The sale of Craig Gordon helped Hearts reduce their debt
Hearts have reduced their debt by almost £6m in the last financial year, despite making a pre-tax loss of £3.5m.
The club's arrears now sit at £30.48m, compared to the previous figure of £36.25m, with pre-tax losses reduced by £8.92m for the year to July 2008.
The sales of Craig Gordon and Roman Bednar aided the debt reduction.
Staffing costs were reduced by almost £1.2m and a debt-for-equity agreement raised £12m but turnover fell by £1.16m to £9.16m.
Scotland international goalkeeper Gordon left Hearts to join Sunderland for £9m before striker Bednar made his loan move to West Bromwich Albion a permanent deal for a fee of £2.3m.
However, the sale of defender Christophe Berra to Wolves in January is not included in the newly released accounts.
The club aim to redevelop their stadium in 2010 - which will increase the capacity to over 20,000 - and hope to complete the work by season 2011/12.
Despite the current challenging economic climate, the club views the outlook with cautious optimism
A club spokesman said: "Despite the current challenging economic climate, the club views the outlook with cautious optimism based on a continued focus on increasing efficiency by lowering costs, improving results on the field and attracting further commercial partnerships.
"In each of these areas, Hearts has made solid progress in the new financial year.
"Key 'post year end' events have included the appointment of Csaba Laszlo as team manager. Mr Laszlo has delivered a marked improvement in the club's on-field progress.
"Other key items of note are the transfer of Christophe Berra to Championships side Wolverhampton Wanderers."
The spokesman added: "The transaction was the highest value transfer for any player from a Scottish club in the January 2009 transfer window and once again demonstrates the value of Hearts' player development system."
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