THE Celtic plc preliminary results for the year ended June 30, 2011. SUMMARY OF THE RESULTS
Operational and Financial Highlights
• Winners of the SFA Scottish Cup.
• Runners up in the SPL and League Cup.
• Appointment of Neil Lennon as Celtic football manager.
• Two home European matches (2010: 5).
• Group revenue £52.56m (2010: £61.72m).
• Investment in football personnel of £10.29m (2010: £13.64m).
• 51 international players between U15 and senior levels.
• Year-end net bank debt of £0.53m (2010: £5.85m).
• Profit before taxation of £0.10m (2010: £2.13m loss).
• Operating expenses before exceptional items £52.50m (2010: £57.25m).
• Profit from trading before asset transactions and exceptional items of £56,000 (2010: £4.46m).
• Exceptional costs of £3.99m (2010: £3.14m)CHAIRMAN’S STATEMENT
This annual statement, my last as Chairman, provides the opportunity to reflect on a year of major transition and substantial progress on the pitch, consolidation and stability within the business and the return of a solidarity between the team, the Club and its supporters. These took us to victory in the Scottish Cup and within a whisker of the SPL title.
As indicated in my interim report, the past year was not without its challenges. Football was not any more immune from the recession than any other activity. Our participation in Europe was short-lived, playing only 2 home games rather than the 5 of the preceding year. Those challenging economic conditions and the poor football performance in season 2009/10 undoubtedly had a detrimental effect on our revenues. Turnover decreased by 14.8% to £52.56m, affected by the reduction in European matches and the ticket and broadcasting revenues that they generate, and a decline in merchandising sales in a difficult retail market.
Against this background the achievements of everyone at the Club - management, staff and our faithful supporters - appear even more outstanding. To achieve and maintain financial stability, and attain a very manageable debt position, while continuing to invest significantly in strengthening the football squad and generate profit in the football sector in Scotland in these conditions is highly commendable. And yet as our Annual Report shows, as a result of these efforts and our activity in the transfer market we managed to turn last year’s loss into break-even, to reduce our debt considerably and still invest a substantial amount in new players.
Operating expenses were reduced again, by £4.75m to £52.51m reflecting lower match and travel costs, reduced cost of sales and smaller labour costs.
Our profit on ordinary activities before taxation of £102,000 is small, but a significant improvement on the loss of £2.13m for the same measure the year before.
Our year end net bank debt – being all our bank borrowings offset by cash - of £530,000 is massively down on the half-year figure we reported (£9.09m) and substantially down on the £5.85m at 30 June 2010. Both of these higher debt figures, sanctioned by the Board in order to finance player investment for the incoming new management team, and the subsequent reduction in debt levels were planned as part of our maintenance of financial stability and the independence that comes with it.
With a significant investment in football personnel of £10.29m our commitment to achieving domestic success and meaningful participation in Europe remains. In previous Annual Reports I have stressed the need for Celtic to develop first class scouting and youth development to compensate for the lack of lucrative TV income. Our investments in developing these are now beginning to pay dividends. The depth of talent now within the squad demonstrates the strength of our scouting. Our youth development operation also continues to improve and will play an increasingly important role in helping to refresh the first team player pool.
Last season saw progress on the park. Full credit must go to Neil, Johan, Alan, Garry and the rest of the management team. They deservedly returned silverware in the Scottish Cup, and narrowly missed out in the League Cup Final. One point - indeed at the end of the day one goal - separated us from the League title and the double. Our shared disappointment is only partly mitigated by a recognition that 92 league points was our highest tally since season 2003/2004 and would have been sufficient to win the league in each season since 2005/2006.
And while we naturally concentrate on our first team fortunes, let's also remember the achievements of our younger players who are the seed corn of the future. The U-19s won their league and the Scottish Youth Cup final, with the U17s winning the prestigious Glasgow Cup. 29 of our players in the 15 to 19 age groups are internationalists. The Girls’ Academy has more than matched these successes, including victory in the Scottish Women’s Football League Division One, championship and cup wins for other girls’ teams and senior team success in the Premier League Cup and Football League Cup.
