Contents. Contents. Chairman s Foreword 3. Racecourse and Training Infrastructure Plan 4. Wagering Licence / Wagering Performance 5.

2009 ANNUAL REPORT

Contents Contents Chairman s Foreword 3 Racecourse and Training Infrastructure Plan 4 Wagering Licence / Wagering Performance 5 Product Fees 6 TAB Limited and Racing Victoria Supreme Court Decision 7 Metropolitan Club Review 8 Drought Proofing Critical for the Future of Racing 9 Prize Money Plan 10 Super VOBIS Payouts Hit Six Year High 11 Jockey and Trainer Premierships Down to the Wire 12 Williams Claims Fourth Scobie 13 2008 Spring Racing Carnival 14 Group 1 Results 15 Jumps Racing 16 Career Pathways 17 RVL Constitution 18 Financial Performance 19 2

Chairman s Foreword Considerable change and increased competitive activity has occurred in the national racing and wagering market over the past 12 months. Within the context of this changing environment and global financial situation, the Victorian Government is in the process of issuing a new wagering licence, the outcome of which is vitally important for the future of the Victorian racing industry. In November 2008, Racing Victoria Limited (RVL) published its vision for the Victorian thoroughbred racing industry Racing To 2020 which was developed to ensure Victorian racing s continued vitality, growth and sustainability. This vision document provides the framework and direction for Victorian thoroughbred racing in an increasingly competitive environment. From 1 February this year minimum prize money levels at all metropolitan and country meetings were increased, injecting an additional $4.5 million for the season. These increases were achieved through cost reductions at RVL and increased revenue from the introduction of a modified product fee model for interstate bookmakers, totalisators and betting exchanges. These prize money commitments have been maintained for the 2009/10 season which, along with programming changes, will deliver an additional $7.3 million in prize money funding year-on-year. The metropolitan racing clubs established a working group, led by former RVL Board member Lindsay Maxsted, to examine the future structure and administration of metropolitan racing. RVL fully supports this process and looks forward to working with the clubs on implementing the recommendations. The 2008 Spring Racing Carnival was a success from an attendance perspective with over 758,000 people through the gates over the 50 days of the Carnival, the second highest crowd figure on record. The Gross Economic Benefit to the Victorian economy of $549.8 million again underlined the importance of the Carnival and the racing industry to the state and the nation. The results were particularly pleasing taking into account the economic environment. New national rules were agreed relating to the introduction of padded whips and the manner and circumstances in which the whip can be used in races and trials. These changes have been topical and considerable negotiation was required between all parties to arrive at a position where these rules can be consistently and sensibly adapted to by riders and applied by the Stewards. The nation was deeply saddened by the tragic loss of lives in the Victorian bushfires which swept across the state on 7 February 2009. The racing industry rallied together in many ways to assist those who had been affected and to raise funds to assist. The VRC s Super Saturday fund-raising effort which was held one month after Black Saturday raised $1.3 million and was a tribute to the many volunteers who worked selflessly to save lives and property. Mark Ewing, Naseema Sparks and Tim Warren retired from the RVL Board at the 2008 AGM and were replaced by Robert Roulston, Paul Schauble and Peter Sinn. A casual vacancy created by the resignation of Robert Cooke was filled by Bryan Gurry for a 12 month term. The RVL Board determined on 27 November that the 2010 jumps racing season will be the last season of jumps racing in Victoria. In closing I would like to thank the RVL Board members for their contribution throughout the year, the Chief Executive, Rob Hines and the staff of RVL for their commitment and dedication. Michael Duffy Chairman 3

Racecourse and Training Infrastructure Plan During May RVL, in conjunction with CRV, released its five year Racecourse and Training Facilities Infrastructure Plan providing a clear future direction for all Victorian Country Racing Clubs. The plan is aimed at establishing a sustainable and viable racing industry for the next five years and beyond. The Infrastructure Plan is the first of its kind for Victorian thoroughbred racing and is the result of more than 12 months of consultation with individuals, clubs, trainers and local government. The key elements of the plan include: an optimum wagering schedule; a five year race date program; a revamped picnic racing program; new race meeting classifications; a training track maintenance funding plan; a capital funding strategy; club sustainability criteria; and an international horse centre at Werribee. The plan will ensure clubs will be rewarded for their performance. It gives all clubs certainty for their future so long as their local communities continue to support racing. Under the plan additional twilight and night meetings will be conducted, total country meetings will increase by 17 to 437 in 2013/14, a three tiered approach for the future funding of maintenance and capital improvements at training facilities has been implemented and the picnic racing season has been modified to commence from the start of the Spring Racing Carnival. Each country club has been provided with an individual five year plan for race dates and club funding. RVL and CRV will undertake annual reviews of each club s circumstances, financial performance and general club development. This will provide the basis for the allocation of future race dates and funding. In conjunction with the Victorian Government, $60 million is being invested in racecourse infrastructure in regional Victoria over the next four years focussing on drought proofing, training facilities and occupational health and safety. An important component of the Plan is the establishment of an International Horse Centre at the Werribee Racecourse precinct in time for the 2010 Spring Racing Carnival. Work has commenced on establishing Werribee as the new home for visiting international horses. Reconstruction of the course proper is underway, which will allow up to eight meetings a year to be run by the end of the 2010/11 racing season. Victoria has led Australia with the development and installation of a safer movable plastic running rail. A contract has been awarded for the supply, installation and commercialisation of new rail systems across the state over the coming three to five years. In February a study into the performance of the synthetic track at Geelong and the impact on horse injuries and fatalities was completed. The findings of this report led to RVL placing a hold on any further synthetic track installations until more data and information can be assessed. RVL appointed Pro Ride to undertake remedial works on the Geelong track and to provide maintenance services for the next 12 months. It is expected the synthetic track will be ready for racing again in April 2010. The plan will ensure clubs will be rewarded for their performance. It gives all clubs certainty for their future so long as their local communities continue to support racing. 4

