Birmingham City's accounts were delayed by an issue over the transfer of kit sponsorship income rights, the directors’ report has revealed.
Rights to cash generated by the 2011/12 deal with kit sponsor Xtep were transferred to Birmingham (Hong Kong) Ltd – a subsidiary of parent company Birmingham International Holdings Ltd.
The report said the switch was made “on the basis of an informal and unwritten agreement between the directors of BCFC and BIHL to enable the HK-based company to maximise the potential of marketing the club within the Far East market”.
The document said auditors BDO had advised on potential tax implications of the move and added: “This issue alone has caused significant delay in publishing the accounts with the auditors having to seek appropriate clarifications from those concerned”.
Details of the club’s long-awaited accounts, which emerged over the weekend, revealed a £10.6 million loss for the year ending June 30.
But the document also forecast a move back into “substantial” profit through player sales and Premier League parachute payments.
However the upbeat analysis remained clouded by the delay in the release of BIHL’s accounts, already postponed three times since last October. They also hold the key to the lifting of the current transfer embargo at St Andrew’s.