Interim Results

Celtic PLC 13 February 2004 13 February 2004 Celtic plc INTERIM RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2003 HIGHLIGHTS OF THE RESULTS • Turnover increased to £36.01m (2002: £30.01m) largely as a result of progressing to UEFA Champions' League group stage and buoyant merchandising sales. • Profit from operations of £3.30m (2002: £0.20m). • Loss before taxation of £2.86m (2002: £5.64m). • Period end debt of £18.17m (2002: £24.19m). • Celtic leads the Scottish Premier League by 11 points and continues to participate in the UEFA Cup and Scottish Cup. Commenting on the results, Brian Quinn CBE, Chairman said: 'Participation in the first stage of the UEFA Champions' League, together with a strong performance in domestic competition, combined to produce improved financial results for the Company compared with the same period last year. Qualification for the Champions' League sustained the excitement generated by last season's UEFA Cup campaign, from which the Company benefited on several fronts. Off the field, Celtic's reputation continues to grow. Our supporters won both the UEFA and FIFA Fair Play awards, an honour unprecedented in European and world club football. The difficulties in the football sector to which I have drawn attention in our previous Annual and Interim Reports are now striking clubs with full force. We are not free of these pressures at Celtic. We intend to maintain the quality of the football squad but we are aware that we must match our costs with sustainable revenues. The challenge we face is to improve our financial position while continuing to build the Club's reputation by regular participation in European competition.' For further information contact: Brian Quinn, Celtic plc Tel: 0141 551 4276 Peter Lawwell, Celtic plc Tel: 0141 551 4276 Alex Barr, Big Partnership Tel: 0141 333 9585 Celtic plc CHAIRMAN'S STATEMENT Participation in the first stage of the UEFA Champions' League, together with a strong performance in domestic competition, combined to produce improved financial results for the Company compared to the same period last year. Following the arrival of Peter Lawwell as Executive Director, Head of Operations in October 2003, the management structure of the Company has been streamlined and a business review, including a programme of cost savings, is already under way. Nevertheless, despite our involvement in the Champions' League net debt increased, albeit marginally, from £17.8 million to £18.2 million for the six months to end December 2003. This requires close attention looking ahead. Qualification for the Champions' League sustained the excitement generated by last season's UEFA Cup campaign, from which the Company benefited on several fronts. Paid attendances at Celtic Park have averaged over 56,000 for all home games, with virtual sell-outs for the three home Champions' League matches. In addition, the multi media and merchandising divisions showed particular strengths. While Celtic Park continues to be a formidable venue for visiting teams in the Champions' League, adverse results away from home led to an exit from the competition late in the final match. Celtic has, however, qualified for the 3rd round of the UEFA Cup where we meet FK Teplice of the Czech Republic. In the Scottish Premier League, only 2 points have been dropped so far this season, a Club record, placing the team 11 points ahead in the contest for the Championship. We have also moved into the quarter-final of the Tennents Scottish Cup. The under-21 and under-19 teams are performing strongly and the efforts in recent years to develop home-grown talent have been rewarded by the promotion of 4 younger players to the first team squad in the period. Martin O'Neill continues to provide strong leadership in the football division. He and his supporting staff, particularly John Robertson, Assistant Manager and Steve Walford, Head Coach, have proved themselves to be among the best management teams in professional football. Their work ethic and high standards are established at all levels in the Club. Off the field, Celtic's reputation continues to grow. Our supporters won both the UEFA and FIFA Fair Play awards, an honour unprecedented in European and World club football. Home attendances have held up against a generally declining trend in football and have been bettered only by Manchester United in the United Kingdom and by only 6 other clubs in Europe's major leagues. Buoyed by participation in the Champions' League, financial performance has improved in the first half of the Company's year. Turnover rose to £36 million, an increase of 20% on the same period last year. Multi media and merchandising rose by 85% and 42%, respectively, against a generally more difficult trend in the football retail sector. Our sales of the new home kit launched in May 2003 reached a record of 90,000 by the end of December and sales of the new away kit introduced in the autumn have also broken Club records, totalling over 45,000. Operating