Celtic Regulatory News (CCP)

15 Feb 2007 07:01

Celtic PLC15 February 2007 CELTIC plc INTERIM RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2006 SUMMARY OF THE RESULTS Operational Highlights • Lead the Bank of Scotland Premierleague by 19 points• Qualification for the last 16 of the UEFA Champions League• Continued participation in the Tennents Scottish Cup• 18 home matches played at Celtic Park in the period (2005: 15)• Successful launch of international and domestic away kits• Construction of the training academy at Lennoxtown progressing well Financial Highlights • Group turnover increased by 41.6% to £46.80m.• Operating expenses increased by 8.5% to £32.04m.• Profit from operations of £14.76m (2005: £3.50m).• Gain on sale of intangible fixed assets £7.12m (2005: £nil)• Profit before taxation of £17.94m (2005: Loss of £0.96m).• Period end bank debt of £10.94m (2005: £8.57m).• Investment in players of £6.32m (2005: £6.55m). For further information contact: Brian Quinn, Celtic plc Tel: 0141 551 4235Peter Lawwell, Celtic plc Tel: 0141 551 4235Iain Jamieson, Celtic plc Tel: 0141 551 4235 CHAIRMAN'S STATEMENT Thanks partly to the coincidence of a number of favourable factors, Celtic'sfinancial performance during the half-year ending December 31 2006 has beenexceptionally good. Participation as Scotland's sole representative in theEuropean Champions League has had a transforming effect on our interim resultswhen compared with a year ago; and we have also benefited significantly fromtransfer activities during the period. By most measures our football resultshave also been the best for many years. It is, however, part of the Chairman'sjob to bring perspective to the Company's performance and we cannot reasonablyexpect to repeat the outstanding features of the first half in the remainingmonths of the year. That said, we are currently enjoying one of the best periodsin the Club's history. Group turnover rose by 41.6% over the corresponding period a year ago. Celticplayed 3 more home games, 2 of which were European ties and 1 SPL game. As aresult, revenues from ticket sales increased by 42% to £21.6 million; and incomefrom multimedia was up by 144% to £14.1 million. Merchandise sales were down bysome 10%, largely because there were 2 kit launches in the period, one fewerthan in the corresponding period a year ago. However retail gross margins showeda clear improvement over the period, reflecting careful management of costs andpricing of our merchandise products. Operating costs as a whole rose by 8.5%, unsurprising in the light of theincreased activity for the Company on almost all fronts. The bulk of theincrease occurred in payments to the playing and football management teams asbonuses for domestic and European competitions earned under a new remunerationscheme took effect. We believe this new scheme will establish a betterrelationship for both players and Club between pay and performance, enabling usto control costs more effectively and rewarding players for the success on thefield. The ratio of labour costs (total and football) to turnover was 40.7% and31.6% (respectively), compared with 51.9% and 40.1% a year ago; and 56.6% and44.5% at the end of June last year. Amortisation costs fell by some 16% over theperiod as several members of the previous squad left the Club to pursue theircareers elsewhere. It is in the measures of profitability that Celtic showed the most strikingimprovement compared with last year. Operating profit rose from £74,000 to £11.9million; and after taking account of gains on player transfers of £7.1 million,profit after interest and taxation amounted to £17.9 million. The correspondingfigure a year ago was a loss of £1.0 million. This turnaround in our financialperformance demonstrates in the most vivid way the importance of Europeanfootball to clubs playing outside the leading five European countries; but it isalso a testament to the professionalism of our executive team. Gordon Strachan's football squad also continues to excel. At present the firstteam leads the Scottish Premier League by 19 points, has progressed to thequarter final of the Tennents SFA Cup and, for the first time, the Club hasqualified for the final 16 in the UEFA Champions League. On the face of it, andgiven the quality of the opposition, our involvement in that competition isexpected by many to terminate at that point. However the squad have alreadyshown