Last checked at 14 Aug 2009 14:59
CELTIC plc
Preliminary Results for the year ended 30 June 2009
SUMMARY OF THE RESULTS
Operational Highlights
Winners of the Co-operative Insurance Cup
Participation in the Group stages of the UEFA Champions League playing 3 home European fixtures (2008: 5)
Season ticket sales of 54,252 (2008: 53,517) following a price freeze and introduction of low-priced concession tickets
26 home matches played at Celtic Park in the year (2008: 28)
Appointment of Tony Mowbray as football manager.
NIKE'S appointment as kit manufacturer extended for 5 years until 2015
Financial Highlights
Group revenue reduced by 0.5% to £72.59m (2008: £72.95m)
Operating expenses reduced by 4.3% to £61.36m (2008: £64.09m)
Profit from trading before asset transactions and exceptional operating expenses of £11.23m (2008: £8.86m)
Exceptional operating expenses of £2.78m (2008: £3.19m)
Gain on disposal of intangible assets of £1.55m (2008: £5.70m)
Profit before taxation of £2.00m (2008: £4.44m)
Year end bank debt of £1.51m (2008: £3.52m) net of cash
Investment of £8.53m (2008: £5.11m) in the acquisition of football players.
For further information contact:
| Dr John Reid, Celtic plc | Tel: 0141 551 4235 |
| Peter Lawwell, Celtic plc | Tel: 0141 551 4235 |
| Iain Jamieson, Celtic plc | Tel: 0141 551 4235 |
CHAIRMAN'S STATEMENT
I am pleased to report on the Company's performance in the year to 30 June 2009. It was a year of great challenges, promise and expectation, both financially and from a football perspective. The financial storm of 2008/2009 has been weathered successfully, so far, but our objective of achieving four SPL championships in a row was not fulfilled; once again we have seen just how closely fought the SPL title can be. Losing the SPL title and the accompanying direct entry place to this year's Champions League to our greatest rivals is not easy to accept; it is not in our nature to be satisfied with second best.
It is a measure of how far we have come in recent years, and the high standards that have been set, that our football fortunes in a year in which we won the CIS Cup, participated once again in the Group Stages of the UEFA Champions League and challenged until the very last for a fourth consecutive SPL title, could be described as mixed. This highlights the contribution and achievements of Gordon Strachan and his backroom staff in their time with the Club, for which we thank them.
The new management team have much to live up to, but we firmly believe that Tony Mowbray and his coaching staff are the right choice to take the Club forward.
From a financial perspective our results for the year continue to provide us with a solid footing and remain highly creditable. Turnover, at £72.59m, was on a par with the £72.95m of 2007/2008, despite playing only 26 home games rather than the 28 of the year before. Merchandising sales improved and multi-media sales increased. Operating expenses reduced by 4.3% in the year (£2.74m) to £61.36m. Exceptional operating expenses of £2.78m were incurred, mainly relating to player impairment values and costs from onerous contracts and employment contract terminations. These are good results in the present economic context.
Gains on player trading of £1.55m this year against £5.70m last time, and higher amortisation costs from investment in players, offset by the savings in operating expenses, result in our profit before tax of £2.00m compared with £4.44m the year before. Our year end bank debt, net of cash, was £1.51m, down from £3.52m the previous year.
Investment in players increased from £5.11m to £8.53m, reflecting our policy of and commitment to strengthening the team within the parameters of a sustainable financial model. Put simply, last year we brought in less from selling players and spent more in bringing in new players than in the previous year. At 53.4% the ratio of total labour cost to turnover has been maintained at the same level as last year - reflecting a total outlay on labour of £38.75m.
These results have been achieved in trying and often frustrating circumstances and substantially in reliance upon the tremendous contribution of the Celtic support. In football, at home and abroad, and in other fields, many organisations are in financial difficulty. We have placed a premium on financial prudence in order to safeguard this Club for future generations.
Unlike other sectors, the football transfer market has not been depressed by recessionary influences; indeed wages for good quality players, as well as transfer fees have increased, buoyed mainly by the broadcasting money available in England. The Scottish broadcasting deal negotiated by the SPL with Setanta last summer - although in no way as lucrative as that offered by SKY in England - was held out as a substantial increase on the agreement then in place. Celtic did not support that new agreement, preferring the SKY option. We believed that in selecting Setanta instead of SKY in the competitive bid process, an opportunity for the SPL to benefit from the greater status, stability, reach and financial resources of one of the world's largest broadcasters was lost, as became apparent when Setanta entered into administration just after the end of the season. The recently agreed arrangements with SKY / ESPN are significantly less than could have been the case had SKY's offer been accepted last year, and are a hard lesson in what could and should have been a far more positive outcome for all of the SPL clubs.
