(“the Racecourse” or “the Company”)
Preliminary Results for the 12 months ended
-- Total turnover up 8% to £19.29m (2017: £17.81m) -- Conference & Events revenues increased by 22% -- 10% growth in
Rocking Horse Nurseryrevenues -- 20% growth in hotel turnover -- Profit before interest, tax and exceptional items £0.84m (2017: £0.49m) -- Exceptional profits £0.92m (2017: £0.29m) -- Consolidated group profit on ordinary activities before tax £1.48m (2017: £0.48m)
-- Raceday attendances of 173,000 (2017: 196,000) impacted by the two days abandoned in March due to snow -- Two successful Party in The Paddock events with
Craig Davidand Rudimental DJ, with overall attendances of more than 33,000 -- Continued investment into prizemoney with an 11% like for like increase -- Attendances of more than 23,000 across the two day Ladbrokes Winter Carnival -- 32% increase in C&E event days -- 3% increase in Nursery occupancy levels -- 4% increase in The Lodge hotel occupancy levels
-- Re-modelling of the main parade ring, improvements to the customer areas behind the stands and new southern entrance building now completed -- Good progress on the phased refurbishment of the Berkshire Stand and improvements to the wider infrastructure -- Cash payments to the Company of £3.25m from DWH residential sales during 2018 --
David Wilson Homesresidential development more than halfway through, with c.930 homes out of the total 1,495 now built.
-- Positive start to trading in 2019, with particularly strong sales for Party in the Paddock dates and Conference and Events -- Ongoing uncertainties around impact of FOBT on funding and media revenues, in spite of this the Company has committed to maintain its total prizemoney at £5m for 2019
“2018 was another progressive and busy year for
Our redevelopment has delivered a first class venue that not only provides us with a stage to continue to host racing of the highest quality, but also facilities which are well placed to meet the increasing demands of the modern day consumer, from horsemen and racegoers, to conference and hotel guests, nursery patrons and local residents. Enabling us to continue growing our well diversified business and maximise the returns from our investments.”
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CHAIRMAN’S STATEMENT FOR THE YEAR ENDED
2018 was another progressive and busy year for
Total turnover grew by 8% to £19.29m in 2018. We have seen improvements in trading performance across a number of areas of the business, with like for like growth in racing revenues of 7%, another excellent year for the
Operating profits were £1.76m in year (2017: £0.78m), including exceptional profits of £0.92m (2017: £0.29m). Profit after tax was £1.79m (2017: £1.18m).
The action on the track in 2018 has once again been thrilling and of a very high quality, demonstrating our continued ability to attract the very best horses across both codes. Highlights early in the year included brilliant victories from both
The 2018 flat season got underway with Dubai Duty Free Spring Trials Weekend and some striking performances which highlighted Classic credentials, including Derby contender, The Young Rascal and Lah Ti Dah who went onto Group 1 success later in the season. Another thrilling renewal of the Al Shaqab Lockinge, in May saw Rhododendron narrowly beat Lightning Spear to become the first filly to win the race since 2004 for Aidan O’Brien with over 11,000 racegoers attending the early summer showpiece.
Our first Party in the Paddock event for 2018 took place in July at the Weatherbys Super Sprint meeting, with a sell?out crowd of 20,000 enjoying
As we turned to the Jumps once more, Sizing Tennessee’s hard?fought win in the second running of the Ladbrokes Trophy in early December, gave
The redevelopment of the racecourse continued throughout 2018 and the team, once again, did an outstanding job of delivering a full calendar of racing and events, in spite of the ongoing disruption. The re?modelling of the main parade ring and improvements to the customer areas behind the stands are now completed and we are delighted with the results and the positive feedback from patrons. The phased refurbishment of the Berkshire Stand and improvements to the wider infrastructure have continued and have significantly enhanced the visitor experience which will as a consequence help us to deliver improved financial returns in the future.
