CELTIC PLC — Interim / Quarterly Report 2021

Feb 11, 2022

National Storage Mechanism | Additional information

RNS Number : 4992B

Celtic PLC

11 February 2022

Celtic plc (the "Company")

INTERIM REPORT FOR THE SIX MONTHS TO 31 DECEMBER 2021

Key Operational Items

·    Currently first in the SPFL Premiership.

·    Winners of the Premier Sports League Cup 21/22.

·    19 home fixtures (2020: 17).

·    Participation in the UEFA Europa League group stages and qualification to the knock-out playoff round of the UEFA Europa Conference League.

Key Financial Items

·    Revenue increased by 29.9% to £52.9m (2020: £40.7m).

·    Profit from trading was £7.0m (2020: loss of £0.3m).

·    Profit from transfer of player registrations (shown as profit on disposal of intangible assets)        £25.8m (2020: £1.0m).

·    Profit before taxation of £27.6m (2020: loss of £5.9m).

·    Acquisition of player registrations of £16.8m (2020: £12.7m).

·    Period end net cash at bank of £25.6m (2020: £19.7m).

For further information contact:

Celtic plc Ian Bankier Peter Lawwell	Tel: 0141 551 4235
Canaccord Genuity Limited, Nominated Adviser and Broker Simon Bridges Thomas Diehl	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.

CHAIRMAN'S STATEMENT

The results for the six months ended 31 December 2021 show revenues of £52.9m (2020: £40.7m) and a profit before taxation of £27.6m (2020: loss before tax of £5.9m). The profit from trading, representing the profit excluding player related gains and charges, amounted to £7.0m (2020: loss of £0.3m). Period end net cash at bank was £25.6m (2020: £19.7m). The introductory page to these interim results summarises the key events in the period.

The major factors driving the much improved financial performance for the period under review were: - first, the return of fans to the stadium driving crucial match day income; second, our qualification for another season in the Europa League with the accompanying ticket sales that were absent last year; and third, the revenues received from successful player trading, notably the sales of Odsonne Edouard and Kristoffer Ajer. In the same period we made substantial investments back into the player squad in order to target the football success that drives our financial success.

Whereas the Covid-19 environment has improved markedly, the sudden emergence of the Omicron variant and resultant reintroduction of temporary societal restrictions in Scotland adversely affected the football sector.  This demonstrates our continued sensitivity to the threat of the pandemic. Mindful of the risks posed to the Club's finances from further restrictions, we continue to manage the business on a prudent basis, balanced against the benefits of investing in the football department. The forecast outturn for the second half of this financial year is expected to be more modest owing to the trading seasonality inherent in the business. As we know, most of our earnings are typically derived in the first six months of the financial year. In line with prior years, we expect to incur losses in the second six months of the financial year owing to the expectation of having less player trading gains, lower UEFA media right distributions and associated UEFA match ticket income, higher amortisation emanating from player acquisitions in January and seasonally lower retail income. In addition, our outturn earnings may be materially impacted by success in footballing competition. On the basis that the impact of Covid-19 appears to be receding at present, we anticipate to finish the financial year with revenues ahead of our previous expectations.

It has been a period of transition for both the executive and the football department.  Michael Nicholson's appointment as Chief Executive was confirmed on 23rd December along with Chris McKay's promotion to Chief Financial Officer.  And our Football Manager, Ange Postecoglou, joined us at the start of the season.  Ange has been able to assemble a first team player squad to fit his proven methodology of attacking football.  We have achieved the permanent transfers of Osaze Urhoghide, Liam Shaw, Liel Abada, Kyogo Furuhashi, Carl Starfelt, Joe Hart, Liam Scales, Josip Juranovic, James McCarthy and Georgios Giakoumakis. In addition, we welcomed to the Club two quality loan signings in Cameron Carter-Vickers and Joao Pedro Neves Filipe (Jota). Further to this we added Daizen Maeda, Yosuke Ideguchi, Johnny Kenny, Reo Hatate and Matt O'Riley over December 2021 and January 2022.

