CHAIRMAN'S STATEMENT

After a rollercoaster season in the highly-competitive Coca-Cola Championship, we suffered the ultimate disappointment of a one-goal defeat in the Play-Off Final against Derby County on 28 May. All the hard work put in by Tony Mowbray, his coaching staff and the playing squad resulted in an anti-climax at the New Wembley, which I am sure was as frustrating for our fans as for everyone else connected with the Club.

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In the League Cup, after victories against Leyton Orient and Cheltenham Town, we were defeated in the third round by the eventual finalists Arsenal. In the FA Cup, having defeated Leeds United and Wolverhampton Wanderers, we took Middlesbrough to a fifth round replay before narrowly losing on penalties.

Elsewhere, the reserve team competed in the Pontin's Holiday League Division One (Central), achieving a respectable fourth-place finish under Craig Shakespeare, who also became an integral part of the first team coaching staff. The Academy side competed for the second successive year in the Premier Academy League, with Michael Appleton steering them to a highly-encouraging fifth-place, ahead of such teams as Everton and Liverpool. Our Academy Manager, Dan Ashworth, and his staff possess an ambitious group of talented youngsters who are eager to step up to senior levels in the future. Under Steve Hopcroft, our player recruitment, particularly from the local area, has created a healthy competition for places and led to a rise in the standard of individual and team performances.

Since the disappointment of last season, we have had to pick ourselves up quickly and prepare for another arduous campaign in the Championship, which started on 11 August. To date, after four games, the Club is in tenth position in the league with six points. Meanwhile, we have progressed to the third round of the Carling Cup after victories over Bournemouth and Peterborough United and will now meet Cardiff City at The Hawthorns on 25 September.

Last season, following relegation, the Club's main aims were to retain its best players and gain promotion. Despite considerable interest from other clubs, the only players to leave were Junichi Inamoto, who was sold to Galatasaray for 0.25m Euros, and Nigel Quashie, who moved to West Ham United in January for an initial £1.5m. In addition, Tomasz Kuszczak joined Manchester United in August 2006 on a season-long loan, which resulted in a permanent transfer in July 2007 for £2.125m.

With a further season in the Coca-Cola Championship, and the continuing high level of interest in our players from other clubs, we made the conscious decision to rebuild the squad for the 2007/08 season. In addition to the departures of Pascal Zuberbuhler and Russell Hoult in January, both Chris Perry and Steve Watson were released. Sadly, Thomas Gaardsoe was forced to retire from football through injury.

The transfers of Diomansy Kamara, Jason Koumas, Paul McShane, Darren Carter and Nathan Ellington have since earned the Club a combined initial fee of £17.7m, before any sell-on clauses. In addition, Curtis Davies has joined Aston Villa on a season-long loan with a view to a permanent sale next summer. These funds have been reinvested into the acquisition of the player registrations of ten new squad members, namely Leon Barnett, Craig Beattie, Chris Brunt, Carl Hoefkens, Shelton Martis, James Morrison, Pele, Bartosz Slusarski, Filipe Teixeira and Tininho, plus a further three players on season-long loans, namely Roman Bednar, Bostjan Cesar and Ishmael Miller. This has resulted in a total initial cost of £12m, plus a net increase in the wage bill of £7.6m over the next four years.

Our total spending on player registrations, first-team wages and coaching staff salaries aggregates over this and the past five seasons to more than £134m with £30m being recovered in subsequent player sales.

Group Turnover for the 12 months ended 30 June 2007 fell to £23.8m compared to £35.5m for the previous year following the Club's relegation from the Premier League. Although the Club did receive the first of its two 'Parachute Payments', media revenue fell by £10.4m. Despite there being more league fixtures in the Championship, as well as the Club reaching the Play-Off Final, gate receipts fell by £0.7m. Following a £9.4m write down in player values last year, a number of those players have been subsequently sold for more than their revised accounting values and this has contributed £3m to profit. A further profit on the sale of other players of £3.7m has resulted in a profit on ordinary activities before taxation of £5.4m.

The decision to retain the existing squad and to continue investing in players at the start of last season resulted in net debt increasing from £1.6m to £4.1m as at 30 June 2007. In line with previous policy, having regard to this position and our lower league status, the Board of Directors do not recommend the payment of a final dividend.

