The Welsh Rugby Union Limited Annual Report 2008 Adroddiad Blynyddol 2008 Undeb Rygbi Cymru Cyf Undeb Rygbi Cymru Cyf Annual Report 2008 • Adroddiad Blynyddol The Welsh Rugby Union Limited The Welsh The Welsh Rugby Union Limited & Millennium Stadium plc Westgate Terrace, Millennium Stadium, Westgate Street, Cardiff CF10 1NS Tel: + 44 (0)870 013 8600 Email: [email protected] www.wru.co.uk www.millenniumstadium.com Leading Welsh rugby to the forefront of the global game in performance and Taking Wales to the world reputation with our rugby Developing grass roots rugby, Welcoming the world to increasing participation, Wales in our stadium supporting clubs and bringing communities together Defining Wales as a nation Promoting the Millennium Stadium as a unique, must play, must visit venue Contents Financial highlights 02 Chairman’s review 04 Group Chief Executive’s overview 06 Operating and Financial Review Financial review 15 Elite rugby 22 Community rugby 36 Stadium 42 Commercial 46 Ticketing and compliance 48 Operations 50 Communications 52 Key performance indicators and business risks 54 Directors’ report 55 Consolidated profit and loss account 58 Consolidated statement of total recognised gains and losses 58 Balance sheets 59 Consolidated cash flow statement 60 Notes to the financial statements 61 Independent auditors’ report 83 Welsh Rugby Union governance 84 Registered office and advisers 87 Obituaries 88 Business Partners 92 Prince William with David Pickering at his first match as Vice Royal Patron THE WELSH RUGBY UNION LIMITED - ANNUAL REPORT 2008 1 Financial highlights Profit & loss extract - 2008 & 2007 Analysis of turnover 60 55 0.2 9% 50 4.5 55% 10% 50.3 45 5.2 0.4 Match income 50 1.7 40 4.3 43.8 8.1 Competition income 35 8.4 5.0 40 30 Commercial income 4.7 25 16% 2008 £ ‘m Other event income 20 30 26.8 27.3 £ ‘m 15 24.3 Other income 23.6 22.7 10 21.1 Government related grants 20 5 10% 15.2 14.9 0 2008 Year 2007 10 8.4 6.2 5.8 3.0 3.8 1.0 0 2008 2007 Year 2008 2007 Operational costs 30 Turnover EBITDA 16% 22% Operational costs Operating profit before exceptional items 25 4.2 Business & administration 1.8 4.3 Allocations to affiliated organisations Profit before tax & exceptional items 20 7% 2.5 Direct 1.7 Amount remaining to service other costs 2.2 15 Elite rugby £ ‘m 12.4 2008 9% 10 9.2 Community rugby Source of debt - 2008 & 2007 Stadium 5 5.9 100 5.3 0 46% 2008 Year 2007 80 37.3 37.3 60 Allocations 10.0 16 0.8 18% £ ‘m 10.0 14 2.8 2.9 40 Regions 12 1.0 1.0 10 Semi-professional 45.0 7% 20 35.0 8 Community rugby £ ‘m 2008 11.4 11.0 6 4 0 75% 2008 Year 2007 2 Term loan Tranche C loan Hire purchase agreements Debentures 0 2008 Year 2007 Prince William with David Pickering at his first match as Vice Royal Patron 2 THE WELSH RUGBY UNION LIMITED - ANNUAL REPORT 2008 THE WELSH RUGBY UNION LIMITED - ANNUAL REPORT 2008 3 Chairman’s statement David Pickering David Pickering Chairman allocations to affiliated organisations (Regional, premiership and community organisations) from £14.9m to £15.2m, as well as being able to record a profit before tax of £2.0m, compared with a loss of £2.3m suffered in the prior year. This financial performance has enabled us to reduce our net debt by £6.5m in the year. This, in turn, has allowed us to renegotiate our banking facilities to provide the Group with a more secure financial foundation to plan for the future. Dennis Gethin and David Pickering Commercially our announcement of the new multi-million pound kit sponsorship deal with Under Armour has Roger Lewis, Bernard Lapasset (IRB), David Pickering and Rick White (Invesco Perpetual) with the IRB Junior World Championship trophy Headlines in the World Game proved that Welsh rugby is a formidable force capable 2007/08 has been a landmark year which has brought of attracting any company or organisation seeking to be return of schools rugby being played at the Millennium My thoughts of sympathy and condolence go to the success and profit and seen Wales playing a lead in the associated with success. Stadium, with two of the finals being won by Gowerton family, friends and teammates of Gareth Jones, the Neath game globally. It was a year we can reflect on with a and Brynteg. RFC scrum half who died after being seriously hurt in a The Millennium Stadium has had an outstanding year great deal of pride. Welsh rugby, to its credit, has again game for his club against Cardiff RFC at the Arms Park. from staging a variety of popular events and managing Our Board lifted the greatest prize in the northern hemisphere by to attract the best performers in the world as well as the Once again, this season has been a success with