Wagering Licence / Wagering Performance WAGERING LICENCE Throughout the year, the Victorian Government progressed the competitive process for the new wagering licence including seeking registrations of interest. There was a parallel process of consultation with the Victorian Racing Industry (VRI) in respect to the drafting of the proposed partnership agreement that needs to be executed between the industry and the successful bidder for the licence. The terms of this agreement will form the basis for securing arrangements that are no less favourable than those in place for the current joint venture with TABCORP. It is also expected that the licensee will have fully met the licensing criterion of having a demonstrated commitment to a viable and growing racing industry. An important aspect of the transition to the post-2012 wagering and gaming structure is a proposed reduction in the State s wagering tax rate to benefit the racing industry and offset the loss of gaming revenue. The proposed change is to lower the tax rate from 19.11% to 7.6%, but as part of its commitment to a no less favourable outcome for the racing industry, the Government agreed to introduce legislation mandating the conduct of a review of the tax rate in 2012 having regard to revenue trends at that time. The Government has indicated that the licence will be issued by mid-2010. WAGERING PERFORMANCE The comparative thoroughbred wagering turnover from 2007/08 to 2008/09 was impacted by EI in August 2007 however it was pleasing that with a full program of local and interstate racing this year the total thoroughbred wagering turnover from off course, on course and bookmakers services continues to grow year on year. The increase in thoroughbred wagering turnover this year was driven by stronger local and interstate racing programs which were supported by increased premium customer and international wagering turnover growth. TURNOVER $M 3000 2500 2000 1500 1000 500 0 THOROUGHBRED WAGERING TURNOVER (TABCORP) On-course Off-course Total 2,627 TURNOVER 0 04/05 05/06 06/07 07/08 08/09 04/05 05/06 06/07 07/08 08/09 $M 600 500 400 300 200 100 BOOKMAKER TURNOVER On-course Off-course Total 543 5

Product Fees The once highly regulated and protected Australian wagering market has now evolved into a vastly more competitive environment with the expansion of corporate bookmakers and betting exchanges and the products and offerings now available. We are now operating in a highly mobile market, where the customer has unlimited choice regarding how, when, where and with whom they spend their leisure and gambling dollar. Differing business models have been implemented in various jurisdictions across Australia for charging product fees to outof-state wagering operators. The TABs in every state are Australian racing s major source of revenue and the Victorian thoroughbred racing industry believes it is vitally important to maintain a strong, viable and competitive tote system in this country. We strongly support a level of ongoing exclusivity for the tote, especially in retail outlets. The reality is that the competitive landscape has changed forever with the advent of corporate bookmakers and Betfair in Australia. RVL was the first Australian principal racing authority to introduce a race fields policy in 2003 to ensure that those wagering service providers who used Victorian thoroughbred racing product met certain criteria and made an economic contribution to the Victorian thoroughbred racing industry for the use of its valuable product. Similar legislation and policies have now been implemented in all states of Australia. What differs however is the method for calculating the fees payable. Depending on the jurisdiction, some fees are applied to a percentage of sales while others are based on various percentage levels of revenue. This is the crux of this sometimes volatile debate and the subject of a number of legal challenges. RVL had been charging product fees calculated on a percentage of revenue until the Supreme Court decision handed down on 13 August 2009 in the proceedings commenced by TAB Limited (the operator of the NSW totalisator) against RVL. The judgment directed RVL to repay race field fees of $5.8 million received by it from TAB Limited during the year. The company s reported net loss of $3.3 million for the year is directly attributed to the judgment. Whilst the financial statements for the year ended 31 July 2009 include the repayment to TAB Limited, they do not reflect the company s entitlement to a share of race field fees from TAB Limited over this period. Racing s competition for the discretionary dollar is from other forms of gambling, sports, casinos and entertainment. It is therefore vitally important that we ensure that racing remains relevant and attractive to punters into the future. We are now operating in a highly mobile market, where the customer has unlimited choice regarding how, when, where and with whom they spend their leisure and gambling dollar. RVL supported the Australian Racing Board s submission to the Federal Government s Productivity Commission into Gambling calling for regulatory intervention to secure the industry s wagering product revenue streams. The Commission handed down its findings and recommendations in October. Public hearings on the Draft Report will be held in late November and in December. The Final Report is due to be presented to the Government by 26 February 2010. 6

