NEWBURY RACECOURSE PLC - Preliminary Results
PR Newswire
London, April 30
The information contained within this announcement is deemed by the Group to constitute inside information as stipulated under the Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310 ("MAR"). With the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.
30thApril 2021
NEWBURY RACECOURSE PLC
(the "Racecourse" or the "Company")
Preliminary results for the 12 months ended 31 December 2020
Newbury Racecourse plc, the racing, entertainment and events business, today announces its preliminary results for the twelve months ended 31 December 2020.
2020 Financial and Business Summary
- Statutory turnover fell by 59% to £8.49m (2019: £20.79m).
- Loss before interest, tax and exceptional items of £2.38m (2019: Profit of £1.03m)
- Consolidated group loss on ordinary activities before tax of £2.27m (2019: Profit of £0.65m).
- Raceday attendances of 12,000 (2019: 178,000) with only four meetings hosting a paying attendance during the year.
- The Company was severely impacted by the COVID-19 pandemic and the decision by the UK Government to implement a series of national lockdowns and subsequently place restrictions on our business's ability to operate normally.
- The Company was initially forced to cease all of its racing, hotel and conference & events ("C&E") trading activities on 17thMarch 2020 with racing finally resuming behind closed doors on 11thJune 2020. A total of 20 racedays took place in 2020 (compared with 29 in 2019) with, for the majority, the only income coming from our betting and media rights agreements. To date the hotel and C&E businesses have not reopened.
- In response, the Company took specific actions to protect our financial position in both the short and long term, which included a restructuring of the staff overhead, targeted cost reductions, a renegotiation of the banking covenants as well as deferring repayment of the final loan instalment to Compton Beauchamp Estates Limited. The Company also benefitted from the use of the Government furlough scheme and Business Rates relief but did not utilise any of the Government loan support schemes.
- In December the Company sold an unused 1.2 acre parcel of land for £1.5m, using some of these funds to purchase the freeholds of ten apartment blocks which were built as part of the racecourse redevelopment.
2021 Update
- The UK Government announcement on 22nd February 2021 detailing the roadmap out of lockdown means the Company is now in a position to plan accordingly. Whilst our hospitality businesses currently remain closed, the nursery remains open to all children and racing continues behind closed doors until the next level of restrictions are lifted on 17thMay 2021. By this point we will have hosted ten racedays in 2021, including the Lockinge Stakes, without paying crowds in attendance.
- Providing that all legal restrictions are lifted on 21stJune 2021 then the outlook for the remainder of the year looks positive but we remain cautious of the fact that the UK Government guidance could change this situation.
- The Company is confident that it has the resources to trade through this period within its current banking facilities. However, due to the uncertainties created by the COVID-19 pandemic and impact that any further UK Government restrictions may potentially have, the Company will hopefully be able to provide further guidance on future financial performance when the interim financial results are reported.
Dominic Burke, Chairman of Newbury Racecourse plc commented:
"2020 was an extremely challenging year for the horseracing industry and our business. The decision to suspend all horseracing in March 2020, followed by the national lockdown was enormously disruptive with all our operations immediately ceasing and several racedays lost. However we were delighted to re-open behind closed doors from June 2020 onwards and have continued in this manner ever since. Whilst this has been helpful in generating income through our media and betting rights agreements, we have lost the significant benefit of hosting crowds and being able to generate revenues through catering, hospitality and our annual concerts. Our Hotel and Conference & Events businesses also closed in March 2020 and have been unable to re-open. We have, however, managed to keep our Nursery business open throughout the past year, particularly to serve key worker parents. Whilst the site remained closed, we provided support to the NHS by offering our facilities as a testing centre and for the local community's Meals on Wheels programme.
Following the vaccination rollout programme this year and the UK Government's current roadmap out of lockdown we are now in a position to be able to plan ahead. The easing of restrictions should enable us to welcome a paying attendance at the racecourse from our 10thJune 2021 meeting onwards as well as make plans to re-open our Hotel and C&E functions later in the year. This will include hosting two Party in The Paddocks in August and September as well as the Ladbrokes Winter Carnival meeting in November. However, we are still mindful that the effects of the pandemic and its impact on society could remain for some while to come, so we are prepared for this and can adapt the business accordingly, as we demonstrated during 2020.
I remain confident that the redevelopment of the racecourse undertaken in recent years has provided us with an exceptional venue that will enable us to continue to host racing and other events of the highest quality in the future, as well as having facilities that remain well placed to meet the increasing demands of our customers, from horsemen and racegoers, to conference and hotel guests, nursery patrons and local residents as and when we are able to welcome them back to the racecourse."
For further information please contact:
Newbury Racecourse plc Tel: 01635 40015
Julian Thick, Chief Executive
Harriet Collins, Marcomms & Sponsorship Director
Allenby Capital Limited Tel: 0203 328 5656
Nick Naylor/Liz Kirchner (Corporate Finance)
Hudson Sandler Tel: 0207 796 4133
Charlie Jack
CHAIRMAN'S STATEMENT FOR THE YEAR END 31 DECEMBER 2020
2020 was an extremely challenging year for Newbury Racecourse plc due to the severe impact of COVID-19 causing significant disruption to all parts of our business, which continues to this day. The news continues to be dominated by the ongoing coronavirus pandemic, although the vaccination programme and easing of lockdown plans unveiled by the government provide optimism for the second half of 2021. In 2020 the British Horseracing Authority's decision to suspend all horseracing in the UK with effect from 17th March 2020 was quickly followed by the first UK lockdown. This has been enormously disruptive to our business, with all operations being immediately ceased. While we were delighted to be able to restart racing 'Behind Closed Doors' in June, the financial impact of the loss of a number of racedays and racing crowds was severe and will continue to be challenging until we are in a position to welcome crowds back on our racecourse without any restrictions. We continue to develop our plans in response to the government lockdown easing timetable, with plans in place for the Hotel and Conference & Events businesses to relaunch following over a year of inactivity in the second half of the year. The Rocking Horse Nursery has continued to operate throughout albeit with some financial impact providing much needed revenues throughout.
We entered 2020 with ambitious targets and a clear strategy to drive further growth in our business and there is no doubt that the impact of the pandemic has severely impacted our financial performance. I am confident that the difficult decisions and actions taken during the year has meant we are well placed to resume full trading activities once circumstances permit. The major investment we have made into our racecourse facilities and infrastructure over recent years was to position Newbury Racecourse for the future, in line with our strategic objective to be a modern and leading racecourse, entertainment and events business. This ambition remains unchanged.
2020 Financial Performance
Statutory turnover fell by 59% to £8.49m in 2020. We were only able to host 20 fixtures during the year, compared with the 29 which were planned. 16 of these were held with no paying public so we were particularly grateful for our Media and Betting Rights to provide much needed income for these days. Total statutory racing income was £6.9m (2019: £17.1m) Our only other income of note was through the Nursery business, which despite being closed to all except key workers children for almost 3 months, generated turnover of £1.22m (2019: £1.47m). Due to their closure from March onwards, our Hotel and Conference & Events business income combined was £0.3m compared to £2.17m in 2019.
