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ANNUAL

CONTENTS As part of the financial presentation at Stage 3 of Scottish Rugby’s AGM on Tuesday 22 December, President & Chairman 3 REPORT we are pleased to provide members with additional financial information on Financial Year 2019/20. Player & Coach Numbers 4 Strategic Report 6 We would like to place on record our thanks for your patience in Ensuring that members are informed about the effect of the what has been an unprecedented year for our clubs and Union, pandemic on the organisation, and in particular, have sufficient Board Report 10 both on and off the pitch. With a fair sense of hope that life can time to consider the financial information and ask questions Independent Auditor’s Report 14 return to a semblance of normality in the coming months, we can about them, is a priority for the Council and Board. cautiously look forward to 2021 and the safe return of our sport We have provided this Report as a means of providing members across . FINANCIAL STATEMENTS with additional detail in advance of that third and final stage of Furthermore, we would like to express our appreciation to the our AGM, supplementing the information already made available Principal Accounting Policies 16 Scottish Government for the emergency sports funding package, by way of the Annual Review and Financial Summary sent to Primary Statements 20 from which Scottish rugby will be able to access up to £20 million members already. of grants and low-interest loans to help offset the financial impact Notes 25 Scottish Rugby has worked to ensure that clubs and the wider of the Covid-19 pandemic. Five Year Summary 36 rugby community in Scotland can weather the storm wrought Commentary on the Financial Statements 37 We are delighted to present a full audited set of accounts for by the global pandemic in the least damaging way and we look the Financial Year 2019/20 in this document, ahead of Stage 3 forward to the resumption of rugby across the country when it is of Scottish Rugby’s AGM on 22 December, with a headline that deemed safe to do so. the business realised a £2.87m surplus after tax for the financial period, considering these factors: • ongoing trading and operations were, as happens every fourth year, impacted by the RWC which reduced our income Ian Barr, levels and increased our costs from what they otherwise President, Scottish Rugby might have been;

• the impact of the Covid-19 pandemic from February 2020 , was material, in particular in relation to the deferral or cancellation of certain international and professional rugby Chairman, Scottish Rugby SCOTTISH RUGBY income streams; and BT , EH12 5PJ • the welcome conclusion of a significant investment in the 0131 346 5000 | scottishrugby.org | @scotlandteam Guinness Pro14 tournament by CVC offset the loss which would otherwise have been incurred. (Our receipts, after deduction of professional fees, as at 31 May 2020 following All information correct at time of publication 14 December 2020. To download a copy please visit scottishrugby.org that transaction are described under “Income from interests in associated undertakings” in the Results for the Year, on page 20.)

Scottish Rugby | Annual Report 2019-20 3 2018/19 2019/20

TOTAL REGISTERED PLAYERS 36,207 36,966

2019/20 PLAYER & COACH

NUMBERSREGISTERED PLAYERS The season 19/20 figures show a slight increase in player numbers. The final figure 36,966 is an increase of 759 net. The registrations for the year saw an increase in new unique registrations of 8,400 however this is then offset by a drop of 7,641 registrations that became inactive, and the removal of duplicate accounts. The vast majority of the increase comes from registrations at S1/U13s, which is the point at which a player needs to be registered to play in competitive rugby and appear on team sheets. Inactive accounts are identified either by the individual player or by the club SCRUMS Administrator. In the future Scottish Rugby will identify player registrations where a player has not appeared on a Teamsheet for two consecutive years and an e-mail will be sent to both the individual and the club to confirm if the registration is still for a playing member.

GLASGOW CALEDONIA CALEDONIA EAST NATIONAL NORTH SOUTH MIDLAND NORTH

Adult Male 4,383 2,937 1,501 2,566 2,026 13,413

Adult Female 487 479 263 441 456 2,126 MALE ADULT 11,028 13,413

Youth Male 6,014 4,407 2,450 3,843 2,589 19,303

Youth Female 431 508 371 467 347 2,124

TOTAL 11,315 8,331 4,585 7,317 5,418 36,966

Non-registered * 1,009 1,231 380 1,092 357 4,069

TOTAL 12,324 9,562 4,965 8,409 5,775 41,035 Figures correct as at 31 May 2020. *Tartan Touch MALE YOUTH 21,176 19,303 REGISTERED COACHES The coach registration process went live in season 19/20. To date 3,507 have registered in SCRUMS. SCRUMS is being developed as the portal for all coaching qualifications from season 21/22. We expect to see an increase in the registered coaches when the coaching qualification moves online. We would remind clubs that the PVG clearance for coaching staff requires that the coach is registered in SCRUMS.

GLASGOW GLASGOW CALEDONIA CALEDONIA EAST NATIONAL NORTH SOUTH MIDLAND NORTH

Female 66 61 33 62 48 270

Male 1,258 582 380 609 408 3,237 FEMALE ADULT 1,658 2,126 TOTAL 1,324 643 413 671 456 3,507 FEMALE YOUTH 2,345 2,124

Figures correct as at 31 May 2020.

4 LEADERSHIP . ENGAGEMENT . ACHIEVEMENT . ENJOYMENT . RESPECT Scottish Rugby | Annual Report 2019-20 5 STRATEGIC REPORT Under the powers delegated by the Bye-Laws of Scottish two home international matches prior to the Commercial and Operational spend also fell, by £0.3m, primarily shareholding, completed a significant strategic partnership , the Directors of Limited, in 2019 compared with three November Test matches during the in relation to the absence of a number of events in the final investment with CVC. Ultimately, this resulted in dividends being in their capacity as the Scottish Rugby Board, present their prior year. As a result, Ticket Income fell by £5.3m. Broadcasting months of the year, due to Covid-19. Salary reductions have paid to Scottish Rugby Union Limited in May 2020 of £8.4m. strategic report for the year ended 31 May 2020. revenues fell by £4.5m, primarily due to the effects of Covid-19 also impacted each of these areas. The Club Support figure of Subsequent to the year end, in October 2020, a further tranche of on the 2020 Guinness 6 Nations tournament. With only 11 of the £3.0m is around £0.1m lower than the previous year and includes income was received in relation to the partnership, the value of Principal Activities scheduled 15 games played in the year, broadcasting income from the first release of the Club Hardship fund. It does not include which was £9.4m. A further sum may be payable up to Financial The principal activity of the Scottish Rugby Union is to promote the tournament was similarly proportioned. Without the effects the support given to clubs, which is included in the Year 2024/25, depending on the financial performance of the the game of Rugby throughout Scotland, using its wholly owned of Covid-19, broadcast income from the Guinness 6 Nations Domestic and Performance Rugby section. Similarly, the total Pro14 group. subsidiary Scottish Rugby Union Limited, “the Company”, for all tournament would have increased compared with the prior year. rugby development expenditure of £7.1m does not include this The Directors continue to monitor borrowing levels, income trading activities. Further, in relation to Broadcasting income, the value attributable support. The increase of £0.2m in Depreciation is as a result of and expenditure against budget on a monthly basis. They also to the two pre-Rugby World Cup matches in 2019 was lower than current and prior year asset additions. Business Review monitor other key business issues including Professional and that for the three November Tests in 2018. Commercial income Average cash debt is measured using the mean value of the National Team performance which are fundamental to the The Union continues to work towards key areas in its plan, has risen £0.2m, in what remains a continuing challenging global weekly bank balances over the course of the year. The average Union’s strategy of growing the game within a stable commercial including winning teams, revenue growth & sustainability, sponsorship environment. Covid-19 has had a similar effect on cash debt over the year amounted to £4.1m, which is £4.9m environment. developing talent, growing the domestic game and sustainable this category of income in relation to the deferral of Guinness 6 behind the prior year, generally as a result of the operating result clubs. Further detail is also outlined in the Annual Review. Nations sponsorship as a result of the number of games played. On pages 10 to 35, the Directors in their capacity as the Scottish and the timing of cash flows related to ticket income and advance Professional rugby income fell from £13.3m to £10.1m, generally Rugby Board present their report and audited consolidated Within the course of the year, a number of notable factors have receipts in relation to the Rugby World Cup in 2019. The net bank as a result of the Covid-19 related curtailment of the season, both financial statements for the year ended 31 May 2020. The financial contributed to the results of the Group, including ongoing trading position at 31 May 2020 of £0.1m credit was £1.4m lower than directly at the two teams, Glasgow and Edinburgh, and also from statements comprise the consolidated financial statements of and operations, the conclusion of a significant investment in the the previous year level. This is primarily due to the 31 May 2019 income streams from EPCR and Pro14. Within Development the Union and its subsidiary, and include the Union’s share of the Guinness Pro14 tournament by CVC Capital Partners (“CVC”), and balance including funds received in advance from , income and grants, the increase of £9.2m was mainly in relation results of associates to 31 May 2020. the onset of the Covid-19 pandemic. Overall, a £2.9m surplus for other funds held in advance in relation to 2019/20 matches, and to additional funding from World Rugby in the Rugby World the year (2019: £0.3m surplus) has been realised. This comprises the Covid-19 effect on the trading position for 2019/20, offset by Financial Risk Management Cup year, and Coronavirus job retention scheme income of an operating deficit of £5.3m, offset by net investment income some advance 6 Nations funds held, and the receipt of funds from £1.3m. Finally, the reduction of £2.0m in Hospitality and other The risk management framework of the Union is well established of £8.4m in relation to the CVC investment in the Pro14, and Pro14 in relation to CVC’s investment in that tournament. Capital income was in relation to the number of events this financial with the ongoing identification, evaluation and status of net interest cost of £0.2m. Within the operating result, prior to Expenditure in the year of £4.4m comprised of the construction of year, compared with the prior year, and the hospitality and other business risks, including those around the terms on which the the onset of Covid-19, a forecasted Rugby World Cup year loss a new on the BT Murrayfield estate, together with other revenues directly associated with those. may withdraw from the European Union, being of around £1.0m was expected, mainly as a result of reduced construction works including main stadium boiler upgrades, east presented to the Audit & Risk Committee, Board and Council, Autumn Test revenues, and additional Men’s National Team Within the expenditure categories, the increase in International stand roof improvements, and suites refurbishment. A number periodically. costs, compared with a non-Rugby World Cup year. However, and Professional Rugby of £0.9m is mainly due to increased costs of other, smaller capital works were also undertaken during this position deteriorated significantly as a result of the effects in the Men’s National team associated with participation in the the year including changing room enhancements, office plant Financial Instruments of the virus, primarily around the deferred completion of the Rugby World Cup. Increased player costs continued to be noted and infrastructure improvements, roller shutter upgrades, and Interest rate swaps are used to reduce exposure to interest rate Guinness 6 Nations tournament, during the financial year, with in professional rugby costs. Within Domestic and Performance fire and other safety improvement work. Similarly, a number movements. Details of this are noted in the Accounting Policies the resultant effects on the Union’s financial position. Rugby, expenditure is lower by £0.5m, primarily due to of IT hardware and software enhancements were carried out and in Note 10 to the financial statements. Forward sale currency significantly curtailed activity at the end of the season as a result during the year. The Capital and Reserves Deficit at the year end Turnover and other income for the year was £55.5m, compared contracts are also used to reduce exposure to exchange rate of Covid-19. Total investment in domestic rugby during the year, improved to (£1.5m) compared with the prior year end of (£4.4m), with the prior year level of £61.1m. This was the result of a movements. Details of this are also noted in the Accounting through club support and rugby development direct and indirect as a result of the overall surplus. number of factors in both normal operations and Covid-19 related Policies and in Note 10 to the financial statements. Financial expenditure was £7.1m, compared with £7.4m in the prior year, matters. In operations, the Guinness 6 Nations cycle resulted in In the course of the year, Celtic Rugby DAC (“CRDAC”), in which instruments are not used for speculative purposes. again with the current year being impacted by Covid-19. The two home matches, compared with the previous year’s three, and the Union, through Scottish Rugby Union Limited, has a 25% Companies Act 2006 – section 172

