Celtic : ANNUAL RESULTS 2021

CELTIC PLC

ANNUAL REPORT

YEAR ENDED

30 JUNE 2021

Chairman's Statement ........................................................................	1	Independent Auditor's Report to the Members....................	41
Summary of the Results......................................................................	2	Consolidated Statement of Comprehensive Income.......	51
Chief Executive's Review....................................................................	4	Consolidated Balance Sheet..........................................................	52
Strategic Report.......................................................................................	6	Company Balance Sheet..................................................................	53
Directors' Report....................................................................................	21	Statements of Changes in Equity...............................................	54
Corporate Governance.......................................................................	27	Consolidated Cash Flow Statement............................................	55
Audit Committee Report...................................................................	33	Company Cash Flow Statement..................................................	56
Remuneration Report.........................................................................	35	Notes to the Financial Statements..............................................	57
Directors' Responsibilities Statement......................................	38	Directors, Officers and Advisers..................................................	84
Five Year Record...................................................................................	40

CHAIRMAN'S STATEMENT Ian Bankier

"We look forward to the season ahead with measured confidence in both our footballing prospects and the robustness of our business model."

S U M M A R Y O F T H E R E S U L T S

OPERATIONAL HIGHLIGHTS

Runners up in the SPFL Premiership

Winner of the delayed 19/20 Scottish Cup for the 4th season in a row and completing an unprecedented 'Quadruple Treble'

FINANCIAL HIGHLIGHTS

Group revenue decreased by 13.4% to £60.8m (2020: £70.2m)

Operating expenses including labour decreased by 7.6% to £74.4m (2020: £80.5m)

Gain on sale of player registrations of £9.4m (2020: £24.2m)

These results for the year ended 30 June 2021 show that revenue fell to £60.8m (2020: £70.2m) and we recorded a loss before tax of £11.5m (2020: £0.1m profit before tax). This was driven by revenue attrition and significantly lower gains on player trading, compared to the prior financial year. In the face of this adverse swing in financial performance, we are satisfied that we took sufficient and appropriate steps to mitigate the losses and control costs in the business. Our

Dominic McKay, who was appointed CEO on 1st July 2021 chose to step down on 10th September for personal reasons. I thank Dom for his contribution over the summer and everyone at Celtic wishes him well for the future. Michael Nicholson, Director of Legal and Football Affairs, has been appointed to the Board as acting Chief Executive Officer. Michael carries the confidence of the Board, he is experienced in Celtic, highly regarded in football circles and is a most

Qualification for the group stages of the UEFA Europa League

28 home matches played at Celtic Park (2020: 261 games)

Acquisition of player registrations of £13.5m (2020: £20.7m)

Loss before taxation of £11.5m (2020: Profit £0.1m)

Year-end cash net of bank borrowings of £16.6m (2020: £18.2m)

year end cash, net of bank borrowings, was £16.6m (2020: £18.2m). This gave us a base to invest in the summer transfer window as discussed further below.

The persisting trading restrictions from Covid-19 translated into lost earnings and, taking account of the seasonality in our trading, this was the key factor in the widening of our losses in the second half of the financial year. Conditions have improved markedly since the year end and we were delighted to welcome our fans back in July 2021. Although our stadium has been operating at near full capacity, recently announced Scottish Government restrictions on large venues will be a further challenge. Whilst we look forward with optimism to a more normal operating environment, we are mindful of the inherent risk of the pandemic continuing to affect public health.

The Board was delighted to welcome new manager Ange Postecoglou to the Club in June 2021. Ange is a modern, progressive coach with exciting, attacking football as his philosophy. He has received a host of prestigious coaching accolades, including being named as Australia's PFA Manager of the decade in 2015. He has been well received by the media and our supporters.

Over the transfer window, post year end, we successfully accomplished a major overhaul of our playing squad. At the season end, we returned a number of loan players that had amplified our squad. Then we invested significant sums in the registrations of Liam Shaw, Osaze Urhoghide, Liel Abada, Carl Starfelt, Kyogo Furuhashi, James McCarthy, Joe Hart, Josip Juranovic, Liam Scales, Georgios Giakoumakis plus the loan signings of Filipe Jota and Cameron Carter-Vickers. And we achieved good value from the transfer out of a number of players, notably, Kristoffer Ajer, Odsonne Edouard and Ryan Christie, who have moved on to other opportunities.

Our strategy of balancing player development and player trading is fundamental to our self-sustaining business model. In particular, the disposal of the registrations of Odsonne Edouard and Kristoffer Ajer demonstrates our core strength of being able to transform young talented players into seasoned professional footballers. In turn, we invest the proceeds of these transactions back into the first team squad to enable us to continue to develop our squad and to challenge for future honours.

effective leader of our executive team.

The entire season captured in the year ended 30 June 2021 was characterised by the absence of supporters in football stadiums and the huge disruption to our operations. On behalf of the Board and everyone at the Club, I thank the Celtic support for their backing and understanding last season whilst also sharing their frustration and disappointment. I must also express my gratitude to our sponsors and partners, who were also challenged by the unique circumstances.

