Page 35 - RFU Annual Report 2015/2016

Financial Review
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from £43.2m to £44.6m (3%), despite 2015 on which the RFU earned CBRE All Schools, investment
the lower number of RFU owned £26m overall from the turnover of into Young Rugby Ambassadors,
internationals, mainly benefitting £228.1m. Excluding the RWC 2015 and additional investment in
from better than expected trading impact in both years, the gross women’s, girls’, and touch rugby
during the RWC 2015 and other profit decreased as anticipated by programmes.
subsequent events. 8% from 79% to 71% as a result of
relatively poor ticket sales for the Net result
Merchandising and licensing summer QBE matches and also Operating profit for the year was
revenue was disappointing and capacity reductions made for the £12.5m. The increase from the
reduced from £5.8m to £5.5m, HSBC London Sevens, and the operating loss of £1.9m in 2014/15
primarily due to England’s group lower margins achieved by TEL is predominantly due to the net
stage exit from the RWC 2015. during RWC 2015. return from hosting RWC 2015
and, notably, after the RFU’s stated
Travel commission earned by Overhead expenses commitment to continually grow
our subsidiary travel business, Overhead expenses include all investment into rugby.
England Rugby Travel Limited administration and stadium costs
(ERT), increased dramatically from and have increased year on year by Interest payable was £0.5m relating
£0.6m to £5.7m as a result of being £7.9m, from £58.6m to £66.5m. The to the interest on drawn down
appointed official travel operator principal increases relate to the loan funds and loan arrangement
for the RWC 2015. one-off RFU costs of hosting RWC fee being amortised over the
2015 and also ERT costs required five year term and £0.9m finance
Revenue from the London Marriott to fulfil the official tour operator cost relating to the straight line
Hotel Twickenham in the South role for RWC 2015, as well as some increase of the liability to Compass
Stand increased marginally year on incremental staff related cost Group PLC. Interest receivable of
year to £6.3m and, while benefiting increases. £0.3m was generated from RWC
during RWC 2015, was impacted 2015 ticket cash being held on term
during the preparation phase as Exceptional item deposits before all settlements
well as from general increasing A £2m payment was made to were made. Investment income
competition in the local area. Compass PLC in July 2014 for the of £0.3m was from investments
early exercising of the put/call held by the Injured Players
Health and Leisure revenue from option over the TEL shares, which Foundation, with the loss on fair
the South Stand’s Virgin Active yielded the RFU a one off profit value reflecting the year end
Classic Health Club was flat year of £14.5m. value of those same investments.
on year at £4.1m. The residential properties in the
Profit for rugby investment vicinity of the stadium owned by
Other revenue comprises stadium Profit for rugby investment was the RFU, now held as investment
rental income, revenue from up £27.4m (37%) from £74.9m to a properties under FRS 102, have
hosting non-RFU events, income record £102.3m. generated a gain of £0.2m on
from Government and other public revaluation at year end.
bodies, and other miscellaneous Professional rugby investment
categories. Total other revenue Professional rugby investment The impact of the above resulted
increased by £1.3m, from £17.9m includes the costs of all in a profit before taxation of £11.7m,
to £19.2m, primarily due to the England representative teams, against a loss before taxation
interim insurance settlement pathway programmes, the of £1.1m recorded in 2014/15.
of £3m made for losses caused support infrastructure, as well After taking account of taxation
by third parties during the as professional club funding. and the share of the profit from
Twickenham Stadium Upgrade Overall investment at £55.7m our subsidiaries attributable to
Project carried out in preparation was up £11.4m against 2014/15. minority shareholders, the profit
for hosting RWC 2015. The increase is due to the player for the year was £3.9m, compared
payments for RWC 2015, plus to a loss of £6.7m in 2014/15.
Cost of sales preparation costs and training
Cost of sales increased by £165.9m, camp costs, and also the summer
from £72.4m to £238.3m. These tour cost to Australia in June 2016, Profit for rugby
costs comprise those directly against no summer tour in 2015.
driving our revenue streams, of investment
which the remaining costs of Rugby development investment topped £100m
hosting RWC 2015 including Rugby development investment
the guarantee and profit share continued to grow for the fifth for the very
payments to World Rugby consecutive year and increased by
comprise £185.6m (78%). The gross £1.6m (5%), from £32.5m to £34.1m, first time.
profit margin has declined by in line with the RFU’s commitment
24%, from 65% in 2014/15 to 41% in to delivering the legacy of the
2015/16, due to the impact of RWC RWC 2015, enhanced spend on

Annual Report 2015/16