Results for the year ended 30 June 2019

RNS Number : 0279O

Celtic PLC

27 September 2019

 

Celtic PLC

Announcement of Results for the year ended 30 June 2019

SUMMARY OF THE RESULTS

Operational Highlights

·    Winner of the Scottish Domestic Treble for an unprecedented third consecutive year (the "Treble Treble")

·    Winner of our eighth consecutive SPFL Premiership title

·    Finished second in the Europa League group stage, qualifying for the Round of 32 for the second year in a row

·    30 home matches played at Celtic Park (2018: 32 including the Scott Brown Testimonial)

·    Continuation of significant stadium investment programme

Financial Highlights

·    Group revenue decreased by 17.9% to £83.4m (2018: £101.6m)

·    Operating expenses including labour decreased by 0.2% to £86.9m (2018: £87.1m)

·    Gain on sale of player registrations of £17.7m (2018: £16.5m)

·    Acquisition of player registrations of £6.2m (2018: £16.6m)

·    Profit before taxation of £11.3m (2018: £17.3m)

·    Year-end cash net of bank borrowings of £28.6m (2018: £36.1m)

·    Year-end net cash, net of debt and debt like items, of £38.9m (2018: £27.0m)¹

¹net cash, net of debt like items, is represented by cash net of bank borrowings of £28.6m (2018: £36.1m) further adjusted for other debt like items, namely the net player trading balance, other loans and remuneration balances owed to certain personnel at the balance sheet date.

For further information contact:

Celtic plc
Ian Bankier, Celtic plc	Tel: [phone]
Peter Lawwell, Celtic plc
Iain Jamieson, Celtic plc

Canaccord Genuity Limited, Nominated Adviser
Simon Bridges	Tel: [phone]

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

 

CHAIRMAN'S STATEMENT

These results, which declare revenue of £83.4m (2018: £101.6m) and a profit before taxation of £11.3m (2018: £17.3m), reflect a satisfactory performance in a financial year in which the Club did not qualify for the Group Stages of the UEFA Champions League, as it had done in the prior year. 

On behalf of the Board I congratulate Neil Lennon, his management team, the players and all staff at the Club on achieving the "Treble Treble".  At short notice, Neil took charge of the squad, delivered an eighth consecutive League Championship and triumphed in the Scottish Cup, making it the Club's ninth successive domestic trophy.  

Of course, we were disappointed to lose Brendan Rodgers during the season, when he left to pursue an opportunity in the English Premier League. Brendan and his staff delivered record breaking success and they leave a phenomenal legacy for which the Board and everyone at Celtic is truly grateful.  We thank them for their outstanding contribution.

The Board was delighted to welcome Neil back to the Club in February and to confirm his appointment as manager following our success at Hampden in May.  Having been the manager when the Club embarked on the present run of domestic success, Neil understands what it takes to be the manager of Celtic.  He has the full support of the Board, executive management team and all the staff at the Club.  At the time of writing, having qualified for the Group Stages of the UEFA Europa League, the Club retains a 100% record in domestic competitions and we look forward with optimism to the season ahead.

The financial results for the year demonstrate the robustness of the Group's strategy of investment in football operations, whilst maintaining a self-sustaining financial model.  This continues to provide a stable platform for football success and shareholder value.  The gains on sales of player registrations, primarily reflected by the gains achieved on the sales of Moussa Dembele to Olympique Lyonnais and Erik Sviatchenko to FC Midtjylland, as well as contingent fees crystallising on previous player transfers, were key to the performance of the Group.

Post year end, the Club completed the sale of academy graduate Kieran Tierney to Arsenal FC for a Club record fee.  This was a great milestone achievement for "one of our own" and recognition for the Club's high standards of player development.  Also, post year end, in the summer transfer window we bolstered the playing squad with the additions of the permanent registrations of Christopher Jullien, Luca Connell, Hatem Abd Elhamed, Boli Bolingoli-Mbombo, Greg Taylor, Jonathan Afolabi, Jeremie Frimpong and Lee O'Connor.

Our year end cash net of bank borrowings was £28.6m (2018: £36.1m) which equates to a net funding position of £38.9m (2018: £27.0m) when adjusted for debt and debt like items (as defined in the Summary of Results on page 2). This allows the Board to continue to plan for the long term, whilst managing the reduced revenues derived from playing in UEFA Europa League in two successive seasons.  The Club continued its significant stadium investment programme to maintain and improve Celtic Park's reputation as one of the best football arenas in the world.

