REG - Celtic PLC - Results for the year ended 30 June 2018

CelticAnnouncement

19/09/2018 16:15

RNS Number : 3111B
Celtic PLC
19 September 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.
 
For further information contact:
 




Celtic plc


 


 


 




Ian Bankier, Celtic plc


Tel: 0141 551 4235


 


 




Peter Lawwell, Celtic plc


 


 


 




Iain Jamieson, Celtic plc


 


 


 




 




Canaccord Genuity Limited, Nominated Adviser


 


 




Simon Bridges


Tel: 0207 523 8000


 


 



 
 
 
 



 
 
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
 
 




 


 
Note


2018
£000


 


2017
£000




CONTINUING OPERATIONS:


 


 


 


 




 


 


 


 


 




Revenue


2


101,573


 


90,639




 


 


 


 


 




Operating expenses (before intangible asset transactions and exceptional items)


2


(87,083)


 


(76,329)




 


 


 


 


 




Profit from trading before intangible asset transactions and exceptional items


 


14,490


 


14,310




 


 


 


 


 




Exceptional operating expenses


3


(4,141)


 


(1,526)




 


 


 


 


 




Amortisation of intangible assets


 


(8,768)


 


(7,546)




 


 


 


 


 




Profit on disposal of intangible assets


 


16,454


 


2,279




 


 


 


 


 




Operating profit


 


18,035


 


7,517




 


 


 


 


 




Finance income


 


216


 


204




 


 


 


 


 




Finance expense


 


(980)


 


(824)




 


 


 


 


 




 


 


 


 


 




Profit before tax


 


17,271


 


6,897




 


 


 


 


 




Income tax expense


5


(1,848)


 


-




 


 


 


 


 




Profit and total comprehensive income for the year


 


15,423


 


6,897




 


 


        


 


 




Basic earnings per Ordinary Share for the year


 
6


16.47p


 


7.38p




 


 


 


 


 




 


 


 


 


 




Diluted earnings per Share for the year


6


11.72p


 


5.46p




 


 


 


 


 




 
 
CONSOLIDATED BALANCE SHEET
 




 


 


2018


 


2017




 


 


£000


 


£000




Assets


 


 


 


 




Non-current assets


 


 


 


 




Property, plant and equipment


 


58,265


 


56,332




Intangible assets


 


20,963


 


13,927




Trade receivables


 


4,397


 


-




 


 


83,625


 


70,259




 


 


 


 


 




Current assets


 


 


 


 




Inventories


 


2,407


 


2,414




Trade and other receivables


 


21,261


 


12,284




Cash and cash equivalents


 


42,563


 


24,505




 


 


66,231


 


39,203




 


 


 


 


 




Total assets


 


149,856


 


109,462




 


 


 


 


 




Equity


 


 


 


 




Issued share capital


 


27,132


 


27,107




Share premium


 


14,720


 


14,657




Other reserve


 


21,222


 


21,222




Accumulated profits/ (losses)


 


9,860


 


(5,563)




Total equity


 


72,934


 


57,423




 


 


 


 


 




Non-current liabilities


 


 


 


 




Borrowings


 


6,250


 


6,450




Debt element of Convertible Cumulative Preference Shares


 


4,208


 


4,232




Trade and other payables


 


10,302


 


5,940




Provisions


 


2,309


 


1,543




Deferred income


 


86


 


115




 


 


23,155


 


18,280




 


 


 


 


 




Current liabilities


 


 


 


 




Trade and other payables


 


27,005


 


10,435




Current borrowings


 


300


 


304




Provisions


 


2,442


 


658




Deferred income


 


24,020


 


22,362




 


 


53,767


 


33,759




 


 


 


 


 




Total liabilities


 


76,922


 


52,039




 


 


 


 


 




 


 


 


 


 




 


 


 


 


 




Total equity and liabilities


 


149,856


 


109,462




 


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
 
 
 




 


Share

capital


Share

premium


Other

reserve


Capital

reserve


Retained

earnings


Total




 


£000


£000


£000


£000


£000


£000




Equity shareholders' funds

as at 1 July 2016


24,316


14,611


21,222


2,781


(12,460)


