CELTIC PLC — Interim / Quarterly Report 2021

Feb 15, 2021

National Storage Mechanism | Additional information

RNS Number : 0259P

Celtic PLC

15 February 2021

Celtic plc (the "Company")

INTERIM REPORT FOR THE SIX MONTHS TO 31 DECEMBER 2020

Operational Highlights

·    Currently second in the SPFL Premiership.

·    Winners of the Scottish FA Cup (season 19/20) for the fourth season in a row, securing an unprecedented fourth consecutive domestic treble.

·    17 home fixtures (2019: 21).

·    Conclusion of the most successful decade in the history of the club with 20 trophies won.

Financial Highlights

·    Revenue decreased by 23.7% to £40.7m (2019: £53.3m)

·    Loss from trading was £0.3m (2019: profit of £7.1m)

·    Profit from transfer of player registrations (shown as profit on disposal of intangible assets)         £1.0m (2019: £23.0m)

·    Loss before taxation of £5.9m (2019: profit of £24.4m)

·    Acquisition of player registrations of £12.7m (2019: £15.0m)

·    Period end net cash at bank of £19.7m (2019: £32.9m)

CHAIRMAN'S STATEMENT

The results for the six months ended 31 December 2020 show revenues of £40.7m (2019: £53.3m) and a loss before taxation of £5.9m (2019: profit of £24.4m). The loss from trading, representing the loss excluding player related gains and charges, amounted to £0.3m (2019: profit of £7.1m). Period end net cash at bank was £19.7m (2019: £32.9m). The introductory page to these interim results summarises the main highlights.

Season 2020/21 started with further significant investment into our playing squad as we prepared for the season ahead, commencing with the Champions League qualification fixtures, featuring challenging single leg knock out ties as a result of the restricted football environment. We acquired the registrations of Albian Ajeti, Vasilis Barkas and David Turbull, retained Mohamed Elyounoussi on loan and brought in experienced internationals Shane Duffy and Diego Laxalt on loan.  We also retained key players who had contributed so much to the team in previous seasons.

At the time of writing we currently sit second in the league 18 points behind the leaders having played one game less and with 10 games remaining. The prolonged summer transfer window, the impact of Covid-19 and, crucially, the loss of our passionate support at matches have undoubtedly had a damaging effect on our performance levels in domestic and European competitions, but we recognise that our performance has not been good enough.  Amidst this challenging environment, however, we secured victory in the postponed 2019/20 Scottish Cup Final to deliver an incredible fourth consecutive treble, following on from securing our ninth consecutive league title. The scale of this achievement cannot be underplayed and should be a cause for pride and celebration for years to come.

The two key factors that adversely affected our financial results for the period under review were: firstly, reduced gains from player trading as we sought to keep intact our squad this season; and, secondly, the unforeseen and prolonged value destructive impact of Covid-19. Our strategy for season 2020/21 was to invest in the team and to retain our best players, with the objective of delivering the league championship. As a result, gains from player trading were minimal. The effects of Covid-19 have persisted longer than many could have envisaged and, as a result, our crucial match day and other income streams derived from our stadium have been reduced to negligible proportions. These two factors largely explain the reduction in our profit before tax. No football club is immune from the effects of Covid-19.

Looking forward, the football and financial environment is still volatile and very uncertain because of the ongoing effects of Covid-19. At the time of writing, it is unclear when the 2020/21 Scottish Cup will re-commence following its suspension. Neither are we able to say at this stage when we will be able to welcome our supporters back to Celtic Park but we continue to work with the football authorities and the Scottish Government with a view to ensuring that fans are able to return to football safely as soon as possible. All of this will continue to affect our financial results meaning we are unable to offer any outlook guidance on revenue or earnings. Trading seasonality means that financial performance in the second half of the financial year will be lower than the first half owing to lower UEFA income along with less matches played.

I would like to thank our outgoing Chief Executive Peter Lawwell for his contribution to Celtic over the last 17 years. His role in transforming Celtic into a modern, highly respected European football club cannot be underestimated and has been nothing short of outstanding. It has been a pleasure to serve alongside him and we look forward to welcoming Dominic McKay as our new Chief Executive to continue to grow the Club.

Finally, on behalf of the Board I would like to reiterate to our supporters, shareholders and partners that their support has been crucial over the last 12 months, in what has been one of the most challenging times for the Club. We recognise their support and we thank them for the loyalty they have shown.