In order to reduce costs, the business responded to the initial lockdown by immediately ceasing all discretionary expenditure. We also utilised the Government Coronavirus Job Retention Scheme where possible, a number of staff accepted voluntary pay cuts but ultimately we took the difficult decision to implement a staffing re'structure and reduce permanent headcount by 30 employees.
The Operating losses in the year were £2.29m (2019: profit of £0.60m), which was net of an exceptional gain of £0.09m (2019: exceptional loss £0.42m). Loss after tax was £2.04m (2019: Profit of £0.79m).
2020 Racing Highlights
The 2020 racing programme was severely impacted by the effect of the first national lockdown. We had already lost the 29th February raceday to waterlogging before all racing was suspended by the BHA on 17th March. The next 6 race meetings, including the April Dubai Duty Free Spring Trials and May's Al Shaqab Lockinge fixture were all abandoned.
Fortunately racing resumed, albeit behind closed doors, from June with an emergency fixtures list and race programme in place for much of the flat season. The fixture list returned to normal from September onwards and in the Jumps season we were delighted to host the Ladbrokes Trophy once more, where Jonjo O'Neill secured his first win with Cloth Cap. Without the presence of a crowd and with only those required on site to ensure the day was managed within the social restrictions in place, it just wasn't the same atmosphere as we've come to expect for this thrilling race. Following the government guidance at the time we were able to welcome a small, controlled crowd to our 16th December fixture, before quickly resuming behind closed doors once the 'second spike' in COVID?19 cases resulted in the third national lockdown being implemented.
The Development
The impact of the pandemic on the trading business meant that in order to further protect our cash position we immediately cancelled all non-committed expenditure. The restoration and refurbishment of the Western End of the Berkshire stand that was already underway was completed during the summer. The completion of this project marked the end of our major redevelopment of the racecourse heartspace and facilities.
Our redevelopment has delivered a first class venue so we can continue to host racing of the highest quality, as well as having facilities which are well placed to meet the increasing demands of the modern day consumer, from horsemen and racegoers, to conference and hotel guests, nursery patrons and local residents. It is anticipated that the redevelopment will enable us to continue to grow our already well diversified business activities and maximise the returns from our investment.
The David Wilson Homes residential development continued throughout 2020 after a short pause during the first lockdown and is now into its final phase, with approximately 950 of the total c.1,500 homes now built and sold, with a further 80 currently in the construction phase.
Financing and liquidity
In early 2020 we fully drew down the revolving credit facility provided by National Westminster Bank plc in order to ensure we had sufficient cash reserves as we entered the period of uncertainty caused by the pandemic and initial lockdown. In July we agreed with the bank to remove the existing covenants and replace them with a single measure, based on minimum liquidity levels, tested through to April 2022, by which time we expect to receive £10.8m (being the payment balance due in relation to the residential development at the racecourse) from David Wilson Homes, a wholly owned subsidiary of Barratt Developments plc. We have also agreed to extend the date for the final repayment of the loan to Compton Beauchamp Estates Limited from November 2020 to April 2022 which coincides with the date when we expect the David Wilson Homes final payment.
In December we completed the sale of a 1.2 acre land parcel on the Northern side of the site for £1.5m, further supporting our cash position. This piece of land was acquired in 2004 in advance of the redevelopment for which the racecourse had no further use.
Outlook and Market Developments
Following the most recent national lockdown, the Government announcement on 22nd February detailing the roadmap out of lockdown means the business is now in a position to plan accordingly. Whilst our hospitality businesses remain closed, the Nursery remains open to all children and racing continues behind closed doors.
The initial milestone was 12th April when Licensed Betting Shops re?opened, generating much needed income to our racedays from this source. We are also able to take advantage by hosting a socially distanced pub garden experience outdoors.
From 17th May, sporting venues can once again welcome a crowd of up to 4,000 outdoors so we're pleased that our raceday on 10th June will be able to host a paying public in attendance for the first time in almost six months. Our next race meeting on 22nd June falls the day after the final date in the Government roadmap where they have indicated that all legal limits on social contact will be removed. We are yet to establish precisely how this will impact us but we are hopeful that crowds will fully return to racing in controlled numbers, particularly as we look forward to two Party in The Paddock events on 14th August (Olly Murs) and 18th September (Rick Astley). We are also planning to relaunch our Hotel and Conference & Events hospitality businesses in late summer from their enforced hibernation of almost 18 months.
We are very mindful of our responsibilities as a business to adhere to the restrictions that the Government have outlined and are ensuring that we fully comply with the advice of the British Horseracing Authority on their recommended governance for hosting our racedays. We remain optimistic that the vaccination rollout programme and the management of COVID-19 cases mean that the roadmap timeline will enable us to proceed with our plans as outlined, so that we can look forward to the summer flat season and through to the autumn jumps season with crowds and full hospitality.
During 2020 we were proud to have played our part in supporting the local West Berkshire community by providing our site to Age Concern for their Meals on Wheels programme. We also allowed the NHS free?of?charge use of our facilities as a local testing centre. In 2021 the NHS have again used our facility as a vaccination centre for the local health practice community.
The Board is confident that the Company has the financial resources to trade through this current year, even if further restrictions are put in place, particularly if there is a 'third spike' in infections resulting in any further national or regional lockdowns. The difficult actions taken during 2020 have put the company in a strong position to recover quickly once the economy fully opens up and people return to normal life. The impact of the financial losses for the 2020 year and for the first half of 2021 remain substantial, but for how much longer remains uncertain.
In conclusion, on behalf of the board, I would like to thank all the staff for their continued hard work, resolve and commitment to the business during last year's challenging times, and look forward to a better outlook in 2021 and beyond.
Our sincere thanks, as ever, to all sponsors, owners, trainers, stable staff, members, racegoers and all customers for their ongoing support.
DOMINIC J BURKE
Chairman
30thApril 2021
GROUP STRATEGIC REPORT FOR THE YEAR END 31 DECEMBER 2020
| STRATEGY AND OBJECTIVES |
The Board's long term strategy is for Newbury Racecourse to be a profitable, leading racecourse, entertainment and events business, with racing at its core. One of the key aims of this Strategic Report is to set out and appraise the business model through which we deliver that strategy.
| THE BUSINESS MODEL |
Newbury Racecourse PLC is the parent of a Group of companies which own Newbury Racecourse and engages in racing, hospitality and associated food and beverage retail activities. In addition, the Group operates a conference and events business, a children's nursery, and an on site hotel. Alongside its trading activities, the Group also owns freehold property from which it receives annual income and also benefits from the sale of residential properties on the site, as part of its long term development agreement with David Wilson Homes.
| PERFORMANCE REVIEW |
2020 was a year severely impacted by the global COVID?19 pandemic. The British Horseracing Authority's decision to suspend all horse racing in the UK from 17th March was followed by the Government declaring a national lockdown which severely impacted the trading of the business. However, racing was able to re'start 'Behind Closed Doors' from June, by which point one of our biggest racing fixtures of the year, the Group One Al Shaqab Lockinge Stakes, had been lost. We were fortunate to benefit from our Media and Betting Rights providing a steady income stream although not sufficient to cover the overheads of the business. We were also able to take advantage of the Government's Coronavirus Job Retention Scheme (furlough) as well as the Business Rates holiday to mitigate some of these losses. Unfortunately, to ensure that we could control our overheads in response to the uncertain trading outlook, it was necessary to re'structure the staffing levels of the business which meant losing 30 employees to redundancy during the year.
