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2019 ANNUAL REPORT CONTENTS

Victorian by the Numbers 4 Chairman’s Report 6 CEO Report 8 Member Stakeholders 10 Strategic Framework 11 Racing and Programming 12 Racing Snapshot 15 Prizemoney 18 Owners and Breeders 19 Participants 20 Equine Welfare 22 Integrity 26 Infrastructure 30 Community 32 Diversity and Inclusion 34 Clubs 36 Wagering 39 Media 40 Racing.com 42 Investments and Industry Sustainability Fund 44 Directors’ Report 46 Lead Auditor’s Independence Declaration 56 Independent Auditor’s Report 57 Directors’ Declaration 60 Consolidated Statement of Surplus or Deficit and Other Comprehensive Income 61 Consolidated Statement of Financial Position 62 Consolidated Statement of Cash Flows 63 Consolidated Statement of Changes in Equity 64 Notes to the Financial Statements 65

Racing Limited ACN 096 917 930 Annual Report for the financial period ended 30 June 2019

Page 2 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 3 VICTORIAN THOROUGHBRED RACING BY THE NUMBERS VICTORIAN THOROUGHBRED RACING BY THE NUMBERS

$1.55B ECONOMIC BENEFIT IN REGIONAL AREAS 71,388 1.38M $ ATTENDEES OWNERS 3.20B $ ECONOMIC IMPACT M+ 3,518 INDUSTRY50 SPEND PER ANNUM ON 25,157 INFRASTRUCTURE FULL TIME STABLE EQUIVALENT JOBS EMPLOYEES $7.02 B TOTAL WAGERING CHANNEL 7 TURNOVER AUDIENCE 548 M OVER THE RACE MEETINGS 4.23 VIEWERS 2018

$ 294 762M 67 JOCKEYS RACETRACKS 8,808 994 ECONOMIC BENEFIT INDIVIDUAL COMPETING HORSES TRAINERS

Page 4 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 5 CHAIRMAN’S REPORT CHAIRMAN’S REPORT

I commend to you Racing Victoria’s 2019 Annual In mid-2019, we were pleased to endorse a We are fortunate to have a Minister for Racing in Report which provides a detailed overview of our three-year Equine Welfare Strategic Plan and Martin Pakula who is a passionate advocate for performance across the 12 months ending 30 June subsequent to the end of the financial year to racing and committed to its sustained success and 2019 and more broadly the health of the Victorian commit to a minimum $25 million spend across we thank him for his ongoing support. thoroughbred racing industry. three years to accelerate its implementation. Our achievements over the past 12 months would This report details another strong financial Based on the level of support we have received not have been possible without the valuable performance in a year in which we offered record both within and outside the racing industry since commitment that each and every participant prizemoney and delivered targeted industry announcing our commitment, I am confident that makes, and I want to thank them for their passion investments to grow the sport and ensure safe and together we can deliver the highest levels of care and dedication. competitive racing. to our horses before, during and after racing. The horses are the heroes of our sport and we must On behalf of the Board, I also want to thank our Over the past 12 months, the Board has been treat them as such. Chief Executive Giles Thompson, his executive team focused on continuing to deliver improvements and all the staff who have worked tirelessly in the in the areas of integrity, equine welfare and During 2018-19, participation within Victorian racing best interests of the industry throughout the year. participant wellbeing. remained exceptional with nation-high attendances, ownership, wagering and international competition The thoroughbred racing industry is a valuable An integrity services review completed in the first recorded. contributor to the state of Victoria delivering over Brian Kruger half of the financial year laid the foundation for $3.2 billion in annual economic benefit and the Chairman resourcing and technology advancements to ensure In addition, we were able to reward our participants equivalent of 25,000 full-time jobs. that we remained best equipped to deliver a level with significant prizemoney increases and continue playing field for all. to offer the highest average prizemoney per race in As well as the economic benefits, racing remains an . integral component of our social fabric, particularly In addition, the Board led a project to review culture throughout country Victoria where it continues to and behaviours within the sport and to consider A bold and diverse footprint remains important to unite communities and support local businesses additional changes in policies and practices that our future in Victoria, which is why we were also and associations. would assist in the prevention of integrity breaches. pleased to increase prizemoney for every Country Cup across the 2018-19 racing season. As an industry, we are likely to face a number of Known as Fair Racing For All, the project engaged challenges in the 12 months ahead, be it delivering a broad range of stakeholders, both within and On the racetrack, Winx’s historic fourth Cox Plate ongoing improvements in equine and participant outside racing, to ultimately deliver a series of and Godolphin’s breakthrough victory in the welfare and integrity reforms; or responding recommendations aimed at promoting a culture Cup with after more than to a very dynamic wagering market and other of fair play and ethical behaviours. 25 years of trying were standouts. The performance competitive pressures. of Linda Meech to become the first female rider to We are working to implement many of these claim the Victorian jockeys’ premiership was equally The engagement of current and future generations recommendations, which include enhanced special. of racing fans is a key to our ongoing viability and licensing standards and compulsory professional the manner in which we address integrity, equine development, for the next licensing period Maintaining our national primacy is a focus for the welfare and participant wellbeing will be pivotal to commencing mid-2020. Board and also the Victorian Government and I us remaining an entertainment and employment want to take this opportunity to acknowledge the option of choice. Leading the Fair Racing For All project was our Government for their continued assistance. Director and wonderful friend Michael Andrew AO, I can assure you that the Board, management and whom we tragically lost to illness in June. Michael That assistance comes through the Victorian staff at Racing Victoria will do our best to deal with was an incredibly hard-working, passionate and Racing Industry Fund, which has facilitated many those challenges and maintain Victoria’s position as astute member of the Board, who was deeply key programs, infrastructure upgrades and events one of the leading racing jurisdictions in , committed to improving the integrity of the sport. across the state this past year, as well as supporting both on and off the track. the delivery of our prizemoney increases. We know that Michael’s legacy will, among other things, live on in the benefits that the Fair Racing For All recommendations deliver in enhancing integrity, culture and behaviours in our sport for future generations.

Page 6 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 7 CEO REPORT CEO REPORT

It is with pleasure that I provide an overview of the A $17.5 million investment was also announced Whilst there has been much to celebrate across the performance of Racing Victoria and the Victorian in FY19 by the State Government to create new past 12 months, there remains increasing pressure thoroughbred racing industry in the 2018-19 facilities at regional training centres as part of a on all industry stakeholders to deliver the highest financial year (FY19). $40.1 million joint funding package that will support standards of integrity and equine welfare. the relocation of Caulfield trainers by the end of In summary, Victorian thoroughbred racing has 2023. To that end, we were pleased to work with the State worked hard to maintain its customer engagement, Government across FY19 in developing the Victorian while delivering record prizemoney returns for There was a continuing focus in FY19 on participant Racing Integrity Board and Victorian Racing Tribunal participants and a strong surplus for the seventh support with $25.6 million – up 1.7% – directed which both took effect in August 2019. consecutive year. towards jockey ride fees, jockey WorkCover, workforce development and welfare initiatives. Implementing the recommendations of our Fair We achieved a net surplus of $8.8 million for FY19 Racing For All project and an accelerated Equine while facilitating a significant targeted increase in The core racing product was well received by Welfare Strategic Plan will be a focus of FY20, as expenditure across prizemoney, infrastructure, risk punters with customers driving turnover on will monitoring an evolving wagering market. management and club funding. Victorian racing to a record $7.02 billion, a 9.4% increase on the previous year. The Point of Consumption Tax introduced on 1 We have also sustained a strong balance sheet, one January 2019 is starting to impact wagering on which ensures that we retain funds to safeguard Off the back of unparalleled promotions and Victorian racing as foreshadowed, which means the Giles Thompson the sport in the face of emerging challenges with generosities from Wagering Service Providers outcome of a legislated Government review in 2020 Chief Executive managed funds under investment growing to $81.4 (WSPs), wagering turnover increased across both will be critical. million at the conclusion of FY19. the 2018 Spring Racing Carnival (up 8.1%) and the 2019 Festival of Racing (up 12.2%). There is also much work to be done on our media Revenue grew by 8.8% to $465.5 million, driven and wagering frameworks with rights agreements principally by Government funding support for We were excited to launch Australia’s first fan-voted nearing their expiry and the Government embarking prizemoney increases which saw an additional race, The All-Star Mile, during the Festival of Racing on its process for the allocation of the post-2024 $23.8 million (+12.2%) paid out to a broad range of which, at $5 million, was the world’s richest mile race. Wagering Licence. participants. This unique race was launched to foster fan In summary, FY20 will be a challenging one for Total prizemoney of $236.3 million was paid by the engagement and it did just that with close to Victorian racing as we face a range of regulatory, industry for the period ($219.2 million from Racing 140,000 eligible votes deciding 10 of the 14 starters, trading and taxation headwinds, as well as Victoria, $12.6 million in Club and other top ups, while more than 16,000 witnessed a fairy-tale win competition from other jurisdictions which is $4.5m in welfare contributions), representing a 43% by Tasmanian filly Mystic Journey at Flemington. being exacerbated by differences in funding increase in prizemoney paid since FY15. arrangements between the States. Accordingly, Engagement numbers were strong across the we’ll be working proactively with all stakeholders In addition to substantial prizemoney increases, year with attendances increasing by 3.3% to 1.4 to ensure we can continue to deliver sustainable we continued to increase our commitment to million attendees, while the number of owners funding for the industry into the future. integrity, equine welfare, participant wellbeing and participating in Victorian racing grew by 6.0% to infrastructure funding which saw industry funding 71,388. In delivering this report, I want to acknowledge the expenditure rise from 73% to 75% of revenue in support and guidance afforded by Brian Kruger and FY19. The 69 race clubs across Victoria each play a crucial our Directors as we implement a range of strategies role in delivering an enjoyable customer experience to secure the future of the sport whilst rewarding Infrastructure expenditure increased by $8.9 million and they are again to be commended for their our current participants and customers. to $22.4 million (66.1%) which reflects investments efforts. and grants to improve and upgrade facilities right A heartfelt thanks to my executive team and the across the state of Victoria. FY19 was a year in which we saw major progress wider Racing Victoria staff for their passion and on the metropolitan clubs’ master plans with dedication to serve the industry and achieve great Key projects included major synthetic track works the launch of the wonderful new Club Stand at outcomes. at , Flemington and Mornington, sand-fibre Flemington; the commencement of works on the track works at Wangaratta and Seymour, and track Moonee Valley development; and the unveiling Finally, I want to acknowledge our customers for widening works at Kilmore and . of the ’s plans for a major their on-going support of Victorian racing and redevelopment of Caulfield. thank our clubs, participants and stakeholders for their sustained contribution.

Page 8 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 9 MEMBER STAKEHOLDERS STRATEGIC FRAMEWORK

Racing Victoria is a public company limited by guarantee which was established in 2001 to provide Racing Victoria’s Strategic Framework has been developed in consultation with key stakeholders, providing independent governance of the Victorian thoroughbred racing industry. consideration to the current state of the industry and some of the longer-term issues and opportunities impacting the sport in Victoria, while outlining a path for future growth and success. Our objectives are to develop, encourage, promote and manage the conduct of thoroughbred racing by encouraging broad participation and sustainably growing the industry’s economic and social value. OUR VISION: OUR PURPOSE: Racing Victoria has 14 constituent members comprising: “RACING FOR ALL” To champion great in Victoria More people, more often, and lead a financially sustainable thoroughbred engaging and enjoying our sport. racing industry. CLUB MEMBERS

OUR STRATEGIC FRAMEWORK IS BUILT ON FIVE KEY ELEMENTS TO DELIVER SUCCESS:

CO N T G HE HORSE E IN T N R T E & G M A E W ANT W D ICIP ELF I RT AR A THE BEST RACING PA E P Delivering our Sport G A N R I E S T INDUSTRY BODY MEMBERS C & A I M N W F C E E E M L L I L L T P Y A E B A NTER E R C U S P I N THE CUSTOMER X N G T E G O S

Why we're here R

P

S F E A R Q N E N U S T H W I O N N O E Y E N T M I THE RIGHT TO EXIST E W E R OUR VALUES ST G E Y A G Non-negotiables L G E How the business behaves F EN T A N R I E IN C F Y O R T A I L S S S L T B R A R U E B U L V THE ENABLERS O CT C I R UR D A E & T T What we need IO N N LE TA

WE HAVE IDENTIFIED FIVE KEY PRIORITY AREAS OF FOCUS united voice

Customer growth and Delivering Strengthening Maximising our Living and deeper engagement the best racing participant and equine key enablers breathing our welfare and integrity values

Page 10 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 11 RACING AND PROGRAMMING RACING AND PROGRAMMING

A total of 4,420 races were conducted across 548 2018 SPRING RACING CARNIVAL The Spring Racing Carnival television ratings on THE ALL-STAR MILE race meetings during the 2018-19 racing season Channel 7 / grew by over 8% with the daily ending 31 July 2019, with 80% of those held outside Victoria’s three-month Spring Racing Carnival average audiences combined to top four million The $5 million All-Star Mile was an exciting new metropolitan Melbourne. started in style with the $1 million viewers. concept introduced in the 2018-19 racing season to (1400m) at Caulfield. From there racing fans were give fans control of the racehorses who competed treated to top class thoroughbred racing, including Country racing welcomed great support from in the world’s richest mile race. ATTENDANCE 132 race meetings, 21 Group 1 races and 27 Country racegoers and punters across the Carnival period Cups across the months of September, October and with feature meeting attendances up 2.9%, The race attracted 140,000 eligible votes and more Thoroughbred racing in Victoria continues to be November 2018. headlined by major increases at the Cranbourne than 16,000 people attended Flemington to witness well supported at the track with 1,386,112 people (up 21%), Dunkeld (up 24%), Geelong (up 10%) emerging Tasmanian star Mystic Journey secure a attending race meetings across the 2018-19 racing The story of spring was mighty mare Winx who and Hamilton (up 36%) Cup meetings. fairy-tale victory. season. didn’t disappoint when winning a record fourth Cox Plate (2040m). The seven-year-old finished The All-Star Mile raceday also proved popular with The nation leading attendance numbers increased her career in April 2019 with 33 straight wins, a FESTIVAL OF RACING punters who wagered $65.9 million on the meeting by 4.1%, which can be partly attributable to the record 25 Group 1 victories and nearly $27 million – a 52% increase on the turnover amassed by the opening of the new Club Stand at Flemington. in prizemoney. The nation’s best gallopers descended on Victoria Blamey Stakes in the same timeslot a year prior. across February and March to compete in nine Country attendances grew by 1.2% to 570,754 while The (3200m) saw the first British Group 1 races including the $1.5 million Blue To foster fan engagement voters were given the metropolitan attendances jumped by 6.2% after full victory in Australia's great race with Cross Counter Diamond Stakes (1200m), the $1 million Australian chance to share in $500,000 worth of prizemoney capacity was returned to Flemington in time for the delivering Godolphin their first victory after 26 Guineas (1600m) and the $1.5 million Australian with each of the 14 runners assigned a lucky ‘Owner and the introduction of The years of trying. They earlier secured their second Cup (2000m). Ambassador’ from the voting pool. With each All-Star Mile during the autumn Festival of Racing. (2400m) with British stayer Best ambassador guaranteed $10,000, it was Ballarat- Solution courtesy of a bold ride from Pat Cosgrave. Tasmanian filly Mystic Journey’s impressive victory based Damien Murnane who celebrated hardest in Guineas at Flemington delivered securing the $250,000 first prize as the Owner Total attendance across Victoria: Victoria continued to attract the world’s best horses trainer Adam Trinder and jockey Anthony Darmanin Ambassador for Mystic Journey. with the Carnival welcoming its 250th international their maiden Group 1 titles, which was in contrast to competitor which added further global interest to the David and Ben Hayes and Tom Dabernig-trained With hosting duties rotated across a trio of 2018-19 1.38M Australia’s premier racing carnival. More than $80 Harlem which landed back-to-back Australian Cups. metropolitan tracks, the second edition of The All- million in prizemoney and bonuses was paid out Star Mile will be run at on 14 2017-18 for the first time and there was an increase in the The Festival of Racing also showcased 13 Country March 2020 before The Valley takes over hosting 1.33M average field sizes across all meetings from 10 to Cups with the annual feature meetings at Echuca duties in 2021. 0.8M 1M 1.2M 1.4M 10.2 starters. (up 44%), Stony Creek (up 23%), Colac (up 18%) and Edenhope (up 13%) all enjoying large increases in attendance.