Ian P Bankier                                                                                                                                                                    

15 February 2021

Chairman

For further information contact:

Celtic plc Ian Bankier Peter Lawwell	Tel: 0141 551 4235
Canaccord Genuity Limited, Nominated Adviser and Broker Simon Bridges Richard Andrews	Tel: 020 7523 8350

This announcement contains inside information for the purposes of article 7 of the Market Abuse Regulation (EU) 596/2014 as amended by regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

INDEPENDENT REVIEW REPORT TO CELTIC PLC

Introduction

We have been engaged by the Company to review the financial information in the interim report for the six months ended 31 December 2020 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 interim 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 interim report be presented and prepared in a form consistent with that which will be adopted in the Company's annual financial statements having regard to the accounting standards applicable to such annual financial statements.

Our responsibility

Our responsibility is to express to the Company a conclusion on the financial information in the interim report based on our review.

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 Financial Reporting Council 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 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 financial information in the interim report for the six months ended 31 December 2019 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.

Use of our report

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.

BDO LLP

Chartered Accountants

Manchester, United Kingdom

Date: 15 February 2021

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

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE 6 MONTHS TO 31 DECEMBER 2020

			2020 Unaudited			2019 Unaudited
		Note	£000			£000
Revenue		2	40,688			53,335
Operating expenses (before intangible asset transactions)			(40,966)			(46,274)
(Loss)/profit from trading before intangible asset transactions			(278)			7,061
Amortisation of intangible assets			(6,583)			(5,874)
Profit on disposal of intangible assets			993			23,021
Operating (loss)/profit			(5,868)			24,208
			-
Finance income		3	515			743
Finance expense		3	(516)			(532)
(Loss)/profit before tax			(5,869)			24,419
Income tax credit/(expense)		4	730			(5,091)
			-
(Loss)/profit and total comprehensive loss for the period			(5,139)			19,328
Basic (loss)/earnings per Ordinary Share		5	(5.45p)			20.51p
Diluted (loss)/earnings per Share		5	(5.45p)			14.36p

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2020

		2020 Unaudited			2019 Unaudited
	Notes	£000			£000
NON-CURRENT ASSETS
Property plant and equipment		57,781			59,550
Intangible assets	6	25,912			23,180
Trade and other receivables	7	9,082			13,175
		92,775			95,905
CURRENT ASSETS
Inventories		3,000			1,772
Trade and other receivables	7	21,064			25,388
Cash and cash equivalents	9	23,183			37,604
		47,247			64,764
TOTAL  ASSETS		140,022			160,669
EQUITY
Issued share capital	8	27,168			27,167
Share premium		14,912			14,848
Other reserve		21,222			21,222
Accumulated profits		13,091			37,926
TOTAL EQUITY		76,393			101,163
NON-CURRENT LIABILITIES
Interest bearing liabilities/ bank loans		2,212			3,476
Debt element of Convertible Cumulative Preference Shares		4,174			4,174
Trade and other payables		4,068			3,443
Lease Liabilities		431			778
Deferred tax	4	906			1,754
Provisions		128			37
Deferred income		14			42
		11,933			13,704
CURRENT LIABILITIES
Trade and other payables		24,997			25,572
Current borrowings		1,364			1,364
Lease Liabilities		568			722
Provisions		6,402			3,531
Deferred income		18,365			14,613
		51,696			45,802
TOTAL LIABILITIES		63,629			59,506
TOTAL EQUITY AND LIABILITIES		140,022			160,669

Approved by the Board on 15 February 2021.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Share         capital			Share premium	Other reserve	Accumulated profits		Total
			£000	£000	£000	£000		£000
EQUITY SHAREHOLDERS' FUNDS AS AT 1 JULY 2019 (Audited)			27,157	14,785	21,222	18,598		81,762
Share capital issued			1	63	-	-		64
Reduction in debt element of convertible cumulative preference shares			9	-	-	-		9
Profit and total comprehensive income for the period			-	-	-	19,328		19,328
EQUITY SHAREHOLDERS' FUNDS AS AT 31 DECEMBER 2019 (Unaudited)			27,167	14,848	21,222	37,926		101,163
EQUITY SHAREHOLDERS' FUNDS AS AT 1 JULY 2020 (Audited)			27,167	14,849	21,222	18,230		81,468
Share capital issued			1	63	-	-		64
Reduction in debt element of convertible cumulative preference shares			-	-	-	-		-
Loss and total comprehensive loss for the period			-	-	-	(5,139)		(5,139)
EQUITY SHAREHOLDERS' FUNDS AS AT 31 DECEMBER 2020 (Unaudited)			27,168	14,912	21,222	13,091		76,393

