hawke’s bay racing annual report€™s bay racing incorporated notice is hereby given that the...

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Hawke’s Bay Racing Annual Report 2011 / 2012

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BUSINESS

1. Apologies.

2. Condolences.

3. Presentation of the Annual Report and Accounts for

the year ended 31 July 2012.

4. Appointment of Auditor.

5. Announcement of Board Appointments.

6. General Business.

NOTICE OF MEETING HAWKE’S BAY RACING INCORPORATED

Notice is hereby given that the Annual General Meeting of Hawke’s Bay Racing Incorporated will be held in the Special Guests Lounge, 1st floor of the Hylton-Smith

Members Stand, Hastings Racecourse on Tuesday 20th November 2012 at 7pm.

JP Fleming

CHIEF EXECUTIVE OFFICER

HAWKE’S BAY RACING INCORPORATED

HASTINGS RACECOURSE

HASTINGS

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HAWKE‘S BAY RACING INCORPORATED 2011-2012

DIRECTORS STEWARDS

AUDITORS Staples Rodway Hawke‘s Bay

SOLICITORS

BANKERS National Bank of New Zealand

CHIEF EXECUTIVE OFFICER Jason Fleming

Bate Hallett

RACING OFFICIALS

NZ Thoroughbred Racing

Handicapper Judge Starter

Dick Hunt Gary Philips

Veterinary Sugeons

Vet Associates Hastings

Assistant Judge

John Jenkins

Clerk of Sales

Paul Terry

Clerks of Course

Murray Thompson

Philip Thompson

Course Commentator

Tony Lee

Mike O‘Sullivan

Honorary Doctors

Dr P J Foley

Racing Operations Manager Kim Treweek

Marketing & Events Manager Greg Howie

Account Department Mark Webby

Sue Treneman

Executive Assistant Victoria Beale

Racecourse Manager Richard Fenwick

Track Assistants

Peter Dickie

Craig Berge

Caretaker

Chris King

M R Ormond (Chairman)

K J Browne

A J Lockyer (resigned March 2012)

E B Smyth

C A J Whyte

A B Cuming

KL Wood

Dr P J Foley

PJ Roebuck

P Shirnack

Mrs A Horrocks

Ms R Waller

TGR Lowry

M P White

J Razos

H Chard

L F Drake

SCH Matthews

A J Wall

STAFF

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06. Chairman’s Report

08. Corporate Governance

10. Chief Executive Report

14. Review of Activities

16. Hawke’s Bay Racing and Breeding Awards

18. 2011 / 2012 Season Racing Review

24. Independent Auditor‘s Report

25. Finance Review Statements

36. Members of HBRI

40. 2012-13 Racing Calendar

TABLEOF CONTENTS

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CHAIRMAN’S REPORT It is not the strongest of the species that survives, nor the most

intelligent; it is the one that is most adaptable to change.

I began my report last year with that same Darwin quotation, but it‘s so relevant I’ve chosen to use it again. The administration of clubs such as ours will continue to be challenging, as has been the case for a number of years. Financial prudence remains essential to en-sure we don‘t end up back in the hole of 2009/10, and to that end we must evolve – adaptability to change being absolutely critical to survive and prosper.

It‘s pleasing to report a cash surplus for the second year run-ning. At face value this year‘s result looks better than last, and indeed we are in a much stronger cash position than we‘ve been for some time. There are warning signals though that all is not well. Our On-course Commissions were down 19%, our gate was down 28% - this on top of reductions also in the previous year. The board had made a decision before last Spring to in-crease gate charges on the three Group One days. In the event, at-tendance numbers dropped quite dramatically, in spite of Jimmy Choux. Of course there were pro-bably a number of factors at work, including ordinary weather, a Rug-by World Cup that certainly had an affect on racing throughout that period, and an economy yet to recover. The support of the Infi-nity Foundation and several other gaming trusts has been hugely im-portant in our success this year.For the 2012/13 season those gate charges have been reversed,

and the board is considering right now the possibility of removing gate charges altogether for all but a couple of our racedays. We need to get people back to the track. The atmosphere created by good crowds attracts rather than de-tracts from the occasion, and we really wouldn‘t be risking a great deal as most of our gate comes on one or two days only. Yes, we have to provide members value, which we endeavour to do by improving our offering in the members facili-ties. Still more to do there.

NZ Thoroughbred Racing released their Draft Performance Report mid September. They have mea-sured their progress over the pre-vious 12 months with 47 KPIs. It‘s a very comprehensive report, and although Matthew Goodson (Chairman) admits they haven‘t got everything right, they are ma-king a good start. Greg Purcell (CEO) has received a lot of criticism for leading the change to Monday and Tuesday racing. Those races were removed from the pre mid-day times and a few shoulder Sun-days that were unprofitable for the clubs, as a tradeoff with the other two codes to alter the sharing of the pot under Section 16 of the Racing Act. Thoroughbred racing gained about $5 million from the arrangement, which enabled NZTR to increase their contribu-tion to stakes during the year by $2.4 million, and run a surplus for infrastructure and future prize-money spending of $2.8 million.

Already HB Racing has benefited from the guaranteed top up to our commissions by $43,000, with the possibility of a bit more to come. Monday and Tuesday racing is not the disaster predicted in some quarters, in spite of only 60% of the races being shown on Sky 1 in Australia. Turnovers are on budget. As clubs we have to cut our costs on those days. They are run for TV / off course betting, and still enable distribution of stakes to owners.

The Hawke‘s Bay Poverty Bay Ra-cing and Breeding Awards were held at Off The Track restaurant on the eve of Makfi Day. Jimmy Choux again featured strongly in several categories, with Pat Lowry‘s mare Golden Gamble (dam of HK Hor-se of the Year Ambitious Dragon) winning the title of Broodmare of the Year. It was wonderful to recognise the outstanding suc-cess of Hawke‘s Bay bred, raced and trained horses. As a province we are punching well above our weight, and with the success of young trainers like John Bary and the new lad on the block James Bridge, I expect we are seeing a resurgence in locally trained hor-ses which goes against all trends. I know the trainers and their owners have appreciated having regular

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jumpouts on the track. We‘re all in this together – owners, trainers, breeders, punters, administrators and racing club members. If we are able to come together on issues rather than fighting about them, the healthier we will all become. Sure a little tension can be healthy, but war seldom is!

In September 2012 we have laun-ched a new sponsorship propo-sal we‘ve named the Desert Gold Club. All details are on our website, (or please contact the office) and I urge you to use your contacts in the wider community to grow our support. The initial response has been excellent – the focus is on not only growing our sponsorship base, but ensuring that our sup-porters get value for their money. The presentation of the Desert Gold Club brochure is first rate, and our thanks to those that helped create it. I thank all of our sponsors over the 2011/12 season, your loy-alty is appreciated, and our hope is that we do indeed represent value.

As I write this we have just com-pleted the 3 days of the 2012 Rush Munro Spring Carnival. We‘ve been blessed with better weather, and in general I think the Club did a much better job of managing our customers needs, although clearly we had an issue on the final day with limited access to the Public Stand. That was partly due to licen-sing restrictions, also some poor decisions on our part, but it won‘t happen again. I have a feeling we are winning the trust of the Police again. After the natural over reac-tion to the very ordinary behaviour of a small minority a couple of ye-ars ago, I expect the heavy handed treatment of the District Licensing Authority and Police will ease just a little.

As with many organisations, we are struggling with the increase in in-surance premiums and reduction in cover offered in the post Christ-church earthquakes/Japanese Tsu-nami era. It doesn‘t look as if the problem will suddenly disappear. John Stace who is on the board of NZTR has led the search for an in-dustry wide solution, not an easy task, and one that has not yet bor-ne fruit. We had a good discussion on this subject at our SGM in July, and there is certainly a feeling that we should be looking to self insure. It would be a bold move indeed, but a premium of $140,000 / year is not sustainable. If the majority of that was ring fenced and invested, we might be in a much stronger position in quite a short time peri-od. It sure as Hell beats going broke slowly with well insured buildings! Hopefully we will have an excel-lent turnout at the AGM, and the board will be guided by the further discussion. It‘s an important decis-ion, and not one that will be taken lightly. We are aware of course that these assets have been built up over generations. Our biggest as-set – the racetrack itself which only 150 years ago was a swamp – is uninsurable. Please make an ex-ception to the generally held rule that a lot of us don‘t attend AGMs. It is particularly important that the board is aware of your views.

The SGM in July was called prima-rily to put the resolution to mem-bers to increase the size of the board. All resolutions were passed, and I look forward to moving for-ward with 3 more elected mem-bers on the board. I hope it gives us broader support and under-standing amongst members when making the difficult decisions that lie ahead.

My thanks to all who have helped in the running of the club. Jason Fleming is a man with not only a passion for racing, but ambition and ability that will take him out of our reach one day. For now it‘s our good fortune that he and his young family prefer Hawke‘s Bay to the wild and windy Taranaki. His team have all played their part, and I thank them on your behalf. Richard Fenwick leads his track staff very capably, and we continue to provide the best Spring surface in the country. After a very wet winter the track will need some remedial work, but nothing out of the ordinary.