The overall effect of the national lockdown and subsequent restrictions on public gatherings and hospitality trading activities has had a significant impact on the performance of the business as detailed below.
In December 2020 the company completed the sale of a 1.2 acre land parcel commonly known as the Opperman site for a cash consideration of £1.5m. The sale price was equal to the asset value held on the Company balance sheet as at 31st December 2019. The company separately purchased the freeholds of 10 apartment blocks (251 units) built by David Wilson Homes during the racecourse development, now providing the company with a future ground rent income stream from a total of 13 apartment blocks (617 units).
In order to support the short?term cash position of the company, in April 2020 the company reached agreement with Compton Beauchamp Estates Limited to defer the repayment of the final loan instalment from November 2020 to April 2022.
| Racing |
The accounts include a total of 20 days racing (2019: 29). Prior to the suspension we had already abandoned 1 race meeting on 29th February due to the weather (2019: 2 meetings abandoned). The suspension resulted in the loss of 6 fixtures. Following this suspension, once racing resumed in June, an emergency calendar of fixtures was initially put in place. Due to this a further 2 of our original fixtures were lost so ultimately the racecourse hosted 8 days National Hunt racing (2019: 11) and 12 days flat racing (2019: 18) during the year. Only 4 of these days were held with a paying attendance; 3 at the start of the year plus the 16th December date where a limited socially restricted crowd was permitted before the third Government lockdown was implemented.
Overall raceday attendances in 2020 were 12,000 (2019: 178,000).
Newbury's richest race meeting, the Al Shaqab Lockinge Day, was unable to be run in 2020. This meeting will continue to be the flagship event in our flat racing calendar, with Al Shaqab confirming their continued generous support of this race following a five year extension to their sponsorship announced during 2019.
Our longstanding association with the Dubai International Arabian Races Committee continues but sadly their flagship UK race meeting normally hosted at Newbury in July was also unable to be held due to restrictions on crowds being permitted. We look forward to this returning in future years.
Our cornerstone jump meeting, The Ladbrokes Winter Carnival, at the end of November, marked the fourth year of our five year partnership with Ladbrokes. This fixture was hosted behind closed doors so we are grateful for their continued sponsorship commitment.
We were grateful that our media agreement enabled the business to receive revenues from this racing income stream during most of 2020. In the year they accounted for a significant portion of our income at 49% of total trading revenue (2019: 25%).
Despite the difficult trading conditions and restrictions our ability to race with public attendance, our total prizemoney in 2020 was £2.7m (2019: £5.0m) but, like many other racecourses, we will need to carefully manage our future prizemoney commitments, as a result of both the ongoing expected decline in LBO revenues, uncertainty around future HBLB funding and the impact of the COVID 19 situation.
We were able to make an Executive Contribution to prizemoney of £0.54m and are grateful for the ongoing support of all our sponsors, with particular thanks to Al Shaqab Racing, bet365, Betfair, Betway, Dubai Duty Free and Ladbrokes for their commitment in 2020.
| Conference and Events |
The Conference & Events sales team began the year with great optimism following the success of 2019. However, the pandemic effectively put a temporary end to all business activity with operations closing in March and not resuming since. In the meantime, the team have continued to focus on building relationships within key sectors, including automotive, telecoms and location filming and we were are hopeful that this will benefit the business once it is able to re?open in 2021.
| Catering, Hospitality and Retail |
Our in house catering operation continues to underpin the delivery of food and beverage retail activities across all of our businesses, although due to the significant loss of activity during 2020 a number of this team were made redundant.
| The Rocking Horse Nursery |
Despite the circumstances the nursery managed to deliver a comparatively strong year in 2020 and was a key contributor in a challenging year. The lockdown meant that the facility had to close to all except the children of key workers, from mid-March to early June, which had a significant impact on our income. However, from June onwards the children were able to return in line with Government guidelines and by the end of the year it was back operating at near optimal capacity. The focus going forward will therefore be on maintaining the very highest levels of care and early years learning standards, through continued investment in the equipment, facilities and staff training.
| The Lodge |
The Lodge hotel temporarily ceased operating on 23rd March once the Government announced the first lockdown. Due to continued restrictions on public movement it has not been open since with all bar one of the staff made redundant during the year as they were unable to be re-deployed elsewhere within the business. Previously the hotel had delivered good levels of growth over the last few years since opening to the general public and we entered 2020 with improvements in both average occupancy and average room rates. The Lodge has an important role at the racecourse and will continue to fulfil the key raceday requirement of providing accommodation to travelling stable staff, in addition to supporting our conference, events and wedding businesses.
| The Redevelopment |
In order to protect the cash position, the company made the decision to suspend all non-essential expenditure, so all investment activity was ceased except for that already committed. Therefore, the only project completed during 2020 was the restoration and refurbishment of the western end of the Berkshire stand including new hospitality facilities, racing integrity (camera) positions and enhanced public facilities on the ground floor. These were completed at an estimated cost of £2.3m.
David Wilson Homes were still able to continue progress with the residential development during the year with the Central Area apartments now fully completed and sold and with construction continuing in the Eastern Area. Approximately 950 homes out of the total c.1,500 are now built and sold with a further 80 currently under construction. Cash receipts from DWH from the sale of properties in 2020 were £0.1m (2019: £1.09m). The final date for the balance of the guaranteed minimum land value to be paid by DWH is April 2022 - as at 31 December 2020 the recognised balance outstanding was £10.69m.
| FINANCIAL COMMENTARY |
Consolidated Group loss before tax in the year ended 31 December 2020 was £2.27m (2019: Profit of £0.65m) which includes £0.09m of exceptional profit (2019: £0.42m exceptional loss).
Total statutory turnover in 2020 was £8.49m (2019: £20.79m). Overall racing revenues fell by £10.21m compared with 2019 (£17.1m). Overall media and betting rights revenues decreased by c. £1.57m (35%), to £2.89m for the twelve months to 31 December 2020, due to the lower number of fixtures, closure of LBO's during the various lockdowns, on top of the anticipated impact of the Government FOBT reform, as previously reported. Conference and Events revenue was £0.18m (2019: £1.32m) and The Lodge was £0.13m (2019: £0.86m) due to these businesses ceasing operations in March. The Nursery turnover was £1.22m (2019: £1.47m) which was down 17% predominantly due to the closure from mid?March to end of May, with the exception of key worker children only attending. Total costs for the year were £11.72m (2019: £20.16m). The overheads were reduced in response to lower income being generated, with the majority of savings made through a staff re'structure which reduced headcount by 30 (a 27% reduction). The company also recovered £0.86m from the Government through the Coronavirus Job Retention Scheme grant as well as benefitting from the Business Rates holiday.
