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2022-12-31-accounts

ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2022

Charity Registration Number: 1145297 Company Registration Number: 07890908

THE RACING FOUNDATION

ANNUAL REPORT AND ACCOUNTS

FOR THE YEAR ENDED 31 DECEMBER 2022

Contents

Contents
Page
Reference and administration details 2
Trustees’ report: 3-10
Structure, Governance and Management
Objectives and Activities
Strategic Report
Independent auditor’s report 11-13
Statement of financial activities 14
Balance sheet 15
Cash flow statement 16
Notes to the accounts 17-27

THE RACING FOUNDATION

REFERENCE AND ADMINISTRATION DETAILS

FOR THE YEAR ENDED 31 DECEMBER 2022

Charity name The Racing Foundation Charity registration number 1145297 Company registration number 07890908 Registered address 75 High Holborn London WC1V 6LS Directors and Trustees during the year Mark Johnston (Term ended 31[st] December 2022) Linda Bowles Susannah Gill Louise Kemble Julia Budd (Term commenced 8[th] January 2022) Alice Page (Term commenced 18[th] January 2022) Algy Smith-Maxwell (Term commenced 8[th] January 2022) Directors and Trustees appointed post year-end James Boyle (Term commenced 1st January 2023) Rishi Persad (Term commenced 14[th] February 2023)

Key Management Personnel

Chief Executive Officer Rob Hezel Grants Manager Tansy Challis Independent auditor Bankers RSM UK Audit LLP Weatherbys Bank Ltd Bluebell House Sanders Road Brian Johnson Way Wellingborough Preston Northamptonshire PR2 5PE NN8 4BX

Investment managers

Cazenove Capital James Hambro & Partners Sarasin & Partners Management Ryder Court LLP Juxon House 12 Moorgate 14 Ryder Street 100 St Paul's London London Churchyard EC2R 6DA SW1Y 6QB London EC4M 8BU

2

THE RACING FOUNDATION

TRUSTEES’ REPORT

FOR THE YEAR ENDED 31 DECEMBER 2022

The Trustees are pleased to present their annual directors report together with the financial statements of the charity for the year ending 31 December 2022 which are also prepared to meet the requirements for directors’ report and accounts for companies act purposes.

The financial statements comply with the charities act 2011, the Companies Act 2006, and Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with financial reporting standard applicable in the UK and Republic of Ireland (FRS 102).

STRUCTURE, GOVERNANCE AND MANAGEMENT

Governing Document

The Racing Foundation was founded by its Members, the British Horseracing Authority, the Racecourse Association and the Thoroughbred Group in December 2011 so that the racing industry had an appropriate vehicle to accept and distribute funds arising from the government’s sale of the Horserace Totalisator Board (‘Tote’). To comply with State Aid rules, it was required to be established as a registered charity with objects to provide funding to charities working in UK Racing.

The Racing Foundation is constituted as a company limited by guarantee, incorporated on 22[nd] December 2011 and registered as a charity on 6[th] January 2012. In the event of the company being wound up, Members are required to contribute an amount not exceeding £1. The company was established under a Memorandum of Association, which established the objects and powers of the charitable company and is governed under its Articles of Association.

The Racing Foundation amended its Articles of Association in 2019, with approval from the Charities Commission and its Members to allow it to make grants for the furtherance of its purposes to non-charitable bodies providing they are for charitable purposes. Previously it was restricted to giving solely to charities. A further amendment was made in 2021 to increase the maximum number of Trustees to 8.

Trustee Induction and Training

New Trustees are appointed with reference to the role description and person specification for Racing Foundation Trustees. This description is amended to reflect specific skills the Trustees consider they may require at each appointment stage. All Trustees receive an introductory presentation from Foundation staff and are provided with a range of documentation to update them on the Foundation’s strategy, governance, policies and current challenges.

Trustees are encouraged to keep updated with relevant legislation, developments and best practice both within the racing and charity sectors and are regularly updated by staff at and between meetings.

Related Parties and co-operation with other organisations

The Foundation regularly updates its Members on key issues and independently gathers their feedback. This has included the extension of existing Trustees, the appointment of new Trustees and the development of strategy. The Foundation engages with senior management and staff at the Member organisations to ensure it has a broad understanding of the industry and to provide greater detail and understanding on key issues.

Pay policy for senior staff

Staff remuneration is reviewed annually at the year-end by the Chair and by another Trustee (and also by the CEO for roles other than his own). During January 2022 Trustees approved an increase in salaries for the year based on cost of living factors and a review of previous performance. Remuneration packages were also benchmarked in summer 2022 by an independent remuneration consultant and adjusted where appropriate in line with market levels.

Appointment of Trustees

The Members are responsible for the appointment of directors, who are also charity Trustees for the purposes of charity law. The number of Trustees shall consist of at least two and not more than eight persons. Members appoint Trustees for terms of up to three years. Unless the Members agree unanimously, a Trustee may only serve a maximum of two terms, before stepping down for a period. All new Trustees are given a full induction on joining the board of Trustees.

