Annual Report 2014 Vision

annual report 2014 vision

Flemington is a world leader in thoroughbred racing, event management and entertainment

values

The day-to-day activities of VRC employees are underpinned by the following values: Integrity Acting with integrity in all that we do. Innovation Encouraging and embracing innovation to achieve continuous improvement. Excellence Setting the highest standards in service and value for our Members, customers and business partners. Collaboration Valuing and respecting the commitment and contribution of all of our people and expecting collaboration across our teams. Safety and Sustainability Providing a safe and environmentally friendly workplace and venue for people, customers and industry participants.

1 celebrating 150 years 9 prizemoney 16 awards 2 board of directors 12 2014 melbourne festival 17 VRC people of racing 18 acknowledgements 4 our results 12 membership 19 partnerships 5 chairman and 12 racing rewards chief executive’s report 20 VRC in the community 13 VRC 150th anniversary 5 the year in review 13 masterplan 22 executive general managers 8 racing 16 technology 23 risk and corporate governance 9 2013 melbourne cup 16 digital 25 ﬁ nancial statements carnival economic impact celebrating 150 years

The Victoria Racing Club evolved from the merging of two earlier rival clubs, The Victoria Turf Club (1852) and the Victoria Jockey Club (1857) – both of which had previously run their own separate racemeetings at Flemington Racecourse.

The Victoria Racing Club was officially formed on 9 March 1864 vision at the famous Scott’s Hotel, Collins Street, Melbourne. This year, we celebrate 150 years of colour and excitement, Flemington is a world leader in thoroughbred racing, of sights and sounds, of fabulous fashion, of moments event management and entertainment and memories.

values

Annual Report 2014 — 1 board of directors

Michael Burn Date joined Committee/Board Current racing interests Chairman, member November 2003 Racehorse owner of the Audit and Risk Business interests Interests outside of racing Management Committee Executive Director Macquarie Family, golf and snow skiing and member of the Capital, Member of Council Masterplan sub-committee and Chair of Finance Committee Bachelor of Commerce Loreto Mandeville Hall University of Melbourne

Amanda Elliott Date joined Committee/Board Current racing interests Vice Chairman and July 2002 Racehorse owner member of the Masterplan Business interests and breeder sub-committee Director Pastoral and Investment Interests outside of racing Bachelor of Arts (Hons) Companies, City of Melbourne Advisory Family and friends, tennis, University of Melbourne Board for Melbourne Spring Fashion golf, theatre, film, restaurants, Week, Member of the Australian Stud travel, agriculture, gardens Book Committee and interior design

John O’Rourke Date joined Committee/Board Current racing interests Honorary Treasurer, member December 2011 Racehorse owner, Member of the Audit and Risk Business interests VRC, Melbourne Racing Management Committee and Director Plenary Group Pty Ltd, Club and Moonee Valley member of the Masterplan Plenary Health Holdings Racing Club sub-committee (Comprehensive Cancer Centre) Interests outside of racing Bachelor of Commerce Pty Limited, Plenary Conventions Golf, Richmond Football Club University of Melbourne, Pty Limited, Flagship Property Graduate Diploma Holdings Pty Ltd in Finance RMIT

Tim Poole Date joined Committee/Board Current racing interests Honorary Treasurer July 2006 Racehorse owner (resigned March 2014) Business interests Interests outside of racing Bachelor of Commerce Non-executive Chairman Lifestyle Family, golf and running University of Melbourne, Communities Limited, Westbourne Associate of the Institute Credit Management Limited, of Chartered Accountants Continuity Capital Partners Pty Ltd, LEK Consulting Advisory Board, Investment Committee of AustralianSuper Pty Ltd. Non-executive Director of Newcrest Mining Limited, AustralianSuper Pty Ltd.

Peter Fekete Date joined Committee/Board Current racing interests Member of the Audit and Risk July 2000 Racehorse owner Management Committee and Business interests Interests outside of racing member of the Masterplan Chairman Thoroughbred Racing Skiing and football sub-committee Productions (VIC) Pty Ltd, Director Bachelor of Business ThoroughVisioN Pty Ltd, and (Accounting) a number of non-listed investment Swinburne University companies. Member of the Finance Fellow of the Institute and Investment Committee for of Chartered Accountants the National Stroke Foundation Australia (FCA)

Paul Leeds Date joined Committee/Board Current racing interests Associate Fellow April 2002 Racehorse owner of Australian Institute Business interests and breeder of Management Vice President National Stroke Interests outside of racing Foundation, Board Director Family, art, food, wine, travel, Collingwood Football Club, Board collectables and football Director Radio 3UZ Pty Ltd and 3UZ Pty Ltd, Chairman Twenty3 Sport+Entertainment, Chairman Australian Made Media, Advisory Board Menzies Art Brands

2 — Victoria Racing club Katherine Bourke Date joined Committee/Board Interests outside of racing Bachelor of Laws, Master July 2004 Hawthorn Football Club, of Laws and Bachelor of Arts Current racing interests food, wine and travel University of Melbourne, Racehorse owner and breeder Member of the Victorian Bar 1989–2007, Chairman of the Bookmakers and Bookmakers’ Clerks Registration Committee 2000–2007, Judge of County Court of Victoria 2007

Elisa Sturzaker Robinson Date joined Committee/Board Current racing interests Member of the Masterplan May 2011 Racehorse owner sub-committee Business interests Interests outside of racing Bachelor of Laws and General Manager – Industry Geelong Football Club, Bachelor of Commerce Management at NBN Co, speaking Kooyong Lawn Tennis Club, Monash University, admitted engagements on diversity and women property development, to the Supreme Court in leadership, business and sport travel, food, art, fashion, of Victoria, Postgraduate sports, including skiing Management Studies and running Melbourne Business School

Michael Ramsden Date joined Committee/Board Current racing interests Member of the Audit and December 2012 Part owner of approximately Risk Management Committee Business interests 45 horses, including The Offer, Bachelor of Economics Managing Director Terrain Capital Ltd, Chautauqua, He’s Your Man Monash University, Chairman Australian Mines Ltd, and Merion Bachelor of Laws Monash Chairman Lowell Capital Ltd, Chairman Interests outside of racing University, Fellow of the African Mahogany (Aust) Pty Ltd Golf, surfing, football, wine Financial Services Institute and food of Australasia

Neil Wilson Date joined Committee/Board Current racing interests Bachelor of Business December 2012 Racehorse owner (Accounting) (MIS), Business interests and breeder Certified Practicing Chief Executive Officer and Interests outside of racing Accountant (CPA) Managing Director Oakton Limited Family, running and travel

Julian Sullivan Date joined Committee/Board Current racing interests Acting Chief Executive March 2014 Racehorse owner April 2014 – present Business interests and breeder Bachelor of Business, Board Director Connery Pty Ltd, Interests outside of racing Graduate Diploma Board director The Bloodstock Business Collingwood Football Club, Business Management, food, wine and travel Monash University

David Courtney Date joined Committee/Board Current racing interests Chief Executive December 2012 Member VRC December 2012 – April 2014 Business interests Interests outside of racing Bachelor of Business RMIT, Former Chief Executive of the Family, beach, snow skiing MBA Monash University, Victoria Racing Club and sailing Fellow of the Institute of Chartered Accountants

Annual Report 2014 — 3 our results

2013/14 snapshot

racing net profit $ 2013/14 result 14 11 group one group two races races $ 3 . 4 m charitable giving $ 2013/14 result 17 32 group three listed races races contributed$ 1 to charitable m causes through VRC fundraising partnerships and donations

2013 melbourne cup carnival 2013 melbourne cup carnival economic impact $

2013/14 result 483 37 horses participated, races were run with an average of 13.1 runners $ 3 6 4 . 5 m per race in gross economic benefit to Victoria Source: IER economic impact report

The Emirates In Australia internationally trained runners Melbourne Cup in the emirates melbourne cup was broadcast into 3.2m home viewers tuned 2013 result 163 into the Emirates territories Melbourne Cup 9 total attendances at VRC racemeetings prizemoney 2013/14 result 2013/14 result 5 1 8 , 9 2 0 $ 3 6 . 7 m including $7.2 million in VRC top-ups

4 — Victoria Racing club chairman and chief executive’s report

the year in review

2013/14 was a significant year for the VRC, as the Club celebrated its 150th anniversary. Celebratory events were held throughout 2014 to ensure that, as a Club, we recognised this milestone appropriately. Success stories abounded during the 2013 Melbourne Cup Carnival – from the dominance of Sydney-based trainer Chris Waller, who won the Melbourne Cup Carnival Trainer Award, to stalwart Jim Cassidy, who landed his 100th Group One win in the Coolmore Stud Stakes. But the standout was witnessing beloved trainer Gai Waterhouse claim Australian racing’s greatest prize, which had, for so long, eluded her. International participation is a key component of the Melbourne Cup Carnival and this was evident again in 2013 when internationally trained horses competed in eight races over the four days. While the internationalisation of the Melbourne Cup has been well documented, the VRC will continue to increase its international marketing efforts to ensure that the Carnival maintains its position as a leading international racing carnival and a major entertainment and tourism event on the Australian events calendar. There was significant progress throughout the year in relation to a number of key strategic initiatives. We reached conditional agreement for the sale of some freehold land which is surplus to the needs of the Club and which it is intended will facilitate a vibrant residential development adjacent to our racecourse. The completion of this sale will be an important step toward the construction of the Club Stand, to replace the Members’ Old Grandstand. In the meantime, the development of racecourse facilities continues – with the highlight in 2013/14 being the new Owners’ and Trainers’ Lounge. A comprehensive upgrade of the Club’s management information systems also progressed significantly during the year. The Club achieved a net profit of $3.4 million in 2013/14. Whilst the profit achieved for the year was broadly in line with recent profitability levels of the Club, it represented a decline relative to the $7.5 million profit recorded in 2013/14. The decline relative to the previous period was largely attributable to decreased general admission sales on certain of our major days, decreased broadcasting fees received from TVN, significantly increased depreciation and amortisation charges and one-off costs associated with the celebration of the VRC’s 150th anniversary and the sale of freehold land. The Club’s balance sheet remains healthy, with the Club being effectively debt free at year end.

Annual Report 2014 — 5 the colour and excitement

chairman and chief executive’s report continued

racing

There were 23 racemeetings held at Flemington during 2013/14. In total, 195 races were run, taking in 2,323 starters. The season average was 11.9 starters per race and the Melbourne Cup Carnival average was 13.1. There were 14 Group One, 11 Group Two, 17 Group Three and 32 Listed Races for a total of 74 ‘Black Type’ races. A comparatively high proportion of the Flemington racing program comprised Group or Listed Races – almost 38% – underlining the VRC’s positioning as one of the world’s great racing clubs.