CONSOLIDATED CASH FLOW STATEMENT

FOR THE 6 MONTHS ENDED 31 DECEMBER 2020

			2020 Unaudited		2019 Unaudited
			£000		£000
Cash flows from operating activities
(Loss)/profit for the period after tax			(5,139)		19,328
Taxation (credit)/charge			(730)		5,091
Depreciation			1,241		1,300
Amortisation			6,583		5,874
Profit on disposal of intangible assets			(993)		(23,021)
Finance costs*			516		532
Finance income*			(515)		(743)
			963		8,361
(Increase)/decrease in inventories			(1,730)		871
(Increase) in receivables			(737)		(400)
(Decrease) in payables and deferred income			(4,029)		(8,097)
Cash (used in)/generated from operations			(5,533)		735
Tax paid			-		-
Interest paid*			(67)		(101)
Interest received*			29		120
Net cash flow from operating activities			(5,571)		754
Cash flows from investing activities
Purchase of property, plant and equipment			(214)		(792)
Purchase of intangible assets			(6,306)		(13,824)
Proceeds from sale of intangible assets			14,346		18,512
Net cash generated from investing activities			7,826		3,896
Cash flows from financing activities
Repayment of debt			(640)		(640)
Payments on leasing activities			(379)		-
Dividend on Convertible Cumulative Preference Shares			(459)		(462)
Net cash used in financing activities			(1,478)		(1,102)
Net increase in cash equivalents			777		3,547
Cash and cash equivalents at 1 July			22,406		34,057
Cash and cash equivalents at 31 December		9	23,183		37,604

*The cash flow statement for 2019 has been restated to correctly present finance income and finance costs as well as interest paid and interest received on a gross rather than the previously net basis. There is no change to the overall reported cash flows from operating activities.

NOTES TO THE FINANCIAL INFORMATION

1.    BASIS OF PREPARATION

The financial information in this interim report comprises the Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Changes in Equity, Consolidated Cash Flow Statement and accompanying notes.  The financial information in this interim report has been prepared under the recognition and measurement requirements of IFRSs as adopted for use in the European Union but does not include all of the disclosures that would be required under those accounting standards.  The accounting policies adopted in the financial statements for the year ended 30 June 2021 will be in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006.

The financial information in this interim report for the six months to 31 December 2020 and to 31 December 2019 has not been audited, but it has been reviewed by the Company's auditor, whose report is set out on page 4.

Adoption of standards effective for periods beginning 1 July 2020

The following standards have been adopted as of 1 July 2020:

·      IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. (Amendment - Disclosure Initiative - Definition of Material)

·      Conceptual Framework for Financial Reporting (revised)

·      IBOR Reform and its Effects on Financial Reporting - Phase 1

Going concern

As part of the Directors' consideration of the going concern assumption used in preparing the Interim Report, different scenarios have been analysed for a minimum period of 12 months from the date of approval of the report with outlook assumptions used beyond this time frame. The main factors considered were:

•     Current financial stability of the Group and on-going access to funds;

•     Continuing restrictions on trading conditions as a result of Covid-19, primarily the attendance of fans in football stadia;

•     Security of revenue streams;

•     First team football performance and success; and

•     Player transfer market conditions.

The Directors have adopted a prudent approach in the assumptions used in relation to the above, in order to provide additional comfort around the viability of the Group going forward.

At 31 December 2020 the cash at bank was £23.2m. In addition, the Group had a net receivables position with respect to player trading payables/receivables. Despite the challenges of the 6 months under review, there remains strong liquidity in the business and, although trading conditions in some areas remains uncertain, the progress being made around vaccinations and controlling the spread of the Covid-19 virus, provides optimism that normalised trading can resume in the short to medium term. 

The Group has retained established contracts with a number of our commercial partners and suppliers providing assurance over future revenues and costs and we have clear visibility over committed labour costs and transfer payables. In addition, the Group has in recent years, achieved significant gains in relation to player trading and manages the movement of players in and out of the team strategically to ensure maximisation of value where required while maintaining a squad of appropriate quality to ensure, as far as possible, continued on field success. This has been illustrated by the sale of Jeremie Frimpong during the January 2021 transfer window.

The non-attendance of football fans in stadia continues to be the most significant factor in planning for the future, however as noted above our assumptions on this matter are considered to be appropriately prudent and do not consider there to be a significant risk in the medium term.

During the 6 months to 31 December 2020, the Group agreed an amended and restated £13m RCF with the Co-operative Bank which remains undrawn. This provides additional access to funds should these be required. The current cash flow forecasts over the period of the going concern review do not show a requirement to utilise this facility.