This only adds to the many challenges we face in the coming season: money is tight for all of our customers; much of Scottish football is now edging along the narrow line of solvency; we must continue to seek to ensure that supporters are satisfied that they are receiving value for the money that they are asked to spend; and, for ourselves, we face a difficult path to our initial goal of Champions League Group Stage qualification.
We will face those challenges undaunted. As a result of a magnificent away performance in Moscow earlier this month we are assured of further European football this season. I believe that is of great importance to our fans.
I also believe that although we have a strong financial base, we cannot be immune from the pressures that weigh on our supporters and their families. Accordingly, Season Ticket prices have been frozen again this year and we have retained the extensive concessionary schemes introduced last year, as part of the family aspect of Celtic Football Club and our policy of attracting the supporters of the future. A record 54,252 season tickets were sold last season, up on 53,517 the year before. Our season ticket sales so far are encouraging but we will have to work extremely hard to match our performance last year. Your support in doing so will be vital.
The difficult economic circumstances are no reason for us to cut back on our Foundation and Charity work. Indeed in many ways these become more important in times of greater deprivation. That is why I am delighted that the Celtic Foundation continues to tackle social inequality in many fields, with over 6,500 young people and adults participating in its programmes each week and a staggering 1,250,000 young people and adults having been involved in some way with its work since its activities began in May 2003. Celtic Charity Fund has again had a major effect on the lives of many of the least fortunate in society, both at home and abroad, with almost £446,500 donated in cash to good causes in the year. As a sum equivalent to 0.61% of Group turnover this year, we are well on our way to achieving the target of 0.7% I set for us at last year's AGM, a commendable effort during an economic recession. I am proud that over the last 12 months the Club has been involved in more charitable, educational and community work than it has at any other time in its history.
This coming year sets us further football challenges. We look forward very much to working with our new manager Tony Mowbray and his team. Tony is in the process of rebuilding the squad. In recent weeks we have been joined by new faces on the playing staff, including Fortune, N'Guemo and Fox. We will continue to seek to strengthen where we can and within our means, and to invest for the longer term in youth development, scouting, and sports science as we have done in previous years. The first full year of operations at Lennoxtown has been very successful and we will be investing further sums in pitch facilities during the year. Attractive, exciting and, importantly, winning football is something that our fans expect, and we aim to provide.
My fellow director, Brian McBride will not be standing for re-election at this year's AGM, after almost 5 years on the Board. I record my own and the Club's appreciation to Brian.
I also express my personal thanks to our supporters, customers, shareholders and staff for their continuing outstanding contribution to maintaining the traditions, standards, success and vibrancy of this great Club.
Dr John Reid
Chairman
14 August 2009
INTRODUCTION
In another very eventful year we won the CIS Cup while narrowly missing out on the Clydesdale Bank Scottish Premierleague and we participated in the UEFA Champions League group stage, which greatly assisted the financial performance of the Company.
Having promised much we disappointingly fell away at the final hurdle to concede the title on the last day of the season, narrowly missing out on four in a row.
Failing to win the Clydesdale Bank Scottish Premierleague last season was additionally disappointing as the title winners secured automatic direct qualification to the group stage of the UEFA Champions League, whilst we as the second placed club are required to negotiate two demanding qualifying rounds before we can take a place in the group stage. Following victory over Dinamo Moscow in the first of those rounds, we now require to overcome Arsenal to progress in the Champions League, although failure to do so will see Celtic participate in the new Europa League in season 2009/2010.
During the course of the 2008/9 season we had mixed fortunes in Europe's premier club competition, beating Villarreal at Celtic Park and only conceding a late equaliser to the holders Manchester United. However, a goalless draw at home to the Danish side Aalborg eventually contributed to us missing out on progression to the last 16.
At the end of the season Gordon Strachan resigned as manager after four successful years in charge, during which we won three SPL titles, one Scottish Cup, two League Cups and reached the last 16 of the UEFA Champions League on two occasions. We are grateful for his contribution to the Club's success during his tenure as manager.
Tony Mowbray, an ex-Celtic player and former manager of Hibernian and West Bromwich Albion, has been appointed to succeed Gordon. Tony has a reputation for playing open, attacking football and giving home grown players their chance, and has been well received by the Celtic supporters. We believe he will continue to bring success to the Club. Tony has been joined at Celtic by Mark Venus, Peter Grant and Neil Lennon in the new Celtic football management team.
FINANCIAL PERFORMANCE
In general it is recognised that much of the football sector continues to be challenged financially. A number of clubs remain heavily in debt and incurring ongoing losses. This has been exacerbated in Scotland by the collapse of Setanta, the most recent media rights holder for SPL football. Conversely the lucrative television deals recently secured in England, particularly by the English Premier League, have resulted in increased transfer values and much higher wages at clubs in that league and fuelled wage and transfer fee inflation around Europe.
