08-05-2022, 01:30 PM
(This post was last modified: 08-05-2022, 01:44 PM by RonnieWallwork.)
A mate of mine who’s in the S4A supporters group sent this to me. I’ve attached pdf which is an easier read!!!
Questions given to the board to answer-which they’re obliged to do so. The writing below doesn’t copy and paste that well. PDF better - attachment.
Whatever people say or think about this group of supporters, they’re fighting the good fight on behalf of us all and the club.
Interesting stuff:
Questions Relating to the Accounts of West Bromwich Albion Club Limited ('Club), West Bromwich Albion Group Limited ('Group') and West Bromwich Albion Holdings Limited ('Holdings')
Background to Questions
The accounts for Club, Group and Holdings were all for the period of 11 months ending 30 June 2021 ('the June 2021 Accounts').
The accounts for Club were dated and signed off by K Xu on 29 March 2022 and PricewaterhouseCoopers LLP ('PWC') on 31 March 2022.
The accounts for Group were dated and signed off by K Xu on 29 March 2022 and
PricewaterhouseCoopers LLP on 31 March 2022.
The accounts for Holdings were dated and signed off by P Y Li on 28 March 2022 and
PricewaterhouseCoopers LLP on 31 March 2022.
The directors for Club at the time the June 2021 Accounts were signed off were and
remain: KXu,MMiles,RGourlayandGLai.
The directors for Group at the time the June 2021 Accounts were signed off were and
remain: KXuandRGourlay.
The sole director for Holdings (100% in Chinese ownership) at the time the June 2021
Accounts were signed off was and remains: P Y Li.
Questions
1. Why was the distribution of the June 2021 Accounts delayed for three months after they were fully approved by directors and signed off by PWC in March 2022? There appears to be no bona fide accountancy or legal reason for doing this, but please provide details of any such reason.
In the absence of any such reason it would be legitimate to conclude that it was simply to further 'bury' the extremely worrying contents of the June 2021 Accounts from minority shareholders and Albion supporters generally.
2. Please explain why there is a continued reluctance to reinstate the annual general meeting for shareholders to enable them to raise questions and seek accountability from the directors and auditors with regard to the accounts and generally? You will appreciate that, in the absence of such a meeting (which is widely regarded as a basic requirement for good corporate governance and transparency), we have no choice but to raise these enquiries on behalf of our members and Albion supporters generally. Many of these questions have come to the S4A Committee directly from our members, many of whom are experienced business people and/or professionals.
3. We are keen to establish which directors acted in March 2021 to facilitate and approve the loan of £4.95m Loan from Group to Wisdom Smart Corporation Ltd
1
('WSL' and the 'WSL Loan'), one of Mr Lai’s other companies (but which is wholly unrelated to the business interests of Albion and is based overseas).
S4A had pointed out on the record on several occasions that there was a conflict of interests on various matters in P Y Li being chairman and a director for Club and the sole director Holdings. It is noted that Mr Li is no longer a director of Club or Group.
Please confirm who at Club authorised the movement from £4.95M from Club’s bank account to Group’s bank account and on what basis this was done.
Please confirm who at Group authorised the terms of the WSL loan. Please confirm the date of the WSL Loan.
4. Please explain how the WSL Loan was in the interests of the Club and Group and how this was justified given the corporate objects and aims of the business. It is a football club which is seeking to re-join the Premier League, not a bank, building society or venture capital fund.
To provide but one example to demonstrate how the loan was not in the interests of Club:
It was clear to most Albion stakeholders at the time the loan was made (and was then allowed to be in default) that the squad required strengthening and balancing. Indeed, we had pointed out to Mr Xu on several occasions that the lack of a fit for purpose striker and a midfielder was clearly required and failure to recruit at the start of season 2021-22 may cost us promotion. Unsurprisingly, that was proven to be case. Had both been in place at the start of last season, it is quite possible that promotion could have been achieved. Many points were squandered in the first half of the season due to not having the fit for purpose striker required.
The football club continues to be unnecessarily hamstrung by the fact that the WSL Loan was made and has not been repaid and the defaulted loan of £3.75M from Club to Holdings from 2014 (‘2014 Loan’) is also still to be repaid by Holdings together with accrued default interest in excess of £1M.