TAB Limited and Racing Victoria Supreme Court Decision The Supreme Court of Victoria handed down a decision on 13 August 2009 in relation to proceedings brought by Tabcorp Holdings Limited subsidiary TAB Limited against RVL and Greyhound Racing Victoria. This proceeding was an administrative law matter before Justice Jennifer Davies in which TAB Ltd challenged RVL s power to impose a race fields fee that had been calculated on a percentage of revenue. The Court made the following key findings: 1. Importantly, the Court upheld RVL s power to impose fees as a condition for the approval of the publication and use of Victorian thoroughbred race fields; 2.However, the Court said that the fee has to be in a fixed amount and because there was a formula specified, the exercise of RVL's power was invalid. Notably, the Court's finding also has the effect of invalidating a fee calculated on the basis of a percentage of turnover; 3. Significantly, for the 2008/09 approval period ending 31 July 2009, the Court recognised and upheld RVL's contractual right to charge TAB Limited 3% of its assessable turnover derived from betting on Victorian thoroughbred race fields. The Court directed the company to repay to TAB Limited race fields fees of $5.8 million received by it from TAB Limited during the year. RVL is assessing its entitlement to a share of race fields fees from TAB Limited for the period ended 31 July 2009 under a pre-existing contract and therefore this revenue will be accounted for in subsequent periods. In light of the Court s decision, RVL has reassessed all applications for race fields approvals effective 4 September and, after giving applicants an opportunity to put their position to RVL, require the payment of a fixed amount for an interim period until 31 December 2009. RVL has also approached the Victorian Government to seek amendments to the legislation to allow the calculation of fees by formulae. The arrangements for determination of fees from 1 January 2010 to 31 July 2010 by RVL will be considered in light of the direction of the Victorian Government on the legislation amendment sought. RVL is assessing its entitlement to a share of race fields fees from TAB Limited for the period ended 31 July 2009 under a pre-existing contract and therefore this revenue will be accounted for in subsequent periods. 7

Metropolitan Club Review On 6 August 2009 the three metropolitan Clubs received a report that they had commissioned from former RVL Director and leading corporate advisor, Lindsay Maxsted. It was subsequently publicly released by the Clubs on 21 September. Mr Maxsted s brief was to consider whether the current structure and operation of three separate Racing Clubs in Melbourne - Victoria Racing Club (VRC), Melbourne Racing Club (MRC) and Moonee Valley Racing Club (MVRC) - is the optimum structure to support a growing and sustainable Victorian Thoroughbred Racing Industry and hence maximise economic returns in the long term for the Industry. This review was to take place against a background of each Club s obligations to its Members. RVL Chairman Michael Duffy was provided with a copy of the report as was the Minister for Racing, Rob Hulls, prior to its public release. The full report is available for download from each of the three metropolitan club s websites. RVL has considered Mr Maxsted s report and determined that the findings will form an important component of its analysis of the structure, cost and efficiency of racing administration in Victoria aimed at maximising benefits to the racing industry. This analysis includes RVL, the three metropolitan Clubs and Country Racing Victoria (CRV). Regarding the recommendations contained in the Maxsted report, RVL makes the following comments: POTENTIAL INDUSTRY AND CLUB CONSOLIDATION A merger of the MVRC and the VRC is supported by RVL. As a precursor to the formal consideration of one of the key recommendations relating to a possible merger of the VRC and MVRC, Mr Maxsted suggested that there be an information sharing process between both clubs specifically to consider their respective Master Plans and future utilisation of their assets. Both Clubs have agreed to undertake this exercise, and then further consider the question of a Club merger. This process has commenced. The Melbourne Racing Club and Mornington Racing Club have since announced that they are in discussions regarding the potential benefits of a merger between these clubs also. RVL encourages the consideration of any consolidation efforts which will be of benefit to the racing industry, its stakeholders and customers. CAPITAL RESOURCES AND MASTER PLANNING RVL considers that the more effective use of capital resources is of paramount importance. Although this is essentially a matter for the Clubs, RVL stands ready to provide support for those plans that will add value to the industry. TRACK REQUIREMENTS RVL agrees that at this point in time there is a requirement for four city tracks. Racing on city tracks is critically important to wagering turnover and consideration must be given to optimising the use of these tracks. It should also be noted that there are under consideration potential developments of additional racing and training facilities at locations close to Melbourne, such as Cranbourne, Pakenham and Ballarat, the reintroduction of synthetic track racing and the transition to more night racing. COST REDUCTION The recommendation regarding shared services is supported although as this is already in operation between RVL, CRV, every country race club and MVRC, the suggestion of creating a separate shared services entity is rejected given the likely duplication and additional cost involved. Costing of the various options will be included in the RVL analysis. TRAINING FACILITIES The principle of the provision and maintenance of training facilities being an industry cost is accepted, provided the funding is based on agreed industry standards and is equitable and consistent across the State. SPONSORSHIP, IP AND MEDIA RIGHTS RVL welcomes the comments regarding the role of RVL in managing the industry s IP in media rights and sponsorship. The Victorian thoroughbred racing industry must constantly review its structures and its use of scarce resources and capital and strive to improve its efficiency and effectiveness in a highly competitive marketplace. RVL will continue to work closely and collaboratively with the Metropolitan Clubs, CRV and our stakeholders to ensure we make sustainable improvements that benefit the industry. 8

