Accounts just received - Oh My God.

[Guest JamboRobbo]

Why not?

 

Because it's not in the best interests of HMFC. He came to us from the day he

"signed" for Kaunus. Any increase in value is due to what he did whilst taking up a spot in the Hearts first team.

 

If that increase is going to Kaunus, it's not in the best interest of HMFC.

 

And anyway, he hardly even played for Hearts to do anything to increase his value.....

[Guest GhostHunter]

He bought himself out of his contract at Benfica, therefore, technically was a free agent and would not have cost Kaunas anything....

[Guest JamboRobbo]

He bought himself out of his contract at Benfica, therefore, technically was a free agent and would not have cost Kaunas anything....

 

aye, but somebody somewhere will have paid him the amount it cost him to get out his contract (the 250k). So the question then is, how much did Hearts pay Kaunus for him. Shouldn't have been more than said 250k IMO.....

 

Or are you suggesting he had 250k lying around and decided to pay 250k to allow himself to go and find a new football club

[Charlie-Brown]

He bought himself out of his contract at Benfica, therefore, technically was a free agent and would not have cost Kaunas anything....

 

Yes but Kaunas would have had to offer him an attractive enough financial package to persuade him to sign so they would have incurred some costs (at least on paper) he was then loaned to Hearts - at some point he transferred permanently from Kaunas to Hearts - but for the period he was technically their player then he was an asset on their book value, presumably increasing in value (like Velicka).

[Peebo]

Yes but Kaunas would have had to offer him an attractive enough financial package to persuade him to sign so they would have incurred some costs (at least on paper) he was then loaned to Hearts - at some point he transferred permanently from Kaunas to Hearts - but for the period he was technically their player then he was an asset on their book value, presumably increasing in value (like Velicka).

 

If Aguiar was signed as a free agent by Kaunas, it is highly unlikely that he ever had any book value as an asset.

[Dazo]

Yes but Kaunas would have had to offer him an attractive enough financial package to persuade him to sign so they would have incurred some costs (at least on paper) he was then loaned to Hearts - at some point he transferred permanently from Kaunas to Hearts - but for the period he was technically their player then he was an asset on their book value, presumably increasing in value (like Velicka).

 

 

 

What you have just described is the reason Kaunas allow the pick of their players to be loaned to hearts. They are getting well paid for it and we are getting very little in return. Maybe this will put a end to the myth that this link up with Kaunas is costing us very little.

[CMc]

What you have just described is the reason Kaunas allow the pick of their players to be loaned to hearts. They are getting well paid for it and we are getting very little in return. Maybe this will put a end to the myth that this link up with Kaunas is costing us very little.

 

Aye, it would be interesting to get a copy of the accounts rom Kaunas to compare. They must be making quite a healthy profit out of all of this.

[Ryan Gosling]

Accounts go to July 30th or something, right?

 

When did the previous year start? Same again?

[davieholt]

According to UBIG we have to get the cost of playing staff down.

In the year to July 2007 the headcount went up from 81 to 93. (and non-playing staff headcount from 32 to 45 - but in relative terms they get peanuts)

 

Still, 138 people employed by Hearts. I for one would never have guessed that.

 

No wonder UBIG are getting tough.

[Coco]

The salient point is that there has been an extreme level of financial mismanagement at Hearts.

 

The sort of mismanagement which at most companies would see the executives fired and probably see the company change hands. However, due to the current largesse of UBIG the company has been able to continue operating.

 

My question is whether Ukio Bankas will see a severe reaction to the credit crunch. Their shareholders should be asking whether they should continue to have exposure to such a risky company as Hearts. And I also worry about UBIG - is their management as poor as the management of Hearts? Are their property investments going to turn sour in the current credit crunch? And the metals/textiles businesses - are they hurting on raw materials?

