HEART OF MIDLOTHIAN PLC

ANNOUNCEMENT OF PRELIMINARY RESULTS FOR THE YEAR ENDED 31 JULY 2005

Financial results

During the year ended 31 July 2005, the Company incurred a loss on ordinary

activities before taxation of £2,728,000, equivalent to a loss per share of

21.6p (2004 - loss of £2,424,000 or 19.2p per share).

Turnover for the year showed an increase of £1,266,000, which reflected

increased season ticket monies, the benefits from reaching the Semi-Finals of

both Cups and, most importantly, increased income in the areas of gate receipts

and TV income through reaching and participating in the group stage of the UEFA

Cup.

Staff costs were £503,000 lower than last year, reflecting the continued

reduction in player costs. Due to this reduction, combined with increased

turnover as described above, the ratio of staff costs to turnover was 53.9%, an

improvement of 16.5% on last year.

Other operating charges were £4,442,000, which was £1,396,000 higher than last

year. This was due to the combination of increased costs for staging our

European games at Murrayfield, the operating costs of a full year at the Youth

Academy and increased sales and marketing costs relating to future income

streams for the new season.

The exceptional item of expenditure of £351,000, relates to the final abortive

costs incurred in the potential sale of Tynecastle Stadium.

The year in review

It has been a dramatic 12 months, but I feel that Hearts will come out of recent

turbulent times in a much stronger position.

We have made some notable progress, not least of which is securing the future of

football at Tynecastle following the result of the EGM in January. Additionally,

our ability to attract and retain the services of top international players has

helped create a team which has been a breath of fresh air in this season's SPL.

Looking back to last season, we were not successful on the field as the Club

endured defeat in the semi finals of both domestic cup competitions and finished

in only 5th place in the Bank of Scotland SPL. This in turn affects the Company

financially with reduced revenues due to a lower league placing than the

previous two seasons, which has been offset by the positive impact of revenues

from our participation in the UEFA Cup referred to above. During this time, the

Club parted company with two managers - Craig Levein and John Robertson - and we

continue to wish them well for the future.

The knock-on effect of our lack of on-field success last season is that the club

will miss out on the potentially lucrative revenue streams that come from

European competition. In this financial year we will also suffer reduced

revenues due to our early exit to Livingston in the CIS Cup.

However, there can be no doubt that the last financial year saw the first stages

of the Club going through a much needed transition period which is designed to

deliver real on and off field success for Heart of Midlothian plc. The Board's

view is that while there is still much work to be done in achieving our ultimate

aims of delivering regular domestic success and European competition

participation, the Club is in a much better position now than it was some 12

months ago.

Events since the year end

At present a recommended cash offer has been made by British Linen Advisers

Limited on behalf of Heart of Midlothian 2005 Limited to acquire the whole of

the issued and to be issued share capital of Heart of Midlothian plc, not

already owned or controlled by UAB Ukio Banko Investicine Grupe. The offer

document was sent to shareholders in mid November and provides full details of

the offer, which has been recommended in the best interests of Hearts and its

shareholders.

In addition to the above, the Board is continuing to consider opportunities to

strengthen the balance sheet of the Club and is currently in the process of

negotiating a potential change of status for the Company.

On operational matters, there has however been a noticeable increase in season

ticket sales due largely to the successful start to the season made by the team.

The players have adapted well in every instance to the changes that have taken

place off-field this season, which have included the departures of former

manager George Burley, Chief Executive Phil Anderton and Chairman George

Foulkes, and then most recently the arrival of new first team coach Graham Rix.

Neither I nor any of my fellow Board members take any pleasure in some of the

decisions that have had to be taken recently, however, everything that the Board

is currently working on is designed to improve the long term standing of the

Club both financially and in a playing sense.

We are working on a number of levels to lift the restrictions within which we

must currently work. First and foremost we are building a team at Hearts that

can compete at the highest levels of domestic competition and thereby secure

regular European football. This team building process will continue with further

investment planned for the January transfer window and also thereafter in the

summer next year.

Secondly we are progressing discussions with Edinburgh City Council and other

relevant authorities on the redevelopment of the main stand at Tynecastle. We

are hopeful that our proposals will demonstrate the economic value to the city

and in turn provide us with a much better opportunity to accommodate more Hearts

fans at Tynecastle.

Finally the imminent move to private ownership through the offer document that

has been circulated to shareholders would provide the opportunity for the Board

to act quickly and effectively in order to realise the vision that it has for

the Club.

