Download - FINANCIAL ANALYSIS

Directors’ Report TheDirectorsofAustralianRugbyUnionLimited(“theCompany”)submitherewiththeirreporttogetherwiththefinancialreportoftheCompanyfortheyearended31December2005andtheAuditors’reportthereon. InordertocomplywiththeprovisionsoftheCorporationsAct2001theDirectorsreportasfollows:

1.ThenamesandparticularsoftheDirectorswhoheldofficeasatanytimeduringorsincetheendofthefinancialyearare:

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Australian Rugby Union 2005 Annual ReportFINANCIAL ANALYSIS & REPORT FINANCIAL ANALYSIS & REPORT

2.Directors’Meetings ThenumberofDirectors’meetings(includingmeetingsofcommitteesofDirectors)andthenumberofmeetingsattendedbyeachoftheDirectorsoftheCompanyduringthefinancialyearare: Director A B A B A B A B A BMrRGraham 12 12 - - 1 1 2 3 1 1MrGFlowers 12 12 - - - - 3 3 1 1MrBKehoe 12 12 1 1 - - - - - -MrDKumar 12 12 - - 1 1 - - - -MrTHall 11 12 2 3 - - - - - -MrMBrown 9 9 - - - - 3 3 1 1MrPMcGrath 9 9 2 2 - - 3 3 - -MrRThomson 9 9 - - - - 3 3 - -MrDUsasz 9 9 2 2 - - - - 1 1MrWBarrett 3 3 1 1 - - 3 3 - -MrDBree 3 3 1 1 - - - - - -MrJ.Collins 3 3 - - - - 3 3 - -MrRATuckey 3 3 - - - 1 3 3 - - A-NumberofMeetingsAttended B-ReflectsthenumberofmeetingsheldduringthetimetheDirectorheldofficeduringtheyear 3.PrincipalActivities TheCompany’sprincipalactivitiesinthecourseofthefinancialyearwerethepromotion,efficiency,progress,developmentandgeneralcontrolofthegameofrugby.Nosignificantchangeinthenatureofthisactivityoccurredduringtheyear.

4.ReviewofOperationsTheoperatingsurplusforthefinancialyearbeforeallocationsandotherpaymentstoMemberUnionswas$5,819,712(2004:$4,008,896).AllocationstoMemberUnionsforcoachinganddevelopmentwere$9,031,510(2004:$8,372,015).

ThenetdeficitforthefinancialyearafterallocationsandotherpaymentstoMemberUnionswas$3,211,798(2004:$4,363,119Deficit).

DetailedcommentaryontheCompany’soperationsareincludedintheChairman’sReport,ManagingDirector’sReport,President’sReport,RugbyServicesReportandtheCorporateServicesDepartment’sreportincludedinthe2005AnnualReport.

5.SubsequentEventsTherehasnotarisenintheintervalbetweentheendofthefinancialyearandthedateofthisreportanyitem,transactionoreventofamaterialandunusualnaturelikely,intheopinionoftheDirectorsoftheCompany,toeffectsignificantlytheoperationsoftheCompany,theresultsofthoseoperations,orthestateofaffairsoftheCompanyinfuturefinancialyears. 6.EnvironmentalRegulations TheCompany’soperationsarenotsubjecttoanysignificantenvironmentalregulationsundereitherCommonwealthorStatelegislation. 7.Directors’Benefits InformationonDirectors’benefitsissetoutinthefollowingnotestothefinancialstatements: 1)Note28:Keymanagementpersonneldisclosures 2)Note29:Relatedparties

8.DerivativesandotherfinancialinstrumentsTheCompany’sactivitiesexposeittochangesininterestratesandforeignexchangerates.Itisalsoexposedtocredit,liquidityandcashflowrisksfromitsoperations.TheBoardhasconfirmedpoliciesandproceduresineachoftheseareastomanagetheseexposures.ManagementreportstotheDirectorsonaregularbasisastothemonitoringofpoliciesinplace,andadherencetothepoliciesisstrictlyobserved.

ItistheCompany’spolicytousederivativefinancialinstrumentstohedgecashflowssubjecttoforeignexchangeraterisks.Derivativefinancialinstrumentsarenotheldforspeculativepurposes.Exposures,includingrelatedderivativehedgesarereportedtotheDirectorsonaregularbasis.

FinancingfacilitiesandoperatingcashflowsaremanagedtoensurethattheCompanyisnotexposedtoanyadverseliquidityrisks.Adequatestandbyfacilitiesaremaintainedtoprovidestrategicliquiditytomeetunexpectedandmaterialcashoutflowsintheordinarycourseofbusiness.

9.IndemnificationandInsuranceofDirectorsandOfficers Inaccordancewith theCompany’sConstitution, theCompanymust indemnifybothcurrentand formerDirectors forall lossesor liabilities incurredby thepersonasanofficeroftheCompanyincurredindefendingproceedingswhethercivilofcriminal,inwhichjudgmentisgiveninfavourofthepersonorinwhichthepersonisacquitted;orinrelationtosuchproceedings,inwhichtheCourtgrantsrelieftothepersonundertheCorporationsAct2001.

Inrespecttothisindemnity,theCompanyhaspaidinsurancepremiumsof$48,395inrespectofDirectors’andOfficers’LiabilityinsurancecontractsforcurrentandformerDirectorsandOfficersoftheCompany.TheinsurancepoliciesdonotcontaindetailsofthepremiumspaidinrespectofindividualDirectorsorOfficersoftheCompany. 10.Leadauditor’sindependencedeclaration Theleadauditor’sindependencedeclarationissetoutonpage88andformspartoftheDirectors’Reportforthe2005financialyear. 11.RoundingOff TheCompanyisofakindreferredtoinASICClassOrder98/100dated10July1998andinaccordancewiththatClassOrder,amountsinthefinancialreportandDirectors’reporthavebeenroundedofftothenearestthousanddollars,unlessotherwisestated.

ByorderoftheBoard

R Graham G Flowers Director Director 17March2006,Melbourne

Ron Graham

Ron has been a Director since December 2000 and was appointedChairman in December 2005. He is also Chairman of the HumanResourceCommitteeandtheBoardNominationsCommittee.RonisaformerChairmanandPresidentofNewSouthWalesRugbyUnionandaWallaby,havingplayed18testsduringthe1970s.HeisManagingPartnerofaninternationalexecutivesearchfirm.

Ben KehoeB.A. Grad. Dip Bus Admin FAICD Ben has been a Director since April 2004. He is a ManagementConsultantandaformerChairmanandDirectorofQueenslandRugbyUnionfrom1997to2005,andthecurrentChairmanofImaginotPtyLtd.

William (Bill) Barrett B. Rur. Sc.

BilljoinedtheBoardinOctober2002.Hehasbeeninvolvedwithrugbyadministration in Queensland for 20 years. He is a former Directorof Queensland Rugby Union from 1998 to 2002 and Chairman ofthe Queensland Country Rugby Committee from 1995 to 1999. BillresignedinApril2005.

Dennis Bree

Dennis has been a Director since March 2001. He is a qualifiedengineer and is Deputy Chief Executive within the Department ofBusiness, Economics and Regional Development for the NorthernTerritoryGovernment.DenniswasPresidentofNorthernTerritoryRugbyUnionfrom1991to2001.DennisresignedinApril2005.

Michael (Mike) Brown B.E. (Hons) BSc MIEAust CPEng

MikejoinedtheBoardinApril2005andisaMemberoftheGovernanceandPolicyCommitteeandtheBoardNominationsCommittee.HeisaCivilEngineerwith31yearsexperienceintheBuildingandConstructionIndustry.MikeisChairmanoftheRugbyYouthFoundationandaformerDirectorofNewSouthWalesRugbyUnion.

Jon Collins JonhasbeenaDirectorsinceDecember2003.HeisaformerDirectorofNewSouthWalesRugbyUnionfrom2001to2002andRandwickRugby Union from 1995 to 2002. John is also Company Director ofSykesGroupPtyLtd,BarwickWinesPtyLtdandPrimaxPumpsUAELlc.JonresignedinApril2005.

Gary FlowersB.Comm, LLB, FAICD (Order of Merit) Gary was appointed Managing Director and CEO in June 2004 andisaMemberoftheBoardNominationsCommittee.HeisalsooneofAustralianRugbyUnion’sCouncillorsontheInternationalRugbyBoardCouncilandSANZARCEO.PriortojoiningtheAustralianRugbyUnion,GarywasManagingPartnerofoneofAustralia’sleadingnationallawfirms,SparkeHelmore.

Travis Hall

TravishasbeenaDirectorsinceDecember2003.Heisappointedbythe Rugby Union Players Association and is a Member of Audit andComplianceCommittee.TravisisChairmanofthe“JohnEalesMedal”CommitteeandwasamemberoftheBrumbiesandWaratahssquadsfrom1998to2003.HeiscurrentlystudyingforCertificateIVinSmallBusiness.

Dilip Kumar B.Bus OPM (Harvard) DiliphasbeenaDirectorsinceJuly2000andisaMemberofHumanResourceCommittee.DilipwasChairmanofNewSouthWalesRugbyUnionfrom2002-2005andChairmanoftheAustralianRugbyUnionfrom April 2005 to December 2005. He was also one of AustralianRugby Union’s Councillors to the International Rugby Board in 2004and2005.

