shareholders are we

Celtic's interim results for the six months to 31 December 2005 gave the first indication of the financial consequences of the Artmedia fiasco and the £15m share issue in December.

Turnover fell to £33.3m (2004: £39.2m), though retained loss for the period was only £961,000, considerably less than some financial analysts had feared.

A change in accountancy rules required Celtic to reallocate £4.6m of non-equity share capital (preference shares) as debt. Under the new rules net debt was £13.3m.

Brian Quinn reported that the club had invested £6.55m in the acquisition of football player registrations for the period. The 'Nike effect' provided the brightest news, as merchandising brought in £9.6m (2004: £6.5m). This reflects not only the extra income Celtic received under the new merchandising contract, but also additional retail sales of the new kit. Sales were particularly depressed during the last year of the Umbro contract.

There is now £25.3m on the balance sheet. The December share issue lifted this figure from what would have been £11.4m.

Operational costs fell slightly but income not connected with European football increased significantly.

Importantly, Celtic invested in player registrations at the upper end of most expectations and debt is clearly coming under control, which will alleviate the burden of interest repayments that have dogged the club in recent years.

The quality of the team has been improved - although that one is always up for debate nobody could argue that at their best this season Celtic have been great to watch - while both debt and costs have been reduced. Players such as Zurawski, Boruc and Nakamura have been recruited on significantly less money than those who departed last summer, which enabled that £6.55m spend on new players. The likely departures of more high earners at the end of this season (Varga and Thompson?) could even free up some more cash for additional signings to follow Miller and Caldwell and strengthen the playing staff still further. If WGS can unearth three more like the aforementioned Zurawski and company then there will be few complaints.

All this without the financial benefits that go along with European football and alongside a damagingly early exit from the Scottish Cup. If nothing else it emphasises how important winning the league and qualifying for the CL is this season.

Celtic have come through a difficult restructuring post-MON looking healthy. With an even bounce of the ball, next season should present more opportunities for development.

Overall it was a respectable set of results. The board have invested quite heavily this year and still have managed to reduce costs. The second half this year should be better than the second half of last year, mainly due to merchandising, extra home games in the SPL and a reduced payroll from last year.

Looking to the future Celtic are set up now to be quite profitable any time we do qualify for the Champions League.

Over at the Death Star, far from publishing an interim report like the Celtic PlC, David Murray released a seven line statement to the media entitled 'Interim Report' to 31 December 2005. The report had no balance sheet, no cash flow information and no net debt figure.

A £6.1m after tax profit was announced, as was a £9.4m increase in turnover to £40.3m. David Murray accredited the higher turnover to Champions League involvement. That such a healthy profit can be reported for a period immediately before a transfer window when Rangers were yet again net sellers (Thompson out for £250k, Boyd in for £200k down) indicates the extent of the financial problems at Ibrox.

Although Murray was claiming to have shown a profit with no balance sheet to back this up, the results were generally given a favourable spin in the press. According to one CQN observer, though, they are actually horrendous. With a one off uplift from the Champions League and an increase of £9.4 million in turnover Rangers only managed to increase profit by £1.3 million, compared to the previous year. The question is, where did the £8.1 million of the extra turnover go to?

Looking at the second half of Rangers' results from 2005, there was a one off gain of £15 million due to the negative goodwill release of the NTL share repurchase, and a gain of £7.5 million on the sale of Boumsong to Newcastle. Without that the second half would have shown a loss of £12 million. There is no gain from player sales this January.

Rangers have reduced the quality of their squad, spent only £1 million, and increased costs and probably debt as well. All accomplished with the largest income they have ever had.

What's clear is that whatever the 'new investment ' is that Murray is promising it is required in a hurry. And Murray is preparing the market for a poor second half of the financial year as well! Failure to qualify for next seasons Champions League will create a huge hole in Rangers finances.

The Hearts v Hibs semi-final draw was the worst DM could possibly have dreaded. Come on Gretna!