The Rugby Club Foundation Limited Financial Report 2020
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THE RUGBY CLUB FOUNDATION LIMITED [A Company Limited by Guarantee] ABN 80 000 050 279 FINANCIAL REPORT for the year ended 30 June 2020 Level 8, 65 York Street, Sydney NSW 2000 Telephone [02] 8014 5831 Web: www.rugbyclub.com.au Email: [email protected] THE RUGBY CLUB FOUNDATION LIMITED [A Company Limited by Guarantee] ABN 80 000 050 279 FINANCIAL REPORT for the year ended 30 June 2020 CONTENTS Page Financial Report Directors' report 2-5 Auditor's independence declaration 6 Independent audit report to the members 7-8 Financial Statements Statement of profit/(loss) and other comprehensive income 9 Statement of changes in equity 9 Statement of financial position 10 Statement of cash flows 11 Notes to the Financial Statements Note 1 Summary of significant accounting policies 12-14 Note 2 Cash and cash equivalents 15 Note 3 Trade and other receivables 15 Note 4 Other assets 15 Note 5 Plant and equipment 15 Note 6 Intangible assets 15 Note 7 Financial assets 16 Note 8 Trade and other payables 16 Note 9 Provisions 16 Note 10 Other liabilities 16 Note 11 Reserves 16 Note 12 Investment income 16 Note 13 Other income 17 Note 14 Grants awarded 17-18 Note 15 Sir Leslie Herron scholarships awarded 18 [See supplementary information on page 23] Note 16 Profit for the year 18 Note 17 Directors' benefits 18 Note 18 Commitments 19 Note 19 Related party transactions 19 Note 20 Key management personnel compensation 19 Note 21 First year adoption of mandatory accounting standard 19 Note 22 Subsequent events 20 Note 23 Covid-19 impact 20 Directors’ declaration 21 Disclaimer 22 Supplementary Information Provision – Sir Leslie Herron scholarship 23 [Formally the Rugby development fund] Page 1 THE RUGBY CLUB FOUNDATION LIMITED [A Company Limited by Guarantee] ABN 80 000 050 279 DIRECTORS' REPORT Your Directors present their report of The Rugby Club Foundation Limited for the year ended 30 June 2020. Directors The names of the directors who held office at any time during the year ended 30 June 2020 and changes in respect of those directors since the year ended 30 June 2020 are as follows: Angus Bruxner President/Chairperson – Elected May-2013; Vice-President Apr-2003 to May-2013; Director since Mar-1998; Member since Mar-1996; Rugby qualified Solicitor Eligible Directors’ meetings 7 – Attended 7 Peter Whittington Vice-President/Deputy Chairperson – Elected May-2013; Treasurer Jun-2012 to May-2013; Director since Feb-2009; Member since Dec-2006; Rugby qualified Lead Partner Eligible Directors’ meetings 7 – Attended 7 Stirling Mortlock AM Treasurer – Elected Feb-2018 Director since Sep-2015; Member since Apr-2015 Rugby qualified Wealth Director Eligible Directors’ meetings 7 – Attended 4 Leave of absence granted – 3 meetings Robert Bradley AM Director – Appointed Sep-2018; Member since May-2002 Chief Executive Officer Eligible Directors’ meetings 7 – Attended 7 Stuart Dickinson Director – Elected Sep-2015; Member since Oct-2008 Rugby qualified Managing Director Eligible Directors’ meetings 7 – Attended 5 Leave of absence granted – 2 meetings Owen Finegan Director – Appointed Oct-2017; Member since Nov-1999 Rugby qualified Chief Executive Officer Eligible Directors’ meetings 7 – Attended 7 Adam Freier Director – Elected Sep-2015; Member since Oct-2003 Rugby qualified General Manager of Marketing and Digital Eligible Directors’ meetings 7 – Attended 7 James Maxwell Director – Elected Sep-2015; Member since Oct-1988 Rugby qualified Solicitor Eligible Directors’ meetings 7 – Attended 6 Leave of absence granted – 1 meeting Paula Ward Director – Appointed Mar-2017; Director May-2013 to Sep-2015; Member since Jul-2012 General Manager, Governance & Business Eligible Directors’ meetings 7 – Attended 7 The Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. Page 2 THE RUGBY CLUB FOUNDATION LIMITED [A Company Limited by Guarantee] ABN 80 000 050 279 DIRECTORS' REPORT [CONTINUED] Objectives Short term: To establish and implement the structures, procedures, protocols and relationships which are required to achieve the below mentioned primary (and long term) objective of The Rugby Club Foundation Limited (Foundation) and to assist generally in the promotion and propagation of the game of Rugby Union football. Long term: To maintain and hopefully improve the Foundation’s financial position so as to generate sufficient funds annually in order to be able to successfully and indefinitely continue to fund its primary objective which is “to encourage the sport of Rugby in the State of New South Wales and elsewhere” (Primary Object) and, in furtherance of the Primary Object, to do anything incidental to maintaining a strong and supportive Member base, which is regarded by the Board of Directors (Board) as essential to the optimum successful achievement of the Primary Object. Strategy for achieving the objectives The principal strategies which the Foundation is implementing include the following: . Investing and