The financial success of next year's Hong Kong Sevens would be severely affected by the economic downturn, a leading Hong Kong Rugby Football Union (HKRFU) official warned as it was revealed the union made a larger than expected surplus of HK$12 million last year. While celebrating a healthy surplus for 2008-09 - mainly generated by revenues earned from the 2009 Cathay Pacific/Credit Suisse Hong Kong Sevens - HKRFU moneyman Pieter Schats sounded a cautionary note that the full effect of the downturn hadn't yet been felt. 'Without wanting to sound pessimistic, the outlook for the next financial year will be very challenging given the market conditions and sentiment,' Schats said. Schats, who after six years stepped down as finance director at the annual general meeting on Thursday, believed the full impact of the global financial crisis was only starting to be felt and would have a huge effect on next year's Sevens. 'Many of our sponsors and patrons prepared their budgets for 2009-10 during the October-December period last year when the economic outlook was pretty dire,' Schats said. 'Commitments to marketing and entertainment budgets have been cut back a lot, and we wait to see what effect this will have on the 2010 Sevens. 'While we expect things to be tough, the union is well equipped to weather the storm given our strong financial position,' he added. The HKRFU raised a glass to another successful year with operating revenues topping HK$100 million for the first time (compared to HK$99.3 million in 2008 and HK$85.8 million in 2007). 'We had budgeted for an operating surplus of HK$5 million for the year, but instead we had a surplus of HK$12.2 million,' Schats said. 'Our improved operating surplus was achieved primarily by savings on expenses of HK$9.2 million.' HKRFU president Brian Stevenson hailed the result as 'fantastic'. 'We are a small union, but I know we are the envy of many bigger unions,' Stevenson said. 'This is largely due to the hard work of Pieter and his colleagues [other directors of the union].' The balance sheet showed rugby was in a healthy state and could once again lay claim to being the richest sport in town with total net assets of HK$156 million. Included in the fixed assets was HK$32 million as the net capitalised costs for King's Park and an investment fund of which the market value as of April 30 was HK$115 million, down HK$15.9 million from the previous year. 'The investments fund comprises HK$59.9 million invested in equities and bonds and another HK$55.2 million invested in low-risk money market funds,' Schats revealed. The reduction of HK$15.9 million in the investments funds from the previous year (HK$130.9 million in 2008) was put down to an unrealised loss on investments in the stock market, as well as a one-off payment of HK$6.9 million to the Australian Rugby Union and New Zealand Rugby Union for bringing the Bledisloe Cup to Hong Kong last year. Schats added: 'We have had a very good set of results in what has been a busy and interesting year. The financial crisis has impacted the HKRFU this financial year and will continue to into the next financial year.'