Having obtained planning consent in 2017 for a full re?development of the
Following the completion of the major heartspace development works, the board instructed Savills to undertake a residual valuation of the land and major buildings. This valuation, which provided us with an estimate of the long?term residual value of the assets, together with a review of the useful economic lives of the major assets, was undertaken solely for the purpose of re?estimating the annual depreciation attributable to those assets and was not a full market valuation exercise. This has resulted in a reduction in the like for like annual depreciation charge of c. £0.59m, which is reflected in the profit and loss account. The board believes this fairly reflects the substance and long?term residual value of the assets which, as a result of the recent redevelopment of the racecourse and its facilities, will continue to provide significant future economic benefits to the business into the longer term.
Outlook and Market Developments
Trading prospects for 2019 look satisfactory to date. We are seeing very strong sales for our two confirmed Party in the Paddock events,
However, there are trading challenges to come, not least the now confirmed £2 cap on stakes for Fixed Odds Betting Terminals (“FOBTs”), which has taken effect from
We intend to maintain our total prizemoney for 2019, in spite of the expected decline in funding from the HBLB and lower expected revenues from our media rights. Like many other racecourses, we will need to manage carefully our future prizemoney commitments in light of these developments.
As previously stated, given the additional investment in the racecourse and the current uncertainty around the financial impact of the FOBT situation, the Board have decided that any return to paying dividends or returning capital to shareholders is not now anticipated to occur before 2022 at the earliest, following repayment of the
Our redevelopment has delivered a first class venue so we can continue to host racing of the highest quality, as well as having facilities which are well placed to meet the increasing demands of the modern day consumer, from horsemen and racegoers, to conference and hotel guests, nursery patrons and local residents. Our redevelopment should enable us to continue growing our well?diversified business activities and maximise the returns from our investments.
We were delighted to be named, once again, as one of the top racecourses in the
Our sincere thanks as ever to all sponsors, owners, trainers, stable staff, racegoers and all customers for their ongoing support and patronage.
DOMINIC J BURKE
STRATEGY AND OBJECTIVES
The Board’s long?term strategy is to continue the profitable development of
THE BUSINESS MODEL
Turnover increased by 8% (£1.49m) to £19.29m (2017: £17.81m). Overall racing revenues, excluding the impact of capital credits claimed, grew by 5% (£0.67m). Despite 2 abandonments in the year (2017: no abandonments) like for like growth in racing revenues was £0.86m (7%). Conference and Events revenues increased by 22% (£0.19m) on prior year.
Total costs increased by 7% to £18.45m (2017: £17.32m). A review of the residual values and useful economic lives of land and buildings resulted in a £0.59m reduction in the annual depreciation estimate charged to the profit and loss account.
Exceptional profits during 2018 were £0.92m (2017: £0.29m) being the reduction of a provision in connection with a contingent liability, net of the cost of writing off the carrying value of the old
Operating profit before interest was £1.76m (2017: £0.78m).
The tax credit of £0.31m (2017: credit £0.71m) relates to the movement in deferred tax during the period.
Profit after tax was £1.79m (2017: £1.18m).
The decrease in cash reserves of £2.89m in the period (2017: £7.84m decrease) includes £3.25m of cash receipts from DWH in respect of properties sold in the period and is net of £6.01m of capital expenditure and tax instalment payments of £0.08m.
The accounts include a total of 30 days racing (2017: 29) comprising 11 days National Hunt racing (2017: 11) and 19 days flat racing (2017: 18).
As ever the racecourse hosted a full and high-quality racing programme during 2018, although two days in March were unfortunately abandoned due to snow (2017: no meetings abandoned).
Overall raceday attendances in 2018 decreased by 12% to 173,000 (2017: 196,000), primarily as a result of the two abandonments in early March and reduced attendances at Ladies Day in August which had delivered a sell?out crowd for Olly Murs the previous year.
