximum field sizes increased b) By making horses viable it is hoped that owners will from 10 to 12. be able to further invest in other horses. c) If owners invest in other horses there will be demand The Prizemoney Contingency Fund commenced the season for horses at yearling and ready to run sales. with a balance of $76,320, which was the carry over balance d) If there is demand for horses at sales then commercial from FY2014/15. breeders may breed more horses. e) If hobby owner/breeders have viable race horses then Over the course of the financial year $456,500 was provided they may have money to breed more to Clubs for additional races and $127,466 was provided horses as opposed to leaving their mares barren. as prizemoney for races with 10 or more starters. A further $84,050 was used to fund additional races at Saturday To overcome the aforementioned issues and to better utilise Secondary meetings which were elevated from Sky Racing 2 our horse population, most meetings in NSW in FY2015/16 to Sky Racing 1. These costs were netted off by $655,000 in contained a Divided Stakes event where the HRNSW races allocated but not conducted. Handicapping Panel framed race conditions and selected race fields from the nominations received. Therefore the net spend in FY2014/15 from the Prizemoney Contingency Fund was $13,016. Lifetime Wins, Average Mile Rate (Competitive Stakes), Wins by a Trainer over a period of time (Encouragement Stakes) and Therefore the total amount to be carried forward to FY2016/17 Wins This Season formed the basis of Race Programming. was $63,304.

Harness Racing NSW Annual Report 2016 27 The comparative results for the 2015/16 racing season against the previous 5 seasons were as follows:

Measure 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2010/11 2010/11 2015/16 2014/15 2014/15 2015/16 Variance Variance Trend Variance Variance Trend % % Meetings 459 483 471 478 463 451 (8) (1.7%) (12) (2.6%) Races 3,602 3,818 3,832 3,851 3,692 3,688 86 2.4% (4) (0.1%) Starters 32,288 33,837 33,982 33,417 32,925 34,713 2,425 7.5% 1,788 5.4% Ave Starters Per Race 8.96 8.86 8.87 8.68 8.92 9.41 0.45 5.0% 0.49 5.5% $1.04 - $1.60favourites 771 766 716 891 779 702 (69) (8.9%) (77) (9.9%) $1.04 - $1.60 favourites % 21.4% 20.1% 18.7% 23.1% 21.1% 19.0% (2.4%) (11.1%) (2.1%) (9.8%) $1.70 - $2.50 favourites 1,522 1,694 1,779 1,801 1,669 1,585 63 4.1% (84) (5.0%) $1.70 - $2.50 favourites % 42.3% 44.4% 46.4% 46.8% 45.2% 43.0% 0.7% 1.7% (2.2%) (4.9%) $2.60 - $3.00 favourites 667 735 726 635 666 685 18 2.7% 19 2.9% $2.60 - $3.00 favourites % 18.5% 19.3% 18.9% 16.5% 18.0% 18.6% 0.1% 0.3% 0.5% 3.0% $3.10+ favourites 642 623 611 542 578 716 74 11.5% 138 23.9% $3.10+ favourites % 17.8% 16.3% 15.9% 13.6% 15.7% 19.4% 1.6% 8.9% 3.8% 24.0% Total Odds On Favourites 1,306 1,360 1,347 1,522 1,338 1,252 (54) (4.1%) (86) (6.4%) Total Odds On % 36.3% 35.6% 35.2% 39.5% 36.2% 33.9% (2.3%) (6.4%) (2.3%) (6.3%) Ave Favourite Price 2.32 2.31 2.33 2.23 2.30 2.38 0.06 2.6% 0.08 3.5% Median Favourite Price 2.20 2.20 2.20 2.10 2.20 2.30 0.10 4.5% 0.10 4.5%

Positive Positive Negative Negative Neutral Neutral

The programming during the 2015/16 racing season combined with prizemoney increases provided viability to a higher percentage of horses and gave more owners the exhilaration of winning a race. Furthermore a better utilisation of the horse pool through “like for like” racing and an increase to the maximum field sizes at Tabcorp Park Menangle and Newcastle led to more individual horses racing, larger field sizes and an increase in total turnover and average turnover per race.

Measure 2014/15 2015/16 2014/15 2014/15 Trend Variance Variance % % All Turnover (inc Corporates & TABs) $,000* 652,707 662,709 10,002 1.5% Ave All Turnover per race $,000* 177 180 3 1.6% Prizemoney 31,336,496 32,204,734 868,238 2.8% Ave Prizemoney per Race 7,656.12 8,184.18 528.06 6.9% Prizemoney per Starter 8,566.57 8,519.77 (46.79) (0.5%) Total Trainers with Starters 958 940 (18) (1.9%) Total Trainers with Winners 535 529 (6) (1.1%) Trainer win % 55.8% 56.3% 0.4% 0.8% Trainers with >3 wins 274 273 (1) (0.4%) Total Drivers that have driven 750 715 (35) (4.7%) Total Drivers with Winners 397 360 (37) (9.3%) Driver win % 52.9% 50.3% (2.6%) (4.9%) Drivers with >3 wins 217 190 (27) (12.4%) Total Owner Groups 2,780 2,847 67 2.4% Total Winning Owners 1,389 1,455 66 4.8% Owner Win % 50.0% 51.1% 1.1% 2.3% Owners with >3 wins 491 518 27 5.5% Total Horses 3,658 3,780 122 3.3% Total Horse Winners 1,781 1,855 74 4.2% Horse win % 48.7% 49.1% 0.4% 0.8% Horses with >3 wins 545 560 15 2.8% Starts per Horse 9.66 9.30 (0.36) (3.7%)

Positive * TAB Races Only Negative Neutral 28 Harness Racing NSW Annual Report 2016 RISING STARS SERIES Grimson led the Series from the outset driving both winners at his home track of Young on the opening night of the Series. The Rising Stars Series was conducted in late June with nine NSW junior drivers joined for the by Western Australia Rising Stuart McDonald and Sam Ison registered victories at Bathurst Star Stuart McDonald. Training and development activities on night 2. Grimson notched up another victory on night 3 at included a Menangle Park Training Centre Tour, a session Penrith and Tom Pay drove the other victor. Wins were shared at the HRNSW Offices which included self-development, around at Newcastle with Brad Elder, Ellen Rixon and Mitch integrity, a media review and psychology, a visit to Success Turnbull all saluting. Stud, the Mount Panorama Car Museum, a stable tour of Steve Turnbull’s property, iFly indoor sky diving, attendance Coming into the final heat Grimson had an unassailable lead, at the Bulldogs vs Broncos NRL game and attendance at the Stuart McDonald won the last heat albeit on protest and he inaugural HRNSW Industry Conference. would finish second. Ellen Rixon who had a consistent Series finished third. Activities were organised around the heats conducted at Young, Bathurst, Penrith, Newcastle and Tabcorp Park The full point score table was as follows Menangle. 1st JASON GRIMSON (SOUTH WEST & RIVERINA) 83 The series was coordinated by Harness Racing NSW staff and popular chaperones David & Rachael Micallef ensured that the 2nd STUART MCDONALD (WESTERN AUSTRALIA) 78 participants were provided with an enjoyable yet educational 3rd ELLEN RIXON (METROPOLITAN) 77 experience. 4th SAM ISON (NORTH WEST) 75 5th MITCH TURNBULL (WESTERN DISTRICTS) 73 Representing the South West & Riverina Region Jason Grimson prevailed. The son of former trainer Colin Grimson (a 6th BRAD ELDER (HUNTER) 61 trainer of Double Identity during his illustrious career) has burst 7th TOM PAY (WESTERN DISTRICTS) 60 on the scene in only his second year as a licenced participant. 8th MARTELLE MAGUIRE (METROPOLITAN) 56 His series victory capped off a remarkable year where he also 9th JAMES HARDING (HUNTER) 45 trained and drove DONT THINK TWICE to victory in the Group 1 Bathurst Gold Tiara. 10th ROSS DRUITT (SOUTH WEST & RIVERINA) 29

NSW Rising Stars (L to R Standing) – James Harding, Stuart McDonald, Tom Pay, Ross Druitt, Mitch Turnbull, Jason Grimson and Sam Ison. (L to R Kneeling) – Ellen Rixon, Brad Elder and Martelle Maguire.

Harness Racing NSW Annual Report 2016 29 Feature Racing Review While he was expected to dominate the trotters’ races, Fitzpatrick could only fill the minor places with his following two SEW EURODRIVE MIRACLE MILE entries with Seven Secrets running fourth in the three-year-old final and short-priced favourite Glenferrie Burn leaving its run too late and ending up second with a late burst in the four and 1:47.5 . . . and Have Faith In Me! . . . .Remember that time and five-year-old Trotters’ Final. don’t forget that name because we’ll be talking about them for generations. Zac Phillips guided Red Hot Tooth to victory to deny Fitzpatrick of making it two from two while Todd McCarthy held on from a That was the time four-year-old budding Kiwi superstar Have fast-finishing Fitzpatrick with Glenferrie Burn in the third race. Faith In Me recorded in winning today’s SEW Eurodrive Miracle Fitzpatrick was delighted to draw first blood: “He (Empire Bay) Mile at Tabcorp Park Menangle. went great, he’s been a really smart horse and he’s made mistakes in the wrong races,” he said. It was a track record too, breaking Adore Me’s Australasian record 1:47.7 set in 2015. “His record really should be better than it is. The only time harness racing fans were left guessing was “I was happy to follow Shang Fang Sword as my bloke has at the finish when Have Faith In Me put in a dive at Inter really good speed and he picked the leader up quickly and Dominion and Victoria Cup winner Lennytheshark, before the finished the race right off. judge ruled he had grabbed victory right on the line. “He’ll have a short break now and then head to Victoria for the It was the perfect race from the next superstar of the sport . . . Redwood and then the Breeders Crown.” although it looked anything but a certainty 100m from home. Lennytheshark came from one-out and one-back to surge to The Three-Year-Old Trotters Final could almost be considered the front halfway up the straight and it appeared as if Have a Bathurst victory as Red Hot Tooth was bred by Geoff Bullock Faith In Me just had too much work to do to catch him. from Bathurst. But this amazing son of Bettors Delight didn’t know defeat and He sent the horse to Kari Males, who trains out of Bolinda in ploughed into the lead before grabbing victory in the last stride. Victoria but is originally a Bathurst girl. Third place went to the amazing mare Arms Of An Angel, who set the race up for the amazing time by leading from the pole Young Victorian-based reinsman Zac Phillips, 20, caught a and running them along in fine style. plane this morning to drive the horse and then headed straight back to drive at Shepparton tonight. Turning for home the mare and Lauren Panella were still giving plenty of cheek after quarters of 26.4s, 27.4s and 26.5s. The “I’ve been up here a few times but this is the first time I’ve winner hit the line with a final split of 27.2 for the incredible driven a winner here,” he grinned. track record time and an even-more-special fourth Group One for the Mark Purdon-Natalie Rasmussen team. “She’s been revelation this horse and came down around six months ago. She wasn’t much to look at but has had six starts “Wow, what a day,” was Rasmussen’s comment as the and kept improving. champion reinsman known by many as Miss Inter Dominion, thanks to her four Inter Dominion victories with Blacks A Fake, “Once she began to race the better horses she just acquitted became known as “Miss Miracle Mile” thanks to a handsome herself well. little bay gelding named Have Faith In Me. “I thought I’d be hard to beat if could lead and we had such a “It was so special with this horse as he has so much learning great run I was really confident. and growing up to do. “If she’s in front she runs her best races. “This win is right up there. Just the way he did it – he’s such a little tiny green little fellow. “I think she could have gone quicker had she needed to. It’s a terrific story the owners are lovely people and it’s really good to “I’m overwhelmed and I’m just so proud of this little horse.” see people win on a big day like today.” Story written by NSW Harness Racing Club She’s All Apples for Jimmy LEADING local reinsman Jimmy Douglass knocked something PEPPER TREE FARM NSW off his “bucket list” when he scored an amazing win with BREEDERS CHALLENGE FINALS outsider Shezallapples in today’s Group One Alabar NSW Breeders Challenge Two-Year-Old Fillies Final at Tabcorp Park Empire Rises to the Challenge Menangle. HONOURS and dollars were shared although there were hardly any great surprises after the three Group Two Trotters Despite his successes around the country, the win was Finals at Tabcorp Park Menangle this afternoon. Douglass’ first Group One in his home state.

Blake Fitzpatrick kicked off the big Breeders Challenge Finals And while his Victoria Derby win a few years ago was Day in typical fashion when he took Empire Bay to victory in something special, the pocket rocket was over the moon to the opening event, the Two-Year-Old Trotters Final. score with Shezallapples after securing a late split near the pegs to beat Rocknroll Emma by 2.9m with Im With Lexy third Sent out a prohibitive $1.50 favourite, Empire Bay was a in a 1:53.3 mile rate. comfortable winner over his only two rivals Shang Fang Sword and Nanas Eyes.

30 Harness Racing NSW Annual Report 2016 Punters were left reeling after the David Thorn-trained youngster paid a massive $91.20 on the tote, despite “I’m just sorry my Dad (his late father Joe) was not here to see Douglass’ suggestion that he seriously felt he was a great this win,” he said. chance going into the race. “Dad actually raced a horse by the same name about 50 years “At the top of the straight I was full of running,” he said. ago and I never for a moment dreamed we would be here “I aimed up for a big gap in the middle and then it suddenly today to celebrate something like this.” closed. Trained by Cordina’s good friends KerryAnn Turner and “I then had to switch to the outside or the inside and I decided reinsman Robbie Morris, Charlaval’s win was even more to go back to the inside and we were lucky enough to get impressive as he appeared to be racing on a slower section of through and when we did we sprinted really quickly. the track.

“I honestly thought she was a hope going into the race. Morris was delighted with the win.

“She went really well in the semi and every run she has just got “It always good to be here on these big days and for him to do better and better and David (Thorn) has been really happy with all that work and come down the outside like that was a real her work. thrill,” he said.

“I thought she felt terrific last start and I knew that with a bit of “It’s hard to believe he didn’t even make this race last year. luck she had a great hope. “He matured late and took all day to do everything but he’s really hitting his straps now and we couldn’t be happier with “They’re good fillies, and to run 52 – well, she’s only a two- him. year-old filly. “I needed everything to do a bit of work and it sort of played in “In both heats there was a slow second quarter and both times my hands really. Match In Heaven carted me into it for a long I went back and said she’d be better if they run along and that’s way and that probably helped a lot and we were able to come exactly how it panned out today. off his back and move right into the finish.

“This was good for Paul (Shipley), he was on this horse and “It’s been a great combination (with KerryAnn) and our is a real was tipped out at Penrith. family affair at home: we’re a tight knit team and you couldn’t do it without them. “Obviously he couldn’t go on with the horse and he’s good friends with the Thorn family, so they were really happy to get “We’ve always had that family support. Kids come and help at him.” the weekend and it’s a really good feeling to score in a race like this. The two-year-old colts’ Breeders Challenge was Bathurst- bound after For A Reason youngster Conviction scored the “I couldn’t be happier for Daniel.” gutsiest of wins for Amanda Turnbull and her trainer/father Steve. Callaghan’s Ready to Rock FANS called for a dead-heat but the judge gave Rockmemama Posted in the breeze for the entire journey, Conviction fought the nod by the barest margin in today’s three-year-old fillies off all challengers in the straight to beat Three Of The Best and final of the Alabar NSW Breeders Challenge. Redbank Blaze by 1.4m in a 1:53.5 mile rate. Just when Eye See Diamonds (Nathan Jack) looked set to win, “It was a super tough effort. I had to go for home a bit early but Rockmemama dived at her and scored a last-stride win, rating he was never going to let that one past,” said Amanda after the 1:52.4 with even-money favourite Heavens Trend a plucky third win. after racing without cover for most of the journey.

“When he heard them coming he was right and knuckled down In a day of upsets, it was a popular win for Newcastle reinsman to hold them off.” Mark Callaghan as there was a sprinkling of money for the daughter of Rocknroll Heaven as she started at $7.90. “When he got beaten at Bathurst he proved to us how tough he really was and I learned a bit about him that night.” It was the stringbean Callaghan’s first Group One success. Likewise for trainer Darryl Thomas, who is based at Sawyers Cordina the Top Rooster Gully. IT was sweet revenge for owner Daniel Cordina, of Cordina Chicken Farms, when the well-backed Charlaval took out “Yes that was quite a thrill,” said Callaghan. today’s thee-year-old colts and geldings Alabar NSW Breeders Challenge Final at Tabcorp Park Menangle today. “Darryl seems to be able to get this horse to peak at just the right time. Cordina was holidaying in the US a few years ago when Blissfull Guy lost a Breeders Challenge to No Ah Saint on “That’s what he did for Bathurst and she won with authority and protest. this was her fourth run in again today and she’s peaked again But Cordina was “back in the spotlight” today when Charlaval and she’s won again. came from well back on the home turn to beat Sams The “I thought we’d either be behind the leader or three back on the Master by a head with Rock Of America 3.6m away third in a fence and I wasn’t too concerned either way . . . as long as 1:51.9 mile rate. we were tracking the good horses - and we were, I knew I’d be right there. Cordina was delighted to finally get a Breeders Challenge trophy for the sideboard. “So it all worked out well.

Harness Racing NSW Annual Report 2016 31 In a field of young drivers, John McCarthy could probably be “They ran a quick last half so she did a good job to get over the classed as a veteran, even though he’s only mid 50s, but he top of them.” took Emilio Rosati’s advice and showed the youngsters a thing or two. Callaghan has three young boys who help out around the stables. All three were on hand to cheer and there were even “I thought she’d be quick out and I might struggle to get to the a few tears on the pedestal as they savoured their father’s lead (from gate five),” said a jubilant McCarthy after scoring on biggest win. the Belinda McCarthy-trained mare.

Sapphire Strides Home for McCarthy “But they just didn’t come at me in the straight. IT’S no surprise to see leading owners Emilio and Mary Rosati in the winners’ circle on Breeders Challenge Day at Tabcorp “I was getting a bit tired near the line . . . but so were they and Park Menangle. she just kept boxing on.”

And beautifully-bred mare Sapphire Stride added to the McCarthy [senior] described Sapphire Stride as a nice mare: fanfare when she scored a surprise win in today’s Alabar NSW “We had a good barrier today and it might have been different Breeders Challenge Group One for four-year-old mares. if we didn’t and this win has made it really good for her as a broodmare later on. What did surprise, however, was the price: Sapphire Stride was sent out at the amazing odds of $36.20 on the TAB before “Emilio said you go show them – and today we did.” leading most of the way to defeat Hey Porsha and Dolly Braveheart, scoring by a head in a 1:52.7 mile rate. Stories written by National Trotguide Editor-In-Chief Michael Court Disappointment of the race was the $1.30 favourite Ameretto (Ash Grives), who settled down near last and couldn’t make up the ground in the straight before finishing a close fourth.

NSW TAB Turnover 230,000

180,000

130,000

80,000 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

Pari Mutual Total Turnover

NSW TAB Average Turnover Per Race 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

32 Harness Racing NSW Annual Report 2016 TAB Races 3,900 3,850 3,800 3,750 3,700 3,650 3,600 3,550 3,500 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

Average Field Size 9.60 9.40 9.20 9.00 8.80 8.60 8.40 8.20 8.00 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

Individual Starters

4,450

4,250

4,050

3,850

3,650

3,450

3,250 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

Harness Racing NSW Annual Report 2016 33 Total Races 4,500

4,000

3,500

3,000

2,500 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

Prizemoney Paid ($M) 34

$M 24

14 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

Prizemoney Paid per race 9,000 8,500 8,000 7,500 7,000 6,500 6,000 5,500 5,000 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

34 Harness Racing NSW Annual Report 2016 Percentage of races run with less than 8 starters 22

10 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

# FOALS BRANDED 1450 1400 1350 1300 1250 1200 1150 1100 1050 1000 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

Harness Racing NSW Annual Report 2016 35 Review of Operations Breeding ALABAR NSW BREEDERS CHALLENGE MAJOR THREE YEAR OLD TROTTERS RACE SERIES 1 race in total and $30,000 in prizemoney and bonuses. Races Stakes Total The Alabar NSW Breeders Challenge series again attracted 1 Final $30,000 $30,000 star juveniles to the 1 prelude and 27 heats conducted around the state with 12 semis and 9 finals run at the country’s premier The Final held at Tabcorp Park Menangle on 26 June 2016 track in late June. was won by RED HOT TOOTH Bred and owned by Graham Bullock The FY2016 series was worth $1.8M and included races Trained by Kari Males for 2YO, 3YO & 4YO Colt, Entires & Geldings and Fillies & Driven by Zac Phillips Mares and incorporated the 2YO, 3YO and 4YO&5YO Trotters series, the 4YO&5YO’s for the first time, which added a further THREE YEAR OLD COLTS & GELDINGS dimension to Industry Day and provided increased money 10 races in total and $305,000 in total prizemoney paid. earning opportunities for owners of NSW Breeders Challenge eligible horses. Races P/M per race Total P/M 7 Heats $15,000 $105,000 TWO YEAR OLD TROTTERS 2 Semis $25,000 $50,000 1 Final $150,000 $150,000 1 race in total and $30,000 in prizemoney and bonuses. Races Stakes Total The Final held at Tabcorp Park Menangle on 26 June 2016 1 Final $30,000 $30,000 was won by CHARLAVAL Bred by Fran Hausfeld The Final held at Tabcorp Park Menangle on 26 June 2016 Owned by Daniel Cordina was won by EMPIRE BAY Trained by KerryAnn Turner Bred and owned by Michael Taylor Driven by Robert Morris Trained and Driven by Blake Fitzpatrick THREE YEAR OLD FILLIES TWO YEAR OLD COLTS & GELDINGS 9 races in total and $290,000 in total prizemoney paid. Races P/M per race Total P/M 10 races in total and $280,000 in prizemoney. 6 Heats $15,000 $90,000 Races P/M per race Total P/M 2 Semis $25,000 $50,000 7 Heats $15,000 $105,000 1 Final $150,000 $150,000 2 Semis $25,000 $50,000 1 Final $125,000 $125,000 The Final held at Tabcorp Park Menangle on 26 June 2016 was won by ROCKMEMAMA The Final held at Tabcorp Park Menangle on 26 June 2016 Bred and Owned by Maxwell Deckert was won by CONVICTION Trained by Darryl Thomas Bred by Yirribee Pacing Stud Driven by Mark Callaghan. Owned by G Sloane and T Sloane Trained by Steve Turnbull FOUR YEAR OLD ENTIRES & GELDINGS Driven by Amanda Turnbull 3 races in total and $150,000 in total prizemoney paid. Races P/M per race Total P/M TWO YEAR OLD FILLIES 2 Semis $25,000 $50,000

10 races in total and $280,000 in total prizemoney paid. 1 Final $100,000 $100,000 Races P/M per race Total P/M The Final held at Tabcorp Park Menangle on 26 June 2016 7 Heats $15,000 $105,000 was won by MOUSE IN THE HOUSE Bred by J W Dwyer, C A Dwyer, I C Thomson, M Pesle, M J Dwyer 2 Semis $25,000 $50,000 Owned by J W Dwyer, M J Dwyer, C A Dwyer, I C Thomson, 1 Final $125,000 $125,000 Trained and Driven by Steve Turnbull.

