Page 54 - RFU Annual Report 2015/2016

Financial Statements
52

Notes to the Financial Statements continued

3. Judgements in applying While FRS 102 does not provide ii) Areas of estimation uncertainty
accounting policies and key sources specific guidance for such The following are the Group’s key
of estimation uncertainty continued arrangements, the RFU has considered sources of estimation uncertainty:
the available guidance, including that
Twickenham Experience Ltd (TEL) relevant to International Financial Pension assumptions
TEL is a joint venture between the RFU Reporting Standards (IFRS). There are a number of assumptions
(owning 60%) and Compass Group management have considered on the
(owning 40%), established to provide The IFRS Interpretations Committee advice of actuaries which have an
catering and hospitality services at (IFRIC), while making no formal impact on the results of the valuation
Twickenham Stadium. The RFU has pronouncements, has indicated that of the pension scheme liabilities at year
granted TEL exclusive hospitality in circumstances where there is an end. The most significant assumptions
rights for a period of 40 years from acquisition of a controlling interest in are those relating to the discount rate
May 2000. a company with purchase arrangement of return on investments, and the rates
over the non-controlling interest, of increase in salaries and pensions.
Under the terms of the shareholder then those arrangements should be
agreement, Compass has the treated as a liability on the balance Taxation
irrevocable right to exercise a put sheet. While the arrangements here Management estimation is required
option, at a stated price, on the do not arise in connection with an to determine the amount of deferred
occurrence of an option event, being acquisition, the RFU has concluded tax assets that can be recognised,
the closure of Twickenham, the that the most appropriate treatment based upon likely timing and level of
reduction of England matches at for the obligation to acquire the future taxable profits, together with an
Twickenham, or the RFU ceasing to non-controlling interest in TEL is as assessment of the effect of future tax
be the governing body of rugby in a liability. The liability is shown in planning strategies.
England. If no option event occurs creditors due after more than one year
before 30 June 2025, the contract (see note 20) and the debit taken to
requires the RFU to buy the 40% other reserves. In addition, the non-
Compass share of TEL for £55m. controlling interests within equity
were reviewed to ensure that there
In implementing FRS 102 the RFU was no double counting, so that this
has reviewed its historical accounting reflects the non-controlling interest’s
treatment of the TEL transactions and rights at the year end to dividends from
arrangements. accumulated profits.

Annual Report 2015/16