Four Stewards of The Hong Kong Jockey Club re-elected; Club's contribution to Hong Kong exceeds HK$15 billion despite difficult year

9 September 2009

At the Annual General Meeting of The Hong Kong Jockey Club today (9 September), Voting Members re-elected four Stewards to the Board for further terms of three years each until the AGM of 2012.  They are Anthony W K Chow, Christopher Cheng Wai Chee, Michael T H Lee and Iain F Bruce.

Following the Meeting, the new Board of Stewards re-elected John C C Chan as Chairman and T Brian Stevenson as Deputy Chairman for 2009/10.

Earlier Mr Chan, reviewing the highlights of the 2008/09 season, said that despite the challenging economy, the Club had contributed more than HK$15 billion to the community for the second year in a row.

The main components were betting duty and tax payments of HK$12.87 billion, a contribution to the Lotteries Fund of HK$0.96 billion and donations through The Hong Kong Charities Trust totalling HK$1.37 billion, the latter being increased by some 30% this year to reflect increased community needs at a difficult time.

"This underlines the crucial role that the Club plays in supporting public spending in Hong Kong, especially at a time of downturn when tax revenues from the business sector are falling, yet society's needs are becoming greater than ever," Mr Chan said.

The Government's share of gross margin through betting duties was almost double the Club's share, he added, and had increased since a package of horse race betting duty reforms was approved in 2006, due to Hong Kong's exceptionally high tax rates.  Gross margin is the revenue remaining after payment of betting dividends and rebates, which is then subject to betting duties. 

Mr Chan noted that the Club's turnover had generally remained steady in 2008/09 although its share of gross margin fell 3.9% to HK$6.37 billion.  Total turnover from the Club's racing, football and Mark Six lottery operations in 2008/09 was HK$108.36 billion, a decrease of 0.1% from last season.

Horse racing continues to be the Club's core activity, accounting for over 60% of turnover and duty payments in 2008/09.  The Club's share of gross margin on racing fell 2.0% to HK$3.09 billion.  Betting duty payments to Government reached HK$8.12 billion, exceeding the HK$8 billion-a-year payment guaranteed to Government under the 2006 betting duty reforms, which meant the Club did not have to make up a shortfall as had been earlier feared.  Racing turnover was HK$66.82 billion, 1.3% lower than in the previous season.

On the football side, the Club's share of gross margin fell by some 6.5% to HK$2.90 billion, while the betting duty paid to Government was also HK$2.90 billion.  Football turnover grew 1.9% to HK$35.11 billion, despite the absence of any major international tournaments during the year.

The Mark Six lottery contributed HK$386 million in commission to the Club, a small increase of 0.8%.  The lottery showed a slight increase of 0.7% in turnover to HK$6.43 billion.  In addition to realising HK$1.61 billion in lottery duty to the Government, Mark Six contributed HK$964 million to the Lotteries Fund, which supports many social projects.

Mr Chan noted that the Club had also experienced a sharp fall in its investment income during the year, in common with all global investors, although "fortunately, we adopt a relatively long-term strategy in our investment portfolio management, so we expect to see a correction in due course".

The Group's net surplus after tax for the season, excluding deficit from Contingency Fund investments (see note below) and before appropriation to the Hong Kong Jockey Club Charities Trust, was HK$707 million.  After a HK$500 million appropriation to the Charities Trust, the retained surplus transferred to Accumulated Reserve was HK$207 million.

Despite the much-reduced appropriation of HK$500 million to the Charities Trust, compared with HK$1.78 billion in 2007/08, the Trust increased its donations to charitable and community projects during the year by some 30% to HK$1.368 billion, which meant calling on its reserves.

"We are prepared to do this at times of need, but clearly we cannot allow a situation of structural deficit to prevail in the long term," Mr Chan said, calling on Government and society at large to ensure that the Club was given room to remain competitive and sustainable.

125th Anniversary of The Hong Kong Jockey Club

Founded in 1884, The Hong Kong Jockey Club is celebrating its 125th Anniversary in 2009/10 season.  Over the past 125 years, it has become one of Hong Kong's best known and respected organisations, providing the public with world-class sporting entertainment as well as being the city's major non-Government community benefactor, now donating more than HK$1 billion a year to charitable and community projects.  It has been a part of Hong Kong through good times and bad, sharing the city's growth and development with its people, and is dedicated to enhancing the quality of life for future generations.

Explanatory note re Contingency Fund:

Apart from funding the normal business operations, the Club maintains a segregated Contingency Fund which is held to provide a source of funds in the event that income from betting operations should cease temporarily; to finance major capital projects, either for the Club or the Hong Kong community; to finance major renovations to improve the Club's substantial investment in property, plant and equipment; or for any other special purposes as deemed appropriate by the Stewards.  The surplus or deficit derived from this Fund is reinvested or absorbed in the Contingency Fund portfolio.

Season-end figures of The Hong Kong Jockey Club

(A) Business Figures

1. Horse Racing ($million)

* 78 race meetings in both seasons

2. Football Betting ($million)

3. Lottery ($million)

(B) Club's Contribution

1. Betting Duties and Profits Tax ($million)

2. Appropriation to The Hong KongJockey Club Charities Trust ($million)

3. Donations by The Hong KongJockey Club Charities Trust ($million)