5. Please justify why such a low interest rate (fixed payment of £50,000 on a loan of £4,950,000) was agreed. Given that it had been reported that WSL was in financial difficulty, this makes such a low interest rate even more perplexing. If £50K covers the period to December 2022, that works out at an approximate annual rate of interest of 0.5%.
6. We note that the WSL Loan is stated as being initially due for re-payment on 15 September 2021. Please explain who decided not to collect the loan at that stage and how that was in the interests of the football club. Please also confirm what the legal consideration was for these amended terms.
7. It appears that no further interest is being collected in respect of the period from 15 September 2021 to the eventual date of payment. If that is the case, it would be legitimate to conclude that is clearly not justifiable, it is highly irregular and does not reflect an arm's length deal. Please explain.
2
Further, given that the loan has been in default, it would be most irregular if compound interest is not payable on both the capital and interest. That does not appear to be the case here. Please explain why.
8. Please confirm why security was not obtained in respect of the WSL Loan. It is noted that WSL were said to be in financial difficulty. It is also noted that security was provided for the smaller £2M Warmfront loan granted to Holdings on 8 September
2021 by Warmfront Holdings Limited (‘Warmfront Loan’ and ‘Warmfront’).
9. Note 26 in Group’s accounts refers to loans in the plural. This suggests more than one loan or that a rolling loan facility was in place. Please provide precise details of the arrangement including how many separate loans were made and whether or not there was a supplemental agreement when the terms of the loan agreement were defaulted in September 2021. If there was a supplemental agreement, please confirm the terms of this.
10. Please confirm who provided legal advice to Club and Group on matters relating the WSL Loan and the prior movement of funds from Club to Group. Please also confirm that the WSL Loan was correctly attested by a local notary public/other appropriate officer in relevant jurisdiction for WSL.
11. Do the directors at Club and Group have any concerns about being able to legally enforce the terms of the WSL in the event of further breach, bearing in mind that the money has been loaned to an entity outside of the United Kingdom without any security having been provided for the loan?
12. Please confirm whether P Y Li still has any connection with Club, Group or Holdings (apart from being the sole director of Holdings), whether by way of legal or equitable interest and/or any voting rights in respect of any or all of those entities and/or being a connected person to Mr Lai.
13. Please confirm who knew about this Loan before the Group Shareholders General Meeting held on 29th July 2021. There was an extensive discussion about how Holdings might repay the 2014 Loan. The existence of the WSL Loan four months earlier clearly should have been a disclosable item as it was wholly relevant to Holdings’ ability to repay the 2014 loan.
Mr Xu also publicly confirmed that the 2014 loan would be repaid by the end of the 2021 and subsequently altered this to the end of February 2022. Re-payment has not been made. Please explain why these promises were not delivered. Given the contents of the June 2021 Accounts, there is concern that these statements were not ever intended to be honoured. This is a very serious matter.
S4A have incurred professional costs and acted in reliance of public statements by a director. It has incurred some wasted legal costs as a result and would have handled matters differently in the interests of the football club and its stakeholders. S4A needs to reserve its position in that regard, including recovery of professional costs.
14. We are pleased to note that the details of the 2014 Loan has finally been included under ‘Related Party Transactions’ in the accounts for Club and Holdings after this error had been pointed out on several occasions by minority shareholders since such omission first manifested itself in the June 2015 Accounts, resulting in a lack of transparency on the 2014 Loan.
3
The details of the 2014 Loan should be set out, including:
- The contracted dates for re-payment;
- Details of loan default; and
- Details of the interest payable. Given that the loan has been in default, it would be most irregular if compound interest is not payable on both the capital and interest.
15. We note that in Note 24 of Club’s accounts it states that the 2014 Loan has no fixed date for re-payment whereas Note 16 Debtors in Group’s accounts states that the loan of £3.754 is payable on demand. Please explain this discrepancy.
Furthermore, we understood that the if any part of the 2014 Loan plus accrued interest had not been repaid on its repayment date(s) as due, then all amounts would be and should have been repayable on demand. We understand that repayment date(s) were missed prior to the sale of Holdings in 2016. In light of this, please explain the above entries in the accounts of Club and Group.
