London Irish Scottish Richmond Limited - Period Ending 2021-06-30

London Irish Scottish Richmond Limited

Contents

London Irish Scottish Richmond Limited

Company Information

London Irish Scottish Richmond Limited

Strategic Report for the Year Ended 30 June 2021

The directors present their strategic report for the year ended 30 June 2021.

Strategic review of the business

The Board and Owners remain fully committed to supporting the club with its aim to deliver success in the Gallagher Premiership and have invested heavily in the playing squad and in our new home at Brentford to achieve this. This move brings improved commercial terms, and a collaborative relationship has been established with the team at Brentford.

The continued impact of the COVID-19 pandemic has placed a high degree of uncertainty on the short-term revenue streams of the club. However, the club continues to explore investment opportunities to strengthen the clubs’ long-term future.

Trading review

With the year being impacted by Covid restrictions, including the majority of our matches being played behind closed doors, and with limited permitted attendances for only 3 home matches, this has affected our revenues (£8.7m) which decreased 4.4% on the previous year (£9.1m).

Cost of sales are up 18%, due to higher matchday costs than compared with the previous year, which are mainly attributed to the move from Reading to Brentford and having to play our remaining 2019/20 season fixtures in the 2020/21 year at The Stoop under an agreement with Harlequins.

Administration costs are down 3.7% as part of a programme to rationalise off field costs during a period where we were unable to generate matchday revenues through attendances.

Within the year we recorded fair value movement gains of £3.8m on the basis of investments held by the business which were externally revalued, as further detailed within notes to the financial statements.

The operating loss for the year at £0.66m has decreased £3.65m as compared with 2020. Excluding the fair value movement, like for like, the operating loss for the year increased by £0.27 million to £4.49m (2020 £4.22m).

The loss before tax, which includes £1.3m Interest (2020 £1.1m) decreased to £1.97m (2020 £5.66m). Like for like, excluding fair value movements, the loss would have been £5.79m an increase of 8.5% in a predominantly pandemic affected year.

London Irish Scottish Richmond Limited

Strategic Report for the Year Ended 30 June 2021

Key Performance Indicators

The company's key financial and other performance indicators during the year were as follows:

* The company’s KPIs in both years were impacted by the COVID-19 pandemic.

The 2020/21 season was predominately affected by the pandemic, which impacted our debtor days both in terms of businesses being challenged and the logistics of remote working practices on payments. Additionally the debtors ledger reflects balances held over for items not able to be delivered within the season such as hospitality.

The 2019/20 season was postponed after only 11 out of 16 home games being played at the Madejski Stadium with the re-scheduled 5 fixtures being played behind closed doors.

2020/21 had all but 3 fixtures played behind closed doors and the 3 attended matches were subject to restrictions on attendances, which skews the average attendance for 2020/21.

London Irish Scottish Richmond Limited

Strategic Report for the Year Ended 30 June 2021

Post balance sheet events

The continued uncertainty and impact of the COVID-19 pandemic beyond the government’s initial road map to June 2021, continues for the club, as it has for all other businesses. However, the club has benefitted from an additional long-term loan that has been made available by central government through HM Treasury and the DCMS (Department for Culture Media & Sport) and the Coronavirus Job Retention Scheme that was extended until 30 September 2021. The Government has recently announced the removal of all remaining legal COVID-19 related restrictions

The club also had a revaluation of it’s training ground at Hazelwood in October 2021, which has increased the value of the site by c. £3m. This is not reflected in the year end balance sheet as at June 2021.

There have been no other material events since the balance sheet date.

Principal risks and uncertainties

The Directors consider the following risks and uncertainties to be key to the future success of the company:

Ability to attract and retain players and coaching staff

We remain confident in our ability to recruit and develop players. The Hazelwood training facility is a world class working environment, as indeed is our new home playing ground at Brentford, and we believe we have a coaching team in place with the pedigree to be able to attract top quality players. Player wages requires a constant focus on the market, however the opportunities we can offer players at London Irish extend beyond just salaries.

London Irish has, historically, and will always be a home-from-home for Irish Exiles, for players and supporters alike. It has, in more recent times, become a home for all Exiles across the world, whatever their nationality, race or age.

Indeed, the Club currently boasts 14 nationalities in the squad, the most diverse in the Gallagher Premiership.

