CELTIC PLC — Interim / Quarterly Report 2014

Feb 7, 2014

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RNS Number : 6097Z

Celtic PLC

07 February 2014

CELTIC plc (the "Company")

Registered number SC3487

INTERIM REPORT FOR THE SIX MONTHS TO 31 DECEMBER 2013

Operational Highlights

·    Progression to group stages of the Champions League.

·    Currently unbeaten in the SPFL Premiership and top of the league.

·    Breaking long standing record for number of consecutive clean sheets.

·    Academy continues to be successful; over 70 internationalists at Under 21 level and below.

· Multi-million pound investment in the area around Celtic Park, benefiting supporters and the local community.

·    Launch of the Kerrydale Bar, Café 1888 and new family stand.

· Installation of a full stadium Wi-Fi network with accompanying matchday application.

Financial Highlights

·    Revenue decreased by 11% to £44.8m (2012: £50.1m).

·    Operating expenses decreased by 7% to £34.3m (2012: £37.0m).

· Profit from trading before asset transaction and exceptional operating expenses of £10.5m(2012: £13.1m).

· Exceptional costs of £2.3m (2012: nil).

·    Profit on disposal of intangible assets £16.5m(2012: £5.2m).

·    Profit before taxation of £21.3m(2012:£ 14.9m).

·    Period end net cash at bank of £5.7m (2012: £0.1m net bank debt).

·    Investment in football personnel of £5.0m (2012: £4.7m).

·    16 home fixtures (2012: 19).

For further information contact:

Ian Bankier, Celtic plc	Tel: 0141 551 4235
Peter Lawwell, Celtic plc	Tel: 0141 551 4235
Iain Jamieson, Celtic plc	Tel: 0141 551 4235
Bruce Garrow, Canaccord Genuity Limited	Tel: 020 7523 8350

CHAIRMAN'S STATEMENT

I am pleased to report on our financial results for the six months ended 31 December 2013. The introductory page to these interim results summarises the main highlights.

We have enjoyed another highly successful period on the football pitch.  As we report today, we are comfortably at the top of the SPFL Premiership, having enjoyed an excellent run of results in the league, remaining unbeaten and having broken a long standing record for the number of consecutive clean sheets.

Having won the Scottish Premier League title in season 2012/13, we qualified once again for the group stages of the UEFA Champions League.  Our reputation as a leading club in European football has been enhanced by that success. These results reflect the financial benefit of participation in the group stages of the Champions League for a second year in a row, coupled with successful management of the playing squad. 

Revenue dropped for the period to £44.8m (2012: £50.1m).  The decrease compared to last year's results at this stage largely reflects the impact of our decision to make the £100 reward for adult season ticket packages, together with playing three fewer home matches in the period and accumulating fewer points in the Champions League group stages, resulting in reduced UEFA distributions. 

Operating expenses for the period decreased by 7% to £34.3m, leading to a profit from trading, before asset transactions and exceptional operating expenses of £10.5m (2012: £13.1m).  Exceptional operating expenses in the period of £2.3m relate to an impairment charge.

Prudent investment in, and management of, our playing squad is a key component of the club's strategy.  In line with that strategy, we continued to invest in the playing squad, with £5.0m invested, an increase from last year (2012: £4.7m).  Our profit on disposal of intangible assets of £16.5m, in comparison to a profit of £5.2m last year, largely reflects the transfers of Gary Hooper, Victor Wanyama and Kelvin Wilson. Together with ongoing investment in our Academy, the identification and creation of Champions League quality players remains fundamental to Celtic.  Following the end of the period, during the 2014 January transfer window, further investment was made, securing the signing of the highly rated players Holmbert Fridjonsson, Stefan Johansen and Leigh Griffiths.  

As at 31st December 2013, net cash at bank was £5.7m.  Our profit before taxation for the half year was £21.3m, an increase of over 40% on the same period last year.

