Preliminary Results
Celtic PLC
20 August 2007
CELTIC plc
Preliminary Results for the year ended 30 June 2007
SUMMARY OF THE RESULTS
Operational Highlights
• Winners of the Bank of Scotland Premierleague by 12 points
• Winners of the Tennent's Scottish Cup
• Progression to the last sixteen of the UEFA Champions League,
playing four home European fixtures (2006: 1)
• 28 home matches played at Celtic Park in the year (2006: 24)
• Successful pre-season friendly trips to Japan, Poland and North
America
• Contract extensions awarded to Aiden McGeady and Darren O'Dea
• Successful launch of the Lisbon Lions' 40th anniversary home kit
together with new away and international kits under the agreement with NIKE
• Season ticket sales continued to be in excess of 53,000
Financial Highlights
• Group turnover increased by 31.0% to £75.24m (2006: £57.41m)
• Operating expenses increased by 10.4% to £59.28m (2006: £53.67m)
• Profit from operations of £15.95m (2006: £3.74m)
• Exceptional operating expenses of £2.88m (2006: £0.58m)
• Gain on disposal of intangible fixed assets of £9.40m (2006:
£0.26m loss)
• Profit before taxation of £15.04m (2006: £4.22m loss)
• Year end bank debt of £4.99m (2006: £9.09m) net of cash
• Investment of £14.44m (2006: £8.84m) in the acquisition of
intangible fixed assets
For further information contact:
Brian Quinn, Celtic plc Tel: 0141 551 4235
Peter Lawwell, Celtic plc Tel: 0141 551 4235
Iain Jamieson, Celtic plc Tel: 0141 551 4235
CHAIRMAN'S STATEMENT
In terms of both football success and financial results, 2006/2007 was an
outstanding year for Celtic Football Club and Celtic plc; indeed it was arguably
among the best ever. Winners of the Bank of Scotland Scottishpremier League and
the Tennent's Scottish FA Cup for the 41st and 34th time, respectively, the Club
also reached the final 16 of the UEFA Champions League for the first time and
were defeated only by the eventual winners, AC Milan, by a single goal after
extra time.
A Celtic player, Shunsuke Nakamura, was voted Scottish Player of the Year;
Gordon Strachan took the award of Manager of the Year; and Celtic Reserves won
the Reserves Championship for the 6th consecutive season. All in all, this was a
very successful year for the Club on the field.
Off the field, and after a number of years in which the Company made losses at
the pre-tax level, Celtic plc recorded a profit of over £15m. Group turnover
rose by 31%. Encouragingly, having invested heavily in strengthening the playing
squad and developing the training facility at Lennoxtown, bank debt at the year
end amounted to just under £5m, compared with over £9m a year previously; and
total net debt stood at around £9m, against a figure of almost £14m a year
earlier. Net assets rose from £22m to around £37m.
By the standards of previous years and, indeed, those of most other football
companies, these are exceptionally good results. However, it is important to
recognise that a number of factors came together, all of which cast a favourable
light on our performance and which cannot reasonably be expected to recur, at
least to the same degree.
Foremost among these was our successful UEFA Champions League campaign. This
competition far outstrips any other in which we are involved in terms of gate
receipts, television revenues and, indirectly, other revenue sources. Last
season we had the bonus of being the only Scottish representative to reach the
group stage. Taking account of the additional costs involved, notably bonus
payments to players, management and support staff, the net contribution to
profit was of the order of £11-12m. The contribution from European football in
the previous year was approximately £0.75m. It also gives the Club greater
exposure to a much wider television audience, reinforcing the reputation of the
Club as one of Europe's re-emerging forces.
The other principal factor affecting the year's financial performance was the
volume of transfer activity. On the back of a particularly buoyant market in
England, Celtic sold a number of players to clubs South of the border to a total
profit of £9.4m. At a time when it is customary - and valid - to note the
disadvantages suffered by Scottish clubs arising from the new FAPL television
contract, it would also be correct to note that Scottish clubs derive benefits
from sales of players into that market. Nevertheless, the gap between the two
markets has grown enormously in the last two years, with the result that the
movement of talent from North to South has become much more pronounced, and
Scottish clubs are even less able than in the past to bid for players on an
equal basis with English clubs, even at the level of the Coca Cola Football
League Championship.
Notwithstanding this trend, Celtic used its improved financial position last
year to strengthen further our first-team playing staff, spending some £14.4m on
new players, and taking forward the establishment of our new training facilities
at Lennoxtown. Maintaining the quality of the squad is a continuous task which
has to be approached in the short-term by activity in the transfer market, and
in the longer-term by finding and developing younger players. Getting the
balance right is a challenge year by year and cannot be guaranteed. Accidents
can and do happen; so it is especially pleasing that John Kennedy has returned
to first-team action after three years of rehabilitation from serious injury.
Total operating expenses rose by 10.4%, primarily higher player costs in the
form of salaries and bonuses, and other costs such as travel and stadium
expenses associated with our European games. No increase in costs at football
clubs is actually welcomed, but when they are a direct result of success in
competition, and are therefore more than compensated by additional revenues,
they can be cheerfully absorbed.
Our ratio of total labour costs to turnover, which already stood at a creditable
56.6% last season, fell to 48.4% in the year just ended. Like many of this
year's figures, this percentage is relatively low and given the need to
pre-qualify for the UEFA Champions League and the spill-over effect of the
English football market into Scotland, may well rise next year. However we are
determined to abide by our policy of year-by-year sustainability in which player
costs play a crucial role.