To my fellow board members, raceday stewards, sub committee members, wonderful flower ladies and all our other voluntary helpers, thank you on behalf of your club for the part you play to ensure HB Racing is successful.

All the best of good fortune over the year ahead.

Mick Ormond - Chairman

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Hawke’s Bay Racing is an Incorporated Society. The Club is governed by the Rules and Regulations adopted by the members (last updated Special General Meeting July 2012 – see www.hawkesbayracing.co.nz for the electronic version).

The Board of the Society is responsible for the gover-nance of the Club. Governance is a matter of high importance and is a fundamental foundation of the culture and business practices of Hawke’s Bay Racing Incorporated (“HBRI”).

A description of the main corporate governance practi-ces are set out below, all practices described, unless otherwise stated, were in place for the entire season.

BOARD COMPOSITION & TERM OF OFFICE

The Board consists of the Chairman and nine directors (increased to twelve at the SGM dated July 19 2012). Each Board Director (elected) must retire tri-annually and may then seek re-election. The Chairman is elected annually.

It is the Board’s and indeed rules intention that Direc-tors reflect a broad range of skills to aid it in carrying out its responsibilities and in meeting the Club’s strategic objectives. Three positions are able to be co-opted with emphasis on recruiting Directors with skills that compli-ment the structure of the group.

The Board meets on a monthly basis and on separate occasions if required to discuss issues and provide di-rection to management for the operations of HBRI. The Board is responsible for;

Ensuring management focus on and plan to meet the goals and objectives of HBRI.

Contributing to the development and approving the strategic direction of HBRI.

Setting budgets and reviewing financial results.

Approving strategic capital expenditure and stake levels.

Monitoring and reviewing the risk management process of HBRI.

Performance assessment of the Chief Executive Officer.

SUBCOMMITTEES

The Board, where applicable, establish subcommit-tees to assist in carrying out its central functions. These subcommittees will meet as required and will act in an advisory capacity making recommendations to the full Board. Subcommittees may by invite include Racing Stewards as appropriate. The subcommittees for the 2011/12 season were as follows;

Audit and Finance – Peter Roebuck, Kevin Wood and Charles Whyte.

Racing and Track – Barry Smyth, Ken Browne and Lester Drake.

Marketing and Sponsorship – Charles Whyte, Mick Ormond, Alistair Cuming, Mike White, Tom Lowry and Peter Foley.

CORPORATE GOVERNANCE

BOARD RESPONSIBILITY

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SUBCOMMITTEES

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

The Chairman is responsible for leading the Board, en-suring at all times that the Board activities are recorded and efficiently conducted.

The Chief Executive is responsible for identifying and implementing strategies for HBRI as well as recommen-ding policies for adoption by the Board to meet the goals and objectives of HBRI. The Chief

Executive is further responsible for the Club’s opera-tions, to deliver an effective and efficiently maintained business at all times.

FINANCIAL REPORTING

The Chief Executive and Financial Officer have made the following representations to the Board;

That the Club’s Financial Statements are complete and present fairly in all material respects of the financial position and operational results;

That the above statement is founded on a sound system of internal controls, risk management assessment and that these are operating efficiently and effectively.

CONFLICTS OF INTEREST

Board Members are expected to avoid any action, position or interest that conflicts with any interest of HBRI or gives any appearance of such a conflict. A Board Member that has a conflict or perceived conflict of inte-rest with that of the Club must bring it to the notice of other Board Members.

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CHIEF EXECUTIVE’S REPORT It is my pleasure to deliver the an-nual report for the past season at Hawke’s Bay Racing.

The stewardship of the business of racing in Hawke’s Bay is both a rewarding and stimulating operati-on to run. Pride and satisfaction are derived from presenting an asset to the community of Hawke’s Bay, the presence of equine superstars that grace our turf and the con-stant improvement from all staff here to make the racing product exceed customer’s needs and expectations.

Grey hairs, in abundance it seems, propagate from the stresses caused by the weather and impact on the bottom line of the business. Further hair loss derives from ra-cings continued loss of market share for the entertainment dollar.

Some solace to the above theme of despair must be recorded, after all, despite the odds, the racing scene here in Hawke’s Bay displays the necessary drive and scope to prosper all the while manicuring a business model whose success is dependant on a variable as uncon-trollable as any, the weather.

Entertainment is a key driver of our focus to re-engage with genera-tions X and Y, who we must enga-ge successfully with to drive our growth and ultimate sustainability. Whilst betting is a cog to our reve-nue streams its relevance and signi-ficance wanes – as it does across all clubs in New Zealand. Such is the impact of this decline at Hawke’s Bay, our net betting revenue is ap-proximately 8% of our total racing

revenue. Such a component, tradi-tionally viewed as the determinati-ve to success shows in honesty the need for diversification and this is one of the core principles of the strategy of the Board.

Whilst the Club must seek to ma-ximise betting turnovers, our long term survival is reliant on attracting more patrons to the track who will participate fiscally with stimulus derived from their wants of enter-tainment being fulfilled. Racing to be blunt is being “dumbed” down by its commoditisation and conti-nued drive to be simply a product for television. This conflicts with the shop front development (i.e. racecourses) due to the erosion of support, lack of engagement and further lining of off-shore corpo-rate bookmakers who do not direct equitable returns to the industry on shore.

It is obvious from the success sto-ries that exist in other racing juris-dictions that change is imperative for a resurgence let alone survival. Those changes must challenge habits, challenge perceptions of value and fundamentally a service proposition to customers needs to be delivered. If we make no change to the customer supply chain com-ponent then racing will continue to shrink and be consumed by other entertainment products.

Furthermore the demands of all stakeholders, relevant or other-wise, cannot be met. The horizon for select projects to foster growth in New Zealand racing is closer as evidenced in the policy and strate-gic direction of New Zealand Tho-

roughbred Racing (“NZTR”). Sensib-ly NZTR has a roadmap to support the advancement of racing where a return on industry investment is objectively determined then mat-ched with investments principles instead of sentiment. Bouquets for the direction that has finally been set by the Board of NZTR. I am firm-ly of the belief that the egalitarian blinkers, so well worn by previous national administrators, have pre-judiced our code and the correc-tion of such weak policy will result in some collateral damage. As a re-sult of sensible strategic planning and implementation Hawke’s Bay Racing will not be caught in the cross fire.

I know for a fact that reminiscing pays few debts, however the tra-ditions of racing and its unique magnification of sport, entertain-ment and animal husbandry into such a dynamic activity mean we cannot ignore the rich tapestry of the past. The elixir is channelling all the great history and tradition into a modern context and one which connects with the changing pace of the modern world. To this end I am thankful that we will finally have a twilight meeting on Thurs-day December 13th which will marry the themes I have discussed

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above into a fun filled day/night. Meeting the market, viz a vizmatching racemeetings with maxi-mum consumer appetite is impe-rative for our goal of recapturing some lost ground.

Change at Hawke’s Bay has seen the business recalibrate literally every single element of its ope-rations in the past three years. This progression has delivered an outstanding financial result for the past season – considering the 2011/12 season presented a chal-lenging year as the economic cli-mate and poor weather on some key Saturday racedays impacted on the Club’s activities.

The Club has worked diligently in the face of the above, consistently managing costs, challenging the status quo and maximising reve-nue from a diminishing base of support as the discretionary spend

tightens, to complete the season with a surplus from operations of $195,477 before depreciation of $128,826. This represents our best result since 2005.

The Racing surplus of $956,841 drives the ultimate profit result achieved at Hawke’s Bay Racing. On face value a superb result, with crowd sizes and weather nega-tively impacting, it is evident that those attending are contributing in a positive manner yielding gre-ater returns. This surplus is the first time that Hawke’s Bay Racing has gone so close to breaking the se-ven figure barrier and sets the bar for future performance.

However this superb result only goes part way to sustaining the ongoing operation. We are still dependant on deriving further in-come from the remainder of our assets and periods when racing is

to deliver continued and possible acceleration to debt repayment;

address capital improvement from cash flow (with greater scope to assess projects using other financial instruments);

to mitigate the impact of events beyond our control via cash reserves which place much needed insulation in our tra-ding operations;

to conduct industry leading events which enhance our goal to perpetuate the success of racing in Hawke’s Bay.

taking a break. There is still much to do in this regard. Further rele-vant assessment of our balance sheet shows that we are in a strong position to deliver important fiscal support to elements of the Boards‘ strategic plan, namely;

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Number of racedays

Number of races

Number of horses started

Average starters per race

Hawke‘s Bay total season stake

Average stakes per race

On course turnover

Off course turnover

Fixed odds turnover

Members

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138

1472

10.67

3,019,750

21,882

3,007,200

21,486,161

520

15

146

1454

9.96

3,110,125

21,302

2,962,006

21,167,852

516

16

150

1572

10.48

3,595,350

23,969

3,268,736

22,082,560

574

18

162

1697

10.48

5,025,760

31,023

3,502,060

23,747,172

494

15

147

1656

11.27

4,862,500

33,078

3,297,306

22,052,395

507

2004 / 2005 2005 / 2006 2006 / 2007 2007 / 2008 2008 / 2009

Number of racedays

Number of races

Number of horses started

Average starters per race

Hawke‘s Bay total season stake

Average stakes per race

On course turnover

Off course turnover

Fixed odds turnover

Members

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126

1355

10.75

3,535,000

28,056

2,883,338

18,839,536

3,019,206

506

12

110

1198

10.90

2,413,375

21,940

2,253,619

15,670,770

2,770,280

537

14

114

1219

10.69

2,623,500

23,013

1,816,784

13,659,626

2,415,060

505

16.67%

3.64%

1.75%

-1.90%

8.71%

4.89%

-19.38%

-12.83%

-12.82%

-5.96%

2009 / 2010 2010 / 2011 2011 / 2012 2011 v 2012 % Change

THE YEAR THAT WAS... The 2011 Rush Munro Spring Car-nival again brought New Zealand’s best equine talent to Hastings and it is my great pleasure to report that the three Spring Group One races achieved the three highest ratings of all races held in the coun-try. With the spotlight on the num-ber of black type races held, it is encouraging that the Winsor Park Plate, Makfi Challenge Stakes and NZ Bloodstock Insurance Spring Classic were ranked one, two and three respectively. The Windsor Park Plate also has the honour of

rating higher than WS Cox Plate in 2011/12.