There is little doubt that this is a robust set of interim results and they reflect a club that is in excellent financial health.  The strategy of the Board is unchanged; our overwhelming priority is to win the SPFL Premiership and to qualify for the group stages of the UEFA Champions League and beyond; we seek to give our manager the best tools for the job, within the constraints of our economic environment; we aim to create value by investing in our youth academy and by acquiring players that we can develop; and in terms of the finances we seek to live within our means.  All of this helps us prepare for the future and the economic uncertainties, which have had such a devastating effect on many other football clubs.

Our Chief Executive, Peter Lawwell, is serving as a Director of the Scottish FA, while our Financial Director, Eric Riley, serves as a Director of the Scottish Professional Football League. The structural and financial difficulties that face Scottish football are well documented and it is fair to say that the outlook for the game is challenging.  I am gratified that Peter and Eric can make a contribution to overcoming the obstacles that lie ahead.

Looking forward to the second half, as with previous years, trading performance in the remaining months of this financial year will not be at the same level as that in the first six months (or the comparable period in 2013), with fewer home matches scheduled, no Champions League participation and lower gain on player sales. 

CHAIRMAN'S STATEMENT

A key focus for the year will be our continued investment in Celtic Park, not only for our own supporters' experience on match days, but also for the benefit of the wider community.  In January we opened a dedicated facility for disabled supporters and, throughout the year, we look forward to delivering further projects, including development of our Wi-Fi system, safe standing areas and the new landscaped and public realm area to the front of Celtic Park.   In addition, we will continue to support Celtic FC Foundation in its very important charitable work, which provides assistance in key priority areas of health, equality, learning and poverty. 

This has been another very active spell for the club and my profound thanks and appreciation go to Neil Lennon and his backroom staff, all of the players, executive management and staff, who are committed to ensuring that Celtic is a world class football club. Most importantly, I pay tribute to the fans, whose support, encouragement and dedication is second to none.

Ian P Bankier                                                                                                                                                                     7 February 2014

Chairman

INDEPENDENT REVIEW REPORT TO CELTIC PLC

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2013 which comprises the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Statement of Changes in Equity, the Consolidated Cash Flow Statement and the related notes.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The interim report, including the financial information contained therein, is the responsibility of and has been approved by the directors.  The directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on AIM which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the Company's annual accounts having regard to the accounting standards applicable to such annual accounts.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on AIM and for no other purpose.  No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent.  Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Auditing Practices Board for use in the United Kingdom.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2013 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.

BDO LLP

Chartered Accountants and Registered Auditors

Glasgow

United Kingdom

Date 7 February 2014

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		6 months to 31 December 2013 Unaudited	6 months to 31 December 2013 Unaudited	6 months to 31 December 2013 Unaudited		6months to 31 December 2012 Unaudited	6months to 31 December 2012 Unaudited	6months to 31 December 2012 Unaudited
CONTINUING OPERATIONS:		Operations excluding player trading	Player trading	Total		Operations excluding player trading	Player trading	Total
	Note	£000	£000	£000		£000	£000	£000
REVENUE	2	44,798	-	44,798		50,058	-	50,058
OPERATING EXPENSES		(34,344)	-	(34,344)		(36,961)	-	(36,961)
PROFIT FROM TRADING BEFORE ASSET TRANSACTIONS AND EXCEPTIONAL OPERATING EXPENSES		10,454	-	10,454		13,097	-	13,097
EXCEPTIONAL OPERATING EXPENSES		-	(2,256)	(2,256)
AMORTISATION OF INTANGIBLE ASSETS		-	(3,037)	(3,037)		-	(2,987)	(2,987)
PROFIT  ON DISPOSAL OF INTANGIBLE ASSETS		-	16,489	16,489		-	5,204	5,204
LOSS ON DISPOSAL OF PROPERTY PLANT AND EQUIPMENT		-	-	-		-	-	-
PROFIT  BEFORE FINANCIAL EXPENSES AND TAXATION		10,454	11,196	21,650		13,097	2,217	15,314
BANK LOANS AND OVERDRAFT CONVERTIBLE PREFERENCE SHARES				( 65) (272)				( 98) (272)
FINANCE COSTS	3			(337)				(370)
PROFIT  BEFORE TAX				21,313				14,944
TAXATION	4			-				-
PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS				21,313				14,944
PROFIT AND TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO THE EQUITY HOLDERS OF THE PARENT				21,313				14,944
BASIC EARNINGS PER ORDINARY SHARE	5			23.33p				16.54p
DILUTED EARNINGS PER SHARE	5			15.84p				11.17p

