Supporting British Racing – The Jockey Club Annual Review

SUPPORTING BRITISH RACING ANNUAL REVIEW AND OUTLOOK 2019

The Jockey Club

CONTENTS

2 Vision & Mission

3 Foreword

7 Review and Outlook

21 Business Performance

Who we are and the vision and mission that drive us.

Foreword by our Senior Steward, Roger Weatherby.

Group Chief Executive, Simon Bazalgette, reviews the year and looks ahead.

Details of a 10th year of commercial growth and reinvestment.

27 A Force for Good

35 Members & Board

37 Partners

38 Locations

How we live up to our mission - across racing and society.

The people overseeing our Royal Charter commitments.

The partners who help us to support British Racing.

Details of our operations around the country.

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Annual Review and Outlook 2019

THE JOCKEY CLUB Inspire The Jockey Club stages thrilling sporting occasions, including the Randox Health Grand National, The Festival presented by Magners and four of the five Classics of the Turf. With Her Majesty The Queen as our Patron, we are governed by Royal Charter to act for the long-term good of British horseacing. This includes reinvesting all profits to support the sport. Founded in 1750, today The Jockey Club is the largest commercial group in Britain’s second-biggest spectator sport. We operate 15 racecourses nationwide, The National Stud, Jockey Club Estates, Jockey Club Catering, Jockey Club Live, Jockey Club Services and our charity, Racing Welfare.  VISION Our vision is for British Racing to be the best in the world for many years to come and for the sport to be accessible for millions of people in the UK to enjoy.  Our mission is to act for the long-term good of British Racing in everything we do.  MISSION

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Foreword by the Senior Steward

SUPPORTING BRITISH RACING

Welcome to this first digital edition of The Jockey Club’s Annual Review and Outlook . We live in a digital world and also we have set ourselves some challenging but important environmental targets as an organisation. In fact, adapting to remain relevant as British society evolves and acting as a responsible citizen are both very important to what we are trying to achieve to have a long, healthy and happy future. Thank you wholeheartedly if you have supported The Jockey Club in some way over the last year. Haven’t we enjoyed some wonderful racing on the Flat and over Jumps at our 15 racecourses and beyond? Newmarket-trained Enable dominant in the middle distance division, Altior unbeaten in nineteen starts, Tiger Roll becoming the first horse since Red Rum to win back-to-back Grand Nationals and so many more. With the help of ITV, Racing TV, the wider media and our own digital platforms, our best horses and the teams behind them have helped to

captivate millions of people in Britain. As the largest commercial group in British Racing our financial performance is important in order to generate funds to invest into our sport’s prize money, facilities and initiatives. We put all profits back into British Racing. 2018 was a tenth consecutive year of commercial growth, allowing us to contribute record amounts into our sport’s prize money. This is outlined in more detail in the Group Chief Executive’s However, with a multi- million pound reduction in funds via the betting industry anticipated, we now face some financial headwinds outside of our direct control. As such, innovation and diversification have never been more important, as is working together across all stakeholders to play a part in overcoming challenges. The good news is that we have a strong and resilient core to build from. We have significant scale as a sport and this is to our great advantage. We reach Review and Business Performance section.

Roger Weatherby

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Annual Review and Outlook 2019

many millions of people in the UK alone. Now we need to ensure that we place ‘the fan’ at the heart of it all. As a sport we need to do much more to convert the people we reach into fans of racing as a sport and not just an exciting social occasion. I believe The Jockey Club can be at the vanguard of this, working with industry partners including Great British Racing, other racecourses, media rightsholders, sponsors and of course the participants whose stories are the ones that people are interested in. At the same time, have we done enough as a sport for existing fans and racehorse owners? We are not a sport that should ever fall into the trap of alienating our biggest advocates while innovating

and expanding beyond our current borders, which I have been surprised to see has happened most notably of late in cricket and elsewhere. Despite a number of improvements, I remain of the view that technology has a far greater role to play in British Racing. Better use of technology can aid the enjoyment of the racing experience and support our sport commercially. Other sports gather and use data and graphics in innovative and engaging ways. We have seen some good examples in recent times, but a step-change is held back by a lack of capital for major investments and a lack of coordination across all stakeholders. Racing events welcome

people of all ages. It is key that we reach young people as they are the next generation of fans. British Racing is cognisant of this, with U18s racing for free, The Jockey Club’s 18-24 RacePass ensuring cost is not a barrier and the great work of organisations such as Racing to School. At The Jockey Club we have the ambition to do more, including using an ‘influencer’ network of existing fans to bring others to enjoy our sport and working with brand partners who resonate with young people. When young people attend the races we need to make the sport accessible to them, as well as them having a great time with us and without dumbing anything down.

