RNS Number : 0279O
Celtic PLC
27 September 2019
 

Celtic PLC

 

Announcement of Results for the year ended 30 June 2019

 

SUMMARY OF THE RESULTS

 

Operational Highlights

 

·    Winner of the Scottish Domestic Treble for an unprecedented third consecutive year (the "Treble Treble")

 

·    Winner of our eighth consecutive SPFL Premiership title

 

·    Finished second in the Europa League group stage, qualifying for the Round of 32 for the second year in a row

 

·    30 home matches played at Celtic Park (2018: 32 including the Scott Brown Testimonial)

 

·    Continuation of significant stadium investment programme

 

 

Financial Highlights

 

·    Group revenue decreased by 17.9% to £83.4m (2018: £101.6m)

 

·    Operating expenses including labour decreased by 0.2% to £86.9m (2018: £87.1m)

 

·    Gain on sale of player registrations of £17.7m (2018: £16.5m)

 

·    Acquisition of player registrations of £6.2m (2018: £16.6m)

 

·    Profit before taxation of £11.3m (2018: £17.3m)

 

·    Year-end cash net of bank borrowings of £28.6m (2018: £36.1m)

 

·    Year-end net cash, net of debt and debt like items, of £38.9m (2018: £27.0m)1

 

1net cash, net of debt like items, is represented by cash net of bank borrowings of £28.6m (2018: £36.1m) further adjusted for other debt like items, namely the net player trading balance, other loans and remuneration balances owed to certain personnel at the balance sheet date.

 

For further information contact:

 

Celtic plc

 

 

 

Ian Bankier, Celtic plc

Tel: 0141 551 4235

 

 

Peter Lawwell, Celtic plc

 

 

 

Iain Jamieson, Celtic plc

 

 

 

 

Canaccord Genuity Limited, Nominated Adviser

 

 

Simon Bridges

Tel: 0207 523 8000

 

 

       

 

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

 

CHAIRMAN'S STATEMENT

These results, which declare revenue of £83.4m (2018: £101.6m) and a profit before taxation of £11.3m (2018: £17.3m), reflect a satisfactory performance in a financial year in which the Club did not qualify for the Group Stages of the UEFA Champions League, as it had done in the prior year. 

 

On behalf of the Board I congratulate Neil Lennon, his management team, the players and all staff at the Club on achieving the "Treble Treble".  At short notice, Neil took charge of the squad, delivered an eighth consecutive League Championship and triumphed in the Scottish Cup, making it the Club's ninth successive domestic trophy.  

 

Of course, we were disappointed to lose Brendan Rodgers during the season, when he left to pursue an opportunity in the English Premier League. Brendan and his staff delivered record breaking success and they leave a phenomenal legacy for which the Board and everyone at Celtic is truly grateful.  We thank them for their outstanding contribution.

 

The Board was delighted to welcome Neil back to the Club in February and to confirm his appointment as manager following our success at Hampden in May.  Having been the manager when the Club embarked on the present run of domestic success, Neil understands what it takes to be the manager of Celtic.  He has the full support of the Board, executive management team and all the staff at the Club.  At the time of writing, having qualified for the Group Stages of the UEFA Europa League, the Club retains a 100% record in domestic competitions and we look forward with optimism to the season ahead.

 

The financial results for the year demonstrate the robustness of the Group's strategy of investment in football operations, whilst maintaining a self-sustaining financial model.  This continues to provide a stable platform for football success and shareholder value.  The gains on sales of player registrations, primarily reflected by the gains achieved on the sales of Moussa Dembele to Olympique Lyonnais and Erik Sviatchenko to FC Midtjylland, as well as contingent fees crystallising on previous player transfers, were key to the performance of the Group.

 

Post year end, the Club completed the sale of academy graduate Kieran Tierney to Arsenal FC for a Club record fee.  This was a great milestone achievement for "one of our own" and recognition for the Club's high standards of player development.  Also, post year end, in the summer transfer window we bolstered the playing squad with the additions of the permanent registrations of Christopher Jullien, Luca Connell, Hatem Abd Elhamed, Boli Bolingoli-Mbombo, Greg Taylor, Jonathan Afolabi, Jeremie Frimpong and Lee O'Connor.

