Page 25 - RFU Annual Report 2017

23
Strategic Report

Financial Review

Stand reduced marginally year on improved 42% from 41% in 2015/16 invest all profits into rugby over a full
year to £6.2m, with the incremental to 83% in 2016/17, due to the impact cycle and to ensure that investment
Twickenham events, including of Rugby World Cup 2015 which programmes are not impacted by
NFL, largely offsetting the increase earned the RFU £26m out of the cyclical nature of the match
in market competition and the the overall turnover of £228.1m. profile. Interest payable was £1.6m
reduction in corporate travel spend. Excluding the RWC 2015 impact in relating to interest on drawn down
2015/16, gross profit increased by loan funds and the arrangement fee
Health and Leisure revenue from the 13% from 70% to 83% as a result of sell being amortised over the five-year
South Stand’s Virgin Active Classic out international matches across the term, and the unwinding of the
Health Club reduced £0.4m (10%) Old Mutual Wealth Series and the contractual obligation to buy back
from £4.1m to £3.7m due to increased Six Nations, compared to relatively the Compass Group PLC’s 40% share
competition in the market. poor ticket sales for the summer QBE in TEL in 2025. Interest receivable
internationals in 2015, and the higher and similar income of £1.5m reflects
Other revenue comprises stadium margins achieved by TEL compared the revaluation gain on fair value of
rental income, revenue from to the period during the Rugby residential properties in the vicinity
hosting non-RFU events, income World Cup. of the stadium, owned by the RFU,
from Government and other public and held as investment properties.
bodies, and other miscellaneous Overhead expenses The gain on the fair value of fixed
items. Total other revenue reduced asset investments of £0.6m relates to
by £5.0m from £19.2m to £14.2m Overhead expenses include all the investments held within the RFU
due to a £3m insurance settlement administration and non-match day Injured Players Foundation and
received in 2016 for losses caused by stadium costs, and reduced £6.1m Spire Fund.
third parties during the Twickenham year-on-year from £66.5m to £60.4m.
Stadium Upgrade Project carried This reflects both that the England The impact of the above resulted
out in preparation for hosting Rugby 2015 staff, and other staff in a loss before taxation of £5.5m,
Rugby World Cup 2015, no World across the business dedicated to against a profit before taxation of
Rugby Development grant income hosting the Rugby World Cup, are no £11.7m recorded in 2015/16. After
recognition in the year after the longer employed and that there has taking into account taxation, and the
Rugby World Cup, and slightly been significant focus on controlling share of profits from our subsidiaries
reduced Sport England income. overheads during 2016/17. attributable to minority shareholders,
the loss for the year was £7.7m,
Under the new Sports Governance Profit for rugby investment compared to a profit of £3.9m in
Code the RFU is now required 2015/16.
to show the income from public Profit for rugby investment was down
investors and to clearly account for £8.7m (8.5%) from the record amount Balance Sheet and Cash Flow
the expenditure of these funds. The of £102.3m to £93.6m, due to 2016/17
analysis and use of Sport England not being a World Cup year. Consolidated capital employed
funds received is shown below: increased £22.1m from £193.1m to
Professional rugby investment £215.2m principally due to the sale
2017 2016 of £28.2m of 2017 debentures and
£m £m Professional Rugby Investment upgraded debentures for the new
Total Sport includes the costs of all England East Stand hospitality area. Other
England income 3.3 4.2 representative teams, pathway movements were the loss for the
programmes, support infrastructure year of £7.7m, a £2m gain arising
Player retention and professional club funding. from the re-measurement of the net
and transition (1.0) (1.6) Overall investment at £63.7m was up defined benefit Pension obligation,
Broadening reach (0.2) (0.6) £8.0m against 2015/16 due in part less related tax components, a £0.1m
Touch and sevens (0.7) (0.4) to the uplift in funding in what was gain on the fair value of the foreign
Women and girls/ the first year of both the Professional exchange hedges and the movement
talent development (1.4) (1.6) Game Agreement and the Players in non-controlling interests’ share
Agreement. in the undistributed profits of
Total spend (3.3) (4.2) subsidiary companies of £0.5m.
Rugby development investment
Intangible fixed assets consist of
Cost of sales Rugby Development Investment software and website development
grew for the sixth consecutive year costs. Additions of £1.8m have been
Cost of sales reduced £207.4m from increasing by £1.8m (5%), from £34.1m made as a result of continued work
£238.3m to £30.9m. These costs to £35.9m, in line with the RFU’s on EnglandRugby.com and other
comprise items driving our revenue commitment to supporting initiatives back office systems, while there were
streams, with matchday expenditure across all areas of the game – schools, disposals with an original cost of
for hosting events being the largest universities, clubs, 15s, 7s, touch, £0.5m and net book value of £0.3m.
element. 2015/16 included the men’s, women’s and girls’ rugby.
remaining costs of hosting Rugby Tangible fixed assets, which
World Cup 2015, including the Net result primarily comprise our investment
guarantee and profit share payments in Twickenham Stadium and
to World Rugby which amounted The operating loss for the year was the Artificial Grass Pitches in
to £185.6m (78%). The gross profit £6.0m. This loss reflects the RFU’s community clubs, increased by £3.9m
margin has, as a consequence, stated commitment to continue to from £230.9m to £234.8m.

Annual Report 2017