BUSINESS PLAN UPDATE FOR 2018

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1 BUSINESS PLAN CONTENTS Foreword 2 3 Vision,mission,cultureandvalues 4 Strategicobjectives Budgetguide Updatefor

2 FOREWORD BY NICK RUST, CHIEF EXECUTIVE I am pleased to be sharing with you the British Horseracing Authority s updated three-year business plan and budget guide for the period In2016,wereleasedthisdocumentinordertoprovideadetailed summaryofthebreadthofourplannedactivityforthatyear,supported byabudgetwhichoutlineshowweintendedtofundthatactivity.it s alsoimportant,asanorganisationthatispredominantlyfundedbyits members,thatweareopenandtransparentaboutwherethebha s moneycomesfromandhowweintendtospendit. Beforewefocusonwhatistocomein2018,Iwanttoreflectuponourachievementsin2017.Theseinclude securingareformedlevyfromwhichfundsbeganflowinginaprilandwhichwillprovideasignificantboost tothegrassrootsofoursportfromthebeginningof2018.thebhatooktheleadonformingthediversityin RacingSteeringGroupandconductingarangeofjockeywelfareinitiativesfocusedonnutrition,concussion andmentalhealth.wealsoimplementedthefindingsofboththequinlanandintegrityreviews,includingthe establishmentofanindependentjudicialpanel.ourcommitmenttoequinewelfarethroughouthorses lives wasreinforcedthroughtheannouncementof30-dayfoalnotification,whileweagreedafixturesandfunding policyforthenextthreeyears,aimedatenhancingbettingandparticipationlevels. Inthefirstiterationofthisplanandguide,wesharedagreedchangestoBHAfeesoverthethree-yearperiod whichwouldbesubjecttoinflationplusa0.75percenttrigger.throughcostcontrolandefficienciesacross thebusiness,iampleasedtosaythatdespitehigherinflationlevels,wewereabletoholdfeerisesin2018at thelowerlevelof2.75percent,whichwillsaveparticipants 250,000infees. WhileIappreciateanyfeerisesareunwelcome,Idowanttomakeitclearthatwehavedoneallthatwecan throughbudgetcontrolovercosts,short-termsavingsinpeoplecostsandminorincomeimprovements,to ensureanimprovedfinancialperformancein2017,allowingustokeepfeerisesatthelowerlevelin2018 andtoremainontracktobreak-evenoverthethreeyears. 2

3 Whilewearealwaysreviewingourcostsandthinkingcreativelyastohowwecanreducetheoverallcostof runningthebha,atthesametimewe reseekingtodeliverevenmoreforoursport. In2018,thiswillinclude IntroductionofthenewRacingAuthorityaspartofmodernisingthewayracingisrun Completionofanindustry-wideconsultationwithindustryandsportingpartnersonafuturemodelfor stewardingtomaintainthehigheststandardsofregulation Aprojecttocreateavisionofracing sfutureandasetofvaluesthatmakeclearwhatoursportstandsfor. Thiswillbethefoundationofanewstrategytoappealtowideraudiencesandaddressrisksinatimeof politicalchangeandopportunity WorkwithgovernmenttomanagethepathtoBrexit,developingcontingencyplanswithMembersto ensurethebestpossibleoutcomeforallinoursport Engageoursportinpromotingthebehavioursthatmakeracingafairandcleansportthat ssafeforour humanandequineparticipants Newinitiativestoimprovehowracehorsesarecaredforovertheirwholelifetimeandmaintainthe reductioninhorsesthatareinjuredwhilstracing Ihopethatyoufindtheinformationcontainedinthisbusinessplanandbudgetguidehelpfulingaininga betterunderstandingofwhatwe redoingtobuildabrighterfutureforoursport,ourhorsesandourpeople. IwouldliketothankallforyourcontributionandsupportforBritishracingandlookforwardtoworking togethertoimplementthisplanin2018andbeyond. Thankyou, NickRust. 3