3

THE RACING FOUNDATION

TRUSTEES’ REPORT (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

STRUCTURE, GOVERNANCE AND MANAGEMENT (continued)

Mark Johnston ended his term of office on the 31[st] December 2022 having served six years as Trustee. James Boyle was appointed to replace him on the 1[st] January 2023. Rishi Persad was also appointed as a Trustee on the 14[th] February 2023.

Organisation

The Trustees are responsible for the governance of the charity and for the use of its funds. In particular, the Trustees are responsible for setting the charity’s strategy and policies, and monitoring progress and fulfilment of these. Day to day management of the charity’s affairs is delegated to the Chief Executive Officer who is supported by a Head of Grants and Programmes. These individuals form the key staff for the charity and remuneration is set and reviewed annually by the Trustees. In 2022 a Social Media Officer was appointed to support the Head of Events and Communications.

OBJECTIVES AND ACTIVITIES

The objects of the charity are:

The advancement for the public benefit of any charitable purpose associated with the horseracing and thoroughbred breeding industry or with equine welfare, in each case by making grants for such charitable purpose or purposes.

In furtherance of these objects, the Trustees developed a strategic plan which provides a framework for how the Foundation will operate over the period 2021-2023. The Foundation considers that the funds it has received from the government’s sale of the Tote represent a unique opportunity to establish a lasting legacy for the horseracing and thoroughbred breeding industry. Therefore, in developing plans, the Trustees agreed to take an approach that:

2022 was the second year of implementation of the Foundations strategy for 2021-2023, the strategy committed the foundation to support the areas of the sport that are charitable in their nature and the areas that can provide the basis for creating a stronger, fairer, more diverse and more sustainable horseracing and breeding industry in the future. The Foundation intends to increase engagement with its stakeholders, to be more transparent about its results, become more active in ensuring the delivery of funded projects and activities and to continue to work flexibly with other funders to provide finance.

The approved strategy documents the Foundation’s purpose, ambitions and activity for three years.

The Foundation’s purpose is defined as:

The Foundation’s ambitions are to:

4

THE RACING FOUNDATION

TRUSTEES’ REPORT (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

STRUCTURE, GOVERNANCE AND MANAGEMENT (continued)

STRATEGIC REPORT

Covid-19

The Foundation has again supported the Horseracing Betting Levy Board (HBLB) by repeating in 2022 the £3m that was donated to the HBLB in 2021 to support its charitable spend to allow its funds to be re-directed once again to support the wider industry.

It was a challenging year for our investments with high inflation and market volatility leading to the real value of the endowment not being maintained. Trustees committed to maintaining the real value of the investments over the economic cycle and withdrew £9m to support spending through the next strategy period to 2026. The performance of the funds by manager is reported in more detail below.

Trustees are provided with a strategy dashboard and a timeline document to update them on progress with the delivery of the strategy. Both Trustees and staff are pleased with the progress made during the first two years in the delivery of the 2021-2023 strategy.

Grant Making Policy

The Foundation may only make grants for charitable purposes to organisations which have been established in the UK or to other bodies for charitable purposes.

The Trustees of the Foundation ensure that the funds are applied appropriately for eligible purposes only and are subject to appropriate terms and conditions. To that end, the Trustees have set out the areas of focus for its giving over the next three years:

Trustees are therefore, satisfied that the Foundation meets the Charity Commission’s public benefit test. Details of the Foundation’s achievements and performance in 2022 against the 2021-2023 strategic plan are listed below:

5

THE RACING FOUNDATION

TRUSTEES’ REPORT (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

STRATEGIC REPORT (continued)

Achievements and Performance

The Foundation has developed an approach to the delivery of its strategy that:

Achievement and performance in 2022 is highlighted against each aspect of the approach in a strategy dashboard which is shared with both Trustees and external stakeholders.

Build understanding

Prompt collaboration

Fund action

Awarded grants by area of focus were:

People 46% Equine 41% Community engagement 13%

Further details of particular grants and performance review documents are available at www.racingfoundation.co.uk

6

THE RACING FOUNDATION

TRUSTEES’ REPORT (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

STRATEGIC REPORT (continued)

Financial Review

The Racing Foundation received its final payment from the Department of Media, Culture and Sport in 2014. Its receipts have been placed with investment managers, with the aim of preserving the capital over the long term and generating investment income to fund grant-making activities.

The Foundation generated income from donations, grants, bank deposits and investments amounting to £3.7 (2021: £1.7m). Investment gains of £8.5m (2020: £4.1m) occurred.

Expenditure totalled £7.5m (2021: £7.4m), including grants of £6.7m (2021: £6.8m). This figure represents the value of grants awarded at the date Trustees approved them. Many awards are multi-year in nature despite the full cost being recognised in 2022 and in cash terms will be funded out of future income.

Overall, as at 31 December 2022 the Foundation’s net funds stood at £80.1m (2020: £94.5m). Due to the extraordinary economic conditions the endowment performance has fallen below the benchmark of CPI + 3% since inception.

