Page 26 - RFU Annual Report 2018

2 FINANCIAL REVIEW

4

SUE DAY

CFO

I am delighted to have joined the RFU The balance sheet of the Group remains Sponsorship revenue is in line with the
at such an important time. I have been strong, with capital employed totalling prior year, reducing by £0.1m (0.5%),
involved in rugby for over 25 years and £194.4m. The reduction in capital from £29.4m to £29.3m. O2 renewed their
am passionate about playing my part employed of £20.8m reflects the increase sponsorship agreement for a further four
in making sure that as many people in the contractual obligation to buy back years and Secure Trading were signed as
as possible across England are able to the Compass shareholding in TEL in sponsors of the men’s sevens side.
benefit from the opportunities that our 2028 following the revised agreement
great game can offer. Crucial to that is entered into during the year (described Hospitality and catering income
making sure that our finances are well in more detail below and in note 3). increased by £0.7m (1.7%), from £40.5m
managed and remain on a firm footing. to £41.2m, despite fewer Twickenham
The RFU has enjoyed unprecedented internationals in 2017/18, reflecting a
The loss for this year was £30.9m revenue growth over the last eight years strong calendar of non-RFU events.
after a record investment of £107.7m or so, which has enabled record levels of
in the game. This level of investment investment in rugby. However, looking Merchandising and licensing revenue
was made possible by an exceptional to the future we know now that the reduced in year decreasing £2.5m
cash gain of £31.6m on the purchase financial outlook will be tougher. There (36%) from £7.0m to £4.5m, mainly
and resale of TEL shares to Compass will be less money to spend both on driven by the outsourcing of the retail
Group. Due to the fact that this was a running the business and on investing operation to Fanatics. As a result, the
transaction in shares of a subsidiary, in rugby. In order to make sure that RFU now receives a guaranteed fee on
this gain is recorded through the P&L RFU finances remain robust, a series of merchandise sold. The outsourcing
reserve which increased by £6.6m during financial metrics are being introduced has increased the profits received by
the year to £25.1m. against which spending and investment the RFU from the retailing of RFU
decisions will be made. These will merchandise.
Revenues were, as expected, lower ensure that the RFU invests its money
year-on-year at £172.4m driven largely where it can achieve the greatest rugby Travel commission earned by our
by the impact on ticket and broadcast and financial returns and that it keeps subsidiary travel business, England
revenues of fewer home matches at in reserve enough funds to cover Rugby Travel Limited (ERT), increased
Twickenham. As a result, profit before unforeseen events that could impact on from £0.7m to £0.8m.
rugby investment reduced 11% year-on- financial performance.
year to £83.3m. Revenue from the London Marriott
Revenue Hotel Twickenham in the South Stand
Rugby investment for the year totalled Ticket revenues decreased £8.0m (21%) remained level with last year at £6.2m.
£107.7m and was split between from £37.9m to £29.9m, due to the
professional rugby at £70.7m and rugby staging of three Old Mutual Wealth Health and Leisure revenue from the
development at £37.0m. Internationals against Argentina, South Stand’s Virgin Active Classic
Australia and Samoa and two home Health Club was also level year on year
In order to fund the development of the Six Nations matches against Wales at £3.7m, despite increasing competition
East Stand and the roll out of the AGP and Ireland, compared to 2016/17 when in the gym market.
pitches, new facilities totalling £100m there were four Old Mutual Wealth
were put in place in November 2017. At Internationals and three home Six Other revenue comprises stadium rental
30th June 2018, borrowing was £45m Nations matches. income, revenue from hosting non-
(compared with borrowing of £35m at RFU events, income from Government
last year-end). Net cash flow was neutral Broadcasting revenue decreased by and other public bodies, and other
as the £30.9m operational loss was offset £4.1m (9%), from £45.3m to £41.2m, miscellaneous categories.
by the cash gain on the TEL transaction. primarily due to one fewer Old Mutual
Wealth International and a fifth placing
in the Six Nations.

Annual
Report
2018