4 VISION, MISSION, CULTURE AND VALUES Our vision TOGETHER WE WILL BUILD A BRIGHTER FUTURE FOR OUR SPORT, OUR HORSES AND OUR PEOPLE. Our mission Wegovern,regulateandrepresentBritishracing. Weleadandco-ordinateactivitieswhichwillensuretheoverallhealth,developmentandgrowthoftheindustry. Weprioritisethewelfareofourhorsesandourpeople. Our culture Inaforward-thinkingenvironmentthatencouragescollaboration,cohesion,dedicationandbelief,theBHAprovides leadershipforbritishracingthatisprotectiveofthedeeptraditionsandproudhistoryofthesportwhilstguidingit towardsabrightfuture. TheBHA,withaculturethatrespectsandrecognisesthecontributionsandprofessionalismofitspeople,seeksto understand,beattentiveto,andbeproactiveinaddressingtheneedsofitsparticipantsandwiderstakeholders. OUR VALUES g Integrity: Wewillalwaysdotherightthingtouphold thebha sreputationforfairness,andtomaintainthe trustofourstakeholders. Accountable:Wetakepersonalresponsibilityfor ouractionsandstrivetoimprovethehealthof Britishracing. Credible: Weareopenandhonestaboutwhatwedo, andtreateveryonefairlyandwithrespect. Responsive: Westayin-tunewiththesport sdiverse stakeholderssothatwecaneffectivelymeetagreed objectivesandgoals. Progressive:Wepromoteaforward-thinkingand collaborativeculturewhilerespectingthestrong heritageofbritishracingasasportandanindustry. 4

5 STRATEGIC OBJECTIVES 2018 Keeping racing NE WEL Equine welfare leadership: Toprovideequine welfareleadership ING RA fair and clean: Togrowconfidence inbritishracing throughappropriate regulationand integrityprocedures To partner in WING BR growing British racing together: Toleadingrowing Britishracing s relevance,revenues andreputation TITIV Competitive and compelling racing: Todelivercompetitive andcompellingracing LD C World class racing: Tocontinuetodevelop aframeworkthat advancesbritain s abilitytostagethe bestqualityracing intheworld Looking after our people: Toimplement properly-funded andintegrated recruitment,training andretentionactivities Enablers: culture, values and capability innovation and technology customer insight and policy 5

6 Equine welfare leadership TheBHAleadsonequinewelfaremattersonbehalfofthesport,andin2018will developandimplementacomprehensiveequinewelfarestrategywhichwillimprove thecapture,analysisandbenchmarkingofracehorsewelfareinformation,whilealso drivingforwardthesport sthehorsecomesfirstwelfarecampaign. NE WEL Enhance the structure of the equine welfare team to deliver the BHA s equine welfare strategy Implementequinewelfarestrategyinitiativesrelatingtoresourcinganddiseasecontrol FurtherdeveloptheBritishthoroughbredracingindustryasaleaderinequinewelfareinBritain Consolidateandadvanceknowledge,policies,guidelinesandequinewelfarepractices Grow central database of racehorse welfare information Generateexternalprojectfundingtocreateadatabasetoretainequinewelfare-relatedinformationforanalysis andbenchmarking Communicatetorelevantpartiesandactonthefindings Initiateawelfareassessmenttooltobenchmarkandmonitorwellbeinginracehorses Review the structure of equine aftercare providers Researchandgainindustrysupportforanewstrategyforequineaftercareproviders Developprogrammesandinitiativesthatadvancewelfareoutcomesforracehorsesafterracing 6

7 Keeping racing fair and clean TheBHA sregulatoryandintegrityfunctionisvitaltoensuringparticipantsandthe publiccanbeconfidentbritishracingisrunfairlyandinaccordancewiththerules; thatcrimeandcorruptionaredeterred,preventedorpenalised;andthereisalevel playingfieldforallcustomers.asregulationandintegrityevolvearoundtheworld,itis vitalbritainisseenasprogressiveandasaleaderwhichembracesnewandimproved procedures,drivesprocesschangeandmaximisestheuseoftechnology,whilealso ensuringtherulesofthesportandrequirementsofparticipantsareunderstood throughongoingeducation. ING RA Enhance regulation and integrity processes Adoptathreatandrisk-basedframeworktoassistintheprioritisationofresourcesallocatedtoperformanceof integrityfunctions Developamodernisedapproachtothedeliveryofracedayintegrityfunctions,includingthecompletionofan industry-wideconsultationonthefuturemodelforracecoursestewarding Embedaprocesstoensuretransparencyregardingthepublicationofinformationrelevanttothehorse Applyinputsfromkeystakeholdergroups,includingtheHorseracingBettorsForum,toassistinidentifying regulatorythreats ExploreextendingregulationtoincludecurrentsectorspresentlynotwithinthescopeoftheRulesofRacing Enhance anti-doping programme Continuetoenhanceanddeveloptheanti-dopingprogrammeconsistentwithcontemporarybestpractice, utilisingnewtechnologyandpracticestoprotectanddeterwrongdoing Reviewandconsiderextendingthecurrentscopeoftheanti-dopingprogramme Ensure appropriate communication of policies and procedures with participants Developatransparentpolicyframeworkfortheregulationofthesport,includingamoreuser-friendlyRulebook andassociatedsupportresourcesforparticipants Developaneducationprogrammeforourparticipantsaboutintegrityissuesincludingdrugs,bettingandwelfare,to reduceaccidentalbreachesofourrules,giveincreasedconfidencetothepublicandallowbharesourcestofocuson moreseriousthreats. Engageoursportinpromotingthebehavioursthatmakeracingafairandcleansportthat ssafeforourhumanand equineparticipants 7

