The WRU reduced its term bank debt to a historic low, invested more than ever before back into the game and extended its property and land portfolio around the Millennium Stadium.
The report shows how the foundation of the financial achievements during the last financial period was laid when the WRU Group recorded a turnover of £58.5m over the 13-month financial period to 30 June, 2010 which was 18% up on the previous year.
This was helped by the WRU Group hosting eight home matches featuring the National Squad which attracted more than 530,000 spectators.
The highlights for the financial period in focus included:
* The record £58.5m turnover
* A £20.0m distribution back into the game
* The opening of the WRU National Centre of Excellence
* The acquisition of a key building in Cardiff city centre
* A revamp of the SWALEC Cup, Plate and Bowl, and
* A significant reduction of the Group’s bank debt
Total financial allocations to affiliates which include all the clubs of Welsh rugby was £20.0m which again registered an 18% year on year increase.
Within that amount, a total of £14.2m was distributed to the four Regions and £1.3m to the semi professional Premiership Division clubs.
Another £4.5m was allocated to the community game including the one-off investment of £1.0m through the in the Participation Points Scheme which delivers an array of rugby equipment to help clubs achieve their aims for development and sustainability.
The Annual Report 2010 shows how the WRU Group registered a profit before interest, tax, depreciation and allocations of £27.6m before tax for PE10 compared to £24.5m for the previous financial period.
The Group Chief Executive, Roger Lewis, said: “I am delighted at the success we have again achieved against the backdrop of an economic environment which remains challenging.
“We have been able to grow the business in terms of income and this has allowed us to make radical and forward looking decisions which will benefit the future of the game in Wales.
“Although we will never become complacent there are now clear and measurable signs that Welsh rugby is working efficiently within a clear operational and financial plan.
“All our efforts are outlined and signposted within a five-year rolling strategic and financial plan which we measure our achievements against and review regularly.
“The financial results we have delivered, particularly over the past four years, show that we operate to high corporate standards which help deliver success and sustainability for our national sport.
“I am extremely mindful that our three core priorities are elite rugby, the community game and the Millennium Stadium so we have to devise polices and strategies which sustain and develop them all.
“We have to have a strong community game to deliver the supporters and players who fill the Millennium Stadium to follow our national teams.
“The range of successful initiatives and projects outlined in our Annual Report all align to our core aims which are to do the best we can for Welsh rugby.
“There are exciting and challenging times ahead, but I am confident we have the right people and the correct strategies and systems in place to look forward with confidence.
“I want to thank all the volunteers and supporters who are so vital to our achievements and I am again grateful for the continued hard work of my executive colleagues, the WRU staff and Millennium Stadium staff and, of course, our players, coaches, the Regions and our clubs.
“I want to offer a particular thanks to the Group Finance Director, Steve Phillips, for the excellent stewardship he delivers for the financial status of Welsh Rugby.”
The cashflows generated from the Group’s operations in the period delivered a reduction in net bank debt to £26.7m.
The WRU Group utilised these enhanced cashflows to terminate the existing derivative instruments at a one-off cost of £5.0m which, tor the Group to potentially become free of the debt as early as 2021. The WRU Group also re-financed its facilities with Barclays Bank plc to reflect the improved position.
The Group adopted FRS26 during the period and this change in accounting policy dictated that the cost of terminating the derivative instruments be spread across prior periods resulting in a loss before tax of £0.8m in PE10 and a loss before tax of £2.5m for YE09. Had the Group not adopted FRS26, the loss before tax for PE10 would have been £4.0m and the profit before tax for YE09 would have been £1.7m. This loss in PE10 arose from the tactical decision to terminate the financial instruments.
Another significant strategic move saw the WRU Group acquire the lease of the Cardiff Arms (formerly the Yates building) in Westgate Street which added to the Group’s property and land portfolio which borders the stadium and the city centre. Including the Cardiff Arms, the Group also invested £2.3m on capital projects covering the WRU Centre of Excellence and various stadium improvements.
Key broadcast contracts with BBC Network, BBC Wales, S4C were also agreed during the period which are seen as a signpost for continued revenue sustainability within the Group.
Significant new commercial partnerships were announced with or renegotiated with the new jersey sponsor Admiral plus the Principality Building Society, Seat, Cadbury’s and Wolfblass.
A historic new era of Welsh rugby was also signalled within the period when the WRU and the Regions signed a new Participation Agreement which will reward the four teams with £30.0m over the next five years and outline a “roadmap” which delivers a range of rugby protocols.
In the international game a new calendar of home international fixtures and Wales tours which offers fans significant rugby diary dates to plan for over the next nine years.
Welsh rugby’s international pathway for future success was also boosted with the opening of the new WRU National Centre of Excellence at the Vale Resort near Hensol outside Cardiff.
The WRU National Academy, which also boasts an arm in North Wales, was launched during the period to become the new training and development home of all international pathway teams including Warren Gatland’s senior squad.
With the Cardiff Blues bringing home the Amlin Challenge Cup, the Ospreys winning the Magners League and the senior squad looking forward to Rugby World Cup 2011 the WRU is now set for an intensive period of interest in the national sport of Wales.
At community level the SWALEC Cup, Plate and Bowl competitions were reshaped to add a new competitive edge to the tournaments while the clubs formerly represented by the Welsh District Rugby Union were absorbed into the WRU Group.
The Group’s alignment with the Welsh Assembly Government continued to prosper with one significant development securing Parc Eiras in Colwyn Bay as the official home of representative rugby and the RGC 1404 team in North Wales.
The Millennium Stadium itself witnessed an enhanced maintenance programme, attracted record numbers to music concerts and was a significant contributor to the Group winning a British Legion Friends of the Forces national award.
The WRU Group Finance Director, Steve Phillips, said: “Our strong financial performance during the period aligned to robust operational systems and structures helped us achieve significant progress within our fiscal strategy.
“The successful refinancing with Barclays Bank plc is clear evidence of the confidence that financial institutions now have in Welsh rugby and I am particularly pleased that we have rid ourselves of the old derivative instruments which have burdened us for some time and were becoming increasingly problematic.
“What our new bank deal delivers is the ability for us to take even more control of our own destiny through robust and confident corporate decision making within the parameters of our future financial plans against a known rugby calendar some for many years ahead
“These are undoubtedly challenging economic times but Welsh rugby is in a strong position to not only weather any difficulties but to plan for development in the years ahead.
“During the period we changed our financial year end from 31 May to 30 June to reflect the operational structure of Welsh rugby and more rugby now played in June.”
The WRU Annual Report 2010 has been circulated to all its member clubs and affiliated organisations and will be presented at the Annual General Meeting of the Group in October.