Income from television, radio and publications almost doubled to £23.2m, thanks
to our participation in the UEFA Champions League - the benefits of being
involved in this competition being nowhere more evident. Income from merchandise
sales fell by about £1m, although comparisons between years are complicated by
the number and nature of replica strip launches. Footballing merchandise is to
some extent a fashion market and therefore difficult at present, and our
marketing and sales staff have done well to maintain the Company's position as
one of the leading retailers of quality football and leisure wear.
On the football field, as I have already stated, we reached new heights. Our
runaway SPL Championship success extended our run in that competition to five
titles in the last seven years. Victory in the Tennent's Scottish FA Cup brought
a domestic double, our 14th. The victory over Manchester United at Celtic Park
in the UEFA Champions League secured a place in the last 16 of that competition
and provided a memorable occasion for our supporters. The excitement and fervour
at Celtic Park on these European occasions probably has no equal in world
football. Our supporters on these occasions are a virtual 12th man.
That these successes were achieved in the context of significant numbers of new
arrivals and departures among the playing staff is compelling evidence of the
excellent management team headed by Gordon Strachan. In the two years since
Gordon joined us he has won the Bank of Scotland Scottish Premierleague by
impressive margins, as well as two other domestic trophies and achieved progress
in Europe. Managing Celtic ranks among the most demanding jobs in football and
Gordon's resilience and professionalism are truly admirable.
Despite some early delays caused mainly by adverse weather, our new training
complex at Lennoxtown is expected to be available for use towards the end of
September 2007. We are excited by the location and the quality of the
facilities. Virtually all of the pieces are in place and, all going well, our
professional football squads will be training at the new complex soon. There
remains the question of what is done with our existing training area at
Barrowfield. We are working with Glasgow City Council as part of a master plan
to regenerate the East End of the city and the area around Celtic Park. This
plan would allow us to improve significantly the coach parking and transport
infrastructure for our supporters and those of visiting teams. We believe this
is long overdue and hope to see it move forward in the coming year.
Spreading the Celtic brand name continues to be a high business priority. The
new TV contract in England makes it even less likely that change will take place
in the structure of football there; and the fact that all but the top half-dozen
FAPL sides may find themselves facing the possibility of relegation in any given
year, with all that that entails in terms of foregone revenue, means that the
great majority of teams in the FAPL would oppose, even more than previously, any
move to admit Scottish teams. We believe that it is our responsibility to
explore whether such a change is possible, but we accept the position as we now
find it and have turned our attention increasingly to other options in looking
to the longer term.
We continue to believe that North America represents a good opportunity in that
connection and have completed another successful tour to the United States this
summer. Our 'soccer schools' in seven States are flourishing and are spreading
the Celtic name to a younger generation. We also carried out short tours to
England, Switzerland and Ireland and will look for further opportunities to
build our reputation abroad.
It has long been my belief that eradicating sectarian and other offensive
behaviour from the Scottish football environment is a longer term task. Success
is properly measured over years, if not decades. But progress towards that
objective can be achieved on a shorter time-scale and we can point to clear
signs of such progress year by year. This takes the form not only of dwindling
numbers of people who sing offensive songs and chants at away games following
the initiatives that I mentioned in last year's Annual Report, but also of
positive action to improve the behaviour of people who might otherwise keep
ancient rivalries alive by unacceptable means.
Our work in education and with the unemployed and other disadvantaged groups
does not always get the recognition it deserves. It is, of course, worth doing
for its own sake; but greater encouragement from the press and media can
multiply its positive effects. The consolidation of our charity and community
activities under the banner of the Celtic Foundation and of the attendance of
religious leaders to the Old Firm game in March, with the positive reception of
this initiative by the press and media, are examples of what can be done.
A historic milestone was reached in May with the 40th Anniversary of the Lisbon
Lions' victory in the European Cup. It is a poor club that cannot celebrate a
famous event 40 years on, and the Lions never showed greater resolution and
stamina than when carrying out a programme of visits, at home and abroad, that
would have exhausted Olympic athletes. They remain a family within a family and
brought out all that is best in the Celtic support.
As I have remarked before, success in football is seldom marked by unbroken,
continuous advances. The nature of modern competitive sport prevents that. Last
year was a very good year for our club and for Celtic plc, and it will be a
monumental challenge to surpass it next year. That does not, of course, mean
that we will not be trying hard to do so. We owe it to our shareholders and
supporters to do that, and you may be sure that your Board, management and
football team will be pulling together to that end.
Brian Quinn CBE
Chairman 20 August 2007
CHIEF EXECUTIVE'S REVIEW
INTRODUCTION
I am delighted to report on another eventful and successful year.
In May 2006 Celtic's participation in the group stage of the UEFA Champions'
League for season 2006/7 was confirmed. This enabled the Club to plan with much
greater certainty both financially and operationally. As with last year, a
number of the established players left Celtic Park for a variety of reasons. The
funds achieved from the sale of these players, together with the incremental
contribution arising from participation in the UEFA Champions' League, enabled
us to buy several new players. These included a number of experienced
individuals as well as younger, often locally developed, players
Celtic retained the Bank of Scotland Premierleague title for 2006/7 by a
significant margin, sealing the Championship in dramatic fashion at Kilmarnock
several weeks before the end of the season. This success in winning the League
title has provided Celtic with entry to the final qualifying round of the UEFA
Champions' League for Season 2007/08. We also won the Scottish FA Cup again,
defeating Dunfermline at Hampden Park in Neil Lennon's final appearance for the
Club.
Celtic achieved new highs in Europe this year, qualifying for the last 16 of the
UEFA Champions League for the first time since the competition adopted its
current format. Along the way there were unforgettable moments against the might
of Benfica and Manchester United. Celtic also pushed the eventual winners AC
Milan every inch of the way over the two legs of that last 16 tie, before
finally succumbing to a goal in extra-time.