Page 12 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 13 RACING AND PROGRAMMING RACING SNAPSHOT

(1 AUGUST 2018 TO 31 JULY 2019)

2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 OTHER RACING INITIATIVES Metropolitan field sizes continue to be the highest PARTICIPANT NUMBERS* nationally at an average of 10.6 starters per race, Individual Starters 8,957 8,749 8,780 8,827 8,754 8,820 8,808 The introduction of a new seven-race three-year-old while country field sizes sit marginally above the Individual Trainers 1,120 1,104 1,074 1,070 1,071 1,020 994 stayers’ series from May to July offered a combined national average at 9.7 starters. $875,000 in prizemoney and further cemented Individual Jockeys 335 325 330 317 291 280 294 Victoria’s position as the home of the stayer. Importantly, Victoria also maintained the lowest NUMBER OF MEETINGS CONDUCTED percentage (14.3%) of races nationally with less Country** 417 410 409 411 410 411 409 A revamped The Andrew Ramsden was launched than eight starters. Metro 115 110 109 108 110 109 111 in May 2019 with the coveted attraction of a ballot exemption into the Melbourne Cup for the winner. Picnic 34 34 31 31 31 29 28 Converted to a race for three, four and five-year old Total 566 554 549 550 551 549 548 stayers over 2800m it was emerging import Steel Average field sizes in NUMBER OF ABANDONED MEETINGS*** Prince who had his connections celebrating wildly Metropolitan TAB races: Country 13 18 12 14 13 15 19 with winning jockey post-race. Metro 2 1 1 2 3 0 0 2018-19 VICTORIA After three years in the making, the inaugural 10.6 STARTERS Total 15 19 13 16 16 15 19 Jericho Cup (4600m) was held in December at 2018-19 NATIONAL AVERAGE NUMBER OF TRANSFERRED MEETINGS Warrnambool. The brainchild of philanthropist Bill 9.9 STARTERS Country 42 46 48 42 43 16 21 Gibbins, the race celebrated 100 years since the Australian Light Horse Brigade staged the Jericho 0 2 4 6 8 10 12 Metro 0 7 15 6 2 0 0 Cup in Palestine during World War I. Australia’s Total 42 53 63 48 45 16 21 longest flat race carried prizemoney of $300,000 NUMBER OF NIGHT MEETINGS and was comfortably won by the Anthony Country 15 13 20 26 41 37 39 Freedman-trained High Mode. Average field sizes in Metro 18 17 16 16 16 16 17 Country TAB races: Total 33 30 36 42 57 53 56

FIELD SIZES 2018-19 VICTORIA NUMBER OF SYNTHETIC MEETINGS 9.7 STARTERS Country 41 37 38 49 43 40 40 A primary business objective is to maximise field 2018-19 NATIONAL AVERAGE Metro 0 0 0 0 0 0 0 sizes to stimulate the growth of wagering and 9.6 STARTERS encourage competitive racing. This is achieved Total 41 37 38 49 43 40 40 through continual refinement of the racing program 0 2 4 6 8 10 12 NUMBER OF RACES to best suit the racing population and the needs Country** 3,301 3,202 3,223 3,301 3,313 3,304 3,295 of trainers. Metro 922 901 932 926 931 940 952 Picnic 205 204 187 182 187 174 173 Total 4,428 4,307 4,342 4,409 4,431 4,418 4,420 NUMBER OF STARTERS Country** 32,285 30,905 31,519 32,593 32,390 32,447 32,073 Metro 9,625 9,842 10,249 10,062 9,886 10,053 10,119 Picnic 1,201 1,209 1,159 1,233 1,219 1,176 1,160 Total 43,111 41,956 42,927 43,888 43,495 43,676 43,352 AVERAGE FIELD SIZES Country** 9.8 9.7 9.8 9.9 9.8 9.8 9.7 Metro 10.4 10.9 11.0 10.9 10.6 10.7 10.6 Picnic 5.9 5.9 6.2 6.8 6.5 6.8 6.7 Total 9.7 9.7 9.9 10.0 9.8 9.9 9.8

* Includes participants licensed in Victoria and visitors from out of state ** Includes TAB and non-TAB country meetings *** Includes full and partially abandoned meetings

Page 14 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 15 RACING SNAPSHOT

2018-19 VICTORIAN RACING AWARD WINNERS

Scobie Breasley Medal Damien Oliver

Fred Hoysted Medal Chris Waller

Tommy Corrigan Medal Shane Jackson

Victorian Racehorse of the Year Winx

Colin Alderson Rising Star Matt Cumani

Roy Higgins Medal Craig Williams

2018-19 PREMIERSHIP WINNERS

Metropolitan Trainer David and Ben Hayes and Tom Dabernig Wins 64

Metropolitan Jockey Craig Williams Wins 63

Metropolitan Apprentice Michael Poy Wins 32

Victorian Trainer David and Ben Hayes and Tom Dabernig Wins 222

Victorian Jockey Linda Meech Wins 139

Victorian Apprentice Michael Poy Wins 79

Country Trainer David and Ben Hayes and Tom Dabernig Wins 158(1)

Country Jockey Linda Meech Wins 114

Country Apprentice Teo Nugent Wins 70(1)

Picnic Trainer Don Dwyer Wins 15

Picnic Jockey Shaun Cooper Wins 31

Jumps Trainer Patrick Payne Wins 17

Jumps Jockey Steven Pateman Wins 18

Note: Individual race dead heats are indicated within brackets.

Page 16 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 17 PRIZEMONEY OWNERS AND BREEDERS

Total prizemoney of $236.2 million was paid by the This mid-season prizemoney injection also OWNERS BREEDERS industry across FY19, representing a 43% increase ensured that Victoria remains the destination to in prizemoney paid since 2015. Of prizemoney race a stayer or a three-year-old with Saturday Ownership reached a five year high with 71,388 The Victorian Owners and Breeders Incentive won across the year, 42% was secured at country metropolitan minimums rising to a record $135,000 Victorian Owners Gold Card holders in the 2018-19 Scheme (VOBIS) remains integral to the Victorian meetings and 58% at metropolitan meetings. per race for each. racing season. This growth rewarded an ongoing breeding industry, rewarding those who choose to commitment to enhance the owners experience to breed, buy, own and race in Victoria. The VOBIS Victoria maintained its position as a national leader Victoria’s marquee races also received major ensure Victorian racing remains an industry leader program collectively offered more than $24 million with average prizemoney and bonuses on offer per prizemoney increases ahead of the 2018 Spring in participation. in prizemoney and bonuses across the 2018-19 race rising to more than $56,000 in FY19, with an Racing Carnival, with the Victoria Racing Club racing season. average $453,000 on offer per race meeting. offering $7.3 million in total prizemoney for the Raceday events and other value additions continue 2018 Melbourne Cup – up from $6.25 million the to be the focus of the business to drive owner The inaugural running of ‘The Showdown’ at Wide ranging prizemoney increases of $12.4 million year before. In addition, prizemoney for the Cox engagement and retention. This also includes the Caulfield Racecourse in April 2019 was a great commenced at the start of the 2018-19 racing Plate and Caulfield Cup were both increased by digital transformation of communication methods collaboration between Racing Victoria and season on 1 August 2018, with a further two-year $2 million to $5 million apiece. to be automated and tailored to individual owners. Thoroughbred Breeders Victoria to continue $40 million increase confirmed upon the re-election growing participation. The $1 million two-year-old of the Labor Government in November 2018. Country racing also received a boost, with an Expanded services to owners included the race is open exclusively to the progeny of VOBIS additional $1.2 million invested to ensure a commencement of a new email and SMS Sires’ nominated stallions, with the Matt Laurie- That prizemoney boost took effect from 1 January prizemoney increase was delivered for every communication service around official trials. trained Prince of Sussex, a son of Swettenham 2019 and ensured participants at all levels were Country Cup during the 2018-19 racing season. The free initiative includes pre and post-trial Stud stallion Toronado, proving triumphant. rewarded, thanks to the Government commitment notifications, including a replay, and complements of $33 million and a $7 million boost from Racing Looking ahead to FY20, a further $13.2 million in the valuable information many trainers currently This commitment to VOBIS Sires helps pave the Victoria to support an increase to minimum prizemoney and bonuses was announced in July send to their owners. way for further expansion with a $500,000 three- prizemoney levels across the state. 2019 taking the total prizemoney and bonuses on year-old VOBIS Sires (1600m) race to commence offer in Victoria for the 2019-20 racing season, Total owners actively participating in the 2019-20 racing season. Minimum prizemoney increased at all country TAB which commenced on 1 August 2019, to a record in Victorian racing: meetings from January 2019, with 170 meetings $268.1 million. These two VOBIS Sires races join the established now offering a minimum of $35,000 per race. VOBIS Gold Premier Race Series to provide a 2018-19 71,388 lucrative series of restricted feature races that reward owners who seek out VOBIS progeny 2017-18 with the opportunity for significant returns on 67,357 their investment.

40,000 50,000 60,000 70,000 80,000

Page 18 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 19 PARTICIPANTS PARTICIPANTS

PARTICIPANT WELLBEING The target is to move all official trials and jump-outs As part of the AJTP, participants receive specialist Fifteen years ago, one in 10 licensed Victorian off the 13 race-free Mondays in the 2019-20 racing guidance from an expert team of physical jockeys was female. Now that number has grown Participant support comprised expenditure of season with consultation with key stakeholders trainers, nutritionists, physiotherapists and sports to one in four riders, fuelling both opportunities $21.8 million in FY19 with this investment directed underway. psychologists, who provide them the best possible and aspirations for young female riders embarking towards jockey ride fees, jockey WorkCover, chance of enjoying a successful career. on a career in racing. workforce development and welfare initiatives. WORKING WEEK The number of female trainers remained steady, The equivalent of 1.2% of prizemoney was directed FEMALE PARTICIPATION accounting for 21% of the active trainers in the to support jockey welfare. This investment allowed The working week has continued to evolve in recent 2018-19 racing season. Total starters trained by for the provision of items such as personal accident years through the expansion of night and twilight The number of licensed female riders in Victoria female trainers grew by 4.5% year-on-year from and public liability, 24/7 Jockey Assistance racing – done to help the sport grow and ensure grew from 54 to 56 in the 2018-19 racing season, 3,975 to 4,147. Program, dedicated medical and welfare officers that it is financially viable. with more than half of the state’s licensed and concussion research. apprentices now female. In FY19 discussions continued with the industry to The health and wellbeing of participants remained consider how the changes to the working week are Female jockeys secured more wins than ever before a key priority in FY19 with a dedicated Participant impacting participation and to see if the industry as – up 5.1% to 623 – off the back of an increased Wellbeing Manager leading the expansion of the a collective can address those concerns. number of bookings. resources available to participants. With the commencement of a review into the STABLELINE is the independent 24/7 counselling working week, Racing Victoria has continued and support service launched in 2018 for licensed these discussions into FY20 and is committed to and registered participants and their families. exploring all options regarding the working week, It expanded its offering in 2019 to provide a mindful of the challenges it currently presents confidential SMS service for those looking to industry participants. engage help, but reluctant to phone or seek a face-to-face session. WORKFORCE DEVELOPMENT

RACE-FREE MONDAYS Racing Victoria’s Apprentice Jockey Training Program (AJTP) continues to go from strength to Following the success of a three-month trial of strength with six female and four male aspiring race-free Mondays in early 2018, the concept was riders inducted into the program in early 2019. expanded over four months from December to March during the 2018-19 racing season. The 10 budding hoops include three teenagers whose fathers are Group 1-winning jockeys: Jaden The initiative seeks to provide stakeholders with a Lloyd, whose father Jeff was the premier rider in break from the seven-day racing schedule, while South Africa and ; Will Price, whose maximising returns to the industry with the shift dad Simon rode Balf’s Choice in the inaugural The of the Monday meetings to Wednesday double All-Star Mile at Flemington; and Campbell Rawiller, headers to service customer demand. whose father Nash remains an elite rider in Australia after riding in Hong Kong. While the number of days with official trials reduced to just four of the 13 race-free Mondays, This trio were joined in the AJTP by seven other participants expressed a desire for a further apprentices who will also aim to follow in the reduction heading into the 2019-20 racing season footsteps of the likes of Craig Williams, Beau where the program of race meetings remains Mertens, Ben Allen and Steph Thornton, who unchanged. have all graduated from the elite program.

Page 20 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 21 EQUINE WELFARE EQUINE WELFARE

• There was no increase in the rate of injuries Racing Victoria’s vision is to be recognised as EQUINE WELFARE INVESTMENT NATIONAL HORSE TRACEABILITY REGISTER among the internationals over the past decade setting the standard in equine welfare and as an and that it was the volume of horses that led to industry we are committed to delivering our The Victorian thoroughbred racing industry Racing Victoria supported the call for the the increased number in 2018; equine athletes the utmost care. continues to lead the way in equine welfare with introduction of a National Horse Traceability $350 million spent annually by owners on the Register to develop a national approach to the • There was no sole contributing factor to the training, care and welfare of racehorses in Victoria. management of horse ownership and whereabouts. incidents of 2018 and equally no one initiative EQUINE WELFARE STRATEGY This equates to more than $40,000 per horse that would eliminate any prospect of it occurring per annum. A senate inquiry titled ‘The feasibility of a again; The industry’s three-year Equine Welfare Strategic National Horse Traceability Register for all horses’ • There was no evidence to suggest that the Plan was released in mid-2019 by Racing Victoria One per cent (or $2.25 million) of the prizemoney is currently ongoing, with two public hearings Werribee training tracks or facilities contributed after consultation with industry stakeholders and offered in Victoria in FY19 was retained to support scheduled for the second half of 2019. directly to any injuries; and animal care and protection groups. Racing Victoria’s equine welfare program and thus contribute to the care of Victorian racehorses A report from the inquiry is due to be submitted • The available technology at the time could not Over 40 priority projects were outlined in the first before, during and after racing. to the Commonwealth Parliament by 5 December have reasonably predicted the fatal injuries to 12-months of the Equine Welfare Strategic Plan, 2019. international horses that have occurred over covering six key pillars: governance and standards; With an additional contribution, Racing Victoria spring since 2010. population dynamics; racing; post-racing; industry ultimately spent $3.8 million – up from a $3.31 culture and industry reputation. million commitment in FY18 – on equine welfare INTERNATIONAL INJURY REVIEW In an effort to reduce the rate of serious injuries programs and initiatives. among international horses, Racing Victoria Examples of some key priorities that have Equine welfare is a priority for the industry and has committed to a number of welfare-focused been implemented include the recruitment of a A total of $11 million was spent on integrity and Racing Victoria is continually reviewing and initiatives. These initiatives include investments in dedicated role to support post-racing initiatives; official veterinary services in FY19. This includes exploring opportunities to further the safety of the new technology, research, infrastructure, veterinary incorporation of equine welfare as a standard related veterinary services to support horses during sport which is not without risks. services and new Track Preparation Guidelines. consideration for all Racing Victoria Board reports racing via injury prevention and raceday assistance. and decisions; expansion of the pre-race off-course As a result of the injury rate among international The most significant was a joint investment of close veterinary examination program; and education for Note: A $25 million commitment to accelerate horses during the 2018 Spring Racing Carnival, to $1.3 million by Racing Victoria, the UoM and the owners on post-racing options. and broaden the delivery of the three-year Equine Racing Victoria conducted a review and sought State Government to bring Australia’s first Standing Welfare Strategic Plan was announced in October contributions from a number of stakeholders CT Scanner to Melbourne in time for the 2019 2019. This supports a statewide re-homing including the (UoM). Spring Racing Carnival to assist in the detection program; post-racing career options; a statewide Among other things the review found that: and prevention of serious equine injuries. foster program; an advanced tracking system; an equine welfare taskforce; humane euthanasia; and responsible breeding.

Page 22 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 23 EQUINE WELFARE

EQUINE RESEARCH LIFE AFTER RACING

Victoria’s $5.25 million three-year Equine Limb Racing Victoria’s retirement plan for racehorses Injury Prevention Program, jointly funded by Racing is underpinned by the demand created for Victoria, the UoM and the State Government, is the thoroughbreds after racing through the Off The most significant research of its type in the world. Track (OTT) program and other life-after-racing initiatives. The achievements of the limb injury prevention program as it reaches the end of its first round The OTT program was launched in 2012 and has of three-year funding are plentiful. The notable sponsored over 700 equestrian events in which findings include: the collective number of appearances by retired racehorses tops 15,000. It also promotes a network • evidence that fractures are due to an accumulation of 50 retrainers to assist in the transition of a horse of damage over time demonstrating the potential to a life-after-racing. for early detection and intervention; • evidence that training workloads are not The OTT program was a major sponsor of the associated with success, indicating that the inaugural reality TV series, Jump implementation of safer training methods will Off, which featured the retraining of retired not impact training performance; and racehorses to compete in a show jumping competition for a major prize of $100,000. • evidence that better bone health leads to better performance, providing a clear incentive for The show received an average audience of 93,252 trainers and owners to pursue practices that for each of the 10 episodes on the Seven Network’s optimise skeletal health and prevent injury. main channel and a total audience of 1.08 million across the series (including repeats) which aired Education on findings of the Equine Limb Injury during the spring of 2018. Prevention Program has been provided in the form of nine seminars for local trainers and equine veterinarians. ACKNOWLEDGED RETRAINER OF THE YEAR AWARD

SAFETY RECORD Nikki Cook claimed the inaugural Racing Victoria Acknowledged Retrainer of the Year award ahead The core objective of Racing Victoria’s research of finalists Jessica Schneider and Amanda Porter investment is to reduce the rate of raceday fatalities which was presented at the Equestrian Victoria in flat racing towards 0.00%. Awards in July 2019.

Victoria’s raceday fatality rate is among the lowest Cook is the owner and operator of Shory Park in world racing with a safety record of 99.95%. horses, one of Australia’s leading retraining Since 2005, Victoria has averaged just under operations. She won the Godolphin Stud and Staff 43,000 annual starters in flat races for an average Stable Award for Thoroughbred Care and Welfare of 22 fatalities per year – a fatal incident rate of in 2016, and her team retrains almost 100 OTT 0.05%. thoroughbreds each year.

In the 2018-19 racing season, there were 23 fatalities in flat racing in Victoria from 43,352 starts. This is equivalent to a fatality rate of 0.05%.

Page 24 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 25 INTEGRITY INTEGRITY

A strong integrity function is critical to a healthy The Racing Victoria Integrity Platform (RVIP) seeks INTEGRITY SERVICES DEPARTMENT REVIEW HUMAN RESOURCING and prosperous Victorian racing industry and sits to enhance transparency and monitoring through: at the heart of Racing Victoria’s 'right to exist'. Following his appointment as Executive General With processes and resources that support the • Real-time tracking of data, such as price Manager – Integrity Services in May 2018, Jamie ISD a key component of the review, a number of movements and associated betting patterns; Stier instigated a review into the processes and appointments were made in FY19 to support the EQUINE SAMPLE COLLECTION • A host engine that ingests ratings and resources that support the Integrity Service new operating model. These include: performance indicators and matches these with Department (ISD) and its aims to deliver world- A total of 13,760 equine samples were collected actual performances; class services. • Participant Protection Manager during the 2018-19 racing season, with prohibited • Licensing and Administration Coordinator substances detected in 11 samples (0.08%) – up • An alerts system to flag inconsistencies; The review was aimed at enhancing the current from 10 (0.07%) in 2017-18 racing season. • Database and library functionality that stores frameworks and to identify key themes to improve • Program Delivery Manager and recalls any integrity comments associated the performance of the ISD’s operating model. It • Cadet Stewards focused on strategy and vision; people; processes; with individual horses, trainers, jockeys, owners • Stewards Operations Manager DIGITAL TRANSFORMATION and wagering movements; systems; and communications. • Veterinary Services Manager • Video analysis and management portal for Racing Victoria continued to enhance its This led to a new operating model designed, among tracking past performances; and technical capabilities in FY19 to support its other things, to clarify the vision of the ISD; define The ISD has undergone significant re-structuring ability to administer the Rules of Racing with the • Links to betting patterns and comments for the strategies that will deliver success; better define over the past 12 months and will continue to evolve, commencement of work to develop a custom-built recording and recall capabilities. people’s roles and responsibilities; and identify particularly within the veterinary services and integrity platform to assist with a broad range of where technology can play a role. equine welfare teams. requirements. The digital transformation project will also assist with shaping the way raceday stewards manage the One such area is a commitment to enhance the use flow of information and communications on course of technology with work underway to reduce the across the various teams. reliance on paper-based processes in the equine sampling program to support the collection and tracking of samples by veterinarians. This will provide the opportunity to better manage staff time on raceday and the accuracy of information being processed.

