FOR THE YEAR ENDED 30 JUNE 2019
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WRFC TRADING LIMITED
COMPANY INFORMATION
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WRFC TRADING LIMITED
CONTENTS
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WRFC TRADING LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2019
The principal activity of the business during the year was promoting the playing and development of rugby football.
Our 2018/19 season started well, injuries of key players and disruption to the coaching team impacted results midseason with close losses, a number of impressive performances at the end of the season resulted in a 9th place finish. We retained our position in the Premiership for a fifth successive season, setup well for next season.
The Owners of the Club remain committed to investing in all of the Club’s teams, the development of the Stadium and facilities to achieve longterm sustainability and providing funding to the first team within the salary cap. The profit for the year, before tax, was £14m which includes fair value gains of £7.4m and exceptional items of £12m. The underlying loss before tax was therefore £5.4m, which is in line with the underlying loss before tax for the prior year of £5.8m. Turnover decreased by £0.8m to £11.4m. On 28 September 2018, the majority shareholding held by Sixways Holdings Limited was purchased by Worcester Sport Limited (formerly known as Militibus Quanco Limited). This audit has been delayed due to the 3 complex transactions in the same accounting year; i) the acquisition/change in ownership, ii) the CVC transaction and iii) the buyout by Bond Group of the remaining 50% from a former shareholder - all of which required detailed assessment as part of the audit process, made all the more difficult due to COVID-19 restrictions. While the global COVID-19 pandemic and resulting national lockdown presented serious challenges, the company and Group have made significant improvements to the strength of its financial position. This included bringing the freehold and leasehold interest in the stadium and property assets back into the Group, reducing borrowing costs and progressing work on the Sixways Development Project with feasibility now nearing completion. The Sixways Development Project is now looking likely to proceed and will represent a materially positive change to the financial health of the business; based on current feasibility projections it will push the Group well into longterm financial sustainability. The Club is saddened to have lost its founder Mr Cecil Duckworth earlier this year and will continue to build on the legacy he created including on his principles of supporting the community, on sustainability and protecting the environment. Prior to his passing it was agreed that Cecil would remain Honorary President of the Club in perpetuity. On the 17th February 2021 the sale and leaseback arrangement in respect of the land and buildings disclosed in note 11 below ended and the land and buildings were brought back under group ownership.
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WRFC TRADING LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
The key principal risks and uncertainties of the Club are as follows:
∙
The health and wellbeing of all playing staff. The Club employs the best coaches, doctors, physiotherapists, nutritionists, and strength and conditioning staff possible to ensure players are kept at their peak physical condition;
∙
Retaining key coaching and playing staff by the timely renewal of contracts, and ensuring that our coaching and support is second to none;
∙
Maintaining our position in the Premiership, which is attractive to fans and broadcasters. The club works with other Premiership club executives to develop a mutually successful UK and European competition;
∙
Continuing with our heads of agreement with the RFU. The club worked with other Premiership club executives on an eight year renewal from September 2016;
∙
Ensuring Sixways Stadium remains a safe match day and conferencing and events experience;
∙
Central funding not tracking in line with the rise in salary cap and the resulting increase in players costs;
∙
Team performance relative to other clubs in the Premiership affecting our supporters, leading to reduced attendance;
∙
The COVID-19 pandemic has presented fresh challenges both financial and operational which have been managed so far, with positive news of the vaccine being rolled out in early 2021. However, the uncertainty surrounding the pandemic including lockdowns, business closures and the outcome of games in the event of a club outbreak presents a material risk to the business; and
∙
Seeking funding and ensuring adequate funds are available to meet the Club's operational needs is a key risk.
The directors are aware of and review these risks and uncertainties as part of their on-going strategic planning. The directors do not consider these risks and uncertainties pose immediate threat to the performance of the business and have taken account of these matters in their business planning. The directors remain confident about the Club's future, and that of professional club rugby as a whole.
