Interim Results

Celtic PLC 31 March 2005 31 March 2005 Celtic plc INTERIM RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2004 HIGHLIGHTS OF THE RESULTS • Group turnover increased by 8.3% to £38.98m. • Operating expenses reduced by 5.7% to £30.84m. • Profit from operations of £8.15m (2003: £3.30m). • Profit before taxation of £2.04m (2003: Loss of £2.86m). • Period end debt of £17.38m (2003: £18.17m). • Lead the Bank of Scotland Premierleague and continued participation in the Tennents Scottish Cup. For further information contact: Brian Quinn, Celtic plc Tel: 0141 551 4235 Peter Lawwell, Celtic plc Tel: 0141 551 4235 Alex Barr, Big Partnership Tel: 0141 333 9585 Celtic plc CHAIRMAN'S STATEMENT Celtic plc recorded an excellent financial performance in the half-year ending 31 December 2004. However, elimination from European competition in December and the fact that we will play fewer domestic home games in the second half of the year, will lead to football revenues in the second half being lower than in the first half. Group turnover for the half-year rose by 8%, compared to the same period last year. All areas of activity showed improvement except for the merchandise and stadium divisions. In merchandising the general weakness in retail sales and compressed margins in sales of football apparel significantly affected performance. There was also a slow down in sales of replica kit ahead of the switch to NIKE as Kit Sponsor in July 2005 - a contract which we expect to bring substantial benefits to the Company over the next five years. The reduction in stadium division turnover reflected the outsourcing of concourse catering at the start of the season but did not result in a reduction in contribution to profit. Ticket sales and multi media revenues rose by 14% and 30% respectively, largely as a result of participation in the UEFA Champions' League and the increase in season ticket pricing implemented earlier in the year. There was also an additional domestic league game compared to the corresponding period a year ago. Multimedia income benefitted by approximately £2.4m from Celtic being Scotland's only representative in the UEFA Champions' League Group Stage. Operating expenses were well controlled, falling by around 6%. The reduction in the costs of merchandise sales, and lower player bonuses in respect of the UEFA Champions' League competition, were the main contributors to the reduction in operating expenses. As a result of these favourable developments in both revenues and costs, a profit from operations of £8.1m was recorded in the six months to 31 December 2004, compared with £3.3m a year ago; and a pre-tax profit of £2.0m was made, compared with a loss of £2.9m last year. Outstanding debt of £17.4m at 31 December 2004 showed a modest improvement over the £18.2m recorded at the end of 2003. Celtic's participation in the UEFA Champions' League was, in the vernacular, a story of two halves. The games against Barcelona, AC Milan and Shakhtar Donetsk from Ukraine proved to be a severe challenge during the first half of the Group Stage. However, draws against AC Milan and Barcelona, and a victory over Shakhtar Donetsk, kept the prospect of continued participation in European competition going to the final game of the section; and we failed to go forward by only one point. As the year ended Celtic led the Bank of Scotland Premierleague by three points. We remain in first place and have progressed to the semi-final of the Tennents Scottish Cup. Our level of success in both competitions will have an important impact on financial performance in the second half of the Company's year, particularly since direct football revenues will be lower than those recorded last year as a result of there being two fewer domestic competitive home games than last year and no further benefit from European football. The playing squad has expanded slightly following the acquisition of two experienced internationals and the departure of one player. The contracts of two other key players have been