Drought Proofing Critical for the Future of Racing Victoria s crippling drought continues to have a devastating effect on many parts of rural and regional Victoria. Our racecourse and training facilities in particular are suffering in a number of ways due to the prolonged stress resulting from insufficient rainfall and access to suitable water supplies. Our objective is to minimise the impact of the drought and its affect on tracks to owners, trainers, clubs and participants by maintaining continuity of operations and initiating long-term drought proofing strategies. RVL is working more closely with clubs and track managers to optimise their tracks and training facilities to support the goals of the industry including adherence to track preparation policies providing for the on-going safety of horses and participants. RVL has implemented a series of initiatives over the past five years to invest in infrastructure that will assist in overcoming this situation and is working with government and other agencies to secure available funding for additional droughtproofing initiatives. Victorian thoroughbred racing is playing a leading role in managing water usage responsibly and innovatively. The industry has already dramatically reduced usage of potable water and we are working to develop sustainable alternative water supplies. RVL engaged with various levels of government and water authorities in relation to stormwater harvesting infrastructure projects at a large number of venues across rural and regional Victoria which will be rolled out over the next three years, in line with the Victorian Racecourse and Training Facilities Infrastructure Plan. A great deal has been achieved since 2004 when the Victorian Government s Smart Water Fund sponsored an investigation of drought-proofing the Greater Melbourne region s racing and training venues (excluding Flemington), including: more than $15 million has been spent or committed in drought-proofing activities which has saved 430 megalitres; a further $6.5m has been earmarked for further investment which is expected to generate further savings of 580 megalitres; capital spend on water saving initiatives at training facilities has been accelerated with capital spend in 2006/07 four times the normal annual capital spend; a framework has been developed to undertake water audits and to identify drought-proofing strategies at all Victorian venues; the Cranbourne Training and Racing complexes have been connected to the Eastern Irrigation Scheme; water tanks and pumps have been installed on new stripping sheds constructed at Mornington and Geelong; stormwater harvesting dams at Cranbourne and Warrnambool; a treated water dam and irrigation system has been constructed at Kyneton treated water is being used to irrigate Kyneton, Cranbourne, Warracknabeal, Stawell, Ararat and Bairnsdale; and a project is underway to provide treated water to Mornington and project feasibility is underway for a treated water connection to Ballarat. 9

Prize Money Plan RVL reaffirmed its commitment to sustained prize money increases during the 2008/09 racing season. The second phase of a two-year $23.6 million prize money improvement plan was implemented from 1 February 2009. Country Minimum TAB races from $10,500 to $12,000 and from $13,500 to $15,000 for Thursdays and Sunday P1 meetings. Total prize money and bonuses paid for the season increased by $11.7 million to $140.4 million. $M 175 150 125 COMPONENTS OF RETURNS TO OWNERS $152.7M The increases are targeted at minimum prize money levels for standard races to ensure these additional funds are spread broadly to racing s participants. It is RVL s intention to continue to make prize money increases at the base level a priority into the future. 100 75 50 The increases to minimum prize money included: 25 Metropolitan Saturday and feature night races from $60,000 to $70,000; 0 03/04 04/05 05/06 06/07 07/08 08/09 Metropolitan Midweek and standard night races from $27,500 to $30,000; Country Showcase races from $21,500 to $22,500; and Prize money and trophies Super VOBIS Riding fees Farriers rebates Starters subsidies Free nominations Jockeys WorkCover Total prize money and bonuses paid for the season increased by $11.7 million to $140.4 million. 10

Super VOBIS Payouts Hit Six Year High Victoria s owners and breeders incentive scheme Super VOBIS returned nearly $6 million in bonus payouts last season, the highest return to investors since the 2002/03 year. In total, $5,921,954 in Super VOBUS bonuses was paid out during the season, up $730,000 on the previous year, reflecting higher success rates amongst Victorian bred progeny for the year. In addition a record $700,000 in Super VOBIS Guarantees was paid to owners and breeders during the 2008/09 racing season with 350 individual horses collecting the $2000 bonus. This figure was more than double the previous year due to the extra crop of qualified horses being eligible for the bonus. The Super VOBIS Guarantee was introduced to reward owners of horses whose first race win is not a Super VOBIS race. The Guarantee provides connections of horses, particularly those that win a 3yo and Up Maiden, an additional opportunity to collect a bonus where one had not previously been paid. Trainers and owners place their horses where they have the best chance to win and our figures suggested that some Super VOBIS qualified horses were missing a chance for a bonus when running in non Super VOBIS races, so the Guarantee was introduced to reward their first win. It is important to the on-going success of the scheme that investors in Super VOBIS qualified horses have every chance of achieving a return, so to see the owners and breeders of 350 horses rewarded with a cheque is very pleasing. $M 7 6 5 4 3 2 1 0 SUPER VOBIS BONUSES 03/04 04/05 05/06 06/07 07/08 08/09 It is important to the on-going success of the scheme that investors in Super VOBIS qualified horses have every chance of achieving a return, so to see the owners and breeders of 350 horses rewarded with a cheque is very pleasing. 11

Jockey and Trainer Premierships Down to the Wire The 2008/09 metropolitan trainer and jockeys premierships were the most tightly contested for many years with both titles not being decided until the last city meeting of the year. Hall of Fame trainer Lee Freedman won his seventh Melbourne Metropolitan Trainers Premiership, taking the lead from arch rival and fellow Hall-Of-Fame inductee David Hayes in the last race of the season at Betfair Park, Sandown. Freedman and Hayes were locked on 64 city winners heading into the final meeting, but Freedman broke the deadlock with his first city winner for more than six weeks. The race for the Metropolitan Jockeys Premiership between Damien Oliver and Craig Williams also went down to the final meeting and ended in an enthralling tie, with the pair being declared joint winners. Oliver and Williams began the day locked on 70 winners apiece and Williams looked to have sealed the title when he won the opening race. However, Oliver bounced back to win race six, to tie with Williams on 71. Young gun Nicholas Hall, son of Melbourne Cup winning jockey Greg, sealed the Apprentices Premiership when Stoneblack won on the final day also. Hall rode 33 winners to finish one clear of Dean Holland and Ibrahim Gundogdu. LEADING JOCKEYS (VIC) 1ST 2ND 3RD STARTS PRIZE MONEY S/RATE Brad Rawiller 127½ 90½ 93½ 705 $4,188,122 18.01 Linda Meech 108 77 93 853 $1,362,357 12.66 Dwayne Dunn 108 74½ 69 678 $5,306,630 15.92 LEADING JOCKEY (METRO) 1ST 2ND 3RD STARTS PRIZE MONEY S/RATE Craig Williams 71 73½ 68½ 557 $5,831,692 12.74 Damien Oliver 71 60 40 391 $5,676,280 18.15 Dwayne Dunn 51 45½ 48 449 $4,573,317 11.35 LEADING TRAINERS (VIC) 1ST 2ND 3RD STARTS PRIZE MONEY S/RATE Lee Freedman 152 131½½ 84 800 $5,403,869 19.00 Peter G Moody 129 89 77 657 $4,378,322 19.63 David Hayes 125½ 124½ 106 1037 $6,793,245 12.05 LEADING TRAINERS (METRO) 1ST 2ND 3RD STARTS PRIZE MONEY S/RATE Lee Freedman 65 57½ 49 416 $4,368,309 15.62 David Hayes 64 69½ 67 660 $5,981,233 9.69 Mick Price 51 31 16 254 $4,544,847 20.07 Freedman and Hayes were locked on 64 city winners heading into the final meeting, but Freedman broke the deadlock with his first city winner for more than six weeks. 12