The Final held at Tabcorp Park Menangle on 26 June 2016 was won by SHEZALLAPPLES Bred by F R Barker and P F Barker Owned by P Shipley & S N Shipley Trained by David Thorn Driven by Jimmy Douglass

36 Harness Racing NSW Annual Report 2016 FOUR YEAR OLD MARES PEPPER TREE FARM BREEDERS CHALLENGE 3 races in total and $150,000 in total prizemoney paid. REGIONAL FINALS Races P/M per race Total P/M 2 Semi Finals $25,000 $50,000 The sixth series of the Pepper Tree Farm NSW Breeders Challenge Regional Finals were conducted at Bathurst on 1 Final $100,000 $100,000 Sunday, 26 July 2015. There were six $20,000 finals conducted for females and males of ages 2, 3 and 4YO. The Final held at Tabcorp Park Menangle on 26 June 2016 was won by SAPPHIRE STRIDE WINNERS: Bred by Brooklyn Lodge Aberdeen Pty Ltd, Owned by E & M Stride Trained by Belinda McCarthy 2YO COLTS & GELDINGS Driven by John McCarthy BETTOR TOGETHER Bred by Yirribee Pacing Stud, S L Woodhouse Owned by Fleur De Lil Trust, Yirribee Pacing Stud FOUR & FIVE YEAR OLD TROTTERS Trained by Belinda McCarthy Driven by Todd McCarthy. 2 races in total and $150,000 in total prizemoney paid.

Races P/M per race Total P/M 2YO FILLIES Prelude $7,000 $7,000 MERRYWOOD RUBY 1 Final $30,000 $37,000 Bred and Owned by W P Dimech, S E Dimech Trained by Wayne Dimech The Final held at Tabcorp Park Menangle on 26 June 2016 Driven by Gavin Fitzpatrick. was won by IONA GRINNER Bred by A T Daniels 3YO COLTS & GELDINGS Owned by T D Williams, I S Williams CHUMLEE Trained by Troy Williams Bred by A Lombardozzi, R N Pike Driven by Todd McCarthy Owned by R A Cluse, T J Cluse Trained and Driven by Amanda Turnbull

3YO FILLIES PEPPER TREE FARM BREEDERS NSW BREEDERS MISS NICKELS CHALLENGE BLUE FINALS Bred by Mark Vallander Owned by Rachel Weaver The Pepper Tree Farm NSW Breeders Challenge Blue Finals Trained and Drivien by David Hewitt. were conducted at Tabcorp Park Menangle on Saturday, 11 July 2015. There were four (G2) $50,000 finals conducted for 4YO ENTIRES & GELDINGS females and males of ages 2 & 3YO. GLENCORE Bred and Owned by M Sieper, E Sieper The series was created for 100% NSW Bred horses, that Trained and Driven by James Rattray being by a stallion that was domiciled in NSW and out of a broodmare that was served in NSW and foaled in NSW. 4YO MARES SHES A JACKSON WINNERS: Bred, Owned, Trained and Driven by Trevor White

2YO COLTS & GELDINGS STALLION PERFORMANCE EXPRESS PASS, Bred by Killarney Farms Pty Ltd Owned by Fleur De Lil Trust Below are tables outlining the total number of wins for sires Trained by Belinda McCarthy during the NSW Breeders Challenge Series’ in FY2016: Driven by James Rattray. Count of Sire Name 2YO FILLIES ROCK N ROLL HEAVEN USA 11 SPORT REPORT SOMEBEACHSOMEWHERE USA 7 Bred and Owned by Craig Cross ROCKNROLL HANOVER USA 4 Trained and Driven by Mark Hewitt FOUR STARZZZ SHARK CA 3

3YO COLTS & GELDINGS SPORTSWRITER USA 3 MILLION DOLLAR WAVE ARMBRO OPERATIVE USA 2 Bred by Yirribee Pacing Stud GRINFROMEARTOEAR USA 2 Owned by P B Dobson, A K Semmens, D A Semmens, ART MAJOR USA 2 F J Spillane, B D Dobson, K Adams, C E Tubbs Trained by Paul Fitzpatrick FOR A REASON 2 Driven by Gavin Fitzpatrick ROLL WITH JOE USA 2

MILLION DOLLAR CAM USA 2 3YO FILLIES MACH THREE CA 2 PASS THE MAGIC Bred by B J Hewitt, C G Hewitt VILLAGE JOLT CA 2 Owned by C G Hewitt MAJOR IN ART USA 2 Trained and Drivien by Bernie Hewitt PASSMASTER HANOVER USA 2 *Minimum 2 wins Harness Racing NSW Annual Report 2016 37 NSW BREEDERS CHALLENGE RACE SERIES – 1:58.0 PERFORMERS (FY2016)

DATE TRACK AGE DIVISION HORSE SIRE NAME MILE RATE 26-06-2016 MENANGLE 4 E&G MOUSE IN THE HOUSE FOUR STARZZZ SHARK CA 1:51.8 26-06-2016 MENANGLE 3 C&G CHARLAVAL FOUR STARZZZ SHARK CA 1:51.9 26-06-2016 MENANGLE 3 FILLY ROCKMEMAMA ROCK N ROLL HEAVEN USA 1:52.4 11-06-2016 MENANGLE 4 MARE AMERETTO MILLION DOLLAR CAM USA 1:52.4 18-06-2016 MENANGLE 3 C&G SAMS THE MASTER TELL ALL USA 1:52.5 26-06-2016 MENANGLE 4 MARE SAPPHIRE STRIDE ARTISTIC FELLA USA 1:52.7 07-06-2016 MENANGLE 3 C&G MATCH IN HEAVEN SOMEBEACHSOMEWHERE USA 1:52.8 18-06-2016 MENANGLE 4 E&G HEZ A DUDE STONEBRIDGE REGAL USA 1:52.9 18-06-2016 MENANGLE 3 C&G ARMA THE GUN VILLAGE JOLT CA 1:52.9 11-06-2016 MENANGLE 2 C&G CONVICTION FOR A REASON 1:53.1 26-06-2016 MENANGLE 2 FILLY SHEZALLAPPLES SPORTSWRITER USA 1:53.3 18-06-2016 MENANGLE 4 MARE JILLIBY JITTERBUG ROCK N ROLL HEAVEN USA 1:53.4 18-06-2016 MENANGLE 4 E&G COLONEL JOY SOMEBEACHSOMEWHERE USA 1:53.4 07-06-2016 MENANGLE 3 FILLY ROCKMEMAMA ROCK N ROLL HEAVEN USA 1:53.5 26-06-2016 MENANGLE 2 C&G CONVICTION FOR A REASON 1:53.5 11-06-2016 MENANGLE 2 C&G THREE OF THE BEST MACH THREE CA 1:54.0 18-06-2016 MENANGLE 3 FILLY HEAVENS TREND ROCK N ROLL HEAVEN USA 1:54.0 07-06-2016 MENANGLE 3 C&G EFFRONTE ROCK N ROLL HEAVEN USA 1:54.0 11-06-2016 MENANGLE 2 FILLY DECAPRIA SOMEBEACHSOMEWHERE USA 1:54.2 31-05-2016 MENANGLE 2 C&G REDBANK BLAZE ROCKNROLL HANOVER USA 1:54.6 18-05-2016 BATHURST 2 C&G BULLET STRIDE MAJOR IN ART USA 1:54.7 07-06-2016 MENANGLE 3 C&G ARMA THE GUN VILLAGE JOLT CA 1:54.7 07-06-2016 MENANGLE 3 FILLY EYE SEE DIAMONDS ROCK N ROLL HEAVEN USA 1:54.7 11-06-2016 MENANGLE 4 MARE HELENS BONUS GRINFROMEARTOEAR USA 1:54.7 25-05-2016 BATHURST 3 C&G FOUROEIGHT ROCK N ROLL HEAVEN USA 1:54.8 11-06-2016 MENANGLE 2 FILLY DONT THINK TWICE ARMBRO OPERATIVE USA 1:54.9 31-05-2016 MENANGLE 2 C&G ATOMIC RED ROCKNROLL HANOVER USA 1:55.0 27-05-2016 NEWCASTLE 3 FILLY EYE SEE DIAMONDS ROCK N ROLL HEAVEN USA 1:55.2 31-05-2016 MENANGLE 2 FILLY JOYCES DESIRE REAL DESIRE USA 1:55.2 31-05-2016 MENANGLE 2 FILLY DECAPRIA SOMEBEACHSOMEWHERE USA 1:55.7 31-05-2016 MENANGLE 2 C&G BULLET STRIDE MAJOR IN ART USA 1:56.0 25-05-2016 BATHURST 3 FILLY ART MISTRESS ART MAJOR USA 1:56.2 26-06-2016 MENANGLE 4 TROT IONA GRINNER GRINFROMEARTOEAR USA 1:56.4 31-05-2016 MENANGLE 2 FILLY ROCKNROLL EMMA ROCKNROLL HANOVER USA 1:56.5 20-05-2016 NEWCASTLE 2 C&G MAXENTIUS MACH THREE CA 1:56.6 11-07-2015 MENANGLE 3 C&G EXPRESS PASS PASSMASTER HANOVER USA 1:56.7 27-05-2016 WAGGA 3 C&G LETTUCEFIRESTAR COURAGE UNDER FIRE NZ 1:56.9 11-07-2015 MENANGLE 2 C&G MILLIONDOLLAR WAVE MILLION DOLLAR CAM USA 1:57.0 18-05-2016 BATHURST 2 FILLY IM WITH LEXY ROLL WITH JOE USA 1:57.0 27-05-2016 NEWCASTLE 3 C&G CHARLAVAL FOUR STARZZZ SHARK CA 1:57.3 26-06-2016 MENANGLE 3 TROT RED HOT TOOTH YANKEE PACO USA 1:57.3 26-07-2015 BATHURST 3 C&G BETTOR TOGETHER BETTORS DELIGHT USA 1:57.5 11-07-2015 MENANGLE 2 FILLY SPORT REPORT SPORTSWRITER USA 1:57.6 27-05-2016 WAGGA 3 FILLY HEAVENS TREND ROCK N ROLL HEAVEN USA 1:57.7 26-05-2016 PENRITH 3 FILLY MY MACKENZIE ROCK N ROLL HEAVEN USA 1:57.7

38 Harness Racing NSW Annual Report 2016 BREEDING SCHEMES ii. The service fee of a stallion nominated for the NSW Breeding Schemes to a NSW based mare upon confirmation of a positive 35 day pregnancy test. Owners Bonus Certificates In FY2016 there were 430 NSW Breeders Challenge Owners There was an increase in certificates issued to 2YO’s Bonus Certificates issued for a total of $1,292,000. This and it can be evidenced that 4YO & older horses that compares to FY2015 where there were 443 NSW Breeders had sustained for the NSW Breeders Challenge and Challenge Owners Bonus Certificates issued for a total of had not won a prior Owners Bonus Certificate reaped $1,333,000. the benefits of the change in conditions in FY2015, which led to a decrease in FY2016. The Bonus Certificates are redeemable against: i. The purchase price of a NSW Breeders Challenge A breakup of the distribution of Certificates was as follows: eligible yearling at a registered Australian sale

Age/Type FY2015 % FY2016 % Variance Certificates Variance % Certificates Certificates 2YO 81 18.3 96 22.3 15 4.0 3YO 177 39.9 174 40.5 (3) 0.6 4YO 98 22.1 99 23.0 1 0.9 5YO 58 13.1 38 8.8 (20) (4.3) 6YO 23 5.2 14 3.3 (9) (1.9) 7YO 3 0.7 5 1.1 2 0.4 SPONSORSHIP 3 0.7 4 1.0 1 0.3 TOTAL 443 430 (13)

Foal Nominators Bonuses Foaling Year Total Foals There were 308 Foal Nominators bonuses won during FY2015/16. This amounted to $924,000 in cash being 2015/16 1,123 distributed. 2014/15 1,148 2013/14 1,238 A further $48,774 was distributed in Group 1 Winning Bonuses 2012/13 1,312 which were paid at 10% of the advertised first prizemoney to any 2YO, 3YO and 4YO Foal Nominator. 2011/12 1,402 2010/11 1,405 Therefore in total $2,264,774 in NSW Breeding Scheme Bonuses were paid in FY2015/16, this was an increase of Stallion Incentive Scheme $188,014 (9.1%) on FY2014/15. The Stallion Incentive Scheme has existed for six breeding seasons. Stallion Nominations Stud Master’s worldwide continued to be given the option of The scheme provides money for the advertising of first season nominating their stallions for the NSW Breeding Schemes, stallions standing in NSW and second season stallions on a while their progeny would be eligible if a mare was served in dollar for dollar basis. NSW and the resultant foal born in NSW. The number of services achieved by Stallion eligible for the Non acceptance would mean that Breeders Challenge Owners Scheme can be seen below: Bonus Scheme Certificates and any future stallion nominator share of all Breeders Challenge Race Series prizemoney First Season Stallion would be foregone. Stallion Stud 2015/16 Services Proving the popularity of the NSW Breeding Schemes 100 stallions were nominated. They hailed from the most Fly Like An Eagle Yirribee Pacing Stud 50 prominent studs in the world with the breakup of stallion Total 50 locations as follows: Second Season Stallions Stallion Location Nominees VIC 32 Stallion Stud 2015/16 NSW 27 Services Caribbean Blaster Yirribee Pacing Stud 67 NZ 20 Shoobees Place USA Lochend Stud 19 Northern Hemisphere 15 Major In Art USA Medowie Lodge 19 QLD 6 Total 340 Foal Numbers 2015/16

The total number of live foals registered in FY2016 was 1,123.

As a comparison the break up for the previous five breeding seasons was as follows:

Harness Racing NSW Annual Report 2016 39 Colonial Stallion Bonus The number of services and live foals for the 2014/15 season HRNSW introduced the Colonial Stallion Bonus in the was as follows: 2014/15 Breeding Season. It was initiated to provide well performed and bred Australasian horses (Colonial Stallions) Stallion 2014/15 2015/16 Live the opportunity to attract strong books of mares and to Services Foals provide breeders with an incentive to send their mares to such Stallions. Caribbean Blaster 110 62 (56%) Flightpath 9 8 (89%) There has been a negative bias by Breeders to using Colonial Lombo Pocket Watch 22 17 (77%) Stallions over recent years. However, with better tracks Mister Swinger 7 7 (100%) producing quick times it is clear that Colonial Stallions are as good as the imported horses. Robin Hood 16 8 (50%) Sir Galvinator 7 5 (71%) $500 is payable upon a live foal to the Foal Nominator of a The Warp Drive 25 9 (36%) mare served by an eligible Colonial Bred Stallion conceived TOTAL 196 116 (59%) in the 2015/16 breeding season. In effect this reduces the payment by the Breeder to the Stallion Owner by $500. There were 1,360 services by Stallions that stood in NSW in 2014/15. The Colonial Stallion Bonus equated to 14% of total The Conditions are as follows: services. • The stallion must have been bred in Australasia. The number of services for the 2015/16 season was as follows: • The stallion must have won a Group 1 race and must be standing at a NSW stud. • The sire of the stallion must have won a Group 1 or Stallion 2015/16 Services equivalent race. Caribbean Blaster 67 • The stallion must be nominated for the NSW Breeders Fly Like An Eagle NZ 50 Challenge. Lombo Pocket Watch 18 Foal nominators may use the $500 to offset NSW Breeders Maffioso 28 Challenge fees at the time of Foal Notification. Mister Swinger 9 Robin Hood 8 Soho Valencia 13 TOTAL 193

There were 837 services by Stallions that stood in NSW in 2015/16. The Colonial Stallion Bonus equated to 23% of total services. Carnival of Cups

TAB 2015/16 Carnival of Cups The provision of additional funding and dedicated promotional Since its inception in 2007 the Carnival of Cups Series has support by HRNSW has enabled clubs to obtain new sponsors been acclaimed by the industry as one of the most progressive as well as create a race event that brings harness racing closer and positive initiatives of the decade. to local communities.

During its existence it has grown significantly. In 2007 fourteen Attendances were high especially in the country and were events were conducted which produced a total financial benefit boosted by live entertainment provided by Clubs which was to the industry of $916,000, the majority of which was paid as subsidised in part by HRNSW. prizemoney. HRNSW would like to congratulate the host Clubs for their In FY2016 twenty eight events were conducted throughout the efforts in obtaining sponsorship and attracting participants and State. A substantial $2,560,090 was distributed as prizemoney, crowds to their venues. proving that the vision of HRNSW Chairman Rex Horne has been achieved. HRNSW would also like to thank the numerous sponsors that have supported the Carnival of Cups concept across the The rationale behind the introduction of the Carnival of Cups state since 2007 and TAB for again sponsoring the Series in was the need perceived by HRNSW to build a linked series of FY2016. races that would incentivise clubs while also providing a fair In FY2016 HRNSW introduced a new award to encourage and equitable means of funding country racing. participation on and off the track. Horses scored points in the series depending on finishing positions in each of the six legs Launched with seed funding obtained from internal efficiencies while owners could earn their horse a bonus four points by as well as the contribution of race dates and funding by the attending the event and reporting to the Club Secretary. Principal Club, the Carnival of Cups Series provides clubs with the opportunity to receive funding from HRNSW which Spare Me Days was declared the leading horse in the six is distributed on a dollar-for-dollar basis according to cash feature races run during the Carnival of Cups and won his sponsorship raised. owners Brad Hewitt and Milly Marmont $15,000.

40 Harness Racing NSW Annual Report 2016 Spare Me Days won two of the six legs of the bonus - the In addition to the major Carnival of Cups bonus there was a Young Cup and the Bulli Cup. The four year old also ran $5,000 participation bonus. second in the Goulburn Cup, Penrith’s Renshaw Cup and Bankstown’s Sydney Cup. Horses became eligible for the participation bonus by competing in a minimum two of the six feature races and The final Carnival of Cups bonus points tally were rewarded with a ticket in the draw for every race feature (including owners bonus points) meeting they competed at. Therefore after earning five tickets Spare Me Days 77 in the draw, it wasn’t a shock when Spare Me Days won another $5,000 for his owners Brad and Milly. Condagen 43 Yayas Hot Spot 42 Beetson 24 Tact Tate 20 Betabcool 19 Pachacuti 17 Bling It On 16 Lochinver 16 Freyberg 15

Carnival of Cups Feature Race Winners Date Club Prizemoney Race Winner Trainer Driver 05/10/15 Eugowra (G3) $30,000 Canola Cup Oh I Am The One NZ A S Turnbull A J Turnbull 08/11/15 Griffith $10,000 Griffith Cup Miss Ponder P S Kahlefeldt J R Grimson 22/11/15 Blayney $12,240 Billy Soo Memorial Cup Oh I Am The One NZ A S Turnbull A J Turnbull 26/12/15 Bathurst (G2) $51,500 Shirley Turnbull Memorial Bling It On B J McCarthy L A McCarthy 31/12/15 Parkes $15,300 Golden Bar Final Camroller C R Thomas S M Maguire 01/01/16 Leeton (G3) $40,800 Breeders Plate Easter Jolt P G Manning D N Moran 02/01/16 Maitland (G3) $30,600 Inter City Pace Kept Under Wraps B J McCarthy L A McCarthy 08/01/16 Temora $12,240 Temora Pacers Cup Holm Three NZ D M Hewitt D M Hewitt 22/01/16 Tamworth (Listed) $25,500 Golden Guitar Cyclone Kate NZ J P McCarthy J P McCarthy 24/01/16 Junee $14,280 Junee Pacers Cup Sporty Spook D A Kennedy D A Kennedy 26/01/16 Goulburn (G3) $31,800 Goulburn Cup Condagen D G Picker D G Picker 14/02/16 Orange $13,250 Banjo Patterson Cup Mister Jay Cee R F Baverstock R P Morris 27/02/16 Albury $14,994 Albury Pacers Cup Wingara P R Romero D N Moran 04/03/16 Wagga Wagga $14,280 Wagga Pacers Cup Wingara P R Romero N R Jack 12/03/16 Young (G3) $30,600 Young Cup Spare Me Days B M Hewitt B M Hewitt 13/03/16 Narrabri $10,200 Carnival of Cups Final Give Me Fifty J L Gaffney J L Gaffney 18/03/16 Broken Hill $14,000 Pacing Cup Plati R M Hryhorec M Smith 27/03/16 Armidale $10,200 Armidale Cup Strathlachlan Andy G A Harding J M Harding 03/04/16 West Wyalong $12,720 Standing Start Series Final Oh Jonny B Good NZ A J Turnbull A J Turnbull 14/04/16 Penrith (G2) $50,000 Renshaw Cup Yayas Hot Spot NZ S P Tritton L R Panella 17/04/16 Cootamundra $14,999 Wattle Time Cup Strathlachlan Andy G A Harding J M Harding 22/04/16 Bankstown (G3) $30,600 Schweppes Sydney Cup Tact Tate NZ A J Turnbull A J Turnbull 29/04/16 Dubbo (G3) $30,600 Red Ochre Mares Classic Maudie Mombassa C Edwards M B Towers 30/04/16 Bulli (G2) $50,000 Bulli Cup Spare Me Days B M Hewitt B M Hewitt 01/05/16 Inverell $10,000 Carnival of Cups Pace Fours Enuf Tas J A Weidemann S L Weidemann 08/05/16 Forbes $12,240 Forbes Final Early Decision J W Vautin C M Williams 12/06/16 Peak Hill $10,200 Peak Hill Final A Life Under Fire L J Hewitt J T O’Shea 13/06/16 Fairfield $14,994 J D Watts Memorial Oh Jonny B Good NZ A J Turnbull N R Jack

Harness Racing NSW Annual Report 2016 41 Review of Operations Integrity

The past year has again been a challenging one for the Integ- • why was it being sold for considerable financial reward rity Department, with continued non-compliance regarding the compared with a registered vitamin; and finally presentation of horses to races not free of prohibited substanc- • HRNSW as a regulator of the industry does not need to es. HRNSW strives to achieve the most level playing field for confirm its performance enhancing abilities, just that it has owners and participants and this is achieved through effective, the potential. robust and well considered equine drug control and testing strategies. But most concerning is that it would appear on the research and intelligence received by HRNSW that there is a welfare We unfortunately saw the departure of highly experienced and issue to be considered. respected Veterinarian Dr Martin Wainscott to Dubai, however his replacement Dr Don Colantonio is “travelling” nicely into Unfortunately there is always the battle to remain ahead of the role. Don has continued to deliver on our increased Out of those that seek to push the limits of substances to enhance Competition and Total Plasma Carbon Dioxide testing strate- the horse’s performance and to beat the forensic laboratories. gies. HRNSW is very conscious of this and works very closely with the Australian Racing Forensic Laboratory (ARFL) on new and The integrity department has continued its investment in both likely substances that may appear on the scene. technologies and resources to ensure that it remains one of the leaders in sports regulation. This has seen additional staff The industry also saw the introduction of the new whip rule added to the department to ensure that participants are being which now means that drivers shall only use the whip whilst compliant with the Rules and Regulations. In addition to its holding a rein in each hand. HRNSW commenced consultation already strong digital technologies, HRNSW has also intro- with the UHRA sometime prior to the introduction of the Rule, duced a case management system which allows inquiries and and we must congratulate the drivers who adapted to the new investigations to be better managed. In addition, the system requirements very quickly and professionally. These new Rules allows for excellent storage and utilisation of intelligence data further demonstrate the industry’s commitment to equine wel- which has been gathered by our team. fare and the provision of a modern industry.