May marked the fourth year of Al Shaqab’s sponsorship of Lockinge Day, Newbury’s richest race meeting, which was attended by c.11,000 racegoers. This meeting continues to be the flagship event in our flat racing calendar and the action on the track once again featured a string of outstanding performances.
Our cornerstone jump meeting, The Ladbrokes Winter Carnival, at the beginning of December, marked the second year of our five year partnership with Ladbrokes. We and the sponsors were pleased to once again see strong attendances across the two day meeting of more than 23,000.
We continued to make further investment in our prize money, with an 11% (£0.23m) like for like increase in our contributions.
We are grateful to have received continued significant support from all of our sponsors, with particular thanks to
We hosted two successful music events in 2018 with
We are proud of our long association with the Dubai International Arabian Races Committee and we were, once again, delighted to host its flagship
Media revenues increased by c. £0.95m (26%), to £4.59m for the twelve months to
Conference and Events
Conference and Events revenues increased by 22% (£0.19m) versus 2017, to £1.06m as a result of an 32% increase in event days.
Our restructured Conference & Events sales team have been and continue to be focused entirely on growing this part of our business, through proactive selling and relationship building within key sectors and with a number of agents. Despite the ongoing challenges of the redevelopment, we have seen a good level of recovery and we remain confident that with the redeveloped facilities the Conference and Events business performance will continue to improve.
Catering, Hospitality and Retail
Our catering, hospitality and retail business saw overall year on year growth in revenues of £0.12m. Raceday catering revenues were c.6% up on 2017 on a like for like basis, with conference catering revenues up c.18% as a result of the improved Conference & Events business in the year.
We are pleased to report another year of strong trading performance at the
Turnover for The Lodge, our on?site hotel, increased by 20% year on year to £0.71m, driven by an average occupancy increase of 4%. Gross operating profits were £0.1m (2017 £0.1m).
The development of the racecourse heartspace continued throughout 2018, with the re?modelled parade ring, betting and retail pods, Southern Entrance and other landscaping works all completed at a total cost of £5.42m.
The enhancement of IT infrastructure across the site, has resulted in improved business technology resilience and capacity, together with an improved customer experience. The refurbishment of the Berkshire Stand and a programme of lift upgrades across the site, continues. These works are focused on enhancing the experience for all of our customers, whilst generating improved financial returns for the wider business in the longer term.
The Board have revisited the strategy for the former
The residential development continues to progress well, with the Central Area now completed and more than 90% sold and the Eastern Area construction well underway. DWH are now more than half way through the total build programme, with c. 930 homes out of the total 1,495, now built. Cash receipts from DWH from the sale of properties in 2018 were £3.25m, which was in accordance with our expectations.
The operational challenges, that the redevelopment inevitably presented during 2018, were proactively managed by the racecourse team alongside our development partners, minimising as far as possible disruption to our customers and neighbours.
KEY PERFORMANCE INDICATORS
The Group uses raceday attendance and trading operating profit as the primary performance indicators. Total attendance was 173,000 (2017: 196,000). Operating profit is shown within the profit and loss account on page 17.
PRINCIPAL RISKS AND UNCERTAINTIES
The main cash flow risks are the vulnerability of race meetings to abandonment due to adverse weather conditions and fluctuating attendances particularly for the Party in the Paddock events, together with the possibility of delayed property receipts from
The Group’s principal financial assets are trade and other receivables. The Group’s credit risk is primarily attributable to its trade receivables. The amounts in the balance sheet are net of allowances for doubtful receivables. Payment is required in advance for ticket, hospitality, sponsorship, and conference and event sales, reducing the risk of bad debt. The
In order to maintain liquidity to ensure that sufficient funds are available for both ongoing operations and the property redevelopment, the Group uses a mixture of long?term and short?term debt finance which is secured on the property assets of the Group. The Board regularly review the facilities available to the Group to ensure that there is sufficient working capital available.
The Group operates within the leisure sector and regularly benchmarks its prices to ensure that it remains competitive.
