Accounts just received - Oh My God.

[From Perth to Paisley]

We dont know how much we paid for Bednar, or Jose from Kaunas.

 

We also dont know if Velicka, Miko and Chesney feature in this, given the latter 2 apparantly now are on Hearts contracts...

 

So much for the transparency....

 

I don't think Karipidis was included in last years figures either. Could be another ?200,000 -?300,000 there. Did we pay a fee for Tiago Costa?

[Guest GhostHunter]

Goncalves, Bednar & Aguiar all transferred from FBK to HMFC - at what cost and who paid their original transfer & signing fee's is uncertain - as is whether any other players like Miko or Chesney have actually been transferred over.

 

They have been.

 

This was confirmed yesterday by a Lithuanian member.

[coppercrutch]

Have they listed the outgoing transfers ?

 

Gordon and potentially Bednar will be in next years accounts. So next year should show a healthy profit.

 

As for the debt it has been said debt is only a problem when it is called in.

 

I am worried by the current economic climate. Debt is not a good thing for any business to have at the moment. Probebly for the next 5 years at least.

 

Not good IMO. Let's hope Vlad is as smart as some people think he is. Not mcuh else we can do really.

 

BTW For anyone who is interested we have 4 Bayern fans over for the game today. I am sure they will be impressed by the standard:eek: !!! So if you see them in Robbos be nice and friendly please !!

[awadooningorgie2]

Goncalves, Bednar & Aguiar all transferred from FBK to HMFC - at what cost and who paid their original transfer & signing fee's is uncertain - as is whether any other players like Miko or Chesney have actually been transferred over.

 

Sorry mate - but if Hearts are spedning these kind of sums on that quality of player then there is only one winner in the deal. And it ain't Hearts.

[coppercrutch]

"The company incurred a net loss of ?12,447,000 during the year ended 31 July 2007, and at that date, the company's liabilities exceeded its total assets by ?24,891,000. These conditions, along with the other matters explained in Note 1 to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern."

 

Independent auditor's report to shareholders

25th March 2008

 

Ouch.

[Guest GhostHunter]

"The company incurred a net loss of ?12,447,000 during the year ended 31 July 2007, and at that date, the company's liabilities exceeded its total assets by ?24,891,000. These conditions, along with the other matters explained in Note 1 to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern."

 

Independent auditor's report to shareholders

25th March 2008

 

Surely irrelevant if UBIG have underwritten the losses and given assurances over the debt level ?

[Peebo]

"The company incurred a net loss of ?12,447,000 during the year ended 31 July 2007, and at that date, the company's liabilities exceeded its total assets by ?24,891,000. These conditions, along with the other matters explained in Note 1 to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern."

 

Independent auditor's report to shareholders

25th March 2008

 

If the auditor had not qualified their opinion, they would not have been their job properly.

[coppercrutch]

If the auditor had not qualified their opinion, they would not have been their job properly.

 

You seem to know a bit about this stuff Peebo. What do you think about the above statement? Should we be worried ?

 

Even if UBIG underwrite this it still worries me a lot. You know how much I hate debt !!

[davemclaren]

"The company incurred a net loss of ?12,447,000 during the year ended 31 July 2007, and at that date, the company's liabilities exceeded its total assets by ?24,891,000. These conditions, along with the other matters explained in Note 1 to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern."

 

Independent auditor's report to shareholders

25th March 2008

 

Auditors caveat that we have had in our accounts for the last 10 years or so...

 

Should UBIG convert their loans to shares I think it means that the shareholding would be diluted and Vlad would then have over 90%. This means we would get even less, if any, info in the annual accounts in future.

[Peebo]

Surely irrelevant if UBIG have underwritten the losses and given assurances over the debt level ?

 

That's how I see it. The accounts being audited are those of Hearts, and do not take into account who or what is bankrolling us, or ownership etc.

[MacDonald Jardine]

Bottom line: we're insolvent.

 

p.14: Going Concern

 

"The company has incurred significant losses in recent years and trading activities result in significant cash outflows.

The Company does not have formal funding facilities in place that allow it to meet its liabilities as they fall due in the foreseeable future. The Company is dependent on the short term financial support of UAB Ukio Banko Investicine Grupe, the Company's ultimate parent undertaking, which provides short term loans and meets the Company's day to day funding requirements."