Reserves Policy and going concern

The Foundation has adopted a policy of maintaining the long-term real capital value of all receipts arising from the government’s sale of the Tote and only spending the financial return derived from the capital. This will ensure that the Tote sale proceeds generate a lasting legacy, which will benefit both current and future generations.

The funds received from the Department of Culture Media and Sport as expendable endowment, are held separately in the accounts along with a designated fund, representing those funds received from the Department of Culture Media and Sport in 2012, which did not carry the expendable endowment restriction on use. Whilst these monies came without restriction, the Trustees felt that it was important to treat these as contributing towards the long-term legacy of the Tote sale and placed an expendable endowment restriction on them too. While Charity Law does not allow for these funds to be merged, they are treated identically.

The Foundation also maintains a general reserve. This unrestricted fund is used to accumulate investment income prior to being spent on charitable grants and costs associated with administering the Foundation.

Investment Policy and Performance

The Foundation has an investment policy, which applies to all monies held within the expendable endowment fund and the designated fund. The policy aims to maintain the real capital value over the long-term, whilst generating a sustainable level of return to support the grant-making activities of the Foundation.

In order to control risk and volatility in the investment portfolio, Trustees have adopted a long-term annual expenditure target of at least 3% of the investment asset value. As a result, the Trustees have adopted an investment performance benchmark of inflation (as measured by the Consumer Prices Index) plus 3% per annum, in the medium to long term after all costs.

The Foundation used the services of three investment managers during the year. Cazenove Capital Management, James Hambro and Partners and Sarasin and Partners LLP, are the investment managers. The performance of these investment managers is closely monitored by the Trustees, with the assistance of a specialist independent investment advisor who also advises Trustees on reviewing and updating the investment policy.

7

THE RACING FOUNDATION

TRUSTEES’ REPORT (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

STRATEGIC REPORT (continued)

Performance

The overall performance of investment managers fell below the targets set for the year. Trustees expected performance to reflect a net increase (in capital value and the generation of investment income) of CPI plus 3% which equated to 13.5% in 2022. Actual performances were:

Manager 2022 target 2022 actual Target from inception Actual from inception
James Hambro 13.5% -11.2% 68% 100.8%
Cazenove 13.5% -12.1% 68% 53.7%
Sarasin 13.5% -9.9% 47.8% 81.2%

This resulted in a loss on investments of £10.5m (2021: £8.5m gain). The Foundation investments are made for the longterm in line with our investment policy, based on the professional advice we source. It is inevitable that market fluctuations will have an adverse impact on the value of our investments at certain times and this combined with the high rate of inflation in the year made the historical target unachievable.

Plans for future Periods

The Foundation strategy identifies four areas of focus: people, equine welfare, community engagement and environmental sustainability and other emerging issues. These issues are critical to racings engagement with its people, its horses and its communities. They are key to maintaining the sports social licence and can positively influence the sports standing with its communities and politicians at both a local and national level.

The approach to be adopted is to:

Build Understanding: We will build understanding, define progress and measure success across the key areas of activity

we will support.

Prompt Collaboration: We will support those delivering activities we fund with advice, guidance, training and development and promote learning and growth for those delivering racings future.

Fund Action: We will provide increased levels of funding and pro-actively work with other funders to leverage additional resources.

Detailed operational plans and budgets have been approved by Trustees for 2023. These plans build on the activity of 2022 and provide a framework against which performance can be monitored at both an organisational and individual level. A key item to be delivered in 2023 will be the agreement and publication of the next 3 year strategy for the Foundation.

In undertaking the activities identified in the business plan the Foundation will support the delivery of the outcomes identified in its strategy and in doing so will be delivering against its purpose:

We exist to make a difference in racing by acting as a catalyst and a funder of improvement.

A fuller review of our performance over the last year and our 3 year strategy is available to view in full at www.racingfoundation.co.uk.

8

THE RACING FOUNDATION

TRUSTEES’ REPORT (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

STRATEGIC REPORT (continued)

Principal Risks and Uncertainties

The principal risks identified by Trustees together with the actions taken to mitigate these risks are set out below:

Risk description Risk mitigation
Stock market volatility:
Market volatility may impact upon both levels of
investment income generated and the real value of the
funds held.		 Two Trustees with investment knowledge were appointed in
2022. The Trustees have consulted widely and taken advice
during the year on their investment policy and approach.
Manager performance continues to be closely monitored and
Trustees have independent advisors who attend all meetings
to advise them.
Lack of continuity and infrastructure:
The need to replace Trustees and the small staff numbers
threaten continuity.		 Additional staffing resources have been used to support a
number of projects in-year. An additional social media post
was established in the year. Two new Trustees were joined in
early 2023.
Industry alignment:
The Trustees decisions on priorities for use the funds may
be questioned by industry stakeholders.		 The Trustees and staff continue to engage widely with
stakeholders to inform activities and strategy. The Foundation
adopts an approach that sees it align clearly with industry
issues and champion industry strategies. The increased co-
operation with other funders including the HBLB has
continued throughout 2022.
IT fraud, cyber-attack:
The general levels of IT fraud have escalated however no
attacks have taken place in year.		 The Trustees are satisfied that the current procedures protect
them as far as is reasonable.
Covid-19:
The implications on the industry, the Foundations
stakeholders and wider grantee network impacts the
delivery of the strategy.		 The Foundation supported wider industry activities with £3m
through the HBLB again in 2022.