Peter McGrathLLB, AAPI, MAICD

PeterjoinedtheBoardinApril2005andisChairmanofGovernanceandPolicyCommitteeandaMemberofAuditandComplianceCommittee.HeisasolicitorandtheManagingPartnerofChamberlainsLawFirminCanberraandhasbeenaPartnerfor9years.PeterisaMemberoftheLawSocietyoftheACTandanAssociateoftheAustralianPropertyInstituteandsitsontheACTDivisionalCounciloftheInstitute.

Robin Thomson RobinjoinedtheBoardinApril2005andisaMemberofGovernanceand Policy Committee. He is a solicitor and current Chairman ofQueensland Rugby Union. Robin is a past Vice-President of theQueenslandRugbyUnionandwasaDirectoroftheRedsRugbyCollegefromitsinceptionin1997until2000.

David UsaszB.Com , FCA

David joined the Board in April 2005 and is Chairman of Audit andCompliance Committee and a Member of the Board NominationsCommittee.HehasbeenaDirectorofQueenslandRugbyUnionsince2001. David has been a Partner of PricewaterhouseCoopers since1987andwasNationalDirectorofCorporateFinanceAustralasiaforsixyears.HehasalsobeenaDirectoroftheRedsRugbyCollegesinceitsinceptionin1997.

Robert (Bob) TuckeyFCA BobhasbeenaDirectorsinceMay1997andwasChairmanfrom2001to2005.HeisaCharteredAccountantandistheViceChairmanoftheInternational Rugby Board, Chairman of the Pacific Islands AdvisoryCommitteeandChairmanoftheiRBAuditandRiskCommittee.BobisaformerDirectorofSANZARPtyLtd,IRFBServices(Ireland)Ltd,RugbyWorldCupLtd,RWCTournamentsLtdandQueenslandRugbyUnion.BobresignedinApril2005.

Ashley SelwoodB.Bus, MBA, FCPA, ACIS Ashley was appointed Company Secretary in 1998 and has heldthe position since that time following a similar appointment atthe Queensland Rugby Union. Ashley is a member of CharteredSecretariesAustralia.

Audit and Compliance Committee Meetings

Human Resource Committee Meetings

Governance & Policy Committee Meetings

Board Nominations Committee MeetingsBoard Meetings

Australian Rugby Union 2005 Annual Report

Balance Sheet asat31December2005 Note 31December2005 31December2004 $’000 $’000 Currentassets Cashandcashequivalents 9 31,254 35,303 Tradeandotherreceivables 10 2,864 3,275 Inventory 11 261 214 Assetsclassifiedasheldforsale 8 2,505 2,537 Otherassets 12 1,143 145 Totalcurrentassets 38,027 41,474 Non-currentassets Tradeandotherreceivables 10 271 367 Property,plantandequipment 13 1,153 1,417 Intangibleassets 14 127 120 Totalnon-currentassets 1,551 1,904 Total assets 39,578 43,378 Currentliabilities Tradeandotherpayables 15 8,148 8,494 Deferredrevenue 16 716 597 Interest-bearingliabilities 17 153 241 Provisions 18 773 938 Totalcurrentliabilities 9,790 10,270 Non-currentliabilities Deferredrevenue 16 1,278 1,363 Interest-bearingliabilities 17 106 258 Provisions 18 289 210 Totalnon-currentliabilities 1,673 1,831 Total liabilities 11,463 12,101 Net assets 28,115 31,277 Equity Reserves 20 616 566 Retainedsurplus 21 27,499 30,711 Total equity 28,115 31,277

TheBalanceSheetistobereadinconjunctionwiththenotestothefinancialstatements.

Cashflow Statement fortheyearended31December2005

Cashflowsfromoperatingactivities Cashreceiptsinthecourseofoperations 65,107 72,998 CashreceiptsinrelationtoRWC2003 - 19,186 Cashpaymentsinthecourseofoperations (61,077) (70,259) CashpaymentsinrelationtoRWC2003 - (62,698)

Netcashprovidedbyoperatingactivities 27(b) 4,030 (40,773)

Cashflowsfrominvestingactivities Interestreceived 2,119 2,695 Proceedsfromsaleofproperty,plant&equipment 2 90 Paymentsforproperty,plantandequipment (801) (175) Paymentsforintangibles (128) (125) Netcashprovidedbyinvestingactivities 1,192 2,485

Cashflowsfromfinancingactivities Repaymentofleaseliability (206) (222) Borrowingcostspaid (34) (29) AllocationstoMemberUnions (9,031) (8,372)

Netcashusedinfinancingactivities (9,271) (8,623)

Netdecreaseincashheld (4,049) (46,911) Cashatbeginningofyear 35,303 82,214 Cashatendofyear 27(a) 31,254 35,303 TheCashflowStatementistobereadinconjunctionwiththenotestothefinancialstatements.

Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To:theDirectorsoftheAustralianRugbyUnionLimitedIdeclarethat,tothebestofmyknowledgeandbelief,inrelationtotheauditforthefinancialyearended31December2005therehavebeen:

(i)nocontraventionsoftheauditorindependencerequirementsassetoutintheCorporationsAct2001inrelationtotheaudit;and(ii)nocontraventionsofanyapplicablecodeofprofessionalconductinrelationtotheaudit.

KPMG Mark S Epper Partner

17March2006

Income Statement fortheyearended31December2005 Note 31December2005 31December2004 $’000 $’000 Revenue Broadcastinglicencefees 31,853 29,404 Sponsorships 18,976 17,154 Netgatetakingsandmatchfees 12,858 12,938 Corporatehospitality 4,138 3,882 Interestreceived 2,119 2,695 Licensingrevenue 1,909 1,583 Governmentgrants 293 574 Affiliationfees 21 21 Otherincome 3 1,121 1,680 73,288 69,931 OperatingExpenditure Commercialoperations 11,146 12,811Financeandadministration 9,134 9,645Mediaandcommunications 1,048 1,034Rugbyoperationsandcommunityrugby 4,960 4,868HighPerformance 14,678 12,765Super12grantsandplayerpayments 24,141 22,876Super12costs 2,328 1,894Borrowingcosts 34 29 67,469 65,922 Incometaxexpense - - Surplusfortheperiod 5,819 4,009 Surplusattributabletomembers 4 5,819 4,009 AllocationstoMemberUnions (9,031) (8,372) Net(deficit)fortheyear 21 (3,212) (4,363) TheIncomeStatementistobereadinconjunctionwiththenotestothefinancialstatements.

Statement of Recognised Income and Expense fortheyearended31December2005 Changeinfairvalueofcashflowhedge 50 - Netincomerecogniseddirectlyinequity 20 50 - Deficitfortheperiod 21 (3,212) (4,363) Totalrecognisedincomeandexpense attributabletomembers (3,162) (4,363)

Therewerenomovementsinequityarisingfromtransactionswithownersasowners. TheStatementofRecognisedIncomeandExpenseistobereadinconjunctionwiththenotestothefinancialstatements.

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Whereahedgeisredesignatedasahedgeofanothertransaction,gainsorlossesarisingonthehedgeprior to itsredesignationareonlydeferredwheretheoriginalanticipatedtransaction isstillexpected tooccurasdesignated,anygainsor losses relating to thehedgeinstrumentareincludedintheIncomeStatementfortheperiod. Gainsorlossesthatarisepriortoanduponthematurityoftransactionsenteredintounderhedgerolloverstrategiesaredeferredandincludedinthemeasurementof thehedgedanticipatedtransactionifthetransactionisstillexpectedtooccurasdesignated.Iftheanticipatedtransactionisnolongerexpectedtooccurasdesignated,thegainsorlossesarerecognisedimmediatelyintheIncomeStatement. Hedgeofmonetaryassetsandliabilities Allotherhedgetransactionsareinitiallyrecordedattherelevantrateatthedateofthetransaction.HedgesoutstandingatreportingdatearevaluedattheratesrulingonthatdateandanygainsorlossesarebroughttoaccountintheIncomeStatement.Costsorgainsarisingatthetimeofenteringintothehedgearedeferredandamortisedoverthelifeofthehedge. (f)Property,plantandequipment

(i)Ownedassets Items of property, plant and equipment are stated at cost as deemed cost lessaccumulateddepreciation(seebelow)andimpairmentlosses(seeaccountingpolicyk).The cost of self-constructed assets includes the cost of materials, direct labour, theinitialestimate,whererelevant,ofthecostsofdismantlingandremovingtheitemsandrestoringthesiteonwhichtheyarelocated,andanappropriateproportionofproductionoverheads. Certainitemsofproperty,plantandequipmentthathadbeenrevaluedtofairvalueonorprior to1January2004, thedateof transition toAustralianAccountingStandards-AIFRSs,aremeasuredonthebasisofdeemedcost,being the revaluedamountat thedateofthatrevaluation. Property that is being constructed or developed for future use as investment propertyis classified as property, plant and equipment and stated at cost until construction ordevelopmentiscomplete,atwhichtimeitisreclassifiedasinvestmentproperty. When the construction or development of a self-constructed investment property iscompletedandwillbecarriedatfairvalue,anydifferencebetweenthefairvalueofthepropertyatthatdateanditspreviouscarryingamountisrecognisedinprofitandloss. Wherepartsofanitemofproperty,plantandequipmenthavedifferentusefullives,theyareaccountedforasseparateitemsofproperty,plantandequipment. (ii)Leasedassets Leasesintermsofwhichtheconsolidatedentityassumessubstantiallyalltherisksandrewards of ownership are classified as finance leases. The owner-occupied propertyacquiredbywayoffinanceleaseisstatedatanamountequaltothelowerofitsfairvalueand the present value of the minimum lease payments at inception of the lease, lessaccumulateddepreciation(seebelow)andimpairmentlosses(seeaccountingpolicyk).Thepropertyheldunderfinanceleasesandleasedoutunderoperatingleaseisclassifiedasinvestmentpropertyandstatedatthefairvaluemodel.Leasepaymentsareaccountedforasdescribedinaccountingpolicy(p).Propertyheldunderoperatingleasesthatwouldotherwise meet the definition of investment property may be classified as investmentpropertyonaproperty-by-propertybasis. (iii)Subsequentcosts The Company recognises in the carrying amount of an item of property, plant andequipment thecostof replacingpartofsuchan itemwhen thatcost is incurred if it isprobable that the future economic benefits embodied with the item will flow to theCompanyandthecostoftheitemcanbemeasuredreliably.AllothercostsarerecognisedintheIncomeStatementasanexpenseasincurred. (iv)Depreciation Depreciation is charged to the Income Statement on a straight-line basis over theestimated useful lives of each part of an item of property, plant and equipment. Theestimatedusefullivesinthecurrentandcomparativeperiodsareasfollows: •buildings100years •plantandequipment2-20years •Plantandequipmentunderhirepurchase6.67years •Plantandequipmentunderfinancelease4years Theresidualvalue,ifsignificant,isreassessedannually.