8 To partner in growing British racing together Thesport sunifiedgovernancestructurethroughthemembers Agreement,and enhancedincomestreamsthroughthenewlevyandmediarightsdeals,providethe optimumconditionstorefreshtheindustry sstrategyforgrowthandpositionbritish racingforabrighterfuture.anagreedvision,joined-upapproachtoopportunitiesand challenges,andcommitmenttofocusonkeycustomergroupsareitskeyfeatures. WING BR Target resources at agreed priorities for the sport JointlydevelopanagreedoverviewandworkingmodelofBritishracing skeyincomeandexpenditureheadings Createincentivesandmatch-fundedopportunities(whereverpossible),tomaximiseoverallprojectbudgets Contributetoanindustry-agreedpolicyfortheuseofcentralfinancialreservesinthesport,startingwiththe transferofreservestotheracingauthority WorkwithgovernmenttomanagethepathtoBrexit,developingcontingencyplanswithMemberstoensurethebest possibleoutcomeforallinoursport Develop a modern working partnership with all forms of British betting operator, based on data-sharing, innovation and common interest TosupportthecreationoftheRacingandBettingForum Ensureastrategyforbettingandliaisonwiththemajoroperatorsisinplace,andsupportedbythetripartiteparties Ensureracingsecuresdata-sharingagreementswithbettingoperatorsforaminimumof50percentoftheUK horseracebettingmarket Workwithbettingoperatorstoensureasuitableandproportionateregulatoryenvironmentisinplacesothattheycan operateresponsiblybutprofitably DevelopgreaterinteractionbetweentheHorseraceBettorsForum,theBHAandRacingandBettingForumandusethis closerworkingarrangementtodeliverinitiativesforthebettingpublic 8

9 Create innovation in betting on our sport, to both grow revenues and improve our betting share ThroughtheRacingandBettingForum,developandestablishnewideasthatracingcantrialorimplementfullyin2018 Reviewopportunitiesforin-runningbettinginnovations,consideringimplicationsonthefabricandregulationofthesport Workwithpoolbettingoperatorstosupportthecreationanddevelopmentofnewbettingopportunities Develop a vision and set of values for the sport Carryoutaprojecttocreateavisionandsetofvaluesforracingtoinspirepeopleinthesport,makecleartothepublic whatwestandforanduniteallinacommonsenseofpurpose Engageoursportinpromotingthebehaviourthatwillsupportourvaluesasasafe,fairandinclusivesport,safeguards ourparticipants,andfocusesracingonachievinginspirationalperformance. 9

10 Competitive and compelling racing ForBritishracingtogrow,thesportmustberesponsivetotherequirementsofits variouscustomers,includingfans,racegoersandbettors.thedemandfromeach ofthesegroupsisforacompetitiveandvariedracingproduct,stagedatcustomerfriendlytimes.aswellasmatchingtherequirementsofthehorsepopulation,the programmeofracesmustbeprogressivesothathorseshavetheopportunitytofulfil theirpotential. TITIV Develop the fixture criteria and scheduling of races to support the growth of betting on British racing WorkingwiththeRacingandBettingForumaspartofanindustry-wideproject,analyseavailablebettingdata Usingthisdata,developrecommendationsfortheoptimisationoffixturesandracescheduling,takingaccountofthe impactonthoseservicingthefixturelist Implementrecommendationsonfixturesandraceschedulingwiththeaimofhavingamaterialimpactonindustry revenuesfrom2019 Review and report on the extent to which the Optimal Race Programme is being implemented ReviewtheOptimalRaceProgrammeanditsunderlyingprincipleswithhorsemenandracecourses IssuequarterlyRaceProgrammeReportshighlightingtheextenttowhichtheOptimalRaceProgrammehasbeen deliveredandidentifyingongoingissues DevelopperformancemeasurestoquantifythedeliveryoftheOptimalRaceProgramme Implement the recommendations of the Handicapping Review which relate to the aims of handicapping, its methodology and operational matters AnnouncetherecommendationsfromtheHandicappingReview,includingtheprocessandtimetableforconsultation Publishaprogressreportontheimplementationoftheserecommendationsbytheendof

