RNS Number:4584K
Heart Of Midlothian PLC
29 April 2003
HEART OF MIDLOTHIAN plc
INTERIM REPORT
6 MONTHS ENDED 31 JANUARY 2003
CHIEF EXECUTIVE'S STATEMENT
6 MONTHS ENDED 31 JANUARY 2003
Introduction
Trading as a football club in recent months has been set against an extremely
challenging landscape. Throughout Europe professional football is feeling the
impact of significantly reduced media revenues and the high cost of players'
salaries. This market correction makes it necessary for clubs to re-address the
fundamentals of the business of professional football.
Closer to home the same difficulties exist, particularly in relation to media
values. There has also been the widely publicised dispute within the Scottish
Premier League between the non-Old Firm clubs and the Old Firm with regard to a
range of issues covering the sharing of central revenues and voting structures.
This dispute is near to resolution, with both sides having agreed a position
which should help the League as a whole to rebuild both its image and long term
commercial viability. Whilst we have been continuing to address our cost base we
have also seen the effects of falling revenue, and the challenge is to maintain
performance levels during this difficult period of realignment.
Financial Results
In the first six months to 31 January 2003 the Company reported a pre-tax profit
of #746,000 compared to a pre-tax loss of #6,000 for the same period last year.
These results cover the period when we have the greater concentration of matches
in the playing season. They also reflect the sale of the player registration of
Antti Niemi to Southampton FC and a further instalment from Everton FC in
respect of games played by Gary Naysmith, who was transferred to that club in
the Autumn of 2000.
The underlying trading position shows a reduction in season ticket income, but
in overall terms both our average attendance and gate income have held up well.
Outlook
The second six months of our trading year as always include the non-trading
months of June and July. Going forward, with no continuing income from the
Tennent's Scottish Cup, the only non-Scottish Premier League revenue in the
second half relates to our share of the semi final revenues for the CIS League
Cup.
Work is now well under way at the Club's joint venture football academy at the
Heriot-Watt Riccarton campus. This facility, when completed in October, will
enable Hearts to remain at the forefront of Scottish professional football. Our
talent recruitment has been exceptional in recent years, and the introduction of
this facility is the final piece in the jigsaw of putting in place solid
facilities to attract and develop a regular pool of talent coming through to the
first team squad.
The ability of the Club to control player costs and at the same time have the
talent to drive income through success on the field is vital. Looking forward,
although the landscape will continue to be challenging, the Club will be well
placed to take advantage of opportunities as they arise.
Chris Robinson
Chief Executive
PROFIT AND LOSS ACCOUNT
6 months ended 31 January 2003
Unaudited 6 months ended
31 January 2003 Unaudited Audited
Operations excluding Player trading 6 months ended 12 months
player Total 31 January 2002 ended
trading 31 July
2002
#'000 #'000 #'000 #'000 #'000
TURNOVER 3,418 - 3,418 3,871 6,072
Staff costs (2,444) - (2,444) (3,017) (5,688)
Depreciation and other amounts
written off tangible and
intangible fixed assets, net
of grant release (169) (133) (302) (538) (1,017)
Other operating charges (1,509) - (1,509) (1,508) (2,849)
(4,122) (133) (4,255) (5,063) (9,554)
OPERATING LOSS (704) (133) (837) (1,192) (3,482)
Gain on sale of players'
registrations - 1,980 1,980 1,509 1,492
PROFIT/(LOSS) ON ORDINARY
ACTIVITIES BEFORE INTEREST (704) 1,847 1,143 317 (1,990)
Interest payable and similar
charges (397) (323) (705)
PROFIT/(LOSS) ON ORDINARY
ACTIVITIES BEFORE TAXATION 746 (6) (2,695)
Tax on profit/(loss) on - - -
ordinary activities
RETAINED PROFIT/(LOSS) FOR THE
FINANCIAL PERIOD 746 (6) (2,695)
Basic earnings/(loss) per
ordinary share 5.9p (0.0)p (21.3)p
Diluted earnings per ordinary
share 5.3p
All of the activities of the Company are classified as continuing operations.