The Trustees have adopted a formal risk management process to assess risk and implement risk management strategies. This process involves:

As a result of this process, the Trustees are satisfied that adequate procedures and systems are in place to effectively manage risk.

TRUSTEES’ RESPONSIBILITIES STATEMENT

The Foundation’s Trustees (who are also the directors for the purposes of Company Law) are responsible for preparing the Trustees’ annual report and financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Company law and the law applicable to charities in England and Wales requires the charity Trustees to prepare financial statements for each year which give a true and fair view of the state of affairs of the charitable company and of the incoming resources and application of resources. In preparing the financial statements, the Trustees are required to:

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THE RACING FOUNDATION

TRUSTEES’ REPORT (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

The Trustees are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the charity and enable them to ensure that the financial statements comply with the Companies Act 2006 and the Charities SORP (2016). They are also responsible for safeguarding the assets of the charity and hence taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Trustees are responsible for the maintenance and integrity of the corporate and financial information included on the charitable company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Statement of Disclosure to Auditors

In so far as the Trustees are aware:

DECLARATION

The Trustees declare that they have approved the Trustees’ report above.

Signed on behalf of the charity’s Trustees

Julia Budd

Julia Budd Chairman of the Trustees

Date: 18/04/23

10

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE RACING FOUNDATION FOR THE YEAR ENDED 31 DECEMBER 2022

Opinion

We have audited the financial statements of The Racing Foundation (the ‘charitable company’) for the year ended 31 December 2022 which comprise the Statement of Financial Activities, the Balance Sheet, the Cash Flow Statement and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the charitable company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the trustees’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the charitable company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the trustees with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the Annual Report other than the financial statements and our auditor’s report thereon. The trustees are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

11

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the charitable company and its environment obtained in the course of the audit, we have not identified material misstatements in the Directors’ Report or the Strategic Report included within the Trustees’ Report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of trustees

As explained more fully in the Statement of Trustees’ responsibilities set out on pages 9 and 10, the trustees (who are also the directors of the charitable company for the purposes of company law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the trustees are responsible for assessing the charitable company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the trustees either intend to liquidate the charitable company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities are instances of non-compliance with laws and regulations. The objectives of our audit are to obtain sufficient appropriate audit evidence regarding compliance with laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements, to perform audit procedures to help identify instances of non-compliance with other laws and regulations that may have a material effect on the financial statements, and to respond appropriately to identified or suspected non-compliance with laws and regulations identified during the audit.

In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the financial statements due to fraud, to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud through designing and implementing appropriate responses and to respond appropriately to fraud or suspected fraud identified during the audit.

However, it is the primary responsibility of management, with the oversight of those charged with governance, to ensure that the entity's operations are conducted in accordance with the provisions of laws and regulations and for the prevention and detection of fraud.

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the audit engagement team:

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As a result of these procedures we consider the most significant laws and regulations that have a direct impact on the financial statements are FRS 102, Charities SORP (FRS 102), Companies Act 2006, Charities Act 2011 and the charitable company’s governing document. We performed audit procedures to detect non-compliances which may have a material impact on the financial statements which included reviewing the financial statements including the Trustees’ Report, reviewing minutes of meetings held in the year of any instances for non-compliance and remaining alert to new or unusual transactions which may not be in accordance with the governing document.

The audit engagement team identified the risk of management override of controls as the area where the financial statements were most susceptible to material misstatement due to fraud. Audit procedures performed included but were not limited to testing manual journal entries and other adjustments, evaluating the business rationale in relation to significant, unusual transactions and transactions entered into outside the normal course of business and challenging judgments and estimates.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the charitable company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the charitable company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charitable company and the charitable company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Karen Musgrave

Karen Musgrave (Senior Statutory Auditor) For and on behalf of RSM UK AUDIT LLP, Statutory Auditor

Chartered Accountants Bluebell House Brian Johnson Way Preston PR2 5PE

Date 18/04/23

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THE RACING FOUNDATION

STATEMENT OF FINANCIAL ACTIVITIES (Including the Income and Expenditure Account and Statement of Total Recognised Gains and Losses)

FOR THE YEAR ENDED 31 DECEMBER 2022

Notes
Income and endowments from:
Donations and legacies
Grants
Income from investments
Total income and endowments
3
Expenditure from:
Raising funds:
Investment management costs
Support costs
Charitable activities:
Grant making
Total expenditure
4
Net (expenditure)/income
Net gains/(losses) on investments
10
Transfers between funds
Net movement in funds
Total funds brought forward
Total funds carried forward		 Unrestricted
funds
£000s		 Expendable
endowment
funds
£000s		 Total
2022
£000s		 Total
2021
£000s
10
-
1,659
1,750 - 1,750
4 - 4
1,909 - 1,909
1,669
3,663 - 3,663
(216)
-
(7,192)
- (207) (207)
(45) - (45)
(7,194) - (7,194)
(7,408)
(7,239) (207) (7,446)
(5,739)
(3,576) (207) (3,783)
(1,397) (9,105) (10,502) 8,455
-
- - -
2,716
91,783
(4,973) (9,312) (14,285)
7,321 87,178 94,499
94,499
2,348 77,866 80,214

All of the activities are continuing. There were no recognised gains or losses other than those stated above.