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in general. The Jockey Club family should be immensely proud of what Racing Welfare has achieved. There is a high demand for its services, but generally at a much earlier stage than previously, helping to ensure more of those who need help can stay in work or receive help well before the situation develops further. Alongside people welfare is horse welfare, where we have a similar responsibility as a sport to provide fantastic care for our Thoroughbred racehorses. The Jockey Club takes this very seriously indeed and recognises that we are a sport built on its popularity amongst the British public. As such I am pleased that the establishment of our own Jockey Club Welfare Group has helped us to make some very positive improvements around our estate and I would like to see a concerted investment across the sport to drive innovation and address public perceptions in tandem. During and after The stakeholders and regulator, and I am not convinced this helped perceptions of British Racing. But ours is a passionate sport and is motivated by a deep love of the horse. The creation of a British Racing Welfare Festival at Cheltenham we had much robust debate in public involving racing’s

Board with representatives from across the sport and independent thinking is another example of the positive steps the sport is taking. On behalf of the Club, I would like to place on record our thanks to Simon Bazalgette who will be standing down as Group Chief Executive by the end of 2019. He has made an outstanding contribution to The Jockey Club and British Racing over more than a decade. He has played a pivotal role in a number of major achievements for the sport and we very much hope that he will continue to be involved in some way into the future. I would also like to thank my fellow Stewards, Jockey Club Members, our management team and all who have made my time as Senior Steward a thoroughly enjoyable and rewarding five years. I pass on the baton to Sandy Dudgeon in July 2019 with great confidence that British Racing’s best days lie ahead. 

“Racing events welcome people of all ages. It is key that we reach young people as they are the next generation of fans” customer has more time to go racing, more time to develop their passion for the sport and potentially more disposable income than young people. Do we deliver the right experience for them and is there more we need to invest in our facilities to ensure they meet their needs? The overarching desire must be for horse racing to be a sport for all. To realise our vision for the sport, we also need to look after the people within British Racing. In recent years I have been delighted by the transformation of our charity, Racing Welfare. Now racing’s workforce are aware of the charity’s services and it has done a fantastic job around initiatives including Racing Staff Week, Mental Health Awareness Week and training Equally, we must also recognise that the older

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The Jockey Club

Group Chief Executive's Review

UNLOCKING RACING'S POTENTIAL

Simon Bazalgette

Last year I stated that over the previous 12 months, horses raced in Britain for record amounts of prize money and were watched by increasing numbers of people on television and mobile devices, while racing fixtures attracted the second-largest crowds of any sport, generating billions of pounds for the UK economy along with employment for many tens of thousands people. I am pleased to report that all this can be said for 2018, accompanied by a 10th year of commercial growth at The Jockey Club, which allowed us to put more than ever into the funding of British Racing, in line with our Royal Charter governance. This Review outlines a lot of good news, delivered by our hardworking people across Jockey Club Racecourses, Jockey Club Estates, The National Stud, Racing Welfare and Jockey Club Services, and in group-wide roles. At the same time, I am clear on an outlook that includes multi-million pound financial challenges for the sport, which we have much work to do to overcome. COMMERCIAL SUCCESS SUPPORTING RACING SUSTAINABILITY Everything we do at The Jockey Club is driven by our mission to act for the long-term health of British Racing. In 2018 we generated a record £214.6 million in turnover, an increase of 6.7% year-on-year, which outpaced the 5.2% growth of the previous year and 1.4% UK GDP growth. In all this was our 10th consecutive year of commercial growth. We have been able to increase Group turnover by 68.2% in those 10 years from £127.6 million in 2009. Last year our underlying profits – which we describe as Group operating profit before prize money – grew by 7.4% to a record £48.1 million. We contributed a record £27.1 million to prize money in 2018, which was more than double the contribution we could afford 10 years ago [2009: £12.5 million]. We were keen to increase grassroots race values, which I am pleased to report rose by more than a third in 2018, while also boosting all other levels of the race programme. As a result, average prize money per fixture at Jockey Club Racecourses

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Annual Review and Outlook 2019

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The Jockey Club

was £157,105, compared to a 2018 industry average of £99,680 excluding JCR. This also compares to the £116,000 average per fixture available at our 15 racecourses 10 years ago. Last year, participants raced for more at Jockey Club Racecourses than at any time in the history of our sport. By choosing to boost prize money in 2018 by a record £4.2 million – or 18.3% year- on-year – we reduced our Group operating profit by £0.9 million to £21 million [2017: £21.9 million]. Net profits after various deductions were £4.5 million. Again the comparison to 10 years ago is a healthy one, when we made a 2009 net loss of £2.1 million. A detailed review of our financial performance follows this section. A FORCE FOR GOOD IN BRITISH RACING Delivering commercial success has been our target and is the consequence of long- term investments and sound financial planning. It enables us to sustain employment within our sport, stage quality racing

at all levels supported by record contributions to prize money, enhance our facilities and the experiences we offer to customers, participants and partners, and invest in initiatives to help to support British Racing. However, financial performance is only one measure of whether we are living up to our mission. Also important is The Jockey Club’s impact on our society – within the racing industry, but also through the communities in which we operate, the causes we support and the environment we must protect to sustain our sport. We dedicate an important section of this Annual Review to these and I believe we must judge our performance on them. Equally vital to the future of our sport in my view is how we ensure our current and future relevance, and how we demonstrate to the public that we are a highly responsible industry. INSPIRING MORE RACING FANS We need to engage more people in racing as a sport and