Page 26 Racing Victoria 2019 Annual Report Page 27 INTEGRITY

FAIR RACING FOR ALL CHAIRMAN OF STEWARDS

The Fair Racing for All (FRFA) review commenced Following the departure of Terry Bailey in July in early 2019 and was designed to complement 2018, Robert Cram was appointed Racing Victoria’s existing work being undertaken by the ISD to Chairman of Stewards. enhance its processes and resourcing. Boasting more than three decades of experience The FRFA steering committee met with more as an integrity official within Victorian racing, Cram than 30 key stakeholder groups and individuals possesses a tremendous wealth of knowledge, across the racing industry, as well as other sporting a strong rapport with industry stakeholders and organisations and business sectors, to consult the ability to lead and nurture Racing Victoria’s on how the Victorian racing industry can work stewards panel. together to drive further improvement.

The objective of the consultation and submission VICTORIAN RACING TRIBUNAL period was to improve voluntary compliance to avoid major integrity breaches, including equine The establishment of the Victorian Racing Tribunal welfare matters, and promote a responsible culture (VRT) was developed throughout FY19 by the State of fair play, ethical behaviours and respect. Government with the aim of further strengthening integrity by streamlining the disciplinary and The wide-ranging improvement initiatives appeals process for all three racing codes. collectively proposed by key stakeholders were endorsed by the Racing Victoria Board with the As a result, the RAD Board will cease, except with next licensing period, commencing mid-2020 respect to certain historical proceedings which for the 2020-21 racing season, targeted for the commenced prior to 1 August 2019 and have not implementation of many recommendations within yet been finalised. the FRFA report. Matters which previously would have been heard by the RAD Board have, from 1 August 2019, been heard by the VRT which has been granted more expansive powers to compel witnesses. In addition, merit reviews to the Victorian Civil and Administrative Tribunal will no longer be permitted.

Page 28 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 29 INFRASTRUCTURE INFRASTRUCTURE

Infrastructure expenditure increased by $8.9 million With the support of the State Government, Ballarat The new Guidelines, which considered feedback The removal of the club’s synthetic racetrack paved to $22.4 million (66.1%) in FY19 which reflects Turf Club (BTC) and Country Racing Victoria from a broad of range of industry stakeholders the way for the widening of the course proper at investments and grants to improve and upgrade (CRV), the $9.3 million 1900m synthetic track was including 85% of trainers requesting a softer racing Geelong which was undertaken in FY19. With its facilities right across the state of Victoria. constructed and opened for racing in May 2019. surface, require track managers to ensure their widening to 27 metres, the track gains an extra rail track is a Good 4 for at least the first race and move meaning the turf track will be in a position to Key projects included major synthetic track works Replacing the BTC’s former inner grass track, the remains Good throughout the meeting. handle more racing into the future. at Ballarat, Flemington and Mornington, sand-fibre Polytrack synthetic track provides a sustainable track works at Wangaratta and Seymour, and track surface that allows the daily training of more than With research affirming that the risk of injuries widening works at Kilmore and Geelong. 500 horses and the conduct of more than 70 race is heightened on firmer tracks, the updated CAULFIELD TRAINING RELOCATION meetings, sets of trials and jump-outs each year. Guidelines, which seek to provide a racing surface with more cushion for horses, further the industry’s With State Government approval of a long-term BALLARAT SYNTHETIC TRACK commitment to the welfare of its horses and the lease between Caulfield Racecourse Reserve TRACK PREPARATION REVIEW safety of its participants. Trust and the Melbourne Racing Club to increase A review of the state’s synthetic racetrack footprint, recreational opportunities and secure horse completed in 2018 by Racing Victoria, identified Following an industry-wide review during FY19 racing at Caulfield for another 65 years, trainers Ballarat as the preferred location for the state’s into the preparation of racing surfaces, changes FLEMINGTON TRAINING UPGRADE at the track were advised in FY19 that they will be second synthetic racetrack alongside the existing to the Racing Surface Preparation Guidelines were relocated over the next five years. Pakenham synthetic track. announced with effect from 1 August 2019. The world-class facilities at had another boost in mid-2019 with the opening of An investment to create new facilities at regional a new $4 million state-of-the-art synthetic training training centres was announced as part of a track. $40.1 million joint Government funding package to support the relocation, which is anticipated to Jointly funded by the Victoria Racing Club (VRC), begin from mid-2020. the Victorian Government and Racing Victoria, the new 2200m track was opened in June and will Work has commenced to construct additional reduce the training load on Flemington’s grass stabling, an inside grass track, and a new tunnel tracks as well as provide a safe, world-class training to accommodate horses at Cranbourne, while track for use in any weather. Pakenham will also receive more stabling, a new uphill track and a new equine pool. With around 600 horses utilising Flemington’s training facilities every day the introduction of the The project will ensure that the regional training new synthetic training track is a significant upgrade. centres can collectively accommodate an additional 600 horses from Caulfield.

GEELONG RACECOURSE GOVERNMENT SUPPORT Following a $1 million investment boost announced for Geelong Racecourse infrastructure in FY18, the The majority of these projects were made possible club’s new sand-fibre training track and desalination by the Victorian Racing Industry Fund which system upgrades were undertaken in FY19 with a the Labor Government committed to extending view to being operational for the 2019-20 racing for a further four years at the November 2018 season. election. This $72 million commitment will allow a broad range of infrastructure and training facility The sand-fibre training track refurbishment will upgrades to occur at tracks across the state. provide trainers with a quality surface to prepare their horses, while the new desalination system will allow the racecourse to be treated by the venue’s bore water, reducing its need to purchase potable town water during the summer months.

Page 30 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 31 COMMUNITY COMMUNITY

A key focus of the Customer team over FY19 A number of high-profile jockeys took part in the LADY OF RACING Filming occurred at several racecourses throughout has been to build on the portfolio of work being Saddle Up program to give the kids an insight into Victoria including Flemington, The Valley, Caulfield, undertaken to engage with future generations, as their day-to-day lives. Champions such as Damien Racing Victoria partnered with the Victorian Werribee, Balnarring and the home of the story, well as promote and drive female participation Oliver, Craig Williams and Michelle Payne, along Club as major sponsor to deliver the Ballarat. The staff at each of these racecourses were within the racing industry. with apprentices like Jess Eaton and Stephanie 25th Lady of Racing Award Luncheon, held on very supportive and went out of their way to help Thornton, all participated in the program. International Women’s Day in March 2019. ensure the industry was well represented.

SADDLE UP AND 16 HANDS Racing Victoria's long-running school incursion The annual awards luncheon was well attended In the lead-up to the world premiere in late program was re-launched as 16 Hands – Connecting with over 400 guests celebrating the achievements September 2019, Racing Victoria hosted Following a successful pilot of the Saddle Up Kids with Horses in September 2018 and was also of four outstanding finalists: prominent jockey exclusive preview screenings for a broad range of School Holiday Program at Flemington Racecourse well received in the primary school market. and mentor to many, Christine Puls; Magic Millions stakeholders including metropolitan and regional in July 2018, the engaging grass roots program has administrator Claudette Luke; retired champion stable staff. In its opening weeks the movie connected with over 1,000 primary school children, jockey Clare Lindop; and leading trainer Natalie assumed the mantle as the highest Australian box teaching them about the horse. CELEBRATING WOMEN IN SPORT Young. office earner of the year.

The growth of the program saw a number of For the second year running Racing Victoria hosted Puls was crowned the 2019 Lady of Racing and racecourses including Flemington, The Valley, ‘Celebrating Women in Sport’ on Oaks Day at was feted for the outstanding contribution she CHARITY UPDATE Caulfield, Ballarat, Cranbourne, Geelong, Flemington Racecourse in November 2018, a unique has made to thoroughbred racing within Victoria. Mornington, Pakenham and Werribee, host the event that recognises outstanding and inspiring Racing Victoria made charitable donations in Saddle Up program throughout subsequent school female performers in racing and sport. excess of $300,000 during FY19 with the major holiday periods. RIDE LIKE A GIRL beneficiaries being the National Jockeys Trust Female change-makers in racing including and the ANZAC Appeal Fund. Children have enjoyed a range of horse-related Melbourne Cup winning jockey Michelle Payne, Ride Like a Girl is a biopic of the inspirational story activities including learning to ride a horse, VRC Chairman Amanda Elliott, Tabcorp Chairman of Michelle Payne and her feats in becoming the The National Jockeys Trust support comes on meeting a thoroughbred racehorse and jockey, and Paula Dwyer and international Group 1 winning first female jockey to win the Melbourne Cup in top of the 1% of prizemoney that is retained for designing their own craft noodle horses and jockey trainer Criquette Head, joined other sporting 2015. jockey welfare in the state of Victoria to deliver an colours to compete in the Saddle Up Cup. stars including AFLW’s Darcy Vescio, basketballer extensive support program for licensed riders. Michele Timms and Olympians including Shane As an Official Partner of the highly-anticipated film, Gould, Nicole Livingstone and Jana Pittman, to Racing Victoria played a key role in supporting The Royal Children's Hospital Good Friday Appeal share their stories. its production and marketing the movie to the was the beneficiary of all nomination fees for the racing industry through a variety of events and new All-Star Mile. A total of $65,000 was donated communications. to assist the treatment of sick children via the Appeal.

Page 32 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 33 DIVERSITY AND INCLUSION

Racing Victoria believes racing is for all and to This year, Racing Victoria commenced measuring achieve this has focused on a number of key gender pay gaps in its updated Business Plan to areas such as gender pay equity, diversity in the keep gender diversity on the strategic agenda. workplace, mentoring opportunities, a respectful workplace and further investment in its structures to support staff to perform at their very best. MANAGEMENT SUPPORT OF GENDER DIVERSITY These initiatives are all aimed at ensuring that Victorian thoroughbred racing remains an industry Work to close the gender gap continued in FY19 of choice, attracting new people and retaining with the introduction of senior managers having those currently engaged with the sport. gender equality key performance indicators. While no rigid target has been set, the aim is to disrupt the status quo to positively influence gender WOMEN’S MENTORING PROGRAM diversity throughout the year.

For the second year running a Women’s Mentoring Measures will be relevant to a team’s goals and Program was delivered in collaboration with objectives for the year and will be both informal Tabcorp and Country Racing Victoria. and formal in nature to best support Racing Victoria’s wider objectives to promote and create The 12-week program is designed to champion a diverse and viable workforce. women and provide them with the opportunity to develop their professional skills through the guidance of experienced, senior mentors. RESPECTFUL WORKPLACES

By focusing on the development of women, the Racing Victoria staff participated in a Respectful partners in the program are seeking to better Workplaces workshop which incorporated values, utilise their talent pool, enhance their position what is a respectful workplace, how unconscious as employers of choice, and leverage the unique bias works, anti-social behaviours including sexual offering that female employees bring to their harassment and bullying, and bystander action. organisations and the Victorian racing industry. This continues to be a cornerstone program delivered to all staff.

MALE CHAMPIONS OF CHANGE STAFF ENGAGEMENT Male Champions of Change plays an influential role in the disclosure of issues relating to gender Staff engagement measured strongly in FY19 equality in the sports industry and broader with the annual workforce survey, indicating an community. Racing Victoria is represented by organisation engagement score of 73% in March. CEO Giles Thompson, standing alongside a number of influential CEOs from a range of One initiative that has gained momentum in FY19 is national sporting organisations and bodies the All Roles Flex Policy, with greater take up and dedicated to making real change. various forms of flexible work being demonstrated at all levels of the organisation. In FY19 a key focus was on Racing Victoria’s participation and contribution to the Male Champions of Change Sport Pathway to Pay Equality Report – a practical guide as to how the ecosystem of sport contributes to inequity of pay and what organisations can do about it.

Page 34 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 35 CLUBS CLUBS

CLUB NUMBERS FY19 special grants of $2.3 million from surplus COUNTRY RACING VICTORIA MOONEE VALLEY RACING CLUB funds at year end were made available for clubs Victoria boasts 69 Racing Clubs across the state for racing purpose investments, including future CRV remains committed to assisting its 67 member The Valley has hosted the greatest champions that that host thoroughbred meetings and play a vital prizemoney enhancements. country clubs to drive patronage to the tracks and have graced the Australian turf, and the honour roll role in engaging with members, racegoers and increase their respective attendance figures. of W.S. Cox Plate winners over the past 99 runnings local communities to promote the sport and deliver This record investment in infrastructure saw major features the crème de la crème. A sell-out crowd of positive and engaging raceday experiences. track works at eight locations, including new or CRV’s five major promotional campaigns (Christmas, more than 38,000 that packed the amphitheatre at upgraded synthetic and sand fibre tracks, track Spring, Kids’, Relax, and Easter) strongly contributed The Valley on Saturday, 27 October 2018 witnessed widening and re-cambering. A total of 17 Country to attendance figure increases at country race days. an historic occasion that will live in sporting and FUNDING Clubs had major works completed or started in Christmas race days were especially successful, with cultural history for generations to come when Winx FY19. a 23% attendance increase on the previous year. delivered her fourth W.S. Cox Plate win. Club funding had a significant increase in FY19, rising by $5.3 million (7.3%) to $78.6 million. A investment was announced in FY19 by the State One of the great success stories from the 2018-19 In 2012, the Club introduced the two-day Cox The additional funding was used for increased Government to create new facilities at regional season was the inaugural running of The Jericho Plate Carnival, with Cox Plate Eve now featuring prizemoney, infrastructure for track and training training centres as part of a $40.1 million joint Cup at Warrnambool on 2 December. A crowd of the Group 1 Stakes and the Cox Plate use and raceday expenses. funding package that will support the relocation 4,300 people attended the race day, and such was Day program showcasing a 10 race program. of Caulfield trainers. the event’s unprecedented success, that it was Each year, the two-day Carnival grows in popularity subsequently made a finalist for CRV Event of and 2018 saw a record aggregate crowd of 51,680 the Year. attend.

Significant attendance increases occurred at In November 2017, the Club entered into a Dunkeld Cup Day and Hamilton Cup Day, while Development Agreement with Australia’s leading a number of other Country Cup meetings also superannuation fund Hostplus and developer experienced substantial growth. The country Hamton to realise its vision for the transformation racing carnivals continue to play an important role of the 98 acre Valley Racecourse site. With the in Victoria, and it was pleasing to see the two-day rezoning of The Valley Racecourse completed in Mildura Cup Carnival increase its crowd by over 2015, the Club selected the Hostplus / Hamton bid 20% on last year. as it closely aligned with the vision for the precinct that it wishes to create. This is a once-in-a-lifetime Thanks to the financial backing of Racing Victoria opportunity to undertake a project of this scale and the Andrews Labor Government, an additional and significance, and over the next 10 – 15 years it $1.2 million over and above all other funding will deliver a new world-class racing facility that streams was spread across the 67 Country Cups is supported by an amazing residential, retail, in Victoria during the 2018-19 racing season. This commercial and lifestyle precinct. was complemented by the announcement that more than $1 million would be injected into the The Club also recently created a new brand for its prizemoney across country Victoria for the 2019 hospitality offer – Dean & McPherson. Drawing on Spring Racing Carnival. the heritage of the famous Valley Racecourse site, Dean & McPherson is a new consumer facing brand CRV’s profitability increased by 21.52% on the that will allow the Club to extend the hospitality previous financial year, and with the majority of activities beyond the physical boundaries of the country clubs also reporting financially successful MVRC. years, this enabled further investment in club infrastructure and race day offers. The Club secured the PGA Tour contract to deliver the full hospitality solution at two of the world’s most prestigious golf tournaments – the 2018 World Cup of Golf at Metropolitan Golf Club and the 2019 Presidents Cup at Royal Melbourne.

Page 36 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 37 CLUBS WAGERING

FY19 was another year of significant evolution Victoria supported a broad range of product and with the wagering market experiencing further customer promotional initiatives by operators consolidation as Ladbrokes and Neds came along with new customer focused features such together as GVC Australia; the introduction of Point as barrier load technology; Victorian Official Price of Consumption Tax (POCT); and further regulatory enhancements; the delivery of jump-out vision; and reforms through initiatives such as the National post-race sectional time data. Consumer Protection Framework. Despite soft fixed odds margins for wagering Nevertheless, unprecedented growth in customer operators in the first half of the year, strong generosity by wagering operators coupled with turnover growth and race field rate changes favourable race results for punters in the first half introduced at the beginning of FY19 combined to of the financial year saw domestic turnover on deliver race fields revenue of $188.1 million, up 9.5%. Victorian thoroughbred racing in FY19 reach a Total receipts from the Victorian TAB (VicTAB) record $7.02 billion, representing growth of 9.4%. joint venture were $209.1 million and included $33 million paid by Tabcorp for the use of Victorian race The showcasing of night racing from September fields by VicTAB. to May remained unique to Victoria in FY19 and MELBOURNE RACING CLUB VICTORIA RACING CLUB continued to drive customer interest with average Pari-mutuel betting accounted for 26% of all turnover per meeting up 8% across the 53 fixtures. domestic Victorian thoroughbred racing turnover, The MRC signed a new long-term lease for Caulfield The VRC began the implementation of its bold down from 44% four years prior in FY15. Retail in October last year to secure the future of horse racing strategy, including announcing prizemoney The extension of the race-free Mondays trial was betting accounted for 46% of all domestic Victorian racing at the precinct for the next 65 years. increases for the Carnival and well embraced by wagering customers once again. thoroughbred racing turnover, down from 62% in TAB Day. Over the 2019 Cup Week The trial saw 13 Wednesdays from December to FY15. The MRC was thrilled to finish the 2018-19 racing a prize pool of $27.6 million was on offer, with March host both a day and twilight meeting with season with a record 15,527 members, including the the Lexus Melbourne Cup alone worth a record the result being a collective uplift in turnover of POCT was implemented across most domestic new Chairman’s Club membership tier achieving $8 million. 14.1%. The initiative will become a permanent jurisdictions throughout FY19 and may impact FY20 a growth of 258% and now requiring a waitlist for fixture from FY20. wagering growth prospects as operators adjust admission. The Club Stand was officially opened on 2018 AAMI their approach to pricing and customer generosity Victoria Derby Day, marking a significant milestone Racing Victoria has and will continue to maintain a to mitigate the additional cost of POCT. The The 2018 Stella Artois Caulfield Cup Carnival in the VRC’s 154-year history, and illustrating the strong focus on investment to ensure that Victorian Victorian Government has committed to a review of was the best yet, with a fantastic 17 international Club’s commitment to the future. thoroughbred racing remains a product of choice POCT by July 2020 and this will be a focus of the runners (including the Stella Artois Caulfield Cup for wagering operators and customers. Racing wagering team in FY20. winning Best Solution), a 13.8% increase in domestic The VRC welcomed new partners and extended turnover and a 3.3% increase in attendance. relationships with sponsors, with the first year of Lexus Melbourne Cup Day and Seppelt Wines The MRC Foundation, the philanthropic arm of the Stakes Day, while Lion and the Club extended their MRC, contributed nearly $500,000 to deliver a total partnership to 25 years. cash donation of over $1.2 million since its inception in 2016. Adding further in-kind assistance valued at The VRC also signed a landmark media rights deal over $370,000, it makes the MRC Foundation the with , with the $100 million, five-year biggest philanthropic body in the racing industry. agreement effective from 2019 to 2023 the biggest in the history of the Club, and one of the biggest in racing globally.

