Racing Australia Annual Report 2017

54 | Racing Australia Annual Report 2017 REVIEW OF OPERATIONS The surplus of the consolidated entity for the financial year amounted to $3,774,648 (2016: $2,936,055 surplus). A review of the operations of the consolidated entity during the financial year and the results of those operations found that during the year, the consolidated entity continued to engage in its principal activity, the results of which are disclosed in the attached financial statements. The Thoroughbred Trainers Service Centre Limited operates based on a letter of financial support from Racing Australia Limited until such time as it becomes cash positive. A new letter of financial support in conjunction with a Deed of Subordination between ASIC, Racing Australia Limited and the Thoroughbred Trainers Service Centre Limited was executed for a further 2 years commencing 1 July 2016. The Thoroughbred Trainers Service Centre Limited trades as a separately registered company as the holder of an Australian Financial Services licence. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS On 30 June 2016 the Service Level Agreement between Australian Genetics Testing Pty Ltd and the University of Queensland in relation to, among other things, the conduct of equine research and related genetic research and testing was terminated by mutual consent. A new agreement to perform related genetic research and testing between Racing Australia Limited and Massey University commenced for a one year period from 1 July 2016. Australian Genetics Testing Pty Ltd operating revenue and costs for related genetic research and testing was incorporated into the operating budget of Racing Australia Limited from 1 July 2016. There were no other significant changes in the state of affairs of the consolidated entity during the financial year. MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR No matter or circumstances has arisen since the end of the financial year, that has significantly affected or may significantly affect, the operations of the company, the results of those operations, or the state of affairs of the company in future financial years. However, the company received legal correspondence pre year- end relating to representations allegedly made to a third party. Subsequent to year-end, on 11 September 2017 the company received a writ filed in the Supreme Court of Victoria on 8 September 2017 relating to this matter. The plaintiff is seeking an order that the company makes good the alleged representations or, alternatively, compensation for alleged loss in the order of $2.2 million. The company intends to vigorously defend the proceedings. Given the early stage of the legal process it is not possible to provide any further information on the company’s actions or potential liability. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS Likely developments in the operations of the consolidated entity and the expected results of those operations have not been included in this report as the Directors believe, on reasonable grounds, that the inclusion of such information would be likely to result in unreasonable prejudice to the consolidated entity. ENVIRONMENTAL REGULATIONS The consolidated entity's operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a State or Territory. INDEMNIFICATION OF OFFICER OR AUDITOR During the financial year, the consolidated entity paid a premium in respect of a contract insuring the Directors of the consolidated entity, the company secretary and all executive officers of the consolidated entity and of any related body corporate against a liability incurred as such a Director, secretary or executive officer to the extent permitted by the Corporations Act 2001. The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company or any related entity against a liability incurred by the auditor. PROCEEDINGS ON BEHALF OF THE COMPANY No person has applied for leave of Court under section 237 of the Corporations Act 2001 to bring proceedings on behalf of the company or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings. The company was not a party to any such proceedings during the year. AUDITOR INDEPENDENCE DECLARATION The lead Auditor’s Independence Declaration required by section 307C of the Corporations Act 2001 is set out on page 55 and forms part of this report. Signed in accordance with a resolution of the Board of Directors. On behalf of the Directors Frances Nelson QC Chair Dated this 14 September 2017 Racing Australia Limited | ACN 105 994 330 and Controlled Entities | Annual Report for the Financial Year Ended 30 June 2017 Directors' Report continued