The impact of the credit crunch on the world economy has been significant and trading conditions have been and continue to be extremely difficult. But Celtic's trading results for the year to 30 June 2009 are again strong, benefiting dramatically from participation in the UEFA Champions League group stage, tighter cost control and player trading.
In the year to 30 June 2009 turnover was £72.59m, which is a slight reduction of £0.37m, 0.5% against the previous year having played 26 home matches in comparison to 28 last year. Much of this net reduction is due to lower ticket revenue with two fewer high value home European matches being played. This reduction has been partially offset by an increase in multi-media, £0.59m, and merchandise sales, £1.09m, largely as a result of there being three kit launches in the current year as against one the previous.
In the year to 30 June 2009 total operating expenses reduced over the previous year by approximately £2.74m, 4.3% to £61.36m. Much of this cost saving is as a result of a reduction in cost of sales, labour, travel and accommodation together with reduced match day costs from playing two fewer home games this season.
During the financial year to 30 June 2009, £8.53m was invested in strengthening the first team squad, which resulted in an amortisation charge of £7.43m in comparison to £5.60m the previous year. In addition a gain on sale of £1.55m resulted from the sales of Sno and Riordan and a contingent receipt in respect of Petrov, this compared to £5.69m last year. Exceptional costs of £2.78m were incurred in comparison to £3.19m last year. This in the main relates to a provision for impairment to player values together with costs arising from onerous contracts and the early termination of certain employment contracts.
As a result of the above, and after various exceptional costs, the Company announced a retained profit for the year to 30 June 2009 of £2.00m which compares with the previous year's £4.44m. Further details can be found in the Financial Director's Review.
FOOTBALL INVESTMENT
Planned trading of players and the development of younger players continue to be integral parts of our longer-term strategy. As in recent seasons any new signings and contract extensions must be at a financially viable level.
The playing squad was further enhanced during the 2008/9 season by the £8.53m investment mentioned above. The funds achieved from the sale of players together with the incremental contribution arising from participation in the group stage of the UEFA Champions League helped fund the acquisition of new players. A number of experienced players were brought in along with younger often locally developed players who offer much potential.
For the 2008/9 season significant sums were invested to strengthen the playing squad, with new signings including Marc Crosas from Barcelona, Georgios Samaras from Manchester City, Shaun Maloney from Aston Villa, Glen Loovens from Cardiff City, Milan Misun from IFK Pribram and both Paddy McCourt and Niall McGinn from Derry City.
Important contract extensions were also secured for Scott McDonald and Aiden McGeady, amongst others.
Of the senior players, Thomas Gravesen, Derek Riordan and Evander Sno left the club in Summer 2008, whilst players loaned out during the year included John Kennedy, Chris Killen and Cillian Sheridan. At the end of the season a number of senior players' contracts came to an end, including those of Bobo Balde, Shunsuke Nakamura, Jean-Joel Perrier-Doumbe, Jan Vennegoor of Hesselink and Paul Hartley.
The Club plans to continue to build on the success achieved in recent years, seeking to further strengthen the first team squad under Tony Mowbray, whilst managing our financial resources responsibly. For season 2009/10 Lukasz Zaluska has been secured from Dundee United, Daniel Fox has arrived from Coventry City and both Marc-Antoine Fortune and Landry N'Guemo have joined Celtic from FC Nancy in France, the latter on a 12 month loan.
In the coming year we plan to augment the infrastructure at Lennoxtown, with a further pitch to be installed. Such investment is intended to provide our football operation with the best possible resources, systems and facilities.
We are in the process of strengthening the scouting department to create a world class scouting system which will enhance player identification and recruitment at all levels, including the introduction of more sophisticated player monitoring and assessment procedures.
FOOTBALL OPERATIONS
During season 2008/9 the Club played 51 competitive matches, winning 31 and losing just 8, with 12 matches drawn. After a thrilling penalty shootout in the semi-final against Dundee United, Celtic went on to beat Rangers in the final to lift the CIS Cup. Furthermore, no less than eighteen Celtic players were called up for senior International duty, spanning eleven different nations.
The reserve side under Willie McStay won the SPL Reserve Championship for the eighth year in a row, losing just 2 of its 22 competitive matches. Willie has since departed to take up a great managerial opportunity at Ujpest in Hungary.
YOUTH ACADEMY
Six new coaches joined the Academy in 2008/9, including Tommy McIntyre as Head of Professional Academy and Stephen Frail as Under 19 Head Coach. Two new teams were added at Under 9s and Under 10s in order to prepare players for participating in the SFA Youth league at Under 11s. We now have squads from Under 9s through to Under 19s.
The season started well for the Under 19s winning the Glasgow Cup by beating Rangers 3-1 in the final. They then went on to record their highest ever position in the prestigious Villarreal Tournament.