The Club was proud to report a record economic impact of the 2018 Melbourne Cup Carnival for Victoria of $447.6 million.

Page 38 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 39 MEDIA MEDIA

Racing Victoria’s investments in media support This network includes key long-standing VISION CAPTURE AND BROADCAST PREPARATION DISTRIBUTION NETWORK delivery against key strategic objectives with a partnerships with , in relation to Racing On course Vision Capture Connectivity from Track Broadcast Mgt & Downstream Media Channels focus on growing and engaging audiences so they Victoria’s data network which connects all embrace the sport by providing relevant content racecourses, and a media production, channel WSP Streaming Racing.com Channel (Web and Mobile) anytime, anywhere to ensure the sustainable management and playout services arrangement Raceday Coverage Production Management growth of the Victorian racing industry. with Chief Entertainment. DVN 2 (fibre) tracks > 9 meetings Hosted Coverage Racing.com (Digital) Media services expenditure of $42.94 million was Racing Victoria’s significant investment in Broadcast Production Centre in line with the prior year (up 0.6%), however total developing and maintaining its media supply chain Racing.com FTA media revenue grew by 10.9%, rising to $50.28 enables it to achieve a wide audience reach across (Channel 78/68) Raceday Coverage million, following growth in revenue streams several different media distribution channels under SNG (satellite) tracks < 9 meetings Racing.com Studio Channel 7 associated with wagering activity levels – primarily arrangements with various third parties. These Hosted Coverage Premium FTA digital streaming provided to wagering partners for agreements include: SKY their mobile and online digital platforms. (Domestic and • Free to air broadcast via International)

Racing Victoria’s media expenditure includes funding (Racing.com channel 78/68 and ) and Industry for Media Rights Revenue Direct Direct International provided to and direct investments in a number of premium meetings via Channel 7; Distribution Channels media assets including Racing.com, Radio Sport • Digital streaming via wagering service providers National, Thoroughbred Racing Productions, Racing Enables wagering turnover including Tabcorp, Sportsbet, Bet365, Ladbrokes Production of the premium raceday broadcast costs funded by Racing Victoria Photos, Best Bets and Winning Post. and BetEasy; growth and fan engagement

In June 2015, the Victorian racing industry made a • Commercial venues and Foxtel via SKY 1 and strategic decision to invest in an industry owned SKY 2; and broadcast network to broaden the distribution of • International broadcasts via the MRC and SKY. This investment in the broadcast network has been In FY19, Racing Victoria with its shareholder clubs Victorian thoroughbred racing. This investment funded by: commenced the process for renewal of critical is key to enabling Racing Victoria to control the media rights deals set to expire in 2020. This is distribution of its product (vision, audio and data) • An increase in wagering revenue via race fields a challenging process against an ever-evolving and to generate strong returns from the racing and Victorian TAB joint venture which can wagering and media landscape. Notwithstanding media rights which it holds on behalf of the industry. be directly attributed to achieving a broad these challenges, the industry is well placed to distribution of Victorian racing vison; continue to maximise the reach and value of • Media rights revenue from sub-licensing Victorian racing content due to the strength of Victorian racing vision both domestically and the industry’s media supply network. internationally; The new Melbourne Cup Carnival media deal • Digital streaming revenue from wagering between Network Ten and the VRC was announced operators based on a share of digital wagering in FY19 and commenced for the 2019 carnival. turnover; and Importantly Network Ten and Racing.com have • Advertising revenue from the Racing.com been able to agree to terms which also see the channel. industry broadcaster on course during the four days. Executing this broad range of media deals relies upon an ongoing commitment to invest in the Seven West Media have remained a strong and industry’s media assets and capabilities. committed media partner for Racing Victoria. A total of 4.23 million viewers watched the Channel Work has been undertaken on the delivery of a new 7/7Two coverage of the 2018 Spring Racing Carnival outside broadcast facility by Thoroughbred Racing - an increase of 8.7%. Production for the 2019 Spring Racing Carnival which will provide a significant upscale to the industry’s on-course production capabilities.

Page 40 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 41 RACING.COM RACING.COM

• Expanded distribution of the linear Racing.com The Racing.com channel(s) remains the core FY19 FINANCIAL PERFORMANCE This investment in the new app has been justified channel onto the Foxtel owned Kayo platform, component of the industry’s media portfolio. These with more than 40% of monthly users to the Racing. complementing the existing broad distribution channels provide a multi-platform, year-round In FY19, Racing.com: com network now using this platform. Key new across FTA channel 78/68; Pay TV channel 529; coverage delivering the critical outcomes of both features available in the app include: and live streaming on the Racing.com app and engagement and wagering with our customers. • Made $7.0 million of broadcast advertising website, and 7 Plus and 7 Sport OTT services; revenue share payments to stakeholders, • An enhanced design for easier navigation; and To date these outcomes have been largely driven including $3.5 million to Racing Victoria; • Exclusive access to race replays including • Continued to expand raceday and magazine via our free-to-air coverage via the Seven West • Grew revenue from advertising, sub-licensing Victorian Stewards vision; show production beyond 4,000 hours per Media broadcast platform. This joint venture with and production services by $3.0 million to $20.7 annum, whilst maintaining broadcast cost per • Airplay and Chromecast functionality – to watch Seven West Media has enabled Victorian racing million, an increase of 17% from the prior year hour at prior year. replays on your TV; to become freely available to approximately 97% FY18; of Australian households. This collaboration with • Integrated tips and expert analysis throughout Australia’s leading free-to-air broadcaster continues • Delivered on the second year of major the app; to deliver immense value to racing in Victoria. sponsorship agreements with Sportsbet, DIGITAL PLATFORM PERFORMANCE BetEasy and Bet365 and entered into • Blackbook feature including notes and notifications; In addition, the role of our digital platform has agreements until 2021-22; A key focus for Racing.com during the year was become increasingly important in our media • Delivered promotion and integration campaigns the further development of its digital business • New quick form and fields view; portfolio. The Racing.com digital platform for a growing network of industry clients with significant growth recorded across the digital • New video hub for all your catch-up TV; was created as part of a joint venture with our (breeders, syndicators, sales companies and race assets of Racing.com in FY19. • An enhanced search capability for horse, jockey shareholder clubs and has developed significantly clubs), and consumer brands seeking association and trainer profiles; and since its initial release in 2014. with Victorian racing; A key driver in these strong results was the new iOS and android app released in October 2018, that • An enhanced race calendar. • Achieved a net surplus from the Thoroughbred The upgrade to the Racing.com app, completed in has now achieved more than 260,000 downloads Racing SA (TRSA) vision rights for the second 2019, has seen a significant increase in usage with and helped grow registered subscribers to the free Supporting the Racing.com network is a strong consecutive year. The acquisition of TRSA rights registered subscribers now in excess of 380,000. Racing Plus vision service to 380,000 people. and growing social media presence. Racing.com has helped grow audience, strengthen the amassed 113,000 followers on Facebook with video broadcast quality and improve Racing.com’s The team at Racing.com also deserves recognition Through FY19 Racing.com averaged around views on the social media site growing from 28.2 overall commercial position. Revenue growth for the improved performance of the business this 500,000 unique users per month with the Racing. million views in FY18 to 49.7 million in FY19. primarily came from sub-licensing streaming year. They are a dedicated team ranging from on- com digital network having now built a solid year- of South Australian races to wagering service air talent, journalists, broadcast managers, digital round community of online racing fans. There are also more than 110,000 subscribers providers and ; technology specialist and administrators who receiving bi-weekly Racing.com EDMs, with an deliver coverage of racing year-round. • Secured an agreement with Network Ten to The new app was jointly funded by Racing Victoria industry leading open rate of 21.6%. Racing.com broadcast every day of the 2019 VRC Melbourne and the Clubs and won a silver medal at the 2019 also manages the core technology platform for a Cup Carnival and the renewed a multi-year Melbourne Design Awards. network of 75 Clubs and Racing Victoria websites. agreement with Hong Kong Jockey Club;

RACING.COM FULL YEAR MANAGEMENT ACCOUNTS FOR FY19:

ANNUAL Revenue and Contracted Shareholder Contributions $’000 KEY METRICS FY19 FY18 GROWTH Revenue – from Activities (Sponsorship, Advertising, Sub-Licensing, Production) $20,728 Average Users per month 497,542 365,106 36% Shareholder Contributions – Racing Victoria (Digital, Broadcast, Management) $12,943 Average Unique Sessions per month 2,542,119 2,037,799 25% Shareholder Contributions – Clubs (Digital) $2,815 Live Stream Minutes per annum (million) 40.40 28.50 42% Total Available Revenue and Shareholder Contributions $36,486 Minutes per annum (million) 20.50 15.30 34% Expenditure $’000 Racing Plus subscribers (as at 30 June) 380,642 250,000 52% Operating Expenditure (Broadcast, Digital, TRSA, Distribution, Management, Content) ($27,102) Revenue Share Payments to Stakeholders ($7,000) Total Expenditure ($34,102)

Page 42 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 43 INVESTMENTS AND INDUSTRY SUSTAINABILITY FUND

Racing Victoria maintains an Industry Sustainability investments are governed by an investment policy Fund (ISF) on behalf of the Victorian thoroughbred that is reviewed annually by the Audit and Risk sub- racing and its stakeholders. The purpose of the ISF committee of the Racing Victoria Board. is to ensure that the industry retains sufficient funds to: Evans and Partners (EaP) are the current manager of the industry investment funds. As at 30 June • protect against unforeseen shocks, downside 2019, the balance of managed funds with EaP risks and to ensure the long-term sustainability totalled $81.4 million. Investments are recorded of the industry; at fair value through the profit and loss (FVTPL) • provide funds to support future industry- based on the different income streams including wide capital projects (e.g. infrastructure) and distribution income, dividend income, interest other capital investments (e.g. media / digital income, foreign income, gains/losses on disposal investments); and of investments and net gain/losses arising on financial assets designed as FVTPL (unrealised • to assist with finance and investment that components). The total return for the year from may not be otherwise available to industry EaP investments was $4.6 million post fees. stakeholders. Any other investments which are made utilising The ISF comprises surplus Racing Victoria cash, funds from the ISF (e.g. Infrastructure projects) managed funds under investment and any loans to are separately tracked and reconciled by Racing industry participants. Victoria and reviewed annually.

The ISF framework was established with the Any assets which are created as a consequence agreement of the Clubs and sets out an Optimum of investing ISF funds will either be accounted Balance target for Racing Victoria to manage for directly as assets on the balance sheet of against, which is reviewed annually by the Racing Racing Victoria or the respective Clubs or industry Victoria Board to ensure that it remains appropriate stakeholders, depending on the nature of the to meet the circumstances and needs of the investment. industry. During FY19 and as at 30 June 2019, the Optimum Balance was set at $80.0 million. Recent such investments have included land purchased adjacent to Pakenham and Cranbourne Racing Victoria engages an investment manager training venues and stakeholder loans to assist to invest and manage accumulated surplus funds major constructions such as the new Flemington that sit outside the near-term operating cash club stand and lighting for night racing at requirements of the business and to hold various Pakenham. financial assets on behalf of the industry. These

Page 44 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 45 DIRECTORS' REPORT DIRECTORS' REPORT

The directors of Racing Victoria Limited (Racing Victoria) submit herewith the annual financial report of the CURRENT DIRECTORS (CONTINUED) company for the financial year ended 30 June 2019. To comply with the provisions of the Corporations Act 2001, the directors’ report as follows: ROWEN CRAIGIE

The names of the directors of the company during or since the end of the financial year are as follows. Appointed 9 October 2017

Mr Craigie has extensive experience working with government and has a strong CURRENT DIRECTORS understanding of wagering. He spent 10 years as Managing Director of Crown Resorts Limited and has previously worked for the Victorian TAB and the Department of Treasury. He is a Director of Racing.com. BRIAN KRUGER CHAIRMAN

Appointed director and Chairman 9 October 2017 KATE JOEL Mr Kruger has a career spanning 35 years with extensive experience in the Australia listed company environment. He spent five years as Managing Director of Toll Holdings after Appointed 9 October 2017 joining as Chief Financial Officer as well as holding various senior management roles at BHP Billiton and BlueScope Steel. He was previously on the Board of Moonee Valley Ms Joel has been a business consultant for over 30 years and was CEO of Leonard Racing Club for 11 years. He is also the Chairman of Incitec Pivot Limited. Joel Auction House for 11 years. Former Chair of Racing Victoria’s Integrity Council and member for four years. Member of Melbourne and Olympic Parks Trust for nine years.

MIKE HIRST DEPUTY CHAIRMAN ROSS LANYON OAM Appointed director 20 October 2015 and appointed Deputy Chairman 16 October 2016 (and served as Appointed 9 October 2017 Acting Chairman from 16 October 2016 until 9 October 2017) Mr Lanyon is the Managing Director of the Elliott Newspaper Group which owns Mr Hirst was the former Managing Director of the & Bank and has newspapers in Regional Victoria. He has received an OAM for his services to thoroughbred broad experience in banking, finance and business planning including previously holding racing and the community of Mildura and was the Chair of Country Racing Victoria from the role of Deputy Chairman of the Treasury Corporation of Victoria. He is a Director of 2011 to 2014. Mr Lanyon is also Chairman of Regional Daily Newspapers of Victoria Pty Amcil and GMHBA. Ltd, The Victorian Country Press Association Ltd and the Mallee Health Foundation. He is a Director of Mildura District Hospital Fund Ltd, Sunraysia Australian Football Commission Ltd, WR Lanyon Holdings Pty Ltd, Mirbeau Pty Ltd, Crown Hotel Wentworth Properties Pty Ltd, CH (Wentworth) Pty Ltd, Noynal Pty Ltd, Clay Hero Pty Ltd and Taler Pty Ltd. GILES THOMPSON CHIEF EXECUTIVE OFFICER SHARON MCCROHAN Appointed director and CEO 18 April 2017 Appointed 9 October 2017 Before joining Racing Victoria in 2015, Mr Thompson had senior executive commercial experience in the wagering and media industries. He spent nine years on the executive Ms McCrohan has a career spanning almost 30 years as a journalist and adviser to Federal team at Betfair Australia, three years as CEO, and had previously spent seven years in and State government leaders and cabinets, private sector boards, sporting bodies, various senior positions at the Financial Times Group and APN News and Media. He is a charities and government agencies. She is a Director of Reliance Worldwide Corporation Director of VicRacing Pty Ltd and Racing Products Pty Ltd. and the Ovarian Cancer Research Foundation.

MICHAEL ANDREW AO GREG NICHOLS

Appointed director 24 October 2016 and reappointed 9 October 2017 Appointed 29 November 2012

Mr Andrew was the former Chairman and CEO of KPMG International, Chairman of the Mr Nichols is presently Chairman of Racing.com and Chairman of Racing Australia. Australian Government’s Board of Taxation, Committee Member of the Melbourne Racing Throughout an extensive career in racing and wagering, he has previously held senior Club and Treasurer of the Melbourne Club. positions in the Betfair Group and was the Chief Executive of the British Horseracing Mr Andrew passed away on 23 June 2019. Board and the South Australian Thoroughbred Racing Authority. He is a Director of GVTL Pty Ltd and TKS Inc.

Page 46 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 47 DIRECTORS' REPORT DIRECTORS' REPORT

OFFICERS 99 operation of the industry: The VTRI is managed with optimal efficiency in order to best enable the meeting of the objectives, whilst also balancing the need for growth so as to ensure the industry’s long term sustainability. This includes effectively delivering race day services to Clubs under Mark Close (Company Secretary) an efficient shared services model;

99 Focus on sustainable industry funding: Maximise whole of industry income which delivers economic PRINCIPAL ACTIVITIES, STRATEGY AND OBJECTIVES benefit to all members, stakeholders and participants and protects the long term sustainability of the VTRI. Coordination and representation of the VTRI in key commercial negotiations which may deliver The consolidated entity’s principal activities in the course of the financial period were related to the significant benefits to members. Manage industry revenues and distributions whilst ensuring the VTRI administration and promotion of thoroughbred racing in the State of Victoria. is managed with optimal efficiency and is well protected against cyclical risks and external threats.

Racing Victoria has a critical role as steward of the Victorian thoroughbred racing industry (VTRI), with a 99 Industry advocacy and promotion: Represent the Victorian thoroughbred racing clubs, VTRI and other focus on ensuring the ongoing sustainability of the industry as a whole and for the benefit of all industry members on broader industry matters including at state, federal and international levels. Maintain stakeholders. The Racing Victoria strategic framework sets a vision for Victorian thoroughbred racing. Our regular and effective consultation with key stakeholders and participants in the VTRI to develop and purpose is to lead and champion great horse racing in Victoria. Our vision is “Racing for All” - encouraging grow the sport (including wagering partners to ensure Victorian thoroughbred racing is the preferred more people, more often, to engage with and enjoy our sport. product of choice for punters). Manage key partnerships with various wagering operators to protect and maximise responsible wagering income. Market and promote the Victorian thoroughbred racing Our key goals and objectives are to: industry as the place to own, race, wager, participate and attend. Manage industry public relations including communication with media. 99 Manage thoroughbred racing to maintain Victoria’s pre-eminence: Victorian thoroughbred racing is recognised throughout Australia and worldwide as the pre-eminent racing jurisdiction in the country; 99 Maintain independence: The Company conducts its operations and exercises its powers and functions in a manner which ensures that public confidence in integrity and independence is upheld and the 99 Maintain the highest standards of integrity and equine and participant safety and welfare: Victorian Company is insulated from any improper external commercial influence. thoroughbred racing is managed and conducted to ensure and continuously improve on the highest levels of integrity and in accordance with the Rules of Racing. Racing Victoria is focused on improving DIVIDENDS the safety and maintaining the welfare of horses and participants; Under the company’s constitution no dividends may be declared or paid. 99 Manage the racing calendar with optimal efficiency: Victorian thoroughbred racing is managed with optimal efficiency to best enable the meeting of its objectives, including becoming the premier state for three year-old and staying races. Develop an optimal race fixture and program to service the needs REVIEW OF OPERATIONS of industry stakeholders; The net surplus of the consolidated entity for the financial year ended 30 June 2019 was $8.801 million 99 Encourage sustainable participation: Victorian thoroughbred racing is managed to encourage the compared to a surplus of $9.293 million in the prior year. fullest possible participation in all aspects and levels of the industry, across a wide and diverse demographic. We are focussed on ensuring a responsible culture of fair play and respect for all The total revenue from operations increased by $37.576 million or 8.8% to $465.469 million versus the industry participants through education and support; previous year (2018: $427.893 million).