2013/14 Group One Winners at Flemington

Makybe Diva Stakes Foreteller Turnbull Stakes Happy Trails Coolmore Stud Stakes Zoustar Longines Mackinnon Stakes Side Glance AAMI Victoria Derby Polanski Myer Classic Red Tracer Emirates Melbourne Cup Fiorente Crown Oaks Kirramosa VRC Sprint Classic Buffering Emirates Stakes Boban Black Caviar Lightning Snitzerland Australian Guineas Shamus Award Lexus Newmarket Handicap Lankan Rupee Darley Australian Cup Fiorente

2013 Melbourne Cup Carnival While there were many highlights during the 2013 Melbourne Cup Carnival, for most the stand out was witnessing Australia’s most celebrated female trainer, Gai Waterhouse, win the coveted Emirates Melbourne Cup – only the second woman to do so in the race’s 153-year history. Jockey Damien Oliver rode Irish-bred six-year-old Fiorente to success in Australia’s greatest horse race. He joined an exclusive group of jockeys to have won three Melbourne Cups. The Loving Cup was won by a diverse syndicate of Australians – 28 owners in total – realising every owner’s ultimate dream. 2013 marked 20 years since Vintage Crop won the Melbourne Cup, opening the door for international horses and trainers to compete in the Cup. Sadly, the trailblazing Irish stayer passed away in July 2014. But his legacy is still felt today, as the internationalisation of the Melbourne Cup Carnival has been a key feature of the race since 1993, and this was again on show in 2013. Eight races were contested by internationally trained horses, two of which were won by international runners. English challengers Side Glance and Ruscello took out the Group One Longines Mackinnon Stakes and Group Three Lexus Stakes, respectively. In the Emirates Melbourne Cup, nine internationally trained runners competed, while a further 10 internationally bred horses competed for Australian trainers. Attracting international horses, trainers and jockeys is a priority for the VRC, as global participation ensures the Melbourne Cup Carnival maintains its status as a world-class event. In 2013, a further element of prestige was added to the Emirates Melbourne Cup, with three of the full field of 24 runners owned by royalty. His Highness Sheikh Mohammed bin Rashid Al Maktoum, His Highness Sheikh Fahad Al Thani and His Royal Highness the Aga Khan IV were represented and Sheikh Fahad and Princess Zahra Aga Khan were at Flemington for the race. The Carnival continues to attract the strongest attendances of any racing event in Australia. The total crowd attendance of 331,196 during the 2013 Melbourne Cup Carnival was a pleasing result. Essential to the success of the Carnival is the high-quality performance of the course proper, which, during Carnival week, sustained 37 races featuring 483 horses. It is important to recognise the track staff, who once again presented a world-class racing surface across the four days.

8 — Victoria Racing club 2011–2013 Melbourne Cup Carnival Attendance Figures 2013 members’ total enclosure % Derby 95,223 55,796 58.6 Cup 104,169 44,586 42.8 Oaks 66,757 43,043 64.5 Stakes 65,047 43,513 66.9 Total 331,196 186,938 56.4

2012 members’ total enclosure % Derby 98,823 50,948 51.6 Cup 106,162 41,516 39.1 Oaks 71,825 37,605 52.4 Stakes 74,546 41,119 55.2 Total 351,356 171,188 48.7

2011 members’ total enclosure % Derby 92,336 57,361 62.1 Cup 105,979 45,815 43.2 Oaks 71,659 46,482 64.9 Stakes 85,112 49,727 58.4 Total 355,086 199,385 56.2

2013 melbourne cup carnival economic impact

The VRC commissioned independent research company IER to measure the contribution that the 2013 Melbourne Cup Carnival made to the Victorian economy. The results highlighted that the Melbourne Cup Carnival is not only an iconic sporting and social event, but that it is of great importance to the state’s economy. Remarkably, the 2013 Melbourne Cup Carnival contributed $364.5 million in gross economic benefit to Victoria. In addition, the Carnival generated a value-added contribution of $177.5 million to Victoria’s gross state product. The value-added contribution, up by 0.5% on 2012, quantifies money spent through Victorian businesses by interstate and international visitors who were in the state specifically to attend the Melbourne Cup Carnival.

prizemoney

During 2013/14, the Club maintained its commitment to owners, returning $36.7 million in prizemoney for the year, including $7.2 million in voluntary top-ups. The Club has committed a further increase in prizemoney for the 2014/15 Racing Season of $1 million, a total of $37.7 million, not including the $0.6 million bonus on offer to any eligible horse that wins the Darley Classic. The Club’s ability to offer such lucrative prizemoney is heavily reliant on the ongoing support of Members, partners and sponsors. In particular, we would like to acknowledge long-standing sponsors Treasury Wine Estates (37 years), Schweppes (36 years), Myer (32 years), AAMI (23 years), Crown (21 years) and Emirates (17 years).

Annual Report 2014 — 9 the fabulous fashion

chairman and chief executive’s report continued

2014 melbourne festival of racing

In recent years, Black Caviar has been the star at Flemington during the Festival of Racing, so it was only fitting that in the Black Caviar Lightning her part owner, Neil Werrett, was victorious once again, with winner Snitzerland. Other key results from the Festival of Racing were 2013 Cox Plate winner Shamus Award winning the Australian Guineas; the 2013/14 Racehorse of the Year, Lankan Rupee, taking out the Lexus Newmarket Handicap and Fiorente tasting success at Flemington again in the Darley Australian Cup. On Super Saturday, Saturday 8 March 2014, the VRC joined with Melbourne Food & Wine Festival to present the Flemington Grazing Trail & Cellar Door. The VRC has long been a supporter of the Melbourne Food & Wine Festival, which has become an iconic event on the Melbourne events calendar. The idea of the very best Victorian food and wine against the backdrop of Group One racing forged an ideal partnership. Victoria’s finest wineries, breweries and food producers showcased their products, while Melbourne’s leading chefs and food critics (including Matt Preston, Joe Grbac, Daniel Wilson, Jesse Gerner, John Lawson and Adam D’Sylva) wowed the crowd with cooking demonstrations. The collaboration proved an undeniable success, with total attendance on Super Saturday 26,979 – a 40.8% increase on the 19,155 attendance figure for 2013.

membership

Membership categories number of members

Full 23,855 Restricted 2,404 Life 125 Pre 1979 286 Provisional 93 Absentee 2,444 Junior 947 Total 30,154

racing rewards

During 2013/14, the Club progressed with its review of the Racing Rewards program. A redesign is underway, made possible by recent investment in systems technology. The new program is scheduled to launch during 2015/16 and will provide Members with additional exciting opportunities to engage with the Club.

Members who achieved Racing Rewards group status 2013/14

Platinum 738 Group One 935 Group Two 1,715 Group Three 3,526 Total 6,914

12 — Victoria Racing club VRC 150th anniversary

On Sunday 9 March 2014, the VRC celebrated its 150th anniversary. This historic milestone was acknowledged through numerous 150th anniversary themed events during the autumn. In addition, the Club produced several commemorative pieces. The VRC in Portrait was a unique artwork produced by leading photographer Ellis Parrinder. The portrait included 42 individuals who had contributed towards the Club’s success. The portrait was unveiled on Thursday 27 February at the 150th Members’ Preview Evening, which featured Gai Waterhouse, Glen Boss and Greg Miles – who were all portrait participants. Other elements of the 150th anniversary were a limited edition merchandise range, including the book Victoria Racing Club: The story of the VRC and Flemington since 1864, written by former CEO Rod Johnson and journalist Rhett Kirkwood, and a website (vrc150.com.au), which is dedicated to celebrating the VRC’s rich heritage through archival images and videos. All Members also received four Members’ Enclosure tickets, which could be used from Black Caviar Lightning Day until the last raceday of the season, Flemington Winter Raceday. More than 15,000 Members’ guests attended a Flemington raceday using these tickets, which was pleasing because it is important to us, as a Club, that Members utilise their Membership to showcase the VRC to their guests.

masterplan

The Club has, for several years, been working on a suite of improvements, known as the Masterplan. These improvements are designed to deliver greater benefits to Members, patrons, the racing industry and the community. As a way of funding these improvements, the VRC and Greenland Australia (Greenland) signed a contract for the sale of two surplus parcels of land at Flemington. The sale, which will inject more than $45 million into Flemington Racecourse, is subject to approvals from the appropriate authorities for development of approximately 10,500 square metres of land on Epsom Road and approximately 30,174 square metres of land known as the Hill Precinct. Greenland has appointed architecture firm Woods Bagot to develop the design concepts for the land. The Club and Greenland are now awaiting the Department of Transport Planning and Local Infrastructure to confirm a planning approval process to consider the proposed development concept. During the VRC 150th anniversary year, the Club was pleased to announce plans for the development of the new Club Stand to replace the Members’ Old Grandstand. While the Members’ Old Grandstand is an iconic piece of Flemington, and has served Members well for 90 years, the Club is looking to the future, and this includes state-of-the-art facilities that highlight the Club’s vision as a world-class outdoor entertainment venue. The VRC is working with leading architectural firm Bates Smart on the new design. In July, the Club received approval, from Heritage Victoria, for a permit to demolish the Members’ Old Grandstand. The Members’ Old Grandstand is heritage listed and therefore the permit does include a number of conditions, which the VRC will consider during the planning phase. The VRC is particularly mindful of the balance between modernising our facilities while preserving our heritage, which is enormously important to Members. Subject to the timely completion of all elements of the planning phase (including external approvals), it is planned that building will commence following the 2015 Melbourne Cup Carnival, with the new Club Stand set to open in October 2017. Further highlighting the Club’s commitment to owners and trainers was the opening of a new Owners’ and Trainers’ Lounge on Turnbull Stakes Day 2013. This lounge ensures that owners and trainers experience first-class hospitality while at Flemington.

Annual Report 2014 — 13 the sights and sounds

chairman and chief executive’s report continued

technology

The Club’s technology project has made substantial progress this year to improve the services delivered to Members and patrons. In 2013/14, the Club implemented a new point of sale system and ‘Tap and Go’ payment technology, new Wi-Fi technology and StadiumVision. In addition, the Club is working towards implementing a new customer relationship management system, e-commerce store and website. The Club also invested in a new human resources information system, payroll system and updated network infrastructure to support the new systems implemented during the past 18 months.

digital

A new customer focused racing website – racing.com – was developed during the year. In a collaborative effort between key stakeholders in the Victorian Racing Industry, the VRC is a 25% shareholder in the site, which provides anywhere, anytime access to best practice aggregated racing data, information, news and videos. The site went live on Thursday 4 September 2014. Racing.com is part of a network that will eventually include the VRC’s website, along with that of Melbourne Racing Club, Country Racing Victoria and Racing Victoria, as well as a dedicated owners’ site. The VRC will launch a new website as part of the racing.com network in 2015.

awards

The VRC was announced the winner of the Major Festivals and Events category at the Australian Tourism Awards in February 2014. The accolade was awarded to the 2012 Melbourne Cup Carnival for its incredible economic and visitation impacts and positive promotion of Melbourne and Australia around the world. The Club beat seven other contenders to win the award, which recognised the Melbourne Cup Carnival as the jewel in Australia’s incredible calendar of major events. Two VRC partners were also recognised with major awards during 2013/14. Channel 7’s 2013 Melbourne Cup Carnival coverage was awarded the Logie for Most Outstanding Sports Coverage. The Emirates Melbourne Cup is now broadcast into 163 territories, promoting the event and Melbourne around the globe. Locally, the Emirates Melbourne Cup continues to stop the nation with more than 3.2 million home viewers tuning into the race, despite it being a work day for most of Australia. The Club’s catering provider, Peter Rowland Catering, was awarded the 2013 Caterer of the Year and Best Venue Caterer at the Restaurant & Catering Awards for their catering at Flemington. Peter Rowland Catering also won two goblets in the Fine Wine & Gourmet Traveller Awards in the Chairman’s Club.