not just a great day out. The more fans racing has the more people will attend, watch, bet and own a racehorse. This in turn supports the sustainability and health of our sport. Some people consider it a negative that today so many people enjoy a day at the races as a sporting and social occasion, rather than because they are passionate about the horses they will see perform. I look at this differently. Instead of being a niche sport where only the initiated attend and others are not welcome, we reach and transact with a vast swathe of the nation. With that mass base we have the opportunity to convert as many as possible into informed racing fans and advocates – but it must be on their terms. In an environment where we are capital-constrained and consumers have a huge amount of choice, this is a lot easier said than done, but we are ensuring it is a focus for the Group. For example, we are investing in the way we tell the stories of our horses and participants, particularly through digital content, which

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Annual Review and Outlook 2019

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The Jockey Club

I am pleased to report reached millions of people last year, and our ambassador work with Bryony Frost, along with numerous participants and credible personalities. I can only see this increasing as a priority in the years ahead if we are to make the in-roads we wish to. This complements the efforts of partners such as ITV, who are doing a great job growing the regular audience for our sport on their platforms. To capture the public’s imagination, however, and to bring to life the stories of our leading characters in the sport, we need to let people in. Racecourses do not control the kind of access I am talking about, so stakeholders must work together if we are to grow as a sport. Others,

such as American football through the NFL, football through Manchester City and rugby through the All Blacks to name three, have derived huge benefits from their stories and characters being brought to life by participating in Amazon’s ‘All or Nothing’ fly-on-the- wall series, for example. F1’s behind-the-scenes docu-series ‘Drive to Survive’ aired on Netflix recently, while Britain’s Youngest Football Boss available through BBC iPlayer has shone a light on women’s football. I look forward to racing achieving similar exposure for our fantastic people and stories. In 2018 we also made significant investments in our website and our app, and are increasingly using

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Annual Review and Outlook 2019

data to tailor and target our customer communications. We are also committed to investing in technologies that can help us to achieve our goal – again within the parameters of our resources. For example, a Racecourse Media Group (RMG) project will allow sectional timing and horse tracking to come much more to the fore as part of engaging and informing people, and we are not short of ideas involving the likes of Augmented Reality, Virtual Reality and e-sports. I remain of the view that there would be significant mutual benefit of an official technology partner. MEDIA AT THE HEART OF OUR FUTURE As a wholly-owned cooperative of racecourses who invest significantly back racecourses working together for the long-term works for racing. At a time there are challenges, the more we can do this across all racecourses and stakeholders the better off the sport will be. At a time when there are challenges, RMG is rolling out products and innovations that can help to grow the value of racing to betting operators, with greater returns for the sport in the process. We are also benefitting from the major shop window provided by our partnership with ITV. In 2018 and since, ITV Racing has increased its into British Racing, RMG is a great model of how

reach amongst the British public, grown the number of viewers tuning in more regularly to watch our sport, and won awards for the quality of their programming including a BAFTA for their coverage of the Randox Health Grand National. In return, British Racing provides ITV with their most extensive sports content, which they have stated also delivers well for them commercially. In 2018, racing coverage on ITV main channel saw average audiences 44% higher than in Channel 4’s final year and significantly, its audience share was 63% greater than achieved on Channel 4. ITV’s strategy has been to use its ITV4 channel to showcase much of its sports content and this

channel has enjoyed strong growth in its average audience, with the last 12 months being on a par with Channel 4's in terms of like-for-like fixtures. FOR THE THRILL OF IT SINCE 1750 Developing and realising the commercial potential of our brand is a strategic priority for The Jockey Club. We are on an excellent trajectory on the back of brand identity work and an official partners programme. Several exciting avenues for future development have been identified, provided we are in a position to invest in them and reap the returns from doing so. For example, currently we are exploring a range of brand licensing opportunities both domestically and internationally.

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The Jockey Club

UNLOCKING OUR PEOPLE’S POTENTIAL Another area we must continue to invest in is our people. The Jockey Club employs more than 600 people across a range of permanent and fixed-term roles. Each year, these people are supported by more than 10,000 temporary raceday staff. We endeavour to support and promote the career progress of our people, and hold Investors in People Accreditation for both Jockey Club Racecourses and Jockey Club Estates. Throughout the Group there are numerous examples of progression into specialist and management positions, including to Board level. Among permanent employees, 30% have worked for us for 10 years or more. We are proud of our loyal

workforce, which we attribute to our culture, clear purpose and ongoing commitment to the training and development of our people. DIVERSITY AND INCLUSION Also on the topic of people, for British Racing to build relevance with future generations to encourage them to become fans of our sport or members of our workforce, we must appeal to people of all backgrounds, ages, gender identities, ethnicities, religions, sexual orientations and physical, mental, economic and social circumstances. Horseracing must be a sport for all and I welcome the work underway in this area within our sport. We already have much

