Celtic Plc.
Celtic plc operates a professional football club and related ancillary activities in Scotland. It also involves in ticket sales derived from matches played at its Celtic Park; youth development activities; merchandising, which includes retail outlets operations under the Celtic brand name; multimedia and communications operations, including television rights, sponsorship, publications, Internet products, and joint marketing initiatives with commercial partners; stewarding and security services; and stadium development activities. The company was founded in 1888 and is based in Glasgow, Scotland
1a) Profit and Loss Account (P&L)
Profit and Loss Account is an essential factor which determines the success of financial status of Celtic Plc. as there can affect the business environment positively at the same time negatively if not noted and evaluated according to accounting standards as the nature of business to acquire good sales and continuous profit values.
Financial statement assumes a good view of the company from where the public can perceive and know if the operations are doing well or not along with the company’s management, stakeholders and other key players.
There was information noted that Celtic Plc company shares are traded on the London Stock Exchange since September 1993 as such turnover and pre-tax profit figures are in millions which affects a better standing of the finances and all of the underlying accounts.
1b) Balance Sheet
Balance sheet is one integral part of the financial statement as there complies to figures which accounts for equity ratios and other factors presented as the company may be doing its best year or not, as reflected in balanced sheet formation. For example the balance sheet shows some situation implies certain net debt from within reallocation from equity under FRS 25, from June 30 of 2007 is £5.15m (2006: £9.25m) and includes all bank borrowings and other loans offset by cash at bank and in hand. For one, reduction was principally as a result of the cash generated from trading during June of 2007 being offset by capital expenditure in respect of transfer fees paid for player acquisitions, tangible asset additions and dividend and interest payments.
1c) Cash Flow Statement (CFS)
There are also cash flow statements that make how Celtic Plc is handling finances in cash values and keep an eye of the capital profits to be involved thereunto. Celtic Plc ways are coming from a strong resources and standards of the finances from which capital gains are of the various kind and business activities are coning from sales, profits and paid taxes on board. The number of investments is important if there is any and how the money is being used and realized serves as a crucial factor.
2) Financial Resources
From ticket sales, as there is progression into the last 16 of the UEFA Champions League saw a significant increase in sales of standard match tickets against the previous season. The total number sold in season 2006/07 was just under 400,000, generating sales revenue of over £8m. Champions League ticket sales accounted for nearly 220,000 tickets at a value of £5.4m, whilst SPL ticket sales totaled over 100,000 at just under £2m. Standard season ticket sales were once again very strong with a total in excess of 50,000 books sold, worth more than £17m. Taking into account Corporate and Premium ticket sales the total reached 53,000, which is amongst the highest in the UK
3a) SWOT Analysis
Strength
Multimedia revenue has increased by £11.31m, 95.1% to £23.20m, almost entirely as result of progressing in the UEFA Champions’ League. Merchandising reported turnover of £13.37m in comparison to £14.34m from the past year. Celtic then, continues to enjoy partnerships with a number of international companies, which provide the foundation of income streams going forward. Indeed, success in qualifying for the group stage of the UEFA Champions League will assist greatly in this process.
Weakness
One weakness can be that, provisional tax computation for accounts purposes provides tax losses carried forward of approximately £30m and an available capital allowances pool of approximately £19m in 2007. The value of the deferred tax asset not reflected in the Financial Statements of the Group is £9.10m, which will be recoverable to the extent of future tax and profits of the Group.
Opportunity
The ability to field some of the competitive side and retain control on costs remains an opportunity stance challenge for example, when one player trading activity completed in the last 24 months has reflected such balanced approach, continued as the organization moves forward. The biggest challenge facing Celtic Plc management is the management of salary and transfer costs whilst achieving playing success in order to yield satisfactory financial results. The Board recognizes the need to maintain strict control of wage costs in an area that requires to be closely monitored. Wage inflation is an area of concern throughout the worldwide football industry that will need to be carefully controlled, particularly following the enhanced television contracts that have now been agreed in England and to a much lesser extent in Scotland and to achieve a managed ratio between turnover and labor costs.
Threat
Total operating expenses increased over last year by £5.61m, 10.4% to £59.28m predominantly due to increased labor costs and other charges related to improved turnover and the 4 additional home games, profit from operations of £15.95m compares with £3.74m last year. The retained profit exceptional of intangible fixed assets, loss on disposal of fixed tangible assets, gain on disposal of intangible assets, interest and tax amounted to £15.04m in comparison to a loss of £4.22m in 2006.