Exceptional profits during 2020 were £0.09m (2019: £0.42m exceptional loss) being the movement in the fair value of the DWH debtor.
Overall operating loss before interest was £2.29m (2019: £0.6m profit). Interest payable was £0.15m (2019: £0.13m) due to the interest charges on the fully drawn loan facility of £6.0m. The tax credit of £0.23m (2019: credit £0.15m) relates to the movement in deferred tax during the period. Loss after tax was £2.04m (2019: £0.79m profit).
The increase in cash reserves of £4.2m in the period (2019: £0.95m decrease) includes £5.5m of additional loan drawdown, £0.37m of cash deficit from operating activities, £0.1m of cash receipts from DWH in respect of properties sold in the period, £1.5m of cash receipts from the sale of the Opperman site and is net of £2m of capital expenditure.
| KEY PERFORMANCE INDICATORS |
The Group uses raceday attendance, trading operating profit and cash generated from operating activities, as the primary performance indicators. Total attendance was 12,000 (2019: 178,000). Operating profit is shown within the profit and loss account on page 20 and cash generated from trading activities is shown within the consolidated statement of cashflows on page 26.
| PRINCIPAL RISKS AND UNCERTAINTIES |
Impact of COVID?19
The global pandemic and the necessary restrictions this has placed upon business activities and public movement significantly impacted trading in 2020. The roadmap outlined by the Government on 22nd February provides the business with a clearer guidance on expectations for 2021. These assumptions have been factored into the Company's response to this risk which is covered in the Chairman's Statement and the Going Concern Basis of Preparation.
Cashflow Risk
The main cash flow risks, under normal trading circumstances, are the vulnerability of race meetings to abandonment due to adverse weather conditions and fluctuating attendances particularly for the Party in the Paddock events, together with the possibility of delayed property receipts from David Wilson Homes. The practice of covering the racetrack to protect it from frost and investment in improved drainage, as well as insuring key racedays, mitigates some of the raceday risk. Regular review of variable conferencing costs reduces the impact of a decline in conference sales. The timing and amount of receipts from David Wilson Homes is dependent upon the rate of sales of residential plots. The risk of delayed receipts is mitigated to some extent by the long stop dates in the sale agreement, in respect of the minimum guaranteed land value. Short term cash flow risk is mitigated by regular review of the expected timing of receipts and by ensuring that the Group has committed facilities in place in order to manage its working capital and investment requirements.
Credit Risk
The Group's principal financial assets are trade and other receivables. The Group's credit risk is primarily attributable to its trade receivables. The amounts in the balance sheet are net of allowances for doubtful receivables. Payment is required in advance for ticket, hospitality, sponsorship, and conference and event sales, reducing the risk of bad debt. The David Wilson Homes debtor is backed by a Parent Company Guarantee from Barratt Developments Plc.
Liquidity Risk
In order to maintain liquidity to ensure that sufficient funds are available for both ongoing operations and the property redevelopment, the Group uses a mixture of term debt and revolving credit facilities which are secured on the property assets of the Group. The Board regularly review the facilities available to the Group to ensure that there is sufficient working capital available.
Price Risk
The Group operates within the leisure sector and regularly benchmarks its prices to ensure that it remains competitive, as well as having a dynamic pricing model in place.
Cost Risk
The Group has had a historically stable cost base. The key risks are unforeseen maintenance liabilities, movement in utility costs and additional regulatory costs for the racing business. A programme of regular maintenance is in place to manage the risk of failure in the infrastructure, while utility contracts are professionally managed. The Group is a member of the Racecourse Association, a trade association which actively seeks to manage increases in regulatory risk.
Interest Rate Risk
The Group manages its exposure to interest rates through an appropriate mixture of interest rate caps and swaps, where necessary.
| GOING CONCERN |
The Board has undertaken a full, thorough and continual review of the Group's forecasts and associated risks and sensitivities, over the next twelve months. The extent of this review reflects the 22nd February 2021 easing of lockdown guidance from the Government as well as specific financial circumstances of the Group.
The Board reviews the cash flow and working capital requirements in detail on a frequent basis, whilst during the past twelve months under the current COVID?19 circumstances the regularity of this scrutiny has increased.
Key trading assumptions made within the cash flow projections base case scenario include:
• Racing taking place behind closed doors for the first 10 racedays of 2021 until the end of May.
- Once the government restrictions on attending sporting events is eased, the raceday on 10th June will be held with a crowd (albeit with social distancing and a capped attendance of 1,000 indoors or 4,000 outdoors). The next milestone on 21st June results in the lifting of all limits on social contact which we have assumed will allow the racecourse to host an unrestricted attendance for the remaining 18 racedays of the year and into 2022.
• The two 2021 Party in the Paddock concerts in August and September will continue to take place as planned with no crowd restrictions or social distancing measures.
• Licenced Betting Offices re?opening on 12th April in line with the government announcement on the easing of restrictions on non?essential retail.
• The Hotel and Conference & Events businesses will generate minimal revenue and trade at break?even or make minor losses in 2021.
• The Nursery will operate as normal during the year.
Alongside these trading businesses the following additional actions have been taken:
•Newbury will continue to utilise the Government's Coronavirus Job Retention Scheme and furlough staff on a flexible basis where appropriate, in accordance with scheme rules.
• Business rate relief has been assumed to extend through to the end of June 2021, in line with Government guidance.
• Agreement was confirmed with NatWest Bank on 31st July 2020 on the replacement of existing financial covenants, relating to the fully drawn £6m credit facility, with a single minimum liquidity level covenant measure of £1,200,000, through to March 2022.
• The CBEL loan final payment due in November 2020 has been deferred until April 2022. This will coincide with the current David Wilson Homes (under a Barratt Developments plc PCG) payment profile indicates that the minimum amount the company can expect to receive by this date will be £10.8m.
• 2021 Capex has been restricted.
• All non?essential expenditure continues to be carefully monitored.
Severe downside Scenario
The impact of COVID?19 is constantly being assessed and the situation (along with Government support) is subject to potential change. The Government's roadmap on the easing of the lockdown means that the racing and nursery operations have been able to plan accordingly. Similarly, the Hotel and C&E hospitality businesses, which have been closed since March 2020, will now be able to create re?opening plans. Whilst the board is confident that the assumptions used in the base case are reasonable, a further scenario has been considered.
This worst case is severe and considers the potential of a further Government lockdown due to COVID?19. Under this extreme scenario racing would remain behind closed doors for the whole of 2021, with no crowds possible until the start of next year. LBO's would also remain closed for the remainder of 2021.
In the extremely unlikely scenario that these events do all occur, sufficient headroom for liquidity will still continue to be achieved for the next 12 months without any mitigating measures needed to be put in place.