to be proud of, including a better gender balance

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Annual Review and Outlook 2019

than other sports amongst our racing crowds and our workforce, while men and women compete on equal terms as participants in our sport. But we need to do more and say more about diversity and inclusion. We need to ensure our sport is truly representative of our society for it to sustain and thrive. The Jockey Club has set up our own Diversity and Inclusion Steering Group and we are also contributing to wider industry efforts. I look forward to seeing significant progress in the years ahead. JOCKEY CLUB RACECOURSES As the largest part of our Group, much of what I have referred to relates to Jockey Club Racecourses, our 15-strong racecourse arm led by Paul Fisher. In 2018, as well as welcoming many of the world’s best horses, trainers and jockeys to race at our events, and distributing the largest sums of prize money in the history of our sport, we also attracted attendances of 1.8 million spectators, while millions of people watched and listened to broadcasts from our media rightsholders. Several popular events descending on Cheltenham for The Festival in 2018, rising to 266,779 in March 2019. Beyond racing, our venues play host to thousands of events a year and another estimated two achieved record crowds, including 262,367 people

million people attended these activities in 2018. Racing can be very proud of staging more of the top ten of Britain’s most attended events than any other sport. It is essential that we customers and participants across all of our venues. This is challenging because we are operating as a capital- constrained business investing through profits and debt financing. However, last year we were able to spend just under £10 million on capital projects in 2018. Projects included a range of facilities improvements with examples being the Hatherleigh Suite at Wincanton, the customer entrance at Warwick, the refurbishment of the 4th floor continue to invest in the experience we offer to

boxes at Cheltenham and enhancements to The Princess Royal Stand roof customer area at Aintree. We also dedicated a specific programme of investment to equine welfare-related improvements, including railings, horsewalks and washdown areas, given our significant focus in this area. A key part of the customer experience at Jockey Club Racecourses is delivered through Jockey Club Catering Campbell. I hope that everyone who has been racing with us would agree that our food and beverage offering goes from strength-to-strength, in general enclosures, owners and trainers, and hospitality spaces, with an emphasis on quality and value. – our joint venture with Compass plc led by Nick

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The Jockey Club

As an important part of enhancing the customer experience and driving commercial growth, we continue to invest in new experiences, such as Cheltenham’s Horse & Groom ‘pub’ hospitality, which proved immediately popular at The Festival. JOCKEY CLUB ESTATES Led by Nick Patton, Jockey Club Estates operates more than 5,000 acres of training grounds at Newmarket, Lambourn and Epsom Downs, and a property portfolio, which includes the historic Jockey Club Rooms in Newmarket, built in 1752. Horses prepared on the Newmarket Training Grounds enjoyed a vintage year in 2018, winning 1,850 races, a year- on-year increase of nearly 10% including a record-breaking 37 Group 1 races. This increase was achieved despite a small reduction in the number of horses trained in Newmarket, with the monthly average of horses using the gallops down by 0.9% to 2,575 horses. Last year our refurbishment programme included major

investments in upgrading the Al Bahathri gallop and the Warren Hill canters on Bury Side, and the Southfields Round canter and the Rubbing House polytrack on Racecourse Side. In recent years £3.4million has been spent on improvements to our training grounds in Newmarket. 2018 was a fruitful year for Lambourn-trained horses; in fact the most successful since Jockey Club Estates took ownership of the Lambourn Training Grounds in 2006. In 2018 the number of horses using the public gallops in Lambourn on a daily basis grew by 6% to an average of 790 horses per month. The number of winners prepared by Lambourn trainers increased by 16%, with a total of 664 winners in the UK and abroad last year. Investments continue into enhancing the facilities at the training centre. In 2018 this included upgrading the surface on the Back of the Hill, the installation of a brand new surface at Long Hedge and the completion of a new

arterial horsewalk next to the Short Gallop. In recent years, we have invested nearly £1.5 million into facilities improvements in Lambourn. 2018 was also a successful year for Epsom-trained horses, with nearly 100 UK winners sent out from yards using the training facilities. In 2018, our programme of works included topping up the surface of the Fibresand gallop with two inches of new material, as well as refurbishing the Beechwood Horsewalk that connects to the Fibresand. We also purchased and installed two new steel-framed steeplechase schooling fences with artificial birch and apron. An important hurdle has been cleared in the plans to renovate Downs House, the yard from which the legendary Eclipse was trained in Epsom and which has been unused for several years. Epsom and Ewell Borough Council approved plans for a multi- million pound redevelopment of the historic training facility brought forward by Mark Travers and Andrew Lynds of Eclipse Barn Racing.