The 25th of May saw the fortieth anniversary of that historic day in Lisbon,
when Celtic became the first British Club to lift the European Cup. The event
was celebrated at Celtic Park with a gala dinner in a grand marquee on the
hallowed turf attended by over a thousand guests. All the victorious Lions were
represented and a memorable night was had by all.
FINANCIAL PERFORMANCE
Celtic's trading results for the year to 30 June 2007 are exceptional,
benefiting dramatically from participation in the UEFA Champions League and from
player trading. The Club's reported profit of £15.04m represents a massive
improvement in financial performance on 2005/06 in what continues to be a highly
challenging football environment in Scotland.
Group turnover has increased by £17.83m, 31.0%, to £75.24m from last year,
largely as a result of playing four more home games due to our progression in
the UEFA Champions' League. The uplift in turnover benefited from the continued
high take-up of season tickets, together with the incremental revenue generated
from pre-season friendlies in Poland, America, England and Japan.
Operating expenses, excluding exceptional operating costs, have increased by
£5.61m, 10.4%, to £59.28m, predominantly due to increased labour and uplifts in
other overheads related to increased trading activity. The amortisation charge
of £5.86m is up by 15.1% on last year, demonstrating the increased investment in
the first team squad. Exceptional costs of £2.88m largely reflect an impairment
provision in respect of intangible fixed assets and compare to £0.58m last year.
The financial performance also benefited from a gain on disposal of intangible
fixed assets of £9.40m mainly represented by the sale of Petrov, Maloney,
Pearson, Varga and Wallace in addition to a lower interest charge in the year.
FOOTBALL INVESTMENT
The Company wishes to build on the success achieved in recent years. It is
imperative that we achieve domestic success and continue the process of
restoring Celtic as a credible force in Europe. We will continue to try to
strengthen the first team squad whilst managing our financial resources
carefully and responsibly. The investment made last year and this, both on new
players and on contract extensions, should continue to yield benefits in this
current season.
In the year to 30 June 2007 £14.4m (2006: £8.84m) was invested in the playing
squad. New signings have included Gary Caldwell, Thomas Gravesen, Lee Naylor,
Kenny Miller, Paul Hartley, Stephen Pressley, Mark Brown and Jan Vennegoor of
Hesselink during the football season and Scott Brown, Massimo Donati, Chris
Killen and Scott Macdonald following the end of the season.
Contracts were extended for a number of first team players, including Aiden
McGeady and Darren O'Dea.
Roy Keane, Mo Camara, Stilian Petrov, Stan Varga and Ross Wallace all left in
the 2006 summer transfer window with Stephen Pearson, Alan Thompson and Shaun
Maloney all leaving in January 2007. Neil Lennon, David Marshall and Craig
Beattie have departed following the end of the season.
Gordon Strachan and his assistants Garry Pendrey and Tommy Burns continue to
plan for further progression. The backroom team has been augmented with the
appointment of John Park as Football Development Manager, which demonstrates the
importance attached by the Club to identifying and developing young talented
players at home and overseas. We now have a revised football operations plan for
season 2007/08 and beyond.
Behind the scenes we have also been delighted to secure the services of Gregory
Dupont as Head of Sport Science. Gregory joined us in the closed season from
Lille and brings a wealth of senior level experience to the medical team,
reporting to Dr Derek McCormack.
Planned trading of players and the development of younger players are integral
parts of our longer-term measures to control costs. As in season 2006/07 any new
signings and/or contract extensions are planned to be at a financially viable
level or, alternatively, funded from profits.
Our new scouting and youth development arrangements will help this process. We
believe that the scouting team established in the last year or so should yield
dividends in the form of new players from the UK and abroad. Several members of
our reserve and Under 19 teams have already stepped up to the senior squad and
we intend to maintain that policy.
A new football bonus scheme was introduced during the year, which is based more
on rewarding players and management for the on field success.
The construction of the new purpose-built training facility and football academy
at Lennoxtown is progressing well and it should be available during September
2007. The benefits of such a facility are self-evident and ultimately will
ensure that players are recruited, developed and traded in the most efficient
and cost effective way possible.
FOOTBALL OPERATIONS
In progressing in Europe and winning the domestic double of SPL Championship and
Scottish Cup, Celtic played a total of 53 competitive matches during the 2006/07
season, winning 35 and losing 11, with 7 matches drawn. It was a tremendous
record and all concerned deserve enormous credit.
Celtic's reserve side won the SPL Reserve Championship for the sixth year in
succession, playing 22 matches and winning 19 of them, a quite phenomenal
record.
Gordon Strachan and Shunsuke Nakamura respectively won the Bank of Scotland
Manager of the Year and Player of the Year awards, with Naka also picking up the
SPFA Player of the Year prize.
TICKET SALES
Progression into the last 16 of the UEFA Champions League saw a significant
increase in sales of standard match tickets against the previous season. The
total number sold in season 2006/07 was just under 400,000, generating sales
revenue of over £8m. Champions League ticket sales accounted for nearly 220,000
tickets at a value of £5.4m, whilst SPL ticket sales totalled over 100,000 at
just under £2m.
Standard season ticket sales were once again very strong with a total in excess
of 50,000 books sold, worth more than £17m. Taking into account Corporate and
Premium ticket sales the total reached 53,000, which is amongst the highest in
the UK.
YOUTH DEVELOPMENT
Nearly 2.6 million lottery chances were sold under the various schemes operated
by Celtic Development Pools Limited during the period from July 2006 to June
2007. Donations of approximately £1m were provided to the Club's Development
Division for the purposes of youth development, whilst a similar sum in prize
money was paid out to Celtic supporters nationwide. In light of the challenging
times facing all small lotteries operating in the UK, this represents a
commendable achievement for Celtic Development Pools.