The additional staff have been busy out in the field undertaking In addition to the most commonly recognised activity con- raceday surveillance, attending non-race meeting activities and ducted by the integrity department, which is the provision of also conducting stable inspections. HRNSW conducted over Stewards at race meeting, the following is a brief description of 400 stable inspections over the last twelve months, which is other activities undertaken: about 40% of all the registered properties. During these inspections, HRNSW personnel are ensuring that the properties are • Intelligence collection, analysis & utilisation suitable for the welfare of the horses, log books are correctly • Investigations & Inquiries completed and medications on the property are all in accor- • Surveillance - Covert & Overt dance with the requirements under the Rules. • Raceday operations – Attendance at Stables • Retention Barn This year also saw the conclusion of all the Cobalt related court • Liaison with NSW Police challenges against both HRNSW and the Rules which govern • Liaison with the Australian and NSW Crime Commission the industry. HRNSW was successful in the NSW Court of • Liaison with other racing and government agencies Appeal in a challenge against the absolute liability of Rule 190 • Equine Welfare which revolves around the presentation of a horse to race free • Stable Inspections of a prohibited substance. The absolute nature of this Rule is a • Human Drug Testing – Alcohol & Drugs of Abuse total protection mechanism for ensuring the level playing field of all participants when they take their horse to the races. With- Equine Drug Control out such a requirement upon the trainers, it would make the enforcement of a robust equine drug control regime difficult, HRNSW again invested considerable resources, including fi- if not impossible. Court challenges were also made against nancial, to deliver an unsurpassed equine drug control program HRNSW and its ability to make and introduce Rules including for the industry. This year saw a considerable amount of time the threshold for Cobalt. It is important to note that HRNSW and resources directed to surveillance and Out of Competition was the first horse racing jurisdiction in the World to introduce strategies. There were a number of specific projects completed a threshold of 200 micrograms per litre in urine. which have delivered the required results. The Integrity team has also been involved in working to stop the supply of unreg- There is continued speculation in some sections of media istered and un-prescribed products throughout the industry. about the science of Cobalt and the soundness of the thresh- This however continues to be one of the biggest challenges old, however the international racing community have since facing the industry- the peddling of illegal products to trainers introduced a threshold of 100 microgram per litre of urine after by rouge individuals or businesses. considerably more research was undertaken. There are many people who believe that large amounts of Cobalt in a horse’s Unfortunately trainers continue to purchase products from system is not performance enhancing, however there are a these people because they are of the belief it would be of as- number of questions which these people do not ask including; sistance, however many of the products being sold for considerable sums are of no value and the integrity and consistency • if it does not enhance the performance of the horse, why of its constituents is zero. was there a need for substances containing large amounts of Cobalt,

42 Harness Racing NSW Annual Report 2016 HRNSW continued to work on the detection of new substances to take this opportunity to acknowledge the support and tireless that may have infiltrated the industry. Not only is it important to assistance offered to the integrity team by John Keledjian, understand what the product is, but more importantly to under- Adam Cawley and the team at ARFL in helping HRNSW deliver stand how and when a substance can be detected. I would like on our equine drug control strategies.

MONTH URINE PRBT BLOOD I-STAT OTHERS TOTAL STARTERS % TO STARTERS Jul-15 192 237 50 86 20 585 2947 19.85% Aug-15 206 277 29 0 15 527 2788 18.90% Sep-15 152 265 32 0 11 460 2204 20.87% Oct-15 172 217 27 142 13 571 2504 22.80% Nov-15 228 235 20 187 11 681 2594 26.25% Dec-15 226 244 44 202 13 729 3007 24.24% Jan-16 213 230 34 194 35 706 3134 22.53% Feb-16 251 270 37 194 186 938 3383 27.73% Mar-16 281 243 39 252 5 820 3656 22.43% Apr-16 249 301 31 150 12 743 3460 21.47% May-16 234 256 37 213 29 769 3063 25.11% Jun-16 213 267 84 118 146 828 2802 29.55% Total 2617 3042 464 1738 496 8357 35542 23.51%

During the FY2016 18 positive samples were detected which samples being over the threshold soon after the threshold was is 0.05% of the total number of samples collected. This is a set, the population result has returned to well within the normal decrease from 0.39% in FY2014. range. Below is a graph which depicts the total number of samples tested for cobalt by HRNSW since September 2013 HRNSW has continued to test for Cobalt subsequent to the (before the introduction of a threshold) until 30 June 2016. As threshold being set in December 2013. Following a spate of you will see the mean being 7.9 of the 2673 samples analysed.

Harness Racing NSW Annual Report 2016 43 Licensing Licensing Committee to assess all applications and deal with licensing matters. In FY2016 HRNSW licensed a total of 1,661 participants across all of the various licensing categories. This was a small On 1 July 2015, HRNSW introduced a new training package decline of 36 from the previous season. In addition, HRNSW for those industry participants seeking to be licensed as a again strengthened its licensing process, through further trainer or driver. A total of 28 people successfully completed enhancing the robust checking of applicants and auditing of the relevant courses during the year. The new online training those already licensed. HRNSW also engaged the services program has been well received by those that have undertaken of the Integrity Auditor to conduct an independent review of the modules. This coupled with the practical sessions allow the licensing process. This has seen the implementation of a those to complete the training session more quickly and easy.

Licence Type TRAINER DRIVER S/HAND 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 A 307 277 287 290 294 285 258 A A 458 409 427 438 436 401 383 A B 235 200 213 213 208 176 152 A C 23 23 18 19 20 52 73 B 45 17 11 23 36 36 44 B A 29 13 10 14 15 16 22 B B 63 19 22 37 43 47 43 B C 16 7 11 11 12 19 21 C 3 4 1 2 2 3 1 C A 1 0 0 0 0 0 0 C B 2 1 0 0 1 2 0 C C 3 3 2 5 1 3 5 A 41 32 35 39 43 45 39 B 61 55 41 41 62 67 73 C 26 24 13 31 31 39 33 S 233 350 368 341 396 506 513 Training Partnerships 0 0 0 0 1 0 1 TOTALS 1,546 1,434 1,459 1,504 1,600 1,697 1,661

Animal Welfare commitment to ensuring the welfare of their horses.

This is topically one of the industry’s biggest challenges moving HRNSW has continued with its partnerships of rehoming forward. The wider community’s expectations have changed programs and the placement of retired horses into other equine over the years, predominately due to their reduced contact with pursuits after their racing careers. It is satisfying to see these livestock animals and an appreciation of how the majority of former racing horses achieve great things in different arenas. our participants acutely care for the horse itself. Appeals Especially within Harness Racing, our participants have a strong affiliation and connection with the horse and they are The Racing Appeals Tribunal again comprised of Mr D Armati generally involved with it for the animal’s entire life cycle. We and Mr E Selwyn OAM whom was appointed in early 2016. as an industry need to be mindful that not everyone has moved Below is a table which breaks downs the appeals in FY2016. with the times and we need to ensure that practices which are It must be reaffirmed that the NSW Racing Appeals Tribunal no longer acceptable are discouraged. For example partici- is completely separate from HRNSW. HRNSW are obligated pants need to be discouraged before disposing of a horse via a to provide secretarial services to the Tribunal only, and the knackery without giving the horse an opportunity for a life after Tribunal members are appointed by Government independent racing. of HRNSW. Appeals Results # It must be stated, that not all horses are suitable for a life after racing due to factors such as injury, temperament, and other Appeals lodged: 33 behavioural issues. There are a considerable large number of Appeals heard: 25 owners and trainers who endeavour to find homes for hors- Appeals to be heard: 6 es that are no longer suitable for racing without the want of reward. HRNSW ensures through its stable inspection program the Upheld: 6 welfare of all registered standardbred horses that are located in NSW. Inspections are undertaken at registered training prop- Varied: 9 erties, studs and owner’s properties. HRNSW will continue to Dismissed: 6 be proactive in ensuring compliance with its Equine Welfare Withdrawn: 4 Policy. Withdrawn - Parker Warning issued: 1 The introduction of the de-registration form and new Rules will No Jurisdiction: 1 allow the industry to better monitor the life cycle traceably of its registered horses. The response from the owners in this regard has been outstanding, and it clearly reiterates the industry’s

44 Harness Racing NSW Annual Report 2016 Review of Operations Marketing & Media

During FY2016 the structure of the consisted of a Media Man- ‘Harness Headlines’ newsletter ager with a strong focus on the promotion of the sport and its The weekly newsletter was created in November 2015 to give stars through a range of print, radio, social media and digital members of the Harness Media Centre an update of all the platforms. media produced by HRNSW for the week.

While the structure changed during FY2015, the goal of Featuring Trots TV clips, media releases and betting informa- promoting and presenting harness racing in NSW to a larger tion, the newsletter is sent to 1864 followers with an open rate audience continued to be a major goal for the organisation, of 42% and click through rate of near 34%. supporting the delivery of Harness Racing New South Wales’ objectives as outlined in the 2015-2017 Strategic Plan. Feature Events – Media Presence SEW Eurodrive Miracle Mile – Sunday February 28 Strengthening relationships with mainstream media organisa- Australasia’s premier sprint test created plenty of media inter- tions remained important however it became abundantly clear est with a new date and slightly new format with the winners of the easiest way to gain traction in the media was to build on the Chariots of Fire and Victoria Cup receiving automatic entry the established Harness Media Centre as a source of informa- into the Grand Circuit event. tion for interested parties. Ultimately the Chariots of Fire winner Have Faith In Me also Rather than relying on other organisations to promote harness won the Miracle Mile setting a new Southern Hemisphere mile racing, more emphasis was placed on creating the content that record in the process when rating 1:47.5 with Lennytheshark, could be used. the Victoria Cup winner, finishing second.

Media Platforms During the month of the Miracle Mile Carnival there were 303,871 page views on Trots TV which was an increase of 45.3% to the same period the year before. Trots TV After celebrating its fifth birthday in June 2016, Trots TV has Trots TV also had a special preview program of the Miracle continued to establish itself as an important tool for the industry Mile featuring Greg Hayes, Amanda Rando and Gareth Hall. to inform and entertain participants. The aim is to continue expanding the content that is available to viewers. New Miracle Mile Facebook and Twitter pages were created for the event and instantly gained followers. Covering many different aspects of the industry from race re- plays, interviews and magazine shows, statistically the number It was also the first year HRNSW took part in ‘Team Teal’ of visitors and page views for Trots TV continued to increase. where every reinswoman drove in teal coloured pants to raise

awareness of ovarian cancer and this gained plenty of atten- In FY2016 Trots TV had more than 2.7 million page views tion during this Carnival. which was an increase of 46.4% than the previous year.

Alabar NSW Breeders Challenge Industry Day Social Media A strengthened social media presence has been a priority for Sunday June 26 HRNSW and more resources were made available to the re- Great winter weather and a strong advertising campaign spective platforms to enhance the experience plus the addition focused on families ensured another large crowd on Breeders of the new HRNSW Instagram and Snapchat accounts. Challenge Final Day in June.

Trots TV content was shared on Facebook and Twitter as well For FY2016 families within the Macarthur region were once as Instagram and Snapchat, while action photography became again targeted in advertising campaigns with a 20,000 leaflet an important of this service, especially for metropolitan meet- letter box drop and strong support from the local papers. ings and this continued to see more people take advantage of HRNSW social media accounts. Regional newspapers also followed the stories of the drivers in the Rising Stars Series which cumulated on this day. The HRNSW Facebook page is the most established account and after starting the year with 11,700 likes, there was a steady There were a record of three trotters finals on the day and growth during the year of 4.7% ending on 12,247 likes. Group One plus plenty of interest generated in newspapers across the western districts following trainer Steve Turnbull’s There has also been growth on the HRNSW Twitter page two Group One wins on the day. with 3423 followers, an increase 573 followers in the past 12 months.

The HRNSW Twitter account is sending out a mixture of news and racing information.

Harness Racing NSW Annual Report 2016 45 Review of Operations External Operations Tabcorp Gear, equipment and safety are also play a very important role for HRA. All new sulkies and wheels are rigorously tested by Harness Racing NSW continues to maintain its long standing Human Impact Engineering prior to being track tested in front association with Tabcorp to further the interests of the harness of stewards before they are listed for approval. Data from racing industry. incidents is regularly analysed and the results are used to further enhance the testing processes. The main thrust of HRNSW’s efforts continues to be obtaining better understandings between the parties on industry turnover performance and general business strategies to stimulate the Harness Racing Industry Consultation Group growth of funding to the racing industry. Harness Racing Industry Consultation Group was formed in Along with Racing NSW Harness Racing NSW links into the accordance with the Harness Racing Act 2009. It is a consul- monthly phone hook ups which discuss turnover and revenue tative body consisting of industry representatives that assists results. HRNSW also attends regular Business and Strategy Harness Racing NSW with the development and implemen- Committee meetings and Racing Products meetings with key tation of industry initiatives and has defined meeting require- Tabcorp personnel, the aim of which is to drive the wagering ments and frequencies. business forward through increased collaboration and understanding between the industry and Tabcorp. The HRICG replaced the former Harness Racing Industry Participants Advisory Committee. Tabcorp provided sponsorship of $300,000 to the industry and to various clubs around the state which was matched by clubs The Committee met 5 times during the year with providing signage and other benefits to TAB and its clients. In representatives of HRNSW with the June meeting deferred to addition Tabcorp gave promotional airtime and live hosting for July. certain events. Industry Associations Harness Racing Australia Harness Racing NSW continued to enjoy good working Harness Racing Australia (HRA) is the peak organisation for relations with the five active industry Associations: the sport of harness racing in Australia. The Executive consists of the Chair or nominated representatives from each of the (i) The Harness Racing Clubs Committee (HRCC) State Controlling bodies, with an independent Chairman. (ii) The United Harness Racing Association (UHRA) (iii) Harness Breeders NSW (HBNSW); HRA is the forum and co-ordination point between the State (iv) The NSW Standardbred Owners Association Controlling Bodies for uniformity of rules and reciprocity of (NSWSOA); and horsemen’s licences, registration of horses and suspensions (v) The NSW Mini-Trotting Association (NSWMTA). and disqualifications. In addition, HRA acts as the national body in international harness racing affairs and is a member The Associations continued to provide substantial feedback of the International Trotting Association. As a joint member to Harness Racing NSW on current and emerging industry of the Event Committee set up in 2008 with Harness Racing concerns, and have been instrumental in assisting with the New Zealand, HRA is involved in supervising the Australasian development of policies aimed at addressing issues. Inter Dominion series (formerly under the auspices of the Inter Dominion Harness Racing Council Inc). Harness Racing NSW’s commitment towards the establishment of strong, representative industry Associations The object of HRA is to promote the Harness Racing Industry will continue in future years with a renewed focus on promoting and to assist its Members to more effectively carry out their the creation of new Associations to represent segments of the powers and obligations under their respective constitutions and industry that at this time lack a mechanism to more actively Incorporating Statutes. participate in industry administration.

HRA is also responsible for National awards, production of Corporate Wagering Operators the Stud Book and the updating of the national HRA website to continue to provide valuable breeding and useful statistical During FY2016 Harness Racing NSW continued dialogue with information free of charge. the various corporate wagering operators on varying matters including licensing. The Standardbreds Unharnessed program, which is partly funded from horse Registration fees, continues to create As the corporate wagering operators provide a significant opportunities for off the track and non-racing horses. level of funding to the industry discussions will continue during Partnerships with Riding Develops Abilities (RDA), Equestrian FY2017 and turnover reviews will also be conducted. Australia (EA) and the State Standardbred Pleasure and Performance Horse Associations continues to create interest and demand in these horses. Horses are now also being placed into State Mounted Police Forces, with three recently graduating with the Victorian Police Force.

46 Harness Racing NSW Annual Report 2016 Standardbred Performance and Most of the horses available for adoption come straight from Pleasure Horse Association racing. The horses need a couple of weeks to settle down and get used to their new environment and new routine before being adopted. HRNSW continues to support and work in conjunction with the Standardbred Performance & Pleasure Horse Association Horses are not placed with adoptees on a first come, first (SPPHA). served basis. The SPPHA try to get you a horse that matches their wishes according to their application. SPPHA is a not-for-profit association, founded in 1993 to promote Standardbred horses in their lives after racing. Racingcorp All funds for the functioning of the SPPHA are raised by fundraising activities such as; a trivia night, donations, Racingcorp is a company founded by the three racing codes merchandise sales, membership and adoption application fees. to act as an agent in dealings with government and Tabcorp on matters relating to the Racing Distribution Agreement and The SPPHA is staffed exclusively by volunteers and are located Intercode Deed. around the state. Harness Racing NSW representation on the Racingcorp Board They work to promote the Standardbred, run the adoption was provided by Mr Graham Kelly (Harness Racing NSW program and provide support and services for their Member) and Mr John Dumesny (Harness Racing NSW CEO). members. Activities include an Association newsletter, a Website, sponsorship of shows and other competitions for Standardbreds.

Standardbreds competing at the 2016 Castle Hill Spring Horse Show – Remi (prepared by Kate Dumesny and Alex Lancaster) ridden by Emma Sanders and Rocky Pop (prepared by Lauren Tritton and Kirsten Lamb ) ridden by Nicole Sanders

Harness Racing NSW Annual Report 2016 47 Corporate Structure

Overview The principle focus of a Steward is to act as a regulatory officer There is a separation of commercial and regulatory functions for NSW harness racing. Stewards are tasked with ensuring within Harness Racing NSW to protect against conflicts of that the integrity of racing and the reputation of harness interests and to ensure that the interests of the industry and racing is maintained and enhanced through the development, racing integrity remain paramount. implementation and enforcement of local and national rules, regulations and policies in connection with Harness racing. Harness Racing NSW was split into two major operating divisions during FY2016 (Commercial Services and all other) Integrity Division also includes: with a separate secretariat unit to provide support to the Chief Executive Officer and Board. (i) A separate integrity unit that includes investigators and a form analyst; The structure during the FY2016 financial year was as follows: (ii) A veterinarian who advises HRNSW on all animal related matters;

CEO & BOARD UNIT The role of the Racing and Product Development Division The Chief Executive Officer and Board Unit is headed by Mr is to prepare policy on issues such as handicapping, race John Dumesny. programming and scheduling and race date allocation In addition to these responsibilities the staff member is charged Staff within this unit provides administrative support to the with the preparation of statistical and performance reports for CEO and Board as well as general administration for the the Board, Executive and clubs on racing-related matters such organisation including building maintenance, stores and as turnover performance, horse movements and population, stationery management, travel and accommodation and and club performance to agreed KPIs. records management. This division also plays a significant role in the development of To ensure the correct separation of duties the Appeals the new tracks Secretary reports directly to the Chief Executive Officer. Both the Chief Operating Officer and the Manager, Commercial The Media section is responsible for providing industry Services report to and take direction from the CEO. marketing and organisation of industry events, sponsorship and production of The Gazette and development of media and REGULATORY AND OTHER social media platforms. The Chief Operating Officer, Mr Reid Sanders, is responsible the management of the Stewarding, Integrity, Licensing and COMMERCIAL SERVICES Registrations and the Racing departments, which incorporate The Commercial Services Division is headed by Manager – the Stewards, Integrity Officer, Investigators, Regulatory Commercial Services Mr Peter Carney. Veterinarian, Handicappers and Racing office staff. Racing and product Development and Marketing and Event Management The Division is responsible for the administration of funding also report to the Chief Operating Officer. arrangements with Tabcorp and wagering operators, payment of funds to clubs and the management of the Industry, HRNSW is required to protect the integrity of harness racing, Racecourse Development and Benevolent Funds which are manage the safety of participants and ensure adherence administered on behalf of the industry by Harness Racing to the Australian Rules of Harness Racing through the NSW. implementation and enforcement of a regulatory regime. The Division also manages the Centralised Stakes Payment The Licensing and Registrations division provides a range of System through which prizemoney and other payments are services such as the issue of licenses to participants, changes made to participants on behalf of all clubs. and transfers of horse ownership and registration of horses and sires. Administration of other finance-related functions such as the collection of fines, licensing and registrations revenue, and The Racing Office is responsible for all operations that relate management of the Unpaid Forfeits List is also undertaken by to the production of race fields for registered harness racing the Commercial Services Division. clubs in New South Wales. Their tasks includes creating race programs, loading nominations (via internet, phone or fax), Information technology services, which are outsourced, and loading of race programs, acceptance of race results, updating administration of industry leases, insurance and commercial TAB Scratching & Driver changes, production / distribution of agreements/operations and HR administration are other media and race day related files, loading of stable returns and responsibilities falling into the remit of the Division. all Harnessweb enquiries.

The office is also responsible for the production of trial fields and trial results for certain race clubs. The staff consist of Handicappers and an Administration Officer. The Handicappers have a thorough knowledge of the Australian Handicapping Rules and the NSW policies that relate to Racing Office operations. All policies are applied in a consistent manner with integrity.

48 Harness Racing NSW Annual Report 2016 Harness Racing NSW Annual Report 2016 49 HRICG Harness Racing Industry Consulative Group

The HRICG committee met its obligations under the Harness Many important matters were discussed during the year with Racing Act 2009 and met on six occasions during the season. numerous recommendations being made to the Board of Harness Racing during the year including: The committee is comprised of representatives of accredited bodies, the Principal Club (Club Menangle), TAB Clubs and • Introduction and support for claiming races non-TAB Clubs. • Drivers superannuation • Sulky recovery scheme The Chair of HRICG during the year was Mr Peter Neil and the • Two year old racing policy deputy chair was Mr J Hogan. • Change in Handicap status for disqualified horses • Unpaid forfeit list and third party debts The Committee Members during the year were: • Capping stallion books • Ready to run sale • Peter Neil (NSWSOA) Chair • Strategic plan • Jeff Hogan (Non TAB Clubs) Deputy Chair • Change in NSW Breeders Challenge conditions • Ray Sharman (Club Menangle) • Payment of Prizemoney to individual owners • Mark Croatto (TAB Clubs) • Review of the Harness Racing Act 2009 • Darryl Kell (Harness Breeders NSW) • Distribution of the Tax Harmonisation Funds • Leon Jurd (United Harness Racing Association) • NSW Racing and Breeding incentives scheme. • Animal Welfare It is with regret and sadness that we note the passing of Mr Don Clough who was the representative for the TAB Clubs and I will to thank all members of the committee for their time which a major contributor to the group over many years. He was also is given selflessly, contribution and commitment to Harness a personnel friend and an Encyplodia when it came to Harness Racing. I wish to thank John Dumnsey and staff of HRNSW for Racing. their hospitality and courtesy during committee meetings which are all held in the Board Room of Harness Racing NSW HRICG status in the industry grows each year and it makes a very meaningful contribution to the growth and viability of the P Neil sport in New South Wales. Chairman

HRCC Harness Racing Clubs Committee

The Harness Racing Clubs Committee (HRCC) is the sole representative body for all Harness Racing Clubs and Whilst the administrative savings will be a direct benefit for Registered Training Facilities in New South Wales in their clubs; the vast majority of the announcements made at the dealings with Harness Racing NSW. conference will have strong and positive impacts on clubs.

Its principle objective involves the promotion and advancement Increased bottom level prizemoney, the establishment of a of harness racing in this State. Additionally, the committee solid marketing budget, infrastructure improvements, and considers all matters which are common to its members in increased expenditure for integrity are all elements that the management and conduct of harness racing clubs and are central to clubs, and how they conduct successful race registered training facilities, and ensures implementation of meetings. the Intra-Code Agreement in conjunction with Harness Racing NSW. Furthermore, while the announcements of how ‘tax parity’ money is to be spent provide a pathway to future growth, the For FY2016, the office bearers of the committee were: past 12 months have nonetheless seen the advancement of key infrastructure projects. President: Mark Croatto Vice President: Peter Plummer The completion of the Menangle Park Training Centre provides Secretary/Treasurer: Danny Dwyer NSW with an outstanding facility which has already seen the arrival of interstate trainers to bolster the local ranks. FY 2016 has seen some important developments which will benefit clubs and training centres. The announcements At Penrith, the opening of the Don Clough OAM race stalls by Harness Racing NSW at the Harnessing Our Future and the up-grades to the race track lighting have provided conference revealed the potential for significant financial relief participants with a much improved race night experience. for clubs through Harness Racing NSW’s absorption of some core costs. The payment of ambulance, race starter, and photo finish fees will provide welcome respite from the ever increasing costs burdens that clubs face.