The Group has had a historically stable cost base. The key risks are unforeseen maintenance liabilities, movement in utility costs and additional regulatory costs for the racing business. A programme of regular maintenance is in place to manage the risk of failure in the infrastructure, while utility contracts are professionally managed. The Group is a member of the
Interest Rate Risk
The Group manages its exposure to interest rates through an appropriate mixture of interest rate caps and swaps, where necessary.
The Board has undertaken a full and thorough review of the Group’s forecasts and associated risks and sensitivities, over the next twelve months and the forseeable future thereafter. The extent of this review reflects the current economic climate, including Brexit, as well as specific financial circumstances of the Group.
The Board identified that the Group’s cash flow forecasts are sensitive to fluctuating revenue streams from ticket sales, corporate hospitality, conference and event income and the timing of receipts and payments in respect of the property redevelopment. A system of regular reviews of forecast business and expected property receipts has been implemented to ensure all variable costs are flexed to match anticipated revenues. In addition, a number of race meetings are insured for adverse weather conditions, reducing the levels of risk carried by the Group.
The Board has reviewed the cash flow and working capital requirements in detail. The Group has updated it's committed credit facilities, which are in place through to
The Group places considerable value on the involvement of its employees and has continued to keep them informed on matters affecting them as employees and on the various factors affecting the performance of the Group and the Company. This is achieved through formal and informal meetings, and distribution of the annual financial statements. Employee representatives are consulted regularly on a wide range of matters affecting their current and future interests.
Policy on Payments to Suppliers
Although no specific code is followed, it is the Group’s and Company’s policy, unless otherwise agreed with suppliers, to pay suppliers within 30 days of the receipt of an invoice, subject to satisfactory performance by the supplier. The amount owed to trade creditors at
Applications for employment by disabled persons are always fully considered, bearing in mind the abilities of the applicant concerned. In the event of members of staff becoming disabled every effort is made to ensure that their employment with the Group continues and the appropriate training is arranged. It is the policy of the Group and the Company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.
During the year the Group made charitable contributions totalling £3,560 to national charities (2017: £2,360).
This report was approved by the board and signed on its behalf by:
J M Thick Chief Executive
2 May 2019
* References to “like for like” reflect year on year performance adjusted for the impact of any abandoned racedays, by excluding the affected racedays in both the current and comparative year, to allow for a fair comparison of underlying trading performance in the strategic review commentary.
SPONSORS IN THE YEAR TO
31 DECEMBER 2018
We would like to thank our leading sponsors for their significant support in 2018
Thoroughbred Breeders’ Association
We also received much appreciated support from the following sponsors;
Big Group Insight
BJP Insurance Brokers
Coln Valley Stud
Conundrum Consulting Ltd
Crossland Employment Solicitors
Donnington Grove Vets
Dreweatts & Bloomsbury Auctions
Event Bar Management
Fuller Smith & Turner PLC
Irish Thoroughbred Marketing
Johnsons Stalbridge Linen Services
There were also 7 races sponsored for birthdays, retirement or in memoriam.
