2007 Annual Report
RACING VICTORIA LIMITED
ACN 096 917 930 2007 Annual Report Contents
Chairman’s Report 2
Board of Directors 4
Chief Executive Officer’s Report 6
Executive Team 9
Corporate Governance 10
Operations 14
Integrity 18
Services 21
Development 24
Financial Performance 38
Financial Report 42
Annual Report published by Harding Media Services Pty Ltd, designed by Scarab Blue Design and printed by Fineline Printing. Photography by Bruno Cannatelli, SDP Photography, Getty Images, Victoria Racing Club, Melbourne Racing Club and Moonee Valley Racing Club.
RACING VICTORIA LIMITED 1 2007 ANNUAL REPORT
Chairman’s Report
Racing Victoria Limited’s role as the peak body of the determine the appropriate aggregation model. In parallel, Victorian thoroughbred racing industry is reaching an the planning process will advance the other business important new phase in its brief history following the improvement opportunities presented within the RVL completion of a comprehensive industry governance and business case. business review. These landmark reforms provide a sound foundation for the That review commenced in October 2006 with the united industry’s future growth and prosperity. It is pleasing to endorsement of RVL’s members – Country Racing Victoria, note that they reflect a common desire from all corners of Melbourne Racing Club, Moonee Valley Racing Club and the industry to install a sharper and more effective the Victoria Racing Club – and its ten industry stakeholder governance structure in order to maximise returns for bodies. The prime objective of the review was to identify racing’s participants. any commercial, structural and operational changes Outside of the review process, RVL vigorously pursued its required to improve the industry’s business model and in strategy for investing in infrastructure development with particular, to examine the potential economic benefits from key achievements including the construction of Victoria’s the consolidated management of the industry’s intellectual first ThoroughTrack racing surface at Geelong and the property rights; improving race date allocation, completion of ThoroughTrack training circuits at Bendigo programming and prize money efficiency; and cost and Warrnambool. reduction through the expansion of shared services. The new all weather racing facility at Geelong immediately The review was undertaken in two parts with the well proved its value by allowing the recommencement of racing respected corporate management expert David Crawford following the closure of the course proper due to Stage 4 conducting an independent review of the industry’s water restrictions. The Geelong ThoroughTrack also became governance structure and Ernst & Young being retained to the mainstay for transferred meetings and for the fixturing oversight RVL’s preparation of a business case to of additional meetings. This showcase development has set investigate the economic benefit opportunities. new standards in occupational health and safety featuring After consultations on the review outcomes, the RVL Board plastic running rails and superior quality starting gates. determined in June 2007 to broadly adopt the Crawford Drought-Proofing Racing continues to be one of the Report’s recommendations for the introduction of a fully industry’s highest priorities and requires ongoing independent RVL Board structure and enhancing RVL’s investment in water conservation, stormwater harvesting capacity to allocate revenue for the benefit of the whole of and recycled water projects. The peak of the 2006/07 the racing industry. The Board also resolved to collaborate summer period drought wreaked havoc to the race program with the industry’s media, wagering and sponsorship rights and necessitated wholesale movement of race meetings holders to develop a business plan which will identify the from tracks unable to access sufficient water. specific intellectual property assets to be pooled and
2 RACING VICTORIA LIMITED CHAIRMAN’S REPORT
Government funding support is crucial in meeting the RVL’s strong focus on improving participant welfare led to industry’s infrastructure improvement needs, particularly the adoption of significant changes to the apprentice jockey in respect to sustaining the extensive network of country program involving the creation of a pre-apprenticeship racing and training facilities. The operation of the $18.6 TAFE program and new financial support schemes for million Racing Industry Development Program has proven trainers and apprentices. Victoria University was invaluable in this regard and RVL looks forward to a commissioned to conduct a world first study into the positive outcome from the Victorian Government’s review welfare of trainers and stable employees which is expected at the end of the program’s initial two years. to identify extensive measures for supporting these key participant sectors. In issuing its pre-election policy statement, Racing in Victoria – Leading the Field, it was reassuring to read the The internationalisation of racing reached new heights in statement by then Premier, Steve Bracks, that his the 2006/07 racing season extending from the memorable Government “is committed to ensuring that the racing Japanese quinella of the Emirates Melbourne Cup; Miss industry is sustainable and continues to flourish”. Equally, Andretti’s domination of the Global Sprint Challenge, we appreciated the then Minister for Racing, John including a victory ahead of three compatriot horses in the Pandazopoulos’ intention that “it will be in partnership that Kings Stand Stakes at Royal Ascot; and in Japan, Takeover we ensure Victorian racing continues to lead the field”. We Target’s success in the Sprinters Stakes and Karasi’s congratulate both of these long standing supporters of extraordinary third time crowning at the world’s richest racing for their major contributions to the industry, and in steeplechase, the Nakayama Grand Jump. There is no doubt turn, now welcome the continued industry support being that these spectacular performances enhance the pre- provided by their respective successors, John Brumby and eminence of Victorian racing and our productive links with Rob Hulls. the other leading racing jurisdictions.
The Victorian Government’s amendment of the legislation The exceptional growth of the economic value and drawing governing the maximum deduction rates from totalisators power of the Victorian Spring Racing Carnival was was another well received support measure which will illustrated again by a record gross benefit of $628.8 million, improve the industry’s revenue returns from wagering. record attendance of 772,719 and an estimated 120,000 international and interstate tourist visitations. The Carnival Race fields legislation generated important additional is indisputably Australia’s largest annual event. revenue through the first time capacity to obtain an economic contribution from non-Victorian wagering service In closing, I wish to thank RVL’s member shareholders, providers operating on Victorian racing product. The industry stakeholders and racing’s many business partners, effective enforcement of this legislation, combined with participants and patrons for their collective contributions to ongoing reforms to Victorian bookmaking regulatory a successful year of achievement. framework, will ensure that the industry maximises the I also thank the RVL Board, executive team and staff for revenue value of fixed odds wagering. At the same time, we their professionalism and commitment throughout the year. are progressively improving the sophistication of our In particular, I would like to acknowledge the contribution wagering integrity monitoring systems including the made to the RVL Board by Ray Orloff who retired at the unveiling of a pilot bet monitoring computer system which 2006 AGM and thank also his successor, Peter McCarthy. is providing RVL Stewards with unprecedented access to betting transaction information. Condolences are expressed upon the passing of two of racing’s genuine legends, Arthur ‘Scobie’ Breasley and
RACING VICTORIA LIMITED 3 2007 ANNUAL REPORT
Jim Houlahan. These great men of the turf will be sadly BOARD OF DIRECTORS missed, but their legacies will certainly never be forgotten. GRAHAM DUFF AM – CHAIRMAN (AGE 65) Finally, although outside of the reporting year, it needs to be • Director, Australian Racing Board Limited recorded that the outbreak of equine influenza in late August • Board of Governors, International Masters Games Association 2007 has posed the biggest ever threat to the Australian • Director, Mark Sensing Ltd racing industry. Thanks to the concerted efforts of the • Chairman of National Construction Management Services Victorian Department of Primary Industries, the participants Pty Ltd of the Victorian racing industry and the many participants of • Former Chairman, North Melbourne Football Club Ltd the equestrian and leisure horse sector, we have kept this • Former Chairman, HOSTPLUS disease north of the Murray. Clearly, the threat remains and • Former Chairman of Victorian Institute of Sport a long term strategy of heightened biosecurity measures and • Former Chairman and Managing Director of John Holland Group vaccination programs need to be employed to keep Victoria • Former Managing Director of Fletcher Challenge Construction EI free and to provide insurance against a future outbreak. (Worldwide) The economic implications of the outbreak are substantial and RVL is continuing to pursue funding relief to minimise THE HON MICHAEL DUFFY – the adverse impact on Victorian racing. DEPUTY CHAIRMAN (AGE 69) Bachelor of Laws degree, University of Melbourne Addressing the EI challenge, completing the industry • Consultant, Mallesons Stephens Jacques Lawyers governance and business reform agenda and effectively • Member of the Order of New Zealand for work on the Closer positioning the industry in whatever may be the structural Economic Relations Agreement with New Zealand (1990) shape of the Victorian wagering and gaming licences • Chair, Judicial Remuneration Tribunal of Victoria beyond 2012 all add up to a most critical new year for RVL • Director, ThoroughVisioN Pty Ltd and the industry’s constituents. • Director, Keane Australia Pty Ltd • Director, Hanover Welfare Services I have no doubt that RVL’s dedication to protecting the Victorian racing industry’s interests has never been • Chair, Kensington Management Committee – A Public–Private Partnership Housing Development, Melbourne stronger and will serve the industry well in the course of • Chair, Bonnyrigg Management Committee – meeting these future challenges. A Public–Private Partnership Housing Development, Sydney The December 2007 Annual General Meeting will mark the • Minister for Communications (1983 – 1987) completion of my second term as RVL’s inaugural Chairman • Minister for Trade (1987 – 1990) at which time I will be retiring from the RVL Board. I am • Federal Attorney General (1990 – 1993) extremely proud of the industry’s achievements over the • MHR (ALP) Holt Vic (1980 – 1996) past six years and am indebted to the unwavering support • Solicitor, private practice of my Deputy Chairman Michael Duffy and the other 22 STEPHEN ALLANSON – directors that have served RVL throughout this period. CHIEF EXECUTIVE OFFICER (AGE 47) It has been an honour and a privilege leading the RVL National Diploma of Information Technology, University of Durban Board in its formative years and I am delighted that the • Director, Australian Racing Board industry has shown the maturity to endorse the evolution of • Director, VicRacing Pty Ltd RVL into a truly independent and empowered governing • Victorian Racing Industry nominee on joint venture management committee with Tabcorp body. This reform places Victorian racing on the strongest • Former Director, RVL Racing Operations possible footing for securing our hard fought reputation as one of the world’s greatest racing industries. PROF. DAVID KARPIN AM (AGE 64) B Com (Hons), MBA, LLD (Hon), FCPA, FAICD, FAIM, FFIN, MACS • Chairman, Warrnambool Cheese & Butter Factory Ltd • Director, Melbourne Business School Limited • Director, Coates Hire Ltd • Director, ThoroughVisioN Pty Ltd GRAHAM DUFF AM • Director, Melbourne Business School Ltd Chairman • Director, National ICT Australia Ltd
4 RACING VICTORIA LIMITED BOARD OF DIRECTORS
Top row (from left): Professor David Karpin, Lindsay Maxsted, Robert Hance, Kevin McNamara, Chinka Steel, Mark Ewing. Bottom row: Peter McCartthy, Stephen Allanson, Graham Duff, The Hon Michael Duffy, Barbara Saunders.
ROBERT HANCE (AGE 64) CHINKA STEEL (AGE 63) • Associate of Australian Society of Accountants since 1969 Bachelor of Law – Melbourne University Bachelor of Commerce Melbourne University • Managing Director, Timbercorp Limited • Non Executive Director, Costa Exchange Limited • Admitted to practice Supreme Court of Victoria and High Court of Australia • Non Executive Director, Boundary Bend Limited • Former Director and Secretary – Petanque Australia Ltd • Director, Plantation Land Limited • Former Director – Country Racing Victoria 1994–2004 • Director, Almonds Australia Pty Ltd • Former Director – Radio 3UZ Pty Ltd • Director, Plantation Pulp Exports Pty Ltd • Former President and Treasurer – Kyneton District Racing Club • Non Executive Chairman, Australian Garlic Producers Pty Ltd • Former President and Secretary – Woodend Race Club • Director, Punters Corner Wines Pty Ltd KEVIN McNAMARA (AGE 72) MARK EWING (AGE 54) FCPA, ACIS Diploma of Business Studies/Accountancy • Director, Vic Racing Pty Ltd • Institute of Chartered Accountants in Australia • Director, Racing Products Victoria Pty Ltd • Non-Executive Chairman – Austral Waste Group Limited • Deputy Chairman, Jade Software Corporation Pty Ltd • Director – Litetherm Products Australia Pty Ltd • Deputy Chairman, Huntingdale Partners Pty Ltd • Former Non-Executive Director – TSV Holdings Limited • Director, Macstech Pty Ltd • Managing Director – Soilwise Biotechnologies Pty Ltd • Former Director, Country Racing Victoria LINDSAY MAXSTED (AGE 53) • Former Chairman, Kilmore Turf Club Inc FCA, Diploma of Business PETER McCARTHY (AGE 53) • Chief Executive Officer, KPMG Australia B. Bus (Acc & Ins) Associate of CPA Australia, ANZIIF (Fellow), • Board Member, KPMG ASPAC Dip. F.S. (Brok), CIP, QPIB • Board Member, KPMG Australia • Executive Consultant – Willis Australia Limited • Chairman, VicRacing Pty Ltd • Chairman – Clearview Park Stud Pty Ltd • Former Chairman & Director, Public Transport Corporation of • Chairman – Thoroughbred Owners and Breeders Advisory Victoria Panel (TOBA) • Past Committee Member – Melbourne Racing Club BARBARA SAUNDERS (AGE 59) • Chairman – Australian Racing Museum • Past President – Thoroughbred Breeders Victoria • Former Group Financial Controller – Olex Cables Limited • Past Director – Thoroughbred Breeders Australia • Former Chairman – Yarra Valley Racing Inc • Past Treasurer – Australian Racing Museum • Former President and Treasurer – Yarra Glen RC
RACING VICTORIA LIMITED 5 2007 ANNUAL REPORT
Chief Executive Officer’s Report
The completion of the review of the Victorian thoroughbred system) and the Accident Insurance fund’s loss of $0.1 racing industry was a pivotal achievement of 2006/07 and million. Importantly, within this broader result, RVL actually has strongly positioned the industry to build a sustainable reduced its own operating funding allocation for 2006/07 to platform for revenue growth and improved business $65.2 million, down $6.1 million on the original budget performance. approved by shareholders for the company and some $0.5m less than RVL’s prior year funding level. This reduction was There are clearly many opportunities to create greater achieved through a combination of productivity savings by revenue streams from consolidating the industry’s media, the company as well as new income growth. wagering and sponsorship rights; further defining the racing program; and driving greater cost efficiencies Despite these achievements, returns to participant throughout racing’s administration. The associated payments grew only marginally for the year, largely business planning processes are underway and auger well reflecting the lower industry income levels of the prior for Victorian racing’s future long term success. year. Prizemoney and program levels for 2006/07 were based upon the drop in RVL’s revenue reported in 2005/06 Racing Victoria Limited fully recognises the value of the (down $5.8 million) and the difficult joint venture revenue critical key performance indicator of returns to owners. outlook foreseen at the time of the prizemoney review in From 1 February 2007, an additional $4.8 million of February 2007. In particular, 2005/06 joint venture prizemoney per annum was made available to increase revenue decreased year-on-year, reflecting the raising of minimum metropolitan and country stakes and the the EGM (Health Benefit) Levy and the impact of the unplaced starters payment was increased from $150 to telecasting dispute and all these factors resulted in a fairly $170 (a rise of 13%) for all non-prizemoney earning starters. flat return to owners performance for 2006/07. These extra returns to owners are payable over a 12 month The good news is that following the February 2007 period to February 2008 and this contributed to a record prizemoney review, RVL took further action on its cost total return of $141.2 million and helped Victoria maintain control and revenue programs, which created a prizemoney its status as the highest prizemoney paying jurisdiction stabilisation account of some $2.9 million by the end of in Australia. 2006/07. This account will only be applied to future returns RVL’s financial performance recorded another very sound to owners and will help the industry better manage year with the underlying result from general operational variations in income levels in future years. activities showing a $0.4 million profit including RVL’s $0.3 During 2006/07, the Victorian thoroughbred racing million share of profit from its investment in Racing industry was the beneficiary of more than $10 million in Information Services Australia. This was reduced to an government funding to support a variety of industry overall reported loss of $0.3 million after allowing for the development projects and programs. Bookmaking Development Fund’s loss of $0.6 million (reflecting investments in the new internet race bookmaking
6 RACING VICTORIA LIMITED CHIEF EXECUTIVE’S REPORT
The Victorian Government’s racing portfolio provided close free Oakbank Carnival in South Australia coinciding with to $8 million of these funds through initiatives including the the use of Victorian designed modular jumps; Racing Industry Development Program and the Living • heightened integrity assurance surveillance, targeting Country Racing Program. Substantial financial assistance stable inspections, race day security and an expanded was also obtained from across the Victorian Government’s drug testing regime; education, tourism, regional development, water and WorkCover portfolios. This funding support remains crucial, • implementation of RVL’s new statutory function to particularly in light of the Victorian racing industry’s approve non-Victorian wagering service providers exposure to the EGM Levy which has now accumulated to an seeking to trade on Victorian thoroughbred race fields, impost of $14.9 million per annum across the three codes. involving the approval of 331 providers, gaining full integrity monitoring access of their betting transactions Operationally, there were many highlights across RVL’s and obtaining a fair economic return for the Victorian business including: industry; • six international runners in the Emirates Melbourne Cup, • commissioning of the Regional Racecourse Revitalisation including two from Japan, and a total of ten international Project master planning exercises at five pilot racecourses runners across the Spring Racing Carnival; to identify development proposals to maximise • expansion of the Asian Mile Challenge to include the community usage of the country racecourse network; Power Pays Futurity Stakes at Caulfield; • successful management of the industry’s infrastructure • creation of the new Melbourne Festival of Racing brand development program, including the completion of the to promote the February/March racing period Geelong, Bendigo and Warrnambool ThoroughTrack culminating with Super Saturday at Caulfield; projects on-time and within their total budget of more than $7 million • industry endorsement of the new ratings based handicapping system and the national adoption of the • progressive roll out of occupational health and safety Victorian devised system; facility improvements with particular attention to upgrading float car parks, starting stalls, horse • continued reinvigoration of jumps racing with the highest movement control fencing, training track lighting and participation numbers for seven years and a sustained training session supervision improvement in race safety – extending to an incident-
RACING VICTORIA LIMITED 7 2007 ANNUAL REPORT
GROSS ECONOMIC IMPACT OF THE SPRING RACING CARNIVAL ATTENDANCE AT $M SPRING RACING CARNIVAL ’000 MAJOR METROPOLITAN MEETINGS 700 600 $628.8M 545,663 600 550
500 500
400 450
300 400
200 350
100 300
0 250 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006
Metropolitan area Regional area Total
Gross economic impact from spending by visitors to the Spring Racing Carnival Source: IER Consulting
• launch of the BookiesOnline wagering system financed The year past has certainly been full of challenges and I by the Bookmaking Development Fund for the benefit of would like to extend my appreciation for the support and the Victorian race bookmaking community; cooperation of my colleagues at CRV, the three metropolitan clubs, RVL’s industry stakeholder bodies, reforms of the sports bookmaking levy structure to • Harness Racing Victoria, Greyhound Racing Victoria, increase competitiveness within the national Tabcorp and the Victorian Government’s Office of Gaming marketplace; and Racing. Advancing the Victorian racing industry • deployment of the OHS programs RaceSafe, StableSafe requires an effective collaborative effort from all of us and I and TrainSafe to promote a culture of safety across the trust we can continue to work together to meet the new three primary workplace environments; year’s challenges – notably those associated with the outbreak of equine influenza and the implementation of the initiation of a new equine research funding partnership • new governance and business model for the thoroughbred with the Federal Government’s Rural Industries Research racing code. and Development Corporation, which combined with continued investment in University of Melbourne In closing, I would like to commend the staff of RVL for research projects leverages in the order of $1 million of their high level of professionalism and their enthusiasm for research value per annum; keeping Victorian racing at the forefront of the world’s best. • enhancement of the Epiphany customer relations system I especially wish to pay tribute to the retiring RVL in collaboration with Country Racing Victoria, Moonee Chairman Graham Duff for his outstanding contribution to Valley Racing Club and Victoria Racing Club; and the Victorian racing industry throughout his six year tenure. His visionary leadership has created a genuine commendation in the Equal Opportunity for Women in • legacy for the industry’s future direction and from a the Workplace Agency business achievement awards for personal perspective, I record my sincere appreciation for the advancement of women in non-traditional areas, his strong support to me and the entire RVL team. recognising developments associated with the jockey welfare program and a continued lift in the proportion of female employees
These achievements are amongst a cohesive and comprehensive program of improvement throughout all areas of the industry’s business and demonstrate that STEPHEN ALLANSON Victoria is keeping pace with the complex and constantly Chief Executive Officer competing demands of racing’s many participants.
