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PLC Report and Accounts 2008

WWFC PLC Report and Accounts 2008Wycombe Wanderers Football Club PLC
Notice of the 2008 Annual General Meeting and Annual Report and Financial Statements for period ending 30th June 2008
Wycombe Wanderers Football Club PLC (the Club) has recently published annual accounts for the year ending 30th June 2008. The Club's annual general meeting will be held in the Vere Suite on Thursday, 4th December 2008 at 8:00 p.m.

As a service to members, copies of the following documents can be found below:

1. The AGM Calling Notice that includes the seven resolutions referred to below;
2. A proxy form containing the resolutions that the Board hope to pass at the AGM, which may be used by shareholders unable to attend the meeting in person;
3. The Directors Report and Accounts to 30th June 2008;
4. The minutes of the Club's AGM that was held on 6th December 2007, which include the questions that the Trusts asked at the AGM together with the answers that were given;
5. The minutes of the General Meeting held on 19th March 2008; and
6. The minutes of the General Meeting held on 5th July 2008.

The Club has reported a loss of £1,664,535 for the year to 30th June 2008 and as a result the Club's net value has fallen even further. The Net Assets of the Club have been reduced to a negative value of -£3,901,320. For reference, the loss for 2006/07 was £612,055 and the Net Asset value at 30/06/07 was -£2,236,785. The period 2006/07 benefited from £441,000 of income from the Carling Cup run and £531,000 from the sale of players including Roger Johnson and Kevin Betsy. There was no cup run in period to 30/06/08 and player sales were £240,484 principally from the sale of Jermaine Easter. £200,000 from the sale of Russell Martin and Sergio Torres will appear in the accounts for 2008/09.

The Trusts asked about the projected loss for 2007/08 at the 2007 AGM. The answer reported in the minutes of the meeting was "The lack of cup runs and player sales will clearly have an impact on this year's trading position. Unless attendances pick up significantly the loss will be greater than last year, but is expected to be lower than the loss for 2005/06." The loss for 2005/06 was £1,872,681 and, whilst the loss for 2007/08 was indeed lower at £1,664,535, this level of loss is economically unsustainable and could not be funded were it not for increases in loans from Mr. Hayes, the Club's Managing Director. In the Chairman's Report, Mr. Beeks states "... For the year to 30 June 2009 the Club's finances are expected to improve significantly, although the loss will be in the region of a million pounds."

The Club continues to live beyond its means with the losses that are clearly unsustainable in the longer term, notwithstanding the fact that Mr. Hayes appears willing to fund the resultant negative cash flow with ever more loan notes. Loan notes outstanding were £5,936,460 at 30th June 2008 compared with £4,175,556 at 30th June 2007, £2,958,161 at 30th June 2006 and £595,000 at 30th June 2005. If the Club loses a further million pounds in 2008/09 as projected by the Chairman and if all of this requires funding by loan notes then the loan notes outstanding will rise to approximately £7 million by June 2009. Other debt exceeds £1.2 million including the bank overdraft, another secured loan, the Inland Revenue and other creditors less cash and debtors.

After projecting a loss for 2008/09 in the region of £1 million, Mr. Beeks states "... The football costs are being brought under control and commercial and matchday revenues are expected to increase. In the following year the finances are expected to move closer to breakeven."

Whilst breakeven must be the minimum target, it is hard to see how this can realistically be achieved. The two items of the profit & loss equation that can be adjusted are the turnover (i.e. sales) and the operating costs.

To turn a loss of £1,664,535 into breakeven would require:
1. A 37% increase in the turnover from £4,469,995 to £6,134,530, with no additional costs to produce the 37% increase; or
2. A fall of 26% in the operating costs from £6,287,176 to £4,622,641; or
3. Some combination of both revenue growth and cost control.

With the current economic outlook in the UK, increasing the turnover by 37% seems unlikely. Match day sales are only approximately £1m and hence rising match day attendances will not increase the turnover to the level of breakeven, even if the Club is successful in the league this year. An increase in turnover to the level of breakeven would require a very large increase across all areas of the Club's activities including the off-field activities such as conferencing and food & beverage. The cost structure of the Club appears to be too large relative to its revenues. Without greater detail on the cost structure, it is not possible to identify the areas of relatively high costs. It is to be hoped that the Club will review costs carefully because, whilst reducing costs is not necessarily easy, it is within the control of the Club. Whilst pushing for revenue growth and tightening cost control seem prudent activities to undertake, it seems extremely unlikely, however, that even a combination of revenue growth and cost control will make the finances approach breakeven.