11 World class racing ContinueddevelopmentoftheframeworkthatseesBritainfurtheritspositionasthe homeofthebestracingintheworldrequiresquality,varietyandopportunityforall aspectsofthethoroughbredasitprogresses,andforthebreedonawiderbasis.itis essentialforbritaintoleadthewaybyencouragingwideracceptanceamongstracing authoritiestoupholdthevalueofblacktypewithaconsistentqualitativeassessment ofgroup/gradedandlistedracesandanoverallinternationalprogrammethatisfitfor purpose.britainshouldalsostrivetoattractthetophorsesandprovideincentivesfor overseasinvestment. LD C Review and develop the British (and European) Flat race programme for stayers Developandagreefurthertargetedenhancementstotheraceprogramme Identifyandimplementsuitablestamina-relatedbreedinginitiatives WorkwiththeEuropeanPatternCommitteetoagreecomplementaryraceprogrammeenhancementsacrossEurope Enhance the mares Jumping programme Developafive-yearblueprintfortheoptimalplanforthemares BlackTypeprogramme Launchasmall,targetedPRcampaign,topromotebuying,owningandtrainingofjumpingmares Produceanupdateddatapacktoreviewandmonitorprogress Improve quality control of the international race programme Workwithourinternationalpartnerstorecordastatementofintenttosupportimprovedqualitycontrol Deviserecommendationsforimprovingbestpracticeandprovidinggreaterconsistencybetweentheregions,andother relatedrecommendationsforthewayahead,includingbutnotlimitedtoproposalsforapromotionandrelegation systemwithininternationalcataloguingstandards 11

12 Looking after our people Thesportisdependentonthededicationandpassionofthepeoplewhocareforour horsesandmustredoubleitseffortstorecruit,trainandretainaworkforcethatallows forthegrowthofbritishracing srelevance,revenuesandreputation.thesporthasa dutyofcaretowardsitsemployeesrangingfromwelfareprovision,physicalandmental wellbeing,totraining,educationandcareerpathwaysateverylevelofthesport. Grow number of potential recruits Maintainandgrowuniquevisitorstocareersinracing.com BuildbrandcampaignstotargetaudiencesincludingthePonyRacingAuthority,PonyClubandother equestrian-focusedorganisations EnhanceexperientialactivitiesandengagementprogrammestodevelopandinspireinterestinBritishracing EngagewithequinecollegesandcollaboratewiththeRacingtoSchoolRidersProgramme Developaprospectdatabaseandco-ordinatedmarketingcommunicationactivity Develop further the industry s stud and stable staff training provision Supporttrainingproviderstogrowcompletionratesforallnewentrantsundertakingfoundationtraining Increasecompletedstudandstablestafftrainingdays Setupatleastoneregionalhubtodeliveradditionallocalrecruitmentandcareersadvice,trainingandeducation initiativesandwelfareandretentionsupport Boost retention throughout the industry by providing industry employees with opportunities to develop their careers Enhancephysicalandmentalhealthsupportservicesforfront-linestaffthroughacomprehensiveracing-specific occupationalhealthservice Supporttheidentificationandpromotionofanindustrystandardformodernworkingpractices Co-ordinatethesport srespectcampaign,includingasafeguardingpolicyandpractice,toenableparticipantstolive, trainandworksafely 12

13 ENABLERS TOCREATEACULTURE BASED ON OUR VALUES,WHILEENSURINGWEHAVE THECAPABILITYTODELIVEROUROBJECTIVES Tobeprogressiveweneedtoensureweretain,recruitanddevelopourstaff.Weneedtoidentifytalentandnurture itaswellasidentifyareaswherecapabilitycouldbeimprovedandprovidetrainingtoachievethis.wewillrecognise thosewhoconsistentlydemonstrateandliveoutourvaluesintheirownroles.ahealthier,happierandmorefulfilled workforcewilldelivergreateroutputandprovidethehighlevelofservicewhichthesportrightlyexpects. TOINNOVATEANDUSENEW TECHNOLOGY InordertoallowustohelpBritishracingachieveitsoverallgoals,wewillleveragedigitaltechnologyandtheability ofourpeopletohelpdriveusforward.thisstrategywillallowustodeliveroperationalexcellenceforourteams, customersandparticipantsandcreateefficiencies.thiswillonlybeachievedbyempoweringpeopletothinkcreatively, stimulatingacultureofinnovation. TOUTILISECUSTOMER INSIGHTANDFEEDBACKINCREATINGAND IMPLEMENTING NEW POLICY Indeliveringourstrategicobjectives,wewillutilisegreaterinputfromourcustomers,includingunderstandingoftheir relativejourneys,todeveloppolicy,tomakebetterdecisionsandtoimproveprocesses. 13

