18th Nov, 2018

Wasps' bond scheme accounts still overdue despite enforcement action for breaking law, with latest 'end of March' timescale missed

Les Reid 4th Apr, 2018 Updated: 4th Apr, 2018

WASPS have failed to meet their own belated timescale to file accounts by the end of March – despite enforcement action being taken against them for breaking the law.

We revealed two weeks ago Wasps Finance plc – the company in charge of the rugby club’s bond scheme – was three months late in filing its accounts, due on December 31 last year.

We also revealed Companies House was taking enforcement action to force it to finally comply with the law.

Wasps told us a fortnight ago: “The accounts are currently being finalised and will be filed by the end of March.”

Asked this week why Companies House still had the accounts marked as overdue, a spokesman for the Wasps group of companies told us today: “We were not able to file our accounts by the end of March as we had wished, due to additional final details of audit work taking slightly longer to complete than expected.

“We have kept Companies House fully informed and will be filing shortly.”

Wasps Finance plc is a public company, 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. The bonds can also be bought and sold on the London Stock Exchange.

The law on filing periodic accounts on time exists to enable clients of companies and all others to publicly examine the financial state of the company in a timely manner – to make informed decisions.

A Wasps statement issued to us two weeks ago 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.

As Wasps’ statement had appeared to be at odds with the statutory requirement, we asked Wasps if it had such an agreement with Companies House.

Wasps replied with the following further statement two weeks ago: “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 had told us the company was subject to “enforcement action”.

Its statement to us read: “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 reported the Wasps group told us it had privately received consent from bondholders to modify the terms of the bond scheme, after it had defaulted on covenants – or pledges – to its bondholders following reported accounting irregularities found by auditors.

The errors, the Wasp Group said, had 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.

The bonds are also secured against the Ricoh Arena, which a recent valuation estimated to be worth £60million, £12million more than previously, although cracks have recently been discovered in the stadium’s structure, attributed to “ground settlement”. Further covenants relate to the Ricoh’s value.

We have reported Wasps Group’s ongoing annual losses since moving to the city from Wycombe after purchasing the Ricoh Arena company on a huge 250-year lease from Coventry City Council and the Alan Edward Higgs Trust. Their revenue has risen, but so too have their costs.

Wasps has said it would “strengthen the robustness of the Group’s reporting and accounting procedures”.

Penalties for late filing of accounts over a period of months involve a staggered fining system, with ultimate sanctions including prosecutions.

We have approached Companies House for further comment.

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