The Club believes that children and young people have the right to protection from all forms of harm and abuse.  We are unequivocally committed to ensuring this.  Celtic Football Club was the first club in Scotland to appoint a safeguarding officer, responsible for developing our policies for the protection of young people, and monitoring and reviewing our procedures to ensure they continue to reflect best practice.  During the year, a number of individuals were found guilty of historic offences committed against young people. The Club expressed its sincere sympathy, regret and sorrow for those affected and stands by its responsibilities, respecting the due process of law.

As we look ahead, the future of UEFA competitions beyond 2024 remains uncertain.  While recognising the risks, the Club considers that the developments being discussed by UEFA, the European Club Association and other stakeholders, present an opportunity to clubs such as Celtic.  Through Peter Lawwell's continued involvement on the Board of the European Club Association and the Professional Football Strategy Council of UEFA, the Club and the game in Scotland continue to be well represented in this very important arena. 

In closing, I thank all of our supporters, shareholders, sponsors, partners and colleagues for their contribution to another successful year for Celtic Football Club.  We all share a common passion for Celtic and everything it does.  The Board is committed to building on our current success for the long term future of the Club.

Ian P Bankier                                                                                                                                             

27 September 2019

Chairman

CHIEF EXECUTIVE'S REVIEW

Looking back on the year under review, like all Celtic supporters I am proud to reflect on the Club's continued domination of Scottish football as the Club made history for the second successive year by winning the "Treble Treble".  Football success is crucial to the Club and our supporters and to win nine consecutive domestic trophies is an amazing achievement for which I congratulate Brendan Rodgers, Neil Lennon, their staff, the players and everyone at the Club.

Stability is important in football, but change is inevitable.  Although we were very disappointed to see Brendan leave Celtic for an opportunity he wished to pursue, I respect his decision and thank him and his staff for all that they have given to the Club and the historic achievements, which have created many wonderful memories.  Following Brendan's departure, I was delighted that Neil Lennon re-joined the Club to clinch the eighth successive League championship and to complete the Treble Treble in challenging circumstances.  Neil is a true Celtic great, as a player, captain and manager and returns to the Club with a wealth of experience as a top quality coach, identifier and developer of players and with the strength of character to take the Club forward.  I wish Neil, assistant manager John Kennedy, first team coach Damien Duff and goalkeeper coach Stephen Woods all the very best as we work together to continue bringing success to the Club.  I also take this opportunity to thank my colleagues, our supporters, shareholders and club partners for their commitment to the continued success of the Club.

Each year, our key football objective is success in all three domestic competitions and progress in the UEFA Champions League.  Although we can be satisfied with our success in domestic football, we are very disappointed that the Club failed to qualify for the Group Stages of the UEFA Champions League in season 2018/19 and 2019/20, although the team did well to qualify in second place in a demanding UEFA Europa League group last season.   For season 2019/20, we have secured qualification for the Group Stages of the UEFA Europa League to ensure European football this season and our domestic performances have been promising.  We look forward to the season ahead. 

The level of competition in European football continues to intensify, increasing the uncertainty connected with qualification and progression within UEFA competitions.   The Club's long term strategy enables the Board to continue to invest in player retention, player recruitment, stadium infrastructure and everything that is needed to develop the Club for future generations and to continue to deliver success, notwithstanding the failure to qualify for the Group Stages of the UEFA Champions League. 

The Board continues to be committed to investing in our football operations and the creation of a world class football club, not only in transfer fees and player wages (which continue to be subject to hyper inflation), but also on football management, coaching, recruitment, medical, performance, sports science and the youth academy.  During the period, despite the 17.9% reduction in revenues we maintained a very high level of investment in total labour costs of £56.1m. 

Player development and recruitment continue to be fundamental to the Club to augment our first team squad and to add to the players being developed in the Academy.  Although we work to conclude transfers as quickly as possible, the transfer market remains challenging.  We continue to invest in player recruitment, to create value, but without putting the Club at risk.  After the period end, we signed eight players on permanent transfers, including players for the first team as well as younger players to add to the talented young players we have in our Academy, to which we added loan transfers of three high quality players from the English Premier League and English Championship.  The challenges in the transfer market demonstrate the importance of our Academy and we continue to develop the Academy for the future.   The objective remains to identify and develop Champions League football players for the Club. 