[Guest GhostHunter]

That's how I see it. The accounts being audited are those of Hearts, and do not take into account who or what is bankrolling us, or ownership etc.

 

Nor can they..

[Guest GhostHunter]

Bottom line: we're insolvent.

 

p.14: Going Concern

 

"The company has incurred significant losses in recent years and trading activities result in significant cash outflows.

The Company does not have formal funding facilities in place that allow it to meet its liabilities as they fall due in the foreseeable future. The Company is dependent on the short term financial support of UAB Ukio Banko Investicine Grupe, the Company's ultimate parent undertaking, which provides short term loans and meets the Company's day to day funding requirements."

 

Cue the over reaction....

 

 

As DM says above - that comment has been about for years....and I would imagine, probably appears in a lot of clubs accounts that are audited...

[pivotno1]

i must admit,it doesnt make for great reading,a lot of it just baffles the **** out of me.but am one of the believers,that the debt only becomes a major issue when its called in,as was happening under the last regime.

[Charlie-Brown]

Sorry mate - but if Hearts are spedning these kind of sums on that quality of player then there is only one winner in the deal. And it ain't Hearts.

 

If Dexter is correct then as well as acquiring some part of Pinilla's registration then at least 5 players (Goncalves, Aguiar, Bednar, Cesnauskis & Mikoliunas) have been transferred to Hearts which is a cost of 6 players at ?625K or 5 players at ?750K approx - already there is the possibility of ?2.8M return if the ?2.3M Bednar & ?500K Miko transfers go ahead.

[Peebo]

You seem to know a bit about this stuff Peebo. What do you think about the above statement? Should we be worried ?

 

Even if UBIG underwrite this it still worries me a lot. You know how much I hate debt !!

 

It is simply standard phrasing for results of this ilk.

 

Should we be worried by the amount of money this club is losing? Well, it certainly isn't good. Personally, I think our levels of debt etc. only become important when our owners are unable to service it properly. Of my many concerns about Romanov, that is not, currently, one of them.

 

Should we be worried by the auditor's statement? Not any more worried than any other business should be who is losing a lot of money (eg us for the previous X years).

[Peebo]

Nor can they..

 

Nor should they...

[coppercrutch]

That's how I see it. The accounts being audited are those of Hearts, and do not take into account who or what is bankrolling us, or ownership etc.

 

I see. What happens if UBIG get a similar audit sometime in the future with a similar outcome ? I just hope UBIG are on the ball and set for the next few years.

[MacDonald Jardine]

Cue the over reaction....

 

 

As DM says above - that comment has been about for years....and I would imagine, probably appears in a lot of clubs accounts that are audited...

 

Yes it has.

The way round it previously was to sell Tynecastle.

The way round it now is short term support from the parent company.

It goes on to say that support is contingent on the Company being able to materially reduce playing staff costs.

I assume to an extent we've done that but it means more of the same or worse for the foreseeable future.

[coppercrutch]

It is simply standard phrasing for results of this ilk.

 

Should we be worried by the amount of money this club is losing? Well, it certainly isn't good. Personally, I think our levels of debt etc. only become important when our owners are unable to service it properly. Of my many concerns about Romanov, that is not, currently, one of them.

 

Should we be worried by the auditor's statement? Not any more worried than any other business should be who is losing a lot of money (eg us for the previous X years).

 

Cheers Peebo. I think I have similar thoughts to yourself on this matter. Still have a niggling worry about UBIG going tits up sometime in the future. Nothing we can do about it though.

[Peebo]

i must admit,it doesnt make for great reading,a lot of it just baffles the **** out of me.but am one of the believers,that the debt only becomes a major issue when its called in,as was happening under the last regime.

 

Exactly. We are now part of the UBIG group, in practise. We are one part that owes money to another part.

 

It is a far, far different scenario to us owing HBOS, or whoever, huge sums of money and having zero prospect of trading our way out of it.

[Guest GhostHunter]

Yes it has.

The way round it previously was to sell Tynecastle.

The way round it now is short term support from the parent company.

It goes on to say that support is contingent on the Company being able to materially reduce playing staff costs.

I assume to an extent we've done that but it means more of the same or worse for the foreseeable future.

 

Nothing by that logic has changed.

 

Selling Tynecastle now, well at any rate, with the planning permission granted, would still generate enough revenue to offset the debt to an extent.

 

My fag packet logic mind....