The matchday draw operated at Celtic Park was once again a major success story.
This lottery product remained very popular with supporters as witnessed by the
strong sales conversion rate. With a top prize of £7,500 on offer, many tried
their luck at winning. Prize money of approximately £1.4m has now been paid out
to Celtic supporters on the pitch at Celtic Park since the start of the Windfall
in 1995 and the top prize this season will be £8,000, the biggest cash prize in
UK football
CELTIC FOUNDATION
The Celtic Foundation continues to support the Club's social dimension,
reflecting the very reasons why Brother Walfrid founded Celtic back in 1888.
The Celtic Foundation integrates a number of very successful project areas:
• Football in the Community and community coaching programmes across both
domestic and international markets, including the newly developed Celtic
Women's and Girls Academy and Boys Community Academy;
• Anti-bigotry, anti-racism and anti-sectarianism initiatives;
• Celtic Charity Fund;
• Celtic Learning Programmes and the Learning Centre;
• The Old Firm Alliance Project;
• Celtic Against Drugs;
• Support Employment Project; and
• Services to Schools.
The creation of the Foundation is indicative of the importance Celtic attaches
to its role in the community, with the Club involved in more educational,
charitable and community initiatives than at any time in its history.
Celtic in the Community continues to be the leading premier community club in
Scotland and arguably the UK. It provides a coaching and development programme
tailored to meet the needs of children, teenagers and adults. The range of
products and services has grown considerably during the past year providing
opportunities for all sectors of the community, with over 4,500 young people and
adults participating in a variety of courses and programmes on a weekly basis.
Celtic remains totally committed to the Programme and to date has invested
significantly in recruiting around 100 Community Coaches and the necessary
supporting infrastructure. The programme also provides a pathway into our Youth
Academy with over 350 youngsters identified and invited into the Development
Centre Programme, 7 having already graduated to the Academy itself.
The introduction of the Women's and Girls Academy and Boys Community Academy
will provide a more structured programme and clear, progressive pathway for
talented players. The Club is delighted that Elaine C. Smith has agreed to
become a patron for the Women's and Girls Academy.
The Community Programme has firmly established itself in Ireland too with over
1,000 youngsters attending a variety of courses each year.
Internationally, Celtic in the Community delivered a social inclusion programme
to thousands of youngsters from some of North America and Canada's most deprived
cities. The Community Programme also delivered a summer programme in Cyprus.
The reputation of the Club and indeed its supporters provide real potential to
offer new programmes internationally. It is our intention to visit Japan and
Australia during 2007/08 in addition to consolidating and rolling out our
Community Programme in North America and Canada.
The Celtic Foundation has been instrumental in securing grant funding to support
several meaningful projects in the areas of health, education, employment,
anti-social behaviour and social inclusion.
Considerable progress has been achieved this year in furthering the Club's
anti-sectarianism initiatives. In March we welcomed then First Minister Jack
McConnell and Scotland's religious leaders to the Old Firm match at Celtic Park
as our guests, promoting our message of inclusion. This enabled them to observe
some of the Club's work against sectarianism through workshops with local
children, which take place at the stadium on a matchday.
The Old Firm Alliance made great progress during the year in helping to educate
young people on the benefits of a healthier lifestyle while providing them with
positive role models to challenge racism and sectarianism. A competition run in
conjunction with Glasgow Community Planning Partnership to find 'Firm Friends',
one a Celtic fan, the other who supported Rangers, attracted a great response
and helped promote our joint efforts in this very important area. Following a
report and recommendations by the Scottish Executive, a press release in
November 2006 highlighted the efforts of both Celtic and Rangers in combating
bigotry and sectarianism and reaffirmed the Clubs' commitment to work together
to promote togetherness, tolerance and social inclusion.
Celtic was delighted to launch the new Celtic Learning Centre at Celtic Park in
May 2006. Built in association with Glasgow City Council, the Centre now
provides invaluable support to improve the education of young people throughout
the region.
1,575 local school children benefited from participating in Celtic Learning
Sports Programmes during the year, with a success rate of 83% on the reason for
referral. This brings total participants to 4,369 since the Programme was
launched in 2004.
The Centre was visited by approximately 8,000 school pupils participating in
Celtic Learning's various support classes this year. These included Literacy and
Numeracy Courses, Web Design Classes in partnership with Stow College, Video
Editing and Broadcasting, French Language support, English Language support
classes for Asylum Seekers, Refugees and children of Economic Migrants, Art
Classes, Anti-Sectarian workshops and Japanese Fun classes. In addition Adult
Community groups participated in Evening computing classes in association with
Glasgow Metropolitan College.
We would like to express our appreciation to all our strategic partners and
participants for supporting the Celtic Foundation during 2006/07. Without their
support the progress and achievements of the Celtic Foundation would not have
been possible.
MERCHANDISING
This was the second year of our contract with NIKE and saw the launch of a new
international kit and a new away kit, whilst 25th May 2007 saw the successful
launch of the 40th anniversary Lisbon Lions home strip.
Turnover for the year reached £13.37m, which is down on the previous year's
income, although this had included a full year of new home kit sales.
2006/07 saw the first full year of trading for the Coatbridge, Clydebank and
Stirling retail stores and a temporary unit opened in Greenock, which has now
been retained on a permanent basis. The number of Celtic retail concessions
within Debenhams stores has been increased to four with the addition of Newry
and Cork to the existing operations in Glasgow and Inverness.