As we progress through the season we are delighted to return to winning ways, securing the first silverware of the season, the Premier Sports Cup in December.  This is the 20th time Celtic has won this trophy. December also saw us finish 3rd in the Europa League Group with a creditable 9 points in what was a difficult group.  We now enter the newly constituted Europa Conference League where we will play FK Bodo/Glimt. At the time of writing we sit at the top of the Premiership with 12 games remaining and we have reached the fifth round of the Scottish Cup. We also note the progress which continues to be made by our women's first team and in particular the magnificent achievement of winning the SWPL Cup in December 2021, the women's team's first trophy in over 10 years. We congratulate the players, Fran Alonso and his management team on this success and hopefully can look forward to further success in the near future.

On behalf of the Board I express my assured confidence in the football management team and the executive management team who collectively share many years' experience in Celtic Football Club and who have worked tirelessly to restore our current position at the top of Scottish Football. We are optimistic about the future.

Finally, I wish to express my sincere gratitude to our supporters, our shareholders and our commercial partners. The support they offered over the last six months and beyond as we emerge from Covid-19 has been immeasurable as we have navigated the Club through this transitional period.

Ian P Bankier                                                                                                                                                                    

11 February 2022

Chairman

INDEPENDENT REVIEW REPORT TO CELTIC PLC

Conclusion

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 2021 which comprises the Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Changes in Equity, Consolidated Cash Flow Statement and related explanatory notes.

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 2021 is not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34 and the London Stock Exchange AIM Rules for Companies.

Basis for conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" ("ISRE (UK) 2410"). 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.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with UK adopted international accounting standards. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with UK adopted International Accounting Standard 34, "Interim Financial Reporting".

Conclusions relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410, however future events or conditions may cause the group to cease to continue as a going concern.

Responsibilities of directors

The directors are responsible for preparing the half-yearly financial report in accordance with the London Stock Exchange AIM Rules for Companies.

In preparing the half-yearly financial report, the Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the review of the financial information

In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statement in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.

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 Transparency (Directive 2004/109/EC) Regulations 2007 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

Glasgow, UK

Date

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 2021

			2021 Unaudited			2020 Unaudited
		Note	£000			£000
Revenue		2	52,858			40,688
Operating expenses (before intangible asset transactions)			(45,810)			(40,966)
Profit/(loss) from trading before intangible asset transactions			7,048			(278)
Exceptional operating credit		3	1,063			-
Amortisation of intangible assets			(6,251)			(6,583)
Profit on disposal of intangible assets			25,752			993
Operating profit/(loss)			27,612			(5,868)
			-
Finance income		4	456			515
Finance expense		4	(512)			(516)
Profit/(loss) before tax			27,556			(5,869)
Income tax (expense)/credit		5	(3,210)			730
			-
Profit/(loss) and total comprehensive income/(expense) for the period			24,346			(5,139)
Basic earnings/(loss) per Ordinary Share		6	25.78p			(5.45p)
Diluted earnings/(loss) per Share		6	18.01p			(5.45p)

The notes on pages 10 to 13 form part of these financial statements.

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2021

		2021 Unaudited			2020 Unaudited
	Notes	£000			£000
NON-CURRENT ASSETS
Property plant and equipment		57,087			57,781
Intangible assets	7	27,522			25,912
Trade and other receivables	8	14,664			9,082
		99,273			92,775
CURRENT ASSETS
Inventories		2,940			3,000
Trade and other receivables	8	32,180			21,064
Cash and cash equivalents	10	27,798			23,183
		62,918			47,247
TOTAL  ASSETS		162,191			140,022
EQUITY
Issued share capital	9	27,168			27,168
Share premium		14,951			14,912
Other reserve		21,222			21,222
Accumulated profits		29,975			13,091
TOTAL EQUITY		93,316			76,393
NON-CURRENT LIABILITIES
Interest bearing liabilities/ bank loans		932			2,212
Debt element of Convertible Cumulative Preference Shares		4,174			4,174
Trade and other payables		7,883			4,068
Lease Liabilities		352			431
Deferred tax	5	2,904			906
Provisions		99			128
Deferred income		-			14
		16,344			11,933
CURRENT LIABILITIES
Trade and other payables		26,124			24,997
Current borrowings		1,336			1,364
Lease Liabilities		562			568
Provisions		6,686			6,402
Deferred income		17,823			18,365
		52,531			51,696
TOTAL LIABILITIES		68,875			63,629
TOTAL EQUITY AND LIABILITIES		162,191			140,022

Approved by the Board on 11 February 2022.