50 Harness Racing NSW Annual Report 2016 Other important improvements included the lighting up-grades for our participants through the owners bonus races and the at Newcastle, while the green site developments at Wagga Princess Series. The clubs look forward to continuing this Wagga and Tamworth have progressed even in the face of partnership for the benefit of all in our sport. difficulties that have arisen at the local level. In concluding this report, it is important to remind all From the racing context, many clubs contributed to the two participants that the HRCC and its member clubs is the year old review, and the subsequent policy development. As closest link between the administrators of the sport and the an important element of our racing calendar, the new two participants and fans they serve. year old policy will provide participants confidence through a set racing programme, additionally, the policy will contribute The HRCC will continue to play a very active and productive to the well-being of the horse through a racing programme role in the management and development of our sport; it’s commencing later in the season. incumbent on us as a committee and as a group of individual clubs to make every possible effort to broaden our fan base, to The Carnival of Cups programme continues to be a success grow ownership and participation, and to have a positive and providing country participants with the opportunity to race constructive relationship with our governing body so that ideas, for excellent prizemoney, while show casing our sport to the strategies and club processes can be met and achieved. broader community. Similarly, the cooperation of the NSW Harness Racing Club with the country clubs to conduct the Most importantly, we look to you, the participants and fans Menangle Country Series is greatly appreciated by all. to also become involved through membership of your local harness racing club. Sitting back and relying on others to The scheduling of $10,000 heats all over the State provides make things happen won’t work. We call on you to take an a wonderful opportunity for smaller clubs to attract the better active role in growing our sport; become involved so that we horses, and to make their race days a success. can all collectively work together; to be innovative with ideas, and to strive for improvements that will ensure the long term Similarly, the harness clubs have worked with both the NSW future of our sport. Owners Association and Harness Breeders NSW in order to not only enhance prizemoney, but to also grow the experience Mark Croatto President

HBNSW Harness Breeders NSW Harness Breeders New South Wales Inc. (HBNSW) is the ac- • Promotion of and Contributions towards the sponsorship of credited body which represents the interests of NSW breeding a number of races throughout the season including: participants in any consultation process concerning the chang- • Harness Breeders NSW continued to contribute es to the NSW Breeding Schemes. prizemoney, rugs and/or trophies to several races throughout NSW during the season, including: Monthly committee meetings are conducted to discuss breeding issues, promotion of the association activities and events. J L Raith Memorial at Menangle OUR DREAM ABOUT ME NZ HBNSW has enjoyed another successful year representing Pink Diamond at Menangle the interests of its members in support the growth and devel- OUR DREAM ABOUT ME NZ opment of breeding in NSW. Delegates from the committee have regularly represented the association with other industry Bathurst Gold Crown (2YO Colts/Geldings) bodies and attended race days to in metropolitan and country ASTRIDE areas to network with our membership. Bathurst Gold Tiara (2YO Fillies) DON’T THINK TWICE Several new initiatives were achieved including the strengthen- Fairfield Golden Easter Egg (3YO Fillies) ing of our advocacy and development of racing opportunities MERRYWOOD RUBY for mares and fillies along with existing operations to encour- Go Girlfriend Series age new membership, consult with our key participants and GROUP 3 FINAL at Tabcorp Park Menangle celebrate their achievements. The following is a brief summary Heats conducted at of the year in review: Wagga Bathurst • The HBNSW Members Race Bonus Scheme $500 cash Newcastle bonus plus a $500 Breeders Certificate. This is a 20 race Penrith series, one race per month across Metropolitan and The Eugowra Mares Race Country tracks throughout New South Wales. (HBNSW contributed $2,200 Prizemoney plus rug and trophy) • Securing our annual discounts for members to leading Standardbred Stallions service fees with participating Studs HBNSW Members Bonus Races for HBNSW members. 20 Races in the season • Low cost FoalGuard Foaling Alarm Hire for Members to (HBNSW Contribute $500 cash and HRNSW provide a $500 ensure the safe delivery of foals. HRNSW Breeding Certificate to the winning breeders of the • 10% discount on the cost of the buffet at Tabcorp Park race if they are a current financial member. Menangle for all current HBNSW members.

Harness Racing NSW Annual Report 2016 51 The Princess Series (for 2YO fillies & 3YO fillies) SOHO VALENCIA, MISTER SWINGER and SIR GALVINATOR (HBNSW contributed $500 per race Prizemoney for the series) – breeding in NSW is entering an exciting new era. The HBNSW Princess Series for 2YO and 3YO fillies was a new series developed this year by HBNSW, in conjunction with Membership Bathurst, Wagga, Young, Goulburn and Newcastle Harness Racing Clubs. HBNSW has contributed an extra $500 to the With a membership base of 415 in the 2015/16 season, our overall prizemoney of each race and each club has added an numbers increased from 350 members the previous year. additional $1,000 to the overall prizemoney of each race. The Committee implemented several new initiatives this year HBNSW have been very grateful for the support of all the par- to increase membership in addition to the existing membership ticipating clubs of this series. benefits as below. Benefits include: Race 1 – 2YO Fillies • Stallion Discounts 2nd February 2016 - Wagga • % Discount at Tabcorp Park Menangle Miracle Mile FASTESTGIRLINTOWN (Sportwriter/Bushy Tail) Restaurant Bred by HBNSW Member Eugene Bennetts & S Bennetts • Loan Mare Scheme whereby members can advertise free Race 2 – 2YO Fillies of charge mares they have for loan. 10th of February 2016 - Bathurst • Membership Cards posted to members ITS ALL BLISS (Blissful Hall. x Onedins Pocketgirl NZ) • Discounted package for Miracle Mile day at Menangle for Bred by HBNSW Member Kevin Hayes & N Hayes HBNSW Members (Normally $90.00 per person, Menangle Race 3 – 3YO Fillies kindly offered our members entry for $75.00 per HBNSW 2nd of March 2016 - Bathurst Member + $75 for one guest). RAINBOW FLASH (Santana Blue Chip x Karamea Shannon) • AI Register will be introduced for the 2016/17 Season Bred by J Bucca & R Lloyd • NSW Industry Page allows visitors to the website to easily Race 4 – 2YO Fillies find sire and stud information in NSW. 6th of March 2016 - Goulburn • Eligibility for Members Bonus Race Scheme MIGHT AND MAIN ( Art Major x Straight Left) • Quarterly eNewsletter Bred by S Caffyn, E Wilson & HBNSW Member Janet Moore • Up to date Website Race 5 – 3YO Fillies 6th of March 2016 - Goulburn Collaboration and Consultation with Membership MERRYWOOD RUBY (Four Starzz Shark x Merrywood Duch- and Stakeholders ess) Bred by HBNSW Member Wayne Dimech & S E Dimech SURVEY CONTEXT – Feedback for the Tax Parity Submission Race 6 – 3YO Fillies 29th of April 2016 - Wagga 91.8% of participants surveyed believed that base prize money MIST YOU (Mister Big USA x Fairly Misty) should increase before feature races are increased. Bred by A C Roberts & K G J Taylor Race 7 -2YO Fillies 82.1% of participants surveyed would support an incremental 6th of May 2016 at Young increase in the nominators bonus commencing in the 2016/17 IM ALL COURAGE (Courage Under Fire x Erin Jean) season reaching $5,000 by the 2018/19 season. Bred by HBNSW Members P D Trevor-Jones, R P Wenning, M Sieper, D K Wenning HBNSW Submission to HRICG: Standing Stallions in NSW/ Race 8 – 2YO Fillies State of the current breeding industry 7th of May 2016 - Newcastle MISS IRISH ROSE (McCardle x Killinchy Rose NZ) A meeting was held on the 14th of May 2016 at the request of Bred by HBNSW Member L J Burley & J P Burley, D J Burley, Harness Racing Industry stakeholders with Harness Breeders S Hassan NSW. Race 9 – 2YO Fillies 7th of May 2016 - Newcastle The meeting discussed the current and future state of the NSW breeding industry. At the meeting a resolution was passed to Race 10 – 3YO Fillies proceed in the protocol to submit a proposal to the accredited 14th of May 2016 - Young bodies via HRICG. Key areas were agreed upon to develop ART MISTRESS (Art Major x Lady Harfield) an integrated approach to supporting the NSW breeding and Bred by HBNSW Member/s The Cordina family racing industry. Please note this proposal did not change or remove any bonuses or incentives already in place at HRNSW HBNSW is committed to increasing the racing opportunities The proposal was submitted to HRICG on the 11th of July for fillies and mares in NSW. For the 2016/17 Season the 2016. Bathurst, Newcastle, Bankstown, Young, Wagga, Penirth and Goulburn Harness Racing Clubs are participating in the Prin- The consensus of the meeting was agreement in principal for a cess Series. NSW based breeding a racing program. The proposal will be developed further over the next few months. NSW Stallion availability

With the introduction of the world’s fastest horse WARRAWEE Animal Welfare NEEDY USA, the availability of World Champion Trotter HBNSW is committed to the welfare of Standardbred horses SEBASTIAN K, the relaunch of FOR A REASON and the and supporting the maintenance of appropriate welfare stan- injection of SMILING SHARD NZ who join recent NSW based dards, which in today’s social climate is critical in maintaining stallion staples MILLION DOLLAR CAM USA, our NSW Harness Industry. A nominated committee delegate IFIHADYOURLUCK USA, SHOOBEES PLACE USA and local has been selected to work with the HRICG Rehoming Work Group 1 performers CARIBBEAN BLASTER, Group to provide insight into the development of an integrated LOMBO POCKET WATCH, ROBIN HOOD, MAFFIOSO,

52 Harness Racing NSW Annual Report 2016 and specific Industry Rehoming Strategy to complement exist- support and for the many businesses that continue to offer ing initiatives which are utilised. sponsorship support on an annual basis. We acknowledge these businesses on our website Sponsorship We would like to thank industry stakeholders for their ongoing Darryll Kell President NSWSOA NSW Standardbred Owners Association To be presented to the Annual General Meeting to be held at Beautiful trophies were awarded to all owners in twelve TAB Corp Park Menangle on Saturday the 5th of November categories and the winners of the trip to Paris were John and 2016 at 5.00pm Marilyn Baker, a timely bonus to the stalwarts of the industry who had a fantastic trip. The mystery trip (a weekend at the Your association had another extremely busy and productive Anchorage on the Central Coast) was won by Peter and year. Following the 2015 Annual General Meeting the Maureen Green who also had a great time. committee was confirmed as below • Peter Neil • Peter Dewsbury The organisation thanks the committee members who organised the function and the support of all sponsors who • Daniel Cordina • Bruce Knight ensure the success of the event. • Peter Green • Marie Neil • Michael Brown • Fran Fitzpatrick The association gave financial support to the Woman’s Cancer Foundation, Ovarian Cancer institute by donating $20 for every • Neil Parnaby • Deanne Thommeny win by a female donor during the period 1st February to 12th March providing the winner was owned by a financial member The hard working committee all volunteer their valuable time in of NSWSOA. The donation was $300 the advancement of the sport of Harness Racing and met on twelve occasions working on a number of projects during the Committee members attended all award nights of racing year and they are all to be congratulated on their commitment clubs who supported the bonus race Series. The association and results achieved. donated a trophy to all successful owners. These events allow the association to be an integral part of racing and show The NSW Standardbred Sales Pty Ltd conducted a Ready 2 solidarity with racing clubs. Run Sale at Menangle. Thirty Five horses were catalogued with nine withdrawals, seventeen horses were sold on the fall The association appointed a new IT social media coordinator, of the hammer a further four were subsequently sold resulting Karen Kemp who updated the website and introduced the in a clearance rate of 80.7% generating gross revenues association to the world of Social Media. including buybacks of $615,000. The association web site is more dynamic and is constantly This event was of tremendous benefit to the industry and is updated and electronic Newsletters are regularly issued. the only officially sanctioned trialling sale for 2 year olds in Australasia. Through its membership of HRICG (Harness Racing Industry Consultation Group) the association has provided insight and The NSW Standardbred Sales Pty Ltd company is 100% provided a strong view to Harness Racing New South Wales owned by the NSW Standardbred Owners Association, is a not on many issues affecting Harness Racing including for Profit company net sale proceeds will be used to support the rehoming of Standardbreds, a very important matter for our • Animal Welfare industry. • The strategic plan • 2 year old racing I would like to thank Peter Green, Daniel Cordina, Peter • The sulky scheme Dewsbury and Dyanna Thommeny for their hard work in • Superannuation for Drivers making the sale a great success. • Distribution of Tax Harmonisation Revenue • Claiming races Membership numbers at the time of writing stood at 213. The • Prize Money splits and drivers fees Association continues in a sound financial position as indicated • Nomination and scratching policies in the financial statements tabled separately. • NSW Breeders Challenge Review

The Bonus Race Series was conducted again with the ongoing The association wishes to thank its sponsors for their ongoing support from Harness Racing New South Wales the principal support during the year. club, Newcastle, Bathurst, Penrith, Albury, Parkes, Young, Wagga, Dubbo, Bankstown and Tamworth clubs. Committee I extend my sincere thanks to the committee for their efforts members were present at each race meeting to present an and contributions, it has been a privilege and pleasure to work association Rug and bonus cheque to all winners who were with such a dedicated group of Harness Racing Supporters financial members of the NSWSOA. In total Bonuses including whose prime motivation is the advancement of the sport. the $500 Harness Racing New South Wales Bonus certificates totalled $22,000.

The 5th Annual Awards Night was conducted at TAB Corp Peter Neil Menangle and was attended by 160 members and guests and President was a great success.

Harness Racing NSW Annual Report 2016 53 UHRA United Harness Racing Association

It was a big year for harness racing across New South and helmets, trainers’ log books, equine welfare, deregistration Wales during FY2016 with the completion of the Menangle of horses, scratching fees and the reintroduction of claiming Park Training Centre, further progress of the new track races. developments in Wagga and Tamworth and yet another successful Breeders Challenge Series. The UHRA is representative of the trainers and drivers. We have a broad range of members located in different regions of During this time the United Harness Racing Association NSW. underwent some change and the elected and active Office Bearers for FY2016 were: This accredited body previously has been heavily involved in the consultation process concerning changes to a President: John McCarthy superannuation guarantee for drivers, the Breeders Challenge, Vice President: Gavin Fitzpatrick the Two-Year-Old Racing Calendar, the Tax Parity Strategy and Secretary: Leon Jurd also rule reviews. Committee: Darren McCall, Robert Morris, Bernie Hewitt and Jim Douglass. As a member of the Harness Racing Industry Consultation Group, the UHRA has a vital say in the future of the industry. In FY2016, the UHRA convened regular bi-monthly meetings The UHRA will continue to represent the overwhelming and on the alternate month, a meeting with Harness Racing majority of honest, hard-working participants in the industry NSW. across NSW, whose integrity and ethical standards bring credit to the sport. The UHRA worked closely with HRNSW on a number of items during this time including new whip rules, drivers’ safety vests John McCarthy President NSWMTA NSW Mini Trotting Association

NSW Mini Trotting Association again had a successful 2015/16 and all looks bright for the future. Another initiative to come Season once again showing a growth in participation rate. from this scheme is the Mini Trotter Progression Scheme that will see members, which have achieved a criterion, receive NSW Championships at Gunning again grew in numbers financial benefits should they progress in harness racing. and with the help of many people was a successful carnival. Fireblaze was successful in the Midget Division, Secret Junior Development days saw many interested new members Mission the Shetland while Miss n Me was the pony champion. enquire about mini trots in particular Castle Hill Show and The success of this carnival has been tremendous and in 2017 Industry Day at Menangle Park both were well received. We Tamworth will be the venue. thank HRNSW for their continued support.

Mobile Mini Miracle & Fishers Ghost continued to be a part A National Mini Trot Rule drawn up for all states will now have of TAB Corp Park Menangle Carnival and has received good a framework to work by. Horse and people welfare is a major reports on this initiative. Carnival of Cup meetings saw mini trot part of the document and we need to work hard on these exhibitions at most venues and these were all well received by issues. As a national committee shortly we will be working on the huge crowds. an Aust/NZ Drivers Series as well as a National Marketing Plan. NSW Association continued our exchange venture with NZ and congratulations to Aleisha Bond on running 3rd in the series. Thanks to all our junior members for their week to week Zane Tomlinson was New Zealand representative to come activities and it is pleasing to see so many former members over for our championships and was a real pleasure to be doing well as they progress their careers. Of cause these associated with him. events do not take place without the many official and volunteers and parents in the sport and we thank you all for Biggest decision in recent times has been the HRNSW Tax your commitment. Parity results which will see funding for the next 5 years for Junior Development. This decision will involve mini trots Terry Judd President

54 Harness Racing NSW Annual Report 2016 Corporate Governance

BOARD RESPONSIBILITIES The Board’s aim is to provide direction and impetus to Harness The Harness Racing NSW Board has in place a Code of Racing NSW’s efforts to secure the future of the industry and Conduct that sets out the responsibilities of the Board and its improve outcomes for its stakeholders. individual members. The varied backgrounds, skills and experience of individual In terms of corporate governance the Board is responsible for: Board Members provides a balanced view of the industry’s needs and opens many paths to obtaining solutions for the • Promoting ethical and responsible decision-making, most pressing issues. • Ensuring compliance with laws, regulations, appropriate accounting standards and corporate The current Chairman, Mr Graham Kelly was elected on 11 policies, February 2016. • Setting and reviewing strategic direction, • Approving the annual operating budget and Members monitoring financial performance, • Approving and monitoring capital expenditure, CHAIRMAN • Monitoring risk management, and KELLY, Graham John • Recognising the legitimate interests of stakeholders (Independently Elected Chairman) and ensuring that the industry is kept fully informed of all material developments in relation to harness Mr Kelly is the former Chairman of TAB Limited, Sky Channel racing. Limited and Centrebet International Ltd. He is also a former Chairman or Director of several financial services companies, BOARD FUNCTIONS including the State Bank of NSW.

The functions of the Board, as outlined in Section 9 of the Mr Kelly was also the Inaugural Inspector of the Independent Harness Racing Act 2009, include the following: Commission Against Corruption and a former Chairman, Managing Partner and Partner of Freehills, Solicitors. (a) To control, supervise and regulate harness racing in the State; Mr Kelly was re-appointed for a second term of 2 years which will expire in February 2018. (b) To register harness racing clubs, harness racing horses, owners, trainers and drivers of harness The following persons were members of the Board throughout racing horses, bookmakers for harness racing and FY 2017; other persons associated with harness racing; • Alex Smith • Rod Smith (c) To initiate, develop and implement policies considered • Robyn Stubbs conducive to the promotion, strategic development • Chris Edwards and welfare of the harness racing industry in the • Rex Horne State; • Grant Mayer

(d) To distribute money received as a result of SMITH, Alexander Stewart AM commercial arrangements required by the Totalizator Mr A Smith has significant high level public sector experience, Act, 1997; including being the former Deputy Director General of the NSW Department of Premier and Cabinet and the NSW Premier’s (e) To allocate harness racing clubs the dates on which Department. they may conduct harness racing meetings. Mr A Smith was made a member of the Order of Australia in The Functions and Powers of HRNSW can be found at the 2002 in recognition of his contribution to public administration new Harness Media Centre website: in NSW. http://www.harnessmediacentre.com.au/hrnsw/about-us/ functions-and-powers Mr A Smith was re-appointed for a term of 3 years which was due to expire in February 2019 however Mr Smith took leave BOARD STRUCTURE of absence in June 2016 and subsequently resigned from the Board on 19 July 2019. The current Board, the majority of whom took office in February 2012, was appointed in accordance with Section 6 of the Harness Racing Act 2009.

The Board is to consist of 5 members recommended for appointment by a Selection Panel and then appointed by the Minister to give effect to the recommendation of the Selection Panel.

Harness Racing NSW Annual Report 2016 55 SMITH, Rodney Graham MAYER, Grant Campbell Mr R Smith has more than 21 years of experience in the Mr Mayer has spent more than 20 years in sports corporate finance sector and business ownership in the motor administration and has worked for some of Australia’s best retail sector. known sporting clubs including the National Rugby League’s Manly Warringah Sea Eagles, West Tigers and Canterbury His interests include breeding, racing and administrative Bankstown Bulldogs. Mr Mayer also spent time with the involvement in the harness racing industry, including roles as Australian Football League’s Greater Western Sydney Giants the former Treasurer of Bathurst Harness Racing Club and and is currently the Chief Executive Officer for A-League Vice President of the NSW Owners Association. soccer club Adelaide United.

Mr R Smith was re-appointed for a term of 4 years which will Mr Mayer was appointed for a term of 3 years which was due expire in February 2020. to expire in October 2018 however Mr Mayer resigned on 9 November 2015. STUBBS, Robyn Narelle Ms Stubbs’ executive career spans 25+ years in senior MEETINGS sales and marketing roles in the media & property sectors, and earlier in fast-moving consumer goods. Working for Harness Racing NSW conducts Board Meetings on a monthly companies such as Stockland, Lend Lease, Fairfax, Network basis usually on the last Tuesday or Wednesday. In special Ten & Unilever, Robyn has generated profitable growth for circumstances where matters must be considered outside this established brands as well as new business start-ups. She has timeframe, the Board holds special Board Meetings either in led multi-disciplinary teams across leasing, sales & marketing, person or by teleconference. operations, sustainability, health & safety, strategy & research and new product development functions. During the year the Members met 12 times. Attendance at meetings was as follows: Ms Stubbs is currently a Non-Executive Director of Aventus, an ASX-listed company. Robyn is also a Board Director for Lifeline Northern Beaches and provides executive coaching services Board Member Meetings Held Total Attended to a range of organisations through Executive Coaching G Kelly 12 12 International (ECI). R Horne 7 7

Ms Stubbs was appointed for a term of 4 years which will C Edwards 7 7 expire in February 2020. G Kelly 12 12 A Smith 12 11 EDWARDS, Christopher John R Smith 12 12 Mr Edwards has been involved with harness racing as a hobby owner, trainer, driver and local steward for over 25 years. R Stubbs 5 5 G Mayer 1 1 A Director of the Dubbo Harness Racing Club since the 1980s, Mr Edwards was Club President from 1992 – 1995, Secretary/ Manager from 2000 – 2004 and was elected for two terms as President.

Mr Edwards has been a past President of the Western Districts Harness Racing Clubs Association and Country Clubs Association, and is currently President of the Dubbo Show Society.

Mr Edwards served two terms of three years on previous Boards and was re-appointed on 4 December 2015 for a further period of 2 years to fill the casual vacancy created by the resignation of Mr Mayer.

Mr Edwards’ term will expire in December 2017.

HORNE, Rex William Mr Horne has extensive industry experience not only as a former Chairman of NSW Harness Racing Club but he is a member of the HRA Executive and has been a former chair and deputy chair of the NSW Harness Racing Club Ltd, a former President of the harness racing industry’s NSW TAB Clubs’ Association, an Alternate Director of Racingcorp Pty Ltd and as a Member of the Inter Dominion Steering Committee.

Mr Horne served two terms on previous Boards and was re-appointed in February 2014 for a further term of two years.

Mr Horne’s term expired in February 2016 and was ineligible to seek re-election as he has reached the maximum term allowable under the Harness Racing Act 2009.

