FOH Updated Q&A

[Footballfirst]

I don't think anyone is wanting a management account breakdown. Rather, it is why we need to run a ?1.4m loss over the next two years, funded by FoH pledges. Personally I have no issue with it since the most important objective is promotion but others like FF do.

 

The most important objective for FoH was to save the club, then the next objective was to achieve fan ownership, not promotion.

 

The first objective has been achieved, but the second objective has been delayed by around three years to finance a speculative two year attempt to achieve promotion.

[Geoff Kilpatrick]

The most important objective for FoH was to save the club, then the next objective was to achieve fan ownership, not promotion.

 

The first objective has been achieved, but the second objective has been delayed by around three years to finance a speculative two year attempt to achieve promotion.

 

That's subjective, to be fair.It would be an interesting poll though.

[Footballfirst]

That's subjective, to be fair.It would be an interesting poll though.

 

From the FoH website

Our Aims

 

The principal aim of the Foundation is to acquire the majority shareholding, which will bring us Tynecastle Stadium, the Heart of Midlothian brand, and the football rights of HMFC, debt-free and liability-free, for the long-term benefit of Heart of Midlothian and its fans.

 

We also aim to stabilise the club financially and to seek to grow the underlying financial base.

 

It is expected that the majority of funds to make this happen will have to be raised from the fans. There is no ?white knight? in this proposition. If Scottish football is to continue and is to flourish in the future, a new operating model needs to be found and the Foundation is keen to prove that fan-supported ownership can succeed in Scotland.

 

---------------------

 

Our Vision

 

The vision of the Foundation of Hearts is:

• To have Hearts fans centrally involved in the ownership and running of this great club
  
• To establish a well-run club which operates with integrity and transparency and encourages entertaining football from a team built around players produced by a thriving youth development programme
  
• To have the club remain at its ?spiritual home? of Tynecastle for the foreseeable future in a stadium which maximises revenue streams
  
• To ensure that the future of Heart of Midlothian Football Club remains secure for all time.
  

-----------------------------------------

No mention there of promotion or rightful place in the top division

[Geoff Kilpatrick]

 

 

From the FoH website

Our Aims

 

The principal aim of the Foundation is to acquire the majority shareholding, which will bring us Tynecastle Stadium, the Heart of Midlothian brand, and the football rights of HMFC, debt-free and liability-free, for the long-term benefit of Heart of Midlothian and its fans.

 

We also aim to stabilise the club financially and to seek to grow the underlying financial base.

 

It is expected that the majority of funds to make this happen will have to be raised from the fans. There is no ?white knight? in this proposition. If Scottish football is to continue and is to flourish in the future, a new operating model needs to be found and the Foundation is keen to prove that fan-supported ownership can succeed in Scotland.

 

---------------------

 

Our Vision

 

The vision of the Foundation of Hearts is:

• To have Hearts fans centrally involved in the ownership and running of this great club
  
• To establish a well-run club which operates with integrity and transparency and encourages entertaining football from a team built around players produced by a thriving youth development programme
  
• To have the club remain at its ?spiritual home? of Tynecastle for the foreseeable future in a stadium which maximises revenue streams
  
• To ensure that the future of Heart of Midlothian Football Club remains secure for all time.
  

-----------------------------------------

No mention there of promotion or rightful place in the top division

No mention at that time of vetoes on board membership either.

[davieholt]

From the FoH website

Our Aims

 

The principal aim of the Foundation is to acquire the majority shareholding, which will bring us Tynecastle Stadium, the Heart of Midlothian brand, and the football rights of HMFC, debt-free and liability-free, for the long-term benefit of Heart of Midlothian and its fans.

 

We also aim to stabilise the club financially and to seek to grow the underlying financial base.

 

It is expected that the majority of funds to make this happen will have to be raised from the fans. There is no ?white knight? in this proposition. If Scottish football is to continue and is to flourish in the future, a new operating model needs to be found and the Foundation is keen to prove that fan-supported ownership can succeed in Scotland.

 

---------------------

 

Our Vision

 

The vision of the Foundation of Hearts is:

• To have Hearts fans centrally involved in the ownership and running of this great club
  
• To establish a well-run club which operates with integrity and transparency and encourages entertaining football from a team built around players produced by a thriving youth development programme
  
• To have the club remain at its ?spiritual home? of Tynecastle for the foreseeable future in a stadium which maximises revenue streams
  
• To ensure that the future of Heart of Midlothian Football Club remains secure for all time.
  