managing the funds received from the sale of the Foundation’s real estate in a manner which preserves the real value of capital, maximises the investment return on capital for an agreed level of risk, and ensures a reasonable level of investment return stability, in order to fund the pursuit of the Foundation’s objectives over the short and long terms. Maximising advantage from marketing and promotional opportunities attaching to the Foundation’s heritage and brand. Organising activities and events for the Members of the Foundation and supporters of Rugby generally, in pursuit of the Primary Object. Applying those strategies to pursue the Foundation’s Primary Object, and its strategic vision of “Sharing the Spirit of the Game”. Principal activities The principal activity of the Foundation (a not-for-profit entity) during the course of the financial year ended 30 June 2020 was to actively pursue the Primary Object through the support and promotion of grassroots Rugby in NSW, including grade, suburban, country, women’s and junior Rugby and Rugby referees. There were no significant changes in the nature of these activities during the relevant period. How these activities assisted in achieving the objectives The activities pursued by the Foundation assist in generating revenue which is then able to be (and was) applied in furtherance of the Primary Object of the Foundation and the promotion and propagation of the game of Rugby Union football. Dividends The Foundation being a public company limited by guarantee, does not have a capital divided into shares, and is prevented by the Corporations Act 2001 and by its Constitution from paying a dividend to members. Operating result The net operating profit before income tax for the year was $709,171 [2019: $206,451], which was derived after financial grants totalling $355,765 [2019: $313,878] were awarded to recipients in respect of grassroots rugby programs, and after charging $6,560 in depreciation and amortisation [2019: $6,560] and interest expense of $4 [2019: $12]. There was no impairment of assets for either year [2020 or 2019]. Income tax expense for the year was $0 [2019: $0]. See Note 1[c]: Taxation. Other comprehensive income reported the fair value gain/(loss) on financial assets held at fair value [these are the investments managed by Mercer investments (Australia) Limited (Mercer)] amounting to a revaluation loss of ($1,061,123) [2019: +$707,948] with the fair value gain/(loss) held in the financial assets reserve as part of equity. Significant events and future developments At a General Meeting of The Rugby Club Foundation Limited held on 22 October 2019 the Members passed the following Ordinary Resolutions: “That the Members hereby approve: (a) the surrender (to the Independent Liquor and Gaming Authority) of the club licence held by the Foundation in respect of its former premises located at Rugby Union House, Rugby Place off 31a Pitt Street, Sydney (Former Premises); and Page 3 THE RUGBY CLUB FOUNDATION LIMITED [A Company Limited by Guarantee] ABN 80 000 050 279 DIRECTORS' REPORT [CONTINUED] Significant events and future developments [continued] (b) for the purpose of section 21(4) of the Gaming Machines Act 2001 (NSW), the sale of the eleven (11) gaming machine entitlements attached to the club licence in respect of the Former Premises”. The Members also passed the following Special Resolution at the General Meeting held on 22 October 2019: “That the constitution of The Rugby Club Foundation Limited in the form presented to the meeting (and having previously been made available to Members) be adopted as the Constitution of The Rugby Club Foundation Limited in substitution for and to the exclusion of the existing Constitution”. By passing each of these resolutions, the Members took an appropriate step following the transition of the Foundation from ‘registered club’ status to ‘not-for-profit foundation’ status at the General Meeting of Rugby Club Limited held on 14 June 2017. Having conducted a comprehensive request for proposal process the Foundation selected and appointed Mercer as the Foundation’s investment manager in December 2017. The Foundation and Mercer formulated an Investment Policy Statement and the Foundation’s funds have been invested by Mercer in accordance with that statement. Under both the Foundation’s Constitution and relevant tax legislation, the Board is under a legal obligation to use all reasonable endeavours to ensure that the Foundation applies its income and its assets solely in furtherance of the Primary Object. The purpose of the Foundation’s grant-making policy is to set out the principles that should guide the annual grant-making commitments approved by the Board and notified to the grantees, in furtherance of the Primary Object. One of those guiding principles is that the Foundation should always endeavour to at least maintain its corpus in real terms, so that the net income derived from it each financial year is available to be applied in perpetuity in furtherance of the Prime Object.