Wholesale income continues to grow through established accounts with Lifestyle
Sports, KitBag, JJB Sports, Heatons and Ireland's largest retailer, Dunnes
Stores.
In terms of merchandise, the Lisbon Lions 40th anniversary saw the successful
release of several limited edition ranges.
MULTI MEDIA
Channel 67 Online and Channel 67 Online Plus subscription levels have continued
to climb. Celtic has also launched a DVD-quality streaming video service,
Channel 67 Premium, which is forecast to grow subscribers during the course of
the new season.
TV revenues reported strong growth as a result of the Club being the sole
Scottish participant in the UEFA Champions' League together with the revenues
generated from pre-season friendlies and the domestic success of the team. .
The Club's official website, www.celticfc.net, has been re-designed with an
increased emphasis on security and greater functionality. Traffic has grown by
40% since the site's re-launch in April, whilst the Japanese language site,
www.celticfc.jp, is currently undergoing similar redevelopment.
Celtic's Multi Media team successfully produced and presented a number of
high-profile events over the last 12 months, including the Tommy Burns
Testimonial Dinner, Player of the Year and the Lisbon Lions 40th Anniversary
Banquet. In addition, the Multi Media team have contributed significantly to the
forthcoming 'Celtic Opus' in terms of content, style and editorial, in
conjunction with the Kraken Group.
DVD titles produced during the year included the end of season review -
'Untouchable' - and the hugely successful 'A Bhoy's Life' (the Jimmy Johnstone
story). The epic Official History of Celtic Football Club is due for completion
in mid October following an 18 month production period.
This year, Multi Media has provided considerable support to the football
department by analysing, filming and editing matches and training sessions, as
well as providing automated analysis of the opposition with the installation of
the Amisco tracking system.
PUBLIC RELATIONS
The level of media interest and activity around the Club was again extremely
high during the year, particularly as a consequence the Club's progression to
the last 16 of the UEFA Champions League as well as continued domestic success.
The PR Department ensured substantial positive media coverage for a range of
Club activities at a national level, including commercial, charitable and
community events. In addition, the Department plays an important role in
effectively dealing with supporter enquiries, working closely with supporter
organisations and liaising directly with Glasgow City Council and other bodies
to ensure the Club maintains its important social dimension.
BRAND PROTECTION
Celtic continued to guard its intellectual property rights throughout the year
to ensure that the Celtic brand remains adequately protected from misuse by
third parties. The Club worked closely with the enforcement authorities,
including the police, customs and trading standards, along with other trademark
holders and trade bodies. Action was taken against those found to be in breach.
Counterfeit goods to the value of approximately £270,000 were removed from the
UK marketplace.
PARTNER PROGRAMME
Our Platinum partnerships with Nike and Carling continue to be successful for
both the Club and the sponsors. The retention of such high profile businesses,
complemented by our long-standing relationships with Phoenix, T-Mobile, Radio
Clyde and Ladbrokes, has helped attract new partners.
Thomas Cook's first year as Official Travel Partner was very successful,
enhancing supporters' travel arrangements to European matches as well as
organising all international travel for the team and officials.
Due to the success of the Celtic FC Credit Card through MBNA, our partnerships
in the financial sector increased. These now include bank accounts available thr
ough Soccer Savings and financial advice with Celtic FC Money, which is operated
by Dutch company AEGON.
New overseas partners, including Polish airline Centralwings, Spanish property
partners The Village and betting partners Bluechip, are helping to grow the
brand internationally and complement our work in Japan and North America. The
focus in 2007/08 will be to secure more UK and overseas sponsors.
STADIUM
In addition to several high-profile Champions League ties, in September 2006
Celtic Park hosted the Scotland international fixture against the Faroe Islands,
enhancing the stadium's reputation as one of the top venues in the country.
During the course of the year Celtic continued to work closely with Glasgow City
Council's Safety Team for Sports Grounds, placing spectator safety as our
highest priority. The Club views this partnership approach as key. Fully
endorsed by the Safety Team was the installation of a new card access system to
the stadium's 105 turnstiles. After a settling in period, the system is now
operating effectively at full capacity. The system is designed to improve
spectator access while providing the latest technology in event safety
management.
During the course of the season, Celtic extended the stewarding arrangements
adopted for European matches to SPL away fixtures. The Celtic stewards who
accompany our fans assist local operations to ensure the safety and well being
of Celtic supporters.
During the year, Celtic's Head Groundsman, John Hayes, received the prestigious
accolade of UK Groundsman of the Year for season 2005/06 from the Institute of
Groundsmanship, whilst Celtic's groundstaff team received the Scottish Premier
League Pitch of the Year award. John also received the Scottish Professional
Groundsman of the Year award, which represents tremendous recognition from his
peers.
FACILITIES
A number of corporate and customer hospitality areas have recently been
refurbished and upgraded, including the Jock Stein lounge and Walfrid
restaurant. In addition, the press area was upgraded and concourse redecorated.
Behind the scenes there has been significant investment in upgrading business
critical IT networks, software, printing, copying and telecommunications
systems. Considerable savings have also been achieved by introducing water and
energy conservation and leak detection devices.
CATERING AND CORPORATE HOSPITALITY
The performance of our seasonal hospitality packages remained strong in all
areas. All four UEFA Champions League matches were sold out and were packaged
with SPL fixtures, generating extra income. The AC Milan and Manchester United
matches also generated significant income from off-site packages.
Conference and Banqueting continued to perform well with a number of successful
events, the greatest success this season being the 40th anniversary dinner for
the Lisbon Lions.
Our Number 7 Restaurant successfully launched a new organic menu for children in
conjunction with the Soil Association's 'Food for Life' campaign, which gained
some very positive publicity.
