THE historic move towards greater fan ownership of Hibs took a major step forward today as shareholders were provided with the detail of the proposal to buy shares in the Easter Road outfit.
The club announced last month that supporters will be able to move Hibs towards greater fan ownership by taking up £2.5million worth of shares, which, if fully subscribed, would see Hibernian FC receive all of the proceeds of the issue, with none of it going to the holding company or to any of the existing shareholders.
At that time, the club also announced it had reached an agreement with the Bank of Scotland, meaning it was now free of bank debt, while the holding company had agreed to halve the debt by converting £4.5 million of loans into new ordinary shares – a move which has now taken place.
Those proposals were met with an overwhelming positive reaction from supporters as has a move to elect two supporters onto the board as non-executive directors, the voting for which closes on Sunday, with those fans eligible to participate in the election urged to do so before the midnight deadline.
But as the financial statements for the year ended last July 31 were today unveiled – showing a loss of £800,000 – for a period covering the 2013-14 season which ended in relegation to the Championship, described in both sporting and financial terms as representing a low point for the club, began dropping through shareholders’ letterboxes this morning, Hibs disclosed details of their plans to widen ownership of the club.
At the club’s AGM, to be held at Easter Road on Wednesday, January 28, shareholders will discuss the increase the authorised share capital from £1.2m to £2.5m, a move that requires approval of shareholders holding 75 per cent or more of the existing shares, but the holding company has already agreed to support the “Written Resolutions” which is a sufficient majority for them to be passed.
Ultimately, provided the issue of new shares is fully subscribed, the current “called-up share capital” will more than double, with new shares being offered at 4p a share, a 2p premium. But one financial analyst told the Evening News that on a “fully diluted basis,” each of those would equate to 18p a share in net asset value, reflecting the fact that Jones Lang LaSalle, International Property consultants valued Easter Road Stadium at £20,200,000 and the training centre at East Mains at £5,250,000 as of last July 31 on the basis of depreciated replacement cost.
At the time of the initial announcement, it was revealed Hibs had been working on their plans for greater fan ownership for almost a year against a backdrop of complex financial regulations which will continue to govern what is seen as a “real first in Scottish football”, as a solvent, stable club moves towards supporters holding more than half the shares.
Supporters who are not shareholders will also be eligible to buy new shares on the same terms, although it is understood they’ll be informed separately as to the procedure they will need to follow in the next few days.
While 2014 may have been a year to forget as far as the vast majority of supporters will be concerned, an unprecedented run of results under former boss Terry Butcher ultimately seeing Hibs relegated through the inaugural SPFL Premeriship play-offs, it was also, in the club’s estimation, one of “radical change; change in the status of the club; change in football management, change in playing staff, change on the board of directors; change in the off-field staff, change in the football academy; change in the club’s banking arrangements and change in the club’s finances”.
However, the cost of falling out of the top flight of Scottish football at the end of a season which began with Europa League action – although it was to end in a disastrous 7-0 hammering at home by Swedish outfit Malmo – was clearly reflected in the club’s latest financial statements, the £800,000 operating loss comparing to a profit of £300,000 the previous year.
A reduction in turnover from £8m to £5.8m reflected, said finance director Jamie Marwick, not just a reduction in income from cup competitions – Hibs exiting both the League and Scottish Cup early having made the final of the Scottish Cup in each of the previous two years – but also the effect of outsourcing Hibs retail operation although that was said to have brought a net benefit to the club.
Operating costs were reduced from £3.3m to £2.4m, while staff costs fell by £200,000 to £3.7m, but the key “wages to turnover ratio” rose from 49 per cent to 64 per cent, a reflection in the fall in turnover.
A loss on disposal of intangible fixed assets for the year of £300,000 arose from player movements and other one-off changes in personnel at the end of the playing season.
And while not specifically reflected in the accounts, Hibs, while staging the maximum number of televised games from Easter Road which resulted in “awkward” kick-off times and smaller crowds, received the second smallest proportion of the “TV pot,” the payouts being based on final league positions.
Although the accounts were only being made publicly available today, they were, in fact, “signed off on August 28, less than a month after the financial year end, the delay, apparently, being to allow the club to bring it’s proposals for wider fan ownership to fruition and to have them available to be discussed at the AGM.