6 LEADERSHIP . ENGAGEMENT . ACHIEVEMENT . ENJOYMENT . RESPECT Scottish Rugby | Annual Report 2019-20 7 The Companies Act 2006 places certain duties and responsibilities quality standards. Relationships with major suppliers and The Directors have actively encouraged direct community and proportionate way, recognising that no two members are the upon the directors of a limited company, including the duty to contractors, including primary sponsors such as BT and , engagement programmes, particularly through the professional same, and the Directors’ responsibilities to act in the interests of promote the success of the company and in doing so, having and outsourced contractors such as Elior (hospitality) and G4S teams ( and ) and international the game as a whole and to promote the success of the Company. regard to a number of matters set out in s 172 (1)(a)-(f) of the Act. (stewarding) have been extended over several contract cycles. teams and their respective players and coaches. International Funding initiatives such as the Club Support Fund, Club The Act also requires the Directors to provide a report on how team tours and training camps include elements of community Regular meetings are held with contractor, supplier and sponsor Sustainability Fund and the Club Hardship Fund are structured the responsibilities listed in s172 are undertaken by the Directors engagement and both professional teams regularly engage in representatives at operational level but also with senior so as to be accessible to all clubs at some level, with access to of that company. That report for Scottish Rugby Union Limited, local activities with schools, hospitals and local clubs, among representatives and decision-makers at other times, including at training and development opportunities and materials available setting out some examples of how those responsibilities are others. Proposed developments or significant changes to matches (in non-Covid times). Tenders are conducted on larger to all members. The Rugby Development Department includes discharged, is replicated below for information purposes. operating procedures at BT Murrayfield are discussed within local scale projects as appropriate. Specific Board approvals are Regional Managers and Regional Directors with designated community forums and local authorities. Reports are provided (a) Consequences of any decision in the long term required above certain thresholds, ensuring enhanced visibility geographic areas to ensure that services and support, and a regularly to the Board. over more substantial contracts. designated point of contact, is available for all members in their The Directors take a long-term view on key decisions and The Company supports several charitable organisations including area, irrespective of size or the level of the game at which they application of resources, recognising that important objectives, Customers - The Directors recognise the vital contribution that the Murrayfield Injured Players Foundation, Hearts and Balls and play. such as developing the game of rugby in Scotland at both supporters make, not only through revenue but also in the the Foundation which themselves provide support professional and amateur level, can only be implemented atmosphere and encouragement they provide to teams. High The Scottish Rugby Union Council provides a higher-level to the wider rugby and other communities. Policies, guidance, successfully over time. standards of customer service are expected, as is a high-quality mechanism for representation from across the game as a whole, support and training in a number of important areas are provided matchday experience. Regular reports are provided to Directors and contribution to Board decisions through its nominated non- Player development through academies and professional for the wider benefit of the rugby community including on at Board meetings. An online customer feedback facility is executive Directors. Council matters are a standing agenda item pathways has been structured over a number of years, with safeguarding of children and young people, wellbeing and more operated. at Board meetings, as are community rugby issues. investment programmes, such as the club sustainability fund and recently in connection with Covid-19 public safety messaging club support fund used to support improvements in facilities and Capital investment in customer facilities has been prioritised by and protocols. Various key policies are reviewed regularly by the The Scottish Rugby Union Council, either itself or through support clubs’ longer term aspirations. the Directors including refurbished hospitality suites, improved Board or a designated Board Committee. designated working parties, regularly provides guidance and toilet facilities and better contact centre telephony. advice to the Directors on matters of importance to members Investment in facilities at BT Murrayfield, and the new stadium The environment is recognised as being an area of increasing and the game as a whole, as part of Board decision-making for Edinburgh Rugby are long term projects considered against Others - The Company works with many organisations within importance and a factor in capital investment and other procedures. It has done so most recently in relation to domestic affordability, impact on borrowing and returns over the longer Scotland and externally to assist in furthering its objectives, spending and activity. Charging points for sponsor-provided season closure arising due to Coronavirus (where various options term. Some projects are conducted jointly with long-term in addition to the interests of the organisation’s member clubs hybrid vehicles have been installed at BT , were considered by the Council, club forums, and competition partners, such as the recent hospitality suites refurbishment. and associated and affiliated bodies. Externally, strong contacts increased separation of waste has improved recycling, and there committees before recommendations were made to the Board), Day-to-day operational activity is undertaken by the executive and relationships have been formed and preserved with the is increased use of recycled materials, including in replacement and restart dates and changes to competition structures, which directors with regular reporting at Board meetings. The Board Scottish Government, and the respective local stadium seats. Reducing environmental impact has been a were discussed within the Council having had presentations reviews strategic priorities every year and during the year if authorities in Edinburgh, Glasgow, North Lanarkshire, the factor in capital expenditure authorised by the Directors on new from the Rugby Development Department and Chief Medical required, and considers budgets against a rolling 4-year cycle. Borders and , where stadium and academy facilities stadium heating systems. Officer, before making recommendations to the Board. operate. Regular meetings are held with representatives of these (b) The interests of employees (e) Maintaining a reputation for high standards of business organisations on operational matters as well as opportunities conduct Our ability to succeed in meeting objectives is dependent on our provided to meet with senior representatives, in normal non- By order of the Board people. Employee matters are considered as a separate standing Covid 19 circumstances. The integrity of the organisation, its officials, directors, employees, item at all scheduled Board meetings, with a written report and members is seen as crucial to the organisation’s standing and Robert M Howat, Secretary More broadly, the Board and the Council of Scottish Rugby Union provided and the HR Director attending all Board meetings and reputation. Procedures exist for declaring and dealing with any Edinburgh, 14 December 2020 have nominated representatives to participate in a range of meetings of the Remuneration, Nominations and Safeguarding, potential conflicts of interest, and Scottish Rugby Union Council external rugby organisations including tournament organisers Wellbeing, Inclusion and Diversity Committees. Aspects of members and Directors are expected to adhere to high standards and governing bodies in which Scottish Rugby Union, through the remit of the SWID Committee are specific to employee of business and ethical behaviour consistent with principles of the Company, has an interest. These include World Rugby, 6 wellbeing, including regular consideration of a number of good governance. Directors receive regular reports in connection Nations, Pro14, EPCR, and British & Irish Lions. assistance programmes that have been created for employees, with disciplinary cases and misconduct involving clubs, and in Those relationships are recognised by the Directors as being of including professional players. Regular staff communication is relation to any employee discipline or performance improvement significant importance to the organisation. Those representatives considered to be vital, undertaken though a weekly electronic matters. Internal policies on probity and whistleblowing are include Directors and Scottish Rugby Union Council members newsletter, regular engagement through designated members of part of the remit of the Safeguarding, Wellbeing, Inclusion and who play an active role in those organisations. Regular reports on the HR department, employee surveys, staff meetings with the Diversity Committee, headed by the Senior Independent Director. activity within those organisations are provided to the Board and Chief Executive, and update messages from the Chief Executive, These policies are reviewed regularly. the Scottish Rugby Union Council. Representation is reviewed including via video for those working from home or from regularly by the Board’s Nominations Committee. Approval of contracts where there may be an ethical question geographically remote locations. in the context of the sporting environment – for example, a The interests of member clubs and associated bodies are Consultation with affected employees or groups of employees potential sponsor being involved in the gaming or gambling commented upon further in paragraph (f) but through the is undertaken as required. A good relationship has been formed sectors – would be referred to the Board as a whole to consider, structures of the organisation these stakeholders elect with Rugby Players’ Scotland, enabling matters affecting irrespective of quantum. representatives to the Scottish Rugby Union Council, with a that association’s members to be discussed in an open and further presence on the Company’s Board of Directors through (f) Acting fairly between members constructive fashion. 4 Council members (including the elected President) serving as In the context of Scottish Rugby’s group structure of an (c) Fostering business relationships with suppliers, customers non-executive directors. Those individuals play an active part on unincorporated members’ association and a limited company and others the Board and on Board Sub-Committees and in contributing to as the main operating vehicle, members are taken to be the decisions made. Suppliers - the Company works with a range of suppliers and members of Scottish Rugby Union. That membership is diverse contractors, having long-established relationships with a (d) Impact of operations on the community and the in scale of club, level of activity and geographical location. The number of them, providing continuity and reliable service and environment Board seeks at all times to act fairly, equitably and in a reasonable