14 BUDGET GUIDE Executive summary In December 2016, the BHA published a three-year budget for the period The main aims of the budget were to provide greater clarity to the sport over where the BHA is spending its money; to give advanced notice over future fee rises; and to demonstrate financial accountability and responsibility, with the budget being break-even in cash terms over the three-year period. We are now in year two of this three-year cycle and the objective of breaking-even remains on track despite changes in activity. Wehavealso,despitehigherinflationlevels,maintainedfeerisesatpreviouslysuggestedlevelsof2.75percentfor2018, ratherthanusingthecpi(asattheendofoctober)plus0.75percenttriggerwhichwouldhaveresultedinparticipantspaying anadditional 250,000infees.Feesfor2019remainbudgetedat2.75percentbutareagainsubjecttoreviewin12months fromnowagainstthecpiplus0.75percenttrigger. Income and expenditure actual actual forecast budget budget Totalincome 31,124 31,852 32,594 32,979 33,825 Totalexpenditure (30,991) (32,046) (32,204) (33,526) (34,054) Interest Surplus/(deficit) 160 (175) 405 (532) (214) Non-cashadjustments 175 (2) (536) Cash surplus / (deficit) 335 (177) (131) (44) financial overview Our2017forecast,baseduponresultstotheendofSeptember,showsasignificantimprovementonouroriginalbudget.Our forecastcashdeficitisnowexpectedtobe 131,000.Thisis 302,000betterthanouroriginalbudgetedcashdeficitof 433,000. Thisimprovedpositionhasbeenaresultofgoodbudgetcontrolovercosts,short-termsavingsinpeoplecostsandminor incomeimprovements.animprovedperformancein2017ispartofthereasonwhywehavebeenabletoretainfeesrisesfor 2018at2.75percentasdescribedabove. Indeterminingthecashsurplusordeficit,non-cashprofitandlossitemssuchasdepreciationareremovedandreplacedwith cashitemssuchascapitalexpenditure.thereisalsoanadjustmenttoreflectthecashreceivedforcorporationtax-based researchanddevelopmenttaxcreditsofabout 100,

15 2018/19 financial overview Theoverarchingmessageremainsthatweareontracktoachievebreak-evenin Thebudgetfor2018is approximatelybreak-evenandin2019weanticipateasmallsurplus,asweimprovefromourloss-makingpositionin2017. Thisimprovementoverthethreeyearswasalwaystheintention.Withfeerisesforboth2018and2019currentlyretainedat2.75 percent,inflationaryincreasesincostsoverandabovethoseoriginallyplannedhavebeenmanagedwithinouroverallbudget. Ourpeoplecostshaveincreasedbutthisisprimarilyafunctionofincreasedactivityaswehavesoughttoleadinareassuchas diversityandsafeguardingandhavehadtoreacttochangesinlegislation,mostnotablyindataprotection. Income actual actual forecast budget budget Racecourses 19,901 20,625 21,795 22,022 22,627 Owners 7,961 8,287 8,493 8,577 8,813 Otherparticipants Publications Other 2,039 1,738 1,134 1,184 1,189 Total 31,124 31,852 32,594 32,979 33,825 Approximately90percentofourincomecomesfromfeesfromracecourses,whoreceiveagrantfromtheHorseraceBetting LevyBoardtooffsetasignificantproportionofthiscost,andowners. Thispercentagechargedtoparticipantgroupsremainsrelativelyconsistenteachyear.Increasesinincomearedrivenbyfee rises,increasedfixturesandchangesinactivity. During2017,weremovedtwoadministrationchargeswhichgeneratedsavingsforownersofmorethan 100,000.These initiativesareintendedtoreduceownershipadministrationandsupportinitiativestogrowownershiplevels. Costs actual actual forecast budget budget Totalpeoplecosts 15,541 16,373 16,822 17,972 18,551 (includingdirectors) RacingAdministration 5,378 5,293 5,194 5,229 5,262 Equinesamplingandresearch 3,330 3,368 3,430 3,643 3,625 Propertyandoverheads 2,348 2,488 2,714 2,780 2,807 Legalandprofessional 1,016 1, Other 3,378 3,217 3,164 3,112 3,029 Total 30,991 32,046 32,204 33,526 34,054 15