The notes on pages 17 to 27 form part of these financial statements

14

THE RACING FOUNDATION

BALANCE SHEET

AS AT 31 DECEMBER 2022

Notes
Fixed Assets
Tangible assets
9
Investments
10
Total fixed asset
Current assets
Debtors
11
Cash at bank and in hand
12
Total current assets
Creditors: amounts falling due
within one year
13
Net current assets
Creditors: amounts falling due
after one year
14
Net assets
Funds of the charity
Unrestricted funds - general
Endowment funds
Total funds
15		 Unrestricted
funds
£000s
-
5,584
5,584
200
2,822
3,022
(3,394)
(372)
(2,864)
2,348
2,348
-
2,348		 Expendable
endowment
funds
£000s
-
67,412
67,412
-
10,454
10,454
-
10,454
-
77,866
-
77,866
77,866		 Total
2022
£000s
-
72,996
72,996
200
13,276
13,476
(3,394)
10,082
(2,864)
80,214
2,348
77,866
80,214		 Total
2021
£000s
-
94,448
94,448
200
6,201
6,401
(4,465)
1,936
(1,885)
94,499
7,321
87,178
94,499

These financial statements were approved and authorised for issue by the Trustees on and 18/04/23 were signed on their behalf by:

Julia Budd

Julia Budd Chairman of the Trustees

The notes on pages 17 to 27 form part of these financial statements.

15

THE RACING FOUNDATION

CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2022

Notes
Cash flows from operating activities
16a
Cash flows from investing activities
Investment income received
Proceeds from sale of investments
Payments to acquire investment assets
Payments to acquire tangible fixed assets
Net cash generated from investing activities
Change in cash and cash equivalents in the reporting period
16b
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
16c		 Total
2022
£000s
(5,784)
1,909
28,337
(17,387)
-
12,859
7,075
6,201
13,276		 Total
2021
£000s
(7,661)
1,659
13,516
(13,861)
-
1,315
(6,347)
12,548
6,201

The notes on pages 17 to 27 form part of these financial statements.

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THE RACING FOUNDATION

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 DECEMBER 2022

1. BASIS OF PREPARATION

1.1 Basis of accounting

The financial statements have been prepared in accordance with Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (effective 1 January 2015) - (Charities SORP (FRS 102)), the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) and the Companies Act 2006. The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies.

The financial statements are prepared in sterling, which is the functional currency of the Charity. Monetary amounts in these financial statements are rounded to the nearest £’000 unless otherwise stated.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

1.2

Going concern

The Trustees have a reasonable expectation that the charity has adequate resources to continue in operational existence for the foreseeable future and the company is well placed to manage its risks successfully. Accordingly, they adopt the going concern basis in preparing the annual report and accounts. Trustees have assessed going concern in light of the ongoing impact of Covid-19 do not see it as an issue to affect the going concern status of the charity given the nature of the Charity and its spending.

2 ACCOUNTING POLICIES

2.1 Incoming resources

Income is included in the Statement of Financial Activities (SoFA) when:

Where incoming resources have related expenditure the incoming resources and related expenditure are reported gross in the SoFA.

Grants and donations are only included in the SoFA when the charity has unconditional entitlement to the resources.

Short term debtors are measured at transaction price, less any impairment.

Investment income is included in the accounts when due. Investment gains and losses include any gain or loss on the sale of investments and any gain or loss resulting from revaluing investments to market value at the end of the year.

2.2

Expenditure and liabilities

Creditors and provisions are recognised where the charity has a present obligation resulting from a past event that will probably result in the transfer of funds to a third party and the amount due to settle the obligation can be measured or estimated reliably. Creditors and provisions are normally recognised at their settlement amount after allowing for any trade discounts due.

Governance costs include costs of the preparation and audit of statutory accounts, the costs of Trustee meetings and cost of any legal advice to Trustees on governance or constitutional matters.

17

THE RACING FOUNDATION

NOTES TO THE ACCOUNTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

2 ACCOUNTING POLICIES (continued)

Where the charity gives a grant commitment with conditions for its payment being a specific level of service or output to be provided, such grants are only recognised in the SoFA once the recipient of the grant has agreed to provide the specified service or output. Grants commitments payable without performance conditions are recognised in the accounts when a commitment has been made and there are no conditions to be met relating to the grant which remain in the control of the charity.

Support costs have been allocated to activity on the basis of staff time and resources.

2.3 Assets

Tangible fixed assets for use by charity are capitalised if they can be used for more than one year, and cost at least £1,000. They are valued at cost or a reasonable value on receipt.