Off the pitch, a lot of work has been undertaken around brand awareness post our move back to London, with the Exile Nation campaign at the heart of our work, aiming to help attract new supporters to the Club, with the leverage of following the footsteps of some of the most exciting overseas players the Club has ever had in its roster.

Regulatory compliance

The club continues to invest in the playing squad subject to the limits of the Premiership Rugby Salary Cap, which the club fully complies with as confirmed by external audit conducted on behalf of Premiership Rugby. The club also complies with all rugby competition rules.

Playing performance

The 2020/21 campaign concluded with London Irish in 9th spot, despite Declan Kidney’s side occupying a top 8 spot for much of the season. Performances have continued to improve since then in what is a hugely competitive season, with a top 4 finish within touching distance.

London Irish Scottish Richmond Limited

Strategic Report for the Year Ended 30 June 2021

Liquidity risk

The Directors are responsible for the management of liquidity risk and ensuring that the club maintains access to sufficient working capital to meet financial obligations as they fall due. Working capital requirements are managed by balancing operating cash flows with funding, as required, from its parent undertaking through London Irish Consortium, and the company has made use of available government support, including the Coronavirus Job Retention Scheme. Cash flow forecasts are regularly prepared and reviewed by the Board to ensure the group has access to sufficient working capital. The company’s cash flow has been well managed such that the impact on the company’s operations has been mitigated as far as possible without the need for reliance upon further shareholder investment during this period.

COVID-19 Risk

The ongoing COVID-19 pandemic continues to generate significant level of uncertainty in the economy. The directors regularly assess the likely effects on company operations going forward and take steps to mitigate any exposure as a result.

Fan engagement

Despite the vast majority of the season being played behind-closed-doors, the Clubs first year at their new home produced some of the most exciting rugby matches in the league, including several comeback victories and draws. With supporters able to watch home games using the BT match pass service, they were able to still feel as though they were experiencing the stadium and anticipation and excitement grew for them to finally be able to return to the stands.

Although mostly played behind-closed-doors, there were 3 opportunities for supporters to experience the Brentford Community Stadium in the 2020/21 season, which were very well received. This also provided opportunity for test events at the stadium with limited capacity which was valuable to ensure an excellent match day experience ahead of full return of crowds in 2021/22.

Social media figures continue to rise. In line with the return to London, the Club’s work around increased content output and brand awareness and the Club’s tilt at a top 4 place heading into the business end of the 2021/22 season.

The launch of a new official London Irish app has been a game changer in bringing supporters closer to the club than ever before. As well as a ticket wallet function, the app provides news, content, and videos at supporters’ fingertips - the fastest way to engage in London Irish content on the move.

In line with the increase in output across digital and social, the Club launched its first ever TikTok platform in January 2022, providing another resource for supporters, focusing in particular on the younger demographic, the fans of the future.

PRL/RFU income

The ongoing receipt of continued and increasing levels of central funding from Premiership Rugby and the RFU depend on the ability of those organisations to maintain and further develop central revenue opportunities and related income streams for all stakeholders.

London Irish Scottish Richmond Limited

Strategic Report for the Year Ended 30 June 2021

Sponsorship

During the 2021/22 season we had 14 Elite Partners feature on the jersey, the most ever, which included several new additions to the commercial portfolio. Three of these partners are committed to multiyear agreements, with discussions already begun with other partners around renewal at the end of this season. After a successful first year, we will be extending our partnership with Gaucho to include its sister properties, M Restaurants, to give us a larger Official Restaurant Partner. Other new category partners have included SkyEx (Taxi Partner) and Equals Money (Executive Club Sponsor). We announced Citygate as Official Vehicle Partner of London Irish & London Irish Foundation under an agreement which runs until the end of the 2022/23 season. We have also welcomed brands such as The Turmeric Co and Lucozade Sport as Official Suppliers to the club. We would like to extend our thanks to our commercial partners and we remain committed to creating value for them as we continue to develop our partnerships.

We also continue to engage sponsors and partners for the club where we believe there is additional synergy and mutual benefit.

Player Development

The 2020/21 season for the London Irish Academy and the Developing Player Programme (DPP) also had major disruption due to COVID. The players within the Academy did not have the exposure they would get in all capacities including, coaching, training sessions, fixtures, and strength & conditioning. The DPP was completely shut down, however we made use of online workshops for players, parents and coaches within our community. Our U16 & U18 Academy had a small amount of activity, but again due to COVID the restrictions were very limiting. The U18 Academy did manage to play 4 fixtures at the end of the season, which certainly helped with important decisions on individuals. The Senior Academy were also impacted and, although able to train, game time was restricted due to National League & Championship clubs League games being on hold.