on several occasions this season that they will not accept defeat untilthe game ends and I am confident they will extend Celtic's growing reputation inEurope, whatever the final result in the next round. The emphasis on careful and patient use of our financial resources will continueto characterise our efforts to strengthen the first team squad; and we will alsocontinue to find and develop players of quality from our youth and reservesquads. Our reserve and under-19 teams lead their respective divisions and weaim to contribute to our younger players' development by making them availableon loan to gain regular playing experience at a higher level. We recently secured the services of John Park as Football Development Manager.Our scouting network now covers 16 countries and, taking account of our youthdevelopment programme, there was a need for a person of proven experience forthat task. John presided over these activities with great success at hisprevious club, Hibernian and we have now re-structured our Sports Science andFitness function by recruiting two new highly regarded sports scientists. In aseparate initiative we have recruited a new fitness coach from Australian Rules Football, a sport in a country in the forefront of sports science and fitness. Inow believe strong foundations have been put in place to find, develop and trainfuture generations of footballers for the Club. The construction of the newtraining ground and academy at Lennoxtown is progressing well and is expected tobe available for next season. I am greatly encouraged by our progress on these fronts. As I mentioned in ourAnnual Report last year, the very substantial additional amounts of money goinginto football in England from new television contracts have created a wide gulfbetween what Scottish clubs and their English counterparts can bring to thetransfer market. In some cases transfer fees and wage deals for players in theChampionship south of the Border are beyond the reach of even the top Scottishclubs. To a much greater degree than ever before, there are two separate marketswith traffic between them largely moving in one direction in terms of evolvingtalent. There is no point complaining about this. The only remedy is to workhard to compensate by strengthening our capacity to identify, attract anddevelop our own players. Celtic's appeal outside the UK continues to grow. We have an opportunity tovisit Japan and the United States - where we will meet the MLS All Stars in July-when the current season ends; and we have received other enquiries from othercountries to play there. I cannot recall a period when interest in the Club hasbeen higher. Of course popularity is, as a famous US Presidential Candidate oncesaid of flattery, "Fine so long as you don't inhale". We will look positively atfurther possibilities of spreading the Celtic brand, but not to the extent thatwe damage it through excess. Off the field, things are also going well. We have consolidated our charitableand community operations under the Celtic Foundation. This will bring greatercohesion to all of our social and charity activities and increase the financialcontributions and other tangible support we make to Scottish life. This, ofcourse, is our heritage and we will continue to make every effort to live up toit. We continue to push ahead with our anti-sectarian activities and have fullysupported the initiative of the Scottish Executive to remove the blight ofreligious bigotry from football. Our supporters have responded magnificently toour appeals in this regard and I believe we are well on the way todisassociating the Club completely from offensive behaviour in this aspect ofScottish life. In October Eric Hagman retired from the Board of Directors of Celtic plc and Iwould like to thank him for three excellent years of service to the Company.Kenny McDowall also left us to pursue his career elsewhere after 10 verysuccessful years in charge of our reserve team. We wish him well - relativelyspeaking - in his new job. The last few weeks have seen the departure of AlanThompson, Stephen Pearson and Shaun Maloney and we wish them luck at their newclubs; while welcoming Stephen Pressley, Mark Brown, Jean-Joel Perrier Doumbeand Paul Hartley to the Club. These are exciting times at Celtic. It may be difficult not to be carried awayby our successes on and off the field these last six months. Both ourshareholders and