KARTING ANNUAL REPORT 20 Year Ending 31 December 2020 AUSTRALIAN KARTING ASSOCIATION LTD. T/AS KARTING AUSTRALIA 2 KARTING AUSTRALIA

TABLE OF CONTENTS

INTRODUCTION

Report from The Chairman 6 Chief Executive Officer'sReport 10

OVERVIEW

Financial Summary 12

ACTIVITY

Covid-19 Response 14 Covid-19 Innovations & Outcomes 18 National Events and State Champions 21 Australian Council 23

FINANCIAL REPORT

Australian Karting Association Ltd 25

AKA TRACK DEVELOPMENT FUND

2020 Summary 54 Financial Report 55

Image Credits: Pace Images and Quick Pixels Photography 3 OUR VALUED PARTNERS

KARTING AUSTRALIA

REPORT FROM THE CHAIRMAN

Glen Egan

It gives me pleasure to report to you as Chairman of Karting Australia.

This is my first report as Chairman having been elected by my fellow Directors early this year following the retirement of inaugural Chair .

The Company I am pleased to report that the sport is in great shape and is rebounding strongly from the trauma and disruption caused by COVID during 2020.

The company, Australian Karting Association Ltd (AKA Ltd), is in excellent financial shape and continues to be well managed from both the business and sporting perspectives. Our Balance Sheet is extremely healthy, and the sport is firing on all cylinders post Covid.

We are reporting that the company achieved a surplus in 2020 of $134,477 after depreciation and amortisation. This is despite lower-than-expected revenue due to Covid. Total company funds at the end of the financial year sit just shy of $2 million in reserves.

We are well equipped to meet any and all of our financial obligations as and when they fall due and to run the sport well into the future.

The surplus enables us to add to our Future Fund in accordance with our By Laws.

Australian Karting Association Ltd. is in excellent financial shape and continues to be well managed from both the business and sporting perspectives. Our Balance Sheet is extremely healthy, and the sport is firing on all cylinders post Covid.

I would like to take this opportunity to clear up a couple of common misconceptions about Karting Australia. AKA Ltd is a Not for Profit (NFP) company that is limited by guarantee which trades as the NFP organisation Karting Australia.

• NFP organisations provide services to the community and do not operate to make a profit for their members (or shareholders, if applicable). Most sports clubs and associations are Not for Profit organisations. All profits generated must go back into the services the organisation provides and must not be distributed to members, even if the organisation winds up.1

• A company limited by guarantee is a public company registered under the Corporations Act and it must comply with the provisions of the Act. It cannot pay dividends to its shareholders or members and is required to report annually to ASIC.

6 A company limited by guarantee will usually have a constitution that sets out specific rules governing the internal affairs of the company.2

• In October 2019, the Member States unanimously approved a new Constitution that governs how Karting Australia operates.3

• The Directors of the company all act in a volunteer capacity.4

Board and Management I would like to thank my fellow Directors and our staff for their work and efforts throughout the year.

For a national sporting organisation, we operate with a small but extremely dedicated staff that is very well led by our CEO Kelvin O’Reilly. Their work over many years has been exceptional. Their work in 2020 faced with the massive challenges created by Covid has been extraordinary. On behalf of the Board, I would like to thank them for their dedication and achievements over the past year.

I would like to acknowledge and thank retiring Chairman Mick Doohan for his work as the inaugural Chairman of the company. Eight years as our Chair is a great innings – particularly so when the initial brief was to effect change, modernise the company, give it a solid financial base so that it has a long-term future and to solve a number of long-term stalled issues like ‘future engines’.

For a national sporting organisation, we operate with a small but extremely dedicated staff that is very well led by our CEO Kelvin O’Reilly. Their work over many years has been exceptional. Their work in 2020 faced with the massive challenges created by Covid has been extraordinary. On behalf of the Board, I would like to thank them for their dedication and achievements over the past year.

I have had the pleasure of working with Mick for the past four years and have inherited the reins of a sporting organisation that is well managed and in good shape. Mick should be pleased with the legacy he has left as karting is a much stronger sport now than it has ever been.