 

Our year end cash net of bank borrowings was £28.6m (2018: £36.1m) which equates to a net funding position of £38.9m (2018: £27.0m) when adjusted for debt and debt like items (as defined in the Summary of Results on page 2). This allows the Board to continue to plan for the long term, whilst managing the reduced revenues derived from playing in UEFA Europa League in two successive seasons.  The Club continued its significant stadium investment programme to maintain and improve Celtic Park's reputation as one of the best football arenas in the world.

 

The Club believes that children and young people have the right to protection from all forms of harm and abuse.  We are unequivocally committed to ensuring this.  Celtic Football Club was the first club in Scotland to appoint a safeguarding officer, responsible for developing our policies for the protection of young people, and monitoring and reviewing our procedures to ensure they continue to reflect best practice.  During the year, a number of individuals were found guilty of historic offences committed against young people. The Club expressed its sincere sympathy, regret and sorrow for those affected and stands by its responsibilities, respecting the due process of law.

 

As we look ahead, the future of UEFA competitions beyond 2024 remains uncertain.  While recognising the risks, the Club considers that the developments being discussed by UEFA, the European Club Association and other stakeholders, present an opportunity to clubs such as Celtic.  Through Peter Lawwell's continued involvement on the Board of the European Club Association and the Professional Football Strategy Council of UEFA, the Club and the game in Scotland continue to be well represented in this very important arena. 

 

In closing, I thank all of our supporters, shareholders, sponsors, partners and colleagues for their contribution to another successful year for Celtic Football Club.  We all share a common passion for Celtic and everything it does.  The Board is committed to building on our current success for the long term future of the Club.

 

Ian P Bankier                                                                                                                                             

27 September 2019

Chairman

CHIEF EXECUTIVE'S REVIEW

 

Looking back on the year under review, like all Celtic supporters I am proud to reflect on the Club's continued domination of Scottish football as the Club made history for the second successive year by winning the "Treble Treble".  Football success is crucial to the Club and our supporters and to win nine consecutive domestic trophies is an amazing achievement for which I congratulate Brendan Rodgers, Neil Lennon, their staff, the players and everyone at the Club.

 

Stability is important in football, but change is inevitable.  Although we were very disappointed to see Brendan leave Celtic for an opportunity he wished to pursue, I respect his decision and thank him and his staff for all that they have given to the Club and the historic achievements, which have created many wonderful memories.  Following Brendan's departure, I was delighted that Neil Lennon re-joined the Club to clinch the eighth successive League championship and to complete the Treble Treble in challenging circumstances.  Neil is a true Celtic great, as a player, captain and manager and returns to the Club with a wealth of experience as a top quality coach, identifier and developer of players and with the strength of character to take the Club forward.  I wish Neil, assistant manager John Kennedy, first team coach Damien Duff and goalkeeper coach Stephen Woods all the very best as we work together to continue bringing success to the Club.  I also take this opportunity to thank my colleagues, our supporters, shareholders and club partners for their commitment to the continued success of the Club.

 

Each year, our key football objective is success in all three domestic competitions and progress in the UEFA Champions League.  Although we can be satisfied with our success in domestic football, we are very disappointed that the Club failed to qualify for the Group Stages of the UEFA Champions League in season 2018/19 and 2019/20, although the team did well to qualify in second place in a demanding UEFA Europa League group last season.   For season 2019/20, we have secured qualification for the Group Stages of the UEFA Europa League to ensure European football this season and our domestic performances have been promising.  We look forward to the season ahead. 

The level of competition in European football continues to intensify, increasing the uncertainty connected with qualification and progression within UEFA competitions.   The Club's long term strategy enables the Board to continue to invest in player retention, player recruitment, stadium infrastructure and everything that is needed to develop the Club for future generations and to continue to deliver success, notwithstanding the failure to qualify for the Group Stages of the UEFA Champions League. 