With less than favourable weather and a rugby tournament which de-flected public attention and wal-lets from racing the Spring Carnival key metrics drove an overall season performance that lost ground on the previous year.

A total of 344 runners (-37 or 10% to 2010/11) entered events held over the Spring Carnival. The re-duction in runners as expected im-pacted on the total on course tur-nover, though the -19% reduction was greater than we had hoped.

With two extra racedays held in 2011/12, net returns to owners in-creased by 8%, with total stakes of $2,623,500 paid across 114 races.

Total betting revenue generated by races held at Hastings, across all three avenues, was $17,897,470, a -14% year on year reduction.

With the soft impact of Spring on all betting on course (75% of on course betting was achieved over these three days), the remainder of the season in reality plays “catch up footy” that can never catch up due to the thin volumes. We know as a rule that the greater the field size commensurate betting

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FINALLY THANKYOU...

I would like to thank and pay tribu-te to a vast number of individuals who make racing such a success here in Hastings. There are count-less staff and volunteers who all contribute to making a raceday and indeed the season a successful one. I would like to offer thanks to you all to ensuring the core values of Hawke’s Bay racing are maintai-ned. All of your efforts underwrite significant achievements and out-comes – thank you.

In April along with three others I ran around every thoroughbred racetrack in New Zealand (51 to be exact plus Bulls) in a manic burst over five days to raise funds for the Catwalk Trust. I am proud to report that $28,000 was raised for the cause and that a fair amount of that came from the Hawke’s Bay. The re-ception we all received when we visited Hastings was a great boost for our spirits. It was a truly unique journey and one which defies all commonsense – but a novel way to raise funds for a truly significant cause.

To the Board of Hawke’s Bay Ra-cing thank you for your continued commitment to defining the strat-egy and direction of our Club. The hours spent on matters relating to the Club are significant and your efforts are greatly appreciated.

To Mick Ormond, extended thanks are well deserved. The energy and involvement of our Chairman this last season has encouraged not only my personal performance but it has accentuated at all times all that is good about racing.

Further thanks to the Board for their support of my Asian Racing Federation Study Tour to Japan in May. It was a study trip that has given many ideas on growth and sustainability to replicate in NZ for the future.

To our Raceday Stewards thankyou also for your efforts across a variety of tasks. Unquestionably many of the tasks are thankless, however necessary to ensure our racedays are a success.

To Rita Best, Jean Mulcaster, Sue Speedy, Shirley Wall and helpers our sincere thanks for the immacu-late presentation of floral arrange-ments on our larger racedays.

To our members, we thank you for your continued support. Also to our trainers and owners that use the Hastings base we thank you for a great year. There has been a raft of great performances from horses trained, owned and or bred in Hawke’s Bay. A summary of the-se are included later in this report within the victors of the Racing and Breeding Awards.

To the Infinity Foundation, New Ze-aland Community Trust and Racing Safety Development Fund thank you for your vital support. This sup-port extended has enabled impro-vements to be made which would have otherwise been unachievable.

Hawke’s Bay Racing are fortunate to be supported by the Hastings

revenue improves. That said the 2011/12 averages for each runner were down by -21% on course to $1,490, off course $11,205 per run-ner (-14%) and fixed odds (which the NZRB oxymoronically includes all bets placed on and off course within) matching the off course trend at -14% or $1,981 per runner.

District Council. Our thanks go to the Mayor Lawrence Yule and CEO Ross McLeod for their assistance in ensuring Hastings has a facility that the district can be proud of. We look forward to working with you on strategic goals now and for the future.

To the medical professionals and media who have supported Hawke’s Bay, we extend our thanks.

Special mention and thanks to the Hawke’s Bay Today whose co-verage continues to improve in the face of lack lustre editorial space in most broadsheet publications.

To those great athletes, from the champion group performers to the humble backmarkers in the maiden races, thank you. The le-gacy of over 150 years of racing in the Hawke’s Bay owes a great deal more than words to you.

Finally to my family, thank you for supporting me to follow my pas-sion and dreams. Racing is a truly great industry to be a part of.

With regards and best wishes to all for the 2012-2013 Racing Season.

JP Fleming

Chief Executive OfficerHawke’s Bay Racing Incorporated

To perpetuate the success of Hawke’s Bay Racing as a valued

and respected leader in thoroughbred racing,

entertainment and hospitality in Australasia.

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Hawke’s Bay Racing is grateful for the continued support of a vast set of sponsors. The success of these partner-ships that exist are borne from the enthusiasm, initiative and generosity exhibited by all our sponsors. Ultimately the vision to deliver the “Sport of Kings”, and the theatre and drama that is associated with it, owes a great deal to our key sponsors.

The Club is very proud, as well as thankful, to the ongoing support it receives from its sponsors. It is through these partnerships – financial and relationship based – that will ensure the Club’s continual growth. We are grateful for the support of each and every supporter. There are nu-merous industry related partners, whilst the continued local support typifies the sense of community and place-ment of racing within the social and economic fabric of the local economy.

I would like to thank the following key sponsors whose support has been instrumental to the success of Hawke‘s Bay Racing.

Firstly to New Zealand Bloodstock Insurance, your sup-port of the Group I Spring Classic has ensured that this iconic race maintains its iconic stature in theracing calendar.

To Westbury Stud and Sheikh Fahad Al Thani thank you for your support of the Group I Makfi Challenge Stakes, a race which opens the season in New Zealand and sets the scene for further Spring riches.

We are also grateful for the support of Nelson, Sue and Rodney Schick, Steve Till and Mike Moran of Windsor Park Stud for their support of the Group I Windsor Park Plate. Thanks also to local breeders for their commitment to our fillies classic, the Group III Gold Trail Stakes held in association with Winsdor Park.

DHL have supported racing in Hawke’s Bay for a num-ber of years and the support of Managing Director Brian Broom in sponsoring the Group II Hawke’s Bay Guineas is a partnership which will ensure this great three year old race grows in stature.

To Alistair and Kim Cuming, thanks are extended for your support of the Group III TradeRacks Stakes, a race that

has grown in prestige. We welcome your enthusiasm and commitment to this race and look forward to continuing this into the future.

The 2012 running of the Group III Hawke’s Bay Gold Cup saw naming rights for the race drawn from a wide group of local sponsors. We are thankful to all the sponsors and especially John and Peter Glew of Lynn Electrical with whom naming rights for the race were associated.

I would also like to acknowledge the support of the sponsors of our winter features, the Hawke’s Bay Steeples and Hawke’s Bay Hurdles. To Livamol I extend our most gracious thanks for your involvement with the Hawke’s Bay Steeples. Further thanks to Hamish and Wynne de Lautour for the commitment you made in sponsoring the Hawke’s Bay Hurdles in 2012.

The support of the Infinity Foundation has enabled many projects improving our facilities to be funded, our thanks to the Trustees for their generous support of racing at the grassroots level. Further thanks are given to New Zealand Community Trust, Lion Foundation, Endeavour Founda-tion and Trust House who have contributed to our busi-ness to underwrite necessary works and projects.

I would like to personally thank all our sponsors who have backed Hawke’s Bay Racing and been on board for the past season. I look forward to strengthening these relationships as we continue to build the business over the coming seasons.