16 — Victoria Racing club VRC people

The Board is acutely aware that the success of the Club is dependent on its people. With this in mind, the VRC aims to create a positive work environment that enables our people to connect with each other, our business partners and our customers. This means providing meaningful and challenging work, developing people to realise their potential and rewarding people for their contribution and achievements. It is important to reward and celebrate the contribution of our people, and the Club does this in a number of ways. During 2013/14, the Club invested in both financial and non-financial rewards. There has been a review on how we pay our people, what benefits they receive and how we celebrate key milestones. This continues to be a focus to ensure we reward and celebrate achievements that will help to deliver on the Club’s strategic priorities. The Club’s workforce is comprised of 197 full-time and part-time permanent and 297 casual employees. The average age is 41 and the gender profile is 43% female and 57% male. The strong Flemington brand and iconic Melbourne Cup Carnival also help attract a seasonal workforce, which at its peak can reach as many as 870 event staff on any given day.

Tim Poole After being on the Board for eight years, VRC Honorary Treasurer Tim Poole stepped down as a Director, in May 2014, to spend more time with his family and to concentrate on his growing business interests. Tim was an outstanding contributor to the Board, having served as Honorary Treasurer, Chairman of the Audit and Risk Management Committee and Chairman of the Masterplan sub-committee during his term. John O’Rourke was elected to replace Tim as Honorary Treasurer.

David Courtney In August, David Courtney resigned as VRC Chief Executive after being on leave since April 2014. Although David was only at the Club for a short amount of time, his contribution was significant and we wish David all the best for the future. Julian Sullivan stepped into the Acting Chief Executive role in David’s absence.

Vale Mr D H Reid oam The Board and Management of the Victoria Racing Club were saddened at the passing of our former Committee/Board Member, Douglas Reid oam, who passed away on 27 May 2014. Doug served the VRC in many capacities during his 28 years on the Committee/Board, including Chairman of VOBIS, as a member of the Australian Stud Book Committee, Chairman of the VRC Program sub-committee and Member of the Racing Appeals Board. Doug was awarded an oam on 11 June 1996 for his services to horseracing and the bloodhorse breeding industry. Doug will be sadly missed by his many friends in racing and particularly at Flemington.

Annual Report 2014 — 17 chairman and chief executive’s report continued

acknowledgements

The Club is privileged to be supported by many of Australia’s leading corporations. These partnerships allow the VRC to offer world-competitive prizemoney, which is crucial to the success of the Club. We would like to thank all who have supported the VRC during 2013/14, in particular our Principal Partner, Emirates Airline, and Major Partners, AAMI, Crown, James Boag and Myer. We would like to acknowledge and thank the VRC Directors, management and staff for their commitment to the success of the Club. It would not be possible for the Club to operate successfully without the cooperation and assistance of a number of individuals and organisations, and accordingly, we record our appreciation and thanks to: • The State Government and the Office of the Premier, The Hon Dr Denis Napthine mp • The Minister for Tourism, The Hon Louise Asher mp • The Minister for Planning, The Hon Matthew Guy mlc • Racing Victoria Limited • The Melbourne Racing Club and Moonee Valley Racing Club • Country Racing Victoria Ltd and all country racing clubs • Our joint proprietor of the Australian Stud Book, Australian Turf Club Limited • The industry’s wagering joint venture partner, Tabcorp Holdings Limited • ThoroughVisioN Pty Ltd • Australian Racing Board • Victorian Major Events Corporation • City of Melbourne Finally, to all of our Members, thank you for your continued support.

18 — Victoria Racing club partnerships

Principal Partner Major Partners

Official Partners

LOGOTYPE COULEUR FOND BLANC Nº dossier : 20120475E M100 J80 N10 Date : 28/03/2013 Validation DA/DC : C40 M40 J40 N100 Validation Client M30 J70 N25 Official Official French OFFICIAL PRINT Official Coffee Official Motor Official timekeeper Spirits Partner Champagne MEDIA PARTNER Partner Vehicle Partner and Watch Partner Partner

OFFICIAL NON-ALCOHOLIC Official Telecast OFFICIAL wellness Official Wagering OFFICIAL sparkling BEVERAGE PARTNER Partner PARTNER Partner WINE PARTNER

Race Sponsors

Event & Program Partners

Media Partners Pin & Win Partner

Annual Report 2014 — 19 VRC in the community

The VRC has a long history of supporting community organisations, and during the year, there were some significant achievements in this area. During 2013/14, more than $1 million was contributed to charitable causes, through VRC fundraising partnerships and donations. Through an ongoing donations program, the VRC assisted more than 112 charities and community groups with ticketing and hospitality donations. Throughout the year, the VRC worked with a range of charities to utilise our world-class facility in order to deliver substantial fundraising results to local causes.

Key highlights included: SecondBite VRC partner SecondBite raised more than $543,000 through the Pin & Win competition during the 2013 Melbourne Cup Carnival. This result is equivalent to 1.35 million meals for Australians in need, through SecondBite’s food rescue program. As a result of this success, SecondBite was reappointed for 2014. The aim of VRC and SecondBite is to match or exceed last year’s record result in 2014, which is, significantly, the 20th year of the Pin & Win promotion. VRC has a long-standing association with SecondBite. Since 2007, the Club has supported SecondBite through surplus food donations. After each major raceday, SecondBite, assisted by the VRC caterers, collects fresh surplus food to distribute to local agencies for community food programs. The total collected during 2013/14 was 9,811 kg, the equivalent of 19,600 meals. From the 2013 Melbourne Cup Carnival alone, SecondBite collected 4,685 kg of fresh food, which helped to provide more than 9,000 meals for vulnerable Australians. Emirates Melbourne Cup Parade It was a milestone year for the Emirates Melbourne Cup Parade, celebrating 30 years. More than 40,000 people lined the Melbourne streets to experience the parade, which has, over time, become a tradition of the Melbourne Cup Carnival. Emirates Melbourne Cup Tour The VRC is committed to promoting the Melbourne Cup Carnival throughout Australia and internationally. The 2013 Emirates Melbourne Cup Tour was the 11th year of the tour and the most extensive to date. The Loving Cup travelled to 34 destinations across rural, regional and metropolitan Australia and New Zealand, in addition to six international destinations. During its travels, the trophy visited 40 schools, 24 hospitals and aged care facilities and participated in more than 50 community events. Pleasingly, a record number of applications (72) were received to conduct events/activities as part of the 2013 Emirates Melbourne Cup Tour. emirates melbourne cup tour

Australia Queensland New Zealand Victoria Beaudesert Auckland Cape Woolamai Brisbane Geelong Dalby Maffra Herberton 34 Melbourne Normanton destinations across Karumba Moe Australia and Longreach Nagambie New Zealand Wonthaggi Nebo Quilpie Tasmania Rockhampton Devonport Launceston Western Australia Kalgoorlie-Boulder Australian Capital Leonora Territory Perth Canberra South Australia New South Wales Adelaide Albury Mortlake Bowral Narracoorte Mulgoa Terang Queanbeyan Woolthorpe Sydney

20 — Victoria Racing club National Jockeys Trust The VRC is an ongoing supporter of the National Jockeys Trust (NJT), a registered charity organisation since 2004. The NJT has helped more than 180 jockeys and their families overcome financial hardship when jockeys are injured or killed in action. Signed saddlecloths from the Melbourne Cup Carnival, feature races and other selected Group One races at Flemington are auctioned each year, with 30% of profit going to the Trust. To recognise involvement in the Emirates Melbourne Cup Parade, the VRC also makes a donation to the Trust for every jockey who participates. Last year’s donation to the NJT from these activities totalled $25,000. The VRC also supports the NJT Pin & Win promotion each autumn, with almost $10,000 in pins sold during Black Caviar Lightning Day and Super Saturday, as well as the annual 4Tracks4Kids walk, which benefits a number of charities, including the NJT. 4Tracks4Kids The VRC is a proud partner of 4Tracks4Kids, a racing industry originated charity dedicated to helping the children of Australia by raising funds through selected partners. On Friday 7 March, the third annual 4Tracks4Kids Melbourne walk saw approximately 200 people walk the famous Flemington straight en route to Moonee Valley, all in the name of raising funds for good causes. Subsequently, 4Tracks4Kids presented its charity partners Doxa Youth Foundation and the National Jockeys Trust with cheques for $191,000 and $84,000, respectively. The Club congratulates Richard and Kaye Callander for their outstanding work with 4Tracks4Kids. ANZAC Day Racing on ANZAC Day at Flemington is a long-standing tradition, and each year, in conjunction with the RSL, the occasion is marked by a moving ceremony in the Mounting Yard. In recognition of the occasion, active and returned service personnel were welcomed to Flemington with free admission and a complimentary beverage on arrival. RSL representatives raised over $9,400 through ANZAC badge sales on ANZAC Day 2014. Western Health Community Raceday The eighth annual Western Health Community Raceday was held at Flemington in December 2013. On this day, the Western Health Foundation raised an impressive $132,000 to support the Children’s Ward at Sunshine Hospital – the third largest provider of paediatric services in Victoria. Peter MacCallum Cancer Centre Flemington is as famous for its roses and gardens as its racing. In 2013/14, floral arrangements used oncourse were donated to the Peter MacCallum Cancer Centre, and were subsequently given to patients, families and carers throughout the hospital.

Annual Report 2014 — 21 executive general managers

Nick Addison Lucas Robertson Executive General Manager Executive General Manager Commercial Partnerships Legal and Risk and Customer Engagement

Amanda Chase Susan Tonks Executive General Manager Executive General Manager Brand, Marketing and People and Culture International Development

Mark Davies Penny Tripp Executive General Manager Acting Executive General Flemington Manager Club Services

Simon Love Executive General Manager Corporate, Finance and Strategic Initiatives

22 — Victoria Racing club risk and corporate governance

The VRC Board is ultimately responsible for the governance of the Club and remains committed to continuous improvement in this area. The Directors operate according to a code of conduct and the rules set down by the Club’s constitution and by-laws.