8 RACING VICTORIA LIMITED CHIEF EXECUTIVE’S REPORT
EXECUTIVE TEAM
1 2 3 4 5
6 7 8 9 10
11 12 13 14 15
1 BERNARD SAUNDRY, Director – Commercial 2 DES GLEESON, Director – Integrity Services 3 LEIGH JORDON, Director – Racing Operations 4 JULIE PIPER, Director – Finance and Services 5 SIMON BARRILE, Legal Counsel 6 DR JOHN McCAFFREY, Director – Veterinary Services 7 DAVID HAWKE, General Manager – Planning and Infrastructure 8 KEVIN SHAW, General Manager – Finance 9 SUSAN HARRISON, General Manager – Organisational Development and Human Resources 10 CHRIS SKORSIS, General Manager – Information Services 11 CHRIS WATSON, General Manager – Education and Training 12 DR PAUL O’CALLAGHAN, General Manager – Veterinary Services 13 JAMIE ROSS, General Manager – Strategic Planning 14 STUART LAING, General Manager – Marketing and Development 15 MARK CLOSE, Manager – Government Relations
RACING VICTORIA LIMITED 9 2007 ANNUAL REPORT
Corporate Governance STRUCTURE OF RVL • Thoroughbred Breeders Victoria (TBV); MEMBERS OF RVL • Thoroughbred Racehorse Owners’ Association (TROA); RVL’s members are Country Racing Victoria Limited (CRV), • Victorian Bookmakers’ Association Limited (VBA); and Melbourne Racing Club (Melb RC), Moonee Valley Racing Club Inc (MVRC) and Victoria Racing Club Limited (VRC). • Victorian Jockeys’ Association (VJA).
BOARD OF DIRECTORS Regular stakeholder forums ensure that the Board of RVL understands issues affecting the Victorian thoroughbred The RVL Board comprises 11 directors – five appointed by racing industry and provide an important two-way an independent Appointment Panel and five appointed by communication opportunity. the members. The eleventh position is the Chief Executive Officer who is appointed by the Board. CRAWFORD REPORT The term of Nominated Director Mr Ray Orloff, who had APPOINTMENT served on the Board since December 2002, expired at the end of the 2006 AGM. Mr Peter McCarthy was appointed The RVL Board appointed Mr David Crawford to conduct an by the Melbourne Racing Club to fill the vacancy caused by independent review of RVL’s governance and structure for Mr Orloff’s retirement. the purposes of making recommendations to the RVL Board which would support revised arrangements for the STAKEHOLDER CONSULTATION governance of the industry that are independent of RVL continued the established process of regular and sectional interests. effective consultation and cooperation with each of the In preparing his report, Mr Crawford consulted with the following racing industry stakeholders: Minister for Racing, RVL’s members and racing industry • Australian Jumping Racing Association (AJRA); stakeholders.
• Australian Liquor Hospitality and Miscellaneous Workers’ RECOMMENDATIONS Union (Victorian Branch) (LHMU); The Crawford Report’s recommendations provided for the • Australian Services Union (Victorian Branch) (ASU); following principal changes: • Australian Trainers’ Association (Victorian Branch) • a new independent and skills based board empowered to (ATA); act in the best interests of the industry; • Australian Workers’ Union (Victorian Branch) (AWU); • the membership of RVL to be expanded to include racing industry stakeholders, subject to those members • Media, Entertainment & Arts Alliance (MEAA); satisfying minimum qualification criteria before being eligible to vote;
10 RACING VICTORIA LIMITED ORGANISATION
• the RVL Board to be responsible for succession planning NEW INDEPENDENT RVL BOARD and the nomination of directors; To facilitate the appointment of the new independent RVL Board, the current members at a special general meeting • the directors to be elected by the members at members’ held on 24 September 2007 unanimously adopted a new meetings; constitution which included the following features: • a vote of 66% to be required to pass all resolutions at • with effect from the close of the 2007 Annual General members’ meetings (including a resolution to remove a Meeting, all existing directors will retire except for director in general meeting); Professor David Karpin, Mr Mark Ewing and Mrs Barbara • the RVL Board to appoint the Chair and Deputy Chair Saunders (Continuing Directors) and the Chief Executive from amongst the directors; Officer; • the provision for RVL to distribute funds received from • the Continuing Directors will be responsible for, with the the Tabcorp Joint Venture as principal and not as agent assistance of an advisor nominated by each of the for the current members; and Minister, the metropolitan race clubs, Country Racing Victoria Limited and the racing industry stakeholders, • the provision of a minimum distribution scheme for the identifying and nominating seven independent directors current members to support their existing racing to take office from the close of the 2007 Annual General programs. Meeting; and CONSULTATION • the directors will be appointed for staggered terms to Following receipt of the Crawford report, RVL consulted ensure that in subsequent years approximately one third with the Minister, RVL’s members and racing industry of the RVL Board will retire at each Annual General stakeholders. As a result of these discussions, the RVL Meeting. Board accepted the principal changes recommended in the Crawford report but varied voting entitlements and the The implementation of the new constitution is subject to transitional arrangements to ensure that a new the constitution not being disallowed by either House of the independent board would be in place at the close of the Victorian Parliament and the support of the State 2007 Annual General Meeting. Government.
RACING VICTORIA LIMITED 11 2007 ANNUAL REPORT
The Board strongly supports good corporate governance 4. SAFEGUARD INTEGRITY IN FINANCIAL and the company implements business practices reflective REPORTING of the following 10 corporate governance principles: The RVL Audit Sub-Committee oversees the integrity of the financial statements of the company, the company’s system 1. LAY SOLID FOUNDATION FOR MANAGEMENT of internal controls and the independence and performance AND OVERSIGHT of the company’s internal and external auditors. The Board has primary responsibility for guiding and The executives are individually accountable for their monitoring the affairs of the company including compliance department’s financial performance and are provided with with the company’s corporate governance objectives. financial delegation authorities with specified limits. The Board operates sub-committees to overview operations and to develop best practice policy and procedures for key 5. MAKE TIMELY AND BALANCED DISCLOSURE areas. These sub-committees are outlined on the opposite RVL recognises the importance of transparent business page. processes and has developed the following formal consultation and disclosure processes: Powers and responsibilities of each sub-committee are set out in their respective charters, which are reviewed • annual general meetings; annually. • regular shareholder meetings; The executives have detailed position descriptions while • quarterly stakeholder meetings; their annual performance is assessed both against these position descriptions and other goals. The Remuneration • regular meetings with the Minister for Racing and Sub-Committee oversights this process together with department officials; and executive succession planning and remuneration. • monthly staff meetings. 2. STRUCTURE THE BOARD TO ADD VALUE RVL has also developed many informal networks which Details of the respective Directors’ qualifications, other foster open and transparent communication between the directorships (including those held within the past three Board, shareholders, stakeholders, management and staff. years), experience and other responsibilities are provided elsewhere in this report, together with the Directors’ 6. RESPECT THE RIGHTS OF SHAREHOLDERS participation in the Board’s Sub-Committees. The Chief Executive Officer meets at least monthly with the executive officers of all RVL members. During the reporting period, the Board members completed an annual review of the Board’s performance. 7. RECOGNISE AND MANAGE RISK RVL has established Sub-Committees with particular 3. PROMOTE ETHICAL AND RESPONSIBLE responsibilities to manage risks including: DECISION MAKING RVL has implemented Codes of Conduct which outline best • the Risk Management Sub-Committee (to monitor the practice for Directors and which set the guidelines for company’s risk management plan, including occupational ethical behaviour by all company personnel. health and safety issues);
12 RACING VICTORIA LIMITED CORPORATE GOVERNANCE
SUB-COMMITTEE ROLE MEETING FREQUENCY BOARD MEMBERSHIP
Audit Sub-Committee To oversee integrity of RVL’s financial and internal 4 times per year (minimum) K McNamara (Chair), controls and performance of internal and L Maxsted, external auditors B Saunders
Racing Integrity To oversee management of all major racing As required to adequately G Duff (Chair), Sub-Committee integrity issues where there is potential impact address integrity issues M Duffy on the industry’s reputation
Remuneration To oversee human resource policy development 4 times per year (minimum) B Saunders (Chair), Sub-Committee and implementation, including remuneration and M Ewing, benefits, performance management, succession D Karpin planning, superannuation and industry welfare programs
Risk Management To oversee business and OHS risk management 4 times per year (minimum) M Duffy (Chair), Sub-Committee systems (including OHS and excluding matters C Steel, dealt with by the Audit Sub-Committee) B Saunders, P McCarthy
Wagering Sub-Committee To oversee RVL’s role in the Victorian Government’s As required to complement D Karpin (Chair), wagering and gaming re-licensing process, the government’s re-licensing R Hance, to ensure the industry’s ability to deliver its strategic timetable M Ewing objectives is maximised
Race Fields Sub-Committee To oversee race fields authorisation, policy Initially, as required to establish L Maxsted (Chair), (Established Sept 05) development and implementation. appropriate policy and G Duff, Grant interim approvals. protocols C Steel
Research Sub-Committee To address research funding issues and create a 4 times per year (minimum) D Karpin (Chair), (Established May 06) structured approach for advancing RVL’s long term M Ewing research agenda
• the Racing Integrity Sub-Committee (to oversee 9. REMUNERATE FAIRLY AND RESPONSIBLY responses to any major integrity issues); and RVL conducts internal salary reviews and externally benchmarks salaries for all positions to ensure that • the Audit Sub-Committee (to oversee the financial affairs remuneration at RVL is consistent with the external of the company). market. 8. ENCOURAGE ENHANCED PERFORMANCE 10. RECOGNISE THE LEGITIMATE INTERESTS OF The Remuneration Sub-Committee oversees the STAKEHOLDERS implementation of human resources policies which RVL has established consultative committees and meets encourage, recognise and promote staff performance and quarterly with key stakeholder groups to discuss issues. careers.
RACING VICTORIA LIMITED 13 2007 ANNUAL REPORT
Operations
RACING PROGRAM RACE PROGRAMMING The Programming Review Group, consisting of four RACE DATES shareholder groups along with representation from the ATA The 2006/07 racing calendar consisted of 540 professional and TROA, met three times during the year to discuss race meetings and 39 picnic meetings. There were 124 programming strategies and racing policies. metropolitan race meetings – a decrease of four on the 2005/06 season, with the Melbourne Racing Club Ratings Based Races were programmed for the first time in conducting 62 meetings (down one from 2005/06), the December 2006 and have been well received by industry Moonee Valley Racing Club 32 (down one) and the Victoria participants. Racing Club 30 (down two). A detailed review into the 2006 Victorian Spring Racing Although the race dates for each Club remained constant, Carnival was also undertaken, which resulted in key the reconstruction of Flemington after last year’s changes to the balloting conditions for both the Caulfield Melbourne Cup Carnival placed pressure on the other three and Melbourne Cups and amendments to feature day tracks throughout the year. Despite this, each Club programming during the Spring. managed the situation extremely well to allow the racing JUMPS RACING program to continue unaffected. The 2007 Jumps Season was a watershed year for the sport There were 455 race meetings held in Country Victoria, with the highest participation rate for seven years and, compared to 445 the previous season. Of these 389 were most notably, an increase in starters in steeplechase races. TAB, 27 were Non-TAB and 39 were picnics. For the first time, RVL developed a specific marketing The effect of the drought on Victorian racecourses was program for jumps racing, which was well received by the severely felt. Ironically, when the rain finally came during media and public. Interstate coverage also increased June and July, Victoria’s tracks were stressed because of significantly. the drought, resulting in numerous meetings being abandoned. Throughout the season, 46 meetings were Modular steeplechase fences made their interstate debut at transferred to other venues and 27 were abandoned. the Oakbank Carnival in South Australia with no incidents recorded there for the first time in many years. The highlight of the season was the introduction of the synthetic ThoroughTrack at Geelong in July. The track Whilst jumps racing is experiencing a significant started to pay back the investment immediately, as six resurgence here in Victoria and in South Australia, meetings were conducted in the first month, including a Tasmania decided to discontinue programming jumps races transferred Metropolitan meeting on 18 July. in that state, which resulted in a number of Tasmanian horses competing in Victoria.