-----------------------------------------

No mention there of promotion or rightful place in the top division

 

They do talk about growing the underlying financial base and maximising revenue streams though. Presumably they think that these aims would be hard to achieve without the team playing in the top division?

[Francis Albert]

I see the myth (or straw man) that anyone wants a detailed breakdown of what our initial ?3.8m is for (before we pay back Ann) lives on. No-one as ever asked for this. No-one.

[Footballfirst]

It seems that the FoH accounts have been lodged with Companies House but are not yet available to view.

 

These are the annual accounts up to 31/10/2013 (nine months ago). Today was the last day that they were allowed to submit accounts.

 

As the accounts are so far out of date, they have little value in assessing the current state of play.

 

There is no reason for FoH not to make the accounts available to all via the website. (transparency and all that)

 

Name & Registered Office:

FOUNDATION OF HEARTS LIMITED

23 MELVILLE STREET

EDINBURGH

MIDLOTHIAN

EH3 7PE

Company No. SC387126

Status: Active

Date of Incorporation: 15/10/2010

Country of Origin: United Kingdom

Company Type: PRI/LTD BY GUAR/NSC (Private, limited by guarantee, no share capital)

Nature of Business (SIC): 94990 - Activities of other membership organizations not elsewhere classified

 

Accounting Reference Date: 31/10

Last Accounts Made Up To: 31/10/2013 (TOTAL EXEMPTION SMALL)

Next Accounts Due: 31/07/2015

Last Return Made Up To: 15/10/2013

Next Return Due: 12/11/2014

Highlighted documents are not yet available for inspection

[Footballfirst]

For information and reference here is a link to BDO's end of administration report lodged with Companies House on 7th July 2014.

 

http://www.scribd.com/doc/235531296/2014-07-07-BDO-End-of-Administration-Report

 

The document details itemised income accrued and expenditure incurred during the Admin period. It will be useful as a reference document when comparing the first year's accounts post admin under Bidco control.

[Footballfirst]

Admins - Can you confirm what happened to the monies donated by JKB members during the admin period (IIRC approx ?58K)?

 

BDO's end of administration report (link above) only shows donations of ?17,649.58. Again IIRC, Bryan Jackson previously indicated that he would not use the JKB donations unless absolutely necessary.

 

Was this money subsequently made available to Bidco, or was it passed to FoH?

 

Again the BDO report indicates that a deficit of ?41,574 was picked up by Bidco as part of the Management agreement (figure was stated at ?41,554.38 elsewhere in the document). The JKB donations should therefore have been enough to eliminate the deficit and provide an additional positive cash balance of around ?17k

[Maple Leaf]

Admins - Can you confirm what happened to the monies donated by JKB members during the admin period (IIRC approx ?58K)?

 

BDO's end of administration report (link above) only shows donations of ?17,649.58. Again IIRC, Bryan Jackson previously indicated that he would not use the JKB donations unless absolutely necessary.

 

Was this money subsequently made available to Bidco, or was it passed to FoH?

 

Again the BDO report indicates that a deficit of ?41,574 was picked up by Bidco as part of the Management agreement (figure was stated at ?41,554.38 elsewhere in the document). The JKB donations should therefore have been enough to eliminate the deficit and provide an additional positive cash balance of around ?17k

 

When BDO turned the Club over to the new management team, there was a line item in the accounts called Donations (iirc), and it amounted to ?50,000. That was money donated by the members of JKB. In my emails with Bryan Jackson, he had said that our donations would not be used in the day-to-day operations during administration, except as a last resort. When the Club exited administration, he and the Finance Manager confirmed to me that the money was still sitting in a special account, unused.

 

Subsequent to the Club exiting administration, in late May, JKB sent a further ?10,725 in donations to the Club.

 

EDIT: I'm quite certain that another BDO document was issued, different from the one linked above. I recall seeing the ?50k line item. I have no idea what the ?17,649.58 is about.