Board composition and term of office The Board consists of nine independent Directors and the Chief Executive. It is the Board’s intention to seek Directors with a broad range of skills and experience to assist it in carrying out its responsibilities and in meeting the Club’s strategic objectives. Each independent Director must seek re-election every three years, and Directors must resign office at the next Annual General Meeting after they reach the age of 72. The Chairman, Vice-Chairman and Honorary Treasurer are appointed each year. They may serve in these roles for a maximum of eight consecutive years.

Sub-committees The Board establishes sub-committees, as required, to assist in carrying out its primary functions. These sub-committees meet on a regular basis, populated by representatives of the Board and management, and act in an advisory capacity, making recommendations to the Board.

Audit and Risk Management Committee The Audit and Risk Management Committee comprises the Honorary Treasurer (as Chair) and not less than two other Directors. This committee meets on at least three occasions throughout the year and on further occasions as the need arises. The committee meets with, and receives regular reports from, the Club’s auditors and management, working with them to review the Club’s risk profile, accounts and financial position. The committee makes recommendations to the Board in relation to key budget, financial and policy items.

Corporate reporting The Board receives reports from management on a monthly basis and otherwise as required.

Management The Club has combined its legal, risk management, safety and compliance functions under a single Legal and Risk Department to ensure a co-ordinated approach to managing risk and compliance across the organisation. The Club utilises a web-based risk management system to record, monitor and report on risks affecting the business. The Senior Risk Manager meets with executives individually and as a group, on a regular basis, to update the risk register at both departmental and enterprise levels, and to review the effectiveness of controls. This process gives input and ownership to people at all levels and in all departments of the Club, while providing greater visibility and confidence to senior management and the Board. During 2013/14, a key initiative has been a gap analysis and establishment of a compliance system using the same software platform as the Club uses for risk management. This will assist in developing an ongoing compliance program with the necessary actions and reporting to ensure a systemic approach to compliance across the Club.

Safety Given the nature of the VRC’s business, the Club remains keenly focused on its safety obligations. This is a high-priority issue for all of our people, highlighted by the intensive work that goes into keeping Flemington Racecourse a safe place to work throughout the year, but especially during and in the lead-up to Melbourne Cup Carnival. The safety team is diligently working with management and our contractors to continually look at how we can improve on what we do in this area.

Annual Report 2014 — 23 risk and corporate governance continued

Conflicts of interest Directors and employees are expected to avoid any action, position or interest that conflicts with an interest of the Club or may give any appearance of such a conflict. A Director who has a conflict or a perceived conflict with an interest of the Club must bring the matter to the notice of the other Directors. Directors will not vote on matters in which they have an interest and may, at the Chairman’s discretion, be asked to leave the meeting while the matter is being considered.

Remuneration A Remuneration Committee, comprising the Chairman, Vice-Chairman and Honorary Treasurer, reviews the Club’s remuneration of management and staff on an annual basis. The Chief Executive and EGM People and Culture also attend these meetings. With the exception of the Chief Executive, VRC’s Directors act in a voluntary capacity. However, they do receive certain reimbursements and compensation for costs incurred while fulfilling their role as a Director. Certain members of the Board participate in the Thoroughbred Racing Industry via means of ownership of racehorses. This involvement is on terms and conditions no more favourable than other participants in the Thoroughbred Racing Industry. Certain Directors are nominated by the Club to act as representatives in the Thoroughbred Racing Industry and those Directors are remunerated in accordance with the relevant entities remuneration practices.

Legal review The VRC’s in-house legal counsel are involved in the negotiation of contracts and provide advice and support on matters affecting the overall legal risk of the Club. Processes and training are implemented, as required, to ensure a consistent approach to contracts and compliance. External legal advice is also sought where appropriate. Monthly reports are provided to the Board in relation to litigation and other material legal matters.

Governance culture The Club remains committed to ensuring that all employees are appropriately inducted, trained and supported, as required, to ensure that corporate governance becomes second nature in all activities undertaken by the Club.

24 — Victoria Racing club financial statements

contents

26 Directors’ Report 30 Independence Declaration 31 Independent Auditor’s Report 32 Statement of Profit or Loss and Other Comprehensive Income 33 Statement of Financial Position 34 Statement of Changes in Equity 35 Statement of Cash Flows 36 Notes to and forming part of the Financial Statements 52 Directors’ Declaration

Annual Report 2014 — 25 Directors’ Report

The Directors of the Victoria Racing Club Limited (‘the Club’) submit herewith the annual financial report of the Club for the financial year ended 31 July 2014. In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows: The Club became a registered company under the Corporations Act 2001 on 10 April 2006. The Club is a public company limited by guarantee, incorporated and operating in Australia. If the Club is wound up, the Constitution states that each current Member, and each person who ceased Membership within the preceding 12 months, is required to contribute a maximum of $10 towards meeting any outstanding obligations of the Club. At 31 July 2014, the number of Members was 30,154 (2013: 30,287), therefore the total contribution required by Members is equal to $301,540. The Directors of the Club during or since the end of the financial year are as follows:

Directors Appointed Qualifications Business Interests

Katherine Bourke July 2004 • Bachelor of Laws, University of Melbourne Member of the Victorian Bar (1989–2007), • Master of Laws, University of Melbourne Chairman of the Bookmakers and Bookmakers • Bachelor of Arts, University of Melbourne Clerks Registration Committee (2000-2007) and Judge of the County Court of Victoria since 2007.

Michael Burn November • Bachelor of Commerce, Executive Director Macquarie Capital, Member 2003 University of Melbourne of Council and Chair of Finance Committee – Loreto Mandeville Hall.

David Courtney December • MBA Monash University Former Chief Executive of the Victoria Racing Club. 2012 • Fellow of the Institute of Chartered Resigned Accountants Australia (FCA) (August 2014)

Amanda Elliott July 2002 • Bachelor of Arts (Hons) Director of the Australian Genetics Testing Pty Ltd, University of Melbourne City of Melbourne Advisory Board for Melbourne Spring Fashion Week. Member of the Australian Stud Book Committee.

Peter Fekete July 2000 • Bachelor of Business (Accounting), Chairman of Thoroughbred Racing Productions (Vic) Swinburne University Pty Ltd, Director of ThoroughVisioN Pty Ltd and • Fellow of the Institute of Chartered a number of non-listed investment companies. Accountants Australia (FCA) Member of the Finance and Investment Committee for the National Stroke Foundation. Member of the Australian Stud Book Committee.

Paul Leeds April 2002 • Associate Fellow of Australian Vice President of National Stroke Foundation, Institute of Management Director of Collingwood Football Club, Director of Radio 3UZ Pty Ltd and 3UZ Pty Ltd, Chairman of Twenty3 Sport + Entertainment, Chairman of Australian Made Media, Advisory Board of Menzies Art Brands.

John O’Rourke December • Bachelor of Commerce, Director of the Plenary Group Pty Ltd, Plenary 2011 University of Melbourne Health Holdings (Comprehensive Cancer Centre) • Graduate Diploma in Finance, RMIT Pty Limited, Plenary Conventions Pty Limited and Flagship Property Holdings Pty Ltd.

Tim Poole July 2006 • Bachelor of Commerce, Non-executive Chairman Lifestyle Communities Resigned University of Melbourne Limited, Westbourne Credit Management (March 2014) • Associate, Institute Limited, Continuity Capital Partners Pty Ltd, of Chartered Accountants LEK Consulting Advisory Board, Investment Committee of AustralianSuper Pty Ltd. Non-executive Director of Newcrest Mining Limited, AustralianSuper Pty Ltd.

Michael Ramsden December • Bachelor of Economics, Monash University Managing Director Terrain Capital Ltd, Chairman 2012 • Bachelor of Laws, Monash University Lowell Capital Ltd, Chairman of Australian Mines Ltd, • Fellow of the Financial Services Institute Chairman of African Mahogany (Aust) Pty Ltd. of Australasia

Elisa Sturzaker May 2011 • Bachelor of Laws and Bachelor of Commerce, General Manager – Industry Management at NBN Co. Robinson Monash University • Admitted to the Supreme Court of Victoria • Postgraduate Management Studies, Melbourne Business School

Neil Wilson December • Bachelor of Business (Accounting) (MIS) Chief Executive Officer and Managing 2012 • Certified Practicing Accountant (CPA) Director of Oakton Limited.

26 — Victoria Racing club Company Secretary Lucas Robertson, Executive General Manager Legal and Risk. Principal activities The principal activities of the Club during the year were the conduct of thoroughbred racemeetings and the provision of training facilities for horses that are stabled and trained at Flemington Racecourse. Objectives, strategies and key areas of focus The Club’s primary objective is for Flemington to be the world leader in thoroughbred racing, event management and entertainment. Key strategies to achieve this include: • Optimise the racing program and raceday experience • Continuous improvement of racing, Member and patron facilities • Active engagement with Members and patrons • Growth of the Melbourne Cup Carnival brand throughout Australia and select international markets • Continued implementation of the ‘Masterplan’, including a review of non-core assets • Improved staff engagement and the further development of a performance based culture • Successful implementation of new systems to enhance the customer offering and drive internal process efficiencies. A key area of focus for the Club is to construct a new grandstand, and ensure it is funded without undue pressure and risk on the Club operations. The Club has a number of indicators to assess and monitor performance. These include: Customer engagement: • Number of Members and Member retention rates • Raceday attendance by customer segments • Customer satisfaction research • Number of events (racing and non-racing). Racing: • Race fields, including average number of starters and quality of fields • Pari-mutuel and bookmaker wagering turnover on Flemington racemeetings • Total prizemoney paid by the Club, including the amount contributed to prizemoney by the Club’s own activities (often referred to as ‘top up’) • Stables’ tenancy • Training gallops. Operations: • Racetrack condition • Utilities usage. In addition to the above, the Club has a number of financial metrics to assess its performance; including banking covenants linked to the Club’s financing facilities. The Club also engages in a number of qualitative market research programs each year to monitor customer satisfaction levels.