During 2020 the company undertook a process of Board renewal which has strengthened the Board. Kevin Davis - Managing Director of Austech Industries and Andrew Westacott - CEO of the – organisers of the Australian Formula 1 Grand Prix and Moto GP both joined the Board during the year adding greater depth and experience in business management and motorsport management in particular.

As we look to the future, I am confident that our Board will continue to add value to our business and the sport of karting.

2020 We entered 2020 with an enormous amount of positive energy and plans for what we thought 2020 would look like and what we thought we could achieve. We adopted a new Constitution and developed a new Strategic Plan in the last quarter of 2019 that will take us through to 2023. We had a very clear and well-defined direction that our management team and our Member States have started to implement. Then, in March 2020, the world as we used to know it changed. Our complete focus shifted to leading our State Associations and our Affiliated Clubs through the dramatic impact of the pandemic.

Kelvin and Lee devoted many long hours to our response to COVID and in my opinion, led the sport magnificently. No one had a manual to follow, they worked on instinct and common sense. They took the best advice on the health issues from the State and Federal Government Health Departments and Dr Brent May our Chief Medical Officer and developed our “Re-ignition Plan” for the sport. It worked exceptionally well and in conjunction with the herculean efforts and commitment of our Clubs and Member States, has been largely responsible for the transition back to normal.

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1 Australian Taxation Office 2 Australian Securities and Investments Commission 3 AKA Ltd Constitution 4 AKA Ltd Constitution – Article 13.10 From that point in time, the work of our Clubs and Member States has been simply outstanding. They got themselves ‘Covid’ organised, they implemented the plans and through their efforts succeeded in maintaining the health of their clubs and the sport. You have embraced social karting; you have started racing again in numbers that we have not seen for a long time.

There is still a lot to do to build on our early success from the back half of 2020. Now is the time for our members to renew their commitment to support their Clubs.

Club competition and social karting activities were the first activities to be back up and running and now all of our higher-level State competitions and the SP Tools Australian Kart Championship presented by Castrol Edge is well underway, despite the continual (currently minor) disruptions caused by Covid.

The pandemic brought forward our plans to conduct most of our Officials’ training on-line. We now have 18 on-line courses and over 1,200 people who have enrolled in the Karting Australia Officials Academy powered by Rosche Paper.

Programs that we were forced to put on hold due to Covid like Junior Sprockets are now running again.

Our promotional partnership with Supercars has been refreshed and as further large event restrictions ease, these will become more prominent. We look forward to the Formula 1 Grand Prix’s return in November and to working with the organisers to actively promote karting as the point of entry for all Grand Prix drivers and motorsport in general.

The pandemic brought forward our plans to conduct most of our Officials’ training on-line. We now have 18 on-line courses and over 1,200 people who have enrolled in the Karting Australia Officials Academy powered by Rosche Paper. This is an amazing result after starting from scratch in April and one that ensures that Clubs can continue to run their events and ensure that social karting activities can be conducted in a structured and safer way than ever before.

Thanks In conclusion, I would like to thank Member States and our Clubs, their tireless committees and volunteers. To our volunteer Officials we acknowledge that there would be no sport of karting without you. Our drivers, parents, participants, teams, members of the karting industry. We all collectively do what we do for you but without you there would be no purpose and no sport. Thank you all.

I’d also like to thank Karting Australia’s partners. Firstly, our premier (non-industry) sponsors – SP Tools, Castrol EDGE and Rosche Paper. Thank you sincerely for what you do for the sport. Our industry partners – Patrizicorse - Vortex engines, Ricciardo karts, and Bridgestone tyres, DPE Kart Technology – MG Tires, ALM Sales – Dunlop tyres, International Karting Distributors – Rotax engines, Mojo tyres and Vega tyres, Remo Racing – Torini engines, Formula 1 Rolex Australian Grand Prix, Supercars – thank you all for your support.