JP Fleming

REVIEW OF ACTIVITES – SPONSORSHIP

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AON

AHD Ltd/Livamol

Amcor Kiwi Packaging

Arthur Ormond

Awesum Organics

Bate Hallet Lawyers

Bay Ford Hastings

BBI

Bedpost Hastings

Best Travel Hastings

Bluewater Hotel

Comcat

Bruce Perry Bloodstock

Chouxmaani Investments Ltd

D M Palmer Ltd

David and Jenny Morison

de Gruchy, G & D

DHL Global Forwarding

Dow Agro-Science

Dunstan Feeds

Edwards and Hardy Wellington

Elbow Room Sports Bar

Endeavour Foundation

Fairview Livestock

Farmers Transport

Fern Ridge Limited

Fruitfed Supplies

Game Lodge

Gary Sherratt

Hales, Mr & Mrs PJ

Hastings District Council

Hastings RSA

Hawkes Bay European Ltd

HB Hunt

HB Racehorse Owners Assn

Health Council

Highbury Park Stud

Holden, PC

Hunt & Seek Limited

SPONSORS I See Red Syndicate

Infinity Foundation

Ivan Grieve

J M Bostock Ltd

Jackson‘s Bakery & Cafe

James Bridge

Jenny Nilsson House of Travel

John & Barbara Holt

John Bary Racing Stables

John Duncan

Ken Browne

Kolla

L I Redshaw Ltd

Lawrence, KJ

Leader Products

Lime Country Thoroughbreds

Lion Breweries

Lion Foundation

Liquor King Napier

Little Avondale Stud

Lowry, TG

Lowry, P

Lynn Electrical

Mainstream Heating & Ventilation

Majestic Horse Transport HB

Manawatu Sound Service

McDonalds Hastings

McDougal, C L

Mediaworks Radio HB

Mick Ormond

Mossman D

Moughan,GF

Nelson, P

NZCT

New Zealand Bloodstock

New Zealand Bloodstock Insurance

New Zealand Racing Board

New Zealand Thoroughbred Racing

Off the Track Restaurant

PGG Wrightson

Patrick Campbell

Phillips, DJ

Profruit NZ

Prout Products

Racing Safety Development Fund

Roger Russell

Rush Munro Ice Cream

Russell Roads

S Wareham

Sam Nelson

Speedy Signs

Staples Rodway HB

Stead Construction

Storty Bar

Symes, TWM

Taradale Club

TAB

Te Whangai Romney

Ted the Painter Ltd

Terry Coffey

Thomas-Lang, G&J

Thompson-Brown, S

Thomson‘s Suits Ltd

Total World Fresh

Trinity Hill Winery

TruTest

Trust House

Tumu ITM

Turks Bar

Veterinary Associates Hastings

Waimea Nurseries

Wairoa Livestock Brokers

WASP NZ Ltd

Wendy Twist

Westbury Stud

Whyte C & A

Windsor Park Stud Ltd

16

2011-2012 HAWKE’S BAY & POVERTY BAY RACING AND BREEDING AWARDS

Each year the leading stakeholder in their particular field is recognised at the Hawke’s Bay /Poverty Bay Racing and Breeding Awards. Long term sponsors Bate Hallett and Vet Associates were once again the sponsors of the Award night. Their involvement is greatly appreciated, Bate Hallett having been involved for 26 years and Vet Associates for the past 10 years.

This year’s Awards evening were held at Off the Track Re-staurant in Havelock North, with Andre Neil as MC there was many laughs to be had as well as achievements to

Hawke’s Bay/Poverty Bay Trainer of the Year (Wins) - Awarded to the trainer utilising the Gisborne, Hastings, Waipukurau or Wairoa training facilities who has attained the most wins in the 2011/2012 Racing Season.Winner – John Bary

Hawke’s Bay/Poverty Bay Trainer of the Year (Strike Rate) - Awarded to the trainer utilising the Gisborne, Hastings, Wairoa or Waipukurau training facilities who has attai-ned the best strike rate in the 2011/2012 Racing Season, with twenty starters being the minimum qualifying amount.Winner - Patrick Campbell

CRITERIA & WINNERS WERE AS FOLLOWS - Hawke’s Bay/Poverty Bay Owned Horse of the Year - Awarded to the owners of the horse owned in the Hawke’s Bay or Poverty Bay districts based on their per-formances in black type races. This award is judged by representatives of Hawke’s Bay Racing, the Hawke’s Bay Racehorse Owners Association and the Hawke’s Bay/Poverty Bay Branch of the NZ Thoroughbred Breeders Association.Winner – Jimmy Choux

Hawke’s Bay/Poverty Bay Trained Horse of the Year - Awarded to the owners of the horse trained at the Gis-borne, Hastings, Waipukurau or Wairoa training facilities who has won the most stakemoney in the 2011/2012 Racing Season.Winner – Jimmy Choux

celebrate. A full house was in attendance, showing the popularity of both the event and the venue.

A special award was given to Graeme & Isabelle Rod-dick, which was in recognition of their immense service to racing, the Horlicks Salver.

Two new category sponsors joined the Awards evening in 2012. Westbury Stud presented the award for the Broodmare of the Year. Richard and Liz Wood introdu-ced a new category, the Jimmy Choux Award for Out-standing Hawke’s Bay 3yo of the Year.

17

Hawke’s Bay/Poverty Bay Owner of the Year - Awarded to the leading owner or partnership residing in the Hawke’s Bay or Poverty Bay districts based on their horses trained at the Gisborne, Hastings, Waipu-kurau or Wairoa training facilities in the 2011/2012 Ra-cing Season. Win – 5 points, Second – 3 points, Third – 1 point.Winner – Paul & Carol Nelson

Hawke’s Bay/Poverty Bay Broodmare of the Year - The mare owned in the Hawke’s Bay or Poverty Bay districts whose progeny has recorded the most success at black type level. Judged by the Keeper of the Stud Book.Winner – Golden Gamble, Dam of Ambitious Dragon, bred by Pat Lowry

Hawke’s Bay/Poverty Bay Breeder of the Year Award - Awarded to the Hawke’s Bay or Poverty Bay based bree-der who recorded the most points based on the per-formances of horses they have bred in the 2011/2012 Racing Season. Group I win – 10 points. Group II or Prestige Jumping Race win – 8 points. Group III win – 6 points. Listed win – 4 points. Any other win – 2 points. Winner – Sue Harty

Horlicks Salver- Awarded in recognition of an outstanding contributi-on to thoroughbred racing in Hawke’s Bay.Winner – Graeme & Isabelle Roddick

Jimmy Choux 3YO of the Year - Highest earning 3YO bred by a Hawke‘s Bay Breeder in the 2011-2012 SeasonWinner – Robyn Waller & Ali Horrocks, Breeders of Whoshe

- Awarded to the Hawke’s Bay and Poverty Bay based breeders of horses that have won black type races in the 2011/12 season;Winners –Pat Lowry – Ambitious DragonGerard Moughan - FireboltSam Kelt – Rock’N’PopRichard & Liz Wood – Jimmy ChouxCraig Harvey, Duncan McLean and T H Morris – TimekeeperRobyn Waller and Ali Horrocks - Whoshe

Group and listed awards

Kim Treweek

Racing Operations Manager

18

2011-2012 SEASON RACING REVIEW

The pre-race hype centred on the Hawke’s Bay Hero Jimmy Choux’s imminent domination of the 2011 Rush Munro Spring Carnival. However no one told five time G1 winner Mufhasa that the door was ajar for a new champion. With his customary cavalier front running style the early pace ensured it was a foot race from the high school bend and “Mufy” with Sam Spratt aboard hit their straps. The two champions then set to their battle and it was ultimately Mufhasa over his preferred distance who held Jimmy Choux by 1 and 3/4 lengths at the line. Mufhasa then went on to frank this race with a gutsy front running win at Group I level at Flemington in the Toorak Handicap. This victory mile was his first Trans-Tasman success and seventh group one.

Makfi Challenge Stakes Group I WFA 1400m

1st Mufhasa2nd Jimmy Choux3rd Fleur De Lune

Owner - DL, SC, NN Archer and Mrs DJ WrightTrainer - Stephen McKeeJockey - Sam SprattBreeding - (g) Pentire x Sheila Cheval (200Breeder - CCE & JW ThompsonTime - 1.53.12 Dead 5

The Champion 2YO of her year, with gutsy wins in NZ’S only G1 Juvenile events, Anabandana came to Hawke’s Bay with high expectation of a season opening victory. Don Sellwood proved that experience beats the field as he had his charge perfectly timed for a vibrant season opening performance. With almost two lengths to second, she was a class above the field. A subsequent G1 placing behind Rock’n‘Pop in the 2000 Guineas at Riccarton resulted in a move to Australia where she was eventually sold at auction to Mornington Stud at the Sydney Easter Broodmare sale for $720,000.

Hawke’s Bay Breeders Gold Trail Stakes Group III 3YOF SW 1200m

1st Anabandana-O Bosson, D Sellwood and CJ Grace2nd Testa Secret3rd Prestigious Miss

Owner - C J GraceTrainer - Don SellwoodJockey - Opie BossonBreeding - (f) Anabaa x Great NoticeBreeder - Reavill Farm Thoroughbred Pty LtdTime - 1.10.84 Good 3

19

Having shown via his season opening performance that his four year old season was likely to be on par with his classic year efforts the second leg of the Triple Crown again proved a titanic battle between two champions of the Turf.Jimmy Choux, at a more favoured distance with a few more metres to wind up, measured his older foe on this occasion perfectly. At the business end of the race, with 200m to run JK Riddell urged Jimmy with a flash of the whip and the son of Thorn Park duly switched on the turbo and exploded out of the turf to record a ¾ length victory and deserved favouritism for the final leg of the Triple Crown. The mile victory was Jimmy Choux’s fourth victory at group level at the distance and his first against all ages.

