And ‘un­cer­tainty’

Nuneaton Telegraph - - FRONT PAGE -

It sits un­der par­ent com­pany Wasps Hold­ings Group (WHL), which also con­sists of Wasps Hold­ings Lim­ited, which runs the rugby club, Ri­coh arena busi­ness Arena Coven­try Lim­ited and events com­pany IEC Ex­pe­ri­ence Lim­ited.

Wasps was also crit­i­cised by the au­di­tors over “fal­si­fied” in­for­ma­tion con­cern­ing a fi­nan­cial ir­reg­u­lar­ity that saw the ac­counts de­layed by more than three months. Wasps Group, which runs the rugby club and the Ri­coh Arena , over­stated its earn­ings af­ter declar­ing a £1.1mil­lion cash in­jec­tion from “ul­ti­mate share­holder” Derek Richard­son as rev­enue in­stead of as a cap­i­tal con­tri­bu­tion.

The re­port said: “Dur­ing the year, WHL [Wasps Group] recog­nised in­come of £1.1m re­lat­ing to a risk mit­i­ga­tion con­tract.

“Man­age­ment con­sid­ered that this ar­range­ment was with an in­de­pen­dent third party, and that there was com­mer­cial sub­stance to the trans­ac­tion.

“We fo­cused on this trans­ac­tion as our ini­tial au­dit pro­ce­dures iden­ti­fied that re­ceipts from this ar­range­ment came from Derek Richard­son, the com­pany’s ul­ti­mate con­trol­ling party, and we had ques­tions as to the com­mer­cial sub­stance of the trans­ac­tion. In the course of our au­dit en­quiries into the above, we were pro­vided with ev­i­dence which our test­ing re­vealed to have been fal­si­fied.

“We un­der­took ad­di­tional au­dit pro­ce­dures to es­tab­lish the facts be­hind the trans­ac­tion and to de­ter­mine whether other key au­dit ev­i­dence was re­li­able.

“Our ex­tended test­ing did not iden­tify any other is­sues with the ev­i­dence sup­port­ing the fi­nan­cial state­ments of WHL.”

The re­port also re­vealed that one of the group’s au­di­tors – Price­wa­ter­house­C­oop­ers – had an­nounced it was “re­sign­ing” fol­low­ing the ac­count­ing ir­reg­u­lar­i­ties.

The dis­crep­ancy was picked up by au­di­tors – who also de­cided the pay­ment came too late to go in the 2017 ac­counts and de­layed the fil­ing of ac­counts for Wasps Fi­nance Plc for the year end­ing June 30, 2017.

The ac­counts should have been with Com­pa­nies House by the end of 2017.

And be­cause they were not it also meant the group had breached the rules of its £35mil­lion bonds scheme – which have been pop­u­lar with in­vestors who earn a fixed gross in­ter­est of 6.5 per cent a year un­til 2022, paid semi-an­nu­ally.

Wasps Fi­nance Plc, which was set up to han­dle the bond scheme launched in April 2015, had to ask bond­hold­ers to waive the breach in its rules on the ra­tio of earn­ings to costs at a meet­ing and re­plen­ish the in­ter­est re­serve ac­count by way of share­holder in­vest­ment on Jan­uary 19, de­lay­ing the ac­counts.

Talk­ing about the fal­si­fied ev­i­dence, a spokesman for the club said: “This was an iso­lated in­ci­dent, en­tirely at odds with our pol­icy of main­tain­ing the high­est stan­dards of gover­nance. The mat­ter has been ad­dressed di­rectly and as we an­nounced in De­cem­ber, a num­ber of mea­sures have been put in place to strengthen the ro­bust­ness of the Group’s re­port­ing and ac­count­ing pro­ce­dures.”

The re­ceipt of in­ter­est re­ceiv­able and com­pli­ance with the Re­tail Bond fi­nan­cial covenants for Wasps Fi­nance Plc are de­pen­dent upon the per­for­mance of par­ent group – Wasps Hold­ings Group (WHG). The group has net as­sets of £13.6mil­lion but made a loss of £3,809,000 in the cur­rent year. Last year, losses to­talled £6,370,000. WHG has cur­rent net li­a­bil­i­ties of £7,877,000, up from £7,202,000 at the end of 2016.

The amount of cash held by Wasps Fi­nance Plc at the bank and in hand fell slightly from £1,772,000 at the end of 2016 to £1,139,000 at the end of 2017.

Its debt con­sists of a £35mil­lion trade­able bond held on the LSE Re­tail Bond mar­ket.

This was an iso­lated in­ci­dent, en­tirely at odds with our pol­icy of main­tain­ing the high­est stan­dards of gover­nance.

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