West Bromwich Albion PLC

Preliminary Results for the year ended June 30, 2004

 

Highlights

·Promotion to the Premier League

·Turnover £20.6m (2003 £28.4m when in the Premier League)

·Operating profit before player amortisation £1.4m (2003 £9.8m)

·Loss on ordinary activities before tax £(0.1)m (2003 £(0.6)m).

·Net funds of £0.9m at the year- end (2003 £1.7m).

·Proposed dividend 250p (2003 170p)

·Since the end of last season the first team squad strengthened by 10 new signings at an initial cost of £9.1m excluding levies and other costs.

·The current first team squad of 31 professionals includes 14 full internationals.

Jeremy Peace, Chairman, commented:

"Two years ago I set out the Board's long term aim to establish the Club in the Premier League.The Club finds itself at this level for the second time in 3 years and a huge effort will be required by everyone to meet the challenge of maintaining the Club's status."

West Bromwich Albion PLC

Financial Results for the year ended 30th June 2004

Financial Highlights

2004

2003

2002

2001

2000

Turnover

£20.6m

£28.4m

£14.3m

£8.5m

£6.8m

(Loss)/profit before tax

£(0.1)m

£(0.6)m

£2.6m

£1.7m

£0.7m

(Loss)/earnings per share

(122)p

(363)p

1179p

1502p

841p

Net funds/(debt)

£0.9m

£1.7m

£(2.1)m

£(2.5)m

£(0.5)m

Dividends per share

250p

170p

160p

150p

nil

League position

Premier League

-

19th

-

-

-

Nationwide Division 1

2nd

-

2nd

6th

21st

Average Attendances

24,800

26,700

20,900

17,400

14,600

Season Tickets

19,300

20,000

14,300

10,100

7,500

Chairman's Statement

The Club enjoyed a successful season during 2003/04, achieving promotion to the Premier League, finishing second in Football League Division I and also reaching the quarter final of the Carling Cup. The Board offers its thanks to Gary Megson, the coaching staff and the players, including those 11 players no longer with the Club.

The signings of Riccardo Scimeca, Martin Albrechtsen, Darren Purse, Tomasz Kuszczak, Jonathan Greening, Kanu, Zoltan Gera, Robert Earnshaw, Junichi Inamoto and Cosmin Contra at an initial cost of £9.1m and up to a further £1.9m if certain performance criteria are met, excluding the 5 per cent transfer levy and other costs, has given the Club its strongest squad in almost 20 years.However with 31 players in the senior squad, the Club will now endeavour to reduce this number by approximately 25 per cent over the coming months to a more manageable number with the added benefit of any transfer fee income and wage savings that will arise.This is made possible by the absence of Transfer Window restrictions for sales or loans between Premier League and Coca Cola Championship Clubs.The recent sales of Sean Gregan to Leeds United F.C., James Chambers to Watford F.C.and Scott Dobie to Millwall F.C. for combined fees of up to £2.0m has started this process.In general, the Transfer Window system does not help any promoted Premier League Club which has to significantly strengthen its squad in a very short time, whilst more established Clubs with a greater certainty of survival have only to select and attract a small number of quality players to augment already strong squads.Having stated that, it must be the Club's aim this season to avoid relegation, as promotion from the Coca Cola Championship is always very hard to achieve.

On Tuesday 26th October Gary Megson informed the Board that he did not wish to remain as manager when his contract expires on 30th June 2005. The Board decided to relieve him of his duties with immediate effect and to recruit a new manager. The Club extends its thanks to Gary for his major contribution over the last 4 ½ years, a time which included 2 promotions to the Premier League and, having reached agreement on the balance of his contract, wishes him well for the future. Following this on 9th November, Bryan Robson was appointed Manager. He joins with a wealth of experience having played at international level for England and Club level for West Bromwich Albion, Manchester United, and Middlesbrough, whom he also managed in the Premiership. The Club wishes him and Nigel Pearson, his new Assistant Manager, a happy and successful time at the Hawthorns.

As at 15th November, after 13 matches, the Club currently stands in 18th position in the Premier League.In order to retain its status and source quality players the Club needs to enhance its scouting system.The Club will then benefit from the wider range of opportunities now being offered by its increased network of contacts in Europe.Such enhancement will entail greater research into targets prior to purchase so that more informed decisions on transfer value, other costs and salary can be reached.Furthermore greater research can be made into players' backgrounds and characters before they join the Club.

Last year, season ticket sales reached a level of 19,300 despite relegation from the Premier League.In order to remain competitive at Premiership level, season ticket prices have been increased by an average of 33 per cent up to £16 excluding VAT per ticket, per match, including all paying concessions.There are now 20,800 season ticket holders and the Club would like to thank all of these supporters for their loyalty.Average attendances during our first 7 home games were 25,700 against 24,800 last season and 26,700 during the previous Premiership campaign. Matchday attendances have been adversely affected by three televised games, one on a Saturday evening and two on Sunday afternoons.