Annual Report 2014 — 27 Directors’ Report continued

Review of operations The profit for the year ended 31 July 2014 was $3.4 million, compared with a profit of $7.5 million for the prior year. The following factors were key contributors to the decline in the financial performance: • The Club experienced a decline in racemeeting attendances during the year, down from 538,000 to 519,000. Contributing to the decline in overall attendance was the Melbourne Cup Carnival, down from 351,000 in 2012 to 331,000 in 2013. The decline in attendance not only impacted public ticketing revenues, but also related Food and Beverage spend on course during the year. • Revenues increased a modest $0.4 million, or 0.3%, to $150.9 million for the year. The main sources of revenue for the Club continues to be raceday catering, dining, hospitality and events $54.0 million, racing distributions $29.5 million and marketing, sponsorship and broadcast rights $22.9 million. Revenues from Members’ subscriptions and their guests continue to play an integral part in the financial success of the Club, contributing $17.8 million in the 2014 financial year, excluding the revenue contribution to raceday catering and dining. • Expenses increased $6.0 million, or 4.2%, for the year. This included the Club’s continued commitment to owners, returning $37.0 million in prizemoney for the year, up $0.3 million, or 0.8%, including $7.2 million in voluntary prizemoney ‘top ups’, with $5.6 million allocated to the Melbourne Cup Carnival to attract the best domestic and international horses to Flemington. Expenses also included one-off costs of $0.6 million relating to the potential sale of surplus land to Greenland (Australia), which is currently held for sale in the financial report. • The Club’s share of its investments’ profits decreased by $0.4 million to $1.2 million. Contributing to the decrease was a decline in the operating performance of the Australian Stud Book (ASB) and Australian Genetics Testing Pty Ltd (AGT) due to legal costs relating to the artificial insemination case in the Federal Court. • Depreciation and amortisation costs of $9.5 million were expensed for the year, compared with $8.8 million for the prior year. • The Club invested $12.1 million in capital projects during the year, including $2.1 million towards the design of the new Club Stand, $3.0 million in new technology and related systems to enhance the customer experience and $0.8 million in the award winning in-situ desalination project. • An actuarial profit of $0.3 million on the Club’s defined benefit superannuation plan was recognised directly in equity during the year following an actuarial review of the plan’s financial position. The Club continues to maintain a term overdraft facility to fund the working capital requirements of the Club during the year, with an expiry of October 2015. Changes in state of affairs During the financial year, there was no significant change in the state of affairs of the Club other than that referred to in the financial statements or notes thereto. Subsequent events On 16 September 2014, the Club and Australian Turf Club (ATC) sold the assets and copyright used in the management and administration of ASB and AGT to Racing Information Services Australia (RISA) for $18.0 million, the Club’s share $9.0 million, for its 50% interest. The Club currently equity accounts its investment in ASB and AGT with a combined carrying value of $0.7 million recorded as at 31 July 2014. There have been no further matters or circumstances occurring subsequent to the end of the financial year that have significantly affected, or may significantly affect, the operations of the Club, the results of those operations or the state of affairs of the Club in future financial years. Future developments Disclosure of information regarding likely developments in the operations of the Club in future financial years and the expected results of those operations is likely to result in unreasonable prejudice to the Club. Accordingly, this information has not been disclosed in this Report. Indemnification of officers and auditors During the financial year, the Club paid a premium in respect of a contract insuring the Directors, officers and employees of the Club against a liability incurred as such a Director, officer or employee to the extent of all losses which the Club becomes legally obligated to pay on account of any claim. The Club has not during or since the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an auditor of the Club against a liability incurred as such an auditor.

28 — Victoria Racing club Dividends Under the Club’s constitution, no dividends may be declared or paid. Directors’ meetings The following table sets out the number of Directors’ Board meetings and meetings of the Audit and Risk Management Committee held during the financial year and the number of meetings attended by each Director (during their tenure). During the financial year, eleven Board meetings and three Audit and Risk Management Committee meetings were held. board audit and risk of directors management committee directors held att’d held att’d Katherine Bourke 11 10 – – Michael Burn 11 11 3 3 David Courtney (a) 11 6 – – Amanda Elliott (b) 11 10 – – Peter Fekete 11 11 3 3 Paul Leeds 11 9 – – John O’Rourke 11 11 1 1 Tim Poole (c) 7 7 1 1 Michael Ramsden 11 11 3 3 Elisa Sturzaker Robinson 11 9 – – Neil Wilson 11 11 – –

(a) The Chief Executive attends the Audit and Risk Management Committee as an invitee. Mr Courtney was on indefinite leave during 2014. (b) Mrs Elliott was on Club business for the February 2014 Board meeting. (c) Tim Poole resigned from the Board in March 2014. Auditor Deloitte Touche Tohmatsu continues in office as the Club’s auditor. The auditor’s Independence Declaration is included in the financial statements on page 30. Signed in accordance with a resolution of Directors made pursuant to Section 298(2) of the Corporations Act 2001. On behalf of the Directors,

Michael S Burn Director Melbourne, 24 October 2014

Annual Report 2014 — 29 Independence Declaration

Deloitte Touche Tohmatsu A.B.N. 74 490 121 060 550 Bourke Street Melbourne VIC 3000 GPO Box 78B Melbourne VIC 3001 Australia The Board of Directors DX 111 Victoria Racing Club Limited Tel: +61 (0) 3 9671 7000 448 Epsom Road Fax: +61 (0) 3 9671 7001 Flemington VIC 3031 www.deloitte.com.au

24 October 2014

Dear Board Members Victoria Racing Club Limited In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Victoria Racing Club Limited. As lead audit partner for the audit of the financial statements of Victoria Racing Club Limited for the financial year ended 31 July 2014, I declare that to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit. Yours sincerely

Deloitte Touche Tohmatsu Peter Caldwell Partner Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited

30 — Victoria Racing club Independent Auditor’s Report to the Members of Victoria Racing Club Limited

Deloitte Touche Tohmatsu A.B.N. 74 490 121 060 550 Bourke Street Melbourne VIC 3000 GPO Box 78B Melbourne VIC 3001 Australia DX 111 Tel: +61 (0) 3 9671 7000 Fax: +61 (0) 3 9671 7001 www.deloitte.com.au

We have audited the accompanying financial report of Victoria Racing Club Limited, which comprises the statement of financial position as at 31 July 2014, the statement of comprehensive income, the statement of cash flows and the statement of changes in equity for the year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the company as set out on pages 32 to 52. Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards – Reduced Disclosure Requirements and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control, relevant to the entity’s preparation of the financial report that gives a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Auditor’s Independence Declaration In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Victoria Racing Club Limited, would be in the same terms if given to the directors as at the time of this auditor’s report. Opinion In our opinion, the financial report of Victoria Racing Club Limited is in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the company’s financial position as at 31 July 2014 and of its performance for the year ended on that date; and (b) complying with Australian Accounting Standards – Reduced Disclosure Requirements and the Corporations Regulations 2001.

Deloitte Touche Tohmatsu Peter Caldwell Partner Chartered Accountants Melbourne, 24 October 2014

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited.

Annual Report 2014 — 31 Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 July 2014

2014 2013 notes $000 $000 Revenue Thoroughbred Racing Industry Distributions 3 (l) 29,545 30,480 Catering, Dining, Hospitality and Events 53,979 51,842 Marketing, Sponsorship and Broadcast Rights 22,860 23,099 Members’ Tickets and Subscriptions 17,769 18,393 Public Ticketing 7,505 8,120 Wagering and Other Racing Revenue 7,106 6,281 Racecourse and Training Facilities 5,559 5,626 Gaming 4,558 4,458 Share of Net Profits of Associates and Jointly Controlled Entities Accounted for Using the Equity Method 3 (c),11 1,186 1,549 Interest 97 246 Net Gain on Disposal of Fixed Assets 10 42 Other Revenue 752 365 Total Revenue 150,926 150,501

Expenditure Prizemoney and Other Returns to Owners 37,030 36,749 Catering, Dining, Hospitality and Events 39,563 36,854 Marketing, Sponsorship and Broadcast Rights 11,968 10,865 Administration and Members’ Services 25,397 24,150 Racecourse and Training Facilities 18,481 18,500 Gaming 4,390 4,239 Financing Costs 8 286 402 Depreciation and Amortisation 9,545 8,838 Other Expenditure 829 935 Total Expenditure 147,489 141,532 Profit for the Year before net (losses)/gains on Available For Sale Financial Assets 5 3,437 8,969

Loss on Available For Sale Financial Assets – (1,500)

Profit for the Year 3,437 7,469

Other Comprehensive Income Loss on Available For Sale Financial Assets – (4,125) Gain on Revaluation of Properties – 756 Actuarial Gain on Defined Benefit Plan 19 281 1,600 Other Comprehensive Income for the Year 281 (1,769) Total Comprehensive Income for the Year 3,718 5,700

The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.

32 — Victoria Racing club Statement of Financial Position at 31 July 2014

2014 2013 notes $000 $000 Assets Current Assets Cash and Cash Equivalents 20 1,173 857 Trade and Other Receivables 9 9,065 9,092 Inventories 3 (b) 865 705 Prepayments 3,031 2,591 Assets Classified as Held For Sale 10 37,581 – Total Current Assets 51,715 13,245

Non-current Assets Trade and Other Receivables 9 12 16 Investments Accounted for using the Equity Method 3 (c),11 922 1,309 Intangibles 12 1,197 1,417 Other Financial Assets 13 1,129 1,129 Property, Plant and Equipment 3(e),(f),(o),14 157,665 192,038 Total Non-current Assets 160,925 195,909 Total Assets 212,640 209,154

Liabilities Current Liabilities Trade and Other Payables 15 9,069 8,712 Fees in Advance 23,678 23,409 Borrowings 16 1,640 950 Provisions 3 (i),(j),17 1,135 1,108 Total Current Liabilities 35,522 34,179

Non-current Liabilities Trade and Other Payables 15 466 733 Borrowings 16 886 1,817 Provisions 3 (i),(j),17 3,776 4,153 Total Non-current Liabilities 5,128 6,703 Total Liabilities 40,650 40,882 Net Assets 171,990 168,272

Equity Retained Earnings 5 118,023 114,305 Reserves 6 53,967 53,967 Total Equity 171,990 168,272

The above Statement of Financial Position should be read in conjunction with the accompanying notes.

Annual Report 2014 — 33 Statement of Changes in Equity for the year ended 31 July 2014

properties investments revaluation revaluation retained reserve reserve earnings total $000 $000 $000 $000 Balance as at 1 August 2012 53,039 4,297 105,236 162,572 Profit for the year – – 7,469 7,469 Other comprehensive income for the year 756 (4,125) 1,600 (1,769) Balance as at 31 July 2013 53,795 172 114,305 168,272 Profit for the year – – 3,437 3,437 Other comprehensive income for the year – – 281 281 Balance as at 31 July 2014 53,795 172 118,023 171,990

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

34 — Victoria Racing club Statement of Cash Flows for the year ended 31 July 2014

2014 2013 notes $000 $000 Cash Flows from Operating Activities: Receipts from Thoroughbred Racing Industry Distributions 29,049 30,273 Receipts from Catering, Dining, Hospitality and Events 53,789 53,112 Receipts from Marketing, Sponsorship and Broadcast Rights 23,524 25,112 Receipts from Members’ Tickets and Subscriptions 18,228 17,396 Receipts from Public Ticketing 7,505 8,120 Receipts from Gaming 4,539 4,645 Receipts from Wagering and Other Racing Revenue 6,408 5,891 Receipts from Racecourse, Training Facilities and Other 7,274 8,034 Payments for Prizemoney (37,030) (36,749) Payments for Catering, Dining, Hospitality and Events (40,564) (36,534) Payments for Marketing, Sponsorship and Broadcast Rights (11,968) (10,770) Payments for Administration and Members’ Services (25,031) (27,589) Payments for Gaming (4,368) (4,202) Payments for Racecourse and Training Facilities (18,480) (18,308) Payments for Other (5) (1,049) Interest Received 97 246 Interest and Other Costs of Finance Paid (264) (350) Net Cash Provided by Operating Activities 20(c) 12,703 17,278

Cash Flows from Investing Activities: Payments for Buildings and Infrastructure (1,886) (1,633) Payments for Plant and Equipment (4,283) (5,023) Payments for Construction Work in Progress (5,959) (3,995) Payments for Intangibles (266) (333) Proceeds from the Sale of Property, Plant and Equipment 10 69 Distribution from Equity Accounted Investments 1,167 – Net Cash Used in Investing Activities (11,217) (10,915)

Cash Flows from Financing Activities: Proceeds from Borrowings – 10,000 Repayment of Borrowings (1,170) (19,005) Net Cash Used in Financing Activities (1,170) (9,005)

Net Increase/(Decrease) in Cash and Cash Equivalents 316 (2,642) Cash and Cash Equivalents at Beginning of the Financial Year 857 3,499 Cash and Cash Equivalents at End of the Financial Year 20(a) 1,173 857

The above Statement of Cash Flows should be read in conjunction with the accompanying notes.

