Page 65 - RFU Annual Report 2018

6
FINANCIAL STATEMENTS

3

Although the development has Valuation of investment properties The FRS 102 valuation of the defined
exceeded the original budget, The RFU carries its investment benefit pension scheme as at 30
management still consider it properties at fair value, with changes in June 2018 was conducted by an
appropriate to capitalise the fair value being recognised in the profit actuary, using as a basis the most
development at cost as its value and loss account. recent actuarial valuation conducted
continues to be supported by at 30 April 2017, updating the
significant future cash inflows, largely For 2018, the RFU has used the assumptions based on discussions with
in the form of hospitality and ticket Nationwide Property House Indicator management.
revenues. Index to determine fair value using
the most recent independent valuation In the current year the pension
Artificial Grass Pitches (AGPs) completed by specialists in 2017 as a changed from a liability to an asset
RFDL has committed to deliver AGPs base. This method requires a number position. Management having obtained
to the grassroots game and these are of estimates and assumptions and specialist advice on the treatment of
considered to be a capital investment. does not take the specific location the asset, determined that an asset
Each pitch is owned and managed by or condition of the properties into should be recognised as the RFU is
RFDL with the RFU Group leasing a account. Despite this, management entitled to any surplus from the fund
site for 30 years from the selected clubs considers the approach to be both once all the liabilities are settled.
on which the pitches are built. cost effective and appropriate and
that the resultant value would not be Deferred taxation asset
The pitches are capitalised and treated materially different to that determined There are three principal drivers of
as tangible fixed assets, with their by an independent expert had one been the temporary differences that are
component parts depreciated from the engaged. available for offset against future
date they are available for use. profits of the Group and that give
b) Areas of estimation uncertainty rise to deferred tax assets. These are
No provision is recognised for the capital allowances on Twickenham
RFDL’s requirement to ensure that each Pension assumptions Stadium and AGP investments, excess
AGP is in such a condition that it has The most significant assumptions charitable donations and tax losses
five years playing usage remaining at affecting the valuation of the pension carried forward.
the end of the lease. It is anticipated scheme liabilities at year end are those
that technological advancements in relating to the discount rate of return Management has made various
this area mean that no additional costs on investments and the future rates of assumptions in assessing the extent
will be incurred to bring it to that increases in salaries and pensions. to which deferred tax assets will be
condition. recovered against the reversal of
Management make these assumptions deferred tax liabilities or future taxable
The pitches are considered to be using advice from the firm of actuaries profits.
largely for the provision of social who perform the pension calculations
benefits by a public benefit entity and and by taking into account all relevant Although uncertainties exist around
are therefore accounted for as items past, present and future information at the current economic climate and
of property, plant and equipment as their disposal. market conditions, the RFU’s ability
required by FRS 102. to forecast its financial performance
means that it is able to ascertain the
probable unwinding of £7.0m of its
deferred tax assets over the next 15
years. Accordingly a deferred tax asset
of £7.0m has been recognised.

Annual
Report
2018