The Group has committed credit facilities, which are in place as an effective bridging facility through to the final David Wilson Homes payment of £10.8m due by April 2022, and the Board has concluded that it has a reasonable expectation that the Group and Parent Company has adequate resources, banking facilities and arrangements in place to continue in operational existence for the foreseeable future and therefore the Going Concern basis has been adopted in preparing the financial statements.
Nonetheless, as at the date of this report, the possible continued impact of COVID 19 provides a level of uncertainty as the situation for the racing industry and our other businesses continually changes. The Board continue to monitor this routinely and to develop detailed forecasts in response to the changing environment and through reviews of mitigation and contingency plans.
SECTION 172 STATEMENT
Section 172 of the Companies Act 2006 requires Directors to take into consideration the interests of stakeholders and other matters in their decision making. The Directors continue to have regard to the interests of the Company's employees, members, partners, the horseracing community and other stakeholders, the impact of it's activities on the local community, the environment and the Company's reputation for good business conduct, when making decisions. In this context, acting in good faith and fairly, the Directors consider what is most likely to promote the success of the Company and for these stakeholders in the long term. For example:
- The engagement of the business with the horseracing community and stakeholders, such as the Racecourse Association and Horsemen's Group is routinely considered during the board's decision-making process.
- The Company has a frequent forum with local residents to ensure communication lines are open & accessible.
- The Company continues to regularly engage with Annual members and corporate box holders and to encourage feedback.
- We encourage a supportive and inclusive working culture within the business as set out in our 'Uniquely Newbury' employee programme, alongside supporting personal development and promoting wellness & mental health awareness.
Key board decisions made during the year in the interests of overall business success set out below:
| Significant events/decisions | Key S172 matters affected | Actions and impact |
| Response to COVID-19 | Customers, employees, shareholders |
|
| Restructuring of staff base | Employees |
|
| Sale of 'Opperman' site | Shareholders, local community |
|
| Purchase of apartment freeholds | Shareholders, local community |
|
| CORPORATE AND SOCIAL RESPONSIBILITY |
Employee Consultation
The Group places considerable value on the involvement of its employees and has continued to keep them informed on matters affecting them as employees and on the various factors affecting the performance of the Group and the Company. This is achieved through formal and informal meetings, and distribution of the annual financial statements. Employee representatives are consulted regularly on a wide range of matters affecting their current and future interests with our 'Uniquely Newbury' employee engagement programme at the forefront of these initiatives.
Policy on Payments to Suppliers
Although no specific code is followed, it is the Group's and Company's policy, unless otherwise agreed with suppliers, to pay suppliers within 30 days of the receipt of an invoice, subject to satisfactory performance by the supplier. The amount owed to trade creditors at 31 December 2020 is 2% (2019: 4%) of the amounts invoiced by suppliers during the year. This percentage, expressed as a proportion of the number of days in the year, is 8 days (2019: 16 days).
Business Relationships
The Directors recognise the need to foster the company's business relationships with suppliers, customers and others. To that effect, the Company have policies and procedures in place, by which principal decisions taken by the company during the financial year were followed.
Disabled Employees
Applications for employment by disabled persons are always fully considered, bearing in mind the abilities of the applicant concerned. In the event of members of staff becoming disabled every effort is made to ensure that their employment with the Group continues and the appropriate training is arranged. It is the policy of the Group and the Company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.
Charitable Donations
During the year the Group made charitable contributions totalling £2,225 to national charities (2019: £5,905).
This report was approved by the board and signed on its behalf by:
J M Thick Chief Executive 30th April 2021 |
CONSOLIDATED PROFIT AND LOSS ACCOUNT
YEAR ENDED 31 DECEMBER 2020
| 2020 | Restated* 2019 | ||
| Note | £000 | £000 | |
Turnover | 4 | 8,487 | 20,794 |
Cost of sales | (9,501) | (17,173) | |
Gross (loss)/profit | (1,014) | 3,621 | |
Administrative expenses | (2,223) | (2,983) | |
Other operating income | 5 | 857 | - |
Gain on revaluations | - | 388 | |
Net exceptional items | 6 | 94 | (422) |
Operating (loss)/profit | 7 | (2,286) | 604 |
Interest receivable and similar income | 9 | 171 | 169 |
Interest payable and similar expenses | 10 | (150) | (126) |
(Loss)/profit before tax | (2,265) | 647 | |
Tax on (loss)/profit | 11 | 225 | 145 |
(Loss)/profit for the financial year | (2,040) | 792 | |
Owners of the parent | (2,040) | 792 | |
Profit per share (basic and diluted)(60.9p) 23.7p All amounts derive from continuing operations |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 31 DECEMBER 2020
| 2020 | Restated 2019 | |||||
| Note | £000 | £000 | ||||
(Loss)/profit for the financial year | (2,040) | 792 | ||||
Other comprehensive income | ||||||
Remeasurement of the net defined benefit schemes | (600) | (407) | ||||
Deferred tax on actuarial (loss)/gain current year charge | 114 | 69 | ||||
Deferred tax prior year adjustment | 5 | 4 | ||||
Other comprehensive (loss)/income for the year | (481) | (334) | ||||
Total comprehensive income for the year | (2,521) | 458 | ||||
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2020
| 2020 | Restated 2019 | ||||
| Note | £000 | £000 | |||
Fixed assets | |||||
| Tangible assets | 14 | 41,549 | 40,388 | ||
| Investments | 15 | 117 | 117 | ||
| Investment property | 16 | - | 1,500 | ||
41,666 | 42,005 | ||||
| Current assets | |||||
| Stocks | 17 | 177 | 272 | ||
| Debtors: amounts falling due after more than one year | 18 | 14,046 | 13,728 | ||
| Debtors: amounts falling due within one year | 18 | 4,130 | 4,655 | ||
| Cash at bank and in hand | 5,529 | 1,269 | |||
23,882 | 19,924 | ||||
Creditors: amounts falling due within one year | 19 | (2,304) | (5,384) | ||
Net current assets | 21,578 | 14,540 | |||
Total assets less current liabilities | 63,244 | 56,545 | |||
Creditors: amounts falling due after more than one year | 20 | (8,611) | (500) | ||
Provisions for liabilities | |||||
| Provisions | 22 | (4,169) | (3,561) | ||
| Pension liability | 25 | (1,538) | (1,019) | ||
Net assets | 48,926 | 51,465 | |||
Capital and reserves | |||||
| Called up share capital | 24 | 335 | 335 | ||
| Share premium | 10,202 | 10,202 | |||
| Revaluation reserve | 24 | 75 | 75 | ||
| Capital redemption reserve | 24 | 143 | 143 | ||
| Profit and loss account | 38,119 | 40,640 | |||
Shareholders' funds | 48,874 | 51,395 | |||
Capital grants | |||||
| Deferred capital grants | 26 | 52 | 70 | ||
48,926 | 51,465 | ||||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2020
| Called up share capital | Share premium account | Capital redemption reserve | Revaluation reserve | Profit and loss account | Total equity | |
| £000 | £000 | £000 | £000 | £000 | £000 | |