The notes on pages 10 to 13 form part of these financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE 6 MONTHS ENDED 31 DECEMBER 2021

	Share         capital				Share premium	Other reserve	Accumulated Profits		Total
			£000		£000	£000	£000		£000
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 expense 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
EQUITY SHAREHOLDERS' FUNDS AS AT 1 JULY 2021 (Audited)			27,168		14,912	21,222	5,629		68,931
Share capital issued			-		39	-	-		39
Reduction in debt element of convertible cumulative preference shares			-		-	-	-		-
Profit and total comprehensive income for the period			-		-	-	24,346		24,346
EQUITY SHAREHOLDERS' FUNDS AS AT 31 DECEMBER 2021 (Unaudited)			27,168		14,951	21,222	29,975		93,316

The notes on pages 10 to 13 form part of these financial statements.

CONSOLIDATED CASH FLOW STATEMENT

FOR THE 6 MONTHS ENDED 31 DECEMBER 2021

	Note		2021 Unaudited		2020 Unaudited
			£000		£000
Cash flows from operating activities
Profit/(loss) for the period after tax			24,346		(5,139)
Income tax expense/ (credit)			3,210		(730)
Depreciation			1,320		1,241
Amortisation			6,251		6,583
Reversal of prior period impairment charge			(1,095)		-
Profit on disposal of intangible assets			(25,752)		(993)
Finance costs			512		516
Finance income			(456)		(515)
			8,336		963
Decrease/ (increase) in inventories			921		(1,730)
Decrease/(Increase) in receivables			1,190		(737)
Decrease in payables and deferred income			(6,644)		(4,029)
Cash generated from/(used in) operations			3,803		(5,533)
Tax paid			-		-
Interest paid			(42)		(67)
Interest received			19		29
Net cash flow from/(used in) operating activities			3,780		(5,571)
Cash flows from investing activities
Purchase of property, plant and equipment			(801)		(214)
Purchase of intangible assets			(13,801)		(6,306)
Proceeds from sale of intangible assets			20,660		14,346
Net cash generated from investing activities			6,058		7,826
Cash flows from financing activities
Repayment of debt			(640)		(640)
Payments on leasing activities			(378)		(379)
Dividend on Convertible Cumulative Preference Shares			(481)		(459)
Net cash used in financing activities			(1,499)		(1,478)
Net increase in cash equivalents			8,339		777
Cash and cash equivalents at 1 July			19,459		22,406
Cash and cash equivalents at 31 December		10	27,798		23,183

The notes on pages 10 to 13 form part of these financial statements.

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 in accordance with UK adopted international accounting standards, 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 2022 will be in accordance with UK adopted international accounting standards.

The financial information in this interim report for the six months to 31 December 2021 and to 31 December 2020 has not been audited, but it has been reviewed by the Company's auditor, whose report is set out on pages 4 and 5.

Adoption of standards effective for periods beginning 1 July 2021

There have been no new standards effective from 1 July 2021, however there have been some amendments to existing standards as follows:

·      Amendment to IFRS 4 Insurance contracts - deferral of IFRS 9.

·      Amendment to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest rate benchmark reform - Phase 2.

·      Amendment to IFRS 16 for Covid-19 rent concessions beyond 30 June 2021, effective from 1 April 2021.

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;

•     current trading environment and potential future restrictions on trading as a result of Covid-19, primarily any impact on 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 2021, the cash at bank was £27.8m. In addition, the Group had a net receivables position with respect to player trading payables/receivables. The 6 months of trading to 31 December 2021 have been more favourable than in the comparative period for 2020 and as a result there remains strong liquidity in the business. At the time writing, there are no indications that trading conditions, and in particular the attendance of fans at football matches, are likely to be negatively impacted in the near future. This situation will however remain under review. 

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 sales of Kris Ajer and Odsonne Edouard during the summer 2021 transfer window.

The Group continues to have access to a £13m RCF with the Co-operative Bank which was amended and restated in Sept 2020. This provides additional access to funds should these be required. The facility has never been drawn down and the current cash flow forecasts over the period of the going concern review do not show a requirement to utilise it.