In closing I would like to thank Celtic supporters for their continued support of Celtic FC Foundation, which continues to deliver projects to improve health, promote equality, encourage learning and tackle poverty, upholding and promoting the charitable principles of the Club

Peter Lawwell                                                                                                                                                          

27 September 2019

Chief Executive

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	Note	2019 £000		2018 £000
Revenue	2	83,410		101,573
Operating expenses (before intangible asset transactions and exceptional items)		(86,904)		(87,083)
(Loss) / profit from trading before intangible asset transactions and exceptional items		(3,494)		14,490
Exceptional operating expenses	3	(1,789)		(4,141)
Amortisation of intangible assets		(9,709)		(8,768)
Profit on disposal of intangible assets		17,717		16,454
Other income		8,795		-
Operating profit		11,520		18,035
Finance income		1,059		216
Finance expense		(1,267)		(980)
Profit before tax		11,312		17,271
Income tax expense	5	(2,574)		(1,848)
Profit and total comprehensive income for the year		8,738		15,423
Basic earnings per Ordinary Share for the year	6	9.30p		16.47p
Diluted earnings per Share for the year	6	6.78p		11.72p

CONSOLIDATED BALANCE SHEET

		2019		2018
		£000		£000
Assets
Non-current assets
Property, plant and equipment		58,690		58,265
Intangible assets		14,156		20,963
Trade receivables		8,089		4,397
		80,935		83,625
Current assets
Inventories		2,643		2,407
Trade and other receivables		25,426		21,261
Cash and cash equivalents		34,057		42,563
		62,126		66,231
Total assets		143,061		149,856
Equity
Issued share capital		27,157		27,132
Share premium		14,785		14,720
Other reserve		21,222		21,222
Accumulated profits		18,598		9,860
Total equity		81,762		72,934
Non-current liabilities
Borrowings		4,108		6,250
Debt element of Convertible Cumulative Preference Shares		4,183		4,208
Trade and other payables		6,943		10,302
Provisions		455		2,309
Deferred tax liabilities		1,139		-
Deferred income		57		86
		16,885		23,155
Current liabilities
Trade and other payables		13,957		27,005
Borrowings		1,364		300
Provisions		3,479		2,442
Deferred income		25,614		24,020
		44,414		53,767
Total liabilities		61,299		76,922
Total equity and liabilities		143,061		149,856

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Share capital	Share premium	Other reserve	Accumulated (losses)/ profit	Total
	£000	£000	£000	£000	£000
Equity shareholders' funds as at 1 July 2017	27,107	14,657	21,222	(5,563)	57,423
Share capital issued	1	63			64
Reduction in debt element of convertible cumulative preference shares following conversion	24	-	-	-	24
Profit and total comprehensive income for the year	-	-	-	15,423	15,423
Equity shareholders' funds as at 30 June 2018	27,132	14,720	21,222	9,860	72,934
Share capital issued	1	65	-	-	66
Reduction in debt element of convertible cumulative preference shares following conversion	24	-	-	-	24
Profit and total comprehensive income for  the year	-	-	-	8,738	8,738
Equity shareholders' funds as at 30 June 2019	27,157	14,785	21,222	18,598	81,762

CONSOLIDATED CASH FLOW STATEMENT

		2019		2018
	Note	£000		£000
Cash flows from operating activities
Profit for the year		8,738		15,423
Income tax expense		2,574		1,848
Depreciation		2,064		1,977
Amortisation of intangible assets		9,709		8,768
Impairment of intangible assets		1,837		214
Profit on disposal of intangible assets		(17,717)		(16,454)
Net finance costs		208		764
		7,413		12,540
(Increase) / decrease in inventories		(236)		7
Increase in receivables		(3,225)		(6,142)
(Decrease) / increase in payables and deferred income		(6,654)		17,378
Cash generated from operations		(2,702)		23,783
Tax paid	5	(2,435)		(707)
Net Interest received / (paid)		7		(47)
Net cash flow from operating activities		(5,130)		23,029
Cash flows from investing activities
Purchase of property, plant and equipment		(2,257)		(3,461)
Purchase of intangible assets		(13,671)		(10,645)
Proceeds from sale of intangible assets		14,040		9,821
Net cash used in investing activities		(1,888)		(4,285)
Cash flows from financing activities
Repayment of debt		(1,010)		(200)
Dividend on Convertible Cumulative Preference Shares		(478)		(486)
Net cash used in financing activities		(1,488)		(686)
Net (decrease) / increase in cash equivalents		(8,506)		18,058
Cash and cash equivalents at 1 July 2018		42,563		24,505
Cash and cash equivalents at 30 June 2019		34,057		42,563

NOTES TO THE FINANCIAL STATEMENTS

1.         BASIS OF PREPARATION

The financial information in this preliminary announcement has been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards (IFRSs) as adopted for use in the EU but does not include all of the disclosures that would be required under IFRS. The accounting policies applied by the Group in this financial information are the same as those applied by the Group in its financial statements for the year ended 30 June 2018 and are those which form the basis of the 2019 financial statements as well as new and amended standards adopted for the first time from 1 July 2018.