In March 2020, the COVID-19 pandemic hit and affected significantly impacted the operations of the Group. There is a significant amount of uncertainty relating to the evolution of the ongoing global pandemic. Although initial vaccine results have been promising, future restrictions cannot be reliably foreseen. Furthermore, to combat the COVID-19 pandemic in September 2020 the Government announced a Sports Winter Survival Package (SWSP). This funding, in the form of a long term loan, is to support the Club through to the end of March 2021 and there is also a provision for further support to run through to March 2022. These amounts have already been confirmed to us by the Government. This additional support, coupled with our own debt raise, will ensure that the Club remains a viable business as we work toward its development and sustainability.
The business measures its financial performance using the following measures:
∙
Setting an annual budget based upon detailed KPIs for the season and for each fixture; attendance, average ticket price, spend per head, retail and margin by category, and then monitoring performance;
∙
Reviewing customer feedback to ensure the winning of new business and retaining existing customers;
∙
Monitoring senior and academy salary squad caps;
∙
Preparing an annual cash flow forecast and shareholder funding requirement, and monitoring these on a monthly rolling basis;
∙
Targeting increasing commercial revenues through sponsorship, hospitality, advertising, events and non match opportunities.
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WRFC TRADING LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
This report was approved by the board
and signed on its behalf.
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WRFC TRADING LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2019
The directors present their report and the financial statements for the year ended 30 June 2019.
The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the
consolidated
financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year
. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙
select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙
make judgements and accounting estimates that are reasonable and prudent;
∙
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The profit for the year, after taxation, amounted to £
12,938,380
(2018:
loss of
£
5,755,423
)
.
No dividend has been declared or paid in the current or prior year.
The directors who served during the year were:
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WRFC TRADING LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
On 28 September 2018, the majority shareholding held by Sixways Holdings Limited was purchased by Worcester Sport Limited (formerly known as Militibus Quanco Limited).
The business remains committed to the long-term vision of becoming a sustainable Premiership Club with aspirations of competing at the very highest level by continued investment in the First team, development of the Academy and a fresh approach to nurturing and developing the Women’s team. Whilst focussing on all Rugby Team’s activity we will also look to now develop the non-Rugby related commercial activity, including major events, along with the entire Sixways site building a sporting and commercial hub that will return a significant income for the Club ensuring we work toward self-sustainability. We will also invest into broadening the support base and improving the fan experience, in and around the Stadium, working with the Community and our Foundation to develop an all-inclusive experience.
The Group's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.
Information on matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the Group's performance.
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WRFC TRADING LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
The ongoing global COVID-19 pandemic, of which the principal effects commenced in February 2020, continues to have a significant impact on the activities of the Group.
The Group has faced significant restrictions to its activities as a result of UK government guidelines designed to reduce the spread of the virus. These restrictions have prevented spectators from being able to attend games, required additional measures to be implemented during training sessions or games and caused delay to the normal operating timetables across the industry. The full extent of the impact in future periods cannot be reliably predicted at the time of the approval of these financial statements, however it is expected to be material. The impact on the Group will depend on the measures imposed by the government, industry regulators and local authorities, as well as the success of any vaccine in preventing transmission of the virus. To combat the COVID-19 pandemic in September 2020 the Government announced a Sports Winter Survival Package (SWSP). This funding, in the form of a long term loan, is to support the Club through to the end of March 2021 and there is also a provision for further support to run through to March 2022. These amounts have already been confirmed to us by the Government. This additional support, coupled with our own debt raise, will ensure that the Club remains a viable business as we work toward the development and sustainability.
GOING CONCERN
The Group has a plan to reduce trading deficits, however with the significant impact of COVID from March 2020 onwards, this has disrupted this plan. The Group has taken advantage of Government support, to help through this difficult period, whilst continuing to focus on their longer term strategy. To combat the COVID-19 pandemic in September 2020 the Government announced a Sports Winter Survival Package (SWSP). This funding is in the form of a long term loan, to support the Club through to the end of March 2021 and there is also a provision for further support to run through to March 2022, if COVID disruption continues.
