Celtic Finances
Celtic PLC – Final Results
RNS No 9678j CELTIC PLC 13 August 1999 PRELIMINARY RESULTS FOR THE YEAR ENDED
30 JUNE 1999
Celtic plc (“Celtic”) is pleased to announce preliminary results for the year ended 30 June 1999. – Turnover £33.84m (1998 : £27.82m)- Profit from operations £6.75m (1998 : £5.09m)- Profit on ordinary activities £0.55m (1998 : £7.10m) before tax- Shareholders Funds £42.592m (1998 : £42.575m)
HIGHLIGHTS
* Turnover has increased by 21.6% to £33.84m.
* Profit from operations increased by 32.6% to £6.75m.
* Reduction in net gain on sale of player registration to £347,000 (1998: £7.41m).
* £6.06m was invested in strengthening the first team squad with the signing of Viduka, Moravcik, Riseth, and Mjallby.
* New 4 year contract agreed with Henrik Larsson, Scotland’s Player of the Year and top goal scorer.
* New Chairman and Chief Executive appointed.
* New structure of Celtic’s football operation with the appointment of Kenny Dalglish as Director of Football Operations, and John Barnes as Head Coach.
* Since the year end, £9.37m has been invested in acquiring Berkovic, Petrov, Tebily, Kharine, Petta and Bonnes.
* Major new four-year sponsorship deal with ntl.
In his statement to shareholders, Chairman, Frank O’Callaghan, said:”Celtic’s pattern of growth, established over the last five years under the direction of Fergus McCann, continued in 1998/99. Your Board is committed to achieving success on the football field, using that success to generate significant revenue from other activities. I believe we have the management in place to achieve both and I am confident that, with your support, we can achieve our goals.”
For further information contact: Allan MacDonald, Chief Executive On the day
EXTRACTS FROM THE CHAIRMAN’S STATEMENT FINANCIAL RESULTS
Turnover increased by 21.6% to £33.84m, with income levels improving in all areas of operation. Operating expenses rose by 19.2% to £27.09m so that profit from operations increased significantly by 32.6% to £6.75m. The ongoing strengthening of the first team squad reflected by a net investment of £4.2m in the year, has resulted in an increase in the amortisation of player registrations of 13.8% to £6.09m, while the net gain on sale of player registrations has reduced by over £7m to £0.35m. It is believed that the market value of the intangible assets representing player registrations is well in excess of the net book value. Profit before and after tax was £550,000 from which a preference dividend of £533,000 falls to be paid. Your Board does not recommend the payment of an ordinary dividend.
LABOUR COSTS
In the year under review, wage costs increased by 16.6% to £14.50m reflecting the increased costs involved in the strengthening of the first team squad and additional labour in respect of the incremental turnover generated. Our desire to strengthen the entire football operation, particularly the first team, together with the wage inflation currently being experienced in the football sector will substantially increase wage costs next year. Your Board will, however, continue to closely monitor this area.
PERSONNEL
The man who must be given most credit for Celtic’s considerable development over the last five years is Fergus McCann. He stepped down as Chairman and Managing Director of Celtic plc in April 1999. It is appropriate at this time to recognise the role Fergus played in rejuvenating Celtic and creating a firm foundation for the Club’s future. The name of Fergus McCann and his contribution to the rebirth of our Club will rightly remain a key part in Celtic’s history. On behalf of my fellow Directors, shareholders and supporters I would like to officially record our thanks for his considerable efforts. It is my further pleasure to welcome Allan Macdonald, former Managing Director of British Aerospace in Asia and Africa, as our new Chief Executive. Although his official date of appointment was 1 July 1999, he has been working behind the scenes since April to ensure a smooth transition and has already made a considerable positive impact.
PROSPECTS
I look to the future with real optimism. We have the largest club stadium in the UK, with the largest number of season ticket holders. Your Board is committed to achieving success on the football field, using that success to generate significant revenue from other activities. I believe we have the management in place to achieve both and I am confident that, with your support, we can achieve our goals.
F O’Callaghan Chairman
EXTRACTS FROM THE CHIEF EXECUTIVE’S REVIEW STADIUM CAPACITY AND TICKET PRICES
Completion of the new ‘Jock Stein Stand’ at Celtic Park in July 1998 successfully concluded the Company’s four-year programme to develop and expand the stadium to its current spectator capacity of 60,506. The additional seating available in the new stand created the opportunity to increase the number of season ticket holders from 42,322 to 53,388. High demand for tickets reserved for match day sales resulted in ‘near full capacity’ attendance at almost all of Celtic’s home matches. This demand was achieved despite match day ticket prices being increased by 12.5%, on average.No corresponding increase was applied to season ticket prices. Income from season ticket and match day ticket sales rose by 28.4% to £15.4 million, primarily as a consequence of the growth in stadium capacity but also (albeit to a much lesser extent) as a result of match day ticket price increases. Season ticket price increases for the 1999/2000 season have been contained to around 6 %, on average. Celtic’s pricing therefore remains at a level well below the average charged by the major clubs competing in the English Premiership, clubs that Celtic requires to compete against for European success.