Depreciation is provided on all tangible fixed assets at rates calculated to write off the cost on a straight-line basis over their expected useful economic lives as follows:

Office equipment over 4 years

Investments are a form of basic financial instruments and are initially shown in the financial statements at market value. Movements in the market values of investments are shown as unrealised gains and losses in the Statement of Financial Activities.

2.4 Cash at bank and in hand

Cash at bank and in hand includes cash and short term highly liquid investments with a short maturity of three months or less from the date of acquisition or opening of the deposit or similar account.

2.5 Financial instruments

The charity only has financial assets and financial liabilities of a kind that qualify as basic financial instruments. Basic financial instruments, including trade and other debtors and creditors are initially recognised at transaction value and subsequently measured at settlement value.

2.6 Funds

General unrestricted funds are donations and other income receivable or generated for the objects of the charity.

Expendable endowment funds and designated funds are held separately from general unrestricted funds. There is no requirement to spend or apply the capital from either of these funds unless, or until, the Trustees decide to spend it. If the Trustees exercise the power to spend or apply the capital of the expendable endowment or designated funds, the relevant funds are transferred to unrestricted general funds in line with the terms of the original grant from the department of culture, media and sport.

2.7 Investment Policy

The investment policy applies to all monies held within the expendable endowment fund and the designated fund. Investments are stated at market value at the balance sheet date, the cost of investments includes commission paid to the investment managers. The SOFA includes the net gains and losses arising on revaluations and disposals throughout the year. Investments held in foreign currencies have been valued on the relevant basis and translated into sterling at the rate ruling at the balance sheet date. Exchange gains and losses arising on translation are included as part of the change of market value in the investments .

18

THE RACING FOUNDATION

NOTES TO THE ACCOUNTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

________________

3.
ANALYSIS OF INCOMING RESOURCES
Donations and legacies
Donations
Grants
Investment income
Dividends receivable
Bank interest
Total
4.
ANALYSIS OF RESOURCES EXPENDED
Cost of generating funds
Investment management fees
Independent investment advice
Support costs (see note 6)
Charitable activity: grant making
Grants payable (see note 5)
Other charitable activity
Support costs (see note 6)
Governance - Auditor’s fee
Governance - Trustees expenses
Total		 2022
£000s
1,750
4		 2021
£000s
10
-
1,639
20
1,767
142
1,669
3,663
2022
£000s		 2021
£000s
187
29
-
178
29
45
216
6,801
63
307
21
-
252
6,718
53
405
18
-
7,192
7,194
7,408
7,446

19

THE RACING FOUNDATION

NOTES TO THE ACCOUNTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

5.
GRANT EXPENDITURE
Community Engagement:
Apiafi Associates
Future Proof Purpose CIC
Great British Racing
National Horseracing Museum
Diversity in Racing Steering Group
National Trainers Federation
Racecourse Association
Racing to School
Racing Together
Riding a Dream Academy
Take the Reins
Urban Equestrian Academy
Racing Centre
People:
Princes Trust
British Horseracing Authority
Women in Racing
Racing Welfare
Rose Paterson Trust
Exeter University
Horseracing Betting Levy Board
Amateur Jockeys Association
Newmarket Academy
Concussion Foundation
Urban Equestrian Academy
Professional Jockeys Association
National Trainers Federation
National Association of Racing Staff
National Horseracing College (Formerly, Northern Racing College)
Thoroughbred Breeders Association
Scottish Racing
Equine:
Horserace Betting Levy Board
Horse Welfare Board
Racecourse Association
HEROS
British Thoroughbred Rehabilitation Centre
Racehorse relief fund (Racehorse Owners Association)
Environmental Sustainability:
British Horseracing Authority
The British Racing School
Thoroughbred Breeders Association
Total grant expenditure		 2022
£000
100
19
200
75
-
-
-
57
-
510
-
13
-
974
12
-
-
274
-
-
3,000
-
-
-
30
5
-
116
-
-
-		 2021
£000
103
-
-
-
45
50
207
43
9
106
20
71
36
690
-
20
140
1,286
50
19
3,000
11
1
30
-
123
36
10
147
370
309
3,437 5,552
-
3,000
-
81
-
-		 200
335
229
150
105
28
3,081 1,047
-
19
-		 25
-
21
19 46
7,511 7,335

20

THE RACING FOUNDATION

NOTES TO THE ACCOUNTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

Grants reduced/withdrawn:
Community engagement:
Queen Margaret University
Riding a Dream Academy
People:
Injured Jockeys Fund
Racing Welfare
University of Liverpool
Liverpool John Moores University
Racehorse Owners Association
Scottish Racing Academy
Thoroughbred Breeders Association
British Racing School
National Horseracing College
Writtle College
Equine:
University of Bristol
Horseracing Betting Levy Board
Arabian Racing Organisation
Horse Welfare Board
British Thoroughbred Retraining Centre
Environmental Sustainability:
British Horseracing Authority
Net grant expenditure		 (10)
(24)		 -
-
(34) -
-
(204)
(39)
-
-
-
(70)
(62)
(165)
(28)		 (10)
(283)
(3)
(94)
(10)
(44)
-
-
-
-
(568) (444)
(21)
-
(123)
(38)
(4)		 (61)
-
-
-
(29)
(186) (90)
(5) -
(5) -
6,718 6,801

All grants were made to organisations. No grants were made to individuals.