At 1 January 2020 | 335 | 10,202 | 143 | 75 | 40,640 | 51,395 |
Loss for the year | - | - | - | - | (2,040) | (2,040) |
Other comprehensive loss | - | - | - | - | (481) | (481) |
At 31 December 2020 | 335 | 10,202 | 143 | 75 | 38,119 | 48,874 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2019
| Called up share capital | Share premium account | Capital redemption reserve | Revaluation reserve | Profit and loss account | Total equity | |
| £000 | £000 | £000 | £000 | £000 | £000 | |
At 1 January 2019 - As previously stated | 335 | 10,202 | 143 | 75 | 39,830 | 50,585 |
| Prior year adjustment | - | - | - | - | 352 | 352 |
At 1 January 2019 - As restated | 335 | 10,202 | 143 | 75 | 40,182 | 50,937 |
| Profit for the year - Restated | - | - | - | - | 792 | 792 |
Other comprehensive loss | - | - | - | - | (334) | (334) |
At 31 December 2019 | 335 | 10,202 | 143 | 75 | 40,640 | 51,395 |
CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 31 DECEMBER 2020
| 2020 | Restated 2019 | |||
| £000 | £000 | |||
| Cash flows from operating activities | ||||
(Loss)/profit for the financial year | (2,040) | 792 | ||
Adjustments for: | ||||
| Exceptional items | (94) | 422 | ||
| Amortisation of capital grants | (18) | (18) | ||
| Depreciation charges | 1,194 | 1,056 | ||
| Interest paid | 150 | 126 | ||
| Interest received | (171) | (169) | ||
| Tax credit | (225) | (145) | ||
| Decrease/(increase) in stocks | 95 | (22) | ||
| Decrease in debtors | 860 | 1,001 | ||
| (Decrease)/increase in creditors | (450) | 291 | ||
| Net fair value losses/(gains) recognised in P&L | - | (388) | ||
| Corporation tax received | 207 | - | ||
| Other associated property receipts | 236 | 12 | ||
| Pension top up payments | (109) | (163) | ||
| Net cash generated from operating activities | (365) | 2,795 | ||
| Cash flows from investing activities | ||||
| Receipts from exceptional sale of fixed assets | 101 | 1,086 | ||
| Purchase of fixed assets | (2,032) | (2,855) | ||
| Sale of tangible fixed assets | - | 1 | ||
| Purchase of freeholds | (411) | - | ||
| Sale of investment properties | 1,500 | - | ||
| Interest received | 7 | 7 | ||
Net cash from investing activities | (835) | (1,761) | ||
| Cash flows from financing activities | ||||
| Receipt of new bank loan | 5,500 | 500 | ||
| Repayment of CBEL loan | - | (2,472) | ||
| British Championship loan repayment | 9 | 9 | ||
| Interest paid | (49) | (25) | ||
Net cash used in financing activities | 5,460 | (1,988) | ||
Net increase/(decrease) in cash and cash equivalents | 4,260 | (954) | ||
Cash and cash equivalents at beginning of year | 1,269 | 2,223 | ||
Cash and cash equivalents at the end of year | 5,529 | 1,269 | ||
Cash and cash equivalents at the end of year comprise: | ||||
Cash at bank and in hand | 5,529 | 1,269 | ||
5,529 | 1,269 | |||
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2020
1. General information
Newbury Racecourse PLC (the "Company") is a public company incorporated, domiciled and registered in England in the UK. The registered number is 00080774 and the registered address is The Racecourse, Newbury, Berkshire, RG14 7NZ.
2. Accounting policies
2.1 Basis of preparation of financial statements
The Group and company financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Profit and Loss Account in these financial statements.
The Parent Company is included in the consolidated financial statements, and is considered to be a qualifying entity under FRS 102 paragraphs 1.8 to 1.12. The following exemptions available under FRS 102 in respect of certain disclosures for the Parent company financial statements have been applied:
• The reconciliation of the number of shares outstanding from the beginning to the end of the period has not been included a second time; and
• No separate Parent Company Cash Flow Statement with related notes is included
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these financial statements. Judgements made by the directors, in the application of these accounting policies that have significant effect on the financial statements are discussed in note 3.
2.2 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries Newbury Racecourse Enterprises Limited and Newbury Racecourse Management Limited.
2.3 Going concern
The Board has undertaken a full, thorough and continual review of the Group's forecasts and associated risks and sensitivities, over the next twelve months. The extent of this review reflects the 22nd February 2021 easing of lockdown guidance from the Government as well as specific financial circumstances of the Group.
The Board reviews the cash flow and working capital requirements in detail on a frequent basis, whilst during the past twelve months under the current COVID 19 circumstances the regularity of this scrutiny has increased.
The Group closed the financial year with £5.5m cash and fully drawn credit facilities of £8.6m, which are in place through to April 2022, by which point the final payment of £10.8m from David Wilson Homes will be received. The Board has concluded that it has a reasonable expectation that there are adequate resources, controls and banking facilities in place to continue in operational existence for the foreseeable future and therefore the going concern basis has been adopted in preparing the financial statements. The full scenario and assumptions used for the future cash flow forecast is detailed in the Strategic Report on page 7. Essentially the business has continued in operation over the past 12 months, despite the various lockdowns and restrictions in place, due to it's ability to race behind closed doors and generate media & betting revenues, which it is fully expected will continue to provide stabilised income into the future. The Board continue to monitor the situation and develop its detailed forecasts to respond the changing environment and to develop mitigation plans when necessary.
Whilst inherent uncertainties still exist in the sector with regard to the phased reintroduction of full attendances, given the financial position of the Company and Group (above), the directors have not identified a material uncertainty that may give rise to significant doubt over going concern.
No adjustments have been made that would otherwise be required were the going concern basis of preparation for the Company or Group not considered to be appropriate.
2.4 Revenue recognition
Services rendered, raceday income including admissions, catering revenues, sponsorship and licence fee income is recognised on the relevant raceday. Annual membership income and box rental is recognised over the period to which they relate.
Other income streams are also recognised over the period to which they relate, for example, ground rents received from residents, conference income is recognised on the day of the conference, the Lodge hotel income is recognised over the duration of the guests stay and nursery income is recognised as the child attends the nursery.
For purposes of improved transparency over revenue, all income relating to prizemoney such as HBLB grants and Owner's entry stakes are allocated as revenue rather than offsetting cost of sales.
Sale of goods, revenue is recognised for the sale of food and liquor when the transaction occurs.
Property receipts
Property receipts are recognised in accordance with the substance of the transaction being that of an exceptional sale of land. The minimum guaranteed sum, as set out in the agreement with David Wilson Homes, is recognised at the point of sale. In accordance with FRS102, at each reporting date, the sum receivable is re estimated based upon currently projected land value with the difference between this value and the discounted net present value recorded in the profit and loss account.