As we progress through the current season, our objective is to work with the authorities to ensure that we can continue to operate in a safe manner and in a way that facilitates our players being able to give their best and our supporters being able to attend matches at full capacity.

We look forward to the season ahead with measured confidence in both our footballing prospects and the robustness of our business model. Celtic plc is directed by a Board of individuals with demonstrable experience both of Celtic and wider business, its operations are managed by an executive team of talented specialists led by our Chief Executive and the executive is supported by a dedicated cast of colleagues who have worked tirelessly for the Club over this most difficult financial year. I thank them all for everything that has been achieved. Celtic is in good hands.

Ian P Bankier, Chairman

20 September 2021

1due to the early curtailment of the 2019/20 Scottish domestic season, 4 home SPFL Premiership matches were unfulfilled.

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CHIEF EXECUTIVE'S REVIEW Michael Nicholson

"After the disappointments of last season, our supporters have stuck by the Club and I sincerely thank them for that."

The year ended 30 June 2021 was one of the most challenging periods the Club has faced in recent history. The impact of Covid-19 and consequential events disrupted our winning rhythm and, crucially, prevented our supporters from attending Celtic Park. Despite securing a historic quadruple treble in December 2020, following the delayed completion of season 2019/20, we were extremely disappointed to relinquish all three domestic trophies in season 2020/21. Similarly, we did not progress beyond the group stages of the Europa League as we had done in the previous season.

With the domestic game, European football and the transfer market in a state of profound uncertainty, we decided at the outset of the 2020/21 season to retain our key players and augment the squad with new acquisitions and loan players. We acquired the registrations of Albian Ajeti, Vasilis Barkas and David Turnbull, retained Mohamed Elyounoussi on loan and brought in experienced internationals Shane Duffy and Diego Laxalt on loan. For a combination of reasons it did not work out for us.

In February, Neil Lennon decided to step down as football manager and assistant manager John Kennedy stepped up to take the team to the end of the season. Our Chief Executive, Peter Lawwell, who had decided to retire during the season under review, stood down on 30th June 2021 after 17 successful years at the Club. I would like to thank both Neil and Peter sincerely for their leadership, commitment and unflinching support they have given the Club, through thick and thin.

Having endured the season described above, we have drawn a line under this and look to move the Club forward, as always.

The Club was delighted to recruit Ange Postecoglou as football manager. Ange is a highly experienced international coach who started his career in Australia, following much domestic success by leading his country

at international level at the World Cup finals and winning a continental championship, before more recently joining Yokohama in Japan, winning the J League Title. Ange is a winner and has a clear vision of the football he wants us to play, which reflects the Club's values and style of play.

In the year under review, we sold the registrations of Jeremie Frimpong, Jack Hendry and Patryk Klimala. And then over the summer transfer window, post year end, we have refreshed the squad, adding 12 new signings, whilst some players have moved on. In addition, academy graduates Stephen Welsh, Tony Ralston and Adam Montgomery have made a strong contribution to the first team in recent months, with other academy graduates also gaining vital experience. Although we will always have work to do, our playing squad is in good shape for the season ahead.

We thank and pay tribute to the players who have left us, and we wish them well, as they progress their individual football careers. I make special mention of our outgoing captain, Scott Brown, who spent

16 years at Celtic amassing ten Scottish championships, five Scottish Cups, and six Scottish League Cups. I thank Scott for his immense contribution to Celtic and I wish our new captain, Callum McGregor, and all of our new players success in their roles going forward under our new manager.

Over the recent years we have invested heavily in our football department so that it can perform at the highest levels in supporting our playing squads and our player identification and development strategy. That investment fed in to one of the most successful periods on the pitch in the Club's history, and we will continue to devote substantial investment to these key areas, our objective being to remain at the forefront of the modern game. A number of evolutionary initiatives are currently under way, to build on that success and to continue to take the Club forward.

Building on the growth and investment in previous years, season 2020/21 saw for the first time a full time professional Celtic FC Women's team take the field, competing in the Scottish Women's Premier League. This was both a significant and a proud moment for the Club. Led by our manager Fran Alonso, our team finished second in the Scottish Women's Premier League, which was a notable achievement. We will continue to invest for future success in this important area of the Club.

I am also pleased to report that a Celtic B team has entered the Scottish Lowland League for the first time in season 2021/22, led by manager Tommy McIntyre. This provides a competitive environment for player development and represents an important step in our player pathway strategy to progress our best young talent from the academy into the first team.

In the last year we have enjoyed working alongside adidas, our new technical kit partner. The response of the Club's supporters to the new merchandise has been outstanding, with record sales through our stores and online. This reflects both the combined global strength of the Club and adidas brand as well as the quality of the products on offer and we look forward to successful years ahead with adidas as a key partner. We also thank Dafabet, Magners and all of our partners for their ongoing support and for working collaboratively and constructively with the Club through the impact of Covid-19..