Further, if the finances were at breakeven then this would achieve no more than to remove the need for a continued increase in loan notes. For the projected £7 million of loan notes to be repaid over, say, five years would require further changes to realise an additional £1,400,000 p.a. or a gain from a development activity of £7 million - see the comments below on a potential new stadium.

Even though it has been possible to fund the losses, the cost base of the Club is much greater than the business can support. Both this cost base and the negative asset value of the Club would greatly reduce the ability of the Club to continue to operate in the event that the ongoing losses were no longer to be funded by the directors.

In the Chairman's Report, Mr. Beeks further states "… The directors are still actively looking at a move to a new stadium, and although the plans are still at a very early stage the directors are encouraged by the pro-active involvement and support from both the Council and London Wasps."

In order for the Trust's Board to take a view on any proposed move to a new stadium, the Club's directors would need to provide a business case that makes the financial viability of moving to a new stadium transparent. As shown above, in order to address the underlying financial problems of the Club, the business case would need to show that either substantial and sustainable additional revenues will accrue to the Club or the cost base of the Club will be dramatically and permanently reduced. A proposal that produces a one-time gain that clears the debts would not necessarily be in the best interest of the Club if it does not balance the continuing revenues and costs. A move to a new stadium might include such a gain through the redevelopment of Adams Park or through other developments associated with the building of the stadium but the Club must be financially sustainable in the longer term. The Trust's Board are fully aware that to be credible any projected improvement in the financial position of the Club cannot be based on unrealistic increases in projected attendance at a new ground. Average match day attendance in 2007/08 was 4,741 and a figure around this level must be used in any projections if they are to be credible. Whilst a new stadium may lead to a short-term increase in attendances, it would be unwise to assume that a large increase in match day attendances is sustainable. Any proposed move would also need to be compared in a balanced manner with the consequences of living within the Club's means at Adams Park so that the relative risks and rewards can be appropriately compared.

Whilst awaiting further information on a possible new stadium and its impact on the Club's finances, shareholders should press the directors to explain how they are planning to stem the losses, turn them into profits and rebuild the positive asset base of the Club. The Trust's Board continues to challenge the Club's Board about the Club's financial management both through the Trust's two Club Directors and during periodic meetings with Board members. The Club has announced that it intends to hold a meeting for shareholders in the New Year. The Trust's Board will encourage the Club's Board to include a full and open discussion of the financial position.

Shareholders are being asked to approve seven resolutions at the AGM. These are numbered resolutions 2 to 8 on the Club's Form of Proxy to match their item number on the order of business. The Trust's Board believes that, on balance, the seven resolutions should be approved. All seven resolutions are ordinary resolutions and require a vote of over 50% in favour to pass.

In summary, the Trust's Board offer the following advice on voting:
 Resolution Number on
Form of Proxy		  Advice: Vote