14 RACING VICTORIA LIMITED OPERATIONS
There were three major highlights of the season for jumps status to five additional Victorian races – VRC Super Impose racing. The first involved the veteran Karasi winning the Plate, VRC Bart Cummings Stakes, VRC Anzac Day Stakes, Nakayama Grand Jump in Japan for the third successive MRC Blue Sapphire Stakes and the Warrnambool Cup. year, further enhancing the international profile of Australian jumps racing. HANDICAPPING Two significant new projects were undertaken during the The second highlight was the performance of Some Are year by the RVL Handicapping Panel. The roll-out of Bent, winner of the JJ Houlahan Jumps Championship. The Ratings Based Programming, where races are framed by gelding won nearly every major hurdle race, including the rating rather than historical wins, is now well accepted by Grand National at Flemington, and provided a real focus for the Industry and has become a permanent feature of racing jumping enthusiasts throughout the season. in this State. The success of the project in Victoria has led The third highlight was the introduction of the dedicated to Ratings Based Programming being introduced across program ‘Jump’ on TVN. Supported by RVL and the AJRA, Australia. the weekly jumps racing program lifted the profile of the In March 2007, the RVL Handicapping Panel took sport and assisted greatly in developing jumps racing as a responsibility for handicapping all races run in Tasmania, a key part of the racing program in 2006/07. move which has been positively embraced. It is expected that the 2007/08 jumping season will One of the highlights of the season was the continued continue to build on the platform established and endorsed success of Australian runners internationally, with by the RVL Board over recent years, vindicating the Takeover Target winning the Sprinters Stakes in Japan in decision to adopt the recommendations of the Jumping October and Miss Andretti taking the Kings Stand Stakes at Review Panel. Royal Ascot in June. Indeed, three of the first four finishers VICTORIAN PATTERN ADVISORY GROUP in the Kings Stand were Australian trained sprinters. During the season the Australian Pattern Committee agreed The season saw real progress in the endeavor to ensure to elevate the VRC Gilgai Stakes and MRC Autumn Stakes to Australian horses receive proper acknowledgement for Group 2 status (from Group 3) for 2007/08 and granted Listed their achievements through the International Ratings and
RACING VICTORIA LIMITED 15 2007 ANNUAL REPORT
the World Thoroughbred Racehorse Rankings. There were ASIAN MILE CHALLENGE 29 Australian trained horses confirmed in the listings Victoria has continued to participate in the Asian Mile compared to 16 in 2005/06 and only nine in 2004/05. Challenge with the inclusion of the Power Pays Futurity Stakes at Caulfield. This year’s Futurity was won by the Gai INTERNATIONAL RECRUITMENT Waterhouse trained Aqua D’Amore. The other races in the series are the Dubai Duty Free at Nad Al Sheba, the GLOBAL SPRINT CHALLENGE Champions Mile at Sha Tin and the Yasuda Kinen, at Tokyo The 2006/07 season continued the international Racecourse. development of racing in Victoria with the third year of the Global Sprint Challenge. PLANNING AND INFRASTRUCTURE The first two legs of the 2007 series, the Group 1 Lightning MAJOR PROJECTS Stakes and the Group 1 Timbercorp Australia Stakes were The headline capital projects for the year were the taken by Miss Andretti. The Challenge then headed to successful completion of three new synthetic RVL Royal Ascot where four Australians, Takeover Target, Miss ThoroughTrack tracks at Bendigo (training width), Andretti, Magnus and Bentley Biscuit contested the Group Warrnambool (training width) and Victoria’s first synthetic 2 Kings Stand Stakes with Miss Andretti again winning in racing track at Geelong. At a combined investment of over superb style. Royal Ascot’s Golden Jubilee Stakes was $7 million, these projects were delivered under budget and contested by the Australians however English sprinter within the agreed time frames. Racing at Geelong had Soldiers Tale narrowly beat Takeover Target, who had ceased due to water restrictions but re-commenced as a finished third to Les Arcs in the same race in 2006. result of the completion of the new track. There were no international entrants in the Japanese legs Other projects completed during the year included and The Challenge next moves to Hong Kong for the upgrading of horse float car parks at a range of venues to seventh and final leg. resolve identified safety risks associated with training and VISITING INTERNATIONAL HORSES racing activity. Other highlights included new irrigation International participation in the 2006/07 season continued systems at Cranbourne, Kilmore and Yarra Valley, the to grow, with international horses now targeting more than completion of course proper drainage systems at just the major spring features. Cranbourne and Kilmore and the purchase and deployment of new race-day starting stalls at Geelong, Wangaratta and 78 international nominations (50 Individual horses) were Swan Hill. A safety upgrading program also commenced for received for the 2006 BMW Caulfield Cup, Tattersall’s Cox the remainder of the state’s starting stalls. Plate and the Emirates Melbourne Cup, compared to 80 (50 Individual horses) in 2005. With the focus of the capital works program increasingly being the improved management of workplace safety at Ten international horses faced the starter during the 2006 venues, even more project effort will be spent in upgrading Spring Racing Carnival, including six in the Emirates fencing and horse movement controls, upgrading training Melbourne Cup, and three in the BMW Caulfield Cup. Other track lighting and attending to improved supervision races with international runners included the Mackinnon facilities. Stakes and the Saab Quality.
16 RACING VICTORIA LIMITED OPERATIONS
CRANBOURNE TRAINING COMPLEX 2002/03 2003/04 2004/05 2005/06 2006/07 Victorian starters produced 6,798 6,344 6,265 6,635 6,867
Percentage of total Victorian starters 13.80% 13.40% 13.29% 14.07% 15.06%
Trainers registered at CTC 122 128 129 124 123
Average starters produced per CTC trainer 56 50 49 54 56
Total trials conducted (including flat, hurdle, steeple) 390 451 466 488 570
Total horses trialed 2,864 3,179 3,191 3,185 3,930
Average starters per trial 7.34 7.05 6.85 6.52 6.89
Percentage of trial starters trained outside CTC 81% 80% 82% 79% 80%
Source RVL & CTC.
CRANBOURNE TRAINING COMPLEX Rainfall was down 28% (24cm) on the previous year and In 2006/07, the Cranbourne Training Complex produced 160 megalitres of ‘A’ class recycled water was utilised on ten Group and Listed winners and Cranbourne trained the grass and sand tracks. horses won in excess of $15m in prize money. Major projects at the complex during the year included a There was a 3.5% increase in the number of starters major equine pool renovation, installation of plasma produced and, of those starters, 10% were winners. An screens in the canteen to allow direct telecast of trials, the average of 588 horses and 65 trainers attended training acquisition of new practice barriers and the installation of each day. Safety System Help Buttons around the track. The complex became a testing ground for the Industry Running Rail There were 18 flat trial days, comprising 412 trials and Project and for a GPS based timing system. There was also 2892 horses plus 20 hurdle and steeple trial days with 161 a security system upgrade and grass renovation trials and 864 starters.
RACING VICTORIA LIMITED 17 2007 ANNUAL REPORT
Integrity Services
DEVELOPMENT equine positives and serious conduct-related matters. The 2006/07 year saw the Integrity Department progress a Several of those matters were complex and lengthy in number of initiatives. to improve the performance of this investigative, hearing and appeal phases. Some 21 cases area of the business. involving the investigation of human drug positives and misconduct were dealt with by way of Stewards’ hearings. The development and implementation of the Government sanctioned Certificate IV in Stewards Training involved 12 In addition, new technologies were employed in pursuit of members of the RVL panel completing the course, which increased compliance. A human saliva testing program was included learning modules such as media training, launched as a pilot with encouraging feedback from administrative law, first aid, promoting ethical behaviour stakeholders. The program was complemented by drug and a horse health course delivered by Dr. Geoff Hazard education programs for riders throughout the state. with the support of the University of Melbourne – Equine Surveillance contractors were engaged throughout the year Centre at Werribee. The training course is now in strong in an effort to either confirm allegations made to Integrity demand with the Victorian Harness and Greyhound codes Services personnel or exculpate participants falsely also taking up the training and inquiries have been accused. Professionals from a number of disciplines received from interstate thoroughbred authorities. provided advice on a broad range of investigations on A state of the art video library has been further developed issues as diverse as water contamination and scientific to not only assist stewards in reviewing races immediately, photography. but to use as a training tool for apprentice jockeys enabling Liaison with police and related agencies continues to them to review their individual performances. The library increase as the industry strengthens its integrity measures contains footage of every TAB meeting conducted in and external relationships. Victoria since 1 November 2005.
The development of a much improved scanner to detect RACE DAY SERVICES microchips in horses is continuing, with the final product During 2006/07, RVL consolidated the rostering, delivery not only being used by stewards, but in the future will be and payment of all race day officials and service providers available for trainers, veterinarians, studs and horse at race meetings throughout the state, leading to a transport companies. consistent level of standards of service provided for Clubs and participants. INVESTIGATION The Investigators this year undertook 68 significant and 93 minor investigations. A total of 15 investigations became the subject of RADB hearings and related generally to
18 RACING VICTORIA LIMITED INTEGRITY SERVICES
The RVL recently completed a Bet Monitoring System pilot project with the cooperation of Tabcorp. This project has clearly demonstrated the integrity benefits of a pro-active bet monitoring system which can securely store and analyse betting information.
BETTING COMPLIANCE AND Bet monitoring continues to remain a key focus of the REGULATION department. It is now conducted by betting supervisors on In September 2006, Victorian bookmakers were granted a daily basis in a dedicated bet monitoring office at RVL. approval by the Victorian Government to accept wagers on This procedure is providing Integrity Services with timely thoroughbred race meetings via the internet. The site and accurate betting information on Victorian race fields bookiesonline.com.au has been developed into a within a secure environment. comprehensive wagering information site which has the RVL recently completed a Bet Monitoring System pilot potential to allow Victorian bookmakers to offer their project with the cooperation of Tabcorp. This project has services to a broader wagering market. clearly demonstrated the integrity benefits of a pro-active Victorian bookmaking wagering turnover for the past bet monitoring system which can securely store and season declined by 6.7% to a total of $520 million. This was analyse betting information. predominately due to two leading bookmakers relocating to other jurisdictions. The relocations had less impact on VETERINARY SERVICES sports turnover, which increased by 9.3% to $105 million. The Sample Selection Strategy recommendations have now A Sports Bookmaking Levy Review was conducted which been implemented and have placed a greater emphasis on resulted in a new sports levy scale being adopted by RVL. targeted selection of horses for sampling, based on a range This is expected to help grow Victorian bookmaking and of risk analysis criteria. A dedicated database has yet to be attract bookmaking business to the State. established but development of a sample selection working group has resulted in a more rational and cost effective approach to sampling and drug detection.
RACING VICTORIA LIMITED 19 2007 ANNUAL REPORT
SAMPLE COLLECTION RATES SAMPLE CATEGORY NUMBER COLLECTED CHANGE ON 05/06 POSITIVES %
Pre-race urine for post-race analysis 735 -7% 4 0.54%
Pre-race blood for pre-race analysis (GC/LC/TCO2) 5,079 -5%
Pre-race blood for post-race analysis 4,942 23% 4 0.08%
Post-race urine/post-race blood for post-race analysis 5,760 3% 5 0.09%
EPO 6,487 10%
Elective testing 23 53%
Out of competition testing (stables, trials, jump-outs) 303 32%
Reinstatement/Test (AR.177A) 80 -26% 1 1.25%
Other (feed samples, pharmaceuticals etc) 41 58%
Source RVL & CTC.
Sampling pressures in the various selection categories have and new compliance requirements have been introduced. now reached the target levels outlined in RVL’s sampling The National Horse Injury Database (ARID) is nearing strategy to great effect, as outlined in the table above. completion and is expected to be operational within the In relation to the Racing Victoria Equine Research Fund, next 12 months. This will allow a comprehensive national $200,000 is now being directed through the Rural injury reporting system which will provide valuable data Industries Research and Development Corporations’ for analysis. This will be used to identify areas requiring (RIRDC) Equine Research and Development Program. This further research to improve the health and welfare of is matched dollar for dollar by the Commonwealth for the racing horses. It will also provide valuable data to racetrack support of equine research. Details of that program and the managers and designers as to how racing injuries might be projects currently being funded can be found on the RIRDC effectively reduced. website. The fund is also supporting the RVL Post-Mortem RVL has funded a major upgrading of its pre-race drug program and two residencies (in Medicine and Surgery) at testing capacity, introducing cutting edge LC/MS the University of Melbourne’s Equine Hospital. technology. This will significantly improve the ability to There have been significant changes in the way RVL detect prohibited substances in blood, as opposed to the regulates the shoeing of thoroughbred racehorses for race traditional urine testing in the pre-race context. This has day. RVL has significantly increased its support for the also necessitated the construction of a new mobile testing training of apprentice farriers by paying their tuition fees vehicle. The development of a range of new methods and providing an enhanced wage subsidy to their Masters, specifically designed to enhance the use of blood as an designed to defray the costs incurred while apprentices effective matrix for drug detection is also having positive attend the required teaching blocks at NMIT. spin-offs for RASL’s drug screening capacity.
Auditing of plating on race day has been significantly improved to ensure horses are shod to industry standards
20 RACING VICTORIA LIMITED SERVICES
Services
HUMAN RESOURCES Human Resources provided significant support to the Human Resources is coordinating the implementation of Industry Review process for shared services. As organisational values which have been adapted from the opportunities arise, RVL will look to providing HR Support existing constitutional objectives to ensure strong internal Services on a pilot basis and MVRC and CRV are currently relevance and alignment to the organisation’s objectives. trialling the provision of HR Support Services. Values are: RVL received special commendation in the Equal Health Safety and Wellbeing – demonstrate and Opportunity for Women in the Workplace Agency (EOWA) promote safe behaviour, building a permanent culture business achievement awards, in the category of of workplace safety; Outstanding EEO Practice for the Advancement of Women in a Non-Traditional Area/Role. The special commendation Ethical Behaviour – demonstrating truthfulness, was awarded due to initiatives such as: honesty, reliability and respect; • further developments to the Jockey Welfare Program, Efficiency – making a commitment to improve and including studies into both on-course female jockey enhance operational efficiencies; facilities and catering; Participation – involvement in available opportunities • the senior leadership and management training program and actively promoting the participation of others; and undertaken by the senior management team, which Service of Customers – demonstrating excellence in included a number of RVL female staff members; and internal and/or external customer service. • RVL’s breakdown of males to females showed that the The above values will be integrated into the full Human number of female employees had increased from 34% Resources cycle of recruitment and selection, to 38%. performance appraisals, learning and development and rewards & recognition. INFORMATION SERVICES Information Services’ involvement was instrumental in As a strategy to address future labour shortages, RVL will delivering Training Partnerships and Rating Based continue to work towards being recognised as an employer of Programming (RBP) to the Victoria racing industry using choice to actively attract, engage and retain talent. An custom built software developed in-house. The same assessment of the organisation’s current attributes, benefits software was later adopted by other Principal Racing and conditions, compared to an Australian leading Employer Authorities around Australia as other states embraced RBP. of Choice study has been conducted. Findings from the assessment were positive and have contributed to the implementation of further best practice policies, increased focus on learning and development and organisational development initiatives. RACING VICTORIA LIMITED 21 2007 ANNUAL REPORT
Other initiatives introduced in 2006/07 where Information PLANNING, ANALYSIS AND Technology featured prominently included; PROCUREMENT • enhancements to the stakes payments system, including Key analysis projects undertaken throughout the year enabling payment of prizemoney to eighth placing in included: Group and Listed races; • assessing the opportunities for the racing industry as • development of an Internet Wagering platform, branded part of the Government’s review of the wagering and as BookiesOnline; gaming licences and funding for the racing industry post 2012; • replacement of RVL’s legacy intranet system using Microsoft’s Sharepoint software; • liaising with members to reach agreement to increase prize money funding from February 2007; • upgrade of the Victorian country-wide area network to improve communications with country clubs utilising • analysis supporting the continued refinement to race Next G Telstra infrastructure; programming to drive improved wagering performance; and • upgrade of the legacy Micropay payroll system to Neller and introduction of a race day rostering system supplied • coordinating the analysis of the business case supporting by Kronos; the Industry Review. • implementation of “first of its kind” microchip scanning The responsibility for administering RVL’s approval of technology for use in horse identification on race day; wagering service providers to publish Victorian thoroughbred race fields was transferred to the planning • development of a Pilot Bet Monitoring System for the and analysis team during the year. A review of the race RVL Integrity Services Department to improve fields economic contribution policy was undertaken and a monitoring of betting activities on Victoria races. further review of this policy is planned in 2008, to ensure • upgrade of the Epiphany CRM system supplied by Unisys the objective of an appropriate contribution to the Victorian Australia, in collaboration with RVL’s shareholders thoroughbred racing is made by the approved wagering MVRC, VRC and CRV; and service providers. • the introduction of SiRIUS, Victoria’s new racing The procurement and facilities function continued to focus administration system for race meeting management; on achieving cost reductions by leveraging the industry’s licensing, Stewards’ embargoes, Veterinary Services, buying power. The refurbishment of the Racing Victoria bookmakers’ turnover and allocations; race results Centre was completed, following the relocation of the VRC, processing and prize money payments delivering improved efficiency and coordination within RVL.