(g)Intangibleassets

Intangiblesincludethecostofregisteringlicensedtrademarks.Theyareamortisedonastraightlinebasisoverthreeyears,whichapproximatelytheperiodofregistrationandthe

periodsduringwhichbenefitsareexpectedtoberealised. Thecarryingamountofexpenditureonintangiblesisreviewedattheendofeachfinancialyear and where the balance exceeds the value of the expected future benefits, thedifferenceischargedtotheIncomeStatement. (h)Tradeandotherreceivables Tradeandotherreceivablesarestatedattheircostlessimpairmentlosses(seeaccountingpolicyk). (i)Inventories Stocksofcoachingmanuals, lawbooks,andother itemswhichareheld for resalearerecognised as inventory. Inventory also comprises stocks of consumables includinguniforms,footwear,playersustenanceandotherrugbyequipmentwhichareusedbytheCompanyintheordinaryconductofitsbusiness. Inventoriesarestatedatthelowerofcostandnetrealisablevalue.Netrealisablevalueistheestimatedsellingpriceintheordinarycourseofbusiness,lesstheestimatedcostsofcompletionandsellingexpenses. The cost of other inventories is based on the first-in first-out principle and includesexpenditure incurred in acquiring the inventories and bringing them to their existinglocationandcondition. (j)Cashandcashequivalents Cashandcashequivalentscomprisescashbalancesandcalldeposits.Bankoverdraftsthat are repayable on demand and form an integral part of the Company’s cashmanagementareincludedasacomponentofcashandcashequivalentsforthepurposeoftheCashflowStatement. (k)Impairment Thecarryingamountsof theCompany’sassets,other than inventories (seeaccountingpolicy i), are reviewed at each Balance Sheet date to determine whether there is anyindicationofimpairment.Ifanysuchindicationexists,theasset’srecoverableamountisestimated(seeaccountingpolicyi). Animpairmentlossisrecognisedwheneverthecarryingamountofanassetoritscash-generating unit exceeds its recoverable amount. Impairment losses are recognised intheIncomeStatement,unlessanassethaspreviouslybeenrevalued,inwhichcasetheimpairmentlossisrecognisedasareversaltotheextentofthatpreviousrevaluationwithanyexcessrecognisedthroughprofitorloss. Impairment losses recognised in respectofcash-generatingunitsareallocated first toreducethecarryingamountofanygoodwillallocatedtocash-generatingunits(groupofunits)andthen,toreducethecarryingamountoftheotherassetsintheunit(groupofunits)onaproratabasis. When a decline in the fair value of an available-for-sale financial asset has beenrecogniseddirectlyinequityandthereisobjectiveevidencethattheassetisimpaired,thecumulativelossthathadbeenrecogniseddirectlyinequityisrecognisedinprofitorlosseventhoughthefinancialassethasnotbeenderecognised.Theamountofthecumulativelossthatisrecognisedinprofitorlossisthedifferencebetweentheacquisitioncostandcurrentfairvalue,lessanyimpairmentlossonthatfinancialassetpreviouslyrecognisedinprofitorloss. (i)Calculationofrecoverableamount The recoverable amount of the Company’s held-to-maturity receivables carried atamortised cost is calculated as the present value of estimated future cash flows,discountedattheoriginaleffectiveinterestrate(i.e.,theeffectiveinterestratecomputedatinitialrecognitionofthesefinancialassets).Receivableswithashortdurationarenotdiscounted. Impairmentof receivables isnot recogniseduntilobjectiveevidence isavailablethatalosseventhasoccurred.Significantreceivablesareindividuallyassessedforimpairment.Impairmenttestingofsignificantreceivablesthatarenotassessedasimpairedindividuallyis performed by placing them into portfolios of significant receivables with similarrisk profiles and undertaking a collective assessment of impairment. Non-significantreceivablesare not individually assessed. Instead, impairment testing isperformed byplacingnon-significantreceivablesinportfoliosofsimilarriskprofiles,basedonobjectiveevidencefromhistoricalexperienceadjustedforanyeffectsofconditionsexistingateachbalancedate. Therecoverableamountofotherassetsisthegreateroftheirfairvaluelesscoststosellandvalueinuse.

Notes to the financial statements fortheyearended31December2005 Note 1. Significant accounting policies TheAustralianRugbyUnionLimited(The“Company”)isaCompanydomiciledinAustralia. ThefinancialreportwasauthorisedforissuebytwoDirectorson17March2006. (a)Statementofcompliance The financial report is a general purpose financial report which has been prepared inaccordancewithAustralianAccountingStandards,Urgent IssuesGroupInterpretationsadoptedbytheAustralianAccountingStandardsBoard(“AASB”)andtheCorporationsAct 2001. International Financial Reporting Standards (“IFRSs”) form the basis ofAustralian Accounting Standards adopted by the AASB, being Australian equivalentsto IFRS (“AIFRS”). The financial reports of the Company also comply with IFRSs andinterpretationsadoptedbytheInternationalAccountingStandardsBoard. ThisistheCompany’sfirstfinancialreportpreparedinaccordancewithAIFRSandAASB1FirstTimeAdoptionofAIFRShasbeenapplied.AnexplanationofhowthetransitiontoAIFRShasaffectedthereportedfinancialposition,financialperformanceandcashflowsoftheCompanyisprovidedinnote31. (b)Basisofpreparation ThefinancialreportispresentedinAustraliandollars. Thefinancialreportispreparedonthehistoricalcostbasisexceptthatderivativefinancialinstrumentsarestatedattheirfairvalue. TheCompanyisofakindreferredtoinASICClassOrder98/100dated10July1998andinaccordancewiththatClassOrder,amountsinthefinancialreportandDirectors’Reporthavebeenroundedofftothenearestthousanddollars,unlessotherwisestated. Non-currentassetsanddisposalgroupsheldforsalearestatedatthelowerofcarryingamountandfairvaluelesscoststosell. ThepreparationofafinancialreportinconformitywithAustralianAccountingStandardsrequires management to make judgments, estimates and assumptions that affecttheapplicationof policiesand reportedamounts of assets and liabilities, income andexpenses.Theestimatesandassociatedassumptionsarebasedonhistoricalexperienceandvariousotherfactorsthatarebelievedtobereasonableunderthecircumstances,theresultsofwhichformthebasisofmakingthejudgmentsaboutcarryingvaluesofassetsandliabilitiesthatarenotreadilyapparentfromothersources.Actualresultsmaydifferfromtheseestimates.TheseaccountingpolicieshavebeenconsistentlyappliedbytheCompany. Theestimatesandunderlyingassumptionsarereviewedonanongoingbasis.Revisionstoaccountingestimatesarerecognisedintheperiodinwhichtheestimateisrevisediftherevisionaffectsonlythatperiod,orintheperiodoftherevisionandfutureperiodsiftherevisionaffectsbothcurrentandfutureperiods. JudgmentsmadebymanagementintheapplicationofAustralianAccountingStandardsthathavesignificanteffectonthefinancialreportandestimateswithasignificantriskofmaterialadjustmentinthenextyeararediscussedinnote1. The accounting policies set out below have been applied consistently to all periodspresented in the financial report and in preparingan openingAIFRS Balance Sheet at1January 2004 for the purposes of the transition to Australian Accounting Standards–AIFRS. (c)ForeignCurrency Foreigncurrencytransactions Transactionsinforeigncurrenciesaretranslatedattheforeignexchangeraterulingatthedateofthetransaction. MonetaryassetsandliabilitiesdenominatedinforeigncurrenciesattheBalanceSheetdate are translated to Australian dollars at the foreign exchange rate ruling at thatdate.ForeignexchangedifferencesarisingontranslationarerecognisedintheIncomeStatement.Non-monetaryassetsandliabilitiesthataremeasuredintermsofhistoricalcost in a foreign currency are translated using the exchange rate at the date of thetransaction.Non-monetaryassetsandliabilitiesdenominatedinforeigncurrenciesthatarestatedatfairvaluearetranslatedtoAustraliandollarsatforeignexchangeratesrulingatthedatesthefairvaluewasdetermined. (d)Derivativefinancialinstruments The Company uses derivative financial instruments to hedge its exposure to foreignexchangerisksarisingfromoperationalactivities.Inaccordancewithitstreasurypolicy,theCompanydoesnotholdorissuederivativefinancialinstrumentsfortradingpurposes.However,derivativesthatdonotqualifyforhedgeaccountingareaccountedforastradinginstruments.