Williams Claims Fourth Scobie Craig Williams joined rival Damien Oliver as the only jockeys to win Scobie Breasley Medals in four consecutive years, when he polled 73 votes to defeat six-time winner Oliver (58) and Brad Rawiller (39) at the 2009 Victorian Thoroughbred Racing Awards presented by TABCORP. Williams and Oliver dominated the 2008/09 Victorian racing season, each polling Scobie votes at an astonishing 30 meetings. Williams season was highlighted by two Group 1 wins for the season, both aboard grand veteran Niconero in the Rokk Ebony Futurity Stakes (1600m) at Caulfield and the Darley Australian Cup (2000m) at Flemington. He also won the Group 2 Dato Tan Chin Nam Stakes (1600m) on Guillotine and rode a quartet of winners on Crown Oaks Day at Flemington. One of the world s most exciting sprinters, the Dan Morton-trained Scenic Blast, was named Mittys Victorian Racehorse of the Year. In five starts in Victoria for the season Scenic Blast won Australia s two premier sprints, the Group 1 Coolmore Lightning Stakes (1000m) and Group 1 Crown Newmarket Handicap (1200m) at Flemington. Scenic Blast went on to win the Australian Racehorse of the Year Award and again flew the flag for Australia winning the Group 1 King s Stand Stakes (1000m) at Royal Ascot in June. Scenic Blast s Newmarket Handicap win also earned him a rating which placed him alongside Weekend Hussler as the highest ranked horse in Australia and New Zealand for the season. The other highlight of the evening belonged to 81-year-old Cups King Bart Cummings who won his second Fred Hoysted Medal presented by Parnell s Dual Joint Care Program. Cummings won the award for his feats during last spring s Melbourne Cup Carnival which were highlighted by his 12th Emirates Melbourne Cup win with Viewed and victory in the Group 1 Patinack Farm Classic (1200m) with top sprinter Swick. Interestingly, Cummings won his previous Fred Hoysted Medal in the 1999/00 season for his 11th Melbourne Cup win with Rogan Josh. Veteran jumps jockey Brett Scott won his third Tommy Corrigan Medal presented by Thoroughbred Racing Productions. Scott polled 37 votes to deny rival Steven Pateman (29) his third straight win in the award. 2009 VICTORIAN THOROUGHBRED RACING AWARD WINNERS: Scobie Breasley Medal presented by TABCORP Fred Hoysted Medal presented by Parnell s Dual Joint Care Program Tommy Corrigan Medal presented by TRP Mittys Victorian Racehorse of the Year TVN Most Memorable Moment Award Common Creative Country Apprentice Award VJA Outstanding Apprentice Award ATA Trainer of Apprentice Award Mittys Metropolitan Apprentice Award Crown Towers Victorian Jumps Jockey Premiership Award Staging Connections Country Trainer of the Year Mitchelton Wines Metropolitan Trainer Premiership Award Radio Sport 927 Country Jockey of the Year Fineline Metropolitan Jockey Premiership Award CRAIG WILLIAMS BART CUMMINGS BRETT SCOTT SCENIC BLAST ROBBIE LAING BRENTON AVDULLA BRENTON AVDULLA JOHN MOLONEY NICHOLAS HALL STEVEN PATEMAN DARREN WEIR LEE FREEDMAN LINDA MEECH CRAIG WILLIAMS & DAMIEN OLIVER 13

2008 Spring Racing Carnival The 2008 Victorian Spring Racing Carnival generated $549.8 million in gross economic benefit to the Victorian economy, according to the annual Economic Benefits Report commissioned by RVLand prepared by IER Pty Ltd. The world renowned 50 day Carnival, which featured 13 metropolitan and 76 country race meetings, attracted more than 758,000 people, an increase of almost 3% on the previous year. The three-meeting Caulfield Spring Racing Carnival and Spring events in the country enjoyed the biggest attendance rises with the Melbourne Racing Club realising a 12.5% increase, its highest attendance total in 10 years, and country meetings recording 6.8% growth on the previous year. The 2008 carnival attracted 93,847 overseas and interstate visitors, a rise of 12.4% on the previous year s 77,342. The report found that visitors contributed $97.9 million or 35.1% of total expenditure generated. More than $40 million was spent on fashion in Victoria which could be directly attributed to the Carnival. The major fashion items purchased were 54,694 hats, 51,969 pairs of shoes, 46,357 dresses and 39,205 suits and ties. These figures reiterate that the Victorian Spring Racing Carnival is one of the world s premier racing carnivals and an iconic sporting and social event for Australia. The carnival continues to attract large numbers of overseas and interstate visitors who make an important and significant contribution to the state s economy. $M 700 600 500 400 300 200 100 0 GROSS ECONOMIC IMPACT OF THE SPRING RACING CARNIVAL 2004 2005 2006 $549.8 2007 2008 Metropolitan area Regional area Total Gross economic impact from spending by visitors to the Spring Racing Carnival Source: IER Consulting 000 2000 1750 1500 1250 1000 750 500 250 0 ATTENDANCE AT VICTORIAN THOROUGHBRED RACE MEETINGS 1,602 04/05 05/06 06/07 07/08 08/09 Spring Racing Carnival attendance (Nine major metropolitan race days) Attendance at all other meetings Total With increased international participation and Equine Influenza restrictions lifted, allowing horses from New South Wales and Queensland to again compete, the number of overseas and interstate visitors also increased significantly on 2007. 14

