PwC cries foul over Wasps rugby club earnings statement

Wasps, the English Premiership rugby union club and owner of the Ricoh Arena in Coventry, has been forced to ask holders of its retail bonds to authorise certain waivers to the terms and conditions, after auditor PwC identified an overstatement of earnings

In a statement to the stock exchange, Wasps said it was making a consent solicitation as a result of a reduction in consolidated EBITDA for the financial year ended 30 June 2017 from its original statement of £3.5m to £2.4m.

Wasps said: ‘The over-statement of consolidated EBITDA was attributable to the improper accounting as income under IFRS of and certain accounting irregularities relating to a £1.1m cash contribution received by Wasps Holdings from its ultimate shareholder, which was incorrectly accounted for as income under IFRS in respect of the financial year ended 30 June 2017.

‘Due to the timing of receipt, the board of directors of Wasps Holdings and its auditors have also concluded that the cash contribution should be accounted for as a capital contribution made in the financial year ending 30 June 2018.’

The change means Coventry-based Wasps is in breach of its agreement with bondholders that sets a ratio of earnings to costs.

Nick Eastwood, Wasps chief executive, said: ‘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.’

Despite the accounting errors, Wasps reported a successful year financially, and finished first in the Aviva Premiership, eventually losing in the final to Exeter. Turnover increased 8.5% to £33.6, while its operating loss fell from £6.2m to £800,000.

Report by Pat Sweet

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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