Mobile Pimm’s Bars
Peter O’Sullevan Charitable Trust
Premier Food Courts
Rayner Bosch Car Service
Relyon Cleaning Services
Ross Brooke Chartered Accountants
South Downs Water
St.James’s Place Wealth Management
T T Tents
West Berkshire Mencap
CONSOLIDATED PROFIT AND LOSS ACCOUNT
2018 2017 Note £000 £000 19,295 17,806 Turnover (15,478) (14,662) Cost of sales Gross profit 3,817 3,144 (2,974) (2,655) Administrative expenses 4 915 290 Net exceptional items Operating profit 1,758 779 12 6 Interest receivable and similar income (287) (307) Interest payable and similar expenses Profit before tax 1,483 478 309 705 Tax on profit Profit after tax 1,792 1,183
Profit per share (basic and diluted) (Note 5) 53.5p 35.3p All amounts derive from continuing operations
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2018 2017 £000 £000 1,792 1,183 Profit for the financial year Other comprehensive income 418 115 Remeasurement of the net defined benefit schemes (71) (22) Deferred tax on actuarial (loss) Other comprehensive income for the year 347 93 Total comprehensive income for the year 2,139 1,276
CONSOLIDATED BALANCE SHEET
2018 2017 £000 £000 Fixed assets Tangible assets 38,490 33,560 Investments 117 117 Investment property 1,112 1,112 39,719 34,789 Current assets Stocks 250 203 Debtors (amounts falling due after 20,079 26,065 more than one year £13,403 (2017: £14,072)) Cash at bank and in hand 2,223 5,107 22,552 31,375 Creditors: amounts falling due within one (5,110) (5,965) year Net current assets 17,442 25,410 Total assets less current liabilities 57,161 60,199 (2,471) (4,746) Creditors: amounts falling due after more than one year Provisions for liabilities Provisions (3,270) (5,774) Pension liability (747) (1,127) Net assets 50,673 48,552 Capital grants Deferred capital grants 88 106 Capital and reserves Called up share 335 335 capital Share premium 10,202 10,202 Revaluation reserve 75 75 Capital redemption 143 143 reserve Profit and loss 39,830 37,691 account Shareholders' funds 50,585 48,446 50,673 48,552
The financial statements of
D J BURKE (Chairman) J M THICK (Chief Executive)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Called up Share Capital Revaluation Profit and Total equity share premium redemption reserve loss capital account reserve account £000 £000 £000 £000 £000 £000 335 10,202 143 75 37,691 48,446 At 1 January 2018 - - - - 1,792 1,792 Profit for the year - - - - 347 347 Other comprehensive income 335 10,202 143 75 39,830 50,585 At 31 December 2018 Called up Share Capital Revaluation Profit and Total equity share premium redemption reserve loss capital account reserve account YEAR ENDED 31 DECEMBER 2017 £000 £000 £000 £000 £000 £000 335 10,202 143 75 36,415 47,170 At 1 January 2017 - - - - 1,183 1,183 Profit for the year - - - - 93 93 Other comprehensive income 335 10,202 143 75 37,691 48,446 At 31 December 2017
CONSOLIDATED CASH FLOW STATEMENT
2018 2017 £000 £000 Cash flows from operating activities Profit for the financial year 1,792 1,183 Adjustments for: Exceptional items (915) (291) Amortisation of capital grants (18) (17) Depreciation charges 905 1,187 Interest paid 287 308 Interest received (12) (6) Tax credit (309) (704) (Increase)/decrease in stocks (47) 21 Decrease/(increase) in debtors 2,374 (1,467) (Decrease)/increase in creditors (440) 645 Corporation tax paid (78) (927) Other associated property receipts 40 - Net cash generated from operating activities 3,579 (68) Cash flows from investing activities Receipts from exceptional sale of fixed assets 3,252 3,146 Purchase of fixed assets (6,011) (7,914) Sale of tangible fixed assets - 16 Other associated property costs (647) (2,935) Interest received 12 6 Net cash from investing activities (3,394) (7,681) Cash flows from financing activities Repayment of CBEL loan (3,000) - British Championship loan repayment 11 - Loan finance issued (69) (78) Interest paid (11) (13) Net cash used in financing activities (3,069) (91) Net (decrease) in cash and cash equivalents (2,884) (7,840) 5,107 12,947 Cash and cash equivalents at beginning of year Cash and cash equivalents at the end of year 2,223 5,107 Cash and cash equivalents at the end of year comprise: 2,223 5,107 Cash at bank and in hand 2,223 5,107
NOTES TO THE FINANCIAL STATEMENTS
1. GENERAL INFORMATION
2. ACCOUNTING POLICIES
2.1 Basis of preparation of financial statements
The Group and company financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Profit and Loss Account in these financial statements.
