Jockey Club Racecourses Limited
Strategic report
The directors present their strategic report and audited financial statements for the year ended 31 December 2021. Business review and principal activities The principal activity of the company is to manage and operate thirteen owned racecourses and two leased racecourses. There have not been any significant changes in the company's principal activities in the year under review. The directors are not aware, at the date of this report, of any likely major changes in the company's activities in the next year. As shown in the company's income statement on page 14, the company's turnover has increased by 23.4% over the prior year. The increase in turnover is primarily due to racing continuing to be staged throughout the year compared to 2020 when racing was cancelled between 18 March 2020 and 31 May 2020. Racing was held behind closed doors up until 17 May 2021 with spectators returning to racecourses from this date in line with the Government's easing of COVID-19 lockdown restrictions. Media incomes were 57.8% ahead of the prior year, principally driven by racing continuing throughout the year, albeit behind closed doors for a period as mentioned above. Betting shops were temporarily closed until 12 April 2021, again due to government restrictions which required non-essential retail shops to close. The increased activity in the year resulted in a 36.2% increase in cost of sales, which includes a prize money contribution increase of £7.8m. Administrative expenses were 6.8% higher than the prior year. Included in administrative expenses is the full cost of employee remuneration. Employee costs increased in line the increased level of activity as capacity restrictions were lifted during the year. Cost savings also included the impact of the business rates holiday which saved £4.2m compared to a normal year. Due to the restrictions on spectator capacity and significantly reduced conference and events we placed a number of employees on furlough during the first half of the year. The corresponding £0.4m (2020: £4.1m) of furlough grants are shown in Other Operating Income (note 9). Abandoned and curtailed fixtures covered by insurance during the year resulted in £25.3m (2020: £16.4m) worth of claims which is also presented in Other Operating Income. In relation to the company's statement of financial position, the directors draw the reader's attention to note 20 to the financial statements concerning the background to the Grant Account. The Grant Account represents capital grants received from the Horserace Betting Levy Board to which the company has an absolute entitlement. In the event therefore that Shareholders' Deficit was restated to include the full extent of this entitlement, Shareholders' Funds would
total £92.4m (2020: £71.1m). Key performance indicators
The key performance indicators for the company are attendances, revenue (above), operating profit margin and net debt (below). Aggregate attendances across the racecourses increased from 398,000 to 646,000 largely due to the lifting of capacity restrictions during the year. Operating profit margin decreased to 15.3% (2020: 19.0%) with the movement reflecting the impacts noted above. There were 15 abandoned fixtures in 2021 (2020: 112). Principal risks and uncertainties The company is subject to a number of risks and uncertainties that are continuously considered by the directors. The impact of COVID-19 continues to be a risk to revenue with the company no longer able to obtain insurance cover for abandonment or curtailment of racedays due to human related pandemics. However, the company maintains adequate cash balances, resources and credit facilities to mitigate the reasonably foreseeable potential financial impacts of this risk and to manage the company's cash position. Our financial planning indicates that the company will continue to operate as a going concern. However, we continue to monitor the impacts and we will set our investment plans accordingly. Notwithstanding the impacts of COVID-19, which are addressed separately, competition within the UK leisure market is a continuing risk for the company and racing sector, which could see it losing leisure market share. The company manages this by continuing to invest in quality racing as well as re-investing in its facilities to encourage both race day and non-race day customers as well as owners, trainers & jockeys who are so vital to our sport. The company will also continue to evolve, having also changed its structure and operating culture over the past few years and this has equipped it to meet the challenges of what is a very competitive leisure market place.
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