21st Apr

FCA tackles Wasps over the 'accuracy and timeliness' of its market reporting


The Financial Conduct Authority (FCA) has launched an investigation into Wasps Rugby Club to establish whether it misled the market about the state of its finances after it admitted to creditors in late 2017 that it had overstated its earnings.


The Premiership club was thereby in breach of covenants on its £35m retail bond and its auditors, PwC, stepped down after finding ‘falsified’ information.

The key issue was that a £1.1m capital injection by Wasps’ owner Derek Richardson was wrongly stated as income; in an announcement made in December 2017 the club admitted that its earnings would therefore have been £2.4m rather than the £3.5m it first stated.

Issued in 2015 the 6.5% 2022 bond, which trades on the London Stock Exchange’s Order Book for Retail Bonds, was planned to help develop the club’s Ricoh stadium in Coventry and refinance its debts.

You can see the whole saga unfolding in these previous articles on Retail Bond Expert:


Wasps Launches 6.50% Secured Bonds due 2022

You want it back when......? Wasps likely to refinance 6.5% bond due 2022

Sting in the tale for holders of Wasps 6.5% due 2022?

We need to come to some arrangement; Wasps seeks bondholders agreement after covenants are breached

Wasps’ 6.5% 2022 retail bond ‘….Should I stay or should I go now?’


FCA has opened a formal investigation into the accuracy and timeliness of statements to the markets made by Wasps Finance Plc the special purpose vehicle (SPV)that is the issuer of the bonds and is summoning individuals for interviews; the regulator has the power to fine and criminally prosecute breaches of its market-cleanliness rules.

When it quit May PwC in a statement to Companies House said that it had been ‘provided with evidence which our testing revealed to have been falsified’ and that ‘given the seriousness of these events’ it no longer felt it appropriate’ to continue in the role.

'FCA has opened a formal investigation into the accuracy and timeliness of statements to the markets made by Wasps Finance Plc'

A 2018 review by the club found that ‘a number of items held on the balance sheet could not be substantiated, and the move on to the new accounting system at the end of 2016 resulted in various transactions being recognised in the old system after the statutory accounts had been finalised’.

Wasps is just the latest in a list of companies being investigated  over the accuracy and timeliness of their public announcements which includes Carillion, Cobham, Telit and Interserve; it also levied a record £27.4m fine on Rio Tinto for breaches, and made Tesco set up a compensation scheme after accounting misstatements.

The probe adds further to the woes of the loss making club is; its latest accounts state that it is ‘dependent upon the financial support of its ultimate shareholder’ (Mr Richardson ) ‘to remain within its committed lending facilities, and to meet the financial covenants associated with the retail bonds’.

With such a lot of publicity surrounding the recent collapse of the mini-bond issued by London Capital and Finance, there is sure to be some nervousness, although it should be stated that bonds issued on ORB are considered to be the gold standard in terms of the level of scrutiny applied by the UK Listing Authority and to date no issue has ever defaulted.

In January 2018 Almost 99% of bondholders voted to waive the breach of covenants and at the last market close the bond was trading at 90.62 suggesting that there was no stampede for the exit.

Wasps’ current accounts state that directors are satisfied support will be forthcoming but that reliance on Mr Richardson means that if he were to withdraw support, the club would not have the cash available to repay the bonds without fresh funding.

Current directors of the SPV are Nick Eastwood, who became the club’s chief executive in 2017, and Mr Richardson, who bought the club in 2013 and staved off its bankruptcy; the bond is secured by the 32,600-seater Ricoh stadium, which the club bought in 2014.


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