Windsor Park Plate GI WFA 1600m

1st Jimmy Choux2nd Mufhasa3rd Hold It Harvey

Owner - Chouxmaani Investments LimitedTrainer - J G BaryJockey - J K RiddellBreeding - (h) Thorn Park x CierzoBreeder - Chouxmaani Investments LimitedTime - 1.34.05 Good 3

The Luke/McKay ownership Partnership have purchased horses astutely over the years and their colt by Pins, justified his $120,000 purchase price as a 2YO with three juvenile wins and numerous group placings yielding $295,000 in sta-kes in his juvenile year alone. To his classic year, victory in the listed Westbury Stud Challenge Stakes was a perfect tune up for the DHL Global Hawke’s Bay Guineas. Always handy Sam Spratt took control like she was a “good thing “and so it proved with a 1 ¾ length victory and another $53,125 in the bank.

DHL Global HB Guineas 3YO SW GIII 1400m

1st Antonio Lombardo2nd Prestigious Miss3rd Ginner Hart

Owner - T E Luke, Mrs K & P N McKayTrainer - P N McKayJockey - Sam SprattBreeding - (c) Pins x Petit VerdotBreeder - R M Anderson, Mrs C N Taylor & Trelawney Thoroughbred LtdTime - 1.22.65 Good 3

20

The final leg in the Hawke’s Bay Triple Crown invariably goes to the best horse of the carnival. With a field of 11 saluting the crowd as they made their way to the start all eyes were on Hawke’s Bay Hero Jimmy Choux. At unbackable odds of $1.40 a start price unlikely to be seen in the race again, Jimmy Choux commanded all the attention and rightly so. In what proved to be his final victory the dominance of his win made the forty percent yield akin to free money. A sub-sequent international odyssey netted a Cox Plate runners up cheque and then a well deserved place in the breeding barn at Rich Hill Stud to reminisce his golden career with a few friends.

NZ Bloodstock Insurance Spring Classic WFA G1 2040m

1st Jimmy Choux2nd Red Ruler3rd Hold it Harvey

Owner - Chouxmaani Investments LimitedTrainer - J G BaryJockey - J K RiddellBreeding - (h) Thorn Park x CierzoBreeder - Chouxmaani Investments LimitedTime - 1.34.05 Good 3

The recent renewals of the TradeRacks Stakes had been a revelation in so far as the females had completely dominated the boys. This year the fairer sex again took the honours with Twilight Savings, steered by three time victor on the day Lisa Allpress. This race proved to be the Mare’s only group win for the 2011/2012 season, through placing’s at GI, GII and GIII levels assured her residual value as a broodmare took appreciative steps.

Trade Racks Stakes OPN HCP GIII 1400m

1st Twilight Saving2nd Imani3rd Justanexcuse

Owner - R Adams, J, Prof RJ & T Harbridge, Ms S Homewood & B Watson)Trainer - M Baker and A ForsmanJockey - L AllpressBreeding - (m) Secret Savings x GhemashahBreeder - Assured Assets Pty LtdTime - 1.22.65 Good 3

21

Already a Group I winner on a heavy track, the 1000 Guineas winner Planet Rock lined up on a wet and wild “summers” day heavy favourite for what has become the perfect lead up race to the NZ Oaks. The mud lark gapped the remaining seven fillies, with a margin of 12.5 lengths between first and fourth it really was a day for gumboots over racing plates. Planet Rock was successful at Group I, II and III level in her classic year further endorsing the super sire son of Danehill, Fastnet Rock, as a sire of top line horses in NZ and indeed Australia. Planet Rock earned her Kiwi/Dutch ownership a handy 11 cheques in her first 12 starts for $400,000. With such a record fashioned her ongoing value in the breeding barn will no doubt realise further returns as the Fastnet Rock lineage competes with distinction in the major races of Australia and NZ.

Lowland Stakes 3YOF GIII 2100m

1st Planet Rock2nd Capital Diamond3rd Quintessential

Owner - Barneswood Farm LtdTrainer - Peter and Dawn WilliamsJockey - D BrowneBreeding - (f) Fastnet Rock x AkrisBreeder - W J GleesonTime - 2.16.04 Slow 9

With such a prestigious name, the expectations of Flemington being a champion were set when he was born of the first Tuesday in November 2005. A cast off from the Lowry Stable in Hawke’s Bay, his new found surrounds and trainer worked the oracle in what was the gelding’s headline performance of the season. With Mark Hills aboard, carrying minimum weight, the final margin was a nose to second. Cue celebrations for owner trainer Lucy Tanner who dared to dream and give this tough gelding one more chance! The winner of the Cup gained exemption from the ballot for the 2012 NZ Bloodstock Insurance Spring Classic which gave Flemington another chance to live up to his name come, unfortunately that day was not his as he finished down the track.

Lynn Electrical Hawke’s Bay Cup OPN HCP GIII 2200M

1st Flemington2nd La Vienne3rd Options

Owner - R W Adams and L E TannerTrainer - L E TannerJockey - M HillsBreeding - (g) Jungle Pocket x SongBreeder - DE & TV Pearce Time - 2.14.97 Dead 4

22

First run in 1881 the Hawke’s Bay Hurdles has been a strong pointer to the seasons form line and ultimate top liners. Morpheus, regally bred, finally matched his promise with three successive prestige jumps races victories at Auckland, Manawatu and here in Hawke’s Bay. Honorary member of Hawke’s Bay Racing Sir Russell Pettigrew’s elation was evi-dent as his gelding trounced the opposition by four lengths.

Te Whangai Romney’s Hawkes Bay Hurdles OPN 3100m

1st Morpheus2nd Yourein3rd Bally Heights

Owner - G A Rogerson, Sir Russell Pettigrew and P & E KartonTrainer - Graham & Debbie RogersonJockey - Richard CullyBreeding - Zabeel x Country Rose, 2005Breeder - IOI Thoroughbred, Pte LtdTimer - 3.33.66 Dead 4

NZ’s second oldest Steeple Chase, behind the Grand National, the Hawke’s Bay Steeplechase is stepped in history and excitement. One would think that 4.8kms of racing action should separate the field and the victor can enjoy the spoils in sweet solitude- not so! Richard Eynon had Volkswagin out in front, quite comfortable, urging the seven year old ever closer to the line. Further back making cutting the corner off the high school bend was Shelley Houston, eyes only on the leader. Volkswagin sensing the presence of another horse dug deep, with Penstar having all the momen-tum at the line, the naked eye favoured the Hawera trained horse. The only thing certain was that it was a Taranaki Quinella and eventually Judge Dick Hunt announced the first ahead heat in the 133rd year since the first running of the race. Spoils were shared, another cup had to be produced and no doubt both took pride of place as well as a fair share of re-filling during celebrations.

Livamol Hawke’s Bay Steeplechase OPN 4800m

1st = Penstar1st = Volkswagin3rd Zagata

Owner Hooker Syndicate / BD & Mrs DJ Hopkins, A C Montgomery, B G & Mrs DG Neville White & J R WheelerTrainer - Bob Baker/John WheelerJockey - Shelley Houston/R EynonBreeding - Pentire x Slick Star/Volksraad x Thelma’s DecisionBreeder - R L Morris & M Paykel/AS & JA BongiornoTime - 6.06.72 Dead 4

24

To the Members of Hawke’s Bay Racing (Incorporated)

We have audited the financial statements of Hawke’s Bay Racing (Incorporated) on pages 1 to 11, which comprise the statement of financial position as at 31 July 2012, the statement of financial performance, statement of movement in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Board ResponsibilitiesThe board is responsible for the preparation and fair presentation of these financial statements in accordance with generally accepted accounting practice in New Zealand and for such internal control as the board determine is ne-cessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (New Zealand). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates, as well as evaluating the overall presen-tation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

We have assisted with the presentation of the financial report from draft financial statements presented by the Board. The Board has taken responsibility for the financial report. Our firm has no other relationship with, or interests in, Hawke’s Bay Racing (Incorporated).

OpinionIn our opinion, the financial statements on pages 1 to 11 present fairly, in all material respects, the financial position of Hawke’s Bay Racing (Incorporated) as at 31 July 2012, and its financial performance for the year then ended in ac-cordance with generally accepted accounting practice in New Zealand.