22 RACING VICTORIA LIMITED SERVICES
RISK MANAGEMENT develop a mutual understanding of risk concerns, Throughout 2006/07, RVL’s Risk Management unit prioritisation of risk-based capital expenditure and continued to focus on the development and deployment of compliance and hazard audits at major training centres, key initiatives, previously identified as part of the Industry including a detailed review of the Cranbourne Training OHS Action Plan. Complex.
RACESAFE CLAIMS MANAGEMENT Following completion of the successful RaceSafe pilot A major focus of RVL’s Insurance & WorkCover program program during the year, which had been jointly funded by during the year has been the development of a more RVL and WorkSafe, RVL commenced a statewide systematic approach to the management of claims. This has deployment of the program to all race clubs. This involves a involved: 3 stage progressive rollout of a standardised OHS • regular scheduled claims review meetings with RVL’s management system (RaceSafe) and electronic risk workcover and general insurers; management database (SHE). Stage 1 is currently on schedule to be implemented at all clubs within 12 months. • internal review of claims management processes; • greater emphasis on statistical modelling of claims data; STABLESAFE and StableSafe is an initiative which has been developed to help trainers improve the safety record across Victoria’s 1178 • a closer coordination between departments regarding thoroughbred training stables. Central to the project is the jockey injury management and rehabilitation, in deployment of two specialist OHS officers for a two year conjunction with the VJA and RVL’s Medical Advisor. term, during which they will develop and implement the StableSafe OHS management systems, educate business REGION FINANCIAL SERVICES owners on legal compliance responsibilities, undertake The Region Financial Services (RFS) group continued to compliance audits and develop sustainable safety programs work closely with country Clubs during the 2006/07 season for the workplaces. with a particular focus on the financial aspects of Club The WorkSafe - Safety Development Fund (SDF) funded operations. This year the role of the RFS team has been program, will enable the StableSafe project officers to particularly important given the impact on rural proactively engage with stable managers and employees to communities caused by ongoing drought conditions which elevate OHS awareness, compliance and reporting and to has placed significant pressure on country Clubs to secure a potential reduction in the number of claims and remain viable. incidents occurring within the industry. The RFS team has been strengthened with the inclusion of experienced staff who have brought a strong focus to TRAINSAFE service delivery, and by the group development of the RFS This initiative has centred on RVL’s Risk Management team Business Plan aimed at further enhancing the financial and providing assistance to RVL’s Planning & Infrastructure business services provided to country Clubs. Unit, to improve safety outcomes at Victoria’s thoroughbred training facilities. This has been achieved through a range of initiatives including monthly forums to discuss training related safety issues, bi-monthly meetings with WorkSafe to
RACING VICTORIA LIMITED 23 2007 ANNUAL REPORT
Development
MARKETING AND DEVELOPMENT SPRING RACING CARNIVAL The Marketing and Development group’s key task is to The results from Victoria’s world-renowned Spring Racing drive public interest in thoroughbred racing, as well as Carnival continued to amaze in 2006, with the 50 days of participation via wagering, media consumption and racing and entertainment a sensational success. The 13 attendances at race meetings. A series of campaigns were metropolitan and 68 country race meetings were attended undertaken throughout the year in support of this objective. by a record 772,719 people, up 40,000 on the previous year. These campaigns were supported by proactive media and The marketing tag line introduced for the first time in 2006 public relations strategies, events and awards, publications, - “It’s Bigger Than You Think” – certainly lived up to the website development and customer relationship promise. management services. An Independent Economic Benefit Report commissioned by RVL and prepared by IER, found the Spring Racing MELBOURNE FESTIVAL OF RACING Carnival generated $628.8 million in gross economic A new umbrella brand, the Melbourne Festival of Racing, benefits for the Victorian economy. was established to promote the February/March racing period, culminating with the VRC Super Saturday meeting Visitors to the 2006 Spring Racing Carnival spent more at Caulfield. This festival will be marketed over the next than $25.7 million on fashion purchases in Victoria with few years as encompassing spectacular international more than 330,000 items purchased including 62,775 hats, quality racing and special events in and around Melbourne. 57,093 pairs of shoes, 33,999 handbags and 26,737 ties. The objective is to entice the tens of thousands of ‘social’ Visitors to the Spring Racing Carnival spent a record $49.1 racegoers who already know and love the Spring Racing million on corporate raceday packages in 2006. Carnival to enjoy racing at a different time of year. CUSTOMER RELATIONS JUMPS RACING The CustomerFirst service centre provides customer A jumps racing marketing strategy was implemented to services for RVL, country clubs, Australian Racing Museum specifically heighten the profile during winter and to and ThoroughVisioN (TVN) as well as providing specific encourage wagering and public interest in the sport, services for owners and Registrar of Racehorses. focusing on the feature jumps races included in the second year of the JJ Houlahan Jumps Championship. The program AUSTRALIAN RACEHORSE OF THE YEAR AND has been immediately effective in increasing media HALL OF FAME PROUDLY SPONSORED BY SKY coverage, wagering and participation by owners and CHANNEL AND TABCORP trainers in jumps racing. For the first time, the 2007 Australian Racehorse of the Year Awards and the Australian Racing Hall of Fame were hosted in Sydney as a combined national event. After a
24 RACING VICTORIA LIMITED DEVELOPMENT
SPRING CARNIVAL ATTENDANCE 2001 2002 2003 2004 2005 2006 Metropolitan 483,369 514,120 519,213 517,260 542,582 582,758
Country 152,962 142,664 156,525 160,143 187,528 189,961
Spring Racing Carnival Total 636,331 656,784 675,738 677,403 730,110 772,719
CORPORATE PACKAGE SPENDING 2001 2002 2003 2004 2005 2006 Metropolitan $13.4m $13.6m $21.1m $37.9m $38.1m $48.4m
Country $0.7m $0.6m $0.6m $0.4m $0.7m $0.7m
Spring Racing Carnival Total $14.1m $14.2m $21.7m $38.3m $38.8m $49.1m
GROSS ECONOMIC BENEFIT 2001 2002 2003 2004 2005 2006 Metropolitan $301.8m $317.4m $322.9m $393.1m $429.2m $535.1m
Country $61.9m $58.3m $65.6m $74.2m $95.1m $93.7m
Spring Racing Carnival Total $363.7m $375.7m $388.5m $467.4m $524.3m $628.8m
false start in September due to the EI outbreak, the event the VRC Lightning Stakes and MVRC Australia Stakes at which is developed and event managed by RVL, was Moonee Valley and the VRC Newmarket Handicap at rescheduled to 26 November at the Pavillion at Royal Caulfield. The five-year-old then captured the Group 2 King Randwick. Stand Stakes at Royal Ascot in course record time, to finish the season with seven wins from 10 starts. Sprinting queen Miss Andretti was named the Australian Racehorse of the Year for the 2006/07 season. The classy Miss Andretti’s dominance was also recognised with the mare, prepared by Hall of Fame trainer Lee Freedman, won William Inglis & Son Champion Sprinter Award while the the Melbourne Festival of Racing Group 1 sprinting treble - public’s love for the great mare saw her voted the winner in the Sky Channel Most Popular Racehorse Award.
RACING VICTORIA LIMITED 25 2007 ANNUAL REPORT
2007 AUSTRALIAN RACEHORSE OF THE YEAR AWARDS PROUDLY SPONSORED BY SKY CHANNEL Australian Racehorse of the Year Award proudly sponsored by Sky Channel Miss Andretti
Yallambee Stud Champion Two-Year-Old Award Meurice
New Zealand Bloodstock Champion Three-Year-Old Filly Award Miss Finland
New Zealand Thoroughbred Marketing Champion Three-Year-Old Colt/Gelding Award Haradasun
William Inglis & Son Champion Sprinter Award Miss Andretti
Racing NSW BOBS Champion Middle Distance Award Desert War
Eliza Park Stud Champion Stayer Award Delta Blues
Sky Channel Most Popular Racehorse Miss Andretti
IRT Champion International Performer Award Takeover Target
Design Awards Champion Jumper Award Some Are Bent
Sire Custodians Ltd & Carazzo Consulting CPAs Champion Sire Award Flying Spur
IER Champion Group One Jockey Award Craig Williams
2GB 873 Champion Group One Trainer Award David Hayes
2007 AUSTRALIAN RACING HALL OF FAME PROUDLY SPONSORED BY SKY CHANNEL AND TABCORP Tabcorp Racing Hall of Fame Legend Phar Lap
Arrowfield Stud Hall of Fame Racehorse category Flight, Grand Flaneur and Super Impose
Longines Hall of Fame trainer category Fred Best and Gai Waterhouse
Racing in Australia Hall of Fame Jockey category Darren Beadman and Arthur Ward
Page’s Event Hire TBC Hall of Fame Associate category Harry Tancred
Star City Chairman’s Award Bill Whittaker
Globe-trotting seven-year-old sprinter Takeover Target also VICTORIAN THOROUGHBRED RACING AWARDS impressed on the world stage with a Group 1 win, a Group PROUDLY SPONSORED BY TABCORP 1 placing and a Group 2 placing away from our shores For the first time, the Victorian Country Racing Awards during the season and was awarded with the IRT Champion joined Celebrating Racing’s Heroes including the International Performer Award. presentation of the Scobie Breasley and Fred Hoysted Medals, to create the Victorian Thoroughbred Racing The Australian Racing Hall of Fame also bestowed its first Awards proudly sponsored by Tabcorp. Legend Award. The judges chose from the 20 inaugural inductees including the greats Scobie Breasley, Cups King Craig Williams waltzed away with his second consecutive Bart Cummings and champion trainer TJ Smith. The first Scobie Breasley Medal by 25 votes, finishing with 72 votes winner of the Legend Award was fittingly the immortal and David Hayes hoisted his maiden Fred Hoysted Medal Phar Lap. polling 90 votes, 24 clear of his nearest rival.
Eight new inductees walked the red carpet to join the Jumps jockey Steven Pateman was rewarded for his honour roll of the Australian Racing Hall of Fame. Sydney- consistent season in the saddle with his first Tommy siders Gai Waterhouse and Darren Beadman were amongst Corrigan Medal, whilst graduating apprentice jockey the modern day greats to be inducted. Andrew Mallyon was recognised with the VJA Outstanding Apprentice in Training Award.
The winner of the inaugural Victorian Racehorse of the Year Award based on performances on Victorian tracks was four-time Group 1 winner Miss Andretti.
26 RACING VICTORIA LIMITED DEVELOPMENT
EDUCATION, TRAINING AND WELFARE EQUINE DENTISTRY RVL and the Australian Equine Dentistry Association have APPRENTICE JOCKEYS’ PROGRAM formed a partnership to deliver the Course in Equine A review of the conditions for apprentice jockeys was Dentistry. conducted during the season. The review has led to the introduction of a range of initiatives for the Apprentice This highly specialised course is only available to four Jockey Program aimed at increasing the level of skills and participants per year and fully qualifies successful resources for training Victoria’s next generation of graduates for a career in equine dentistry. champions in the saddle. INTERNATIONAL PROGRAM The key initiatives include: The training program for six Turkish apprentices concluded • A $2000 apprenticeship assistance grant to reimburse in May with five of the boys achieving their race riding establishment costs such as the purchase of riding gear permit. The Turkish Jockey Club also requested RVL to and insurances; provide specialised training to its 24 stewards. Chief Investigator Peter McMillan and Deputy Chief Steward • A $2000 mentoring and development grant for trainers; Terry Bailey travelled to Istanbul to deliver a challenging • An accommodation subsidy of $50 per week; program which was well received by the Turkish Authorities. • A revised financial management program; The Course in Racing Investigation was conducted for New selection criteria for trainers proposing to employ • external participants. Stewards and investigators from an apprentice jockey; and Malaysia, New Zealand, Queensland and Tasmania • The creation of a pre-apprenticeship program through completed a rigorous five-day program. TAFE. WELFARE AND SAFETY All initiatives will be implemented by January 2008 and The Victoria University conducted a high level study into further enhance RVL’s commitment to the development of the welfare and health of stable employees and trainers. quality apprentices. The final report and recommendations will be presented to In a joint initiative with the Tasmanian Thoroughbred RVL in the new season and a range of initiatives designed Racing Council all Tasmanian apprentices jockeys will to support people in racing stables will be introduced. attend training at RVL and receive on-going workplace The RVL jockey welfare program continued to offer support during the course of their apprenticeship. improved services to jockeys. New race day nutritional guidelines have been prepared by the Victorian Institute of STEWARDS’ TRAINING Sport and will be trialled by race clubs. RVL continues to Twelve RVL stewards completed the Certificate IV in work with the National Jockey Safety Committee to ensure Racing Administration (Steward) and another 12 will continued improvements are made to riding gear, medical complete the program in December. This is the first time management systems and jockey services. stewards received a national qualification. The success of this program has lead to 12 stewards from the harness and greyhound racing codes being enrolled in the RVL program.
RACING VICTORIA LIMITED 27 2007 ANNUAL REPORT
SCHOOLS AND EDUCATION THOROUGHBRED BREEDERS VICTORIA (TBV) The RVL Schools Program received an overwhelming AWARDS response with over 15,000 students attending programs at Martin O’Connor was awarded the Leading Victorian Champions – Australian Racing Museum or participating in Breeder and Leading Victorian Small Breeder for the the Subzero visitation program. Highlights of this year’s second consecutive year, as well as his departed broodmare program were the visits to smaller country schools in the Finneto taking out Champion Victorian Broodmare thanks Swan Hill, Mildura and Mansfield regions. Support to the feats of Cox Plate hero Fields of Omagh. Deceased materials designed by the RVL Education Officer have been Blue Gum Farm stallion Rubiton was the Champion utilised by many students and have proved to be both Victorian Stallion, while Swettenham Stud resident Dash relevant and suitable resources in implementing the for Cash won the Champion Freshman Sire award. prescribed curriculum framework. OWNERS OWNERS & BREEDERS More than 20,000 owners signed up for the 2007 Owners’ Gold Card with many now enjoying the associated benefits SUPER VOBIS of racehorse ownership. In February the Victorian Owners’ In August 2006, the Thoroughbred Owners and Breeders Night was held at Moonee Valley with 200 guests enjoying Advisory (TOBA) Panel made two important a dinner with celebrity owners including Kevin Sheedy, announcements to strengthen Super VOBIS. The first was Simon O’Donnell, Angela Pippos and Billy Slater. the increase in the Super VOBIS Country Bonus from The Gold Card is available to any owner who races a horse $7000 to $8000 per race. The second was the introduction in Victoria. It provides exclusive access to improved of the Super VOBIS Guarantee. This was a particularly services for owners on race day and entry to over 300 race important initiative in the history of the scheme and was meetings, even when their horse is not running. implemented in June 2007 to reward the owners of horses that win their first TAB race outside of a Super VOBIS race. RACING INFORMATION SERVICES OWNERS & BREEDERS ANNUAL AWARDS AUSTRALIA The Owners & Breeders Awards night celebrates feats of Following the restructure of Racing Information Services excellence from the racing and breeding industries from Australia Pty Ltd (RISA) in March 2006 and the the 2006/2007 season. appointment of Myles Foreman in the new role of Chief Executive Officer in June 2006, RISA developed and SUPER VOBIS AWARDS adopted a new business plan in August 2006, which The Super VOBIS Horse of the Year was won by Pompeii adopted the Core Vision: ‘To be Australia’s leading provider Ruler, who won the VRC Australia Cup, MRC St George of Racing Information and Racing Industry Services’. Stakes, VRC Craiglee Stakes and the MRC JJ Liston Stakes. Pompeii Ruler was bred and nominated to Super VOBIS by During the year RISA established a new organisational Bridsan Bloodstock and was raised at Chatswood Stud in structure to assume direct responsibility for the Seymour, he has collected $1.5m in stakes. management of services which had previously been outsourced to Racing Victoria Limited and Racing NSW, such as financial management and information technology management. Throughout this time, RISA also took over the full management and operation of the Registrar of Racehorses located in RISA’s Sydney Office.
28 RACING VICTORIA LIMITED DEVELOPMENT
As the owner and operator of the RISA Service Centre The facility at Champions, Federation Square has created (Formerly the Trainers Service Centre) the process of opportunities to positively impact on the racing industry’s managing nominations, weights, gear changes, acceptances KPI areas by: and scratchings across Australia is now managed by RISA. 1. creating a positive community perception of In July, Queensland Racing Limited entered RISA as the thoroughbred racing; last Principal Racing Authority to take up a Shareholding in 2. encouraging raceday attendance; RISA. Today RISA’s shareholders are Racing Victoria Limited, Racing NSW, Queensland Racing Limited, Racing 3. developing new generations of racegoers through and Wagering Western Australia, Thoroughbred Racing SA, connection with children, families and the female Tasmanian Thoroughbred Racing Council, Thoroughbred demographic; Racing NT and Canberra Racing Club. 4. encouraging thoroughbred ownership;
At the same time, an independent Chairman, Charles 5. encouraging racing club membership; and Macek, was appointed which completed the last aspects of the March 2006 restructure of RISA 6. generating perceptions of racing that might result in a positive impact on punting habits.