16. The July 2020 Accounts were signed off in February 2021 but not distributed until late March 2021 when details of this new Loan must have been under negotiation and/or nearing completion. We are surprised and concerned that this matter was not disclosed to shareholders at that point and/or when the loan was made, given the significance of it to the running of the football club. Furthermore, Mr Xu had assured us in regular update meetings with him that money had not left the football club during the periods in question. We acted in reliance on that, had updated our members and not taken further legal steps on that basis.
Indeed, having met with Mr Xu in June 2021, Mr Xu authorised an update to our members which included the statement:
This is a very serious matter.
17. The minority shareholders are surprised and disappointed that they were not notified of the intention to delay submission of the 2021 Accounts; particularly given Mr Gourlay's stated wish (and welcome evident effort) to improve communications. Please confirm that you will notify of S4A on similar matters going forward within the spirit of the relationship we are trying to forge and the mutually agreed and acknowledged wish to achieve transparency.
18. Please confirm whether any material financial transactions using Club or Group funds have been entered into since 30 June 2021 to date, including:
Whether or not any further loans have been made by either Club or Group since 30 June 2021; and/or
“We had previously communicated concerns to the Club's solicitors and auditors
about the possibility of money leaving the Club (as we had to the Premier League
when referring the issue of ownership to them). Ken has once more assured us that
no money has left the Club.”
4
Whether or not any funds of Club have been transferred to Group or any other party or entity since 30 June 2021.
Where any such transactions have been entered into, please provide details of these.
19. Please confirm whether any material financial transactions using Club or Group funds are envisaged at any time prior to 30 June 2023, including:
Any further loans to be made by either Club or Group prior to that date; and/or
Any funds of Club to transferred to Group or any other party or entity prior to that date.
If so, please provide details.
20. Minutes of the Albion Assembly Meeting dated 29 April 2022 (taken from the football club’s official website) state:
“He [Ron Gourlay] also confirmed the financial accounts will be published between now and the end of June’ and there are no issues to report.”
Please explain this comment given the content of the June 2021 Accounts and the numerous serious and significant issues arising from the same.
21. Please confirm that no steps have been taken or will be taken in connection with the sale or fixed charging of the Hawthorns (and surrounding land holdings) and/or the Training Ground or are contemplated whilst Holdings remains in the ownership of Mr Lai and others. It is accepted that routine banking facilities (for example an arms- length debenture for bona fide business need for the football club) have been used previously by the football club and may need to be in the future. You must appreciate, however, that there is a high level of concern amongst Albion supporters on this front given the content of the June 2021 Accounts, the failure of Holdings to re-pay legal debts due to the football club and the general failure to invest in the football club (and now a developing pattern of instead taking money out of the football club).
22.
a. b. c.
23.
24. Please explain the accumulated depreciation of £15M stated for freehold land and property.
Please provide a full list of all real property assets (i.e. land and buildings) held by
Club and Group (whether operational or investment land and property). In each case,
please provide:
The full address including postcodes;
Whether it is owned and registered in the name of Club or Group; and
The value assigned to that property for the purpose of the accounts.
We understand that the addresses may not be provided for properties which are also
used as accommodation for players and staff at any time, but still require the
information requested in b and c in respect of any such properties.
Group’s accounts show freehold land and property at cost of valuation of £41M
whereas Club’s accounts state the same at only £30M. Please explain.
5
We note that the highest paid director was paid £446,000 for 11 months compared
with £208,000 for the 13 month period ended 31 July 2020. This appears somewhat
strange given that an experienced CEO was replaced in post with an inexperienced
CEO and that Mark Jenkins has publicly stated that he was not being paid a bonus.
Please explain.
25.
26. It is noted that Lee Cooper resigned as Finance Director in mid-March 2021 without another post lined up at that time. Was this resignation linked to the WSL Loan?
27. The following statement is made on page 21 of the June 2021 Accounts for Club:
".....Furthermore, the base forecasts also include a potential dividend pay-out to settle a £5m receivable provided to a related party Wisdom Smart Corporation Limited in March 2021, and further settlement of a £2m loan borrowed by West Bromwich Albion Holdings Limited from Warmfront Holdings Limited in September 2021 and loaned to a related party since the group are not budgeting to receive any of the £7m funds in the period to the end of next season. The Board will not commit the club to further liabilities in upcoming transfer windows without the source of funding for such liabilities being confirmed."
