Saru R70 million in the black

The South African Rugby Union reported record cash reserves when it released its 2008 financial results on Wednesday.

Saru had R70 million in the bank at the end of the financial year, reflecting the healthy state of the group’s financial affairs, said Basil Haddad, group financial director.

‘Cash reserves were buoyed by a £3 million grant from the IRB trust, following the highly successful 2007 World Cup,’ said Haddad. ‘That grant led to a R31 million operating profit at last year-end allowing us to make a once-off, special injection of R20 million into the development of the game, through the provincial unions.’

The development grants were a significant contributor to an operating loss of R27 million – the majority of which was budgeted for in revised forecasts, following the decision to make the special development investment.

However, other material contributors that impacted the bottom line were a write-off of R6 million owed by a major sponsor, now in liquidation (Canterbury), and a decline in the rand/US dollar exchange rate in late 2008.

‘The importance of funding the development of the game at grassroots level prompted the development grant in the knowledge that while it would have a major effect on the final bottom line, the group’s balance sheet was well able to absorb it,’ said Haddad.

Saru revenues grew 15% to R432 million in 2008 – without taking into account the £3 million IRB grant, which was accounted for in 2007. This growth was more than matched by the increase in operating expenditure, including the special development investment which was up 20% on the 2007 level to R470 million.

Saru payed out R135 million to the 14 provincial unions, and spent a further R229 million on costs related to the Springboks and its provincial rugby competitions.

‘The financial situation should further improve in 2009, due mainly to profits which we expect to generate from the 10-match Lions Series. After several years of rigorous planning and preparation, we are looking forward to a highly successful tour – such an opportunity only comes around every twelve years,’ added Haddad.

The draft financial statements for the year ended 31 December 2008 will be presented to Saru’s annual general meeting in Cape Town on 27 March.