GLEN EGAN Chairman of the Board

8 9 CHIEF EXECUTIVE OFFICER'S REPORT

2020 was a year that promised so much, delivered so little and The COVID Impact and Response one that will be remembered for eternity for so many wrong At the outset, I must thank our Chief Operating Officer Lee reasons. Hanatschek, our Chief Medical Officer Dr Brent May and the Board. The challenge of writing my report for this year’s Annual Report is to mention things that are not Covid related. It is almost The Board for putting their complete faith and support in me impossible to do, such was the impact that Covid-19 had on 2020. as CEO, in Lee as my most dedicated “right hand man” and in Brent for the excellent and very timely medical advice that saw Highlights us develop plans and implement things that had never been At the time of writing, our karting organisation and activities are in contemplated before to ensure that our Member States, Affiliated great shape. Clubs and Licence holders got back on track largely unscathed by • Participation in karting events from Club level through to the COVID. Australian Kart Championship is up right across the country. Our priorities were : • Our licence numbers have bounced back strongly as we 1. To ensure that our Member States and Affiliated Clubs were continue to come out of the Covid-enforced restrictions. properly prepared and ready to recommence karting activity • Karting Australia is reporting a significant trading surplus of as soon as government restrictions allow that to happen. $134,477 (after depreciation and amortisation) for the year 2. To prepare our Member States and Affiliated Clubs to ending 31 December 2020, despite significantly reduced conduct our sport in the ‘new normal’ covid affected revenues affected by Covid-19. environment of strained economic times. • Our Clubs and Member States across the country have all 3. To ensure that our individual Members (licence holders) and emerged from Covid energised and full of enthusiasm. stakeholders remain engaged with our sport. • Social Karting is now a key element of the overall karting mix. The Karting Australia staff invested thousands of hours into all • Innovations brought about by Covid including on-line things COVID! registration for social activities, standard Driver’s briefings, We all know that there was no manual, no play book to follow. and electronic scrutineering, are here to stay. Instinct and experience borne from many decades as sports • The Karting Australia Officials Academy powered by Rosche administrators kicked in and carried us through. Paper that was launched early in the pandemic to respond We did everything that we could to make sure that nobody got left to the call for officials to help our sport, now has over 1200 behind. Drivers’ licences were extended to cover the lock down people enrolled in it with most courses conducted on-line periods when people were not allowed to be at our racetracks. making them more accessible. We held webinars, training and information sessions and sent • Our key sponsors SP Tools and Castrol EDGE have more than 40 written advices to Member States and Affiliated maintained their support of our karting activities even while Clubs - every time that something changed – no matter whether it so many competitions and programs like the SP Tools Junior was nationally or in a State or region. This was our new normal. Sprockets program were in the Covid induced hiatus.