extended. As a result of this activity, the ratio of our labour costs to turnover is bound to deteriorate in the second half of the year and may exceed 60% for the year as a whole. However, we aim to show some improvement in this ratio after the current year as the Club seeks to bring costs back towards a level commensurate with sustainable revenues. Trading of players and the development of younger players are integral parts of our longer-term measures to control costs. We plan to upgrade our scouting activities, expanding their geographic coverage. Appraisal of sites to enhance our training facilities, which currently fall short of what we need and what is appropriate for a club of Celtic's standing, is well advanced. We expect to be able to announce our preferred choice of location before the end of the season, as promised in last year's Annual Report. At the Annual General Meeting in October 2004 the Board confirmed that the merits of a dividend reinvestment scheme would be examined. That has been done and we intend to circulate proposals to shareholders later in the financial year. 30 March 2005 Brian Quinn CBE INDEPENDENT REVIEW REPORT 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 2004, 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 2004. PKF Registered Auditors Glasgow, UK 30 March 2005 Celtic plc GROUP PROFIT AND LOSS ACCOUNT 6 months to 6 months to 6months 6months 12 31 December 31 December to to months 2004 2004 31 December 31 to 30 2004 December June 2004 2003 Unaudited Unaudited Unaudited Unaudited Audited Operations Player Total Total Total excluding Trading player trading £000 £000 £000 £000 £000 Notes TURNOVER - GROUP AND SHARE OF JOINT 39,226 - 39,226 36,008 69,020 VENTURE LESS SHARE OF (245) - (245) - - JOINT -------- -------- --------- -------- -------- VENTURE GROUP 3 38,981 - 38,981 36,008 69,020 TURNOVER OPERATING EXPENSES (30,835) - (30,835) (32,706) (64,150) -------- -------- --------- -------- -------- PROFIT FROM OPERATIONS 8,146 - 8,146 3,302 4,870 AMORTISATION OF - (5,229) (5,229) (5,434) (10,770) INTANGIBLE FIXED -------- -------- --------- -------- -------- ASSETS EXCEPTIONAL OPERATING - - - - (390) EXPENSES -------- -------- --------- -------- -------- OPERATING PROFIT / (LOSS) 8,146 (5,229) 2,917 (2,132) (6,290) SHARE OF OPERATING LOSS IN JOINT (262) - (262) - - VENTURE -------- -------- --------- -------- -------- TOTAL OPERATING PROFIT / (LOSS) 7,884 (5,229) 2,655 (2,132) (6,290) (LOSS) / PROFIT ON DISPOSAL OF 4 - (47) (47) (119) 306 INTANGIBLE FIXED ASSESTS LOSS ON DISPOSAL OF TANGIBLE FIXED - - - (150) ASSETS -------- -------- --------- -------- -------- PROFIT / (LOSS) 7,884 (5,276) 2,608 (6,134) BEFORE INTEREST AND TAXATION (2,251) -------- -------- -------- -------- NET INTEREST PAYABLE (570) (604) (1,337) --------- -------- -------- PROFIT / (LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION 2,038 (2,855) (7,471) TAX CHARGE ON ORDINARY 5 - - - ACTIVITIES --------- -------- -------- PROFIT / (LOSS) FOR THE 2,038 (2,855) (7,471) PERIOD DIVIDENDS - Non Equity 6 - - (1,455) --------- -------- -------- RETAINED PROFIT / (LOSS) FOR THE 2,038 (2,855) (8,926) PERIOD ========= ======== ======== EARNINGS / (LOSS) PER ORDINARY 7 4.27p (11.70p) (29.15p) SHARE ========= ======== ======== DILUTED EARNINGS / (LOSS) PER SHARE 7 2.28p (11.70p) (29.15p) ========= ======== ======== 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 31 30 June December December 2004 2003 2004 Unaudited Unaudited Audited Notes £000 £000 £000 FIXED ASSETS Tangible assets 49,251 48,542 48,428 Intangible assets 8 8,757 15,869 12,032 ----------- ----------- ----------- 58,008 64,411 60,460 CURRENT ASSETS Stocks 2,404 2,242 1,763 Debtors 8,146 6,048 5,317 Cash at bank and in hand 797 6,270 371 ----------- ----------- ----------- 11,347 14,560 7,451 CREDITORS (13,858) (13,058) (15,610) Amounts falling due within one year Income deferred less than one year (9,804) (10,449) (10,908) ----------- ----------- ----------- NET CURRENT LIABILITIES (12,315) (8,947) (19,067) ----------- ----------- ----------- TOTAL ASSETS LESS CURRENT 45,693 55,464 41,393 LIABILITIES CREDITORS 9 (18,000) (24,000) (16,000) Amounts falling due after more than one year Provisions for liabilities and charges 10 (262) - - ----------- ----------- ----------- NET ASSETS 27,431 31,464 25,393 =========== =========== =========== CAPITAL AND RESERVES Called up share capital (includes non-equity) 11 29,405 29,405 29,405 Other reserve 21,222 21,222 21,222 Profit and loss account (23,196) (19,163) (25,234) ----------- ----------- ----------- SHAREHOLDERS' FUNDS 27,431 31,464 25,393 =========== =========== =========== Approved by the Board on 30 March 2005 Celtic plc GROUP CASH FLOW STATEMENT 6 months 6 months 12 months to to to 31 31 30 June December December 2004 2003 2004 Unaudited Unaudited Audited £000 £000 £000 RECONCILIATION OF OPERATING PROFIT / (LOSS) TO NET CASH INFLOW / (OUTFLOW) FROM OPERATING ACTIVITIES Operating profit / (loss) 2,655 (2,132) (6,290) Depreciation 788 702 1,371 Amortisation 5,229 5,434 10,770 (Increase) / decrease in stocks (641) (183) 296 Increase in debtors (2,927) (1,371) (333) Increase in creditors 240 1,571 2,921 ------------- ----------- ----------- --------------- ----------- ----------- Net cash inflow from operating activities 5,344 4,021 8,735 =============== =========== =========== ============= =========== =========== CASH FLOW STATEMENT Net cash inflow from operating activities 5,344 4,021 8,735 Returns on investments and servicing of finance (3,668) (1,160) (1,893) Capital expenditure and financial investment (3,248) (3,252) (4,865) ------------- ----------- ----------- --------------- ----------- ----------- Cash (outflow) / inflow before use of liquid resources and financing (1,572) (391) 1,977 Financing 1,998 5,908 (2,359) ------------- ----------- ----------- Increase / (decrease) in cash 426 5,517 (382) ============= =========== =========== RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Increase / (decrease) in cash in the period 426 5,517 (382) Cash (inflow) / outflow from movement in debt (1,998) (5,908) 2,359 ------------- ----------- ----------- Movement in net debt in the period (1,572) (391) 1,977 Net debt at 1 July (15,805) (17,782) (17,782) ------------- ----------- ----------- Net debt at period end (17,377) (18,173) (15,805) ============= =========== =========== Celtic plc NOTES TO THE FINANCIAL STATEMENTS 1. The results for the year ended 30 June 2004 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 2004, 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 2004. 3. TURNOVER 6 months to 6 months to 12 months 31 December 31 December to 30 June 2004 2003 2004 Unaudited Unaudited Audited £000 £000 £000 Turnover comprised: Professional football 19,147 16,782 34,728 Multimedia & communications 11,303 8,691 16,062 Merchandising 6,499 8,283 13,425 Stadium enterprises 1,274 1,586 3,449 Youth development 758 666 1,356 ----------- ----------- ----------- 38,981 36,008 69,020 =========== =========== =========== Number of home games 16 15 32 =========== =========== =========== 4. NET LOSS ON SALE OF INTANGIBLE FIXED ASSETS A loss on sale of £47,000 is reported in the current period following the termination of Bobby Petta's registration with Celtic. The loss for the same period last year reflected the transfer of Mark Fotheringham's registration to Dundee Football Club and that of Steve Guppy to Leicester City Football Club (16 January 2004). 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. 6. As in previous years no provision has been made in respect of the 6% dividend of £544,000 that is payable on the Preference Shares on 31 August 2005 nor for the 4% dividend of £901,000 that is payable on the Convertible Preferred Ordinary Shares on 31 August 2005 in respect of the year ending 30 June 2005. 