Group 1 Results R E S U L T S O F V I C T O R I A N G R O U P 1 R A C E S F O R 2 0 0 8 / 0 9 Race Track Age Sex Conditions Distance Prizemoney Winner Jockey Trainer Cleanevent Manikato Stakes Moonee Valley Open Open WFA 1200 $350,000 Typhoon Zed Nash Rawiller Tim Martin Rokk Ebony Underwood Stakes Caulfield 3yo+ Open WFA 1800 $350,000 Weekend Hussler Brad Rawiller Ross McDonald Sir Rupert Clarke Stakes Caulfield Open Open Hcp 1400 $350,000 Orange County (NZ) Damien Oliver Brian Mayfield-Smith Patinack Turnbull Stakes Flemington 3yo+ Open SWP 2000 $500,000 Littorio Steven King Nigel Blackiston The Age Caulfield Guineas Caulfield 3yo Open SW 1600 $1,000,000 Whobegotyou Michael Rodd Mark Kavanagh Yalumba Stakes Caulfield 3yo+ Open WFA 2000 $400,000 Douro Valley James Winks Danny O'Brien David Jones Toorak Handicap Caulfield Open Open Hcp 1600 $350,000 Alamosa (NZ) Craig Newitt Mick Price Schweppes Thousand Guineas Caulfield 3yo Fillies SW 1600 $500,000 Gallica Damien Oliver Mick Price BMW Caulfield Cup Caulfield Open Open Hcp 2400 $2,500,000 All the Good (IRE) Kerrin McEvoy Saeed Bin Suroor Tatts Cox Plate Moonee Valley 3yo+ Open WFA 2040 $3,000,000 Maldivian (NZ) Michael Rodd Mark Kavanagh Myer Classic Flemington 3yo+ F&M WFA 1600 $500,000 Forensics Kerrin McEvoy Peter Snowden AAMI Victoria Derby Flemington 3yo Open SW 2500 $1,500,000 Rebel Raider Clare Lindop Leon Macdonald Crown Mackinnon Stakes Flemington Open Open WFA 2000 $750,000 Theseo Nash Rawiller Gai Waterhouse Coolmore Stud Stakes Flemington 3yo Open SW 1200 $500,000 Northern Meteor Nash Rawiller Gai Waterhouse Emirates Melbourne Cup Flemington Open Open Hcp 3200 $5,500,000 Viewed Blake Shinn Bart Cummings Crown Oaks Flemington 3yo Fillies SW 2500 $1,000,000 Samantha Miss Hugh Bowman Kris Lees Patinack Farm Classic Flemington Open Open WFA 1200 $500,000 Swick (NZ) Michael Rodd Bart Cummings Emirates Stakes Flemington Open Open Qlty 1610 $1,000,000 All Silent Dwayne Dunn Grahame Begg Coolmore Lightning Stakes Flemington Open Open WFA 1000 $500,000 Scenic Blast Steven Arnold Dan Morton Sportingbet Orr Stakes Caulfield Open Open WFA 1400 $400,000 Maldivian (NZ) Michael Rodd Mark Kavanagh Pulse Pharmacy Australia Stakes Moonee Valley Open Open WFA 1200 $400,000 Apache Cat Damien Oliver Greg Eurell Sportingbet Oakleigh Plate Caulfield Open Open Hcp 1100 $400,000 Swiss Ace Ken Pope Mick Mair Arrowfield Stud Blue Diamond Stakes Caulfield 2yo Open SW 1200 $1,000,000 Reward for Effort Luke Nolen Peter Moody Rokk Ebony Futurity Stakes Caulfield Open Open WFA 1600 $500,000 Niconero Craig Williams David Hayes Crown Newmarket Handicap Flemington Open Open Hcp 1200 $1,000,000 Scenic Blast Steven Arnold Dan Morton Darley Australian Cup Flemington Open Open WFA 2000 $1,000,000 Niconero Craig Williams David Hayes Cadbury Guineas Flemington 3yo Open SW 1600 $750,000 Heart of Dreams Craig Newitt Mick Price 15

