REG - Celtic PLC - Results for the year ended 30 June 2022

CelticAnnouncement

20/09/2022 17:30

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RNS Number : 0472A  Celtic PLC  20 September 2022

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.

 

Celtic PLC

 

Announcement of Results for the year ended 30 June 2022

 

SUMMARY OF THE RESULTS

 

Key Operational Items

 

·    Winner of the SPFL cinch Premiership and qualification for UEFA
Champions League group stages in season 2022/23

 

·    Winner of the Premier Sports Cup for season 2021/22

 

·    Qualification for the group stages of the UEFA Europa League for
season 2021/22

 

·    31 home matches played at Celtic Park (2021: 28 games)

 

 

Key Financial Items

 

·    Group revenue increased by 45.2% to £88.2m (2021: £60.8m)

 

·    Operating expenses including labour increased by 23.4% to £91.7m
(2021: £74.4m)

 

·    Gain on sale of player registrations of £29.0m (2021: £9.4m)

 

·    Acquisition of player registrations of £38.4m (2021: £13.5m)

 

·    Profit before taxation of £6.1m (2021: Loss of £11.5m)

 

·    Year-end cash net of bank borrowings of £30.2m (2021: £16.6m)

 

For further information contact:

 

 Celtic plc
 Ian Bankier, Celtic plc              Tel: 0141 551 4235
 Iain Jamieson, Celtic plc

 Canaccord Genuity Limited, Nominated Adviser
 Simon Bridges             Tel: 0207 523 8000

 

CHAIRMAN'S STATEMENT

These results for the year ended 30 June 2022 show that revenue increased to
£88.2m (2021: £60.8m) with a corresponding profit before tax of £6.1m
(2021: £11.5 loss before tax). The key driver of the revenue growth was the
restoration of a more normalised trading environment as we emerged from
Covid-19 and were able to operate at full stadium capacity for all but five
matches at the beginning of the season, where crowd restrictions remained.
This, along with record gains from player trading in the year, £29.0m (2021:
£9.4m), ensured the delivery of the reported profit. The contribution of
player trading gains, especially in Europa League years, ensures that we
maintain a healthy and sustainable financial future. In terms of funding and
liquidity, our year end cash, net of bank borrowings, was £30.2m (2021:
£16.6m). The increase this year was principally due to the timing of season
ticket sales taking place later in the summer of 2021.

 

The Covid-19 surge over December 2021 to February 2022 was mitigated by the
SPFL's initiative to bring forward the winter break to minimise disruption and
protect vital match day ticket income for Scottish football as a whole. As a
result, our supporters were able to attend two more matches and we did not
suffer any revenue attrition from closed door matches. Consequently, the
second half financial performance and the reduction in earnings in this period
can be attributed to trading seasonality and the timing of player trading
gains that were weighted towards the first half of the financial year.

 

As reported in my interim statement, we acquired several excellent additions
to our player squad over the January transfer window. We thus entered the
second half of the financial year 6 points off the top of the Premiership
leader board, but with some confidence that we had the Manager and the squad
to deliver our key objective of regaining the SPFL cinch Premiership title.
We were delighted to win the title in May 2022 to add to the Premier Sports
Cup won in December 2021.

 

An extremely welcome added bonus has been that the winner of the SPFL
Premiership gained automatic qualification for the 2022/23 UEFA Champions
League. This is the first time the champions of Scotland have achieved this in
12 years, due to an increase in Scotland's UEFA coefficient. Our Champions
League draw has provided us with a suite of exciting ties involving Real
Madrid, Shakhtar Donetsk and RB Leipzig.

 

The benefit of automatic qualification has delivered certainty over the season
ahead, allowing us to back our Manager and build greater strength into the
playing squad.  Having signed Jota, Cameron Carter-Vickers, Alexandro
Bernabei and Benjamin Siegrist in June 2022, we report a total investment in
the player registrations of £38.4m for the financial year. Post year end, we
completed the permanent signings of Sead Haksabanovic and Aaron Mooy alongside
the temporary transfers of Moritz Jenz and Oliver Abildgaard.  We continue to
balance the benefits of investing in experienced players alongside younger
talent with a view to developing all players' performances on the pitch and
trading when conditions are right. The successful execution of this model is a
challenge but is vitally important for clubs such as Celtic.