[Francis Albert]

What you have just described is the reason Kaunas allow the pick of their players to be loaned to hearts. They are getting well paid for it and we are getting very little in return. Maybe this will put a end to the myth that this link up with Kaunas is costing us very little.

 

Purely in relation to the finances I am wondering who "they" and "us" are in this context. As far as Vlad/UBIG are concerned it is one pocket to another and will move to whichever is financially more efficient.

 

Did anyone really expect transparency in the financial arrangements when Hearts fled enthusiastically into the Vlad empire?

[redm]

Just thinking...I'm sure they mentioned that the planning application is currently running a bill of around ?1m. Not sure how that fits in with what the accounts say (or if its mentioned specifically?) but that bill might well have been included in this year's figures...

[Coco]

Just thinking...I'm sure they mentioned that the planning application is currently running a bill of around ?1m. Not sure how that fits in with what the accounts say (or if its mentioned specifically?) but that bill might well have been included in this year's figures...

 

I would doubt that. It would seem a lot more likely that those costs would be in this year's figures.

[redm]

I would doubt that. It would seem a lot more likely that those costs would be in this year's figures.

 

Preparation for this has been going on since 2006 so surely a significant percentage of the costs will have been incurred earlier rather than later? Just a thought, of course...would be interesting to know though.

[Craig Gordons Gloves]

I'm convinced that i can see alot of ostrich arses on this thread....

 

Yes, the accounts are for last financial year so we may not be as bad now, the fact remains that we have a turnover that hovers around the 10-13 million mark, yet we have liabilities that total 3-4 times that. If we were still a plc then we'd be in loads of trouble! In addition - although we are part of an overall group - much like the huns were part of MIM and made a loss, we don't know the intention of why we run at such a loss and carry such debt. If it is indeed a tax dodge, then i for one and crapping it- because in todays global economy banks are not the safest of places and all it would take is a plunge again in the mortgage market and suddenly we become an expensive tax dodge.

 

From a fiscal point of view, we need strong leadership - i'm assuming that is part of the reason for Ogilvie being named MD. This will result in a lot of cost cutting measures - namely on the playing side - so all this talk of a new manager with a war chest and freedom is not really going to happen if we are trying to be run as a viable business versus a dream.

[Geoff Kilpatrick]

So there has been a 'Kaunas adjustment'? I wonder if Jankauskas and Fyssas were part of the adjustment too to contribute to the ?3.8M. In addition, we also signed Kingston and Karipidis for around ?700K of that ?3.8M.

 

In fact, in one sense I'm glad of the Kaunas adjustment as it helps explain why the costs went up. What is still concerning is that our turnover almost flatlined, although stripping out player sales does mean it went up by ?600K. I would have thought it would have went up further.

 

As for the accounting notes, they basically explain why the sheriff orders etc. arrive because the club awaits the Lithuanian float each month to pay the bills. At the same time though, you have to wonder how quickly the ?7M for CG has been eaten up this year.

[The Mighty Thor]

So basically the accounts say the following;

 

Take a large amount of 'international cash', run it through a UK based business at 40 degrees with a light spin cycle and hey presto you have a nice clean debt figure.

 

Brilliant.

 

Thankfully the debt figure is manageable and we'll be 'debt free in a few years'.

 

I was worried by the ?36.25 million figure for a minute there.

[starcatcher]

I would just like to express my appreciation for the excellent contribution in this thread from Martin T.

 

I would like to hear more pontification from martin on this topic because he is clearly speaking from an educated perspective.

[Ryan Gosling]

So there has been a 'Kaunas adjustment'? I wonder if Jankauskas and Fyssas were part of the adjustment too to contribute to the ?3.8M. In addition, we also signed Kingston and Karipidis for around ?700K of that ?3.8M.

 

In fact, in one sense I'm glad of the Kaunas adjustment as it helps explain why the costs went up. What is still concerning is that our turnover almost flatlined, although stripping out player sales does mean it went up by ?600K. I would have thought it would have went up further.