Derivative financial instruments are recognised initially at cost. Subsequent to initialrecognition,derivativefinancialinstrumentsarestatedatfairvalue.Thegainorlossonremeasurementtofairvalueisrecognisedimmediatelyinprofitorloss.However,wherederivativesqualifyforhedgeaccounting,recognitionofanyresultantgainorlossdependsonthenatureoftheitembeinghedged(seeaccountingpolicye). ThefairvalueofforwardexchangecontractsistheirquotedmarketpriceattheBalanceSheetdate,beingthepresentvalueofthequotedforwardprice. (e)Hedging (i)Cashflowhedges Where a derivative financial instrument is designated as a hedge of the variability incashflowsofarecognisedassetorliability,orahighlyprobableforecastedtransaction,theeffectivepartofanygainorlossonthederivativefinancialinstrumentisrecogniseddirectlyinequity.Whentheforecastedtransactionsubsequentlyresultsintherecognitionofanon-financialassetornon-financial liability,or the forecast transaction foranon-financialassetornon-financialliability,theassociatedcumulativegainorlossisremovedfromequityandincludedintheinitialcostorothercarryingamountofthenon-financialasset or liability. If a hedge of a forecasted transaction subsequently results in therecognitionofafinancialassetorafinancialliability,theassociatedgainsandlossesthatwererecogniseddirectlyinequityarereclassifiedintoprofitorlossinthesameperiodorperiodsduringwhich theassetacquiredor liabilityassumedaffectsprofitor loss (i.e.,wheninterestincomeorexpenseisrecognised). Forcashflowhedges,otherthanthosecoveredbytheprecedingtwopolicystatements,the associated cumulative gain or loss is removed from equity and recognised in theIncome Statement in the same period or periods during which the hedged forecasttransaction affects profit or loss. The ineffective part of any gain or loss is recognisedimmediatelyintheIncomeStatement. When a hedging instrument expires or is sold, terminated or exercised, or the entityrevokes designation of the hedge relationship, but the hedged forecast transaction isstill expected to occur, the cumulative gain or loss at that point remains in equity andis recognised in accordance with the above policy when the transaction occurs. If thehedgedtransactionisnolongerexpectedtotakeplace,thecumulativeunrealisedgainorlossrecognisedinequityisrecognisedimmediatelyintheIncomeStatement. (ii)Hedgeofmonetaryassetsandliabilities Where a derivative financial instrument is used to hedge economically the foreignexchange exposure of a recognised monetary asset or liability, no hedge accountingisappliedandanygainor losson thehedging instrument is recognised in the IncomeStatement. Comparativeperiodpolicy Cashflowhedges Transactionsaredesignatedasahedgeof theanticipatedspecificpurchaseorsaleofgoodsorservices,purchaseofqualifyingassets,orananticipatedinteresttransaction,onlywhentheyareexpectedtoreduceexposuretotherisksbeinghedged,aredesignatedprospectivelysothatitisclearwhenananticipatedtransactionhasorhasnotoccurredanditisprobabletheanticipatedtransactionwilloccurasdesignated. Gains or losses on the hedge arising up to the date of the anticipated transaction,togetherwithanycostsorgainsarisingatthetimeofenteringintothehedge,aredeferredandincludedinthemeasurementoftheanticipatedtransactionwhenthetransactionhasoccurredasdesignated.AnygainsorlossesonthehedgetransactionafterthatdateareincludedintheIncomeStatement. ThenetamountreceivableorpayableunderforwardforeignexchangecontractsandtheassociateddeferredgainsorlossesarerecordedontheBalanceSheetfromthedateofinceptionofthehedgetransaction.Whenrecognised,thenetreceivablesorpayablesarerevaluedusingtheforeigncurrencycurrentatreportingdate. The net amounts receivable or payable under currency, forward rate agreements andfutures contracts and the associated deferred gains or losses are not recorded on theBalanceSheetuntilthehedgetransactionoccurs.Whenrecognisedthenetreceivablesorpayablesarerevaluedusingtheinterestorcommodityratescurrentatreportingdate. Option premiums are recorded in “other assets” when paid and included in themeasurementofthetransactionwhenitoccurs. When the anticipated transaction is no longer expected to occur as designated, thedeferredgainsorlossesrelatingtothehedgedtransactionarerecognisedimmediatelyinthencomeStatement. Where a hedge transaction is terminated early and the anticipated transaction is stillexpectedtooccurasdesignated,thedeferredgainsor lossesthataroseonthehedgepriortoitsterminationcontinuetobedeferredandareincludedinthemeasurementofthepurchaseorsaleorinteresttransactionwhenitoccurs.Whereahedgetransactionisterminatedearlybecausetheanticipatedtransactionisnolongerexpectedtooccurasdesignated,deferredgainsandlossesthataroseonthehedgepriortoitsterminationareincludedintheIncomeStatementfortheperiod.


Note 2. Changes in accounting policy InthecurrentfinancialyeartheCompanyadoptedAASB132:FinancialInstruments:Disclosure&PresentationandAASB139:FinancialInstruments:RecognitionandMeasurement.ThischangeinaccountingpolicyhasbeenadoptedinaccordancewiththetransitionrulescontainedinAASB1,whichdoesnotrequiretherestatementofcomparativeinformationforfinancialinstrumentswithinthescopeofAASB132andAASB139. TheadoptionofAASB139hasresultedintheCompanyrecognisingallderivativefinancialinstrumentsasassetsorliabilitiesatfairvalue.Thischangehasbeenaccountedforbyadjustingtheopeningbalanceofequity(cashflowhedgingreserve)at1January2005.

TheimpactontheBalanceSheetinthecomparativeperiodissetoutbelowasanadjustmenttotheopeningBalanceSheetat1January2005.Thetransitionalprovisionswillnothaveanyeffectinfuturereportingperiods. ReconciliationofopeningbalancesaffectedbyAASB132and139at1January2005

PreviousGAAP EffectofTransitiontoAIFRS AIFRS

Forwardcontractassets - 441 441 Cashflowhedgereserve - (441) (441) UnderpreviousAustralianGAAP,theCompanydidnotrecogniseanyderivativesatfairvalueontheBalanceSheet.InaccordancewithAIFRSsallderivativeswouldberecognisedatfairvalue.At1January2005,thefairvalueoftheforwardexchangecontractswas$441,422.TheeffectintheCompanyistoincreaseforwardcontractassetsby$441,422andincreasethecashflowhedgingreserveby$441,422. 31December2005 31December2004 Note 3. Other Income $’000 $’000 Otherrevenue: Managementfee-NSWRU 386 852 iRBgrant 352 352 ForeignExchangegain 267 267 Managementfee-NTRU 12 12 Managementfee-VRU 8 - Gainonsaleofnon-currentassets 1 90 Sundry 95 107 Total other revenue 1,121 1,680

Note 4. Surplus Thesurplusfortheyearhasbeenarrivedatafter charging/(crediting)thefollowingitems: Amortisationof: NewSouthWalesRugbyUnionLimitedloan 12 13Trademarks 121 176 133 189 Depreciationof: Propertyunderstratatitle 32 33Plantandequipment 411 520Plantandequipmentunderfinancelease 652 233 1,095 786 Total amortisation and depreciation 1,228 975 Borrowingcosts Otherparties -Financeleaseinterestcharges 34 29 34 29 Netbadanddoubtfuldebtsexpense/(benefit)includingmovementsinprovisionfordoubtfuldebts (41) 75 Netexpense/(benefit)frommovementsinprovisionfor employeeentitlements (86) (323) Operatingleaserentalexpense Minimumleasepayments 1,355 1,210 Net(gain)ondisposalofnon-currentassets (1) (54)

9392


Notes to the financial statements fortheyearended31December2005

(k)Impairment

(i)Calculationofrecoverableamount(continued)