AUSTRALIAN RACING MUSEUM A research study undertaken by IER Pty. Ltd during 2007 The concept underpinning the development of Champions, indicated that the Australian Racing Museum and Hall of the Australian Racing Museum and Hall of Fame was to Fame is delivering significant value to the racing industry’s provide a unique opportunity to ‘touch’ the consumer off- Key Performance Indicator Areas. course, in an environment that would be controlled by racing, The IER Value Study empirically determined that the inviting the interaction of youth, children and families. Museum makes a significant contribution to the racing One of the great attributes of selecting Federation Square as industry by influencing positively against all of the KPI the new home for the Museum is the significant exposure areas. In addition, the report highlights the significant role racing receives from the sporting “Live Sites” hosted on the the Museum is playing in changing perceptions about stage and Big Screen located in the public square. Some of thoroughbred racing, particularly amongst children and the the events featured in the past include Melbourne’s major female demographic. annual events like test cricket, the AFL Grand Final, the Champions remains committed to securing its position as a Melbourne Cup Carnival and the Grand Prix. cultural and community based institution and asset for the industry.
RACING VICTORIA LIMITED 29 2007 ANNUAL REPORT
Whilst the visitation figures and the findings of the Value Thoroughbreds – Caroline Searcy takes an in-depth look at Study Report indicate Champions is already delivering the Australian and International breeding scene. considerable value, the Board of the Australian Racing Country Cup Season – TVN has advanced the coverage of Museum and Racing Victoria Limited are working together Victoria’s Country Cup circuit during the Spring Racing to develop an improved operating environment that will Carnival, taking the clubs’ major days to new and exciting deliver savings and benefits of $0.6m per annum. levels of exposure. TVN In addition to TVN’s content development, a host of new on- ThoroughVisioN (TVN) is a premium multimedia sports air talent has made their way onto our screens in 2006/07, entertainment company specialising in the expert with Caroline Searcy, Richard Wade, Frank Coletta and presentation of the best local and international Emma Freedman all joining the TVN stable, while Adam thoroughbred horse racing to Pay-TV viewers, hotels, clubs Olszanski’s reputation as the best up and coming race and betting outlets around Australia. caller and race day host in Australia has continued to grow.
TVN is 50% owned by the Victorian thoroughbred racing After 36 years as one of Australia’s most popular and industry (MRC, MVRC, VRC and CRV) and 50% by the respected race callers, Bryan Martin announced that he major Sydney metropolitan clubs (AJC and STC) and would retire from race calling at the end of the 2007 Spring currently manages the media rights for all thoroughbred Racing Carnival. Bryan has made a fantastic contribution to racing in these jurisdictions. the establishment of TVN and will continue to work closely with TVN as producer and host of our new Legends of As Australia’s only dedicated thoroughbred racing channel, Racing series. TVN has continued its commitment to delivering quality racing coverage in a live, active and contemporary format, TVN has also continued to make an important contribution combining expert form analysis, insight and commentary to the racing industry’s communications arm, as evidenced with the latest thoroughbred industry news and information by TVN’s critical role in providing around the clock, from Australia and around the world. up-to-the-moment coverage of the Equine Influenza outbreak in 2007. In 2006/07, TVN continued to add new content and programming to the its broadcast schedule, utilising TVN’s unwavering commitment to revolutionising the leading edge digital technology to change the way presentation and delivery of Australian thoroughbred Australians see the thoroughbred racing. racing has driven the rapid evolution of its media network, with the company now comprising broadcast, online and New programs include: print channels that deliver exclusive content to the International Thoroughbreds – A weekly review of all Australian and international markets. major international racing news and results. The distribution of TVN’s broadcasts on the Foxtel, Legends of Racing – Bryan Martin spends some time with Austar and Optus platforms and the channel’s evolving champion personalities of the turf. relationship with TABCORP and the Nine Network now sees Australian thoroughbred racing served by a level of Jump – A weekly review of the highs and lows of the coverage and exposure that was unimaginable in the pre- Australian and International jump seasons. TVN environment.
30 RACING VICTORIA LIMITED DEVELOPMENT
RESULTS OF VICTORIAN GROUP ONE RACES 2006/07 DISTANCE RACE (METRES) PRIZE MONEY WINNER JOCKEY TRAINER Cleanevent Manikato Stakes 1200 $400,000 Miss Andretti Craig Newitt Lee Freedman Dubai Duty Free Underwood Stakes 1800 $350,000 El Segundo Darren Gauci Colin Little Dubai Racing Club Cup 1400 $350,000 Rewaaya Craig Williams David Hayes Carlton Draught Caulfield Guineas 1600 $1,000,000 Wonderful World Luke Nolen Bart Cummings Yalumba Stakes 2000 $400,000 Casual Pass Nash Rawiller Matthew Ellerton Toorak Handicap 1600 $350,000 Red Dazzler Jim Cassidy Mick Price Vinery Stud Thousand Guineas 1600 $500,000 Miss Finland Craig Williams David Hayes Carlton Draught Caulfield Cup 2400 $2,500,000 Tawqueet Dwayne Dunn David Hayes Carlton Draught Cox Plate 2040 $3,100,000 Fields Of Omagh Craig Williams David Hayes Myer Classic 1600 $500,000 Lyrical Bid Craig Williams Brian Mayfield-Smith AAMI Victoria Derby 2500 $1,500,000 Efficient Michael Rodd Graeme Rogerson Motorola Mackinnon Stakes 2000 $750,000 Desert War Chris Munce Gai Waterhouse Seppelt Salinger Stakes 1200 $500,000 Dance Hero Chris Munce Gai Waterhouse Emirates Melbourne Cup 3200 $5,000,000 Delta Blues Katsuhiko Sumii Yasunari Iwata VRC Crown Oaks 2500 $750,000 Miss Finland Craig Williams David Hayes Emirates Stakes 1610 $500,000 Divine Madonna Stephen Baster Mark Kavanagh Lightning Stakes 1000 $500,000 Miss Andretti Craig Newitt Lee Freedman C.F. Orr Stakes 1400 $300,000 El Segundo Damien Oliver Colin Little Timbercorp Australia Stakes 1200 $400,000 Miss Andretti Craig Newitt Lee Freedman Oakleigh Plate 1100 $350,000 Undue Steven Arnold Shane Clarke AAMI Blue Diamond Stakes 1200 $1,000,000 Sleek Chassis Dwayne Dunn David Hayes Futurity Stakes 1600 $700,000 Aqua D’amore Stephen Baster Gai Waterhouse Seppelt Wines Newmarket Handicap 1200 $1,000,000 Miss Andretti Craig Newitt Lee Freedman Darley Australian Cup 2000 $1,000,000 Pompeii Ruler Craig Newitt Mick Price Cadbury Australian Guineas 1600 $750,000 Miss Finland Craig Williams David Hayes
Source: RVL
VICTORIAN THOROUGHBRED RACING AWARDS - PROUDLY SPONSORED BY TABCORP Scobie Breasley Medal proudly sponsored by Tabcorp Craig Williams Fred Hoysted Medal proudly sponsored by Premier Technology Group David Hayes Design Awards Metropolitan Jockey of the Year Award Craig Williams Michelton Wines Metropolitan Trainer of the Year Award David Hayes Michelton Wines Metropolitan Apprentice of the Year Award Sebastian Murphy TGM Engineers and Surveyors Country Trainer of the Year Award Darren Weir Radio Sport 927 Country Jockey of the Year Award Brad Rawiller Woodside Park Stud Victorian Racehorse of the Year Award Miss Andretti No Fuss Events Victorian Country Racehorse of the Year Award Forest Knight Direct Air Country Club of the Year Award Yarra Valley Racing Club Saville Hotel Group Victorian Special Achievement Award Karasi Wolsey Victorian Country Racing Most Improved Club Award Kerang Turf Club Camp Australia Victorian Country Racing Event of the Year Award Dunkeld Racing Club & Mt Wycheproof & District Racing Club Robian International Country Apprentice of the Year Award Nicholas Hall ATA Trainer of Outstanding Jockey in Training Award Brett Mallyon Tommy Corrigan Medal proudly sponsored by TVN's Jump Steven Pateman VJA Outstanding Apprentice in Training Award Andrew Mallyon VRMA Personality of the Year Award Craig Williams VRC Bert Wolfe Award Patrick Bartley
Source: RVL
RACING VICTORIA LIMITED 31 2007 ANNUAL REPORT
ATTENDANCE AT VICTORIAN NUMBER OF VICTORIAN THOROUGHBRED RACE MEETINGS RACE MEETINGS CONDUCTED ’000 ’000 2000 700
1750 1,653 600 560
1500
500 1250
400 1000
300 750
500 200
250 100
0 02/03 03/04 04/05 05/06 06/07 0 02/03 03/04 04/05 05/06 06/07 Spring Racing Carnival attendance (Nine major metropolitan race days) TAB Non TAB Total Attendance at all other meetings Total
AVERAGE PRIZE MONEY / RACE INDEX 350 Victoria
300
250
200
150
100
50 INDEX – 100=NATIONAL AVERAGE IN 1992/93 AVERAGE INDEX – 100=NATIONAL
0 92/9393/94 94/9595/9696/97 97/98 98/99 99/00 00/01 01/02 02/03 03/0404/05 05/06 06/07
NSW NT QLD SA TAS VIC WA Australia
32 RACING VICTORIA LIMITED DEVELOPMENT
$M COMPONENTS OF RETURNS TO OWNERS 150
120
90
60
30
0 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07
Prize money and trophies Super VOBIS Riding fees Jockeys’ WorkCover Farriers rebates Starters’ subsidies Free nominations
RACING VICTORIA LIMITED 33 2007 ANNUAL REPORT
VICTORIAN PERCENTAGE SHARE OF VICTORIAN PERCENTAGE SHARE OF NATIONAL THOROUGHBRED RACES INDIVIDUAL HORSES WHICH STARTED NATIONALLY
24% 32% 23%
22% 29.7% 30%
20%
28%
18%
16% 26% 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07
Includes all TAB, non-TAB, picnic and point to point races. Includes all TAB, non-TAB, picnic and point to point races.
NUMBER OF THOROUGHBRED RACES – NUMBER OF INDIVIDUAL STARTERS – AUSTRALIA AND VICTORIA AUSTRALIA AND VICTORIA ’000 ’000 ’000 ’000 24 5.0 33 10
23 22,498 32,020
22 32 9,335
21 4,563 4.5 9,105 9 4,497 VICTORIA VICTORIA
AUSTRALIA AUSTRALIA 31,419 20 31
19,545 19
18 4.0 30 8 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07
Australia Victoria Australia Victoria Includes all TAB, non-TAB, picnic and point to point races. Includes all individual horses which started in TAB, non-TAB, picnic and point to point races.
34 RACING VICTORIA LIMITED DEVELOPMENT
AVERAGE EARNINGS – TOP 100 TRAINERS AVERAGE EARNINGS – TOP 100 JOCKEYS $’000 $’000 500 350
450 300 400
350 250
300 200
250
150 200
150 100
100 50 50
0 0 Top 10 11 to 20 21 to 30 31 to 40 41 to 60 61 to 100 Top 10 11 to 20 21 to 30 31 to 40 41 to 60 61 to 100
2004/05 2005/06 2006/07 2004/05 2005/06 2006/07 Includes 10% commission on prize money and Super VOBIS earnings within Victoria Includes riding fees, 5% commission on prize money and Super VOBIS earnings within Victoria
RACING VICTORIA LIMITED 35 2007 ANNUAL REPORT
2006/07 INDUSTRY INCOME 2006/07 INDUSTRY SOURCES ($230.5M) EXPENDITURE ($230.8M)
Program Fee ($58.4M) First distributions to shareholders ($22.9M) Product Fee ($82.8M) Second distributions to shareholders ($121.4M) Marketing Fee ($2.8M) Administration and operations ($37M) JV Profit ($65.4M) Other returns to owners ($20.9M) Electronic Gaming Machine Levy Rebate ($7.2) Raceday services ($8.2M) Super VOBIS Income ($2.1M) Stewards video and race telecasting ($4.6M) Racefields ($2.7M) Training facility development and maintenance ($10.8M) Industry Recoveries ($1.9M) Other industry expenditure ($3.9M) Shareholder Grant ($1.0M) Grants – Australian Racing Museum ($1.2M) Other Income ($6.3M)
36 RACING VICTORIA LIMITED DEVELOPMENT
THOROUGHBRED THREE CODE MARKET SHARE OF TOTAL OFFCOURSE WAGERING
100% 16.49% 90%
80% 15.46% 70%
60%
50%
40% 68.05% 30%
20%
10%
0% 02/03 03/04 04/05 05/06 06/07
Thoroughbred Harness Greyhounds
THOROUGHBRED WAGERING TURNOVER (TABCORP) BOOKMAKER TURNOVER $M $M 3000 600
2,548 517
2500 500
2000 400
1500 300 TURNOVER
1000 200
500 100
0 0 02/03 03/04 04/05 05/06 06/07 02/03 03/04 04/05 05/06 06/07
On-course Off-course Total On-course Phone Total
RACING VICTORIA LIMITED 37 2007 ANNUAL REPORT
Financial Performance VICTORIAN RACING INDUSTRY AND In turn, VicRacing Pty Ltd and Racing Products Victoria Pty TABCORP JOINT VENTURE STRUCTURE Ltd distribute this income to the three codes based on the In 1994, the Victorian Racing Industry (VRI) and Tabcorp following formula: Holdings Limited formed an unincorporated joint venture • the joint venture profit, marketing fee and 25% of the for the operation of a wagering and gaming business in product supply fee are allocated to the codes based on Victoria. This coincided with the privatisation of the former off-course wagering market share; and Totalizator Agency Board, the public float of Tabcorp and the issuing of a wagering and a gaming licence by the • the racing program fee and 75% of the product supply fee Victorian Government under the Gaming and Betting Act are allocated on a fixed basis of 73% thoroughbred code, 1994. The joint venture agreement and licences are in place 18% harness code and 9% greyhound code. until 2012. The Act specifies that the VRI will be no worse In addition, from time to time, VicRacing Pty Ltd and off under the business arrangements relating to the Racing Products Victoria Pty Ltd enter into arrangements renewal of those licences. with Tabcorp for the benefit of the joint venture that have a The VRI’s participation in the joint venture is conducted different sharing basis as agreed between the parties under the auspices of VicRacing Pty Ltd and Racing (eg vision arrangements). Products Victoria Pty Ltd. Both companies have six directors (four nominated by RVL, one nominated by MEMBERS’ AGREEMENT AND Harness Racing Victoria and one nominated by Greyhound DISTRIBUTION SCHEME Racing Victoria). The Distribution Scheme aims to ensure a fair and equitable scheme of distribution of joint venture revenue VicRacing Pty Ltd and Tabcorp have one vote each on the that: Joint Venture Management Committee. All decisions by the Committee must be unanimous, thereby giving both parties • adequately supports the objectives of the Victorian equal control over the conduct of the joint venture. Thoroughbred Racing Industry; VicRacing Pty Ltd holds the VRI’s equity interest in the • achieves a fair and equitable distribution of Joint Venture joint venture and is entitled to a 25% share of the joint Revenue to the Members and RVL for the purposes of venture’s total profit (incorporating the net profit arising conducting their respective functions; from Tabcorp’s wagering and gaming businesses). • achieves maximum flexibility in race date allocation and Racing Products Victoria Pty Ltd supplies racing services to programming whilst minimising impact on club Tabcorp in return for racing program, product supply and profitability; and marketing fees. • provides incentives for club performance and achievement of industry objectives.