Staples Rodway Hawkes Bay Partnership

6 November 2012

Hastings, New Zealand

INDEPENDENT AUDITOR’S REPORT

25

HAWKE‘S BAY RACING (INCORPORATED)CONSOLIDATED STATEMENT OF

RACING PERFORMANCEFOR THE YEAR ENDED 31 JULY 2012

Racing Revenue Admission, Privilege Fees & Box Sales

Commission, Fractions & Unclaimed Dividends

Group & Listed Subsidies

Nomination & Acceptance Fees

NZTR Subsidy

NZTR Spring Carnival Support

NZRB Dividend

Race Book Sales

Sponsorship

Private Function Income

Final ECR Distribution

Net Bar Contribution

Punter of the Year

Other Income

Notes 2012 $ 97,509

373,936

5,000

187,774

2,823,000

160,000

4,348

26,169

298,852

159,743

49,185

20,102

8,775

313,454

136,746

409,731

5,000

226,321

2,513,375

160,000

-

12,391

398,808

240,457

-

15,889

18,619

13,243

2011 $

TOTAL RACING REVENUE 4,514,069 4,164,358

(2)

Racing Expenditure Advertising

Promotion

Bad and Doubtful Debts

Punter of the Year

Race Meeting Operational Levies

Race Book Costs

Raceday Printing

Raceday Services

Raceday Wages

Stakes & Trophies

Sundry Raceday Expenses

Tote Costs

Notes 2012 $ 52,255

282,604

1,004

67,421

7,000

30,339

3,856

182,568

70,852

2,695,768

51,608

111,953

39,800

375,051

-

60,272

6,000

32,503

4,006

170,005

74,659

2,419,331

68,604

117,987

2011 $

TOTAL RACING EXPENDITURE 3,557,228 3,368,218 NET RACING SURPLUS 956,841 796,140

26


FINANCIAL PERFORMANCEFOR THE YEAR ENDED 31 JULY 2012

Revenue Net racing surplus from Race Meetings

Interest

Membership

Rental

Secretarial Fees

Donations

Sundry Income

Track & Training Income

Net Farm Revenue

Notes 2012 $ 956,841

10,108

36,995

58,931

100,589

72,238

12,555

117,427

17,195

796,140

12,493

33,531

64,239

120,721

86,897

15,196

110,929

14,805

2011 $

TOTAL REVENUE 1,382,879 1,254,951

Expenditure Administration Costs

Audit Fees - Audit

- Other Services


Cleaning

Depreciation

Electricity

Insurance

Interest & Bank Charges

Legal Fees

Photocopier Rental

Rates

Repairs & Maintenance

Salaries & Wages

Subscriptions & Donations

Sundry Expenses

Travel & Promotion

Notes 2012 $ 56,579

13,650

2,585

-

24,313

128,826

32,397

121,001

74,266

879

11,237

58,208

112,064

618,334

4,064

22,798

35,027

44,282

10,900

2,562

125,255

24,971

132,035

31,624

91,092

67,096

3,230

10,769

54,257

90,326

596,975

2,176

39,718

43,657

2011 $

TOTAL EXPENDITURE 1,316,228 1,370,926

(6)

(3)

NET SURPLUS (DEFICIT) 66,651 (115,975)

27

Non Current Assets


FINANCIAL POSITION AS AT 31 JULY 2012 Current Assets

Cash on hand

Bank current account

Bank deposits

Accounts receivable & prepayments

Stock on hand

GST receivable

Advance

Notes 2012 $ -

153,939

122,306

96,392

21,647

65,663

-

250

131,085

59,113

126,361

39,758

10,479

-

2011 $

TOTAL 459,947 367,046

(5)

(4)

Current Liabilities Trade creditors & accruals

Employee entitlements

Income in advance

Trophy funds - Walker/Stead

Loan from Hawke‘s Bay Hunt

Current portion of term loans

Notes 2012 $ 180,191

37,287

160,803

11,200

160,000

47,677

178,829

43,963

186,118

11,200

160,000

61,618

2011 $

TOTAL 597,158 641,728

Shares in companies

Property, Plant and Equipment (6)

8,590

4,014,120

4,022,710

8,590

4,106,724

4,115,314

TOTAL ASSETS 459,947 367,046

Notes 2012 $ 2011 $

(7)

(9)

(8)

Term loans (7) 846,658 868,444

TOTAL LIABILITIES 1,510,172 1,443,816

Notes 2012 $ 2011 $ Non Current Liabilities

NET ASSETS 3,038,841 2,972,189

Represented By: EQUITY 3,038,841 2,972,189

These financial statements were authorised for issue by the Board on 6 November 2012

28

OPENING EQUITY 2,972,189 3,088,164


MOVEMENTS IN EQUITYFOR THE YEAR ENDED 31 JULY 2012

Net Surplus/(Deficit)

Total Recognised Revenue & Expenditure

66 ,651

66 ,651

(115,975)

(115,975)

CLOSING EQUITY 3,038,841 2,972,189

Notes 2012 $ 2011 $

Retained Earnings

Revaluation Reserve

1,789,985

1,248,856

1,723,333

1,248,856

3,038,841 2,972,189

29


CASHFLOWS FOR THE YEAR ENDED 31 JULY 2012

Cashflows From Operating Activities Cash was provided from:

Receipts from customers & racing industry

Interest received

Cash was applied to:

Payments to suppliers & employees

Interest paid

GST (net)

Net operating cashflows

Notes 2012 $

5,126,838

10,108

5,136,946

(4,855,493)

(68,525)

(55,184)

(4,979,202)

157,744

4,705,678

12,493

4,718,171

(4,289,295)

(67,095)

(36,103)

(4,392,493)

325,678

2011 $

(10)

Cashflows From Investing Activities

Cashflows From Financing Activities

Cash was provided from:

Repayment of advance

Cash was applied to:

Fixed asset purchases

Net investing cashflows

Cash was provided from:

Loan repayments

Net financing cashflows

Net increase (decrease) in cash

Add cash at beginning of year

Ending cash carried forward

Represented by:

Cash on hand

Bank accounts

Bank deposits

Notes

Notes

2012 $

2012 $

-

-

(36,220)

(36,220)

(36,220)

(35,727)

(30,491)

85,797

190,448

276,245

-

153,939

122,306

276,245

18,622

18,622

(66,032)

(66,032)

(47,410)

(30,491)

(35,727)

247,777

(57,329)

190,448

250

131,085

59,113

190,448

2011 $

2011 $

30

REPORTING ENTITYHawke‘s Bay Racing Incorporated is an Incorporated Society established under the Incorporated Societies Act 1908.The consolidated financial statements comprise the society and its non-trading subsidiary, Hawke‘s Bay Racing Centre Limited. The financial statements have been prepared in accordance with generally accepted accounting practices in New Zealand.

MEASUREMENT BASEUnless otherwise stated the measurement base adopted is that of historical cost.

PARTICULAR ACCOUNTING POLICIESThe following are the particular accounting policies which have a material effect on the measurement of results and financial position.

DIFFERENTIAL REPORTINGThe society is a qualifying entity under the Framework for Differential Reporting as it is not publicly accountable and is not large. The society has taken advantage of all available exemptions except for FRS 10 Statement of Cashflows and FRS 19 Accounting for GST.

INCOME RECOGNITIONSponsorship income includes donated products and services at fair value.

DEPRECIATIONDepreciation is charged to write off the cost of depreciable fixed assets over their expected economic lives. The prin-cipal rates of depreciation used are as follows: Buildings 2% DV Plant and Equipment 20% DV Vehicles 20% DV Furniture and Fittings 10% DV Office Equipment 33% DV

TAXATIONTaxation is not payable as Racing Clubs are exempt from Income Tax in terms of Section CW 40 (2) of the Income Tax Act 2007.

DEBTORSDebtors are valued at expected realisable value.

HAWKE‘S BAY RACING (INCORPORATED)NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 JULY 2012

1. STATEMENT OF ACCOUNTING POLICIES

31

STOCKTrading stocks are valued at the lower of cost or net realisable value. Livestock is valued at market value (National Average Market Value).

INVESTMENTSInvestments are valued at cost.

FIXED ASSETSLand, Course Developments and Buildings are recorded at 1978 Government Valuation plus subsequent additions at cost, less building accumulated depreciation. All other assets are at cost less accumulated depreciation. Land and course developments are not depreciated.

GSTAll amounts are shown exclusive of Goods and Services Tax (GST), except for receivables and payables that are stated inclusive of GST.

CASH FLOWSThe following definitions are used in the statement of cash flows:

CHANGES IN ACCOUNTING POLICIESInsurance premiums are paid monthly. Previously a liability for the annual premium and a prepayment were recog-nised in the statement of financial position. This practice has been discontinued as it better reflects the nature of insurance arrangements and the payment obligations. The previous year‘s figures have been restated with both recei-vable and payables reduced by $125,975.

There have been no other changes in accounting policies. All policies have been consistently applied.

Operating activities include all transactions and other events that are not investing or financing activities.

Investing activities are those activities relating to the acquisition, holding and disposal of property, plant and equip-ment and of investments.

Financing activities are those activities that result in changes in the borrowings not falling within the definition of cash.

Cash comprises cash on hand, bank in funds and short term deposits offset by bank overdrafts.

32

Turnover

Cost of Sales

Gross Profit

Wages

Bar Service contracts

Other Expenditure

Net Bar Contribution

129,846

73,654

56,192

6,429

28,656

1,005

20,102

149,145

69,339

79,806

47,486

7,246

9,185

15,889

2. NET BAR CONTRIBUTION 2012 $ 2011 $

Interest

- Bank Loans and Overdraft

- Deposits from Affiliated Entities

- Other

Bank Fees

42,965

13,230

10,563

66,758

7,508

74,266

39,210

12,050

11,893

63,153

3,943

67,096

3. INTEREST AND BANK CHARGES 2012 $ 2011 $

Sheep on hand

Bar stock

Other

6,840

10,106

4,701

21,647

16,764

12,347

10,647

39,758

4. STOCK ON HAND 2012 $ 2011 $

Due within one year

Less provision

125,000

(125,000)

-

125,000

(125,000)

-

5. ADVANCE The loan advanced to Standard 183 Ltd is secured by way of personal guarantee by M J O‘Brien. The final payment of the loan was due in January 2011. The borrower has not made this payment and the loan is in default. The society is working with the borrower to agree revised terms for repayment. The board has made full provision for impairment of the loan as the value of the security held is doubtful. Interest is not being accrued on this loan.