our winning the RBS Six Nations Championship through our best sporting events, such as RWC07. We look forward We are delighted that Gerald Davies will manage the reputation and standing enhanced, but I am determined second Grand Slam in four years. Strong decision to welcoming back all three SANZAR rugby teams this British and Irish Lions to South Africa in 2009 and I am that we keep our feet firmly on the ground. Next season making by all in Welsh rugby played a major part in autumn along with the world’s leading players to grace honoured to represent Wales as Chairman for the next promises to be tough year both on the field and equally raising our performances on the national stage. Great the stage of the finest rugby stadium in the world. three years of the Six Nations Board and as an Executive challenging in financial terms. With only two home credit must go to our Grand Slam winning senior Director of the IRB up to and including Rugby World Cup games in the RBS Six Nations, prudence and sound international squad, the Board and our executive and Development of rugby 2011. financial management remain at the heart of our game. coaching teams led by Roger Lewis and Warren Future generations will benefit from the key decisions we Gatland, respectively. Development of our game is critical and I am pleased to At home, I want to congratulate Dennis Gethin on his see rugby go from strength to strength. We congratulate election as our President and I am enjoying the have taken to drive down the debt of the Group; down Victory on the field has again been matched by success our age grade teams on their success at U16 and U18 opportunity this has offered us to work closely together. from over £70.0m to £45.0m in five years. We must and in the boardroom. Wales captured the prizes of staging level which shows that our young player development Finally, I would like to thank the Board for both their we will continue our sound fiscal stewardship of the part of Rugby World Cup 2007 (“RWC07”), the pathway is identifying and nurturing players of a calibre support and hard work, particularly my Vice-Chairman, Group, thereby ensuring that the game in Wales is Heineken Cup Final and the inaugural IRB Junior World that has enabled us to finish fourth in the world at U19 Ken Hewitt, and the heads of our sub-committees, Alan secure for future generations to enjoy. Championship; all of which helped preserve our proud and U20 IRB tournaments for two consecutive seasons. Jones, Russell Howell and Martin Davies. Thank you for your continuing support. status as leaders in the world game. New grounds and stadia are being developed at our Regions with a new stadium at Llanelli and at Cardiff to Conclusion Financial match the Liberty Stadium in Swansea. These will be It would be inappropriate to conclude without followed by a newly developed stadium at Rodney The financial performance of the Group was also recognising the sadness felt by myself and the whole of Parade. On the field, the Blues and the Ospreys reached pleasing, aided by the performance on the field, Welsh rugby for the loss of our friend Ray Gravell whose the quarter finals of the Heineken Cup and the Ospreys commercial success and sound financial stewardship. passing, during the year, was a loss both to our game, won the EDF Energy Cup. The Group generated earnings before interest, tax, our nation and, of course, his friends around the world David Pickering depreciation, allocations to affiliated organisations and Chairman Three major reviews on elite rugby, the Premiership and and his family. That sense of tragedy was compounded exceptional items of £23.6m; an increase of 12% on the The Welsh Rugby Union Limited the community game will result in further improvements to late in the season when an awful accident happened, prior year. This has allowed us to increase our these key areas of our game and there was a welcome which reminded us all how fragile our hold on life can be. 4 THE WELSH RUGBY UNION LIMITED - ANNUAL REPORT 2008 THE WELSH RUGBY UNION LIMITED - ANNUAL REPORT 2008 5 Group Chief Executive Overview Roger Lewis Group Chief Executive • Generated a profit before tax of £2.0m (compared to the loss of £2.3m last year) • Reduced our bank debt by £10.0m to £45.0m and reduced our net debt by £6.5m • Renegotiated our arrangements with Barclays Bank PLC • Ensured that the Group’s financial position is stronger today than at any time previously since the Millennium Stadium opened in 1999 This financial performance was achieved during a Rugby World Cup year, not an ideal year for financial success, Prince William talks to Jonathan Thomas which is truly remarkable.