Page 74 - RFU Annual Report 2017

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Financial Statements

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 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 £1.6m (2016: £2.0m).

In the year 2000 the RFU established a subsidiary company, Twickenham Experience Limited (TEL), and assigned to it
the rights to provide catering and hospitality services at Twickenham Stadium. The RFU owns 60.0% (2016: 60.0%) and the
Compass Group owns 40% (2016: 40%) of the share capital of TEL at 30 June 2017.

The RFU has leased certain areas of Twickenham Stadium to TEL until 2025 at £0.2m per annum. During the year the RFU
received £3.1m (2016: £2.3m) from TEL in respect of ticket revenues and royalties, and paid £2.3m (2016: £2.2m) to TEL in
respect of catering services. The Group paid £12.8m (2016: £15.0m) to the Compass Group in respect of provisions, staff costs,
royalties and other services. At 30 June 2017 £1.9m (2016: £2.0m) was owed to the RFU by TEL and is shown in amounts owed
by Group undertakings in the Parent balance sheet. At 30 June 2017 £0.1m (2016: £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 £0.2m (2016: £0.4m) to its subsidiary company England Rugby Travel (ERT) in respect of travel
expenses, and recharged costs relating to the operation of the Olympic Games Sevens rugby team of £0.75m (2016: £0.03m)
to Great Britain Rugby Sevens Limited.

29. Financial instruments

Financial risk factors
The Group is exposed to various financial risks relating to its interest bearing assets and liabilities. The financial risks
include foreign exchange risk, interest rate risk, credit risk and liquidity risk.

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

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

Credit risk
The Group has no significant concentration of credit risk. It has also implemented policies that ensure that appropriate
credit checks are carried out before sales to new customers commence. Interest bearing assets are only invested with
financial institutions that have excellent credit ratings.

Annual Report 2017