CONSOLIDATED BALANCE SHEET

		31 December 2013		31 December 2012		30 June 2013
		Unaudited		Unaudited		Audited
	Notes	£000		£000		£000
NON-CURRENT ASSETS
Property plant and equipment		52,893		52,903		52,456
Intangible assets	6	8,624		8,241		9,798
		61,517		61,144		62,254
##### CURRENT ASSETS
Inventories		2,384		2,191		1,734
Receivables	7	20,051		11,340		3,934
Cash at bank		16,649		10,655		14,348
		39,084		24,186		20,016
TOTAL  ASSETS		100,601		85,330		82,270
EQUITY
Issued share capital	8	24,322		24,265		24,341
Share premium		14,529		14,486		14,486
Other reserve		21,222		21,222		21,222
Capital reserve		2,672		2,630		2,650
Retained earnings		1,171		(14,937)		(20,142)
TOTAL EQUITY		63,916		47,666		42,557
LIABILITIES NON-CURRENT LIABILITIES Interest bearing loans		10,032		10,407		10,219
Debt element of non-equity share capital		4,343		4,441		4,345
Deferred income		89		91		119
	9	14,464		14,939		14,683
CURRENT LIABILITIES
Trade and other payables		12,741		13,676		14,048
Current borrowings		1,042		493		489
Provisions		1,087		-		1,240
Deferred income		7,351		8,556		9,253
		22,221		22,725		25,030
TOTAL LIABILITIES		36,685		37,664		39,713
TOTAL EQUITY AND LIABILITIES		100,601		85,330		82,270

Approved by the Board on 7 February 2014

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Share capital	Share premium	Other reserve	Capital reserve	Retained earnings	Total
	£000	£000	£000	£000	£000	£000
EQUITY SHAREHOLDERS' FUNDS AS AT 1 JULY 2012 (audited)	24,264	14,443	21,222	2,630	(29,881)	32,678
Share capital issued	1	43	-	-	-	44
Transfer from capital reserve	-	-	-	-	-	-
Profit and total comprehensive income for the period	-	-	-	-	14,944	14,944
EQUITY SHAREHOLDERS' FUNDS AS AT 31 DECEMBER 2012 (Unaudited)	24,265	14,486	21,222	2,630	(14,937)	47,666
Transfer to capital reserve	(20)	-	-	20	-	-
Reduction in debt element of convertible cumulative preference shares	96	-	-	-	-	96
Profit and total comprehensive income for the period	-	-	-	-	(5,205)	(5,205)
EQUITY SHAREHOLDERS' FUNDS AS AT 30 JUNE 2013 (Audited)	24,341	14,486	21,222	2,650	(20,142)	42,557
Share capital issued	1	43	-	-	-	44
Transfer to capital reserve	(22)	-	-	22	-	-
Reduction in debt element of convertible cumulative preference shares	2	-	-	-	-	2
Profit and total comprehensive income for the period	-	-	-	-	21,313	21,313
EQUITY SHAREHOLDERS' FUNDS AS AT 31 DECEMBER 2013 (Unaudited)	24,322	14,529	21,222	2,672	1,171	63,916