The Group continues to perform a detailed budgeting process each year which looks ahead four years from the current financial year, and is reviewed and approved by the Board. The Group also re-forecasts each month and this is distributed to the Board. As a consequence, and in conjunction with the additional forecasting and sensitivity analysis which has taken place, the Directors believe that the Company is well placed to manage its business risks successfully despite the continuing uncertain economic outlook.

In consideration of all of the above, the Directors have a reasonable expectation that the Group and 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 the Interim Report.

2.    REVENUE

		6 months to 31 Dec 2020		6 months to 31 Dec 2019
		Unaudited £000		Unaudited £000
Football and stadium operations		12,570		26,987
Multimedia and other commercial activities		13,049		15,108
Merchandising		15,069		11,240
		40,688		53,335
Number of home games		17		21

3.      FINANCE INCOME AND EXPENSE

		6 months to 31 December 2020		6 months to 31 December 2019
		Unaudited £000		Unaudited £000
Finance income:
Interest receivable on bank deposits		29		120
Notional interest income on deferred consideration		486		623
		515		743

		6 months to 31 December 2020		6 months to 31 December 2019
		Unaudited £000		Unaudited £000
Finance expense:
Interest payable on bank and other loans		(60)		(115)
Notional interest expense on deferred consideration		(172)		(133)
Dividend on Convertible Cumulative Preference Shares		(284)		(284)
		(516)		(532)

4.    TAXATION                                                                                            

Tax has been charged at 19% for the six months ended 31 December 2020 (2019: 19%) representing the best estimate of the average annual effective tax rate expected to apply for the full year, applied to the pre-tax income of the six month period. After accounting for prior period adjustments and deferred tax, this has resulted in tax credit in the statement of comprehensive income of £0.7m (2019: charge of £5.1m).

5.    EARNINGS PER SHARE

Loss per share and diluted loss per share of 5.45p (2019: earnings per share of 20.51p, diluted earnings per share of 14.36p) has been calculated by dividing the loss for the period of £5.1m (2019: profit of £19.3m) by the weighted average number of Ordinary Shares in issue 94,315,059 (2019: 94,262,133) in issue during the year. 

1. INTANGIBLE ASSETS

		31 December 2020		31 December 2019
		Unaudited		Unaudited
Cost		£000		£000
At 1 July		49,846		44,652
Additions		12,667		15,008
Disposals		(1,581)		(3,324)
At period end		60,932		56,336
Amortisation
At 1 July		30,018		30,496
Charge for the period		6,583		5,874
Disposals		(1,581)		(3,214)
At period end		35,020		33,156
Net Book Value at period end		25,912		23,180

7.      TRADE AND OTHER RECEIVABLES

	31 December 2020 Unaudited		31 December 2019 Unaudited
£000	£000
Trade receivables	19,024		28,554
Prepayments and accrued income	5,767		7,510
Other receivables	5,355		2,499
	30,146		38,563
Amounts falling due after more than one year included above are:
	2020		2019
	£000		£000
Trade receivables	9,082		13,175

8.      SHARE CAPITAL

	Authorised				Allotted, called up and fully paid
	31 December				31 December
	2020		2019		2020	2020	2019	2019
	Unaudited				Unaudited		Unaudited
	No 000		No 000		No 000	£000	No 000	£000
Equity
Ordinary Shares of 1p each	223,608		223,605		94,349	944	94,290	943
Deferred Shares of 1p each	672,852		672,715		672,852	6,729	672,715	6,727
Convertible Preferred Ordinary Shares of £1 each	14,756		14,758		12,769	12,769	12,770	12,770
Non-equity
Convertible Cumulative Preference Shares of 60p each	18,298		18,298		15,798	9,479	15,798	9,480
Less reallocated to debt: Initial debt	-		-		-	(2,753)	-	(2,753)
	929,514		929,376		795,768	27,168	795,573	27,167

9.      ANALYSIS OF NET CASH AT BANK

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

		31 December 2020		31 December 2019
		Unaudited		Unaudited
		£000		£000
Bank Loans due after more than one year		(2,212)		(3,476)
Bank Loans due within one year		(1,264)		(1,264)
Cash and cash equivalents:
Cash at bank and on hand		23,183		37,604
Net  cash at bank at period end		19,707		32,864

10.   POST BALANCE SHEET EVENTS

Since the balance sheet date, we have secured the temporary registration of Jonjoe Kenny from Everton. We have also permanently transferred the registration of Jeremie Frimpong to Bayer Leverkusen and temporarily transferred the registration Olivier Ntcham to Marseille.

In addition we have temporarily transferred the registrations of development squad players Leo Hjelde to Ross County, Ben Wylie to Ballymena United, Barry Coffey to Cliftonville and Scott Robertson to Doncaster Rovers.

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