2.5 Investment property
Investment in properties are freehold interests which are held to earn rental income. Investment properties are recognised at fair value.
2.6 Other investments
Investments in subsidiaries are measured at cost less accumulated impairment.
Investments in unlisted Group shares, whose market value can be reliably determined, are remeasured to market value at each balance sheet date. Gains and losses on remeasurement are recognised in the Consolidated Profit and Loss Account for the period. Where market value cannot be reliably determined, such investments are stated at historic cost less impairment.
2.7 Investment income
Dividends and other investment income receivable are included in the Profit and Loss Account inclusive of withholding tax but exclusive of other taxes.
2.8 Lease assets receivable
Lease assets receivable relates to freeholds that the Group has acquired, or has the option to acquire, from David Wilson Homes. The freeholds concerned relate to residential apartment buildings constructed as part of the overall residential development. Individual apartments in the development were sold by David Wilson Homes to purchasers under long term leases, typically of 125 years. Under the terms of their long term leases, lessees are required to pay 'ground rent' to the freehold owner for the duration of their lease. As the majority of the risks and rewards, for much of the life of the property, lie with the lessee, the Group does not recognise a fixed asset in relation to the freehold to the extent attributable to the lease.
These are initially recognised at fair value which is calculated based on the net present value of future cashflows arising from the ground rents receivable over the lease term. This also represents the market value of the freehold agreed at the time of the underlying transaction. These amounts are included in the balance sheet as debtors less than and greater than one year. Ground rent receipts relating to the period, are applied against the net receivable balance. The leases receivables are monitored for indications of impairment by comparing the net present value of future rentals receivable to the carrying value of the lease receivable. Where there is a shortfall in the present value of the future ground rents receivable, an impairment of the carrying value of the lease receivable is recognised.
2.9 Tangible fixed assets
Tangible fixed assets are stated at cost or valuation, net of depreciation and any provision for impairment.
Land is not depreciated. Depreciation on other assets is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight line method.
Depreciation is provided on the following basis:
Freehold buildings and outdoor fixtures 2% - 5% straight line
Tractors and motor vehicles 5% - 10% straight line
Fixtures, fittings and equipment 2% - 25% straight line
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date (see note 3).
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Consolidated Profit and Loss Account.
2.10 Impairment of assets
Financial assets (including trade and other debtors)
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate. For financial instruments measured at cost less impairment an impairment is calculated as the difference between its carrying amount and the best estimate of the amount that the Company would receive for the asset if it were to be sold at the reporting date. Interest on the impaired asset continues to be recognised through the unwinding of the discount. Impairment losses are recognised in profit or loss. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.
Non financial assets
The carrying amounts of the entity's non financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. The recoverable amount of an asset or cash generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash generating unit").
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
2.11 Impairment of fixed assets and goodwill
Assets that are subject to depreciation or amortisation are assessed at each balance sheet date to determine whether there is any indication that the assets are impaired. Where there is any indication that an asset may be impaired, the carrying value of the asset (or cash generating unit to which the asset has been allocated) is tested for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's (or CGU's) fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Non financial assets that have been previously impaired are reviewed at each balance sheet date to assess whether there is any indication that the impairment losses recognised in prior periods may no longer exist or may have decreased.
2.12 Stocks
Stocks are valued at the lower of cost and net realisable value. Provision is made for obsolete, slow moving or defective items where appropriate.
2.13 Repairs and renewals
Expenditure on repairs and renewals and costs of temporary facilities during construction works are written off against profits in the year in which they are incurred.
2.14 Non recognised financial information
The profit and loss account includes measures which are not accounting measures under UK GAAP which are used to access the financial performance of the business.
2.15 Cash and cash investments
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours.
Cash which is held on deposits that are not accessible with less than 24 hours' notice, is deemed to not be liquid and is therefore classified as cash investments on the balance sheet.
2.16 Provisions for liabilities
Provisions are made where an event has taken place that gives the Group a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to the Consolidated Profit and Loss Account in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the Balance Sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Balance Sheet.
2.17 Dividends
Where dividends are declared, appropriately authorised (and hence no longer at the discretion of the Group) after the balance sheet date but before the relevant financial statements are authorised for issue, dividends are not recognised as a liability at the balance sheet date because they do not meet the criteria of a present obligation in FRS102.
2.18 Current and deferred taxation
The tax expense for the year comprises current and deferred tax. Tax is recognised in the Consolidated Profit and Loss Account, except that a charge attributable to an item of income and expense recognised as other
comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company and the Group operate and generate income.
Deferred tax is provided on timing differences which arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements. The following timing differences are not provided for: differences between accumulated depreciation and tax allowances for the cost of a fixed asset if and when all conditions for retaining the tax allowances have been met; and differences relating to investments in subsidiaries, to the extent that it is not probable that they will reverse in the foreseeable future and the reporting entity is able to control the reversal of the timing difference. Deferred tax is not recognised on permanent differences arising because certain types of income or expense are non taxable or are disallowable for tax or because certain tax charges or allowances are greater or smaller than the corresponding income or expense.
Deferred tax is provided in respect of the additional tax that will be paid or avoided on differences between the amount at which an asset (other than goodwill) or liability is recognised in a business combination and the corresponding amount that can be deducted or assessed for tax. Goodwill is adjusted by the amount of such deferred tax.
Deferred tax is measured at the tax rate that is expected to apply to the reversal of the related difference, using tax rates enacted or substantively enacted at the balance sheet date. For non depreciable assets that are measured using the revaluation model, or investment property that is measured at fair value, deferred tax is provided at the rates and allowances applicable to the sale of the asset/property. Deferred tax balances are not discounted.
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that is it probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.
2.19 Grants
Capital grants
Capital grants received, apart from HBLB grants, are accounted for as deferred grants on the Balance Sheet and credited to the Profit and Loss Account over the estimated economic lives of the asset to which they relate. Capital grants are in deferred capital grants on the Balance Sheet as the associated works have been performed and it is not in any way repayable.
Horserace Betting Levy Board (HBLB) grants
The HBLB provides funding to racecourses which is used to support racing activities. HBLB grants are accounted for under the performance model in line with standard industry practice. HBLB grants are credited to the Profit and Loss Account as revenue in the month of the raceday, the corresponding debtor is carried on the Balance Sheet until the cash is received.
Coronavirus Job Retention Scheme
The Government has provide grants, such as The Coronavirus Job Retention Scheme grants are accounted for under the performance model in line with accounting standards, with grants credited to the Profit and Loss Account as other operating income in the month of the corresponding payroll expense. The corresponding debtor is carried on the balance sheet until the cash is received.
2.20 Pensions
Defined contribution plans and other long term employee benefits
A defined contribution plan is a post employment benefit plan under which the company pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the profit and loss account in the periods during which services are rendered by employees.
Defined benefit plans
A defined benefit plan is a post employment benefit plan other than a defined contribution plan. The entity's net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to
determine its present value. The fair value of any plan assets is deducted. The entity determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate as determined at the beginning of the annual period to the net defined benefit liability (asset) taking account of
changes arising as a result of contributions and benefit payments.