38 RACING VICTORIA LIMITED FINANCIAL PERFORMANCE
The key features of the Distribution Scheme include: • RVL is directly accountable to clubs for its efficiency with funding restructured into three components: • Member prize money distributions are based on consistent prizemoney funding by race type, regardless - core operations, of venue; - returns to owners, and starters subsidies funded at a consistent level across all • - discretionary expenditure; Victorian races; • race club programs are set to optimise wagering WorkCover costs and ride fees paid by RVL on behalf of • turnover; and clubs; • all industry race day services are managed, controlled Super Vobis funding indexed by wagering revenue • and funded by RVL on behalf of clubs. growth annually; • all races run in Victoria are funded; • funding levels represent minimum prize money funding levels and clubs retain the right to top up prize money; • incentive arrangements based on on-course turnover and prize money top ups by clubs;
RACING VICTORIA LIMITED 39 2007 ANNUAL REPORT
RACING VICTORIA LIMITED FINANCIAL increased by $3.1 million versus the prior year. PERFORMANCE 2006/07 Shareholder grants totalling $1 million were received REPORTED PROFIT/(LOSS) during the year and have been disclosed in the accounts as RVL’s underlying result from general operational activities non-operating revenue. recorded a profit of $0.1 million for the 2006/07 year, which was reduced to an overall reported consolidated loss EXPENSES of $0.3 million as follows: Total RVL expenditure excluding distributions to shareholders amounted to $87.5 million in 2006/07 and $M consisted of $37.1 million in RVL operating expenditure and General Operations Profit (before RISA) 0.1 $50.4 million in industry-related expenditure. Operating Plus: Racing Information Services Australia (RISA) expenditure increased by $1.4 million and industry share of profit 0.3 expenditure increased by $3.1 million compared to last year. Less: Bookmakers Development Fund (BDF) (0.6) Grants to the Australian Racing Museum at Federation Accident Insurance Fund (AIF) (0.1) Square totalled $1.2 million. RVL has also guaranteed a Reported Consolidated Loss (0.3) loan facility of Australian Racing Museum Limited totalling $0.5 million.
The BDF position arises from internet bookmaking system Training track development and maintenance funding investment costs and the RISA item reflects our investment totalled $10.8 million, an increase of $2.2 million, and share in the national racing information business. reflects RVL’s commitment to provide first class training facilities. REVENUE Revenue from operating and non-operating activities Jockeys’ WorkCover expenses totalled $3.2 million in totalled $231.5 million in 2006/07, an increase of $16.6 2006/07, a decrease of $0.4 million compared to the million on the previous year (including share of profit from previous year, primarily as a result of a decrease in the RISA). WorkCover premium for jockeys which resulted from reduced claims and improved claims management. Racing program, product and marketing fees received from the joint venture operation with Tabcorp totalled $143.9 Following the vision settlement between Tabcorp and TVN, million, an increase of $8.6 million reflecting the higher RVL telecasting arrangements directly with Sky Channel wagering turnover growth during the year. The joint have now ceased and have been restructured within the venture profit share was $65.4 million, an increase of Joint Venture arrangements. $2.7 million. To assist member shareholders in the restructure of Revenue from the Racing Industry Development Program ThoroughVisioN, RVL has entered into a funding agreement increased by $2.0 million compared to the previous year with the member shareholders to borrow up to $3 million. and was in line with the revised government arrangements. The member shareholders have agreed to collectively guarantee a credit facility and fund the interest payments Other operating revenue totalled $13.6 million and and RVL will be entitled to retain $1 million per annum out of future distributions for the purpose of discharging the facility.
40 RACING VICTORIA LIMITED FINANCIAL PERFORMANCE
DISTRIBUTIONS AND PRIZE MONEY CASHFLOW PAYMENTS Cash at the end of the financial year totalled $5.5 million, a Distributions to member shareholders and the creation of a decrease of $1.5 million compared to the previous year. prize money stabilisation account totalled $144.2 million in Net cash provided by operating activities was $5.0 million, 2006/07, an increase of $11.5 million compared to the an increase of $2.9 million, whilst net cash used in previous year’s expenditure. investing activities increased by $10.6 million to $13.7 The prize money stabilisation account of $2.9 million was million, due to higher levels of investment in Plant and enabled through actions taken by the company to reduce Equipment and Thoroughtrack facilities. RVL’s funding requirements. This account will only be Net cash used in financing activities includes $1.8 million applied to future returns to participants and will help the in relation to repayment of borrowings and $9.1 million in industry better manage variations in income levels in relation to proceeds from borrowings for Thoroughtrack future years. developments. Distributions to or on behalf of member shareholders were as follows: (i) FIRST DISTRIBUTIONS: $’000 Region Services 541 Thoroughbred Country Assistance Fund 9,043 Picnic racing 493 Program variation payments 2,618 Capital funding 10,064 Other 131
22,890
(ii) SECOND DISTRIBUTIONS (PRIZE MONEY FUNDS): Country Racing Victoria 42,307 Melbourne Racing Club 31,055 Moonee Valley Racing Club 16,502 Victoria Racing Club 28,587 Prize money Stabilisation 2,904
121,355
Total Distributions: 144,245
RACING VICTORIA LIMITED 41 2007 ANNUAL REPORT
Financial Report
RACING VICTORIA LIMITED ACN 096 917 930 FINANCIAL REPORT FOR THE FINANCIAL YEAR ENDED 31 JULY 2007
Directors’ Report 43
Auditor’s Independence Declaration 46
Independent Audit Report 47
Directors’ Declaration 48
Income Statement 49
Balance Sheet 50
Statement of Cash Flows 51
Statement of Recognised Income and Expense 52
Notes to the Financial Statements 53
42 RACING VICTORIA LIMITED FINANCIAL REPORT
DIRECTORS’ REPORT
The directors of Racing Victoria Limited submit herewith the annual financial report for the financial year ended 31 July 2007. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:
The names of the directors of the company during or since the end of the financial year are as follows. Directors’ particulars and profiles can be viewed in the Annual Report.
Graham Duff
Stephen Allanson
The Hon Michael Duffy
Prof David Karpin AM
Lindsay Maxsted
Kevin McNamara
Ray Orloff Director resigned 07/12/2006
HEP (Chinka) Steel
Robert Hance
Barbara Saunders
Mark Ewing
Peter McCarthy Director appointed 07/12/2006
Company Secretary Peter J. Williams
PRINCIPAL ACTIVITIES The company’s principal activities in the course of the financial year were the administration of thoroughbred racing in the State of Victoria.
DIVIDENDS Under the company’s constitution no dividends may be declared or paid.
REVIEW OF OPERATIONS The total revenue from operations including Victorian thoroughbred racing industry joint venture revenue received under the Racing Deed of Operations increased by 7.6% to $231.2 million in the twelve months to 31 July 2007. The operating loss of the company for the twelve months to 31 July 2007 was $274,000 compared to a loss of $1,187,000 in the prior twelve months.
The loss from operations for the twelve months to 31 July 2007 consisted of a profit from Racing Victoria Limited general operations of $350,000, including the share of profit from the equity accounting treatment of Racing Information Services Australia Pty Ltd (RISA) of $282,000 and losses from the Accident Insurance Fund of $57,000 and Bookmakers Development Fund of $567,000.
CHANGES IN STATE OF AFFAIRS During the financial year there was no significant change in the state of affairs of the company other than that referred to in the financial statements or notes hereto.
RACING VICTORIA LIMITED 43 2007 ANNUAL REPORT
DIRECTORS’ REPORT
SUBSEQUENT EVENTS Equine Influenza The outbreak of equine influenza in NSW and QLD in August 2007 is likely to have a negative impact on the future financial performance and financial position of the company, the extent of which cannot be quantified as at the date of this report.
Sportsbet Litigation Litigation has commenced in the Federal Court of Australia against the company (and others) on 24 September 2007, relating to a dispute with Sportsbet Pty Ltd who has made claims against the company’s conduct relating to implementation of the race fields provisions (s.2.3.16A of the Gaming Regulation Act 2003 (Vic)). The claims include damages of $1,699,552. The directors are of the opinion that the claims can be successfully defended by the company.
FUTURE DEVELOPMENTS Disclosure of information regarding likely developments in the operations of the company in future financial years and the expected results of those operations is likely to result in unreasonable prejudice to the company. Accordingly, this information has not been included in this report.
DIRECTORS’ MEETINGS The following table sets out the number of directors’ meetings (including meetings of committees of directors) held during the financial year and the number of meetings attended by each director (while they were a director or committee member). During the financial year, 11 board meetings, 4 special meeting and 5 audit committee meetings were held. BOARD OF DIRECTORS AUDIT COMMITTEE No. of No. of No. of No. of Regular Regular Special Special No. of No. of Meetings Meetings Meetings Meetings Meetings Meetings Directors Held (1) Attended Held (1) Attended Held (1) Attended
Mr Graham Duff 11 11 4 4
The Hon. Michael Duffy 11 9 4 4
Mr Robert Hance 11 10 4 2
Prof. David Karpin AM 11 9 4 2
Mr Lindsay Maxsted 11 9 4 4 5 4
Mr Kevin McNamara 11 11 4 4 5 5
Mr Ray Orloff (2) 5522
Mr HEP (Chinka) Steel 11 11 4 4
Mr Mark Ewing 11 10 4 4
Mrs Barbara Saunders 11 11 4 4 5 4
Mr Stephen Allanson 11 11 4 4
Mr Peter McCarthy (3) 6522
(1) The number of meetings held during the time the directors held office during the 12 months to 31 July 2007. (2) Mr Ray Orloff resigned on 7/12/06. (3) Mr Peter McCarthy was appointed as a director on 7/12/06.
44 RACING VICTORIA LIMITED FINANCIAL REPORT
DIRECTORS’ REPORT
INDEMNIFICATION OF OFFICERS AND AUDITORS During the financial year, the company paid a premium in respect of a contract insuring the directors of the company, the company secretary and all executive officers of the company and of any related body corporate against a liability incurred as such a director, secretary or executive officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.
The company has executed deeds of indemnity in favour of each of the directors. Each of these deeds provides for the company to indemnify each director to the maximum extent permitted by law against:
• all liabilities incurred by the director as an officer of the company and each subsidiary; and
• all legal costs and expenses arising from proceedings or an investigation incurred by the director as an officer of the company or of a subsidiary.
The deeds also give the directors a right of access to board papers for a period of seven years after their retirement and requires the company to maintain insurance cover for the directors. A director’s right of access to board papers is subject to protection of the company’s legal professional privilege rights and to the director keeping the board papers in confidence.
The company has not otherwise, during or since the financial year, indemnified or agreed to indemnify an officer or auditor of the company or of any related body corporate against a liability incurred as such an officer or auditor.
AUDITOR’S INDEPENDENCE DECLARATION The auditor’s independence declaration is included on page 4 of the financial report.
ROUNDING OFF OF AMOUNTS The company is a company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order amounts in the directors’ report and the financial report have been rounded off to the nearest thousand dollars.
Signed in accordance with a resolution of the directors made pursuant to s.298(2) of the Corporations Act 2001.
On behalf of the directors
Graham Duff Chairman
Melbourne, 1 November 2007
RACING VICTORIA LIMITED 45 2007 ANNUAL REPORT
AUDITOR’S INDEPENDENCE DECLARATION
Deloitte Touche Tohmatsu ABN 74 490 121 060
180 Lonsdale Street Melbourne VIC 3000 GPO Box 78B Melbourne VIC 3001 Australia
DX 111 Tel: +61 (0) 3 9208 7000 Fax: +61 (0) 3 9208 7001 www.deloitte.com.au
The Board of Directors Racing Victoria Limited 400 Epsom Road Flemington VIC 3031
Dear Board Members Racing Victoria Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of RVL.
As lead audit partner for the audit of the financial statements of Racing Victoria Limited for the financial year ended 31 July 2007, I declare that to the best of my knowledge and belief, there have been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
Tom Imbesi Partner Chartered Accountants Melbourne, 1 November 2007
Liability limited by a scheme approved under Professional Standards Legislation.
46 RACING VICTORIA LIMITED FINANCIAL REPORT
INDEPENDENT AUDIT REPORT
Deloitte Touche Tohmatsu ABN 74 490 121 060
180 Lonsdale Street Melbourne VIC 3000 GPO Box 78B Melbourne VIC 3001 Australia
DX 111 Tel: +61 (0) 3 9208 7000 Fax: +61 (0) 3 9208 7001 www.deloitte.com.au
INDEPENDENT AUDIT REPORT TO THE MEMBERS OF RACING VICTORIA LIMITED We have audited the accompanying financial report of Racing Victoria Limited, which comprises the balance sheet as at 31 July 2007, and the income statement, cash flow statement and statement of recognised income and expense for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration as set out on pages 48 to 73. Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards. Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation 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 directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Auditor’s Independence Declaration In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. Auditor’s Opinion In our opinion: (a) the financial report of Racing Victoria Limited is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the company’s financial position as at 31 July 2007 and of its performance for the year ended on that date; and (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and (b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
DELOITTE TOUCHE TOHMATSU
Tom Imbesi Partner Chartered Accountants Melbourne, 1 November 2007
Liability limited by a scheme approved under Professional Standards Legislation.
RACING VICTORIA LIMITED 47 2007 ANNUAL REPORT
DIRECTORS’ DECLARATION
The directors declare that:
(a) in the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable;
(b) in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the company.
Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act 2001.
On behalf of the Directors
Graham Duff Chairman
Melbourne, 1 November 2007
48 RACING VICTORIA LIMITED FINANCIAL REPORT
INCOME STATEMENT
FOR THE FINANCIAL YEAR ENDED 31 JULY 2007
NOTE 2007 2006 $’000 $’000 Revenues 2(a) 231,178 214,898 Share of profit of associates and jointly controlled entities accounted for using the equity method 282 (421) Expenses from ordinary activities (excluding distributions) 2(b) (87,489) (82,957)
Profit From Continuing Operations Before Distributions 143,971 131,520
Distributions 2(c) (144,245) (132,707)
Profit/(Loss) before income tax (274) (1,187)
Income tax expense 1(n) - -
Profit/(Loss) from continuing operations (274) (1,187)
Profit/(Loss) for the period (274) (1,187)
Notes to the financial statements are included on pages 53 to 73.
RACING VICTORIA LIMITED 49 2007 ANNUAL REPORT
BALANCE SHEET
FOR THE FINANCIAL YEAR ENDED 31 JULY 2007
NOTE 2007 2006 $’000 $’000 CURRENT ASSETS Cash and cash equivalents 23(a) 5,456 6,943 Trade and other receivables 4 19,449 20,607 Other 5 596 672
Total Current Assets 25,501 28,222
NON-CURRENT ASSETS Other financial assets 6 12,037 1,403 Property, plant & equipment 7 8,922 8,542 Other intangible assets 8 3,659 2,740 Investments accounted for using the equity method 9 3,473 3,740
Total Non-Current Assets 28,091 16,425
Total Assets 53,592 44,647
CURRENT LIABILITIES Trade and other payables 10 23,300 25,188 Borrowings 11 1,360 1,785 Provisions 12 4,272 1,181
Total Current Liabilities 28,932 28,154
NON-CURRENT LIABILITIES Borrowings 13 10,694 3,000 Provisions 14 7,764 8,681
Total Non-Current Liabilities 18,458 11,681
Total Liabilities 47,390 39,835
Net Assets 6,202 4,812
EQUITY Issued capital 15 - - Retained earnings 16 6,202 4,812
Total Equity 6,202 4,812
Notes to the financial statements are included on pages 53 to 73.
50 RACING VICTORIA LIMITED FINANCIAL REPORT
STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2007
INFLOWS/(Outflows) INFLOWS/(Outflows) NOTE 2007 2006 $’000 $’000 Cash flows from operating activities Receipts on behalf of the thoroughbred racing industry 203,620 199,164 Distributions on behalf of clubs (120,096) (117,207) Payments to suppliers and employees (106,683) (103,267) Interest received 247 700 Receipts from other activities 27,863 20,467 Refundable joint venture payment - 2,153
Net cash provided by operating activities 23(c) 4,951 2,010
Cash flows from investing activities Payments for plant & equipment (3,687) (3,070) Payments for Thoroughtrack (10,020) -
Net cash used in investing activities (13,707) (3,070)
Cash flows from financing activities Repayment of borrowings (1,785) (2,026) Proceeds from borrowings 9,054 -
Net cash provided by/(used in) financing activities 7,269 (2,026)
Net increase/(decrease) in cash held (1,487) (3,086)
Cash at beginning of financial year 6,943 10,029
Cash at the end of financial year 23(a) 5,456 6,943
Notes to the financial statements are included on pages 53 to 73.
RACING VICTORIA LIMITED 51 2007 ANNUAL REPORT
STATEMENT OF RECOGNISED INCOME AND EXPENSE
FOR THE FINANCIAL YEAR ENDED 31 JULY 2007
NOTE 2007 2006 $’000 $’000 Actuarial Gain / (Loss) on defined benefit plans 18 1,664 2,103
Net income / (expense) recognised directly in equity 1,664 2,103
Profit / (Loss) for the period (274) (1,187)
Total recognised income and expense for the year 1,390 916
Notes to the financial statements are included on pages 53 to 73.