Annual Report 2014 — 35 Notes to and forming part of the Financial Statements of the Victoria Racing Club Limited for the year ended 31 July 2014

1. General information The Victoria Racing Club Limited’s principal place of business and registered office is 448 Epsom Road, Flemington 3031, tel (03) 8378 0888. Victoria Racing Club Limited (‘the Club’) is a public company limited by guarantee, incorporated and operating in Australia.

2. Adoption of new and revised accounting standards Standards affecting reported results and financial position The Club has adopted the following accounting standards, which became applicable from 1 August 2013: • AASB 10 – Consolidated Financial Statements • AASB 12 – Disclosure of Interests in Other Entities • AASB 13 – Fair Value Measurement • AASB 119 – Employee Benefits The adoption of these standards did not have a material effect on the financial position or performance of the Club during the period. Standards affecting presentation and disclosure AASB 119 ‘Employee Benefits’(2011) In the current year, the Club has applied AASB 119 Employee Benefits (as revised in 2011) and the related consequential amendments for the first time. AASB 119 Employee Benefits (as revised in 2011) impacts the accounting for defined benefit plans and termination benefits. As the Club already recognised actuarial gains and losses through other comprehensive income, there is no impact to the Statement of Financial Position balance sheet items as a result of applying the revised standard to the 2013 disclosures. However, the revised standard does alter the allocation of expense between profit or loss and other comprehensive income. For the year ended 31 July 2013, the defined benefit cost in the income statement would have been adjusted from $(0.1) million to $0.3 million and the actuarial gain/(loss) on the defined benefit plan adjusted from $1.6 million to $2.0 million, a $nil impact on the total comprehensive income for the year. The interest cost and expected return on plan assets used in the previous version of AASB (as revised in 2011) 119 are replaced with a ‘net interest’ amount under AASB 119 (as revised in 2011), which is calculated by applying the discount rate to the net defined benefit liability or asset. These changes have had an impact on the amounts recognised in profit or loss and other comprehensive income in prior years. Standards and interpretations adopted with no effect on financial statements There are no new and revised standards and interpretations adopted in these financial statements affecting the reporting results or financial position.

36 — Victoria Racing club 3. Significant accounting policies Statement of compliance These financial statements are general purpose financial statements which have been prepared in accordance with the Corporations Act 2001 and Australian Accounting Standards – Reduced Disclosure Requirements as issued by the Australian Accounting Standards Board (AASB). The financial statements were authorised for issue by the Directors on 24 October 2014. Basis of preparation The financial report has been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted. The Club is a company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order, amounts in the financial report are rounded off to the nearest thousand dollars, unless otherwise indicated. The Club has retained the presentation and classification of items in the financial statements from one period to the next unless: i. It is apparent, following a significant change in the nature of the entity’s operations or a review of its financial statements, that another presentation or classification would be more appropriate having regard to the criteria or the selection and application of accounting policies in AASB 108; or ii. An Australian Accounting Standard requires a change in presentation. The following significant accounting policies have been adopted in the preparation and presentation of the financial report. (a) Cash and cash equivalents Cash comprises cash on hand and term deposits. Cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value and have a maturity of three months or less at the date of acquisition, where applicable. Bank overdrafts will be shown within borrowings in current liabilities in the Statement of Financial Position. (b) Inventories Inventories are stated at the lower of cost and net realisable value. Costs, including an appropriate portion of fixed and variable overhead expenses, are assigned to inventory on hand by the method most appropriate to each particular class of inventory, with the majority being valued on a first in first out basis. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. (c) Financial assets Other financial assets The investments in ThoroughVisioN Pty Ltd and 3UZ Sport 927 held by the Club are classified as being available for sale financial assets and are stated at fair value per the Directors’ valuation. Gains and losses arising from changes in fair value are recognised directly in the investment revaluation reserve with the exception of impairment losses, which are recognised directly in the Statement of Profit or Loss and Other Comprehensive Income to the extent that it exceeds the balance, if any, held in the revaluation reserve relating to a previous revaluation of that asset. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in the investment revaluation reserve would be included in the Statement of Profit or Loss and Other Comprehensive Income for the period. Available for sale financial assets are carried at Directors’ valuation with independent valuations for available for sale assets prepared as and when the Directors see fit. The independent valuations are used to assist Directors in assessing the fair value of available for sale assets.

Annual Report 2014 — 37 Notes to and forming part of the Financial Statements of the Victoria Racing Club Limited for the year ended 31 July 2014 continued

3. Significant accounting policies continued (c) Financial assets continued Loans and receivables Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are initially measured at fair value, net of transaction costs. Loans and receivables are subsequently measured at amortised cost using the effective interest method less impairment.

Investments in associates Subsequent to initial recognition, investments in associates are accounted for under the equity method in the financial statements.

Jointly controlled entities Interests in jointly controlled entities in which the Club is a venturer (and so has joint control) are accounted for under the equity method. The investments in the Australian Stud Book and the Australian Genetics Testing Pty Ltd are accounted for under the equity method. (d) Other financial liabilities Other financial liabilities, including trade and other payables and borrowings, are initially measured at fair value, net of transaction costs. Trade and other payables are recognised when the Club becomes obliged to make payments resulting from the purchase of goods and services. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability or, where appropriate, a shorter period. (e) Property, plant and equipment Freehold land is measured at fair value. Fair value is determined on the basis of an annual independent valuation prepared by external valuation experts based on an analysis of the size and position of the land, and of sales of land within close proximity over the last number of years. Fair values are recognised in the financial statements and are reviewed at the end of each reporting period to ensure that the carrying values of freehold land are not materially different from their fair values. Any revaluation increase arising from the revaluation of land is credited to the properties revaluation reserve. A decrease in carrying amount arising on the revaluation of land is charged as an expense in the Statement of Profit or Loss and Other Comprehensive Income to the extent that it exceeds the balance, if any, held in the revaluation reserve relating to a previous revaluation of that asset. Plant and equipment and buildings are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item. In the event that settlement of all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present value as at the date of acquisition. Depreciation is provided on plant and equipment, including buildings and infrastructure, but excluding construction work in progress, and is calculated on a straight line basis so as to write off the net cost of each asset over its expected useful life to its estimated residual value. The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period, with the effect of any changes recognised on a prospective basis. The following estimated useful lives are used in the calculation of depreciation: • Buildings and infrastructure – 25 to 40 years • Plant and equipment – 3 to 10 years.

38 — Victoria Racing club (f) Leased assets Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the leased asset to the lessee. All other leases are classified as operating leases. Assets held under finance leases are initially recognised at their fair value or, if lower, at amounts equal to the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the Statement of Financial Position as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Club’s general policy on borrowing costs. Refer to Note 3(h). Finance leased assets are amortised on a straight line basis over the estimated useful life of the asset. Operating lease payments are recognised as an expense on a straight line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. (g) Impairment of tangible and intangible assets excluding goodwill At the end of each reporting period, the Club reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset the Club estimates the recoverable amount of the cash-generating unit to which the asset belongs. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using the pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the Statement of Profit or Loss and Other Comprehensive Income, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised in Statement of Profit or Loss and Other Comprehensive Income immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation increase. (h) Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in the Statement of Profit or Loss and Other Comprehensive Income in the period in which they are incurred.

Annual Report 2014 — 39 Notes to and forming part of the Financial Statements of the Victoria Racing Club Limited for the year ended 31 July 2014 continued

3. Significant accounting policies continued (i) Provisions Provisions are recognised when the Club has a present obligation (legal or constructive) as a result of a past event, it is probable that the Club will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a 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. (j) Employee benefits A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave when it is probable that settlement will be required and they are capable of being measured reliably. Liabilities recognised in respect of short-term employee benefits are measured at their nominal values using the remuneration rate expected to apply at the time of settlement. Liabilities recognised in respect of long-term employee benefits are measured as the present value of the estimated future cash outflows to be made by the Club in respect of services provided by employees up to reporting date.

Defined benefit plans For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest) is reflected immediately in the Statement of Financial Position with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows: • service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements); • net interest expense or income; and • remeasurement. The Club presents the first two components of defined benefit costs in profit or loss in the line item administration and membership services expenses. Curtailment gains and losses are accounted for as past service costs. The retirement benefit obligation recognised in the Statement of Financial Position represents the actual deficit or surplus in the Club’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans. (k) Revenue Revenue is measured at the fair value of the consideration received or receivable for sale of goods and services.

Sale of goods and services Revenue from the sale of goods and services is recognised when all of the following conditions are satisfied: • The Club has transferred to the buyer the significant risks and rewards of ownership of the goods or service • The Club retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold or service provided • The amount of revenue can be measured reliably • It is probable that the economic benefits associated with the transaction will flow to the Club • The costs incurred or to be incurred in respect of the transaction can be measured reliably.

40 — Victoria Racing club Interest revenue Interest revenue is recognised when it is probable that the economic benefits will flow to the Club and that the amount of revenue can be measured reliably. Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition. (l) Thoroughbred Racing Industry distributions The Club received distributions of $29.5 million (2013: $30.5 million) and these represent the amount received and receivable in respect of the year ended 31 July 2014, net of industry adjustments. In addition, the Club received $2.8 million (2013: $3.2 million) representing contributions made to the Club by Racing Victoria Limited to fund, in part, capital developments at Flemington Racecourse. (m) Goods and Services Tax Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax (GST), except: (i) where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or (ii) for receivables and payables that are recognised inclusive of GST. The net amount of GST recoverable from or payable to the taxation authority is included as part of receivables or payables. (n) Intangible assets Intangible assets acquired separately are included under property, plant and equipment and are carried at cost less accumulated amortisation and impairment. Amortisation is charged on a straight line basis over their estimated useful lives. The estimated useful life and amortisation method is reviewed at the end of each annual reporting period, with any changes in these accounting estimates being accounted for on a prospective basis. (0) Government grants Government grants are not recognised until there is a reasonable assurance that the Club will comply with the conditions attaching to them and that the grants will be received. (p) Assets held for sale Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales for such an asset and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

4. Critical accounting judgements and key sources of estimation uncertainty In the application of the Club’s accounting policies, which are described in Note 3, management is required to make judgements, estimates and assumptions about carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. 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. Management uses their judgement in selecting the most appropriate valuation technique in deriving fair value. For available for sale financial assets as noted in Note 13, a combination of commonly used valuation techniques are applied.