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THE NATIONAL STUD The National Stud has been an integral part of the British Thoroughbred breeding industry for more than 100 years. The Jockey Club has owned and operated The Stud since 2008 and today it is led by Tim Lane. In November 2018, we were delighted to announce that HRH The Duchess of Cornwall – a Jockey Club Member – had agreed to become Patron of The Stud. In 2018, five stallions stood at The Stud as part of the range of breeding services available. These were Aclaim, Gregorian, Marcel, Spill The Beans and Time Test. Meanwhile, The Stud’s education arm continued to deliver world-class training for the next generation of

stud staff and tours of the farm formed part of Discover Newmarket and remained open to all. Facilities at The National Stud continue to improve, with HRH The Duchess of Cornwall officially opening the refurbished Stallion Unit in May 2019. JOCKEY CLUB SERVICES Jockey Club Services has been providing a range of business services to an excellent roster of UK sports organisations since its inception five years ago. Recently we were pleased to welcome high- profile governing body, UK Athletics, to this roster, having engaged us to provide finance and accounting services to them. Jockey Club Services makes good use of our assets

and expertise to generate additional revenues for British Racing, with the bonus of broadening the experience and horizons of our people in the process. RACING WELFARE The Jockey Club’s charity, Racing Welfare, plays an essential role within our sport, providing help and support for racing’s workforce under the leadership of Dawn Goodfellow and its dedicated team. Racing Welfare offers professional guidance and practical help to those people whose dedication is vital for the wellbeing of British Racing. This includes providing a national network of Welfare Officers based in regional offices around the UK, operating Racing’s Support

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Annual Review and Outlook 2019

Line, a multi-channel helpline available 24 hours a day, plus a range of online resources to help people. Racing Homes is the charity’s housing association, which provides subsidised accommodation for those who meet a set criteria. In 2018, Racing Welfare provided support or interventions on a total of 10,518 occasions, with services accessed through Racing’s Support Line in particular. Within this, the charity’s Welfare Officers provided direct support to 2,386 people, which was a year-on- year increase of 13%. Racing Welfare issued grants totalling £227,428 to improve people’s health and wellbeing in 2018, which was a 3% increase year- on-year. A detailed update on Racing Welfare’s activities is included later in the ‘Force For Good’ section of this Annual Review, as Racing Welfare represents a cornerstone of The Jockey Club’s contribution to British Racing. INDUSTRY FUNDING OUTLOOK We are finalising this Review as the final quarter of the 2018/19 Levy returns have come in £11 million below Levy Board expectations. To lose funding of this magnitude is a bitter blow for the sport. If identified as a structural issue with the system, such as a loophole, it would be a tough pill to swallow given the successful effort that went into reforming the Levy only recently.

This comes at a time when British Racing is starting to feel the knock-on impact of changes to gambling legislation, which is leading to the closure of a significant number of betting shops around the UK in 2019 and over the next few years. We sell media rights to betting shops and so fewer of them reduces this revenue line and also the Levy if a punter does not head elsewhere. Both the timing and number of closures is important, but various estimates suggest a negative impact for British Racing of between £40 million and £60 million by 2021. Ours is a highly resilient sport and industry, and I am confident the revenue lines within our direct influence can grow and things will be back in shape after a period of correction. However, I am concerned about how the negative impact will play out at the coal-face of the sport over the next couple of years. LESS RACING = LESS FUNDING It has been interesting to observe and experience relations between racing’s stakeholders with these financial challenges facing the sport. At a time when we need to come together, unfortunately there is a level of mistrust in some cases about the gravity of the situation or a lack of agreement that pain is shared. I am also concerned there is a real misunderstanding

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Annual Review and Outlook 2019

about the sport’s revenue streams. Provided there are enough horses to service a certain size of fixture list, every fixture generates funds for the sport under our current commercial model. The bulk of British Racing’s funding – for prize money, integrity and promotion – is generated by the sport taking place. Revenues that aid prize money funding are derived through media rights income, Levy payments, general admissions, owners’ entry stakes, sponsorship, hospitality sales and so on. Less racing means less money to go into prize money for the sport’s participants. It is concerning that this is not well understood, at a time when there are already less funds available through media rights and Levy. Instead I see fixtures positioned as if they are solely for the benefit of racecourses. This sport is a joint venture and we either win together or lose together. MUCH TO LOOK FORWARD TO Despite financial turbulence, I am very optimistic about the future. I agree with Roger’s closing remarks in his Foreword that our best days lie

ahead. We will be buffeted by financial impacts beyond our control in the short-term and in the meantime I see no reason why British Racing cannot continue to stage some of the most thrilling sport anywhere in the world, work together to become more relevant to more people in the process and in so doing continue to grow our revenue lines to help to sustain our future. We are hundreds of years old as a sport and have a knack of constantly evolving to remain an important part of national life. That is by design, not by accident, and we must keep up the momentum. On a personal note, this is my final Group Chief Executive’s Review. I have taken the decision to stand down by the end of 2019 in order to pursue an exclusively non-executive career. It is a role I have greatly enjoyed since taking post in September 2008 and I would like to thank everyone who has been of great help along the way. The Jockey Club is an organisation I feel privileged to lead and horseracing is a sport I care a lot about. I hope to remain involved in an appropriate non- executive or advisory capacity, as well as attending as a

racehorse owner and fan. As I reflect on more than a decade in post, I think about the many good people who work for The Jockey Club. They are talented and hardworking, and are united by a clear mission to act for the long-term good of British Racing. In doing so we are guided by a set of five core values that we developed together and are now embedded in the DNA of our culture. These are not shouted about externally because it is not about virtue signalling; it is about everyone we come into contact with experiencing them for themselves. Our mission and our values have helped us to create a positive and dedicated culture, and long may The Jockey Club continue to do everything in its power to help our fantastic sport to have a bright future. 