Social Impact

The club remains committed to working with the wider community in Berkshire, Surrey, Hampshire, and Middlesex. With the London Irish Foundation, which is a registered charity, this operates under the direction of an independent Board of Trustees and builds upon the previous success of the London Irish Community Department in using the power of sport to make a lasting, positive impact on the lives of individuals, and build a meaningful and sustainable legacy for sport and education across the communities we serve.

London Irish Scottish Richmond Limited

Strategic Report for the Year Ended 30 June 2021

Outlook

Although the pandemic meant that crowds were heavily restricted during the 2020/21 season, there were positive signs that the stadium move would result in increased attendances.

Tickets for the 3 fixtures with restricted crowds permitted were in high demand, selling out in advance and attracting new fans from the local area.

The 2020/21 season increased appetite for live sport and London Irish have certainly benefited from that, in line with a return to London.

Since the stadium has fully opened up to supporters’ feedback has been overwhelmingly positive from supporters, opposing teams, journalists, and pundits alike. The Brentford Community Stadium is gaining a reputation for the best rugby stadium in the league, an opinion already shared by many.

At the midway point in the campaign, an attendance of 11,000+ against Exeter Chiefs was another positive step in the right direction, with crowds continuing to rise, comfortably doubling those at the Madejski Stadium in our last season in Reading.

Approved by the Board on 29 March 2022 and signed on its behalf by:

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A Alli
Company secretary

London Irish Scottish Richmond Limited

Directors' Report for the Year Ended 30 June 2021

The directors present their report and the financial statements for the year ended 30 June 2021.

Results and dividends

The profit and loss account is set out on page 13 and shows the loss for the year.

The directors do not recommend the payment of a dividend (2020- £nil).

Principal activity

The principal activity of the company is that of a professional rugby club.

Director of the company

The directors who held office during the year were as follows:

M L Bensted

A Robson

M R Crossan

B W E Facer (resigned 6 February 2021)

Financial instruments

The group currently utilises a mixture of shareholder loan funds and external long-term debt to satisfy the working capital requirements of the group.

Liquidity risk (as reported within the Strategic Report) is managed by the regular monitoring of operational cash flows and access to a combination of shareholder funds and external long-term debt.

Due to the nature of the financing of the company's operations going forward, there is no major exposure to price or liquidity risk.

There is also no major exposure to credit and cash flow risks as the majority of sales are cash based and amounts outstanding from trade debtors are monitored regularly for both time and credit limits.

Disclosure of information in the strategic report

The company has chosen to in accordance with s.414 C (11) Companies Act 2006 to set out in the company's strategic report information required by Schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 to be contained in the directors' report. It has done so in respect of future developments and financial risk, management and exposure and future developments.

Disclosure of information to the auditor

London Irish Scottish Richmond Limited

Directors' Report for the Year Ended 30 June 2021

Going concern

The company is reliant upon the continued support of London Irish Consortium (2013) Limited through its ultimate controlling party Powerday plc.

The Gallagher Premiership matches for the season were played predominately behind closed doors due to the COVID-19 pandemic , with just 3 home matches being attended and subject to a restricted attendance. For season 2021/22, the Club has had 2 games cancelled due to COVID-19 at the halfway stage of the season and at the time of writing this report the Club currently sits 8th in the Premiership, having sat as high as 4th in the league table. The situation is under constant review by the directors in respect of COVID-19 to ensure cash flow is positively managed and the impact to the company's operations is mitigated as far as practicably possible.

Given the continuing impact of COVID-19, as well as the company’s reliance on the continued financial support of London Irish Consortium (2013) Limited, through its ultimate controlling party Powerday Plc, would suggest that we need to recognise that a material uncertainty exists as to the company’s ability to continue as a going concern. However, the directors are confident that funding will be secured to meet the day to day working capital requirements of the company and to also continue to invest in the long-term future of the company.

The directors are confident that funding will be secured to meet the day to day working capital requirements of the company and to also continue to invest in the long-term future of the company. As such the financial statements have been prepared on a going concern basis.