8 LEADERSHIP . ENGAGEMENT . ACHIEVEMENT . ENJOYMENT . RESPECT Scottish Rugby | Annual Report 2019-20 9 Board Report BOARD REPORT BT Murrayfield ahead of Scotland v Georgia, 23 October 2020 Under the powers delegated by the Bye-Laws of Scottish Rugby Union, the Directors of Scottish Rugby Union Limited, in • Consideration of further mitigating actions available, for that applications from disabled people are always positively their capacity as the Scottish Rugby Board, present their report and the audited consolidated financial statements for the example a delay or reduction in budgeted discretionary considered by the organisation. year ended 31 May 2020. spend and use of the recently extended Covid-19 job In addition to our employment practices, we have achieved the retention scheme. An overview and review of the Union can be found in the Business planned expenditure at the discretion of the Union. Scottish Intermediate Level of the Equality Standard: A Framework for Review, within the Strategic Report on page 6. Rugby has taken advantage of the Government’s Covid-19 job In this severe but plausible downside scenario there is still sufficient Sport which is a collaborative effort between the four national retention scheme and plans to continue to do so whilst the Going Concern and Outlook liquidity headroom throughout the going concern period. Sports Councils, UK Sport and equality organisations to achieve scheme is available and certain roles and functions cannot be measurable stands of equality. Scottish Rugby has also been Based on this assessment of the Union’s financial position, In determining whether the going concern basis of preparation carried out due to social distancing and other restrictions being awarded the Preliminary Level of the Equality Standard through forward cash flow projections, and consideration of the effects, for the financial statements is appropriate the Directors have in place. A number of salary reductions were also put in place our efforts and commitment to make rugby in Scotland open and possible future effects, of Covid-19, as well as a number of considered the sources of revenue, the ongoing running costs of all at the outset of the pandemic. These factors have also been to all. Our Safeguarding, Wellbeing, Inclusion and Diversity assumptions, mitigating measures already taken and further aspects of the Union’s operations and the availability of funding. factored into the cash flow forecasts prepared by the Directors. Committee has been well established, chaired by our Senior measures which could be taken the Directors have a clear and All of this has been considered against the ongoing impact of the Independent Non-Executive Director and Equality and Diversity Subsequent to year end a working capital facility of £11.8m reasonable expectation that the Union has adequate resources Coronavirus pandemic. The Directors have prepared a base case Champion ensuring inclusion and diversity remains a focus for and a revolving credit facility of £8.5m have been procured and to continue in operational existence for the foreseeable future cash flow forecast and a severe but plausible downside forecast our Board. Scottish Rugby has also signed the Equality Network an advance of grant has also been secured from World Rugby. and do not foresee a scenario where additional funds will be covering the going concern period and beyond. Scottish LGBTI Sports Charter. Healthy cash reserves have been generated from the recent required. The Directors are therefore satisfied to adopt the going The pandemic resulted in postponement of both the Guinness external investment into Pro 14 rugby. concern basis in preparing the financial statements. Consultation with employees or their representatives has Pro 14 19/20 season and the 2020 Guinness 6 Nations continued at all levels, with the aim of ensuring that their views The Directors’ base case cash flow forecast which shows clear Employees Championship. These tournaments are key drivers in the Union’s are taken into account when decisions are made that are likely liquidity headroom through the going concern period is based on revenue sources from the national team and the pro teams. Both Scottish Rugby recognises the value and importance of to affect their interests and that all employees are aware of the the following key assumptions: competitions have subsequently been completed as elite sport promoting equal employment opportunities for its current and financial and economic performance of their business units and has been able to resume, albeit behind closed doors for now. • 50% attendance at the 2021 Guinness 6 Nations future colleagues and considers all forms of discrimination to of the Union as a whole. Communication with all employees The 20/21 Guinness Pro 14 season is underway and the 2021 Championship and crowds allowed to resume at Guinness be unacceptable in the workplace. We aim to be an inclusive continues through e-mail communication, group-wide Engage Guinness 6 Nations Championship is planned to go ahead in line Pro 14 matches played in Scotland organisation where everyone is treated with dignity and respect newsletter briefings, CEO employee briefings and the distribution with normal scheduling. There is also an Autumn Internationals • Potential 100% attendance possible for the 2021 Autumn and where diversity is valued across all of the recognised equality of the Annual Review and Annual Report. programme scheduled in line with previous years. Internationals strands detailed within the Equality Act 2010. The organisation is committed to providing equal opportunities throughout The key revenue sources of the Union are broadcasting, • Salary costs return to contracted levels recruitment, employment, training and career development and sponsorship, sale of tickets and other match day income. The has a comprehensive Equal Opportunities Employment Policy, Directors have considered the impact of the pandemic on each As the Directors recognise that there remains a risk in relation to Diversity and Inclusion Policy and several other related policies of these sources. With the resumption of elite sport and the when crowds are allowed to resume at live sporting events the that support the nine protected characteristics within the contractual nature of broadcasting and sponsorship income base case has also been sensitised and a severe but plausible Equality Act. these revenue sources are less likely to be impacted by the downside scenario has been prepared. The severe but plausible pandemic and amounts are relatively certain. With uncertainty downside scenario is based on the following assumptions: We are committed to adopting equitable employment practices existing as to when crowds will be allowed to return to live sport • No attendance at the 2021 Guinness 6 Nations Championship and terms and conditions which are based on the merits, ability there is greater uncertainty and risk in relation to ticket income and no crowds allowed to resume at Guinness Pro 14 and potential of individuals, and to avoiding any conditions and other match day income. These matters have been factored matches played in Scotland or requirements that cannot be justified by the needs of the into the cash flow forecasts prepared by the Directors. job. As an example of this equitable approach, we have been • Potential 25% attendance possible for the 2021 Autumn granted the Positive About Disabled People award by Job Centre The cost base is largely fixed, although with many costs and Internationals Plus, recognising our commitment to diversity and confirming

10 LEADERSHIP . ENGAGEMENT . ACHIEVEMENT . ENJOYMENT . RESPECT Scottish Rugby | Annual Report 2019-20 11 Streamlined Energy and Carbon Report NORMALISING Elements of the Group’s operations, including for the training Auditors FTE* 422 employees and playing of rugby, are conducted at public premises in the UK Energy Use and GHG Emissions METRIC PricewaterhouseCoopers LLP have indicated their willingness to UK which are not owned, operated or controlled by the Group, Intensity Ratio FY be reappointed for another term. The tables below detail the energy used by the Group in its 5.01 t CO2e / FTE and where use of those premises is variable and shared with a 2019-20 business activities involving the combustion of gas and fuels, the number of other parties. Consumption data for those premises is Directors purchase of electricity and business mileage, in both kWh and *Based on average monthly number of employees in the period not yet available to the Group, nor has it been possible to provide The members of the Scottish Rugby Board as at 31 May 2020 tCO2e. They also detail the total energy and emissions by scope with Full Time Equivalent status. a reliable estimate of energy use attributable to the Group in are listed below, with further details to be found in the Scottish and as a total. those circumstances. Principal Energy Efficiency Actions Rugby Annual Review: Statement of Directors’ responsibilities TYPE OF Energy Usage GHG Emissions During the financial reporting period, the main energy John Jeffrey, Chairman (appointed 26 May 2020) ACTIVITY (kWh) (t CO2e) reduction project undertaken by the Group was an overhaul The Directors are responsible for preparing the non-statutory Ian Barr (appointed 28 April 2020) Grid Electricity 4,284,377 990 and replacement of the aged boiler units and water heaters group financial statements in accordance with United Kingdom Natural Gas 4,697,808 864 previously servicing BT Murrayfield stadium. This project also Generally Accepted Accounting Practice, thus enabling them to Dee Bradbury included the installation of a new and more efficient undersoil fulfil their obligation to obtain an audit of Scottish Rugby Union’s Diesel Gas Oil 120,754 31 Julia Bracewell boiler system to service the pitch. Having such improved and group financial statements. LPG 2,201 0 efficient infrastructure now in place is expected to significantly Mark Dodson, Chief Executive The Directors must not approve the non-statutory Union financial Fleet 511,286 123 reduce energy consumption and ultimately lower the overall statements unless they are satisfied that the non-statutory Union William Gardner Fuel Reimbursed 458,115 105 carbon emissions by the Group. financial statements give a true and fair view of the state of affairs Andrew Healy, Finance Director Total 10,074,541 2,113 Additionally, the Group achieved compliance with the Energy of the Union and of the surplus or deficit of the Union for that Savings Opportunity Scheme (ESOS) Part 2. As part of that scope period. In preparing the non-statutory financial statements, the Robert M Howat, General Counsel Energy Usage GHG Emissions SCOPE of work, a site energy audit was conducted at BT Murrayfield Directors are responsible for: Dominic McKay, Chief Operating Officer (kWh) (t CO2e) to identify and assess energy saving and carbon reduction • selecting suitable accounting policies and then applying Scope 1 opportunities. Several initiatives were identified, which have and David McMillan them consistently; Direct GHG 5,332,049 1,018 continue to be assessed in terms of their financial viability and Graeme Scott Emissions expected environmental benefits. • stating whether applicable United Kingdom Accounting Scope 2 Standards, comprising FRS 102, have been followed, Lesley Thomson QC Methodology Energy Indirect 4,284,377 990 subject to any material departures disclosed and explained During the year, on 25 March 2020, Adam Gray ceased to be a Emissions The framework followed to calculate the required information in in the financial statements; director. On 25 May 2020, Colin Grassie retired as a director. this report was the GHG Reporting Protocol - Corporate Standard. Scope 3 • making judgements and accounting estimates that are Other Indirect 458,115 105 Subsequent to the year end Dee Bradbury and Graeme Scott Data has been provided from the following sources: reasonable and prudent; and Emissions retired as directors, on 15 August 2020. Malcolm Offord and Bob Richmond were appointed as directors on 16 August 2020. Total 10,074,541 2,113 • 50% of data from supplier and the Group’s databases. • preparing the non-statutory financial statements on the going concern basis unless it is inappropriate to presume • 50% of data from invoices. Intensity Ratio that the Union will continue in business. The DEFRA 2020 conversion figures for CO2e were used along By order of the Board To convert absolute emissions to an emissions intensity metric, The Directors are also responsible for safeguarding the assets with the fuel property figures to determine the kWh content. the Group has calculated emissions per a relevant unit of of the Union and hence for taking reasonable steps for the Robert M Howat, Secretary measure. Where the actual data was not available, an estimate was made prevention and detection of fraud and other irregularities. Edinburgh, 14 December 2020 based on amounts invoiced by respective suppliers, assuming An intensity ratio is a way of defining the Group’s emissions data The Directors are responsible for keeping adequate accounting that fuel supplied over the period was generally equal to fuel in relation to an appropriate business metric, such as tonnes of records that are sufficient to show and explain the Union’s consumed. This was the approach adopted to calculation of CO2e per £ of revenue, or tonnes of CO2e per total square metres transactions and disclose with reasonable accuracy at any time Diesel Gas Oil and LPG, which are included within Scope 1 above. of floor space, or per full time employee. This allows comparison the financial position of the Union. of energy efficiency performance over time and with other similar A further source of Scope 1 emission considered applicable The Directors are responsible for the maintenance and integrity of types of organisations. to the Group’s operations, although not included in the data the Union’s website. Legislation in the United Kingdom governing tables above, is the use of Fluorinated Gas (F-Gas) refrigerant. SECR intensity ratios are calculated by dividing the Group’s the preparation and dissemination of financial statements may Such fuel is typically used onsite at BT Murrayfield in split unit emissions by its organisation-specific metric. differ from legislation in other jurisdictions. air conditioning systems or general use refrigerators. The reason In the case of the Group, the most appropriate metric chosen to for the omission of GHG emissions from refrigerant is due to In the case of each Director in office at the date the Directors’ normalise the emissions is based on number of FTE employees the limitations encountered in being able to source an exact Report is approved: and its intensity ratio is detailed below. FTE, as a divisible unit consumption of F-Gas in the period, from each of the applicable • so far as the Director is aware, there is no relevant audit of measurement, is deemed most appropriate due its relative units, as opposed to quantifying the capacity of refrigerant they information of which the Union’s auditors are unaware; and stability from year to year and the fact that the nature of the hold. The designated third party contractors maintaining these Group’s operations across Scotland, with a number of employees systems have confirmed that they have no record of any top-up • they have taken all the steps that they ought to have taken utilising fleet vehicles and reimbursement of fuel costs, refrigerant gas being supplied to air-conditioning or other cooling as a director in order to make themselves aware of any contributes to the total energy usage figures. units in the year ended 31 May 2020. Nevertheless, the Group relevant audit information and to establish that the Union’s intends to put a process in place for the recording and monitoring auditors are aware of that information. of such data, in consultation with the Group’s third party supplier, to ensure that the overall data on GHG emissions for 2020/21 includes that from consumption of refrigerant sources.

