Hearts AGM

[2NaFish]

It would be surprising if things weren't better than worst case assumptions.

 

That's pretty much inherent to the nature of worst case assumptions

 

If you take a worst case assumption of the original worst case assumptions you can say they wouldnt be an improvement.

[topcat]

If you take a worst case assumption of the original worst case assumptions you can say they wouldnt be an improvement.

Which would be a surprise

[Francis Albert]

It would be surprising if things weren't better than worst case assumptions.

 

That's pretty much inherent to the nature of worst case assumptions

Of course. The question was how much better and the impact or consequences of things being better.

[JamboAl]

The increased revenue over original worst case assumptions can pretty much all be explained by increased ST and walk up sales. I am quite satisfied with the level of detail provided and my pitchforks are (if I have any) still in some dusty and long forgotten corner of the garden shed. Some of the spin and evasions in some of the answers is disappointing and a bit below the standards of open-ness I'd expect. To be continued!

So what is the problem?

Surely in any business context you can't expect 100% open-ness.

If you got to know everything in minute detail, that info would also be available to competitors.

As I said, trust in those in charge, await the next accounts and then hit them with all guns blazing if you have been badly misled and seriously bad judgments made.  If the reverse happens I'm sure you will be the first to lavish them with praise.

[Francis Albert]

Now that I have got over the festive season, as promised  few more comments on the answers to the supplementary AGM questions. In the familiar Saturday evening TV news words, IF YOU DON'T  WANT TO KNOW LOOK AWAY NOW. The answers generally strike me as wee bit more defensive and chippy than what we had at the AGM.

 

Q1 was mine. The answer has chosen to compare budget and forecasts with the later updated budget rather than the original "worst case" budget. My guestimate of ?1.4m improvement in forecast revenue vs the worst case budget estimate was pretty much spot on. The forecast loss (before FoH contribution) has reduced by approx. ?400k with additional spend on staff costs (?350k) and overheads (?600k) largely explaining where the rest of the improvement in revenue has gone.

The answer to the second part about what accounts for the changes in forecast costs also doesn't add much to the info provided at the AGM - although the ?150k increase in facility improvement and essential maintenance costs doesn't seem to justify the level of emphasis put on that element. 

 

Q2 1) is ignored. The answer is the total cost to FoH to finally purchase shares will be ?6.3 to ?6.8m depending on whether you treat the interest on Bidco's loan as being paid by FoH or the club (it amounts to much the same thing in practice). Not sure why the shyness about this.

 

Q3. The answer denies any speculation is going on. I am not sure why. It is obvious from the figures and the increase in expenditure vs the worst case budget that there is some "discretionary" spending above budget is going on. I'd call thatspeculation. Some modest speculation taking advantage of increased revenue to improve our chances of getting promotion this year seems common sense and I think would be (is) universally supported. The rest of the answer seems to me a bit evasive and/or misleading. It suggests that the early repayment of Bidco's loan would significantly reduce the financial risk to Bidco. I don't think you can reduce significantly a risk that isn't significant - the Bidco/FoH agreement provides layers of protection to Bidco. It also says Bidco is losing money by providing the loan. That may be true in some accounting sense but  a loan at a 6% interest rate (with arrangement fees and set up costs paid)  - currently over 5% real interest - is not really loss making. I'd love some of that sort of loss!

 

Q4 is about the risk of promotion being delayed and DDs dropping off. The answer says fan ownership would be at risk with the biggest risk being to Bidco. I find that incomprehensioble. In those circumstances Bidco will own Hearts and have an asset, If that asset is not worth considerably more than the Bidco loan after receiving ?3.8m subsidy then Ann's famous business skills have been grossly exaggerated. The fans risk however will be having paid ?3.8m and owning nothing.

 

Q5 to Q10 to follow.

Q5 about what information from quarterly presentations to the FoH board will be passed on to FoH members? Plans will be shared on a "continuous" basis subject to constraints on commercial confidentiality.

 

Q6. FF's (I think) question about why FoH ownership could not have been delivered earlier with contractual arrangements to provide Bidco/Ann with the power they need to "turn the club round" with the help of the ?3.8m FoH subsidy. (I think this amounts to asking if the risks of the Bidco/FoH agreement  - see comment on Q4 - could have been more balanced. Answer pretty much evaded - we should be grateful for Ann giving her time free (we are, we are) and she needed full control to attract the right people. There may be something in this but the real reason the deal is structured as it is seems more likely to me to be to ensure that FoH pledgers have the strongest incentive to keep DDs flowing until the objective of their pledges (fan ownership) is delivered in 4 or 5 years.

 

Q7 about Ann's retained 13% of shares. Already commented on earlier in thread so won't repeat except to say that the assertion that FoH will pay the same share price for their 75.1% as Ann will for her 13.2% is true only in the narrowest technical sense and is so misleading as to vear towards .. well extreme economy with the truth. If Ann retains her 13% as she seems to intend to, she will have paid ?20,000 for that 13% and FoH will have paid over ?1m for an equivalent percentage. (There is a case for Ann or in future some trust retaining a share of more than 10% so that she/it could exercise rights to require audits/reports if rogue elements at some stage managed to take control of FoH in much the way as happened for example at the Co-op. It would be more convincing than Ann's "sentimental reasons")

 

Q8 is about what happened to some old Romanov shares. The gobbledygook answer basically says this is very complicated and you wouldn't understand - some attempt to explain in laymans terms would have been appropriate for the audience. 

 

Q9 is about having some charity shirt sponsor this season. Not possible because of SPFL rules on registration of strips pre-season.

 

Q10 covered elsewhere except part about what happened to funds raised in various auctions and fund raising events before the takeover. Assurance all directed appropriately eg to HYDC.

 

Some disappointing evasions which have nothing to do with "commercial confidentiality".

[Footballfirst]

Q5 through Q8 were all mine. As you say the answers were largely evasive, but not unexpected.

 

I have no problem from Ann profiting from her involvement in helping save the club, but I wish that she had been up front about it all rather than dressing it up as being some sort of philathropic act.

 

Re Q8. I posted follow up questions to Jacqui Duncan a couple of weeks ago after the club's annual returns (at Aug 2013, Aug 2014 and Dec 2014) were lodged with Companies House.  It surprised me to note that Quantum still held 15% of the shares in Aug 2014, a month after Bidco was meant to have settled with everyone who accepted the compulsory share offer.  The Dec 2014 return suggests that the transfer has gone through, but a list of the major shareholdings in not available online.  I also asked if an offer had been made to the QLTR for the 6.5M shares formerly held by HOM 2005.  If not I'd happily make an offer for them myself if I could get them at the same price as Ann acquired her shares in the share offer.(approx 11 for 1p).  I'm still waiting for an answer.

[al_hearts65]

When you look at the money Sevco have spent on board members over the last few years and what we are paying ours the money Ann is making on her investment looks like a good deal to me.  The expertise that we have and the way they appear to be running the club on a secure business footing will be of incalculable benefit in the long term I think.  No spivery, no onerous contracts, happy players, full stadium, inspired choice of young manager, I could go on with the blessings we have.  I am not sure what a board of the quality we have would cost at market value but I think it will be less than whatever Ann eventually realises for her investment in the club.