ENFORCEMENT action has been taken against Wasps for late filing of accounts – a criminal offence – amid problems with its bond scheme and cracks found at the Ricoh, we can reveal.
The accounts for Wasps Finance Plc are now nearly three months late, having been due at Companies House by December 31 last year.
Wasps Finance Plc is a public company which administers the bond scheme, separate to management company Wasps Holdings Limited which manages the rugby club.
The bond scheme was set up in 2015 to transfer the Wasps group’s £35million debts into bonds. Anonymous people and organisations bought the bonds. They are due to receive 6.5 per cent annual interest on the bonds, and get their money back in 2022.
When the Coventry Observer asked Wasps to explain the late filing of accounts for the year ending June 2017, they referred to problems in the scheme reported to bondholders in December last year.
A Wasps statement issued to us claimed the timescale for filing the accounts had been “driven by the requirements of the bondholder meeting held at the end of January.”
Yet the late filing of accounts is unconditionally a criminal offence.
The rugby club responded to us with the following statement:
A spokesperson for Wasps Group said: “The timetable for the annual accounts has been driven by the requirements of the bondholder meeting held at the end of January. The accounts are currently being finalised and will be filed by the end of March.”
As the statement appears to be at odds with the statutory requirements to file accounts on time, we asked Wasps if it had such an agreement with Companies House.
Wasps replied with the following further statement:
“Wasps informed Companies House about the bondholder meeting and that the accounts would be filed later as a result of this, which they were happy with.”
But Companies House told us the company was subject to “enforcement action”. Its statement to us reads..
“We are taking appropriate enforcement action to secure the filing of the overdue accounts but this is a matter between Companies House and the company. Our aim is to secure compliance and bring the filing records up to date and we are taking the appropriate action to achieve this.”
We also asked Wasps Finance Plc if it had secured the private waivers and modifications to the scheme that it sought from bondholders.
It replied: “Yes, Wasps Finance Plc received consent from the bondholders.”
Wasps had defaulted on covenants – or pledges – to its bondholders following accounting irregularities found by auditors, the Wasps group of companies had claimed in December.
The errors, it said, related to how a further £1.1million loan by Wasps’ “ultimate shareholder” Derek Richardson had been wrongly entered into the 2016/7 accounts, and would now be allocated to the next year’s accounts.
It meant Wasps’ pre-tax earnings (EBITDA) for 2016/7 had fallen by £1.1million to £2.4millon. This was below 1.5 times the value of interest payments due on the bonds.
One of the covenant pledges to bondholders was that EBITDA would not fall below this ratio.
In December, Wasps announced the errors and stated it was seeking bondholders’ permission to waive and modify the terms of the covenants.
The bonds are secured against the Ricoh Arena, which a recent valuation estimated to be worth £60million, £12million more than previously. Further covenants relate to the Ricoh’s value.
It has emerged this month that cracks have been discovered at the stadium, attributed to “ground settlement”.
A Wasps Ricoh Arena statement reads: “Routine building checks have found some minor cracks in some walls which is a result of ground settlement, which is not unusual in a building of this size. In consultation with our structural engineer we are carrying out the normal maintenance.
“The Ricoh Arena will remain open as normal during maintenance works and there will be no disruption to the venue’s day-to-day operations.”
Wasps also reported in December that, for the year up to June 2017, ongoing operating losses continued, but reduced from £6.2million to £800,000.
We have reported how significant rises in annual revenue since Wasps came to the Ricoh Arena, after its 2014 purchase of the stadium management company, has been accompanied by large costs increases, affecting the bottom line.
A statement from Wasps’ Nick Eastwood in December read:
“We take the events and circumstances surrounding the accounting of the cash contribution extremely seriously and have implemented various steps to strengthen the robustness of the Group’s reporting and accounting procedures. The business has evolved significantly since we moved to the Ricoh Arena in 2015. We have continued to grow the business, reported record revenues and reduced operating losses as part of our strategy to build a stable foundation for our long-term future. We welcome the continued support from our Bondholders throughout this time. We believe the proposals announced today represent important amendments that are in their interest as part of the Group’s ongoing development and commercial success.”