Rugby Australia strikes series of deals to keep it solvent and lodge accounts

Rugby Australia has struck a series of last-minute deals that have enabled it to finally lodge its 2019 financial accounts.

Former RA boss Raelene Castle will receive a six-figure bonus.

Rugby Australia struck a series of last-minute deals including a $6.9m loan with HSBC to remain solvent and finally get its 2019 financial accounts signed off.

The accounts, obtained by The Australian on Sunday evening, reveal a series of undertakings by Rugby Australia directors that soothed concerns of auditors KPMG and allowed the accounts to finally be signed off a month past their original due date.

While the accounts confirm the $9.4m million loss RA had announced at the end of April for the 2019 year, they also contain details about loans, cashflow projections and other financial measures put in place during May. The accounts also show Rugby Australia receiving written confirmation from World Rugby on May 14 that it would receive a £7.5m ($14.2m) advance from World Rugby, with $4.7m being received during May and the remaining amount being sent by the end of 2020.

While that has helped with short-term cashflow issues, Rugby Australia is also set to receive $6.9m from HSBC for a restructure of derivative instruments in place to hedge future broadcast income usually received in US dollars it had in place with the bank.

“As a consequence of COVID-19 and the uncertainty of whether Rugby content can be delivered under existing broadcast contracts (Rugby Australia) has undertaken a restructure of derivative instruments in place to hedge future USD broadcasting receipts with HSBC,” the accounts say. “The company has received a credit approved offer, which is subject to documentation, from HSBC for a loan facility of up to $6.9m that is repayable in June 2022 in respect to this restructure.”

Sources told The Australian last week the accounts being signed off was contingent on a bank guarantee. KPMG said it noted Rugby Australia had “a net current account deficiency of $6.7m as of December 31, 2019” but about $7m of that was “financial liabilities in relation to the mark to market forward exchanged contracts accounted through equity”.

One reason KPMG was reluctant to previously sign off on the accounts was the potential lack of broadcast revenue this year due to the shutdown of sport as a result of COVID-19 and the lack of a broadcast deal past the end of 2020.

As well as clinching the loan from World Rugby, which is repayable in 2023 and accumulates interest at the London Inter-bank Offered Rate, Rugby Australia has also registered about 200 staff on the federal government’s JobKeeper scheme.

It also gave several other reasons for the accounts to be signed off, including cashflow forecasts being prepared on a conservative basis with no rugby being played until 2021, revenue from various state government departments continuing to be received, a review of Rugby Australia’s business operations and a number of broadcast contracts being in place for the 2021 financial year with other SANZAAR broadcast partners.

Other revelations include commitments of about $14.8m to fund the Super Rugby teams, down from $24m in 2019 after COVID-19 disruptions.

The annual report also shows that former CEO Raelene Castle is to be paid a six-figure bonus. The Australian previously revealed that Castle was due to be paid the $114,000 bonus after former chair Cameron Clyne concluded she had met key performance indicators in a board meeting held before the World Cup.