The Board continues to be committed to investing in our football operations and the creation of a world class football club, not only in transfer fees and player wages (which continue to be subject to hyper inflation), but also on football management, coaching, recruitment, medical, performance, sports science and the youth academy.  During the period, despite the 17.9% reduction in revenues we maintained a very high level of investment in total labour costs of £56.1m. 

Player development and recruitment continue to be fundamental to the Club to augment our first team squad and to add to the players being developed in the Academy.  Although we work to conclude transfers as quickly as possible, the transfer market remains challenging.  We continue to invest in player recruitment, to create value, but without putting the Club at risk.  After the period end, we signed eight players on permanent transfers, including players for the first team as well as younger players to add to the talented young players we have in our Academy, to which we added loan transfers of three high quality players from the English Premier League and English Championship.  The challenges in the transfer market demonstrate the importance of our Academy and we continue to develop the Academy for the future.   The objective remains to identify and develop Champions League football players for the Club. 

In closing I would like to thank Celtic supporters for their continued support of Celtic FC Foundation, which continues to deliver projects to improve health, promote equality, encourage learning and tackle poverty, upholding and promoting the charitable principles of the Club

 

Peter Lawwell                                                                                                                                                          

27 September 2019

Chief Executive

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

 

 

Note

2019

£000

 

2018

£000

 

 

 

 

 

 

 

 

 

 

Revenue

2

83,410

 

101,573

 

 

 

 

 

Operating expenses (before intangible asset transactions and exceptional items)

 

(86,904)

 

(87,083)

 

 

 

 

 

(Loss) / profit from trading before intangible asset transactions and exceptional items

 

(3,494)

 

14,490

 

 

 

 

 

Exceptional operating expenses

3

(1,789)

 

(4,141)

 

 

 

 

 

Amortisation of intangible assets

 

(9,709)

 

(8,768)

 

 

 

 

 

Profit on disposal of intangible assets

 

17,717

 

16,454

 

 

 

 

 

Other income

 

8,795

 

-

 

 

 

 

 

Operating profit

 

11,520

 

18,035

 

 

 

 

 

Finance income

 

1,059

 

216

 

 

 

 

 

Finance expense

 

(1,267)

 

(980)

 

 

 

 

 

 

 

 

 

 

Profit before tax

 

11,312

 

17,271

 

 

 

 

 

Income tax expense

5

(2,574)

 

(1,848)

 

 

 

 

 

Profit and total comprehensive income for the year

 

8,738

 

15,423

 

 

 

 

        

Basic earnings per Ordinary Share for the year

 

6

9.30p

 

16.47p

 

 

 

 

 

 

 

 

 

 

Diluted earnings per Share for the year

6

6.78p

 

11.72p

 

 

 

 

 

 

CONSOLIDATED BALANCE SHEET

 

 

 

2019

 

2018

 

 

£000

 

£000

Assets

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

 

58,690

 

58,265

Intangible assets

 

14,156

 

20,963

Trade receivables

 

8,089

 

4,397

 

 

80,935

 

83,625

 

 

 

 

 

Current assets

 

 

 

 

Inventories

 

2,643

 

2,407

Trade and other receivables

 

25,426

 

21,261

Cash and cash equivalents

 

34,057

 

42,563

 

 

62,126

 

66,231

 

 

 

 

 

Total assets

 

143,061

 

149,856

 

 

 

 

 

Equity

 

 

 

 

Issued share capital

 

27,157

 

27,132

Share premium

 

14,785

 

14,720

Other reserve

 

21,222

 

21,222

Accumulated profits

 

18,598

 

9,860

Total equity

 

81,762

 

72,934

 

 

 

 

 

Non-current liabilities

 

 

 

 

Borrowings

 

4,108

 

6,250

Debt element of Convertible Cumulative Preference Shares

 

4,183

 

4,208

Trade and other payables

 

6,943

 

10,302

Provisions

 

455

 

2,309

Deferred tax liabilities

 

1,139

 

-

Deferred income

 