The discount rate is the yield at the balance sheet date on AA credit rated bonds denominated in the currency of, and having maturity dates approximating to the terms of the entity's obligations. A valuation is performed annually by a qualified actuary using the projected unit credit method. The entity recognises net defined benefit plan assets to the extent that it is able to recover the surplus either through reduced contributions in the future or through refunds from the plan.
Changes in the net defined benefit liability arising from employee service rendered during the period, net interest on net defined benefit liability, and the cost of plan introductions, benefit changes, curtailments and settlements during the period are recognised in profit or loss.
Remeasurement of the net defined benefit liability/asset is recognised in other comprehensive income in the period in which it occurs.
2.21 Borrowing costs
Interest bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs are accounted for on an accrual basis in the profit and loss account using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period which they arise. Debt issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
2.22 Financial instruments
Trade and other debtors / creditors
Trade and other debtors are recognised initially at transaction price plus attributable transaction costs. Trade and other creditors are recognised initially at transaction price plus attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any impairment losses in the case of trade debtors. If the arrangement constitutes a financing transaction, for example if payment is deferred beyond normal business terms, then it is measured at the present value of future payments discounted at a market rate of instrument for a similar debt instrument.
Interest bearing borrowings classified as basic financial instruments
Interest bearing borrowings are recognised initially at the present value of future payments discounted at a market rate of interest. Subsequent to initial recognition, interest bearing borrowings are stated at amortised cost using the effective interest method, less any impairment losses.
Fair value measurement
Assets and liabilities that are measured at fair value are classified by level of fair value hierarchy as follows:
Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 - inputs for the asset or liability that are not based on observable market data.
2.23 Exceptional items
Directors exercise their judgement in classification of certain items as exceptional and outside the Group's underlying results. The determination of whether items should be separately disclosed as an exceptional item or other adjustment requires judgement on its materiality, nature and incidence. Accounting transactions related to the DWH agreement are considered outside the ordinary course of business, see note 5 for further detail.
2.24 Non recognised financial information
The Consolidated Profit and Loss Account includes measures which are not accounting measures under UK GAAP which are used to access the financial performance of the business. These measures which are termed 'non GAAP' include reference to EBITDA within the Strategic Report.
3. Judgments in applying accounting policies and key sources of estimation uncertainty
In the application of the Group's accounting policies, which are described in note 2, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Critical judgements in applying the Group's accounting policies
The following are the critical judgements, apart from those involving estimations (which are dealt with separately below), that the directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the financial statements;
David Wilson Homes
The fair value of the long term David Wilson Homes debtor balance is determined with reference to current market conditions and to reflect the risks specific to the balance due. Estimates include the current value of the land as determined by the agreed parameters of the land sale agreement with David Wilson Homes, together with the application of a suitable discount rate.
Impairment of assets
Determining whether assets are impaired requires an estimation of the value in use of the cash generating units to which assets have been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash generating unit and a suitable discount rate in order to calculate present value. The carrying amount of tangible fixed assets and investment property at the Balance Sheet date was £41.7 million. No impairment loss was recognised in 2020 as there was no further indication of impairment required (2019: no impairment loss).
Residual values and useful economic lives
The Group's tangible fixed assets are reviewed, whenever there is a relevant change in circumstances or after relevant review, in order to assess whether the residual values and useful economic lives continue to be appropriate for calculating depreciation in the period. There was no change in residual values or useful economic lives during 2020.
4. | EXCEPTIONAL ITEMS | |||||
| 2020 | 2019 | |||||
| £000 | £000 | |||||
Net book value of asset disposal | (6) | (3) | ||||
DWH debtor movement in fair value | 100 | (419) | ||||
94 | (422) | |||||
| In accordance with note 2, accounting transactions related to the DWH agreement are considered outside the ordinary course of business. |
5. PROFIT PER SHARE
Basic and diluted profit per share is calculated by dividing the loss attributable to ordinary shareholders for the year ended 31 December 2020 of £2,040,000 (2019 restated: profit £792,000) by the weighted average number of ordinary shares during the year of 3,348,326 (2019: 3,348,326).
| 6. | EXPLANATION OF PRIOR YEAR ADJUSTMENTS | |||||
| The group has restated comparative financial information in order to bring the accounting treatment of the leasehold asset receivable in line with the requirements of FRS 102. In 2012, under the terms of the David Wilson Homes land sale agreement, part of the consideration arising from David Wilson Homes was an option to purchase, at a substantial discount to market value, the interest in the ground rents of the new residential apartment buildings. This had been recognised in the financial statements as a lease receivable of £3.56m for the present value of all expected future rentals is recognised at 31 December 2016, with any ground rents received being netted off against the debtor. On further consideration, the accounting of the present value of the lease receivable has been updated to reflect the length of the leasehold period of 125 years, and to split out the value of the exercised freehold option that has been purchased to be held as freehold property. The effect on the financial statements as at 1 January 2019 is an increase in the lease asset receivable of £0.18m, an increase in freehold property of £0.17m and an increase in profit and loss reserve of £0.35m. The impact on 2019 profit for the year is £0.16m (effective interest on unwinding of discount applied to receivables) and the impact on the balance sheet at 31 December 2019, is an increase in lease asset of £0.34m, an increase in freehold property of £0.17m and an increase in profit and loss reserve of £0.51m. | ||||||
| At 1 January 2019 | At 31 December 2019 | |||||
| £000 | £000 | |||||
RECONCILIATION OF EQUITY | ||||||
Equity reported prior to restatement | 50,585 | 50,881 | ||||
| Prior period adjustment: | ||||||
| Recognition of effective interest on lease asset receivable | 352 | 514 | ||||
| 50,937 | 51,395 | |||||
| 2019 | |||||
| £000 | |||||
RECONCILIATION OF PROFIT FOR YEAR ENDED 31 DECEMBER 2019 | |||||
Profit for the financial period previously reported | 630 | ||||
| Recognition of effective interest on lease asset receivable | 162 | ||||
792 | |||||
NOTES
The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2020 or 2019, but is derived from those accounts. Statutory accounts for 2019 have been delivered to the Registrar of Companies and those for 2020 will be delivered following the company's annual general meeting.
The information included in this announcement is taken from the financial statements which are expected to be dispatched to the members shortly and will be available at www.newburyracecourse.co.uk.
This announcement is based on the Company's financial statements, which are prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland and with those parts of the Companies Act 2006 that are applicable to companies reporting under UK GAAP.
Neither an audit nor a review provides assurance on the maintenance and integrity of the website, including controls used to achieve this, and in particular whether any changes may have occurred to the financial information since first published. These matters are the responsibility of the directors but no control procedures can provide absolute assurance in this area.
Legislation in the United Kingdom governing the preparation and dissemination of financial information differs from legislation in other jurisdictions.
This preliminary statement was approved by the Board of Directors on 29 April 2021