expenses were up by 10%, mainly reflecting higher contractual remuneration in the football division and the effect on labour costs of bringing the catering operations back in-house in the summer. The ratio of total labour costs to turnover fell from 62% to 56%, with the ratio of football labour costs to turnover at 47%, compared with 54% a year ago. Profit from operations, which roughly broke even at this stage a year ago, was £3.3 million. Amortisation and net player transfer transactions rose by £0.26 million to £5.5 million, producing an operating loss of £2.2 million and a pre-tax loss of £2.9 million after taking higher interest charges into account. As a result of the loss incurred net assets fell to £31.5million at the period-end compared to £41.8 million a year ago and £34.3 million at 30 June last year. Net debt at 31 December 2003 amounted to £18.2 million despite the benefits from participation in the Champions' League. The Company aims, over time, to strengthen its balance sheet and bring its net debt down. Outlook The difficulties in the football sector to which I have drawn attention in our previous Annual and Interim Reports are now striking clubs with full force. Clubs throughout Europe are feeling the effects and many are in a distressed condition. Scottish clubs are probably even more severely hit than in most other countries. In some cases the efforts to control costs have failed to compensate for the fall in income and several clubs have gone into administration in search of short-term relief. The current difficulties appear to be structural rather than temporary and it will require the combined efforts of the football authorities and clubs to find a way to return to a viable and stable Scottish football environment. We are not free of these pressures at Celtic. We intend to maintain the quality of the football squad but are aware that we must match our costs with sustainable revenues. The challenge we face is to improve our financial position while continuing to build the Club's reputation by regular participation in European competition. Further progress in the UEFA Cup and the Tennents Scottish Cup this season would assist our efforts to improve financial performance. The programme of seeking cost savings will continue and should yield benefits this year and for some years to come. However, unless profit is generated to compensate for the contribution achieved from progress in the UEFA Cup last year, trading performance in the second six months will be well down on the first. I believe our supporters now have a better understanding of the balance we must strike between financial stability and football success, particularly as regards activity in the transfer market. With their continued support through the current period of turbulence in football, I am confident we can look forward to further progress on and off the field. 13 February 2004 Brian Quinn CBE INDEPENDENT REVIEW REPORT TO CELTIC plc Introduction We have been instructed by the Company to review the financial information for the six months ended 31 December 2003, which comprises the Group Profit and Loss Account, Group Balance Sheet, Group 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 financial information. 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 Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review Work Performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of Group management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom Auditing Standards 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 that should be made to the financial information as presented for the six months ended 31 December 2003. PKF Registered Auditors Glasgow, UK 13 February 2004 Celtic plc GROUP PROFIT AND LOSS ACCOUNT 6 months to 6 months to 6 months to 6 months to 12 months 31 December 31 December 31 December 31 December to 30 June 2003 2003 2003 2002 2003 Unaudited Unaudited Unaudited Unaudited Audited Operations excluding Player player trading Trading £000 £000 £000 £000 £000 Notes TURNOVER 3 36,008 - 36,008 30,009 60,569 OPERATING (32,706) - (32,706) (29,807) (53,839) EXPENSES --------- --------- --------- -------- -------- PROFIT FROM 3,302 - 3,302 202 6,730 OPERATIONS AMORTISATION - (5,434) (5,434) (5,292) (10,332) OF INTANGIBLE FIXED ASSETS --------- --------- --------- -------- -------- EXCEPTIONAL - - - - (872) OPERATING EXPENSES --------- --------- --------- -------- -------- OPERATING 3,302 (5,434) (2,132) (5,090) (4,474) PROFIT / (LOSS) LOSS ON DISPOSAL 4 - (119) (119) - (70) OF INTANGIBLE FIXED ASSESTS LOSS ON DISPOSAL (41) OF TANGIBLE FIXED ASSETS ASSETS --------- --------- --------- -------- -------- PROFIT / (LOSS) 3,302 (5,553) (2,251) (5,090) (4,585) BEFORE INTEREST AND TAXATION --------- --------- NET INTEREST PAYABLE (604) (553) (1,209) --------- -------- -------- LOSS ON ORDINARY (2,855) (5,643) (5,794) ACTIVITIES BEFORE TAXATION TAX CHARGE ON 5 - - (5,865) ORDINARY ACTIVITIES --------- -------- -------- LOSS FOR THE PERIOD (2,855) (5,643) (11,659) DIVIDENDS - Non Equity 6 - - (1,457) ========= ======== ======== RETAINED LOSS (2,855) (5,643) (13,116) FOR THE PERIOD ========= ======== ======== LOSS PER 7 (11.70p) (20.84p) (42.91p) ORDINARY SHARE ========= ======== ======== DILUTED LOSS 7 (11.70p) (20.84p) (42.91p) ========= ======== ======== All amounts relate to continuing operations. There were no gains or losses recognised in any of the above results other than the loss for the period. Celtic plc GROUP BALANCE SHEET 31 December 31 December 30 June 2003 2002 2003 Unaudited Unaudited Audited Notes £000 £000 £000 FIXED ASSETS Tangible assets 48,542 48,896 48,564 Intangible assets 8 15,869 25,419 20,513 ----------- ----------- ----------- 64,411 74,315 69,077 CURRENT ASSETS Stocks 2,242 1,574 2,059 Deferred tax asset 5 - 5,615 - Debtors 6,048 4,998 4,660 Cash at bank and in hand 6,270 249 753 ----------- ----------- ----------- 14,560 12,436 7,472 CREDITORS Amounts falling due within one 9 (13,058) (13,568) (11,760) year Income deferred less than one (10,449) (6,883) (10,826) year ----------- ----------- ----------- NET CURRENT LIABILITIES (8,947) (8,015) (15,114) ----------- ----------- ----------- TOTAL ASSETS LESS CURRENT 55,464 66,300 53,963 LIABILITIES ----------- ----------- ----------- CREDITORS Amounts falling due after more 10 (24,000) (24,508) (19,644) than one year ----------- ----------- ----------- NET ASSETS 31,464 41,792 34,319 =========== =========== =========== CAPITAL AND RESERVES Called up share capital 11 29,405 29,405 29,405 (includes non-equity) Share premium - 21,222 - Other reserve 21,222 - 21,222 Profit and loss account (19,163) (8,835) (16,308) ----------- ----------- ----------- SHAREHOLDERS' FUNDS 31,464 41,792 34,319 =========== =========== =========== Approved by the Board on 13 February 2004 Celtic plc GROUP CASH FLOW STATEMENT 6 months to 6 months to 12 months to 31 December 31 December 30 June 2003 2002 2003 Unaudited Unaudited Audited £000 £000 £000 RECONCILIATION OF OPERATING LOSS TO NET CASH INFLOW / (OUTFLOW) FROM OPERATING ACTIVITIES Operating loss (2,132) (5,090) (4,474) Depreciation 702 681 1,405 Amortisation 5,434 5,292 10,332 Provision for impairment - - 475 of intangible fixed assets Grants release - - (1) Increase in stocks (183) (316) (801) Increase in debtors (1,371) (1,741) (1,853) Increase / (Decrease) in 1,571 (109) 1,611 creditors ----------- ----------- ----------- Net cash inflow / (outflow) 4,021 (1,283) 6,694 from operating activities =========== =========== =========== CASH FLOW STATEMENT Net cash inflow / (outflow) 4,021 (1,283) 6,694 from operating activities Returns on investments and (1,160) (1,111) (1,767) servicing of finance Capital expenditure and (3,252) (5,324) (6,236) financial investment ----------- ----------- ----------- Cash outflow before use of liquid resources and financing (391) (7,718) (1,309) Financing 5,908 7,308 1,529 ----------- ----------- ----------- Increase / (Decrease) in cash 5,517 (410) 220 =========== =========== =========== RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Increase / (Decrease) in 5,517 (410) 220 cash in the period Cash outflow from movement (5,908) (7,308) (1,529) in debt ----------- ----------- ----------- Movement in net debt in (391) (7,718) (1,309) the period Net debt at 1 July (17,782) (16,473) (16,473) ----------- ----------- ----------- Net debt at period end (18,173) (24,191) (17,782) =========== =========== =========== Celtic plc NOTES TO THE FINANCIAL STATEMENTS 1. The results for the year ended 30 June 2003 are extracted from the accounts filed with the Registrar of Companies, which contained an unqualified audit report. 2. The interim results for the 6 months to 31 December 2003, which comprise the Group Profit and Loss Account, Group Balance Sheet, Group Cash Flow Statement and the related Notes, have been prepared on the same basis and using the same accounting policies as those used in the preparation of the last full year's accounts to 30 June 2003. 3. TURNOVER 6 months to 6 months to 12 months 31 December 31 December to 30 June 2003 2002 2003 Unaudited Unaudited Audited £000 £000 £000 Turnover comprised: Professional football 16,782 17,885 30,480 Multimedia & communications 8,691 4,684 15,600 Merchandising 8,283 5,820 11,456 Stadium enterprises 1,586 911 1,644 Youth development 666 709 1,389 ----------- ----------- ----------- 36,008 30,009 60,569 =========== =========== =========== Number of home games 15 20 32 =========== =========== =========== 4. NET LOSS ON SALE OF INTANGIBLE FIXED ASSETS A loss on sale of £119,000 is reported in the current period following the sale of Mark Fotheringham to Dundee Football Club and the transfer of registration of Steve Guppy to Leicester City Football Club (16 January 2004). No gain or loss was reported in the same period last year. 5. 