TICKET SALES
Season 2008/9 was another successful year. Standard season ticket sales exceeded 51,000 with a value of circa £17m. The introduction of new concessionary prices for kids' season tickets was very well received by supporters, with nearly 10,000 taking advantage of the discounted tickets. Sales were boosted by a highly successful half season ticket sale, which accounted for 2,100 season sales worth over £180,000. Taking into account Corporate and Premium ticket sales the total number of seasonal tickets sold reached over 54,000, which is amongst the highest in the UK.
Match ticket sales of over 300,000, generated revenue in excess of £7million. Nearly 160,000 UEFA Champions League tickets were sold at a value of £4.2m, whilst many SPL games were sold out.
Given the current economic climate the Board took the decision to maintain prices again for the new season.
CELTIC DEVELOPMENT
Approximately 2.3 million lottery chances were sold by Celtic Development Pools Limited during the period July 2008 to June 2009. Around £840,000 was donated to Celtic's Development Division for the purposes of youth development. Over £900,000 in prize money was paid out to supporters from all over the country.
The weekly Celtic Pool lottery continues to out-perform most football club and charitable lottery products; the Paradise Windfall match day lottery continues to be very popular, with a top prize of £8,500 last season being the biggest cash prize in UK football. Prize money of approximately £1.9 million has now been paid out to Celtic supporters at Celtic Park since the start of the Windfall in 1995.
CELTIC FOUNDATION
Through a number of projects the Celtic Foundation has again demonstrated its ability to tackle the social inequalities that children, youths and adults encounter living in Glasgow and elsewhere.
The Foundation has also strengthened its partnerships arrangements with the private, public and voluntary sectors to deliver on key policy initiatives in respect of young people and adults. These include improving health, social well-being and educational attainment, promoting positive behaviour, increasing confidence and raising self-worth, providing training and/or employment opportunities and working with young people who are at risk of offending or who have offended.
The Celtic Foundation has attracted over 1,250,000 young people and adults from across Scotland, Ireland and beyond since the inception of the programme in May 2003. Currently over 6,500 young people and adults participate in the Celtic Foundation's programmes each week.
Under the Play for Celtic programme, 36 Community Academy teams operate across the country, with the aim of establishing a further 30 teams during season 2009/10. In recent years over 30 youngsters have graduated from our community programmes into the Celtic Youth Academy.
The Girls Community / Youth Academy and Celtic Ladies Senior teams also continue to make good progress with all Youth Academy sides winning their respective Leagues and additional cup successes during season 2008/9.
Celtic Football Club is fully committed to the continuation of the Celtic Foundation and its community work and has invested substantially in infrastructure and programme delivery. The community aspect plays a key role in the Club's social ethos and corporate social responsibilities. Over the past 12 months the Club has been involved in more charitable, educational and community work than at any time in its history.
MERCHANDISING
Merchandising revenue for the year reached £17.18m, which was 6.8% up on the previous year despite the challenging market place. The international away kit released in June 2009 has also proved to be a success with initial sales ahead of expectations. An additional away kit was launched in August 2009 and the iconic 'bumble-bee' design has been well received.
The Club now operates fourteen stand-alone shops and licenses one franchise store. Two temporary units were opened in Livingston and Braehead to benefit from the Christmas trading period. The Argyle Street store was extensively refurbished in February of this year in conjunction with NIKE.
Autumn 2008 also saw the successful release of the Club's Official History DVD and in the Spring of 2009 a tribute DVD to Tommy Burns was issued. Both have performed well.
MULTI MEDIA & MARKETING
The Multi Media Division now includes the Company's marketing function, a change effected in February 2009 to ensure consistency in communicating the Club's message.
Channel 67, the Club's online portal to view live matches, is now in its eleventh year and continues to provide quality streams of Celtic matches to the worldwide fan base. Going forward and subject to broadcasting rights, the intention is to further develop the Channel 67 brand following the collapse of the Setanta operation in the UK.
Celticfc.net and Celticfc.jp websites have seen new functionality and features in the past year and development work continues in these areas.
Multi Media & Marketing had production and technical input into the successful Tony Roper play the 'Celts in Seville' and is working with other writers and producers with a view to staging more Celtic productions in future.
The department continues to produce high quality, sell-thru'DVD products to the retail and wholesale markets. In the past financial year we have released The Official History of Celtic Football Club as well as producing and successfully releasing 'Faithful Through and Through - The Tommy Burns Story'.
Television advertisements and all video-related promotional material continue to be produced by the Club's in-house team of production staff, editors and camera operators. This service affords other parts of the business a cost-effective solution to advertising and promotion on both internal and external media.
The department continued to provide a solution for cost-effectively producing and presenting top-quality Club dinners and events. In the past year these have included Player of the Year, the Joe McBride and Stevie Chalmers Tribute Nights, and the Club's Annual Charity Dinner among others.