After the disappointments of last season, our supporters have stuck by the Club and I sincerely thank them for that. In very difficult circumstances, our supporters have backed Ange and the team with remarkable season ticket sales over the summer period. Celtic Park is finally back as it should be; full of the best supporters in world football. Everyone at the Club wants to reward our supporters' commitment and loyalty with entertaining and winning football and I look forward to this current season with optimism.

In closing, I would like to recognise the personal efforts and sacrifices of all colleagues at the Club over this challenging period. Their selfless dedication and steadfast commitment to Celtic has played a vital role in the Club emerging from the impact of Covid-19 and gives us a solid foundation to restore the success that our supporters and everyone at the Club desire.

Michael Nicholson, Acting Chief Executive

20 September 2021

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STRATEGIC REPORT

The Directors present their Strategic Report for the year ended 30 June 2021.

The Strategic Report contains certain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this report. Such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information. The assumptions used take into account the known effects of the Covid-19 pandemic ('Covid-19') and the impact this has had and is currently having on the operations of the Group. At the time of writing the effects of Covid-19 on the business are subsiding, however these circumstances and the resultant trading conditions may still be subject to change in the coming financial year owing to the unpredictable nature of Covid-19.

The Strategic Report discusses the following areas:

• Covid-19
• • Financial and other implications on the business (refer to pages 6 - 15)
  • Management decisions and mitigating actions (refer to pages 6 - 7)
• Strategic management
• • Strategy, the business model and objectives (refer to page 8)
  • Principal risks and uncertainties (refer to pages 11 - 12)
• Business performance
• • Fair review of the Group's business (refer to pages 8 - 10)
  • Key performance indicators (refer to page 8)
• Business environment
• • Main trends and factors (refer to pages 13 - 15)

COVID-19

The adverse impact of Covid-19 had been significant in the year ended 30 June 2020 and this was evident from the financial results reported for that period. Following the early season curtailment in 19/20, it was agreed in July 2020 that the 20/21 SPFL Premiership season would re-start with matches being played behind closed doors. However, the retail and hospitality sectors had re-opened after a period of closure and this, along with the work going on behind the scenes around a safe return for fans to football stadia including the planning of some test events in the early part of the season, had provided some optimism that we would see an end to closed door matches in the near future. As it transpired, due to the continuing spread of Covid-19 and the resulting government measures, the entire season was played without any fans in attendance for all of the Club's home matches. This had a material detrimental effect on the business and required a number of measures, both operationally and financially, to navigate the business through this challenging period.

MITIGATING ACTION AND PROTECTIVE MEASURES

STRATEGY FOLLOWING LOCKDOWN

As the strict lockdown measures, which had been in place and curtailed trading in the last quarter of the year ended 30 June 2020, began to ease, the executive management had a number of areas of focus, most notably:

• Continued engagement with the football authorities, and in particular the SFA and SPFL Joint Response Group ('JRG') with the aim of bringing supporters back to the stadium;
• Formulating a financial plan for the coming year, ensuring appropriately prudent assumptions were in place, to fully account for the potential financial implications of the continuing pandemic;
• Ensuring the safety and well-being of staff, as well as continuing to facilitate home working;
• Managing the operation of football matches behind closed doors and providing a match broadcast media offering for season ticket holders in lieu of stadium entry; and
• Supporting our football department in preparation for the new season while managing the potential financial challenges ahead.

In respect of the final point above, the strong Balance Sheet we had in place at the start of the year allowed us to progress with targeted investment to try and ensure the first team was as well placed as possible to compete on various fronts in the coming season.

The Group continued to engage with specific external consultants in order to keep apace with the ever-changing regulations associated with Covid-19, as we aimed to ensure a safe working and playing environment as well as formulating processes and plans for the potential safe return of supporters to football stadia.

IMPACT ON OUR STAKEHOLDERS

The Group has been cognisant of the detrimental impact across society brought about by Covid-19 and continued to support its key stakeholders where possible, noting the varied challenges experienced within each group.

EMPLOYEES

In the year ended 30 June 2020, the Group had taken advantage of the UK Government's Job Retention Scheme ('JRS') and

this continued as necessary into the financial year under review. Despite the scheme offering varying levels of benefits throughout the year, the Group continued to pay all furloughed employees in full, topping up any difference between the JRS funding and the relevant pay of the affected employees.

In addition, a voluntary decision was made by the executive and non-executive Directors to continue to take a reduction in salary for the opening period of the financial year.

Those employees who were continuing to work, either on full or part time basis, have been supported in working from home in line with the government guidance. The work place was altered to incorporate necessary social distancing measures and PPE is available to all staff that require to be in our facilities. Our Human Resources team have also maintained regular dialogue with employees by distributing updated Government guidance as it becomes available, online training modules on how to stay safe and mental health resources, all in an effort to maintain employee wellbeing.

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