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. In the12 months ended 30 June 2003, the Group wrote off the deferred tax asset of £5.61m and advance corporation tax asset of £0.25m, resulting in a tax charge of £5.86m. 6. As in previous years no provision has been made in respect of the 6% dividend of £554,000 that is payable on the Preference Shares on 31 August 2004 nor for the 4% dividend of £900,000 that is payable on the Convertible Preferred Ordinary Shares on 31 August 2004 in respect of the year ending 30 June 2004. 7. Loss per share has been calculated by dividing the loss for the period by the weighted average number of Ordinary Shares in issue 30,616,563 (2002: 30,564,593), after taking account of one half of the net dividends in Note 6 above. Diluted loss per share has been calculated using the same figures as the basic calculation. No account has been taken of share purchase options, as these potential Ordinary Shares are not considered to be dilutive under the definitions of the applicable accounting standards. 8. INTANGIBLE ASSETS 6 months to 6 months to 12 months 31 December 31 December to 30 June 2003 2002 2003 Unaudited Unaudited Audited £000 £000 £000 Cost At 1 July 52,250 47,915 47,915 Additions 959 4,816 5,425 Disposals (6,136) (940) (1,090) ----------- ----------- ----------- At period end 47,073 51,791 52,250 =========== =========== =========== Amortisation At 1 July 31,737 22,020 22,020 Charge for the period 5,434 5,292 10,332 Provision for impairment - - 475 Disposals (5,967) (940) (1,090) ----------- ----------- ----------- At period end 31,204 26,372 31,737 =========== =========== =========== Net Book Value at period end 15,869 25,419 20,513 =========== =========== =========== 9. CREDITORS - AMOUNTS FALLING DUE WITHIN ONE YEAR Amounts payable in agreed instalments in respect of the transfer of player registrations at 31 December 2003 and included in creditors amounted to £1,267,500 (2002: £3,075,000). 10. CREDITORS - AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR Creditors due after more than one year reflect long-term bank loans of £24.0m (2002: £23.5m) drawn down at the end of the period as part of the Company's bank facility. The Company's bank facility of £36.0m comprises an overdraft facility of £12.0m, which remains unutilised at 31 December 2003, and term loans of £24.0m of which £7.3m is repayable in equal quarterly instalments from October 2009 until April 2019, and £16.7m is repayable in July 2019. The Company has the option to repay the loans earlier than these dates without penalty. Including cash on deposit and the £12.0m of unutilised overdraft facility, the Company had available liquid resources of £18.3m as at the balance sheet date. 11. SHARE CAPITAL Authorised Allotted, called up and fully paid 31 December 31 December 2003 2002 2003 2003 2002 2002 Group and Company No 000 No 000 No 000 £000 No 000 £000 Equity Ordinary shares 36,394 36,339 30,644 306 30,590 306 of 1p each Non-equity Convertible preferred 20,000 20,000 18,012 18,012 18,012 18,012 ordinary shares of £1 each Convertible cumulative 19,606 19,661 17,106 10,265 17,160 10,297 preference shares of 60p each Deferred shares of 1p 82,220 78,998 82,220 822 79,034 790 each ------- ------- ------- ------- ------- ------- 158,220 154,998 147,982 29,405 144,796 29,405 ======= ======= ======= ======= ======= ======= During the six month period to 31 December 2003 53,000 Convertible Cumulative Preference Shares of 60p each were converted into 53,000 Ordinary Shares of 1p each and 3,127,000 Deferred Shares of 1p each in accordance with Article 4C(1) of the Company's Articles of Association. The above split of share capital between equity and non-equity is disclosed in accordance with FRS4. 12. TRANSFER FEES PAYABLE/RECEIVABLE Under the terms of certain contracts in respect of the transfer of player registrations, additional amounts will be payable/receivable by the Company if specific future conditions are met. Amounts in respect of such contracts could result in an amount payable of £1,145,000 of which £685,000 could arise within one year, and amounts receivable of £800,000 of which £600,000 could arise within one year. 13. POST BALANCE SHEET EVENTS Since the period end Celtic acquired the registration of Stephen Pearson from Motherwell FC, the registration of Steve Guppy was transferred to Leicester City FC and that of Stephen Crainey to Southampton FC. In addition, the registrations of Bobby Petta and Magnus Hedman have been transferred temporarily to Fulham FC and Ancona Calcio S.p.A. respectively until 30 June 2004. Directors Brian Quinn CBE (Chairman)* Peter T Lawwell (Executive Director, Head of Operations) Eric J Riley (Financial Director) Tom E Allison * Dermot F Desmond* Eric Hagman CBE* Secretary Robert M Howat Directors of the Celtic Football and Athletic Company Limited Peter T Lawwell Eric J Riley Kevin Sweeney* John S Keane* Michael A McDonald* * Independent Non-Executive Director Secretary Robert M Howat Football Manager Martin O'Neill MBE OBE This information is provided by RNS The company news service from the London Stock Exchange

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