One of our two Non-Executive Directors, Joe Brandrick, will be retiring from the Board at the Annual General Meeting after 21 years' service but his association with the Club will continue in the role of Vice-President. Furthermore, Dr John Evans retired as Football Club Secretary and Director during the summer after 18 years' service. John will continue to offer consultancy support to his successor, Darren Eales, who joined us in March 2006 and was appointed to the Football Club Board as Legal Director and Secretary on 1 July.

Simon Hunt was appointed in June as Sporting and Technical Director (designate) and he has made a valuable contribution to the acquisition of players during the summer transfer window. Now that the window has closed, Simon will be focussing on the development of the medical, sports science and Academy areas of the Club as well as on our continuing player recruitment programme.

Earlier this year, after listening to supporters, the Club decided to reduce season-ticket prices for the current campaign and paid particular attention to young families, reintroducing heavily-discounted junior rates. This has resulted in season-ticket sales exceeding 15,300, some 2,300 more than at the same time last year. This 17 per cent increase vindicates the decision to reduce prices by a weighted average of 20 per cent, resulting in an average price of £12.44 per season-ticket seat per game across all concessions.

The Board would like to thank our away support, which continues to be a credit to the Club by supplying, as in the previous five years, free transport to an away fixture this season, with the trip to Barnsley on 9 February 2008 being the most likely choice. For home matches, the Club is again providing subsidised transport on the increasingly popular 'Hawthorns Express' service on the already-established routes.

As part of the Club's ongoing commitment to investing in new technology, last season saw the implementation of 'Infogenisis', an electronic point of sale (EPOS) solution, in the East Stand corporate hospitality areas. Following the success of this first phase, the technology was implemented in the East Stand, Birmingham Road End and Smethwick End public catering areas before the start of the 2007/08 season. Total investment in the project so far is £0.15m.

Our Community Sports Hall, sponsored by Barclays and the Football Foundation, as part of the Barclays Spaces for Sports initiative, was officially opened in January. Ongoing infrastructure development at the Training Ground has seen a further investment to improve these facilities. Given continuing levels of excess capacity, we believe that now would be an imprudent time to build a new West Stand. However, this season we will be seeking to completely refurbish the existing Halfords Lane Stand as part of the continuing redevelopment of The Hawthorns.

The new Sandwell City Academy School, of which the Club is proud to be a sponsor, has enjoyed a successful first year in operation. The school has provided a positive working environment for all students, which has been reflected in the progress made in core subjects and exam results. The WBA scholars programme is also proving successful, as is the sharing of our facilities. We wish Head Teacher, Simon Topper, the staff and students every success during the current academic year.

Our Community & Education Programme, under the guidance of Fraser Foster, continues to benefit young people and adults in the Sandwell and Dudley area. The new Community Sports Hall has granted local people greater access to the Club and, in turn, created opportunities for the Club to support their health and education. Significant projects have been undertaken with a commensurate increase in staffing levels.

Last year's nominated charities enjoyed a successful year. With the support of the Club, a total of over £50,000 was raised. This year, the Club will be supporting three charities: Victim Support West Midlands, based in Oldbury, providing support for the victims and witnesses of all crimes; Brake, a road Safety Charity with one simple aim: to stop death and injury on roads and provide help to people bereaved and injured by road crashes; and Childline Midlands, a 24 hour free helpline for children and young people in danger or distress, currently receiving 4,500 calls a day.

The Club has continued to enhance our much-admired collection of memorabilia and further displays are currently being completed. In the near future regular tours of our memorabilia collection will be conducted. Also we continue to enjoy a close-working relationship with the Former Players' Association and are delighted to support its activities.

The disappointment at Wembley has only made us more determined to achieve our long-term aim of establishing the club in the Premier League. Outside the top flight, we must always be aware of controlling our costs in a prudent manner to safeguard the future of the Club whilst we pursue our ambitions to compete at a higher level.

As always, my thanks go to my Board colleagues and all members of our staff for their continued support and efforts during a challenging year.

Jeremy Peace

Chairman

12 September 2007