10 When the 2020 pandemic became reality, he worked closely with myself and Lee all our sport and the events – at all levels. competitions were immediately put on the way. To have a sponsor such as SP Tools, whose hold, programs were shut down, Clubs Karting Australia Board staff has the same vision for the sport as were locked down, gross uncertainty on Throughout the pandemic I could not the members of the AKA Board and Staff, many fronts was everywhere. have wished for a more supportive Board. is something that we’re very proud of and During the first three months of the We identified at the onset of Covid that look forward to continuing for many years pandemic, it was normal for Lee and I to we were in exceptional times and that it to come. both be working 100-hour weeks. The called for exceptional measures. I asked We are honoured also to have had a speed at which things changed in the early the Board for their support to manage long association and partnership with a months was simply astounding. Quite our Covid response which they willingly worldwide company like Castrol and we often by the time we had finished writing provided. thank them for their support of grassroots advices to our Clubs based on morning Karting was one of the, if not the, first motorsport in this country. media conferences and directions, things national sports to be back up and running had changed and we needed to do it over With the support of SP Tools, Castrol and across the country. We achieved that again. our other commercial partners that assist safely and in full compliance with the laws us in many areas, we’re able to achieve the We made submissions to all levels of and the prevailing restrictions – something goals we set across the sport. Government, were responsible for the AIS that not all sports were able to do. It did Rebooting Sport stages for karting. We not happen by chance. It was due to a lot I would like to take this opportunity to wrote comprehensive “How To” manuals of very hard work and lateral thinking, but thank everyone who is a part of this for our Clubs and members who would be it was totally worthwhile. great sport, from those mentioned attending our Tracks – five of them in total above to the individual licence holders, I am proud of what we achieved with the (plus updates), multiple new pro-forma industry members, parents, mechanics full support of the Board and indeed our forms, regulations, methods of operation, and general club members. We are all a full karting community. I would like to and plans to get things back to normal. ‘family’ working towards a common goal thank the Board and you, our members, of bettering the sport we love. We have We developed and successfully for allowing my staff and I to provide the one of the smallest administration staff implemented our “Road Out Of Lockdown” guidance and leadership to you that has in Australian motorsport and together we – and with the benefit of hindsight, we got produced an outstanding outcome. punch well above our weight. I would like it right – both in the timeframes and the With the end of the year also came the to thank Lee, Mandy and Matthew for their level of activity that could be undertaken. end of Mick Doohan’s term as Chair of dedication and tremendous work ethic. I don’t think that I have ever been prouder the company. Mick has served as Chair Tony Manson for his efforts on safety, risk of our entire karting community. The of the company since its inception in and compliance and my wife Barbara for adaptation and flexibility that our Member 2013. His long-term vision for the sport, assisting me and allowing me to do what I States and Clubs showed in the face of strength of character, integrity, drive and do, regardless of the ‘crazy’ hours that this adversity, along with the enormous desire willingness to make hard decisions are job sometimes entails. to get back on track safely and as quickly hallmarks of his time as our Chair. It has While we have achieved much more in the as possible was simply amazing. The been an honour for me to work with Mick past 12 months than we could ever have reaction of our Drivers in getting back on and to develop our relationship across the imagined in March and April last year, track was simply awesome. journey to now be one of friendship. there’s always a new challenge and we’re The majority of the members of our When asked, Mick accepted the invitation always striving to develop our sport. karting industry are all reporting record of the founding members of the Australian trading years – something that in April Motorsport Council Ltd (AMC) to become and May 2020, we could never have the inaugural Chairman of the AMC. contemplated in our wildest dreams. This, along with ever increasing time commitments overseas has necessitated At no stage until the worst of the Mick standing down as our Chair. 2020 pandemic had passed did I ever contemplate just how successful our plan Stepping into Mick’s shoes in January, Kelvin O’Reilly and work would be. The bounce back has current Chair Glen Egan has worked Karting Australia – Chief Executive Officer been incredible. Our karters are more tirelessly with the Board and management positive and confident and are racing and to ensure that we continue to capitalise on engaging with their Clubs in ways that the Covid bounce back. have never been seen before. Thanks A special thank you must go to Steve Pallas In conclusion, I would like to thank every of Sports Community who helped to guide one of our State and Club Administrators Karting Australia, our Member States and and Volunteer Officials who dedicate so Affiliated Clubs all throughout the process, much of their time to the management of 11 KARTING AUSTRALIA FINANCIAL SUMMARY

Significant surplus recorded for 2020 Financial Year

Given the prevailing circumstances of the pandemic throughout most of 2020, the financial results for Australian Karting Association Ltd (AKA) achieved for the year ending 31 December 2020 were exceptional and are largely because of the plans that the company developed and that were successfully implemented in conjunction with the Member States and Affiliated Clubs to recommence karting activity as soon government restrictions permitted.

AKA is in a very strong financial position and maintains a sound business model – even allowing for the COVID-19 disruption.

A trading surplus of $134,477 after depreciation and amortisation ($277,499 before depreciation) was recorded. Consequently, based on the company's policy, an amount of $18,586 is to be allocated to the Future Fund term deposit during 2021.

The Balance sheet of the company remains strong with a retained surplus of $1.925 million ($1.79 million for financial year 2019). The company has a very sound Current Assets Ratio.

Our funds are invested conservatively but we pursue the best available rates of interest in the market.