The following statement was made by Mr Lai on the football club's official website on June 2022:
These two statements do not wholly reconcile. Accordingly, please clarify whether the WSL loan and the Warmfront Loan are to repaid: a) further to a prior declaration of dividend to produce the £7M funds to do so; or b) without the need of a prior declaration of dividend prior to repayment or at any time. The former will deprive the football club of £7M plus the associated pro-rata dividend payable to minority shareholders (which is not sought by the vast majority of such shareholders).
28. We do not accept that the loan should have been made, the terms on which it was made, the fact that it has been allowed to default and the failure to negotiate the payment of further interest, however:
a. Please confirm that the directors will take all steps required to obtain repayment of the WSL loan in December 2022 so that the football club's position is not further prejudiced by the WSL loan.
b. We assume that the directors of Club and Group maintain updated financial intelligence on WSL (as any prudent lender would), but please confirm.
29. Please explain how Holdings has the right to require Group to pay a dividend to enable Holdings to repay the Warmfront Loan. The Warmfront Loan is not of any concern to the football club, its aims or the operation of business. Once more, it is legitimate to conclude that this is highly irregular.
“The upturn in the global economy has brought with it greater positivity and I can
confirm I will repay the loan in full, with interest, by the end of the current calendar
year and the funds will be available to the club during the January 2023 transfer
window."
6
30. Holdings appears to have no employees and only one director, P Y Li, who was Chairman of Club and a director of Group, when the WLS Loan was entered into during the year ending 30 June 2021. We understand the P Y Li is based overseas. Holdings has its registered office at The Hawthorns. Please explain.
Please confirm that neither Club/Group employees and nor Club/Group's solicitors were involved in dealing with any loan documentation on behalf of Holdings.
31. Please confirm who pays the professional costs and other running costs of Holdings (including the provision of accounts for Holdings and its audit fees) and confirm that Club or Group funds are not used.
32. Given that Group shares appear to have been offered as security for the Warmfront Loan, has Holdings provided notice to Group that its shares are being used as security for a loan which is completely unconnected with the business of the football club?
33. Please confirm whether or not the Warmfront Loan was repaid on 31 March 2022. If it has been paid off, please confirm whether any funds from Club and/or Group have been used directly or indirectly to facilitate such repayment.
34. Please explain why it has been necessary to create a new (intermediate) holding company, WBAFC Holdings Limited, incorporated in Jersey on 9 September 2021 registration number 137991.
35. Please explain why the new holding company is not incorporated in the United Kingdom.
36. Company searches for WBAFC Holdings Limited (i.e. matters of public record) state: "Significant person(s) who is an Individual: Ke Xu" and
A search of FGD 1 Limited states:
"Significant person(s) who is an Individual:
"Significant person(s) who is an Entity: Fairway Trust Limited."
The nature of Fairway Trust Limited is evident: www.fairwaygroup.com
Please confirm who FGD 1 Limited and the listed ‘Significant person(s) as an Individual’ for FG1 Limited are and why they are now involved. Does this constitute a change of ownership? If so, have you notified the Premier League and the EFL of this?
"Significant person(s) who is an Entity: FGD 1 Limited, incorporated in Jersey 28
December 2011 registration number 28 December 2011."
Alistair James Rothwell
Christian Vernon Falle
Mark Anthony Andrews
Jacqueline Highfield
Scott Nelson
7
37. Please confirm whether or not a a takeover or partial takeover of Holdings is already underway. If it is, please provide further details of this.
38. Please confirm if all or any of FGD 1 Limited and the listed ‘Significant person(s) as an Individual’ for FG1 Limited have provided funds to Holdings or Mr Lai at any time or whether there is any intention for this to occur going forward.
39. Please confirm if FGD 1 Limited and the listed ‘Significant person(s) as an Individual’ for FG1 Limited are in any way related to Warmfront.
40. Please confirm if any or all of Jeremy Peace, a relative of his or an appointed nominee or representative of his are involved with FGD 1 Limited, the listed ‘Significant person(s) as an Individual’ for FG1 Limited, Fairway Trust Limited, Warmfront or Holdings or if you are on notice of any intention for there to be any such involvement with those stated or otherwise with Club or Group at any time in the future.