99 Meet social obligations: Victorian thoroughbred racing is conducted to ensure that it meets its social Total wagering revenue grew by $5.148 million or 1.4% versus the prior year. Race fields income grew obligations to Victoria and the communities in which it operates, including: by $16.353 million or 9.5% versus the prior year, which was driven by a combination of strong wagering turnover growth on Victorian thoroughbred racing product - up 9.4% on the prior year - and a net increase • promoting Victorian country thoroughbred racing; in fees received following changes made to race fields rates that were introduced at the beginning of the • encouraging responsible wagering and gaming; and FY19 period. Stronger race fields revenue was partially offset by a decline in distributions received from • optimising employment in the VTRI. the VicTAB joint venture, through a combination of softer performance and the impact of the new Point of Consumption Tax (POCT) arrangements from 1 January 2019. 99 Optimise economic benefits: Responsible and prudent financial management to optimise the economic benefits for a wide range of stakeholders and participants of the VTRI, including: During the period, Racing Victoria received additional funding from various Government sources. This included a share of compensation payments made to the VTRI following the introduction of POCT from • the owners of thoroughbred racehorses; 1 January 2019, various grants to partially fund a number of key infrastructure projects completed during • other participants and stakeholders in Victorian thoroughbred racing; the period, and a commitment of funding to support significant prizemoney increases announced and • the breeders of thoroughbred racehorses; implemented during the period. • the communities in which Victorian thoroughbred racing operates; and • the Victorian economy generally.

Page 48 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 49 DIRECTORS' REPORT DIRECTORS' REPORT

Funds under investment also generated additional investment income versus the prior year. Investment Industry Expenditure growth including realised gains, unrealised gains and investment income in the form of dividends and interest totalled $5.702 million (2018: $2.971 million). Industry expenditure reflects targeted funding and investment provided to owners, participants and clubs and accounts for the majority of the consolidated entity expenditure (74.8% of revenue). In addition to the total revenue reported during the period, amounts of $8.310 million were recovered from Wagering Service Providers (WSPs) as a result of a series of audits conducted on race fields revenue • Prizemoney and Victorian Owners and Breeders Incentive Scheme (VOBIS) expenditure increased by receipts. These recoveries that relate to prior financial years have been reallocated to their correct periods $23.762 million to $219.171 million (or 12.2%). Prizemoney and VOBIS expenditure is key to enabling through the restatement of prior period financial statements as required in accordance with Australian the industry vision and growth, with direct beneficiaries including owners, trainers and jockeys. These Accounting Standards. investments increase the attractiveness of Victorian thoroughbred racing and lead to improvements in the quality of runners, field sizes and overall interest in our industry. Our Victorian breeders also Total expenditure increased to $458.202 million in the period (2018: $419.226 million). Of the additional benefit through the VOBIS scheme, both directly through bonuses available and indirectly through $38.976 million spend, $24.200 million (or 62.1%) was directed to owners and participants through eligible horses becoming a more attractive sales proposition. Major uplifts were provided this period increased prizemoney, bonuses and support, $12.937 million (or 33.2%) went to clubs through funding and with record prizemoney for the metropolitan Spring Racing Carnival features, a prizemoney boost for infrastructure projects, with the balance primarily going towards operational expenditure. every Country Cup, greater returns for first time winners, the introduction of the $5.000 million All Star Mile and the $1.000 million The Showdown and further increases to prizemoney minimums from 1 Racing Victoria’s business model is based around making regular, proactive investments to ensure the January 2019 which were jointly funded by the VTRI and Government. delivery of the best racing and to support the sustainability of its various stakeholders. With the exception of operational spend at 13.1% of revenue, most expenditure is directed towards funding, supporting and • Club funding expenditure increased by $4.018 million to $80.919 million (or 5.2%). Club funding growing the industry and the number of participants. This is outlined as follows: expenditure is undertaken in accordance with funding agreements executed with each club. These have both fixed and performance based components. The three metropolitan clubs entered into agreements commencing 1 August 2017 for a three-year term. The country clubs funding agreement was extended on 1 August 2018 for a period of two years ending 31 July 2020 with an option for a third Racing Victoria expenditure as a % of revenue – FY19 vs FY18 year at the discretion of Country Racing Victoria.

• Infrastructure expenditure increased by $8.919 million to $22.413 million (or 66.1%) which reflects expenditure and grants to improve and upgrade facilities. Key projects of note included major Prizemoney 47% (46%) synthetic track works at Ballarat, Flemington and Mornington, sand fibre track works at Wangaratta and Seymour, and track widening works at Kilmore and Geelong.

Club Funding • Participant support increased by $0.438 million to $25.616 million (or 1.7%) and includes additional 17% (18%) investments directed towards jockey, trainer or equine participant welfare initiatives. The jockey and Industry 75% (73%) equine welfare component of this spend equates to 2.8% of advertised prizemoney, and is above the Infrastructure 2.0% of prizemoney minimum which is deducted to fund such activities. A significant component 5% (3%) of welfare expenditure related to funding support provided for the equine limb injury prevention research program in partnership with the University of Melbourne. Other participant support outside welfare includes jockey WorkCover fees (based on claims experience), jockey ride fees, as well as our Participant Support investment in the apprentice program. 6% (6%) Income Generating Expenditure

Media services expenditure of $42.943 million, was largely in line with prior year (up 0.6%). This includes Wagering Services strategic investments in media distribution infrastructure, vision capture, production, content creation 1% (2%) and channel production in order to enable the VTRI to achieve a broad audience reach across multiple Total Expenditure Income Generating distribution channels, and drive growth in media rights and wagering income for the industry. Some of 98% of Revenue 10% (12%) this revenue is recorded directly in other external related party accounts including our member clubs and (98% FY18%) Media Services 9% (10%) Racing.com. Wagering services expenditure decreased by $3.128 million (or 33.9%) to $6.101 million.

Operational 13% (13%)

Page 50 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 51 DIRECTORS' REPORT DIRECTORS' REPORT

Operational Expenditure CHANGES IN STATE OF AFFAIRS

The core costs of managing and administering Victorian thoroughbred racing, generally comprise There was no significant change in the state of affairs of the consolidated entity during the financial year. expenditure relating to:

• racing operations (including raceday services, vets and quarantine); SUBSEQUENT EVENTS

• integrity and stewarding; Subsequent to 30 June 2019, on Friday, 13 September 2019 the Victorian Civil and Administrative Tribunal (VCAT) handed down its decisions regarding appeals lodged by certain trainers in relation to the Aquanita case. • wagering and business development; and As of the date of signing, these decisions remain open to appeal by the relevant parties. Subject to all • executive, administration and support; avenues of appeal by the parties being exhausted, Racing Victoria Stewards will consider whether an application(s) should be made to the relevant body with respect to the disqualification of any particular • marketing and communications. horse(s).

The consolidated entity maintained solid control over operational expenditure in FY19 with these costs The disqualification of any horse(s) may bring rise to a future liability through the upgrading of placings being kept in line with prior year as a percentage of total revenue (13.1% vs 2018: 13.2%). Key movements in and the consequent payment of revised prizemoney. operational expenditure from the prior year included targeted additional spend on information technology and risk management initiatives (cloud computing, disaster recovery, cyber security and business Following a review of the facts and details available as at the date of signing the accounts, Racing continuity). Other uplifts were attributable to items that were one-off in nature, including costs attributable Victoria believes that the current allowance for any potential future liability for payment of future revised to an organisation-wide restructure program that commenced in late FY19 and the write down of some prizemoney remains appropriate. materially impaired and disposed assets. The consolidated entity also incurred significant new additional costs relating to the development and promotion of the inaugural All-Star Mile race in March, however these Other than that noted above, there has not been any matter or circumstance occurring subsequent to the were largely offset by the managed reduction of costs in other operational areas. end of the period that has significantly affected or may affect the operations of the consolidated entity, the results of those operations or the state of affairs of the consolidated entity in future financial periods. Investment Activities

The consolidated entity continued its engagement with Evans and Partners during the year to manage FUTURE DEVELOPMENTS accumulated surplus funds that sit outside working capital requirements. During the year, the consolidated entity shifted its investment mandate to balanced from conservative, with investments made in various Likely developments in the operations of the consolidated entity in future financial periods include: financial assets including cash, interest rate securities, Australian and international equities, property and infrastructure and alternative funds. The investment mandate and asset allocations are reviewed on an Wagering Revenue annual basis together with the governing investment policy. As at 30 June 2019 these financial assets totalled $81.366 million (2018: $78.750 million). • Wagering licence renewal – the exclusive pari-mutuel and retail wagering licence currently held by VicTAB is scheduled to conclude in August 2024. The government has formally commenced a process Racing Victoria has agreed to hold and invest these financial assets on behalf of the Victorian thoroughbred to review the terms of renewal of this licence. Racing Victoria has been invited to make submissions industry as part of an Industry Sustainability Fund (ISF). The purpose of the ISF is to ensure that the to this process. The Victorian Racing Industry is a major beneficiary of this licence through funding industry retains sufficient funds to protect the long-term sustainability of the industry, provide funds to arrangements with the licencee which provide the industry with a material amount of its ongoing support important industry-wide capital infrastructure and investments, and also to assist with finance funding. and investment that may not be otherwise available. The ISF framework defines the ISF to comprise of a mixture of cash, loans to stakeholders and investments made from surplus funds. Loans to stakeholders • Point of Consumption Tax (POCT) review - from 1 January 2019, the Victorian Government introduced currently total $16.982 million (fair value $10.040 million). The remaining balance of funds is expected to be a new point of consumption wagering and betting tax (POCT), payable by all wagering operators on all apportioned evenly between funds for industry investments and cash reserves to provide protection against wagering and betting activity undertaken by Victorian residents. industry externalities and to ensure the sustainability of industry funding and investment. Racing Victoria and the clubs have agreed to maintain an optimum balance of $80.000 million, which is subject to annual The State Government has committed to review the terms of the POCT no later than 18 months following review. Racing Victoria and the clubs have also agreed to terms upon which any surplus cash funds above its introduction. The industry is actively monitoring the impacts of the new tax on wagering activity the optimum balance can be made available to clubs via special grants for nominated racing purposes. levels and revenues, which provide the majority of industry funding. This review may include the tax rate set by Government, as well as the rate and terms of the compensation payment provided to the industry Following assessment of the financial year, the consolidated entity has confirmed that additional by the State Government to mitigate the impact of the introduction of the new tax. grants totalling $2.300m (2018: $3.600 million) will be made available to clubs over and above regular club funding commitments, to be used for racing purpose investments, including future prizemoney The outcome of the POCT review may have a material positive or negative impact on the operations of enhancements. the consolidated entity.

Page 52 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 53 DIRECTORS' REPORT DIRECTORS' REPORT

Industry Expenditure INDEMNIFICATION OF OFFICERS AND AUDITORS

• On 11 July 2019, the consolidated entity announced a 2019 Spring Racing Carnival enhancement During the financial year, the consolidated entity paid a premium in respect of a contract insuring the package to help maintain the pre-eminence of the Victorian thoroughbred racing industry. Racing directors of the consolidated entity, the company secretary and all executive officers of the consolidated Victoria, Clubs and the State Government combined to deliver an uplift of more than $18.000 million in entity and of any related body corporate against a liability incurred as such a director, secretary or total prizemoney and bonuses on offer across the state with a focus remaining on three year-old and executive officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits staying races. disclosure of the nature of the liability and the amount of the premium.

The consolidated entity has executed deeds of indemnity in favour of each of the directors. Each of these DIRECTORS’ MEETINGS deeds provides for the consolidated entity to indemnify each director to the maximum extent permitted by law against: The following table sets out the number of directors’ meetings (including monthly and special meetings of the board and meetings of the audit and risk committee) held during the financial period and the number of • all liabilities incurred by the director as an officer of the consolidated entity and each subsidiary; and meetings attended by each director (while they were a director or committee member). During the financial year, 11 board meetings, one special board meeting and six audit committee meetings were held. • all legal costs and expenses arising from proceedings or an investigation incurred by the director as an officer of the consolidated entity or of a subsidiary. BOARD OF DIRECTORS AUDIT AND RISK No. of No. of No. of No. of The deeds also give the directors a right of access to board papers within their term for a period of seven No. of No. of Monthly Monthly Special Special years after their retirement and require the consolidated entity to maintain insurance cover for the directors. Directors Meetings Meetings Meetings Meetings Meetings Meetings Held (*) Attended A director’s right of access to board papers is subject to protection of the consolidated entity’s legal Held (*) Attended Held (*) Attended professional privilege rights and to the director keeping the board papers in confidence. Brian Kruger (Chair) 11 11 1 1 The consolidated entity has not otherwise, during or since the financial year, indemnified or agreed to Mike Hirst (Chair indemnify any officer or auditor of the consolidated entity or of any related body corporate against a of Audit and Risk 11 11 1 0 6 6 liability incurred by such an officer or auditor. Committee, appointed 11 July 2019)

Michael Andrew AO AUDITOR’S INDEPENDENCE DECLARATION (Chair of Audit and Risk 11 10 1 1 6 6 Committee, deceased The auditor’s independence declaration is included on page 56 of the financial report and forms part of this 23 June 2019) directors’ report.

Rowen Craigie 11 10 1 1 ROUNDING OFF OF AMOUNTS Kate Joel 11 10 1 1 6 5

Ross Lanyon OAM 11 10 1 1 The company is a company of the kind referred to in Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, dated 24 March 2016, and in accordance with that Corporations Instrument Sharon McCrohan 11 10 1 1 amounts in the directors’ report and the financial statements are rounded off to the nearest thousand dollars, unless otherwise indicated. Greg Nichols 11 11 1 1

Giles Thompson (CEO) 11 11 1 1 6 6 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 (*) The number of meetings held during the time the directors held office during the 12 months to 30 June 2019.

BRIAN KRUGER MIKE HIRST Chairman Chairman of Audit and Risk Committee

Melbourne, 17 September 2019 Melbourne, 17 September 2019

Page 54 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 55 LEAD AUDITOR’S INDEPENDENCE DECLARATION INDEPENDENT AUDITOR’S REPORT

Lead Auditor’s Independence Declaration under Independent Auditor’s Report Section 307C of the Corporations Act 2001 To the members of Racing Victoria Limited

To the Directors of Racing Victoria Limited Opinion

We have audited the Financial Report of The Financial Report comprises: I declare that, to the best of my knowledge and belief, in relation to the audit of Racing Victoria Limited Racing Victoria Limited (the Company). for the financial year ended 30 June 2019 there have been: • Consolidated statement of financial position as at 30 In our opinion, the accompanying Financial June 2019 i. no contraventions of the auditor independence requirements as set out in the Report of the Company is in accordance Corporations Act 2001 in relation to the audit; and • Consolidated statement of surplus or deficit and with the Corporations Act 2001, including: ii. no contraventions of any applicable code of professional conduct in relation to the audit. other comprehensive income, Consolidated • giving a true and fair view of the statement of changes in equity, and Consolidated Group’s financial position as at 30 statement of cash flows for the year then ended June 2019 and of its financial • Notes including a summary of significant accounting performance for the year ended on policies that date; and • Directors’ Declaration • complying with Australian Accounting The Group consists of the Company and the entities it KPMG Chris Sargent Standards - Reduced Disclosure Requirements and the Corporations controlled at the year-end or from time to time during the financial year. Partner Regulations 2001.

Melbourne

17 September 2019 Emphasis of Matter – Restatement of comparative balances

We draw attention to Note 1 to the Financial Report which describes a prior period restatement relating to the incorrect application of race fields conditions resulting in under-reported wagering revenue relating to prior years.

As set out in Note 1 to the Financial Report, following an analysis of the application of the Group’s policies and commercial agreements, a total of $8.310 million in under-reported wagering revenue relating to prior years was identified. This amount has been received from or agreed with the relevant wagering provider during the current financial year. Our report is not modified in respect of this matter. We note that the financial report of the prior period was audited by the predecessor auditor, Deloitte Touche Tohmatsu, whose report dated 25 September 2018 expressed an unmodified opinion.

Page 56 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 57

11

KPMG, an Australian partnership and a member firm of the KPMG Liability limited by a scheme approved under network of independent member firms affiliated with KPMG Professional Standards Legislation. 12 International Cooperative (“KPMG International”), a Swiss entity. KPMG, an Australian partnership and a member firm of the KPMG Liability limited by a scheme approved under network of independent member firms affiliated with KPMG Professional Standards Legislation. International Cooperative (“KPMG International”), a Swiss entity. INDEPENDENT AUDITOR’S REPORT INDEPENDENT AUDITOR’S REPORT

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit Auditor’s responsibilities for the audit of the Financial Report evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our responsibilities under those standards are further described in the Auditor’s responsibilities for Our objective is: the audit of the Financial Report section of our report. • to obtain reasonable assurance about whether the Financial Report as a whole is free from We are independent of the Group in accordance with the Corporations Act 2001 and the ethical material misstatement, whether due to fraud or error; and requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics • to issue an Auditor’s Report that includes our opinion. for Professional Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Other Information Misstatements can arise from fraud or error. They are considered material if, individually or in the Other Information is financial and non-financial information in Racing Victoria Limited’s annual aggregate, they could reasonably be expected to influence the economic decisions of users taken on reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors the basis of the Financial Report. are responsible for the Other Information. A further description of our responsibilities for the audit of the Financial Report is located at the Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not Auditing and Assurance Standards Board website at: express an audit opinion or any form of assurance conclusion thereon. http://www.auasb.gov.au/auditors_responsibilities/ar3.pdf This description forms part of our Auditor’s Report. In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. KPM_INI_01 We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report. The Other Information we obtained prior to the date of this Auditor’s Report was the Directors’ Report. KPMG Chris Sargent Responsibilities of the Directors for the Financial Report Partner The Directors are responsible for: Melbourne • preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards - Reduced Disclosure Requirements and the Corporations Act 2001; 17 September 2019 • implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error; • assessing the Group’s ability to continue as a going concern and whether the use of the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Page 58 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 59

13

14 DIRECTORS‘ DECLARATION CONSOLIDATED STATEMENT OF SURPLUS OR DEFICIT AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2019

In the opinion of the directors of Racing Victoria: 30 JUNE 2019 30 JUNE 2018 (a) the consolidated entity is not publicly accountable; RESTATED* NOTE $’000 $’000 (b) the financial statements and notes that are set out on pages 61 to 99 are in accordance with the 364,168 Corporations Act 2001, including: Wagering revenue 2(a) 359,020 Media 2(b) 50,278 45,339 (i) giving a true and fair view of Racing Victoria’s financial position as at 30 June 2019 and of its performance, for the financial year ended on that date; and Other revenue 2(c) 51,023 23,534 465,469 427,893 (ii) complying with Australian Accounting Standards – Reduced Disclosure Regime and the Prizemoney 2(d) (219,171) (195,409) Corporations Regulations 2001; and Club funding 2(d) (80,919) (76,901) (c) there are reasonable grounds to believe that the consolidated entity will be able to pay its debts as Infrastructure 2(d) (22,413) (13,494) and when they become due and payable. Participant support 2(d) (25,616) (25,178)

Signed in accordance with a resolution of the directors: Wagering services expenditure 2(e) (6,101) (9,229) Media services expenditure 2(f) (42,943) (42,682) Operational expenditure 2(g) (61,039) (56,333) (458,202) (419,226) Impairment loss - (900) Share of profit of associates accounted for using the equity 7 1,534 1,526 method BRIAN KRUGER MIKE HIRST Surplus before income tax 8,801 9,293 Chairman Chairman of Audit and Risk Committee Income tax expense 26(n) - - Melbourne, 17 September 2019 Melbourne, 17 September 2019 Surplus for the year 8,801 9,293 Other comprehensive income for the year Items that will not be reclassified to the Income Statement Remeasurement of gains/(losses) on pension schemes 15 (462) 248 Total comprehensive income for the year 8,339 9,541

Notes to the financial statements are included on pages 65 to 99. * Prior period restatement is disclosed on page 65.