Annual Report 2014 — 41 Notes to and forming part of the Financial Statements of the Victoria Racing Club Limited for the year ended 31 July 2014 continued

5. Retained earnings 2014 2013 $000 $000 Balance at 1 August 114,305 105,236 Actuarial gain on defined benefit plan 281 1,600 Net profit 3,437 7,469 Balance at 31 July 118,023 114,305

6. Reserves 2014 2013 $000 $000 Investment revaluation 172 172 Properties revaluation 53,795 53,795 Balance at 31 July 53,967 53,967

Investment revaluation reserve Balance at 1 August 172 4,297 Valuation loss recognised – (4,125) Balance at 31 July 172 172

The investment revaluation reserve arises on the revaluation of available for sale financial assets. Where a revalued financial asset is sold, that portion of the reserve which relates to that financial asset is effectively realised and is recognised in the Statement of Profit or Loss and Other Comprehensive Income. Where a revalued financial asset is impaired, that portion of the reserve which relates to that financial asset is recognised in the Statement of Profit or Loss and Other Comprehensive Income. 2014 2013 $000 $000 Properties revaluation reserve Balance at 1 August 53,795 53,039 Revaluation increments – 756 Balance at 31 July 53,795 53,795

The properties revaluation reserve arises from the revaluation of land. Where revalued land is sold, that portion of the properties revaluation reserve which relates to that asset, and is effectively realised, is transferred directly to retained earnings.

42 — Victoria Racing club 7. Income tax The Club is exempt from income tax under section 50–45SS9.1(a) of the Income Tax Assessment Act 1997 (as amended).

8. Finance cost 2014 2013 $000 $000 Interest on term overdraft 191 344 Interest on obligations under finance lease 95 73 Less amounts included in the cost of qualifying assets – (15) Total 286 402

9. Trade and other receivables 2014 2013 $000 $000 Current Trade receivables (i) 6,712 6,786 Other receivables 1,322 1,212 Wagering distribution – 169 TVN rights fees – 300 Thoroughbred Racing Production (Vic) Pty Ltd 1,031 625 9,065 9,092

Non-current 3UZ Sport 927 12 16 Total 9,077 9,108

(i) The average credit period on sales of goods and services is 30 days. Penalty interest is charged on outstanding receivables where applicable.

10. Assets held for sale 2014 2013 $000 $000 Freehold land held for sale (i) 37,581 –

Total 37,581 –

(i) During the year, the Club entered an agreement with Greenland (Australia) to sell parcels of freehold land surplus to the Club’s needs. The Club expects the transaction to take place during the 2015 financial year.

Annual Report 2014 — 43 Notes to and forming part of the Financial Statements of the Victoria Racing Club Limited for the year ended 31 July 2014 continued

11. Investments accounted for using the equity method 2014 2013 $000 $000 Investments in associates 185 257 Investments in jointly controlled entities 737 1,052 922 1,309

principal country of 2014 2013 name of entity activity incorporation $000 $000 Investments in associates Australian Prices Network Distribution of betting price fluctuations Australia 16.7 16.7 Thoroughbred Racing Production (Vic) Pty Ltd Production of on course racing vision Australia 25.0 25.0

Jointly controlled entity Australian Stud Book Maintenance of breeding register Australia 50.0 50.0 Australian Genetics Testing Pty Ltd DNA screening of research animals Australia 50.0 50.0

2014 2013 $000 $000 Summarised financial information of associates Share of associates’ profit 501 724

Summarised financial information of jointly controlled entities Share of jointly controlled entities profit 685 825 1,186 1,549

44 — Victoria Racing club 12. Other intangible assets 2014 2013 $000 $000 Cost 1,614 1,794 Accumulated amortisation (417) (377) 1,197 1,417

gaming water entitlements (i) website rights (ii) total cost $000 $000 $000 $000 Balance at 1 August 2012 – 281 180 461 Additions 1,333 – – 1,333 Impairment – – – – Disposals – – – – Balance at 31 July 2013 1,333 281 180 1,794 Additions – – – – Impairment – – – – Disposals – – (180) (180) Balance at 31 July 2014 1,333 281 – 1,614

Accumulated amortisation Balance at 1 August 2012 – 16 127 143 Amortisation expense 128 70 36 234 Impairment – – – – Disposals – – – – Balance at 31 July 2013 128 86 163 377 Amortisation expense 133 70 17 220 Impairment – – – – Disposals – – (180) (180) Balance at 31 July 2014 261 156 – 417

(i) In August 2012, the Club’s Gaming venue commenced operation under a new gaming machine entitlement arrangement. The Club is entitled to operate 80 gaming machines over a 10-year period. (ii) In 2009, the Club acquired the right for a period of five years to utilise additional annual quantities of potable water, this expired during 2014 financial year.

13. Other financial assets 2014 2013 $000 $000 Available for sale investments at fair value: Non-current ThoroughVisioN Pty Ltd (i) – – 3UZ Sport 927 (ii) 1,074 1,074 1,074 1,074

Investments carried at amortised cost: Non-current Bank term deposits 55 55 Total 1,129 1,129

(i) During the 2013 financial year, a new shareholders and media rights agreement was entered into with ThoroughVisioN Pty Ltd (TVN). The new agreement was structured to maximise the Club’s media rights’ returns (a revenue item) on an annual basis, this resulted in the fair value of the Club’s shareholding in TVN being assessed as $nil. At 31 July 2014, the Club assessed the fair value of its shareholding in TVN as $nil. The Club continues to hold a 12.5% (2013: 12.5%) shareholding in ThoroughVisioN Pty Ltd. (ii) At 31 July 2014, the Club held a 14.23% (2013: 14.23%) shareholding in 3UZ Sport 927. Based on a combination of factors, which included market values of assets and licences held and analysis of direct and indirect benefits accruing to the racing industry as a result of ownership of the radio station, the Club has valued its 14.23% shareholding at $1.074 million (2013: $1.074 million).

Annual Report 2014 — 45 Notes to and forming part of the Financial Statements of the Victoria Racing Club Limited for the year ended 31 July 2014 continued

14. Property, plant and equipment assets freehold work in buildings plant and under land at progress and equipment finance fair value at cost infrastructure at cost lease total $000 $000 $000 $000 $000 $000 Gross carrying amount Balance at 1 August 2012 59,733 2,020 124,912 131,736 156 318,557 Additions – 5,974 1,633 4,065 2,982 14,654 Transfers – (417) – 417 – – Net revaluation increments 756 – – – – 756 Impairment – – – – – – Disposals – – – (937) (156) (1,093) Balance at 31 July 2013 60,489 7,577 126,545 135,281 2,982 332,874 Additions – 5,959 795 4,689 – 11,443 Transfers – (3,985) 665 1,783 1,537 – Transfer to held for sale (36,491) – – – – (36,491) Net revaluation increments – – – – – – Impairment – – – – – – Disposals – – – (132) – (132) Balance at 31 July 2014 23,998 9,551 128,005 141,621 4,519 307,694

Accumulated depreciation and impairment Balance at 1 August 2012 – – 64,583 68,561 152 133,296 Depreciation expense – – 2,995 5,575 34 8,604 Disposals – – – (908) (156) (1,064) Balance at 31 July 2013 – – 67,578 73,228 30 140,836 Depreciation expense – – 3,043 5,815 467 9,325 Disposals – – – (132) – (132) Balance at 31 July 2014 – – 70,621 78,911 497 150,029

Net book value As at 31 July 2013 60,489 7,577 58,967 62,053 2,952 192,038 As at 31 July 2014 23,998 9,551 57,384 62,710 4,022 157,665

Freehold land carried at fair value. An independent valuation of the Club’s freehold land was performed by PP&E Valuations to determine the fair value of the land. The valuation which conforms to Australian Valuation Standards, was determined by reference to similar sales of real estate in the local and surrounding areas and with regard to the size, shape and topography of the individual parcels of land. The effective date of the valuation is 31 July 2014 (2013: 31 July 2013).

46 — Victoria Racing club 15. Trade and other payables 2014 2013 $000 $000 Current Trade payables (i) 2,666 1,640 Other payables 4,935 5,321 Payables for assets 1,201 1,484 Gaming Licence Payable 267 267 9,069 8,712

(i) The average credit period on purchases is 30 days. No interest is charged on trade payables.

Non-current Gaming Licence Payable 466 733 Total 9,535 9,445

16. Borrowings 2014 2013 $000 $000 Unsecured – at amortised cost Current Finance lease liabilities (i) 1,640 950 1,640 950

Non-current Finance lease liabilities (i) 886 1,817 Total 2,526 2,767

(i) Secured by assets leased

17. Provisions 2014 2013 $000 $000 Current Employee benefits 1,135 1,108

Non-current Employee benefits 2,903 2,875 Defined benefit plan 873 1,278 3,776 4,153 Total 4,911 5,261

The employee benefits expense for the year was $0.5 million (2013: $0.7 million). The expense has been included in the Statement of Profit or Loss and Other Comprehensive Income in expenditure for administration and members’ services.