Inassessingvalueinuse,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheasset.Foranassetthatdoesnotgeneratelargely independent cash inflows, the recoverable amount is determined for the cash-generatingunittowhichtheassetbelongs. (ii)Reversalsofimpairment Animpairmentlossinrespectofaheld-to-maturityreceivablecarriedatamortisedcostisreversedifthesubsequentincreaseinrecoverableamountcanberelatedobjectivelytoaneventoccurringaftertheimpairmentlosswasrecognised. An impairment loss in respect of an investment in an equity instrument classified asavailableforsaleisnotreversedthroughprofitorloss. Animpairmentlossisreversedonlytotheextentthattheasset’scarryingamountdoesnotexceedthecarryingamountthatwouldhavebeendetermined,netofdepreciationoramortisation,ifnoimpairmentlosshadbeenrecognised. (l)Interest-bearingborrowings Currentaccountingpolicy Interest-bearing borrowings are recognised initially at fair value less attributabletransaction costs. Subsequent to initial recognition, interest-bearing borrowings arestatedatamortisedcostwithanydifferencebetweencostandredemptionvaluebeingrecognised in the Income Statement over the period of the borrowings on an effectiveinterestbasis. Comparativeperiodpolicy Bank loans are recognised at their principal amount, subject to set-off arrangements.Interestexpenseisaccruedat the contracted rate and included in note 15 Trade andOtherPayables. (m)Employeebenefits (i)Definedcontributionplans ObligationsforcontributionstodefinedcontributionpensionplansarerecognisedasanexpenseintheIncomeStatementasincurred. (ii)Long-termservicebenefits TheCompany’snetobligationinrespectoflong-termservicebenefits,otherthanpensionplans,istheamountoffuturebenefitthatemployeeshaveearnedinreturnfortheirserviceinthecurrentandpriorperiods.Theobligationiscalculatedusingtheprojectedunitcreditmethodandisdiscountedtoitspresentvalueandthefairvalueofanyrelatedassetsisdeducted.ThediscountrateistheyieldattheBalanceSheetdateongovernmentbondsthathavematuritydatesapproximatingtothetermsoftheCompany’sobligations. (iii)Wages,salaries,annualleave,sickleaveandnon-monetarybenefits The provisions for employee benefits to wages, salaries, annual leave and sick leaverepresenttheamount that theCompanyhasapresentobligationtopayresultingfromemployees’servicesprovideduptoreportingdate.TheprovisionshavebeencalculatedatundiscountedamountsbasedonremunerationwageandsalaryratesthattheCompanyexpectstopayatreportingdateincludingrelatedon-costssuchasworkerscompensationinsurance and payroll tax. The carrying amount of the provisions approximate net fairvalue. Non-accumulatingnon-monetarybenefits,suchasmedicalcare,housing,carsandfreeorsubsidisedgoodsandservices,areexpensedbasedonthenetmarginalcosttotheCompanyasthebenefitsaretakenbytheemployees. (n)Provisions Aprovision is recognised in theBalanceSheetwhentheCompanyhasapresent legalorconstructiveobligationasaresultofapastevent,andit isprobablethatanoutflowof economic benefits will be required to settle the obligation. If the effect is material,provisions are determined by discounting the expected future cash flows at a pre-taxrate that reflects current market assessments of the time value of money and, whereappropriate,therisksspecifictotheliability. (i)SelfInsurance TheCompanyself-insuresforrisksassociatedwithworker’scompensation.Outstandingclaims are recognised when an incident occurs that may give rise to a claim and aremeasuredatthecostthattheentityexpectstoincurinsettlingtheclaims,discounted

usingaratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheliability. (o)Revenue (i)Goodssoldandservicesrendered Revenue from the sale of goods is recognised in the Income Statement when thesignificantrisksandrewardsofownershiphavebeentransferredtothebuyer.RevenuefromservicesrenderedisrecognisedintheIncomeStatementinproportiontothestageofcompletionofthetransactionattheBalanceSheetdate.Thestageofcompletionisassessedbyreferencetosurveysofworkperformed.Norevenueisrecognisediftherearesignificantuncertaintiesregardingrecoveryoftheconsiderationdue,thecostsincurredortobeincurredcannotbemeasuredreliably,thereisariskofreturnofgoodsorthereiscontinuingmanagementinvolvementwiththegoods. (ii)Governmentgrants GovernmentgrantsarerecognisedintheBalanceSheetinitiallyasdeferredincomewhenthereisreasonableassurancethatitwillbereceivedandthattheCompanywillcomplywith theconditionsattaching to it.Grants thatcompensate theCompany forexpensesincurredarerecognisedasrevenueintheIncomeStatementonasystematicbasisinthesameperiodsinwhichtheexpensesareincurred.GrantsthatcompensatetheCompanyforthecostofanassetarerecognisedintheIncomeStatementasotheroperatingincomeonasystematicbasisovertheusefullifeoftheasset. (p)Expenses (i)Operatingleasepayments Payments made under operating leases are recognised in the Income Statement on astraight-linebasisoverthetermofthelease.LeaseincentivesreceivedarerecognisedintheIncomeStatementasanintegralpartofthetotalleaseexpense. (ii)Financeleasepayments Minimumleasepaymentsareapportionedbetweenthefinancechargeandthereductionoftheoutstandingliability.Thefinancechargeisallocatedtoeachperiodduringtheleasetermsoastoproduceaconstantperiodicrateofinterestontheremainingbalanceoftheliability. (iii)Netfinancingcosts Net financing costs comprise interest payable on borrowings calculated using theeffective interest rate method, interest receivable on funds invested, foreign exchangegainsandlosses,andgainsandlossesonhedginginstrumentsthatarerecognisedintheIncomeStatement(seeaccountingpolicye). InterestincomeisrecognisedintheIncomeStatementasitaccrues,usingtheeffectiveinterestmethod. TheinterestexpensecomponentoffinanceleasepaymentsisrecognisedintheIncomeStatementusingtheeffectiveinterestratemethod. (q)Segmentreporting A segment is a distinguishable component of the Company that is engaged either inprovidingproductsorservices(businesssegment),or inprovidingproductsorserviceswithin a particular economic environment (geographical segment), which is subject torisksandrewardsthataredifferentfromthoseofothersegments. (r)Non-currentassetsheldforsale Immediately before classification as held for sale, the measurement of the asset isbroughtuptodateinaccordancewithapplicableaccountingstandards.Then,oninitialclassificationasheldforsale,non-currentassetsanddisposalgroupsarerecognisedatthelowerofcarryingamountandfairvaluelesscosttosell. Impairmentlossesoninitialclassificationasheldforsaleareincludedinprofitandloss,evenwhenthereisarevaluation.Thesameappliestogainsandlossesonsubsequentremeasurement. (s)Goodsandservicestax Revenue,expensesandassetsarerecognisednetoftheamountofgoodsandservicestax(GST),exceptwheretheamountofGSTincurredisnotrecoverablefromthetaxationauthority.Inthesecircumstances,theGSTisrecognisedaspartofthecostofacquisitionoftheassetoraspartoftheexpense. ReceivablesandpayablesarestatedwiththeamountofGSTincluded.ThenetamountofGSTrecoverablefrom,orpayableto,theATOisincludedasacurrentassetorliabilityintheBalanceSheet. CashflowsareincludedintheCashflowStatementonagrossbasis.TheGSTcomponentsofcashflowsarisingfrominvestingandfinancingactivitieswhicharerecoverablefrom,orpayableto,theATOareclassifiedasoperatingcashflows.


9594



31December2005 31December2004

Note 5. Auditors’ remuneration $ $Auditservices AuditorsoftheCompany-KPMG Auditofthefinancialreport-2005 50,000 43,795 50,000 43,795 Otherservices AuditorsoftheCompany-KPMG Otherassuranceservices 25,204 -Advisoryservices 31,068 28,500 56,272 28,500 106,272 72,295

Note 6. Segment reporting TheCompanyispredominantlyconcernedwiththepromotion,progressandgeneralcontrolofthegameofRugbyinAustralia.AccordinglynosegmentdisclosurehasbeenpreparedastheDirectorsconsidertheCompanyonlyoperatesinonesegment.

Note 7. Income tax TheCompanyisexemptfromincometaxunderthetermsofDivision50oftheIncomeTaxAssessmentAct1997. Note 8. Assets classified as held for sale AbuildingownedbytheARUispresentedasheldforsalefollowingthedecisionbymanagementtosellthebuildingduringthe2004year. Asat31December2005,thebuildingwasvaluedatbetween$2.5mand$2.75mbyanindependentvaluer.Thecarryingamountof$2.5miswithinthisrangeandisthereforenotimpaired.

31December2005 31December2004 $’000 $’000Freeholdproperty Atcost 2,650 2,650Accumulateddepreciation (145) (113) Total assets held for sale 2,505 2,537 Note 9. Cash and cash equivalents Cashatbankandonhand 624 1,862 Cashondeposit 30,630 33,441 Cash and cash equivalents in the Statement of Cashflows 31,254 35,303

31December2005 31December2004

Note 10. Trade and Other Receivables $’000 $’000 Current Tradereceivables 1,509 1,339 Otherreceivables-memberunions 288 1,856 NewSouthWalesRugbyUnionloan* - 179 NewSouthWalesRugbyUnionloanagreement-AussieStadiumfitout** 63 58 Otherreceivables 1,133 13

Provisionfordoubtfuldebts (129) (170) 2,864 3,275 Non-current LoanstoMemberUnions: NewSouthWalesRugbyUnion* - 32 NewSouthWalesRugbyUnionloanagreement-Aussiefitout** 105 169 ACTRugbyUnion 27 27 NorthernTerritoryRugbyUnion 80 80 TasmanianRugbyUnion 17 17 SouthAustralianRugbyUnion 42 42 271 367 *TheCompanywasamortisingthisloantoNSWRUovera20yearperiodinexchangefortheuseofcertainfacilitiesatAussieStadiumandothervenueswhereNSWRUconductsmatches.Thisloanwasfullypaidduringtheyear. **TheCompanyprovidedaloanof$350,000at9.03%p.a.toNSWRU,inordertopayforNSWRU’sfitoutoftheirAussieStadiumoffices. Thesefundswereprovidedthroughafinancing leasebetweentheCompanyandComleasePtyLtd. The loancommencedon19July2002and is inplaceuntil June2008. The loan is tobe repaidthroughmonthlyinstalmentsof$6,313includinginterest.