Approved by the director on 29 March 2022 and signed by:



 

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M L Bensted
Director

London Irish Scottish Richmond Limited

Statement of Directors' Responsibilities

Directors' Responsibilities

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006 and in accordance with FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

London Irish Scottish Richmond Limited

Independent Auditor's Report to the Members of London Irish Scottish Richmond Limited
for the Year Ended 30 June 2021

Opinion

We have audited the financial statements of London Irish Scottish Richmond Limited (the 'company') for the year ended 30 June 2021, which comprise the Income Statement, Statement of Financial Position, Statement of Changes in Equity, and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty related to going concern

We draw attention to note 1 in the financial statements which indicates that with the uncertainty connected with the impact of COVID-19 on the operations of the company, and the resultant timing of cash flows there is a risk that the company may be unable to pay its liabilities as they fall due. In conjunction with this, the company remains dependent on the continued financial support of London Irish Consortium (2013) Limited and its ultimate controlling party Powerday Plc.

These events or conditions, along with other matters as set forth in note 1, indicate that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern. The financial statements do not include any adjustments that would result if the company was not able to continue as a going concern. Our opinion is not modified in respect of this matter.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

London Irish Scottish Richmond Limited

Independent Auditor's Report to the Members of London Irish Scottish Richmond Limited
for the Year Ended 30 June 2021

Opinion on other matter prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

Matters on which we are required to report by exception

In the light of our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors' Report.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities (set out on page 10), the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

London Irish Scottish Richmond Limited

Independent Auditor's Report to the Members of London Irish Scottish Richmond Limited
for the Year Ended 30 June 2021

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Based on our understanding of the company and the industry in which it operates, we determined that the principal risks of non-compliance with laws and regulations related to the reporting framework (FRS 102 and the Companies Act 2006) UK corporate taxation laws, health and safety legislation, the Premiership Rugby salary cap and the Coronavirus Job Retention Scheme (CJRS) legislation. These risks were communicated to our audit team and we remained alert to any indications of non-compliance throughout our audit. The audit partner ensured that the audit team had appropriate skills and experience to identify non-compliance with laws and regulations.

We understood how the company is complying with relevant legislation by making enquiries of management and conducting a review of board minutes. We also considered the results of our audit procedures and to what extent these corroborate this understanding and assessed the susceptibility of the company’s financial statements to material misstatement. This included consideration of how fraud might occur and evaluation of management’s incentives and opportunities for fraudulent manipulation of the financial statements.

We designed our audit procedures to identify any non-compliance with laws and regulations. Such procedures included, but were not limited to, inspection of any regulatory or legal correspondence; challenging assumptions and judgements made by management; identifying and testing journal entries with a focus on large or unusual transactions as determined based on our understanding of the business; identifying and assessing the effectiveness of controls in place to prevent and detect fraud, reviewing estimates and judgements for management bias and agreeing the financial statements to supporting documentation.

Owing to the inherent limitations of an audit, there remains a risk that a material misstatement may not have been detected, even though we have properly planned and performed our audit in accordance with auditing standards. We are not responsible for preventing non-compliance with laws and regulations and cannot be expected to detect all instances of non-compliance.

The primary responsibility for the detection and prevention of fraud rests with those responsible for governance and management, and the further removed non-compliance with laws and regulations is from the events reflected within the financial statements, the less likely auditors will become aware of it.

The risk of not detecting a material mis-statement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment, collusion, commission misrepresentation and forgery.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

London Irish Scottish Richmond Limited

Independent Auditor's Report to the Members of London Irish Scottish Richmond Limited
for the Year Ended 30 June 2021

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

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John Chamberlain (Senior Statutory Auditor)
For and on behalf of

Brebners, Statutory Auditor
130 Shaftesbury Avenue
W1D 5AR

1 April 2022

London Irish Scottish Richmond Limited

Income Statement for the Year Ended 30 June 2021

All activities relate to continuing activities.

There are no other gains and losses in the year other than those shown above. Accordingly, no separate statement of comprehensive income is presented.

London Irish Scottish Richmond Limited

Statement of Financial Position as at 30 June 2021

Company registration number: 03780648

Approved and authorised by the Board on 29 March 2022 and signed on its behalf by:

 

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M R Crossan

Director

London Irish Scottish Richmond Limited

Statement of Changes in Equity for the Year Ended 30 June 2021

London Irish Scottish Richmond Limited

Notes to the Financial Statements for the Year Ended 30 June 2021

Statement of compliance

Basis of preparation

London Irish Scottish Richmond Limited

Notes to the Financial Statements for the Year Ended 30 June 2021

Going concern

The financial statements have been prepared on the going concern basis which assumes the company will continue in operational existence for the foreseeable future. In assessing the reasonableness of this assumptions the directors have taken into account current trading performance and cash flow forecast of the company for not less than 12 months from the date of approval of these financial statements.