3b) Ratio Analysis
Celtic Plc Financial Overview – Ratio Analysis Year Turnover Pre-tax profit Wages / Turnover ratio (%) Employees
2006/07
75.237
15.040
48.4
496
2005/06
57.411
-4.222
56.6
489
2004/05
62.168
-7.733
60.2
453
2003/04
69.020
-7.471
58.7
493
2002/03
60.569
-5.794
54.6
418
2001/02
56.892
-2.974
57.6
392
2000/01
42.007
-11.190
61.7
381
1999/00
38.579
-5.985
52.3
444
1994/95
10.376
1993/94
8.736
According to the annual report, both football success and financial results, 2006/2007 was an Encouragingly, having invested heavily in strengthening the playing squad and developing the training facility at Lennoxtown, bank debt at the year end amounted to just under £5m, compared with over £9m and total net debt stood However, it is important to recognize that number of factors came together, all of which cast favorable light on our performance and which cannot reasonably be expected to recur, at least to the same degree. The other principal factor affecting the year’s financial performance was the volume of transfer activity. On the back of a particularly buoyant market in England, the company sold a number of players to clubs south of the border to a total profit of £9.4m.
Nevertheless, the gap between the two markets has grown enormously in the last two years, with the result that the movement of talent from North to South has become much more pronounced, and Scottish clubs are even less able than in the past to bid for players on an equal basis with English clubs, even at the level of the Coca Cola Football League Championship.
Total operating expenses rose by 10.4%, primarily higher player costs in the form of salaries and bonuses, and other costs such as travel and stadium expenses associated with our European games. No increase in costs at football clubs is actually welcomed, but when they are a direct result of success in competition, and are therefore more than compensated by additional revenues, they can be cheerfully absorbed.
Celtic plc ratio as there account to the costs to turnover, which already stood at a creditable 56.6% last season, fell to 48.4% in the year 2007. Like many of this year’s figures, the percentage is relatively low and given the need to pre- qualifies for the UEFA Champions League and the spill-over effect of the English football market into Scotland, may well rise next year. However we are determined to abide by policy of year-by-year sustainability in which player costs play crucial role. Income from merchandise sales fell by about £1m, although comparisons between years are complicated by the number and nature of replica strip launches.
Moreover, there was outstanding options are exercisable in total only after three years from the date of grant and provided that over three consecutive financial years: The increase in market value of the Company’s shares would place the Company in the top one third of companies within the Leisure, Entertainment and Hotels sector of the FTSE and if the percentage growth in earnings per share over such consecutive financial years exceeds percentage growth in RPI over the same period by an average of at least 3% per year. The performance criteria stated above were regarded as challenging test of comparative financial performance, with a view to securing consistent growth and shareholder
return against the sector.
Financial Highlights
- Group turnover increased by 31.0% to £75.24m (2006: £57.41m)
- Operating expenses increased by 10.4% to £59.28m (2006: £53.67m)
- Profit from operations of £15.95m (2006: £3.74m)
- Exceptional operating expenses of £2.88m (2006: £0.58m)
- Gain on disposal of intangible fixed assets of £9.40m (2006: £0.26m loss)
- Profit before taxation of £15.04m (2006: £4.22m loss)
- Year end bank debt of £4.99m (2006: £9.09m) net of cash
- Investment of £14.44m (2006: £8.84m) in the acquisition of intangible fixed assets
In an instance, movements in turnover in comparison to last year are noted below. Income from football operations increased by £7.69m, 28.8% to £34.34m, mainly as a result of progressing to the last 16 of the UEFA Champions’ League and having played 4 more home games this year in comparison to last. The increase has been augmented by the continued high take up of season tickets following a price increase of approximately 3% in addition to the revenues
There is risk in Celtic Plc business if the gearing is also high from the year 2007 up to 2008 Key decisions, including: financial policies, budgets, strategy and long term planning, major capital expenditure, material contracts, risk management and controls, health and safety and the appointment of the Celtic’s principal external advisers, directors and senior executives are all subject to Board approval.
4) Compliance with reporting standards
There were required to first adopt International Accounting Standards (IAS) when preparing Celtic Plc Financial Statements as in conjunction with its auditors, identified the key standards which will impact upon the Financial Statements and have taken steps to ensure the availability of comparative figures. Accounting for financial instruments and segmental reporting are those areas where we expect IAS to have the most impact on our Financial Statements. Under IAS14 Segmental Reporting, additional disclosure will be required as a result of what are defined as reportable segments. The There improvement in identifying such reportable segments and has determined that while they are not expected to be significantly different to the current five operating divisions, additional information will be required and accounting systems have been adapted to accommodate successful conversion to financial reporting under IAS will be achieved.
5) Recommendations
For one turn of recommendation, there is a need for Celtic Plc to remain and keep a stable status of the business as reflected into having a desirable flow of its financial accounting and flow of statements like for example, detailed balanced sheet, compensative SWOT analysis, P and L assessment and other factors that can serve as remarked pointers of better business operation advances. There is ample need to control and stabilize cash flow domains of the Celtic Plc and to keep track of business environment and be aware of the challenge to achieve better financial status the next year round. Football merchandise is to some extent a fashion market and therefore difficult at present, and Celtic Plc marketing and sales staff have done well to maintain the Company’s position as one of the leading retailers of quality football and leisure wear.
Bibliography
Celtic Plc website
Available from: www.celticfc.co.uk
Notes
http://www.celticfc.net/news/stories/news_200807142800.aspx
Credit:ivythesis.typepad.com
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