Annual Report 2014 — 47 Notes to and forming part of the Financial Statements of the Victoria Racing Club Limited for the year ended 31 July 2014 continued

18. Leases Finance leases Leasing arrangements relate to the purchase of technology equipment and motor vehicles with lease terms of up to four years remaining. At the conclusion of the term and final payment, full ownership is transferred to the Club. present value of minimum future minimum future lease payments lease payments 2014 2013 2014 2013 finance lease liabilities $000 $000 $000 $000 – not later than 1 year 1,640 950 1,640 950 – later than 1 year and not later than 5 years 952 1,937 886 1,817

Included in the financial statements as: (Note 16) – Current borrowings 1,640 950 – Non-current borrowings 886 1,817 2,526 2,767

Operating leases Leasing arrangements relate to the rental of computer equipment and motor vehicles with lease terms of between 3 to 5 years. On conclusion of the term, there are options to extend the lease or return the goods. 2014 2013 $000 $000 Non-cancellable operating lease commitments No longer than 1 year 219 204 Longer than 1 year and not longer than 5 years 359 114 578 318

48 — Victoria Racing club 19. Defined benefit superannuation plan A significant number of employees of the Club are members of the Victorian Racing Industry Superannuation Fund (the sub-plan) of AMP Signature Super. The sub-plan has a combination of defined benefit and accumulation membership. The following information relates to the defined benefit membership. The defined benefit segment of the sub-plan is closed to new members. The defined benefit members are entitled to retirement benefits based on a multiple of their deemed final salary upon attainment of a retirement age of 60. No other post-retirement benefits are provided to these employees. The defined benefit superannuation segment is a funded segment of the sub-plan. The net deficit determined in the sub-plan’s most recent financial report, for the year ended 31 July 2014, was $0.873 million (2013: $1.278 million). The Club has a legal liability to make up a deficit in the defined benefit segment of the sub-plan, but no direct legal right to withdraw any surplus from the sub-plan. 2014 2013 % % Key assumptions used for the purpose of the actuarial valuation were as follows (expressed as weighted averages): Discount rate gross of tax 3.5 3.7 Expected return on plan assets 7.0 7.0 Expected rate of salary increase 4.5 4.5

Amounts recognised in profit or loss in respect of the defined benefit plan are as follows: 2014 2013 $000 $000 Recognised in the Statement of Profit or Loss and Other Comprehensive Income 405 (66) Actuarial gains incurred during the year (281) (1,600) Cumulative actuarial losses 1,037 1,318 The amount included in the Statement of Financial Position arising from the Club’s obligations in respect of its defined benefit sub-plan is as follows: Present value of defined benefit obligation at end of year 11,191 10,872 Fair value of plan assets at end of year (10,318) (9,594) Net liability arising from defined benefit 873 1,278

Movements in the fair value of the plan assets in the current period were as follows: Opening fair value of plan assets 9,594 9,106 Employer contributions 529 551 Member contributions 31 141 Benefits paid (604) (1,852) Other 768 1,648 Closing fair value of plan assets 10,318 9,594

The analysis of the plan assets and the expected rate of return at the Statement of Financial Position date are as follows:

fair value of plan assets 2014 2013 $000 $000 Equity instruments 3,830 5,756 Debt instruments 4,514 2,446 Property 849 528 Other 1,125 864

Weighted average expected return 10,318 9,594

The actual return on plan assets was $0.8 million (2013: $1.65 million).

Annual Report 2014 — 49 Notes to and forming part of the Financial Statements of the Victoria Racing Club Limited for the year ended 31 July 2014 continued

20. Notes to the statement of cash flows 2014 2013 $000 $000 (a) Reconciliation of cash and cash equivalents Cash at Bank 1,173 857 Bank overdraft – – 1,173 857

(b) Financing facilities Unsecured facility (i) Amount used – – Amount unused 22,000 22,000 22,000 22,000

(i) The unsecured facility limit reduces to $10.0 million on 1 August to 31 December.

Unsecured leasing facility Amount used – – Amount unused 1,300 1,300 1,300 1,300

(c) Reconciliation of profit for the year to net cash flows from operating activities Profit for the year 3,437 7,469 Depreciation and amortisation expense 9,545 8,838 Capitalised interest payments on qualifying assets – 14 Share of profits in associated entities not received as dividends or distributions (19) (1,549) Gain on disposal of fixed assets (10) (42) Non-cash movements in defined benefit superannuation expense 405 617 Loss on Available For Sale Financial Assets – 1,500

Changes in operating assets and liabilities Decrease/(Increase) in trade and other receivables (409) 2,306 (Increase)/Decrease in inventories (160) 101 (Decrease)/Increase in trade and other payables (5) (250) (Decrease)/Increase in fees in advance 269 273 Increase in employee benefit provisions (350) (2,001) Net operating cash flow 12,703 17,278

21. Auditor’s remuneration 2014 2013 $ $ Auditors of Victoria Racing Club Limited – Audit of the financial report 117,200 113,800 – Other services 40,275 46,633 157,475 160,433

50 — Victoria Racing club 22. Key management personnel compensation The key management personnel of the Club include the Chief Executive Officer, along with the seven direct reports (2013: six) and members of the Board. During the year, the compensation of the key management personnel is set out below and includes remuneration and allowances, payments for accrued annual and long service leave and post employment benefits in the form of superannuation. Directors of the Board are not remunerated by the Club; however, do receive certain reimbursements and travel allowances for costs incurred while fulfilling their role as a Director. 2014 2013 $ $ Compensation to Directors and other members of key management personnel of the Company 2,431,360 2,790,287

23. Capital commitments The Club has capital commitments for capital expenditure on qualifying assets at 31 July 2014 of $1.8 million (2013: $4.6 million).

24. Contingent liabilities The Club has guaranteed the obligations of Thoroughbred Racing Productions (Vic) Pty Ltd in respect of loans provided by Australia and New Zealand Banking Group for the amount not exceeding $2.26 million (2013: $2.26 million). In August 2014, the Club was released from this obligation.

25. Related parties The following parties are considered to be related parties to the Club: Members of the Board who held office in the year ended 31 July 2014 (as detailed on page 26 of this Report). All members of the Board act in an honorary capacity and receive no remuneration for their services; however, they do receive certain reimbursements and compensation for costs incurred while fulfilling their role as a Director. Certain members of the Board participate in the Thoroughbred Racing Industry via means of ownership of racehorses. This involvement is on terms and conditions no more favourable than other participants in the Thoroughbred Racing Industry. Certain Directors are nominated by the Club to act as representatives in the thoroughbred industry, those Directors are remunerated in accordance with the relevant entities remuneration practices. The Club paid Directors’ and Officers’ Liability Insurance on behalf of the Board and officers of the Club. The Club indemnifies each officer of the Club against any liability that may be instituted against them or any of them in the exercise of their office or performance of their duties. The Club has not otherwise, during or since the financial year, indemnified or agreed to indemnify an officer or auditor of the Club or any related organisation against liability incurred as such an officer or auditor. All other material transactions and balances with related parties have been disclosed in this Report.

26. Subsequent events On 16 September 2014, the Club and ATC sold the assets and copyright used in the management and administration of ASB and AGT to RISA for $18.0 million, the Club’s share $9.0 million, for its 50% interest. The Club currently equity accounts its investment in ASB and AGT with a combined carrying value of $0.7 million recorded as at 31 July 2014. There have been no further matters or circumstances occurring subsequent to the end of the financial year that have significantly affected, or may significantly affect, the operations of the Club, the results of those operations or the state of affairs of the Club in future financial years.

Annual Report 2014 — 51 Directors’ declaration

The Directors declare that: (a) In the Directors’ opinion, there are reasonable grounds to believe that the Club will be able to pay its debts as and when they become due and payable. (b) In the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with Accounting Standards and giving a true and fair view of the financial position and performance of the Club. Signed in accordance with a resolution of the Directors made pursuant to Section 295 (5) of the Corporations Act 2001. On behalf of the Directors

Michael Burn John O’Rourke Director Director Melbourne, 24 October 2014

52 — Victoria Racing club The VRC unveiled The VRC in Portrait, a commemorative photograph of some of Australia’s most notable faces who have made a contribution to the VRC’s success. The portrait, by leading photographer Ellis Parrinder, features 42 individuals from around the globe who have made their mark in business, racing, entertainment or fashion, and includes:

Black Caviar Jeannine-Renee Pascale Sue Lloyd-Williams ao Champion Australian racehorse, Eight time Myer Fashions VRC Deputy Chief Executive unbeaten in all 25 career starts on the Field winner 1987–1996 1979–2011

Patrick Snowball David Courtney The Honourable Managing Director and Group Chief Chief Executive 2012–2014 Dr Denis Napthine mp Executive Officer of Suncorp Group, Premier of Victoria and representing Major Partner AAMI Bruce McAvaney oam Minister for Racing Sports broadcaster, Seven Network Andrew Ramsden Harry White VRC Committee/Board 1983–2004 Rick Jamieson Former leading jockey and VRC Chairman 1998–2003 Breeder of Black Caviar and winner of four Melbourne Cups principal of Harry the Hirer, Lady Susan Renouf marquee supplier to Flemington Prue Acton VRC Member and owner of Former leading Australian Melbourne Cup winner Beldale Ball Les Carlyon designer and influential Award winning writer and Flemington fashion figure Dermot Weld journalist, VRC Life Member International trainer and winner The Right Honourable of two Melbourne Cups with Lee Freedman The Lord Mayor Robert Doyle Vintage Crop and Media Puzzle Trainer of five Melbourne Cup The Lord Mayor of Melbourne winners, including the legendary Rod Fitzroy Makybe Diva Glen Boss VRC Committee/Board 1993–2011 Leading jockey and winner VRC Chairman 2003–2011 Amanda Elliott of three consecutive Melbourne VRC Committee/Board Cups with Makybe Diva Bart Cummings am 2002–current Trainer of an unequalled VRC Vice Chairman 2011–current Ann Peacock 12 Melbourne Cup winners Crown Melbourne Michael Burn Gai Waterhouse VRC Committee/Board Peter Rowland oam Trainer of 2013 Emirates 2003–current Founder of Peter Rowland Catering, Melbourne Cup winner Fiorente VRC Chairman 2011–current official caterer at Flemington

John Patterson Hilton Nicholas am obe Terry Freeman Clerk of the Course at VRC Committee Member 1960–1993 Keeper of the roses at Flemington Flemington since 1961 VRC Chairman 1982–1986 and current longest standing VRC employee His Highness Sheikh Ahmed Roy Higgins mbe Bin Saeed Al Maktoum Former leading jockey and Rod Johnson Chairman and Chief Executive winner of two Melbourne Cups VRC Secretary/Chief Executive of Principal Partner Emirates Airline 1986–1994 David Hayes Gérald Mossé Trainer of Melbourne Cup James Packer Leading international jockey winner Jeune and a record Chairman of Major Partner Crown and winner of the 2010 Emirates six Group winners in a day Melbourne Cup with Americain at Flemington in 1990 Lloyd Williams Committee Member 1990–1995 Sally Chirnside Brian Beattie Thoroughbred owner and breeder, First female VRC Committee VRC Chief Executive 1994–2000 and winner of four Melbourne Cups Member 1991–2002 Sir Rod Eddington ao Philip Treacy obe Greg Miles Chairman of Victorian Major Events London hat designer and former Racecaller of 33 Melbourne Cups Company and Lion, representing VRC International Style Ambassador Major Partner James Boag Dale Monteith The Honourable Alex Chernov ac qc VRC Chief Executive 2000–2012 Sheila Laxon Governor of Victoria First female trainer to win 2011–current a Melbourne Cup, with mare Ethereal in 2001

Photographs are courtesy of Ellis Parrinder, Bryce Dunkley, Hayden Charles and Getty Images. Paper: this annual report is printed entirely on paper certified by the Forest Stewardship Council (FSC) to be sourced from responsibly managed plantation forests. The cover, printed on Knight Smooth, is made without the use of harmful elemental chlorine, while the text, printed on HannoArt, is produced as a totally chlorine free paper and is manufactured under the world’s best practice ISO14001 Environmental Management System. Victoria Racing Club Limited (ACN 119 214 078) 448 Epsom Road, Flemington Victoria 3031 Telephone: 613 8378 0888, Facsimile: 613 8378 0661 vrc.net.au

The VRC and Flemington logos are ™, annual report 2014 Victoria Racing Club Limited (ACN 119 214 078)