8
Questions given to the board to answer-which they’re obliged to do so. The writing below doesn’t copy and paste that well. PDF better - attachment.
Whatever people say or think about this group of supporters, they’re fighting the good fight on behalf of us all and the club.
Interesting stuff:
Questions Relating to the Accounts of West Bromwich Albion Club Limited ('Club), West Bromwich Albion Group Limited ('Group') and West Bromwich Albion Holdings Limited ('Holdings')
Background to Questions
The accounts for Club, Group and Holdings were all for the period of 11 months ending 30 June 2021 ('the June 2021 Accounts').
The accounts for Club were dated and signed off by K Xu on 29 March 2022 and PricewaterhouseCoopers LLP ('PWC') on 31 March 2022.
The accounts for Group were dated and signed off by K Xu on 29 March 2022 and
PricewaterhouseCoopers LLP on 31 March 2022.
The accounts for Holdings were dated and signed off by P Y Li on 28 March 2022 and
PricewaterhouseCoopers LLP on 31 March 2022.
The directors for Club at the time the June 2021 Accounts were signed off were and
remain: KXu,MMiles,RGourlayandGLai.
The directors for Group at the time the June 2021 Accounts were signed off were and
remain: KXuandRGourlay.
The sole director for Holdings (100% in Chinese ownership) at the time the June 2021
Accounts were signed off was and remains: P Y Li.
Questions
1. Why was the distribution of the June 2021 Accounts delayed for three months after they were fully approved by directors and signed off by PWC in March 2022? There appears to be no bona fide accountancy or legal reason for doing this, but please provide details of any such reason.
In the absence of any such reason it would be legitimate to conclude that it was simply to further 'bury' the extremely worrying contents of the June 2021 Accounts from minority shareholders and Albion supporters generally.
2. Please explain why there is a continued reluctance to reinstate the annual general meeting for shareholders to enable them to raise questions and seek accountability from the directors and auditors with regard to the accounts and generally? You will appreciate that, in the absence of such a meeting (which is widely regarded as a basic requirement for good corporate governance and transparency), we have no choice but to raise these enquiries on behalf of our members and Albion supporters generally. Many of these questions have come to the S4A Committee directly from our members, many of whom are experienced business people and/or professionals.
3. We are keen to establish which directors acted in March 2021 to facilitate and approve the loan of £4.95m Loan from Group to Wisdom Smart Corporation Ltd
1
('WSL' and the 'WSL Loan'), one of Mr Lai’s other companies (but which is wholly unrelated to the business interests of Albion and is based overseas).
S4A had pointed out on the record on several occasions that there was a conflict of interests on various matters in P Y Li being chairman and a director for Club and the sole director Holdings. It is noted that Mr Li is no longer a director of Club or Group.
Please confirm who at Club authorised the movement from £4.95M from Club’s bank account to Group’s bank account and on what basis this was done.
Please confirm who at Group authorised the terms of the WSL loan. Please confirm the date of the WSL Loan.
4. Please explain how the WSL Loan was in the interests of the Club and Group and how this was justified given the corporate objects and aims of the business. It is a football club which is seeking to re-join the Premier League, not a bank, building society or venture capital fund.
To provide but one example to demonstrate how the loan was not in the interests of Club:
It was clear to most Albion stakeholders at the time the loan was made (and was then allowed to be in default) that the squad required strengthening and balancing. Indeed, we had pointed out to Mr Xu on several occasions that the lack of a fit for purpose striker and a midfielder was clearly required and failure to recruit at the start of season 2021-22 may cost us promotion. Unsurprisingly, that was proven to be case. Had both been in place at the start of last season, it is quite possible that promotion could have been achieved. Many points were squandered in the first half of the season due to not having the fit for purpose striker required.
The football club continues to be unnecessarily hamstrung by the fact that the WSL Loan was made and has not been repaid and the defaulted loan of £3.75M from Club to Holdings from 2014 (‘2014 Loan’) is also still to be repaid by Holdings together with accrued default interest in excess of £1M.