52 RACING VICTORIA LIMITED FINANCIAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
1. SUMMARY OF ACCOUNTING POLICIES Statement of compliance The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001, applicable Accounting Standards and Urgent Issues Group Interpretations, and complies with other requirements of the law. Accounting Standards include Australian equivalents to International Financial Reporting Standards (‘A-IFRS’). Compliance with the A-IFRS ensures that the financial statements and notes of the company comply with International Financial Reporting Standards (“IFRS’).
The financial statements were authorised for issue by the directors on 1 November 2007.
Basis of preparation The financial report has been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets.
The Company is a company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order amounts in the Financial Report are rounded off to the nearest thousand dollars, unless otherwise indicated.
The financial report has also been prepared in accordance with the terms of various agreements with the Victoria Racing Club, the Members (as defined at (i) and (ii) below) and the racing industry in Victoria as follows:
(i) Establishment of Operations The company was incorporated on 17 December 2001 for the purpose of administering the Victorian thoroughbred racing industry which was previously the responsibility of the Victoria Racing Club (VRC).
On 19 December 2001 the four thoroughbred racing bodies – Victoria Racing Club, Melbourne Racing Club, Moonee Valley Racing Club and Country Racing Victoria (collectively the Members) entered into a Members Agreement with the company. Under this agreement the Members agreed to establish the company as the new Principal Club and governing body for thoroughbred racing in Victoria, to be owned and funded by the Members. The VRC agreed to relinquish its status as the Principal Club and its role as governing body to facilitate the granting to the company of that status and role.
(ii) Thoroughbred Racing Industry Revenue and Distributions The racing industry in Victoria has entered into joint venture and information supply agreements with the TABCORP Group of Companies. Under a Racing Industry Deed of Operations executed on 25 May 1994, the thoroughbred, harness and greyhound racing codes have determined arrangements between themselves including the allocation of joint venture profits and information supply fees. This income is received by the thoroughbred racing industry in the form of a racing program fee, a product supply fee, a marketing fee and the joint venture profit share (refer Note 2(a)).
Following an extensive consultation process the member shareholders and Racing Victoria Limited adopted a revised thoroughbred distribution scheme from 1 August 2005.
The key features of the distribution scheme include:
• Prizemoney funding distributions to members are based on a standard prizemoney funding allocation by race type and funding levels will represent minimum prizemoney levels in future years.
• Clubs and Country Racing Victoria have absolute discretion for setting prizemoney levels and can ‘top up’ prizemoney by applying additional funding from their own operations.
• Incentive arrangements based on on-course turnover and prizemoney top ups by clubs.
RACING VICTORIA LIMITED 53 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
• Racing Victoria Limited is directly accountable to clubs for its efficiency with funding restructured into three components: - core operations - returns to owners - discretionary expenditure
• Race programs set to optimise wagering turnover.
• All industry race day services are managed, controlled and funded by Racing Victoria Limited on behalf of clubs.
• Starters subsidies funded at a consistent level across all Victorian races.
• Workcover costs and ride fees paid by Racing Victoria Limited on behalf of clubs.
• Super Vobis funding indexed by wagering revenue growth annually.
• All races run in Victoria are funded.
(iii) Retained Profits Under the terms of the Members agreement net profit and the ongoing retained profits of the company cannot be distributed as dividends to the Members.
Significant Accounting Policies The following significant accounting policies have been adopted in the preparation and presentation of the financial report:
(a) Borrowings Borrowings are recorded initially at fair value, net of transaction costs. Subsequent to initial recognition, borrowings are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit and loss over the period of the borrowing using the effective interest rate method.
(b) Cash and Cash Equivalents Cash comprises cash on hand and demand deposits. Cash equivalents are short tem, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.
Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
(c) Employee Benefits A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave, and sick leave when it is probable that settlement will be required and they are capable of being measured reliably.
Liabilities recognised in respect of employee benefits expected to be settled within 12 months, are measured at their nominal values, using the remuneration rate expected to apply at the time of settlement.
Liabilities recognised in respect of employee benefits which are not expected to be settled within 12 months, are measured as the present value of the estimated future cash outflows to be made by the company in respect of services provided by employees up to the reporting date.
Defined Contribution Plans Contributions to defined contribution superannuation plans are expensed when incurred.
54 RACING VICTORIA LIMITED FINANCIAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Defined Benefit Plans For defined benefit superannuation plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at each reporting date. Actuarial gains and losses are recognised in full, directly in retained earnings, in the period in which they occur.
Past service is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight line basis over the average period until the benefits become vested.
The defined benefit obligation recognised in the balance sheet represents the present value of the defined benefit, net of the fair value of the plan assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the plan.
(d) Financial Assets Investments are recognised and derecognised on trade date where purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs except for those financial assets classified as at fair value through profit or loss which are initially measured at fair value.
Subsequent to initial recognition, investments in associates are accounted for under the equity method.
Loans and Receivables Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method less impairment interest is recognised by applying effective interest rates.
(e) Financial Instruments issued by the Company Debt and Equity Instruments Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the contractual arrangement.
Interest Interest is classified as an expense consistent with the balance sheet classification of the related debt.
(f) Goods and Services Tax Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:
i. where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense or
ii. for receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.
Cash flows are included in the statement of cash flows on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from or payable to, the taxation authority is classified as operating cash flows.
(g) Impairment of Other Tangible and Intangible Assets At each reporting date, Racing Victoria Limited reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, Racing Victoria Limited estimates the recoverable amount of the cash generating unit to which the asset belongs. Where a reasonable and consistent basis can be identified, corporate assets are also allocated to individual cash generating units, or otherwise they are allocated the smallest group of cash generating units for which a reasonable and consistent allocation basis can be identified.
RACING VICTORIA LIMITED 55 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the reversal of the impairment loss is treated as a revaluation increase.
(h) Intangible Assets Capitalised Software Capitalised software is recorded at cost less accumulated amortisation and impairment. Amortisation is charged on a straight line basis over the estimated useful life of the software being 5 years.
(i) Leased Assets Leased assets are classified as finance leases when terms of the lease transfer subsequentially at the risks and rewards incidental to ownership of the leased asset to the leasee. All other leases are classified as operating leases.
(j) Payables Trade payables and other accounts payable are recognised when the company becomes obliged to make future payments resulting from the purchase of goods and services.
(k) Property, Plant and Equipment Plant and equipment, leasehold improvements and super screens under finance lease are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item. In the event that settlement of all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present value as at the date of acquisition.
Depreciation is provided on property, plant and equipment, including freehold buildings but excluding land. Depreciation is calculated on a straight-line basis so as to write off the net cost or other revalued amount of each asset over its expected useful life to its residual value. Leasehold improvements are depreciated over the period of the lease or estimated useful life; whichever is the shorter, using the straight-line method. The estimated useful lives, residual values and depreciation method is reviewed at the end of each annual reporting period, with effect of any changes recognised on a prospective basis.
The following estimated useful lives are used in the calculation of depreciation:
Buildings and Improvements 40 years Plant and Equipment 3 to 10 years Leasehold Improvements 5 years Equipment under finance lease 5 years
56 RACING VICTORIA LIMITED FINANCIAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
(l) Provisions Provisions are recognised when the company has a present obligation (legal or constructive) as a result of a past event, it is probable that the company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation, the future sacrifice for economic benefits is probable, and the amount of the provision can be measured reliably.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cashflows estimated to settle the present obligation, its carrying amount is the present value of those cashflows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Accident Insurance Fund Prior to 1 September 1985 the Fund was an authorised insurer for the purposes of the Workers Compensation Act 1958. The provision for outstanding claims is disclosed at Note 14. The provision is based on the last actuarial assessment of the outstanding claims of the Fund conducted as at 31 July 2003 by Frank Funder, a fellow of the Institute of Actuaries of Australia and reviewed annually by management having regard for material events impacting the calculation of the provision.
(m) Revenue Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.
Thoroughbred Racing Industry Revenue Revenue is recognised when receivable under the joint venture and information supply agreements with the TABCORP Group of Companies.
Sale of Goods and Disposal of Assets Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
• the company has transferred to the buyer the significant risks and rewards of ownership of the goods;
• the company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
• the amount of revenue can be measured reliably;
• it is probable that the economic benefits associated with the transaction will flow to the entity; and
• the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Rendering of Services Revenue from a contract to provide services is recognised by reference to the stage of completion of the contract. The stage of the contract is determined as follows:
• installation fees are recognised by reference to the stage of completion of the installation, determined as the proportion of the total time expected to install that has elapsed at reporting date;
• servicing fees included in the price of products sold are recognised by reference to the proportion of the total cost of providing the servicing for the product sold, taking into account historical trends in the number of services actually provided on past goods sold;
• revenue from time and material contracts is recognised at the contractual rates as labour hours are delivered and direct expenses incurred.
RACING VICTORIA LIMITED 57 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Contributions of Assets Revenue arising from the contribution of assets is recognised when the company gains control of the contribution or the right to receive the contribution.
Interest Revenue Interest revenue is accrued on a time basis, by reference to the principal outstanding and effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the assets carrying amount.
(n) Income Tax The company is exempt from Income Tax under section 50-45 of the Income Tax Assessment Act.
(o) Critical Accounting Judgements and Key Sources of Estimation Uncertainty In the application of the Company’s accounting policies, which are described above, Management is required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods.
Critical judgements in applying the Company’s accounting policies Judgements made by management in the application of A-IFRS that have significant effects on the financial statements and estimates with a significant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to the financial statements.
Accounting policies are selected and applied in a manner that ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the Balance Sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
Useful lives of Property, Plant & Equipment and Computer Software & Databases As described in note 1(k), the Company reviews the estimated useful lives of property, plant and equipment and equipment at the end of each annual reporting period.
(p) Adoption of New and Revised Accounting Standards In the current year, the Company has adopted all of the new and revised Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current annual reporting period. The adoption of these new and revised Standards and Interpretations has not resulted in changes to the Company’s accounting policies reported for the current and prior years.
(q) Standards and Interpretations in Issue not yet Adopted At the date of authorisation of the financial report, the following Standards and Interpretations were in issue but not yet effective:
- AASB 2007-4 ‘Amendments to Australian Accounting Standards arising from ED 151 and Other amendments’ makes amendments to a number of Australian Accounting Standards to introduce various accounting policy options, delete various disclosures presently required, and to make a number of editorial amendments, effective for the annual reporting periods beginning 1 July 2007.
58 RACING VICTORIA LIMITED FINANCIAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
- AASB 7 ‘Financial Instruments: Disclosure’ and consequential amendments to other accounting standards resulting from its issue, effective for annual reporting periods on or after 1 January 2007.
- AASB 101 ‘Presentation of Financial Statements’ – revised standard, effective for annual reporting periods beginning on or after 1 January 2007.
- AASB Interpretation 10 ‘Interim Financial Reporting and Impairment’, effective for annual reporting periods beginning on or after 1 November 2006.
- AASB 8 ‘Operating Segments’ and consequential amendments to other accounting standards resulting from its issue, effective for annual reporting periods beginning on or after 1 January 2009.
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the Financial Statements of the Company.
The circumstances addressed by Interpretation 10, which prohibits the reversal of certain impairment losses, do not affect the Company’s previously reported results and accordingly, there will be no impact to these Financial Statements on adoption of the Interpretation.
The application of AASB 101 (revised) and AASB 7 will not affect any of the amounts recognised in the Financial Statements, but will change the disclosures presently made in relation to the Company’s financial instruments and the objectives, policies and processes for managing capital. The Company does not intend to change any of its current accounting policies on adoption of AASB 2007-4; accordingly, there will be no financial impact to these Financial Statements. However, in the Company’s Financial Statements for the year ended 31 July 2008, certain information may no longer be disclosed, or may be disclosed in an alternative manner, due to amendments made by AASB 2007-4 to the disclosure requirements of various Accounting Standards. AASB 8 is not expected to have an impact on the financial results of the Company as the standard is only concerned with disclosures. Racing Victoria Limited has not yet assessed the possible impact on the Financial Statements following the consequential amendments to other Accounting Standards resulting from the issue of AASB 8.
These Standards and Interpretations will be first adopted in the Financial Statements of the Company that relates to the annual reporting period beginning after the effective date of pronouncement.
RACING VICTORIA LIMITED 59 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2007
2007 2006 $’000 $’000
2. PROFIT FROM OPERATIONS (a) Revenue: Revenue from continuing operations consisted of the following items: Racing program fee 58,420 54,073 Product supply fee 82,768 78,705 Marketing fee 2,753 2,569 Joint venture profit share 65,365 62,656
Total joint venture revenue 209,306 198,003
Racing industry development program 7,162 5,160 Racing 128 444 Publishing 808 726 Licence fees 496 448 SuperVobis 2,106 2,123 Interest 444 756 Regional services 725 773 Industry service recoveries 1,937 1,724 Rent received 478 256 Other 6,523 3,263
Non-operating revenue: Profit / (loss) has been arrived at after crediting / (charging) the following gains and losses from continuing operations: Shareholder grant 1,000 1,000 Other 65 222
231,178 214,898
(b) Expenses: Profit / (loss) has been arrived at after charging the following expenses. Racing Victoria Limited Operating Expenditure Integrity services 8,275 7,666 Racing 3,197 3,143 Veterinary & swabbing 2,874 2,586 Racing development 5,645 5,623 Information services 3,485 2,899 Legal 941 1,182 Occupancy 1,020 979 Services and administration 6,103 6,254 Depreciation and amortisation 2,436 2,230 Bookmakers development fund 1,087 1,131 Other 1,990 1,962
37,053 35,655
60 RACING VICTORIA LIMITED FINANCIAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2007
2007 2006 $’000 $’000
2. PROFIT FROM OPERATIONS (CONTINUED) Industry Expenditure Marketing & promotion 1,729 1,784 Race day services 8,137 7,787 Special projects allocations 1,019 459 Grants – Australian Racing Museum 1,150 1,450 Stewards video & race telecasting 4,636 4,544 Formguide 1,255 1,314 Training track development 2,711 2,250 Training facilities maintenance funding 8,100 6,406 Jockeys workcover expenses 3,155 3,519 Telecasting (450) 61 SuperVobis 5,155 5,797 Provision for doubtful debts 17 - Riding fees 8,120 6,582 Starters subsidy 4,441 4,270 Legal and consulting 636 774 Other 625 305
50,436 47,302
Total operating and industry expenditure 87,489 82,957
Revenue and expenses from ordinary activities include: Contributions to defined benefit superannuation plan 1,438 1,483 Depreciation of non-current assets: Property, plant and equipment 1,223 1,190 Amortisation of non-current assets: Computer software and databases 1,213 1,040 Operating lease rental expenses 737 630 Operating expenses – other related party: - Australian Racing Museum 1,150 1,450
RACING VICTORIA LIMITED 61 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2007
2007 2006 $’000 $’000
2. PROFIT FROM OPERATIONS (CONTINUED) (c) Distributions: (i) First Distributions: Region Services 541 525 Thoroughbred Country Assistance Fund 9,043 8,531 Picnic racing 493 479 Program variation payments 2,618 2,706 Capital funding 10,064 10,064 Other 131 251
22,890 22,556
(ii) Second Distributions: Country Racing Victoria 42,307 39,886 Melbourne Racing Club 31,055 29,045 Moonee Valley Racing Club 16,502 15,925 Victoria Racing Club 28,587 25,295 Prizemoney Stabilisation 2,904 -
121,355 110,151
Total Distributions: 144,245 132,707
3. SIGNIFICANT ITEMS The net profit includes the following significant items: Contributions to Australian Racing Museum Ltd (1,150) (1,450)
(1,150) (1,450)
4. CURRENT TRADE AND OTHER RECEIVABLES Trade receivables 3,279 4,670 Allowance for doubtful debts (17) -
3,262 4,670 Joint Venture Fees and indexation receivable 5,970 6,313 Joint Venture Profit share receivable 6,308 4,159 Racing Information Services Australia - other related party - 1,698 ThoroughVisioN Pty Ltd – other related party - 1,348 Sundry receivables 3,909 2,419
19,449 20,607
5. OTHER CURRENT ASSETS Prepayments – other 596 672
596 672
62 RACING VICTORIA LIMITED FINANCIAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2007
2007 2006 $’000 $’000
6. OTHER NON-CURRENT FINANCIAL ASSETS At amortised cost: Receivable from Racing Information Services Australia – other related party 2,017 1,403 Training Tracks Capital Receivable (Note 13) 10,020 - Receivable from Australian Racing Museum - other related party 1,875 1,875 - Less allowance for doubtful debts (1,875) (1,875)
12,037 1,403
7. PROPERTY, PLANT AND EQUIPMENT Super Screens Under Hire Plant & Buildings Purchase Equipment at cost at cost at cost Total $’000 $’000 $’000 $’000 Gross carrying amount (at cost) Balance at 31 July 2006 5,909 5,030 5,351 16,290 Additions 1,839 - 164 2,003 Assets written off - - (404) (404)
Balance at 31 July 2007 7,748 5,030 5,111 17,889
Accumulated Depreciation/Amortisation Balance at 31 July 2006 (502) (4,496) (2,750) (7,748) Assets write-off - - 4 4 Depreciation expense (228) (517) (478) (1,223)
Balance at 31 July 2007 (730) (5,013) (3,224) (8,967)
Net Book Value As at 31 July 2006 5,407 534 2,601 8,542
As at 31 July 2007 7,018 17 1,887 8,922
2007 2006 $’000 $’000 Aggregate depreciation allocated whether recognised as an expense or capitalised as part of the carrying amount of other assets during the year. Buildings 228 69 Super Screens 517 1,006 Plant and equipment 478 115
1,223 1,190
RACING VICTORIA LIMITED 63 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2007
2007 2006 $’000 $’000
8. OTHER INTANGIBLE ASSETS Computer Software and databases Gross carrying amount (at cost) Balance at 31 July 2006 12,559 10,772 Additions 2,234 1,787 Disposals (102) -
Balance at 31 July 2007 14,691 12,559
Computer Software and databases Accumulated Amortisation Balance at 31 July 2006 (9,819) (8,779) Amortisation expense (1,213) (1,040)
Balance at 31 July 2007 (11,032) (9,819)
Net Book Value 3,659 2,740
9. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Name of Entity Principal Activity Balance Date Ownership Interest Carrying Amount
Interest in associated entity: 2007 2006 2007 2006 $’000 $’000 Racing Information Services Australia Pty Ltd Racing Information 31/07/2007 35% 42% 3,743 3,740
Significant influence is derived over Racing Information Services Australia Pty Ltd through the Board’s appointment of a nominee director. Pursuant to a shareholder agreement the company has the right to cast 33% of the votes at a shareholder meeting. The company acquired its 42.68% interest in Racing Information Services Australia Pty Ltd on 1 December 2003. On 1 July 2007 Queensland Thoroughbred Racing Board acquired an 18% interest in Racing Information Services Australia Pty Ltd, effectively diluting the interest Racing Victoria Limited has in the Company to 35%.
