Rugby AU reports provisional $9.4 million deficit at AGM amid future uncertainty
Yesterday at 6:17 PM
by Beth Newman
Rugby Australia chairman Paul McLean says the growing uncertainty crated by the coronavirus pandemic led to the organisation being unable to publish their annual report and full financial results on Monday.
Rugby AU reported a provisional $9.4 million deficit at its annual general meeting on Monday but was not able to publish its annual report with no completed and signed audit of its financial results.
The board and its members met via video conference on Monday for the yearly update on the state of the business.
With the audit of its 2019 financial records unable to be completed amid the coronavirus pandemic gripping the world, the organisation could not publish its annual report and financial results but was able to update members on its financial position.
Auditing can be halted in the instance of an event that might have a significant financial impact between the end of the financial year, December 31 in rugby's case, and the reporting date.
Current chairman Paul McLean, speaking to media via video conference on Monday afternoon, said the board had sought expert advice on safe harbour in the recent unpreceded circumstances.
Safe harbour allows directors of financially distressed businesses the ability to turn their businesses around without taking on any personal liability.
"Those provisions are helpful and also the government’s most recent statements about directors relating to insolvency as well, so we’ve taken all of that on board and those steps have been in place for I suspect three weeks now.
McLean said the uncertainty about the next year for Rugby Australia meant they could not sign and complete their usual financial audit.
"One of stipulations about the companies and the directors are required to assess is the cash flow and reserves of the company and whether they are sufficient to meet their forecast obligations for the 12 months from now, so whilst the accounts have been done they are unaudited and unsigned and they were presented today to the AGM so people are aware of what 2019 looked like," he said.
"From a directors perspective – and this applies to every business, not just rugby – directors need to be comfortable that they, the position in terms of their access to cash and reserves, they need to know what that looks like for the next 12 months before they’ll sign off on those, so it’s not unusual for accounts to be finalised and not signed for a period of months after.
"The first deadline is the 30th April to sign those, but in this current environment we’ve been advised it’s not one month, it might be two or three.
"Once the board and directors have a clearer picture that provides certainty we will be a position to finalise this conclusion and then finalise the statements and allow KPMG to complete the audit."
McLean said there was no question at the end of the last financial year over Rugby Australia's solvency.
"No, no they weren’t (solvency concerns). So life has changed a bit since then, as you know," he said.
This year's turnaround was stark, from a $5.4 million profit in 2018, but Rugby Australia was expecting to record a loss in 2019 with the World Cup reducing the number of home Tests in the international season.
In a statement released on Monday, Rugby Australia said that its "revenue targets" were met in 2019 while its spending increased in a number of areas.
Community grants, player payments and the cost of settling the Israel Folau court matter all contributed to $6.6 million of extra spending in 2019, and a $9.4 million deficit.
The financial, and practical, pain could continue into 2020 as the sport heads into an unprecedented period of uncertainty due to the coronavirus pandemic.
It is currently unclear when sport will be able to be resumed after the federal Government's announcement of further restrictions on public gatherings and outdoor activities.
Currently, Australians can not have public gatherings of more than two people unless they live with those people, effectively making any live sport impossible to be held for the immediate future.
The cancellation of Super Rugby in its familiar form looks all but certain while the July Test series around the Southern Hemisphere are under a cloud in the current climate.
Monday's news comes after the Players' Association expressed its frustration at the governing for "locking" them out of discussions about pay cuts and plans for the sport's future.
McLean said there would be even "harder decisions" to make as the implications of the health crisis on rugby's financial state become clearer.
“These are unprecedented and extremely uncertain times for our world, not only our sport with the global pandemic of COVID-19," he said in a statement.
“To put it simply, there is no way of knowing what damage this crisis will have on our game, or for how long it will continue to impact us.
“It has forced us to make some extremely difficult decisions, and there will be even harder decisions to come as we continue to navigate the implications of the virus on the game’s finances.
“It was important for us today to review the year and reflect on our learnings from 2019, however the uncertainty that we are facing regarding our immediate future naturally led the discussion at the meeting.”
BOARD MEMBERS
Rugby Australia also confirmed the inclusion of three new board members at he meeting, officially ending the tenure of former chairman Cameron Clyne.
Clyne, Brett Robinson and Ann Sherry were all replaced in Monday's meeting, with two elected directors and one appointment.
Supercars chairman Peter Wiggs was elected to the board while Virgin Blue founder Brett Godfrey and former Wallaby Daniel Herbert were officially appointed as directors.
All three of those additions was flagged earlier this month and one of Wiggs or Godfrey is expected to take over from McLean as permanent chairman in the coming months.
PARTICIPATION
Rugby Australia's meeting was also used to point out some positive moments from 2019, especially across participation.
The national organisation recorded growth in XVs participation, including a third straight year of double digit growth in female XVs.
Five new schools-based competitions were launched that involved almost 500 boys from non-traditional rugby schools.
The Dream Big Time tour to identify and develop Indigenous talent was run for the first time, leading to the creation of the First Nations squads that have played in a number of Sevens tournaments in 2019 and the start of 2020.
The Classic Wallabies also led the #GoldBlooded tour, taking the Webb Ellis trophy around the country in the lead-up to the Rugby World Cup in Japan last year.
https://www.rugby.com.au/news/2020/0...meeting-update
