Read the NZRB 2017 Annual Report

Watch the NZRB 2017 AGM

A year of successful performance delivery has seen the New Zealand Racing Board (NZRB) announce a reported net profit of $144.0 million and an underlying operating profit result of $148.0 million for the year ending 31 July 2017, and comes following the Board’s announcement in April of additional industry funding of $12 million for stakes in 2017/18.

“The NZRB is delivering on its financial commitments and it is delivering on its commitments to increase support to the industry,” says NZRB Chair, Glenda Hughes.

“Our underlying operating profit before distributions, strategic initiatives and gain on sale of the Hamilton building is up $3.3 million (+2.3%) and continues our track record of increasing net profit year on year. We’ve done this by continuing to tightly manage costs, driving customer acquisition and pushing up our betting margins,” says Hughes.

“We are delivering on our financial commitments to racing and sport in New Zealand, distributing $137.6 million to the three racing Codes and making Commission payments of $9.3 million to National Sporting Organisations - up 16.1% on last year. We also provided $3.0 million to grassroots sports from gaming.

“Over the past year NZRB has delivered the Optimus programme, the largest technology project in 30 years. We have also made good progress on our other key strategic initiatives - the fixed odds betting platform, customer and channel improvements, racefields legislation and our optimise the calendar project. We estimate these projects, once fully delivered, will increase net profit to close to $200 million in 2019/20 year.

“We are confident that the key strategic initiatives being progressed will deliver a significant uplift in distributable profit, so earlier this year we announced our commitment to deliver some of the future funding increase early, by providing an additional $12 million to be applied to stakes in the 2017/18 season and again in the 2018/19 season subject to Board approval - the largest increase in stakes in the last ten years,” says Hughes.

NZRB CEO John Allen notes “as well as the reported financial results, we have provided underlying results for profit and expenses to provide a clearer view of NZRB’s underlying core business performance. Underlying results exclude investment in the key strategic initiative work, which were not included in the budget for 2016/17 as per the 2016 NZRB Statement of Intent, and any one-off gain on sale of buildings during the 2015/16 and 2016/17 years.

“Underlying operating expenses are down $5.1 million (3.7%) as we continue to actively control costs. We have made savings in underlying staff expenses of $4.4 million or 6.6% on last year - a significant shift in our ability to manage costs, while continuing to invest,” says Allen.

“We have increased total turnover by $7.4 million (0.3%) to $2.68 billion with gaming turnover increasing by $32.9 million (8.2%) to $436.3 million and betting turnover decreasing by 1.1% as a result of VIP restrictions under our new agreement with Tabcorp (-$32.2m or -21.2%), the loss of some high staking Elite customers, the high number of race meeting abandonments this year, and lack of major international sporting events in 2016/17 with the exception of the British & Irish Lions tour.

“This was partly offset by improved betting margins across many product categories, particularly in racing fixed odds betting up 1.1 percentage points on last year to 14.4%. The implementation of our new automated fixed odds betting platform will help us further improve our FOB margins from the 2017/18 financial year,” says Allen.

“We have delivered a number of Customer and Channels initiatives which has seen 192,200, active account customers place a bet over the past year - up 6.7% on last year, with our digital channels continuing to grow in popularity and accounting for 58% of betting activity and our TAB Mobile App remains our fastest growing touchpoint, up 63.5% on last year,” says Allen.

“While I am proud of the result my team have delivered, the exceptionally high number of abandonments this year have made things challenging. Over the last ten years, there has been an average of nine abandonments per season - this year we had four times that, with 36 meetings affected by abandonments, costing the industry $2.3 million in lost profit.

“This situation raises some fundamental questions about the state of and use of racing infrastructure and the investment required to address these sorts of issues. I am currently working on a plan in conjunction with the Codes to look at an industry agreed solution that will be a key focus for NZRB over the coming year,” says Allen.