The directors have prepared forecasts to July 2022, which has quantified the future funding need of the Company. The directors have considered the existing funding available and the support available through their wider group companies, and other companies under common control. Whilst this funding meets a large proportion of the funding they anticipate needing, there is still some further funding considered necessary for which the group has a number of options available. The directors have identified a number of opportunities to raise the necessary finance and are continuing to consider the most beneficial route for the group. A corporate finance partner has been engaged to help evaluate and secure the most suitable form of finance, both to support working capital and future development plans. The directors, and their corporate finance partner, are confident of the ability of the Group to raise the additional finance the company anticipates it requires to continue as a going concern, however, this is not guaranteed until one is chosen and entered into. The Group, as at February 2021, owns the freehold to the Sixways site, which was valued by an independent RICS valuer at £16.7m in 2018 including land and stadium which has been substantially improved with a multi-million investment together with significantly improved planning potential for development, which is now unencumbered and not being used to secure any debts. The directors have confirmed that, if required, these assets would be used to secure any funding required. After reviewing the Group's forecasts and projections, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the going concern basis in preparing its consolidated financial statements.
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WRFC TRADING LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
The auditors, Bishop Fleming LLP, will be proposed for reappointment in accordance with
section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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WRFC TRADING LIMITED
INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF WRFC TRADING LIMITED
We have audited the financial statements of WRFC Trading Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 30 June 2019, which comprise the Group Statement of Comprehensive Income, the Group and Company Statements of Financial Position, the Group Statement of Cash Flows, the Group and Company Statement of Changes in Equity
and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards,
including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
∙
the directors
' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
∙
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Group's or the parent Company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.
The directors are responsible for the other information. The other information comprises the information included in the Directors Report and Strategic Report, other than the financial statements and our Auditors' Report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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WRFC TRADING LIMITED
INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF WRFC TRADING LIMITED (CONTINUED)
In our opinion, based on the work undertaken in the course of the audit:
∙
the information given in the Group Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙
the Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities
. This description forms part of our Auditors' Report.
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WRFC TRADING LIMITED
INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF WRFC TRADING LIMITED (CONTINUED)
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
Statutory Auditors
1-3 College Yard
WR1 2LB
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WRFC TRADING LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019
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WRFC TRADING LIMITED
REGISTERED NUMBER:
03160145
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT
30 JUNE 2019
The financial statements were approved and authorised for issue by the board and were signed on its behalf by
:
The notes on pages 17 to 38 form part of these financial statements.
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WRFC TRADING LIMITED
REGISTERED NUMBER:
03160145
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT
30 JUNE 2019
The financial statements were approved and authorised for issue by the board and were signed on its behalf by
:
The notes on pages 17 to 38 form part of these financial statements.
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WRFC TRADING LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
30 JUNE 2019
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WRFC TRADING LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
30 JUNE 2019
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WRFC TRADING LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
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WRFC TRADING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
WRFC Trading Limited is a private company limited by shares incorporated in the UK and registered in England and Wales. The registered office is Sixways Stadium, Warriors Way, Hindlip, Worcester, WR3 8ZE.
The principal activity of the Group and the Company is to promote the playing and development of rugby football.
2.
ACCOUNTING POLICIES
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in
the UK and the Republic of Ireland and the Companies Act 2006
.
The financial statements are prepared in sterling, which is the functional and presentation currency of the Company, and are rounded to the nearest £1.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiary ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.
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WRFC TRADING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
ACCOUNTING POLICIES (continued)
The Group has a plan to reduce trading deficits, however with the significant impact of COVID from March 2020 onwards, this has disrupted this plan. The Group has taken advantage of Government support, to help through this difficult period, whilst continuing to focus on their longer term strategy. To combat the COVID-19 pandemic in September 2020 the Government announced a Sports Winter Survival Package (SWSP). This funding is in the form of a long term loan, to support the Club through to the end of March 2021 and there is also a provision for further support to run through to March 2022, if COVID disruption continues.