It’s often said that Celtic is more than a Football Club. We must never lose sight of why the Club was founded. The Celtic Foundation acts as a vehicle to deliver our community programmes covering not only football coaching for children, youths and adults but running specialist projects with important social dimensions. These are at a higher level than at any time in the Foundation’s history. The very ethos of the Club continues to flow strongly through that work.
Football at Celtic is many things, but being dull is not one of them. Events during the year, particularly off the field, started at a remarkable pace and after only the briefest of respites from terrible winter weather, accelerated into one of the most extraordinary series of occurrences in Scottish football for many years.
The first half of this year culminated in significant reform within the SFA being announced, with Scottish football clubs later unanimously approving proposals for improved transparency and accountability, and introducing a better and fairer framework for handling disputes and disciplinary matters. As a club which has been at the forefront of the movement for change we welcome these developments. Of course they will now have to be tested in practice, but we will continue to encourage and support the implementation of the reformed structures. Our Chief Executive’s appointment to the Professional Game Board is testimony to our commitment in that direction.
The Scottish Premier League also continues to consider major restructuring, although an outcome from those deliberations is some way off. We should not under-estimate the challenges of developing a sustainable financial model for Scottish football; radical thinking is as appropriate here as it was for the SFA.
Issues over sectarianism, violence, domestic abuse and alcohol misuse continue to plague Scottish society and in the spring of this year the Scottish Government and authorities sought football’s help in tackling these problems. We have participated actively in the Joint Action Group process and hope that the significant time and effort we have devoted will bear a positive dividend in future, but there will be no quick fix or easy solution.
New legislation designed to outlaw offensive behaviour connected with football, and the sort of threatening communications that our manager was subjected to, is also likely to be introduced to supplement existing powers. We welcome the expressed intention of the Scottish Government and authorities to tackle extremes of behaviour, and the small minority who continue to tarnish the reputation of our country and our football but also wish to see that the new legislation and any action taken to enforce it is carefully considered, applied fairly and is a proportionate response to the seriousness of the problems encountered.
Against this backdrop I must acknowledge the remarkable strength and character of Neil Lennon. At Celtic our expectations of a manager are so high that it is easy to overlook just how challenging that job is. In his first full season as a manager Neil has succeeded in restoring a pride and passion to our play, showcasing emerging talent and uniting our supporters. To do that in any normal environment would be a major achievement but to have done it in the deplorable context of death threats, a physical assault and explosive devices, was nothing short of extraordinary. The commitment Neil and his family have shown this season, and that accorded to him by fans, is what makes this Club truly special. I thank you all.
As I hand over the Chairmanship at the AGM I must pay tribute to my fellow Directors for their support and guidance throughout my tenure here, and to the Club’s employees, who work, largely unheralded and unsung to make sure that the experience of our team’s football at Celtic Park and elsewhere remains a safe and enjoyable one. They have gone well beyond the call of duty and been unfailingly committed and courteous in the assistance they have provided.
And finally, to our fans. I have had occasion in the past to pay tribute to the uniqueness of Celtic supporters. Even as I write this year’s Chairman’s Statement, over 55,000 Celtic fans have turned out for a midweek Charity Match to raise money for the victims of the East Africa Famine. Few other, if any, football clubs would have seen such a huge response. This year they have already contributed over £387,000 to charitable causes. Their support for the Club has been just as outstanding. Loyalty and Solidarity are not items that appear in the columns of our annual accounts. They do not show up on a balance sheet. But they are an invaluable asset, the very lifeblood of a club like Celtic. Last year our supporters came together, and stayed together through a period of immense controversy and difficulty. They were a source of unwavering support and inspiration to everyone at the Club, from the Boardroom to the dressing room. No one who was present at the last league game of the season, who saw the sheer determination, even in adversity, to celebrate being part of what Celtic is, can doubt that.
It has been my honour and privilege to have served you and this Club and to have chaired its Board over the last four years. I am confident that with a talented young team and manager, the guidance of highly experienced directors, and above all your continuing support, Celtic Football Club will continue to be a vibrant and unique football club. Dr John Reid
15 August 2011
For the full Celtic plc preliminary results to year ended June 30, 2011, click HERE