Ulster Rugby Annual Report

Total expenditure increased by almost £1.8m to £12.0m for the 14 month period when compared to the year to April 2018. The 12 months to April 2019 saw total expenditure increase by £0.3m to £10.5m. Looking at the direct comparison of expenditure for the year to April 2019 and the year to April 2018 shows that administration expenses, stadium costs and rugby development costs all increased by approximately £300k each. This was offset by £150k reduction in match costs. May and June required £1.5m additional costs with £0.9m attributable to professional rugby expenditure, £0.3m additional administration expenditure and £150k rugby development costs. These additional costs related to normal monthly running costs. Administrative expenses amounted to £1.8m for the 14 month period, showing an increase of £0.4m over the admin expenses for the year to April 2018. Looking at the equivalent 12 month periods, admin expenses were £300k higher in 18/19. Administrative expenses include costs of running the domestic game, finance, HR, IT, sales, marketing and communications as well as electricity, phones and computer maintenance. Other significant expenditure lines include heat and light, telephone costs, legal costs and IT maintenance. The largest expenditure item was professional rugby expenses of £5.9m, an increase of £0.8m. Professional rugby expenses include player costs, team management costs and medical costs. Despite the increase on the previous year the costs were held flat when comparing the equivalent 12 month periods to the end of April. The costs for professional rugby would have been lower had the senior team not progressed to playoff rugby in both competitions which resulted in higher bonus costs than budgeted. Player salary costs were managed through the season by a number of early retirements which enabled exposure of a number of the Academy players to the senior side. General rugby expenses amounted to almost £0.5m for the 14 month period, with the major expense item being net depreciation. Referees expenses, hospitality costs and other rugby costs including some severance costs, are also included in this category. The increase in the period relates to the additional two months and the severance costs. Domestic match expenses include the costs of running senior and junior club competitions as well as youth and schools’ rugby competitions. These costs amounted to £115k which was similar to 2017/18. Professional game match expenses reduced by £57k to £1.05m for the 14 months. The cost of home match expenses decreased by £14k despite one additional home match in the 18/19 period when compared to the previous year. This was due to a review of stewarding resources required. Away match costs also decreased by £43k, much of which was due to better cost control and use of scheduled flights where possible. Kingspan stadium costs increased by almost £0.3m during the 14 month period. This was partly due to the additional two months but also rates for 2018/19. The Branch benefitted from a rates review which

culminated in a rates rebate during 2017/18 which effectively negated the rates charge for the year. Other development expenses, which include rugby development officer costs and Academy development costs amounted to £1.9m for the 14 month period. This was £0.4m higher than other development expenditure in 2017/18. Over £1.25m was invested in the domestic rugby with almost half of this due to Rugby Net assets reduced to -£0.2m at the end June 2019. This position and likely outcome had been highlighted to the IRFU when considering the change of accounting period to the end of June. The position would have been a net assets position of £0.8m had the period end not changed from April. However, the alignment of the season, sponsorship contracts and player contracts was considered to improve transparency. The IRFU has provided the Branch with a strong letter of support confirming that financial support will be ongoing from the Union for the forthcoming year. Cash remains important for the Branch. Cash balances ended the period at £1.6m. This is an increase of £0.9m from last year end and is the result of £0.9m being due to the IRFU for player recharges. This had been settled by year end last year as invoicing had been at an earlier point during 2017/18. Ulster Branch repaid its outstanding debt to the IRFU at the end of 2015/16 for the loan on the corporate stand. This leaves the Branch with no loan creditors on its balance sheet. OUTLOOK The Professional Game continues to contribute around 80% of the Branch’s income. With a better season on the pitch, season tickets for 2019/20 are marginally ahead of 2018/19. Season ticket sales will undoubtedly be helped by qualification for Champions Cup rugby again next season. Terrace season tickets traditionally sell later in the cycle towards the end of the summer so I’m hopeful of a late pickup. The Branch had three Chief Executives during the year in Shane Logan, David Dobbin as an interim appointment and finally Jonny Petrie from the middle of December. The senior staff and committees continued with the cost reduction production programmes started in the previous year. This programme of work is set to continue into 2019/20 alongside the considerable work undertaken by the various improvement theme working parties. The work of these working groups has now been picked up by the Chief Executive and the Branch staff and forms a framework for the development of the Branch strategic work over the next couple of years. These improvement themes include culture and values, stakeholder engagement, the club game and participation, the professional game, talent and the Academy, and the business model. Paul Terrington must be congratulated for devising and driving this body of work which will stand the Branch in good stead in the coming years. Development Officers. BALANCE SHEET

36

IRFU ULSTER BRANCH ANNUAL REPORT 2018/19