Jumps Racing Glamour jumper Pentiffic was the star of the 2009 jumps racing season, and was named Australian Jumper of the Year, along with winning the JJ Houlahan Championship Horse title and the Victoria Racing Club Jumping Achievement of the Year Award. In a dominant season, the Fran Houlahan and Brian Johnston-trained jumper was victorious in the Grand National, Hiskens and Crisp Steeplechases in Victoria, together with the Yalumba Classic Hurdle at Oakbank, SA. With wins in four of the 15 legs of the JJ Houlahan Championship, Pentiffic finished the season on 48 points, 10 clear of Yamanura, with Desert Master next best on 34 points. The champion jockey across the series was Brad McLean (78 points) who triumphed over Brett Scott (60) and equal third placegetters Trent Wells and Adam Trinder (54). Ciaron Maher (70) held off a late charge from Robbie Laing (68) to be crowned champion trainer, with Houlahan and Johnston (62) finishing a close-up third. Legendary trainer Eric Musgrove was acknowledged for his stellar career when presented with the Country Racing Victoria Lifetime Contribution of the Year Award at the Australian Jumping Racing Association s annual Mosstrooper Awards. Musgrove was the first trainer to amass 500 winners over jumps. He has also prepared jumps winners in four states and has won almost every major event on the jumping calendar. Young rider Arron Lynch, who enjoyed success with Mybigfatgreekhorse throughout the season, was awarded the RVL Jumping Jockey Encouragement Award. Robbie Laing s monumental feat to win the Grand Annual Steeplechase first up with Sir Pentire was recognised with the presentation of the Warrnambool Racing Club Provincial Jumping Achievement of the Year Award. Laing had also won TVN's Most Memorable Moment Award at the Victorian Thoroughbred Racing Awards. During May the RVL Board conducted an urgent review into the circumstances surrounding a number of incidents that occurred in the first two months of the new jumps racing season. The Board unanimously resolved that jumps racing would continue in Victoria with a number of new conditions to be implemented during the remainder of the season. JUMPS RACING SEASON AWARD WINNERS J.J.Houlahan Jumps Championship Award (Horse) J.J.Houlahan Jumps Championship Award (Jockey) J.J.Houlahan Jumps Championship Award (Trainer) Victoria Racing Club Jumping Achievement of the Year Award Country Racing Victoria Lifetime Contribution to Jumping Award TRSA Les Short SA Jumping Achievement of the Year Award RVL Jumping Jockey Encouragement Award After extensive consultation, in particular with jumps jockeys and trainers, the Board adopted a range of recommendations from the Jumps Review Panel to improve safety for horses and riders. The RVL Board determined on 27 November that the 2010 jumps racing season will be the last season of jumps racing in Victoria. Warrnambool Racing Club Provincial Jumping Achievement of the Year Award Melbourne Racing Club Jumping Media Story of the Year Award Moonee Valley Racing Club Jumping Photo of the Year Award PENTIFFIC BRAD MCLEAN CIARON MAHER PENTIFFIC ERIC MUSGROVE ERIC MUSGROVE ARRON LYNCH ROBBIE LAING TIM HICKMAN BRUNO CANNATELLI 16

Career Pathways The development of sustainable career pathways for industry employees is an important initiative in maintaining the thoroughbred racing and breeding industry s position as a major employer and growing industry. RVL has established formalised partnerships with a number of tertiary institutions, including University of Ballarat, East Gippsland TAFE, Northern Melbourne Institute of TAFE (NMIT) and the National Centre for Equine Education, Goulburn Ovens Institute of TAFE (GOTAFE), to deliver expanded training and education programs for jockeys, stable hands, trainers, track riders and other industry specific roles. Compulsory training has now been implemented for a number of additional licence categories to ensure the racing participants have the necessary skills and knowledge to perform the duties efficiently, safely and with increased confidence From 1 August 2011, following amendments to the Rules of Racing, mandatory training has been extended beyond the traditional licence categories of new trainers, farriers and apprentice jockeys. Other licence roles including pretrainer, jumps trainer, picnic jockey, jumps jockey and riders agent will now be required to undertake mandatory training. In addition, the registered roles of trainers assistant, stablehand, racing manager and float driver will also be subject to mandatory training. The tertiary institutions will be providing vital resources, skills and facilities across the state to assist in the delivery of these important programs. RVL will financially support registered stablehands who complete this process prior to 31 July 2011. Compulsory training has now been implemented for a number of additional licence categories to ensure the racing participants have the necessary skills and knowledge to perform the duties efficiently, safely and with increased confidence. 17

RVL Constitution The principal components to the RVL Constitution provide that: the membership of the Company includes RVL s ten stakeholder bodies subject to those new members satisfying minimum qualification criteria before being eligible to vote; the Company s membership and associated voting rights are as follows Country Racing Victoria ten votes Melbourne Racing Club five votes Moonee Valley Racing Club five votes Victoria Racing Club five votes Thoroughbred Racehorse Owners Association three votes Thoroughbred Breeders Victoria two votes Australian Trainers Association two votes Victorian Jockeys Association one vote Australian Jumping Racing Association and Victorian Bookmakers Association - one vote exercisable jointly Australian Services Union, Australian Workers Union, Liquor, Hospitality & Miscellaneous Workers Union and Media and Entertainment Arts Alliance - one vote exercisable jointly. a vote of 66.66% is required to pass all resolutions at a general meeting other than a special resolution (which will continue to require a vote of 75%); the independent board was appointed with effect from the close of the 2007 Annual General Meeting; and with effect from the 2008 Annual General Meeting directors are required to retire by rotation and be subject to appointment by direct election of the members in the event of any member nominating candidates in addition to candidates proposed by the Company s Board. The RVL Constitution came into operation on 29 November 2007, being the day upon which the Victorian Government Gazette published a certification by the Minister for Racing that the special resolution had not been disallowed by either House of the Victorian Parliament. THOROUGHBRED RACING INDUSTRY REVENUE AND DISTRIBUTIONS The racing industry in Victoria has entered into joint venture and information supply agreements with the TABCORP Group of Companies. Under a Racing Industry Deed of Operations executed on 25 May 1994, the thoroughbred, harness and greyhound racing codes have determined arrangements between themselves including the allocation of joint venture profits and information supply fees. This income is received by the thoroughbred racing industry in the form of a racing program fee, a product supply fee, a marketing fee and the joint venture profit share. The RVL Constitution provides that the Company and the Clubs agreed to terminate the Members Agreement as it operated between them and a new Club Members Deed entered into for the purpose of providing for certain arrangements in relation to the governance of the TABCORP Joint Venture, the making of grants to the Clubs and the re-licensing process. In relation to the Company making grants to the Clubs, the following principles apply: the Company will from time to time make grants to participants in the Victorian thoroughbred racing industry for the purpose of encouraging thoroughbred horse racing; in making grants, the Company will seek to: (i) adequately support the objectives of the Victorian thoroughbred racing industry; (ii) provide incentives for Club performance and achievements of industry objectives; and (iii) encourage and optimise participation in the ownership of thoroughbred race horses throughout Victoria by maximising returns to owners through statewide prize money strategies and other incentives. the Clubs further acknowledge that, consistent with the Constitution of the Company, no portion or amount of the income or assets of the Company may be distributed, paid or transferred directly or indirectly by way of dividend, bonus, or otherwise by way of profit to or amongst the Clubs in their capacity as Members. 18