50,470




Share capital issued


1


46


-


-


-


47




Reduction in debt element of convertible cumulative preference shares following conversion


9


-


-


-


-


9




Transfer from capital reserve


2,781


-


-


(2,781)


-


-




Profit and total comprehensive income for
the year


-


-


-


-


6,897


6,897




 


 


 


 


 


 


 




Equity shareholders' funds

as at 30 June 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






CONSOLIDATED CASH FLOW STATEMENT
 




 


 


2018


 


2017




 


Note


£000


 


£000




 


 


 


 


 




Cash flows from operating activities


 


 


 


 




Profit for the year


 


15,423


 


6,897




Income tax expense


5


1,848


 


-




Depreciation


 


1,977


 


1,664




Amortisation of intangible assets


 


8,768


 


7,546




Impairment of intangible assets


 


214


 


287




Reversal of prior period impairment charge


 


-


 


(64)




Profit on disposal of intangible assets


 


(16,454)


 


(2,279)




Loss on disposal of property, plant and equipment


 


-


 


198




Net Finance costs


 


764


 


620




 


 


12,540


 


14,869




 
 


 


 


 


 




(Increase) / decrease in inventories


 


7


 


(525)




(Increase) in receivables


 


(6,142)


 


(687)




Increase in payables and deferred income


 


17,378


 


2,435




Cash generated from operations


 


23,783


 


16,092




Tax paid


 


(707)


 


-




Net Interest paid


 


(47)


 


(95)




Net cash flow from operating activities


 


23,029


 


15,997




 
 


 


 


 


 




Cash flows from investing activities


 


 


 


 




Purchase of property, plant and equipment


 


(3,461)


 


(2,737)




Purchase of intangible assets


 


(10,645)


 


(9,889)




Proceeds from sale of intangible assets


 


9,821


 


11,382




Net cash used in investing activities


 


(4,285)


 


(1,244)




 
 


 


 


 


 




Cash flows from financing activities


 


 


 


 




Repayment of debt


 


(200)


 


(200)




Dividend on Convertible Cumulative Preference Shares


 


(486)


 


(498)




Net cash used in financing activities


 


(686)


 


(698)




 


 


 


 


 




Net increase in cash equivalents


 


18,058


 


14,055




Cash and cash equivalents at 1 July 2017


 


24,505


 


10,450




Cash and cash equivalents at 30 June 2018


 


42,563


 


24,505






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




 


 


 


 


 




 


 


2018

£000


 


2017

£000




The Group's revenue comprised:


 


 


 


 




Football and Stadium Operations


 


43,587


 


37,571




Merchandising


 


17,717


 


16,479




Multimedia and Other Commercial Activities


 


40,269


 


36,589




 


 


101,573


 


90,639




 


 


 


 


 




 
 
3.         EXCEPTIONAL OPERATING EXPENSES
 
The exceptional operating expenses of £4.14m (2017: £1.53m) can be analysed as follows:
 
 




Exceptional operating expenses comprised


2018

£000


 


2017

£000
 




Impairment of intangible assets and other prepaid costs


511


 


287




Reversal of prior period impairment charges


-


 


(64)




Onerous employment contracts


3,549


 


1,004




Compromise payments on contract termination


81


 


299




 


4,141


 


1,526




 
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
 




 


2018


 


2017




 


£000


 


£000




Reconciliation of earnings to basic earnings:


 


 


 




 


 


 


 




Net earnings attributable to equity holders of the parent


15,423


 


6,897




 


 


 


 




Basic earnings


15,423


 


6,897




 


 


 


 




Reconciliation of basic earnings to diluted  earnings:


 


 


 




 


 


 


 




Basic earnings


15,423


 


6,897




Non-equity share dividend


573


 


577




Reclaim of statute barred non-equity share dividends


-


 


(19)




 


 


 


 




Diluted earnings


15,996


 


7,455




 
 


 


 


 




 


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


93,663


 


93,403




 


 


 


 




Dilutive effect of convertible shares


42,803


 


43,041




 


 


 


 




Diluted weighted average number of ordinary shares


136,466


 


136,444




 
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.




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