 

Our women's team also went on to add to the SWPL Cup win in December 2021 by
winning the Women's Scottish Cup in May 2022. This cup double represents a
remarkable achievement in such a short time and I congratulate Fran Alonso and
his team and reaffirm our commitment to the women's game in Scotland.

 

The biggest influence on the financial and sporting fortunes of the Club is
our ability to participate in European competition.  As covered by Michael
Nicholson in his report, the Champions League format will change in 2024.
This will provide further opportunities and enhanced media rights.  Our task
is to be prepared to maximise the opportunities that will evolve by remaining
financially strong and stable, whilst investing intelligently in the player
squad, the football department and the sporting infrastructure and facilities.

 

We have every confidence in our business model that over the period of my
office has demonstrated its robustness, especially in challenging times.  In
closing, I thank all of my colleagues at Celtic, whose enormous efforts have
delivered this pleasing year of transition.  I also pay tribute to our
remarkable support, who have backed the Manager and the team every step of the
way.

 

 
 

Ian P Bankier,
Chairman
 

20 September 2022

 

CHIEF EXECUTIVE'S REVIEW

 

Following the challenges and disappointments of the year to June 2021, but
with Celtic Park finally back as it should be - full of our supporters -
everyone at the Club wanted to reward our supporters' commitment and loyalty
with entertaining and winning football.  This year ended 30 June 2022 began
with our Manager, Ange Postecoglou, taking on the existing squad and
developing it, while introducing his attacking, high intensity style of
football. The immediate priority in the 2021 summer transfer window,
therefore, was to support the Manager, and the Club committed investment in
players the Manager believed would contribute to our success.

 

In UEFA competitions, we prepared for our UEFA Champions League qualifier
against FC Midtjylland with a squad in transition and lost the tie.  Having
overcome AZ Alkmaar, we qualified for the group stages of the UEFA Europa
League, where we faced Bayer 04 Leverkusen, Real Betis and Ferencvaros TC.
This was high quality opposition and, having finished third in the group, we
qualified for the knock out play-offs of the newly constituted UEFA Europa
Conference League, ultimately exiting the tournament to Bodo Glimt FC.

 

Domestically, despite losing three of our first six cinch Premiership matches,
our supporters continued to believe in and support what our Manager was
looking to achieve.  Early success in the Premier Sports Cup fed confidence
and everyone connected with the Club was delighted to see Callum McGregor lift
his first trophy as Celtic captain.  Following the last of the league
defeats, in September 2021, we embarked upon on a remarkable 32 match unbeaten
run until the end of the season; an outstanding achievement and one that led
to us regaining the cinch Premiership title.

 

The scale of that achievement should not be underestimated, and we thank and
congratulate the Manager, the Captain and all of the players and staff for a
fantastic season of entertaining and winning football.

 

Season 2021/22 also saw us build on the success of last season for our Women's
team, with the team securing a domestic cup double for the first time in the
Club's history.  This was an excellent achievement and demonstrated real
progress for Manager Fran Alonso, Captain Kelly Clark and all of the players
and staff of the Women's team. Our strategy is to continue to develop and
invest in the Women's team and we are pleased that this commitment has been
matched by the SPFL by incorporating the women's game into the league
governing body in order to continue to develop the game in Scotland.

 

Celtic FC B entered the Scottish Football Lowland League as a guest team for
the first time in season 2021/22. We finished third in the 34-match programme
in what was a highly competitive environment.  Following the success of this
initiative, we were pleased to be accepted as a guest team for season 2022/23,
during which Celtic FC B will also compete in the UEFA Youth League.  Having
aligned the B Team directly under the First Team Manager, and having appointed
Stephen McManus and Darren O'Dea as our B Team coaches, we wish them and the
players the best of luck for the season ahead. We see Celtic FC B as a vitally
important development pathway opportunity, which directly aligns with our
youth development strategy.

 

During the year, we continued to review and develop the technical functions
supporting our football operations, making appointments in Recruitment,
Medical, Sports Science and our Academy, as well as investing in the Training
Centre at Lennoxtown.  We are continuing to work on further infrastructure
developments, in addition to the recent stadium banners update, including the
development of a new viewing platform for our disabled supporters and a new
match day bar for season ticket holders, with a view to improving the match
day experience for our supporters.  Continuous improvement remains a key part
of the Club's strategy.

