Page 75 - RFU Annual Report 2015/2016

Financial Statements
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30. Transition to FRS 102 continued
The following were changes in accounting policies arising from the transition to FRS 102:

1. Employee benefits – pensions
Under previous UK GAAP, the interest on the expected return on plan assets was calculated using an expected asset rate.
FRS 102 requires that the net interest on the net defined benefit liability is calculated using the liability discount rate
for the scheme. As such there was a decrease in overhead expenses arising from this adjustment which was offset by a
corresponding change in other comprehensive income of £0.3m.

2. Employee benefits – accrued holiday pay
Under previous UK GAAP, the Group and Company did not accrue for earned but unused holiday pay and an adjustment to
accruals has been made to include provision in the Group for these amounts of £0.9m and £0.6m at 1 July 2014 and 30 June
2015 respectively. The Company provision was £0.6m at 1 July 2014 and 30 June 2015.

3. Derivatives
The Group has changed its policy to record forward foreign currency on the balance sheet at fair value and account
for changes in fair value through profit and loss or in other comprehensive income where they are in effective hedging
arrangements including the associated deferred tax. These were previously recognised on an accruals basis,
or at contracted rates.

4. Intangible assets
The Group has reclassified software and website development costs from tangible fixed assets to intangible assets resulting
in an increase in the carrying value of intangible assets of £0.1m and £1.2m at 1 July 2014 and 30 June 2015 respectively.
The increase in the carrying value of the Parent’s intangible assets was £0.1m and £1.1m at 1 July 2014 and 30 June 2015
respectively.
5. Goodwill
Goodwill that arose on the purchase of the 7.5% shareholding in TEL from Hamsard, has been transferred to other reserve
under FRS 102.

6. Debentures
The Group changed its policy to subsequently adjust the carrying value of its debentures to reflect any accrued interest
payable or receivable. It is not anticipated that there will be any interest payable or receivable.

7. Investment properties
Under FRS 102, the RFU has identified a number of properties that qualify as investment properties under FRS 102. As
such, the Group has established a policy to initially recognise investment properties at cost, and where a fair value can be
measured reliably, to subsequently hold these assets at fair value with adjustments to the associated deferred tax. This has
resulted in an increase in investment properties of £6.5m and £6.9m at 1 July 2014 and 30 June 2015 respectively with a
corresponding gain in the profit and loss account of £0.4m for the Group and Parent.

8. Public benefit and entities concessionary loans
The Group and Company have determined that they meet the definition to be classified as a public benefit entity under
FRS 102 section 34. FRS 102 section 34 contains additional guidance specific to public benefit entities. This has resulted in
continuing to carry certain financial instruments, such as those that would be expected to be treated as concessionary loans,
loan notes and debentures at their UK GAAP carrying value, rather than at amortised cost in accordance with FRS 102,
sections 11 and 12.

9. Gain on transaction with a controlled entity
The Group and Parent have reclassified the gain on purchase and subsequent resale of shares of TEL arising in 2015 from the
profit and loss to equity as this is a transaction with a subsidiary in the Group’s capacity as a shareholder. The amount of the
reclassification was £14.5m.

10. Liability with non-controlling interests
The Group and Company have recognised a liability for the contractual obligation to buy back Compass Group PLC’s 40%
share in TEL in 2025. See section 3 Judgements in applying accounting policies and key sources of estimation uncertainty
for further detail.
11. Investments (Parent only)
The RFU’s investment in TEL is increased by the amount of consideration to be paid in 2025 to acquire the 40% shareholding
held by Compass.

Annual Report 2015/16