The partnership with Lindley Catering, who provide our concourse catering
service on matchdays, continues to work well.
In terms of the Visitor Centre, numbers remained encouraging despite a small
shortfall in visitors this season compared to last.
SUPPORTER RELATIONS
The Club continued the practice of consulting with Supporters' Groups throughout
the season. Quarterly meetings have been maintained with representatives of the
Celtic Supporters Association, The Affiliation of Celtic Supporters Clubs, The
Association of Irish Celtic Supporters Clubs as well as the Donegal and South
Wales and Bristol Associations. The content of the meetings has varied to cover
a wide range of issues including European travel, sectarian singing and its
possible implications as well as away supporter behaviour in general. These
meetings have been very positive and are planned to continue. In addition open
forums have been held with supporters to discuss concerns on topics such as seat
relocation. In all cases the views and opinions of our supporters are highly
valued and we will continue to provide a platform for these to be aired.
Introduction of the new access control system throughout the stadium means that
season ticket holders now enter with their smartcards, with match ticket holders
using bar-coded tickets. One of the security benefits of the new system has been
easier identification of forged tickets at high-profile matches. Furthermore,
the majority of renewing season ticket holders have had their smartcards
re-activated for use in season 2007/8, saving the cost of voucher books and
postage.
Development continues on our Customer Relationship Management (CRM) database,
which integrates supporter data from across the Club. This allows us to use
information more effectively to reduce marketing costs, drive revenues, improve
customer service and provide additional value to Club sponsors and partners. The
coming season will see changes in the way the Club communicates to its
supporters by e-mail, with the CRM system being used to send personalised
messages and offers appropriate to the recipient based on their database
profile.
In line with the excellent work undertaken by the Celtic Foundation in tackling
bigotry and sectarianism, the Club has pro-actively engaged with supporter
groups to ensure that supporters following Celtic at home and away continue to
uphold the standards of behaviour we expect and to rigorously combat
unacceptable conduct in whatever form it may arise.
CELTIC CHARITY FUND
Celtic Charity Fund, the Club's charitable arm, again enjoyed a highly
successful year, raising thousands of pounds for a range of worthy causes.
Fundraising activities included a legends match against Liverpool, a charity
badge day at Celtic Park and our Annual Sporting Dinner in the Kerrydale Suite,
which was attended by football management, Directors and first team players.
DebRA was the principal beneficiary and a host of other organisations also
benefited from support during the course of the year, totalling around £170,000.
The Fund continues to be one of the most successful and high profile charity
operations within football.
The appointment of a Community Relations Manager in September 2006 highlighted
the Club's commitment to supporting worthy causes. Having now put in place a
revised application process, we will look to increase the fundraising impetus
for 2007/08.
HUMAN RESOURCES
Celtic was re-awarded the 'Positive About Disabled People' symbol by Job Centre
Plus during the year in recognition of working towards fulfilling our
commitments to colleagues and job applicants with a disability.
Furthermore, the Club made a formal commitment to work towards attaining
'Investors In People' status, seeking to further improve its people-management
and development policies and practices in line with nationally recognised
standards.
Over 80 pupils from local schools enjoyed a week of structured work experience
at Celtic Park during the year, part of a highly regarded and successful ongoing
programme.
The hard work and contribution of all colleagues in a very busy but highly
successful year is once again greatly appreciated.
SUMMARY AND OUTLOOK
Season 2006/07 was an extremely successful year for Celtic. Gordon Strachan
deserves much credit for the football success he has achieved. Celtic progressed
to the last 16 of the UEFA Champions' League for the first time, and
domestically the Tennent's Scottish Cup was secured in addition to winning the
Bank of Scotland Premierleague. This football success has greatly assisted
trading performance which in addition to the gains reported from player
transactions has resulted in record financial results for the year to 30 June
2007, and in the year end bank debt being reduced to £4.99m. This performance
has provided an ideal platform to ensure further progress is achieved. Equally
it is recognised that the football sector remains financially difficult with the
revenues generated by progress in European competitions highly significant.
Trading at the beginning of the new financial year has been relatively
encouraging. Seasonal sales of standard, premium and corporate tickets are at
levels comparable with last year and a new away football kit has been launched
in a competitive merchandise market. Like last year, additional revenue streams
continue to be sought and new commercial agreements, including new SPL
television and radio contracts, albeit at levels far below those of the FA
Premier League, should boost such income. Celtic continues to enjoy partnerships
with a number of international companies, which provide the foundation of our
income streams going forward.
The expected completion of the new training academy at Lennoxtown in the autumn
should enhance the number of internally generated youth players establishing
themselves in the first team. These initiatives together with the control of
football labour costs should result in a cost base and financial model that is
sustainable. Success in qualifying for the group stage of the UEFA Champions
League will assist greatly in this process.
The ability to field a competitive side and retain control on costs remains a
challenge. The player trading activity completed in the last 24 months has
reflected such a balanced approach and this will be continued as the
organisation moves forward. The biggest challenge facing your Board is the
management of salary and transfer costs whilst achieving playing success in
order to yield satisfactory financial results.
Our objectives are to secure domestic football success and to ensure UEFA
Champions' League football at Celtic Park on an annual basis.
