Results for the year ended 30 June 2018

Celtic PLC

Results for the year ended 30 June 2018

SUMMARY OF THE RESULTS

Operational Highlights

·    Winner of the Scottish Domestic "Double Treble" and our seventh consecutive SPFL Premiership title

·    Qualified for the UEFA Champions League group stages for the second consecutive season

·    Finished third in the UEFA Champions League group stage, qualifying for the round of 32 of the Europa League

·    32 home matches (including the Scott Brown Testimonial) played at Celtic Park (2017: 31)

Financial Highlights

·    Group revenue increased by 12.1% to £101.6m (2017: £90.6m)

·    Operating expenses including labour increased by 14.1% to £87.1m (2017: £76.3m)

·    Gain on sale of player registrations of £16.5m (2017: £2.3m)

·    Acquisition of player registrations of £16.6m (2017: £13.8m)

·    Profit before taxation of £17.3m (2017: £6.9m)

·    Year-end cash net of bank borrowings of £36.1m (2017: £17.9m)

·    Year-end net cash, net of debt and debt like items, of £27.0m (2017: £13.4m)¹

¹net cash, net of debt like items, is represented by cash net of bank borrowings of £36.1m (2017: £17.9m) 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.

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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 record sales revenue of £101.6m (2017: £90.6m) and a profit before taxation of £17.3m (2017: £6.9m), reflect a financial year in which everything went well. 

On behalf of the Board I congratulate Brendan Rodgers, his staff and the players on making history for a second successive year, achieving a historic "Double Treble", a seventh consecutive League Championship and consecutive qualifications for the group stages of the UEFA Champions League.   Everything that happens on the pitch is supported across the Club and I also congratulate the executive management team and all the staff at the Club. 

The Board considers that the Group's proven strategy of investment in football operations, whilst maintaining a self-sustaining financial model, has provided a stable platform for the success enjoyed in the year under review.  This approach remains entirely appropriate for us, as we seek to continue to deliver football success and, in turn, shareholder value. 

The year-end cash net of bank borrowings was £36.1m (2017: £17.9m), which equates to a net funding position of £27.0m (2017: £13.4m) when adjusted for debt and debt like items (as defined in the Summary of the Results). This allows the Board to plan for the unexpected and manage the immediate disappointment of failing to qualify for the Group Stages of the Champions League. 

In my last annual report I referred to our vulnerability to the growing financial power of a number of key constituencies within the European Game.  These circumstances are unchanged and we remain watchful of events that unfold. Through Peter Lawwell's continued involvement in the Board of the European Club Association, the Club Competitions Committee at UEFA and the Professional Football Strategy Council of UEFA, the Club and the game in Scotland are well represented in this very important arena. 

During the year, we made prudent and considered investments in our infrastructure at Celtic Park, including the completion of a new playing surface to suit the manager's desired style of play, new LED floodlighting to comply with the UEFA elite requirements and an updated sound system. Celtic Park's reputation as one of the foremost football arenas in the world, with our supporters recognised as the best in the world by FIFA, is something we can all be proud of. 

The Club continues to support the important work of Celtic FC Foundation and we all share the same sense of pride in the generosity of Celtic supporters, which the Foundation harnesses to help so many people at home and abroad.  It is often said that Celtic is a club like no other and the efforts of Celtic supporters and the Foundation is the best example of that.

I thank all of our supporters, shareholders, sponsors, partners and colleagues for their contribution to another successful year for the Club.  We will continue to work together to develop our club for the long term.

Ian P Bankier                                                                                                                                                 

19 September 2018

Chairman

CHIEF EXECUTIVE'S REVIEW

Each year, our key football objective is success in all three domestic competitions and in the UEFA Champions League.  Building on the remarkable Invincible season last year, the Club made history again this year by winning the "Double Treble" for the first time in Scottish football history.  Added to that, the team qualified for and performed well in the group stages of the UEFA Champions League, competing with two of the strongest teams in the world and qualifying for the last 32 of the UEFA Europa League.  I congratulate Brendan, his staff, the players and everyone at the Club for these remarkable achievements. 

