Page 58 - RFU Annual Report 2017

56
Financial Statements

Notes to the Financial Statements continued

2. Accounting policies continued The defined benefit scheme is funded (v) Derivative financial instruments
by scheme assets, which are held and hedging activities
(s) Cash and cash equivalents independently from those of the Group The use by the Group of derivative
Cash is represented by cash in hand in separately administered funds. The financial instruments is limited to
and deposits with financial institutions. assets are measured at fair value. forward foreign exchange contracts.
Cash equivalents are highly liquid The contracts are taken out because
investments that mature in no more Fair value is based on market price the income from the Six Nations
than three months from the date of information, and in the case of quoted tournament is denominated in Euros.
acquisition and are readily convertible securities it is the published bid price.
into known amounts of cash with an Liabilities are measured on an actuarial The instruments should initially be
insignificant risk of change in value. basis using the projected unit method recorded at their fair value. However,
and are discounted at a rate equivalent on the date that a contract is entered
In the Group Cash Flow Statement, to the current rate of return on a high into the fair value is nil.
cash and cash equivalents are shown quality corporate bond of equivalent
net of bank overdrafts that are currency and term to the scheme Any gain or loss, achieved or incurred,
repayable on demand and form an liabilities. The actuarial valuations are is recorded in the profit and loss
integral part of the Company’s cash obtained at least triennially and are reserve, which forms part of the equity
management. updated at each Balance Sheet date. of the Group. The balance in the
The value of a net pension benefit reserve account is released to profit and
(t) Pension costs and other asset is limited to the amount that may loss when the contracts are settled and
post-retirement benefits be recovered either through reduced the tournament income is received.
The Rugby Football Union operates a contributions or agreed refunds from
defined benefit scheme and a defined the scheme. (w) Debentures
contribution scheme. The Group has determined that its
The resulting defined benefit asset or debentures meet the criteria within
Defined benefit scheme current service liability is presented separately from section 34 of FRS102 to be classified
costs, past service costs and gains and other assets and liabilities on the face as public benefit entity concessionary
losses on settlements are charged to of the Balance Sheet. The pension loans.
profit and loss in the period in which charge is calculated on the basis of
they occur. actuarial advice. The Group initially records these items
in the Balance Sheet at the amount
Net interest is determined by Contributions to the defined received or paid. In subsequent periods
multiplying the net defined benefit contribution scheme are recognised in the carrying amount is adjusted to
liability by the discount rate at the profit and loss in the period in which reflect any accrued interest payable
start of the period, taking into account they become payable. or receivable. It is, however not
any changes in the net defined benefit anticipated that there will be any
liability during the period as a result of (u) Translation of foreign currencies interest payable or receivable.
contribution and benefit payments. Net Transactions in foreign currencies are
interest is recognised in profit and loss recorded at the rate of exchange on the
as other finance revenue or cost. date of the transaction. Transactions
that are hedged using forward
Re-measurements, comprising exchange contracts are recorded at the
actuarial gains and losses, the effect forward contract rate.
of the asset ceiling and the return
on the net defined benefit liability Monetary assets and liabilities
(excluding amounts included in net denominated in foreign currencies
interest) are recognised in other are translated at the rates ruling at the
comprehensive income in the period Balance Sheet date. Exchange gains
in which they occur. Re-measurements and losses, arising on both settled and
are not reclassified to profit and loss in unsettled foreign currency transactions,
subsequent periods. are included in the profit and loss.

Annual Report 2017