The commercial aspect of publishing also sits within the department with oversight of the Celtic View, match day programme and various book titles.
PUBLIC RELATIONS
The level of media interest and activity around the Club was again extremely high during the year, given the Club's UEFA Champions League participation and involvement in domestic competitions.
The PR Department continued to manage a substantial level of media coverage for a range of Club activities at a national level, including commercial, charitable and community events. In addition, the Department plays an important role in dealing with supporter enquiries, working closely with supporter organisations and liaising directly with Glasgow City Council and other bodies to ensure the Club maintains its important social dimension.
BRAND PROTECTION
Celtic protects its intellectual property rights internationally and seeks to prevent unauthorised bodies from using the Celtic brand. This work ensures that the Celtic brand remains a valuable asset of the Club and also assists in raising the Club's global profile.
The Club continues to work closely with the enforcement authorities. Counterfeit goods to the value of around £200,000 were removed from the marketplace, with other investigative and enforcement work conducted on an ongoing basis.
PARTNER PROGRAMME
NIKE and Celtic agreed an extension of their relationship which is now in place until 2015; the deal continues to support Celtic's global commercial strategy and gives the Club an excellent platform to gain new partners. In 2008/9, Emirates, Citylink, Konami, Wish Telecoms and Albert Bartlett became new Club partners and with Powerade and Shields Autoparks already signed for the season ahead, Celtic's partner portfolio continues to grow.
Key contract extensions have been agreed with Thomas Cook, BT and Seat Exchange. The implementation of LED perimeter advertising boards at Celtic Park has given partners a new way to advertise and the Club will strive to find further ways to support our sponsors going forward. The focus for season 2009/10 will be to continue to explore new revenue streams, both domestically and overseas, with an emphasis on "Platinum" partnerships
STADIUM
Spectator safety remains of paramount importance for fans attending matches both home and away. During the course of the year, Celtic Football Club continued to enhance its close liaison and valuable partnership with the Glasgow City Council Safety Team for Sports Grounds.
We continued to develop the training of colleagues responsible for public safety duties. To meet the requirements of the Guide to Safety at Sports Grounds (Edition Five), the year saw the successful completion of accredited training in Spectator Safety Management and the introduction of training towards the SVQ Level 2 qualification for Event Stewards. In addition, the Club was delighted to be invited to provide an input to the Match Commanders Training Programme held at the Scottish Police College and to UEFA Safety and Security Seminars held in Amsterdam, Athens and Belarus.
The success of the travel stewarding arrangements continued. with Celtic travel stewards accompanying our fans to assist in local operations, ensuring the wellbeing of Celtic supporters who continue to attract praise from safety authorities for their positive support of the team.
FACILITIES
The Facilities team undertook a number of maintenance and refurbishment projects during a busy year, enhancing the environment for customers and colleagues alike.
Streamlining of purchasing procedures and a focus on energy saving initiatives resulted in improved efficiency and cost control.
We will strive to further improve service and upgrade facilities throughout the Stadium and at the Training Ground in Lennoxtown, with Health and Safety continuing to be of the utmost importance.
Celtic continues to invest in its Information, Communications and Technology (ICT) systems to ensure it has a modern, robust and secure infrastructure to support business operations going forward. Over the course of the next year, we will be looking to drive efficiencies in our ICT infrastructure whilst looking to provide improved services, communication and information to our customers.
CATERING AND CORPORATE HOSPITALITY
The Number 7 Restaurant has experienced an impressive level of sales growth over last season, with our children's menu receiving a Gold Award from the Soil Association. The presentation was made by HRH The Prince of Wales and this is the highest accreditation that has ever been presented to a football club in the UK.
Conference and Banqueting performed well in a difficult competitive climate. We provided hospitality services for a number of prestigious events, including the Young Scottish Muslim Awards, Player of the Year dinners in Glasgow and Ireland, Celtic Supporters Club Annual Rally and various tribute dinners.
In terms of match day services, the strong partnership with Lindley Catering has continued to grow, whilst food and beverage sales in the hospitality lounges performed ahead of budget.
Corporate Hospitality also performed well, with excellent customer feedback. Corporate and Premium seasonal sales were strong in all areas ending the season ahead of budget.
The Visitor Centre beat its sales targets in another challenging market and regularly welcomed visitors from Asia, North America and across the United Kingdom.
SUPPORTER RELATIONS
Our Customer Relationship Management (CRM) system has continued to be developed and enhanced over the past year. This system has allowed us to bring together supporter information gathered from many business areas. By creating one central database we can obtain a complete picture of each supporter's transactions with the Club.
The number of supporters on the database has continued to grow, with a 14% increase seen in the last year. Analysis of this data helps us to communicate with and market to supporters in a more targeted and effective manner, reducing costs and driving revenues for both the Club and for our partners and sponsors.