The Club recognises that success on the pitch leads to success off the pitch, which is why the Board is committed to investing in our football operations.  Our ambition remains to create a world class football club.   Our success on the pitch this year has allowed us to commit, not only to fees for the transfer of player registrations (£16.6m, rising from £13.8m in 2017), but also to player, football management, coaching, recruitment, medical, performance, sports science and the youth academy costs.  Total labour costs in 2018 increased by £7.1m, from £52.2m in 2017 to £59.3m (14%), largely due to increases in the football department.  This has allowed the Club to retain key football personnel including Kristoffer Ajer, Kieran Tierney, Calum McGregor, Tom Rogic and Leigh Griffiths on long term contracts.

We continue to search the world for talented players to play the Celtic way, such as Odsonne Edouard who joined the Club for a Club record transfer fee.  Player recruitment and development continues to be fundamental to the Club.  Our objective is always to bring players to the Club who will improve the squad.  Given the quality of our existing squad that is a challenging task, made more difficult by hyper-inflation in transfer fees and player salaries in the market.  Nevertheless, our objective is to invest everything that we can into the football operation without putting the Club at risk.

For season 2018/19, everyone at the Club was disappointed not to qualify for the Group Stages of the Champions League.  As we shared the successes of the last two seasons, we share in that disappointment, but given the Club's strategy over many years we have financial reserves to rely upon as we continue to look to the future with ambition and optimism.

Our long term strategy enables us 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.  We have an excellent first team squad and in the Youth Academy we have the next generation of exciting young players such as Mikey Johnston, Karamoko Dembele and many others, all of whom are eager to follow in the footsteps of Kieran Tierney, James Forrest and Calum McGregor in becoming Champions League players for Celtic Football Club. 

In closing I would like to record my continued appreciation for our Club captain, Scott Brown, who celebrated his Testimonial Season during the year.  Scott has served Celtic brilliantly over the past decade. He has been a fantastic Celtic captain, doing so much for the Club on and off the pitch in this role. Scott's dedication and commitment is an inspiration to everyone at the Club as we work to deliver success for the Celtic support.

Peter Lawwell                                                                                                                                                             

19 September 2018

Chief Executive   

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED BALANCE SHEET

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED CASH FLOW STATEMENT

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 as adopted for use in the EU (IFRSs) but does not include all of the disclosures that would be required under IFRSs. 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 2017 and are those which will form the basis of the 2018 financial statements.

2.         REVENUE

3.         EXCEPTIONAL OPERATING EXPENSES

The exceptional operating expenses of £4.14m (2017: £1.53m) can be analysed as follows:

The impairment of intangible assets, and the reversal of impairment charges, 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 contact 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 (2017: £0.51m), was paid on 31 August 2018 to those holders of Convertible Cumulative Preference Shares on the share register at 28 July 2018. A number of shareholders elected to participate in the Company's scrip dividend reinvestment scheme for the financial year to 30 June 2018.  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 £nil (2017: £0.02m) in respect of statute barred preference dividends in accordance with the Company's Articles of Association.

5.         TAX ON ORDINARY ACTIVITIES

The provision for corporation tax as at 30 June 2018 is £1.14m (2017: nil) which reflects a tax charge of £1.85m with payments of £0.70m made in the year. There are no tax losses carried forward (2017: £7.64m) and the available capital allowances pool is approximately £10.50m (2017: £9.52m). These estimates are subject to the agreement of the current and prior years' corporation tax computations with H M Revenue and Customs. 

6.         EARNINGS PER SHARE

Earnings per share of 16.47p (2017: 7.38p) has been calculated by dividing the profit for the period of £15.4m (2017: £6.90m) by the weighted average number of Ordinary Shares of 93.7m (2017: 93.4m) in issue during the year.  Diluted earnings per share of 11.72p (2017: 5.46p) as at 30 June 2018 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 2018 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 2018 or 30 June 2017. The Independent Auditor's Reports on the statutory financial statements for 2018 and 2017 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 2017 have been filed with the Registrar of Companies and those for 2018 will be delivered to the Registrar of Companies in due course.