The pandemic caused management to reshape most areas of the business including the 2020 Budget to account for the negative Debt recovery action that the company was forced to commence impact that COVID had on our programs, national competitions, against KNSW following their expulsion in 2019 was settled on 23 royalties, and licence sales. Like most Australian businesses, the April 2020 with KNSW making a settlement payment to AKA Ltd company qualified for the Federal Government financial support of $62,000 (comprising the full $49,759 claimed, plus interest and during the pandemic through the Cash Flow Boost and Job Keeper costs.) programs. Matters that remain outstanding include AKA’s claim against There are ongoing litigation costs that resulted from the expulsion KNSW of copyright infringement relating primarily to our National of KNSW. We have been forced to look to the courts to recover Competition Rules – the Karting Manual. There also remains the valuable property from some KNSW Clubs that chose to break separate issue of the repayment of loans by previously affiliated away together with the cost of recovering significant funds that Clubs to the Track Development Fund Trust. KNSW withheld from us for licences sold in 2018 along with costs associated with protection of our intellectual property resulted in one off abnormal expenditure on legal and administrative costs.

12 Important Financial Information RACE MEETING ENTRY FEES Following is a summary of the financial relationship that exists Entry Fees Set by and Paid to AKA in 2020: between AKA and all member State Associations and between the • Australian Kart Championship Member States and Clubs. Entry Fees Confirmed by the State Association and Paid to the The fee structure under which the sport operates today is the Event Organiser: same as it was before 1 September 2013 under the former administration of AKA Inc. • State Championship

ANNUAL MEMBERSHIP FEES • State Cup State Associations do not pay any annual affiliation fee to AKA. • State Trophy Annual AKA Club Affiliation fee - $50.00 (the fee has never been • State Series increased by AKA Ltd.) • Zonal Competition EVENT ORGANISING PERMIT FEES Permit Fees Set by and Paid to AKA: • Club Competition

• Australian Kart Championship Race Meeting Entry Fees Set by the Club and paid to the Club:

• National Series Events • Club Karting - including Club Championship and Social Karting • National Cup Events Track Development Fund levy Permit Fees Set by and Paid to the State Association: Every event entry fee includes a levy of $3.00 that is paid into the • State Championship Track Development Fund and that is held on trust by the Trustee until the date of vesting of the Trust. The Trust makes funds • State Cup available in the form of loans to Affiliated Clubs to develop and • State Trophy improve their facilities.

• State Series INSURANCE FEES AND COVER AKA provides the full insurance program for the sport that • Zonal Competition includes: • Club Competition • Management Liability insurance for State Associations; and DRIVER’S LICENCE FEES • Public and Product Liability Insurance for State Association The Driver’s Licence is provided to each State Association by AKA and Clubs; and at a ‘wholesale’ price. • Personal Accident Insurance for Drivers, Officials and The fee that Drivers pay for a Competition or Recreational Licence volunteers. is set by your State Association. • When an Event Organiser (generally a Club) obtains an Organising Permit for an Event from either AKA or a State Association, the insurance cover for the Event that is paid for and provided by AKA at no fee is automatically activated so that our Drivers, Officials, Clubs and State Associations are fully covered.

13 COVID-19 RESPONSE

Karting Australia's response to the COVID-19 Pandemic

Like the majority of Australia, Friday March 13, 2020 is a day that the karting community will never forget - particularly the Karting Australia staff. It was the day that the sporting world came to a grinding halt with the cancellation of the 2020 Formula 1 Australian Grand Prix in due to the COVID-19 Pandemic. From that point on, Karting Australia staff guided the Member States and Clubs through the most tumultuous period that the sport has ever seen.