2.         REVENUE

		2019   £000		2018 £000
The Group's revenue comprised: Football and Stadium Operations		43,252		43,587
Merchandising		18,076		17,717
Multimedia and Other Commercial Activities		22,082		40,269
		83,410		101,573

3.         EXCEPTIONAL OPERATING EXPENSES

The exceptional operating expenses of £1.79m (2018: £4.14m) can be analysed as follows:

	2019 £000		2018 £000
Impairment of intangible assets and other prepaid costs	2,017		511
Reversal of prior period impairment charges	(52)		-
Onerous employment contracts	383		3,549
Onerous employment contract releases	(580)		-
Settlement agreements on contract termination	21		81
	1,789		4,141

The impairment of intangible assets relate to adjustments required as a result of management's assessment of the carrying value of certain player registrations relative to their current market value.

Onerous employment contract costs result from a situation where the committed costs under that contract are assessed as exceeding the economic benefits expected to be received by the Group over the term of the contract.

Settlement agreements on contract termination are costs in relation to exiting certain employment contracts.

 

4.         DIVIDEND ON CONVERTIBLE CUMULATIVE PREFERENCE SHARES

A 6% non-equity dividend of £0.51m (2018: £0.51m) was paid on 30 August 2019 to those holders of Convertible Cumulative Preference Shares on the share register at 26 July 2019. A number of shareholders elected to participate in the Company's scrip dividend reinvestment scheme for the financial year to 30 June 2019.  Those shareholders have received new Ordinary Shares in lieu of cash.  No dividends were payable or proposed to be payable on the Company's Ordinary Shares.

During the year, the Company reclaimed £0.07m (2018: £nil) in respect of statute barred preference dividends in accordance with the Company's Articles of Association.

5.         TAX ON ORDINARY ACTIVITIES

The corporation tax payable as at 30 June 2019 was £0.14m (2018: £1.14m). The current year tax expense was £1.44m and total tax payments in the year were £2.44m, of which £1.24m was in relation to the current financial year with £1.20m in respect of the year ended 30 June 2018. In addition, there are overpayments with respect to prior periods of £0.06m. The available capital allowances pool is approximately £9.00m (2018: £10.50m). These estimates are subject to the agreement of the current year's corporation tax computations with H M Revenue and Customs.

6.         EARNINGS PER SHARE

Reconciliation of basic earnings to diluted  earnings:	2019 £000		2018 £000
Basic earnings	8,738		15,423
Non-equity share dividend	570		573
Reclaim of statute barred non-equity share dividends	(67)		-
Diluted earnings	9,241		15,996
	No.'000		No.'000
Reconciliation of basic weighted average number of ordinary shares to diluted weighted average number of ordinary shares:
Basic weighted average number of ordinary shares	93,977		93,663
Dilutive effect of convertible shares	42,410		42,803
Diluted weighted average number of ordinary shares	136,387		136,466

Earnings per share of 9.30p (2018: 16.47p) has been calculated by dividing the profit for the period of £8.74m (2018: £15.42m) by the weighted average number of Ordinary Shares of 94.0m (2018: 93.7m) in issue during the year.  Diluted earnings per share of 6.78p (2018: 11.72p) as at 30 June 2019 has been calculated by dividing the profit for the period by the weighted average number of Ordinary Shares, Convertible Cumulative Preference Shares and Convertible Preferred Ordinary Shares in issue, assuming conversion at the Balance Sheet date, if dilutive.

7.         ANNUAL REPORT & FINANCIAL STATEMENTS

Copies of the Annual Report & Financial Statements together with the Notice and Notes of the 2019 AGM will be issued to all shareholders in due course.

The financial information set out above does not constitute the Company's statutory financial statements for the years ended 30 June 2019 or 30 June 2018. The Independent Auditor's Reports on the statutory financial statements for 2019 and 2018 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. The statutory financial statements for 2018 have been filed with the Registrar of Companies and those for 2019 will be delivered to the Registrar of Companies in due course.

 

END

 

 

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