The use of lower cost communication channels such as e-mail and SMS messaging in conjunction with the CRM system has been successful in reducing costs and generating income, particularly in the promotion of ticket sales and events. But communicating with our supporters is not just about marketing products; a new weekly e-mail newsletter has been introduced to provide supporters with news, videos, interviews, and competitions.
CELTIC CHARITY FUND
Celtic Charity Fund, the Club's charitable arm, again enjoyed a highly successful year, donating over £446,000 to a range of worthy causes. A detailed summary of its activities is set out in the Annual Report.
The Club's commitment to supporting worthy causes will continue in 2009/10 as we look to increase the fundraising impetus and, in turn, our donations to registered charities in Scotland, Ireland and across the globe.
HUMAN RESOURCES
Celtic remains the only SPL club to date to become an "Investor in People". This prestigious award was gained in 2007 in recognition of attaining the national standard for people management and development. We are now the only Scottish club to hold this award, whilst in England there are just four clubs with full or part-recognition.
Remuneration and benefits are regularly reviewed and benchmarked and employee welfare remains an important consideration. Recruitment and induction processes have been revised and updated, whilst all Celtic colleagues now have access to a free Employee Assistance Programme and a comprehensive voluntary benefits package called Celtic Choice.
In January 2009 Celtic was awarded the "Positive about Disabled People" symbol by Job Centre Plus for the fourth successive year, reflecting the fact that we continue to meet our commitments to colleagues and job applicants with a disability.
Celtic also continues to hold "Tommy's" accreditation, which is recognition of the Company's good-practice policies in respect of pregnant employees.
55 pupils from local schools enjoyed a week of structured work experience at Celtic Park during the year. This is a highly successful ongoing programme open to all, which has received plaudits from pupils, parents and the education authorities.
The hard work and contribution of all colleagues in another exciting year is greatly appreciated.
SUMMARY AND OUTLOOK
Football success continues to have a major effect on trading performance which, in addition to the gains reported from player trading, has resulted in strong financial results again for the year to 30 June 2009. However, our failure to progress beyond the group stage of the Champions League has contributed to a profit performance that fell short of last year.
The football sector remains financially difficult, particularly given recent economic pressures. To some extent, football has been protected from the harshest of these forces but overall attendances dipped a little and this had knock-on consequences for our merchandise and hospitality businesses. Furthermore, the collapse of the Setanta broadcasting contract for the SPL and associated demise of Celtic TV had a negative impact on income at the end of the financial year.
Revenues generated by progress in European competitions remain of major significance and provide greater flexibility regarding player investment.
We continue to maximise revenues and develop the Celtic brand at home and abroad and together with the ongoing management of costs we should maintain a sustainable financial model.
Trading at the beginning of the new financial year has been quite encouraging in a challenging marketplace. Celtic enjoys partnerships with several international companies, which will continue to provide income streams going forward. However, additional revenue generating opportunities continue to be sought.
It is imperative that we attain domestic success and compete successfully, particularly in the Clydesdale Bank Scottish Premierleague. Wage and transfer fee inflation at the highest level continues to rise. The gap with major European nations widens and thus the cost of attracting quality new players increases. As such the emphasis on careful and patient use of our financial resources and development of talent will characterise our efforts to strengthen the first team squad.
We will continue to invest strategically on our technical functions, talent identification, Academy, Sports Science and performance analysis, with the objective of achieving excellence and creating Champions League quality players.
Once again, the biggest challenge facing the Board is the management of salary and transfer costs whilst achieving playing success in order to yield satisfactory financial results. Clearly, European progression is key in enabling the Club to achieve its financial objectives.