14 From the moment that the Federal and State Governments Following the effective 'shut down' of the sport from March 25, started to impose restrictions due to the COVID-19 Pandemic, Karting Australia's objectives were set: Karting Australia began to make plans on how the sport would 1. Keep everyone in the Karting Australia Family properly and emerge from the stoppage in a Covid-safe environment. responsibly advised with fact-based information – not news On the afternoon of Friday March 13, Karting Australia's Chief reports and social media spin. We are relying upon firsthand Executive Officer and Lee Hanatschek conducted the first of Government sources and advice from our Chief Medical numerous teleconferences with Member States and Key Industry Officer. If a National or State Chief Medical Officer or the Members advising them of the latest information from the government doesn’t say it, we won’t rely on it. authorities and how it would affect the sport of karting - both in 2. Protect our Members and to play our part in protecting the the short and long term. Australian community – particularly those who are most The first communication direct to States, Members and Clubs vulnerable. was distributed on Sunday March 15 and continued to flow all 3. Keep the wheels spinning at our Clubs when we are able throughout the year. to do so in accordance with Government restrictions to The CEO sought and obtained from the Board appropriate make sure that every Affiliated Club and State Association is extended delegated authority to run, what has turned out to be prepared as best that they can be to hit the ground running an extremely changeable information and awareness program with social and competition karting as soon as we are cleared and to make informed decisions deemed necessary that are in the to continue. best interest of the sport. • Plan and Prepare so we are all ready to proceed – particularly at Club level once we get the green light. 15 With seven state governments all being ahead of the wave when it came During the height of the pandemic, Karting managing the restrictions in different to procedures and contact tracing for all Australia hosted webinars, held training manners, Karting Australia continuously attendees. and information sessions in conjunction made contact with the various state with Sports Community and sent more When launching the re-ignition plan in authorities for health, sport and recreation than 40 written advices to Member States April to the Member States and Clubs, it while continually monitoring the press and Affiliated Clubs - every time that was guided by the Chief Medical Officer conferences by state premiers. something changed – no matter whether it who consulted with his colleagues at was nationally or in a State or region. the Australian Institute of Sport Karting Australia assisted Members States (AIS) and various and Affiliated Clubs throughout the period governments, to provide clear and consistent messaging this work enabled through standardised artwork - both for Karting Australia on-line and at their venues. to be recognised in Due to the enforced lockdowns, all current the AIS' Framework Karting Australia licence holders, or those for rebooting sport that renewed within April to June, received in a COVID-19 an additional three months on their licence Environment. - a benefit that was later extended for the This re-ignition plan Victorian licence holders after having to By continuing to follow the Public Health outlined the 'Roadmap' ahead for the endure a second lengthy lockdown due to Orders and Directions enabled the sport sport over the following months to enable the outbreak in their state. of karting to be one of the first sports the sport to return to a 'new-normal' Beginning with Social Karting Activities to return to competition, while also throughout the second half of the year.

16 coronavirus covid-19

in limited numbers once restrictions started to ease, Karting Australia Clubs then were able to move towards Club-level competition and into larger level competitions at the majority of places across the country.

Throughout the entire journey, Karting Australia continued to focus on the objectives of keeping the clubs informed while investigating Covid-safe ways to 'keep the wheels spinning', all of which in turn led to the clubs who embraced the opportunities when they KART COLLECTION arose gaining a significant increase in participation upon their return to competition. While it was a significantly challenging time for PIT CREW all involved in the sport, the manner in which the Pandemic and accompanying restrictions were handled by Karting Australia Staff, Member States, Affiliated at a time Clubs and Licence holders provided the sport with ONE significant opportunities - both in the short and long term. Many of these innovations and opportunities are outlined in the following pages.

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COVID-19 INNOVATIONS & OUTCOMES

From the challenges of COVID-19 came innovation

ELECTRONIC CHECK IN STANDARD DRIVER'S BRIEFING NOTES

Well before the State With Covid restrictions

Drivers Briefing Notes Government's made it (Insert Event Date) – (Insert Club Name) enforcing strict limits on General Instructions 1. Motorsport Is Dangerous You are reminded that Motorsport is Dangerous. So as to minimise risk and to ensure the continuity compulsory for attendees of the Race Meeting please ensure that you comply with the directions given by the Officials at all gathering in groups, Karting times.

2. Race Order to electronically check-in to The Race Order is as detailed at the bottom of these Drivers Briefing Notes. It is the Driver’s Australia produced a standard responsibility to be familiar with the Order and to be at the Grid ready to compete.

3. Event Format In accordance with the Supplementary Regulations and any Addendums and/or Bulletins that have venues, Karting Australia been issued, the Event will consist of the following format: pro-forma Driver's Briefing Practice