[Footballfirst]

When BDO turned the Club over to the new management team, there was a line item in the accounts called Donations (iirc), and it amounted to ?50,000. That was money donated by the members of JKB. In my emails with Bryan Jackson, he had said that our donations would not be used in the day-to-day operations during administration, except as a last resort. When the Club exited administration, he and the Finance Manager confirmed to me that the money was still sitting in a special account, unused.

 

Subsequent to the Club exiting administration, in late May, JKB sent a further ?10,725 in donations to the Club.

 

EDIT: I'm quite certain that another BDO document was issued, different from the one linked above. I recall seeing the ?50k line item. I have no idea what the ?17,649.58 is about.

 

Thanks Ron

 

That was part of the reasons for me asking. The Creditors report issued at the end of January stated that donations amounted to ?78,238.36. I also recall the statement of not using the JKB donations unless absolutely necessary, but I'm unsure if that was documented formally by BDO, posted on the official website, or communicated on here. It would probably have been around about April. Either way I think that it would be worth checking with the club what has happened to the money.

[Footballfirst]

I found the reference in the BDO Management agreement with Bidco from 9th May.

 

[Maple Leaf]

I found the reference in the BDO Management agreement with Bidco from 9th May.

 

 

Thanks. I knew I'd seen it somewhere.

[Maple Leaf]

Thanks Ron

 

That was part of the reasons for me asking. The Creditors report issued at the end of January stated that donations amounted to ?78,238.36. I also recall the statement of not using the JKB donations unless absolutely necessary, but I'm unsure if that was documented formally by BDO, posted on the official website, or communicated on here. It would probably have been around about April. Either way I think that it would be worth checking with the club what has happened to the money.

 

I've been informed by an impeccable source that the JKB donation money is still sitting, untouched, in a separate account.

 

The Club management hope to use it in a manner that'll directly benefit the fans, but there's been no decision on anything specific.

[Footballfirst]

I've been informed by an impeccable source that the JKB donation money is still sitting, untouched, in a separate account.

 

The Club management hope to use it in a manner that'll directly benefit the fans, but there's been no decision on anything specific.

 

I admire the sentiment behind that, but the purpose of the donations was to help keep the club afloat not to spend the money in some way that it is returned to the fans.

 

I'd rather that it went to the Academy to enable then to recruit two or three decent 14/15 year old prospects that will benefit the club in the longer term.

[Geoff Kilpatrick]

Vlad statue please. Easy solution!

[Ulysses]

 

I admire the sentiment behind that, but the purpose of the donations was to help keep the club afloat not to spend the money in some way that it is returned to the fans.

 

I'd rather that it went to the Academy to enable then to recruit two or three decent 14/15 year old prospects that will benefit the club in the longer term.

 

We've donated the money to Hearts, and therefore how it gets spent is up to Hearts.

[davemclaren]

We've donated the money to Hearts, and therefore how it gets spent is up to Hearts.

 

Agreed.

[Francis Albert]

I agree it's up to Hearts to spend the money as Hearts see fit. I do find the fact that the money has not been touched (and that I believe by no means all the Fighting Fund's contributions were spent) makes a bit of a nonsense of all the scary words about us being on the brink of running out of cash towards the end of administration. Presumably designed to scare the Lithuanian admins. Doubt they were fooled.

[davemclaren]

I agree it's up to Hearts to spend the money as Hearts see fit. I do find the fact that the money has not been touched (and that I believe by no means all the Fighting Fund's contributions were spent) makes a bit of a nonsense of all the scary words about us being on the brink of running out of cash towards the end of administration. Presumably designed to scare the Lithuanian admins. Doubt they were fooled.

 

Good outcome either way.

[Francis Albert]

Of course the outcome is good but it does mean that, with BDO talk about needing every last penny, our JKB donations were arguably given under somewhat false pretences. Not as false as the FoH DDs I grant you!

 

It is also slightly odd that our JKB donations seem to be ring fenced for purposes presumably to be revealed whereas our ?3.8m FoH donations disappear into the "working capital" pot.

[Neil Jung]

 

Of course the outcome is good but it does mean that, with BDO talk about needing every last penny, our JKB donations were arguably given under somewhat false pretences. Not as false as the FoH DDs I grant you!

 

It is also slightly odd that our JKB donations seem to be ring fenced for purposes presumably to be revealed whereas our ?3.8m FoH donations disappear into the "working capital" pot.