12 LEADERSHIP . ENGAGEMENT . ACHIEVEMENT . ENJOYMENT . RESPECT Scottish Rugby | Annual Report 2019-20 13 in possession during Scotland’s game with , 31 October 2020

INDEPENDENT AUDITORS’ REPORT to the Directors of the Scottish Rugby Union Scotland’s Hannah Smith in action during the 13-13 draw with , 25 October 2020 Report on the Audit of the Financial Statements Conclusions Relating to Going Concern Responsibilities for the Financial Statements and the audit Use of this Report

Opinion We have nothing to report in respect of the following matters in Responsibilities of the directors for the financial statements This report, including the opinion, has been prepared for and only relation to which ISAs (UK) require us to report to you where: for the Union’s directors as a body for their governance purposes In our opinion, Scottish Rugby Union’s non-statutory group As explained more fully in the Statement of Directors’ in connection with the Union’s Byelaws and in accordance with financial statements (the “financial statements”): • the directors’ use of the going concern basis of accounting responsibilities, the directors are responsible for the preparation our engagement letter dated 16 July 2020 and for no other in the preparation of the financial statements is not of the financial statements in accordance with the applicable • give a true and fair view of the state of the Group’s affairs as at purpose. We do not, in giving this opinion, accept or assume appropriate; or framework and for being satisfied that they give a true and fair 31 May 2020 and of its profit and cash flows for the year then responsibility for any other purpose or to any other person to • the directors have not disclosed in the financial statements view. The directors are also responsible for such internal control ended; and whom this report is shown or into whose hands it may come, any identified material uncertainties that may cast as they determine is necessary to enable the preparation of • have been properly prepared in accordance with United including without limitation under any contractual obligations significant doubt about the Group’s ability to continue to financial statements that are free from material misstatement, Kingdom Generally Accepted Accounting Practice (United of the Union, save where expressly agreed by our prior consent adopt the going concern basis of accounting for a period whether due to fraud or error. Kingdom Accounting Standards, comprising FRS 102 “The in writing. of at least twelve months from the date when the financial Financial Reporting Standard applicable in the UK and In preparing the financial statements, the directors are statements are authorised for issue. ”, and applicable law). responsible for assessing the Group’s ability to continue as a However, because not all future events or conditions can be going concern, disclosing, as applicable, matters related to going PricewaterhouseCoopers LLP We have audited the financial statements, included within the predicted, this statement is not a guarantee as to the Group’s concern and using the going concern basis of accounting unless Financial Statements (the “Annual Report”), which comprise: the Chartered Accountants and Statutory Auditors ability to continue as a going concern. the directors either intend to liquidate the Group or to cease consolidated balance sheet as at 31 May 2020; the consolidated Edinburgh, operations, or have no realistic alternative but to do so. income and expenditure account and the consolidated statement Reporting on Other Information 14 December 2020 of comprehensive income, the consolidated statement of cash Auditors’ responsibilities for the audit of the financial The other information comprises all of the information in the flows, and the consolidated statement of changes in equity for statements Annual Report other than the financial statements and our the year then ended; the principal accounting policies; and the auditors’ report thereon. The directors are responsible for the Our objectives are to obtain reasonable assurance about whether notes to the financial statements. other information. Our opinion on the financial statements does the financial statements as a whole are free from material Basis for Opinion not cover the other information and, accordingly, we do not misstatement, whether due to fraud or error, and to issue an express an audit opinion or any form of assurance thereon. auditors’ report that includes our opinion. Reasonable assurance We conducted our audit in accordance with International is a high level of assurance, but is not a guarantee that an audit Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. In connection with our audit of the financial statements, our conducted in accordance with ISAs (UK) will always detect a Our responsibilities under ISAs (UK) are further described in the responsibility is to read the other information and, in doing material misstatement when it exists. Misstatements can arise Auditors’ responsibilities for the audit of the financial statements so, consider whether the other information is materially from fraud or error and are considered material if, individually or section of our report. We believe that the audit evidence we have inconsistent with the financial statements or our knowledge in the aggregate, they could reasonably be expected to influence obtained is sufficient and appropriate to provide a basis for our obtained in the audit, or otherwise appears to be materially the economic decisions of users taken on the basis of these opinion. misstated. If we identify an apparent material inconsistency or financial statements. material misstatement, we are required to perform procedures Independence to conclude whether there is a material misstatement of the A further description of our responsibilities for the audit of the We remained independent of the Group in accordance with financial statements or a material misstatement of the other financial statements is located on the FRC’s website at: www.frc. the ethical requirements that are relevant to our audit of the information. If, based on the work we have performed, we org.uk/auditorsresponsibilities. This description forms part of financial statements in the UK, which includes the FRC’s Ethical conclude that there is a material misstatement of this other our auditors’ report. Standard, and we have fulfilled our other ethical responsibilities information, we are required to report that fact. We have nothing in accordance with these requirements. to report based on these responsibilities.

14 LEADERSHIP . ENGAGEMENT . ACHIEVEMENT . ENJOYMENT . RESPECT Scottish Rugby | Annual Report 2019-20 15 FINANCIAL STATEMENTS A scrum put-in in a Scottish Cup game between Highland and County, October 2020 PRINCIPAL ACCOUNTING POLICIES sponsorship, sale of tickets and other match day income. The downside scenario has been prepared. The severe but plausible A subsidiary is an entity controlled by the Group. Control is Directors have considered the impact of the pandemic on each downside scenario is based on the following assumptions: the power to govern the financial and operating policies of an The financial statements have been prepared in compliance of these sources. With the resumption of elite sport and the entity so as to obtain benefits from its activities. All intra-Group • No attendance at the 2021 Guinness 6 Nations Championship with United Kingdom Accounting Standards, including Financial contractual nature of broadcasting and sponsorship income transactions, balances, income and expenses are eliminated on and no crowds allowed to resume at Guinness Pro 14 Reporting Standard 102, The Financial Reporting Standard these revenue sources are less likely to be impacted by the consolidation. Adjustments are made to eliminate the surplus or matches played in Scotland applicable in the United Kingdom and the Republic of Ireland pandemic and amounts are relatively certain. With uncertainty deficit arising on transactions with associates to the extent of the (“FRS 102”). existing as to when crowds will be allowed to return to live sport • Potential 25% attendance possible for the 2021 Autumn Group’s interest in the entity. there is greater uncertainty and risk in relation to ticket income Internationals The principal accounting policies applied in the preparation of An associate is an entity, being neither a subsidiary nor a joint and other match day income. These matters have been factored these consolidated financial statements are set out below. These • Consideration of further mitigating actions available, for venture, in which the Group holds a long-term interest and where into the cash flow forecasts prepared by the Directors. policies have been consistently applied to all the years presented, example a delay or reduction in budgeted discretionary the Group has significant influence. The Group considers that it unless otherwise stated. The cost base is largely fixed, although with many costs and spend and use of the recently extended Covid-19 job has significant influence where it has the power to participate Basis of Preparation planned expenditure at the discretion of the Union. Scottish retention scheme. in the financial and operating decisions of the associate. The Rugby has taken advantage of the Government’s Covid-19 job results of associates are accounted for using the equity method In this severe but plausible downside scenario there is still sufficient These financial statements are prepared on the going concern retention scheme and plans to continue to do so whilst the of accounting. liquidity headroom throughout the going concern period. basis, under the historical cost convention, as modified by the scheme is available and certain roles and functions cannot be Functional and Presentational Currency recognition of certain financial assets and liabilities measured at carried out due to social distancing and other restrictions being Based on this assessment of the Union’s financial position, fair value. in place. A number of salary reductions were also put in place forward cash flow projections, and consideration of the effects, Both the functional and presentational currency of the Union is Going Concern at the outset of the pandemic. These factors have also been and possible future effects, of Covid-19, as well as a number of Pounds Sterling. assumptions, mitigating measures already taken and further factored into the cash flow forecasts prepared by the Directors. Turnover and Other Income In determining whether the going concern basis of preparation measures which could be taken the Directors have a clear and Subsequent to year end a working capital facility of £11.8m for the financial statements is appropriate the Directors have reasonable expectation that the Union has adequate resources Turnover represents ticket sales, broadcasting revenue, and a revolving credit facility of £8.5m have been procured and considered the sources of revenue, the ongoing running costs of all to continue in operational existence for the foreseeable future commercial (including barter transactions) income and all an advance of grant has also been secured from World Rugby. aspects of the Union’s operations and the availability of funding. and do not foresee a scenario where additional funds will be other income and is stated net of VAT. Revenue is recognised Healthy cash reserves have been generated from the recent All of this has been considered against the ongoing impact of the required. The Directors are therefore satisfied to adopt the going based on the relevant contractual terms or in accordance with external investment into Pro 14 rugby. Coronavirus pandemic. The Directors have prepared a base case concern basis in preparing the financial statements. the occurrence of the relevant event. Where consideration is cash flow forecast and a severe but plausible downside forecast The Directors’ base case cash flow forecast which shows clear received in kind for barter transactions, income and expenditure Basis of Consolidation covering the going concern period and beyond. liquidity headroom through the going concern period is based on are grossed up on the basis of arm’s length commercial rates. The consolidated financial statements cover the year to 31 May The pandemic resulted in postponement of both the Guinness the following key assumptions: Tangible Assets 2020 and include the Scottish Rugby Union, a mutual organisation, Pro 14 19/20 season and the 2020 Guinness 6 Nations • 50% attendance at the 2021 Guinness 6 Nations its subsidiary undertakings for accounting purposes Scottish The cost of tangible assets is their purchase cost, together with Championship. These tournaments are key drivers in the Union’s Championship and crowds allowed to resume at Guinness Rugby Union Limited, Edinburgh Rugby Limited, Glasgow any incidental costs of acquisition. Significant sums are spent on revenue sources from the national team and the pro teams. Both Pro 14 matches played in Scotland competitions have subsequently been completed as elite sport Warriors Limited, Saltire Rugby Holdings Limited, and The maintenance of the Union’s main asset, BT Murrayfield Stadium, has been able to resume, albeit behind closed doors for now. • Potential 100% attendance possible for the 2021 Autumn Murrayfield Experience Limited, and a related body, the Thistle therefore the de-minimus level for capitalisation of assets has The 20/21 Guinness Pro 14 season is underway and the 2021 Internationals Rugby Trust. The consolidated financial statements also include been set at £10,000 for the first three asset categories below and the Union’s share of the results of associates to 31 May 2020. at £5,000 for Other equipment. Depreciation is calculated so as Guinness 6 Nations Championship is planned to go ahead in line • Salary costs return to contracted levels with normal scheduling. There is also an Autumn Internationals The parent body, Scottish Rugby Union, has not traded during to write off the cost of tangible fixed assets, less their estimated programme scheduled in line with previous years. As the Directors recognise that there remains a risk in relation to either the current period or previous year and its only assets and residual values, over the expected useful economic lives of the when crowds are allowed to resume at live sporting events the liabilities are its investment in, and loans from, Scottish Rugby assets concerned. The straight line basis is used in respect of all The key revenue sources of the Union are broadcasting, base case has also been sensitised and a severe but plausible Union Limited of £50,000. assets and the principal annual depreciation rates are:

16 LEADERSHIP . ENGAGEMENT . ACHIEVEMENT . ENJOYMENT . RESPECT Scottish Rugby | Annual Report 2019-20 17 % held under finance leases are depreciated over the shorter of the assessed collectively for impairment based on their ageing. (iii) Offsetting Land Nil lease term and the useful lives of equivalent owned assets. If an asset is impaired, the impairment loss is the difference Financial assets and liabilities are offset and the net amounts Stands and Heritable property 1-20 Grants between the carrying amount and the present value of presented in the financial statements when there is a legally Fixtures and fittings 4-25 the estimated cash flows discounted at the asset’s original enforceable right to set off the recognised amounts and there Other equipment 7-50 Revenue grants are credited to the income and expenditure effective interest rate. The impairment loss is recognised in is an intention to settle on a net basis or to realise the asset No depreciation is charged on Assets Under Construction. account in the same period as the related expenses. the Income Statement. and settle the liability simultaneously. Intangible Assets The Coronavirus Job Retention Scheme has been utilised in the If there is a decrease in the impairment loss arising from an event (iv) Hedging arrangements course of the year, with sums relating to the financial year being occurring after the impairment was recognised, the impairment The Union applies hedge accounting in respect of forward Intangible assets comprise computer related software. The cost credited to the income and expenditure account in the same is reversed. The reversal is such that the current carrying amount foreign exchange contracts held to manage the cash flow of intangible fixed assets is their purchase cost, together with period as the related expenses. does not exceed what the carrying amount would have been had exposures of forecast transactions denominated in foreign any incidental costs of acquisition. The level for capitalisation the impairment not previously been recognised. The impairment currencies. These foreign exchange hedges have been of intangible fixed assets has been set at £5,000. Amortisation Taxation reversal is recognised in the Income Statement. designated as cash flow hedges. is calculated so as to write off the cost of intangible fixed assets, The Union has mutual trading status for taxation purposes as regards Other financial assets, are initially measured at fair value, less their estimated residual values, over the expected useful The Union also applies hedge accounting for transactions its trading activities with the members and pays tax only on the which is normally the transaction price. economic lives of the assets concerned. The straight line basis is profit derived from trading with non-members. Deferred Taxation is entered into to manage the cash flow exposures of borrowings. Such assets are subsequently carried at fair value and the used in respect of all assets and the principal annual amortisation recognised on all timing differences where the transaction or events Interest rate swaps are held to manage the interest rate changes in fair value are recognised in the Income Statement, rates are: that give rise to an obligation to pay more, or less, tax in the future exposures and are designated as cash flow hedges of floating unless they are included in a hedging arrangement, and except rate borrowings. % have occurred by the Balance Sheet date. Deferred tax assets are that investments in equity instruments that are not publicly Intangible Fixed Assets 10-50 recognised when it is probable that they will be recovered. The tax Changes in the fair values of derivatives designated as cash traded and whose fair values cannot be measured reliably are rates in force at the Balance Sheet date are used to calculate the flow hedges, and which are effective, are recognised directly No amortisation is charged on Assets Under Construction. measured at cost less impairment. need for any deferred tax provision or asset. in equity. Any ineffectiveness in the hedging relationship Investment in subsidiaries, associates and other investments Financial assets are derecognised when (a) the contractual (being the excess of the cumulative change in fair value Long term incentive plan rights to the cash flows from the asset expire or are settled, or of the hedging instrument since inception of the hedge Investments in subsidiaries, associates and other fixed asset Various bonus schemes, including annual bonus schemes and (b) substantially all the risks and rewards of the ownership of over the cumulative change in the fair value of the hedged investments are included at cost less any accumulated a Long Term Incentive Plan (“LTIP”) have been operated in the asset are transferred to another party, or (c) despite having item since inception of the hedge) is recognised in the impairment losses. Dividends received are recognised in the recent years. The LTIP was designed to retain and reward those retained some significant risks and rewards of ownership, Income Statement. income and expenditure account when the right to receive participating over a longer period, aligned against medium control of the asset has been transferred to another party payment is established. The gain or loss recognised in Other Comprehensive Income and longer-term strategic objectives which seek consistent who has the practical ability to unilaterally sell the asset to an is reclassified to the Income Statement when the hedge Deferred Income improvement in performance over time. The most recent scheme unrelated third party without imposing additional restrictions. relationship ends. Hedge accounting is discontinued commenced in FY 15/16, for a 5-year period, with FY19/20 being its (ii) Financial liabilities Capital grants and debenture premiums are transferred to deferred when the hedging instrument expires, no longer meets the last year. Conditional awards could be made by the Remuneration income and amortised over the estimated useful life of the Basic financial liabilities, including trade and other payables, hedging criteria, the forecast transaction is no longer highly Committee, with accumulated amounts then capable of being associated fixed assets or the life of the debenture, respectively. and bank loans, are initially recognised at transaction price, probable, the hedged debt instrument is derecognised released after 3 years and 5 years if the Committee was satisfied unless the arrangement constitutes a financing transaction, or the hedging instrument is terminated. Debenture issue costs that targets had been met at those points. Amounts potentially where the debt instrument is measured at the present value Public benefit entity concessionary loans (including available were based on a maximum percentage of salary. The The costs associated with the issue of capital instruments are of the future receipts discounted at a market rate of interest. debentures) Remuneration Committee had full discretion over what amounts, charged to the income and expenditure account on an annual Debt instruments are subsequently carried at amortised cost, if any, within that cap, should apply. A liability for the plan is In determining whether or not amounts received (including basis over the minimum period remaining until the redemption using the effective interest method. raised on the estimated amount payable in terms of the incentive debentures) from third parties are financial liabilities, of the associated instrument. scheme plans. The LTIP has been terminated at year 4, with no Trade creditors are obligations to pay for goods or services consideration is given to the terms and whether or not the Pension costs awards made for year 5 (FY19/20) and has not been replaced. that have been acquired in the ordinary course of business Company has the unconditional right to avoid settling in cash from suppliers. Accounts payable are classified as current or other financial assets and whether settlement is dependent Contributions are made by the Union to money purchase Financial Instruments liabilities if payment is due within one year or less. If on the occurrence or non-occurrence of uncertain future events scheme pension arrangements for certain employees. Amounts The Union has chosen to adopt Sections 11 and 12 of FRS 102 in not, they are presented as non-current liabilities. Trade beyond the Company and the third party’s control. Where there due to assurance companies are charged against the income respect of financial instruments. creditors are recognised initially at transaction price and is not an unconditional right the amounts received are accounted and expenditure account in the period in which they become subsequently measured at amortised cost using the effective for as concessionary loans arrangements, when received for payable. The Union provides no other post retirement benefits (i) Financial Assets interest method. the purpose of furthering the primary objective of the Group. to its employees. Basic financial assets, including trade and other debtors, This includes any debentures or bank loans received below the The derivative instruments utilised by the Union are interest cash and bank balances and loans, are initially recognised prevailing market rate of interest which are initially measured at Finance and operating leases rate swaps and forward exchange forward contracts. at transaction price, unless the arrangement constitutes a the amount received. In subsequent years, the carrying amount Costs in respect of operating leases are charged on a straight line financing transaction, where the transaction is measured Derivatives are initially recognised at fair value on the date a of concessionary loans in the financial statements is adjusted to basis over the lease term. at the present value of the future receipts discounted at a derivative contract is entered into and are subsequently re- reflect any accrued interest payable or receivable. market rate of interest. Such assets are subsequently carried measured at their value on the market price date from relevant Leasing and hire purchase agreements which transfer Critical accounting judgements and estimation uncertainty at amortised cost using the effective interest method. counterparties. Changes in the fair value of derivatives are substantially all the benefits and risks of ownership of an asset Estimates and judgements are continually evaluated and are based At the end of each reporting period financial assets recognised in the Income Statement in finance costs or are treated as if the asset had been purchased outright. The on historical experience and other factors, including expectations measured at amortised cost are assessed for objective finance income as appropriate, unless they are included in a assets are included in fixed assets and the capital element of the of future events that are believed to be reasonable under the evidence of impairment. They are first assessed individually hedging arrangement. leasing commitment is shown as an obligation under finance circumstances. The Directors consider that their assessment of the for impairment, or collectively where the debtors are not Financial liabilities are derecognised when the liability is leases. The lease rentals are treated as consisting of capital and going concern basis of preparation for the Financial Statements is individually significant. Where there is no objective evidence extinguished, that is when the contractual obligation is interest elements, with the capital element applied to reduce the a critical accounting judgement. Other than the elements outlined of impairment for an individual debtor, it is included in a group discharged, cancelled or expires. outstanding obligation and the interest element charged against in the area of going concern, the directors do not consider that of debtors with similar credit risk characteristics and these are the surplus or deficit for the period on a straight line basis. Assets there are any further key accounting judgements and estimates in the preparation of these financial statements.

18 LEADERSHIP . ENGAGEMENT . ACHIEVEMENT . ENJOYMENT . RESPECT Scottish Rugby | Annual Report 2019-20 19 CONSOLIDATED INCOME & EXPENDITURE ACCOUNT CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 May 2020 for the year ended 31 May 2020

2020 2019 2020 2019 Notes £000 £000 £000 £000

Turnover and Other Income Surplus for the financial year 2,869 308 Ticket Income 10,524 15,776 Broadcasting Revenues 11,011 15,517 Other comprehensive (expenditure) / income: Commercial Income 9,879 9,704 Professional Rugby 10,139 13,323 Cash Flow hedges: Development Income & Grants 10,620 1,421 Change in value of interest rate hedging instruments (10) 32 Hospitality and Other Income 3,295 5,336 Change in value of foreign exchange hedging instruments (14) 452 55,468 61,077 Other comprehensive (expenditure) / income for the year (24) 484 Costs International and Professional Rugby (31,677) (30,797) Total comprehensive income for the year 2,845 792 Domestic and Performance Rugby (9,358) (9,854) Commercial and Operational (15,165) (15,459) Club Support and Development (2,982) (3,088) Depreciation and Amortisation (1,562) (1,341) (60,744) (60,539)

Operating (Deficit) / Surplus (5,276) 538

Income from interests in associated undertakings 7 8,381 -

Profit on ordinary activities before interest and taxation 3,105 538

Net interest 3 (236) (230)

Surplus on ordinary activities before taxation 1 2,869 308

Tax on surplus on ordinary activities 4 - -

Surplus for the financial year 17 2,869 308

The turnover and operating (deficit) / surplus shown above are derived from continuing operations within the UK.