7. Earnings / (loss) per share has been calculated by dividing the earnings / (loss) for the period by the weighted average number of Ordinary Shares in issue 30,797,810 (2003: 30,616,563), after taking account of one half of the net dividends in note 6 above. Diluted earnings / (loss) per share has been calculated by dividing the earnings / (loss) 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 in accordance with FRS14. In 2003 no account was taken of potential conversion or share purchase options, as these potential ordinary shares were not considered to be dilutive under the definitions of the applicable accounting standards. Celtic plc NOTES TO THE FINANCIAL STATEMENTS 8. INTANGIBLE ASSETS 6 months to 6 months to 12 months 31 December 2004 31 December 2003 to 30 June 2004 Unaudited Unaudited Audited Cost £000 £000 £000 At 1 July 48,561 52,250 52,250 Additions 1,990 959 2,458 Disposals (6,464) (6,136) (6,147) ------------- ----------- ----------- At period end 44,087 47,073 48,561 ============= =========== =========== Amortisation At 1 July 36,529 31,737 31,737 Charge for the period 5,229 5,434 10,770 Disposals (6,428) (5,967) (5,978) ------------- ----------- ----------- At period end 35,330 31,204 36,529 ============= =========== =========== Net Book Value at period end 8,757 15,869 12,032 ============= =========== =========== 9. CREDITORS - AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR Creditors due after more than one year reflect long-term bank loans of £18.0m (2003: £24.0m) 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 2004, 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 £18.6m (2003: £17.8m) as at the balance sheet date. 10. PROVISIONS FOR LIABILITIES AND CHARGES On 1 July 2004, Celtic F.C. Limited entered into a joint venture with Setanta Sport (PPV) Limited creating a dedicated Celtic TV channel, Celtic TV. Under the terms of the joint venture, Celtic F.C. Limited is not required to fund any of the losses incurred by the joint venture company. However, despite there being no legal requirement to fund losses, a provision has been incorporated in the balance sheet representing Celtic F.C. Limited's 50% share of the net liabilities in the joint venture company as specified by FRS9. Celtic plc NOTES TO THE FINANCIAL STATEMENTS 11. SHARE CAPITAL Authorised Allotted, called up and fully paid 31 December 31 December 2004 2003 2004 2004 2003 2003 Group and Company No 000 No 000 No 000 £000 No 000 £000 Equity Ordinary shares of 1p each 36,699 36,394 30,949 309 30,644 306 Deferred shares of 1p each 100,244 82,220 100,244 1,002 82,220 822 Non-equity Convertible preferred ordinary shares of £1 each 20,000 20,000 18,012 18,012 18,012 18,012 Convertible cumulative preference shares of 60p 19,301 19,606 16,801 10,082 17,106 10,265 each -------- ------- ------- -------- -------- ------ 176,244 158,220 166,006 29,405 147,982 29,405 ======== ======= ======= ======== ======== ====== During the six month period to 31 December 2004 302,494 Convertible Cumulative Preference Shares of 60p each were converted into 302,494 Ordinary Shares of 1p each and 17,847,146 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. As at 31 December 2004 amounts in respect of such contracts could result in an amount payable of £621,000 of which £571,000 could arise within one year, and amounts receivable of £800,000 of which £460,000 could arise within one year. 13 POST BALANCE SHEET EVENTS On 7 January 2005 Celtic extended the contract of John Hartson until at least May 2007 and on 28 January 2005 Celtic acquired the registration of Stephane Henchoz from Liverpool FC until the end of the current football season. On 31 January 2005 the loan registration of Craig Bellamy was obtained from Newcastle United FC until the end of the current football season and that of Henri Camara was transferred to Southampton FC. On 1 February 2005 Dianbobo Balde extended his contract with Celtic until 31 May 2009 subject to certain conditions. Celtic plc Directors Brian Quinn CBE (Chairman)* Peter T Lawwell (Chief Executive) Eric J Riley (Financial) Tom E Allison * Dermot F Desmond* Eric Hagman CBE* Brian J McBride* 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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