Peter T Lawwell 20 August 2007
Chief Executive
GROUP PROFIT & LOSS ACCOUNT
2007 2006
Operations Player Total £000
excluding trading £000
player £000
trading
£000
Notes
TURNOVER -
group and
share of joint
venture 75,237 - 75,237 57,859
LESS SHARE OF
JOINT VENTURE - - - (448)
-------- -------- -------- --------
GROUP TURNOVER 2 75,237 - 75,237 57,411
OPERATING
EXPENSES 3 (59,283) - (59,283) (53,674)
-------- -------- -------- --------
PROFIT FROM
OPERATIONS 15,954 - 15,954 3,737
EXCEPTIONAL
OPERATING
EXPENSES 3, 4 (216) (2,663) (2,879) (579)
AMORTISATION
OF INTANGIBLE
FIXED ASSETS 3, 13 - (5,865) (5,865) (5,095)
-------- -------- -------- --------
GROUP
OPERATING
PROFIT/(LOSS) 15,738 (8,528) 7,210 (1,937)
LESS SHARE OF OPERATING PROFIT - - - -
IN JOINT VENTURE -------- -------- -------- --------
TOTAL
OPERATING
PROFIT/(LOSS) 15,738 (8,528) 7,210 (1,937)
PROFIT /
(LOSS) ON
DISPOSAL OF
INTANGIBLE
FIXED ASSETS - 9,397 9,397 (265)
LOSS ON
DISPOSAL OF
TANGIBLE FIXED
ASSETS (339) - (339) (250)
-------- -------- -------- --------
PROFIT/(LOSS)
BEFORE
INTEREST AND
TAXATION 15,399 869 16,268 (2,452)
======== ========
INTEREST
PAYABLE: 8
BANK LOANS AND
OVERDRAFTS (484) (999)
NON EQUITY
SHARES (744) (771)
-------- --------
PROFIT/(LOSS)
ON ORDINARY
ACTIVITIES
BEFORE
TAXATION 15,040 (4,222)
TAXATION ON
PROFIT/(LOSS)
ON ORDINARY
ACTIVITIES 9 - -
-------- --------
PROFIT/(LOSS)
FOR THE YEAR 22 15,040 (4,222)
-------- --------
EARNINGS /
(LOSS) PER
ORDINARY SHARE 11 18.53p (7.19p)
DILUTED
EARNINGS /
(LOSS) PER
SHARE 11 11.48p (7.19p)
All amounts relate to continuing operations.
There were no gains or losses recognised in 2007 or 2006 other than the profit
or loss for the year.
GROUP BALANCE SHEET
2007 2006
Notes £000 £000 £000 £000
FIXED ASSETS
Tangible assets 12 55,861 49,924
Intangible assets 13 12,990 7,593
-------- --------
68,851 57,517
CURRENT ASSETS
Stocks 15 3,383 1,901
Debtors 17 7,997 5,029
Cash at bank and in hand 7,006 2,914
-------- --------
18,386 9,844
======== ========
CREDITORS - Amounts falling
due within one year 18 (20,922) (15,481)
Income deferred less
than one year 19 (13,244) (12,589)
-------- --------
(34,166) (28,070)
======== ========
NET CURRENT LIABILITIES (15,780) (18,226)
-------- --------
TOTAL ASSETS LESS
CURRENT LIABILITIES 53,071 39,291
CREDITORS - Amounts falling
due
after more than one year 20 (16,342) (17,194)
-------- --------
NET ASSETS 36,729 22,097
======== ========
CAPITAL AND RESERVES
Called up share capital 21 23,452 23,450
Other reserve 22 21,222 21,222
Share premium account 22 14,129 14,089
Capital redemption reserve 22 2,440 1,739
Profit and loss account 22 (24,514) (38,403)
-------- --------
SHAREHOLDERS' FUNDS 23 36,729 22,097
======== ========
Approved by the Board on 20 August 2007
GROUP CASH FLOW STATEMENT
2007 2006
£000 £000
RECONCILIATION OF OPERATING PROFIT / (LOSS) TO NET
CASH INFLOW FROM OPERATING ACTIVITIES
Operating profit / (loss) 7,210 (1,937)
Depreciation 1,708 1,798
Amortisation of intangible fixed assets 5,865 5,095
Provision for impairment of intangible fixed assets 2,663 400
(Increase) / decrease in stocks (1,482) 86
Decrease / (increase) in debtors 987 (308)
Increase / (decrease) in creditors and deferred income 1,089 (159)
--------- ---------
Net cash inflow from operating activities 18,040 4,975
========= =========
CASH FLOW STATEMENT
Net cash inflow from operating activities 18,040 4,975
Returns on investments and servicing of finance (Note 24) (1,005) (1,520)
Capital expenditure and financial investment (Note 24) (12,054) (6,869)
--------- ---------
Cash inflow / (outflow) before use of liquid resources
and financing 4,981 (3,414)
Financing (Note 24) (889) (8,393)
Net proceeds of equity share capital - 14,550
--------- ---------
Increase in cash 4,092 2,743
========= =========
RECONCILIATION OF NET CASH FLOW TO
MOVEMENT IN NET DEBT (Note 25)
Increase in cash in the year 4,092 2,743
Cash outflow from movement in debt 889 8,393
--------- ---------
Change in net debt resulting from cash flows 4,981 11,136
Non cash movement in debt (181) (210)
--------- ---------
Movement in net debt in the year 4,800 10,926
Net debt at 1 July (13,965) (24,891)
--------- ---------
Net debt at 30 June (9,165) (13,965)
========= =========
NOTES TO THE ACCOUNTS
1. ACCOUNTING POLICIES
The Financial Statements are prepared under the historical cost convention and
comply with applicable accounting standards.
The Financial Statements have been prepared on the same basis and using the same
accounting policies as those used in the Financial Statements for the year ended
30 June 2006 which included implementation of the presentational aspects of FRS
25 ('Financial Instruments: disclosure and presentation') for the first time.