5. Please justify why such a low interest rate (fixed payment of £50,000 on a loan of £4,950,000) was agreed. Given that it had been reported that WSL was in financial difficulty, this makes such a low interest rate even more perplexing. If £50K covers the period to December 2022, that works out at an approximate annual rate of interest of 0.5%.
6. We note that the WSL Loan is stated as being initially due for re-payment on 15 September 2021. Please explain who decided not to collect the loan at that stage and how that was in the interests of the football club. Please also confirm what the legal consideration was for these amended terms.
7. It appears that no further interest is being collected in respect of the period from 15 September 2021 to the eventual date of payment. If that is the case, it would be legitimate to conclude that is clearly not justifiable, it is highly irregular and does not reflect an arm's length deal. Please explain.
2
Further, given that the loan has been in default, it would be most irregular if compound interest is not payable on both the capital and interest. That does not appear to be the case here. Please explain why.
8. Please confirm why security was not obtained in respect of the WSL Loan. It is noted that WSL were said to be in financial difficulty. It is also noted that security was provided for the smaller £2M Warmfront loan granted to Holdings on 8 September
2021 by Warmfront Holdings Limited (‘Warmfront Loan’ and ‘Warmfront’).
9. Note 26 in Group’s accounts refers to loans in the plural. This suggests more than one loan or that a rolling loan facility was in place. Please provide precise details of the arrangement including how many separate loans were made and whether or not there was a supplemental agreement when the terms of the loan agreement were defaulted in September 2021. If there was a supplemental agreement, please confirm the terms of this.
10. Please confirm who provided legal advice to Club and Group on matters relating the WSL Loan and the prior movement of funds from Club to Group. Please also confirm that the WSL Loan was correctly attested by a local notary public/other appropriate officer in relevant jurisdiction for WSL.
11. Do the directors at Club and Group have any concerns about being able to legally enforce the terms of the WSL in the event of further breach, bearing in mind that the money has been loaned to an entity outside of the United Kingdom without any security having been provided for the loan?
12. Please confirm whether P Y Li still has any connection with Club, Group or Holdings (apart from being the sole director of Holdings), whether by way of legal or equitable interest and/or any voting rights in respect of any or all of those entities and/or being a connected person to Mr Lai.
13. Please confirm who knew about this Loan before the Group Shareholders General Meeting held on 29th July 2021. There was an extensive discussion about how Holdings might repay the 2014 Loan. The existence of the WSL Loan four months earlier clearly should have been a disclosable item as it was wholly relevant to Holdings’ ability to repay the 2014 loan.
Mr Xu also publicly confirmed that the 2014 loan would be repaid by the end of the 2021 and subsequently altered this to the end of February 2022. Re-payment has not been made. Please explain why these promises were not delivered. Given the contents of the June 2021 Accounts, there is concern that these statements were not ever intended to be honoured. This is a very serious matter.
S4A have incurred professional costs and acted in reliance of public statements by a director. It has incurred some wasted legal costs as a result and would have handled matters differently in the interests of the football club and its stakeholders. S4A needs to reserve its position in that regard, including recovery of professional costs.
14. We are pleased to note that the details of the 2014 Loan has finally been included under ‘Related Party Transactions’ in the accounts for Club and Holdings after this error had been pointed out on several occasions by minority shareholders since such omission first manifested itself in the June 2015 Accounts, resulting in a lack of transparency on the 2014 Loan.
3
The details of the 2014 Loan should be set out, including:
- The contracted dates for re-payment;
- Details of loan default; and
- Details of the interest payable. Given that the loan has been in default, it would be most irregular if compound interest is not payable on both the capital and interest.
15. We note that in Note 24 of Club’s accounts it states that the 2014 Loan has no fixed date for re-payment whereas Note 16 Debtors in Group’s accounts states that the loan of £3.754 is payable on demand. Please explain this discrepancy.
Furthermore, we understood that the if any part of the 2014 Loan plus accrued interest had not been repaid on its repayment date(s) as due, then all amounts would be and should have been repayable on demand. We understand that repayment date(s) were missed prior to the sale of Holdings in 2016. In light of this, please explain the above entries in the accounts of Club and Group.