CONSOLIDATED CASH FLOW STATEMENT

			6 months to 31 December 2013		6 months to 31 December 2012
	Note		Unaudited		Unaudited
			£000		£000
Cash flows from operating activities
Profit before tax			21,313		14,944
Depreciation			1,049		939
Amortisation			3,037		2,987
Impairment of intangible assets			2,256		-
Profit on disposal of intangible assets			(16,489)		(5,204)
Loss on disposal of property, plant and equipment			-		-
Finance costs			337		370
			11,503		14,036
(Increase) / decrease in inventories			(650)		(31)
(Increase) in receivables			(3,424)		(4,823)
(Decrease) in payables and deferred income			(1,206)		(3,107)
Cash (utilised in) / generated from operations			6,223		6,075
Interest paid			(65)		(98)
Net cash flow from operating activities - A			6,158		5,977
Cash flows from investing activities
Purchase of property, plant and equipment			(888)		(732)
Purchase of intangible assets			(7,555)		(6,529)
Proceeds from sale of intangible assets			4,704		4,428
Net cash used in investing activities - B			(3,739)		(2,833)
Cash flows from financing activities
Repayment of debt			(192)		(188)
Dividends paid			(483)		(499)
Net cash (used) in financing activities - C			(675)		(687)
Net increase  in cash equivalents A+B+C			1,744		2,457
Cash and cash equivalents at 1 July			14,348		8,198
Cash and cash equivalents at period end		10	16,092		10,655

NOTES TO THE FINANCIAL STATEMENTS

1.      BASIS OF PREPARATION

This Interim Report, comprising the Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Changes in Equity, Consolidated Cash Flow Statement and accompanying Notes, has been prepared in accordance with the AIM rules of the London Stock Exchange.  The measurement and recognition accounting policies applied are consistent with those that will be applied in the 2014 annual accounts which will be prepared in accordance with IFRS.

The interim results do not constitute the statutory accounts within the meaning of s434 of the Companies Act 2006.  The financial information in this Report for the six months to 31 December 2013 and to 31 December 2012 has not been audited.   The comparative figures for the year ended 30 June 2012 are extracted from the Group's audited financial statements for that period as filed with the Registrar of Companies. They do not constitute the statutory accounts within the meaning of s434 of the Companies Act 2006 for that period.  Those accounts received an unqualified audit report which did not contain any statement under sections 498 (2) or (3) of the Companies Act 2006.

The Company has considerable financial resources available to it, together with established contracts with a number of customers and suppliers.  As a consequence, the Directors believe that the Company is well placed to manage its business risks successfully despite the continuing uncertain economic outlook.  The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future.  Thus, they continue to adopt the going concern basis of accounting in preparing these interim financial results.

The auditor has reviewed this Interim Report and their report is set out earlier in this document.

2.      REVENUE - SEGMENTAL INFORMATION

		6 months to 31 December 2013		6 months to 31 December 2012
Revenue comprised:		Unaudited £000		Unaudited £000
Football and stadium operations		16,836		18,598
Multimedia & other commercial activities		19,586		21,613
Merchandising		8,376		9,847
		44,798		50,058
Number of home games		16		19

3.      FINANCE COSTS

Payable as follows on:		6 months to 31 December 2013		6 months to 31 December 2012
		Unaudited £000		Unaudited £000
Bank loans and overdraft		65		98
Non-equity shares		272		272
Total		337		370

NOTES TO THE FINANCIAL STATEMENTS

4.    TAXATION                                                                                             

After taking account of unutilised tax losses brought forward, together with the projected performance for the next six months, no provision for taxation is required. 

5.    EARNINGS PER SHARE

Basic earnings per share has been calculated by dividing the profit for the period of £21.3m (2012: £14.9m) by the weighted average number of Ordinary Shares in issue 91,337,562 (2012: 90,364,753).  Diluted earnings per share as at 31 December 2013 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 December 2013 and December 2012 no account was taken of potential conversion of share purchase options, as these potential Ordinary Shares were not considered to be dilutive under the definitions of the applicable accounting standards.