Note 11. Inventory Inventoryheldforre-sale,atcost 46 68Consumables,atcost 215 146 261 214 Note 12. Other current assets Prepayments 1,093 145ForeignExchangeForward 50 - 1,143 145 Note 13. Plant and equipment Plantandequipment Atcost 4,633 4,002 Accumulateddepreciation (3,480) (3,072) 1,153 930 Plantandequipmentunderfinancelease Atcapitalisedcost 1,145 975Accumulateddepreciation (1,145) (488) - 487 Total plant and equipment (net book value) 1,153 1,417 Reconciliations Reconciliationsofthecarryingamountsforeachclassof property,plantandequipmentaresetoutbelow: Plantandequipment Carryingamountatbeginningofperiod 930 1,216Additions 636 270Disposals (2) (36)Depreciation (411) (520)Carryingamountatendofperiod 1,153 930 Plantandequipmentunderfinancelease Carryingamountatbeginningofperiod 487 720Additions 165 -Depreciation (652) (233)Carryingamountatendofperiod - 487



31December2005 31December2004 Note 14. Intangibles $’000 $’000 Trademarks,atcost 657 529 Accumulatedamortisation (530) (409) 127 120 Note 15. Trade and other payables Tradecreditors 63 368 MemberUnioncreditorsandaccruals - 28 Othercreditorsandaccruals 8,085 8,098 8,148 8,494 Note 16. Deferred Revenue

Current 716 597 Non-current 1,278 1,363 Note 17. Interest-bearing liabilities Currentleaseliability 153 241

Non-currentleaseliability 106 258 Financingarrangements TheCompanyhasaccesstothefollowinglinesofcredit:

Totalfacilitiesavailable: FinancialGuarantee 20 20Foreigncurrencydealinglimit 430 430Globalpaymentsfacilities 600 600ANZonlinepaymentsfacility 1,500 1,500Businesscreditcardfacility 85 60Onlinepayrollfacility 100 100Chequeencashmentfacility 20 20 2,755 2,730 Facilitiesutilisedatreportingdate: FinancialGuarantee 20 20Foreigncurrencydealinglimit - -Globalpaymentsfacility - -ANZonlinepaymentsfacility - -Businesscreditcardfacility - -Onlinepayrollfacility - -Chequeencashmentfacility - - 20 20 Facilitiesnotutilisedatreportingdate: FinancialGuarantee - -Foreigncurrencydealinglimit 430 430Globalpaymentsfacility 600 600ANZonlinepaymentsfacility 1,500 1,500Businesscreditcardfacility 85 60Onlinepayrollfacility 100 100Chequeencashmentfacility 20 20 2,735 2,710

TheCompanycancelledtheoverdraftfacilityduring2003howeverthebankholdsaregisteredmortgageovertheCompany’sstratatitlepropertyandaregisteredequitablemortgagedebentureoveralltheCompany’sassets.

9796

FINANCIAL ANALYSIS & REPORTFINANCIAL ANALYSIS & REPORT

31December2005 31December2004 Note 18. Employee Benefits $’000 $’000

Employeebenefits Current AnnualLeave 760 909 Long-ServiceLeave 13 29 773 938 Non-Current Long-ServiceLeave 289 210 1,062 1,148

Numberofemployees Numberofemployeesatyearend 120 116 Superannuation TheCompanycontributestoexternallymanagedsuperannuationplans.Benefitsarebasedupontheaccumulationofassetsintheseplans. TheCompanyhasalegallyenforceableobligationtocontributeataflatratesetundertheCommonwealthSuperannuationGuaranteeCharge. Note 19. Contributed equity

TheCompanyisaCompanylimitedbyguaranteeand,intheeventofthewindingupoftheCompany,membersmayberequiredtocontributeamaximumof$100each. Note 20. Reserves Capitalprofitsreserve 566 566CashflowHedgeReserve 50 - 616 566

Natureandpurposeofreserves Capitalprofits Upondisposalofrevaluedassets,anyrelatedrevaluationincrementstandingtothecreditoftheassetrevaluationreserveistransferredtothecapitalprofitsreserve. CashflowHedgeReserve Thecashflowhedgereserverepresentsthefairvalueoftheforwardforeignexchangecontractsthecompanyusesasdescribedinnote22. Note 21. Retained surplus Retainedsurplusatbeginningofperiod 30,711 35,074Net(deficit)/surplusfortheperiod (3,212) (4,363) Retainedsurplusattheendofperiod 27,499 30,711


Company Carrying Fair Carrying Fair amount value amount value Note 2005 2005 2004 2004InthousandsofAUD Tradeandotherreceivables 10 2,8642,864 3,2753,275 Cashandcashequivalents 9 31,25431,254 35,30335,303 Forwardexchangecontracts: Assets 51 51 - - Financeleaseliabilities 17 259 259 499 499 Tradeandotherpayables 15 8,1488,148 8,4948,494 Unrecognised(losses)/gains - - Estimationoffairvalues Thefollowingsummarisesthemajormethodsandassumptionsusedinestimatingthefairvaluesoffinancialinstrumentsreflectedinthetable. Derivatives Forwardexchangecontractsareeithermarkedtomarketusinglistedmarketpricesorbydiscountingthecontractualforwardpriceanddeductingthecurrentspotrate.Forinterestrateswapsbrokerquotesareused.Thosequotesarebacktestedusingpricingmodelsordiscountedcashflowtechniques. Wherediscountedcashflowtechniquesareused,estimatedfuturecashflowsarebasedonmanagement’sbestestimatesandthediscountrateisamarketrelatedrateforasimilarinstrumentattheBalanceSheetdate.Whereotherpricingmodelsareused,inputsarebasedonmarketrelateddataattheBalanceSheetdate. Financeleaseliabilities Thefairvalueisestimatedasthepresentvalueoffuturecashflows,discountedatmarketinterestratesforhomogeneousleaseagreements.Theestimatedfairvaluesreflectchangeininterestrates. Tradeandotherreceivables/payables For receivables/payableswitha remaining lifeof less thanoneyear, thenotionalamount isdeemed to reflect the fair value.Allother receivables/payablesarediscounted todeterminethefairvalue. Interestratesusedfordeterminingfairvalue TheCompanyusesthegovernmentyieldcurveasof31December2005plusanadequateconstantcreditspreadtodiscountfinancialinstruments.Theinterestratesusedareasfollows: 2005 2004 Loansandborrowings - - Leases 7.95%to9.03% 7.95%to9.03% Receivables - -

9998

FINANCIAL ANALYSIS & REPORTFINANCIAL ANALYSIS & REPORT


Note 22. Financial Instruments

Exposuretocredit,interestrateandcurrencyrisksarisesinthenormalcourseoftheCompany’sbusiness.Derivativefinancialinstrumentsareusedtohedgeexposuretofluctuationsinforeignexchangerates. TheCompanyhasacreditpolicyinplaceandtheexposuretocreditriskismonitoredonanongoingbasis.Creditevaluationsareperformedonallcustomersrequiringcreditoveracertainamount.TheCompanydoesnotrequirecollateralinrespectoffinancialassets. InvestmentsareallowedonlyinliquidsecuritiesandonlywithcounterpartiesthathaveacreditratingequaltoorbetterthantheCompany.TransactionsinvolvingderivativefinancialinstrumentsarewithcounterpartieswithwhomtheCompanyhasasignednettingagreementaswellassoundcreditratings.Giventheirhighcreditratings,managementdoesnotexpectanycounterpartytofailtomeetitsobligations. AttheBalanceSheetdatetherewerenosignificantconcentrationsofcreditrisk.Themaximumexposuretocreditriskisrepresentedbythecarryingamountofeachfinancialasset,includingderivativefinancialinstruments,intheBalanceSheet. Hedging

TheCompany 2005 Effective 6months 6to12 1to2 2to5 Morethan Note interestrate Total orless months years years 5years

InthousandsofAUD Cashandcashequivalents* 9 5.33% 31,254 - - - - -Financeleaseliabilities 17 7.96% 259 77 77 106 - -Unsecuredbankfacility - - - - - - - 31,513 77 77 106 - - 2004 Effective 6months 6to12 1to2 2to5 Morethan Note interestrate Total orless months years years 5years Cashandcashequivalents* 9 5.30% 35,303 - - - - -Financeleaseliabilities 17 8.27% 499 121 121 152 106 -Unsecuredbankfacility - - - - - - 35,802 121 121 152 106 -

*Theseassetsbearinterestatafixedrate. Foreigncurrencyrisk TheCompanyisexposedtoforeigncurrencyriskonrevenuethatisdenominatedinacurrencyotherthantheAUD.ThecurrencygivingrisetothisriskisprimarilyUSD. TheCompanyhedgesninety fivepercentofall tradereceivablesdenominated inaforeigncurrency. TheCompanyusesforwardexchangecontractstohedgeits foreigncurrencyrisk.MostoftheforwardexchangecontractshavematuritiesoflessthanoneyearaftertheBalanceSheetdate.Wherenecessary,theforwardexchangecontractsarerolledoveratmaturity. InrespectofothermonetaryassetsandliabilitiesheldincurrenciesotherthantheAUD,theCompanyensuresthatthenetexposureiskepttoanacceptablelevel,bybuyingorsellingforeigncurrenciesatspotrateswherenecessarytoaddressshort-termimbalances.