The parent company is included in the consolidated financial statements and is considered to be a qualifying entity under FRS 102 paragraphs 1.8 to 1.12. The following exemptions available under FRS 102 in respect of certain disclosures for the parent company financial statements have been applied:
• The reconciliation of the number of shares outstanding from the beginning to the end of the period has not been included a second time; and
• No separate parent company Cash Flow Statement with related notes is included
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these financial statements. Judgements made by the directors, in the application of these accounting policies that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed in note 3.
2.2 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries
2.3 Going concern
The Board has undertaken a full and thorough review of the Group’s forecasts and associated risks and sensitivities. The extent of this review reflects the current economic climate, including Brexit, as well as the specific financial circumstances of the Group.
The Board identified that the Group’s cash flow forecasts are sensitive to fluctuating revenue streams from ticket sales, corporate hospitality, conference and event income and the timing of receipts and payments in respect of the property redevelopment. A system of regular reviews of forecast business and expected property receipts has been implemented to ensure all variable costs are flexed to match anticipated revenues. In addition, a number of race meetings have been insured for adverse weather conditions, reducing the levels of risk carried by the Group.
The Board has reviewed the cash flow and working capital requirements in detail. At the balance sheet date, the Company has adequate cash reserves, together with updated revolving credit facilities which are in place through to
Following this review the Board has concluded that it has a reasonable expectation that the Group has adequate resources and banking facilities in place to continue in operational existence for the foreseeable future and on that basis the going concern basis has been adopted in preparing the financial statements.
2.4 Revenue recognition
Services rendered, raceday income including admissions, catering revenues, sponsorship and licence fee income is recognised on the relevant raceday. Annual membership income and box rental is recognised over the period to which they relate.
Other income streams are also recognised over the period to which they relate, for example, ground rents received from residents, conference income is recognised on the day of the conference, the Lodge hotel income is recognised over the duration of the guests stay and nursery income is recognised as the child attends the nursery.
Sale of goods, revenue is recognised for the sale of food and liquor when the transaction occurs.
Property receipts are recognised in accordance with the substance of the transaction being that of an exceptional sale of land. The minimum guaranteed sum, as set out in the agreement with
2.5 Investment property
Investment in properties are freehold interests which are held to earn rental income. Investment properties are recognised at fair value.
2.6 Other investments
Investments in subsidiaries are measured at cost less accumulated impairment.
Investments in unlisted Group shares, whose market value can be reliably determined, are remeasured to market value at each balance sheet date. Gains and losses on remeasurement are recognised in the Consolidated Profit and Loss Account for the period. Where market value cannot be reliably determined, such investments are stated at historic cost less impairment.
2.7 Investment income
Dividends and other investment income receivable are included in the Profit and Loss Account inclusive of withholding tax but exclusive of other taxes.
2.8 Lease assets receivable
Lease assets receivable relates to freeholds that the Group has acquired, or has the option to acquire, from
These are initially recognised at fair value which is calculated based on the net present value of future cashflows arising from the ground rents receivable over the lease term. This also represents the market value of the freehold agreed with
2.9 Tangible fixed assets
Tangible fixed assets are stated at cost or valuation, net of depreciation and any provision for impairment.
Land is not depreciated. Depreciation on other assets is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight?line method.
Depreciation is provided on the following basis:
Freehold buildings and outdoor fixtures - 2% ? 5% straight line Tractors and motor vehicles - 5% ? 10% straight line Fixtures and fittings and equipment - 2% ? 25% straight line
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date (see note 3).
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Consolidated Profit and Loss Account.
2.10 Impairment of assets
Financial assets (including trade and other debtors)
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. For financial instruments measured at cost less impairment an impairment is calculated as the difference between its carrying amount and the best estimate of the amount that the Company would receive for the asset if it were to be sold at the reporting date. Interest on the impaired asset continues to be recognised through the unwinding of the discount. Impairment losses are recognised in profit or loss. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.