56 Harness Racing NSW Annual Report 2016 Financial Statements for the Year ended 30 June 2016

Harness Racing NSW Members’ Report Members’ Declaration Lead Auditor’s Independence Declaration Auditor’s Report Statement of Profit or Loss and Other Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements

Industry Funds Members’ Declaration Auditor’s Report Statement of Profit or Loss and Other Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements

Racecourse Development Fund Members’ Declaration Auditor’s Report Statement of Profit or Loss and Other Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements

Harness Racing NSW Annual Report 2016 57 Financial Statements Harness Racing NSW

Contents Members’ Report 59 Members’ Declaration 60 Statement of Profit or Loss and Other Comprehensive Income 61 Statement of Financial Position 62 Statement of Cash Flows 63 Statement of Changes in Equity 63 Notes to the Financial Statements 64

58 Harness Racing NSW Annual Report 2016 Members’ Report • Allocation to harness racing clubs and harness racing associations of the dates on which they may conduct The Members of Harness Racing New South Wales (HRNSW) harness racing meetings and harness races, and present their report together with the financial statements for • Development and review of policy in relation to the the financial year ended 30 June 2016. breeding and handicapping of harness racing horses.

HRNSW is a statutory corporation (entity) constituted under the RESULT Harness Racing Act 2009 (as amended). The comprehensive income for the financial year amounted to $6,881,300 (2015: Surplus $2,227,347). MEMBERS The Members of HRNSW in office at the date of this report are: The FY2016 surplus includes the items below which are in addition to normal product fees derived from the TAB and • Mr Graham Kelly - Chairman corporate wagering operators: • Mr Chris Edwards • Mr Rod Smith (a) $3,044,587 of Tax Parity revenues. Tax parity • Ms Robyn Stubbs legislation was introduced by the New South Wales government on 24 November 2015. The effect The following persons were Members of HRNSW from the date of the Legislation is to reduce the tax paid on wagers of their appointment until the date of this report: to bring the NSW tax in line with that charged in Victoria. The tax will be reduced over a five year period. Date of Appointment Mr Chris Edwards 4 December 2015 (b) $918,572 of revenue bought to account following the Ms Robyn Stubbs 5 February 2016 forgiveness by the NSW Government of the reminder of the $2.0m loan taken out in June 2009. The following persons were Members of HRNSW from the beginning of the financial year until the date of their retirement (c) $1,228,414 earned on investments held in the Future or resignation: Fund.

Date of Retirement/Resignation Excluding the above items the entity derived a surplus of Mr Rex Horne 5 February 2016 $1,689,728 which was mainly due to higher than expected Mr Alex Smith 19 July 2016 Wagering Incentive Fee from the TAB during the year.

The following person was a Member of HRNSW for the The Future Fund comprises race fields monies collected from following period: 1 September 2008 to 31 March 2012 less disbursements and repayments to other Funds which supported racing operations Date of Appointment Date of Resignation during that period. Mr Grant Mayer 22 October 2015 9 November 2015 SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS MEMBERS MEETINGS There have been no significant changes in the state of affairs During the year Members met 12 times. Attendance at of the entity during the year except that: meetings was as follows: Number (i) on 31 July 2015 amendments were made to Racing Administration Regulation 2012 which enabled HRNSW to increase the ceiling of the race fields fees Name Attended Eligible to Attend that it could charge corporate wagering operators. Mr Graham Kelly 12 12 The change had a positive impact on race fields Mr Rex Horne 7 7 income derived in the year to 30 June 2016; and Mr Chris Edwards 7 7 (ii) on 24 November 2015 the Betting Tax Amendment Mr Alex Smith 11 11 Act 2015 was assented to which began the process of Mr Rod Smith 12 12 implementing the NSW Government’s commitment to facilitate tax parity with Victoria. The reduction in the Ms Robyn Stubbs 5 5 tax rate will ensure that additional funds are made Mr Grant Mayer 1 1 available to support the NSW racing industry. Harness Racing NSW will receive 12.7% of the tax benefit; and Member emoluments are shown in Note 5 (g) in the attached financial statements. (iii) In June 2016 the NSW Government agreed to forgive the outstanding loan balance remaining on the PRINCIPAL ACTIVITIES original $2.0m loan advanced to HRNSW in 2009. The loan was taken out to cover amalgamation The principal activities of HRNSW during the period included expenses and unfunded harness superannuation the following functions: liabilities of the former Greyhound and Harness • Registration of harness racing clubs and harness Racing Regulatory Authority. racing associations, • Initiation, development and implementation of policies considered conducive to the promotion, strategic development and welfare of the harness racing industry in the State, • Distribution of money received as a result of commercial arrangements required by the Totalizator Act 1997, Harness Racing NSW Annual Report 2016 59 STAFF Members’ Declaration The entity employed thirty six (36) full time employees as at 30 June 2016 (2015: 33). The Members of Harness Racing New South Wales (HRNSW) present their declaration for the financial year ended 30 June As at the date of this report the entity had thirty six (36) 2016. employees. In the opinion of the Members of the entity: – EVENTS SUBSEQUENT TO BALANCE DATE There are no matters or circumstances that have arisen since (a) the accompanying financial statements and notes: the end of the year that have significantly affected or may significantly affect: (i) comply with Accounting Standards and other mandatory professional reporting i) the operation of the entity; requirements, and ii) the results of these operations; ii) the state of affairs of the entity, in future years. (ii) give a true and fair view of the entity’s financial position as at 30 June 2016 and its CORPORATE GOVERNANCE performance for the financial year ended on In recognising the need for the highest standards of corporate that date, and behaviour and accountability, Members support and have adhered to the principles of good corporate governance (b) there are reasonable grounds to believe that the entity including the adherence to an agreed Code of Conduct and the will be able to pay its debts as and when they fall due, disclosure of interests by Members. and

LIKELY FUTURE DEVELOPMENTS (c) the financial statements also comply with International There are no likely developments which will affect the Financial Reporting Standards as disclosed in Note 2. operations of the entity in subsequent years except as disclosed above other than it is likely that HRNSW will: Signed in accordance with a resolution of the Members at Bankstown. (i) Purchase land; (ii) Build race tracks and related infrastructure; (iii) Provide funding for track improvements at current tracks; (iv) Provide funding to maintain current tracks; Graham Kelly within New South Wales in its own right or through the Chairman Racecourse Development Fund.

MEMBERS BENEFITS Rod Smith Neither since the beginning of the financial year, nor during the Member financial year, has a Member whilst being a Member, received or become entitled to receive a benefit by reason of a contract Dated 19th August 2016 made by the entity or a related body corporate which the Member or with a firm of which the Member is a member, or a company in which the Member is a member, or a company in which the Member has a substantial interest other than the interests of Mr Rod Smith through a contract for the supply of vehicles on commercial terms to HRNSW through Terry Shields Toyota.

AUDITOR INDEPENDENCE The lead auditor's independence declaration has been received and accepted.

Signed in accordance with a resolution of the Members at Bankstown.

Graham Kelly Chairman

Rod Smith Member

Dated 19th August 2016

60 Harness Racing NSW Annual Report 2016 Statement of Profit or Loss and Other Comprehensive Income for the financial year ended 30 June 2016

2016 2015 REVENUE from continuing operations Note $ $ Product Fee 4(a) 19,104,384 20,385,149 Wagering Incentive Fee 4(a) 16,698,542 15,266,533 Race Fields Revenue 4(b) 10,128,235 10,769,201 Tax Parity Revenue 4(c) 3,044,587 - Investment Income - Future Fund 4(d) 1,228,414 682,773 Finance Income – Interest Revenue 131,500 255,689 Grants Received - RDF - Equipment Purchases 4(e) 456,519 169,276 Grants Received - RDF - Integrity Related Expenses 4(f) - 450,000 Grants Received - Industry Funds 4(g) 186,660 182,806 Gazette Income 4(h) 140,820 194,762 Registration & Licensing Income 712,259 613,611 Stewarding and Other Fees Charged to Clubs 4(i) 1,067,757 1,074,008 Lease Income - Menangle Park Training Centre 94,000 - Profit on Sale of Assets 7,103 - Other Income 4(j) 94,441 122,804

Total Revenue 53,095,220 50,166,612

EXPENSES from continuing operations HRNSW TAB Distribution: to Clubs 5(a) 17,055,186 16,968,308 to Industry Fund 5(b) 2,479,290 2,448,676 to Racecourse Development Fund 5(c) 708,368 707,852 Prizemoney Paid 11,058,585 11,809,095 Payments from Race Fields Receipts 5(d) 6,374,591 6,613,474 Payments from Future Fund 5(e) - 255,000 HRA Membership Levy 109,646 110,973 Employee Salaries and Related Expenses 5(f) 3,824,068 3,531,984 Members Fees 5(g) 108,196 106,493 NSW Harness Racing Gazette 6,482 168,713 Media Centre 56,036 176,140 Postage, Printing & Stationery 82,361 111,504 Travel Expenses 5(h) 355,908 269,483 Consultancy & Contractors 49,606 63,679 Occupancy Expenses 306,140 120,961 Equipment Expenses 17,107 16,947 IT and Communication Expenses 5(i) 450,682 408,398 Depreciation Expense 351,947 238,110 Insurance 77,433 66,299 Racing Integrity Expenses 5(j) 1,528,982 1,820,738 Sky Video/Photo Finish Expenses 5(k) 1,817,332 1,632,194 Bad Debt Expense 5(l) (1,422) 4,785 Other Expenses 5(m) 245,992 176,493 Amalgamation Expenses 5(n) - 56,181 Transfer Fine Income to Other Funds 69,975 56,784

Total Expenses 47,132,492 47,939,266

Harness Racing NSW Annual Report 2016 61 SURPLUS FOR THE YEAR 5,962,728 2,227,347

Comprehensive Income Loan Forgiveness - NSW Treasury 5(o) 918,572 -

Other Comprehensive Income for the Year 918,572 -

Total Comprehensive Income for the Year 6,881,300 2,227,347

The accompanying notes form part of these financial statements

Statement of Financial Position for the financial year ended 30 June 2016

2016 2015 CURRENT ASSETS Note $ $ Cash and Cash Equivalents 6 890,926 257,596 Investments 7 5,043,154 10,734,057 Trade and Other Receivables 8 15,075,072 15,799,788 Other 9 20,706 28,678

Total Current Assets 21,029,858 26,820,119

NON-CURRENT ASSETS Investments 7 10,272,607 - Property, Plant and Equipment 11 4,959,234 4,599,512 Land 10 950,398 950,398 Total Non-Current Assets 16,182,239 5,549,910

TOTAL ASSETS 37,212,097 32,370,029

LIABILITIES CURRENT LIABILITIES Trade and Other Payables 12 9,932,677 11,263,604 Provision for Employee Benefits 13 562,382 565,141 Total Current Liabilities 10,495,058 11,828,745

NON-CURRENT LIABILITIES Trade and Other Payables 15 - 705,545 Total Non-Current Liabilities - 705,545

TOTAL LIABILITIES 10,495,058 12,534,290

NET ASSETS 26,717,039 19,835,739

EQUITY

Accumulated Surplus 26,717,039 19,835,739

TOTAL EQUITY 26,717,039 19,835,739

The accompanying notes form part of these financial statements

62 Harness Racing NSW Annual Report 2016 Statement of Cash Flows for the financial year ended 30 June 2016

2016 2015 CASH FLOWS FROM OPERATING ACTIVITIES Note $ $ Receipts from Customers 57,649,838 48,436,381 Interest Received 1,359,914 938,462 Payments to Suppliers, Employees and Participants (53,149,203) (48,893,577) Amalgamation Costs - (56,181)

Net Cash Provided by Operating Activities 20 5,860,548 425,085

CASH FLOWS FROM INVESTING ACTIVITIES Payments for Property, Plant & Equipment (971,503) (184,525) (Payments for) / Proceeds From Investments (4,581,703) 151,117 Proceeds from the sale of Property, Plant & Equipment 325,987 -

Net Cash Used in Investing Activities (5,227,219) (33,408)

CASH FLOWS FROM FINANCING ACTIVITIES Loan repayment - (213,027)

Net Cash Used in Financing Activities - (213,027)

Net Increase in Cash and Cash Equivalents Held 633,330 178,651

Cash and Cash Equivalents at the Beginning of the Year 257,596 78,946

Cash and Cash Equivalents at the End of the Year 6 890,926 257,596

The accompanying notes form part of these financial statements

Statement of Changes in Equity for the financial year ended 30 June 2016

2016 2015 $ $ Total Equity at the Beginning of Financial Year 19,835,739 17,608,391 Total Comprehensive Income 6,881,300 2,227,348 Total recognised income and expense for the year 6,881,300 2,227,348

Total Equity at the End of the Financial Year 26,717,039 19,835,739

The accompanying notes form part of these financial statements

Harness Racing NSW Annual Report 2016 63 Notes to the Financial Statements for the financial year ended 30 June 2016

1. THE REPORTING ENTITY Available-For-Sale financial assets including fixed interest and listed securities included in the JBWere Investment a) Harness Racing New South Wales (HRNSW) Future Fund Portfolio are measured at fair value. Gains and HRNSW is an independent body incorporated as a statutory Losses are recognised in the Statement of Profit or Loss and body under the Harness Racing Act 2009 to fund and control Comprehensive Income. the harness racing industry in New South Wales. Other Income b) Benevolent Fund Revenue earned from all other activities is recognised when The Benevolent Fund was set up to assist persons associated the product or service in respect of which the fees have been with the harness racing industry in New South Wales who are charged is receivable. in indigent circumstances and require financial assistance. The assets, liabilities and transactions of the Fund are c) Accounts Receivable and Other Debtors incorporated into these financial statements and summarised Accounts receivable and other debtors include amounts due in Note 14. from members as well as amounts receivable from customers for goods sold in the ordinary course of business. Receivables c) Separate Funds expected to be collected within 12 months of the reporting The following funds administered by HRNSW are not period are classified as current assets. All other receivables incorporated in these financial statements: are classified as non-current assets.

i. Harness Racing Racecourse Development Accounts receivable are initially recognised at fair value and Fund. subsequently measured at amortised cost using the effective ii. Harness Racing Industry Fund. interest method, less any provision for impairment.

HRNSW prepares and furnishes separate financial statements d) Financial Instruments for these funds in its Annual Report. Categories 2. SUMMARY OF SIGNIFICANT Financial assets are classified into the following specified categories: Financial assets ‘at fair value through the profit or ACCOUNTING POLICIES loss’, ‘held to maturity’ investments, ‘available-for-sale’ financial assets and ‘loans and receivables’. The principal accounting policies adopted in the preparation The classification depends on the nature and purpose of of the financial report are set out below. These policies have the financial assets and is determined at the time of initial been consistently applied by the entity and, except where there recognition. is a change in accounting policy, are consistent with those of the previous year. Initial Recognition and Measurement Financial instruments, incorporating financial assets and This financial report is a general purpose financial report financial liabilities, are recognised when the entity becomes a that has been prepared in accordance with International party to the contractual provisions of the instrument. Financial Reporting Standards as applicable to not-for- Financial instruments are initially measured at fair value plus profit entities, other authoritative pronouncements of the transaction costs where the instrument is not classified as at Australian Accounting Standards Board, Australian Accounting fair value through profit and loss. Transaction costs related to Interpretations and the Corporations Act 2001. instruments classified at fair value through profit or loss are expensed to profit or loss immediately. a) Income Tax HRNSW is registered as a not-for-profit organisation with the Loans and Receivables Australian Taxation Office. Income is not subject to income Loans and receivables are non-derivative financial assets with tax. fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective b) Revenue Recognition interest rate method. Revenue is measured at fair value of the consideration received or receivable, net of goods and services tax (GST) Held-to-maturity Investments payable to the taxation authority and net of any allowances. These investments have fixed maturities. Held to maturity Revenue is recognised in the period to which the revenue investments held by HRNSW are stated at amortised cost relates. using the effective interest rate method.

TAB Distributions Available–for-Sale Financial Assets Distributions from Tab Limited (“TAB”) are recognised as they Available-For-Sale financial assets are non-derivative financial accrue to the benefit of the entity based on distribution advices assets that are either designated as such or that are not received from TAB. classified in any other categories. They comprise investments in the equity of other entities where there is neither a fixed Interest Earned / Financial Income maturity nor fixed nor determinable payments. They are held at Interest and other investment revenue is recognised as it fair value with changes in fair value taken through the profit or accrues taking into account the effective yield on the financial loss statement. asset.

64 Harness Racing NSW Annual Report 2016 Notes to the Financial Statements (Continued)) for the financial year ended 30 June 2016

f) Revaluation of Non-Current Assets Non-current assets are revalued every five years or sooner if Financial Liabilities a revaluation is deemed to be material and may be performed Non-derivative financial liabilities are recognised at amortised for all the non-current assets or a class of non-current assets. cost, comprising original debt less principal repayment and None the less, as stated above, non-current assets are not amortisation. carried at an amount exceeding the recoverable amount.

The carrying amount of non-current assets is reviewed Fair Value annually by the Members to ensure that they are not in excess Fair value is determined based on current bid prices for all of the recoverable amount of those assets. The recoverable quoted investments. Valuation techniques are applied to amount is assessed on the basis of the expected net cash determine the fair value for all unlisted securities. flows which will be received from the assets employment and subsequent disposal. The expected net cash flows have Impairment of Financial Assets not been discounted to present values in determining the At each reporting date HRNSW assesses whether there recoverable amount. AASB 136 allows a not-for-profit entity is objective evidence that a financial instrument has been to determine value in use of an asset using the depreciated impaired. In the case of available-for-sale financial instruments, replacement cost of the asset if the future economic benefits of a significant or prolonged decline in the value of the instrument the asset are not primarily dependent on net cash inflows and is considered to determine whether impairment has arisen. the asset would be replaced if the entity were deprived of it. Impairment losses are recognised in the statement of profit or loss and other comprehensive income. g) Loans and Borrowings All loans are measured at principal amount. Interest is charged as it occurs. Derecognition Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to h) Employee Salaries and Related Expenses another party whereby the entity no longer has any significant Provision is made for employee entitlement benefits continuing involvement in the risks and benefits associated accumulated as a result of an employee’s service up to the with the asset. Financial liabilities are derecognised where the reporting date. These benefits include wages and salaries, related obligations are either discharged, cancelled or expire. annual leave and long service leave.

The difference between the carrying value of the financial Liabilities arising in respect of wages and salaries, annual liability extinguished or transferred to another party and the fair leave and any other employee entitlements expected to value of consideration paid, including the transfer of non-cash be settled within twelve months of the reporting date are assets or liabilities assumed is recognised in profit or loss. measured at their nominal amounts, plus related on-costs. All other employee entitlement liabilities are measured at the present value of the estimated future cash outflow to be e) Property, Plant and Equipment Each class of Buildings, Property, plant and equipment is made in respect of services provided by employees up to the measured at cost (except for land as described in Notes 10 reporting date. In determining the present value of future cash and 11) less accumulated depreciation and impairment losses. outflows, the interest rates attaching to government guaranteed securities which have terms to maturity approximating the The carrying amount of plant and equipment is reviewed terms of the related liability are used. annually by the Board to ensure that it is not in excess of the recoverable amount from those assets. The recoverable Contributions are made by the entity to employee amount is assessed on the basis of the accepted net cash superannuation funds and are charged as expenses when flows which will be received from the asset’s employment and incurred. subsequent disposal. i) Goods and Services Tax (GST) Buildings, property, plant and equipment are depreciated on a Revenues, expenses and assets are recognised net of the straight line basis over their useful lives, as follows: amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances the GST is Buildings and fitouts 4% - 10% recognised as part of the cost of the acquisition of the asset or Plant and equipment 10% - 40% as part of the expense. Telecommunications, computer hardware 25% - 40% Receivables and payables are stated with the amount of GST Motor Vehicles 20% – 33% included where possible.

Fixed asset purchases of items below $2,500 are written off to The net amount of GST recoverable for, or payable to, the expense in the year of acquisition. ATO is included as a current asset or liability in the statement of financial position. Cash Flows are included in the statement The asset’s residual values are reviewed and adjusted if of cash flows as a gross basis. The GST components of cash appropriate at each balance date. flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as An asset’s carrying amount is written down immediately to its operating cash flows. recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Harness Racing NSW Annual Report 2016 65 Notes to the Financial Statements (Continued)) for the financial year ended 30 June 2016

j) Cash and Cash Equivalents 3. BASIS OF PREPARATION Cash and cash equivalents include cash on hand and deposits held at call with banks and other financial institutions. a) Statement of compliance The financial report is a general purpose financial report which k) Comparative Figures has been prepared in accordance with Australian Accounting Where required by Accounting Standards, comparative figures Standards (‘AASBs’) (including Australian Interpretations) have been adjusted to conform with changes in presentation adopted by the Australian Accounting Standards Board for the current financial year. (‘AASB’) and the Harness Racing Act 2009 (as amended). The financial report of the entity also complies with the IFRSs l) Revision of Accounting Estimates and interpretations adopted by the International Accounting Revisions of accounting estimates are recognised Standards Board. prospectively in current and future periods only. b) Basis of measurement m) New Accounting standards and interpretations The financial statements have been prepared on the historical There are no new standards or interpretations which have a cost basis except for certain non-current assets and financial material effect on the financial statements. instruments that are measured at revalued amounts or fair values, as explained in the Summary of Significant Accounting n) Operating Leases Policies above. Where HRNSW is a lessee, payments on operating lease agreements are recognised as an expense on a straight c) Functional and presentation currency line basis over the lease term. Associated costs, such as These financial statements are presented in Australian dollars, maintenance and insurance, are expensed as incurred. which is the entity’s functional currency.

o) Software d) Use of estimates and judgements Significant costs associated with software development are The preparation of financial statements requires management deferred and amortised on a straight line basis over the period to make judgements, estimates and assumptions that affect the of their expected benefit, being 5 years. application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. p) Finance Income and Expenses Finance costs are expensed in the period in which they are Estimates and underlying assumptions are reviewed on incurred. an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in Finance income consists of interest from banks and other any future periods affected. financial institutions. Interest is recognised as it accrues. There are no major estimates that impact these financial q) GHRRA Assets and Liabilities transferred statements. By order of the Minister for Gaming and Racing, all harness related assets and liabilities of the Greyhound and Harness and Harness Racing Regulatory Authority (“GHRRA”) were transferred to Harness Racing New South Wales on 1 July 2009.

r) Accounts Payable and Other Payables Accounts payable and other payables represent the liability outstanding at the end of the reporting period for goods and services received by the company during the reporting period which remain unpaid. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability.

66 Harness Racing NSW Annual Report 2016 Notes to the Financial Statements (Continued)) for the financial year ended 30 June 2016

4 REVENUE 2016 2015 $ $ (a) Product Fee 19,104,384 20,385,149 Wagering Incentive Fee 16,698,542 15,266,533 HRNSW's share of the TAB Distribution is paid by 35,802,926 35,651,682 NSW Racing Pty Ltd. HRNSW's share is determined by the Intercode Deed. Product fees (Daily, and quarterly) are based on wagering turnover (all codes) and Wagering Incentive Fees (WIF), paid half yearly, are based on wagering profitability (All Codes).

(b) Race Fields Revenue From various Corporate Wagering Operators 10,128,235 10,769,201 10,128,235 10,769,201

(c) Tax Parity Revenue Revenue from reduction in NSW betting tax 3,044,587 - 3,044,587 - The Betting Tax Legislation Amendment Act 2015 was assented to on 24 November 2015. The effect of the Act is to reduce the tax paid on wagers placed through the TAB. The legislation will facilitate tax parity with Victoria over a five year period and thereby ensure that additional funds are available for the industry.

(d) Investment Income - Future Fund Investment Income - JBWere Portfolio 1,228,414 682,773 1,228,414 682,773 Investment Income recognised on Future Fund monies held for the industry and remaining after distribution of race fields receipts received from September 2008 to March 2012 and released following the High Court win March 2012.