20 LEADERSHIP . ENGAGEMENT . ACHIEVEMENT . ENJOYMENT . RESPECT Scottish Rugby | Annual Report 2019-20 21 CONSOLIDATED BALANCE SHEET CONSOLIDATED STATEMENT OF CHANGES IN EQUITY as at 31 May 2020 for the year ended 31 May 2020

2020 2019 Notes £000 £000 General Hedging Fixed Assets Reserve Reserve Total Tangible assets 5 41,477 38,622 £000 £000 £000 Intangible assets 6 614 610 Investments 7 663 2 Balance as at 1 June 2018 (4,665) (516) (5,181) 42,754 39,234 Surplus for the year 308 - 308 Current Assets Other comprehensive income for the year: Derivative financial instruments: falling due after more than one year 10 - 207 Fair value gain on interest rate derivative financial instrument - 32 32 Fair value gain on foreign exchange derivative financial instrument - 452 452 Derivative financial instruments 10 148 152 Total other comprehensive income for the year - 484 484 Debtors 8 8,753 9,027 Cash at bank 5,485 4,529 Balance as at 31 May 2019 (4,357) (32) (4,389) Cash in hand 23 14 14,409 13,722 Balance as at 1 June 2019 (4,357) (32) (4,389) Creditors: amounts falling due within one year 9 (24,707) (20,540) Surplus for the year 2,869 - 2,869 Derivative financial instruments 10 (161) (82) Other comprehensive expenditure for the year: Net Current Liabilities (10,459) (6,693) Fair value loss on interest rate derivative financial instrument - (10) (10) Fair value loss on foreign exchange derivative financial instrument - (14) (14) Provisions for liabilities 11 (99) (99) Total other comprehensive expenditure for the year - (24) (24)

Total assets less current liabilities and provisions 32,196 32,442 Balance as at 31 May 2020 (1,488) (56) (1,544)

Creditors: amounts falling due after more than one year 9 - 3,000 The hedging reserve is used to record transactions arising from the Union’s cash flow hedging arrangements. Derivative Financial Instruments 10 43 310 Deferred income 12 1,650 1,556 Ten Year Debentures 13 - - Murrayfield Debentures 14 31,950 31,868 Irredeemable Debentures 15 97 97 33,740 36,831 Capital and Reserves General reserve 17 (1,488) (4,357) Hedging reserve (56) (32) Total Capital and Reserves Deficit (1,544) (4,389)

32,196 32,442

The financial statements on pages 16 to 35 were approved by the Scottish Rugby Board and signed on its behalf on 14 December 2020 by:

John Jeffrey, Chairman

Mark Dodson, Chief Executive

22 LEADERSHIP . ENGAGEMENT . ACHIEVEMENT . ENJOYMENT . RESPECT Scottish Rugby | Annual Report 2019-20 23 CONSOLIDATED STATEMENT OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 May 2020

2020 2019 1. Surplus on ordinary activities before taxation Notes £000 £000 2020 2019 The surplus on ordinary activities before taxation is stated after crediting: £000 £000 Net cash from operating activities 18 (4,040) 4,827 Amortisation of deferred income 52 117 Barter transaction sponsorship income 1,236 1,092 Cash Flow from investing activities And after charging: Payments to acquire Tangible Assets (4,841) (1,534) Auditors’ remuneration 41 33 Payments to acquire Intangible Assets (113) (14) Auditors’ fees for non-audit services Payments to acquire Fixed Asset Investments (613) - Tax compliance 9 9 Dividend received 8,381 - Tax advisory 79 25 Net cash generated from / (used in) investing activities 2,814 (1,548) Corporate Finance Advisory 33 - Other 3 79 Cash flow from financing activities Depreciation charge for the year: Repayment of bank loan - (500) Owned fixed assets 1,457 1,301 Receipt from bank loan facility 2,407 - Amortisation charge for the year: Finance lease - (4) Owned intangible assets 105 40 Interest paid on bank overdrafts and loans (216) (225) Operating lease rentals Net cash generated from / (used in) financing activities 2,191 (729) Plant & Machinery 15 21 Other 409 409 Net increase in cash at bank and in hand 965 2,550 Barter transaction sponsorship costs 1,236 1,092 Administrative and management expenses 3,973 4,060 Cash and cash equivalents at the beginning of the year 4,543 1,993

Cash and cash equivalents at the end of the year 5,508 4,543

24 LEADERSHIP . ENGAGEMENT . ACHIEVEMENT . ENJOYMENT . RESPECT Scottish Rugby | Annual Report 2019-20 25 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

2. Staff Costs 3. Net Interest The average monthly number of persons employed during the year who are involved in and support the Scottish game was: 2020 2019 £000 £000 2020 2020 2019 2019 Interest payable on bank overdrafts (154) (149) No. No. No. No. Amortisation of Debenture issue costs (82) (81) Rugby (236) (230) Professional Players 115 104 Professional Teams – Coaching & Operations 39 35 The rates of interest on the Union’s term loan borrowings are included in Note 10. National Team – Coaching & Operations 10 11 Elite Development Players & Coaches 37 34 4. Tax on surplus on ordinary activities Domestic & Performance 88 79 2020 2019 Strength & Conditioning 20 17 £000 £000 Medical & Physiotherapy 20 19 Current Tax: 329 299 On surplus arising from non-mutual trading - - Stadium Operations 47 40 Commercial, marketing & other corporate functions 69 62 Deferred: TOTAL 445 401 Origination and reversal of timing differences (861) 162 Movement in deferred tax unprovided 861 (162) - - Within these figures: Domestic & Performance includes employees within the FOSROC Academies, Rugby Development Support, Services, Factors affecting the current tax charge for the year Participation and Development, Coach Development, Outreach & Equality, Schools & Youth, Domestic and Elite Refereeing, and Age Grade & Other Coaches. Surplus on ordinary activities before taxation 2,869 308 Stadium Operations includes staff involved in Event Management, Ticketing and Stadium, Pitch & Grounds Maintenance. Corporation Tax at 19% (2019 – 19%) 59 Commercial, marketing & other corporate functions includes Commercial & Marketing, HR & Communications, Finance & IT, 545 Governance and Business Services. Effects of: 2020 2019 Net expenses not deductible for tax purposes 207 180 £000 £000 Crystallisation of tax losses 947 (162) Employment costs: Income not subject to tax (1,592) - Wages and salaries 27,396 27,323 Non-taxable mutual profits (238) (217) Social security costs 3,288 3,386 Depreciation in excess of capital allowances 124 107 Other pension costs 871 779 Capital transactions 16 16 31,555 31,488 Movement in other timing differences (9) 17 - - At the year end the pension accrual was £291k (2019 - £331k). The Union has gross taxable profits arising in the year of £nil (2019 - £nil).

26 LEADERSHIP . ENGAGEMENT . ACHIEVEMENT . ENJOYMENT . RESPECT Scottish Rugby | Annual Report 2019-20 27 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

5. Tangible Assets 7. Investments Heritable Fixtures and Other Assets Under Through Scottish Rugby Union Limited the Union holds one €1.25 ordinary share in British & Irish Lions DAC, First Floor, Property Fittings Equipment Construction Total Simmonscourt House, Simmonscourt Road, Ballsbridge, 4, a company incorporated in the Irish Republic. The Union’s investment represents a 25% holding in the issued share capital of the company. £000 £000 £000 £000 £000 Cost The Union is the beneficial owner of 1,667 €1.27 ordinary shares in Limited, 24/26 City Quay, Dublin As at 1 June 2019 47,494 14,616 3,774 1,064 66,948 2, a company incorporated in the Irish Republic and which is in liquidation. The Union’s holding represents 16.67% of the company’s issued share capital. Additions 321 867 937 2,187 4,312 Transfers - - 612 (612) - In addition to the above, the Union is a member of European Professional Club Rugby, a Swiss association, whose principal Disposals - (745) - - (745) activity is promoting and managing the European Rugby Champions Cup, and Continental Shield. As at 31 May 2020 47,815 14,738 5,323 2,639 70,515 The Union, through Scottish Rugby Union Limited, is one of three subscribers, the others being The Limited and , to Great Britain Limited, a company incorporated in and Wales, and limited by guarantee. Accumulated Depreciation As at 1 June 2019 13,355 12,592 2,379 - 28,326 Given the disposition of the other shareholdings in these companies, and the immateriality of their net surpluses and net Charge for year 724 278 455 - 1,457 assets after receipt of dividends by the Union, the Directors do not believe that these investments fall to be treated as associate companies. Disposals - (745) - - (745) As at 31 May 2020 14,079 12,125 2,834 - 29,038 During the year, the (“FIR”) were admitted to Celtic Rugby DAC, Millbank House, Arkle Road, Sandyford Industrial Estate, Dublin 18, a company incorporated in the Irish Republic, as a shareholder, through subscription for and allotment of new shares as part of a capital restructuring. The resultant voting shareholding for each shareholder, one of Net book value whom is the Scottish Rugby Union Limited, is 25%. As at 31 May 2020 33,736 2,613 2,489 2,639 41,477 During the year, Celtic Rugby DAC entered into a partnership involving itself and an external partner, CVC Capital Partners. Following the completion of the transaction, the Group’s main trading vehicle, Scottish Rugby Union Limited, received a 34,139 2,024 1,395 1,064 38,622 As at 31 May 2019 dividend from Celtic Rugby DAC of £8.381m. Under the relevant agreements, the CVC interest in the new partnership will increase over several years if a number of conditions are met. Once fully invested, CVC Capital Partners will hold a 28% interest 6. Intangible Assets in the new partnership, with Celtic Rugby DAC holding the remaining majority 72% interest. Computer The carrying value of the Union’s investment in associate, Celtic Rugby DAC, and which is held by Scottish Rugby Union Limited, Software Total is nil. £000 £000 During the year, in accordance with the subscription agreement entered into, the Group’s main trading vehicle, Scottish Rugby Cost Union Limited, acquired a shareholding in Washington DC Professional Rugby LLC through a wholly owned subsidiary, Scottish As at 1 June 2019 676 676 Rugby (USA) LLC. At 31 May 2020, the Group’s resultant shareholding in Washington DC Professional Rugby LLC was 28.4%, Additions 109 109 acquired at a total cost incurred over the year, including professional fees, of £661k. The Group’s share of this company’s profit for the year was nil. The Group’s share of this company’s net assets at 31 May 2020 was nil. There is the expectation that this As at 31 May 2020 785 785 company will generate positive future cash flows and, as such, no impairment charge has been made against the Group’s investment in this company. Accumulated Amortisation The Union’s subsidiary, Scottish Rugby Union Limited, owns 100% of the shareholding of The Murrayfield Experience Limited, As at 1 June 2019 66 66 Saltire Rugby Holdings Limited, Edinburgh Rugby Limited and Glasgow Warriors Limited. These companies are all dormant, Charge for year 105 105 and their registered address is BT Murrayfield Stadium, Edinburgh EH12 5PJ. As at 31 May 2020 171 171 Fixed asset investments are stated at the lower of cost and valuation.