Why do you continue to invest in something that clearly concerns you? Save it then contribute in a lump sum once you're convinced? You're obviously not convinced at this moment. If you've entrusted Ann and FOH with running the club in the interim (which you clearly have by your contribution) why don't you do just that until such a point where material issues are evident. You're a decent poster however the overriding theme of this thread is of pen pushers and compliance officers trying to outdo each other. There's another thread FF started about expenditure which is interesting however all of a sudden you have a dozen posters questioning how the money is being spent. Right now we should support what we've invested in until such a time when there is clear cause for alarm.

[Francis Albert]

I continue to support Hearts after over 50 years. They have often caused me concern. I have often been more critical of them than I have ever been of FoH or Ann Budge.

 

Questioning is for me evidence that people care.

 

BTW where is this constitution?

[Mikey1874]

Great the JKB money is still there. Might well have been critical with more delays in the transfer of ownership. But well done BDO for keeping it aside.

 

Have confidence club will make the right choice but happy if it remains unused. Nice to have these sort of "dilemmas". Well done everyone.

[jambos are go!]

I have met Ann Budge a couple of times and have done some business with her company. I have no doubt that she has the interests on Hearts along with protecting her investment as twin priorities. Not much wrong with that. I imagine nothing will give her more pleasure thsn handing over HMFC to the supporters on schedule and in rude sporting and financial health. That includes addressing the elephant in the room. The main Stand and/or stadium relocation issue. Plus making sure the lunatics dont take over the asylum.

 

 

[Neil Jung]

 

I continue to support Hearts after over 50 years. They have often caused me concern. I have often been more critical of them than I have ever been of FoH or Ann Budge.

 

Questioning is for me evidence that people care.

 

BTW where is this constitution?

We all care FA. Give it time.

[Francis Albert]

Ann Budge, in her capacity not as a FoH contributor but as a third party entering into an agreement with FoH saw and approved the FoH constitution a month or more ago. Isn't it about time the FoH funders, who will agree to membership next week when their DDs are taken, saw it?

[Geoff Kilpatrick]

Of course the outcome is good but it does mean that, with BDO talk about needing every last penny, our JKB donations were arguably given under somewhat false pretences. Not as false as the FoH DDs I grant you!

 

It is also slightly odd that our JKB donations seem to be ring fenced for purposes presumably to be revealed whereas our ?3.8m FoH donations disappear into the "working capital" pot.

How was the JKB donation "false pretences"? The final deficit figure that BDO handed over to Ann Budge was slightly higher than the contributions from here. I have no doubt BDO would have used them as a last resort. Plus admin is not meant to last more than 12 months. We came very close to that mark.

[Neil Jung]

 

Ann Budge, in her capacity not as a FoH contributor but as a third party entering into an agreement with FoH saw and approved the FoH constitution a month or more ago. Isn't it about time the FoH funders, who will agree to membership next week when their DDs are taken, saw it?

Depends what other priorities are currently being addressed. I think we all agree the impending season should be somewhere near the top of the to-do list. Demand for immediate information baffles me given the state of the club.

[Geoff Kilpatrick]

 

Depends what other priorities are currently being addressed. I think we all agree the impending season should be somewhere near the top of the to-do list. Demand for immediate information baffles me given the state of the club.

What state is this exactly?

 

We've sold over 12,000 STs, the most since the first two seasons of the Vlad era. There is a massive feel-good factor amongst the support for the new season. This is when FoH should be communicating to get people to join outside of the current number.

[Neil Jung]

 

 

What state is this exactly?

 

We've sold over 12,000 STs, the most since the first two seasons of the Vlad era. There is a massive feel-good factor amongst the support for the new season. This is when FoH should be communicating to get people to join outside of the current number.

A few weeks ago people on here we're saying we'd be lucky to shift 8000. Now it's 12,000, great. Season starts next week. To quote Ann Budge "quite frankly we don't have much time".

Why people can't accept this is an evolving situation, yet in its infancy, is beyond me. There are a hundred things to do I'm sure but they can't all be done within the space of 10 weeks.

As for the state of the club it's been well documented.

[Geoff Kilpatrick]

 

A few weeks ago people on here we're saying we'd be lucky to shift 8000. Now it's 12,000, great. Season starts next week. To quote Ann Budge "quite frankly we don't have much time".