The company made a loss of £3,492,061 in the current year, and at the year-end had net current liabilities of £35,403,871 and net liabilities of £28,237,812. The Board have continued to invest heavily in the squad and the club will remain in the Gallagher Premiership for the 2022-23 season. Costs will continue to be monitored and effective working capital management strategies implemented.

The Gallagher Premiership matches for the season were played predominately behind closed doors due to the COVID-19 pandemic , with just 3 home matches being attended and subject to a restricted attendance. For season 2021/22, the Club has had 2 games cancelled due to COVID-19 at the halfway stage of the season and at the time of writing this report the Club currently sits 8th in the Premiership, having sat as high as 4th in the league table. The situation is under constant review by the directors in respect of COVID-19 to ensure cash flow is positively managed and the impact to the company's operations is mitigated as far as practicably possible.

Further losses have been incurred post year end and the forecasts prepared by the directors show continued losses for at least the next 12 months. As detailed within the strategic report the club has taken advantage of a long term loan facility provided through HM treasury, the DCMS and Sport England, and also taken advantage of available government support throughout the pandemic with these initiatives providing working capital for the company. Inevitably there is a degree of uncertainty as to the exact level of such losses, and therefore the level of additional funding required. An extension to the loan facility from the DCMS has been agreed after the year end, with an additional £2.972m received.

The group remains dependent on the continued financial support of London Irish Consortium (2013) Limited and its' ultimate controlling party Powerday plc. The directors of these entities remain committed to restoring London Irish rugby club to a profitable professional rugby club, well established within the elite levels of the Gallagher Premiership. To date the shareholder investors of London Irish Consortium (2013) Limited have provided additional working capital as and when required. No formal arrangements are in place with regard to levels of committed future funding.

As part of their commitment to restore the trading and playing fortunes of London Irish rugby club, the investors continue to seek additional external investment.

This situation indicates that a material uncertainty exists that may cast a significant doubt on the company’s ability to continue as a going concern due to the uncertainty on the timing of cashflows which creates a risk the company may be unable to pay its liabilities as they fall due. However, the directors are confident that funding will be secured to meet the day to day working capital requirements of the company and to also continue to invest in the long-term future of the company.

Having made appropriate enquiries of its ultimate controlling party the Board is confident that taking into account our current trading performance, cash requirements, potential additional investors joining the Consortium and confirmation regarding the ongoing intention to provide support from the majority shareholders, adequate funding will be made available and that the company will be a going concern for not less than 12 months from the approval of these financial statements. The directors therefore continue to adopt the going concern basis of preparation for these financial statements.

London Irish Scottish Richmond Limited

Notes to the Financial Statements for the Year Ended 30 June 2021

Revenue recognition

Season ticket income

Season ticket revenues are recognised on an accruals basis in line with the timing of home matches played. Income received in advance is carried forward as deferred income and released to revenue on a systematic basis.

Match day income

Gate receipts and other match day revenues are recognised with the period in which the respective match takes place.

Sale of goods

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the amount of revenue can be reliably measured.

Sponsorship Income

Sponsorship and similar commercial income is recognised on an accruals basis in accordance with the substance of the relevant agreement. Income received in advance is carried forwards as deferred income.

Premier Rugby Limited income

Premier Rugby Limited income is recognised on an accruals basis. Income received in advance is carried forward as deferred income and released to revenue on a systematic basis over the season.

Government grants

Foreign currency transactions and balances

Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the respective functional currency of the entity at the rates prevailing on the reporting period date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rate on the date when the fair value is re-measured.

Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated.

Tangible fixed assets and depreciation

London Irish Scottish Richmond Limited

Notes to the Financial Statements for the Year Ended 30 June 2021

Intangible assets

Amortisation

Operating leases

Investments

Stocks

Cash and cash equivalents

London Irish Scottish Richmond Limited

Notes to the Financial Statements for the Year Ended 30 June 2021

Borrowings

Taxation

Pension contributions

Financial instruments

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the entity after deducting all of its financial liabilities.