16 Total people costs and headcount TheBHAemploysmorethan230fullandpart-timepeople.Wealsoemploysessionalstaff,primarilyinracedayregulation andoperations,tohelpusmanagetherequirementsofthefixturelist.boarddirectors costsarealsoincludedintotalpeople costs.therehavebeenchangesduring2017tothebhaexecutiveteamandfollowingthequinlanreviewintodisciplinaryand judicialprocesses. Therearefurtherchangesplannedin2018toenableustodeliveronourobjectivesinindustrypeopleanddevelopmentand racingandoperations.wealsohavebudgetedforadditionalresourcetoadvanceindustrydiversity,safeguarding,respectand integrityprogrammesanddataprotection.afullheadcounttableisincludedbelow. Dec-2016 Sept-2017 Budget 2018 Integrityandregulatoryoperations Racedayregulationandoperations(includingveterinary) Racingandoperations Executive Executivesupport Industrypeopleanddevelopment Communicationsandcorporateaffairs GreatBritishRacingInternational Legalandgovernance Total Racing Administration Racingadministrationservices,mainlyprovidedbyWeatherbys,haveseenareductionincostsof7.5percentinrealterms between2015and2018. Wehavemadesubstantialchangestoownershipstructuresin2017,includingtheremovalofcertainfeesasdescribedabove. Wealsolaunchedawebsiteforownersallowingfreeaccesstoraceplanninginformation.Weseethisasapositivestepin supportingownershipgrowthlong-term. Equine health and welfare Anewstrategyiscurrentlybeingdevelopedandoncecompletethiswillbepresentedtothewiderindustrywiththeintention ofseekingfundingtoimplementtheserecommendations.theaimistodeliveranewapproachtoveterinaryactivitiesona racedayandtoincreasefocusonout-of-competitionwelfare. Inadditiontotheproposedincreaseinpeoplestructures,ourequinesamplingandresearchbudgetofmorethan 3.6million willtargeta3percentincreaseinanalyticaltestsundertaken. Stewarding Wecommencedindustry-wideconsultationinSeptember2017onanew,modernisedapproachtostewarding.Withtheresults ofthisconsultationnotexpectedtobeknownbeforetheendof2017,andafterthe2018budgethasbeenapproved,wehave includedacontingencywithinourpeoplecoststoimplementtheoutcomeofthisconsultation. 16

17 Industry recruitment, training and retention Addressingthewiderindustrypeopleissuesisanimportantareaofouractivityandwehavededicatedresourcetofacilitatethe deliveryofwiderindustrypolicyandtoseektoimprovewiderindustryfunding. Other activity Deliveringcostefficienciesremainsakeyrequirementandthisbudgetincludessavingsincertaintargetedareas.Withover85 percentofourcostsfixedintheshort-term,deliveringefficienciesremainschallengingbutisachievableashighlightedbyour workinracingadministration.everypoundsavedcanbeputbackintoracing.webelievetherearebothshortandlong-term opportunitiesforthebhaandthewidersporttoworkmoreefficiently. ThedeliveryofthenewLevymechanismwasasignificantachievementforthesport,deliveringadditionalstatutoryincomeof 35-40millionwhencomparedtothepreviousmechanism.Managingthisprocessonbehalfofthesportincurredsignificant legalandprofessionalcosts.thesecosts,whichhavefallenin2017,arebudgetedtofallfurtherin2018. Capital expenditure WecontinuetoinvestinnewtechnologytoensuretheBHAisusingthemostappropriatemethodstodeliveritscorefunctions.In 2016and2017weinvestedinexcessof 1.5milliontoachievethis.Notablehighlightsareanupgradetothedigitalarchive,used tomaintainallracerecordings,andtheroll-outofanewracereplaysystemforusebythestewards.thisinvestmentincreased depreciationcostssignificantly thesecosts,plusinflation,arethedriverbehindincreasedpropertyandoverheadcosts. Weexpectcapitalexpenditurein2018and2019tobeabout 400,000perannum. Cash Operatingcashattheendof2017isforecastintheregionof 4.5million.Duringthethree-yearperiod, ,cashis forecasttofallto 3.5millionduring2018,beforerecoveringto 4.5-5millionbytheendof