our supporters certainly deserve the rewards we are currentlyenjoying. But what is more important is that there are signs that our effortsover several years to establish lasting improvements in our infrastructure, bothas a football club and as a company, are now delivering a measure of success.Our management team, led by Peter Lawwell, is showing great energy andinitiative on all fronts. Gordon Strachan and his support staff are deliveringoutstanding consistency and resolve. And our supporters, as always, are ourultimate strength. I thank them for their dedication and commitment. Brian Quinn CBE 14 February 2007 Celtic plc INDEPENDENT REVIEW REPORT INDEPENDENT REVIEW REPORT TO CELTIC plc Introduction We have been instructed by the company to review the financial information forthe six months ended 31 December 2006, which comprises the Group Profit and LossAccount, the Group Balance Sheet, the Group Cash Flow Statement and the relatednotes. We have read the other information contained in the interim report andconsidered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the company in accordance with the terms of ourengagement. Our review has been undertaken so that we might state to the companythose matters we are required to state to it in this report and for no otherpurpose. To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the company for our review work, for thisreport, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the AIMRules of the London Stock Exchange which require that it must be prepared in aform consistent with that which will be adopted in the next annual accountshaving regard to the accounting standards applicable to such annual accounts. Review work performed We conducted our review in accordance with guidance contained in Bulletin1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of Group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 December 2006. PKF(UK) LLP Registered AuditorsGlasgow, UK14 February 2007 Celtic plcGROUP PROFIT AND LOSS ACCOUNT 6 months 6 months 6months 6months 12 months to 31 to 31 to to to 30 December December 31 31 June 2006 2006 2006 December December Audited Unaudited Unaudited 2006 2005 Unaudited Unaudited Operations excluding player Player trading Trading Total Total Total £000 £000 £000 £000 £000 Notes TURNOVER - GROUP AND SHARE OF 46,796 - 46,796 33,351 57,859JOINT VENTURELESS SHARE OF JOINT VENTURE - - - (312) (448)GROUP TURNOVER 2 46,796 - 46,796 33,039 57,411OPERATING EXPENSES (32,039) - (32,039) (29,535) (53,674)PROFIT FROM OPERATIONS 14,757 - 14,757 3,504 3,737AMORTISATION OF - (2,891) (2,891) (3,430) (5,095)INTANGIBLE FIXED ASSETSEXCEPTIONAL OPERATING - - - - (579)EXPENSESOPERATING PROFIT / (LOSS) 14,757 (2,891) 11,866 74 (1,937)SHARE OF OPERATING LOSS IN - - - -JOINT VENTURETOTAL OPERATING PROFIT / 14,757 (2,891) 11,866 74 (1,937)(LOSS)PROFIT / (LOSS) ON DISPOSAL - 7,120 7,120 - (265)OFINTANGIBLE FIXED ASSESTSLOSS ON DISPOSAL OF TANGIBLE (258) - (258) - (250)FIXED ASSETSPROFIT / (LOSS) BEFOREINTEREST AND TAXATION 14,499 4,229 18,728 74 (2,452) NET INTEREST PAYABLE 3BANK LOANS AND OVERDRAFT (416) (661) (999)NON EQUITY DIVIDENDS (372) (374) (771)PROFIT / (LOSS) ON ORDINARYACTIVITIES BEFORE TAXATION 17,940 (961) (4,222)TAX CHARGE ON ORDINARY 4ACTIVITIES - - -PROFIT / (LOSS) FOR THE 17,940 (961) (4,222)PERIOD RETAINED PROFIT / (LOSS) FOR 17,940 (961) (4,222)THE PERIODEARNINGS / (LOSS) PER 5 22.11p (2.85p) (7.19p)ORDINARY SHAREDILUTED EARNINGS / (LOSS) PER 10.95p (2.85p) (7.19p)SHARE 5All amounts relate to continuing operations. There were no gains or losses recognised in any of the above results other thanthe profit for the period. GROUP BALANCE SHEET 31 December 31 December 30 June 2006 2005 2006 Unaudited Unaudited Audited Notes £000 £000 £000FIXED ASSETSTangible assets 51,799 49,082 49,924Intangible assets 6 10,651 8,124 7,593 62,450 57,206 57,517 Stocks 2,184 2,187 1,901Debtors 7 11,150 4,570 5,029Cash at bank and in hand 1,056 3,429 2,914 14,390 10,186 9,844 CREDITORSAmounts falling due within one year (12,528) (13,431) (15,481)Income deferred less than one year (8,502) (11,301) (12,589) NET CURRENT LIABILITIES (6,640) (14,546) (18,226) TOTAL ASSETS LESS CURRENT LIABILITIES 55,810 42,660 39,291 CREDITORSAmounts falling due after more than 8 (16,182) (17,303) (17,194)one year NET ASSETS 39,628 25,357 22,097 CAPITAL AND RESERVESCalled up share capital 9 23,451 23,449 23,450Other