[Charlie-Brown]

Yes it has.

The way round it previously was to sell Tynecastle.

The way round it now is short term support from the parent company.

It goes on to say that support is contingent on the Company being able to materially reduce playing staff costs.

I assume to an extent we've done that but it means more of the same or worse for the foreseeable future.

 

Not necessarily - as players are capable of improving either their form or both their form and their development (if they are a younger player) - just look at the difference between Motherwell last season & this season with minimal changes in playing staff & no significant (major) player purchases. Dundee Utd since Levein are another example.

[robin_hobosblind]

Does it not benefit VR/UBIG for Hearts to be in large amounts of debt ?

 

Do they not get a ridiculous amount of tax rebates back from the Lithuanian government for companies debt that is non-lithuanian ?

 

Would make sense then for the Hearts debt to high.

 

Plus, with UBIG capitalising on the debt levels this year, it shows long term commitment to the club....

 

And, a debt is only a debt (in reality) when it's called in

Well yes it does. The more debt he runs up, the higher capital sum we pay to maintain the debt/borrowing or interest at the same debt level and thus money he makes from it.

 

Just remember, we account for about 1/8th of the profits of his bank!

[awadooningorgie2]

There seems to be a general tendancy to talk about the overall debt and whether it matters or not.

 

What is more alarming in my opinion are some of the actual costs highlighted in the accounts. The devil lies in the detail -

 

?12,488,000 on staff costs.

 

?3,822,000 to acquire player's registrations.

 

Utterly astonishing when set beside who came in and who left that season.

 

I think the numbers are so high we are not really able to comprehend what is happening.

[Toxteth O'Grady]

Yes it has.

The way round it previously was to sell Tynecastle.

The way round it now is short term support from the parent company.

It goes on to say that support is contingent on the Company being able to materially reduce playing staff costs.

I assume to an extent we've done that but it means more of the same or worse for the foreseeable future.

 

 

Why stop at playing staff?

 

We have a whole heap of people who are not essential for the running of a football club.

[john brownlee]

So we should all thank them for spending ?22 million pounds, generating a loss of ?12.447 million.....

 

Aye, it may be paper trails but it is still going against the name of my club.

 

And for hee-haw.

 

How the hell have wages gone up - we shed some of the higher earners.

 

Seems like it's name a number what we pay Kaunas.

 

It kind of puts into perspective my annual total of about 500 GBPs contribution to the Hearts

 

:5643::5643:

[Guest GhostHunter]

Well yes it does. The more debt he runs up, the higher capital sum we pay to maintain the debt/borrowing or interest at the same debt level and thus money he makes from it.

 

Just remember, we account for about 1/8th of the profits of his bank!

 

You missed the point.

 

Interest levels/payments on the debt are lower than we would pay to a UK bank.

 

i was talking in terms of "rebates" back from the Lithuanian government.

[bean counter]

I don't really see what all the fuss is about. These accounts are for the year ended July 2007.

 

The numbers to the end July 2008 are more important as they will show the

 

Reduction in payroll costs as the cost saving measure show through

The profit from player trading ( CG)

 

Last Years accounts ( 2006 ) came out about Feb 2007 and showed a loss of approx

? 5.8 M, no cost saving measures were put in place till well after that date so I've always expected this set of numbers to show an increased loss on last year and an increase in the Debt. ( otherwise why vote to allow the Board to extend the borrowings ).

[Guest JamboRobbo]

If Dexter is correct then as well as acquiring some part of Pinilla's registration then at least 5 players (Goncalves, Aguiar, Bednar, Cesnauskis & Mikoliunas) have been transferred to Hearts which is a cost of 6 players at ?625K or 5 players at ?750K approx - already there is the possibility of ?2.8M return if the ?2.3M Bednar & ?500K Miko transfers go ahead.

 

 

If true, sounds like Hearts have been paying more to Kaunus for players, than Kaunus were paying to sign them.

 

Sounds like signing them direct to Hearts for the original fee would be more in HEarts interests than paying a premium to Kaunus. (Goncalves 500k, Bednar 500k, Aguiar was free but we paid 2 or 300k to him for him buying out his contract).

[Guest GhostHunter]

I don't really see what all the fuss is about. These accounts are for the year ended July 2007.