2012 $ 2011 $

33

6. PROPERTY, PLANT AND EQUIPMENT Freehold land at valuation

Freehold land at cost

Total freehold land

Course developments at valuation

Course developments at cost

Total course developments

Buildings at valuation

Buildings at cost

Less accumulated depreciation

Total buildings

Plant & equipment at cost


Total plant & equipment

Motor vehicles at cost


Total motor vehicles

Furniture & fittings at cost


Total furniture & fittings

Office equipment at cost


Total office equipment

2012 $ 739,058

474,421

1,213,479

270,990

561,032

832,022

438,425

3,010,933

(1,542,988)

1,906,370

749,164

(669,713)

79,451

193,762

(165,359)

28,403

325,255

(299,118)

26,137

186,093

(165,231)

20,862

2011 $

Depreciation

Buildings

Plant, Equipment & Vehicles

Furniture & Fittings

Office Equipment

68,669

41,437

5,626

13,094

128,826

73,179

38,124

6,206

14,526

132,035

Pre 1979 Land, Course Developments and Buildings are revalued to 1978 government valuation, with subsequent additions recorded at cost. This is allowed under the transitional provisions of Financial Reporting Standard No 3 Property, Plant and Equipment.

Latest Rating Valuation (01/08/2010) of land and buildings plus subsequent additions and disposals at cost $12,225,000.

739,058

474,421

1,213,479

270,990

561,032

832,022

438,425

3,010,933

(1,611,658)

1,837,700

739,629

(675,146)

64,483

162,072

(130,790)

31,282

331,131

(304,744)

26,387

187,092

(178,325)

8,767

TOTAL FIXED ASSETS 4,014,120 4,106,724

34

NATIONAL BANK FACILITIESThe Society has an overdraft facility of $120,000 (2011: $120,000) and two term loans totalling $355,900 (2011: $439,304) at 31 July 2012. The bank facility is secured by way of a first charge registered mortgage over the Society‘s property and guarantee from Hawke‘s Bay Racing Centre Limited.The interest rate on the bank facilities are as follows:Loan 1 6.24% (Fixed term to 21 June 2013)Loan 2 6.37% (Fixed term to 21 June 2014) Overdraft 12.90%

NZTR LOANThe Society has a loan from NZTR totalling $490,758 (2011: $490,758). The loan is interest only and secured by way of first charge registered mortgage over one of the Society‘s properties. Interest is charged at the official cash rate plus 1% at 31 July 2012. (3.5% at 31 July 2011).

7. TERM LOANS

Total Term Loans

Due within one year

Due beyond one year

47,677

846,658

61,618

868,444

TOTAL TERM LOANS 894,335 930,062

The interest on these funds is put towards a sash for the Gold Trail Stakes (Stead) and trophies for the Hawke‘s Bay Hurdles & Steeples (Walker) each year.

8. TROPHY FUNDS

The Society has a loan agreement with Hawke‘s Bay Hunt (Inc) recording this loan of $160,000 (2011: $160,000). The term expiry date is sixty days post notice of demand by the lender to repay. Interest rate is calculated as the being the midpoint between the deposit rate that would be achieved by Hawke‘s Bay Hunt (Inc) on retail terms and the rate Hawke‘s Bay Racing (Inc) would pay for the same funds on a commercial overdraft arrangement. At year end this was 7.90% (2011: 8.70%).

9. LOAN FROM HAWKES BAY HUNT (Inc)

2012 $ 2011 $

35

Net Surplus/(Deficit) for year

Add non-cash items

Depreciation


Movement in Working Capital Items

(Increase) / Decrease in Accounts Receivable & Prepayments

(Increase) in Stock on Hand

Increase / (Decrease) in Accounts Payable

Increase / (Decrease) in Employee Entitlement

Increase / (Decrease) in Income in Advance

Net Operating Cash Flows

66,651

128,826

-

195,477

(25,215)

18,111

1,362

(6,676)

(25,315)

(37,733)

157,744

(115,975)

132,036

125,255

141,316

71,652

(6,674)

72,164

(8,258)

55,478

184,362

325,678

10. RECONCILIATION OF OPERATING CASHFLOWS 2012 $ 2011 $

Lease CommitmentsHawke‘s Bay Racing Inc. has an ongoing commitment in the form of operating leases for a photocopier and vehicles for the following amounts.

Directors M Ormond, C Whyte, K Wood, A Cuming, K Browne and P Roebuck have provided sponsorship during the year. This is at normal commercial rates and terms.

There are no contingent liabilities at balance date (2011: Nil).

There are no subsequent events to balance date. (2011: Nil)

11. COMMITMENTS

12. RELATED PARTY TRANSACTIONS

13. CONTINGENT LIABILITIES

14. SUBSEQUENT EVENTS

Lease Commitments

Within 1 year

Within 1 - 2 years

2 to 5 years

Total lease expenses for the period was $14,863.

Capital Commitments

There are no capital commitments at year end (2011: Nil)

