Page 24 - RFU Annual Report 2017

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Strategic Report

Financial Review

Richard Daniel
Group Finance Director

2016/17, the first year of normal The RFU has prepared these Ticket revenues (excluding Rugby
trading following the Rugby World financial statements in accordance World Cup 2015) increased £17.6m
Cup in 2015, saw record levels of with Financial Reporting Standards (87%) from £20.3m to £37.9m, due
investment into rugby despite lower 102 (FRS102), as required by the to the staging of four Old Mutual
year-on-year revenues. Total rugby Financial Reporting Council and Wealth Series internationals against
investment was £99.6m, up £9.8m adopted for the first time in the 2016 South Africa, Fiji, Argentina and
(11%) on 2015/16. That brings the accounts. Australia, and three home Six
total investment into rugby over the Nations matches against Italy,
five years of the complete Strategic The profit and loss reserve of £18.5m Scotland and France, compared to
Plan cycle to £408m, up by £55m is in line with the RFU reserves 2015/16 when there were only two
(16%) against the target. policy, which leaves the RFU in summer QBE Internationals against
a strong position to comfortably Ireland and France, and two home
Revenues were significantly lower manage the variability of the four- RBS 6 Nations matches against
year-on-year at £184.9m, driven in year Rugby World Cup match cycle Wales and Ireland.
large part by the £228m of Rugby going forward.
World Cup revenue in 2015/16. A Broadcasting revenue increased
comparison of total revenue in The £50m revolving credit facility £1.3m (3%), from £44m to £45.3m,
2016/17 against the last season with RBS remains in place to provide primarily due to the contracted uplift
with the same match profile and funding for the ongoing East in the five-year Sky deal.
excluding any Rugby World Cup Stand development project and the
impact (2012/13) shows total revenue Artificial Grass Pitch (AGP) scheme. Sponsorship revenue increased
is up 20%. At 30th June 2017, £35m of this £0.1m (0.3%), from £29.3m to £29.4m.
facility had been drawn down. O2 renewed their sponsorship
Growth was achieved across the key agreement for a further four years
revenue streams of ticketing (up The balance sheet of the Group and Secure Trading were signed as
87% vs 2015/16), broadcasting (up remains strong with capital sponsors of the men’s sevens side.
3% vs 2015/16 ) and merchandising employed totalling £215.2m. The
and licensing (up 27% v 2015/16), growth in capital employed of £22.1m Hospitality and catering income
while sponsorship was broadly flat is largely driven by the £28.2m reduced by £4.1m (9%) from £44.6m to
year-on-year. Revenues from match- debentures sold in the year, which £40.5m, despite the higher number of
day hospitality and travel, which includes those relating to the new RFU owned internationals in 2016/17,
benefitted from hosting the Rugby East Stand facilities. reflecting the prior year gain driven
World Cup in 2015/16, have shown by hosting 10 Rugby World Cup
increases against the last season As in 2016 the contractual obligation matches in 2015.
with the same match profile and to buy back the Compass Group
excluding any Rugby World Cup PLC’s 40% share in TEL in 2025 is Merchandising and licensing
impact (2012/13). recognised, with £48.3m of the £55m revenue was strong in the year,
included within other creditors increasing £1.5m (27%) from £5.5m
Profit for rugby investment reduced amounts falling due after one year. to £7.0m, benefitting from the high
8.5% year on year to £93.6m as a result The RFU projections continue to number of England games and
of the reduction in gross profit, which show that the Compass Group PLC’s driven by the success of the team on
was partially mitigated by overheads estimated value of TEL remains in the pitch.
being £6.1m (9%) lower year-on-year. excess of the contractual purchase
The rugby investment of £99.6m was price of £55m, which is not reflected Travel commission earned by our
split between Professional Rugby of in these financial statements. A subsidiary travel business, England
£63.7m (up 14% vs 2015/16), which loan of £3m was also provided by Rugby Travel Limited (ERT), reduced
included the first year costs of both Compass during the year, as initial dramatically from £5.7m to £0.7m
the new eight year Professional funding towards the East Stand as a result of the 2015/16 numbers
Game Agreement and the new project, and is repayable in 2025. having benefitted from the company
four year players deal, and Rugby being appointed official domestic
Development of £35.9m, which was Revenue travel operator for the Rugby World
up £1.8m (5%) on 2015/16 and reflects Cup. Underlying revenue growth
the ongoing investment into growing Total revenue reduced by £222.2m, is achieved due to the continued
and supporting the game and from £407.1m to £184.9m, driven expansion of the tours business.
strengthening the clubs. This amount largely by the one-off Rugby World
includes grants provided as part of Cup amount in the 2015/16 accounts. Revenue from the London Marriott
the RugbyShare programme. Hotel Twickenham in the South

Annual Report 2017