 

As for the accounting notes, they basically explain why the sheriff orders etc. arrive because the club awaits the Lithuanian float each month to pay the bills. At the same time though, you have to wonder how quickly the ?7M for CG has been eaten up this year.

 

 

We signed Pinilla twice as well - once on loan, then once buying Sporting's share of the contract - over a million at least altogether.

 

The share issue thing intrigues me though - that's a good thing, right?

[Martin_T]

I would just like to express my appreciation for the excellent contribution in this thread from Martin T.

 

I would like to hear more pontification from martin on this topic because he is clearly speaking from an educated perspective.

 

 

Thank you for your kind words, however the heavy cold that is keeping me in this Saturday night has also probably put paid to any more contributions, excellent or otherwise, this evening.

 

For the record, Coco is probably more educated on the subject of investment banking than I am.

[Rudi's Left Foot]

I wouldn't say that there has been financial mismanagement rather a lack of acceptance into what could go wrong if we didn't continue to finish as high up the league and compete in Europe.

 

The essential point is that if we can lower our expenditure to a point where we are actually making a profit, expect this not to be until the stadium development is completed, then all that hapened is that UKIO Bankas have increased their profits due to taking on our debt.

 

HMFC are also looking at releasing shares for the company to increase the capital at the club, much a like Rangers a couple of years ago. This would run the risk of diluting the shareholders holding however i would assume that it would be an open sale and Romanov would not be entitled to get "first dibs" on the sale of shares.

 

As for the risk to UKIO Bankas with the credit crunch, my understanding is that alot of UBIG's other holdings are in the commodity markets, and as such this market is flying while the financial sector is struggling. I wouln't thik that the "credit crunch" will be affecting UBIG as a whole, maybe UKIO in the short term, but the markets will return to a more normal level by the 3rd quarter, the central banks of the world are desprately trying to ensure this.

 

As others have said before the debt is only debt if it gets called in.....and it won't!

[aDONis]

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.

 

Just to clear this up. Differences arise because not all expenses are "cash items" and not everything paid for are "expenses".

 

In classicl accounting terms, if you buy a piece of machinery for ?100k you don't expense it at the time. So your bank balance is worse by ?100k, but you'll only incur the expense of x% for the accounting year.

 

aDONis

[Charlie-Brown]

I knew Aberdonians knew all about money

[jambo_ellen]

Haha my mate got one of these through his door, he's a hibby. had a wee look at it and didn't really understand it but ?36m in debt can't be good.

[awadooningorgie2]

Just to clear this up. Differences arise because not all expenses are "cash items" and not everything paid for are "expenses".

 

In classicl accounting terms, if you buy a piece of machinery for ?100k you don't expense it at the time. So your bank balance is worse by ?100k, but you'll only incur the expense of x% for the accounting year.

 

aDONis

 

Thank you aDONis. The statement that includes this reduction of debt is termed 'Net cash inflow from finance' of around ?10 mill which is set against ?7 mill of costs including ?4 mill for player registrations, ?1 mill of interest, payments to acuire tangible assets ?750k, net cash outflow from operating activities.

 

The total leaves 'increase in cash in year' of ?2.871 million which is then set against the losses, reducing them to a mere ?7.844 million.

 

Can anyone expand on what this really means??

[castlerock]

Thank you aDONis. The statement that includes this reduction of debt is termed 'Net cash inflow from finance' of around ?10 mill which is set against ?7 mill of costs including ?4 mill for player registrations, ?1 mill of interest, payments to acuire tangible assets ?750k, net cash outflow from operating activities.

 

The total leaves 'increase in cash in year' of ?2.871 million which is then set against the losses, reducing them to a mere ?7.844 million.

 

Can anyone expand on what this really means??

it means that in real terms debt increased by 12+m but in accounting terms only by 7.8m

[awadooningorgie2]

it means that in real terms debt increased by 12+m but in accounting terms only by 7.8m

 

 

What do real terms and accounting terms actually mean then? Are you saying we actually owe more money than is shown in the accounts?