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
6 months ended 31 January 2003
Unaudited Unaudited Audited
6 months 6 months 12 months
Ended ended ended
31 January 31 January 31 July
2003 2002 2002
#'000 #'000 #'000
Profit/(loss) for the 746 (6) (2,695)
financial period
Surplus arising on revaluation - - 2,658
of fixed assets
Impairment loss - - (500)
Total recognised gains and 746 (6) (537)
losses in the period
BALANCE SHEET
as at 31 January 2003
Unaudited Unaudited Audited
31 January 31 January 31 July
2003 2002 2002
#'000 #'000 #'000
FIXED ASSETS
Intangible assets 523 987 723
Tangible assets 14,036 11,465 13,692
14,559 12,452 14,415
CURRENT ASSETS
Stock 213 107 183
Debtors 2,994 2,260 2,411
3,207 2,367 2,594
CREDITORS: amounts (5,950) (3,607) (6,722)
falling due within one
year
NET CURRENT LIABILITIES (2,743) (1,240) (4,128)
TOTAL ASSETS LESS CURRENT 11,816 11,212 10,287
LIABILITIES
CREDITORS: amounts
falling due after more
than one year
Other creditors (9,122) (8,948) (8,446)
Convertible loan stock (5,077) (4,862) (4,970)
(14,199) (13,810) (13,416)
(2,383) (2,598) (3,129)
CAPITAL AND RESERVES
Called up share capital 1,263 1,263 1,263
Share premium account 3,126 3,140 3,133
Revaluation reserve 3,085 979 3,122
Profit and loss account - (9,857) (7,980) (10,647)
deficit
EQUITY SHAREHOLDERS' (2,383) (2,598) (3,129)
DEFICIT
CASH FLOW STATEMENT
6 months ended 31 January 2003
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 January 31 January 31 July
2003 2002 2002
#'000 #'000 #'000
Net cash outflow from (1,952) (3,965) (4,846)
operating activities
Returns on investments (290) (215) (489)
and servicing of
finance
Capital expenditure and 1,518 1,653 1,019
financial investment
(724) (2,527) (4,316)
Financing 1,654 6,869 6,790
Increase in cash in the 930 4,342 2,474
period
RECONCILIATION OF NET CASH
FLOW TO MOVEMENT IN NET DEBT
Increase in cash in the period 930 4,342 2,474
Cash flow from movement in debt
and hire purchase financing (1,654) (6,869) (6,790)
Change in net debt resulting
from cash flows (724) (2,527) (4,316)
Amortisation of finance costs (7) (7) (14)
Interest accrual capitalised
into debt (100) (101) (202)
New hire purchase contracts - (19) (19)
Movement in net debt (831) (2,654) (4,551)
Opening net debt (14,789) (10,238) (10,238)
Closing net debt (15,620) (12,892) (14,789)
RECONCILIATION OF OPERATING
LOSS TO NET CASH OUTFLOW FROM
OPERATING ACTIVITIES
Operating loss (837) (1,192) (3,482)
Depreciation 184 145 293
Amortisation of intangible
fixed assets 133 411 760
(Increase)/decrease in stocks (30) 76 -
Increase in debtors (833) (612) (448)
Decrease in creditors (569) (2,793) (1,969)
(1,952) (3,965) (4,846)
NOTES TO THE INTERIM REPORT
6 months ended 31 January 2003
1 BASIS OF PREPARATION
The Interim Report for the six months ended 31 January 2003 is
unaudited and has been prepared on the basis of the accounting policies
set out in the audited report and accounts for the year ended 31 July
2002. The Directors approved the Interim Report on 28 April 2003.
The financial information contained in the Interim Report does not
constitute statutory accounts within the meaning of Section 240 of the
Companies Act 1985. The information at 31 July 2002 has been extracted
from the statutory accounts for the year then ended, which were reported
on by the auditors without qualification or statement under Section 237
(2) or (3) of the Companies Act 1985 and have been delivered to the
Registrar of Companies.
2. GOING CONCERN BASIS
The Directors have considered the deficit on shareholders' funds of
#2,383,000, arising principally from prior period trading losses. In
this context the Directors have prepared trading and cash flow forecasts
for the year to 31 July 2004. Inherent in the preparation of forecasts
is the subjectivity of various factors, including team performance,
player movements and other aspects, the outcome of which cannot be known
in advance.
After making enquiries, the Directors have formed a judgement that, at
the time of approving the Interim Report, there is a reasonable
expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future. For this reason the
Directors continue to adopt the going concern basis in preparing the
Interim Report. The Interim Report does not include any adjustments
which would result from the going concern basis being no longer
appropriate.
3 TAXATION
Taxation has not been provided for the six months ended 31 January 2003
(2002 - #Nil) due to the availability of tax losses.
4 EARNINGS/(LOSS) PER ORDINARY SHARE
Basic earnings/(loss) per ordinary share has been calculated on the
basis of a profit of #746,000 (2002 - loss #6,000) taking account of the
weighted average number of ordinary shares in issue throughout the
period of 12,633,636 (2002 - 12,633,636).
Diluted earnings per ordinary share has been calculated taking account
of the potential conversion of loan stock and accrued interest to
3,445,489 ordinary shares.
There is no difference between the comparative basic and diluted loss
per ordinary share as the potential ordinary shares arising on the
conversion of loan stock and accrued interest do not have a dilutive
effect as defined by FRS14.
5 INTERIM REPORT
This Interim Report is being sent by post to all registered
shareholders. Additional copies are available at the Registered Office
of the Company, Tynecastle Stadium, Gorgie Road, Edinburgh, EH11 2NL.
INDEPENDENT REVIEW REPORT
TO HEART OF MIDLOTHIAN plc
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 31 January 2003 which comprises the profit and loss
account, the statement of total recognised gains and losses, the balance sheet,
the cash flow statement and related notes 1 to 5 together with the
reconciliation of net cash flow to movement in net debt and the reconciliation
of operating loss to net cash outflow from operating activities. We have read
the other information contained in the Interim Report and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.
This report is made solely to the Company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the Company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the Company, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The Interim Report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are responsible for preparing the Interim Report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial
data, and, based thereon, assessing whether the accounting policies and
presentation have been consistently applied unless otherwise disclosed. A review
excludes audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom auditing standards and therefore
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the interim financial information.
Going concern
In arriving at our review conclusion, we have considered the adequacy of the
disclosures made in note 2 of the Interim Report concerning the adoption of the
going concern basis and the subjectivity of various factors in the preparation
of trading and cash flow forecasts. In view of the significance of this
uncertainty we consider that this matter should be drawn to your attention, but
our review conclusion is not qualified in this respect.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 January 2003.
Deloitte & Touche
Chartered Accountants
Edinburgh
28 April 2003
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR ILFVRSSITFIV
