MINISTRY PAPER [, ;; 2.. CAYMANAS TRACK LIMITED! ( ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS FOR YEAR ENDED MARCH 31, 2011.
1.0
INTRODUCTION
1.1 The matter for tabling in the Houses of Parliament is the annual report and audited financial statements for Caymanas Track Limited (CTL) for the financial year ended March 31, 2011. The Company is incorporated in Jamaica, wholly owned by the Government of Jamaica through the Accountant General and the Commissioner of Lands and is limited by shares. CTL's principal activities comprise the promotion of horseracing at Cayrnanas Park under licence, promotion of simulcast horseracing, and the running of pari-mutuel pools (on and off the track).
2.0
OPERATING OVERVIEW
2.1 Despite the ongoing competition for the gaming dollar, CTL continued its focus on attracting new punters, maintaining its existing customer base and improving the facilities at the racing plant. These activities, along with the rebranding of the entity are expected to enhance divestment prospects. The following highlight some of the activities pursued. 2.2
Racing
2.2.1 Table I shows that racing income consisted of earnings from local and simulcast betting. Local racing was the larger component (58.51 %) of turnover, grossing $2,505.44 million over 85 race-days, compared to $2,518.14 million over 80 race-days in 200911 o. Simi lady for simulcast racing, the number of racedays increased (by 16 days), while revenue fell (by $455.60 million). 2.3 Capital Expenditure 2.3.1 Work 011 improving the plant in conformity with international standards continued during the year and enhancements were undertaken at a total cost of $62.44 million (20 10 - $33.44 million). Expenditure included $43.41 million to acquire machinery and tracking communication equipment (70% of capital expenditure), as well as $14.49 million for construction work in progress. Purses 2.4 2.4.1 Purse payments rose by $60.02 million to $56l.68 million for the year, compared to $501.66 million in 200911 O. The additional payments are in respect of increased appearance fees which rose from $3,250 to $5,000, etTective June 1, 2010. The rise in fees are expected to 1
encourage acqUIsItIon and ownership of horses, increase the number of competing horses and facilitate contribution to owners who do not finish in the top six in each race.
3.0
DISCLOSURES
3.1
Auditors' Report
3.1.1 The Auditors, PricewaterhouseCoopers gave their unqualified opmlOn, indicating that proper accounting records were kept and that the financial statements prepared give a true and fair view of the affairs of the Company as at March 31, 2011. The auditors noted that the statements were prepared in accordance with International Financial Reporting Standards and complied with the provisions ofthe Jamaican Companies Act. 3.1.2 Without qualifying their opinion, the Auditors drew attention to CTL's accumulated deficit of $112.89 million and its $92.53 million excess of liabilities over asscts as at March 31, 2011. This, the Auditors indicated, casts significant doubt on CTL's ability to continue as a going concern, given the existence of a material uncertainty as to whether the company will be able to realise its assets and discharge its liabilities in the normal course of business. 3.2
Emoluments of Senior Executives
3.2.1 During 2010111, the compensation package for the 9-member executive management team amounted to $29.96 million and represented 10.58% oftotal staff costs of $283.11 millionl. Executive emoluments ranged from $1.01 million (paid to the Chief Executive Officer who was employed from April 1-22, 2010) to an amount of $7.07 million. The full report on salary and allowances is attached at Appendix 1. Of note, compensation for the Board of directors ranged from $0.17 million to $2.36 million and details are outlined in Appendix II. 5.0
FINANCIAL HIGHLIGHTS
5.1. The summary profit and loss report, outlined in Table 2 indicates that notwithstanding a decline of $349.87 million in total expenses, CTL incurred a deficit of $56.72 million compared to the surplus of $11.86 million for 200911 O. The $56.72 million deficit was directly attributed to a decrease of $457.13 million in total revenue, due to reduced betting income. 5.2 As indicated previously, CTL's raceday sales declined significantly (by $468.66 million) due chiefly to a decline of $455.66 million in simulcast sales. CTL indicated that this resuited from severe weather conditions during the months of December 2010 to March 2011, which caused the cancellation of 676 races from several tracks in the United States of America and England. In addition, an investigation undertaken by the Office of the Contractor General (OCO) during the year, resulted in a reduction in the number of English tracks beaming simulcast to Jamaica during the OCG's review. It is also of note that competition for the betting dollar also affected the Entity's raceday earnings.
I
Excludes employer's statutory contribution or $23.84 million 2
5.3
Profit and Loss
-3,872.91 415.02 167.21 -225.82 -436.51 -80.10
-4,256.56 500.03 155.68 -221.8 -406.57 27.34
383.65
-9.01
-85.01 11.5 3 -4.02 -29.94 -107.44
-17.00 7.41 1.81 7.36 -392.98
-1.39
5.4 The chief contributor to the reduction in total expenses was cost of sales. This expense generally varies directly with racing income and hence declined by $383.65 million to a total $3,872.91 million and accounted for 85% of total expenses.
5.5 Balance Sheet 5.5.1 CTL's reduced sales, impacted directly, its liquidity, as evidenced by the increase in net current liabilities to $591.93 million from $478.90 million at March 31, 2010. The decline of $113.03 million in working capital occurred as current assets decreased by $69.81 million to $274.85 million, while current liabilities increased by $43.23 million. With respect to current assets, cash and short term deposits decreased by $82.50 million to $150.80 million, as flows from operations were insufficient to finance the Company's activities. The cash flow challenges also necessitated delayed payments to some creditors, hence the marginal increase in current liabilities at the end of the year. Most of these obligations have since been settled. 6.0
CONCLUSION
6.1 CTL's turnover was impacted negatively by various issues which effected a deficit of $56.72 million for the year. However, the Company remained focused on enhancing its level of sales, as well as improving the physical condition of the facilities at the Track, in anticipation of the divestment of the facility.
4
Audley Shaw, M.P.
Minister of Finance and Planning
November I ! ,2011
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Fik # 629/056
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