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Annual Review and Outlook 2019

Group Business Performance

The following financial information has been extracted from the audited financial statements of The Jockey Club for the year ended 31 December 2018.

CONTINUED GROWTH + REINVESTMENT

In 2018, The Jockey Club delivered a tenth consecutive year of revenue growth, with Group turnover up by 6.7% year-on- year to a new record £214.6 million (2017: £201.1 million). This represented an increase in turnover of 68.2% over the past decade and enabled us to contribute a record £27.1 million to prize money last year. As the most significant contributor to the Group’s turnover, Jockey Club Racecourses had another strong year, notably seeing continued growth at our large Festivals. With attendance increases in 2018 at The Festival at Cheltenham and the Randox Health Grand National Festival at Aintree, those seven days delivered more than £1 million in additional profits compared to 2017, with increased sponsorship revenues accounting for more than £0.4 million of this. The QIPCO Guineas also saw impressive year-on-year growth, while attendances at The Investec Derby Festival were 4,000 higher than in 2017. However, the final result of the latter was impacted by the entries being skewed towards yearling entries rather than three year-old and supplementary entries. This was the first stage in what turned out to be a challenging summer for British Racing, with the football World Cup and the sustained period of warm weather both impacting attendances through June to August. Although our courses significantly out- performed the rest of the industry, there were adverse impacts on both attendances and field sizes at The Moët & Chandon July Festival, The Coral-Eclipse and summer Saturdays at both Newmarket and Haydock Park. This was followed by a strong recovery in the autumn period with late season field sizes at our Flat racing courses particularly impressive. The year also finished strongly with an impressive autumn Jumps season, including good returns on admissions and hospitality at the Betfair Chase at Haydock Park and the Betfair Tingle Creek at Sandown Park.

£27.1m Record prize money contributed in 2018

10yrs Consecutive years of commercial growth

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We also delivered another relatively strong set of returns from our Jockey Club Live summer music nights. We had strong returns from Nile Rogers and Chic, George Ezra, Paloma Faith and Craig David, while some other acts were less successful and overall returns were slightly behind 2017. However, music nights remain a major source of earnings and our risk exposure is limited by the structure of the joint venture agreement.

We staged 339 fixtures at our 15 racecourses in 2018, with seven additional fixtures partly compensating for 16 weather- related abandonments. We benefited significantly from a new betting shop media rights contract with SIS, which went live in April 2018. This materially increased the value of these rights for the latter nine months of the year. Field size performance continued to be strong, aside from the summer period previously noted and this was

£10.4m Capital expenditure in 2018

2015

2016

2017

2018

£m £m £m

£m

Group financial performance Turnover Operating profit before prize money

214.6

183.3

191.5 43.4

201.1 44.8

48.1

41.8 21.9

21

Operating profit

22.6

21.9

0.3

Profit on sale of tangible fixed assets

0.1

-0.1

0.5

-9.3 -7.9

Net depreciation

-5.4 -6.6

-6

-7

Net interest

-7.8

-7.8

1.2 0.1

Other finance costs

1.4

-1.4

1

Gains/(losses) on changes in fair value of inves ments

0.4 -1.4

0.6

0.4

0 0

HBLB waived grants

-0.8

0 0

Exceptional items

0

3.5

4.5

Net profit after share of associates PAT

10.9

10.8

9.1

2015

2016

2017

2018

£m £m £m

£m

Group turnover breakdown Jockey Club Racecourses

203.9

174.2

182

191.7

7.3 3.3

Jockey Club Estates

6.5

6.9

7

The National Stud

2.5

2.5

2.3

0.1

Club fees

0.1

0.1

0.1

214.6

Total

183.3

191.5

201.1

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Annual Review and Outlook 2019