(e) Grants Received - RDF - Equipment Purchases Funding for purchase of Fixed Assets 456,519 169,276 456,519 169,276

(f) Grants Received - RDF - Integrity Related Expenses Grant received - Integrity Expenses - 450,000 - 450,000

(g) Grants Received - Industry Fund Management of Centralised Stakes Payment System 163,200 160,212 Breeders Challenge Stakes Management Fee 23,460 22,594 186,660 182,806 (h) Gazette Income Subscriptions 140,820 150,677 Advertising Income - 44,085 140,820 194,762

Harness Racing NSW Annual Report 2016 67 Notes to the Financial Statements (Continued)) for the financial year ended 30 June 2016

4 REVENUE (Continued) 2016 2015 $ $ (i) Stewarding and Other Fees Charged to Clubs Stewarding Costs 936,276 920,254 Photo Finish Costs 114,697 140,729 Swab Recovery and Other 16,784 13,025 1,067,757 1,074,008

(j) Other Income Other 24,466 122,804 Benevolent Fund Income 69,975 - 94,441 122,804

5 OPERATING EXPENSES

(a) HRNSW TAB Distribution - To Clubs NSWHRC - Principal Club 12,181,152 12,066,958 NSWHRC - Menangle 252,000 252,000 Bankstown 151,200 189,000 Bathurst 699,906 671,400 Bulli 15,000 116,550 Dubbo 189,450 189,450 Goulburn 126,000 126,000 Newcastle 917,147 907,650 Parkes 170,100 161,100 Penrith 642,115 529,200 Tamworth 302,400 296,100 Wagga Wagga 369,217 419,400 Young 255,150 245,700 All Other Clubs 784,351 797,800 17,055,186 16,968,308

During FY2016 all clubs except the NSWHRC only received administration funding. HRNSW paid prize money direct to participants. The $12.181m paid to the NSWHRC includes prize money and administration funding.

(b) HRNSW Distribution - to Industry Fund HRNSW is required under the Intra Code Agreement to distribute a percentage of its share of the TAB Distribution to the Industry Fund for the development and furtherance of the industry in NSW. The amount distributed to the Industry Fund is equal to 6% (2015: 6%) of the HRNSW share of the TAB Distribution. 2,125,105 2,123,556 Additional Carnival of Cups Levy - 1% (2015: 1%). 354,184 325,120 2,479,290 2,448,676

68 Harness Racing NSW Annual Report 2016 Notes to the Financial Statements (Continued)) for the financial year ended 30 June 2016

5 OPERATING EXPENSES (Continued) 2016 2015 $ $ (c) HRNSW TAB Distribution - to Racecourse Development Fund

The amount distributed to the Industry Fund is equal to 2% (2015: 2%) of the HRNSW share of the TAB Distribution. 708,368 707,852 708,368 707,852

(d) Payments from Race Fields Receipts Payments for club administration funding and prizemoney 4,824,591 5,663,474 Payments to Industry Fund for Breeding 1,450,000 700,000 Payments to Industry Fund for Marketing 100,000 250,000 6,374,591 6,613,474

(e) Payments From Future Fund Contribution to Inter-Dominion Prizemoney - 255,000 - 255,000

(f) Employee Salaries and Related Expenses Salaries 3,300,579 3,050,290 Superannuation 278,486 248,789 Payroll Tax 158,256 129,594 Annual & Long Service Leave (2,760) 6,253 Workers Compensation Insurance 17,295 16,157 Temporary Staff and Other 72,212 80,901 3,824,068 3,531,984

(g) Members Fees Graham Kelly 30,320 15,332 Chris Edwards 9,123 10,601 Alex Smith 15,819 15,397 Rod Smith 15,837 15,397 Robyn Stubbs 6,516 - Rex Horne 30,581 49,766 Grant Mayer - - 108,196 106,493

(h) Travel expenses Employees 318,328 230,211 Members 35,259 38,464 Other 2,321 808 355,908 269,483

(i) IT and Communication Expenses IT Support & Software 335,879 271,224 Phone, fax and related expenditure 114,802 137,175 450,682 408,398

Harness Racing NSW Annual Report 2016 69 Notes to the Financial Statements (Continued)) for the financial year ended 30 June 2016

5 OPERATING EXPENSES (Continued) 2016 2015 $ $ (j) Racing Integrity Expenses Swab Testing and reporting 885,033 876,843 Stewards inquiries/appeals & related legal expenses 330,471 638,303 Analytics & Research 110,636 154,518 Registration Processing 72,040 60,810 Integrity Auditor 20,464 19,289 Freeze Branding expenses 9,181 9,359 Menangle Park Training Centre Expenses 43,647 - Other Integrity 57,511 61,616 1,528,982 1,820,738 The figures above do not include employee costs which are reported in note 5(f).

The reduction in total integrity expenses during FY2016 is mainly due to the receipt of $350,000 as a settlement of legal expenses incurred by HRNSW in prior years. When employment costs are included total integrity expenses have increased.

(k) Sky Video/Photo Finish Expenses Sky Video 1,768,592 1,496,762 Photo Finish 48,740 135,432 1,817,332 1,632,194

(l) Bad Debts Bad Debts Written Off ( 1,422) 4,785 Movement in Provision - - ( 1,422) 4,785 Current provisions provide adequate cover for any risk in bad debts.

(m) Other Expenses Bank and Investment Portfolio Charges 94,823 30,542 Legal and Audit fees 90,970 73,561 Benevolent Fund Expenses 15,879 40,709 Sundry Expenses 44,321 31,682 245,992 176,493

(n) Amalgamation Expenses Interest on the $2m NSW Government Loan - 56,181 Refer Note 12 - 56,181

(o) Other Comprehensive income Loan forgiven - NSW Treasury 918,572 - Refer Note 12 918,572 - The remaining portion of the $2.0m loan provided by the NSW Government through NSW Treasury to fund amalgamation expenses and unfunded superannuation liabilities of the Greyhound and Harness Racing Regulatory Authority in 2009 was forgiven in June 2016.

70 Harness Racing NSW Annual Report 2016 Notes to the Financial Statements (Continued)) for the financial year ended 30 June 2016

2016 2015 6 Cash and Cash Equivalents $ $ Cash at Bank 890,476 257,146 Cash on Hand 450 450 890,926 257,596 The entity has an overdraft limit of $250,000 at the bank (2015: $250,000) - unused at year end.

7 Investments JBWere - Future Fund 12,317,947 10,130,469 Other Deposits 2,997,814 603,588 15,315,761 10,734,057

Current 5,043,154 10,734,057 Non-Current 10,272,607 - 15,315,761 10,734,057

8 Trade and Other Receivables Trade Debtors 2,287,835 3,789,832 Less provision for Doubtful Debts ( 39,082) ( 39,082) NSW Racing Pty Ltd 12,165,695 11,413,937 Australian Taxation Office - 4,206 Related Party 660,624 630,895 15,075,072 15,799,788 Trade debtors are non-interest bearing and generally are on thirty day terms. All other current receivables are non-interest bearing and are receivable between seven and ninety days.

9 Other Current Assets Prepayments 19,266 27,237 Benevolent Fund Funeral Certificates 1,440 1,440 20,706 28,677

10 Land Black Hill (Beresfield) 950,398 950,398 950,398 950,398 In the year ended 30 June 2008 HRNSW acquired ownership of a parcel of land at 167 Lenaghans Drive, Black Hill (Beresfield) at no significant reciprocal cost to HRNSW. The asset was brought to account at the value determined by an independent valuer of $950,000. The asset is subject to a Memorandum of Understanding to ensure that any commercial benefit arising from any possible future sale will be restricted to use in the Hunter region.

Harness Racing NSW Annual Report 2016 71 Notes to the Financial Statements (Continued)) for the financial year ended 30 June 2016

11 Property, Plant & Equiptment Freehold Freehold Computer Furniture & Other Motor Total Land Buildings Equipment Fittings Equipment Vehicles $ $ $ $ $ $ $ As at 1 July 2014 Cost or fair value 3,143,744 1,362,303 656,198 30,825 400,623 174,689 5,768,382 Accumulated depreciation - ( 205,333) ( 566,696) ( 30,825) ( 280,397) ( 32,031) ( 1,115,283) Net Book Value 3,143,744 1,156,970 89,502 ( 0) 120,226 142,658 4,653,100

Year ended 30 June 2015 Opening Net Book value 3,143,744 1,156,970 89,502 ( 0) 120,226 142,658 4,653,100 Additions - - 69,879 3,795 1,804 109,046 184,524 Depreciation charge - ( 64,704) ( 53,443) ( 342) ( 50,154) ( 69,469) ( 238,111) Disposals ------Depreciation on disposals ------Closing net book amount 3,143,744 1,092,266 105,938 3,453 71,876 182,235 4,599,512

At 30 June 2015 Cost or fair value 3,143,744 1,362,303 726,076 34,620 402,427 283,735 5,952,905 Accumulated depreciation - ( 270,037) ( 620,138) ( 31,167) ( 330,551) ( 101,500) ( 1,353,393) Net Book Value 3,143,744 1,092,266 105,938 3,453 71,876 182,235 4,599,512

Year ended 30 June 2016 Opening Net Book value 3,143,744 1,092,266 105,938 3,453 71,876 182,235 4,599,512 Additions 44,714 - 423,699 4,601 31,013 467,476 971,503 Acquisition of a business ------Depreciation charge - ( 64,704) ( 135,764) ( 909) ( 43,489) ( 107,081) ( 351,947) Disposals - - - ( 2,355) - ( 323,633) ( 325,987) Depreciation on disposals - - - - 66,154 66,154 Closing net book amount 3,188,458 1,027,562 393,873 4,791 59,399 285,151 4,959,234

At 30 June 2016 Cost or fair value 3,188,458 1,362,303 1,149,776 36,866 433,439 427,578 6,598,420 Accumulated depreciation - ( 334,741) ( 755,903) ( 32,075) ( 374,040) ( 142,427) ( 1,639,186) Net Book Value 3,188,458 1,027,562 393,873 4,791 59,399 285,151 4,959,234 On 1 July 2009 HRNSW acquired the net harness assets of the former Greyhound and Harness Racing Regulatory Authority (“GHRRA”).

As part of the transition net Property, Plant and Equipment assets of $1,614,908 were transferred to HRNSW for $nil consideration.

72 Harness Racing NSW Annual Report 2016 Notes to the Financial Statements (Continued)) for the financial year ended 30 June 2016

2016 2015 12 Trade and Other Payables $ $ Australian Taxation Office 498,177 - Prize Money Payments (264,440) 396,324 HRNSW Distribution Due to Clubs and Funds - 3,094,361 Other creditors 9,217,862 5,770,251 Related Parties 481,078 1,789,641 Loan - NSW Government - 213,027 9,932,677 11,263,604

The Loan from the NSW Government was taken out to assist with meeting the costs associated with the dissolution of the Greyhound and Harness Racing Regulatory Authority (GHRRA) in 2009 and the amalgamation with Harness Racing New South Wales. The costs included unfunded Defined Benefit Scheme Superannuation contributions, unfunded recreational and long service leave, transfer costs for GHRRA staff who migrated to HRNSW and redundancy costs. The outstanding balance of the loan was forgiven by the government in June 2016.

2016 2015 13 Provision for Employee Benefits $ $ Annual Leave 244,503 293,257 Long Service Leave 317,879 271,884 562,382 565,141

The current provision for employee benefits includes accrued annual leave and long service leave. For long service leave it covers all unconditional entitlements where employees have completed their required period of service and also those where employees are entitled to pro-rata payments in certain circumstances. The entire amount of the provision is presented as current as HRNSW does not have an unconditional right to defer settlement of any of these obligations. The measurement and recognition criteria relating to employee benefits has been included in Note 2 to these financial statements. 2016 2015 14 Benevolent Fund $ $ Interest earned 5,264 7,364 Other Revenue 69,975 - Less Administration expenses (65) (66) Less Disbursements (15,814) (40,642) Operating Surplus (Deficiency) 59,360 (33,345)

Accumulated Surplus - Brought Forward 166,655 200,000 Accumulated Surplus - Carried Forward 226,015 166,655

Represented by: Cash 70,125 59,609 Investments 154,451 150,145 Loans Receivable - - Trade Receivables - - Transferable Funeral Certificates 1,440 1,440 Payables - (44,539) Net Assets 226,015 166,655 An independent valuation of the six Transferable Funeral Service Certificates issued by the Pine Grove Memorial Park Limited, based on a fair market valuation was $24,780 (net of GST) as at 30 June 2006.

Harness Racing NSW Annual Report 2016 73 Notes to the Financial Statements (Continued)) for the financial year ended 30 June 2016

2016 2015 15 Non Current Trade and Other Payables $ $ Loan - NSW Government - 705,545 - 705,545 Refer Note 12 above

16 Superannuation Commitments Basis - AASB119 SASS SANCS SSS TOTAL 30-Jun-16 30-Jun-16 30-Jun-16 30-Jun-16 Member Numbers

Contributors 1 1 - Deferred benefits - - - Pensioners - - - Pensions fully commuted - - - Superannuation Position for AASB 119 purposes A$ A$ A$ A$ Accrued liability (Note 1) 520,787 71,046 - 591,834 Estimated reserve account balance (592,116) (105,828) - (697,943) 1. Deficit/(surplus) (71,328) (34,781) - (106,110) 2. Future Service Liability (Note 2) 59,345 37,746 - 97,091 3. Surplus in excess of recovery available from schemes 6,063 2,956 - 9,019 (- 1. - 2. and subject to a minimum of zero) 4. Net (asset)/liability to be recognised in statement of (65,266) (31,825) - (97,091) financial position (1. + 3.) Note 1 The accrued liability includes a contribution tax provision. This is calculated based on grossing up the deficit/(surplus) less the allowance for past service expenses and insurable death and disability liabilities at a contribution tax rate of 15%. Note 2 The Future Service Liability (FSL) does not have to be recognised by an employer. It is only used to determine if an asset ceiling limit should be imposed (AASB 119 para 64). Under AASB 119, any prepaid superannuation asset recognised cannot exceed the present value of any economic benefits that may be available in the form of refunds from the plan or reductions in future contributions to the plan. Where the “surplus in excess of recovery” is zero, no asset ceiling limit is imposed. (Note: this also includes a contribution tax provision).

74 Harness Racing NSW Annual Report 2016 Notes to the Financial Statements (Continued)) for the financial year ended 30 June 2016

AASB 119 Disclosure items 30 June 2015 Description of other entities' responsibilities for the governance of the fund - Para 139(a)(iii) Nature of the benefits provided by the Fund – Paragraph 139 (a)(i) The Fund's Trustee is responsible for the governance of the Fund. The Trustee has a legal obligation to act The Pooled Fund holds in trust the investments of the closed solely in the best interests of fund beneficiaries. The Trustee NSW public sector superannuation schemes: has the following roles:

• State Authorities Superannuation Scheme (SASS) • Administration of the fund and payment to the beneficiaries • State Superannuation Scheme (SSS) from fund assets when required in accordance with the • Police Superannuation Scheme (PSS) fund rules; • State Authorities Non-contributory Superannuation scheme (SANCS) • Management and investment of the fund assets; and

These schemes are all defined benefit schemes – at least • Compliance with other applicable regulations. a component of the final benefit is derived from a multiple of member salary and years of membership. Members Description of risks - Para 139(b) receive lump sum or pension benefits on retirement, death, disablement and withdrawal. There are a number of risks to which the Fund exposes the Employer. The more significant risks relating All the Schemes are closed to new members. to the defined benefits are:

Description of the regulatory framework • Investment risk - The risk that investment returns will be lower than assumed and the Employer will need to increase Para 139(a)(ii) contributions to offset this shortfall.

The schemes in the Pooled Fund are established and • Longevity risk – The risk that pensioners live longer than governed by the following NSW legislation: Superannuation assumed, increasing future pensions. Act 1916, State Authorities Superannuation Act 1987, Police Regulation (Superannuation) Act 1906, State Authorities • Pension indexation risk – The risk that pensions will Non-Contributory Superannuation Scheme Act 1987, and their increase at a rate greater than assumed, increasing future associated regulations. pensions.

The schemes in the Pooled Fund are exempt public sector • Salary growth risk - The risk that wages or salaries (on superannuation schemes under the Commonwealth which future benefit amounts for active members will be Superannuation Industry (Supervision) Act 1993 (SIS). The based) will rise more rapidly than assumed, increasing SIS Legislation treats exempt public sector superannuation defined benefit amounts and thereby requiring additional funds as complying funds for concessional taxation and employer contributions. superannuation guarantee purposes. • Legislative risk - The risk is that legislative changes could Under a Heads of Government agreement, the New South be made which increase the cost of providing the defined Wales Government undertakes to ensure that the Pooled benefits. Fund will conform with the principles of the Commonwealth’s retirement incomes policy relating to preservation, vesting The defined benefit fund assets are invested with independent and reporting to members and that members’ benefits are fund managers and have a diversified asset mix. adequately protected. The Fund has no significant concentration of investment risk or liquidity risk. The New South Wales Government prudentially monitors and audits the Pooled Fund and the Trustee Board activities in a manner consistent with the prudential controls of the SIS Description of significant events Para 139(c) legislation. These provisions are in addition to other legislative obligations on the Trustee Board and internal processes that There were no fund amendments, curtailments or settlements monitor the Trustee Board’s adherence to the principles of the during the year. Commonwealth’s retirement incomes policy.

An actuarial investigation of the Pooled Fund is performed every three years. The last actuarial investigation was performed as at 30 June 2015.The next actuarial investigation will be performed at 30 June 2018.

Harness Racing NSW Annual Report 2016 75 Notes to the Financial Statements (Continued)) for the financial year ended 30 June 2016

Reconciliation of the Net Defined Benefit Liability/(Asset) - Para 140(a)

SASS SANCS SSS Total Financial Financial Financial Financial Year to Year to Year to Year to 30 June 2016 30 June 2016 30 June 2016 30 June 2016 A$ A$ A$ A$ Net Defined Benefit Liability/(Asset) at start of (97,161) (31,967) - (129,128) year Current service cost 28,143 4,577 - 32,720 Net Interest on the net defined benefit liability/ (2,944) (969) - (3,913) (asset) Past service cost - - - - (Gains)/losses arising from settlements - - - - Actual return on Fund assets less Interest (341) (49) - (390) income Actuarial (gains)/losses arising from changes in 2,051 (262) - 1,789 demographic assumptions Actuarial (gains)/losses arising from changes in 38,971 8,107 - 47,078 financial assumptions Actuarial (gains)/losses arising from liability 5,705 834 - 6,539 experience Adjustment for effect of asset ceiling (39,691) (12,097) - (51,788) Employer contributions - - - - Effects of transfers in/out due to business - - - - contributions and disposals Net Defined Benefit Liability/(Asset) (65,266) (31,825) - (97,091) at end of year

Reconciliation of the Fair Value of Fund Assets – Para 140(a)(i)

SASS SANCS SSS Total Financial Financial Financial Financial Year to Year to Year to Year to 30 June 2016 30 June 2016 30 June 2016 30 June 2016 A$ A$ A$ A$ Fair value of Fund assets at 995,573 159,193 - 1,154,766 beginning of the year Interest income 28,522 4,615 - 33,137 Actual return on Fund assets 341 49 - 390 less Interest income Employer contributions - - - - Contributions by participants 6,539 0 - 6,539 Benefits paid (438,530) (57,425) - (495,955) Taxes, premiums & expenses paid (329) (604) - (933) Transfers in/out due to business combinations - - - - and disposals Contributions to accumulation section - - - - Settlements - - - - Exchange rate changes - - - - Fair value of Fund assets at end of the year 592,116 105,828 - 697,943

76 Harness Racing NSW Annual Report 2016 Notes to the Financial Statements (Continued)) for the financial year ended 30 June 2016

Reconciliation of the Defined Benefit Obligation – Para 140(a)(ii)

SASS SANCS SSS Total Financial Financial Financial Financial Year to Year to Year to Year to 30 June 2016 30 June 2016 30 June 2016 30 June 2016 A$ A$ A$ A$ Present value of defined benefit obligations 854,005 112,615 - 966,620 at beginning of the year Current service cost 28,143 4,577 - 32,720 Interest cost 24,232 3,204 - 27,436 Contributions by participants 6,539 - - 6,539 Actuarial (gains)/losses arising from changes in 2,051 (262) - 1,789 demographic assumptions Actuarial (gains)/losses arising from changes in 38,971 8,107 - 47,078 financial assumptions Actuarial (gains)/losses arising from liability 5,705 834 - 6,539 experience Benefits paid (438,530) (57,425) - (495,955) Taxes, premiums & expenses paid (329) (604) - (933) Transfers in/out due to the business - - - - combinations and disposals Contributions to accumulation section - - - - Past service cost - - - - Settlements - - - - Exchange rate changes - - - - Present value of defined benefit obligations 520,787 71,046 - 591,834 at end of the year

Reconciliation of the effect of the Asset Ceiling - Para 140(a)(iii)

SASS SANCS SSS Total Financial Financial Financial Financial Year to Year to Year to Year to 30 June 2016 30 June 2016 30 June 2016 30 June 2016 A$ A$ A$ A$ Adjustment for effect of asset ceiling at 44,408 14,611 - 59,018 beginning of the year Interest on the effect of asset ceiling 1,346 443 1,788 Change in the effect of asset ceiling (39,691) (12,097) - (51,788) Adjustment for effect of asset ceiling at end 6,063 2,956 - 9,019 of the year

The adjustment for the effect of asset ceiling has been determined based on the maximum economic benefit available to the entity in the form of reductions in future employer contributions.

Harness Racing NSW Annual Report 2016 77 Notes to the Financial Statements (Continued)) for the financial year ended 30 June 2016

Fair value of Fund assets - Para 142

All Pooled Fund assets are invested by SAS Trustee Corporation (STC) at arm’s length through independent fund managers, assets are not separately invested for each entity and it is not possible or appropriate to disaggregate and attribute fund assets to individual entities. As such, the disclosures below relate to total assets of the Pooled Fund. As at 30 June 2016 Quoted prices Significant Unobservable in active observable inputs markets for inputs Level 3 Asset category Total (A$'000) identical Level 2 (A$’000) assets Level 1 (A$’000) (A$’000) Short Term Securities 2,050,414 2,044,454 5,960 - Australian Fixed Interest 2,720,590 2,724 2,717,865 - International Fixed Interest 834,374 (1,358) 835,731 - Australian Equities 9,720,877 9,171,767 549,087 24 International Equities 12,093,667 9,026,207 2,078,766 988,694 Property 3,650,267 1,113,253 618,946 1,918,068 Alternatives 7,115,949 470,130 3,122,185 3,523,634 Total 38,186,138 21,827,178 9,928,540 6,430,420 The percentage invested in each asset class at the reporting date is:

As at 30-Jun-16 Short Term Securities 5.4% Australian Fixed Interest 7.1% International Fixed Interest 2.2% Australian Equities 25.5% International Equities 31.7% Property 9.6% Alternatives 18.6% Total 100.0%

^Additional to the assets disclosed above, at 30 June 2016 the Pooled Fund has provisions for receivables/(payables) estimated to be around $2.83 billion. This gives total estimated assets $41.01 billion.

Level 1 - quoted prices in active markets for identical assets or liabilities. The assets in this level are listed shares; listed unit trusts. Level 2 - inputs other than quoted prices observable for the asset or liability either directly or indirectly. The assets in this level are cash; notes; government, semi-government and corporate bonds; unlisted trusts where quoted prices are available in active markets for identical assets or liabilities. Level 3 - inputs for the asset or liability that are not based on observable market data. The assets in this level are unlisted property; unlisted shares; unlisted infrastructure; distressed debt; hedge funds.

