SARU Financial Results Announced
The South African Rugby Union (SARU) made a small operating profit – as per forecast – in a year of depressed revenues, the Union announced on Wednesday.
SARU showed an operating profit of R1.4m for the 2010 financial year, although exceptional items meant that the Group incurred an operating loss before taxation of R5.4m. This was mainly as a result of SARU being required to pay R4.9m as surety to a bank in support of a loan to a former associate company, Eagles Rugby (Pty) Ltd, which was put into liquidation in 2010.
“We forecast a modest operating profit for 2010 and were able to achieve that result before exceptional items,” said Basil Haddad, SARU’s chief financial officer. “Overall SARU’s position is reasonably healthy and the prospects for 2011 are brighter. We expect to make a reasonable profit this year.”
Haddad said that the return to a non-British & Irish Lions season (in comparison to 2009), and the fact that the broadcast deal was in its final year of a five-year period (and is not index linked while costs continue to rise) had meant SARU had prepared for a tough year.
In addition, SARU’s dollar-based revenues were affected by the stronger rand while exceptional items ultimately led to the pre-tax loss.
Haddad said SARU inherited the liability in relation to Eagles Rugby (Pty) Ltd several years ago when the Union agreed to buy shareholdings from SAIL in the three Southern and Eastern Cape unions.
However Haddad said SARU’s overall position remained robust: “A new broadcasting deal and a number of new sponsorship agreements start in 2011 – in addition to grants of £2m from the IRB – and it’s expected that revenues will be significantly higher in 2011,” said Haddad.
“We should achieve a reasonable profit and that’s despite the additional costs incurred in a Rugby World Cup year and an increase in the allocation of broadcasting rights revenues to the Provincial Unions and Super Rugby franchises.”
SARU’s full financial statements will be presented to the Annual General Meeting in Cape Town on April 1.
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