Net book value As at 31 May 2020 614 614

As at 31 May 2019 610 610

28 LEADERSHIP . ENGAGEMENT . ACHIEVEMENT . ENJOYMENT . RESPECT Scottish Rugby | Annual Report 2019-20 29 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

8. Debtors 10. Financial instruments 2020 2019 Treasury policy Amounts falling due within one year £000 £000 Treasury activity is focused on monitoring working capital, managing interest rate risk and managing currency rate risk. Treasury Trade debtors 7,409 8,272 activity is not a profit centre and the Union neither enters into transactions of a speculative nature nor trades in financial instruments. Other debtors 438 - The Union has the following financial instruments: Prepayments 906 755 2020 2019 8,753 9,027 £000 £000 Financial assets that are debt instruments measured at amortised cost: 9. Creditors Cash at bank and in hand 5,508 4,543 2020 2019 Trade debtors 7,409 8,272 Amounts falling due within one year £000 £000 Other debtors 438 - Advance receipts 5,810 8,780 Trade creditors 2,249 3,319 Financial assets measured at fair value through other comprehensive Other tax and social security 3,388 2,456 income due within one year: Accruals 6,783 7,055 Derivative financial instruments 148 152 Bank loans 5,407 - 24,707 20,540 Financial assets measured at fair value through other comprehensive income due after more than one year: Derivative financial instruments - 207 2020 2019 Amounts falling due after more than one year £000 £000 Financial liabilities measured at amortised cost due within one year: Bank loans - 3,000 Overdraft and bank loans 5,407 - 3,000 - Trade creditors 3,319 2,249 Other creditors 12,593 15,835 Within Amounts falling due within one year, bank loans of £3.0m (2019 – Amounts falling due after more than one year - £3.0m) were repayable in full by 30 June 2020. This loan was rolled over to 31 October 2020, and has now been repaid. The balance Financial liabilities measured at amortised cost due after more than one of Bank Loans within Amounts falling due within one year represents a development loan in relation to the new stadium year: development. The Union completed a further refinancing in November and December 2020, which comprised a working Overdraft and bank loans - 3,000 capital facility of £11.8m together with a Revolving Credit Facility of £8.5m, which remains undrawn at the date of signing of the Financial Statements. The existing Bond and Floating Charge over the assets of Scottish Rugby Union Limited provides security for the company’s banker for amounts due to them. Financial liabilities measured at fair value through other comprehensive income due within one year: Derivative financial instruments 161 82

Financial liabilities measured at fair value through other comprehensive income due after more than one year: Derivative financial instruments 43 310

Derivative financial instruments - Forward Contracts Through Scottish Rugby Union Limited the Union enters into forward foreign exchange contracts to mitigate the exchange rate risk for certain future foreign currency receivables. The forward foreign exchange contracts are measured at fair value, which is determined using valuation techniques that utilise observable inputs. The key inputs used in valuing the derivatives are the year end spot exchange rates. The fair value of the forward foreign exchange currency contracts at 31 May 2020 was (£54k) (2019: (£20k)). Derivative financial instruments - Interest Rate Swaps Through Scottish Rugby Union Limited the Union has a term loan with Bank of Scotland of £3.0m (2019: £3.0m), with the balance being repayable in full by 30 June 2020, which was rolled over until 31 October 2020. This was repaid on 30 October 2020. The Union, through Scottish Rugby Union Limited, had also entered into an interest rate swap with the Bank of Scotland, which was used to hedge exposure to interest rate movements on the bank loan facility in relation to £1.0m (2019: £2.5m) of the term loan. This had fixed the interest rate on these borrowings over the period of the loan to 30 June 2020, at an average rate of 3.491%. The interest rate swap arrangement has a fair market value, being the net present value of future cash flows due under the swap compared to current interest rates. The fair value of the interest rate swap on 31 May 2020 was (£2k). The fair value of the interest rate swaps in place on 31 May 2019 was (£12k).

30 LEADERSHIP . ENGAGEMENT . ACHIEVEMENT . ENJOYMENT . RESPECT Scottish Rugby | Annual Report 2019-20 31 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

11. Provisions for Liabilities 14. Murrayfield Debentures 2020 2020 2019 2019 Deferred Class of Value No. No. No. Tax Other Total Debenture Each Authorised Issued £000 Issued £000 £000 £000 £000 A £1,200 9,100 9,092 10,910 9,092 10,910 Opening - 99 99 B £2,200 7,900 7,900 17,380 7,900 17,380 Utilisation during the year - - - C £3,500 1,000 1,000 3,500 1,000 3,500 Closing - 99 99 Thistle £9,900 500 188 1,861 188 1,861 Debentures issued 18,180 33,651 18,180 33,651 2020 2019 Issue Costs: Deferred taxation comprises: £000 £000 Opening 1,783 1,864 Accelerated capital allowances 1,202 1,116 Amortisation (82) (81) Other timing differences 254 261 Closing 1,701 1,783 Trading losses carried forward (2,686) (1,616) (1,230) (239) Net Issue Proceeds less Amortisation 31,950 31,868 Deferred tax asset not recognised 1,230 239 - - The Murrayfield Debentures are unsecured, rank pari passu and are interest free. Repayment is at the discretion of the Company but the terms include an administration clause meaning the Company does not have an unconditional right to avoid settling. Following due consideration of future anticipated taxable profits, the residual deferred tax assets on trading losses carried Holders have the right to purchase a ticket for any event or match at the stadium for which the Union retains direct control over forward has not been recognised on the basis that it will take some time for them to be fully recovered. The deferred tax asset the allocation of all tickets. In respect of Six Nations matches the ticket is for a specific seat. Thistle and C Debenture holders will be fully recoverable should there be appropriate future taxable profits. also have a right to purchase certain matchday hospitality packages.

12. Deferred Income 15. Irredeemable Debentures Heritable Debenture 2020 2019 The 972 (2019 - 972) Debentures of £100 each (the 1925 Debentures) entitle the holder to purchase two tickets at Murrayfield for each match directly controlled by the Union. The debentures are interest free. Property Premium Total Total £000 £000 £000 £000 16. Leases Opening 1,468 88 1,556 1,673 Operating Lease commitments 2020 2019 Additions in the year 146 - 146 - £000 £000 Amortisation in period (22) (30) (52) (117) Land & Buildings; payable in Closing 1,592 58 1,650 1,556 1 year 308 409 2 to 5 years 300 608 13. Ten Year Debentures 608 1,017 2020 2019 17. General Reserve Debenture Class of Value Max. No. No. No. 2020 2019 Issue Debenture Each Authorised Issued Issued £000 £000 2009 Debentures J £1 500 - - Opening (4,357) (4,665) K £1 1,000 - - Surplus for the year 2,869 308 L £1 200 - - Closing (1,488) (4,357) 2012 Debentures N £1 1,000 14 14 O £1 1,000 180 180 18. Reconciliation of operating surplus to net cashflow from operating activities Debentures issued 194 194 2020 2019 £000 £000 Operating (deficit)/surplus (5,276) 538 The term of the 2009 Debentures, which were unsecured, concluded on 31 May 2019. The 2012 Debentures are Depreciation charge 1,457 1,301 unsecured, interest free and repayable at par on 31 May 2022. Holders of the 2012 Debentures have the right to purchase Amortisation charge 105 40 a ticket for any event or match at the stadium for which the Union retains direct control over the allocation of all tickets. In respect of Six Nations matches, the ticket is for a specific seat. Deferred income amortisation (52) (117) Tenant club residual fund - (52) Decrease/(Increase) in debtors 274 (1,007) (Decrease)/Increase in creditors (548) 4,124 (4,040) 4,827

32 LEADERSHIP . ENGAGEMENT . ACHIEVEMENT . ENJOYMENT . RESPECT Scottish Rugby | Annual Report 2019-20 33 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

19. Reconciliation of net cashflow to movement in net debt 22. Capital Commitments 2020 2019 At 31 May 2020, Scottish Rugby Union Limited had capital commitments of £3.38m in relation to the completion of the £000 £000 construction of the new stadium on its estate at BT Murrayfield. Increase in cash in the year 965 2,550 Amortisation of Murrayfield Debentures (82) (81) 23. Related Party Transactions Conclusion of 2009 Debenture Term - 1 Three of the directors of Scottish Rugby Union Limited, Dee Bradbury, Ian Barr and William Gardner were also trustees of the Finance Lease - 4 Murrayfield Injured Players Foundation during the year. Adam Gray ceased to be a trustee on 25 March 2020. Scottish Rugby Repayment of bank loan - 500 Union Limited does not charge the charity for any administrative or other support that it provides and made a donation to it of Receipt from bank loan facility (2,407) - £1,755 in the current year (2019: £1,596).

Change in net debt during the year (1,524) 2,974 24. Post Balance Sheet Event Net debt at the beginning of the year (30,414) (33,388) Following the year end, in October 2020, a further tranche of income was received in relation to the partnership between CRDAC Net debt at the end of the year (31,938) (30,414) and CVC, the value of which was £9.4m. The Term Loan of £3m was repaid on 30 October 2020. A further refinancing was completed in November and December 20. Analysis of net debt 2020, which comprised a working capital facility of £11.8m together with a Revolving Credit Facility of £8.5m, which remains 31 May Other 31 May undrawn at the date of signing of the Financial Statements. 2019 Cash Flows Changes 2020 £000 £000 £000 £000 25. SRU Group Cash in hand 14 9 - 23 The Scottish Rugby Union carries out all its operations through Scottish Rugby Union Limited, which is treated as a wholly Cash at bank 4,529 956 - 5,485 owned subsidiary for accounting purposes, with its registered office being Murrayfield Stadium, Edinburgh, EH12 5PJ. The Bank loans (3,000) (2,407) - (5,407) issued share capital of Scottish Rugby Union Limited is held in trust for the benefit of the members of Scottish Rugby Union Finance lease due within one year 8 - - 8 by the Trustees of the Scottish Rugby Union Trust (49,999 Ordinary Shares of £1 each) and G A Ireland (1 Ordinary Share of Irredeemable Debentures (97) - - (97) £1) as a nominee. For accounting purposes, the Group is also deemed to include the Thistle Rugby Trust. The Group has taken advantage of the exemption conferred by FRS102 from the need to disclose transactions between Group entities that have Murrayfield Debentures (31,868) - (82) (31,950) been eliminated on consolidation in these Group financial statements. (30,414) (1,442) (82) (31,938)

Debentures have been treated as public benefit entity concessionary loans as they were received below the prevailing market rate of interest and for the purpose of furthering the primary objective of the Union.