Derivatives, including futures and options, can be used by investment managers. However, each manager's investment mandate clearly states that derivatives may only be used to facilitate efficient cash flow management or to hedge the portfolio against market movements and cannot be used for speculative purposes or gearing of the investment portfolio. As such managers make limited use of derivatives.

78 Harness Racing NSW Annual Report 2016 Notes to the Financial Statements (Continued)) for the financial year ended 30 June 2016

Fair value of entity's own financial instruments - Para 143

The fair value of the Pooled Fund assets include as at 30 June 2016 include $189.6 million in NSW government bonds.

Of the direct properties owned by the Pooled Fund; - SAS Trustee Corporation occupies part of a property owned by the Pooled Fund with a fair value of $222 million (30 June 2015; $159 million).

- Health Administration Corporation occupies part of a property 50% owned by the Pooled Fund with a fair value of $243 million (30 June 2015:$204 million)

Significant Actuarial Assumptions at the Reporting Date - Para 144

As at 30-Jun-15 Discount rate 1.99% pa

Salary increase rate (excluding promotional increases) 2.50% 2016/17 to 2018/2019; 3.50% 2019/2020 and 2020/2021, 3.0% pa 2021/2022 to 2025/2026;and 3.50% pa thereafter

Rate of CPI increase 1.50% 2015/2016; 1.75% 2016/2017; 2.25% 2017/2018; 2.50% thereafter

Pensioner mortality The pensioner mortality assumptions are as per the 2015 Actuarial Investigation of the Pooled Fund. These assumptions are disclosed in the actuarial investigation report available from the trustee’s website. The report shows the pension mortality rates for each age.

Sensitivity Analysis - Para 145

The entity's total defined benefit obligation as at 30 June 2016 under several scenarios is presented below. The total defined benefit obligation disclosed is inclusive of the contribution tax provision which is calculated based on the asset level at 30 June 2016.

Scenarios A to F relate to sensitivity of the total defined benefit obligation to economic assumptions, and scenarios G and H relate to sensitivity to demographic assumptions. Base Case Scenario A Scenario B -1.0% +1.0% discount rate discount rate Discount rate 1.99% 0.99% 2.99% Rate of CPI increase as above as above as above Salary inflation rate as above as above as above Defined benefit obligation (A$) 591,834 644,620 546,434

Base Case Scenario C Scenario D +0.5% rate of -0.5% rate of CPI increase CPI increase Discount rate as above as above above as above rates plus above rates less Rate of CPI increase as above .05% .05% Salary inflation rate as above as above as above Defined benefit obligation (A$) 591,834 591,834 591,834

Harness Racing NSW Annual Report 2016 79 Notes to the Financial Statements (Continued)) for the financial year ended 30 June 2016

Base Case Scenario E Scenario F +0.5% salary -0.5% salary increase rate increase rate Discount rate as above as above as above Rate of CPI increase as above as above as above above rates plus above rates less Salary inflation rate as above 0.5% pa 0.5% pa Defined benefit obligation (A$) 591,834 616,489 568,712

Base Case Scenario G ScenarioH-5% +5% pensioner pensioner mortality mortality rates* rates** Defined benefit obligation (A$) 591,834 591,834 591,834

* Assumes the long term pensioner mortality improvement factors for years post 2021 also apply for years 2016 to 2021. ** Assumes the short term pensioner mortality improvement factors for years 2016-2021 also apply for years after 2021. The defined benefit obligation has been recalculated by changing the assumptions as outlined above, whilst retaining all other assumptions.

Asset-Liability matching strategies - Para 146

The Trustee monitors its asset-liability risk continuously in setting its investment strategy. It also monitors cash flows to manage liquidity requirements. No explicit asset-liability matching strategy is used by the Trustee.

Funding arrangements - Para 147(a)

Funding arrangements are reviewed at least every three years following the release of the triennial actuarial review and was last reviewed following completion of the triennial review as at 30 June 2015. Contribution rates are set after discussions between the employer, STC and NSW Treasury.

Funding positions are reviewed annually and funding arrangements may be adjusted as required after each annual review.

Surplus/deficit

The following is a summary of the 30 June 2016 financial position of the Fund calculated in accordance withAAS 25 “Financial Reporting by Superannuation Plans”:

SASS SANCS SSS Total 30-Jun-16 30-Jun-16 30-Jun-16 30-Jun-16 A$ A$ A$ A$ Accrued benefits* 387,843 43,390 - 431,233 Net market value of Fund assets (592,116) (105,828) - (697,943) Net (surplus)/deficit (204,273) (62,437) - (266,710)

80 Harness Racing NSW Annual Report 2016 Notes to the Financial Statements (Continued)) for the financial year ended 30 June 2016

*There is no allowance for a contribution tax provision within the Accrued Benefits figure for AAS 25. Allowance for contributions tax is made when setting the contribution rates. Contribution recommendations Recommended contribution rates for the entity are:

SASS SANCS SSS multiple of % member multiple of member salary member contributions contributions #N/A #N/A #N/A

Economic assumptions

The economic assumptions adopted for the 30 June 2015 actuarial investigation of the Pooled Fund are:

Weighted-Average Assumptions Expected rate of return on Fund assets backing current pension liabilities 7.8% pa Expected rate of return on Fund assets backing other liabilities 6.8% pa Expected salary increase rate (excluding promotional salary increases) 3.0% pa to 30 June 2019, then 3.5% pa thereafter Expected rate of CPI increase 2.5% pa

Expected contributions - Para 147(b)

SASS SANCS SSS Total Financial Financial Financial Financial Year to Year to Year to Year to 30 June 2017 30 June 2017 30 June 2017 30 June 2017 A$ A$ A$ A$ Expected employer contributions - - - -

Maturity profile of defined benefit obligation - Para 147(c)

The weighted average duration of the defined benefit obligation is 12.1 years.

Harness Racing NSW Annual Report 2016 81 Notes to the Financial Statements (Continued)) for the financial year ended 30 June 2016

Appendix 3 Additional Information 30 June 2016

Profit or Loss Impact SASS SANCS SSS Total Financial Financial Financial Financial Year to Year to Year to Year to 30 June 2016 30 June 2016 30 June 2016 30 June 2016 A$ A$ A$ A$ Current service cost 28,143 4,577 - 32,720 Net interest (2,944) (969) - (3,913) Past service cost - - - - (Gains)/Loss on settlement - - - - Profit or loss component of the Defined 25,199 3,609 - 28,808 Benefit Cost

Other Comprehensive Income SASS SANCS SSS Total Financial Financial Financial Financial Year to Year to Year to Year to 30 June 2016 30 June 2016 30 June 2016 30 June 2016 A$ A$ A$ A$ Actuarial (gains) losses on liabilities 46,727 (8,679) - 55,407 Actual return on Fund assets less Interest (341) (49) - (390) income Effects of transfers in/out due to business - - - - combinations and disposals Adjustment for effect of asset ceiling (39,691) (12,097) - (51,788) Total remeasurement in Other 6,696 (3,467) - 3,229 Comprehensive Income

82 Harness Racing NSW Annual Report 2016 Notes to the Financial Statements (Continued)) for the financial year ended 30 June 2016

17. CONTINGENT ASSETS AND LIABILITIES 19. FINANCIAL RISK MANAGEMENT

(i) Contingent Assets Overview There are no known contingent assets. The entity has exposure to the following risks from its use of financial instruments: (2) Contingent Liabilities The Entity has a contractual obligation to pay Mr Milton Morris • Credit risk; and Phoenix Bells Pty Ltd the sum of $200,000 within 28 days • Interest rate risk; of the date of rezoning of the Black Hill/Beresfield Land (refer • Liquidity risk; and Note 10). Rezoning is defined in the settlement agreement as • Market risk follows: The Members have overall responsibility for the establishment “Rezoning” means the rezoning of the land by the Newcastle and oversight of the risk management framework. City Council in, or substantially in, the manner sought by HRNSW, or as otherwise accepted by HRNSW and on Risk management policies are established to identify and conditions acceptable to HRNSW in its absolute discretion. analyse the risks faced by the entity, to set appropriate risk At the date of this report the Land has not been rezoned in a limits and controls, and to monitor risks and adherence to manner acceptable to HRNSW. limits. Risk management policies and systems are reviewed Any payment made to Mr Morris and Phoenix Bells Pty Ltd will regularly to reflect changes in market conditions and the be deducted from the proceeds received. entity’s activities. The entity and systems are reviewed regularly to reflect changes in market conditions and 18. COMMITMENTS the entity’s activities. The entity through its training and management standards and procedures, aims to develop a HRNSW leases office equipment and motor vehicles under disciplined and constructive control environment in which all non-cancellable operating leases. The leases vary in terms. employees understand their roles and obligations. 2016 2015 $ $ Commitments for minimum leasee payments in relation to Non-cancellable operating leases are payable as follows Due within one year - 12,903 Late than one year but not later than two - - years - 12,903

20. NOTE TO THE STATEMENT OF CASH FLOWS 2016 2015 $ $ Reconciliation of Net Cash from Operating Activities to Surplus / (Deficit) for the year

Surplus for the year 6,881,300 2,227,347 Depreciation and Amortisation 351,947 238,110 Depreciation on Assests sold (66,154) - Debt forgiveness of NSW Treasury Loan (918,572) - Operating Profit before changes in Working Capital Provisions 6,248,521 2,465,457

Changes in Assests and Liabilities Change in Trade and Other Receivables 724,716 (5,177,007) Change in prepayments and Other Assets 7,971 (18,069) Change in Trade and Other Payables (1,117,900) 3,148,451 Change in Employment Benefits (2,760) 6,253 Net Cash Provided by Operating Activities 5,860,548 425,085 21. EVENTS OCCURRING AFTER THE REPORTING PERIOD

There are no matters or circumstances that have arisen since the end of the year that have significantly affected or may significantly affect: iii) the operation of the entity; ii) the results of these operations; iv) the state of affairs of the entity, in future years.

END OF AUDITED FINANCIAL STATEMENTS Harness Racing NSW Annual Report 2016 83 Financial Statements Harness Racing NSW Industry Fund

Contents Members’ Declaration 85 Statement of Profit or Loss and Other Comprehensive Income 86 Statement of Changes in Equity 86 Statement of Financial Position 87 Statement of Cash Flows 87 Notes to the Financial Statements 88

84 Harness Racing NSW Annual Report 2016 Members’ Declaration

The Members of Harness Racing New South Wales (HRNSW) present their declaration for the financial year ended 30 June 2016.

In the opinion of the Members of the entity: –

(a) the accompanying financial statements and notes:

(i) comply with Accounting Standards and other mandatory professional reporting requirements, and

(ii) give a true and fair view of the entity’s financial position as at 30 June 2016 and its performance for the financial year ended on that date, and

(b) there are reasonable grounds to believe that the entity will be able to pay its debts as and when they fall due, and

Signed in accordance with a resolution of the Members at Bankstown.

Graham Kelly Chairman

Rod Smith Member

Dated 19th August 2016

Harness Racing NSW Annual Report 2016 85 Statement of Profit or Loss and Other Comprehensive Income for the financial year ended 30 June 2016

2016 2015 Note $ $ Revenue from Continuing Operations

HRNSW Distribution 3 (a) 2,479,290 2,448,676 Race Fields - Contribution to Breeding Schemes 3 (b) 1,450,000 700,000 Race Fields - Contribution to Marketing Expenses 100,000 250,000 Foal and Sire Registration Fee 3(c) 706,984 683,916 HRA Breeders Incentive 293,575 269,053 Interest Earned 55,080 91,107 Fee Revenue 3 (d) 12,900 56,784 Sponsorship Revenue 330,000 331,680 Training Course Revenue - - Other Income 3 (e) 301,143 280,651 Total Revenue 5,728,971 5,111,867

Expenses from Continuing Operations Prizemoney Subsidies 4 (a) 1,165,412 1,103,000 Breeders' Bonus Incentive Certificates 2,353,889 1,792,282 Grants and Other Subsidies 4 (b) 511,498 786,926 Breeders Challenge - 269,053 Harness Racing Australia and RISE Expenses 472,512 465,350 Sponsorship Distribution 252,500 250,000 Carnival of Cups 4 (c) 594,072 673,006 Management Fee and Other Expenses 4 (d) 204,097 191,072 Total Expenses 5,553,979 5,530,690 Surplus / (Deficit) for the Year 174,991 (418,823) Comprehensive Income Other Comprehensive income - - Other Comprehensive Income for the Year - - Total Comprehensive Income for the Year 174,991 (418,823)

The accompanying notes form part of these financial statements

Statement of Changes in Equity for the financial year ended 30 June 2016

2016 2015 $ $ Total Equity at the beginning of the financial year 701,032 1,119,855 Total Comprehensive Income 174,991 (418,823) Total Equity at the end of the financial year 876,023 701,032

The accompanying notes form part of these financial statements

86 Harness Racing NSW Annual Report 2016 Statement of Financial Position for the financial year ended 30 June 2016

2016 2015 Note $ $ ASSETS

CURRENT ASSETS Cash and Cash Equivalents 5 47,261 179,148 Investments 6 1,161,509 1,325,460 Receivables 7 3,199,860 2,550,708 Other Current Assets 8 21,245 22,239 Total Current Assets 4,429,876 4,077,555 TOTAL ASSETS 4,429,876 4,077,555

LIABILITIES CURRENT LIABILITIES Payables 9 1,350,639 1,386,690 Income Received in Advance 10 371,839 509,135 Provision for Unredeemed Breeders Bonus 11 1,086,285 939,000 Total Current Liabilities 2,808,763 2,834,825

NON-CURRENT LIABILITIES Income Received in Advance 10 745,090 541,699 Total Non-Current Liabilities 745,090 541,699 TOTAL LIABILITIES 3,553,853 3,376,524 NET ASSETS 876,023 701,032

EQUITY Accumulated Surplus 876,023 701,032 Total Equity 876,023 701,032

The accompanying notes form part of these financial statements

Statement of Cash Flows for the financial year ended 30 June 2016

2016 2015 Note $ $ CASH FLOWS FROM OPERATING ACTIVITIES

Cash receipts from HRNSW, Participants and Others 5,528,306 5,740,297 Interest from Investments and Bank Accounts 55,080 91,107 Payments to Suppliers and Participants (5,879,223) (4,935,011) Net Cash (Used in) / Provided By Operating Activities 12 (295,837) 896,392

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from / (Payments for) Investments 163,951 (763,712) Net Cash Provided by / (Used in) Investing activities 163,951 (763,712) Net (Decrease) / Increase in Cash and Cash Equivalents Held (131,887) 132,681 Cash and Cash Equivalents at the Beginning of the Year 179,148 46,468 Cash and Cash Equivalents at the End of the Year 5 47,261 179,148

The accompanying notes form part of these financial statements

Harness Racing NSW Annual Report 2016 87 Notes to the Financial Statements for the financial year ended 30 June 2016

1. STATEMENT OF ACCOUNTING POLICIES Interest Earned / Financial Income Interest revenue is recognised as it accrues taking into account The principal accounting policies adopted in the preparation of the effective yield on the financial asset. the financial report are set out below. These policies have been consistently applied by the entity, and, except where there is Other Income a change in accounting policy, are consistent with those of the Revenue earned from all other activities is recognised when previous year. the product or service in respect of which the fees have been charged is receivable. a) Reporting Identity Harness Racing Industry Fund (HRIF) derives income Foal and Breeders Challenge Registration Fees from arrangements put in place by Harness Racing New Revenue earned from Foal and Breeders Challenge South Wales (HRNSW) and harness racing clubs for the Registration fees is recognised when the series or event management and distribution of funds available to the harness in respect of which the fees have been charged has been racing industry. The relevant Agreements are the NSW conducted. Harness Racing TAB Clubs Arrangements dated 26 February 1998 and as amended dated 27 May 1999 and 28 July 2000, h) Goods and Services Tax (GST) and the Intracode Agreement dated July 2004. Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the The arrangements require separate Funds to be maintained amount of GST incurred is not recoverable from the Australian under the management of HRNSW in consultation with the Taxation Office (ATO). In these circumstances the GST is NSW Harness Racing Clubs Committee. Consequently these recognised as part of the cost of the acquisition of the asset or Funds to not form part of the HRNSW accounts and therefore as part of the expense. are not included in the HRNSW financial statements. Receivables and payables are stated with the amount of GST b) Revision of Accounting Estimates included where possible. Revisions of accounting estimates are recognised prospectively in current and future periods only. The net amount of GST recoverable for, or payable to, the ATO is included as a current asset or liability in the statement c) Cash and Cash Equivalents of financial position. Cash Flows are included in the statement Cash and Cash equivalents consist of cash at bank and other of cash flows on a gross basis. The GST components of cash short-term highly liquid investments with maturities of three flows arising from investing and financing activities which are months or less which are readily convertible to cash and which recoverable from, or payable to, the ATO are classified as are subject to an insignificant risk of change in value. operating cash flows.

d) Breeders’ Bonus Incentive Certificates i) New Standards and Interpretations not yet adopted A provision is made for the estimated number of certificates There are no new standards or interpretations which have a to be redeemed, which appears in the statement of financial material effect on the financial statements. position as a current liability. j) Financial Instruments Non-derivative financial instruments comprise trade and other e) Breeders Challenge Registration HRIF holds funds received from foal and sire registration fees receivables, cash and cash equivalents and trade and other of a particular year. Funds are retained to make available payables. monies to fund the Breeders’ Challenge Series when those foals reach series’ competition age. The fees received are Cash and cash equivalents comprise cash balances and call treated as Income received in advance and transferred to deposits. income in the years of competition. k) Finance Income and Expenses There are no finance expenses. f) Income Tax The Harness Racing Industry Fund has been recognised by the Australian Taxation Office as a not-for-profit entity and is Finance income consists of interest from banks and other not subject to income tax. financial institutions. Interest is recognised as it accrues.

g) Revenue Recognition Revenue is measured at fair value of the consideration l) Impairment received or receivable, net of goods and services tax (GST) Financial assets payable to the taxation authority and net of any allowances. A financial asset is assessed at each reporting date to Revenue is recognised in the period to which the revenue determine whether there is any objective evidence that it is relates. impaired. A financial asset is considered impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. HRNSW Distributions Distributions from Harness Racing New South Wales HRNSW An impairment loss in respect of a financial asset measured are recognised as they accrue to the benefit of the Fund based at amortised cost is calculated as the difference between its on distribution advices received from HRNSW. carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate.

88 Harness Racing NSW Annual Report 2016 Notes to the Financial Statements for the financial year ended 30 June 2016

m) Accounts Receivable and Other Debtors Accounts receivable and other debtors include amounts due from members as well as amounts receivable from customers for goods sold in the ordinary course of business. Receivables expected to be collected within 12 months of the reporting period are classified as current assets. All other receivables are classified as non-current assets. Accounts receivable are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment.

n) Accounts Payable and Other Payables Accounts payable and other payables represent the liability outstanding at the end of the reporting period for goods and services received by the company during the reporting period which remain unpaid. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability.

2. BASIS OF PREPARATION

a) Statement of Compliance The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (AASB’s) (including Australian Interpretations) adopted by the Australian Accounting Standards Board (AASB) and the Harness Racing Act 2009 (as amended). The financial report of the Fund also complies with the IFRSs and interpretations adopted by the International Accounting Standards Board.

The financial statements were approved by the Board of HRNSW on 19 August 2016.

b) Basis of Measurement The financial statements have been prepared on the historical cost basis.

c) Functional and Presentation Currency These financial statements are presented in Australian dollars, which is the Fund’s functional currency.

d) Statement Use of Estimates and Judgements The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

Harness Racing NSW Annual Report 2016 89 Notes to the Financial Statements (Continued) for the financial year ended 30 June 2016

2016 2015 3 OPERATING INCOME Note $ $

(a) HRNSW Distribution Funds totalling 6% (FY 2015: 6%) of the TAB Distribution were provided by HRNSW 2,125,105 2,123,556 Carnival of Cups Funding - 1% (2015: 1%) 354,184 325,120 Total 2,479,290 2,448,676

(b) Race Fields - Contribution to Breeding Schemes Race Fields contribution from HRNSW 1,450,000 700,000 Total 1,450,000 700,000

Contribution to Breeding Schemes from Race Fields revenue as determined by the Board of HRNSW.

(c) Foal and Sire Registration Fee Breeders Challenge Income 620,089 593,963 Foal Registration Fee 86,895 89,954 706,984 683,916

(d) Fee Revenue Fine Income from HRNSW 12,900 56,784 Total 12,900 56,784

(e) Other income Reimbursement of Expenses by HRNSW 109,646 110,973 Awards Night Income 72,193 92,723 EI Subsidies released 119,129 - All Other 175 76,956 Total 301,143 280,651

90 Harness Racing NSW Annual Report 2016 Notes to the Financial Statements (Continued) for the financial year ended 30 June 2016

2016 2015 4 OPERATING EXPENSES Note $ $ (a) Prize Money Subsidies Trotters Foundation 41,000 41,000 Breeders Challenge 1,124,412 1,026,000 Other - 36,000 1,165,412 1,103,000

(b) Grants & Other Subsidies Animal Welfare 4,524 - Awards Night 113,701 106,628 Bred in the Blue - 32,890 Breeders Challenge - Other Expenses 103,192 48,357 Breeders Challenge - Rugs & Trophies 41,353 27,905 Breeding Support 24,600 35,730 iForm 38,754 8,486 Industry Associations 18,054 11,202 Industry Training & Development 12,952 20,000 Interdominion Marketing Expenses - 267,658 Marketing and Media 30,503 66,806 Miscellaneous - 6,951 NSW Mini Trotting Association 13,859 20,696 Racing Support 17,778 - Seminars & Forums 62,331 20,458 Trots TV 4,815 27,052 World Trotting Conference Support - 60,000 Youth Development - NSW Rising Stars 21,024 18,143 Youth Development - State of Origin Series - 4,748 Youth Development - Young Drivers 4,056 3,217 511,498 786,926

(d) Management Fee and Other Expenses Management Fees Paid to HRNSW 186,660 182,806 Bank and Audit Fees 8,887 8,266 Other 8,550 - 204,097 191,072

5 Cash and Cash Equivalents Cash at Bank - CBA 47,261 179,148 47,261 179,148

6 Investments Deposits with Bank 1,161,509 1,325,460 1,161,509 1,325,460

Harness Racing NSW Annual Report 2016 91 Notes to the Financial Statements (Continued) for the financial year ended 30 June 2016

2016 2015 7 Receivables Note $ $ Due from Related Party - HRNSW 3,041,644 2,234,991 Due from Clubs 1,485 2,200 Due from Other 156,731 313,517 Total 3,199,860 2,550,708

8 Other Current Assets Prepayments 21,245 22,239 Total 21,245 22,239

9 Payables Payable to Clubs 155,039 280,246 Prize Money 1,007,523 983,000 Payable to Other Creditors 188,079 123,443 Total 1,350,639 1,386,690

10 Income Received In Advance Current Liabilities 371,839 509,135 Non Current Liabilities 745,090 541,699 Total 1,116,929 1,050,834

11 PROVISION FOR UNREDEEMED (iii) The purchase price of a NSW Breeders Challenge BREEDERS’ BONUS INCENTIVE eligible horse at a registered trialling sale conducted in NSW. CERTIFICATES The certificates are no longer redeemable for cash. The NSW Breeders Challenge Owners Bonus Certificates worth $2,500 each have been issued since 1 July, 2010. Prior During the year to 30 June 2011 the value of the Certificate to this, State Bred Bonus Certificates were issued, worth was increased to $3,000 provided the win was in a Career or $2,000 each if won at TAB club meetings or $500 if won at Metropolitan penalty bearing race. Non-TAB club meetings. From 1 September 2013 a 5YO or older horse that had not All certificates could be redeemed for their full face value up won a bonus certificate and provided the win was in a Career to two years after the date of issue. The certificates are only or Metropolitan penalty bearing race the owners of a Breeders redeemable as follows: Challenge eligible 5YO or older horse can also win a bonus certificate for their horses’ first NSW win of the season. (i) The purchase price of a NSW Breeders Challenge eligible yearling at a registered The owners of these 5YO and older horses must have paid the Australian sale; series fee or made a sustaining payment as either a 2YO or 3YO to be eligible to win a NSW Breeders Challenge Owners’ (ii) The service fee of a stallion nominated for the NSW Bonus Certificate. Breeding Schemes to a NSW based mare upon confirmation of a positive 35 day pregnancy test;

2016 2015 Provision for Unredeemed Breeders Bonus Certificates $ $ Unredeemed Bonus Certificates 1,086,285 939,000 Total 1,086,285 939,000

92 Harness Racing NSW Annual Report 2016 Notes to the Financial Statements (Continued) for the financial year ended 30 June 2016

2016 2015 12 Notes to the Statement of Cash Flows $ $ Surplus / (Loss) 174,991 (418,822) Surplus / (Deficit) before changes in Working Capital Provisions 174,991 (418,822)

Change in Trade and Other Receivables (649,153) 556,247 Change in Other Assets 994 (11,409) Change in Trade and Other Payables (36,050) 427,020 Change in Unredeemed Bonus Incentive Certificates 147,285 282,500 Change in Income in Advance 66,094 60,855 Net Cash (Used in) / Provided By Operating Activities (295,837) 896,392

13 FINANCIAL RISK MANAGEMENT

Overview The Fund has exposure to the following risks from its use of financial instruments:

• Credit risk; • Interest rate risk; • Liquidity risk; and • Market risk

The Members have overall responsibility for the establishment and oversight of the risk management framework.