 

We are delighted to continue to work with our sponsors, including adidas,
Dafabet and Magners, and we thank them and all of our partners for their
continued support. Our retail and multimedia businesses continue to perform
strongly and our match day attendances, including season ticket sales, and
other stadium businesses all performed above expectations in the year.  We
are, however, mindful of the current economic headwinds. We continue to
monitor the situation and factor the economic environment into key decisions.

 

As we look forward into the future of European football, the second half of
the financial year saw UEFA confirm a number of significant developments with
respect to the format of the European game and key governance matters.

 

Firstly, in May 2022, UEFA announced that it had approved a new Champions
League format post 2024, involving an expansion to 36 teams, a shift away from
the traditional group stage format to a single league phase and an increase to
eight matches from six in the initial phase. Similarly, under the proposals
the Europa League and Conference League would also be expanded to accommodate
36 teams, with eight matches and six matches respectively in the initial
phase. There is an expectation that, once implemented, this would lead to
increased media rights, which would in turn benefit all participating clubs,
and we would see this as a positive development for European football as a
whole.

 

Secondly, UEFA introduced significant enhancements in financial governance by
introducing new Financial Sustainability Regulations to replace the previous
Financial Fair Play Regulations. These are being introduced on a phased basis
from summer 2022 and have the effect of introducing more rigorous spending
controls and more definitive sanctions in order to create a sustainable future
for the European Club environment. Celtic played a significant role at a
strategic and technical level in the development of the new regulations,
continuing to demonstrate our strategy of participating and contributing to
the future of the game at the highest level.

 

As we look to the season ahead with confidence, I would like to thank all of
our colleagues for the huge part that they played in the Club's success last
season. Having started the season under Covid-19 restrictions and facing into
a number of challenges, our colleagues helped to create the environment in
which our teams delivered that success.  We will continue to work across all
aspects of the Club to build on the achievements of last season and to take
our Club forward.  Finally, on behalf of everyone at Celtic, we thank our
supporters, who got behind our Manager and the team from day one and whose
contribution is crucial when it comes to our Club's success.

 

Michael Nicholson, Chief Executive
 
 

20 September 2022

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 June 2022

 

 

                                                                                       2022        2021

                                                                               Notes   £000        £000

 Revenue                                                                       2       88,235      60,781

 Operating expenses (before intangible asset transactions and exceptional              (91,728)    (74,353)
 items)

 Loss from trading before intangible asset transactions and exceptional items          (3,493)     (13,572)

 Exceptional operating expenses                                                3       (6,262)     (333)

 Amortisation of intangible assets                                                     (13,045)    (11,821)

 Profit on disposal of intangible assets                                               29,029      9,435

 Other income                                                                          -           5,000

 Operating profit / (loss)                                                             6,229       (11,291)

 Finance income                                                                        876         855

 Finance expense                                                                       (969)       (1,056)

 Profit / (loss) before tax                                                            6,136       (11,492)

 Tax expense                                                                   5       (287)       (1,109)

 Profit / (loss) and total comprehensive profit / (loss) for the year                  5,849       (12,601)

 Basic profit / (loss) per Ordinary Share for the year                         6       6.19p       (13.35)p

 Diluted profit / (loss) per Share for the year                                6       4.69p       (13.35)p

 

 

CONSOLIDATED BALANCE SHEET

As at 30 June 2022

 

                                                               2022         2021
                                                               £000         £000
 Assets
 Non-current assets
 Property, plant and equipment                                 56,265       57,939
 Intangible assets                                             35,489       18,303
 Trade receivables                                             13,000       11,312
                                                               104,754      87,554
 Current assets
 Inventories                                                   2,987        3,860
 Trade and other receivables                                   38,367       23,764
 Cash and cash equivalents                                     31,869       19,459
                                                               73,223       47,083

 Total assets                                                  177,977      134,637

 Equity
 Issued share capital                                          27,166       27,166
 Share premium                                                 14,951       14,914
 Other reserve                                                 21,222       21,222
 Accumulated profits                                           11,478       5,629
 Total equity                                                  74,817       68,931

 Non-current liabilities
 Borrowings                                                    314          1,549
 Debt element of Convertible Cumulative Preference Shares      4,174        4,174
 Trade and other payables                                      16,806       4,043
 Lease liabilities                                             318          540
 Provisions                                                    114          99
 Deferred tax liabilities                                      2,982        2,793
                                                               24,708       13,198