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 and taking into account reasonably forecasted worst case scenarios, 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 2021		6 months to 31 Dec 2020
		Unaudited £000		Unaudited £000
Football and stadium operations		23,558		12,570
Multimedia and other commercial activities		13,973		13,049
Merchandising		15,327		15,069
		52,858		40,688
Number of home games		19		17

3.      EXCEPTIONAL OPERATING CREDIT

The exceptional operating credit of £1.06m (2020: nil) represent settlement payments of £0.03m and an impairment reversal of       £1.09m which was a previously provided for in relation to intangible assets deemed to be irrecoverable. These events are deemed to be unusual in relation to what management consider to be normal operating conditions.

4.      FINANCE INCOME AND EXPENSE

		6 months to 31 December 2021		6 months to 31 December 2020
		Unaudited £000		Unaudited £000
Finance income:
Interest receivable on bank deposits		19		29
Notional interest income		437		486
		456		515

		6 months to 31 December 2021		6 months to 31 December 2020
		Unaudited £000		Unaudited £000
Finance expense:
Interest payable on bank and other loans		(40)		(60)
Notional interest expense		(188)		(172)
Dividend on Convertible Cumulative Preference Shares		(284)		(284)
		(512)		(516)

5.    TAXATION                                                                                            

Tax has been charged at 19% for the six months ended 31 December 2021 (2020: 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 deferred tax, this has resulted in tax expense in the statement of comprehensive income of £3.2m (2020: credit of £0.7m).

6.    EARNINGS PER SHARE

Basic earnings per share has been calculated by dividing the profit for the period of £24.3m (2020: loss of £5.1m) by the weighted average number of Ordinary Shares in issue of 94,446,660 (2020: 94,315,059). Diluted earnings per share has been calculated by dividing the profit for the period by the weighted average number of Ordinary Share, Convertible Cumulative Preference Shares and Convertible Preferred Ordinary Shares in issue, assuming conversion at the balance sheet if dilutive. 

1. INTANGIBLE ASSETS

		31 December 2021		31 December 2020
		Unaudited		Unaudited
Cost		£000		£000
At 1 July		49,559		49,846
Additions		16,760		12,667
Disposals		(19,186)		(1,581)
At period end		47,133		60,932
Amortisation
At 1 July		31,256		30,018
Charge for the period		6,251		6,583
Reversal of prior period impairment		1,094		-
Disposals		(18,990)		(1,581)
At period end		19,611		35,020
Net Book Value at period end		27,522		25,912

8.      TRADE AND OTHER RECEIVABLES

	31 December 2021 Unaudited		31 December 2020 Unaudited
£000	£000
Trade receivables	34,381		19,024
Prepayments and accrued income	7,436		5,767
Other receivables	5,027		5,355
	46,844		30,146
Amounts falling due after more than one year included above are:
	2021		2020
	£000		£000
Trade receivables	14,664		9,082

9.      SHARE CAPITAL

	Authorised				Allotted, called up and fully paid
	31 December				31 December
	2021		2020		2021	2021	2020	2020
	Unaudited				Unaudited		Unaudited
	No 000		No 000		No 000	£000	No 000	£000
Equity
Ordinary Shares of 1p each	223,681		223,608		94,457	945	94,349	944
Deferred Shares of 1p each	676,275		672,852		676,275	6,763	672,852	6,729
Convertible Preferred Ordinary Shares of £1 each	14,722		14,756		12,734	12,734	12,769	12,769
Non-equity
Convertible Cumulative Preference Shares of 60p each	18,297		18,298		15,797	9,479	15,798	9,479
Less reallocated to debt: Initial debt	-		-		-	(2,753)	-	(2,753)
	932,975		929,514		799,263	27,168	795,768	27,168

10.      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 2021		31 December 2020
		Unaudited		Unaudited
		£000		£000
Bank Loans due after more than one year		(932)		(2,212)
Bank Loans due within one year		(1,236)		(1,264)
Cash and cash equivalents:
Cash at bank and on hand		27,798		23,183
Net cash at bank at period end		25,630		19,707

11.      POST BALANCE SHEET EVENTS

Since the balance sheet date, we have secured the permanent registrations of Daizen Maeda, Yosuke Ideguchi, Reo Hatate, Johnny Kenny, and Matthew O'Riley.

We have also temporarily transferred the registrations of Ewan Henderson to Hibernian, Conor Hazard to HJK Helsinki, Liam Shaw to Motherwell, Osaze Urhoghide to KV Oostende and Lee O'Connor has permanently transferred to Tranmere Rovers.

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