BROADCASTING & PUBLISHING REVENUE
Income from broadcasting and publishing increased by 28.6% to £4.38 million during the course of the financial year. This growth largely derived from Celtic’s share of additional revenue generated by the new TV broadcasting contract between the Scottish Premier League and broadcasters for the coverage of domestic league matches. This new contract was effective from the start of the 1998/1999 football league season. The Company is also committed to working with the management of the Scottish Premier League to create further value from the sale of Scottish Premier League matches to overseas markets.
MERCHANDISING
Against a background of declining sales within the general retail sector in the U.K., and particularly within the sports goods sector, steady growth of 6.9% in the Company’s revenue from retail merchandising (£5.1 million) in the course of the financial year was a commendable achievement. Such performance in a very challenging retail market environment is indicative of the underlying strength of the Celtic brand. A new retail outlet was opened in Dublin on 30th November 1998. The Club is continuing to pursue its already well-established plans to expand merchandising revenues. By the end of the current financial year, the new Dublin store will have been operating for a whole trading year, and it is also intended to open two additional outlets. There are also plans to generate additional sales via the Internet.
CATERING
Income from catering rose by 21.8% to £2.65 million, largely as a result of additional match day food outlets being opened in the new Jock Stein stand and the opening at the end of September 1998 of the Kerrydale Suite which provides conference facilities for up to 800 and banqueting for up to 500. The Company will continue to expand and strengthen the appeal of its retail catering business. The new Kerrydale Suite will continue to be heavily promoted during its initial year of operation and additional fast-food outlets are being opened within the stadium in the early course of the new football season in order to cater for the near full capacity attendances anticipated for most home matches.
OTHER COMMERCIAL REVENUES
SponsorshipUmbro, Phoenix Honda and other corporate sponsors maintained their active support of the Club and its activities during the 1998/1999 football season. A major new four-year sponsorship deal has been concluded with the international media company, ntl. The contract became effective from the commencement of the current season. Corporate HospitalityIncome from corporate hospitality (£3.21 million) was 39% higher than in the previous financial year primarily as a result of the creation of the ’67 Club, a new match day hospitality facility located in the Jock Stein Stand. This growth was above expectations and it is encouraging to note that high levels of ‘repeat business’ are the norm in the corporate hospitality market as a whole. Plans are in place to maintain the growth trend in this important business sector. The renewed level of interest in Celtic amongst supporters, the general public and the business community has resulted in a number of the Company’s corporate hospitality facilities being taken up by corporate customers early in the season and, in many cases, for the complete season.
FOOTBALL OPERATIONS
Success on the field of play is of critical importance to Celtic’s business operations and corporate strategy. The Club has a stadium and playing environment to match the best in Europe. It has also invested in the development of a competitive first team squad, which succeeded in winning the Scottish Premier League in 1998. Celtic’s aim is to achieve and sustain success in all domestic competitions and to restore the club as a force in European football. A new management team has been established to achieve these objectives. Kenny Dalglish, as Director of Football Operations, is now in charge of all aspects of Celtic’s footballing activities, John Barnes has been engaged as Head Coach, supported by Eric Black as Assistant Head Coach. Terry McDermott has been employed as Head Scout and Assistant First Team Coach. The Company has appointed its first ever full-time doctor, Roddy MacDonald, who specialises in sports medicine. Player acquisition and personal remuneration costs in the professional football world have soared to new levels in recent years, following the Bosman ruling. In order to achieve a viable football business, within which the cost of successful football operations is affordable relative to the income of the business as a whole, it is essential for Celtic to develop its own young players of a quality consistent with the club’s footballing aspirations. It is therefore intended to establish a national and international youth development programme and facilities capable of delivering highly talented young players able to compete for and win places in Celtic’s first team. Kenny Dalglish will play the lead role in this critical aspect of Celtic’s future.