The carrying amounts of the entity’s non?financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. The recoverable amount of an asset or cash?generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre?tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash?generating unit”).
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Stocks are valued at the lower of cost and net realisable value. Provision is made for obsolete, slow moving or defective items where appropriate.
2.12 Repairs and renewals
Expenditure on repairs and renewals and costs of temporary facilities during construction works are written off against profits in the year in which they are incurred.
2.13 Non-recognised financial information
The profit and loss account includes measures which are not accounting measures under
2.14 Cash and cash investments
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours.
Cash which is held on deposits that are not accessible with less than 24 hours’ notice, is deemed to not be liquid and is therefore classified as cash investments on the balance sheet.
2.15 Provisions for liabilities
Provisions are made where an event has taken place that gives the Group a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to the Consolidated Profit and Loss Account in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the Balance Sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Balance Sheet.
Where dividends are declared, appropriately authorised (and hence no longer at the discretion of the Group) after the balance sheet date but before the relevant financial statements are authorised for issue, dividends are not recognised as a liability at the balance sheet date because they do not meet the criteria of a present obligation in FRS102.
2.17 Current and deferred taxation
The tax expense for the year comprises current and deferred tax. Tax is recognised in the Consolidated Profit and Loss Account, except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company and the Group operate and generate income.
Deferred tax is provided on timing differences which arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements. The following timing differences are not provided for: differences between accumulated depreciation and tax allowances for the cost of a fixed asset if and when all conditions for retaining the tax allowances have been met; and differences relating to investments in subsidiaries, to the extent that it is not probable that they will reverse in the foreseeable future and the reporting entity is able to control the reversal of the timing difference. Deferred tax is not recognised on permanent differences arising because certain types of income or expense are non?taxable or are disallowable for tax or because certain tax charges or allowances are greater or smaller than the corresponding income or expense.
Deferred tax is provided in respect of the additional tax that will be paid or avoided on differences between the amount at which an asset (other than goodwill) or liability is recognised in a business combination and the corresponding amount that can be deducted or assessed for tax.
Deferred tax is measured at the tax rate that is expected to apply to the reversal of the related difference, using tax rates enacted or substantively enacted at the balance sheet date. For non?depreciable assets that are measured using the revaluation model, or investment property that is measured at fair value, deferred tax is provided at the rates and allowances applicable to the sale of the asset/property. Deferred tax balances are not discounted.
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that is it probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.
Capital grants received, apart from HBLB grants, are accounted for as deferred grants on the Balance Sheet and credited to the Profit and Loss Account over the estimated economic lives of the asset to which they relate. Capital grants are in deferred capital grants on the Balance Sheet as the associated works have been performed and it is not in any way repayable.
The HBLB provides funding to racecourses which is used to support racing activities. HBLB grants are accounted for under the performance model in line with standard industry practice. HBLB grants are credited to the Profit and Loss Account as revenue in the month of the raceday, the corresponding debtor is carried on the Balance Sheet until the cash is received.
Defined contribution plans and other long-term employee benefits
A defined contribution plan is a post?employment benefit plan under which the company pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the profit and loss account in the periods during which services are rendered by employees.
Defined benefit plans
A defined benefit plan is a post?employment benefit plan other than a defined contribution plan. The entity’s net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The fair value of any plan assets is deducted. The entity determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate as determined at the beginning of the annual period to the net defined benefit liability (asset) taking account of changes arising as a result of contributions and benefit payments.
The discount rate is the yield at the balance sheet date on AA credit rated bonds denominated in the currency of, and having maturity dates approximating to the terms of the entity’s obligations. A valuation is performed annually by a qualified actuary using the projected unit credit method. The entity recognises net defined benefit plan assets to the extent that it is able to recover the surplus either through reduced contributions in the future or through refunds from the plan.
Changes in the net defined benefit liability arising from employee service rendered during the period, net interest on net defined benefit liability, and the cost of plan introductions, benefit changes, curtailments and settlements during the period are recognised in profit or loss.