Page 60 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 61 CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF CASH FLOWS

AS AT 30 JUNE 2019 FOR THE YEAR ENDED 30 JUNE 2019

30 JUNE 2019 30 JUNE 2018 30 JUNE 2017 30 JUNE 2019 30 JUNE 2018 RESTATED* RESTATED* NOTE $’000 $’000 NOTE $’000 $’000 $’000 Cash flows from operating activities Current Assets Receipts on behalf of the thoroughbred racing industry 516,568 456,709 Cash and cash equivalents 22(a) 27,148 13,962 28,504 Payments associated with industry expenditure (309,440) (292,382) Trade and other receivables 3 41,670 42,789 33,016 Payments associated with all other expenditure (186,818) (161,813) Other financial assets 4 86,335 83,831 66,047 Interest received 570 242 Other assets 169 143 58 Interest paid - (1) Total Current Assets 155,322 140,725 127,625 Net cash generated by operating activities 22(b) 20,880 2,755 Non-Current Assets Other financial assets 4 8,440 8,366 9,607 Cash flows from investing activities Property, plant & equipment 5 20,715 19,068 17,885 Proceeds/(payments) for financial assets 2,000 (15,000) Intangible and goodwill 6 10,837 8,399 9,780 Payments for property, plant & equipment (4,441) (2,294) Investments accounted for using the equity 7 11,657 10,123 8,597 Payments for intangibles (3,247) (208) method Loans to related entities and repayments received (2,006) 240 Other assets 15 239 853 764 Proceeds from sale of property, plant & equipment - 2 Total Non-Current Assets 51,888 46,809 46,093 Net cash used in investing activities (7,694) (17,260) Total Assets 207,210 187,534 173,718 Current Liabilities Trade and other payables 9 46,402 41,481 38,368 Cash flows from financing activities Borrowings - - 36 Repayment of borrowings - (37) Unearned revenue 10 5,769 585 - Net cash used in financing activities - (37) Provisions 11 7,380 6,101 6,075 Net increase/(decrease) in cash held 13,186 (14,542) Total Current Liabilities 59,551 48,167 44,479 Cash at beginning of financial year 13,962 28,504 Non-Current Liabilities Cash at the end of financial year 22(a) 27,148 13,962 Unearned revenue 10 370 543 - Provisions 11 3,438 3,312 3,268 Notes to the financial statements are included on pages 65 to 99. Total Non-Current Liabilities 3,808 3,855 3,268 Total Liabilities 63,359 52,022 47,747 Net Assets 143,851 135,512 125,971 Equity Issued capital 12 - - - Retained earnings 13 143,851 135,512 125,971 Total Equity 143,851 135,512 125,971

Notes to the financial statements are included on pages 65 to 99. * Prior period restatement is disclosed on page 65.

Page 62 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 63 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2019 FOR THE YEAR ENDED 30 JUNE 2019

RETAINED ISSUED 1. SUMMARY OF ACCOUNTING POLICIES EARNINGS TOTAL CAPITAL RESTATED* The principal accounting policies adopted in the preparation of these consolidated financial statements are NOTE $’000 $’000 $’000 set out below. These policies have been consistently applied to all the years presented, unless otherwise Reported balance at 1 July 2017 - 121,309 121,309 stated. The financial statements are for the consolidated entity consisting of Racing Victoria Limited and its subsidiaries. Impact of restatement - 4,662 4,662 Restated balance at 1 July 2017 - 125,971 125,971 Basis of preparation

Surplus for the year - 9,293 9,293 Compliance with Australian Accounting Standards – Reduced Disclosure Requirements Actuarial loss on defined benefit plans 15 - 248 248 These general purpose financial statements have been prepared in accordance with the Australian Accounting Standards – Reduced Disclosure Requirements, other authoritative pronouncements of the Balance at 30 June 2018 - 135,512 135,512 Australian Accounting Standards Board and Interpretations, and the Corporations Act 2001.

Balance at 1 July 2018 - 135,512 135,512 For the purposes of preparing the consolidated financial statements, the consolidated entity is a not-for- Surplus for the year - 8,801 8,801 profit entity. The financial statements were authorised for issue by the directors on 17 September 2019. Actuarial gain on defined benefit plans 15 - (462) (462) Prior period restatement Balance at 30 June 2019 - 143,851 143,851 During 2019, the consolidated entity conducted a series of audits on the revenue received from race fields fees paid by corporate WSPs dating back to 2015. These audits uncovered some incorrect applications of

Notes to the financial statements including prior year restatement are disclosed on pages 65 to 99. race fields conditions resulting in under-reported wagering revenue relating to prior years which were not known at the time of signing prior year accounts. Following confirmation of these audits, a total of $8.310 * Prior period restatement is disclosed on page 65. million was recovered from WSPs.

If these amounts recovered from WSPs were to be included in the 30 June 2019 accounts as revenue in the period, it would result in wagering revenue being overstated, leading to an accounting error as per AASB 108. In recognition of this, each of the affected financial statement line items for prior periods have been correctly restated as follows:

• An additional $3.648 million of revenue is recognised in the year ending 2018;

• A further $4.662 million is recognised in FY18 opening retained earnings, reflecting the revenue which should have correctly been associated with financial years ending 2015, 2016 and 2017.

The following tables summarise the impacts on the consolidated entity’s financial statements.

Consolidated Statement of Surplus or Deficit and Other Comprehensive Income for the year ended 30 June 2018

IMPACT OF PRIOR PERIOD RESTATEMENT AS REPORTED 30 JUNE 2018 ADJUSTMENTS PREVIOUSLY RESTATED*

$’000 $’000 $’000 Wagering revenue 355,372 3,648 359,020 Surplus for the year 5,645 3,648 9,293 Total comprehensive income for the year 5,893 3,648 9,541

Page 64 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 65 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2019 FOR THE YEAR ENDED 30 JUNE 2019

1. SUMMARY OF ACCOUNTING POLICIES (CONTINUED) 1. SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

AS REPORTED ADJUSTMENTS 30 JUNE 2018 (ii) Current Membership PREVIOUSLY RESTATED* The current membership of Racing Victoria Limited now comprises of: $’000 $’000 $’000 Club members: Country Racing Victoria, Melbourne Racing Club, Moonee Valley Racing Club & Victoria Racing Club. Industry body members: Australian Jumping Racing Association, Australian Services Trade and other receivables 34,479 8,310 42,789 Union, Australian Trainers Association (Victorian Division), Australian Workers Union (Victorian Total Current Assets 132,415 8,310 140,725 Division), Media and Entertainment Arts Alliance, Thoroughbred Breeders Victoria, Thoroughbred Total Assets 179,224 8,310 187,534 Racehorse Owners Association, United Voice, Victorian Bookmakers Association & Victorian Jockeys Association.

Retained earnings 127,202 8,310 135,512 (iii) Thoroughbred Racing Industry Revenue and Distributions Total Equity 127,202 8,310 135,512 On the 16 August 2012, the racing industry in Victoria entered into new joint venture and information supply agreements with the Tabcorp group of companies. Under a racing industry Deed of Operations executed on 21 December 2011, the thoroughbred, harness and greyhound racing codes have AS REPORTED ADJUSTMENTS 30 JUNE 2017 PREVIOUSLY RESTATED* determined arrangements between themselves, including the allocation of joint venture profits and information supply fees. $’000 $’000 $’000 Trade and other receivables 28,354 4,662 33,016 Wagering income is received by the thoroughbred racing industry in the form of the above joint venture distributions, international distributions and race fields fees (refer Note 2(a)). Total Current Assets 122,963 4,662 127,625

Total Assets 169,056 4,662 173,718 The consolidated entity will endeavour to make grants to member clubs having regard to the following principles: Retained earnings 121,309 4,662 125,971 • The consolidated entity will from time to time make grants to members and participants in Total Equity 121,309 4,662 125,971 the Victorian thoroughbred racing industry for the purpose of encouraging thoroughbred horseracing.

Historical cost convention • In making grants, the consolidated entity will seek to:

These financial statements have been prepared under the historical cost convention, as modified by the (i) adequately support the objectives of the Victorian thoroughbred racing industry; revaluation of financial assets and liabilities (including derivative instruments) at fair value through profit or loss. (ii) provide incentives for club performance and achievements of industry objectives; and The company is a company of the kind referred to in Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, dated 24 March 2016, and in accordance with that Corporations Instrument (iii) encourage and optimise participation in the ownership of thoroughbred race horses amounts in the directors’ report and the financial statements are rounded off to the nearest Australian throughout Victoria by maximising returns to owners through statewide prizemoney thousand dollars, unless otherwise indicated. strategies and other incentives.

The financial report has also been prepared in accordance with the terms of various agreements with the • The clubs further acknowledge that, consistent with the constitution of the consolidated entity, members (as defined at (i), (ii) and (iii) below) and the racing industry in Victoria as follows: no portion or amount of the income or assets of the consolidated entity may be distributed, paid or transferred directly or indirectly by way of dividend, bonus, or otherwise by way of (i) Establishment of Operations profit to or amongst the clubs in their capacity as members. The consolidated entity 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 (iv) Retained Profits Club (VRC). Under the terms of the Members Agreement net profit and the ongoing retained profits of the consolidated entity cannot be distributed as dividends to the members. 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 consolidated entity. Under this agreement the members agreed to establish the consolidated entity as the new principal club and governing body for thoroughbred racing in Victoria. The VRC agreed to relinquish its status as the principal club and its role as governing body to facilitate the granting to the consolidated entity of that status and role.

Page 66 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 67 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2019 FOR THE YEAR ENDED 30 JUNE 2019

1. SUMMARY OF ACCOUNTING POLICIES (CONTINUED) 1. SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

Significant Accounting Policies Critical judgements in applying the consolidated entity’s accounting policies The following significant accounting policies have been adopted in the preparation and presentation of the Judgements made by management in the application of the consolidated entity’s accounting policies financial report: that have significant effects on the financial statements and estimates with a significant risk of material adjustments in the next period are disclosed, where applicable, in the relevant notes to the financial (a) AASB 15 Revenue from Contracts with Customers statements. Following application of AASB 15, management has determined that it will defer a proportion of VOBIS nomination revenue into unearned revenue, to be recognised as revenue in future years. The proportion will Accounting policies are selected and applied in a manner that ensures that the resulting financial be determined based upon the likelihood of a nominated horse winning a VOBIS bonus as either a 2 year- information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the old or 3 year-old horse. underlying transactions or other events is reported.

For the year ended 30 June 2019, the consolidated entity recorded $3.213 million (2018: $4.164 million) of The following are the key assumptions concerning the future, and other key sources of estimation VOBIS nomination revenue with a total of $0.100 million and $0.370 million deferred into 2020 and 2021 uncertainty at balance date, that have a significant risk of causing a material adjustment to the carrying respectively, representing management’s estimate of the likelihood of 2019 nominated horses winning a amounts of assets and liabilities within the next financial period. VOBIS bonus as either a 2 year-old or 3 year-old based upon historical averages. • Impairment of Indefinite Life Intangible Assets Impact of AASB 16 Leases (effective from 1 July 2019) As described in note 26(g), the consolidated entity assesses the recoverable amount of indefinite life AASB 16 Leases introduces a single, on-balance sheet lease accounting model for lessees, in a similar way intangible assets, by estimating the future cash flows, growth and discount rate at the end of each to the accounting treatment for finance leases under AASB 117 Leases. Under AASB 16, a lessee recognises annual reporting period. a right-of-use asset representing its right-to-use the underlying asset and a lease liability representing its obligations to make lease payments. • Provisions As described in note 26(c) and 26(l), the consolidated entity estimates the present value of current The consolidated entity has considered the impact of implementing AASB16 in relation to the following: obligations based on management estimates for general provisions, WorkCover, employee provisions, defined benefit and contribution plans at the end of each annual reporting period. • Leasehold property and equipment where it is a lessee; and • Useful lives of Property, Plant & Equipment and Computer Software & Databases • Agreements which provide a right to occupy a room As described in note 26(k), the consolidated entity reviews the estimated useful lives of property, plant and equipment at the end of each annual reporting period. The consolidated entity reviewed and assessed that there is no impact on the above for the financial period. • Contingent Liabilities Furthermore, AASB 16 retains the AASB 17 Leases accounting treatment for lessors requiring a lease to be The consolidated entity makes judgement on any potential liability that may occur depending on the classified as a finance lease if substantially all of the risk and rewards incidental to ownership of the leased outcome of an uncertain future event. These liabilities are listed under note 24. asset have been transferred to the lessee or otherwise to be classified as an operating lease. All other significant accounting policies adopted in the preparation and presentation of the financial (b) Critical Accounting Judgements and Key Sources of Estimation Uncertainty report are included under note 26. In the application of the consolidated entity’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.

Page 68 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 69 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2019 FOR THE YEAR ENDED 30 JUNE 2019

30 JUNE 2019 30 JUNE 2018 30 JUNE 2019 30 JUNE 2018 RESTATED* RESTATED*

$’000 $’000 $’000 $’000

2. SURPLUS FROM OPERATIONS 2. SURPLUS FROM OPERATIONS (CONTINUED) Revenue from operations consisted of the following items: Revenue from operations consisted of the following items: (a) Wagering Revenue (c) Other Revenue Joint venture distributions (i) 168,372 180,178 POCT revenue (iv) 7,648 - International distributions 7,665 7,064 Prizemoney contribution (v) 8,430 - Race fields revenue 188,131 171,778 Racing revenue 2,459 2,501 364,168 359,020 VOBIS 6,851 6,574 Racecourse infrastructure program (vi) 13,968 6,261 (b) Media Revenue Customer revenue 825 834 Media rights revenue 32,952 28,457 Industry service recoveries 1,480 1,619 Racing.com advertising (ii) 3,500 3,470 Rent income 933 906 Racing Victoria share of Racing.com (iii) 4,146 3,551 Other revenue 2,727 1,868 Publications revenue 8,378 8,466 45,321 20,563 Other revenue 1,302 1,395 50,278 45,339 Investment income Distribution income 432 561 (i) Joint venture distributions from VicTAB were impacted by new POCT make–whole arrangements commencing 1 January 2019. From this date, Interest income 2,019 1,445 Product Fees received by the Victorian Racing Industry are to be reduced by an amount equivalent to the increased wagering tax paid by VicTAB following the introduction of the new POCT. Gross joint venture distributions of $173.017 million for the full year ended 30 June 2019 Dividend income 346 355 (2018: $180.178 million) were reduced by $4.645 million in 2H19 as a direct impact of these POCT arrangements. Foreign income 1,935 1,443 (ii) Reflects Racing Victoria’s share of Racing.com advertising income received directly from Racing.com. The consolidated entity also benefits 4,732 3,804 indirectly from its expenditure contributions to Racing.com through growth in wagering and digital media rights revenue captured within wagering and media revenue (notes 2 (a) and (b)). (iii) Refer note 8, interests in joint operations. Other gains and losses Loss on disposal of investments (78) (18) Net gain/(loss) arising on financial assets designated as FVTPL 1,048 (815) 970 (833) 51,023 23,534

(iv) Racing Victoria’s share of State Government compensation paid to the Victorian Racing Industry following the introduction of POCT from 1 January 2019. (v) State Government commitment to support increases to the minimum levels of thoroughbred prizemoney from 1 January 2019. (vi) State Government and club funding contribution increase due to an uplift in major infrastructure works in the period including synthetic tracks, sand fibre tracks and track widening projects.

Page 70 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 71 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2019 FOR THE YEAR ENDED 30 JUNE 2019

30 JUNE 2019 30 JUNE 2018 30 JUNE 2019 30 JUNE 2018 RESTATED* $’000 $’000 $’000 $’000 2. SURPLUS FROM OPERATIONS (CONTINUED) 2. SURPLUS FROM OPERATIONS (CONTINUED) (e) Wagering Services Expenditure Surplus/(deficit) has been arrived at after charging the following expenses: (d) Industry Expenditure Wagering operations expense 1,373 1,398 Prizemoney Wagering development fund 2,139 3,342 Prizemoney (vii) 208,130 183,458 Joint venture contributions 2,081 4,414 VOBIS 11,041 11,951 Bookmakers development fund 97 75 219,171 195,409 Other expense 411 - 6,101 9,229 Club Funding (f) Media Services Expenditure Fixed 22,391 18,505 Racing Victoria share of Racing.com (x) 16,206 15,833 Track and infrastructure 18,160 17,035 Race callers expense Wagering 14,004 13,052 847 851 Formguide expense Club grants (viii) 2,300 3,600 2,006 1,984 Race vision services Media rights 23,216 23,703 8,089 8,048 Publications expense Loan discounting 848 1,006 5,526 5,559 Radio Sport National funding 80,919 76,901 1,391 1,420 Media infrastructure expense 3,675 4,458 Production expense Infrastructure 2,301 2,182 Other expense Infrastructure operations 1,409 1,347 2,902 2,347 Infrastructure capital vested with clubs (ix) 21,004 12,147 42,943 42,682 22,413 13,494 (x) Refer note 8, interests in joint operations. This amount includes those costs directly paid for by Racing Victoria on behalf of Racing.com as well as Racing Victoria’s share of other Racing.com expenses. Participant Support Riding fees 12,226 11,686 Jockey WorkCover 6,002 6,933 Workforce development and other expense 1,184 1,197 Jockey welfare expense 2,403 2,051 Equine welfare expense 3,801 3,311 25,616 25,178 348,119 310,982

(vii) Prizemoney payments reported are net of amounts deducted and retained by Racing Victoria for jockey and equine welfare contributions totaling 2% (1% each). (viii) The Industry Sustainability Fund framework allows for accumulated surplus funds above the agreed balance to be granted to clubs on terms and conditions approved by the Racing Victoria Board. (ix) An uplift in major infrastructure works in the period including synthetic tracks, sand fibre tracks and track widening projects.