reserve 21,222 21,222 21,222Share premium 14,129 14,089 14,089Capital redemption reserve 2,540 1,857 1,739Profit and loss account 10 (21,714) (35,260) (38,403)SHAREHOLDERS' FUNDS 39,628 25,357 22,097Approved by the Board on 14 February 2007 GROUP CASH FLOW STATEMENT 6 months to 6 months to 12 months to 31 December 31 December 30 June 2006 2005 2006 Unaudited Unaudited Audited £000 £000 £000RECONCILIATION OF OPERATING PROFIT / (LOSS) TO NETCASH INFLOW FROM OPERATING ACTIVITIESOperating profit / (loss) 11,866 74 (1,937)Depreciation 972 852 1,798Amortisation 2,891 3,430 5,095Provision for impairment of intangible fixed - - 400assets(Increase)/ decrease in stocks (283) (200) 86Increase in debtors (2,545) (12) (308)Decrease in creditors and deferred income (4,605) (608) (159)Net cash inflow from operating activities 8,296 3,536 4,975 CASH FLOW STATEMENTNet cash inflow from operating 8,296 3,536 4,975activitiesReturns on investments and servicing of (937) (1,206) (1,520)financeCapital expenditure and financial (8,328) (5,215) (6,869)investmentCash outflow before use of liquid resources (969) (2,885) (3,414)and financingFinancing (889) (8,407) (8,393)Net proceeds of issued equity share - 14,550 14,550capital(Decrease) / increase in cash (1,858) 3,258 2,743 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NETDEBT(Decrease) / increase in cash in the period (1,858) 3,258 2,743Cash outflow from movement in debt 889 8,407 8,393Non Cash movement in debt (82) (113) (210)Movement in net debt in the period (1,051) 11,552 10,926Net debt at 1 July (13,965) (24,891) (24,891)Net debt at period end 11 (15,016) (13,339) (13,965) NOTES TO THE FINANCIAL STATEMENTS 1.The interim results for the 6 months to 31 December 2006, whichcomprise the Group Profit and Loss Account, Group Balance Sheet, Group Cash FlowStatement and the related notes, have been prepared on the same basis and usingthe same accounting policies as those which will be used in the preparation ofthe annual accounts to 30 June 2007. These are consistent with those used in thepreparation of the last annual accounts to 30 June 2006. The interim results donot constitute the statutory accounts within the meaning of s240 of theCompanies Act 1985. The financial information in this report for the six monthsto 31 December 2006 has not been audited. The results for the year ended 30 June2006 are extracted from the accounts filed with the Registrar of Companies,which contained an unqualified audit report. 2. TURNOVER 6 months to 6 months to 12 months 31 December 31 December to 30 June 2006 2005 2006 Unaudited Unaudited Audited £000 £000 £000Turnover comprised: Professional football 21,560 15,213 26,659Multimedia & communications 14,138 5,801 11,889Merchandising 8,692 9,629 14,337Stadium enterprises 1,414 1,528 2,779Youth development 992 868 1,747 46,796 33,039 57,411 Number of home games 18 15 24 3. NET INTEREST PAYABLE 6 months to 6 months to 12 months 31 December 31 December to 30 JunePayable as follows on: 2006 2005 2006 Unaudited Unaudited Audited £000 £000 £000 Bank Loans and Overdraft 416 661 999Preference Shares 272 261 544Convertible Preferred Ordinary Shares 100 113 227 Total 788 1,035 1,770 4. After taking account of unutilised tax losses brought forward, together withthe projected performance for the next six months, no provision for taxation isrequired. 5. Earnings / (loss) per share has been calculated by dividing the earnings /(loss) for the period by the weighted average number of Ordinary Shares in issue81,126,084 (2005: 33,724,872). Diluted earnings per share as at 31 December 2006has been calculated by dividing the earnings for the period by the weightedaverage number of Ordinary Shares, Preference Shares and Convertible PreferredOrdinary Shares in issue, assuming conversion at the balance sheet date, and thefull exercise of outstanding share purchase options, if dilutive, in accordancewith FRS 22. As at December 2005 and June 2006 no account was taken of potentialconversion or share purchase options, as these potential ordinary shares werenot considered to be dilutive under the definitions of the applicable accountingstandards. 