 

The numbers to the end July 2008 are more important as they will show the

 

Reduction in payroll costs as the cost saving measure show through

The profit from player trading ( CG)

 

Last Years accounts ( 2006 ) came out about Feb 2007 and showed a loss of approx

? 5.8 M, no cost saving measures were put in place till well after that date so I've always expected this set of numbers to show an increased loss on last year and an increase in the Debt. ( otherwise why vote to allow the Board to extend the borrowings ).

 

Correct.

[Guest GhostHunter]

If true, sounds like Hearts have been paying more to Kaunus for players, than Kaunus were paying to sign them.

 

Sounds like signing them direct to Hearts for the original fee would be more in HEarts interests than paying a premium to Kaunus. (Goncalves 500k, Bednar 500k, Aguiar was free but we paid 2 or 300k to him for him buying out his contract).

 

Did we ?

 

Missed that one - I only knew he paid 250k himself to get out of his Benfica contract - wasnt aware we repaid him ?

[Guest JamboRobbo]

?3,822,000 to acquire player's registrations.

 

Utterly astonishing when set beside who came in and who left that season.

 

Thats what I found strangest also.

 

basically 4M quid on transfers. On who?!!

[portobellojambo1]

If the auditor had not qualified their opinion, they would not have been their job properly.

 

Agree, it is standard wording that appears in many sets of accounts for many different types of operations.

 

The accountants know that the shareholders have to approve the figures they produce, so they have to give them as accurate a picture as they can of the present financial status and, if you like, a very brief resume as to what it means for the future.

 

In shortened form it just sort of means we are making less than we are spending, if it continues the debt will get worse, we have no petty cash to play with and are totally reliant on the parent company for survival.

 

Without UBIG we are Donald Ducked, people will have their own opinion on the situation if the sentence had started "with UBIG".

 

Probably could have been typed up in about 5 minutes, but when your hourly rate is about ?180 it is better to drag preparation out and spread it over a longer period. Produce 20 or so pages of +'s and -'s, and get more money for it.

[Guest JamboRobbo]

Did we ?

 

Missed that one - I only knew he paid 250k himself to get out of his Benfica contract - wasnt aware we repaid him ?

 

That was what I was talking about.

 

MAybe it wasn't officialy announced, but I've little doubt we paid him it, whether in signing on fee or whatever......just as I've little doubt Rangers will pay Websters costs for him getting out of his contract.

[MacDonald Jardine]

Why stop at playing staff?

 

We have a whole heap of people who are not essential for the running of a football club.

 

That was a direct quote from the accounts.

UBIG are insisting on cuts in playing costs.

[Guest GhostHunter]

That was what I was talking about.

 

MAybe it wasn't officialy announced, but I've little doubt we paid him it, whether in signing on fee or whatever......just as I've little doubt Rangers will pay Websters costs for him getting out of his contract.

 

That would surely have to be detailed in the accounts though ?

[Gambo]

Postie has not been yet (in fact i'm sure i aint notified them of my change of address:eek:, so i might not get my accounts), does it say when the AGM will be?

[JamboGraham]

Thats what I found strangest also.

 

basically 4M quid on transfers. On who?!!

 

An earlier poster came up with a figure of about ?2.7m (not sure how accurate that figure is?)

 

I wonder if this figure includes agent fees involved in transfers, scouting, admin costs, etc, etc, could this come anywhere near ?1m?

 

Not seen the full report yet as my share holding is still registered at my old address. Is there not a note on this figure?

[awadooningorgie2]

I'll ask again - if someone can explain to me how we spent ?22 million, brought in ?10 million and only showed an increase in debt of ?8 million?

 

If we compare the accounts for 2007 and 2006 - loss for the year is stated as ?5.767m in 2006 and ?12.447m in 2007.

 

Opening net debt in 2006 ?21.526, closing debt ?28.405m.

Opening net debt in 2007 ?28.405,closing debt ?36.249.

 

It doesn't add up.

[Guest JamboRobbo]

That would surely have to be detailed in the accounts though ?

 

 

either in the total of player wages or signing on fees, or maybe "acquiring registrations".

 

Important point is, Bruno only paid 250k.......

[JamboGraham]

(in fact i'm sure i aint notified them of my change of address:eek:, so i might not get my accounts)

 

That goes for me as well, is it Hearts directly that you have to notify to get this updated? The only piece of paperwork that I still have is the share certificate itself!