64 RACING VICTORIA LIMITED FINANCIAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2007
2007 2006 $’000 $’000 9. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)
Movements in investments in associates At the beginning of the financial year 3,740 4,530 Dilution of shareholding (549) (369) Share of operating profit / (loss) 282 (421)
At the end of the financial year 3,473 3,740
Summarised financial position of associates: Current assets: Cash and cash equivalents 1,547 2,516 Trade and other receivables 592 849 Non-current assets: Property, plant and equipment 162 1,732 Trade and other receivables 1,888 1,888 Intangibles 8,203 6,239 Current liabilities: Trade and other payables (635) (2,266) Provisions (89) (48) Non-current liabilities: Borrowings (1,468) (2,037) Provisions (277) (111)
Net Assets 9,923 8,762
Net profit / (loss) 542 (986)
10. CURRENT TRADE AND OTHER PAYABLES Unsecured: Trade payables 9,018 5,469 Stakes accruals 4,272 3,877 Sundry payables 5,816 7,992 Refundable joint venture payment - 2,153 GST payable 216 104 Club distributions 3,302 4,948 Thoroughbred country assistance fund 676 645
23,300 25,188
RACING VICTORIA LIMITED 65 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2007
2007 2006 $’000 $’000
11. CURRENT BORROWINGS Secured at amortised cost: Commercial Bills (i) 1,000 1,000 Training Tracks Facility (i) 360 - Hire purchase (ii) (Note 17(b)) - 785
1,360 1,785
(i) Secured by a fixed and floating charge over the assets of Racing Victoria Limited (ii) Secured by the assets subject to hire purchase, the current market value of which exceeds the value of liability
12. CURRENT PROVISIONS Employee benefits 1,368 1,181 Prizemoney Stabilisation (i) 2,904 -
4,272 1,181
(i) Prizemoney Stabilisation: Balance at beginning of the year - 125 Income support provided on behalf of members 2,904 - Amounts applied on behalf of members - (125)
Balance at end of the year 2,904 -
13. NON-CURRENT BORROWINGS Secured at amortised cost: Commercial Bills (i) 2,000 3,000 Training Tracks Facility (i) (Note 6) 8,694 -
10,694 3,000
(i) Secured by a fixed and floating charge over the assets of Racing Victoria Limited
14. NON-CURRENT PROVISIONS Accident claims (i) (Note 1(l)) 1,804 1,804 Employee benefits 2,533 2,130 Superannuation – Defined Benefit Fund (Note 18) 3,427 4,747
7,764 8,681
(i) Accident claims Balance at beginning of the year 1,804 1,804
Balance at end of the year 1,804 1,804
15. ISSUED CAPITAL The company is a company limited by guarantee. Every member undertakes to and must contribute an amount not exceeding $10 in the event of the winding up of the company.
66 RACING VICTORIA LIMITED FINANCIAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2007
2007 2006 $’000 $’000
16. RETAINED EARNINGS Balance at beginning of financial period 4,812 4,541 Adjustment on adoption of accounting policies specified by AASB 132 and AASB 139 (Note 18) - (645) Actuarial gains/(losses) 1,664 2,103 Net Profit/(Loss) (274) (1,187)
Balance at end of financial period 6,202 4,812
17. COMMITMENTS FOR EXPENDITURE (a) Non-cancellable operating leases: Not later than 1 year 795 630 Later than 1 year but not later than 5 years 1,066 -
1,861 630
Operating leases relate to the leasing of motor vehicles. The term of each individual lease is between one and three years. These lease agreements are not subject to rental adjustments. (b) Hire purchase liabilities: No later than 1 year - 807 Later than 1 year and not later than 5 years - -
Minimum hire purchase payments - 807
Deduct future hire purchase charges - 22
Hire purchase liabilities - 785
Included in the financial statements as borrowings: Current (Note 11) - 785
- 785
The hire purchase liabilities relate to the hire purchase of super screens. The term of each individual hire purchase agreement is 5 years. (c) The company has undertaken to provide financial support to the Australian Racing Museum to a maximum of $1,100,000 during 2007/08.
RACING VICTORIA LIMITED 67 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
18. SUPERANNUATION COMMITMENTS The employees of the company are members of Victorian Racing Industry Superannuation Fund, which also includes employees of the Victoria Racing Club and Country Racing Victoria. The fund has a composition of defined benefit and accumulation membership.
Under the defined benefit plan, employees are entitled to retirement benefits based on a multiple of their deemed final salary upon attainment of their retirement age of 60. No other post-retirement benefits are provided to these employees.
The defined benefit plans are funded plans. The superannuation plans compute their obligations in accordance with Accounting Standard AAS 25 “Financial Reporting by Superannuation Plans” which prescribes a different measurement basis to that applied in this financial report. The net surplus determined in the plans most recent financial report, being the annual reports for the financial year ended 30 June 2007, was $3,427,000 (2006: $4,747,000). The plan actuaries have not recommended that additional contributions beyond the current contribution level be made. Funding recommendations are made by the actuaries based on their forecast of various matters, including future plan assets performance, interest rates and salary increases.
The company has a legal liability to make up a deficit in the plans but no legal right to use any surplus in the plans to further its own interests.
2007 2006 %% Key Assumptions used (expressed as weighted averages) Discount rate gross of tax 6.0 5.8 Discount rate net of tax 5.1 4.9 Expected return on plan assets 7.0 7.0 Expected rate of salary increase 4.5 4.5
2007 2006 $’000 $’000 Amounts recognised in income in respect of these defined benefit plans are as follows: Current service cost 1,654 1,716 Interest cost 989 886 Expected return on plan assets (1,205) (1,119)
Total including employee benefit expense 1,438 1,483
Actuarial gains / (losses) incurred during the year and recognised in the statement of recognised income and expense 1,664 2,103
Cumulative actuarial gains / (losses) recognised in the statement of recognised income and expense 3,209 1,543
68 RACING VICTORIA LIMITED FINANCIAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
2007 2006 $’000 $’000
18. SUPERANNUATION COMMITMENTS (CONTINUED) The amount included in the balance sheet arising from the company’s obligations in respect of its defined benefit plan is as follows: Present value of funded defined benefit obligations (22,600) (22,565) Fair value of plan assets 19,173 17,818
Net asset / (liability) arising from defined benefit obligations (3,427) (4,747)
Included in the balance sheet: Non-current provision for employee benefits (Note 14): Superannuation - defined benefit fund 3,427 4,747
Net liability arising from defined benefit obligations 3,427 4,747
Movement in the present value of defined benefit obligations in the current period were as follows: Opening defined benefit obligation (22,565) (22,470) Current service cost (1,654) (1,716) Interest cost (988) (886) Contribution from plan participants (249) (134) Actuarial (gains) / losses 1,128 1,406 Benefits and tax paid 906 1,235 Notional liability transfer to RISA 822 -
Closing defined benefit obligation (22,600) (22,565)
Movement in the present value of plan assets in the current period were as follows: Opening fair value of plan assets 17,818 15,986 Expected return on assets 1,205 1,120 Actuarial gains / (losses) 538 697 Contributions from the employer 1,091 1,116 Contributions from plan participants 249 134 Benefits and tax paid (906) (1,235) Notional asset transfer to RISA (822) -
Closing fair value of plan assets 19,173 17,818
The actual return on plan assets was $1,664,000 (2006: ($2,103,000)). The company expects to make a contribution of $1,048,000 to the defined benefit plans during the next financial year. In accordance with actuarial recommendations, the employer currently contributes 18% of employees salaries. Employees contribute between 0% and 5% of salary.
The history of experience adjustments is as follows:
Experience adjustments on plan liabilities 774 137 Experience adjustments on plan assets 538 697
RACING VICTORIA LIMITED 69 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
2007 2006 $’000 $’000
18. SUPERANNUATION COMMITMENTS (CONTINUED) Fair Value of Plan Assets: Equity Instruments 11,312 10,512 Debt Instruments 5,369 4,989 Property 1,917 1,782 Other 575 535
19,173 17,818
2007 2006 %% The analysis of the plan assets and the expected rate of return at the balance sheet date is as follows Equity Instruments 7.75 7.75 Debt Instruments 5.5 5.5 Property 7 7 Other 77
Fair value of plan assets The Fair value of plan assets includes no amounts relating to: • Any of the employers own financial instruments • Any property occupied by, or other assets used by, the employer.
Expected rate of return on plan assets The expected return on plan assets assumptions is determined by weighing the expected long-term return for each asset class by the target allocation to each class. The returns used for each class are net of investment tax and fees.
Nature of Superannuation asset / liability The employer has recognised a liability in the balance sheet in respect of its defined benefit superannuation arrangements. If a surplus exists in the Plan, the employer may be able to utilise this by way of reduced contributions, depending on the advice of the Plan’s actuary
70 RACING VICTORIA LIMITED FINANCIAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
2007 2006 $’000 $’000
19. KEY MANAGEMENT PERSONNEL REMUNERATION The aggregate compensation of the key management personnel, including directors of the company, is set out below: Short-term employee benefits 2,312,080 2,272,951 Post-employment benefits 459,151 369,320
2,771,231 2,642,271
20. REMUNERATION OF AUDITORS Audit 89,500 85,500 Audit of A-IFRS - 12,500
89,500 98,000
21. SEGMENT REPORTING The company operates in the thoroughbred racing industry in the State of Victoria.
22. RELATED PARTY DISCLOSURES
(a) Equity interests in associates and joint ventures Details of interests in associates and joint venture are disclosed in note 9 to the financial statements.
(b) Key management personnel compensation Details of key management personnel compensation including directors are disclosed in Note 19 to the financial statements
(c) Transactions with key management personnel Certain directors participate in the thoroughbred racing industry via means of ownership of race horses either individually or through related entities. This involvement is on terms and conditions no more favourable than other participants in the thoroughbred racing industry.
(d) Other Related party disclosures Transactions with key management personnel and their related entities The net profit reported in the Income Statement in 2007 includes expenses in relation to activities paid by Racing Victoria Limited on behalf of the Australian Racing Museum Ltd (director related entity) totalling $1,150,000 (2006: $1,450,000). In addition the company paid for services provided by the Australian Racing Museum in relation to education and public program and owners development totalling $720,000. These expenses were incurred only after approval by the Racing Victoria Limited board. During the financial year the company also provided administrative services to the entity on normal commercial terms and conditions as agreed by the parties. Aggregate amounts receivable from director related entities are disclosed in Notes 4 and 6 to the financial statements.
RACING VICTORIA LIMITED 71 2007 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
2007 2006 $’000 $’000
23. NOTES TO THE STATEMENT OF CASH FLOWS (a) Reconciliation of cash For the purpose of the statement of cash flows, cash and cash equivalents includes cash on hand and in banks and investments, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the balance sheet as follows: Cash at bank 5,456 6,943
(b) Financing facilities Commercial bill facility: - amount used 3,000 4,000 - amount unused 3,000 2,000
6,000 6,000
Short term advance facility: - amount used - - - amount unused 4,000 -
4,000 -
Lease and hire purchase, reviewed annually: - amount used - 785 - amount unused 3,000 2,215
3,000 3,000
(c) Reconciliation of net profit to net cash flows from operating activities Profit/(Loss) from ordinary activities (274) (1,187) Share of associates profit (282) 421 Depreciation & amortisation of non-current assets 2,436 2,230 Allowance for doubtful debts – general 17 - Defined benefit plan expense 347 367 RISA restructure expenses - 161 RISA restructure special distribution - (668) RISA restructure receivable writedown - 1,146 Interest income - (222) Changes in net assets & liabilities:
(Increase)/Decrease in: Receivables 1,139 4,772 Prepayments 76 80
Increase/(Decrease) in: Payables (2,002) (4,951) Prizemoney Stabilisation 2,904 (125) Provisions 590 (14)
Net cash provided by operating activities 4,951 2,010
72 RACING VICTORIA LIMITED FINANCIAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
24. FINANCIAL INSTRUMENTS The company has adopted the policy of only dealing with creditworthy counterparts and obtaining sufficient security where appropriate, as a means of mitigating the risk of financial loss.
Short term deposits are carried at cost. Interest revenue is recognised on an effective yield basis.
Cash assets of $5,456,000 and interest bearing liabilities of $12,054,000 are subject to interest rate risk. At 31 July 2007 the cash assets had an average applicable interest rate of 6.25% and interest bearing liabilities an average applicable interest rate of 7.65%. There were no other financial assets or liabilities in the Statement of Financial Position subject to such risk at 31 July 2007.
The carrying value of the financial assets and liabilities in the Statement of Financial Position represent their fair net values.
25. CONTINGENT LIABILITY Under the Deed of Contribution and Indemnity with the Victoria Racing Club, the company has indemnified the Victoria Racing Club against any claims against the Victoria Racing Club arising from its previous operation of the thoroughbred racing industry in Victoria.
Racing Victoria Limited has guaranteed a loan facility of Australian Racing Museum Limited totalling $500,000.
26. SUBSEQUENT EVENTS Equine Influenza The outbreak of equine influenza in NSW and QLD in August 2007 is likely to have a negative impact on the future financial performance and financial position of the company, the extent of which cannot be quantified as at the date of this report.
Sportsbet Litigation Litigation has commenced in the Federal Court of Australia against the company (and others) on 24 September 2007, relating to a dispute with Sportsbet Pty Ltd who has made claims against the company’s conduct relating to implementation of the race fields provisions (s.2.3.16A of the Gaming Regulation Act 2003 (Vic)). The claims include damages of $1,699,552. The directors are of the opinion that the claims can be successfully defended by the company.
27. ADDITIONAL COMPANY INFORMATION Racing Victoria Limited is a company incorporated and operating in Australia. Principal Registered Office and Principal Place of Business Racing Victoria Limited 400 Epsom Road Flemington Victoria 3031 Telephone: (03) 9258 4258 www.racingvictoria.net.au
RACING VICTORIA LIMITED 73 Racing Victoria Limited 400 Epsom Road Flemington Victoria 3031 Telephone: (03) 9258 4258 Fax: (03) 9258 4707 Web: www.racingvictoria.net.au Email: [email protected]