21

THE RACING FOUNDATION

NOTES TO THE ACCOUNTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

6.
SUPPORT COSTS
Management & administration
Website, IT and communications
Travel and general office expenses		 Generating
Funds
£000s
26
9
10
45		 Grant
making
£000s		 Total
£000s
232 258
85 94
88 98
405 450

All support costs are allocated to activities based on the approximate amount of staff time devoted to each activity.

7. TRUSTEE REMUNERATION AND EXPENSES

The Trustees received no remuneration for their role as Trustee during this or the preceding year.

Trustee’s expenses of £295 (2021: £266) are included in charitable activities. Expenses were reimbursed to 2 trustees (2021: 2).

8.
STAFF COSTS
Gross wages
Employer’s national insurance contributions
Pension costs
Total staff costs		 2022
£000s
210
21
21
252		 2021
£000s
148
19
16
183

4 employees were employed by the company during the year (2021: 2.8)

Key staff incurred total remuneration costs of £188k during the year (2021: £140k).

1 employee earned between £90-95k during the period (2021: 1 - £70-75k).

22

THE RACING FOUNDATION

NOTES TO THE ACCOUNTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

9.
TANGIBLE FIXED ASSETS
Cost
At 1 January 2022
Additions
At 31 December 2022
Depreciation
At 1 January 2022
Depreciation charge for the year
At 31 December 2022
Net book value
At 31 December 2021
At 31 December 2022
10.
FIXED ASSETS INVESTMENTS
Carrying market value at the beginning of the year
Additions to investments at cost
Disposals at carrying value
Investment gains/(losses)
Carrying market value at end of year
Historical cost at end of year
Analysis of investments (at market value)
Listed investments:
Fixed interest securities
Equity shares
Common investment funds, investment trusts & unit trusts
Carrying market value at end of year		 Office
Equipment
£000s
13
-
13
13
-
13
-
-
2022
£000s
94,448
17,387
(28,337)
10,502
72,996
63,367
£000s
7,849
49,006
16,141
72,996		 Total
£000s
13
-
13
13
-
13
-
-
2021
£000s
85,648
13,861
(13,516)
8,455
94,448
71,536
£000s
8,251
68,701
17,496
94,448

All investments held by the Foundation are registered on recognised UK, USA and International stock exchanges.

Material investment holdings (at market value)

The following investments represent more than 5% of the value of total investments:

£000s £000s
- -

23

THE RACING FOUNDATION

NOTES TO THE ACCOUNTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

11.
DEBTORS
Other debtors
Included within Other debtors is a balance of £200k falling due after m
12.
CASH AT BANK
Cash on deposit with investment managers
Cash on bank deposit
Current account
13.
CREDITORS: amounts falling due within one year
Grant commitments
Accruals and deferred income
Other taxation and social security
14.
CREDITORS: amounts falling due after more than one year
Grant commitments
15.
FUNDS ANALYSIS
Balance
Brought
Incoming
Outgoing
Forward
Resources
Resources
£000s
£000s
£000s
Unrestricted funds
General reserves
(6,218)
3,663
(7,239)
Designated
13,539
-
-
7,321
3,663
(7,239)
Endowment funds
Expendable:
Tote Sale Proceeds
87,178
-
(207)
Total funds
94,499
3,663
(7,446)		 2022
£000s
200
ore than 1 year
2022
£000s
2,822
10,449
5
13,276
2022
£000s
3,262
128
4
3,394
2022
£000s
2,864
Gains and
Transfers
Losses
£000s
£000s
-
-
-
(1,397)
-
(1,397)
-
(9,105)
-
(10,502)		 2022
£000s
200
ore than 1 year
2022
£000s
2,822
10,449
5
13,276
2022
£000s
3,262
128
4
3,394
2022
£000s
2,864
Gains and
Transfers
Losses
£000s
£000s
-
-
-
(1,397)
-
(1,397)
-
(9,105)
-
(10,502)		 2021
£000s
200
2021
£000s
990
5,199
12
2,822
10,449
5
6,201
13,276
2022
£000s
3,262
128
4
3,394
2022
£000s
2,864
Gains and
Losses
£000s
-
(1,397)
(1,397)
(9,105)
(10,502)		 2021
£000s
4,355
110
-
4,465
2021
£000s
1,885
Balance
Carried
Forward
£000s
(9,794)
12,142
2,348
77,866
80,214

24

THE RACING FOUNDATION

NOTES TO THE ACCOUNTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

15. FUNDS ANALYSIS (continued)

Unrestricted General Reserves

The general reserve represents those unrestricted funds held by the charity which have not been designated for a specific purpose. These funds receive all endowment income and are held to cover grant expenditure and the ongoing costs of administering the charity.