A note of thanks

I would like to add a note of thanks. As I have mentioned we have witnessed a

period of rapid change at the Club and I feel that the players and staff must be

acknowledged for their professionalism and commitment to Hearts. I would also

want to place on the record the Board's appreciation of the backing that the

fans have given the team throughout the season. Tynecastle has seen a capacity

home crowd for every game so far this season and this gives the Board confidence

that we should do everything we can to deliver new modern facilities at the

stadium as quickly as allowable.

R Romanov

Chairman and Acting Chief Executive

28 November 2005

PROFIT AND LOSS ACCOUNT

Year ended 31 July 2005

Operations

excluding

player Player 2005 2004

Note trading trading Total Total

£'000 £'000 £'000 £'000

TURNOVER 8,428 - 8,428 7,162

_____ _______ _______ ______

Staff costs (4,541) - (4,541) (5,044)

Depreciation and other amounts

written off tangible and

intangible fixed assets (429) (204) (633) (614)

Other operating charges (4,442) - (4,442) (3,046)

Operating exceptional items (351) - (351) (234)

______ _______ ________ ______

TOTAL OPERATING CHARGES (9,763) (204) (9,967) (8,938)

______ _______ ________ ______

OPERATING LOSS (1,335) (204) (1,539) (1,776)

(Loss)/gain on sale of players'

registrations - (42) (42) 185

______ _______ ________ ______

LOSS ON ORDINARY ACTIVITIES

BEFORE INTEREST (1,335) (246) (1,581) (1,591)

______ _______

Interest payable and similar (1,147) (833)

charges

________ ______

LOSS ON ORDINARY ACTIVITIES

BEFORE TAXATION (2,728) (2,424)

Tax on loss on ordinary - -

activities

_______ _______

RETAINED LOSS FOR THE

FINANCIAL YEAR (2,728) (2,424)

======= =======

Basic and diluted loss per

ordinary share 3 (21.6)p (19.2)p

======= =======

All of the activities of the Company are classified as continuing operations.

STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

Year ended 31 July 2005

2005 2004

£'000 £'000

Loss for the financial year (2,728) (2,424)

Revaluation gain on freehold property 2,199 -

Reversal of 2002 impairment loss - 500

_______ _______

Total recognised gains and losses in the year (529) (1,924)

======= =======

BALANCE SHEET

31 JULY 2005 2005 2004

£'000 £'000

FIXED ASSETS

Intangible assets 165 232

Tangible assets 17,754 15,708

______ ______

17,919 15,940

______ ______

CURRENT ASSETS

Stock 108 176

Debtors

- due within one year 1,028 2,132

- due after one year - 500

______ ______

1,136 2,808

______ ______

CREDITORS: amounts falling due within one year

Other creditors (7,127) (11,343)

Convertible loan stock (1,250) (953)

_______ ________

(8,377) (12,296)

_______ ________

NET CURRENT LIABILITIES (7,241) (9,488)

_______ ________

TOTAL ASSETS LESS CURRENT LIABILITIES 10,678 6,452

_______ ________

Other creditors (13,936) (8,168)

Convertible loan stock (3,335) (4,432)

_______ ________

(17,271) (12,600)

PROVISIONS FOR LIABILITIES AND CHARGES (84) -

_______ ________

NET LIABILITIES (6,677) (6,148)

======= ========

CAPITAL AND RESERVES

Called up share capital 1,263 1,263

Share premium account 3,119 3,119

Revaluation reserve 5,589 3,474

Profit and loss account - deficit (16,648) (14,004)

_______ ________

EQUITY SHAREHOLDERS' DEFICIT (6,677) (6,148)

======= ========

CASH FLOW STATEMENT

Year ended 31 July 2005

2005 2004

£'000 £'000

Net cash outflow from operating activities (638) (597)

Returns on investments and servicing of finance (971) (743)

Capital expenditure and financial investment (282) (453)

______ ______

Cash outflow before use of financing (1,891) (1,793)

Financing (1,593) (241)

______ ______

Decrease in cash in the year (3,484) (2,034)

====== =======

RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW

FROM OPERATING ACTIVITIES

2005 2004

£'000 £'000

Operating loss (1,539) (1,776)

Depreciation 429 353

Amortisation 204 297

Release of Football Trust grant (36) (36)

Decrease in stocks 68 109

Decrease in debtors 1,604 177

(Decrease)/increase in creditors (1,368) 279

_______ _______

Net cash outflow from operating activities (638) (597)

======= =======

RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT

2005 2004

£'000 £'000

Decrease in cash in the year (3,484) (2,034)

Cash flow from movement in debt and hire purchase

financing 1,593 241

_______ _______

Change in net debt resulting from cash flows (1,891) (1,793)