57

 

86

 

 

16,885

 

23,155

 

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

 

13,957

 

27,005

Borrowings

 

1,364

 

300

Provisions

 

3,479

 

2,442

Deferred income

 

25,614

 

24,020

 

 

44,414

 

53,767

 

 

 

 

 

Total liabilities

 

61,299

 

76,922

 

 

 

 

 

 

 

 

 

 

Total equity and liabilities

 

143,061

 

149,856

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

 

Share
capital

Share
premium

Other
reserve

Accumulated (losses)/ profit

Total

 

£000

£000

£000

£000

£000

Equity shareholders' funds
as at 1 July 2017

27,107

14,657

21,222

(5,563)

57,423

Share capital issued

1

63

 

 

64

Reduction in debt element of convertible cumulative preference shares following conversion

24

-

-

-

24

Profit and total comprehensive income for

the year

-

-

-

15,423

15,423

 

 

 

 

 

 

Equity shareholders' funds
as at 30 June 2018

27,132

14,720

21,222

9,860

72,934

 

 

 

 

 

 

Share capital issued

1

65

-

-

66

Reduction in debt element of convertible cumulative preference shares following conversion

24

-

-

-

24

Profit and total comprehensive income for  the year

-

-

-

8,738

8,738

 

 

 

 

 

 

Equity shareholders' funds
as at 30 June 2019

27,157

14,785

21,222

18,598

81,762

CONSOLIDATED CASH FLOW STATEMENT

 

 

 

2019

 

2018

 

Note

£000

 

£000

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

Profit for the year

 

8,738

 

15,423

Income tax expense

 

2,574

 

1,848

Depreciation

 

2,064

 

1,977

Amortisation of intangible assets

 

9,709

 

8,768

Impairment of intangible assets

 

1,837

 

214

Profit on disposal of intangible assets

 

(17,717)

 

(16,454)

Net finance costs

 

208

 

764

 

 

7,413

 

12,540

 

 

 

 

 

 

(Increase) / decrease in inventories

 

(236)

 

7

Increase in receivables

 

(3,225)

 

(6,142)

(Decrease) / increase in payables and deferred income

 

(6,654)

 

17,378

Cash generated from operations

 

(2,702)

 

23,783

Tax paid

5

(2,435)

 

(707)

Net Interest received / (paid)

 

7

 

(47)

Net cash flow from operating activities

 

(5,130)

 

23,029

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Purchase of property, plant and equipment

 

(2,257)

 

(3,461)

Purchase of intangible assets

 

(13,671)

 

(10,645)

Proceeds from sale of intangible assets

 

14,040

 

9,821

Net cash used in investing activities

 

(1,888)

 

(4,285)

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Repayment of debt

 

(1,010)

 

(200)

Dividend on Convertible Cumulative Preference Shares

 

(478)

 

(486)

Net cash used in financing activities

 

(1,488)

 

(686)

 

 

 

 

 

Net (decrease) / increase in cash equivalents

 

(8,506)

 

18,058

Cash and cash equivalents at 1 July 2018

 

42,563

 

24,505

Cash and cash equivalents at 30 June 2019

 

34,057

 

42,563

 

 

NOTES TO THE FINANCIAL STATEMENTS

 

1.         BASIS OF PREPARATION

 

The financial information in this preliminary announcement has been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards (IFRSs) as adopted for use in the EU but does not include all of the disclosures that would be required under IFRS. The accounting policies applied by the Group in this financial information are the same as those applied by the Group in its financial statements for the year ended 30 June 2018 and are those which form the basis of the 2019 financial statements as well as new and amended standards adopted for the first time from 1 July 2018.