Remeasurement of the net defined benefit liability/asset is recognised in other comprehensive income in the period in which it occurs.
2.20 Borrowing costs
Interest bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs are accounted for on an accrual basis in the profit and loss account using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period which they arise.
2.21 Financial instruments
Trade and other debtors / creditors
Trade and other debtors are recognised initially at transaction price plus attributable transaction costs. Trade and other creditors are recognised initially at transaction price plus attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any impairment losses in the case of trade debtors. If the arrangement constitutes a financing transaction, for example if payment is deferred beyond normal business terms, then it is measured at the present value of future payments discounted at a market rate of instrument for a similar debt instrument.
Interest?bearing borrowings classified as basic financial instruments
Interest?bearing borrowings are recognised initially at the present value of future payments discounted at a market rate of interest. Subsequent to initial recognition, interest?bearing borrowings are stated at amortised cost using the effective interest method, less any impairment losses.
Fair value measurement
Assets and liabilities that are measured at fair value are classified by level of fair value hierarchy as follows:
Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 – inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 – inputs for the asset or liability that are not based on observable market data.
2.22 Exceptional items
Directors exercise their judgement in classification of certain items as exceptional and outside the Group’s underlying results. The determination of whether items should be separately disclosed as an exceptional item or other adjustment requires judgement on its materiality, nature and incidence. Accounting transactions related to the DWH agreement are considered outside the ordinary course of business, see note 5 for further detail.
3. JUDGMENTS IN APPLYING ACCOUNTING POLICIES AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group’s accounting policies, which are described in note 2, the directors are required to make judgements, estimates and assumptions about the 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.
Critical judgements in applying the Group’s accounting policies
The following are the critical judgements, apart from those involving estimations (which are dealt with separately below), that the directors have made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements;
Capitalisation of design fees and expenditure in connection with the ongoing development works, which during the year ended
Significant estimation techniques include:
The fair value of the long?term
Impairment of assets
Determining whether assets are impaired requires an estimation of the value in use of the cash?generating units to which assets have been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash?generating unit and a suitable discount rate in order to calculate present value. The carrying amount of tangible fixed assets and investment property at the Balance Sheet date was £39.6 million. No impairment loss was recognised in 2018 as there was no further indication of impairment required (2017: no impairment loss).
Residual values and useful economic lives
The Group's tangible fixed assets are reviewed, whenever there is a relevant change in circumstances or after relevant review, in order to assess whether the residual values and useful economic lives continue to be appropriate for calculating depreciation in the period. The reassessment of residual values and useful economic lives led to a reduction in depreciation of approximately £0.59m in the period.
4. EXCEPTIONAL ITEMS 2018 2017 £000 £000 (2) 347 Net book value of asset disposal 904 308 Other associated items 13 (365) DWH debtor movement in fair value 915 290
Other associated items are attributable to the reduction of a provision in connection with ongoing obligations related to the sale of land and redevelopment of the racecourse, net of the cost of writing off the carrying value of the
Pall Mallbuilding. In accordance with note 2, accounting transactions related to the DWH agreement are considered outside the ordinary course of business.
5. PROFIT PER SHARE
Basic and diluted profit per share is calculated by dividing the profit attributable to ordinary shareholders for the year ended
The financial information set out above does not constitute the company's statutory accounts for the years ended
The information included in this announcement is taken from the audited financial statements which are expected to be dispatched to the members shortly and will be available at www.newburyracecourse.co.uk.
This announcement is based on the Company’s financial statements, which are prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including FRS 102 “The Financial Reporting Standard applicable in the
Neither an audit nor a review provides assurance on the maintenance and integrity of the website, including controls used to achieve this, and in particular whether any changes may have occurred to the financial information since first published. These matters are the responsibility of the directors but no control procedures can provide absolute assurance in this area.
Legislation in the
This preliminary statement was approved by the Board of Directors on