Amortisation of finance costs (14) (14)

Interest accrual capitalised into debt - (186)

_______ _______

(1,905) (1,993)

Opening net debt (19,621) (17,628)

_______ _______

Closing net debt (21,526) (19,621)

======= =======

1. FINANCIAL INFORMATION

The financial information contained in this preliminary announcement does not

constitute statutory accounts for the years ended 31 July 2005 or 2004. The

financial information for the year ended 31 July 2004 is derived from the

statutory accounts for that year which have been delivered to the Registrar of

Companies. The auditors reports on those accounts; their report was

unqualified and did not contain a statement under s237(2) or (3) of the

Companies Act 1985. The statutory accounts for the year ended 31 July 2005

will be finalised on the basis of the financial information presented by the

directors in the preliminary announcement and will be delivered to the

Registrar of Companies following the Company's annual general meeting.

The accounting policies adopted with regard to the preliminary announcement are

consistent with those used in the statutory accounts for the year ended 31 July

2004.

The Directors of Heart of Midlothian plc are responsible for preparing and

issuing this preliminary announcement. Additional copies of this report and

copies of the 2005 Annual Report are available from the registered office of

Heart of Midlothian plc, Tynecastle Stadium, Gorgie Road, Edinburgh, EH11 2NL.

2. GOING CONCERN

The Company does not currently have formal funding facilities in place that

allow it to meet its liabilities as they fall due in the foreseeable future.

The Company is wholly dependent on the short term financial support of

Lithuanian bank AB Ukio Bankas, which in addition to other term loans,

provides a guarantee for the Company's overdraft facility, and UAB Ukio

Banko Investicine Grupe which provides other short term loans. Such current

funding is repayable on demand.

UAB Ukio Banko Investicine Grupe is a 29.9% shareholder, which expects to

complete an offer to acquire the majority of the remaining shares of the

Company in the short term. As part of the offer process, UAB Ukio Banko

Investicine Grupe has confirmed to the Board its commitment to using its

best endeavours to provide or arrange the provision of appropriate financial

support to the Company in order to achieve the objectives set out

by the Board. Such commitment includes meeting or arranging the long term

financing of any working capital deficits in the year to 31 July 2006

and its intention to organise for the Company such finance as is required to

complete the development of Tynecastle Stadium in the longer term.

However, such assurance is in no way binding or legally enforceable by the

Company and is in any event conditional upon UAB Ukio Banko Investicine Grupe

achieving, through its 100% subsidiary undertaking Heart of Midlothian 2005

Limited, its target of 75% ownership of the Company. Also, should UAB Ukio

Banko Investicine Grupe complete its offer for the remaining shares of

the Company, this would represent a change in control the Company, which is

an event that could trigger the automatic repayment of the Company's long term

loan. Therefore, the position remains uncertain at the time of approval of

the financial statements, but the Directors remain confident that the

necessary funding will be made available.

Accordingly, the Directors have prepared the financial statements on the

basis that the Company is a going concern. Should the financial support

set out above not be available to the Company and the adoption of the going

concern basis were inappropriate, adjustments would be required to write

down assets to the assessment of their recoverable value, to reclassify fixed

assets as current assets, and to provide for any further liabilities that

may arise.

3. LOSS PER SHARE

Basic

The loss per share has been calculated on the basis of the number of ordinary

shares in issue throughout the year ended 31 July 2005 of 12,633,636 (2004 -

12,633,636) and the loss after tax for the year of 2,728,000 (2004 -

£2,424,000).

Diluted

There is no difference between the basic and diluted loss per share.

4 Revaluation of freehold property

During the year ended 31 July 2005, Rydens, Chartered Surveyors, valued the

freehold land and buildings as at 31 July 2005 on a depreciated replacement

cost basis at £15 million on the basis of the Practice Statements contained

within the Royal Institution of Chartered Surveyors Appraisal & Valuation

manual. In accordance with FRS 15 Tangible Fixed Assets, this valuation has

been applied in the current year. This results in an increase in the

revaluation reserve in the year of £2,199,000.

5 Debt restructuring

On 8 February 2005, the Company completed a restructuring of its short and

longer term borrowing facilities, which involved the consolidation of a

number of individual short and long term facility agreements and a change

in principal bankers from Halifax Bank of Scotland to AB Ukio Bankas. The

effect of the restructuring, which did not impact the total banking

facilities available to the Company, was to reduce the Company's short term

borrowing facilities, including bank overdraft and other loans in favour

of longer term agreements

6. APPROVAL

The Board of Directors approved this preliminary announcement on 28 November

2005.