Where the contractual obligations of financial instruments (including share capital) are equivalent to a similar debt instrument, those financial instruments are classed as financial liabilities. Financial liabilities are presented as such in the balance sheet. Finance costs and gains or losses relating to financial liabilities are included in the profit and loss account. Finance costs are calculated so as to produce a constant rate of return on the outstanding liability.

Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity.

London Irish Scottish Richmond Limited

Notes to the Financial Statements for the Year Ended 30 June 2021

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectation of future events, that are believed to be reasonable under the circumstances.

Other than those involving estimations, there are no judgements that management has made in the process of applying the entity's accounting policies that had a significant effect on the amounts recognised in the financial statements.

Accounting estimates and assumptions are made concerning the future and, by their nature, will rarely equal the related actual outcome. The key assumptions and other sources of estimation uncertainty that have a significant risk of causing a material adjustment to the to the carrying amounts of assets and liabilities within the next year are as follows:

• Recognition of CVC transaction proceeds;
• Amortisation of intangible assets
• Depreciation of fixed assets
• Unlisted investment carrying value; and
• Recognition of deferred tax

The analysis of the company's revenue for the year from continuing operations is as follows:

In the opinion of the directors there is only one segment which is the playing and development of rugby football.

All turnover originates in the UK.

The sale of a significant minority interest in Premier Rugby Limited ("PRL") to certain funds advised or managed by CVC Capital Partners ("CVC") was signed on 29th March 2019 with the Club receiving a cash inflow of £12.8m as a result of the transaction. This income has been recognised in the Profit and Loss Account over 48 months, with amounts relating to future periods being recognised as deferred income.

The income recognised is included within Premier Rugby and RFU income above.

The analysis of the company's other operating income for the year is as follows:

London Irish Scottish Richmond Limited

Notes to the Financial Statements for the Year Ended 30 June 2021

The aggregate payroll costs (including directors' remuneration) were as follows:

The average number of persons employed by the company during the year, including executive directors, was made up as follows:

The directors' remuneration for the year was as follows:

Retirement benefits are accruing to the following number of directors under:

In addition to the above, Directors fees amounting to £20,469 (2020: £23,438) have been charged to the Profit and Loss account for the services of the non-executive directors.

London Irish Scottish Richmond Limited

Notes to the Financial Statements for the Year Ended 30 June 2021

Arrived at after charging/(crediting)

London Irish Scottish Richmond Limited

Notes to the Financial Statements for the Year Ended 30 June 2021

Tax charged/(credited) in the income statement

The tax on profit before tax for the year is higher than the standard rate of corporation tax in the UK (2020 - higher than the standard rate of corporation tax in the UK) of 19% (2020 - 19%).

The differences are reconciled below:

London Irish Scottish Richmond Limited

Notes to the Financial Statements for the Year Ended 30 June 2021

London Irish Scottish Richmond Limited

Notes to the Financial Statements for the Year Ended 30 June 2021

The unlisted investments represent investment in 'Income shares' (Invested Units) entitling the holder to future income streams from Premier Rugby Limited ("PRL") and a co-investment along with CVC Funds, in an additional minority shareholding in PRL.

Subsequent to the CVC transaction on the 29 March 2019, the 'P' shares formerly held were replaced by Invested Units. The Invested Units entitle the holder to future income streams from PRL. The principal activity of PRL is to promote and foster the interests of member clubs. It is incorporated in the UK.

The company has valued its investment in PRL based upon the income stream provided by the investment, and in line with PRL Investor Limited and other shareholding clubs. The valuation is based upon the projected future income stream into perpetuity discounted at a rate of 8% per annum, and this methodology has been approved by the PRL Board and is reviewed on an annual basis. The co-investment is valued using the same methodology.

The directors consider that the upwards revaluation in the year accurately represents the fair value. The increase in valuation reflects a change in the distribution rights (as detailed within the Licence, Services and Commercial Rights Agreement) attached to the units held by the company, with the proportion of overall distributions due increased from 33.33% to 50%. The impact of Covid-19 is considered to be an exceptional and short-term and therefore does not impact the valuation of the investment which is based on a medium to long term plan.

Any material changes to expected future cash inflows, estimated discount rates applied or the proportion of future distributions due to each investor could result in a valuation materially different to that included within the financial statements at 30th June 2021.

London Irish Scottish Richmond Limited

Notes to the Financial Statements for the Year Ended 30 June 2021

Included in amounts owed to group undertakings is £500,000 due to the parent undertaking, London Irish Holdings Limited, in respect of a nil coupon loan note issued in 2002. The instrument is interest free and repayable on demand.