[WalterEgo]

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...

Not true Dex, we had formal funding previously. I remember reading about this in last year's accounts and being really nervous. Hearts has no formal agreement with UKIO and UKIO has no responsibility towards Hearts.

[WalterEgo]

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!

I dropped a note to Stewart Fraser - he sorted it out for me.

[davemclaren]

Not true Dex, we had formal funding previously. I remember reading about this in last year's accounts and being really nervous. Hearts has no formal agreement with UKIO and UKIO has no responsibility towards Hearts.

 

In the CPR days the auditors stated this as well as we were technically insolvent then as well. I'll see if I can dig out some old accounts to confirm.

[WalterEgo]

In the CPR days the auditors stated this as well as we were technically insolvent then as well. I'll see if I can dig out some old accounts to confirm.

I wasn't referring to that. I was commenting on Dexter's comment about someone else's comment about having no formal funding in place.

[Gibbo]

The operating loss was ?11.752m. This doesn't include interest, which as a normal accounting practice is brought in later in the calculation.

 

Some of this was, as pointed out by aDONis, non-cash items; depreciation of ?549k & amortisation of ?1,342m. The former entails wrting off the cost of fixed assets over their useful lives. The latter is the same thing but for intangible assets. In our case this will mean writing off transfer fees over the player's contract.

 

In addition, working capital was reduced by cutting stocks, reducing debtors (people who owe us money) & increasing short term (less than a year) creditors.

 

As a result, the cash outflow from operations was 'only' ?2.967m. This is from Note 1 on p. 13.

 

The following comes from the Cash Flow Statement on p. 9.

 

To the operating cash outflow must be added interest paid of ?932k.

The huge payment of ?3.822m paid for players.

?741k to acquire tangible fixed assets

An income of ?1.28m from the sale of players.

This is different from the ?1.12m in the Profit & Loss because the players sold must have had a balance sheet value of ?160k.

This adds up to a net cash outflow pof ?7.182m.

 

The following items on Financing just show how the cash outflow has been financed (by short term loans in our case but it could also have been by equity or long term loans). It appears from Note 2 on p. 13 that all our debt is in the form of loans rather an overdraft, which is a small positive as a bank can ask for repayment of an overdraft at any time but repayment of a loan depends on its terms).

[BRY]

Hi folks,

 

This is my first year as a shareholder (1 share!), and so, my first set of accounts.

No great surprises there, but some worrying reading, all the same.

 

What happens about the invitation to the AGM?

I can't make it, so do you think I should appoint a proxy?

Is there any point? (as the board will have the majority vote anyway)

 

P.S. - I haven't read all the replies in this thread yet, but did anyone else notice that we have already received ?8m for Craig Gordon... (page 24)

[Heartbeat]

sorry if this has vbeen noted but didnt see it

 

The figures in themselves are a concern although I admit to not being an expert in analysis of these. They do however state it is in line with expectations and limits and manageable. I however as I am sure everyone else must be are concerned but do realise we must increase this to go forward, still its a concern. This being said I was surprised to see in the comments on page two under the statement signed by Roman Romanov that " expenditure on the playing squad is unlikely to rise any further"

 

This I read as no more players coming in that will cost money? or perhaps a salary cap ala hobos? problem is and although I have said the debt concerns me so will sound a bit double standards, how do we achieve the noted aims of " future revenues will be generated through increased participation in european competition, larger attendances in a redeveloped Tynecastle" if we are stuck with the squad we have. Accepted the defence has gotten its a act together recently and on its day the midfield can play but I do not see anything in the forward line and these are the players that cost money. So unless we have this miracle worker manager lined up that can turn what we have into a force worthy of competing at the top end of the table the comment about no further expenditure on the squad worries me from a purely footballing point of view.