Peter T Lawwell 14 August 2009
Chief Executive
CONSOLIDATED INCOME STATEMENT
| 2009 | 2008 | |||||||
| Notes | Operations excluding player trading £000 | Player trading £000 |
Total £000 |
Total £000 | ||||
| Continuing operations: | ||||||||
| Revenue | 2 | 72,587 | - | 72,587 | 72,953 | |||
| Operating expenses | (61,358) | - | (61,358) | (64,095) | ||||
| Profit from trading before asset transactions and exceptional items | 11,229 | - | - | 11,229 | 8,858 | |||
| Exceptional operating expenses | 3 | (1,985) | (797) | (2,782) | (3,189) | |||
| Amortisation of intangible assets | - | (7,434) | (7,434) | (5,598) | ||||
| Profit on disposal of intangible assets | 1,546 | 1,546 | 5,695 | |||||
| Profit / (loss) on disposal of property plant and equipment | 231 | - | 231 | (268) | ||||
| Profit/(loss) before finance costs and tax | 9,475 | (6,685) | 2,790 | 5,498 | ||||
| Finance costs: | ||||||||
| Bank loans and overdrafts | (243) | (519) | ||||||
| Convertible Preference Shares | 4 | (544) | (544) | |||||
| Profit before tax | 2,003 | 4,435 | ||||||
| Taxation | 5 | - | - | |||||
| Profit for the year from continuing operations | 2,003 | 4,435 | ||||||
| Profit for the year attributable to equity holders of the parent | 2,003 | 4,435 | ||||||
| Basic earnings per Ordinary Share | 6 | 2.24p | 5.09p | |||||
| Diluted earnings per share | 6 | 1.87p | 3.70p | |||||
CONSOLIDATED BALANCE SHEET
| 2009 | 2008 | |||
| £000 | £000 | |||
| Assets | ||||
| Non-current assets | ||||
| Property, plant and equipment | 56,689 | 56,315 | ||
| Intangible assets | 12,145 | 11,862 | ||
| 68,834 | 68,177 | |||
| Current assets | ||||
| Inventories | 2,020 | 2,410 | ||
| Trade and other receivables | 4,427 | 6,063 | ||
| Cash and cash equivalents | 10,489 | 8,475 | ||
| 16,936 | 16,948 | |||
| Total assets | 85,770 | 85,125 | ||
| Equity | ||||
| Issued share capital | 24,204 | 24,122 | ||
| Share premium | 14,309 | 14,205 | ||
| Other reserve | 21,222 | 21,222 | ||
| Capital redemption reserve | 2,686 | 2,766 | ||
| Accumulated losses | (19,071) | (21,074) | ||
| Total equity | 43,350 | 41,241 | ||
| Non-current liabilities | ||||
| Interest-bearing liabilities/bank loan | 12,000 | 12,000 | ||
| Debt element of Convertible Preference Shares | 3,027 | 3,027 | ||
| Deferred income | 254 | 820 | ||
| 15,281 | 15,847 | |||
| Current liabilities | ||||
| Trade and other payables | 14,188 | 16,224 | ||
| Current borrowings | 140 | 154 | ||
| Deferred income | 12,811 | 11,659 | ||
| 27,139 | 28,037 | |||
| Total liabilities | 42,421 | 43,884 | ||
| Total equity and liabilities | 85,770 | 85,125 | ||
Approved by the Board on 14 August 2009
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| Share capital | Share premium | Other reserve | Capital redemption reserve | Retained earnings | Total | |
| £000 | £000 | £000 | £000 | £000 | £000 | |
| Equity shareholders' funds as at 1 July 2007 | 23,452 | 14,129 | 21,222 | 2,440 | (24,514) | 36,729 |
| Share capital issued | 1 | 76 | - | - | - | 77 |
| Transfer to Capital Redemption Reserve | 669 | - | - | 326 | (995) | - |
| Profit for the period | 4,435 | 4,435 | ||||
| Equity shareholders' funds as at 30 June 2008 | 24,122 | 14,205 | 21,222 | 2,766 | (21,074) | 41,241 |
| Share capital issued | 2 | 104 | - | - | - | 106 |
| Transfer to Capital Redemption Reserve | 80 | - | - | (80) | - | - |
| Profit for the period | - | - | - | - | 2,003 | 2,003 |
| Equity shareholders' funds as at 30 June 2009 | 24,204 | 14,309 | 21,222 | 2,686 | (19,071) | 43,350 |
CONSOLIDATED CASH FLOW STATEMENT
| 2009 | 2008 | |||
| £000 | £000 | |||
| Cash flows from operating activities | ||||
| Profit for the year | 2,003 | 4,435 | ||
| Depreciation | 2,204 | 1,925 | ||
| Amortisation of intangible assets | 7,434 | 5,598 | ||
| Impairment of intangible assets | 797 | 353 | ||
| Profit on disposal of intangible assets | (1,546) | (5,695) | ||
| (Profit) /loss on disposal of property, plant and equipment | (231) | 268 | ||
| Finance costs | 787 | 1,063 | ||
| Sub total | 11,448 | 7,947 | ||
| Decrease in inventories | 390 | 973 | ||
| (Increase)/decrease in receivables | (406) | (123) | ||
| (Increase)/decrease in payables and deferred income | (2,415) | 2,824 | ||
| Cash generated from operations | 9,017 | 11,621 | ||
| Interest paid | (243) | (519) | ||
| Net cash flow from operating activities - A | 8,774 | 11,102 | ||
| Cash flows from investing activities | ||||
| Purchase of property, plant and equipment | (3,574) | (3,605) | ||
| Purchase of intangible assets | (6,970) | (12,254) | ||
| Proceeds from sale of property, plant and equipment | 596 | - | ||
| Proceeds from sale of intangible assets | 3,639 | 8,048 | ||
| Net cash used in investing activities - B | (6,309) | (7,811) | ||
| Cash flows from financing activities | ||||
| Repayment of debt | (14) | (887) | ||
| Dividends paid | (437) | (935) | ||
| Net cash used in financing activities - C | (451) | (1,822) | ||
| Net increase in cash equivalents A+B+C | 2,014 | 1,469 | ||
| Cash and cash equivalents at 1 July | 8,475 | 7,006 | ||
| Cash and cash equivalents at 30 June | 10,489 | 8,475 |
NOTES TO THE ACCOUNTS
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
These Financial Statements have been prepared in accordance with IFRS as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The accounting policies have been consistently applied to both years presented.