Unrestricted Designated – Tote Sale Proceeds

The Tote Sale Proceeds designated fund was established to hold funds granted by the Department for Culture Media and Sport, where those funds were not restricted as expendable endowment. Although unrestricted, the Trustees had chosen to designate these funds for long-term investment and treat them as an expendable endowment on which in ordinary circumstances they intend to spend the financial return including interest generated by these funds.

Expendable Endowment – Tote Sale Proceeds

The Tote Sale Proceeds expendable endowment fund was established to hold funds granted by the Department for Culture Media and Sport, where those funds were deemed expendable endowment by the grantor. The Trustees have chosen to utilise these funds for long-term investment and spend the financial return generated by these funds.

16.
NOTES TO THE CASH FLOW STATEMENT
(a)
Reconciliation of net income to net cash inflow from operating activities:
Net income
Adjustments:
Items not involving the movement of funds:
Depreciation charge
Investment income receivable
Changes in working capital:
Increase in debtors
Decrease in creditors
Net cash outflow from operating activities
(b)
Reconciliation of net cash flow to movement in net funds:


Increase/(Decrease) in cash in the year
Change in net funds		 2022
£000s
(3,783)
-
(1,909)
-
(92)
(5,784)


7,075
7,075		 2021
£000s
(5,739)
2
(1,659)
(100)
(165)
(7,661)
(6,347)
(6,347)

25

THE RACING FOUNDATION

NOTES TO THE ACCOUNTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

16. NOTES TO THE CASH FLOW STATEMENT (continued)

16.
NOTES TO THE CASH FLOW STATEMENT (continued)
(c)
Analysis of the change in net funds:
Net cash:
Cash at bank and in hand
Change in net funds		 1 Jan 2022
£000s
6,201		 Cash flow
£000s
7,075		 31 Dec 2022
£000s
13,276
6,201 7,075 13,276

17. TRANSACTIONS WITH RELATED PARTIES

During the year grants with a net value of £274k (2021: £1,203k) were awarded to Racing Welfare. The sole member of Racing Welfare is the Jockey Club. Julia Budd was a Trustee of the Racing Foundation and Member of the Jockey Club during the year. At the year end the balance due to Racing Welfare was £274k (2021: £1.3m).

During the year grants with a net value of £19k (2021: 0k) were awarded to the British Racing School. Julia Budd was a Trustee of the Racing Foundation and Trustee of the British Racing School during the year. At the year end the balance due to the British Racing School was £0k (2021: £0k).

During the year grants with a combined value of £0k (2021: £147k) were awarded to the National Horseracing College. Susannah Gill is a Trustee of the National Horseracing College (formerly Northern Racing College). At the year end the balance due to the National Horseracing College (formerly Northern Racing College) was £0k (2021: £0k).

During the year grants with a combined value of £0k (2021: £45k) were awarded to the Diversity and Inclusion Steering Group. Susannah Gill and Linda Bowles were Trustees of the Racing Foundation and members of the Diversity and Inclusion Steering Group during the year. At the year end the balance due to the Diversity and Inclusion Steering Group was £79k (2021: £163k).

During the year grants with a combined value of £0k (2021: £391k) were made to the Thoroughbred Breeders Association, £0k (2021: £28k) to the Racehorse Owners Association, £5k (2021: £123k) to the Professional Jockeys Association, £0k (2021: £86k) to the National Trainers Federation, and £116k (2021: £10k) to the National Association of Racing Staff. All these bodies are Members of the Thoroughbred Group, who are one of the three Members of the Racing Foundation. At the year end the balance due to the Thoroughbred Breeders Association was £194k (2021: £317k) and the National Association of Racing Staff was £58k (2021: £0k).

During the year grants with a combined value of £0k (2021: £436k) were made to the Racecourse Association. The Racecourse Association are one of the three Members of the Racing Foundation. At the year end the balance due to the Racecourse Association was £28k (2021: £84k).

During the year grants with a combined value of £0k (2021: £45k) were made to the British Horseracing Authority, (BHA). The BHA are one of the three Members of the Racing Foundation. At the year end the balance due to the BHA was £0k (2021: £25k).

26

THE RACING FOUNDATION

NOTES TO THE ACCOUNTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

18. ACTIVITIES BY FUND IN PREVIOUS YEAR

Activities in both unrestricted and restricted funds for the previous year are as follows:-

Notes
Income and endowments from:
Donations and legacies
Income from investments
Total income and endowments
3
Expenditure on:
Raising funds:
Investment management costs
Charitable activities:
Grant making
Total expenditure
4
Net gains/(losses) on investments
Net movement in funds
19
Net income/(expenditure) for the year
This stated after charging:
Depreciation
Auditors remuneration
20.
Financial instruments
Financial assets:
Debt instruments measured at amortised cost
Equity instruments measured at cost less impairment
Financial liabilities:
Measured at amortised cost		 Unrestricted
funds
£000’s		 Expendable
endowment
funds
£000’s		 Expendable
endowment
funds
£000’s
10 -
1,659 -
1,669 -
- (216)
(7,192) -
(7,192) (216)
1,141 7,314
(4,382) 7,098

27