TheprincipalamountsoftheCompany’sUSDbankloanshavebeenfullyhedgedusingforwardcontractsthatmatureonthesamedateastheloansaredueforrepayment. Forecastedtransactions TheCompanyclassifiesitsforwardexchangecontractshedgingforecastedtransactionsascashflowhedgesandstatesthematfairvalue.Thefairvalueofforwardexchangecontractsat1January2005wasadjustedagainsttheopeningbalanceofthehedgingreserveatthatdate. Thenetfairvalueofforwardexchangecontractsusedashedgesofforecastedtransactionsat31December2005was$50,539(2004:$nil),comprisingassetsof$50,539(2004:$nil)andliabilitiesof$nil(2004:$nil)thatwererecognisedinfairvaluederivatives.TheCompanydoesnothaveanyforwardexchangecontractshedgingforecasttransactions. Sensitivityanalysis InmanaginginterestrateandcurrencyriskstheCompanyaimstoreducetheimpactofshort-termfluctuationsontheCompany’searnings.Overthelonger-term,however,permanentchangesinforeignexchangeandinterestrateswouldhaveanimpactonCompany’searnings. Fairvalues ThefairvaluestogetherwiththecarryingamountsshownintheBalanceSheetareasfollows:


101100


Note 24. Contingent liabilities TheCompanyisadefendantinanumberofclaimsforpersonalinjuriesandotherdamagesrelatingtothegameofrugby.Theseclaimsarebeingdefendedandgenerallyaresubjecttoinsurancecoverage.AtthistimetheDirectorsareunabletoascertainwhattheCompany’sliability,ifany,maybe.

Note 25. Investment in associated Company TheCompanyownsaonethirdinterestinanunincorporatedjointventure,SANZARPtyLimited(ACN069272304).TheprimarypurposeofSANZARPtyLimitedistoactasagentfortheSANZARunincorporatedjointventureinrelationtospecificaspectsoftheNewsCorporationLimitedagreement. Theassetsandliabilitiesofthejointventurewerenotmaterialasat31December2005andtheCompany’sinterestswerethereforenotincludedintheCompany’sfinancialstatements.AllincomeflowingfromtheNewsAgreementandSANZARwasderiveddirectlybytheCompany. Alloftheobligationsoftheventurersarisingfromorattributabletothejointventureareseveralonlyandnotjointandseveral.

Note 26. Interest in joint venture TheCompanyhasaone-thirdinterestinanunincorporatedjointventure,SANZAR,whichwasestablishedtomanagespecificaspectsoftheNewsCorporationLimitedagreement(“NewsAgreement”)andpromoteinternationalrugbytournaments. Theassetsandliabilitiesofthejointventurewerenotmaterialasat31December2005andtheCompany’sinterestswerethereforenotincludedintheCompany’sfinancialstatements.AllincomeflowingfromtheNewsAgreementandSANZARwasderiveddirectlybytheCompany.

Alloftheobligationsoftheventurersarisingfromorattributabletothejointventureareseveralonlyandnotjointandseveral. Note 27. Notes to the Cashflow Statement (a)ReconciliationofCash ForthepurposesoftheCashflowStatement,cashincludescashonhandandatbankandshorttermdepositsatcall,netofoutstandingbankoverdrafts.CashasattheendofthefinancialperiodasshowninthestatementofcashflowsisreconciledtotherelateditemsintheBalanceSheetasfollows: 31December2005 31December2004 $’000 $’000 Cashatbankandonhand 624 1,862Cashondeposit 30,630 33,441 31,254 35,303 (b)Reconciliationofsurplustonetcashprovidedbyoperatingactivities Net(deficit)/surplusfortheperiod (3,212) (4,363) Add/(less)itemsclassifiedasinvesting/financingactivities: AllocationstoMemberUnions 9,031 8,372Interestreceived (2,119) (2,695)Interestpaid 34 29(Gain)/lossondisposalofproperty,plantandequipment (1) (54) Add/(less)non-cashitems: Amortisationoftrademarks&NSWRUloan 133 189Depreciation 1,095 786Amountssetasidetoprovisions (131) (248)Movementinfairvalueforwardcontract 50 - Beforechangeinassetsandliabilities 4,880 2,016

Changeinassetsandliabilitiesduringthefinancialperiod (Increase)/decreaseinreceivables 507 18,840 (Increase)/decreaseinprepaymentsanddeferredexpenditure (998) (51) (Increase)/decreaseininventory (47) 66 Increase/(decrease)inpayablesandprovisions (346) (61,651) Increase/(decrease)indeferredrevenue 34 7

Net cash provided by operating activities 4,030 (40,773)


Note 23. Commitments (a)TheNewsCorporationLimited TheCompany, togetherwithNewZealandRugbyUnionandSouthAfricanRugbyFootballUnionhadanagreementwithTheNewsCorporationLimited (“NewsAgreement”)whichcommencedin1995andwasinplaceuntil2005.Underthisagreement,theCompanysold,amongotherthings,itsbroadcastingrightsformatchesintheTriNationSeries(twoTestsagainstbothNewZealandandSouthAfricaperannum)andtheprovincialRugbySuper12Competition. TheNewsAgreementalsocommittedtheCompanytohostanin-boundtouragainstarecognisedrugbyplayingnation.Inanydomesticseason,theWallabiesshallplayatleastthreeTestsinAustralia(overandabovetheTriNationsSeries).AminimumoftwooftheseTestsshallbeagainstthenationalrepresentativeteamofarecognisedrugbyplayingnation. TheCompany,togetherwithNewZealandRugbyUnionandSouthAfricanRugbyFootballUnionhasenteredintoagreementswithanumberofbroadcastersaroundtheworld,includingNewsCorporationLimited,fortheperiod2006to2010forallInternationalandProvincialmatches.

(b)SANZARJointVenture The Company has given certain undertakings in respect to its participation in the SANZAR joint venture. These undertakings are consistent with its undertakings under the NewsAgreement. (c)ForeignExchangeHedgingArrangements TheCompanyhasnegotiateditspaymentarrangementsundertheNewsAgreementwherebyincomeflowsrelevanttotheagreedshareinplaceupto2005willbeinAustraliandollars.ThebalancearisingfromanincreasedshareisdenominatedinUnitedStatesDollarsandhasbeenhedgedwiththeuseofforwardexchangecontractsinplacewithMacquarieBankLimited.ThesehedgeshavebeenestablishedforthebalanceoftheNewsAgreementexposedtotheriskoffluctuationsinforeigncurrency. (d)MemberUnionCollectiveBargainingAgreementandMemorandaofUnderstandingwithMemberUnions ACollectiveBargainingAgreementhasbeennegotiatedbetweentheCompany,NewSouthWalesRugbyUnionLtd,QueenslandRugbyUnionLtd,AustralianCapitalTerritoryRugbyUnionLtdandRugbyUnionPlayers’AssociationInc.UnderthisagreementtheCompany,alongwiththeotherrugbybodiesisrequiredtomakeminimumplayerpayments.Thesetotalaminimumof$25,000,000for2006(2005-$22,180,000). TheCompanyisrequiredtomakegrantstoMemberUnionsundertheMemorandaofUnderstanding.Underthesememoranda,theCompanyiscommittedtopayaminimumamountof$26,652,884for2006(2005-$19,212,206). (e)Wallaby1stMembership InOctober1998,theCompanylaunchedtheWallabyFirstMembershipProgramme.TheMembership,limitedto5,000,providesaccesstopurchaseapremiumseatforallWallabyTestMatchesplayedinSydneyforthenextthirtyyears,includingfixturesatTelstraStadium. (f)StadiumAustraliaHiringAgreement TheCompanysignedahiringagreementwithStadiumAustraliaManagementLimited.UnderthisagreementtheCompanyiscommittedtoholdingatleasttwoWallabyTestMatchesatTelstraStadiumeachyearuntiltheyearending31December2011.Thehiringfeesaretobedeterminedbyreferencetothenumberandtypeofticketssoldforeachmatch. 31December2005 31December2004(g)OperatingLeaseCommitments

$’000 $’000 Futureoperatingleaserentalsnotprovidedforinthefinancialstatementsandpayable:

Withinoneyear 281 1,279Oneyearorlaterandnolaterthanfiveyears 36 244 317 1,523 TheCompanyleasespropertyundernon-cancellableoperatingleasesexpiringwithinthreeyears.LeasesgenerallyprovidetheCompanyarightofrenewalatwhichtimealltermsarerenegotiated.LeasepaymentscompriseabaseamountplusanincrementalrentalbasedonmovementsintheConsumerPriceIndex. TheCompanyleasesmotorvehiclesunderoperatingleasesexpiringwithinoneyear.Leasepaymentsarefixedforthetermoftheleases. (h)Financeleasepaymentcommitments Financeleasecommitmentsarepayable: Withinoneyear 167 274Oneyearorlaterandnolaterthanfiveyears 114 281 281 555 Less:Futurefinanceleasecharges (22) (56) 259 499 Leaseliabilitiesprovidedforinthefinancialstatements: Current 153 241Non-current 106 258Totalleaseliability 259 499 TheCompany leasesoffice fitoutat theAussieStadiumunder finance leasesexpiring in2008. Leasepaymentsare fixed for theentireperiodof the lease. TheCompany takesownershipofthefitoutattheendofthelease.

TheCompanyleasesofficefitoutat181MillerStreetNorthSydneyunderfinanceleasesexpiringin2006.Leasepaymentsarefixedfortheentireperiodofthelease.TheCompanytakesownershipofthefitoutattheendofthelease. (i)Generalbusiness In the ordinary course of business the Company has entered into commitments and undertakings with Member Unions, sponsors and other parties to support the promotion,sponsorship,coachinganddevelopmentofthegameofRugby.