The Club will endeavour to improve its capacity within the existing stadium until it becomes necessary to commence new building works.A capacity of up to 40,000 will eventually be sought which should make the Club an equal revenue competitor with medium sized Premier League Clubs.However, such additional capacity will only be added if actual demand at commercial prices so warrants.

During the year, the Club recorded a pre-tax loss of £0.1m on a reduced turnover of £20.6m.Transfer fee expenditure on 14 new players, prior to the end of the season, totalled £4.2m against anticipated receipts of £2.6m from the sales of Jason Roberts and Daniele Dichio.As the squad increased in size and quality, player wages have remained fairly consistent at £9.3m including promotion bonuses, giving rise to a player wages to turnover ratio of 45 per cent.A combination of Premier League "parachute" money, good attendances and steady retail sales, despite relegation, and the impact of first time in-house conferencing and banqueting sales all contributed to turnover.Since the year end, the Club has signed a 2 year Club Sponsorship deal with T-Mobile (UK) and is looking forward to building on this relationship, as well as its affinity partnerships with Coors, Creation, and the West Bromwich Building Society.

Financially the Club continues to plan on a rolling 3 year basis and as always, it is necessary to structure player contracts in line with the receipt of Premier League income.Of the 31 players in the first team squad, 17 have contracts extending beyond this season with a further 9 under option for a further year at the Club's discretion.Due to the policy of reducing salaries if relegation should occur, the player wage bill will fall by more than 50 per cent in those circumstances.

Full-time staff members number 121, with 61 employed on the playing side and 60 on the non-playing side, increases of 2 and decreases of 3 respectively on last year after squad strengthening and the closure of the Sports and Social Club and The Woodman Public House.

The Club has continued to improve its infrastructure.After the disappointing failure of the new ticketing system, a second system has now been successfully implemented.Internet ticket sales are now on the increase accounting for 22 per cent of season ticket sales.The Club is now in the latter stages of integrating the Ski-Data access control system whilst stadium capacity has been increased by 266 seats to 28,000.The Club is currently looking at plans to add catering and other facilities at the training ground, subject to planning permission, whilst continuing to upgrade the quality of the pitches there.

Following promotion, the Club decided to concentrate the investment of resource on its first team squad.The effect of this is to delay the building of the new indoor Academy facility until the 2005/06 season.That department is now under the charge of Dan Ashworth, who joined us in December from Cambridge United. The Community Programme continues its excellent work, whilst The Sandwell Academy School, of which the Club is delighted to be a sponsor, continues to work towards opening in September 2006.

The Board recommends an interim dividend of 250p per share, an increase of nearly 50 per cent on last year or just under 40 per cent more than the level of 180p that would have been recommended if the Club had remained in the Football League.As forecast in previous statements, this increase reflects the Club's higher league status, underlying net funds position and inherently strong business model and is a reward for shareholder loyalty.

The Board has welcomed the new "Fit and Proper" persons tests for Football Club Directors together with new Football Club insolvency regulations which it is hoped will benefit the professional game.

The Football Club Board has been strengthened by the appointment of Jonathan Fuller as Operations Director in July, following his 4 year tenure as Chief Executive of Stoke City F.C.With 14 years experience in football management and an accountant by training, he is already proving to be an asset to the Club.

The Club continues its support of Charities with the 4 nominated charities this year being, the Mayor of Sandwell Charities, Acorns Children's Hospice,Sandwell Women's Aid, The Foundation for Conductive Education, and is looking forward to working with them.

The memorabilia collection which is displayed in the East Stand continues to grow with some very worthwhile additions made in the last 12 months.The Former Players Association is now becoming established and the Club is delighted to be able to work with and support this organisation.The 125th Anniversary Mural was unveiled on 7th August before our celebration game again Boavista which although finishing 0-0, was an enjoyable and memorable day for all at the Club.

Two years ago I set out the Board's long term aim to establish the Club in the Premier League.The Club finds itself at this level for the second time in 3 years and a huge effort will be required by everyone to meet the challenge of maintaining the Clubs status.Meanwhile, I would like to thank my Board colleagues and all our employees for their tremendous and successful efforts last season.

Jeremy Peace

Chairman

15th November 2004

Results for the year 30 June, 2004

Group Profit and Loss Account

30 June 2004

30 June 2004

30 June 2004

30 June 2003

£

£

£

£

Operations

excluding player

Player

amortisation

amortisation

and trading

and trading

Total

Total

Turnover

20,569,516

-

20,569,516

28,445,484