Page 72 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 73 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2019 FOR THE YEAR ENDED 30 JUNE 2019

30 JUNE 2019 30 JUNE 2018 30 JUNE 2019 30 JUNE 2018 $’000 $’000 $’000 $’000

2. SURPLUS FROM OPERATIONS (CONTINUED) 2. SURPLUS FROM OPERATIONS (CONTINUED)

(g) Operational Expenditure Expenses from ordinary activities include: Customer Employee benefits expense (xi) 24,484 19,487 Customer contact centre 535 421 Defined benefit superannuation plan expense 153 159 Marketing expense 6,942 7,545 AIF actuarial assessment - (58) Industry communications expense 1,466 1,127 Depreciation of non-current assets: 8,943 9,093 - Property, plant and equipment 2,113 2,027 Amortisation of non-current assets: Racing - Computer software and databases 719 673 Raceday services expense 11,124 11,070 Operating expenses – other related party: Racing operations expense 3,087 2,872 - Australian Racing Museum 650 650 14,211 13,942 Impairment loss - 900

Integrity and Veterinary (xi) Material uplift primarily attributable to organisational restructure program that commenced in late FY19, combined with new hires and full year Integrity expense 6,209 6,660 timing impacts of staff across key focus areas, including executive office and technology. Legal expense 1,476 1,453 Veterinary expense 958 949 Swabbing expense 2,352 2,185 10,995 11,247

Adminstration and Other Services and administration expense 9,852 9,043 Legal expense 1,791 1,827 Occupancy expense 1,838 1,571 Strategy and projects 1,207 1,749 Information technology 4,413 2,914 Fleet costs 334 309 Depreciation and amortisation 2,765 2,700 Interest expense - 1 Asset write down 770 (2) Restructure plan 1,125 - Doubtful debts 979 358 Other 1,816 1,581 26,890 22,051 61,039 56,333

Page 74 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 75 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2019 FOR THE YEAR ENDED 30 JUNE 2019

30 JUNE 2019 30 JUNE 2018 30 JUNE 2019 30 JUNE 2018 RESTATED* $’000 $’000 $’000 $’000 4. OTHER FINANCIAL ASSETS 3. CURRENT TRADE AND OTHER RECEIVABLES Current: Trade receivables (i) 22,363 27,310 Financial assets designated as FVTPL Allowance for doubtful debts (ii)(iii) (979) (358) - Australian shares 5,754 3,765 21,384 26,952 - International shares 14,611 3,512 Joint venture fees receivable 12,994 9,904 - Interest bearing securities 54,882 70,456 Media rights receivables 3,961 3,513 75,247 77,733 Sundry receivables 3,331 2,420 41,670 42,789 Financial assets measured at amortised cost - Cash investments 6,120 1,017 (i) The majority of trade receivables arise as a result of transactions with wagering service providers, trainers and racing clubs with credit periods - Cash deposits - Jockey apprentice and career benefit 3,368 5,081 provided at 10 days, 60 days and 30 days respectively. A provision has been made for estimated irrecoverable amounts from these receivables, determined by reference to past default experience. - Loans to related parties - Racing.com Club shareholders (i) 1,600 - (ii) Loss allowances for trade receivables are measured at an amount equal to lifetime Expected Credit Losses (ECLs). When determining whether 11,088 6,098 the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the consolidated entity considers reasonable and supportable information that is relevant and available without undue cost or effort. This is determined by reference 86,335 83,831 to past default experience. (iii) Reconciliation of doubtful debts. Non Current: Allowance for doubtful debts at the beginning of the period 358 49 Financial assets measured at amortised cost - Bad debts written off (28) (255) - Loans to related party - Victoria Racing Club (ii) 5,635 5,308 - Movement in allowance account taken to surplus or deficit 649 564 - Loans to related party - Pakenham Racing Club (ii) (iii) 2,399 3,058 Allowance for doubtful debts at the end of the period 979 358 - Loans to related party - Sports Wagering Integrity Monitoring Ltd (iv) 406 - 8,440 8,366

(i) The consolidated entity has provided loans to the other Racing.com shareholders (Country Racing Victoria, Melbourne Racing Club, Moonee Valley Racing Club and Victoria Racing Club) in equal value to support the development of the Racing.com digital and mobile application platform during the year. Loan repayments will occur 1 January 2020. (ii) The consolidated entity has provided loans to Victoria Racing Club and Pakenham Racing Club. These loans totaling $10.000 million and $4.976 million respectively have been provided at discount-to-market rates and recognised at amortised cost. (iii) The repayment of the consolidated entity loan totaling $4.976 million is subordinated to bank loans held by the Pakenham Racing Club (PRC). After reviewing PRC’s most recent forecast cash outlook, it is the view of Racing Victoria that it is appropriate to recognise a further loan discount of $0.848 million as at 30 June 2019 reflecting the delay of the expected repayment of the loan. The consolidated entity continues to closely monitor the recoverability of this loan and the additional credit support (via corporate guarantees) provided by Racing Victoria as security for bank loans to the PRC. (iv) The consolidated entity has provided a loan to Sports Wagering Integrity Monitoring Ltd (SWIM) to fund the capital costs of developing a transaction level wagering and betting monitoring system.

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5. PROPERTY, PLANT AND EQUIPMENT 6. INTANGIBLE ASSETS

Infra- Racing. Freehold Plant & Computer Buildings structure Total com Land Equipment software & Mastheads Goodwill Total Capital Domain databases $’000 $’000 $’000 $’000 $’000 name $’000 $’000 $’000 $’000 $’000 Gross carrying amount (at cost) Gross carrying amount (at cost) Balance at the beginning of the period 9,995 4200 7,334 11,099 32,628 Balance at the beginning of the period 4,365 2,052 4,725 947 12,089 Additions 1,154 2,142 440 705 4,441 Additions 3,247 - - - 3,247 Assets written off (426) - (158) (2,470) (3,054) Assets written off (919) - - - (919) Balance at the end of the period 10,723 6,342 7,616 9,334 34,015 Balance at the end of the period 6,693 2,052 4,725 947 14,417

Accumulated Depreciation Balance at the beginning of the period (3,164) - (4,569) (5,827) (13,560) Accumulated Amortisation Assets written off 140 - 141 2,093 2,374 Balance at the beginning of the period (3,690) - - - (3,690) Depreciation expense (326) - (702) (1,086) (2,114) Assets written off 829 - - - 829 Balance at the end of the period (3,350) - (5,130) (4,820) (13,300) Amortisation expense (719) - - - (719) Balance at the end of the period (3,580) - - - (3,580)

Net Book Value As at the beginning of the period 6,831 4,200 2,765 5,272 19,068 Net Book Value As at the end of the period 7,373 6,342 2,486 4,514 20,715 As at the beginning of the period 675 2,052 4,725 947 8,399 As at the end of the period 3,113 2,052 4,725 947 10,837

30 JUNE 2019 30 JUNE 2018 7. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD $’000 $’000 Name of entity Principal activity Balance Ownership interest Carrying amount date Aggregate depreciation allocated and recognised as an expense during the period: 2019 2018 2019 2018 $’000 $’000 Buildings 326 297 Racing Australia Ltd Racing Information 30/06/2019 35% 35% 11,657 10,123 Infrastructure capital 702 663 Plant and equipment 1,086 1,067 Significant influence is derived over Racing Australia Ltd through the Board’s appointment of a nominee 2,114 2,027 director. Pursuant to a shareholder agreement the consolidated entity has the right to cast 35% of the votes at a shareholder meeting.

30 JUNE 2019 30 JUNE 2018 $’000 $’000 Movements in investments in associates At the beginning of the financial period 10,123 8,597 Share of profit 1,534 1,526 At the end of the financial period 11,657 10,123

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8. INTERESTS IN JOINT OPERATIONS 30 JUNE 2019 30 JUNE 2018 $’000 $’000 The consolidated entity has the following significant interests in joint operations: 9. CURRENT TRADE AND OTHER PAYABLES A 20% shareholding (2018: 20%) in an unincorporated joint arrangement relating to the development and operation of the digital and television platform, Racing.com Pty Ltd (Racing.com). The remaining Unsecured: 80% shareholding in Racing.com resides with the Melbourne Racing Club, Victoria Racing Club, Moonee Trade payables 12,457 12,802 Valley Racing Club and Country Racing Victoria in equal 20% shares. Racing Victoria has also entered into a commerical joint venture arrangement with Seven West Media to facilitate the Racing.com broadcast Joint venture payable 2,185 865 business, pursuant to which Racing Victoria has a number of expenditure commitments as set out further Prizemoney accruals 4,395 3,478 below. The principal place of business of Racing.com is Victoria, Australia. Sundry payables 13,110 9,277

The consolidated entity has accounted for its share of the Racing.com joint operation as follows: Club grants payable 2,300 3,600 Media rights payable 5,458 4,815 30 JUNE 2019 30 JUNE 2018 Jockey apprentice and career benefit payables 3,369 5,081 $’000 $’000 GST payable 3,128 1,563 Revenue 46,402 41,481 Racing Victoria share of Racing.com (i) 4,146 3,551 4,146 3,551

Expenditure 10. UNEARNED REVENUE Directly incurred costs: Digital contribution 3,641 3,473 Current: Television production contribution 8,196 8,028 Prepaid revenue (i) 5,769 585 Management contribution 700 700 5,769 585 12,537 12,201 Racing Victoria share of Racing.com (i) 3,669 3,632 Non current: 370 543 16,206 15,833 Prepaid revenue 370 543

Financial position movement: (i) State Government $5.000 million contribution towards 2019 Spring Racing Carnival prizemoney enhancement package received in June 2019. Current assets 533 280 Non-current assets 465 (16) Current liabilities (495) (340) Non-current liabilities (26) (5) 477 (81)

(i) Accounting for joint operations includes Racing Victoria taking up its 20% share of all Racing.com revenue and expenditure outside direct member contributions towards digital, television production and management as set out above.

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30 JUNE 2019 30 JUNE 2018 30 JUNE 2019 30 JUNE 2018

$’000 $’000 $’000 $’000

11. PROVISIONS 14. COMMITMENTS FOR EXPENDITURE

Current: (a) Broadcast contract:

Employee benefits 7,380 6,101 Not later than 1 year 8,462 658 7,380 6,101 Later than 1 year but not later than 5 years 26,440 - 34,902 658 Non current: Accident claims (i) (Note 26(l)) 2,894 2,894

Employee benefits 544 418 Broadcast contract relates to the supply of outside broadcasting services to the Victorian Thoroughbred 3,438 3,312 Racing Industry by Thoroughbred Racing Productions. Racing Victoria entered into a new five year contract during the period.

(i) Accident claims (b) The consolidated entity has undertaken to provide financial support to the Australian Racing Museum Balance at beginning of the period 2,894 2,952 to a maximum of $0.908 million (indexed) for years ceasing 2019-20, and then to a maximum of Additional provisions - (58) $0.700 million (indexed) for ten years from 2020-21 ceasing 2029-30. Balance at end of the period 2,894 2,894

15. SUPERANNUATION COMMITMENTS

12. ISSUED CAPITAL The employees of the consolidated entity 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 The entity is a company limited by guarantee. Every member undertakes to and must contribute an amount composition of defined benefit and accumulation membership. not exceeding $10 in the event of the winding up of the entity. The financial information of the fund disclosed in this report relates to the employees of the consolidated entity. 30 JUNE 2019 30 JUNE 2018 RESTATED* Under the defined benefit plan, employees are entitled to retirement benefits based on a multiple of their $’000 $’000 deemed final salary upon attainment of their retirement age of 60. No other post-retirement benefits are provided to these employees. 13. RETAINED EARNINGS The defined benefit plans are funded plans. The net surplus determined in the plans most recent financial Balance at beginning of financial period 13,512 125,971 report, being the annual reports for the financial period ended 30 June 2019, was $0.239 million (2018: $0.853 million). The plan actuaries have recommended that no additional contributions beyond the current Net surplus 8,801 9,293 contribution level be made, with an employer contribution holiday recommended until 31 March 2020. Actuarial (losses)/gains (462) 248 Funding recommendations are made by the actuaries based on their forecast of various matters, including Balance at end of financial period 143,851 135,512 future plan assets performance, interest rates and salary increases.

The consolidated entity 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.

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15. SUPERANNUATION COMMITMENTS (CONTINUED) 30 JUNE 2019 30 JUNE 2018

$’000 $’000 30 JUNE 2019 30 JUNE 2018 $’000 $’000 17. REMUNERATION OF AUDITORS

Amounts recognised in income in respect of the defined benefit plan is as follows: Audit of the financial report 89 107 Current service cost 184 187 Other assurance services 112 - Net Interest (31) (29) 201 107 Total including employee benefit expense 153 158 Actuarial gains/(losses) during the period and recognised The auditor of Racing Victoria Limited is KPMG (2018: Deloitte Touche Tohmatsu). in the statement of changes in equity (462) 248 Cumulative actuarial gains recognised in the statement of changes in equity 2,644 3,106 18. SUBSIDIARIES

Details of the consolidated entity's material subsidiaries at the reporting period are as follows: The amount included in the statement of financial position arising from the consolidated entity’s obligations in respect of its defined benefit plan is as follows: Country of Ownership interest Ownership interest Name of entity Present value of funded defined benefit obligations (4,630) (4,666) incorporation 2019 2018

Fair value of plan assets 4,869 5,519 % % Net asset arising from defined benefit obligations 239 853 RVL Media Pty Ltd Australia 100 100 RVL Media International Pty Ltd Australia 100 100

16. KEY MANAGEMENT PERSONNEL REMUNERATION RVL Media Pty Ltd and RVL Media International Pty Ltd are subsidiaries responsible for the aggregation of The aggregate compensation of key management personnel (which includes the CEO and all members of club media rights and commercialisation via domestic, international the Executive Management Team and all Directors of the consolidated entity) is set out below: and digital platforms.

Management Short-term employee benefits 3,571 2,516 Other long-term benefits 92 33 Termination benefits 483 - 4,146 2,549

Non executive directors Short-term employee benefits 636 620 Other long-term benefits 11 4 647 624

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30 JUNE 2018 30 JUNE 2017 21. RELATED PARTY DISCLOSURES (CONTINUED) 30 JUNE 2019 RESTATED* RESTATED*

$’000 $’000 During the financial period the consolidated entity entered into transactions with the following entities that require key management personnel to act in the capacity of director as part of their Racing 19. PARENT ENTITY FINANCIAL INFORMATION Victoria employment – VicRacing Pty Ltd, Racing Products Victoria Pty Ltd, Australian Racing Museum Ltd, Racing Australia Ltd, Racing.com Pty Ltd, Sports Wagering Integrity Monitoring Ltd, and Racing Assets Analytical Services Ltd. These transactions included both revenue and operational expenditure, with expenditure incurred only after approval by the Racing Victoria Board. The consolidated entity also Current assets 146,027 135,575 121,908 provided administrative services to some of these director related entities on normal commercial Non-current assets 51,985 46,810 46,093 terms and conditions as agreed by the parties. Total assets 198,012 182,385 168,001 Revenue Expenditure Current liabilities 54,087 43,351 32,517 $’000 $’000 Non-current liabilities 3,808 3,855 3,268 VicRacing Pty Ltd 83,785 2,002 Total liabilities 57,895 47,206 35,785 Racing Products Pty Ltd 100,362 79 Australian Racing Museum Ltd 67 650 Shareholders’ equity Racing Australia Ltd 150 2,481 Retained earnings 140,117 135,179 132,216 Racing.com Pty Ltd (i) 3,974 17,056 Total equity 140,117 135,179 132,216 Racing Analytical Services Ltd 503 2,248 Profit for the period 5,303 2,715 20,219 Sports Wagering Integrity Monitoring Ltd 6 400 Total comprehensive income for the period 4,841 2,963 20,682 188,847 24,916 All contingent liabilities of the parent company are consistent with those listed in Note 24 of the consolidated entity. (i) Amounts do not align with Racing.com revenue and expenditure disclosed within notes 2 and 8, as the above transactions amounts exclude accounting for joint operations amounts based on Racing Victoria’s 20% shareholding. The above transaction amounts also include: 20. SEGMENT REPORTING • revenue from industry service recoveries for the provision of administration services; and • expenditure for race callers managed by Racing.com The consolidated entity operates in the thoroughbred racing industry in the State of Victoria.

21. RELATED PARTY DISCLOSURES Transactions with member related entities During the financial period the consolidated entity entered into transactions with current membership (a) Equity interests in associates and joint arrangements entities of Racing Victoria. These member entities comprise club members and industry body members Details of interests in associates and joint arrangements are disclosed in notes 7 and 8 to the financial as listed under the current membership within note 1 of the financial report. These transactions included statements. revenue and expenditure, with expenditure incurred only after approval by the Racing Victoria Board. The consolidated entity also provided loans to some club members on terms and conditions as agreed by the (b) Key management personnel compensation parties, refer to note 4. Details of key management personnel compensation including directors are disclosed in note 16 to the financial statements.

(c) Transactions with key management personnel Key management personnel, including 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 During the financial period the consolidated entity did not enter into any transactions with related entities of key management personnel.

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30 JUNE 2019 30 JUNE 2018 24. CONTINGENT LIABILITIES

$’000 $’000 • Under the Deed of Contribution and Indemnity with the Victoria Racing Club, the consolidated entity 22. NOTES TO THE STATEMENT OF CASH FLOWS has indemnified the Victoria Racing Club against any claims made towards the Victoria Racing Club arising from its previous operation of the thoroughbred racing industry in Victoria. (a) Reconciliation of cash • Racing Victoria no longer has a loan guarantee obligation in relation to a Racing Australia Pty Ltd For the purpose of the statement of cash flows, cash and cash equivalents includes cash on hand and in facility entered into following the acquisition of the Australian stud book (2018: $1.362 million). banks, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the financial period as shown in the statement of cash flows is reconciled to the related items in the statement of financial • Racing Victoria has guaranteed a loan facility of Pakenham Racing Club Inc. of $5.000 million position as follows: (2018: $14.500 million). Following a re-financing by the Club during the period, Racing Victoria has negotiated with the Club's financiers ANZ, to reduce the total amount provided by way of guarantee Cash at bank 27,148 6,101 to support the Club's loan facilities.