6. INTANGIBLE ASSETS 6 months to 6 months to 12 months 31 December 31 December to 30 June 2006 2005 2006 Unaudited Unaudited AuditedCost £000 £000 £000 At 1 July 23,530 38,445 38,445Additions 6,318 6,552 8,840Disposals (2,195) (10,048) (23,755)At period end 27,653 34,949 23,530AmortisationAt 1 July 15,937 33,192 33,192Charge for the period 2,891 3,430 5,095Provision for impairment - - 400Disposals (1,826) (9,797) (22,750)At period end 17,002 26,825 15,937 Net Book Value at period end 10,651 8,124 7,593 7. DEBTORS The increase in the level of debtors from 31 December 2005 of £6.58m isprimarily a result of an increase in amounts receivable in respect of TV andother trading revenues as a result of Celtic being involved in Champions LeagueEuropean football this season together with increased amounts receivable inrespect of player transfers. 8. CREDITORS - AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR 31 December 31 December 30 June 2006 2005 2006 £'000 £'000 £'000 Co-operative Bank Loan 12,000 12,000 12,000Non - equity share capital reclassifiedas debt under FRS 25 due after more than 3,026 3,699 3,814one yearDeferred Income 1,156 1,604 1,380 16,182 17,303 17,194 Creditors due after more than one year reflect long-term bank loans of £12.0m(2005: £12.0m) drawn down at the end of the period as part of the Company's bankfacility of £36.0m and £3.03m (2005: £3.70m) as a result of the reallocation ofnon-equity share capital from equity to debt following the introduction of thepresentational aspects of FRS 25 and £1.16m (2005: £1.60m) of deferred income. 9. SHARE CAPITAL Authorised Allotted, called up and fully paid 31 December 31 December 2006 2005 2006 2006 2005 2005Group and Company No 000 No 000 No 000 £000 No 000 £000 EquityOrdinary Shares of 1p 211,701 211,699 81,181 812 81,015 810each Deferred Shares of 1p 100,362 100,244 100,362 1,004 100,244 1,002eachNon-equity Convertible PreferredOrdinary Shares of £1 20,000 20,000 18,012 18,012 18,012 18,012each ConvertibleCumulative Preference 19,299 19,301 16,799 10,080 16,801 10,082Shares of 60p eachLess reallocated todebt under FRS 25 - - - (6,457) - (6,457) 351,362 351,244 216,354 23,451 216,072 23,449 10. RECONCILIATION OF MOVEMENT IN PROFIT AND LOSS ACCOUNT Profit and Loss Account 31 December 31 December 30 June 2006 2005 2006 £000 £000 £000 As at the beginning of the period (38,403) (33,510) (33,510)Profit / (Loss) for the period 17,940 (961) (4,222)Participating dividend payable on the (450) - -Convertible Preferred Ordinary SharesTransfer to Capital Redemption Reserve (801) (789) (671) As at the period end (21,714) (35,260) (38,403) Under the terms of the Convertible Preferred Ordinary Share Offer a 2%participating dividend, additional to the base 4%, is payable on the CPO Sharesas a result of Celtic's progression to the last sixteen in the UEFA ChampionsLeague. 11. ANALYSIS OF NET DEBT The impact on the debt position of the Company following the implementation ofthe presentational aspects of FRS 25 is as follows: 31 December 31 December 30 June 2006 2005 2006 £000 £000 £000 Bank loans and overdraft net of cash at 11,102 8,739 9,250bank and in hand Debt element of non -equity share 3,914 4,600 4,715capital Revised net debt at period end 15,016 13,339 13,965 12. TRANSFER FEES PAYABLE / RECEIVABLE Under the terms of certain contracts in respect of the transfer of playerregistrations, additional amounts will be payable/receivable by the Company ifspecific future conditions are met. As at 31 December 2006 amounts in respect ofsuch contracts could result in an amount payable of £2.81m of which £1.09m couldarise within one year, and amounts receivable of £2.40m of which £1.65m couldarise within one year. 13. POST BALANCE SHEET EVENTS On 11 January 2006 the registration of Stephen Pearson was transferred to DerbyCounty, on 12 January Alan Thompson's registration was transferred to LeedsUnited until 30 June 2007 and on 18 January David Marshall's registration wastransferred to Norwich City until 30 June 2007. Celtic acquired the registrationof Scottish internationalist Steven Pressley on 1 January, the registration ofgoalkeeper Mark Brown from Inverness Caledonian Thistle on 18 January and thatof Jean-Joel Perrier-Doumbe from Rennes on 25 January until 31 May 2007. On 31January the registration of Paul Hartley was acquired from Heart of Midlothianand that of Shaun Maloney transferred to Aston Villa. On 6 February AidenMcGeady's contract was extended to 31 May 2011. These transactions do not haveany impact on the reported trading figures for the period ended 31 December2006. This information is provided by RNS The company news service from the London Stock Exchange