Rugger Guy looks at the Celtic’s Interim Report

In the midst of all that Six Nations thingy, my egg-chasing mate cast his expert eye over Celtic’s numbers.

As ever, I am merely the publisher. So, see you out the other side.

 

Phil, I have carried out a financial review of the interim results of Celtic plc “Celtic” for the six months to 31 December 2021. As is always the case with interims, there is not a full publication of results with comprehensive notes. The report is some 15 pages, which compares with 50 plus pages in the publication of year-end numbers.

Consequently, my review is not as detailed as possible.

However, there is sufficient information and disclosures to draw out the main features and make some observations.

In order to comment on the results, I will set out the report into the following sections.

 

Putting the interims in context.

A comparison with the interims last year and also in 2019 where there was less impact from Covid.

Liquidity and cash flow.

Outlook.

 

Interims in context.

 

The results for Celtic for the six months to 31 December 2021 are still impacted somewhat by covid but are a lot closer to normalised trading. I will show the 2019 interims also as a slightly more comparable performance throughout.

The main takeaways are as follows:

 

Revenue increased by almost 30% to £52.9m, vs £40.7m last year and £53.3m in 2019.

Operating profits, before player trading was £7m vs a loss of £0.3m last year and a profit of £11.5m in 2019.

Profit from player trading was £25.8m vs £1m last year and £23m in 2019.

Net cash at bank was £25.6m vs £19.7m last year and £32.9m in 2019.

 

All in all, the final results are very positive. A resumption of operating profits and very strong contribution from player trading, Edouard, Ajer and Christie notable contributors.

The policy of developing players and selling on to reinvest continues once again. Celtic bought 10 players and brought in 2 players on loan in the first 6 months and invested a further £19m in this process.

The strong cash position of almost £26m puts the football club in a strong position for the second half where I am informed  Celtic spent between £6m and £7m on five further players. In addition, there is always an operating loss in h2.

 

Comparison with last years interims and 2019.

 

A breakdown of the revenue mix is as follows:

 

6 months to 31 December 2021 2020       2019

£m                          £m                          £m

Football and stadium      23.6                        12.6                        27.0

Multimedia                                         14.0                        13.0                        15.1

Merchandising                                  15.3                        15.1                        11.2

Total revenues                  52.9                        40.7                        53.3

 

The revenues allowing for the Covid effect show a strong rebound in 2021, the trend should continue going forward.

 

Operating profit (loss)      7.0                       (0.3)                       11.5

 

Profit (loss) before tax   27.6                        (5.9)                       24.4

 

Net cash at bank                               25.6                        19.7                        32.9

 

Liquidity and cashflow.

 

Looking at the strength of the balance sheet, it is good to see that Celtic now enjoy a strong positive working capital position once more. In simple terms, this looks at current assets and current liabilities over the next 12 months. There is a  surplus of £10.4m which compares with a deficit of £4.4m last year. In addition the non-current assets ( due after more than 12 months) on trade (principally player trading receipts and payments) show a surplus of almost £7m. Given that Celtic have allegedly spent some £7m in the January transfer window, it demonstrates once more the prudent management of Celtic’s finances.

Celtic spent almost £17m on player registrations in the first half compared to almost £13m last year, so it shows the degree of ongoing investment in player development.

Cash flow from trading aided by player trading was also good in the first 6 months to December. Almost £4m was generated versus an outflow of £5.6m last year. In overall gross cash balances, this increased to £27.8m vs £23.2m. Remember that Celtic has £2.2m in borrowings. Also bear in mind that Celtic also have a £13m facility which could be used if required. This has been in place for some considerable time but has never been used.

 

Outlook.

 

Once more, Celtic unsurprisingly received an unqualified audit report.

However, as is normally the case, management has indicated that an operating loss is likely to be incurred in the second half of the year. The principal reasons cited for this is less player trading, lower UEFA media rights and match ticket income, coupled with lower retail income. Celtic have had a very comprehensive investment in new players in the current financial year. Some 17 players have been registered of which 2 are on loan. Several departures of players have also taken place and from a footballing perspective, in which I cannot add value,  it appears that Celtic could have a successful year.

As I have commented on for several years now, the critical aspect of the football club strategy is becoming more and more influenced by success in Europe. When Celtic achieve some form of European success,  there is less pressure to sell on players to provide the necessary financing. The prospect of entry into the Champions League Group stages, I am informed, guarantees potentially £40m additional revenues, so it is self-evident how important this influences things. In the meantime Celtic had net cash of almost £26m coupled with a £13m facility, so once more the football club is in a strong financial position.

European success would be the icing on the cake and result in an even more impressive financial position.

 

So, there you have it.

The richest club in Scotland looks financially well run.

The thing is there is now a manager in place who knows how to spend the money rather well.

That could be a game-changer going forward.