Page 16 - RFU Annual Report 2018

1 CEO’S REVIEW
OF THE YEAR

4

STEVE BROWN

CEO

I was appointed RFU Chief Executive For current planning purposes, we have position, robust contracted revenues
Officer in September 2017 and, needed to face up to four key challenges and a good balance sheet. But we need
alongside our Board and Executive team, to our income not encountered in recent to plan more prudently, given the recent
began a long-term strategic assessment years: rise in our fixed cost base, driven largely
of our organisation and the environment by the Professional Game Agreement
in which it operates. This exercise was An unprecedented period of growth (PGA) and Elite Playing Squad (EPS)
essential to ensure the deliverability of and investment into rugby over the fees, which were negotiated when our
our newly unveiled four-year Strategic past seven years is now followed by revenue outlook was more optimistic,
Plan at the start of the season, against a growing uncertainty in both the UK and by stadium depreciation.
backdrop of a rapidly changing sporting sports market and the wider economic
landscape. environment. This means that our As a result, rugby investment is likely
assumptions about future revenue to come down from the over £100m
Looking back, 2017/18 clearly marks must be re-set from 2018/19 onwards. averaged over the past three years
a transition point for the Union as it to around £95m per year, still a very
moves from a period of high growth Our four-year cyclical business faces substantial sum, but one we need to
and investment in the game to a more the impact of a ‘normal’ Rugby World adjust to in 2019/20 and beyond.
challenging time. Cup Year loss in 2019/20 for the first
time in eight years, given that the 2015 During the period under review we
Our levels of investment into rugby home Rugby World Cup delivered reduced overheads by £1.1m, with a
of £107.7m, which was £8.1m, or 8% circa £30 million profit and World Cup further focus on efficiency in June
more than in 2016/17, was made in years are normally loss making as we 2018 leading to a consultation process
the knowledge that we had a planned do not have our Twickenham autumn with our staff as part of the 2018/19
major exceptional cash gain of £31.6m, internationals. business planning process. As a result,
resulting from a restructuring of 62 roles were made redundant across the
the RFU’s holding in Twickenham The recent one-time major income organisation although, with the creation
Experience Limited. boosts - including the profits from of some new roles as part of the process,
hosting RWC2015 in England - are no 54 people actually left the RFU. While
However, because this cash gain cannot, longer on the horizon. this was not an easy decision to make,
for accounting purposes, be recognised it was however necessary to ensure the
in the Profit and Loss (P&L) account but Our contracted investment in the financial stability of the Union going
appears instead in the Profit and Loss professional game has increased in forward in more challenging times.
reserve, our figures show a loss for the recent years. Success at elite level, in
year of £30.9m. In essence, the Profit and particular the success of the senior Tough decisions have had to be made
Loss account shows all of our outgoing England men’s team, drives our but we have an ambitious strategy,
investment as expenditure but none of business model and provides the including some exciting initiatives for
the £31.6m of incoming cash from the funding for community rugby, so it the community game, and a World Cup
exceptional cash gain. is essential that we keep our England in Japan in a year’s time which we aim
teams winning and Twickenham to win.
The decision was made to invest that Stadium in good repair. This translates
cash back into the game because we into significant committed investment In 2017/18, our income was impacted by
always plan to invest as much as we can which reduces the amount of our fifth place in the Six Nations and the
into the game from all of the income discretionary spend at our disposal. costs of the redundancy programme in
we generate, while building healthy, the year. As a consequence, our overall
appropriate reserves for the future, and We have capital employed of business plan financial targets were
as a result, the RFU remains on a sound nearly £195m, we own our key not hit, meaning that the executive and
financial footing, with our commitment asset, Twickenham Stadium, and employee bonuses were not paid out.
to ensuring that rugby flourishes in we have completed the East Stand Full details of our financial performance
England as strong as ever. redevelopment, which will protect our are outlined in the financial statements
future revenue. We have a healthy cash in this report.

Annual
Report
2018