Hearts reveal operating profit during darkest days

HEARTS have announced their financial accounts for the year ending June 2014 – and they reveal the club actually made an operating profit during their fraught 12-month spell in administration.

By DARREN JOHNSTONE Tuesday, 16th December 2014, 12:00 am

Hearts have returned to health both on and off the pitch. Picture: Ian Rutherford

The period relating to the Tynecastle outfit’s results coincides almost exactly with the time the Edinburgh club was under the control of insolvency practitioners BDO.

Hearts, who have returned to health both on and off the pitch courtesy of the partnership between new majority shareholder Ann Budge and fans group the Foundation of Hearts, made an operating profit of £896,000 for the year.

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During that period, staff costs were reduced from £5.4 million in 2013 to £2.9m, with the average number of players and coaching staff falling from 94 to 67.

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A reduction in staff costs was partly helped by some players agreeing to a reduction in their wages, while the likes of John Sutton, Marius Zaliukas and Andrew Driver moved on from the Gorgie outfit.

A drop in turnover of £792,000 to £6.5m was largely blamed on the club’s poor record in the cup competitions.

The accounts also note that administrators BDO were paid £325,000, although this money was deducted from the £2.4m that Budge paid Lithuanian bank Ukio Bankas, whose debt was secured against Tynecastle stadium.

As part of the deal that took Hearts out of administration, the Foundation, which is backed by around 8,000 fans making monthly donations, are committed to handing over £3.8m in the first two years and will repay Budge’s £2.4m in full over five years.

Hearts’ net debt stood at £3,166,000 in June although this amount takes into account the loans made by Budge and the Foundation.

The club was also forced to pick up football debt totalling £575,000. A statement in the accounts signed off by chairwoman Budge, who will address shareholders at tomorrow’s

Annual General Meeting, read: “The last two years have been turbulent for our business, however, we are confident that our new structure and our close relationship with the Foundation of Hearts Ltd will move the business forward in a positive manner.

“The company’s prudent and financial foundations allow us to confirm that will continue to meet the Financial Fair Play criteria introduced by Uefa in season 2013/14.

“The cornerstone of our business continues to be the development of what is widely recognised as the best young squad of footballers in the country.

“This is something our fans have recognised and they too have bolstered our business plan with unprecedented season ticket and retail sales for the 2014/15 season.

“The style of football being played by our exciting young squad has truly captured the imagination of the Edinburgh public and beyond and many top-flight English clubs now have our young talent in their sights.

“Finally, the Board would like to express its thanks to the employees, players, supporters, shareholders and other associates such as sponsors, commercial and community partners who continue to support the business.”

The Foundation handed over £1.22 million up until June and that figure has since risen to £1.8 million.

Midfielder Adam King’s switch to English Premier League side Swansea in January this year makes up a big slice of the £234,000 in transfer fees Hearts received.

The accounts also confirm that £27.5 million of debt was written off as part of the Company Voluntary Arrangement that was crucial to the club’s exit from administration.

Much of that money was due to former owner Vladimir Romanov’s collapsed companies Ukio Bankas and UBIG.

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