Why people can't accept this is an evolving situation, yet in its infancy, is beyond me. There are a hundred things to do I'm sure but they can't all be done within the space of 10 weeks.

As for the state of the club it's been well documented.

What part of this "state" are FoH responsible for addressing?

[Neil Jung]

 

 

What part of this "state" are FoH responsible for addressing?

Apologies I'd picked up post 127 incorrectly. You have a point re FOH communication.

[Geoff Kilpatrick]

 

Apologies I'd picked up post 127 incorrectly. You have a point re FOH communication.

No probs.

[Footballfirst]

Here is a link to the FoH Annual Accounts for the year to the end of October 2013 which are now available at Companies House.

 

http://www.scribd.co...H-Accounts-2013

 

As is normal with abbreviated accounts, there is little to be gleaned from them other than that it looks like the first two months subscriptions Sep-Oct 2013 brought in ?250,000.

 

I'd hope that FoH would reveal more information about the accounts shortly, otherwise there won't be much to discuss about finances at the AGM.

[Francis Albert]

If the first two months brought in ?250k then we are looking at ?1.5m per year ... more, since subscriptions grew a bit after the first two months.

 

"Abbreviated" is certainly accurate.

[Don Dan]

Abbreviated = Brief.

[Footballfirst]

To be fair on this occasion the FOH accounts should be quite simple to prepare and understand, given that it is a very simple business model i.e. take in pledge monies (and pass them out as a loan to HMFC some months later). It's not as though they have employees, fixed assets, multiple income streams or many creditors to account for.

 

However the next set of accounts should reflect increasing pledge money and the assets and liabilities created as as result of the May 2014 agreements with HMFC and Bidco. The level of detail provided should be a Board decision (hopefully not influenced by Bidco). Technically, FOH will remain as a "small company" at least until it takes ownership of HMFC, therefore the legal requirement for disclosure is limited, e.g. no requirement for audited results. I'd hope that, as a fans owned organisation, FOH (and ultimately HMFC) will be much more transparent than the legal minimum.

[Francis Albert]

Just to allay the fears that we "pen pushers and compliance officers" risk diverting people from addressing the state of the club, FoH's role for the next 3 to 5 years is to pass money from our bank accounts via Bidco's to Hearts. By now I hope an automated process. FoH will (beyond Ian Murray attending the odd HMFC Board meeting) have no other direct role in sorting out the mess at the club.

 

So asking FoH to give us a slightly better clue (if they have one) about what our 3.8m is for or to let us see the FoH constitution is not a threat to anyone's priority in sorting out the club.

[Disco Dave]

 

I agree that we should at some point see what the money is being used for but does it really matter right now?. When the annual accounts come out it will say we spent ?x on wages, ?x on maintenance, ?x on utilities etc etc.

 

To say specifically the FOH money is used to pay for lets say maintenance is a bit of a moot point because they could just as well allocate season ticket money for that and use the FOH money for something else. Its all income at the end of the day and it will be shown in the accounts at year end.

 

I'm sure that we would all be pretty p!ssed off if they spent it on gold plated pensions and luxury offices for management but I think we need to trust that everyone has the clubs best interest at heart and the income will therefore be used for sensible purposes of rebuilding our great club.

[hughesie27]

Just got my email from FOH with their accounts. I see that they note that they have in excess of ?1.4m in the bank. For 8000 pledgers that works out at an average of about ?14.50 a month per pledger.

[Footballfirst]

Just got my email from FOH with their accounts. I see that they note that they have in excess of ?1.4m in the bank. For 8000 pledgers that works out at an average of about ?14.50 a month per pledger.

 

The ?1.4M is not in the bank. It is what FOH have taken in pledges. At least ?1M of that will already have been passed to HMFC (as an interest free loan)

[Francis Albert]

While technically it may be a loan it is in practice an interest free gift.

[Footballfirst]

While technically it may be a loan it is in practice an interest free gift.

 

Correct, but in the longer term, it will be useful for FOH to maintain the debt and the security that goes with it should the club go belly up at some point in the future (they could ditch other debt and retain ownership of the club's major assets).

[Francis Albert]

My August DD has been taken so I have now formally agreed to become a member of FoH. Happy with that but I wonder when I join Ann in having a chance to see the constitution of the organisation I have now agreed to be a member of or even (as promised by Ian) a summary of it.