 Current liabilities
 Trade and other payables                                      36,758       20,223
 Lease liabilities                                             539          645
 Borrowings                                                    1,336        1,336
 Provisions                                                    8,350        6,213
 Deferred income                                               31,469       24,091
                                                               78,452       52,508

 Total liabilities                                             103,160      65,706

 Total equity and liabilities                                  177,977      134,637

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2022

 

 Group                                                                  Share    Share    Other    Accumulated  Total
                                                                        capital  premium  reserve  profit
                                                                        £000     £000     £000     £000         £000
 Equity shareholders' funds                                             27,166   14,849   21,222   18,230       81,467
 as at 1 July 2020
 Share capital issued                                                   -        65       -        -            65
 Reduction in debt element of convertible cumulative preference shares  -        -        -        -            -
 Loss and total comprehensive loss                                      -        -        -        (12,601)     (12,601)

 for the year
 Equity shareholders' funds                                             27,166   14,914   21,222   5,629        68,931
 as at 30 June 2021

 Share capital issued                                                   -        37       -        -            37
 Reduction in debt element of convertible cumulative preference shares  -        -        -        -            -
 Profit and total comprehensive profit                                  -        -        -        5,849        5,849

 for the year
 Equity shareholders' funds                                             27,166   14,951   21,222   11,478       74,817
 as at 30 June 2022

 

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 30 June 2022

 

                                                                 2022          2021
                                                                 £000          £000

 Cash flows from operating activities                     Notes
 Profit / (loss) for the year                                    5,849         (12,601)
 Taxation charge                                                 287           1,109
 Depreciation                                                    2,736         2,494
 Amortisation of intangible assets                               13,045        11,821
 Impairment of intangible assets and other prepaid costs         7,235         -
 Reversal of prior period impairment charge                      (1,094)       (297)
 Profit on disposal of intangible assets                         (29,029)      (9,435)
 Loss on disposal of tangible fixed assets                       -             110
 Finance income                                                  (876)         (855)
 Finance costs                                                   969           1,056
                                                                 (878)         (6,598)

 Decrease / (increase) in inventories                            873           (2,591)
 Increase in receivables                                         (1,856)       (1,627)
 Increase / (decrease) in payables and deferred income           12,302        (698)
 Cash from / (used in) operations                                10,441        (11,514)
 Tax paid                                                 5      -             (268)
 Interest received                                               64            34
 Interest paid                                                   (77)          (118)
 Net cash flow from / (used in) operating activities             10,428        (11,866)

 Cash flows from investing activities
 Purchase of property, plant and equipment                       (1,034)       (482)
 Purchase of intangible assets                                   (20,566)      (13,630)
 Proceeds from sale of intangible assets                         26,044        25,522
 Net cash from  investing activities                             4,444         11,410

 Cash flows used in financing activities
 Repayment of debt                                               (1,280)       (1,280)
 Payments on leasing activities                                  (693)         (739)
 Dividend on Convertible Cumulative Preference Shares            (489)         (472)
 Net cash used in financing activities                           (2,462)       (2,491)

 Net increase / (decrease) in cash equivalents                   12,410        (2,947)
 Cash and cash equivalents at 1 July 2021                        19,459        22,406
 Cash and cash equivalents at 30 June 2022                       31,869        19,459

 

 

NOTES TO THE FINANCIAL STATEMENTS

 

1.         BASIS OF PREPARATION

 

The principal accounting policies applied in the preparation of these
Financial Statements are set out below.  These policies have been
consistently applied to financial years 2022 and 2021, presented, for both the
Group and the Company.

 

Going Concern

 

The Group has adequate financial resources available to it, including
currently undrawn bank facilities, together with established contracts with a
number of customers and suppliers.

 

Additionally, the Group continues to perform a detailed budgeting process each
year which is reviewed and approved by the Board. The Group also performs
regular re-forecasts and these projections, which include profit/loss and cash
flow forecasts, are distributed to the Board. As a consequence, the Directors
believe that the Group is well placed to manage its business risks
successfully over the medium term.

 

In consideration of the above, the Directors have a reasonable expectation
that the Group and Company has adequate resources to continue in operational
existence for the foreseeable future. Thus they continue to adopt the going
concern basis of accounting in preparing the annual Financial Statements.

