Page 68 - RFU Annual Report 2015/2016

Financial Statements
66

Notes to the Financial Statements continued

28. Related parties

Under FRS 102 section 33, the Group is exempt from disclosing related party transactions with entities that are wholly owned
by the Rugby Football Union. All transactions with entities owned by the Group are eliminated on consolidation.

All Directors and certain senior employees who have authority and responsibility for planning, directing and controlling the
activities of the Group are considered to be key management personnel. Total remuneration in respect of these individuals is
£2.0m (2015: £1.7m).

In 2000 the RFU established a subsidiary company, TEL, and assigned to that company the rights to provide catering and
hospitality services at Twickenham Stadium. The share capital of TEL at 30 June 2016 was held 60.0% (2015: 60.0%) RFU and
40.0% (2015: 40.0%) Compass.

The RFU has leased certain areas of Twickenham Stadium for £0.1m (2015: £0.1m) per annum to TEL for 15 years.

During the year the RFU received £2.3m (2015: £2.9m) from TEL in respect of ticket revenue and royalties, and paid £2.2m
(2015: £2.1m) in respect of catering services. The Group also paid £15.0m (2015: £12.3m) in respect of provisions, staff costs,
royalties and other services to Compass and its subsidiary companies.

At 30 June 2016, a balance of £2.0m (2015: £2.2m) was owed to the RFU by TEL and is shown in amounts owed by Group
undertakings in the Parent balance sheet; also, an amount of £0.1m (2015: £0.1m) was owed by the RFU to TEL and is shown
in amounts owed to Group undertakings in the Parent balance sheet.

During the year, the RFU paid £0.1m (2015: £0.1m) to its subsidiary ERT in respect of travel expenses.

The RFU recharged costs relating to the operation of the Olympic Games Sevens rugby team during the year of £0.03m
(2015: £nil) to its associate Great Britain Rugby Sevens Ltd.

29. Financial instruments

Financial risk factors
The Group is exposed to financial risk from the interest bearing assets and liabilities. These expose the Group to financial
risks including foreign exchange risk, interest rate risk, credit risk and liquidity risk.

Foreign exchange risk
The Group is exposed to foreign exchange risk due to income from the Six Nations tournament received in Euros. This is
mitigated through the use of forward contracts to fix the rate up to a year in advance.

Interest rate risk
The Group has interest bearing assets, primarily cash, which are invested at differing interest rates. Interest rates on interest
bearing assets are fixed for the term of the investment. Interest rates on operating accounts are variable at 0.5% lower than
the fixed term rate as the cash is at call. The Group also has an interest bearing liability for which interest is payable at the
variable rate applicable to the borrowed amount.

Credit risk
The Group has no significant concentration of credit risk. The Group has implemented policies that require appropriate
credit checks on potential customers before sales commence. Interest bearing assets are only invested with financial
institutions that have excellent credit ratings.

Annual Report 2015/16