16. The July 2020 Accounts were signed off in February 2021 but not distributed until late March 2021 when details of this new Loan must have been under negotiation and/or nearing completion. We are surprised and concerned that this matter was not disclosed to shareholders at that point and/or when the loan was made, given the significance of it to the running of the football club. Furthermore, Mr Xu had assured us in regular update meetings with him that money had not left the football club during the periods in question. We acted in reliance on that, had updated our members and not taken further legal steps on that basis.
Indeed, having met with Mr Xu in June 2021, Mr Xu authorised an update to our members which included the statement:
This is a very serious matter.
17. The minority shareholders are surprised and disappointed that they were not notified of the intention to delay submission of the 2021 Accounts; particularly given Mr Gourlay's stated wish (and welcome evident effort) to improve communications. Please confirm that you will notify of S4A on similar matters going forward within the spirit of the relationship we are trying to forge and the mutually agreed and acknowledged wish to achieve transparency.
18. Please confirm whether any material financial transactions using Club or Group funds have been entered into since 30 June 2021 to date, including:
Whether or not any further loans have been made by either Club or Group since 30 June 2021; and/or
“We had previously communicated concerns to the Club's solicitors and auditors
about the possibility of money leaving the Club (as we had to the Premier League
when referring the issue of ownership to them). Ken has once more assured us that
no money has left the Club.”
4
Whether or not any funds of Club have been transferred to Group or any other party or entity since 30 June 2021.
Where any such transactions have been entered into, please provide details of these.
19. Please confirm whether any material financial transactions using Club or Group funds are envisaged at any time prior to 30 June 2023, including:
Any further loans to be made by either Club or Group prior to that date; and/or
Any funds of Club to transferred to Group or any other party or entity prior to that date.
If so, please provide details.
20. Minutes of the Albion Assembly Meeting dated 29 April 2022 (taken from the football club’s official website) state:
“He [Ron Gourlay] also confirmed the financial accounts will be published between now and the end of June’ and there are no issues to report.”
Please explain this comment given the content of the June 2021 Accounts and the numerous serious and significant issues arising from the same.
21. Please confirm that no steps have been taken or will be taken in connection with the sale or fixed charging of the Hawthorns (and surrounding land holdings) and/or the Training Ground or are contemplated whilst Holdings remains in the ownership of Mr Lai and others. It is accepted that routine banking facilities (for example an arms- length debenture for bona fide business need for the football club) have been used previously by the football club and may need to be in the future. You must appreciate, however, that there is a high level of concern amongst Albion supporters on this front given the content of the June 2021 Accounts, the failure of Holdings to re-pay legal debts due to the football club and the general failure to invest in the football club (and now a developing pattern of instead taking money out of the football club).
22.
a. b. c.
23.
24. Please explain the accumulated depreciation of £15M stated for freehold land and property.
Please provide a full list of all real property assets (i.e. land and buildings) held by
Club and Group (whether operational or investment land and property). In each case,
please provide:
The full address including postcodes;
Whether it is owned and registered in the name of Club or Group; and
The value assigned to that property for the purpose of the accounts.
We understand that the addresses may not be provided for properties which are also
used as accommodation for players and staff at any time, but still require the
information requested in b and c in respect of any such properties.
Group’s accounts show freehold land and property at cost of valuation of £41M
whereas Club’s accounts state the same at only £30M. Please explain.
5
We note that the highest paid director was paid £446,000 for 11 months compared
with £208,000 for the 13 month period ended 31 July 2020. This appears somewhat
strange given that an experienced CEO was replaced in post with an inexperienced
CEO and that Mark Jenkins has publicly stated that he was not being paid a bonus.
Please explain.
25.
26. It is noted that Lee Cooper resigned as Finance Director in mid-March 2021 without another post lined up at that time. Was this resignation linked to the WSL Loan?
27. The following statement is made on page 21 of the June 2021 Accounts for Club:
".....Furthermore, the base forecasts also include a potential dividend pay-out to settle a £5m receivable provided to a related party Wisdom Smart Corporation Limited in March 2021, and further settlement of a £2m loan borrowed by West Bromwich Albion Holdings Limited from Warmfront Holdings Limited in September 2021 and loaned to a related party since the group are not budgeting to receive any of the £7m funds in the period to the end of next season. The Board will not commit the club to further liabilities in upcoming transfer windows without the source of funding for such liabilities being confirmed."
