Page 34 - RFU Annual Report 2015/2016

Financial Review
32

Stephen Brown
Chief Financial Officer

2015/16 has been a truly call option with Compass Group
exceptional year. The significant PLC over TEL in July 2014 is now
financial success of hosting the being taken to reserves. £47.4m of
Rugby World Cup in 2015 has the £55m contractual obligation to
meant that the RFU has delivered buy back Compass Group PLC’s
retained profits in what would 40% share in TEL in 2025 is now
ordinarily be a sizeable loss- recognised in creditors and will
making year in the cycle. In increase to £55m on a straight line
addition, this retained profit is basis over the next ten years.
after investing a record £89.8m
into rugby (up 17% vs 2014/15). There are a number of significant Revenue
Total investment into rugby in restatements, particularly Total revenue increased by
the last four years has exceeded concerning the various £199.2m, from £207.9m to £407.1m.
our Strategic Plan target accounting transactions related to This was driven by RWC 2015,
by £28m (10%). Twickenham Experience Ltd (TEL). broadcasting, sponsorship, travel,
hospitality and catering revenue
Revenues nearly doubled year While this treatment of the streams, while ticket revenues fell
on year, to a record £407.1m, historical TEL transactions as a result of the otherwise low
principally as a result of the correctly and appropriately meets match profile of a non-autumn
inclusion of the balance of Rugby the requirements of the new international year.
World Cup 2015 (RWC 2015) reporting standards, it is important
revenues of £228.1m. There was to note that the RFU projections The RWC 2015 revenues reflect the
underlying revenue growth, indicate that Compass Group balance of the total tournament
however, across a number of areas, PLC’s shareholding in TEL will be ticket income, and other revenues
with increased broadcasting (up valued in excess of the contractual of £281.4m not previously
39% vs 2014/15), sponsorship purchase price of £55m in 2025. recognised in prior years as a
(up 8% vs 2014/15), match-day result of accounting for the hosting
hospitality, and non-match day The profit and loss reserve of of the RWC 2015 as a long-term
conference and events business £23.1m is in line with the RFU contract.
(up 3% vs 2014/15), and travel reserves policy, which leaves
revenues associated with England the RFU in a strong position to Non-RWC 2015 ticket revenue
Rugby Travel being the official comfortably manage the variability reduced by £14.4m, from £34.7m to
travel operator for RWC 2015 (up of the four-year Rugby World Cup £20.3m, due to the staging of only
850% vs 2014/15). match cycle going forward. two summer QBE Internationals
against Ireland and France, and
Profit for rugby investment topped The £10m revolving credit facility two home RBS 6 Nations matches
£100m for the very first time. The with RBS was terminated during against Wales and Ireland,
rugby investment of £89.8m was the year and replaced with a new compared to 2014/15 with four
split between professional rugby 5- year, £50m revolving credit QBE Internationals against New
of £55.7m (up 26% vs 2014/15) and facility to provide funding for the Zealand, South Africa, Samoa and
included the squad and camp costs East Stand development project Australia, and three home Six
in the build-up to and during RWC and the Artificial Grass Pitch Nations matches against Italy,
2015; and rugby development (AGP) project. At 30th June 2016, Scotland and France.
of £34.1m, which was up 5% on £24.6m of this facility had been
2014/15 due to further spending drawn down. Broadcasting revenue increased
on game development and legacy by £12.4m (39%), from £31.6m
initiatives. The Balance Sheet of the Group to £44m, mainly due to the new
remains strong, with capital improved five-year deal with Sky
The RFU has elected to prepare employed totalling £193.1m. There and increased share of Six Nations
these financial statements have been significant movements broadcasting as a result of winning
in accordance with Financial in the levels of debtors and the Grand Slam.
Reporting Standard 102 (FRS creditors brought about by the
102), as required by the Financial settlement of all RWC 2015 related Sponsorship revenue increased by
Reporting Council following the dues by England Rugby 2015. £2.1m (8%), from £27.2m to £29.3m.
replacement of UK GAAP, for all Old Mutual Wealth joined us as
accounting periods starting on or The adoption of FRS 102 has also a new partner with the remaining
after 1 January 2015. As a result, significantly changed the previous increase due to the renewal or
the prior year financial statements treatment for the purchase of the extension of agreements with O2
have been restated. The full impact 7.5% of TEL shares from Hamsard and Canterbury for 2015/16.
of the transition to FRS 102 on on 30 June 2014. The goodwill that
the previously reported financial arose on this, and the previously Hospitality and catering, ordinarily
performance and Balance Sheet is categorised exceptional gain that our single largest Group revenue
provided in note 30. arose on the exercise of the put/ stream, still increased by £1.4m,

Annual Report 2015/16