Under FRS 25 the Group's Preference Shares and Convertible Preferred Ordinary
Shares, as compound financial instruments, have been reclassified as a
combination of debt and equity and non-equity dividends reclassified as interest
with a resultant reduction in Shareholders' Funds. Consequently, net assets of
the Group at 30 June 2007 are reported £3.11m (2006: £3.81m) below that which
would have been reported prior to the implementation of FRS 25. As a result of
the accounting treatment of the Convertible Preferred Ordinary Share dividends
under FRS 25, there is a requirement under the capital maintenance provisions of
the Companies Act 1985 to transfer an element of distributable reserves into a
capital redemption reserve.
The Group's Profit and Loss Account follows the Financial Reporting Guidance for
Football Clubs issued in February 2003 by The Football League, The FA Premier
League and the FA, although the turnover within Note 2 continues to be analysed
in accordance within the headings of the business operations of the Group.
2. TURNOVER
Turnover in respect of the five business operations, all of 2007 2006
which arises in the UK, comprised: £000 £000
Professional football 34,345 26,659
Multimedia and communications 23,199 11,889
Merchandising 13,367 14,337
Stadium enterprises 2,679 2,779
Youth development 1,647 1,747
--------- ---------
75,237 57,411
--------- ---------
3. EXCEPTIONAL OPERATING EXPENSES
The exceptional operating expenses of £2.88m (2006: £0.58m) reflect £0.22m
(2006: £0.18m) in respect of labour costs largely arising as a result of the
early termination of certain employment contracts and £2.66m (2006: £0.40m) in
respect of a provision for impairment of intangible fixed assets.
4. DIVIDENDS
A 6% (before tax credit deduction) non-equity dividend of £0.54m is payable on
31 August 2007 to those holders of Convertible Cumulative Preference Shares on
the share register at 3 August 2007, together with the amount due in respect of
the Convertible Preferred Ordinary Shares fixed dividend of 4% of £0.9m (2006:
£0.9m) plus the participating dividend of 2%, £0.45m (2006: £nil) as a result of
reaching the knockout stage of the UEFA Champions League. A number of
shareholders have elected to participate in the Company's scrip dividend
reinvestment scheme for this financial year. Those shareholders will receive new
Ordinary Shares in lieu of cash. The implementation of the presentational
aspects of FRS 25 ('Financial Instruments: disclosure and presentation') in the
preparation of the annual results, requires that the Group's Preference Shares
and Convertible Preferred Ordinary Shares, as compound financial instruments,
are classified as a combination of debt and equity and the attributable
non-equity dividends are classified as interest.
5. TAXATION
No provision for corporation tax or deferred tax is required in respect of the
year ended 30 June 2007. Estimated tax losses available for set-off against
future trading profits amount to approximately £30m (2006: £44m). This estimate
is subject to the agreement of the current and prior years' corporation tax
computations with HM Revenue and Customs.
6. EARNINGS PER SHARE
Earnings per share has been calculated by dividing the profit for the period of
£15.04m (2006: £4.22m loss) by the weighted average number of Ordinary Shares of
81.15 million (2006: 58.76 million) in issue during the year. Diluted earnings
per share as at 30 June 2007 has been calculated by dividing the earnings 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,
if dilutive, in accordance with FRS 22 Earnings Per Share. The result of this
calculation was 135.8 million shares (2006: 58.76 million). As at June 2006 and
June 2007 no account was taken of potential share purchase options, as these
potential ordinary shares were not considered to be dilutive under the
definitions of the applicable accounting standards.
7. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Group
2007 2006
£000 £000
At 1 July 22,097 11,728
Movements in year:
Issue of ordinary share capital 42 14,591
Participating dividend payable on the Convertible
Preferred Ordinary Shares (450) -
Profit / (loss) for the year 15,040 (4,222)
--------- ---------
At 30 June 36,729 22,097
--------- ---------
8. ANALYSIS OF NET DEBT
At Cash Flow Non-cash At
1 July 2006 £000 Movement 30 June 2007
£000 in Debt £000
£000
Cash at bank
and in hand 2,914 4,092 - 7,006
--------- --------- --------- ---------
2,914 4,092 - 7,006
--------- --------- --------- ---------
Debt due
within 1 year (1,065) 6 - (1,059)
Debt due after
1 year (15,814) 883 (181) (15,112)
--------- --------- --------- ---------
(16,879) 889 (181) (16,171)
--------- --------- --------- ---------
Net debt (13,965) 4,981 (181) (9,165)
--------- --------- --------- ---------
9. ANALYSIS OF CASH FLOWS FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT
2007 2006
£000 £000
Returns on investments and servicing of finance
Dividends paid (521) (521)
Interest paid (484) (999)
--------- ---------
Net cash outflow from returns on investments and
servicing of finance (1,005) (1,520)
--------- ---------
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (7,069) (3,035)
Payments to acquire intangible fixed assets (10,959) (4,477)
Proceeds from sales of intangible fixed assets 5,974 643
--------- ---------
Net cash outflow from capital expenditure and financial
investment (12,054) (6,869)
--------- ---------
Financing
Loans paid (883) (8,383)
Loan instalments paid (6) (10)
--------- ---------
Net cash outflow from financing (889) (8,393)
--------- ---------
10. ANNUAL REPORT & ACCOUNTS
Copies of the annual report & accounts together with the notice and notes of the
2007 AGM are expected to be issued to all shareholders in due course.
The financial information set out above was approved by the directors on 20
August 2007 and does not constitute the Company's statutory accounts for the
years ended 30 June 2007 or 30 June 2006. The auditors' opinion on the 2007
statutory accounts is unmodified and does not include a statement under Section
237 (2) or (3) of the Companies Act 1985. The statutory accounts for 2006 have
been filed and those for 2007 will be delivered to the Registrar of Companies in
due course.
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