21. Transactions Involving Directors of Scottish Rugby Union Limited The names of the Directors who served during the period are as set out on page 13. The aggregate emoluments payable to the Directors for the year comprised: 2020 2019 £000 £000 Fees and salaries 1,398 2,246 Contributions to pension schemes 29 27 1,427 2,273

The highest paid director received aggregate emoluments of £454k (2019 - £933k) during the period, comprising salary and benefits of £454k (2019 - £933k) and pension contributions of £nil (2019 - nil). In addition to annual bonus schemes, in prior years a Long Term Incentive Plan (“LTIP”) was operated to attract, retain and incentivise participating employees over longer term periods and achieve alignment with the organisation’s medium and long term strategic initiatives and targets. The Board’s Remuneration Committee set the parameters of those medium and long term initiatives and targets and assessed progress against them, before deciding whether any award should be made under the LTIP. However, as a result of the Coronavirus pandemic and its effect on the organisation, the Committee has terminated the Plan at 2018/19. Accordingly, no awards have been made, or will be made, for 2019/20. The amounts shown for the year ended 31 May 2020 include sums in relation to awards up to 2018/19 for the participating directors. By agreement with participants, payment of these conditional awards previously made has been delayed to future dates spanning at least two financial years. The amounts shown for the year ended 31 May 2019 include the crystallisation and release of sums accumulated for the first 3 years (financial years 15/16, 16/17 and 17/18) of a 5-year plan for the participating directors, including the highest paid director, as well as annual bonus awards for financial years 2017/18 and 2018/19.

34 LEADERSHIP . ENGAGEMENT . ACHIEVEMENT . ENJOYMENT . RESPECT Scottish Rugby | Annual Report 2019-20 35 FIVE YEAR SUMMARY COMMENTARY ON THE FINANCIAL STATEMENTS This page does not form part of the audited Financial Statements. 2020 2019 2018 2017 2016 This section provides a general commentary on the turnover and costs categories for the year ended 31 May 2020. £000 £000 £000 £000 £000 Turnover

Income 55,468 61,077 57,241 51,449 47,434 The Group’s turnover comes from a number of areas. National team match ticket sales, including the Guinness 6 Nations and other home international matches, pro-club match ticket sales, together with related broadcasting revenue provide a significant element of this. Match day income also includes revenue from pitchside advertising boards, match programmes and revenue from hospitality Expenditure: activities. The sale of merchandise throughout the year is a further important source of income. International and Professional Rugby 31,677 30,797 28,894 24,967 23,988 Scottish Rugby is grateful for funding from its many sponsors including BT and Macron. All of Scottish Rugby’s partners are noted at the Domestic and Performance Rugby 9,358 9,854 8,731 7,623 7,509 back of the Annual Report. Scottish Rugby is also grateful for significant grant funding from World Rugby, sportscotland and the Cashback Commercial and Operational 15,165 15,459 13,252 12,460 10,570 for Communities programme. Turnover also includes income from European Professional Club Rugby (EPCR) and the Guinness Pro14, and from other events held in BT Murrayfield Stadium including football matches, dinners, business conferences, concerts and Christmas Club Support and Development 2,982 3,088 2,913 2,766 2,937 party nights. Depreciation and Amortisation 1,562 1,341 1,281 1,231 1,180 International and Professional Rugby 60,744 60,539 55,071 49,047 46,184 The expenditure relating to the players, management, medical and strength & conditioning teams involved in International and Professional rugby is within this category. This includes travel, food and accommodation at venues, salaries, kit, laundry costs, travel Operating (Deficit)/Surplus (5,276) 538 2,170 2,402 1,250 insurance, training facilities, honours caps and team coach hire for all of the Scotland teams playing at international level. It also includes all Pro-club costs, being players’, coaches’ and support staff salaries together with kit, travel and other coaching costs, and Deficit on disposal of Fixed Asset - - - (331) - match day outgoings such as advertising, turnstile staff, ticket printing, venue preparation and entertainment. Expenditure in the provision of medical services, including physiotherapists, match doctors for the players, crowd doctors, and the Income from interests in associated undertakings 8,381 - - - - medical supplies needed to support players involved in international and professional rugby is included in this category. Also included is the investment in the strength and conditioning personnel who work with the National and Professional teams, together with the associated programme costs. Surplus on ordinary activities before interest 3,105 538 2,170 2,071 1,250 The Professional layer of the game continues to be a critical component of rugby in this country. While the Men’s National Team currently drives revenues to support the vast majority of the organisation’s activity, the professional teams, whilst also contributing to Net interest (236) (230) (333) (356) (404) the various income streams, primarily provide the opportunities and pathways for players and coaches to develop to that international level and compete for Scotland in the international team on the global stage. As such, there is a recognised net cost to the organisation in the area of professional rugby which amounted to £11.6m in 2019/20 (£8.3m – 2018/19). The increase year on year was primarily Surplus before taxation 2,869 308 1,837 1,715 846 due to reduced professional rugby related income, as outlined in the Income & Expenditure statement which was largely related to the effects of Covid-19. Taxation - - - - (10) Domestic and Performance Rugby Grassroots investment, which is key in helping to develop the players and coaches of the future, as well as maintaining and growing Surplus for year 2,869 308 1,837 1,715 836 the game, is included in this category. The Rugby Development team, which is supported by sportscotland, together with associated programme costs, including travel, training – both internal and external – and event costs are also included. Similarly, expenditure for the delivery of the programme related to funding from the Cashback for Communities grant is included here. Capital Expenditure 4,421 2,255 1,104 889 732 The investment in The Fosroc is included in this category, with costs including coaching, facilities, programmes and players, kit, equipment and match venue and logistics. Specialist coaching costs are included here, as are analysis and other rugby operational support costs. This area also includes investment in the Scottish Qualified programme and Nice player and related costs.

This page does not form part of the audited Financial Statements. Referee development, from grassroots to international level, includes the costs of referee coaching, travel to games, kit, and staffing and office expenditure for those employed in this area. Referee costs also include salary, travelling expenses and associated costs for professional refereeing. Scottish Rugby delivers coaching courses throughout Scotland, including United Kingdom Coaching Certificate (UKCC) ones. The costs of these are included here and the delivery of this programme is part funded by sportscotland. This area also includes the staff in the Training & Education team, training and facility costs, and course resources, as well as tutor and registration fees. The costs of a number of other coaching resources and initiatives, including the on-line training hub, workshops and conferences, and Rugby Right are also part of this area’s expenditure. Finally, the provision of medical services from physiotherapists and doctors, for cover at various domestic and performance rugby events and matches are included here, as are related strength and conditioning costs. Scottish Rugby is grateful for the support of sportscotland and World Rugby grants which assist in the delivery of a number of the above programmes. Scottish Rugby is grateful for the support of sportscotland and World Rugby grants which assist in the delivery of a number of the above programmes. Commercial & Operational

Commercial and Operational costs cover various areas of activity in Scottish Rugby. The running costs of the national stadium are included and these range from pitch repair and preparation to roof and other stadium maintenance, and include security, insurance,

36 LEADERSHIP . ENGAGEMENT . ACHIEVEMENT . ENJOYMENT . RESPECT Scottish Rugby | Annual Report 2019-20 37 rates, electricity, gas and water, all of which continue to ensure that BT Murrayfield remains a suitable, safe, and well maintained venue. THANK YOU TO Also included are match day and non-match day operational and staff costs, as are other event management and entertainment costs. Marketing and commercial expenditure is included in this area, where the costs of partnering with, developing and maintaining Scottish OUR PARTNERS Rugby’s family of sponsors are recorded. The activation costs of marketing campaigns, promotional materials, media events and other operational activities are also included here. Similarly included are the costs of other support staff and programmes in the areas of ticketing, HR, procurement, IT, finance, governance and business services. Finally, the costs of the communications and corporate affairs team and related activity across the wide range of print, broadcast, web and other social media are part of this category. PRINCIPAL PARTNERS OFFICIAL PARTNERS Club Support and Development

Scottish Rugby recognises that investment in the sport at grassroots level is a key element in maintaining and growing the game of rugby. Clubs are supported through the payment of Club Sustainability Awards, Club Sustainability Fund, Player Accident Insurance, contributions to cup and league travel costs, the payment of all referees’ travel costs across the country, and in 2019/20, the Club Hardship Fund, as a result of Covid-19. Ticket commissions which clubs receive for sales of international and sevens tickets are included here as are player reward scheme payments, where clubs’ contributions to the development of players who have gone on to win academy or professional contracts are acknowledged. The joint funding of Club Development Officers in partnerships with both clubs and local authorities across the country is also part of club support and development expenditure. The funding values for the current and previous year are noted below:

2020 2019 £000 £000

Direct Club Support Funding (Note 1) 2,028 2,160 Direct Club Support Funding – paid on behalf of clubs (Note 2) 364 409 Development Officer Contributions 590 519 Club Support and Development 2,982 3,088 Rugby Development Funding (Note 3) 4,125 4,339

Total 7,107 7,427 Sports Note 1 – Direct Club Support Funding consists of the elements of funding outlined in the commentary above paid directly to clubs, namely Club Sustainability Awards, Club Sustainability Fund, contributions to cup and league travel costs, ticket commissions, player reward scheme payments, and in 2019/20, the Club Hardship Fund. Note 2 – Direct Club Support Funding paid on behalf of clubs consists of the elements of funding outlined in the commentary above paid on behalf of clubs, being Player Accident Insurance, and the payment of match officials’ travel costs. Note 3 – Rugby Development Funding consists of the investment in the Rugby Development team across the country, match officials and related programme costs, the competitions team and related events and programme costs, and the Training & Education team and programme costs. Depreciation and Amortisation

Depreciation is the annual charge in respect of Scottish Rugby Union Limited’s fixed assets, primarily the redevelopment costs of BT Murrayfield Stadium. Amortisation is the annual charge in respect of Scottish Rugby Union Limited’s intangible fixed assets.

Front cover Scotland’s Helen Nelson v France , October 2020 Registered Office Auditors Back cover BT Murrayfield Stadium PricewaterhouseCoopers LLP Hannah Smith, Tennent’s Premiership Final between Edinburgh, EH12 5PJ Level 4, Atria One, Watsonians and Hillhead Jordanhill, Myreside December 2019 144 Morrison Street, Produced by Edinburgh, EH3 8EX Scottish Rugby

Editor Bankers Solicitors Stuart MacLennan Bank of Scotland Pinsent Masons Designer Head Office Princes Exchange Laura Chessar The Mound, 1 Earl Grey Street, Edinburgh, EH1 1YZ Edinburgh, EH3 9AQ Photography SNS Group

38 LEADERSHIP . ENGAGEMENT . ACHIEVEMENT . ENJOYMENT . RESPECT Scottish Rugby | Annual Report 2019-20 39 CT RESPE .

YMENT ENJO .

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