2015

2016

2017

2018

£m £m £m

£m

Group operating profits breakdown The Jockey Club

0

-0.1

0

0

19.3 0.8 0.9

Jockey Club Racecourses

20.8

21.3

21.1

Jockey Club Estates

0.7

1

0.8

The National Stud

0.5

0.3

0

21

Total

21.9

22.6

21.9

2015

2016

2017

2018

£m £m £m

£m

Sources of prize money investment JCR contribution

27.1

19.9 15.6

20.8

22.9

16.4

Industry contribution

14.8

15.2

8.4

Entry fees

8.4

8

7.6

51.9

Total

43.9

43.6

45.7

2015

2016

2017

2018

£m £m £m

£m

Group capital expenditure

10.4

28.6

12.5

13.8

2015

2016

2017

2018

£m £m £m

£m

Group net debt Total

101.9

105.8

100.7

103.8

2015

2016

2017

2018

£m £m £m

£m

Group cashflow Net cashflow from trading Cash from exceptional items

19.2

22.9

22

17.9

0

0

3.5

0

1

Dividends received

0.2

0.2

0.2

-9.7

Net capital expenditure

-29.2

-12.1

-13

-7.7

Net interest paid

-6.6

-7.8

-7.8

-7.6

Other net loan movements

17.3

1.3

2.6

-5.1

Change in cash

4.6

7.1

-0.1

24

The Jockey Club

reflected in the SIS revenues. Our field sizes were in line with 2017 on the Flat and nearly 0.5 runners more at Jumps fixtures, with both significantly ahead of industry averages. Racecourse Media Group performance continued to be strong, in particular in the GBI international business and on Pay TV. Our Conference & Events business saw strong year-on- year growth as we started to see the benefit of our national approach to large agents and the benefits of some of our courses being used as filming locations, while at Aintree we benefitted from overspill matchday hospitality business from Liverpool Football Club. Furthermore, commercial partnership revenues were enhanced by our Group-wide Official Partner agreement with Diageo. Jockey Club Estates recorded continued turnover growth to £7.3 million in 2018 (2017: £7.0 million), with a small reduction in Newmarket horse numbers driven by lower Godolphin pre-training volumes. These were partly offset by volume growth at some smaller yards, which is a pleasing trend. Positive momentum built up over the past few years at Lambourn continued apace, with a 4% growth in horse numbers to an average of 789 horses in 2018. The National Stud had a very strong year with turnover up by £1 million to £3.3 million, driven in the main by a highly

successful first season at stud for Time Test, who covered 110 mares, of which 38 were to breeding right holders. He also had a very successful first season in New Zealand at Little Avondale Stud, where he will return for the 2019 southern hemisphere season. Boarding volumes both for mares and for spelling horses also continued to be strong, in particular in the latter part of the year. GROUP OPERATING PROFIT Operating profit referenced in this review is core operating profit, which we believe is the most appropriate measure of underlying operational performance and the same measure we have used in prior years. This is defined as statutory profit on ordinary activities after adding back the following: tax, interest, depreciation, share of joint venture profits, changes in fair values of financial investments and investment properties and profit and loss on the sale of fixed assets. As budgeted, Group operating profit was managed down to reflect both record £4.2 million in prize money contribution and increased investments in on-course maintenance programmes, enhanced customer experiences and improving our CRM, data management, WiFi and digital media capabilities designed to support British Racing over the long-term. Operating profit in 2018 was

339 Number of fixtures at our 15 racecourses in 2018

£157,105 Average prize money per fixture

£3.3m National Stud turnover up from £1 million

25

Annual Review and Outlook 2019

£21.0 million (2017: £21.9 million). We continue to deliver strong underlying growth in operating profits, evidenced by record Group operating profit before prize money of £48.1 million in 2018, up by 7.4% from £44.8 million in 2017. associates was £4.5 million in 2018 (2017: £9.1 million). This was partly a result of the lower operating profit already outlined and also because 2018 saw a higher depreciation charge of £9.3 million versus £7.0 million in 2017 as a result of the impact of the first year of owning Time Test (£0.5 million) and lower capital grant amortisation (£0.9 million), plus the impact of more historic capital expenditure projects coming through. The gain on the upward movement in investment values was also lower by £0.3 million. CAPITAL INVESTMENT We continued to invest in capital projects throughout 2018 with details provided in the Group Chief Executive’s Review. This saw us make total net capital spend during the year of £9.7 million (2017: £13.0 million). PRIZE MONEY INVESTMENT Total prize money at Jockey Club Racecourses increased by £6.2 million to a record £51.9 million in 2018 (2017: £45.7 million). The key driver of this was our contribution from our NET PROFITS Net profit after share of

own resources, which increased from £22.9 million to a new record of £27.1 million (18.3%), supplemented by increases in industry funding following reforms to the Horserace Betting Levy. Contribution from entries increased vs 2017 due to higher runner numbers at Jockey Club Racecourses. The contribution from our own funds as a proportion of total prize money increased once again, from 50.1% to 52.2%. Our courses distributed record average prize money per fixture of £157,105 compared to the previous record £133,000 in 2017 – a year-on-year increase of 18.1% – and 57.6% more than the industry average (excluding JCR) of £99,680. GROUP DEBT We refinanced Jockey Club Racecourses’ bank debt on more favourable terms during 2018 and the benefits of this will be seen in 2019 interest charges. A 12-year facility is now in place until 2030 for £90 million, but only £85 million of this was drawn at year end, due to our strong underlying cash position. As a result, net debt was reduced by £2 million to £101.8 million. As a company without equity, entirely manageable and serviceable debt levels given the Group’s assets, cash holdings and credit arrangements remain the basis of funding our investments. However, we plan to pay down £8.9 million of retail bond debt in June 2019 in readiness for

the aforementioned reduction in media revenues via the betting sector. GROUP CASHFLOW Group net cashflow from our operating activities was £19.2 million at the end of 2018. The business continues to be highly cash generative with very limited exposure to bad debt and ongoing headroom for both capital expenditure and debt repayment. A dividend was received from Racecourse Media Group "Total prize money at JCR increased by £6.2 million to a record £51.9 million" and its policy of paying both licence fees and dividends. Net cash capital expenditure of £9.7 million reflects the continued investment on maintaining and improving racecourse and other facilities, and technology and other infrastructure investments outlined previously. The movement in other loans partly reflects the non- drawdown of £5 million of the new facility mentioned previously.  in line with its underlying performance for the year