The Group's Profit and Loss Account follows the Financial Reporting Guidance for Football Clubs issued in February 2003 by The Football League, The FA Premier League and the FA, although the revenue within Note 2 continues to be analysed in accordance within the headings of the business operations of the Group.
2. REVENUE
| The Group's revenue comprises: | 2009 £000 | 2008 £000 | |
| Football and stadium operations | 36,534 | 38,580 | |
| Merchandising | 17,180 | 16,092 | |
| Multimedia and other commercial activities | 18,873 | 18,281 | |
| 72,587 | 72,953 |
3. EXCEPTIONAL OPERATING EXPENSES
The exceptional operating expenses of £2.78m (2008: £3.19m) reflect £1.98m (2008: £2.84m) in respect of labour and other ancillary costs largely arising as a result of onerous contracts and the early termination of certain employment contracts and £0.80m (2008: £0.35m) in respect of a provision for impairment of intangible assets.
4. DIVIDENDS
A 6% (before tax credit deduction) non-equity dividend of £0.54m (2008: £0.54m) is payable on 1 September 2009 to those holders of Convertible Cumulative Preference Shares on the share register at 31 July 2009. On 31 August 2007 the entitlement to a dividend on the Convertible Preferred Ordinary Shares ceased. A number of shareholders have elected to participate in the Company's scrip dividend reinvestment scheme for this financial year. Those shareholders will receive new Ordinary Shares in lieu of cash. The implementation of the presentational aspects of IAS32 ("Financial Instruments: disclosure") in the preparation of the annual results, requires that the Group's Preference Shares and Convertible Preferred Ordinary Shares, as compound financial instruments, are classified as a combination of debt and equity and the attributable non-equity dividends are classified as finance costs. No dividends were payable or proposed to be payable on the Company's Ordinary Shares.
5. TAXATION
No provision for corporation tax or deferred tax is required in respect of the year ended 30 June 2009. Estimated tax losses available for set-off against future trading profits amount to approximately £25m (2008: £27m). This estimate is subject to the agreement of the current and prior years' corporation tax computations with H M Revenue and Customs.
6. EARNINGS PER SHARE
| 2009 | 2008 | ||
| £000 | £000 | ||
| Reconciliation of net profit to basic earnings: | |||
| Net profit attributable to equity holders of the parent | 2,003 | 4,435 | |
| Basic earnings | 2,003 | 4,435 | |
| Reconciliation of basic earnings to diluted earnings: | |||
| Basic earnings | 2,003 | 4,435 | |
| Non-equity share dividend | 544 | 544 | |
| 2,547 | 4,979 | ||
| 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 | 89,584 | 87,171 | |
| Dilutive effect of share options | - | - | |
| Dilutive effect of convertible shares | 46,346 | 47,252 | |
| Diluted weighted average number of ordinary shares | 135,930 | 134,423 |
Earnings per share has been calculated by dividing the profit for the period of £2.00m (2008: £4.44m) by the weighted average number of Ordinary Shares of 89.58m (2008: 87.17 m) in issue during the year. Diluted earnings per share as at 30 June 2009 has been calculated by dividing the earnings for the period by the weighted average number of Ordinary Shares, Preference Shares and Convertible Preferred Ordinary Shares in issue, assuming conversion at the balance sheet date, and the full exercise of outstanding share purchase options, if dilutive, in accordance with IAS33 Earnings Per Share. As at June 2008 and June 2009 no account was taken of potential share purchase options, as these potential Ordinary Shares were not considered to be dilutive under the definitions of the applicable accounting standards.
7. ANNUAL REPORT & ACCOUNTS
Copies of the Annual Report & Accounts together with the notice and notes of the 2009 AGM are expected to be issued to all shareholders in due course.
The financial information set out above was approved by the Directors on 14 August 2009 and does not constitute the Company's statutory accounts for the years ended 30 June 2009 or 30 June 2008. The auditors' opinion on the 2009 statutory accounts is unmodified and does not include a statement under Section 237 (2) or (3) of the Companies Act 1985. The statutory accounts for 2008 have been filed and those for 2009 will be delivered to the Registrar of Companies in due course.