4,712

4,712

13,742

23,166

13,821

6,798

-

20,619

2012 $ 2011 $

36

Best R 2007

Buddo D 1960

de Gruchy G W 1971

Ellingham R L 1987

Harvey W J 1963

Holden P C 1946

Hutchinson B J D 1974

Hylton-Smith J D 1955

Johnston N R 1983

Langdale P M Y 1984

LIFE MEMBERS HAWKE’S BAY RACING INC 2011/2012 RACING SEASON MEMBERS

Lowry T R 1963

McCallum S M 1990

Nation R W 1990

Nelson S O 1990

Ormond A E 1976

Ormond U C 1990

Pattison J G 1958

Peacock M G 1950

Renton D M 1962

Sabiston D W 1963

Scoular J D 1964

Shanley C G 1990

Simmons H T 1949

Skidmore J J 1970

Throp W F 1960

White H P

Mudgway W A 1984

Redshaw L I 1974

Symes T W M 1968

HONORARY MEMBERS Agnew J A 1967

Anderson S 1997

Arlidge J L 1990

Baillie J M 1970

Barker P 1958

Barrett P E 1967

Beachen A J 1964

Beale J A 1994

Beatson J D 1982

Begley L J 1960

Berkahn R O 1973

Blackmore C H 1960

Breakwell G L 1956

Bridgeman C 1961

Bridgeman J A 1962

Broughton L W 1944

Callaghan D B 1970

Callaghan M J 1951

Cassidy G M 1963

Chittick A G 1968

Chittick B W 1969

Christensen E M 1972

Coleman P M 1973

Couper W A 1962

Cranswick D 1990

Crawford J M 1955

Crist W F 1967

Crosse L G 1973

Dawson R C 1973

Dent W J 1968

Donnelly G P

Frizzell J A 1962

Gordon D J 1963

Grieve I D 1971

Grieve P H 1964

Guerin P J 1976

Halpin W L 1976

Harris K N 1970

Harris M J 1963

Holland J E 1964

Hope M B 1972

Horton J H 1962

Hudson P M 1968

James B H 1974

Jans B W 1974

Jarvis J A 1967

Johansen J E 1970

Jones D 1972

Kerins P M 1974

Leathley C D 1964

Lepper W E 1962

Liddle A R 1960

Lobban H G 1960

Loughnan T O 1969

Lowe G E 1961

Lowry E P 1962

Mackintosh J 1965

MacMillan M R 1966

Mahony J M 1990

Mahony P S 1962

McCormick G H 1973

McKenzie R 1945

McLeod D R 1974

McLiesh A R

McMillin J R 1973

Mulcaster R J 1974

Murtagh M L 1974

Murtagh P M 1970

Nelson P S 1970

Nichol D W 1970

Nicholson B G 1962

O‘Malley O 1969

Orange K W 1995

Ormond M R 1976

Ormond W W 1963

O‘Sullivan M 1964

Parkinson L E 1961

Parsons R J 1959

Pettigrew R H 1947

Plowman M V 1974

Plowman Bloodstock Ltd 1974

37

HAWKE’S BAY RACING INC 2011/2012 RACING SEASON MEMBERS

FULL MEMBERS

Powell F T 1971

Rae D G 1961

Reeves N

Reid H K 1990

Rhind E M 1992

Robson A R 1990

Scott G J 1959

Sheild J I 1968

Sherratt C W 1963

Smith E W 1952

Smith R A 1974

Stainton J B 1956

Stevenson D L 1974

Strother P M 1962

Thelwall G A 1970

Titter D N 1951

Todd R G 1973

Tremain P 1992

Twigg D R 1948

Twist N B 1970

van de Ven E M 1960

Verschaffelt E 1973

Walker L J 1964

Walls E M 1974

Watson M J 1968

Wattie R K 1962

Wedd D J 1962

White E D 1967

Willis J C 1976

Wilson J I 1960

Wong H 1960

Yardley D W 1974

Aldridge A M 1988

Allison J 2007

Apatu A 2011

Baker D 2011

Bary J 2000

Bauld S 2012

Bayliss K P 2010

Beck M 2011

Bell R F 2011

Biggs M 2008

Bisset C R 2010

Black R A 2011

Bridge J 2011

Bridge J W 2011

Brightwell S 2011

Brooke S 2008

Browne K J 1981

Browning R J 2011

Buchnan B 2011

Burley K 2011

Cadigan P J 2007

Cameron A 1992

Campbell A J 2011

Carney M R 2009

Castles D B 2008

Castles K A 2008

Chadwick R P M 2011

Chambers G W 1999

Chard H C 1978

Chateris H 2011

Chilton E J 2011

Clark T 2009

Clayton C D 2004

Cook A B 2010

Costello J P 2005

Cuming A B 2009

Curtis D & J 2009

de Lautour W B 2002

de Lautour H 2004

Deacon J 1992

Dixon M J 2002

Dorward N 2011

Drinkwater J R 1980

Driscoll G 2011

Drummond P G

Duff G I T 2011

Duncan G M 2009

Fairgray C A 2010

Ferguson A D 2004

Foley P J 1987

Forbes A 2011

Francis G 2010

Franklin S J 2011

Galbraith V R 2010

Gibbs A J 1995

Gibson B R 2008

Gordon C 2010

Gray D E 2005

Greatbatch M J 2011

Greer P J 2003

Grey R 2007

Grieve D P 2004

Griffin G 2009

Harold M J 2005

Hart G J 2005

Hart G H 2003

Hawkins S B 2008

Hebberley B J 2003

Hickey B 2004

Hill G 2010

Holden D J 1978

Horrocks A M 1991

Howard S 2009

Humphreys K J 2005

Hurlimann W E 1989

Jensen P 2006

Johnson K R 2003

Jones L 2010

Keighley D M 2006

Kelsey B J 2011

Kennedy H D 2008

Kenneth K B 2011

Kerins P 2002

Liley D J 2002

38

Lister N J 2011

Little S D 1977

Lockyer A J 2004

Lowry G 2010

Lowry T G 1991

MacGregor H D 2007

Mackie L J 2007

MacPhee T D 2001

Macphee B R 2011

Maguire M J 2003

Mahony T P 1987

Matthews P

McCarthy K J 2006

McDonald P R 1978

McEntee P 2007

McGifford J G 2009

McGinty P J 2005

McGregor J 2009

McKenzie R C 2004

McLaughlin J 2005

McLeod R 2010

Mettrick A J 2011

Miller G 2011

Miller R M 1975

Morison D C 2008

Mouat L M 2006

Moughan G F 1998

Munro G C 2005

Murdoch W T 2011

Murphy P M 2008

Nelson M 2005

Newall MD 2011

Nicholsen K 2011

O‘Grady H J 1999

Ormond M 2003

Ormond R 2003

Ormond C A 2011

Ormond A M 2011

O‘Sullivan T 2001

HAWKE’S BAY RACING INC 2011/2012 RACING SEASON MEMBERS Peacock A 1990

Peterson B 2011

Potaka P 1986

Potter R 2009

Pratt A L 2011

Prenter S 2004

Priest C 2006

Pulford N J 2008

Quin M J F 2008

Razos J S 1988

Razos M P 1979

Redshaw M 2007

Reilly W J 1992

Reisima B M 2004

Reynolds P R 2008

Rigby F B 2011

Roebuck J 2010

Roebuck P J 1990

Russell K & C 2000

Russell C P 1990

Russell M 2009

Ryan S 2009

Ryan D 2011

Sanders V J 2008

Sanson C 2004

Schirnack P 1990

Schirnack M J 2004

Scobie R D 2007

Sherratt G 2008

Simpson P 2003

Skerman C J 2011

Slack T 1988

Smyth E B 1982

Stace R M 2005

Stace J L 2005

Stevenson P M 2006

Stewart K M 2002

Symes W E 2011

Thomas-Long J 2009

Thomson M J 1978

Todd C D 2011

Tonge A 2011

Trickett S 2010

Turfrey N O 1997

Turner R J 2011

Van Zonnevend T 2011

Von Dadelszen F A 2008

Waldin D W 2011

Walker L 2012

Wall A J 1988

Wall A S 1984

Ward P B 1979

Warren M 2011

Wedd G J 1997

White M 2011

Whyte C A J 2009

Williams K 2007

Wilson P 2010

Wood K L 2004

Wood R D 1991

Wood S 2011

Woolhouse B R 2007

39

HAWKE’S BAY RACING INC 2011/2012 RACING SEASON MEMBERS OVER 65 MEMBERS

Aldridge E 2001

Anderson A K 1990

Anderton C H 1980

Arrowsmith R 1995

Bary A 1975

Bath D C 2011

Beachen W H 1985

Bell M P 1998

Benton M E 2011

Benton J M 2011

Bishop D S 1979

Bisman G B 2010

Blake A G 2004

Blundell J H 2006

Blundell B 2007

Brady P M 1985

Breban D F 1990

Brenton-Rule M 1998

Brittin P G 2001

Brittin D R 1980

Brodie J C 1994

Buckingham F P 2009

Caffery M 2008

Callum A K 2011

Carey G R 2010

Carran A K 1984

Chapman W A 2010

Chilton R W 2011

Coffey T P 1988

Collings R J 1997

Colson G C 1996

Coxon T R 1990

Crawley B 1998

Cutler R N 1991

Davis E 1991

Dean B 2002

Death R A 2011

Donovan B J 2001

Downey W P 1980

Drake L F 1987

Duncan G A 2009

Duncan J C 2004

Dunn H D 2006

Edmunds D M 2011

Evans C J 2010

Fargher G O 2007

Fitzpatrick H M 1999

Fletcher V 1990

Galloway A M 1986

Gifford B 1996

Gillies A 2005

Goodall M T 1987

Gore J 2010

Grace A R 1997

Gray N 1985

Greaney M J 2007

Greene K F 2011

Gudsell M H 1981

Guerin B J 1985

Hales P J 1998

Harper M J 2007

Hay B F 2006

Hayes O J 2007

Healy M J 1985

Henneker B S 2004

Hesketh G J 1987

Heywood B 2011

Hill D B 2002

Holden P R 1988

Hollebone N R M 2007

Holt P G 1990

Houlahan M G 2009

Ireland B P 2004

Johansson L W 2011

Johnston K 2011

Keighley B W 2005

Kelly J F 2008

Kiddle K W 1980

Kieran B 2007

Knobloch H J 2006

Lambeth R L 2010

Lancaster D N 1986

Laxon E B 1966

Lee D 2011

Longley T E 1999

Lowrie M 2010

Lyndon T 2010

Mabbett M H 2006

Maciver A 2011

Macklow P K 1980

Martin D J 2006

Matthews S C H 1992

McCarrison I 2005

McClurg D J 2004

McDowall C C 2007

McIntosh L P 2011

McIntyre P J 2006

McLeod K B 2010

McMillan S A 1980

McPeake B 2005

Meech H 1990

Molloy T A 2000

Morgan S I 1983

Murphy A M 2011

Nelson L 2004

Netley G W 1985

Nilsen P 2010

Nilsen B 2007

Nobilo R 1997

Nokes B 2011

Northover S M 1980

O‘Connor K J 2004

Owen D J 2011

Parker L 2008

Pattullo D 2010

Pettigrew W J 2010

Phillips D J 1990

40

HAWKE’S BAY RACING INC 2011/2012 RACING SEASON MEMBERS Price V 2011

Quinn M J 1993

Reid R 2008

Reynolds R A 1981

Richardson I L 1979

Richardson E I 2009

Robinson J R 2007

Roddick G J 1988

Ryan D H 1983

Sayers J 2008

Shaw N D 2004

Shirley M J 2008

Simonsen E N 2006

Skerman G 2007

Small M S 1990

Best S E 2010

Buckeridge J 2006

Chittick W L 1992

Fitness L T 1982

Fraser P B 2009

Leitch L D 2003

Nichol R W 2007

Pinfold M A 2010

Pratt S 2011

Rolls P D 2010

Turner S K 2011

Wilson D M 1999

Yanko B A 1988

Thomson D 2009

Smith A H B 2000

Smith J C 2009

Smith F H 1995

Speedy S 2004

Spotswood R C 1990

Spring L P 1980

Standring D J 2001

Sugden P F 1978

Sutherland B W 2007

Sutherland M D 1990

Tasker B L 1990

Taylor J E

Taylor W A 2005

Taylor H A 1986

Tomlins C 2006

Townrow P 2006

Train A 1990

Treweek P J 2005

Trower D G 1985

Truby G P 2011

Turner P M 2002

Upton P 2007

Vos P 1978

Wall B C 1975

Waller R 2003

Walter C R 1994

Weston W G 2003

Williams R A 2011

Wilson F E 2007

Woodmass R B 1983

Yarlett I W 1982

ASSOCIATE MEMBERS

JUNIOR MEMBERS

42

Monday 6th August 2012

Saturday 1st September 2012

Saturday 22nd September 2012

Saturday 6th October 2012

Thursday 25th October 2012

Thursday 13th December 2012

Tuesday 1st January 2013

Sunday 13th January 2013

Wednesday 30th January 2013

Saturday 2nd March 2013

Saturday 20th April 2013

Friday 3rd May 2013

Monday 27th May 2013

Saturday 29th June 2013

Thursday 18th July 2013

2012 -2013 Calendar

DATE

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