26

The Jockey Club

To deliver our long-term vision for British Racing, it is vital that The Jockey Club acts in the best interests of our sport, contributes to the communities in which we operate and protects the environment required to sustain horseracing. ‘Going Green’ is The Jockey Club’s campaign to increase employee awareness of the importance of looking after our environment and achieving our ambitious sustainability targets. Since 2013, the campaign has delivered workshops, roadshows and regular forums for training and engaging employees in all areas of sustainability. A network of Green Champions based at each of our venues manages local initiatives and supports the overall implementation of the Going Green campaign. Successes to date include: • 22% reduction in mainline energy consumption • 38% reduction in CO2 emissions from mainline energy • 14% reduction in total mainline energy consumption in 2018 vs 2017 SUSTAINABILITY AT THE JOCKEY CLUB

27

Annual Review and Outlook 2019

• Introduction of solar panels at four racecourses and The National Stud, which are expected to generate more than 500,000kwh in 2019 • Target for sending zero waste to landfill by 2020 achieved in the summer of 2018 • The proportion of waste recycled has increased annually, with 73% achieved in 2018 and the remainder going to waste-to-energy plants • Reduction of single-use plastics • Priority for local suppliers • Working with local charities to ensure food can be appropriately redirected in the event of excess, such as fixture abandonments. Carlisle is just one example of a smaller racecourse with a conscientious Jockey Club team exceeding the Group’s sustainability targets for both energy and waste, achieving 95% recycling in recent months. It also became the first of our racecourses to offer the sale of reusable hot drinks cups and switch to canned water, eliminating the sale of products served in single-use plastic to the public. We have set challenging sustainability targets to deliver

and we strive to continue to lead the way in the racing industry. Updates with the latest data are communicated on a monthly basis to employees to keep track of our progress. The Jockey Club’s targets include: • 25% reduction in mainline energy consumption • 10% reduction in waste volume • Greater than 80% of waste to be recycled • Green Tourism Award accreditation for all racecourses • All mainline energy switched to green supplies by end of 2019 initiatives which have been implemented include site audits and process reviews. Employees are encouraged to engage in the Going Green campaign through a number of ways, including: • Employee awareness campaigns and engagement of all employees as part of their induction • Green Employee of the Quarter Awards We constantly review our initiatives and embrace innovation to support us along the way. To date, some of the

A FORCE FOR GOOD

28

The Jockey Club

• Green Champion network: ◆ Tool kit ◆  Monthly conference calls ◆  Annual away days ◆ Incentive Scheme ◆ Webinars and training • Site working group meetings • Site audits to identify energy saving opportunities • Battle of the Baseloads • Big Switch-offs over Bank Holidays and other extended office/venue closure periods • Quarterly Going Green Newsletters • Introduction of focused policies While employee engagement has been a major factor in achieving our targets to date, sustainability is also a key concern in all capital investment projects, regardless of size. Impact on waste and energy consumption is considered for both during the build of a project and for post-implementation. The Jockey Club’s dedicated Sustainability Manager sits on the Project Review Board and, for example, was an active member of the project team for our successful £45 million redevelopment at Cheltenham Racecourse, as well as regularly advising on smaller projects and refurbishments. We share best practice in sustainability within the racing industry and far beyond and became a founding member

of the British Association for Sustainability in Sport (BASIS). We regularly reassesses recommendations on how best to tackle the impact on climate change and the need to adapt practices to reduce our environmental footprint. Our Sustainability Manager is a regular presenter at conferences around Europe, sharing best practice and supporting smaller sporting organisations in their bid to go greener. In the UK, The Jockey Club also leads masterclasses for Racing Together to share knowledge within the racing industry. THE JOCKEY CLUB IN THE COMMUNITY At each of our racecourses, we work within the community to support local causes through charitable donations of tickets and other fundraising means, and in conjunction with local authorities and businesses. Warwick and Nottingham Racecourses are situated on publicly-owned land, requiring close cooperation with the councils for the good of the host community. In the case of Warwick, the team works with its neighbours on St Mary’s Lands, the common area in central Warwick and home to the racecourse, to contribute to a masterplan for the area which benefits all parties and the community. The working group consists of local schools, hospitals and Warwick Castle, a football club, a golf course and a drum corps, as well as joggers,

"We share best practice in sustainability within the racing industry and far beyond"

29

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