The directors have prepared forecasts to July 2022, which has quantified the future funding need of the Company. The directors have considered the existing funding available and the support available through their wider group companies, and other companies under common control. Whilst this funding meets a large proportion of the funding they anticipate needing, there is still some further funding considered necessary for which the group has a number of options available. The directors have identified a number of opportunities to raise the necessary finance and are continuing to consider the most beneficial route for the group. A corporate finance partner has been engaged to help evaluate and secure the most suitable form of finance, both to support working capital and future development plans. The directors, and their corporate finance partner, are confident of the ability of the group to raise the additional finance the company anticipates it requires to continue as a going concern, however, this is not guaranteed until one is chosen and entered into. The Group, as at February 2021, owns the freehold to the Sixways site, which was valued by an independent RICS valuer at £16.7m in 2018 including land and stadium which has been substantially improved with a multi-million investment together with significantly improved planning potential for development, which is now unencumbered and not being used to secure any debts. The directors have confirmed that, if required, these assets would be used to secure any funding required. After reviewing the Group's forecasts and projections, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the going concern basis in preparing its consolidated financial statements.
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WRFC TRADING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
ACCOUNTING POLICIES (continued)
Where a sale and leaseback transaction results in a finance lease, no gain is immediately recognised for any excess of sales proceeds over the carrying amount of the asset. Instead, the proceeds are presented as a liability and subsequently measured at amortised cost using the effective interest method.
When a sale and leaseback transaction results in an operating lease, and it is clear that the transition is established at fair value any profit or loss is recognised immediately. If the sale price is below fair value, any profit or loss is recognised immediately unless the loss is compensated for by the future lease payments at below market price. In that case any such loss is amortised in proportion to the lease payments over the period for which the asset is expected to be used. If the sale price is above fair value, the excess over fair value is amortised over the period for which the asset is expected to be used.
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WRFC TRADING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
ACCOUNTING POLICIES (continued)
Grants of a revenue nature are recognised in the Consolidated Statement of Comprehensive Income in the same period as the related expenditure.
Interest income is recognised in profit or loss using the effective interest method.
Termination benefits are accrued for in the period in which the agreement is signed.
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WRFC TRADING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
ACCOUNTING POLICIES (continued)
Exceptional items are transactions that fall within the ordinary activities of the Group but are presented separately due to their size or incidence.
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WRFC TRADING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
ACCOUNTING POLICIES (continued)
Land is not depreciated. Depreciation on other assets is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Investments in subsidiaries are measured at cost less accumulated impairment.
Investments in unlisted shares, whose market value can be reliably determined, are remeasured to market value at each balance sheet date. Gains and losses on remeasurement are recognised in the Consolidated Statement of Comprehensive Income for the period. Where market value cannot be reliably determined, such investments are stated at historic cost less impairment.
At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
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WRFC TRADING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
ACCOUNTING POLICIES (continued)
Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the Statement of Financial Position date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Statement of Financial Position.
The Group only enters into basic financial instruments transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in non-puttable ordinary shares.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other debtors and creditors, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade creditors or debtors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or financed at a rate of interest that is not a market rate or in case of an out-right short-term loan not at market rate, the financial asset or liability is measured, initially, at the present value of the future cash flow discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost.
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WRFC TRADING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
ACCOUNTING POLICIES (continued)
In the application of the Company's accounting policies, which are described in note 2, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period of the revision and future periods if the revision affects both current and future periods. The following are the critical judgements and key sources of estimation uncertainty that the directors have made in the process of applying the Company's accounting policies and that have the most significant effect on the amounts recognised in the financial statements. Income taxes The Company is subject to the income tax laws of the United Kingdom. These laws are complex and subject to different interpretations by taxpayers and tax authorities. When estiablishing income tax provisions, the directors make a number of judgements and interpretations about the application and interaction of these laws. Changes in these tax laws or in their interpretation could affect the Company's effective tax rate and the results of operations in a given period. Accordingly, potentially significant tax benefits will not be recognised until there is sufficient certainty that they will be accepted by HMRC.
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WRFC TRADING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
3.