• On Friday 13 September 2019 the Victorian Civil and Administrative Tribunal (VCAT) handed down its (b) Reconciliation of net profit to net cash flows from operating activities decisions regarding the appeals lodged by trainers Robert Smerdon, Stuart Webb, Tony Vasil and Liam Birchley against the May 2018 convictions and disqualifications handed to them by the Racing Appeals Profit from ordinary activities 8,800 9,293 and Disciplinary (RAD) Board in the Aquanita Case. Share of associates (profit) (1,534) (1,526) Depreciation & amortisation of non-current assets 2,831 2,700 As of the date of signing, these decisions remain open to appeal by the relevant parties. Subject to all avenues of appeal by the parties being exhausted, Racing Victoria Stewards will consider whether Asset written off & impairment of non-current assets 771 (2) an application(s) should be made to the relevant body with respect to the disqualification of any Actuarial movement loss 153 101 particular horse(s). Interest income - 29 Managed investment gain (4,616) (2,214) The disqualification of any horse(s) may bring rise to a future liability through the upgrading of placings and the consequent payment of revised prizemoney. Racing Victoria retains its right to seek Loan discount unwind (516) (544) recovery of prizemoney paid to connections of disqualified horses. Loan discount to market 848 1,006 Changes in net assets & liabilities: Racing Victoria has made allowance for a potential liability in relation to the payment of future revised prizemoney. Having reviewed the 13 September VCAT decisions, Racing Victoria believes that this (Increase)/decrease in: allowance remains appropriate as at the date of signing the accounts. Receivables 1,119 (9,803) Prepayments (27) (84) 25. SUBSEQUENT EVENTS Increase/(decrease) in:

Payables 6,634 2,543 Subsequent to 30 June 2019, on Friday, 13 September 2019 the Victorian Civil and Administrative Tribunal (VCAT) Unearned revenue 5,011 1,128 handed down its decisions regarding appeals lodged by certain trainers in relation to the Aquanita case. Provisions 1,406 128 As of the date of signing, these decisions remain open to appeal by the relevant parties. Subject to all avenues Net cash provided by operating activities 20,880 2,755 of appeal by the parties being exhausted, Racing Victoria Stewards will consider whether an application(s) should be made to the relevant body with respect to the disqualification of any particular horse(s).

23. CONTINGENT ASSET The disqualification of any horse(s) may bring rise to a future liability through the upgrading of placings and the consequent payment of revised prizemoney. Racing Victoria notes that it is likely that up to $3.000 million will be recovered from Ballarat Turf Club via future club contribution on terms still to be agreed upon as at the signing date. Following a review of the facts and details available as at the date of signing the accounts, Racing Victoria believes that the current allowance for any potential future liability for payment of future revised prizemoney remains appropriate.

Other than that noted above, there has not been any matter or circumstance occurring subsequent to the end of the period that has significantly affected or may affect the operations of the consolidated entity, the results of those operations or the state of affairs of the consolidated entity in future financial periods.

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26. SIGNIFICANT ACCOUNTING POLICIES 26. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The following significant accounting policies have been adopted in the preparation and presentation of the (d) Financial assets financial report: Classification and measurement of financial assets All recognised financial assets that are within the scope of AASB 9 are required to be subsequently (a) Borrowings and Borrowing Costs measured at amortised cost or fair value on the basis of the entity’s business model for managing the Borrowings are recorded initially at fair value, net of transaction costs. Subsequent to initial financial assets and the contractual cash flow characteristics of the financial assets. 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 Specifically: the borrowing using the effective interest rate method. • debt investments that are held within a business model whose objective is to collect the contractual Other borrowing costs are recognised as an expense in the period in which they are incurred. cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal amount outstanding, are subsequently measured at amortised cost; (b) Cash and Cash Equivalents Cash comprises cash on hand and demand deposits. Cash equivalents are short term, highly liquid • all other debt investments and equity investments are subsequently measured at fair value through investments that are readily convertible to known amounts of cash and are subject to an insignificant profit and loss (FVTPL). risk of changes in value. Despite the aforegoing, the consolidated entity may make the following irrevocable election/ (c) Employee Benefits designation at initial recognition of a financial asset: 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 • the consolidated entity may irrevocably elect to present subsequent changes in fair value of an are capable of being measured reliably. equity investment that is neither held for trading nor contingent consideration recognised by an acquirer in a business combination to which IFRS 3 applies in other comprehensive income; and 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 • the consolidated entity may irrevocably designate a debt investment that meets the amortised cost settlement. or fair value through other comprehensive income (FVTOCI) criteria as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch. 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 Debt instruments that are subsequently measured at amortised cost or at FVTOCI are subject to consolidated entity in respect of services provided by employees up to the reporting date. impairment.

Defined Contribution Plans Impairment of financial assets Contributions to defined contribution superannuation plans are expensed when incurred. In relation to the impairment of financial assets, AASB 9 requires an expected credit loss (ECL) model as opposed to an incurred credit loss model under IAS 39. The ECL model requires the consolidated Defined Benefit Plans entity to account for expected credit losses and changes in those expected credit losses at each For defined benefit superannuation plans, the cost of providing benefits is determined using the reporting date to reflect changes in credit risk since initial recognition of the financial assets. In other projected unit credit method, with actuarial valuations being carried out at each reporting date. words, it is no longer necessary for a credit event to have occurred before credit losses are recognised. Actuarial gains and losses are recognised in full, directly in retained earnings, in the period in which they occur. The consolidated entity reviewed its related party loan receivables for impairment under the General Approach to determine whether there has been a Significant Increase in Credit Risk (SICR) since initial Past service is recognised immediately to the extent that the benefits are already vested, and recognition and whether loans are credit impaired. This determines whether the loans are in Stage 1, otherwise is amortised on a straight-line basis over the average period until the benefits become Stage 2, or Stage 3, which in turn determines both; vested. • the amount of ECL to be recognised: 12-month ECL or Lifetime ECL; and The defined benefit obligation recognised in the statement of financial position represents the present value of the defined benefit, net of the fair value of the plan assets. Any asset resulting from this • the amount of interest income to be recognised in future reporting periods: Effective Interest Rate calculation is limited to past service cost, plus the present value of available refunds and reductions in (EIR) based on gross carrying amount of the loan which excludes ECL or the net carrying amount future contributions to the plan. (i.e the amortised cost) which includes ECL.

Lifetime ECL are the ECL that result from all possible default events over the expected life of loans whereas 12-month ECL are a portion of Lifetime ECL that represent the ECL that result from default events that are possible within 12 months of the reporting date.

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26. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 26. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The consolidated entity reviewed its related party loans and assessed that none of the loans have suffered Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value SICR with no months of the reporting date. 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 Loss allowances for trade receivables are measured at an amount equal to lifetime ECLs. When determining the asset for which the estimates of future cash flows have not been adjusted. Notwithstanding this, whether the credit risk of a financial asset has increased significantly since initial recognition and when value in use is depreciated replacement cost of an asset when the future economic benefits of the estimating ECLs, the consolidated entity considers reasonable and supportable information that is relevant asset are not primarily dependent on the asset’s ability to generate net cash inflows and where the and available without undue cost or effort. This is determined by reference to past default experience. consolidated entity would, if deprived of the asset, replace its remaining future economic benefits. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying Loans and Receivables amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. Trade receivables, loans, and other receivables that have fixed or determinable payments that are not An impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at fair value, in which case the impairment loss is treated as a revaluation decrease. amortised cost using the effective interest method less impairment interest which is recognised by applying effective interest rates. 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 (e) Financial Instruments issued by the consolidated entity increased carrying amount does not exceed the carrying amount that would have been determined Debt and Equity Instruments had no impairment loss been recognised for the asset (cash-generating unit) in prior periods. A Debt and equity instruments are classified as either liabilities or as equity in accordance with the reversal of an impairment loss is recognised in profit or loss immediately, unless the relevant asset substance of the contractual arrangement. is carried at fair value, in which case the reversal of the impairment loss is treated as a revaluation increase. Interest Interest is classified as an expense consistent with the balance sheet classification of the related debt. (h) Intangible Assets Capitalised Software and Databases (f) Goods and Services Tax Capitalised software is recorded at cost less accumulated amortisation and impairment. Amortisation Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except: is charged on a straight-line basis over the estimated useful life of the software being five years.

• where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as Mastheads part of the cost of acquisition of an asset or as part of an item of expense; or Mastheads recognised by the Group by nature have an indefinite useful life and are not amortised. Each period, the useful life of this asset is reviewed to determine whether events and circumstances • for trade receivables and payables which are recognised inclusive of GST. continue to support an indefinite useful life assessment for the asset. Such assets are tested for impairment in accordance with the policy stated in note 26(g). • The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables. Domain Names Domain Names recognised by the Group have an indefinite useful life and are not amortised. Each Cash flows are included in the statement of cash flows on a gross basis. The GST component of period, the useful life of this asset is reviewed to determine whether events and circumstances cash flows arising from investing and financing activities which is recoverable from or payable to the continue to support an indefinite useful life assessment for the asset. Such assets are tested for taxation authority is classified as operating cash flows. impairment in accordance with the policy stated in note 26(g).

(g) Impairment of Other Tangible and Intangible Assets (i) Leased Assets At each reporting date, the consolidated entity reviews the carrying amounts of its tangible and Leased assets are classified as finance leases when terms of the lease transfer subsequently all intangible assets to determine whether there is any indication that those assets have suffered an the risks and rewards incidental to ownership of the leased asset to the leasee. All other leases are impairment loss. If any such indication exists, the recoverable amount of the asset is estimated to classified as operating leases. determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the consolidated entity estimates the recoverable amount of Finance leased assets are amortised on a straight-line basis over the estimated useful life of the asset. the cash generating unit to which the asset belongs. Where a reasonable and consistent basis can be Operating lease payments are recognised as an expense on a straight-line basis over the lease term, identified, corporate assets are also allocated to individual cash generating units, otherwise they are except where another systematic basis is more representative of the time pattern in which economic allocated the smallest group of cash generating units for which a reasonable and consistent allocation benefits from the lease asset are consumed. Contingent rentals arising under operating leases are basis can be identified. recognised as an expense in the period in which they are incurred.

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.

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FOR THE YEAR ENDED 30 JUNE 2019 FOR THE YEAR ENDED 30 JUNE 2019

26. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 26. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(j) Payables Accident Insurance Fund Trade payables and other accounts payable are recognised when the consolidated entity becomes Prior to 1 September 1985 the Fund was an authorised insurer for the purposes of the Workers obliged to make future payments resulting from the purchase of goods and services. Trade and other Compensation Act 1958. The provision for outstanding claims is disclosed at note 11. The provision is payables are stated at amortised cost. reviewed annually by management having regard for material events impacting the calculation of the provision. (k) Property, Plant and Equipment Plant and equipment, buildings and infrastructure capital are stated at cost less accumulated (m) Revenue depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition The consolidated entity recognises revenue when it transfers control over a product or service to a of the item. In the event that settlement of all or part of the purchase consideration is deferred, cost is customer. Revenue is measured at the fair value of the consideration received or receivable. Revenue is determined by discounting the amounts payable in the future to their present value as at the date of reduced for estimated customer returns, rebates and other similar allowances. acquisition. Wagering Revenue Depreciation is recognised on property, plant and equipment, including freehold buildings but Thoroughbred racing industry revenue is recognised when receivable under the joint venture and excluding land. Depreciation is calculated on a straight-line basis to write-off the net cost or information supply agreements with the Tabcorp group of companies. 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 Race fields revenue is recognised when receivable under the policy applied to all licensed wagering shorter, using the straight-line method. The estimated useful lives, residual values and depreciation service providers for the publication and use of Victorian thoroughbred race fields. method are reviewed at the end of each annual reporting period, with effect of any changes recognised on a prospective basis. Rendering of Services Revenue from a contract to provide services is recognised by reference to the stage of completion of The following estimated useful lives are used in the calculation of depreciation: the contract. The stage of the contract is determined as follows:

• Buildings and Improvements 10 to 40 years • 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 • Plant and Equipment 2 to 20 years date;

• Infrastructure Capital 5 to 10 years • 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 During the period the consolidated entity undertook the management of projects which are part of trends in the number of services actually provided on past goods sold; and the capital infrastructure program. These projects are individually assessed for appropriateness of recognition as assets within the consolidated statement of financial position of the consolidated entity. • revenue from time and material contracts is recognised at the contractual rates as labour hours are The key elements for recognition of any capital expenditure as an asset are control and ensuring that delivered and direct expenses incurred. future economic benefits will flow to the consolidated entity. Contributions of Assets (l) Provisions Revenue arising from the contribution of assets is recognised when the consolidated entity gains Provisions are recognised when the consolidated entity has a present obligation (legal or constructive) control of the contribution or the right to receive the contribution. as a result of a past event, it is probable that the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation, the future sacrifice for Interest revenue economic benefits is probable, and the amount of the provision can be measured reliably. 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 amount recognised as a provision is the best estimate of the consideration required to settle the expected life of the financial asset to the assets carrying amount. 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 Government Grants obligation, its carrying amount is the present value of those cashflows. Government grants are not recognised until there is reasonable assurance that the consolidated entity will comply with the conditions attaching to them and that the grants will be received. 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.

Page 94 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 95 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2019 FOR THE YEAR ENDED 30 JUNE 2019

26. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 26. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Government grants are recognised in profit or loss on a systematic basis over the periods in which (p) Interests in Joint Operations the consolidated entity recognises as expenses the related costs for which the grants are intended A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement to compensate. Specifically, government grants whose primary condition is that the consolidated have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is entity should purchase, construct or otherwise acquire non-current assets are recognised as deferred the contractually agreed sharing of control of an arrangement, which exists only when decisions about revenue in the consolidated statement of financial position and transferred to profit or loss on a the relevant activities require unanimous consent of the parties sharing control. systematic and rational basis over the useful lives of the related assets. When a group entity undertakes its activities under joint operations, the Group as a joint operator Government grants that are receivable as compensation for expenses or losses already incurred or for recognises in relation to its interest in a joint operation: the purpose of giving immediate financial support to the consolidated entity with no future related costs are recognised in profit or loss in the period in which they become receivable. • its assets, including its share of any assets held jointly;

VOBIS Nominations • its liabilities, including its share of any liabilities incurred jointly; Following application of AASB 15, a proportion of VOBIS nomination revenue will be deferred into unearned revenue, to be recognised as revenue in future years. The proportion will be determined based • its share of the revenue from the sale of the output by the joint operation; and upon the likelihood of a nominated horse winning a VOBIS bonus as either a 2 year-old or 3 year-old horse. • its expenses, including its share of any expenses incurred jointly and directly. (n) Income Tax The consolidated entity is exempt from Income Tax under section 50-45 of the Income Tax Assessment Act. The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the AASBs applicable to the particular assets, liabilities, revenues and (o) Investments in Associates expenses. An associate is an entity over which the consolidated entity has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but When a group entity transacts with a joint operation in which a group entity is a joint operator it is not control or joint control over those policies. (such as a sale or contribution of assets), the Group is considered to be conducting the transaction with the other parties to the joint operation, and gains and losses resulting from the transactions The results and assets and liabilities of associates are incorporated in these consolidated financial are recognised in the Group’s consolidated financial statements only to the extent of other parties’ statements using the equity method of accounting, except when the investment, or a portion thereof, interests in the joint operation. is classified as held for sale, in which case it is accounted for in accordance with AASB 5. Under the equity method, an investment in an associate is initially recognised in the consolidated statement of When a group entity transacts with a joint operation in which a group entity is a joint operator (such financial position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss as a purchase of assets), the Group does not recognise its share of the gains and losses until it resells and other comprehensive income of the associate. those assets to a third party.

An investment in an associate is accounted for using the equity method from the date on which the (q) Subsidiaries investee becomes an associate. On acquisition of the investment in an associate, any excess of the cost The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Racing of the investment over the Group’s share of the net fair value of the identifiable assets and liabilities of Victoria (‘’consolidated entity’’ or ‘’parent entity’’) as at 30 June 2019 and the results of all subsidiaries the investee is recognised as goodwill, which is included within the carrying amount of the investment. for the period then ended. Racing Victoria and its subsidiaries together are referred to in this financial Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the report as the group or the consolidated entity. cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired. Subsidiaries are all entities (including special purpose entities) over which the consolidated entity has control. Control is achieved when the Company: The requirements of AASB 139 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group’s investment in an associate. When necessary, the entire • has power over the investee; carrying amount of the investment (including goodwill) is tested for impairment in accordance with AASB 136 ‘Impairment of Assets’ as a single asset by comparing its recoverable amount (higher • is exposed, or has rights, to variable returns from its involvement with the investee; and of value in use and fair value less costs of disposal) with its carrying amount, any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment • has the ability to use its power to affect its returns. loss is recognised in accordance with AASB 136 to the extent that the recoverable amount of the investment subsequently increases.

The Group discontinues the use of the equity method from the date when the investment ceases to be an associate, or when the investment is classified as held for sale.

Page 96 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 97 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2019 FOR THE YEAR ENDED 30 JUNE 2019

26. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 26. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or there are changes to one or more of the three elements of control listed above. When the Company more frequently when there is an indication that the unit may be impaired. If the recoverable amount has less than a majority of the voting rights of an investee, it has power over the investee when the of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill the Company’s voting rights in an investee are sufficient to give it power, including: is recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods. • the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders; On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. • potential voting rights held by the Company, other vote holders or other parties; (t) New Accounting Standards and Interpretations • rights arising from other contractual arrangements; and There were no new accounting standards adopted during the year.

• any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including 27. ADDITIONAL CONSOLIDATED ENTITY INFORMATION voting patterns at previous shareholders’ meetings. Racing Victoria Limited is a consolidated entity incorporated and operating in Australia. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and Principal Registered Office and Principal Place of Business ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit Racing Victoria Limited or loss and other comprehensive income from the date the Company gains control until the date when 400 Epsom Road the Company ceases to control the subsidiary. Flemington Victoria 3031 Telephone: (03) 9258 4258 Profit or loss and each component of other comprehensive income are attributed to the owners of the Company. www.racingvictoria.com.au

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. Investments in subsidiaries are recognised at cost.

(r) Parent Entity Financial Information The financial information for the parent entity, Racing Victoria Limited, disclosed in note 19 has been prepared on the same basis as the consolidated financial statements.

(s) Goodwill Goodwill arising on an acquisition of a business is carried at cost as established at the date of the acquisition of the business less accumulated impairment losses, if any.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination.

Page 98 Racing Victoria 2019 Annual Report Racing Victoria 2019 Annual Report Page 99 RACING VICTORIA LIMITED 400 EPSOM ROAD FLEMINGTON VICTORIA 3031 RACINGVICTORIA.COM.AU