Revealed: Shareholders submit 17 questions which West Brom answer

West Bromwich Albion's minority shareholder group, Shareholders 4 Albion (S4A), have submitted 17 questions to the club following thorough inspection of the club's 2022/23 accounts, which were released in March. Albion were taken over by Shilen Patel and Bilkul Football WBA in February and his arrival alleviated many immediate, short-term concerns which the club had previously faced.

Albion, readying themselves for pre-season ahead of their fourth straight season in the Championship, are still facing a tricky summer as far as recruitment is concerned and are waiting for various responses from out of contract players on whether they'll be remaining at the club. At any rate, the Baggies and Carlos Corberan must look to recruit as many as half a dozen players within their financial constraints.

Off the field, there is optimism. S4A hope to meet with Patel when convenient for the Florida based chairman, and in the meantime have complimented the new controlling shareholder for his commitment to reintroducing transparency at the highest level of the club and improving the lines of communication which were non-existent under Guochuan Lai.

S4A were also pleased by the handling of the accounts by auditors Azets, and believe that, as a result, the list of questions they desired to have answered weren't as long as they otherwise might've been - certainly not compared to the 38 questions sent to then director of Group Xu Ke a little over a year ago.

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Having pored over the accounts - of which the 2023-24 equivalent is likely to make for grim reading next spring because of decisions made which pre-dated Patel's time - S4A sent the Baggies 17 questions which had been raised during their assessment, questions which have been seen and can be summarised by BirminghamLive ...

• Is there a willingness to reintroduce annual general meetings for Group during 2025, once accounts have been produced for the year ended 30 June 2024?

Albion response: Going forwards there is an intention to reintroduce AGMs for West Bromwich Albion Group Limited.

• Minority shareholders have asked about a funding agreement with the EFL - to run up to 30 June 2025 - and to what level it reaches. The accounts note states it is between Club and the EFL, but are Bilkul also a party to the agreement?

Albion response: The agreement is a confidential agreement between WBA, the EFL and Bilkul Football WBA LLC. Azets (Auditors) have reviewed the agreement and disclosures made and have agreed that going concern is the correct basis of preparation.

• A capital injection totalling £2.52m has been received by the club, can you confirm if this is a loan from Bilkul?

Albion response: The capital injection noted (in addition to the full repayment of the Wisdom Smart Loan plus interest) has been made by Bilkul Football WBA LLC to support the running costs of the Football Club.

• Could shareholders receive any further information regarding the terms for repayment of the MSD loan capital over the remaining two and a half years of the stated four-year term please? £2m was repaid after year end so our best estimate is that interest is now running at approximately £3.88m per annum.

Albion response: The MSD agreement is a confidential agreement and cannot be shared. It should be noted that the outstanding amount is below the £28m borrowed due to repayments already made.

• Minority shareholders have asked that the financial consequences of the outcome of the investigation of the 2014 loan are announced to minority shareholders.

Albion response: Once the investigation has concluded WBA will release a club statement.

• There were no key management personnel other than directors of Club and that their total remuneration was £1.211m. The figure for total directors' remuneration in Club’s accounts states the figure as £1.047m, which is £164,000 lower. Is this difference explained by the costs of N.I. payments being excluded from the Club figures?

Albion response: This difference is due to N.I.

• Group’s director Xu Ke was paid £247,000 by Group. Was this purely for his services to Group? Did Xu Ke receive any further remuneration as a director of Club?

Albion response: The amount stated is the total amount paid for all services relating to the football club and associated companies.

• The Director’s Review refers to a fall in sponsorship income. Where is this shown in the accounts?

Albion response: This is referring to the reduction in Parachute payments and associated monies received from the English Premier League.

• The Group Income Summary shows ‘Interest Receivable’ of £948,000 but only £734,000 is shown in the cash flow. The difference (£214,000) seems to be accruing default interest on the Wisdom Smart Loan that has not been paid as at 30 June 2023, but please confirm. Why is the additional accruing default interest relating to the 2014 loan for the same period (estimated to be £309,000) not also included as Interest Receivable?

Albion response: The amount referred to is interest from the Wisdom Smart Loan. The interest is being accrued within Group and wasn’t paid until settled post June 2023, hence the different reporting. The £309k is included within the interest receivable.

• Group refers to contingent liabilities of £7.6m compared to £10.7m as at June 2022. Please confirm which players’ contracts are involved in this current figure?

Albion response: The reduction is due to payments made in accordance with the transfer agreement with opposition clubs. The names and amounts remain confidential.

• Why has there been such a large increase in audit fees relating to the club's financial statements, from £27,000 to £46,000? There is also a new item in Group's accounts, a fee of of £34,000 relating to ‘other Taxation services’. What does this relate to please?

Albion response: The increased audit fees paid are a reflection of the true costs of the works undertaken. The previous years fees were not representative of works undertaken. For comparison fees in June 21 were £67k and June 20 were £59k. The additional fees were incurred due to additional work commissioned by the club.

• There is a new paragraph referring to deferred tax, with a figure of £31.9m stated for certain deferred tax losses. Please explain how these large losses have arisen.

Albion response: This is due to Roll over Relief that has been claimed in prior years and predominantly driven by player trading.

• It is legitimate to suggest that only one director of Group being in situ during this period, especially considering the context of the accounts, is not healthy corporate governance. Who was involved in determining Xu Ke’s remuneration as sole director of Group and are there any plans to add directors to Group alongside Shilen Patel?

Albion response: The appointment of a single Director is in accordance with Group’s Article’s of Association. Furthermore, the Auditors have signed off the accounts following the financial reporting framework applicable to law and United Kingdom Accounting Standards. The above said, it is acknowledged that it is best practice and good governance to have more than one director of a company. It is planned that further director(s) will be appointed in due course.

• A further £91,000 has been paid for Holdings’ professional costs. We appreciate that this is now a historic matter, but it has been raised by a significant number of minority shareholders and this apparent breach of promise has caused some irritation.

Albion response: This amount was solely related to sale of the club / Group shares and has been addressed in the sale transaction.

• Please explain the figure of £778,000 for ‘Other Debtors’ in Note 14 of Group’s accounts (this was only £21,000 in the previous period).

Albion response: The numbers quoted are in fact in Football Club accounts rather than Group but refer to invoices raised (predominantly for commercial agreements) ahead of the forthcoming season.

• The ‘Borrowing Issuance Transaction costs’ are stated as being £600,000. Is that a total of various professional (and possibly other costs?) or a 3% arrangement fee? If an arrangement fee was paid, to whom was it paid?

Albion response: The c £600k reduction is due to various costs and fees incurred as part of the MSD Loan transaction.

• Holdings has now changed its name and no longer carries mention of West Bromwich Albion. For completeness, please confirm that it has similarly been dropped from West Bromwich Albion (HK) Ltd and WBAFC Holdings (Jersey).

Albion response: It was a requirement of the recent sale transaction that the names of companies were to be changed to remove any reference to WBA. Other name changes are currently in progress.