 

2.         REVENUE

 

 

 

  2019
  £000

 

2018

£000

The Group's revenue comprised:

Football and Stadium Operations

 

 

43,252

 

 

43,587

Merchandising

 

18,076

 

17,717

Multimedia and Other Commercial Activities

 

22,082

 

40,269

 

 

83,410

 

101,573

 

 

3.         EXCEPTIONAL OPERATING EXPENSES

 

The exceptional operating expenses of £1.79m (2018: £4.14m) can be analysed as follows:

 

 

2019
£000

 

2018
£000

Impairment of intangible assets and other prepaid costs

2,017

 

511

Reversal of prior period impairment charges

(52)

 

-

Onerous employment contracts

383

 

3,549

Onerous employment contract releases

(580)

 

-

Settlement agreements on contract termination

21

 

81

 

   1,789

 

4,141

 

 

The impairment of intangible assets relate to adjustments required as a result of management's assessment of the carrying value of certain player registrations relative to their current market value.

 

Onerous employment contract costs result from a situation where the committed costs under that contract are assessed as exceeding the economic benefits expected to be received by the Group over the term of the contract.

 

Settlement agreements on contract termination are costs in relation to exiting certain employment contracts.

 

 

4.         DIVIDEND ON CONVERTIBLE CUMULATIVE PREFERENCE SHARES

 

A 6% non-equity dividend of £0.51m (2018: £0.51m) was paid on 30 August 2019 to those holders of Convertible Cumulative Preference Shares on the share register at 26 July 2019. A number of shareholders elected to participate in the Company's scrip dividend reinvestment scheme for the financial year to 30 June 2019.  Those shareholders have received new Ordinary Shares in lieu of cash.  No dividends were payable or proposed to be payable on the Company's Ordinary Shares.

 

During the year, the Company reclaimed £0.07m (2018: £nil) in respect of statute barred preference dividends in accordance with the Company's Articles of Association.

 

 

5.         TAX ON ORDINARY ACTIVITIES

 

The corporation tax payable as at 30 June 2019 was £0.14m (2018: £1.14m). The current year tax expense was £1.44m and total tax payments in the year were £2.44m, of which £1.24m was in relation to the current financial year with £1.20m in respect of the year ended 30 June 2018. In addition, there are overpayments with respect to prior periods of £0.06m. The available capital allowances pool is approximately £9.00m (2018: £10.50m). These estimates are subject to the agreement of the current year's corporation tax computations with H M Revenue and Customs.

 

 

6.         EARNINGS PER SHARE

 

Reconciliation of basic earnings to diluted  earnings:

2019
£000

 

2018
£000

 

 

 

 

Basic earnings

8,738

 

15,423

Non-equity share dividend

570

 

573

Reclaim of statute barred non-equity share dividends

(67)

 

-

Diluted earnings

9,241

 

15,996

 

 

 

 

 

 

No.'000

 

 

No.'000

Reconciliation of basic weighted average number of ordinary shares to

diluted weighted average number of ordinary shares:

 

 

 

 

 

 

 

Basic weighted average number of ordinary shares

93,977

 

93,663

 

 

 

 

Dilutive effect of convertible shares

42,410

 

42,803

 

 

 

 

Diluted weighted average number of ordinary shares

136,387

 

136,466

 

 

Earnings per share of 9.30p (2018: 16.47p) has been calculated by dividing the profit for the period of £8.74m (2018: £15.42m) by the weighted average number of Ordinary Shares of 94.0m (2018: 93.7m) in issue during the year.  Diluted earnings per share of 6.78p (2018: 11.72p) as at 30 June 2019 has been calculated by dividing the profit for the period by the weighted average number of Ordinary Shares, Convertible Cumulative Preference Shares and Convertible Preferred Ordinary Shares in issue, assuming conversion at the Balance Sheet date, if dilutive.

  

 

7.         ANNUAL REPORT & FINANCIAL STATEMENTS

 

Copies of the Annual Report & Financial Statements together with the Notice and Notes of the 2019 AGM will be issued to all shareholders in due course.

 

The financial information set out above does not constitute the Company's statutory financial statements for the years ended 30 June 2019 or 30 June 2018. The Independent Auditor's Reports on the statutory financial statements for 2019 and 2018 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. The statutory financial statements for 2018 have been filed with the Registrar of Companies and those for 2019 will be delivered to the Registrar of Companies in due course.


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