[robin_hobosblind]

I'll ask again - if someone can explain to me how we spent ?22 million, brought in ?10 million and only showed an increase in debt of ?8 million?

 

If we compare the accounts for 2007 and 2006 - loss for the year is stated as ?5.767m in 2006 and ?12.447m in 2007.

 

Opening net debt in 2006 ?21.526, closing debt ?28.405m.

Opening net debt in 2007 ?28.405,closing debt ?36.249.

 

It doesn't add up.

 

Player trading - sale of players. I assume anyway.

[Charlie-Brown]

That would surely have to be detailed in the accounts though ?

 

Not necessarily as it could be re-imbursed over the length of his contract in terms of higher wages or as an agreed bonus payment or whatever - there are very little precise details for any individual player and it's always been that way - apart from reported wages precise details of players/employees contracts are confidential.

[Peebo]

I'll ask again - if someone can explain to me how we spent ?22 million, brought in ?10 million and only showed an increase in debt of ?8 million?

 

If we compare the accounts for 2007 and 2006 - loss for the year is stated as ?5.767m in 2006 and ?12.447m in 2007.

 

Opening net debt in 2006 ?21.526, closing debt ?28.405m.

Opening net debt in 2007 ?28.405,closing debt ?36.249.

 

It doesn't add up.

 

I don't have the accounts, but I suggest you look at the notes about the assets, for changes in value etc.

 

As I said before, a company can make a loss without the level of debt changing.

[Charlie-Brown]

either in the total of player wages or signing on fees, or maybe "acquiring registrations".

 

Important point is, Bruno only paid 250k.......

 

You are talking about a 3 stage process - Aguiar terminates Benfica contract, Aguiar signs for FBK Kaunas, Aguiar is transferred to Hearts after a loan period. You would have to know who paid for what & when? Also what his "transfer" value was and what his book value is now.

[Guest JamboRobbo]

You are talking about a 3 stage process - Aguiar terminates Benfica contract, Aguiar signs for FBK Kaunas, Aguiar is transferred to Hearts after a loan period. You would have to know who paid for what & when?

 

My point is, Hearts shouldn't be paying more to Kaunus (certainly not hundreds of thousands more) than Kaunus payed to Bruno.

[mda]

So are we basically saying that the level of loss and overall debt doesn't matter because we're now effectively part of UBIG and therefore don't have a major creditor like HBOS wanting repayment and charging massive interest rates. So therefore the debt is only an issue if Vlad wanted to move on?

 

Its just that for a club like us who are playing in the SPL, all these figures still scare me a little bit. OK, more than a little bit, quite a lot. How do we turn things around on the park when we're this far in debt off the park?

 

If someone who knows what they're talking about could maybe sum up what the figures mean and put it as a sticky in the forum, that would be a big help as it would give people one place to start before discussing the elements of it.

[Charlie-Brown]

My point is, Hearts shouldn't be paying more to Kaunus (certainly not hundreds of thousands more) than Kaunus payed to Bruno.

 

Why not? It depends who paid for what & when and whether the players value rose over that period surely - it only doesn't make sense if Hearts paid more for Aguiar than he is worth?

[buca junior]

I've not seen the accounts, but am I not right in saying they are for the year to 31 July 2007. So they won't include the Gordon fee and the (coming?) Bednar fee. We'll also have fees for Pospisil and Velicka in the next accounting period.

 

We know we were big spenders to 31 July 2007 so I don't think some of the figures being banded around here should be a surprise.

So no, I don't think I've been had.

 

I'm slightly more uneasy with the debt now than I was 2 months ago, but that's more to do with the global banking situation as opposed to anything UBIG have recently done.

 

The debt will increase when the new stand is built but in absence of viable alternatives we just have to take a leap of faith and let UBIG press ahead.

 

 

I certainly don't think this can be dismissed as irrelevant because we all expected a large debt. We (Heart of Midlothian) have no given right to accumulate such a high debt and relax because we ARE Heart of Midloithian, est 1874, The Heart and Soul of Edinburgh...............

 

To report such figures in return for a 4th place finish (in a league consisting of only 12 teams) is quite frankly atrocious. To run up such a debt on salaries on mediocre players, asks the question, who is negotiating such salaries? I am well aware that paying a large transfer fee or salary does not always constitute a guaranteed world beater, but it just sickens we that after so many examples of football clubs throwing money away on talentless players, we have fallen into the same trap....again.