SUMMARY
The backing of Celtic supporters is unique. It is the aim of the Board and Management of the club to continue to develop the many opportunities that such passionate backing brings, and to deliver success both on the field of play, in all of the competitions in which Celtic competes, and in the business arena in which Celtic must also compete effectively
Allan MacDonald Chief Executive Celtic plc
GROUP PROFIT AND LOSS ACCOUNT YEAR ENDED 30 JUNE 1999
1999
£0001998
£000TURNOVER (note 3) 33,840 27,821 OPERATING EXPENSES (27,086)
(22,727)
PROFIT FROM OPERATIONS 6,754
5,094
AMORTISATION OF INTANGIBLE (6,088)
(5,348)
FIXED ASSETS NET GAIN ON SALE OF INTANGIBLE FIXED ASSETS 347 7,410 OPERATING PROFIT 1,013
7,156
INTEREST RECEIVABLE AND SIMILAR INCOME – 97 INTEREST PAYABLE AND SIMILAR CHARGES (463)
(121)
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 550
7,132
TAX ON ORDINARY ACTIVITIES – (31) PROFIT FOR THE YEAR 550
7,101
PREFERENCE DIVIDEND (533)
(533)
RETAINED PROFIT FOR THE YEAR 17
6,568
EARNINGS PER ORDINARY SHARE (note 4) 0.06p 22.65p DILUTED EARNINGS PER SHARE (note 4) 1.16p 14.90p
All amounts relate to continuing operations. There were no gains or losses recognised in 1999 other than the profit for the year.
Celtic plc GROUP BALANCE SHEET 30 JUNE 1999
1999
£0001998
£000FIXED ASSETS Tangible assets 43,773 41,724 Intangible assets 13,538 14,441 57,311
56,165
CURRENT ASSETS Stocks 532 495 Debtors 3,556 2,642 Cash at bank and in hand 1,645 21 5,733
3,158
CREDITORS Amounts falling (7,148)
(8,621)
due within one year Income deferred less than one year (8,525)
(7,918)
(15,673)
(16,539)
NET CURRENT LIABILITIES (9,940)
(13,381)
TOTAL ASSETS LESS CURRENT LIABILITIES 47,371
42,784
CREDITORS – Amounts falling due after more than one year (4,779) (209) NET ASSETS 42,592
42,575
CAPITAL AND RESERVES Called up share capital (includes non-equity) 11,390 11,390 Share premium 17,361 17,361 Profit and loss account 13,841 13824 SHAREHOLDERS’ FUNDS 42,592
42,575
Celtic plc GROUP CASH FLOW STATEMENT YEAR ENDED 30 JUNE 1999
1999
£0001998
£000RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES Operating profit 1,013 7,156 Depreciation 974 747 Amortisation of intangible fixed assets 6,088 5,348 Net gain on sale of intangible fixed assets (347)
(7410)
Grants release (1)
(2)
Increase in stocks (37)
(369)
Increase in debtors (1,520)
(188)
Increase in creditors 1,707 2,303 Net cash inflow from operating activities 7,877
7,585
CASH FLOW STATEMENT Net cash inflow from operating activities 7,877 7,585 Returns on investments and servicing of finance (996)
(557)
Taxation paid (139)
(133)
Capital expenditure and financial investment (8,250)
(12,033)
Cash outflow before use of liquid resources and financing (1,508)
(5,138)
Financing 4,909 (96)
Increase/(decrease) in cash 3,401
(5,234)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Increase/(decrease) in cash in the period 3,401 (5,234) Cash (outflow)/inflow from (increase)/ decrease in debt (4,909) 96 Change in net debt resulting form cash flows and movement in net debt in the period (1,508)
(5,138)
Net (debt)/funds at 1 July (2,169) 2,969 Net debt at 30 June (3,677)
(2,169)
NOTES TO THE PRELIMINARY RESULTS
- 1 The financial information set out above was approved by the directors on 12th August 1999 and does not constitute the Company’s statutory accounts for the years ended 30 June 1999 or 1998. The auditors’ opinion on the 1998 statutory accounts is unqualified and does not include a statement under Section 237 (2) or (3) of the Companies Act 1985. The statutory accounts for 1998 have been filed and those for 1999 will be delivered to the Registrar of Companies in due course.
- 2 The preference dividend of 6% (inclusive of tax credit) will be paid on 31 August to the preference shareholders on the register at 20 August 1999. The directors do not recommend the payment of an ordinary dividend.
- 3 Turnover Turnover comprised:
1999
£0001998
£000Change
£000Change
%Ticket sales 15,404 11,993 3,411 28.4 Broadcasting fees and publishing 4,383 3,407 976 28.6 Merchandise revenue 5,100 4,771 329 6.9 Catering 2,647 2,174 473 21.8 Other commercial income 6,306 5,476 830 15.2 33,840 27,821 6,019 21.6
- 4 Earnings Per Share Earnings per share has been calculated by dividing the profit for the period by the number of ordinary shares (29 million) in issue. Diluted earnings per share has been calculated by dividing the profit for the period by the total number of ordinary and preference shares (total 47.5 million) in issue at 30 June 1999 and the full exercise of outstanding share purchase options. The 1998 comparative figures have been adjusted to take account of the 100 for 1 share split, which took place during the year to 30 June 1999.
- 5 Copies of the Preliminary Results can be obtained from the Company’s Registered office at 95, Kerrydale Street, Glasgow, G40 3RE.