 1

 2
  For

 2

 3
  For

 3

 4
  For

 4

 5
  For

 5

6
  For

6

 7
  For

 7

 8
  For

Resolution 1: To receive and sign the Minutes of the 2007 Annual General Meeting. The Minutes appear to be an accurate record of the 2007 AGM and include the questions that the Trusts asked at the AGM together with the answers that were given. The Trust's Board advises shareholders to vote for receiving and signing the minutes.
Resolution 2: To receive and sign the Minutes of the General Meeting held on 19th March 2008. The Minutes appear to be an accurate record of the General Meeting held on 19th March 2008. The Trust's Board advises shareholders to vote for receiving and signing the minutes.
Resolution 3: To receive and sign the Minutes of the General Meeting held on 5th July 2008. The Minutes appear to be an accurate record of the General Meeting held on 5th July 2008. The Trust's Board advises shareholders to vote for receiving and signing the minutes.
Resolution 4: To receive and adopt the Report of the Directors and the Audited Accounts for the period ended 30th June 2008 (previously circulated). The accounts have been audited and should be accurate, notwithstanding the poor financial performance. The Trust's Board will be seeking further information on what assurances the auditors have been given about the funding of the Club's continuing losses. The Trust's Board advises shareholders to vote for receiving the accounts.
Resolution 5: To re-elect as a Director Mr. Brian Lund Kane, who is retiring by rotation. Given the scale of the continuing financial losses of the PLC, it can be argued that shareholders should be looking to change the current board of directors in order to introduce greater financial prudence. However, Mr. Kane has made a significant personal investment in the Club both in the form of shares and loan notes. Further, together with the other Club directors, Mr. Kane is responsible for the current situation at the Club. On balance, the Trust's Board believes that it is appropriate that Mr. Kane continues as a director and works to ensure the Club's long-term financial viability. The Trust's Board advises shareholders to vote for re-electing Mr. Kane as a Director.
Resolution 6: To elect as a Non-Executive Director Mr. Andrew John Pelley, who was co-opted onto the Board of Directors on 9th October 2008 and offers himself for election. The calling notice for the AGM contains a note stating that "The Board believe that Mr. Pelley's marketing expertise, experience and enthusiasm, will be of great assistance to the Company and that he will contribute to a variety of specific projects."

Mr. Pelley is known to be a business associate of the PLC's Managing Director, Mr. Stephen Hayes. There is no distinction in law between a Non-Executive Director and any other kind of director and hence the term "Non-Executive" could have been dropped from the wording of the resolution. Crucially, the Trust's Board understands that Mr. Pelley is a non-voting director and like the other directors is unpaid. His position appears to be similar to that of an unpaid senior employee of the Club albeit that he has the additional legal responsibilities that apply to all directors. The Trust's Board is not in a position to comment on Mr. Pelley's attributes nor does it know the specific projects to which the Club's Board hopes that he will contribute. The Trust's Board will be asking for clarification of these points at the Club's AGM and will seek a meeting with Mr. Pelley in order to discuss matters at the Club with him directly. Nevertheless, the Club's accounts reveal falling revenues, rising costs and continued discussions of a move to new ground. It seems reasonable that the Club avail itself of any expertise that Mr. Pelley can bring to the situation. The Trust's Board advises shareholders to vote for electing Mr. Pelley as a Director.
Resolution 7: To re-appoint HW, Chartered Accounts as auditors of the Company and for their remuneration to be determined by the Directors. As noted above, the Trust's Board will be seeking further information on what assurances the auditors have been given about the funding of the Club's continuing losses. HW, Chartered Accountants are a reputable firm of accountants, who should be expected to provide reliable accounts for use by shareholders. The Trust's Board advises shareholders to vote for re-appointing HW, Chartered Accountants as auditors.

We hope that you find the advice above helpful.

Membership of Wycombe Wanderers Trust is the best way for supporters to stay well informed about this and future debates at the Club as well as ensuring that your voice is heard on matters important to the future of the Club, through the voting of the Trust's shares. Application details can be obtained from the Secretary at the address below.

Voting the Trust's Holdings of Ordinary Shares and Founder Shares
Wycombe Wanderers Trust will vote its holding of Ordinary Shares and Founder Shares according to the democratic majority wishes of the Trust's members. For clarity, the two shareholdings will be voted separately. The holding of 100,000 Ordinary Shares will be voted according to the majority wishes of all Trust members. The holding of Founder Shares (137 shares as at 18th November 2008) will be voted according to the wishes of Qualifying Members. Members may vote on these resolutions by either completing and returning the paper response form mailed to them or completing the electronic response form below - see link.

Responses to be received by 5:00 p.m. on Tuesday 2nd December 2008.

Supporting documents are below
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 Notice of the 2008 Annual General Meeting
 Form of Proxy
 Annual Report and Financial Statements
** Beware this is a very large 4.4 MB file **
 Minutes of the AGM on 6th December 2007
 Minutes of the EGM on 19th March 2008
 Minutes of the EGM on 5th July 2008
   On-line voting for Members
Members of Wycombe Wanderers Trust are asked to guide the
Trust's Board on how to vote its holdings
of Ordinary and Founder Shares
   Chairman: "Closer to break even"
The Club's official website announces the results
with a positive, if somewhat misleading, headline.
Link to the Club's report on the accounts.

posted in plc-annual-report | 05.12.2008. 22:47