Categorisation of financial instruments

Financial assets measured at fair value

Financial assets measured at fair value through profit and loss comprise the company's investment in 'Income Shares' (Invested Units) in Premier Rugby Limited (PRL) and a co-investment with CVC funds, in a minority shareholding in PRL.

London Irish Scottish Richmond Limited

Notes to the Financial Statements for the Year Ended 30 June 2021

The deferred tax relates to the capital gain on the investment revaluations.

At the year end the company has a potential unrecognised deferred tax asset of £3,621,488 (2020 - £2,758,786) in respect of losses, accelerated capital allowances and other short term timing differences. It is considered unlikely that these will be utilised in the foreseeable future. Therefore, the deferred tax asset has not been recognised in the current or previous year.

Allotted, called up and fully paid shares

During the year the group secured external loan finance amounting to £8,187,000 from The English Sports Council. The loan finance is secured by a floating charge over the assets of the London Irish Holdings group and its immediate parent London Irish Consortium (2013) Limited. Interest has been charged at a rate of 2.00% on the loan amounting to £96,841 in the year.

London Irish Scottish Richmond Limited

Notes to the Financial Statements for the Year Ended 30 June 2021

Share capital

This reserve represents the nominal value of equity capital issued.

Profit and loss account

This reserve represents cumulative profits and losses of the company, net of dividends paid and other adjustments.

Operating leases

The total of future minimum lease payments is as follows:

Other financial commitments

The company has negotiated a licence agreement for London Irish Rugby Club to play its home games at the Brentford Community Stadium.

London Irish Scottish Richmond Limited

Notes to the Financial Statements for the Year Ended 30 June 2021

The company has taken advantage of the exemption conferred by FRS 102 not to disclose transactions with wholly owned companies within the group.

During the year the company entered into transactions, in the ordinary course of business, with other related parties. Transactions entered into, and trading balances outstanding at 30 June 2021, are as follows:

Expenditure with and payables to related parties

Loans from entities with significant influence over the company

During the year loans no additional loans were made to the company from London Irish Consortium (2013) Limited. All such loans are secured against the assets of the company and at a fixed interest rate of 6%. Repayments of £17,500 (2020: £18,000) were made in the year. Total interest charged in the year was £1,159,641 (2020: £1,098,590). The total balance outstanding as at 30 June 2021 is £18,295,033 (2020: £17,152,892).

 

Terms and conditions of transactions with related parties

Outstanding balances with entities are unsecured, interest free and settlement is expected within the terms of the invoice. The company has not provided or benefited from any guarantees for any related party receivables or payables. During the year ended 30 June 2021 the company has not made any provision for doubtful debts relating to amounts owed by related parties (2020: nil).

Income and receivables from related parties

London Irish Scottish Richmond Limited

Notes to the Financial Statements for the Year Ended 30 June 2021

Key management personnel

Key management compensation

Summary of transactions with key management

Key management personnel include all persons that have authority and responsibility for planning, directing and controlling the activities of the group.

Pension commitments and other post-retirement benefits

The company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost represents contributions payable by the company to the fund and amounted to £85,070 (2020 - £101,556). At 30 June 2021 contributions amounting to £34,951 (2020: £35,931) were payable to the fund and were included in creditors.

The company's immediate parent is London Irish Holdings Limited, incorporated in England and Wales.

The parent of the smallest group preparing group accounts including the results of the company is London Irish Holdings Limited.

The address of London Irish Holdings Limited is:

Hazelwood
Hazelwood Drive
Sunbury-on-Thames
Middlesex
TW16 9EX

The parent of the largest group preparing group accounts including the results of the company is Powerday plc.

The address of Powerday plc is:
130 Shaftesbury Avenue
2nd Floor
London
W1D 5EU

London Irish Scottish Richmond Limited

Notes to the Financial Statements for the Year Ended 30 June 2021

The ultimate parent is Powerday plc, incorporated in England and Wales.

These financial statements are available upon request from Companies House at Crown Way, Cardiff, CF14 3UZ.

The ultimate controlling party is M R Crossan.

Subsequent to the year end the London Irish Holdings Group secured additional external loan finance amounting to £2,972,000 from The English Sports Council. The loan finance is secured by a floating charge over the assets of the London Irish Holdings group and its immediate parent London Irish Consortium (2013) Limited.