Risk management policies are established to identify and analyse the risks faced by the Fund, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Fund’s activities. The Fund and systems are reviewed regularly to reflect changes in market conditions and the Fund’s activities. The Fund through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

END OF AUDITED FINANCIAL STATEMENTS

Harness Racing NSW Annual Report 2016 93 Financial Statements Harness Racing NSW Racecourse Development Fund

Contents Members’ Declaration Independent Auditors’ Report Statement of Profit or Loss and Other Comprehensive Income Statement of Financial Position Statement of Cash Flows Statement of Changes in Equity Notes to the Financial Statements

94 Harness Racing NSW Annual Report 2016 Members’ Declaration

The Members of Harness Racing New South Wales (HRNSW) present their declaration for the Harness Racing Racecourse Development Fund for the financial year ended 30 June 2016.

In the opinion of the Members of the entity: –

(a) the accompanying financial statements and notes:

(i) comply with Accounting Standards and other mandatory professional reporting requirements; and

(ii) give a true and fair view of the entity’s financial position as at 30 June 2016 and its performance for the financial year ended on that date; and

(b) there are reasonable grounds to believe that the entity will be able to pay its debts as and when they fall due; and

Signed in accordance with a resolution of the Members at Bankstown.

Graham Kelly Chairman

Rod Smith Member

Dated 19th August 2016

Harness Racing NSW Annual Report 2016 95 Independent Auditors’ Report To the Members of Independence Harness Racing Racecourse Development Fund In conducting our audit, we have complied with the independence requirements of APES 110: Code of Ethics for Professional Accounts. We confirm that the independence Report on the financial report We have audited the accompanying financial report of declaration provided to the Members of Harness Racing New Harness Racing Racecourse Development Fund (the ‘entity’) South Wales on 19 August 2016, would be in the same terms if which comprises the statement of financial position as at provided to the Members as at the date of this Auditors’ report. 30 June 2016, and the statement of profit or loss and other comprehensive income, statement of changes in equity, Auditors’ opinion on the financial report and statement of cash flows for the year ended on that date, a summary of significant accounting policies and other In our opinion: explanatory notes and the Members’ Declaration. a the financial report of Harness Racing Racecourse Development Fund: Members’ responsibility for the financial report The Members of the entity are responsible for the preparation and fair presentation of the financial report in accordance with i gives a true and fair view of the entity’s Australian Accounting Standards (including the Australian financial position as at 30 June 2016 and of Accounting Interpretations). This responsibility includes its performance for the financial year ended establishing and maintaining internal control relevant to the on that date; and preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or ii complies with Australian Accounting error, selecting and applying appropriate accounting policies; Standards (including the Australian and making accounting estimates that are reasonable in Accounting Interpretations). the circumstances. In note 2(a), the members also state, in accordance with Australian Accounting Standard AASB 101 b the financial report of the entity also complies Presentation of Financial Statements, that the financial report with International Financial Reporting Standards as of the entity, comprising the financial statements and notes, disclosed in note 2(a) complies with International Financial Reporting Standards. K S Black & Co Chartered Accountants Auditors’ 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. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and Scott Bennison perform the audit to obtain reasonable assurance whether the Partner financial report is free from material misstatement. Sydney An audit involves performing procedures to obtain audit Dated: 19 August 2016 evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditors’ 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 and fair presentation of the financial report 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 members, as well as evaluating the overall presentation of the financial report.

We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

96 Harness Racing NSW Annual Report 2016 Statement of Profit or Loss and Other Comprehensive Income for the financial year ended 30 June 2016

2016 2015 Note $ $ Revenue from Continuing Operations HRNSW Distribution 3 (a) 708,368 707,852 Investment income 3 (b) 920,940 791,846 Other Income 3 (c) - 820 Total Revenue 1,629,308 1,500,518

Expenses from Continuing Operations Administration Expenses 102,075 42,225 Grants Made 4 (a) 528,387 218,473 New Track Expenses 4 (b) 7,074,205 6,396,260 Country Election Promise Grants 4 (c) - 129,320 Training Centre Funding 4 (d) 618,976 548,702 Refund to State Government 4 (e) (43,907) (1,835) Integrity Expenditure - Subsidy to HRNSW 4 (f) - 491,424 Flood Assistance to Hunter Region 6,490 - Depreciation Expense 9 23,268 - Total Expenses 8,309,495 7,824,568 Deficit for the Year (6,680,187) (6,324,051)

Comprehensive Income Other Comprehensive income - - Other Comprehensive Income for the Year - - Total Comprehensive Income for the Year (6,680,187) (6,324,051)

The accompanying notes form part of these statements

Statement of Changes in Equity for the financial year ended 30 June 2016

2016 2015 $ $ Total Equity at the beginning of the financial year 17,944,067 24,268,118 Total comprehensive Income (6,680,187) (6,324,051) Total Equity at the end of the financial year 11,263,880 17,944,067

The accompanying notes form part of these statements

Harness Racing NSW Annual Report 2016 97 Statement of Financial Position for the financial year ended 30 June 2016

2016 2015 Note $ $ ASSETS

CURRENT ASSETS Cash and Cash Equivalents 5 661,613 350,407 Deposits 6 10,370,108 18,385,694 Loans Receivable 7 59,915 5,000 Other Receivables 8 427,130 344,309 Total Current Assets 11,518,766 19,085,410

NON-CURRENT ASSETS Loans Receivable 7 338,652 233,047 Property, Plant & Equipment 9 170,404 12,727 Total Non Current Assets 509,057 245,774 TOTAL ASSETS 12,027,821 19,331,184

LIABILITIES

CURRENT LIABILITIES Payables 10 763,942 1,387,118 Total Current Liabilities 763,942 1,387,118 TOTAL LIABILITIES 763,942 1,387,118 NET ASSETS 11,263,880 17,944,067

EQUITY Accumulated Surplus 11,263,880 17,944,067 Total Equity 11,263,880 17,944,067

The accompanying notes form part of these statements

98 Harness Racing NSW Annual Report 2016 Statement of Cash Flows for the financial year ended 30 June 2016

2016 2015 Note $ $ CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from HRNSW, Participants and Others 688,103 1,193,054 Interest from Investments and Bank Accounts 920,940 791,846 Payments to Suppliers and Participants (8,971,958) (6,781,664) Net Cash (Used in) / Provided by Operating Activities 14 (7,362,915) (4,796,764)

CASH FLOWS FROM FINANCING ACTIVITIES Loans Repaid (160,520) 4,550 Net Cash (Used In) / Provided by Financing Activities (160,520) 4,550

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from / (Payments for) Investments 7,834,641 5,118,782 Net Cash Provided by / (Used In) Investing Activities 7,834,641 5,118,782 Net Increase/(Decrease) in Cash and Cash Equivalents Held 311,206 326,568 Cash and Cash Equivalents at the Beginning of the Year 350,407 23,839 Cash and Cash Equivalents at the End of the Year 5 661,613 350,407

The accompanying notes form part of these statements Notes to the Financial Statements for the financial year ended 30 June 2016

1. STATEMENT OF ACCOUNTING POLICIES c) Cash and Cash Equivalents Cash and Cash equivalents consist of cash at bank and other The principal accounting policies adopted in the preparation of short-term highly liquid investments with maturities of two the financial report are set out below. These policies have been months or less which are readily convertible to cash and which consistently applied by the entity, and, except where there is are subject to an insignificant risk of change in value. a change in accounting policy, are consistent with those of the previous year. d) Grants The RDF provided financial assistance by means of ‘Interest a) Reporting Identity Free Interminable Loans’. These advances are, in effect, a On 1 July 1998 the NSW Government wound up the conditional grant. The loans are interest free and interminable predecessor of this Fund, the Racecourse Development and will not be subject to repayment unless: Committee (RDC) and transferred the assets, agreements and rights of the Committee to the relevant controlling body of the (a) The club/association carries out its activities in such a three codes within the racing industry. The Harness Racing manner as to jeopardise its financial position or; Racecourse Development Fund (RDF) was established to take over responsibility for determining and managing the harness (b) The club/association disposes of freehold racing industry capital development. property on which the improvements (the subject of Arrangements were put into place by Harness Racing New the financial assistance) are located. South Wales (the previous HRNSW) and harness racing clubs for the management and funding of the RDF. The The RDF also provided financial assistance by means of relevant agreements are the NSW Harness Racing TAB Clubs repayable loans and grants. Arrangements dated 26 February 1998 and as amended dated 27 May 1999 and 28 July 2000, and the Intracode Agreement e) Income Tax dated July 2004. The Racecourse Development Fund has been recognised by the Australian Taxation Office as a not-for-profit entity and is The arrangements require separate Funds to be maintained not subject to income tax. under the management of HRNSW in consultation with the NSW Harness Racing Clubs Committee. Consequently, these f) Revenue Recognition Funds do not form part of HRNSW and therefore are not Revenue is measured at fair value of the consideration included in the HRNSW financial statements. received or receivable, net of goods and services tax (GST) payable to the taxation authority and net of any allowances. b) Revision of Accounting Estimates Revenue is recognised in the period to which the revenue Revisions of accounting estimates are recognised relates. prospectively in current and future periods only.

Harness Racing NSW Annual Report 2016 99 Notes to the Financial Statements (Continued) for the financial year ended 30 June 2016

HRNSW Distributions j) Impairment Distributions from Harness Racing New South Wales (HRNSW) are recognised as they accrue to the benefit of the Financial assets Fund based on distribution advices received from HRNSW. A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is Interest Earned / Financial Income impaired. A financial asset is considered impaired if objective Interest and other investment revenue is recognised as it evidence indicates that one or more events have had a accrues taking into account the effective yield on the financial negative effect on the estimated future cash flows of that asset. asset. An impairment loss in respect of a financial asset measured Available-For-Sale financial assets at amortised cost is calculated as the difference between its Available-For-Sale financial assets including fixed interest and carrying amount, and the present value of the estimated future listed securities included in the JBWere Investment Portfolio cash flows discounted at the original effective interest rate. are measured at fair value. Gains and Losses are recognised in the Statement of Profit & Loss. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial Other Income assets are assessed collectively in groups that share similar Revenue earned from all other activities is recognised when credit risk characteristics. the product or service in respect of which the fees have been charged is receivable. All impairment losses are recognised in profit or loss.

g) Goods and Services Tax (GST) An impairment loss is reversed if the reversal can be related Revenues, expenses and assets are recognised net of the objectively to an event occurring after the impairment loss was amount of goods and services tax (GST), except where the recognised. For financial assets measured at amortised cost amount of GST incurred is not recoverable from the Australian the reversal is recognised in profit or loss. Taxation Office (ATO). In these circumstances the GST is recognised as part of the cost of the acquisition of the asset or k) Accounts Receivable and Other Debtors as part of the expense. Accounts receivable and other debtors include amounts due from members as well as amounts receivable from customers Receivables and payables are stated with the amount of GST for goods sold in the ordinary course of business. Receivables included where possible. expected to be collected within 12 months of the reporting period are classified as current assets. All other receivables The net amount of GST recoverable for, or payable to, the ATO are classified as non-current assets. is included as a current asset or liability in the statement of financial position. Cash Flows are included in the statement Accounts receivable are initially recognised at fair value and of cash flows as a gross basis. The GST components of cash subsequently measured at amortised cost using the effective flows arising from investing and financing activities which are interest method, less any provision for impairment. recoverable from, or payable to, the ATO are classified as operating cash flows. l) Accounts Payable and Other Payables Accounts payable and other payables represent the liability h) New Standards and Interpretations not yet adopted outstanding at the end of the reporting period for goods and There are no new Standards or Interpretations that have any services received by the company during the reporting period material effect. which remain unpaid. The balance is recognised as a current liability with the amounts normally paid within 30 days of i) Financial Instruments recognition of the liability. Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents and trade and other payables.

Cash and cash equivalents comprise cash balances and call deposits.

Deposits Deposits consist of held-to-maturity investments placed with various banks.

Other Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.

100 Harness Racing NSW Annual Report 2016 Notes to the Financial Statements (Continued) for the financial year ended 30 June 2016

2. BASIS OF PREPARATION c) Functional and Presentation Currency These financial statements are presented in Australian dollars, a) Statement of Compliance which is the Fund’s functional currency. The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting d) Use of Estimates and Judgements Standards (AASB’s) (including Australian Interpretations) The preparation of financial statements requires management adopted by the Australian Accounting Standards Board to make judgements, estimates and assumptions that affect the (AASB) and the Harness Racing Act 2009 (as amended). application of accounting policies and the reported amounts The financial report of the Fund also complies with the IFRSs of assets, liabilities, income and expenses. Actual results may and interpretations adopted by the International Accounting differ from these estimates. Standards Board. Estimates and underlying assumptions are reviewed on The financial statements were approved by the Board of an ongoing basis. Revisions to accounting estimates are HRNSW on 19 August 2016. recognised in the period in which the estimate is revised and in any future periods affected. b) Basis of Measurement The financial statements have been prepared on the historical cost basis.

Note 2016 2015 3 OPERATING INCOME $ $ (a) HRNSW Distribution Funds totalling 2% (FY 2015: 2%) of the TAB Distribution were provided by HRNSW 708,368 707,852 708,368 707,852

(b) Investment Income Interest Income - Banks 9,777 370,594 Investment Income - JBWere 911,163 421,252 920,940 791,846

4 OPERATING EXPENSES (a) Grants Made Grants - Clubs 13 71,868 49,197 Grants - HRNSW - Funding for Purchase of Equipment 456,519 169,276 528,387 218,473

Harness Racing NSW Annual Report 2016 101 Notes to the Financial Statements (Continued) for the financial year ended 30 June 2016

Note 2016 2015 4 OPERATING EXPENSES (Continued) $ $ (b) Specific Track Expenses Tamworth 63,630 1,835 Menangle Park Training Centre 5,770,964 3,392,354 Bathurst 119,335 2,019,110 Newcastle 2,080 37,623 Penrith 927,078 799,620 Wagga Wagga 77,717 145,493 Hawkesbury 111,492 - Goulburn 1,909 - Lithgow - 225 7,074,205 6,396,260 All expenditure on new tracks and the training centre is expensed in the year in which it is incurred rather than capitalised and written off over the expected life of the asset or the lease. This accounting treatment has contributed to the large deficit for the year and reduction in Equity

(d) Training Centre Funding Expenditure on various tracks throughout the state 618,976 548,702 618,976 548,702

(e) Potential Refund to State Government (43,907) (1,835) (43,907) (1,835)

Accrual of potential refund to NSW State Government if Tamworth Showground site is purchased in lieu of developing a harness track at a new site. Amount represents grant of $300,000 less expenses incurred to date. Amount remaining is $Nil.

(f) Integrity Expenditure - Grant to HRNSW Subsidy to HRNSW for integrity related expenses - 450,000 Integrity Asset Purchases - 41,424 - 491,424

5 Cash and Cash Equivalents Cash at Bank 661,613 350,407 661,613 350,407

6 Deposits Investments - JBWere Investment Portfolio 10,370,108 18,385,694 10,370,108 18,385,694

102 Harness Racing NSW Annual Report 2016 Notes to the Financial Statements (Continued) for the financial year ended 30 June 2016

2016 2015 7 Loans Receivable $ $ Balance at the Beginning of the year 238,047 242,597 Loans made during the year 165,520 450 Loans repaid during the Year (5,000) (5,000) Balance at the End of the Year 398,567 238,047

Balance due within one year 59,915 5,000 Balance due longer than one year 338,652 233,047 398,567 238,047

8 Other Receivables HRNSW 242,747 218,827 Accrued Interest on Bank Investments - 15,961 Other 184,383 109,522 427,130 344,309

Other Equipment Motor Vehicles Total 9 Property, Plant & Equipment $ $ $ As at 1 July 2014 Cost or fair value - - - Accumulated depreciation - - - Net Book Value - - -

Year ended 30 June 2015 Opening Net Book value - 12,727 12,727 Additions - - - Depreciation charge - - - Disposals - - - Depreciation on disposals - - - Closing net book amount - 12,727 12,727

At 30 June 2015 Cost or fair value - 12,727 12,727 Accumulated depreciation - - - Net Book Value - 12,727 12,727

Year ended 30 June 2016 Opening Net Book value - 12,727 12,727 Additions 90,036 90,909 180,945 Acquisition of a business - - - Depreciation charge (9,939) (13,329) (23,268) Disposals - - - Depreciation on disposals - - - Closing net book amount 80,097 90,307 170,404

At 30 June 2016 Cost or fair value 90,036 103,636 193,673 Accumulated depreciation (9,939) (13,329) (23,268) Net Book Value 80,097 90,307 170,404

Harness Racing NSW Annual Report 2016 103 Notes to the Financial Statements (Continued) for the financial year ended 30 June 2016

2016 2015 10 Payables $ $ HRNSW - 624,998 Clubs - 27,932 Other 763,942 734,188 763,942 1,387,118

11. CONTINGENT LIABILITIES & COMMITMENTS FOR EXPENDITURE (c) Training Centre Funding

(a) Emergency Integrity Fund. In addition to expenditure on infrastructure outlined in Note 11 (a) above, HRNSW also resolved that all tracks throughout During FY2012 the Board of HRNSW determined that $1.0m NSW would receive operational funding grants to maintain would be set aside from the Racecourse Development Fund existing facilities. The amount of each grant is based on the for an Emergency Integrity Fund to investigate allegations of horse population near each racecourse. corruption. In determining the amount to be allocated to each track, a list Expenditure of $412,490 was incurred in FY2012 and $93,823 of horses at each venue was created from information that in FY2013 with $54,778 also spent purchasing assets including HRNSW had when the budgets were being drawn up. swab stalls at certain tracks. Costs of $31,836 were incurred The information was drawn from the official address where FY2014. each horse is located. That was then linked to a local council and from there the closest track was determined. Also For FY2015 the Board determined that any remaining amounts considered were the supply chain of horses from each track would be used to assist with the funding of integrity related and the running of official trials. expenses during that financial year. The fund was initially allocated $680,000 pa to be spent on No amounts were therefore available in FY2016. tracks every year and ran for the three years to 30 June 2015. Clubs were able to draw down as required or may hold off and request a higher amount in a future year. (b) Country Racing Election Promise Grants A new fund amounting to $750,000 pa was established in As part of the Coalition’s campaign for the 2011 NSW State FY2016 and will run for a three year period to June 2018. Election, a promise of a $5M grant was made to country racing Thereafter clubs will be required to apply for grants. should the Coalition win government.

Following the Coalition’s win $5M was apportioned between (d) Capital Expenditure. the three racing codes and HRNSW was allocated $650k for use at its country based venues. In addition to the grant In addition to 11(c) above, the Board resolved to allocate HRNSW resolved to use $1.2m of the monies received from substantial amounts for expenditure on certain infrastructure the sale of Harold Park on infrastructure and equipment. in FY2016 including funds for completion of the training centre HRNSW wrote to all clubs, excluding the Principal Club, at Menangle and funds for other projects such as upgrades to requesting details of their requirements for plant, equipment, Penrith and professional works for the construction of a new track and facility upgrades. track at both Tamworth and Wagga.

The total amount to be spent on infrastructure and equipment The Board of HRNSW has developed a two year infrastructure was therefore around $1,900,000 and spending was plan which covers a number of tracks across the state. undertaken over a four year period.

The Fund has now been fully used.

104 Harness Racing NSW Annual Report 2016 Notes to the Financial Statements (Continued) for the financial year ended 30 June 2016

12. CONTINGENT ASSETS

(a) Interest Free Interminable Loans

The RDF and its predecessor have made Interest Free Interminable Loans (IFIL). These loans are not repayable except in the exceptional circumstances which are described in Note 1(d). The loans subject to this condition as at 30 June 2015 amount to:

Contingent Assets 2016 2015 Interest Free Interminable Loans $ $ Carried Forward from Previous Years 24,423,973 24,423,973 IFILs made during the year - - Repayments made during the year - - Balance at the end of the Financial Year 24,423,973 24,423,973

The balance carried forward included contingent assets of $39,512,799 transferred from the TAB Racecourse Development Fund in respect to IFILs made 1 November 1971 to 30 June 1998.

13. FINANCIAL ASSISTANCE PAYMENTS & COMMITMENTS OUTSTANDING Commitment Funding Funding Payments Commitment B/Forward Withdrawn Approved Made Outstanding from Not used 2015/16 2015/16 2015/16 Club Project 30-Jun-15 Bathurst Drainage - - 4,900 4,900 - Newcastle Fibre Optic cabling - - 38,255 38,255 - Eugowra Stewards Room - - 25,000 25,000 - Forbes Conditioner - - 3,713 3,713 - - - 71,868 71,868 -

Assistance for projects $50,000 and over Projects Interest Free Interminable Loans - - - - - Loans - - - - - Grants ------

Assistance for projects under $50,000 Projects Interest Free Interminable Loans - - - - - Loans - - - - - Grants - - 71,868 71,868 - - - 71,868 71,868 -

Total All assistance - - 71,868 71,868 -

Harness Racing NSW Annual Report 2016 105 Notes to the Financial Statements (Continued) for the financial year ended 30 June 2016

2016 2015 14 Notes to the Statement of Cash Flows $ $ (Deficit) / Surplus for the Year (6,680,187) (6,324,051) Depreciation and Amortisation 23,268 - Operating Deficit before changes in Working Capital Provisions (6,656,919) (6,324,051)

Change in Trade and Other Receivables (82,820) 375,923 Change in Trade and Other Payables (623,176) 1,151,364 Net Cash (Used In) / Provided By Operating Activities (7,362,915) (4,796,764)

15. FINANCIAL RISK MANAGEMENT

Overview

The Fund has exposure to the following risks from its use of financial instruments:

• Credit risk; • Interest rate risk; • Liquidity risk; and • Market risk

The Members have overall responsibility for the establishment and oversight of the risk management framework.

END OF AUDITED FINANCIAL STATEMENTS

106 Harness Racing NSW Annual Report 2016