6.      INTANGIBLE ASSETS

		6 months to 31 December 2013		6 months to 31 December 2012		12 months to 30 June 2013
		Unaudited		Unaudited		Audited
Cost		£000		£000		£000
At 1 July		28,473		28,737		28,737
Additions		5,026		4,655		9,665
Disposals		(4,024)		(8,282)		(9,929)
At period end		29,475		25,110		28,473
Amortisation
At 1 July		18,675		21,404		21,404
Charge for the period		3,037		2,987		5,930
Provision for impairment		2,256		-		501
Disposals		(3,117)		(7,522)		(9,160)
At period end		20,851		16,869		18,675
Net Book Value at period end		8,624		8,241		9,798

7.      RECEIVABLES

The increase of £8.7m in the level of receivables from 31 December 2012 to £20.1m is primarily a result of an increase in amounts due in instalments from player sales conducted in previous transfer windows.

NOTES TO THE FINANCIAL STATEMENTS

8.     SHARE CAPITAL

	Authorised          31 December              30 June				Allotted, called up and fully paid                                  31 December                                   30 June
	2013		2012	2013		2013	2013	2012	2012	2013	2013
	No 000		No 000	No 000		No 000	£000	No 000	£000	No 000	£000
Equity
Ordinary Shares of 1p each	221,126		220,124	220,867		91,487	915	90,409	904	91,152	912
Deferred Shares of 1p each	550,769		497,110	538,405		550,769	5,508	497,110	4,971	538,405	5,384
#### Non-equity
Convertible Preferred Ordinary Shares of £1 each	15,738		15,959	15,855		13,751	13,751	13,971	13,971	13,868	13,868
Convertible Cumulative Preference Shares of 60p each	18,738		19,282	18,753		16,238	9,742	16,782	10,069	16,253	9,752
Less reallocated to debt under IAS 32: Initial debt Capital reserve	-		-	-		-	(2,922) (2,672)	-	(3,020) (2,630)	-   -	(2,925) (2,650)
											-
	806,371		752,475	793,880		672,245	24,322	618,272	24,265	659,783	24,341

9.      NON - CURRENT LIABILITIES

Non-current liabilities reflect the non-current element of bank loans of £10.0m (December 2012: £10.4m, June 2013: £10.2m) drawn down at the end of the period as part of the Company's bank facility of £32.8m (December 2012: £33.6m, June 2013: £33.2m) and £4.3m (December 2012: £4.4m, June 2013: £4.4m) as a result of the reallocation of non-equity share capital from equity to debt following the introduction of IAS 32 and £0.1m (December 2012: £0.1m, June 2013: £0.1m) of deferred income.

10.    ANALYSIS OF NET CASH AT BANK / (NET BANK DEBT)

The reconciliation of the movement in cash and cash equivalents per the cash flow statement to net bank debt is as follows:                                                                                                                  

		31 December 2013		31 December 2012		30 June 2013
		£000		£000		£000
Bank Loans due after more than one year		(10,031)		(10,407)		(10,219)
Bank Loans due within one year		(375)		(375)		(375)
Cash and cash equivalents:
Overdrafts due within one year		(557)		-		-
Cash at bank		16,649		10,655		14,348
Net  cash at bank / (Net bank debt) at period end		5,686		(127)		3,754

Total net cash, including other loans of £0.1m (2012: £0.1m) and that arising from the reclassification of equity to debt following the adoption of IAS32 of £4.3m (2012: £4.4m) amounted to £1.2m (2012: £4.7m net debt).

NOTES TO THE FINANCIAL STATEMENTS

11.    POST BALANCE SHEET EVENTS

Following 31 December 2013, Celtic acquired the permanent registrations of Holmbert Fridjonsson, Stefan Johansen and Leigh Griffiths. The registration of Joseph Ledley was sold to Crystal Palace, the registration of Tomas Rogic was loaned to Melbourne Victory and the registration of Mohamed Bangura was cancelled by mutual consent.

This information is provided by RNS

The company news service from the London Stock Exchange

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