1. Accounting policies

The financial statements have been prepared under the historical cost convention and in accordance with applicable UK accounting standards. A summary of the significant group accounting policies is set out below, together with an explanation of where changes have been made to previous policies on the adoption of new accounting standards in the year.

(a) Basis of consolidation

The group financial statements consolidate the financial statements of the Rugby Football Union and its subsidiary undertakings made up to 30 June 2007 and its share of the results and post acquisition reserves of associated undertakings. The profits and losses of subsidiary and associated undertakings are consolidated from the date of acquisition to the date of disposal. The group’s interests in associates are accounted for using the equity method. Subsidiary undertakings are fully consolidated line by line, with the minority shareholders’ share of earnings and retained earnings shown separately.

The Rugby Football Foundation, a registered charity (charity no. 1100277 and company no. 4608134), is consolidated within these group financial statements on the basis that it is a quasisubsidiary of the Rugby Football Union. Given the Rugby Football Foundation’s status as a charity, separate disclosure of its activities is provided in note 26.

(b) Pension costs and other post retirement benefits

The Rugby Football Union operates a defined benefit scheme and a defined contribution scheme.

Defined benefit pension scheme current service costs and gains and losses on settlements are charged to the profit and loss account. Past service costs are recognised immediately in the profit and loss account if the benefits have vested. If the benefits have not vested, the costs are recognised over the period until vesting occurs. The interest cost and expected return on assets are shown as a net amount in net finance income. Actuarial gains and losses are recognised immediately in the statement of total recognised gains and losses.

The defined benefit scheme is funded with the assets of the scheme held separately from those of the group, in separately administered funds. Pension scheme assets are measured at fair value and liabilities are measured on an actuarial basis using the projected method and discounted at a rate equivalent to the currency rate of return on a high quality corporate bond of equivalent currency and term to the scheme liabilities. The actuarial valuations are obtained at least triennially and are updated at each balance sheet date. The resulting defined benefit asset or liability, net of the related deferred tax, is presented separately after other net assets on the face of the balance sheet.