The following statement was made by Mr Lai on the football club's official website on June 2022:
These two statements do not wholly reconcile. Accordingly, please clarify whether the WSL loan and the Warmfront Loan are to repaid: a) further to a prior declaration of dividend to produce the £7M funds to do so; or b) without the need of a prior declaration of dividend prior to repayment or at any time. The former will deprive the football club of £7M plus the associated pro-rata dividend payable to minority shareholders (which is not sought by the vast majority of such shareholders).
28. We do not accept that the loan should have been made, the terms on which it was made, the fact that it has been allowed to default and the failure to negotiate the payment of further interest, however:
a. Please confirm that the directors will take all steps required to obtain repayment of the WSL loan in December 2022 so that the football club's position is not further prejudiced by the WSL loan.
b. We assume that the directors of Club and Group maintain updated financial intelligence on WSL (as any prudent lender would), but please confirm.
29. Please explain how Holdings has the right to require Group to pay a dividend to enable Holdings to repay the Warmfront Loan. The Warmfront Loan is not of any concern to the football club, its aims or the operation of business. Once more, it is legitimate to conclude that this is highly irregular.
“The upturn in the global economy has brought with it greater positivity and I can
confirm I will repay the loan in full, with interest, by the end of the current calendar
year and the funds will be available to the club during the January 2023 transfer
window."
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30. Holdings appears to have no employees and only one director, P Y Li, who was Chairman of Club and a director of Group, when the WLS Loan was entered into during the year ending 30 June 2021. We understand the P Y Li is based overseas. Holdings has its registered office at The Hawthorns. Please explain.
Please confirm that neither Club/Group employees and nor Club/Group's solicitors were involved in dealing with any loan documentation on behalf of Holdings.
31. Please confirm who pays the professional costs and other running costs of Holdings (including the provision of accounts for Holdings and its audit fees) and confirm that Club or Group funds are not used.
32. Given that Group shares appear to have been offered as security for the Warmfront Loan, has Holdings provided notice to Group that its shares are being used as security for a loan which is completely unconnected with the business of the football club?
33. Please confirm whether or not the Warmfront Loan was repaid on 31 March 2022. If it has been paid off, please confirm whether any funds from Club and/or Group have been used directly or indirectly to facilitate such repayment.
34. Please explain why it has been necessary to create a new (intermediate) holding company, WBAFC Holdings Limited, incorporated in Jersey on 9 September 2021 registration number 137991.
35. Please explain why the new holding company is not incorporated in the United Kingdom.
36. Company searches for WBAFC Holdings Limited (i.e. matters of public record) state: "Significant person(s) who is an Individual: Ke Xu" and
A search of FGD 1 Limited states:
"Significant person(s) who is an Individual:
"Significant person(s) who is an Entity: Fairway Trust Limited."
The nature of Fairway Trust Limited is evident: www.fairwaygroup.com
Please confirm who FGD 1 Limited and the listed ‘Significant person(s) as an Individual’ for FG1 Limited are and why they are now involved. Does this constitute a change of ownership? If so, have you notified the Premier League and the EFL of this?
"Significant person(s) who is an Entity: FGD 1 Limited, incorporated in Jersey 28
December 2011 registration number 28 December 2011."
Alistair James Rothwell
Christian Vernon Falle
Mark Anthony Andrews
Jacqueline Highfield
Scott Nelson
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37. Please confirm whether or not a a takeover or partial takeover of Holdings is already underway. If it is, please provide further details of this.
38. Please confirm if all or any of FGD 1 Limited and the listed ‘Significant person(s) as an Individual’ for FG1 Limited have provided funds to Holdings or Mr Lai at any time or whether there is any intention for this to occur going forward.
39. Please confirm if FGD 1 Limited and the listed ‘Significant person(s) as an Individual’ for FG1 Limited are in any way related to Warmfront.
40. Please confirm if any or all of Jeremy Peace, a relative of his or an appointed nominee or representative of his are involved with FGD 1 Limited, the listed ‘Significant person(s) as an Individual’ for FG1 Limited, Fairway Trust Limited, Warmfront or Holdings or if you are on notice of any intention for there to be any such involvement with those stated or otherwise with Club or Group at any time in the future.
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