JUDGEMENTS IN APPLYING ACCOUNTING POLICIES (CONTINUED)
Share investment carrying value
The Company holds its investment in PRL at fair value as required under Section 12 of FRS 102. The Company has invested units and shares in PRL. The valuation of these was initially provided by PRL based upon independent advice sought at the time of the restructuring. The Board has conducted its own review of the fair value of this investment based upon the expected future cash inflows due to the Club from its investment in PRL. The shares held in PRL have been held at nil value as, whilst they convey voting and dividend rights, the Company expects the future cash inflows from these to be nil as PRL is set up to break even with all income less costs being distributed to members through the invested units agreement. The expected future cash flows resulting from the invested units have been modelled under different scenarios, based upon historical and expected future cash inflows. Whilst there is a belief that the investment by CVC will enable PRL to significantly enhance the value of commercial income, this is in the early stages of development and, therefore, in the judgement of the Board, this has not been factored into the valuation. The expected cash inflows under each scenario have been discounted at an appropriate Weighted Average Cost of Capital (WACC) to provide an expected value for each scenario. The Company has assessed the probability of each scenario and multiplied the expected cash inflows under each by its probability of occurrence to dervice a weighted average value for the investment. As the ownership of the asset is highly restricted due to the terms of the shareholder agreement pertaining to the invested units, this valuation has then been reduced by a minority interest deduction to arrive at an appropriate fair value. Any changes to the expected cash inflows, estimates made relating to WACC/minority interest valuation declaration, or changes to the share structure/percentage of invested units held in the future could result in a materially different valuation compare to that recorded as at 30 June 2019.
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WRFC TRADING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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WRFC TRADING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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WRFC TRADING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
9.
TAXATION (CONTINUED)
There were no factors that may affect future tax charges.
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WRFC TRADING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
11.
TANGIBLE FIXED ASSETS (CONTINUED)
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WRFC TRADING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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WRFC TRADING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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WRFC TRADING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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WRFC TRADING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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WRFC TRADING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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WRFC TRADING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Share premium account
This reserve records the amount above the nominal value received for shares sold, less transaction costs.
Capital redemption reserve
This reserve represents the value of the subsidiary's liabilities assumed by the parent undertaking.
Other reserves
This reserve includes all capital contributions made by Worcester Sport Limited, that represent the settling of debts during the financial year on behalf of WRFC Trading Limited, which previously owed these monies to other creditors. In the period to 30 June 2019 these contributions totalled £8,000,000 (2018: £Nil).
Profit and loss account
This reserve includes all current and prior period retained profits and losses. This includes £13,865,000 (2018: £6,483,037) which arose on the revaluation of investments and is therefore non-distributable.
A prior year adjustment has been made in the financial statements to account for previously unrecognised deferred tax liabilities arising on fair value movements in respect of Investments recognised through profit or loss. The impact of the prior year adjustment has reduced net assets as at 1 July 2018 and 1 July 2017 by £1,102,124. There has been no impact on the reported profit or loss for the year to 30 June 2018. The previously disclosed deferred tax asset due after one year has now been netted off against this restated deferred tax liability.
At 30 June 2019 a contingent liability was deemed to be in place in respect of deferred consideration of £1,500,000 in relation to the sale of the Club that took place during the financial year. This may be payable upon the satisfaction of certain criteria.
Furthermore, at 30 June 2019 there was an unlimited cross guarantee to National Westminster Bank plc by and for the company and for its subsidiary, WRFC Players Limited. The company is also party to a group VAT registration with its subsidiary, WRFC Players Limited. Both entities are jointly and severally liable for any outstanding VAT balances.
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WRFC TRADING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
The Group operates a defined contribution pension scheme. The assets of the scheme are held seperately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £107,555 (2018: £66,731).
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WRFC TRADING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
On the 17th February 2021 the sale and leaseback arrangement in respect of the land and buildings disclosed in note 11 ended and the land and buildings were brought back under group ownership.
The immediate parent undertaking is Worcester Sport Limited (formerly known as Militibus Quanco Limited). There is no ultimate controlling party.
On 11 June 2019, Bond Group Sixways Limited acquired 50% of the issued share capital of Worcester Sport Limited. At 30 June 2019, Bond Group Sixways Limited is the most senior parent undertaking that produces financial statements for public use.
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