 

 

2.         REVENUE

                                                 2022         2021

£000

                                                              £000
 The Group's revenue comprised:

 Football and Stadium Operations                 42,782       20,825
 Merchandising                                   24,925       22,609
 Multimedia and Other Commercial Activities      20,528       17,347
                                                 88,235       60,781

 

 

3.         EXCEPTIONAL OPERATING EXPENSES

 

The exceptional operating expenses of £6.3m (2021: £0.3m) can be analysed as
follows:

 

                                                          2022       2021

£000
£000
 Impairment of intangible assets and other prepaid costs  7,235      -
 Reversal of prior period impairment charges              (1,094)    (297)
 Settlement agreements on contract termination            121        630
                                                          6,262      333

 

 

The impairment of intangible assets in the current year 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. The
carrying value of intangible assets are reviewed against criteria indicative
of impairment and, where the carrying value exceeds their current market
value, impairment is recognised. Where events subsequent to this initial
assessment give rise to a reversal of any impairments, such as a transfer or a
significant turnaround in performance, an impairment reversal is recognised.

 

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

 

These events are deemed to be unusual in relation to what management consider
to be normal operating conditions as the occurrence of these events is
sufficiently irregular enough to warrant it as exceptional.

 

4.         DIVIDEND ON CONVERTIBLE CUMULATIVE PREFERENCE SHARES

 

A 6% non-equity dividend of £0.53m (2021: £0.53m) was paid on 31 August 2022
to those holders of Convertible Cumulative Preference Shares on the share
register at 29 July 2022. A number of shareholders elected to participate in
the Company's scrip dividend reinvestment scheme for the financial year to 30
June 2022.  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 (2021: £nil) in respect of
statute barred preference dividends in accordance with the Company's Articles
of Association.

 

 

5.         TAX ON ORDINARY ACTIVITIES

 

The corporation tax receivable as at 30 June 2022 was £0.5m (2021: £0.6m).
The current year tax charge was £0.3m and total tax payments in the year were
nil (2021: £0.3m). The available capital allowances pool is approximately
£5.1m (2021: £6.2m). These estimates are subject to the agreement of the
current year's corporation tax computations with H M Revenue and Customs.

 

The standard rate of corporation tax for the year in the United Kingdom is 19%
(2021: 19%).

 

                                              2022        2021

£000
£000

 Current tax expense
 UK corporation tax                           99          (609)
 Adjustments in respect of prior periods      -           290
 Total current tax expense                    99          (319)

 Deferred tax expense
 Origination of temporary timing differences  143         827
 Adjustments in respect of prior periods      -           (69)
 Effects of changes in tax rates              45          670
 Total deferred tax                           188         1,428
 Total tax expense                            287         1,109

 

6.         EARNINGS / (LOSS) PER SHARE

 

 Reconciliation of basic earnings / (loss) to diluted earnings / (loss):  2022          2021
                                                                          £000          £000
 Basic earnings / (loss)                                                  5,849         (12,601)
 Non-equity share dividend                                                569           569
 Diluted earnings / (loss)                                                6,418         (12,032)

                                                                          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                         94,457        94,366
 Dilutive effect of convertible shares                                    42,252        42,286
 Diluted weighted average number of ordinary shares                       136,709       136,652

 

Earnings per share of 6.19p (2021: loss per share of 13.35p) has been
calculated by dividing the total comprehensive profit for the period of £5.8m
(2021: loss of £12.6m) by the weighted average number of Ordinary Shares of
94.5m (2021: 94.4m) in issue during the year.

 

Diluted earnings per share of 4.69p has been calculated by dividing the
diluted earnings for the period of £6.4m 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. When considering a loss per share scenario, no adjustment
is made for the preference share dividend and therefore the diluted loss per
share is equal to the basic loss per share, as was the case in the prior year.

 

 

7.         ANNUAL REPORT & FINANCIAL STATEMENTS

 

Copies of the Annual Report & Financial Statements together with the
Notice and Notes of the 2022 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 2022 or 30 June
2021. The Independent Auditor's Reports on the statutory financial statements
for 2022 and 2021 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 2021 have been
filed with the Registrar of Companies and those for 2022 will be delivered to
the Registrar of Companies in due course.

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