Financial Performance RACING VICTORIA LIMITED FINANCIAL PERFORMANCE 2008/09 PERFORMANCE RVL s underlying result from general operational activities recorded a loss of $2.9 million for the 2008/09 year which, when consolidated with related entities/operations, totalled a reported loss of $3.3 million for the period as follows: $M General Operations Profit (2.9) Plus: Bookmaking Development Fund (BDF) 0.1 Less: Share of RISA Loss (0.4) Accident Insurance Fund Loss (0.1) Reported Consolidated Profit (3.3) Limited (the operator of the NSW totalisator) against Racing Victoria Limited, which directed the company to repay race field fees of $5.8 million received by it from TAB Limited during the year. Whilst the financial statements for the year ended 31 July 2009 include the repayment to TAB Limited, they do not reflect the company s entitlement to a share of race field fees from TAB Limited for the period ended 31 July 2009. The company is currently assessing its entitlement to revenue for this period under a pre-existing contract and therefore will be accounted for in subsequent periods. REVENUE Revenue from operating and non-operating activities totalled $239.4 million in 2008/09, an increase of $7.6 million on the previous year. Revenue from race fields totalled $10.2 million, an increase of $7.4 million compared to the previous year. Other operating revenue totalled $16.6 million, a decrease of $2.8 million from the year prior. Shareholder grants totalling $1.1 million were received during the year and have been disclosed in the accounts as nonoperating revenue. EXPENSES Total RVL expenditure excluding distributions to shareholders amounted to $91.3 million in 2008/09 and consisted of $35.1 million in RVL operating expenditure and $56.2 million in industry-related expenditure. Operating expenditure decreased by $2.4 million and industry expenditure increased by $0.2 million compared to last year. Jockeys WorkCover expenses totalled $3.8 million in 2008/09, an increase of $1.0 million compared to the previous year, primarily as a result of an increase in the WorkCover premium for jockeys during the year. SuperVOBIS net returns to owners totalled $6.1 million, an increase of $0.8 million on the prior year expenditure. To assist member shareholders in the restructure of ThoroughVisioN, RVL has entered into a funding agreement with the member shareholders to borrow up to $1 million. The member shareholders have agreed to collectively guarantee a credit facility and fund the interest payments and RVL will be entitled to retain $1 million per annum out of future distributions for the purpose of discharging the facility. The company s reported net loss of $3.3 million for the year, which has also materially affected the ratio of current assets to current liabilities and retained earnings in the Balance Sheet, is directly attributed to the Supreme Court of Victoria judgment handed down on 13 August 2009 in the proceedings commenced by TAB Racing program, product (after deduction of third party charges for race fields fees totalling $13.4 million) and marketing fees received from the joint venture operation with TABCORP totalled $139.2 million, a decrease of $4.2 million. The joint venture profit share was $72.2 million, an increase of $7.9 million. Grants to the Australian Racing Museum at Federation Square totalled $1.8 million. Training track development and maintenance funding totalled $11.7 million and continues to reflect RVL s commitment to provide first class training facilities. 19

Financial Performance GRANTS TO MEMBERS Grants to members totalled $151.0 million, an increase of $14.7 million compared to the prior year and reflects the increased minimum prize money funding by RVL during the year. Grants to members were as follows: GRANTS GRANTS 2008/09 2007/08 $,000 $,000 Prize money and Priority Grants: Country Racing Victoria 64,790 56,230 Melbourne Racing Club 35,621 34,686 Moonee Valley Racing Club 20,586 18,638 Victoria Racing Club 29,675 29,633 Prize money subsidies 307 - Prize money Stabilisation - (2,904) Total Grants to Members: 150,979 136,283 CASHFLOW Cash at the end of the financial year totalled $2.6 million, a decrease of $7.0 million compared to the previous year. Net cash provided by normal operating activities was $5.7 million, an increase of $13.1 million, whilst net cash used in investing activities increased by $0.4 million to $1.8 million. Net cash used in financing activities totalled $10.9 million, reflecting the application during the current year of product fees and sponsorships in advance in the prior year and repayment of borrowings. Jockeys WorkCover expenses totalled $3.8 million in 2008/09, an increase of $1.0 million compared to the previous year, primarily as a result of an increase in the WorkCover premium for jockeys during the year. 20