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Note 31. Australian equivalents to International Financial Reporting Standards Asstatedinsignificantaccountingpoliciesnote1(a),thesearetheCompany’sfirstfinancialstatementspreparedinaccordancewithAIFRSs. Thepoliciessetoutinthesignificantaccountingpoliciessectionofthisreporthavebeenappliedinpreparingthefinancialstatementsfortheyearended31December2005,thecomparativeinformationpresentedinthesefinancialstatementsfortheyearended31December2004andinthepreparationofanopeningAIFRSBalanceSheetat1January2004(theCompany’sdateoftransition). InpreparingitsopeningAIFRSBalanceSheet,theCompanyhasadjustedamountsreportedpreviouslyinfinancialstatementspreparedinaccordancewithitsoldbasisofaccounting(previousGAAP).AnexplanationofhowthetransitionfrompreviousGAAPtoAIFRSshasaffectedtheCompany’sfinancialposition,financialperformanceandcashflowsissetoutinthefollowingtablesandthenotesthataccompanythetables. Reconciliationofequity Previous Effectof AIFRSs Previous Effectof AIFRSs GAAP transition GAAP transition toAIFRSs toAIFRSs

InthousandsofAUD 1-Jan-04 31-Dec-04

Assets

Cashandcashequivalents 82,214 -82,214 35,303 -35,303Tradeandotherreceivables 22,149 -22,149 3,275 - 3,275Inventories 280 -280 214 - 214Property,plantandequipment - - - 2,537 - 2,537Otherassets 94 - 94 145 - 145Total current assets 104,737 - 104,737 41,474 - 41,474 Receivables 441 - 441 367 - 367Property,plantandequipment 4,506 - 4,506 1,417 - 1,417Intangibleassets 71 - 171 120 - 120Total non-current assets 5,118 - 5,118 1,904 - 1,904Total assets 109,855 - 09,855 43,378 - 43,378 Liabilities

Tradeandotherpayables 70,070 -70,070 8,494 - 8,494Interest-bearingliabilities 274 - 274 241 - 241Deferredrevenue 308 - 308 597 - 597Provisions 1,281 - 1,281 938 - 938Total current liabilities 71,933 - 71,933 10,270 - 10,270 Interest-bearingliabilities 447 - 447 258 - 258Deferredrevenue 1,645 - 1,645 1,363 - 1,363Provisions 190 - 190 210 - 210Total non-current liabilities 2,282 - 2,282 1,831 - 1,831 Total liabilities 74,215 - 74,215 12,101 - 12,101 Net assets 35,640 - 35,640 31,277 - 31,277 Equity Reserves 1,765 - 1,765 1,765 - 1,765Retainedearnings 33,875 -33,875 29,512 -29,512Total equity 35,640 - 35,640 31,277 - 31,277 ExplanationoftransitiontoAIFRSs Assetoutinnote2,achangeinaccountingpolicyoccurredeffective1January2005fortheapplicationofAASB132andAASB139.Thisimpactisnotshowninthetableabove. ReconciliationofSurplus TherearenomaterialdifferencesbetweenthesurpluspresentedunderAIFRSandthesurpluspresentedunderpreviousGAAP. ReconciliationofCashflowStatement TherearenomaterialdifferencesbetweentheCashflowStatementpresentedunderAIFRSandthecashflowstatementpresentedunderpreviousGAAP.


Note 28. Key management personnel disclosures 31December2005 31December2004 $ $

Totalincomepaidorpayable,orotherwisemadeavailabletoDirectorsoftheCompanyfromtheCompanyoranyrelatedpartyinconnectionwiththemanagementoftheaffairsoftheCompany 850,200 735,570

Therewerenoothertransactionswithkeymanagementpersonnel,ortheirrelatedpartiesotherthanthosesetoutinnote29relatingtotheordinarycourseofbusiness. Note 29. Related parties Directors ThenamesofeachpersonholdingthepositionofDirectoroftheCompanyduringthefinancialyearwere: RGraham,WBarrett(resigned28April2005),DBree(resigned28April2005),MBrown(appointed28April2005),JCollins(resigned28April2005), GMFlowers,THall,BKehoe,DKumar,PMcGrath(appointed28April2005),RThomson(appointed28April2005),RATuckey(resigned28April2005) andDUsasz(appointed28April2005). RelatedPartyTransactions TheCompanyconductsnumeroustransactionswithMemberUnionsinthenormalcourseofthenationaladministrationofthegameofrugby.DetailsofloanswhichareinterestbearingandallocationsandotherpaymentstoMemberUnionsaredisclosedinnotes10and15respectively.AmountsreceivableandpayablebyMemberUnionsasat31December2005areincludedintradedebtorsandtradecreditors. FromtimetotimeDirectorsoftheCompany,ortheirassociates,maypurchasegoodsorservicesfromorthroughtheCompany.Thesepurchasesaregenerallyonthesametermsandconditionsasthoseenteredintobyotheremployeesorcustomersoraretrivialordomesticinnature. ThetermsandconditionsoftransactionswithDirectorsandtheirrelatedpartieswerenomorefavourablethanthoseavailable,orwhichmightreasonablybeexpectedtobeavailable,onsimilartransactionstononDirectorrelatedentitiesonanarm’slengthbasis.

Note 30. Events subsequent to balance date Therehasnotarisenintheintervalbetweentheendofthefinancialyearandthedateofthisreportanyitem,transactionoreventofamaterialandunusualnaturelikely,intheopinionoftheDirectorsoftheCompany,toeffectsignificantlytheoperationsoftheCompany,theresultsofthoseoperations,orthestateofaffairsoftheCompanyinfuturefinancialyears.


105104


Directors’ Declaration IntheopinionoftheDirectorsofAustralianRugbyUnionLimited: a)Thefinancialstatementsandnotes,setoutonpages88to103areinaccordancewiththeCorporationsAct2001,including: (i)givingatrueandfairviewofthefinancialpositionoftheCompanyasat31December2005andofitsperformance,asrepresented bytheresultsofitsoperationsanditscashflows,fortheyearendedonthatdate;and

(ii)complyingwithAccountingStandardsandtheCorporationsRegulations2001;and

b)TherearereasonablegroundstobelievethattheCompanywillbeabletopayitsdebtsasandwhentheybecomedueandpayable. ByorderoftheBoard

RGraham Director

GFlowers Director

Melbourne 17March2006

Independent audit report to the members of Australian Rugby Union Limited Scope

ThefinancialreportandDirectors’responsibility

ThefinancialreportcomprisesoftheIncomeStatement,StatementofRecognisedIncomeandExpense,BalanceSheet,CashflowStatement,accompanyingnotes1to31tothefinancialstatements,andtheDirectors’Declarationsetoutonpage104fortheAustralianRugbyUnionLimited,fortheyearended31December2005. TheDirectorsoftheCompanyareresponsibleforthepreparationandtrueandfairpresentationofthefinancialreportinaccordancewiththeCorporationsAct2001.Thisincludesresponsibilityforthemaintenanceofadequateaccountingrecordsandinternalcontrolsthataredesignedtopreventanddetectfraudanderror,andfortheaccountingpoliciesandaccountingestimatesinherentinthefinancialreport.TheDirectorsarealsoresponsibleforpreparingtherelevantreconcilinginformationregardingtheadjustmentsrequiredundertheAustralianAccountingStandardAASB1First-timeAdoptionofAustralianequivalentstoInternationalFinancialReportingStandards. Auditapproach

WeconductedanindependentauditinordertoexpressanopiniontothemembersoftheCompany.OurauditwasconductedinaccordancewithAustralianAuditingStandardsinordertoprovidereasonableassuranceastowhetherthefinancialreportisfreeofmaterialmisstatement.Thenatureofanauditisinfluencedbyfactorssuchastheuseofprofessionaljudgement,selectivetesting,theinherentlimitationsofinternalcontrol,andtheavailabilityofpersuasiveratherthanconclusiveevidence.Therefore,anauditcannotguaranteethatallmaterialmisstatementshavebeendetected.

Weperformedprocedurestoassesswhetherinallmaterialrespectsthefinancialreportpresentsfairly,inaccordancewiththeCorporationsAct2001,AustralianAccountingStandardsandothermandatory financial reportingrequirements inAustralia,aviewwhich isconsistentwithourunderstandingof theCompany’s financialposition,of theirperformanceasrepresentedbytheresultsoftheiroperationsandcashflows. Weformedourauditopiniononthebasisoftheseprocedures,whichincluded: ·examining,onatestbasis,informationtoprovideevidencesupportingtheamountsanddisclosuresinthefinancialreport,and ·assessingtheappropriatenessoftheaccountingpoliciesanddisclosuresusedandthereasonablenessofsignificantaccountingestimatesmadebytheDirectors. Whileweconsideredtheeffectivenessofmanagement’sinternalcontrolsoverfinancialreportingwhendeterminingthenatureandextentofourprocedures,ourauditwasnotdesignedtoprovideassuranceoninternalcontrols.

Audit opinion

Inouropinion,thefinancialreportofAustralianRugbyUnionLimitedisinaccordancewith: (a)theCorporationsAct2001,including: (i)givingatrueandfairviewoftheCompany’sfinancialpositionasat31December2005andoftheirperformancefortheyearendedonthatdate;and(ii)complyingwithAustralianAccountingStandardsandtheCorporationsRegulations2001;and (b)othermandatoryfinancialreportingrequirementsinAustralia.

KPMG

MarkEpper Partner

17March2006